<PAGE>

                         SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549

                                    FORM 10-QSB

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

                  FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1997

                                         or

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

                            Commission file No. 0-12641


                                       [LOGO]

                          IMAGING TECHNOLOGIES CORPORATION
         (Exact name of small business issuer as specified in its charter)

              DELAWARE                                     33-0021693
    (State or other jurisdiction                      (IRS Employer ID No.)
 of incorporation or organization) 

                                 11031 VIA FRONTERA
                            SAN DIEGO, CALIFORNIA 92127
                      (Address of principal executive offices)

          Issuer's Telephone Number, Including Area Code:  (619) 613-1300

Check whether the issuer (1) has filed all reports required to be filed by 
Section 13 or 15(d) of the Exchange Act 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 / /    

State the number of shares outstanding of each of the issuer's classes of 
common stock, as of the latest practicable date.

                         Class:  Common Stock, $0.005 par
                         --------------------------------

                Outstanding at February 13, 1998: 11,243,483 Shares
                ---------------------------------------------------

Transitional Small Business Disclosure Format (Check one):

                                  Yes / /  No  /X/
<PAGE>

                         IMAGING TECHNOLOGIES CORPORATION 
                                  AND SUBSIDIARIES

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
                                        INDEX
-------------------------------------------------------------------------------
                                                                        PAGE
                                                                         NO.
<S>                                                                     <C>
 Part I.   Financial Information:

           Consolidated Condensed Balance Sheet, December 31, 1997        1


           Consolidated Condensed Statement of Operations
               Three Months ended December 31, 1997 and 1996              2

           Consolidated Condensed Statement of Operations
               Six Months ended December 31, 1997 and 1996                3

           Consolidated Condensed Statement of Cash Flows
               Six Months ended December 31, 1997 and 1996                4

           Notes to Consolidated Condensed Financial Statements           5

           Management's Discussion and Analysis or Plan of Operations     6

 Part II.  Other Information                                             11
-------------------------------------------------------------------------------
</TABLE>
<PAGE>

                         IMAGING TECHNOLOGIES CORPORATION 
                                  AND SUBSIDIARIES
                       CONSOLIDATED CONDENSED BALANCE SHEET 
                                    (UNAUDITED)
                                 DECEMBER 31, 1997

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
                                     ASSETS
-------------------------------------------------------------------------------
<S>                                                           <C>
Current assets:
     Cash                                                     $   3,103,000
     Accounts receivable, net                                    11,579,000
     Inventories                                                  3,139,000
     Other current assets                                         1,184,000
                                                              -------------
Total current assets                                             19,005,000

Capitalized software, net                                         1,628,000
Prepaid licenses, net                                             1,021,000
Property and equipment, net                                       1,523,000
Goodwill                                                            382,000
Other                                                               299,000
                                                              -------------

                                                              $  23,858,000
                                                              -------------
                                                              -------------
-------------------------------------------------------------------------------
                        LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------------------------------------------------
Current liabilities:
     Accounts payable                                         $   2,764,000
     Accrued expenses                                             1,001,000
     Deferred revenues                                               98,000
     Notes payable and capital leases                             3,228,000
                                                              -------------

Total current liabilities                                         7,091,000

     Long-term note payable                                         103,000
                                                              -------------

Total liabilities                                                 7,194,000
                                                              -------------

Shareholders' equity:
     5% convertible preferred stock
     $1,000 PAR VALUE, 7,500 SHARES AUTHORIZED,
      420.5 ISSUED AND OUTSTANDING                                  420,000

     Series C redeemable convertible preferred stock
     $1,000 PAR VALUE, $10,000 LIQUIDATION VALUE, 1,200 
      SHARES AUTHORIZED, 490 ISSUED AND OUTSTANDING               4,900,000

     Preferred stock
     $1,000 PAR VALUE, 1,183 AUTHORIZED, 
      NO SHARES ISSUED AND OUTSTANDING

     Common stock
     $.005 PAR VALUE, 100,000,000 SHARES AUTHORIZED,
      11,146,835 SHARES ISSUED AND OUTSTANDING                       50,000

     Paid-in capital                                             33,405,000
     Shareholder loans                                             (135,000)
     Accumulated deficit                                        (21,976,000)
                                                              -------------

Total shareholders' equity                                       16,664,000
                                                              -------------

                                                              $  23,858,000
                                                              -------------
                                                              -------------
-------------------------------------------------------------------------------
</TABLE>
   SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

                                       1
<PAGE>

                        IMAGING TECHNOLOGIES CORPORATION 
                                AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS 
                                  (UNAUDITED) 

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
                                                     THREE MONTHS ENDED DECEMBER 31,
                                                         1997                 1996
-------------------------------------------------------------------------------------
<S>                                                 <C>                 <C>
Revenues:
     Sales of products                              $  8,219,000        $  6,108,000
     Engineering fees                                  1,531,000           1,396,000
     Royalties                                                                10,000
                                                    ------------        ------------
                                                       9,750,000           7,514,000
                                                    ------------        ------------

Costs and expenses:
     Cost of products sold                             5,913,000           3,796,000
     Selling, general and administrative               2,169,000           2,756,000
     Cost of engineering fees and research and 
       development                                       572,000             697,000
                                                    ------------        ------------
                                                       8,654,000           7,249,000
                                                    ------------        ------------

Income from operations                                 1,096,000             265,000

Other income (expense):
     Interest, net                                       (16,000)            (15,000)
     Other                                                                    49,000
                                                    ------------        ------------
                                                         (16,000)             34,000
                                                    ------------        ------------

Net income before provision for income taxes           1,080,000             299,000

Provision for taxes                                                            6,000
                                                    ------------        ------------

Net income                                          $  1,080,000        $    293,000
                                                    ------------        ------------
                                                    ------------        ------------

Primary and fully diluted income 
  per common share                                  $       0.08        $       0.03
                                                    ------------        ------------
                                                    ------------        ------------

Average shares outstanding                            13,561,000           8,962,000
                                                    ------------        ------------
                                                    ------------        ------------
-------------------------------------------------------------------------------------
</TABLE>
      SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

                                       2
<PAGE>

                         IMAGING TECHNOLOGIES CORPORATION 
                                 AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS 
                                  (UNAUDITED) 

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
                                                      SIX MONTHS ENDED DECEMBER 31,
                                                         1997                1996
-------------------------------------------------------------------------------------
<S>                                                <C>                 <C>
Revenues:
     Sales of products                             $  14,497,000       $  12,396,000
     Engineering fees                                  3,047,000           2,714,000
     Royalties                                                               285,000
                                                    ------------        ------------
                                                      17,544,000          15,395,000
                                                    ------------        ------------

Costs and expenses:
     Cost of products sold                            10,186,000           7,872,000
     Selling, general and administrative               4,293,000           6,107,000
     Cost of engineering fees and  research and 
       development                                     1,169,000           1,453,000
     Purchased research and development                                      780,000
                                                    ------------        ------------
                                                      15,648,000          16,212,000
                                                    ------------        ------------

Income (loss) from operations                          1,896,000            (817,000)

Other income (expense):
     Interest, net                                       (42,000)            (11,000)
     Other                                                (2,000)             28,000
                                                    ------------        ------------

                                                         (44,000)             17,000
                                                    ------------        ------------

Net income (loss) before provision for 
  income taxes                                         1,852,000            (800,000)

Provision for taxes                                        4,000               9,000
                                                    ------------        ------------

Net income (loss)                                   $  1,848,000         $  (809,000)
                                                    ------------        ------------
                                                    ------------        ------------

Primary and fully diluted income (loss) 
  per common share                                  $       0.14         $     (0.10)
                                                    ------------        ------------
                                                    ------------        ------------

Average shares outstanding                            13,412,000           9,069,000
                                                    ------------        ------------
                                                    ------------        ------------
-------------------------------------------------------------------------------------
</TABLE>
       SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

                                       3
<PAGE>
                          IMAGING TECHNOLOGIES CORPORATION
                                 AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS 
                                    (UNAUDITED)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
                                                                      SIX MONTHS ENDED DECEMBER 31,
                                                                        1997                1996
-----------------------------------------------------------------------------------------------------
<S>                                                                <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                  $  1,848,000        $   (809,000)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO CASH USED 
     BY OPERATING ACTIVITIES:
     Depreciation and amortization of property and equipment            298,000             628,000
     Purchased research and development                                                     780,000
     Changes in assets and liabilities:
          Accounts receivable                                        (3,028,000)         (1,794,000)
          Inventories                                                  (497,000)             12,000
          Other current assets                                         (659,000)           (403,000)
          Accounts payable and accrued expenses                         149,000            (798,000)
          Deferred revenues                                            (258,000)           (178,000)
                                                                   ------------         -----------
NET CASH USED BY OPERATING ACTIVITIES                                (2,147,000)         (2,562,000)
                                                                   ------------         -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Prepaid licenses and royalties                                    (323,000)           (179,000)
     Capitalized software development costs                          (1,079,000)           (151,000) 
     Purchase of net assets by NewGen Systems Corporation                                   (86,000)
     Proceeds from certificate of deposit                                                    50,000
     Capital expenditures                                              (104,000)           (550,000)
                                                                   ------------         -----------
NET CASH USED BY INVESTING ACTIVITIES                                (1,506,000)           (916,000)
                                                                   ------------         -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Net proceeds from sale of preferred stock                        5,000,000
     Net proceeds from exercise of stock options and warrants           581,000             176,000
     Net increase line-of-credit                                      1,234,000             324,000
     Principal payments under capital lease obligations                  (5,000)            (13,000)
     Proceeds from long term debt                                                            96,000
     Proceeds from shareholder loans                                     12,000
     Capital contributions - NewGen                                                       1,002,000
     Repayment of notes payable                                        (321,000)            (10,000)
                                                                   ------------         -----------
NET CASH USED BY FINANCING ACTIVITIES                                 6,501,000           1,575,000
                                                                   ------------         -----------

Net increase (decrease) in cash                                       2,848,000          (1,903,000)

Cash at the beginning of the period                                     255,000           4,394,000
                                                                   ------------         -----------
Cash at the end of the period                                      $  3,103,000        $  2,491,000
                                                                   ------------         -----------
                                                                   ------------         -----------

NON-CASH FINANCING ACTIVITIES:
     Conversion of preferred stock into common stock               $    100,000        $  1,371,000
                                                                   ------------         -----------
                                                                   ------------         -----------
     Options exercised with loans                                  $      8,000        $     22,000
                                                                   ------------         -----------
                                                                   ------------         -----------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid during the period for interest                      $    110,000        $     87,000
                                                                   ------------         -----------
                                                                   ------------         -----------
     Cash paid during the period for income taxes                                      $      9,000
                                                                   ------------         -----------
                                                                   ------------         -----------
-----------------------------------------------------------------------------------------------------
</TABLE>
          SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                       4
<PAGE>

                       IMAGING TECHNOLOGIES CORPORATION 
                               AND SUBSIDIARIES
            NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 
                                 (UNAUDITED)

NOTE 1 - PRINCIPLES OF CONSOLIDATION

The accompanying consolidated condensed financial statements of Imaging 
Technologies Corporation and Subsidiaries (the "Company" or "ITEC") have not 
been audited. These financial statements reflect all adjustments (consisting 
only of normal recurring adjustments) which are, in the opinion of 
management, necessary for a fair presentation of the 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 which are included in the Company's annual report on 
Form 10-KSB for the year ended June 30, 1997 and the Company's Form 10-QSB 
for the quarter ended September 30, 1997 filed with the Securities and 
Exchange Commission. Interim operating results are not necessarily indicative 
of operating results for the full year. 

NOTE 2 - INVENTORIES 

Inventories at December 31, 1997 consisted of the following:

<TABLE>
     <S>                                      <C>
     Raw materials and supplies               $  970,000
     Work in process                              82,000
     Finished goods                            2,087,000
                                              ----------
                                              $3,139,000
                                              ----------
                                              ----------
</TABLE>

NOTE 3 - MERGERS AND ACQUISITIONS

ACQUISITION OF MCMICAN CORPORATION

Effective November 24, 1997, the Company purchased the total outstanding 
shares of the privately-held McMican Corporation, doing business as New Media 
Memory ("NMM") for 200,000 shares of ITEC common stock. The new operation 
will be called the Digital Storage Products Division of Imaging Technologies 
Corporation, producing specialized memory modules for handheld personal 
computers, digital cameras, and printers. 

The transaction was accounted for as a purchase; accordingly, the results of 
NMM's operations have been included in consolidated operations from the date 
of acquisition. The following are the unaudited pro forma results of 
operations of the Company as though NMM was acquired on July 1, 1997.

<TABLE>
<CAPTION>
                         Quarter ended December 31,   Six months ended December 31,
                         --------------------------   -----------------------------
                             1997          1996           1997             1996
                         -----------    ----------    ------------    -------------
<S>                      <C>            <C>           <C>             <C>
Revenues                 $10,570,000    $7,981,000     $19,712,000    $16,754,000
Net income (loss)          1,140,000       252,000       2,035,000       (754,000)
Primary income (loss)
 per common share        $       .08    $      .02     $       .15    $      (.09)
</TABLE>

The fair value of the net assets acquired were $1,110,000 and the liabilities 
assumed were $652,000. In conjunction with the acquisition, the Company 
recorded goodwill of approximately $309,000.

MERGER OF COLOR SOLUTIONS, INC.

Effective November 30, 1997, Color Solutions, Inc. ("CSI") was merged into a
newly created, wholly-owned subsidiary of the Company. Under the terms of the
Merger Agreement, 850,000 unregistered shares of ITEC's common stock were
exchanged for all of the outstanding shares of CSI. On November 30, 1997, CSI
began operating as a wholly-owned subsidiary of the Company.

As a result of the merger, which is being accounted for as a pooling of
interests, the consolidated results of operations for the six months ended
December 31, 1997 and 1996 include pre-merger net sales of $610,000 and
$676,000, and net losses after taxes of $48,000 and $117,000, respectively. 

                                       5
<PAGE>

                        IMAGING TECHNOLOGIES CORPORATION 
                               AND SUBSIDIARIES

         MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

RESULTS OF OPERATIONS

This Form 10-QSB contains both historical and forward-looking statements 
within the meaning of Section 27A of the Securities Act of 1933, as amended, 
and Section 21E of the Securities Exchange Act of 1934, as amended, which 
reflect the Company's current judgment on those issues. While management is 
optimistic about the Company's long-term prospects, the historical financial 
information contained herein may not be indicative of future financial 
performance. In fact, future financial performance may be materially 
different from the historical financial performance. Because such statements 
apply to future events, they are subject to risks and uncertainties that 
could cause the actual results to differ materially. Important factors which 
could cause actual results to differ materially include, but are not limited 
to: business conditions and growth in the electronics industry and general 
economy - both domestic and international; lower than expected customer 
orders; competitive factors, including pricing pressures, technological 
developments and products offered by competitors; availability of components; 
technological difficulties and resource constraints encountered in developing 
new products; and the timely flow of competitive new products and market 
acceptance of those products. Actual results may differ materially from these 
statements as a result of risk factors inherent in the Company's business, 
industry, customer base, or other factors. Risk factors which are applicable 
to the Company may be found in the Company's various filing with the 
Securities and Exchange Commission.

Users of this Form 10-QSB are cautioned not to place undue reliance on these 
forward-looking statements, which speak only as of the date thereof. The 
Company undertakes no obligation to publicly release updates or revisions to 
these statements. 

RESULTS OF OPERATIONS

The Company has been in a transition period, from older technology and 
products, to becoming a leading technology-based supplier of state-of-the-art 
printer controllers to OEM customers. The implementation of the strategy of 
the development of the new Adobe-Registered Trademark- PostScript-Registered 
Trademark- Interpreter (APSI) project, which includes the Company's color 
ColorImage-TM- Series controller implementation of Adobe PostScript software 
for OEM customers, and its monochrome LaserImage-TM- Series controllers which 
may also include HP-based (PCL) multi-function technology continues to show 
promising results. 

The Company has been successful in attracting several major customers, with 
substantial resources and marketing capabilities, that desire to utilize the 
Company's technologies which have been developed over the past few years. 
Several customers have executed contracts over the past few years to adapt 
Adobe PostScript software and/or the Company's software products to 
controllers that will be integrated with the printer engines of various OEM 
customers. These customers include or have included, but are not limited to, 
Integrated Device Technology, Inc., Matsushita Electric Company, Ltd. 
(Panasonic), Minolta Company, Ltd., NEC Electronics, Inc., Canon USA, Inc., 
Apple Computer, Mita Digital Design and Xerox Corporation.

                                       6
<PAGE>

ITEC's strategy has required the Company to alter its focus away from some of 
its traditional revenue sources and to make expenditures in support of these 
efforts. As a result, the Company's business continues to be in a significant 
transitional phase and there are important short-term operational and 
liquidity challenges. Accordingly, year-to-year financial comparisons may be 
of limited usefulness now and for the next several quarters due to these 
important changes in the Company's business. 

Effective February 14, 1997, the Company consummated its merger with NewGen 
Imaging Systems, formerly NewGen Systems Acquisition Corporation ("NewGen"). 
Accordingly, the consolidated results of operations for the six months ended 
December 31, 1996 include pre-merger net sales of $7,190,000 and a net loss 
after taxes of $1,551,000. 

Effective November 24, 1997, the Company consummated its acquisition of 
McMican Corporation, doing business as New Media Memory ("NMM"). Accordingly, 
the consolidated results of operations include NMM net sales of $370,000 and 
income of $19,000 from the date of acquisition.

Effective November 30, 1997, the Company consummated its merger with Color 
Solutions, Inc. ("CSI"). Accordingly, the consolidated results of operations 
for the six months ended December 31, 1997 and 1996 include pre-merger net 
sales of $610,000 and $676,000, and net losses after taxes of $48,000 and 
$117,000, respectively.

Total ITEC revenues were $9,750,000 for the quarter ended December 31, 1997 
versus $7,514,000 for the quarter ended December 31, 1996. The Company, 
through its PCPI Technologies subsidiary, recognized non-recurring 
engineering fees ("NRE") to adapt the Company's software products to 
controllers of its OEM customers and of other related software of 
approximately $1,531,000 for the quarter ended December 31, 1997 compared to 
$1,396,000 for the quarter ended December 31, 1996, an increase of 10%. The 
Company had net income of $1,080,000 for the quarter ended December 31, 1997 
compared to net income of $293,000 for the quarter ended December 31, 1996, 
an increase of 269%.

Total ITEC revenues were $17,544,000 for the six months ended December 31, 
1997 versus $15,395,000 for the six months ended December 31, 1996. The 
Company, through its PCPI Technologies subsidiary, recognized non-recurring 
engineering fees ("NRE") to adapt the Company's software products to 
controllers of its OEM customers and of other related software of 
approximately $3,047,000 for the six months ended December 31, 1997 compared 
to $2,714,000 for the six months ended December 31, 1996, an increase of 12%. 
The Company had net income of $1,848,000 for the six months ended December 
31, 1997 compared to a net loss of $809,000 for the six months ended December 
31, 1996.

REVENUES

SALES OF PRODUCTS were $8,219,000 for the quarter ended December 31, 1997 
versus $6,108,000 for the quarter ended December 31, 1996, an increase of 
35%. For the six months ended December 31, 1997 sales of products were 
$14,497,000 compared to $12,396,000 for the six months ended December 31, 
1996, an increase of 17%. The Company's sales of products were derived 
primarily from ITEC's wholly-owned subsidiaries Prima International 
("Prima"), NewGen Imaging Systems ("NewGen"), Color Solutions ("CSI") and New 
Media Memory ("NMM").

Sales of product through Prima for the quarters ended December 31, 1997 and 
1996 and  were $2,869,000 and $2,398,000, respectively. Such sales for the 
six months ended 

                                       7
<PAGE>

December 31, 1997 and 1996 were $5,245,000 and $4,530,000, respectively. The 
majority of Prima's sales were from distribution of PCMCIA-based memory 
storage products. The increases in product sales during the quarter and six 
months ended December 31, 1997 are attributed to an increase in Prima's 
distribution sales of PCMCIA-based memory products from SanDisk Corporation 
and Integral Peripherals, Inc. 

Sales of product through NewGen for the quarter ended December 31, 1997 were 
$4,205,000 compared to $3,429,000 for the quarter ended December 31, 1996. 
Such sales for the six months ended December 31, 1997 and 1996 were 
$7,420,000 and $7,190,000, respectively. The increase in these sales is the 
result of a product transition from certain "older technology-based" products 
which have been phased out. NewGen's sales of products are derived from high 
resolution imaging and color digital proofing products, which in some cases 
have been designed by NewGen or to NewGen's specifications, to customers in 
the printing and graphic arts industry throughout the world.

The Company has been transitioning from older technology and products, to new 
technology-based printer controller products over the past few years. It is 
anticipated that certain of these new technology-based products being 
developed by PCPI can be distributed into NewGen's customer base.

Sales of product through CSI for the quarter ended December 31, 1997 were 
$958,000 compared to $281,000 for the quarter ended December 31, 1996. Such 
sales for the six months ended December 31, 1997 and 1996 were $1,569,000 and 
$676,000, respectively. The increase in these sales is the result of the 
transition of CSI from the product development stage of their business to a 
product being sold in the market place.

ENGINEERING FEES during the quarters ended December 31, 1997 and 1996 were 
derived through the Company's PCPI Technologies subsidiary performing work on 
engineering projects that were funded by OEM customers under non-recurring 
engineering contracts. NRE revenue for the quarter ended December 31, 1997 
and 1996 was $1,531,000 and $1,396,000, respectively, which was recognized 
during the course of development based on the percentage of completion 
method. Such revenues for the six months ended December 31, 1997 and 1996 
were $3,047,000 and $2,714,000, respectively.

ROYALTIES through the Company's PCPI Technologies subsidiary for the quarter 
and six month periods ended December 31, 1996 were $10,000 and $285,000 and 
were derived primarily from "older-technology" based products. During the 
quarter and six month periods ended December 31, 1997, no such revenues were 
recognized. In the past, license fees and royalty revenue have shown 
significant period-to-period fluctuations which may continue in future 
periods. PCPI Technologies has submitted several proposals to prospective 
customers in order to develop Adobe PostScript-based controllers and other 
controllers based upon its ImageBase-TM-technology. While PCPI Technologies 
has entered into some contracts with OEM customers for controller 
development, there can be no assurance that additional contracts will be 
obtained for the development of such controllers, or that the existing 
contracts will be completed, or that products will be shipped by the customer 
which may result in the generation of future royalties and license revenues 
or that these products, once generating royalties, will continue to do so. 

COST OF PRODUCTS SOLD

Cost of products sold for the quarter ended December 31, 1997 and 1996 were 
$5,913,000 and $3,796,000, respectively, representing gross margins of 28% 
and 38%. Cost of products sold for the six months ended December 31, 1997 and 
1996 were $10,186,000 and $7,872,000, respectively, representing gross 
margins of 30% and 36%.

                                       8
<PAGE>

The decrease in the gross margin percentage is attributed to a change in the 
product mix between the periods. 

SELLING, GENERAL AND ADMINISTRATIVE 

Selling, general and administrative expenses for the quarter ended December 
31, 1997 were $2,169,000 versus $2,756,000 for the quarter ended December 31, 
1996. Selling, general and administrative expenses for the six months ended 
December 31, 1997 were $4,293,000 versus $6,107,000 for the six months ended 
December 31, 1996. The decrease is primarily the result of the Company's 
concerted effort to reduce the general and administrative expenses of the 
Company over the past year through the consolidation of various 
administrative functions. These decreases are partially offset by increased 
selling expenses in an attempt to stimulate technology and product sales.

COST OF ENGINEERING FEES AND RESEARCH AND DEVELOPMENT 

Cost of engineering fees and research and development for the quarter ended 
December 31, 1997 was $572,000 versus $697,000 for the quarter ended December 
31, 1996, representing technology sales gross margins of 63% and 50%. Cost of 
engineering fees and research and development for the six months ended 
December 31, 1997 was $1,169,000 versus $1,453,000 for the six months ended 
December 31, 1996, representing technology sales gross margins of 62% and 
46%. These expenditures consist of engineering expenses associated with the 
development of controller technologies and designs for PCPI technology 
customers. A significant component of the decreased cost of engineering fees 
and research and development is attributed to reduced hardware production 
costs during the quarters and a reduction in the amount of outside 
consultants being used by PCPI Technologies.

During the quarter and six month periods ended December 31, 1997, the Company 
capitalized certain qualified costs in the aggregate amount of $569,000 and 
$1,079,000, respectively, pursuant to Financial Accounting Standard No. 86 
("Accounting for Costs of Computer Software to be Sold, Leased, or Otherwise 
Marketed"). 

The consolidated statement of operations for the six month period ended 
December 31, 1996, includes approximately $780,000 of purchased research and 
development costs associated with the July 1996 purchase of the rights to 
certain products lines under development by NewGen.

Over the past year, PCPI Technologies has noticed an increase in the demand 
for qualified engineers in the local market. As a result of this increased 
demand, the cost of hiring and maintaining engineers could continue to 
increase and PCPI Technologies could experience difficulty in obtaining these 
resources in the future. Should the local market not be able to supply the 
required engineering talent, the Company may be required to hire individuals 
from outside the market or consider establishing an engineering division in 
an area of the country that could more readily support PCPI Technologies 
engineering requirements.

OTHER INCOME AND LOSS 

Net interest expense was $16,000 for the quarter ended December 31, 1997 
compared to $15,000 for the quarter ended December 31, 1996. Net interest 
expense for the six months ended December 31, 1997 and 1996 was $42,000 and 
$11,000, respectively. The increase is associated with an increase in the 
usage of the Company's line of credit facilities which was partially offset 
by reductions in the outstanding debt at ITEC and

                                       9
<PAGE>

interest income associated with the increased cash invested during the 
quarterly and six month periods.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1997, the Company had working capital of $11,914,000 compared 
to working capital of $5,203,000 as of June 30, 1997. The increase is 
primarily attributed to the continued improvement of the Company's operations 
and the initial $5,000,000 closing of the C Redeemable Convertible Preferred 
Stock ("Series C Shares"). Under the terms of the Series C private placement, 
subject to certain additional conditions, the Company has the right to call 
for a second round of financing up to an aggregate amount of $5,000,000 and 
the holders of the Series C Shares, subject to certain conditions, are 
entitled to purchase additional Series C Shares up to $2,000,000. In 
addition, the Company closed a $3,000,000 line of credit facility with a 
commercial bank to help to finance the sales growth of PCPI Technologies and 
Prima.

The Company's Adobe co-development projects present continuing liquidity 
problems for PCPI Technologies because, in the short-term, these activities 
are net users of working capital. Although the Company has improved its 
liquidity, adequate working capital is necessary to continue the Company's 
operations, develop its technology licensing business and to deliver the 
resulting products to contract customers in an efficient and timely manner. 
The increasing sales at Prima, New Media Memory and NewGen place additional 
pressures on ITEC's working capital. In addition, as noted above, while the 
Company has entered into several contracts with OEM customers for controller 
development, there can be no assurance that additional contracts will be 
obtained for the development of such controllers, or that the existing 
contracts will be completed, or that products will be shipped by the customer 
that will generate future royalty and license revenues or that once these 
products are being shipped by the Company's customers that they will continue 
to generate royalties.

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 December 31, 1997 was approximately $486,000.

As of December 31, 1997, the Company's wholly-owned subsidiary NewGen had 
$525,000 of available borrowings under its special purpose line of credit and 
ITEC had $1,534,000 of available borrowings under its special purpose line of 
credit.

ITEC has no material commitments for capital expenditures. 

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<PAGE>

                         PART II.  OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

No reportable matter.

ITEM 2.  CHANGES IN SECURITIES     

None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None

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

None.

ITEM 5.  OTHER INFORMATION

None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:

          11.1 Computation of Earnings (loss) Per Common Share

(b)  Reports on Form 8-K:

     None


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<PAGE>

                                   SIGNATURES

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

                                        IMAGING TECHNOLOGIES CORPORATION


                                        BY: HARRY J. SAAL
                                        --------------------------------------
DATE:  February 14, 1998                Harry J. Saal
                                        CHAIRMAN OF THE BOARD


                                        BY: EDWARD W. SAVARESE
                                        --------------------------------------
DATE: February 14, 1998                 Edward W. Savarese
                                        VICE CHAIRMAN OF THE BOARD, 
                                        CHIEF EXECUTIVE OFFICER


                                        BY: RALPH R. BARRY
                                        --------------------------------------
DATE February 14, 1998                  Ralph R. Barry
                                        VICE PRESIDENT AND CHIEF FINANCIAL
                                        OFFICER



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