SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q
                   QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002
                                       or
                   TRANSITION REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                           Commission file No. 0-12641

                                                [GRAPHIC OMITED]

                        IMAGING TECHNOLOGIES CORPORATION
             (Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
<S>                                                             <C>
DELAWARE . . . . . . . . . . . . . . . . . . . . . . . . . . .             33-0021693
(State or other jurisdiction of incorporation or organization)  (IRS Employer ID No.)
</TABLE>

                             15175 INNOVATION DRIVE
                           SAN DIEGO, CALIFORNIA 92128
                    (Address of principal executive offices)
       Registrant's Telephone Number, Including Area Code:  (858) 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     No

The  number of shares outstanding of the registrant's common stock as of May 15,
2002,  was  349,032,249.

<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                               <C>
TABLE OF CONTENTS
                                                                                                  Page
PART I - FINANCIAL INFORMATION
ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS
     Consolidated Balance Sheets - March 31, 2002 (unaudited) and June 30, 2001 (audited). . . .     3
     Consolidated Statements of Operations  - 3 months ended March 31, 2002 and 2001 (unaudited)     4
     Consolidated Statements of Operations  - 9 months ended March 31, 2002 and 2001 (unaudited)     5
     Consolidated Statements of Cash Flows - 9 months ended March 31, 2002 and 2001 (unaudited).     6
     Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . .     7

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
               RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    11

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. . . . . . . . . . . . . . .    22

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    23
ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . .    23
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . .    23
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . . . . . . . . . . . .    23
ITEM 5.  OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    23
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . . .    24

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    25
</TABLE>

<PAGE>

PART  I.  -  FINANCIAL  INFORMATION

ITEM  1.   CONSOLIDATED  FINANCIAL  STATEMENTS

IMAGING TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED  BALANCE  SHEETS
(IN  THOUSANDS,  EXCEPT  SHARE  DATA)
<TABLE>
<CAPTION>

<S>                                                             <C>           <C>
ASSETS
                                                                MARCH 31,     JUNE 30,
                                                                       2002           2001
    (audited)
Current assets
     Cash. . . . . . . . . . . . . . . . . . . . . . . . . . .  $        87   $         35
     Accounts receivable:
        Billed . . . . . . . . . . . . . . . . . . . . . . . .        1,158             58
        Unbilled . . . . . . . . . . . . . . . . . . . . . . .          306              -
                                                                ------------  -------------
                                                                      1,464             58

     Inventories . . . . . . . . . . . . . . . . . . . . . . .        1,045             50
     Prepaid expenses and other. . . . . . . . . . . . . . . .          168            259
                                                                ------------  -------------
          Total current assets . . . . . . . . . . . . . . . .        2,764            402

Property and equipment, net. . . . . . . . . . . . . . . . . .          177            241
Goodwill, net. . . . . . . . . . . . . . . . . . . . . . . . .        1,823            569
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . .           16              -
                                                                ------------  -------------

                                                                $     4,780   $      1,212
                                                                ============  =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
     Borrowings under bank note payable. . . . . . . . . . . .  $     3,718   $      4,318
     Short-term debt . . . . . . . . . . . . . . . . . . . . .        4,562          3,379
     Accounts payable. . . . . . . . . . . . . . . . . . . . .        6,407          6,450
     PEO payroll taxes and other payroll deductions. . . . . .          404              -
     PEO accrued worksite employee . . . . . . . . . . . . . .          529              -
     Other accrued expenses. . . . . . . . . . . . . . . . . .        5,525          3,175
                                                                ------------  -------------
          Total current liabilities. . . . . . . . . . . . . .       21,145         17,322

Stockholders' net capital deficiency
     Series A preferred stock, $1,000 par value, 7,500 shares
        authorized, 420.5 shares issued and outstanding. . . .          420            420
     Common stock, $0.005 par value, 500,000,000 shares
        authorized, 276,935,848 and 170,901,065 shares
        issued and outstanding, respectively . . . . . . . . .        1,572            864
     Paid-in capital . . . . . . . . . . . . . . . . . . . . .       73,122         69,472
     Shareholder loans . . . . . . . . . . . . . . . . . . . .         (105)          (105)
     Common stock warrants . . . . . . . . . . . . . . . . . .          541            475
     Accumulated deficit . . . . . . . . . . . . . . . . . . .      (91,915)       (87,236)
                                                                ------------  -------------
          Total shareholders' net capital deficiency . . . . .      (16,365)       (16,110)
                                                                ------------  -------------
                                                                $     4,780   $      1,212
                                                                ============  =============

See Notes to Consolidated Financial Statements.
</TABLE>

<PAGE>

                IMAGING TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                          THREE MONTHS ENDED MARCH 31,
                        (in thousands, except share data)
                                   (unaudited)

<TABLE>
<CAPTION>
<S>                                                   <C>            <C>
                                                              2002           2001
Revenues
     Sales of products . . . . . . . . . . . . . . .  $        814   $      1,165
     Software sales, licenses and royalties. . . . .           470             30
     PEO services. . . . . . . . . . . . . . . . . .         8,098              -
                                                      -------------  -------------
                                                             9,382          1,195
                                                      -------------  -------------
Costs and expenses
     Cost of products sold . . . . . . . . . . . . .           614          1,050
     Cost of software sales, licenses and royalties.           277              -
     Cost of PEO services. . . . . . . . . . . . . .         7,735              -
     Selling, general, and administrative. . . . . .         1,863          1,559
     Research and development. . . . . . . . . . . .            68            223
                                                      -------------  -------------
                                                            10,557          2,832
                                                      -------------  -------------

Income (loss) from operations. . . . . . . . . . . .        (1,175)        (1,637)
                                                      -------------  -------------

Other income (expense):
     Interest and financing costs, net . . . . . . .          (364)           (65)
     Management fees . . . . . . . . . . . . . . . .             -              -
     Gain on extinguishment of debt. . . . . . . . .           411              -
     Other . . . . . . . . . . . . . . . . . . . . .             -              -
                                                      -------------  -------------
                                                                47            (65)
                                                      -------------  -------------

Income (loss) before income taxes. . . . . . . . . .        (1,128)        (1,702)
Income tax expense

Net income (loss). . . . . . . . . . . . . . . . . .  $     (1,128)  $     (1,702)
                                                      =============  =============

Earnings (loss) per common share
     Basic . . . . . . . . . . . . . . . . . . . . .  $      (0.01)  $      (0.01)
                                                      =============  =============
     Diluted . . . . . . . . . . . . . . . . . . . .  $      (0.01)  $      (0.01)
                                                      =============  =============

Weighted average common shares . . . . . . . . . . .       263,320        141,148
                                                      =============  =============
Weighted average common shares - assuming dilution .       263,320        141,148
                                                      =============  =============

See Notes to Consolidated Financial Statements.
</TABLE>

<PAGE>
                IMAGING TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                           NINE MONTHS ENDED MARCH 31,
                        (in thousands, except share data)
                                   (unaudited)

<TABLE>
<CAPTION>
<S>                                                  <C>            <C>
                                                             2002           2001
Revenues
     Sales of imaging products. . . . . . . . . . .  $      2,578   $      2,381
     Sales of software, licenses and royalties. . .           820            662
     PEO services . . . . . . . . . . . . . . . . .        15,172              -
                                                     -------------  -------------
                                                           18,570          3,043
                                                     -------------  -------------
Costs and expenses
     Cost of products sold. . . . . . . . . . . . .         1,828          1,974
     Cost of software, licenses and royalties . . .           331              -
     Cost of PEO services . . . . . . . . . . . . .        14,530              -
     Selling, general, and administrative . . . . .         5,449          5,631
     Research and development . . . . . . . . . . .           140            679
                                                     -------------  -------------
                                                           22,278          8,284
                                                     -------------  -------------

Income (loss) from operations . . . . . . . . . . .        (3,708)        (5,241)
                                                     -------------  -------------

Other income (expense):
     Interest and financing costs, net. . . . . . .        (1,382)          (787)
     Gain on extinguishment of debt . . . . . . . .           411              -
     Other. . . . . . . . . . . . . . . . . . . . .             -              -
                                                     -------------  -------------
                                                             (971)          (787)
                                                     -------------  -------------

Income (loss) before income taxes . . . . . . . . .        (4,679)        (6,028)
Income tax expense

Net income (loss) . . . . . . . . . . . . . . . . .  $     (4,679)  $     (6,028)
                                                     =============  =============

Earnings (loss) per common share
     Basic. . . . . . . . . . . . . . . . . . . . .  $      (0.02)  $      (0.05)
                                                     =============  =============
     Diluted. . . . . . . . . . . . . . . . . . . .  $      (0.02)  $      (0.05)
                                                     =============  =============

Weighted average common shares. . . . . . . . . . .       211,143        119,045
                                                     =============  =============
Weighted average common shares - assuming dilution.       211,143        119,045
                                                     =============  =============

See Notes to Consolidated Financial Statements.
</TABLE>

<PAGE>
                IMAGING TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                           NINE MONTHS ENDED MARCH 31,
                        (in thousands, except share data)
                                   (unaudited)

<TABLE>
<CAPTION>
<S>                                                                 <C>             <C>
                                                                             2002           2001
Cash flows from operating activities
   Net income (loss) . . . . . . . . . . . . . . . . . . . . . . .  $      (4,679)  $     (6,028)
   Adjustments to reconcile net income (loss) to net
     cash from operating activities
       Depreciation and amortization . . . . . . . . . . . . . . .             81            252
       Stock issued for services . . . . . . . . . . . . . . . . .            495            871
       Non-cash interest . . . . . . . . . . . . . . . . . . . . .            831            364
       Warrant discount expense. . . . . . . . . . . . . . . . . .            109              -
       Gain on extinguishment of debt. . . . . . . . . . . . . . .           (411)             -
        Changes in operating assets and liabilities
           Accounts receivable . . . . . . . . . . . . . . . . . .         (1,406)            58
           Inventories . . . . . . . . . . . . . . . . . . . . . .           (994)            47
           Prepaid expenses and other. . . . . . . . . . . . . . .            (91)           (43)
           Accounts payable and accrued expenses . . . . . . . . .          2,428            701
           PEO payroll taxes and other payroll deductions payable.            404              -
           PEO accrued worksite employee expense . . . . . . . . .            529              -
           Other assets. . . . . . . . . . . . . . . . . . . . . .            (16)             -
                                                                    --------------  -------------
               Net cash from operating activities. . . . . . . . .         (2,720)        (3,778)

Cash flows from investing activities
   Capital expenditures. . . . . . . . . . . . . . . . . . . . . .            (56)          (104)
   Cash investment in acquisitions . . . . . . . . . . . . . . . .           (250)             -
   Cash acquired in acquisitions . . . . . . . . . . . . . . . . .            215              -
   Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              -            150
                                                                    --------------  -------------
               Net cash from investing activities. . . . . . . . .            (91)            46

Cash flows from financing activities
   Net borrowings under bank lines of credit . . . . . . . . . . .           (600)        (1,500)
   Issuance of other notes payable . . . . . . . . . . . . . . . .          1,183            850
   Warrant proceeds. . . . . . . . . . . . . . . . . . . . . . . .             66              -
   Net proceeds from issuance of common stock. . . . . . . . . . .          2,214          4,366
                                                                    --------------  -------------
               Net cash from financing activities. . . . . . . . .          2,863          3,716

Net increase (decrease) in cash. . . . . . . . . . . . . . . . . .             52            (16)
Cash, beginning of period. . . . . . . . . . . . . . . . . . . . .             35            291
                                                                    --------------  -------------
Cash, end of period. . . . . . . . . . . . . . . . . . . . . . . .  $          87   $        275
                                                                    ==============  =============


See Notes to Consolidated Financial Statements.
</TABLE>

<PAGE>
                IMAGING TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (in thousands, except share data)
                                   (unaudited)

NOTE  1.  BASIS  OF  PRESENTATION

The  accompanying  unaudited  consolidated  condensed  financial  statements  of
Imaging Technologies Corporation and Subsidiaries (the "Company" or "ITEC") have
been  prepared  pursuant  to the rules of the Securities and Exchange Commission
(the  "SEC")  for  quarterly  reports on Form 10-Q and do not include all of the
information  and  note  disclosures  required  by  generally accepted accounting
principles.  These  financial  statements and notes herein are unaudited, but in
the  opinion  of  management,  include  all  the adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the Company's
financial  position,  results  of  operations,  and  cash  flows for the periods
presented.  These  financial  statements  should be read in conjunction with the
Company's  audited  financial  statements  and notes thereto for the years ended
June  30,  2001,  2000, and 1999 included in the Company's annual report on Form
10-K  filed  with  the  SEC.  Interim  operating  results  are  not  necessarily
indicative  of  operating  results for any future interim period or for the full
year.

NOTE  2.  GOING  CONCERN  CONSIDERATIONS

The  accompanying  financial  statements  have  been  prepared assuming that the
Company  will  continue  as a going concern. At March 31, 2002, and for the year
then  ended,  the  Company  has  experienced  a net loss and has deficiencies in
working  capital and net worth that raise substantial doubt about its ability to
continue  as  a  going  concern.
On  August  20,  1999,  at  the  request of Imperial Bank, the Company's primary
lender,  the  Superior  Court of San Diego appointed an operational receiver who
took  control of the Company's day-to-day operations on August 23, 1999. On June
21,  2000, in connection with a settlement agreement reached with Imperial Bank,
the  Superior  Court  of  San  Diego  issued an order dismissing the operational
receiver.

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

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

The Company must obtain additional funds to provide adequate working capital and
finance  operations. However, there can be no assurance that the Company will be
able  to complete any additional debt or equity financings on favorable terms or
at  all, or that any such financings, if completed, will be adequate to meet the
Company's  capital  requirements  including  compliance  with  the Imperial Bank
settlement agreement. Any additional equity or convertible debt financings could
result  in substantial dilution to the Company's stockholders. If adequate funds
are  not  available,  the  Company may be required to delay, reduce or eliminate
some  or  all  of  its  planned  activities,  including any potential mergers or
acquisitions.  The  Company's  inability  to fund its capital requirements would
have  a  material adverse effect on the Company. The financial statements do not
include  any adjustments that might result from the outcome of this uncertainty.

NOTE  3.  EARNINGS  (LOSS)  PER  COMMON  SHARE

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

<TABLE>
<CAPTION>
                               EARNINGS (LOSS)      SHARES       PER-SHARE
<S>                            <C>               <C>            <C>
                                    (NUMERATOR)  (DENOMINATOR)  AMOUNT
MARCH 31, 2001
     Net loss . . . . . . . .  $        (1,702)
          Preferred dividends               (6)
                               ----------------
     Basic and diluted EPS. .           (1,708)        114,148  $    (0.01)

MARCH 31, 2002
     Net loss . . . . . . . .  $        (1,128)
          Preferred dividends               (6)
                               ----------------
     Basic and diluted EPS. .           (1,134)        263,320  $    (0.01)
</TABLE>

NOTE  4.  INVENTORIES

<TABLE>
<CAPTION>

<S>                           <C>              <C>
                              MAR. 31, 2002    JUNE 30, 2001
Inventories
     Materials and suppliers  $           264  $              10
     Finished goods. . . . .              781                 40
                              ---------------  -----------------
                              $         1,045  $              50
                              ===============  =================
</TABLE>

NOTE  5.  RECENT  ACCOUNTING  PRONOUNCEMENTS

SFAS  141

In  July  2001,  FASB  issued  SFAS  No.  141, "Business Combinations," which is
effective  for business combinations initiated after June 30, 2001. SFAS No. 141
eliminates  the  pooling  of  interest  method  of  accounting  for  business
combinations  and  requires that all business combinations occurring on or after
July  1,  2001  be accounted for under the purchase method. The Company does not
expect  SFAS  No.  141  to  have  a material impact on its financial statements.

SFAS  142

In  July  2001,  the  FASB  issued  SFAS No. 142, "Goodwill and Other Intangible
Assets,"  which is effective for fiscal years beginning after December 15, 2001.
Early adoption is permitted for entities with fiscal years beginning after March
15,  2001,  provided  that  the first interim financial statements have not been
previously  issued.  SFAS  No.  142  addresses  how  intangible  assets that are
acquired individually or with a group of other assets should be accounted for in
the  financial  statements  upon  their  acquisition  and  after  they have been
initially  recognized  in  the  financial statements. SFAS No. 142 requires that
goodwill  and  intangible  assets  that  have  indefinite  useful  lives  not be
amortized  but rather be tested at least annually for impairment, and intangible
assets  that have finite useful lives be amortized over their useful lives. SFAS
No.  142  provides  specific guidance for testing goodwill and intangible assets
that will not be amortized for impairment. In addition, SFAS No. 142 expands the
disclosure  requirements about goodwill and other intangible assets in the years
subsequent  to  their  acquisition.  Impairment  losses  for  goodwill  and
indefinite-life  intangible  assets that arise due to the initial application of
SFAS  No.  142  are  to  be  reported  as  resulting from a change in accounting
principle.  However, goodwill and intangible assets acquired after June 30, 2001
will  be subject immediately to the provisions of SFAS No. 142. The Company does
not  expect  SFAS No. 142 to have a material effect on its financial statements.
Previously,  the  Company  amortized  $118 thousand of goodwill and discontinued
amortization  of  goodwill  for  acquisitions  made  prior  to  July  1,  2001.

SFAS  143

In  June  2001,  the  FASB  issued SFAS No. 143 "Accounting for Asset Retirement
Obligation." SFAS No. 143 is effective for fiscal years beginning after June 15,
2002,  and  will  require  companies  to record a liability for asset retirement
obligations  in  the period in which they are incurred, which typically could be
upon  completion  or  shortly thereafter. The FASB decided to limit the scope to
legal obligation and the liability will be recorded at fair value. The effect of
adoption  of  this standard on the Company's results of operations and financial
positions  is  being  evaluated.

SFAS  144

In  August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal  of  Long-Lived  Assets."  SFAS  No.  144 is effective for fiscal years
beginning  after  December  15,  2001. It provides a single accounting model for
long-lived  assets  to  be disposed of and replaces SFAS No. 121 "Accounting for
the  Impairment  of  Long-Lived Assets and Long-Lived Assets to Be Disposed Of."
The  effect  of adoption of this standard on the Company's results of operations
and  financial  positions  is  being  evaluated.

NOTE  6.  CONVERTIBLE  NOTES  PAYABLE

In December 2000, the Company entered into a Convertible Note Purchase Agreement
for $850,000, bearing an annual interest a of 8%, due December 2003. The Note is
convertible  into  the  Company's  common  stock.

In July 2001, the Company entered into a Convertible Note Purchase Agreement for
$1,000,000,  bearing  an  annual interest rate of 8%, due July 2004. The Note is
convertible  into  the  Company's  common  stock.

In  September  2001,  the Company entered into a Convertible Promissory Note for
$300,000,  bearing  an  interest  rate  of  8%,  due September 2004. The Note is
convertible  into  the  Company's  common  stock.

In  November  2001,  the  Company entered into a Convertible Promissory Note for
$200,000,  bearing  an  interest  rate  of  8%,  due  November 2004. The Note is
convertible  into  the  Company's  common  stock.

In  January  2002,  the Company entered into a Secured Convertible Debenture for
$500,000,  bearing an interest rate of 8%. The Debenture is convertible into the
Company's  common  stock.

NOTE  7.  STOCK  ISSUANCES

During  the quarter, ITEC issued 23,055,556 common shares to holders of $415,000
of  convertible  notes  payable  at  an  average conversion price of  $0.018 per
share.

ITEC  issued during the quarter 4,277,778 registered common shares for legal and
consulting  services  at an average market price of  $0.03 per share pursuant to
previously  registrations  under  Form  S-8.  The Company recognized $128,333 in
expenses.

Registered  warrants, exercised during the quarter at an average price of $0.016
per  share,  amounted to 24,833,333 common shares. The Company received $388,000
in  cash  and expensed $108,667 as a warrant discount as the result of repricing
the  exercise  price.

As  the  result of beneficial conversions of convertible notes payable to common
stock,  during  the quarters ended March 31, 2002, December 31 and September 30,
2001,  $165,556,  $85,719  and  $579,699  was  charged  to  interest  expense
respectively.

During  the  quarter, the Company settled $1,160,221 of its debt in exchange for
35,705,190  common  shares and notes payable of $40,000. This resulted in a gain
on  extinguishments  of  debt  of  $410,879.

NOTE  8.  BUSINESS  ACQUISITIONS

On  March  8,  2002, ITEC acquired all of the outstanding shares of EnStructure,
Inc.  ("EnStructure),  a Nevada corporation, for $250,000, payable in restricted
common  stock  of  the Company. The purchase price may be increased or decreased
based  upon  EnStructure's  representations  of  projected revenues and profits,
which  are  defined in the acquisition agreement attached as an to the Company's
Form  8-K,  dated  March  28,  2002.

EnStructure  is  professional  employer  organization  ("PEO")  that  intends to
provides  personnel  management  services,  including  benefits  and  payroll
administration,  health  and workers' compensation insurance programs, personnel
records  management,  and  employer  liability  management.

The  purchase  price  was  determined  through  analysis  of the value of future
revenues  and  profits  of  EnStructure  and  the  value  of  certain  insurance
relationships  held  in  California  by  EnStructure.

EnStructure,  Inc. is operated by ITEC as a wholly-owned subsidiary. EnStructure
will  be  the  operating  unit  into  which  the  Company  will  place  new
California-based  PEO  clients.  The  acquisition  agreement,  iprovides for the
purchase price to be tied to selling PEO services of $20 million in annual value
during  a  certain  period  of  time.

EnStructure was incorporated in May 2001 and has had limited operations to date.
It  was  established  to  market  PEO  services,  primarily  in  California.

EnStructure's  sole  property  is  a  qualified  first-dollar-coverage  workers'
compensation insurance agreement with California's State Fund Insurance Company.
As  the  acquisition price does not meet the materiality rule of Regulation S-X.
Pro  forma financial statements are not available as EnStructure has had limited
operations  since  its  inception.  The  Company  disclosed  the  details of the
EnStructure  transaction  on

NOTE  9.  SEGMENT  INFORMATION

During  the  three-month  and  nine-month  period  ended  March  31,  2002,  the
Company  managed  and  internally  reported  the  Company's  business  as  three
reportable  segments,  principally,  (1)  imaging  products and accessories, (2)
imaging  software,  and  (3)  PEO  services.

Segment  information  for  the  period  ended March 31, 2002 is as follows:

<TABLE>
<CAPTION>
<S>                          <C>         <C>                <C>
(in thousands)

                             IMAGING
                             PRODUCTS    IMAGING SOFTWARE   PEO SERVICES
                                         -----------------  -------------
3-months
---------------------------
    Revenues. . . . . . . .  $     814   $             470  $       8,098
    Operating income (loss)     (1,412)                154             83

9-months
---------------------------
    Revenues. . . . . . . .  $   2,578   $             820  $      15,172
    Operating income (loss)     (4,280)                390            182
</TABLE>

     Additional  information regarding revenue by products and service groups is
not  presented  because  it  is  currently impracticable to do so due to various
reorganizations  of the Company's accounting systems. A comprehensive accounting
system  is  being  implemented  that  should  enable  the Company to report such
information  in  the  future.

     During the period ended March 31, 2002, no customer accounted for more than
10%  of  consolidated  accounts  receivable  or  total  consolidated  revenues.

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

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

OVERVIEW

     Imaging  Technologies Corporation develops and distributes imaging software
and distributes high-quality digital imaging products. The Company sells a range
of  printer  and  imaging  products  for use in graphics and publishing, digital
photography,  and other niche business and technical markets. The Company's core
technologies are related to the design and development of software products that
improve the accuracy of color reproduction. ITEC's ColorBlind  software provides
color  management  to improve the accuracy of color reproduction - especially as
it  relates  to  matching  color between different devices in a network, such as
monitors  and  printers.

In  order  to  capitalize  on  its  existing  systems integration expertise, the
Company  has  begun  to  provide  more  services  to  help  with tasks that have
negatively  impacted  the  business  operations  of  our  exiting  and potential
customers.  To  this  end,  ITEC  has  begun to pursue strategic acquisitions in
personnel  and  employment  practice  management.  We  believe  that  there  is
considerable  synergy  between  providing  office  systems  solutions  with
administrative  services.

     The  Company  provides  comprehensive personnel management services through
its  wholly-owned  SourceOne  subsidiary.  SourceOne  is a professional employer
organization  ("PEO")  that provides benefits and payroll administration, health
and  workers' compensation insurance programs, personnel records management, and
employer  liability  management.

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

The  Company's  current  strategy  is:  (1) to commercialize its own technology,
which  is  embodies  in  its ColorBlind Color Management software, (2) to market
imaging  products,  including  printers,  copiers,  and consumables (toner, ink,
etc.)  from  other  manufacturers  to  its  customers, and (3) to expand its PEO
related  business  activities.

     To  successfully  execute  its  current  strategy, the Company will need to
improve  its  working  capital  position.  The  Company  plans  to  overcome the
circumstances  that  impact  our  ability  to  remain  a going concern through a
combination  of  achieving  profitability,  raising  additional  debt and equity
financing,  and  renegotiating  existing  obligations.

     There  can  be  no  assurance,  however,  that  the Company will be able to
complete  any additional debt or equity financings on favorable terms or at all,
or  that  any  such  financings,  if  completed,  will  be  adequate to meet the
Company's  capital  requirements.  Any  additional  equity  or  convertible debt
financings  could  result in substantial dilution to the Company's stockholders.
If  adequate  funds  are  not  available,  the Company may be required to delay,
reduce  or  eliminate  some  or  all  of  its  planned activities, including any
potential  mergers  or acquisitions. The Company's inability to fund its capital
requirements  would  have  a  material  adverse  effect on the Company. Also see
"Liquidity  and  Capital  Resources."  and  "Item  1.  Business  -  Risks  and
Uncertainties  -  Future  Capital  Needs."

Office  Products  and  Systems

     The  office  products  and  systems  industry  is  undergoing a fundamental
transformation  characterized  by  a  transition from analog to digital systems,
management  of  publishing  and  printing  over  the  Internet,  reliance  on
outsourcing,  and  the  rapid  transition  to  color  output.

     The  worldwide  document/imaging market is expected to grow to $209 billion
by  2003.  The  global  office  market is forecast to increase to $43 billion in
2003.  In-house  color  document  production  is  expected to grow at a compound
annual  rate  of  40%  over  the  next  few  years.

 ITEC's  office  products  and  systems  group integrates a variety of products,
including  printers, plotters, copiers, and software, into a seamless, networked
solution  for  clients  who  are  generally  small  to  medium sized businesses.
Hardware,  software  and  supplies  are  bundled together as a systems solution.

     ITEC's  e-commerce  initiatives, dealseekers.com and color.com, provide for
sales  and support of software products and consumables such as inks, toner, and
paper.

PERSONNEL  MANAGEMENT  SYSTEMS  -  SOURCEONE  AND  ENSTRUCTURE

     As  ITEC  changes its focus from development and manufacturing to providing
business  services,  management  identified  the  opportunity  to  expand  into
personnel  and  human  resources  management.  ITEC hopes to leverage its office
products  and  systems  expertise  with  that  of offering professional employer
organization  (PEO)  services.

     The  Company's  PEO  business provides a broad range of services associated
with  staff  leasing  and human resources management. These include benefits and
payroll  administration,  health  and  workers' compensation insurance programs,
personnel records management, employer liability management, employee recruiting
and  selection,  performance  management, and training and development services.

     The  PEO  business  is  growing  rapidly,  but  profit  margins  are  low.
Consequently, profitability depends on (1) economies of scale leading to greater
operating  efficiencies;  and  (2)  value-added  services  such  as  training,
education,  Internet  support,  and  office  products  sales.

     The  PEO  industry  collectively  serves  approximately 4 million work site
employees  in  the  United  States.  The  target  market for the PEO industry is
represented  by companies with 100 or fewer employees; a market of approximately
60  million  people.

The  PEO industry began in 1985 with approximately 14,000 employees collectively
under management. According to the National Association of Professional Employer
Organizations  ("NAPEO"), there are approximately 900 PEO firms operating in the
U.S.,  in  nearly  every  state.

NAPEO  reports that current PEO industry revenues are approximately $18 billion.
The  average  annual  growth  rate  of  the  industry, since 1985, has been 15%.
According to the U.S. Small Business Administration ("SBA"), the U.S. has over 6
million  small  businesses,  defined  as  those  companies  with  100  or  fewer
employees,  representing  over  99%  of  all  businesses. The U.S. Census Bureau
reports  that  small  businesses  represent  the fastest growing segment of U.S.
employment  and  commerce,  representing  an  estimated  annual  payroll of $1.4
trillion.

A  typical  PEO  client company has 12 work site employees and an average annual
pay  per  work  site  employee  of  $22,517.

The  PEO  industry  is  growing  due  to  the  increased  burden associated with
employment  practice  management  and  human  resources  regulation.

     Growing pressure from federal agencies such as the Department of Labor, the
Immigration  and  Naturalization  Service,  and the Equal Employment Opportunity
Commission,  and  the  burdens  of  employment-related compliance such as COBRA,
OSHA,  workers'  compensation,  unemployment compensation, wrongful termination,
ADA  ("Americans  with  Disabilities  Act"), and FMLA ("Family and Medical Leave
Act")  demand  increasing  levels  of  resources  from  small  businesses.

ACQUISITION  AND  SALE  OF  BUSINESS  UNITS

     On  March  8,  2002,  ITEC  acquired  all  of  the  outstanding  shares  of
EnStructure, Inc. ("EnStructure), a Nevada corporation, for $250,000, payable in
restricted  common  stock of the Company. The purchase price may be increased or
decreased  based  upon  EnStructure's  representations of projected revenues and
profits, which are defined in the acquisition agreement, which was  exhibited as
part  of  the  Company's  Form  8-K,  dated  March  28,  2002.

     EnStructure  is  professional employer organization ("PEO") that intends to
provides  personnel  management  services,  including  benefits  and  payroll
administration,  health  and workers' compensation insurance programs, personnel
records  management,  and  employer  liability  management.

     The  purchase  price was determined through analysis of the value of future
revenues  and  profits  of  EnStructure  and  the  value  of  certain  insurance
relationships  held  in  California  by  EnStructure.

     EnStructure,  Inc.  is  operated  by  ITEC  as  a  wholly-owned subsidiary.
EnStructure  will  be  the  operating unit into which the Company will place new
California-based  PEO  clients.  The  acquisition  agreement,  iprovides for the
purchase price to be tied to selling PEO services of $20 million in annual value
during  a  certain  period  of  time.

     EnStructure  was incorporated in May 2001 and has had limited operations to
date.  It  was  established  to  market  PEO  services, primarily in California.
EnStructure's  sole  property  is  a  qualified  first-dollar-coverage  workers'
compensation insurance agreement with California's State Fund Insurance Company.

RESULTS  OF  OPERATIONS  NET  REVENUES

     Revenues  were  $9.4  million  and  $1.2 million for the three-month period
ended  March  31,  2002  and  2001,  respectively,  as increase of 683%. For the
nine-month  period  ended  March  31, 2002 and 2001, respectively, revenues were
$18.6  million  and  $3.04  million,  an increase of 512%. The increase in total
revenues  for  the  three and nine month periods as compared with the prior year
was  due  primarily  to  revenues  associated with the Company's PEO operations.

IMAGING  PRODUCTS

     Sales of imaging products were $814 thousand and $1.2 million for the three
month  period  ended  March  31, 2002 and 2001, respectively, a decrease of $351
thousand  or 43%. For the nine-month period ended March 31, 2002 and 2001, sales
of  imaging  products  were  $2.6  million  and  $2.4  million, respectively; an
increase  $197 thousand, or 8%. Increase and decreases in product sales from the
reported  periods  of  2002  as  compared  to  2001 were due to variances on the
Company's  ability  to  finance  inventory  purchases.  The  Company's  lack  of
sufficient working capital has had, and may continue to have, a negative adverse
effect  on  imaging  products  sales.

     Revenue  from  software  sales,  licensing  fees  and  royalties  were $470
thousand  and  $30  thousand for the three-month period ended March 31, 2002 and
2001  respectively,  an increase of $440 thousand, or 1,467%. For the nine-month
period  ended  March  31, 2002 and 2001, respectively, software sales, licensing
fees  and  royalties  were  $820  thousand  and  $662 thousand, respectively, an
increase  of  $158  thousand, or 24%. The increase is primarily due to increased
sales  of  ColorBlind  software.

Royalties  and  licensing fees vary from quarter to quarter and are dependent on
the  sales  of  products  sold  by  OEM customers using ITEC technologies. These
revenues,  however,  continue  to  decline,  and  are expected to decline in the
future due to the Company's focus on imaging product sales and the Company's PEO
operations  as  opposed  to  technology  licensing  activities.

PEO  SERVICES

     PEO  revenues  for  the  three-month  period ended March 31, 2002 were $8.1
million.  PEO revenues for the nine-month period ended March 31, 2002 were $15.1
million.  The  Company  entered  this  business  segment through acquisitions in
November  2001.  Consequently,  there were no reported PEO revenues in the prior
year.

COST  OF  PRODUCTS  SOLD

     Cost  of  products sold were $614 thousand (75% of product sales) and $1.05
million  (90%  of product sales) for the three-month period ended March 31, 2002
and 2002, respectively. For the nine-month period ended March 31, 2002 and 2001,
cost  of  products  sold  were  $1.83  million  (71% of product sales) and $1.97
million  (83%  of  product  sales),  respectively.  The  increase  in margins is
primarily  due  to  changes in product mix. In the prior year, ITEC continued to
sell  branded  printer  products,  developed  in-jous  and  manufactured  by
contractors.  ITEC  now integrates a wide variety of imaging products, which are
acquired  from  other manufacturers and integrated for customers by ITEC's sales
and  support  staff.

     Cost  of  software,  licenses  and  royalties  were  $277  thousand (59% of
associated  revenues)  for the three-month period ended March 31, 2002.  For the
nine-month period ended March 31, 2002, cost of software, licenses and royalties
were  $331  thousand  (40%  of associated revenues). Comparative results for the
year-earlier period is not presented because it is currently impracticable to do
so  due  to  various  reorganizations  of  the  Company's  accounting systems. A
comprehensive  accounting  system  is  being  implemented that should enable the
Company  to  report  such  information  in  the  future.

     Cost  of  PEO  services  were  $7.7  million  (96% of PEO revenues) for the
three-month period ended March 31, 2002; and $14.5 million (96% of PEO revenues)
for  the  nine-month  period  ended  March 31, 2002. The Company began providing
these services pursuant to acquisitions in the current fiscal year. Accordingly,
there  are  no  comparative  results  for  the  prior  year  periods.

SELLING,  GENERAL  AND  ADMINISTRATIVE  EXPENSES

     Selling,  general  and  administrative expenses have consisted primarily of
salaries  and commissions of sales and marketing personnel, salaries and related
costs for general corporate functions, including finance, accounting, facilities
and  legal,  advertising  and  other  marketing  related  expenses, and fees for
professional  services.

     Selling,  general  and  administrative  expenses for the three-month period
ended  March  31,  2002  and  2001,  respectively,  were  $1.86 million and $1.6
million. In the current three-month period, selling, general, and administrative
expenses  increased  $304  thousand  (16%)  from  the  year-earlier quarter. The
increase  was due primarily to the costs associated with consulting expenses and
the  issuance  of  stock.

     Selling,  general  and  administrative  expenses  for the nine-month period
ended March 31, 2002 and 2001, respectively, were $5.5 million and $5.6 million.
In  the  current  nine-month  period,  the Company reduced selling, general, and
administrative  expenses  $182  thousand (3%) due primarily to staff reductions,
which  were  offset,  in  part,  by  consulting  expenses.

COSTS  OF  RESEARCH  AND  DEVELOPMENT

     Costs  of  research and development were $68 thousand and $223 thousand for
the  period  ended  March  31,  2002  and 2001, respectively; a decrease of $155
thousand  (70%).  For  the  nine-month  period  ended  March  31, 2002 and 2001,
respectively,  research  and  development  costs  were  $140  thousand  and $679
thousand, a decrease of $539 thousand (79%). Over the past year, the Company had
been  reducing  its  engineering  and  licensing  activities and has re-directed
research  and  development  costs  toward  the  development  and  support of the
Company's  ColorBlind  software  products.

OTHER  INCOME  AND  EXPENSE

     Interest  and financing costs were $364 thousand for the period ended March
31,  2002  as  compared  to  $65  thousand  in  the  prior year period.  For the
nine-months  ended  March  31,  2002,  interest and financing costs totaled $1.4
million;  these  costs were $787 in the prior year period. The increases are due
primarily to the addition of beneficial conversions on the Company's convertible
debt.

     During  the  three-month  period  ended March 31, 2002, the Company settled
$1.2  of  its  debt  in  exchange for approximately 36 million common shares and
notes  payable  of  $40  thousand. This resulted in a gain on extinguishments of
debt  of  $411  thousand.

LIQUIDITY  AND  CAPITAL  RESOURCES

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

     As a result of some of the Company's financing activities, there has been a
significant  increase in the number of issued and outstanding shares. During the
three-month  period  ended March 31, 2002, the Company issued an additional 87.8
million  shares.  During the nine-month period ended March 31, 2002, the Company
issued  143.5  million  shares.  These  shares  of  common stock were issued for
raising  capital due to private placements and for corporate expenses in lieu of
cash,  and  for  the  exercise of warrants. (Also see Note 7 to the Consolidated
Financial  Statements.)

     As  of  March  31,  2002, the Company had negative working capital of $18.7
million,  an  increase of approximately $1.8 million (11%) in working capital as
compared  to  June  30,  2001,  due  primarily to the Company's net loss in each
successive  quarterly  period  since  the  year  ended  June  30,  2001.

     Net  cash used in operating activities decreased $1.1 million (28%) to $2.7
million  during  the  nine-month period ended March 31, 2002, due primarily to a
$1.3  million  (22%)  decrease  in  the  Company's  net loss from the prior year
period.

Net  cash  used  by  investing activities was $91 thousand during the nine-month
period  ended  March 31, 2002. The Company had cash from investing activities of
$46  thousand in the prior year period. The difference was due primarily to cash
used  for  acquisitions  in  the  current  fiscal  year.
Net  cash  from  financing activities was $2.9 million for the nine-month period
ended  March  31, 2002, a decrease of $853 thousand, or 23%. The decrease is due
primarily  to a reduction in proceeds from the sale of common stock, because the
trading  price  of  the  Company's  common  stock  fell substantially during the
period.

     The  Company  has  no  material  commitments  for capital expenditures. 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,  2002,  was  approximately  $315  thousand.

     The  Company's  capital  requirements depend on numerous factors, including
market  acceptance  of  the  Company's  products,  the  scope and success of the
Company's  product  development  efforts,  the  resources the Company devotes to
marketing  and  selling  its  products,  and  other  factors.  The report of the
Company's  independent  auditors  accompanying  the  Company's  June  30,  2001
financial  statements  includes  an  explanatory paragraph indicating there is a
substantial  doubt  about  the Company's ability to continue as a going concern,
due  primarily  to the decreases in the Company's working capital and net worth.
(Also  see  Note  2  to  the  Consolidated  Financial  Statements.)

RISKS  AND  UNCERTAINTIES
-------------------------

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

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

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

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

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

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

The  markets  for  the  products  we  sell  are  highly  competitive and rapidly
changing.  Some  of  our  current and prospective competitors have significantly
greater  financial, technical, manufacturing and marketing resources than we do.
Our  ability  to  compete  in  our  markets depends on a number of factors, some
within  and others outside our control. These factors include: the frequency and
success  of  product  introductions by us and by our competitors; the variety of
PEO related services offered by us and by our competitors; the selling prices of
our  products  and of our competitors' products; the performance of our products
and  of  our  competitors'  products;  product  distribution  by  us  and by our
competitors; our marketing ability and the marketing ability of our competitors;
and  the  quality  of  customer  support  offered  by us and by our competitors.
A  key  element  of  our  strategy  is  to provide competitively priced, quality
products.  We  cannot  be  certain  that  our  products  will  continue  to  be
competitively  priced.  We have reduced prices on certain of our products in the
past  and will likely continue to do so in the future.  Price reductions, if not
offset by similar reductions in product costs, will reduce our gross margins and
may  adversely  affect  our  financial  condition  and  results  of  operations.

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

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

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

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

IF OUR SUPPLIERS CEASE LICENSING THEIR PRODUCTS TO US, WE MAY HAVE TO REDUCE OUR
WORK  FORCE  OR  CEASE  OPERATIONS.

At present, many of our products use technology licensed from outside suppliers.
We rely heavily on these suppliers for upgrades and support.  In the case of our
font  products,  we  license  the fonts from outside suppliers, who also own the
intellectual  property  rights  to  the  fonts.  Our  reliance  on  third-party
suppliers  involves  many  risks,  including  our limited control over potential
hardware  and  software  incompatibilities  among  the  products  we  sell.
Furthermore,  we  cannot  be  certain  that  all of the suppliers of products we
market  will  continue  to license their products to us, or that these suppliers
will  not  license  their  products  to  other  companies  simultaneously.

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

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

Acquisitions involve a number of risks, including: integrating acquired products
and  technologies  in a timely manner; integrating businesses and employees with
our  business;  managing  geographically-dispersed operations; reductions in our
reported  operating results from acquisition-related charges and amortization of
goodwill;  potential  increases  in  stock  compensation  expense  and increased
compensation  expense  resulting  from  newly-hired  employees; the diversion of
management  attention; the assumption of unknown liabilities; potential disputes
with  the  sellers  of  one or more acquired entities; our inability to maintain
customers  or  goodwill  of  an  acquired  business; the need to divest unwanted
assets  or  products; and the possible failure to retain key acquired personnel.
Client satisfaction or performance problems with an acquired business could also
have  a  material  adverse  effect  on our reputation, and any acquired business
could  significantly  under  perform  relative  to  our  expectations.  We  are
currently  facing  all of these challenges and our ability to meet them over the
long  term  has not been established.  As a result, we cannot be certain that we
will  be  able  to  integrate  acquired  businesses,  products  or  technologies
successfully  or in a timely manner in accordance with our strategic objectives,
which could have a material adverse effect on our overall financial performance.
In  addition,  if  we  issue  equity  securities as consideration for any future
acquisitions, existing stockholders will experience ownership dilution and these
equity  securities  may have rights, preferences or privileges superior to those
of  our  common  stock.  See  "Future  Capital  Needs."

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

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

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

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

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

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

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

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

We  intend  to  pursue  international  markets  as key avenues for growth and to
increase  the  percentage  of  sales generated in international markets.  In our
2001,  2000  and  1999 fiscal years, sales outside the United States represented
approximately  22%,  2% and 56% of our net sales, respectively.  We expect sales
outside  the United States to continue to represent a significant portion of our
sales.  As  we  continue  to  expand our international sales and operations, our
business  and  overall  financial  performance  may be adversely affected by the
factors  stated  above.

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

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

Throughout  fiscal  1999,  2000  and  2001, and through the date of this filing,
approximately  fifty  trade  creditors  have  made  claims  and/or filed actions
alleging  the  failure  of  us  to pay our obligations to them in a total amount
exceeding  $3  million.  These actions are in various stages of litigation, with
many resulting in judgments being entered against us.  Several of those who have
obtained  judgments  have filed judgment liens on our assets. These claims range
in  value  from less than one thousand dollars to just over one million dollars,
with  the  great majority being less than twenty thousand dollars.  Should we be
required  to  pay the full amount demanded in each of these claims and lawsuits,
we  may  have  to cease our operations.  However, to date, the superior security
interest held by Imperial Bank has prevented nearly all of these trade creditors
from  collecting  on  their  judgments.

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

For  several  recent  periods,  up through the fiscal quarter ended December 31,
2001,  we  had  a net loss, negative working capital and a decline in net worth,
which raises substantial doubt about our ability to continue as a going concern.
Our  losses  have  resulted primarily from an inability to achieve product sales
and contract revenue targets due to insufficient working capital. Our ability to
continue  operations  will  depend  on  positive  cash flow, if any, from future
operations  and  on our ability to raise additional funds through equity or debt
financing.  Although we have reduced our work force and discontinued some of our
operations,  if we are unable to achieve the necessary product sales or raise or
obtain  needed  funding,  we  may  be  forced  to  discontinue  operations.

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

Our products are marketed and sold through a distribution channel of value added
resellers,  manufacturers'  representatives,  retail  vendors,  and  systems
integrators.  We have a network of dealers and distributors in the United States
and  Canada, in the European Community and on the European Continent, as well as
a  growing  number of resellers in Africa, Asia, the Middle East, Latin America,
and  Australia.  We  support  our  worldwide  distribution  network and end-user
customers  through centralized distribution and support operations headquartered
in San Diego. As of April 19, 2002, we directly employed 14 individuals involved
in  marketing  and  sales  activities.

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

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

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

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

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

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

By  entering  into a co-employer relationship with employees assigned to work at
client  company locations, we assume certain obligations and responsibilities or
an employer under these laws.  However, many of these laws (such as the Employee
Retirement  Income  Security  Act ("ERISA") and federal and state employment tax
laws)  do  not  specifically  address  the  obligations  and responsibilities of
non-traditional  employers  such as PEOs; and the definition of "employer" under
these laws is not uniform.  Additionally, some of the states in which we operate
have  not  addressed  the  PEO  relationship  for  purposes  of  compliance with
applicable  state  laws  governing the employer/employee relationship.  If these
other  federal or state laws are ultimately applied to our PEO relationship with
our worksite employees in a manner adverse to us, such an application could have
a  material  adverse effect on our financial condition or results of operations.
While many states do not explicitly regulate PEOs, twenty-one states have passed
laws  that  have  licensing  or  registration requirements for PEOs, and several
other  states  are  considering  such  regulation.  Such laws vary from state to
state,  but  generally  provide for monitoring the fiscal responsibility of PEOs
and,  in  some  cases,  codify  and  clarify  the co-employment relationship for
unemployment,  workers'  compensation and other purposes under state law.  There
can  be  no  assurance that we will be able to satisfy licensing requirements of
other  applicable  relations  for  all  states.  Additionally,  there  can be no
assurance  that  we  will  be  able  to  renew  our  licenses  in  all  states.
Our  client  service  agreement  establishes  a  contractual  division  of
responsibilities  between  us  and  our clients for various personnel management
matters,  including  compliance  with  and  liability  under  various government
regulations.  However,  because  we  act  as a co-employer, we may be subject to
liability  for  violations  of  these  or  other  laws despite these contractual
provisions,  even  if  we  do  not participate in such violations.  Although our
agreement  provides  that  the  client  is  to  indemnify  us  for any liability
attributable to the conduct of the client, we may not be able to collect on such
a  contractual indemnification claim, and thus may be responsible for satisfying
such  liabilities.  Additionally,  worksite  employees  may  be deemed to be our
agents,  subjecting  us to liability for the actions of such worksite employees.

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

The  current  health and workers' compensation contracts are provided by vendors
with whom we have an established relationship and on terms that we believe to be
favorable.  While  we  believe  that  replacement  contracts could be secured on
competitive  terms without causing significant disruption to our business, there
can  be  no  assurance  in  this  regard.

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

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

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

The  market price of our common stock historically has fluctuated significantly.
Our  stock  price  could  fluctuate  significantly  in the future based upon any
number  of  factors  such  as:  general  stock  market  trends; announcements of
developments  related  to our business; fluctuations in our operating results; a
shortfall  in  our  revenues or earnings compared to the estimates of securities
analysts;  announcements  of  technological  innovations,  new  products  or
enhancements  by  us  or  our  competitors;  general  conditions in the computer
peripheral  market  and  the imaging markets we serve; general conditions in the
worldwide  economy;  developments  in  patents  or  other  intellectual property
rights;  and developments in our relationships with our customers and suppliers.
In  addition,  in  recent  years the stock market in general, and the market for
shares  of  technology  stocks  in  particular,  have  experienced extreme price
fluctuations,  which  have  often been unrelated to the operating performance of
affected  companies.  Similarly,  the  market  price  of  our  common  stock may
fluctuate  significantly  based  upon  factors  unrelated  to  our  operating
performance.

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

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

The  penalty  for  noncompliance  of  the  Settlement  Agreement is a stipulated
judgment  that  allows  Imperial  Bank  to immediately reinstate the operational
receiver  and  begin  liquidation  proceedings against us.  The monthly payments
have  been  reduced  to  $50,000  for  the  balance  of  calendar year 2002.  of
Operational  Receiver

WE  MAY  SEEK  ADDITIONAL  FINANCING,  WHICH  WOULD  RESULT  IN  THE ISSUANCE OF
ADDITIONAL  SHARES  OF  OUR  CAPITAL  STOCK  AND/OR RIGHTS TO ACQUIRE ADDITIONAL
SHARES  OF  OUR  CAPITAL  STOCK.

Additional  issuances  of  capital  stock would result in a reduction of current
stockholders'  percentage  interest in ITEC.  Furthermore, if the exercise price
of  any  outstanding  or issuable options or warrants or the conversion ratio of
any  preferred  stock  is  lower than the price per share of common stock at the
time  of  the  exercise  or conversion, then the price per share of common stock
would  decrease  because  the number of shares of common stock outstanding would
increase  without  a  corresponding  increase  in  the dollar amount assigned to
stockholders'  equity.

The  addition  of a substantial number of shares of common stock into the market
or  by  the registration of any other of our securities under the Securities Act
may  significantly  and  negatively  affect  the prevailing market price for our
common stock.  Furthermore, future sales of shares of common stock issuable upon
the exercise of outstanding warrants and options may have a depressive effect on
the  market  price  of  the common stock, as these warrants and options would be
more  likely  to be exercised at a time when the price of the common stock is in
excess  of  the  applicable  exercise  price.

The  sale or issuance of any shares of preferred stock having rights superior to
those  of the common stock may result in a decrease in the value or market price
of  the  common stock.  The issuance of preferred stock could have the effect of
delaying,  deferring or preventing a change of ownership without further vote or
action  by the stockholders and may adversely affect the voting and other rights
of  the  holders  of  common  stock.

Our  board of directors currently is authorized to issue up to 100,000 shares of
preferred  stock.  The  board  has  the  power  to establish the dividend rates,
preferential  payments  on  our  liquidation,  voting  rights,  redemption  and
conversion  terms  and  privileges  for  any  series  of  preferred  stock.

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

The  Nasdaq  SmallCap  Market  and Nasdaq Marketplace Rules require an issuer to
evidence  a  minimum  of $2,000,000 in net tangible assets, a $35,000,000 market
capitalization  or $500,000 in net income in the latest fiscal year or in two of
the  last  three  fiscal  years,  and a $1.00 per share bid price, respectively.
Since  we  do  not  qualify  to  be  listed  on  The  Nasdaq  SmallCap  Market,
stockholders  may find it more difficult to sell our common stock.  This lack of
liquidity also may make it more difficult for us to raise capital in the future.
Trading  of our common stock is now being conducted over-the-counter through the
NASD  Electronic  Bulletin  Board and covered by Rule 15g-9 under the Securities
Exchange  Act  of  1934.  Under  this  rule,  broker/dealers who recommend these
securities  to persons other than established customers and accredited investors
must  make  a  special  written  suitability determination for the purchaser and
receive  the  purchaser's  written  agreement  to  a  transaction prior to sale.
Securities  are  exempt from this rule if the market price is at least $5.00 per
share.

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

ITEM  3.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

        Not  applicable.

<PAGE>
PART  II  -  OTHER  INFORMATION

ITEM  1.  LEGAL  PROCEEDINGS

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

     Throughout fiscal 1999, 2000 and 2001, and through the date of this filing,
approximately  fifty  trade  creditors  have  made  claims  and/or filed actions
alleging  the  failure  of  us  to pay our obligations to them in a total amount
exceeding  $3  million.  These actions are in various stages of litigation, with
many  resulting in judgments being entered against us. Several of those who have
obtained  judgments  have filed judgment liens on our assets. These claims range
in  value  from less than one thousand dollars to just over one million dollars,
with  the  great  majority  being  less  than  twenty  thousand  dollars.

     Furthermore,  from  time to time, the Company may be involved in litigation
relating  to  claims  arising  out  of  its  operations  in the normal course of
business.

ITEM  2.  CHANGES  IN  SECURITIES  AND  USE  OF  PROCEEDS

     None.

ITEM  3.  DEFAULTS  UPON  SENIOR  SECURITIES

     None

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

     None

ITEM  5.  OTHER  INFORMATION

The  PEO  industry  has  been  experiencing  a  changing  business  environment.
Regulatory  agencies  throughout  the United States are involved in establishing
new  regulations  related  to the PEO industry. Additionally, insurance carriers
are  re-evaluating  plans  provided to employers in general and PEO companies in
particular.

In  April  2002,  our  SourceOne Group PEO subsidiary ("SOG") was ordered by the
Bureau  of Insurance of the State of Virginia to declare itself a Multi-Employer
Welfare  Arrangement ("MEWA") pursuance to Virginia law that became effective on
October  1,  2001  (approximately six weeks prior to ITEC's acquisition of SOG).
The  Virginia  Bureau  of Insurance promulgated the resultant regulations during
the  quarter.  The  MEWA  designation requires SOG to obtain proper licensing in
order  to  continue  as  a  multiple employer provider of health benefits to its
worksite  employees and co-employer clients, and to avoid possible fines, which,
if  imposed,  are not expected to have a material effect upon SOG should they be
imposed.  Accordingly, we have submitted a licensing application to the Virginia
Bureau  of  Insurance.  Furthermore,  it  is our intention to replace all health
benefit  coverage  for  SOG  worksite  employees  with  brokered  benefit  plans
directly,  which will be sold to each employer client with each client being the
named  insured.  However,  there can be no assurance that all of our co-employer
clients  will  accept this change and that they will continue to be our clients.
Additionally,  SOG's workers' compensation carrier declined to renew coverage as
of May 1, 2002. SOG has made application to other insurance carrier programs and
we  expect to replace the expired policy before the end of May 2002. Prospective
carriers  have  indicated  that  such a new policy would become effective May 1,
2002,  which  would  circumvent any lapse in coverage. SOG's co-employer clients
have been notified of the non-renewal of our current policy. Nevertheless, there
can  be  no  assurance  that  SOG  will be able to retain all of its co-employer
clients  as a result of a change in the workers' compensation plan we provide or
the  higher  manual  premium  rates  anticipated  under  such  a  plan.

ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K

 (a)     Exhibits:

         None.

 (b)     Reports  on  Form  8-K:

         On  March  28,  2002,  the  Company  filed  Form  8-K  related  to the
acquisition  of  EnStructure,  Inc.

         On  May  2,  2002, the Company filed Form 8-K related to the change of
its  auditors.

<PAGE>

SIGNATURES

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

Dated:  May  20,  2002

IMAGING  TECHNOLOGIES  CORPORATION  (Registrant)


By:  /s/  BRIAN  BONAR
----------------------

Brian  Bonar
Chief  Executive  Officer
and  Principal  Financial  and  Accounting  Officer