<PAGE>
                                       
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                       
                                   FORM 10-Q
                                       
         /X/      QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                                       
                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
                                      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 registrant as specified in its charter)
                                       

          DELAWARE                                              33-0021693
(State or other jurisdiction of                           (IRS Employer ID No.)
incorporation or organization)                         
                                       
                              11031 VIA FRONTERA
                          SAN DIEGO, CALIFORNIA 92127
                   (Address of principal executive offices)
                                       
      Registrant's Telephone Number, Including Area Code:  (619) 613-1300


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
                                      ---     ---

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

Class: Common Stock, $0.005 par  Outstanding at May 12, 1998: 11,923,128 Shares
-------------------------------  ----------------------------------------------

<PAGE>

              IMAGING TECHNOLOGIES CORPORTATION AND SUBSIDIARIES
                                       
                                     INDEX
<TABLE>
<CAPTION>
                                                                     PAGE 
                                                                      NO.
<S>                                                                  <C>
Part I.  Financial Information:

         Consolidated Condensed Balance Sheet
           March 31, 1998 and June 30, 1997                            3

         Consolidated Condensed Statement of Operations
           Three Months ended March 31, 1998 and 1997                  4

         Consolidated Condensed Statement of Operations
           Nine Months ended March 31, 1998 and 1997                   5

         Consolidated Condensed Statement of Cash Flows
           Nine Months ended March 31, 1998 and 1997                   6

         Notes to Consolidated Condensed Financial Statements          7

         Management's Discussion and Analysis or Plan of Operations   10

Part II. Other Information                                            16
</TABLE>

                                       2

<PAGE>
                                       
              IMAGING TECHNOLOGIES CORPORATION, AND SUBSIDIARIES
                     CONSOLIDATED CONDENSED BALANCE SHEET
                            (Dollars in thousands)

<TABLE>
<CAPTION>
   
                                                                       MARCH 31,      JUNE 30
                                                                         1998           1997
                                                                      ---------      --------
                                                                     (UNAUDITED)
<S>                                                                   <C>            <C>
                       ASSETS
Current assets:
  Cash                                                                $  1,778       $    255
  Accounts receivable trade, net                                         8,139          2,556
  Contract receivables:
    Billed                                                               2,490          1,415
    Unbilled recoverable costs and accrued profit on
      progress completed                                                 4,538          3,208
    Inventories                                                          4,040          2,348
    Other current assets                                                 2,011            550
                                                                      --------       --------
Total current assets                                                    22,996         10,332

Property and equipment, net                                              1,523          1,672
Prepaid Licenses, net                                                    1,020            697
Capitalized software, net                                                2,417            549
Income tax benefit                                                         600            250
Goodwill                                                                   504             73
Other                                                                       49             50
                                                                      --------       --------
                                                                      $ 29,109       $ 13,623
                                                                      --------       --------
                                                                      --------       --------


          LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                                    $  4,863       $  2,877
  Accrued expenses                                                         878          1,417
  Borrowings under bank lines of credit                                  5,028            955
  Notes payable                                                            262            349
                                                                      --------       --------
Total current liabilities                                               11,031          5,598
Long-term debt                                                             200            222
                                                                      --------       --------
                                                                        11,231          5,820
                                                                      --------       --------

Shareholders' equity:
  5% convertible preferred stock, $1,000 par value, 
  7,500 shares authorized, 420.5 issued and outstanding                    420            420

  5% series C convertible preferred stock, $10,000 par value, 
  1,200 shares authorized, 335 shares issued and outstanding             3,350              -

  Common stock, $.005 par value, 100,000,000 shares authorized, 
  11,804,770 and 10,584,612 shares, respectively, issued and
  outstanding                                                               54             49
  Paid-in capital                                                       35,043         31,300
  Shareholder loans                                                       (135)          (140)
  Accumulated deficit                                                  (20,854)       (23,826)
                                                                      --------       --------
   Total shareholders' equity                                           17,878          7,803
                                                                      --------       --------
                                                                      $ 29,109       $ 13,623
                                                                      --------       --------
                                                                      --------       --------
</TABLE>
                                      
     SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

                                       3


<PAGE>

              IMAGING TECHNOLOGIES CORPORTATION AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
                 (Dollars in thousands except per share data)
                                  (unaudited)
                                       

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED MARCH 31,
                                                           1998             1997
                                                        ---------        -----------
<S>                                                     <C>              <C>
Revenues:
  Sales of products                                     $ 9,275           $ 6,790 
  Engineering fees                                        1,497             1,531
                                                        -------           -------
                                                         10,772             8,321
                                                        -------           -------

Costs and expenses:
  Cost of products sold                                   6,864             4,441
  Selling, general and administrative                     2,500             2,006
  Cost of engineering fees and research and
   development                                              566               999
                                                        -------           -------
                                                          9,930             7,446
                                                        -------           -------
   
Income from operations                                      842               875
Other income (expense):                                     (71)              (22)
                                                        -------           -------
Income before income tax benefit (expense)                  771               853
Income tax benefit (expense)                                350                (5)
                                                        -------           -------
Net income                                              $ 1,121           $   848
                                                        -------           -------
                                                        -------           -------
Income per share data:
  Basic income per share                                $  0.10           $  0.09
                                                        -------           -------
                                                        -------           -------
  Diluted income per share                              $  0.08           $  0.07
                                                        -------           -------
                                                        -------           -------

  Common shares outstanding                              11,447             9,086
                                                        -------           -------
                                                        -------           -------
  Common shares outstanding assuming dilution            13,685            11,627
                                                        -------           -------
                                                        -------           -------
</TABLE>
                                       
     SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
                                       

                                       4

<PAGE>

                                       
              IMAGING TECHNOLOGIES CORPORTATION AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
                 (Dollars in thousands except per share data)
                                  (unaudited)
                                       

<TABLE>
<CAPTION>
                                                         NINE MONTHS ENDED MARCH 31,
                                                           1998             1997
                                                        ---------        -----------
<S>                                                     <C>              <C>
Revenues:
   Sales of products                                     $23,776           $19,187
   Engineering fees                                        4,544             4,245
   License fees and royalties                                  -               285
                                                         -------           -------
                                                          28,320            23,717
                                                         -------           -------

Costs and expenses:
   Cost of products sold                                  17,053            12,312
   Selling, general and administrative                     6,807             8,143
   Cost of engineering fees and research and
     development                                           1,720             2,452
   Purchased research and development                          -               780
                                                         -------           -------
                                                          25,580            23,687
                                                         -------           -------

Income from operations                                     2,740                30

Other income (expense):                                     (115)               25
                                                         -------           -------

Income before income tax benefit (expense)                 2,625                55

Income tax benefit (expense)                                 346               (16)
                                                         -------           -------

Net income                                               $ 2,971           $    39
                                                         -------           -------
                                                         -------           -------

Income per share data:
   Basic income per share                                $  0.27           $  0.00
                                                         -------           -------
                                                         -------           -------

   Diluted income per share                              $  0.22           $  0.00
                                                         -------           -------
                                                         -------           -------

   Common shares outstanding                              11,048             8,157
                                                         -------           -------
                                                         -------           -------
   Common shares outstanding assuming dilution            13,276            11,102
                                                         -------           -------
                                                         -------           -------
</TABLE>
                                       
    SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.

                                      5

<PAGE>

              IMAGING TECHNOLOGIES CORPORTATION AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
                            (Dollars in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                              NINE MONTHS ENDED MARCH 31,
                                                                                 1998           1997
                                                                              ---------      -----------
<S>                                                                           <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                    $ 2,971        $    39
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH USED BY OPERATING ACTIVITIES:
     Depreciation and amortization of equipment                                   499            360
     Income tax benefit                                                          (350)             -
     Amortization of prepaid assets                                                 -            389
     Purchased in-process research and development                                  -            780
     Changes in assets and liabilities:
          Accounts receivable                                                  (7,329)        (2,716)
          Inventories                                                          (1,230)          (750)
          Other current assets                                                 (1,453)          (542)
          Accounts payable and accrued expenses                                   897         (1,298)
                                                                              -------        -------
NET CASH USED BY OPERATING ACTIVITIES                                          (5,995)        (3,738)
                                                                              -------        -------

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired in merger                                                            38              -
     Prepaid licenses and royalties                                              (323)          (345)
     Capitalized software development costs                                    (1,868)          (301)
     Proceeds from certificate of deposit                                           -             50
     Purchase of net assets by NewGen Systems                                       -            (86)
     Capital expenditures                                                        (285)          (853)
                                                                              -------        -------
NET CASH USED BY INVESTING ACTIVITIES                                          (2,438)        (1,535)
                                                                              -------        -------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Capital contributions - NewGen Systems                                         -          1,002
     Net proceeds from exercise of stock options and warrants                   1,319            180
     Net borrowings under lines of credit                                       3,741            445
     Repayment of notes payable and capital lease obligations                    (109)           (93)
     Net proceeds from sale of preferred stock                                  5,000              -
Collection of shareholder loans                                                     5              -
     Proceeds from notes payable                                                    -            143
NET CASH PROVIDED BY FINANCING ACTIVITIES                                       9,956          1,677
                                                                              -------        -------

Net (decrease) increase in cash                                                 1,523         (3,596)

Cash at the beginning of the period                                               255          4,394
                                                                              -------        -------
Cash at the end of the period                                                 $ 1,778        $   798
                                                                              -------        -------
                                                                              -------        -------
</TABLE>


     SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                       6


<PAGE>
                       IMAGING TECHNOLOGIES CORPORATION
                               AND SUBSIDIARIES
             NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                            (Dollars in thousands)
                                  (unaudited)

NOTE 1 - BASIS OF PRESENTATION

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 quarters ended September 30 and December 31, 1997 filed with the 
Securities and Exchange Commission. Interim operating results are not 
necessarily indicative of operating results for the full year.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Earnings (loss) per share is presented in accordance with Financial 
Accounting Standards Board (FASB) Statement of Financial Accounting Standards 
(SFAS) No. 128, "Earnings Per Share" (EPS).  This statement requires the 
presentation of EPS to reflect both "Basic EPS" and "Diluted EPS" on the face 
of the statement of operations.  In general, Basic EPS excludes dilution 
created by common stock equivalents and is a function of the weighted average 
number of common shares outstanding for the period, after giving effect to 
the dividend requirements of preferred stock.  Diluted EPS reflects the 
potential dilution created by convertible preferred stock, convertible notes 
and common stock equivalents using the treasury stock method.

In June 1997, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" 
("SFAS 130").  SFAS 130 establishes standards for reporting and display of 
comprehensive income and its components in a full set of general-purpose 
financial statements.  An enterprise that has no items of other comprehensive 
income in any period presented is not required to report comprehensive 
income. SFAS 130 is effective for fiscal years beginning after December 15, 
1997. Management does not believe that the adoption of SFAS 130 will have a 
material impact on the Company's financial statements.

In June 1997, The Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards No. 131, "Disclosures about Segments of an 
Enterprise and Related Information" ("SFAS 131").  SFAS 131 establishes 
standards for the way that public business enterprises report information 
about operating segments in annual financial statements and requires that 
those enterprises report selected information about operating segments in 
interim financial reports issued to shareholders.  It also establishes 
standards for related disclosures about products and services, geographic 
areas, and major customers.  SFAS 131 is effective for fiscal years beginning 
after December 15, 1997.  Management plans to adopt this accounting standard 
in fiscal 1999. Management has not yet assessed the impact that the adoption 
of SFAS 131 will have on the Company's financial statements.

Certain prior period amounts have been reclassified to conform to the current
period presentation.

NOTE 3- INVENTORIES

Inventories consisted of the following:
<TABLE>
<CAPTION>
                                                          MARCH 31,      JUNE 30,
                                                            1998           1997
                                                          --------       -------
       <S>                                                <C>            <C>
       Raw materials and supplies                          $1,983         $1,475
       Work in process                                        137              -
       Finished goods                                       1,920            873
                                                          -------         ------
                                                           $4,040         $2,348
                                                          -------         ------
                                                          -------         ------
</TABLE>
                                      7


<PAGE>

NOTE 4- SUPPLEMENTAL DISCLOSURES OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                      NINE MONTHS ENDED MARCH 31,
                                                                          1998           1997
                                                                      -----------      ----------
<S>                                                                   <C>              <C>
NON-CASH FINANCING ACTIVITIES:
     Conversion of preferred stock into common stock                     $1,650         $2,166
     Options exercised with loans                                                           22
     Common stock issued with notes - NewGen                                                82
     Conversion of convertible notes into common stock - NewGen                          1,000
     Conversion of acquisition debt into common stock - NewGen                             500
     Conversion of accounts payable into notes payable                                     248
     Acquisition of net assets for common stock (excluding cash):
         Accounts receivable                                                659
         Inventories                                                        462
         Other current assets                                                 6
         Property and equipment                                              65
         Goodwill                                                           431
         Accounts payable and accrued liabilities                          (550)
         Borrowings under bank line of credit                              (332)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid during the period for interest                            $  184         $  111
     Cash paid during the period for income taxes                        $    8         $    9
</TABLE>

NOTE 5 - MERGERS AND ACQUISITIONS

                      ACQUISITION OF MCMICAN CORPORATION

Effective November 24, 1997, the Company purchased the total outstanding 
shares of the privately-held McMican Corporation ("McMican"), 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 
McMican'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 McMican was acquired on July 1, 1997.

<TABLE>
<CAPTION>
                                  QUARTER ENDED MARCH 31,      NINE MONTHS ENDED DECEMBER 31,
                                  -----------------------      ------------------------------
                                     1998       1997                 1998      1997
                                    ------     ------               ------    ------
  <S>                             <C>          <C>              <C>           <C>
  Revenues                         $10,772     $8,918              $30,488    $25,674
  Net income                         1,121        872                3,110        118
  Basic income per common share    $   .10     $  .09              $   .28    $   .00
</TABLE>

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

                        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 was accounted for as a pooling of interests, 
the consolidated results of operations for the nine months ended March 31, 
1998 and 1997 include pre-merger net sales of $610 and $1,094, and net losses 
after taxes of $48 and $116, respectively.


                                       8


<PAGE>

NOTE 6- SUBSEQUENT EVENT

The Company's Board of Directors is considering a plan to restructure the 
Company's operations to streamline and reduce resources utilized in the 
business.  During the preceding fourteen months, the Company has acquired 
four separate businesses that are engaged in the Company's industry segment.  
The Board believes that significant economies can be achieved by focusing and 
coordinating product development, distribution, and marketing and by 
consolidating certain redundant functions involving administration, selling 
and marketing, distribution, engineering, and manufacturing.  In this regard, 
the Company leased an additional 11,600 square feet of office, manufacturing, 
and warehouse space adjacent to its corporate headquarters in San Diego, and 
it is in the process of evaluating which subsidiary operations shall be 
relocated thereto.  These decisions are expected to result in the write-off 
of certain related assets, the accrual of costs related to workforce 
reductions and relocation, and reserves for excess space and manufacturing 
capacity.  No final decisions have been made regarding the restructuring 
actions; and, accordingly, the financial implications of these actions cannot 
be determined at this time. However, the Board expects that the financial 
implications will be included in the fourth-quarter 1998 operating results.

                                      9

<PAGE>


               IMAGING TECHNOLOGIES CORPORATION AND SUBSIDIARIES
          MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

RESULTS OF OPERATIONS

This Form 10-Q 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-Q 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. 

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 


                                      10

<PAGE>

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 nine months ended 
March 31, 1997 include pre-merger net sales of $7,190 and a net loss after 
taxes of $1,551. 

Effective November 24, 1997, the Company consummated its acquisition of 
McMican Corporation ("McMican"). The acquisition was accounted for as a 
purchase. Accordingly, the consolidated results of operations for the nine 
months ended March 31, 1998 include McMican's net sales of $1,893 and income 
of $237 from the date of acquisition. 

Effective November 30, 1997, the Company consummated its merger with Color 
Solutions, Inc. ("CSI"). The merger was accounted for as a pooling of 
interests.  Accordingly, the consolidated results of operations for the nine 
months ended March 31, 1998 and 1997 include pre-merger net sales of $610 and 
$1,094, and net losses after taxes of $48 and $116, respectively. 

Total ITEC revenues were $10,772 for the quarter ended March 31, 1998 versus 
$8,321 for the quarter ended March 31, 1997. 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 $1,497 for the quarter ended March 
31, 1998 compared to $1,531 for the quarter ended March 31, 1997, a decrease 
of 2%. The Company had net income of $1,121 for the quarter ended March 31, 
1998 compared to net income of $848 for the quarter ended March 31, 1997, an 
increase of 32%. 

Total ITEC revenues were $28,320 for the nine months ended March 31, 1998 
versus $23,717 for the nine months ended March 31, 1997. 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 $4,544 for the nine 
months ended March 31, 1998 compared to $4,245 for the nine months ended 
March 31, 1997, an increase of 7%. The Company had net income of $2,971 for 
the nine months ended March 31, 1998 compared to a net income of $39 for the 
nine months ended March 31, 1997.

REVENUES

SALES OF PRODUCTS were $9,275 for the quarter ended March 31, 1998 versus 
$6,790 for the quarter ended March 31, 1997, an increase of 37%. For the nine 
months ended March 31, 1998 sales of products were $23,776 compared to 
$19,187 for the nine months ended March 31, 1997, an increase of 24%. 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 McMican.

Sales of product through Prima for the quarters ended March 31, 1998 and 1997 
were $2,230 and $2,642, respectively. Such sales for the nine months ended 
March 31, 1998 and 1997 were $7,476 and $7,172, respectively. The majority of 
Prima's sales were from distribution of PCMCIA-based memory storage products. 
The increases in product sales during the nine months ended March 31, 1998 
are attributed to an increase in Prima's distribution sales of PCMCIA-based 
memory products.  The decrease in product sales for 

                                       11

<PAGE>

the quarter ended March 31, 1998 is attributed to a significant vendor that 
was unable to provide product during the quarter.

Sales of product through NewGen for the quarter ended March 31, 1998 were 
$4,100 compared to $3,731 for the quarter ended March 31, 1997. Such sales 
for the nine months ended March 31, 1998 and 1997 were $11,520 and $10,921, 
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 March 31, 1998 were $459 
compared to $417 for the quarter ended March 31, 1997. Such sales for the 
nine months ended March 31, 1998 and 1997 were $1,847 and $1,094, 
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 March 31, 1998 and 1997 were 
derived through the Company's PCPI Technologies subsidiary performing work on 
engineering projects for OEM customers under non-recurring engineering 
contracts. NRE revenue for the quarter ended March 31, 1998 and 1997 was 
$1,497 and $1,531, respectively, which was recognized during the course of 
development based on the percentage of completion method. Such revenues for 
the nine months ended March 31, 1998 and 1997 were $4,544 and $4,245, 
respectively.

ROYALTIES through the Company's PCPI Technologies subsidiary for the nine 
month period ended March 31, 1997, the Company earned royalty revenues of 
$285 which were derived primarily from "older-technology" based products. 
During the quarters ended March 31, 1998 and 1997 and nine month period ended 
March 31, 1998, 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 March 31, 1998 and 1997 were 
$6,864 and $4,441, respectively, representing gross margins of 26% and 35%. 
Cost of products sold for the nine months ended March 31, 1998 and 1997 were 
$17,053 and $12,312, respectively, representing gross margins of 28% and 36%. 
The decrease in the gross margin percentage is attributed to a change in the 
product mix between the periods, and the reduction in prices of end-of-life 
products as ITEC begins introducing new products.


                                      12

<PAGE>

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses for the quarter ended March 31, 
1998 were $2,500 versus $2,006 for the quarter ended March 31, 1997.  The 
increase results primarily from increased selling expenses in an attempt to 
stimulate technology and product sales, and the associated costs from the 
opening of the ITEC Europe facility and the Company's newly acquired 
subsidiaries. Selling, general and administrative expenses for the nine 
months ended March 31, 1998 were $6,807 versus $8,143 for the nine months 
ended March 31, 1997. 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 offset by increased selling expenses.

COST OF ENGINEERING FEES AND RESEARCH AND DEVELOPMENT

Cost of engineering fees and research and development for the quarter ended 
March 31, 1998 was $566 versus $999 for the quarter ended March 31, 1997. 
Cost of engineering fees and research and development for the nine months 
ended March 31, 1998 was $1,720 versus $2,452 for the nine months ended March 
31, 1997. These expenditures consist of engineering expenses associated with 
the development of controller technologies and designs for PCPI technology 
customers. During the quarter and nine month periods ended March 31, 1998, 
the Company capitalized certain qualified costs in the aggregate amount of 
$789 and $1,868, 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 nine month period ended 
March 31, 1997, includes approximately $780 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 EXPENSE

Other income and loss consists primarily of net interest expense which was 
$58 for the quarter ended March 31, 1998 compared to $19 for the quarter 
ended March 31, 1997. Net interest expense for the nine months ended March 
31, 1998 and 1997 was $128 and $35, 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 
interest income associated with the increased cash invested during the 
quarterly and nine month periods.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 1998, the Company had working capital of $11,965 compared to
working capital of $4,734 as of June 30, 1997. The increase is primarily
attributed to the continued 


                                      13


<PAGE>

improvement of the Company's operations and the initial $5,000 closing of the 
Series 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 and the holders of the Series C Shares, 
subject to certain conditions, are entitled to purchase additional Series C 
Shares up to $2,000. In addition, the Company closed a $3,000 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 ITEC and its subsidiaries 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 March 31, 1998 was approximately $487.  The Series C redeemable 
convertible preferred stock does not contain dividend provisions. 

As of March 31, 1998, ITEC had $897 of available borrowings under its special 
purpose line of credit.

ITEC has no material commitments for capital expenditures.

CERTAIN BUSINESS RISKS

In the past, the Company has reported net losses and has only recently 
reported net income.  The Company has accumulated aggregated net losses from 
inception through March 31, 1998, of approximately $21 million.  Although the 
Company has reported net income for the past eight quarters ended March 31, 
1998, there can be no assurance that the Company will maintain profitability 
on a quarterly basis or achieve profitability on an annual basis in the 
future.  The success of the Company and its business strategy is dependent 
upon, among other things, the ability and willingness of the Company's OEM 
customers to timely develop and promote products that incorporate the 
Company's technology.  The Company believes that future revenues may be 
similarly concentrated with a limited number of OEM customers.  Consequently, 
any significant decrease in product sales or reduction in licensing or 
engineering services with a large OEM customer would have a material adverse 
effect on the Company's operating results.

The market for the Company's products is characterized by rapidly changing 
technology, evolving industry standards and needs, frequent new product 
introductions and diminishing time frames within which to develop new 
products. The failure of the Company and its OEM customers to meet these 
needs on a timely basis or to anticipate or respond to rapidly changing 
technology could result in a loss of competitiveness or revenues, which would 
have a material adverse effect on the Company's operating results.


                                      14

<PAGE>

Also inherent in the Company's business are additional risks, which include: 
competition in the market, including internal development by OEMs; the risk 
of delays in the development of products, whether such delays are within the 
control of the Company or not; risks associated in developing products for 
new and rapidly developing markets, in which the Company has directed a 
substantial portion of its recent development efforts; dependence on sole 
source providers; uncertainties regarding protection of intellectual property 
rights, including the potential for trademark and patent infringement 
litigation; dependence on key personnel; and risks associated with the 
Company's international business activities, which account for a substantial 
portion of its revenue.

ABSENCE OF DIVIDENDS - No cash dividends have been paid on the Company's 
Common Stock to date and the Company does not anticipate paying cash 
dividends in the foreseeable future.

VOLATILITY OF STOCK PRICE - The market price of the Company's Common Stock 
has fluctuated significantly since the Company's initial public offering of 
Common Stock in December 1983.  The Company believes that factors such as 
general stock market trends, announcements of developments related to 
Company's business, fluctuations in the Company's operating results, general 
conditions in the computer peripheral market and the markets served by the 
Company or the worldwide economy, a shortfall in revenue or earnings from 
securities analysts' expectations, announcements of technological innovations 
by the Company or its competitors, developments in patents or other 
intellectual property rights and developments in the Company's relationships 
with its customers and suppliers could cause a further significant 
fluctuation in the price of the Company's Common Stock.  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.   There can be no assurance that the market price of the Company's 
Common Stock will not experience significant fluctuations that are unrelated 
to the Company's performance.


                                     15

<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

                                      16

<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:  May 14, 1888                  Harry J. Saal
                                     CHAIRMAN OF THE BOARD

                                     BY: BRIAN BONAR
                                     ----------------------------------------
DATE: May 14, 1888                   Brian Bonar
                                     CHIEF EXECUTIVE OFFICER AND PRESIDENT

                                     BY: GERRY B. BERG
                                     ----------------------------------------
DATE May 14, 1888                    Gerry B. Berg
                                     VICE PRESIDENT AND ACTING CHIEF 
                                     FINANCIAL OFFICER


                                      17