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                            UNITED STATES OF AMERICA
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

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

                     FOR THE FISCAL YEAR ENDED JUNE 30, 2000



                           COMMISSION FILE NO. 0-12641


                        IMAGING TECHNOLOGIES CORPORATION
             (Exact Name of Registrant as Specified in its Charter)

<TABLE>
<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
                                 (858) 613-1300
   (Address of Principal Executive Offices and Registrant's Telephone Number,
                              Including Area Code)

                  Securities registered under Section 12(b) of
                  the Exchange Act: NONE Securities registered
                    under Section 12(g) of the Exchange Act:

                         Common Stock, $0.005 par value

Indicate by a check mark 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 preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /

Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes /X/ No / /

At October 6, 2000, the aggregate market value of the voting stock held by
non-affiliates of the registrant was approximately $26,153,639 based on the last
trade price as reported on the NASD Electronic Bulletin Board. For purposes of
this calculation, shares owned by officers, directors, and 10% stockholders
known to the registrant have been excluded. Such exclusion is not intended, nor
shall it be deemed, to be an admission that such persons are affiliates of the
registrant.

At October 6, 2000, there were 104,197,764 shares of the registrant's Common
Stock, $0.005 par value, issued and outstanding.

Information required by Part III of this Form 10-K is incorporated therein by
reference from the Company's definitive Proxy Statement with respect to its 1999
Annual Meeting of Stockholders to be filed pursuant to Regulation 14A within 120
days after June 30, 2000.




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FORWARD LOOKING STATEMENTS

In addition to historical information, this Annual Report on Form 10-K may
contain 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 judgement on the future
direction of the business, such risks and uncertainties could cause actual
results to differ materially from any future performance suggested below.
Readers are cautioned not to place undue reliance on the forward-looking
statements, which speak only as of the date of this Annual Report. The Company
undertakes no obligation to publicly release any revisions to forward-looking
statements to reflect events or circumstances arising after the date of this
document. See "Risks and Uncertainties." References in this Annual Report on
Form 10-K to "ITEC" and the "Company" are to Imaging Technologies Corporation
and its wholly-owned direct and indirect subsidiaries, Personal Computer
Products, Incorporated, a California corporation (PCPI), NewGen Imaging Systems,
Incorporated, a California corporation (NewGen), Color Solutions, Inc, a
California corporation (CSI), ITEC Europe, Ltd., formed under the laws of the
United Kingdom, (ITEC Europe), and DealSeekers.com, Incorporated, a Delaware
corporation.


PART I

ITEM 1.

BUSINESS

         ITEC develops, manufactures, and distributes high-quality digital
imaging solutions. The Company produces a wide range of printer and imaging
products for use in graphics, publishing, digital photography, and other
business and technical markets. In the 1980's, ITEC began the development of
core technologies related to the design and development of controllers for
non-impact printers and multifunction peripheral devices, such as copiers,
scanners, and facsimile machines. During the past few years, the Company has
expanded its product offerings to include monochrome and color printers,
external print servers, and software to improve the accuracy of color
reproduction.

         ITEC offers advanced digital color and monochrome output devices for a
number of specialized publishing markets, including electronic prepress, graphic
design, on-demand printing, business and technical office, and digital
photography markets. The Company's new generation of products incorporate
advanced printer and imaging controller technologies to produce faster, output
of enhanced images at competitive prices. All of ITEC's color laser and
dye-sublimation printers incorporate the Company's proprietary ColorBlind(R)
Color Management software.

         ITEC's ColorBlind Color Management software is a suite of applications,
utilities and tools designed to create, edit, and apply industry standard
International Color Consortium ("ICC") profiles that produce accurate color
rendering across a wide range of peripheral devices. "ColorBlind Aware" is
growing to be recognized as an industry standard to denote color accuracy as
manufacturers integrate ColorBlind's Color Management resources into their
product designs.

         The Company benefits from technology alliances with several industry
leaders to develop embedded printer controller and digital imaging technology.
ITEC produces printer controllers that provide performance advantages for its
OEM customers in a modular form. ITEC's customers also benefit by outsourcing
their engineering development to ITEC, thus achieving faster time-to-market.

         Imaging Technologies Corporation (OTCBB: ITEC) was incorporated in
March, 1982 under the laws of the State of California, and reincorporated in
May, 1983 under the laws of the State of Delaware. The Company's principal
executive offices are located at 15175 Innovation Drive, San Diego, CA 92128.
The Company's main phone number is (858) 613-1300.

MARKET OVERVIEW

         ITEC's principal markets encompass desktop digital imaging and
printing. The Company's primary market segment is image management to control
the function of printers and/or digital copiers. The Company provides a variety
of technical solutions and products to meet the changing needs of this market,
including printers, controllers, and software.

         Worldwide printer shipments reached 71.6 million units in 1999,
increasing by 19 percent over the previous year according to Dataquest Inc., a
unit of Gartner Group, Inc. Aiding worldwide printer growth

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was the rapid increase in sales from developing regions, such as Asia/Pacific,
which boasted a 33 percent increase last year.

         Various underlying industries may have a direct impact on ITEC's market
potential. For example, according to the Gartner Group, 5.4 million of the 103
million households in the United States currently have a digital camera with an
estimated 12.7 million U.S. households planning on having a digital camera by
the end of the year. Worldwide digital camera shipments exceeded 6.5 million
units in 1999, and will increase dramatically to 41.6 million by 2004, according
to International Data Corp.

         Changes in the technology of document creation, management, production,
and transmittal (including the Internet) have been transforming the imaging
market. The greater bandwidth now available to even small desktop computers has
facilitated the movement of color images; this has created an increase in the
demand for cross platform color reproduction.

         The growth of networks, the increased availability and dissemination of
documents on the Internet, and the rapid adoption of color at the desktop have
significantly changed printing and document management. In the last few years,
the market has been reshaped from one dominated by dedicated printers and
scanners at the workstation, to an emphasis on document workflow using
network-shared imaging products than enable remote document delivery and
distribution.

         Imaging professionals have been forced to deal with more complex
documents for distribution throughout the business enterprise. Powerful
authoring applications enable the creation of documents, the components of which
originate from multiple locations around the world. Adobe Systems' Acrobat(R)
Portable Document Format (PDF(R)) and PostScript printing technologies have
become more important elements in the document imaging workflow due to their
ability to improve the efficiency of digital master document transmission and
the reliability of printing at remote locations.

         The digital pre-press market is experiencing a double-digit growth rate
and is also now expanding to a pre-visualization market, representing annual
revenues of $400 billion world-wide.

         The direct-to-plate and direct-to-print trends in the printing industry
have created more demand for digital color proofing due to the fact that
conventional proofing methods cannot be used in those environments.

         The market growth and acceptance of the digital camera and the improved
resolution of these cameras have increased the demand for color management and
accurate color printing.

         Accordingly, color integrity is an important underlying requirement in
the imaging process. The widespread use of color applications at the desktop,
demand for higher quality color reproduction, expanded use of the Internet for
document dissemination and e-commerce, growth of office networks, and the
increased acceptance and use of digital photography are some of the factors that
influence our markets.

         ITEC is working to deliver solutions that meet current and future
demands of the imaging markets: higher resolution, faster printed output, easier
and more consistent color rendering, and reduced dependence on device-specific
applications.

BUSINESS STRATEGY

         The Company's objective is to be a global market leader in digital
imaging by delivering higher-quality, easy-to-use products and technology. ITEC
is focused on the continued development of advanced integrated digital imaging
solutions. The Company's principal target markets include: (1) embedded printer
controller technology for non-impact printers (laser, copier, duplicator and ink
jet); (2) external digital print controllers and print servers for
printing-on-demand; (3) specialized printers and digital proofing devices for
graphics and publishing (including niche business applications); and (4) color
management software products.

PRINTER CONTROLLER PRODUCTS

         ITEC has a long history of participation in the design, development,
and integration of digital printing controller technology. The printer
controller houses the intelligence of the device. It is a powerful microcomputer
that controls imaging and output of the printed image.

         ITEC develops and manufactures embedded imaging controllers for
original equipment manufacturers (OEMs), who benefit by outsourcing their
engineering development and manufacturing. In an age of rapid and persistent
technology change, ITEC provides OEM customers the ability to achieve faster
time-to-market, which may be critical to product success.



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         ITEC has established relationships with leading printer manufacturers
and marketers throughout the world. ITEC has the ability to embed the core
technology of the PostScript page description language into its image management
products. Adobe PostScript is the most widely accepted printing and imaging
technology for corporations, publishers, and government agencies. 75% of all
commercial publications are imaged on PostScript devices. Incorporating
PostScript technology, ITEC controllers deliver advanced features and a
universal operating environment for digital documents.

         ITEC produces a range of integrated controller solutions for printers
and multifunction peripherals. The Company's new embedded imaging controllers
are sold to OEM customers for integration into digital color and monochrome
printers. ITEC's ImageScript(TM) controller accommodates a wide range of new
printer designs. Features include: Adobe PostScript-3 compatibility, a powerful
reduced-instruction-set-computer (RISC) processor, image enhancement
co-processors, and printing resolution up to 1200 dots-per-inch (dpi). The
flexible architecture of ITEC controllers allows OEM customers to select from a
range of options including processor speed, resolution and
communication/networking connectivity.

         ITEC also produces an Adobe PostScript-3 raster image processing (RIP)
controller, which can be used by digital duplicators. Digital duplicators are
used for short run printing and provide significant cost savings over
conventional copy machines. Primary users of digital duplicators include
quick-print shops, churches, schools, and government offices. ITEC's controller
has an architecture that allows it to manage the output functions of a wide
range of duplicator products.

PRINTERS

         ITEC's printer product line features network compatibility and Adobe
PostScript-3 technology. The products provide higher performance, enhanced image
quality, and advanced page processing. Under the ITEC brand, the Company sells a
range of products in both monochrome and color. The Company's product strategy
is to produce value-added printers that meet the more exacting requirements of
specialized segments of the market.

         The LaserImage 1200 laser printer is designed to quickly produce
full-bleed proofs for pre-press and graphic arts applications. The printer is
positioned as a workgroup solution for printing complex documents or high volume
printing. It features Adobe PostScript-3 with a RISC-based controller designed
and engineered by ITEC. A number of configurations are available, including
network connectivity options.

         The ColorImage(R) 2500 combines ITEC's award-winning ColorBlind color
management system with Adobe PostScript-3. ITEC's controller technology is built
around a very fast RISC processor to provide the performance necessary to
reproduce complex color pages. The 2500 also features: up to 1200x1200 dpi
resolution, an image enhancement co-processor, and a precision toning system to
deliver crisp, high quality, color-correct images. Print speed is 4 color pages
per minute and 16 monochrome pages per minute.

COLOR MANAGEMENT SOFTWARE

         Accurate color reproduction is one of the largest single challenges
facing the imaging industry. Customers demand systems that are easy to use,
predictable and consistent. The fundamental challenge is the control of "color
space." Color space for printed materials is different from the color space for
devices such as cameras, scanners and computer monitors. A color management
system is needed so users can convert their files for use with different
devices. The varying characteristics of each device are captured in a device
profile. The International Color Consortium ("ICC") has established a standard
for the format for these profiles.

         ITEC's ColorBlind Color Management software is a suite of applications,
utilities, and tools that allow users to precisely create ICC profiles for each
device in the color workflow including scanners, monitors, digital cameras,
printers, and other specialized digital color input and output devices. Once
profiled, ColorBlind balances these profiles to produce accurate, consistent,
and reliable color rendering from input to output.

         "ColorBlind Aware" is recognized as an industry standard for color
accuracy. In order to advance this standard, ITEC actively encourages printer,
scanner, and monitor manufacturers integrate ColorBlind into product designs.
ColorBlind software is sold as a standalone application or licensed by OEM's for
resale to be bundled with peripheral devices.


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OPERATIONS

         ITEC's consolidated corporate headquarters facility houses all of
ITEC's U.S. operations. The Company's 56,000 square foot headquarters facilities
house all of the Company's engineering, sales and marketing, customer support,
accounting, production, and warehousing departments. In addition, ITEC's
DealSeekers.com and Color.com Internet E-Commerce operations are managed from
this location.

         In order to address the opportunities of new product development,
marketing, and sales, ITEC has recently organized the company into four groups:
(1) engineering, (2) printer products, (3) software products, and (4) printer
consumables.

ENGINEERING

         ITEC's engineering group focuses on developing and branding new company
products, and also provides engineering and design services for major original
equipment manufacturers (OEM). The engineering division has strong alliances
with industry leaders to develop the next generation of printer controller
technology. ITEC produces laser printer controllers (motherboards) that provide
maximum price/performance for its OEM customers.

         The Company has a number of initiatives under way in this area that are
expected to produce revenues in fiscal 2001, including a three-year agreement
with a Japanese OEM customer for the development and sale of a new generation of
printer controllers. The agreement includes $850,000 of non-recurring fees for
engineering services. The manufacturing portion of the agreement has been
scheduled to begin in fiscal 2001. Based on future sales estimates by the
customer (who, due to competitive reasons has asked that its name be kept
confidential), the follow-on manufacturing of the controllers could have a
potential value to ITEC of $7.5 million over the next several years.

PRINTER PRODUCTS

         The printer products group provides a full range of advanced digital
color and monochrome printer products for the publishing markets. The company's
new generation of products incorporate advanced printing and imaging controller
technologies to produce faster enhanced image output at competitive prices.
ITEC's color laser printers incorporate the company's proprietary ColorBlind
color management software and are the first to offer "ColorBlind Aware" in
conjunction with Adobe's newest PostScript technology.

         ITEC's printer products are marketed and sold through a distribution
channel of value-added resellers (VARS), manufacturer's representatives, retail
vendors, and systems integrators. The Company has a network of dealers and
distributors in the United States, Canada, and Europe; and it is expanding with
additional resellers in Africa, Asia, the Middle East, Latin America, and
Australia.

         The Company expects export sales to continue to represent a significant
portion of its sales. Earlier this year, ITEC began shipment of printers and
printing products to the Company's Korean distributor.

         ITEC supports its worldwide distribution network and end-user customers
through centralized manufacturing, distribution, and repair operations from the
Company's San Diego headquarters.

SOFTWARE PRODUCTS

         ITEC's software products group produces ColorBlind Color Management
software. ColorBlind is an award-winning suite of applications that produce
accurate color rendering across a wide range of peripheral devices. "ColorBlind
Aware" is rapidly being adopted as an industry standard for color accuracy as
manufacturers integrate ColorBlind color management resources into product
designs.

         ITEC has licensed ColorBlind to Agfa Monotype Corporation, a world
leader in the development of color technologies and products. The Company
expects to receive royalties from Agfa's sales to OEM customers.

         ITEC has expanded its operations internationally this year,
establishing product development and ColorBlind software distribution contracts
throughout Mainland Asia, and Japan. Recently, ITEC established a strategic
international sales and distribution agreement for ColorBlind software
throughout Southeast Asia with Professys Asia.

         The Company also recently signed a licensing agreement for the
ColorBlind engine with DALiM Software of Germany, a privately-held company that
offers software solutions to customers in the printing and publishing industries
worldwide.

         Additionally, ITEC signed a master distribution agreement with
TypeMaker Ltd., a color management specialist in England. TypeMaker will sell
ColorBlind products directly to its European



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customer base. The Company has also signed distribution agreements with Ados, an
Australian software distributor, and with Professys Asia of Singapore.

         ITEC has begun to introduce new versions of its ColorBlind family of
products to provide full support to the latest Apple(R) Macintosh(R)
technologies, including the OS9 operating system for the G4 PowerMac(R), as well
as support for USB devices.

         ITEC is working to increase the recognition of its products by
leveraging the market reach of other companies. An example is ITEC's
co-marketing agreement recently signed with Epson. Epson will use ITEC's
Colorblind Professional profile creation and editing software to create ICC
Profiles for use with the Epson Stylus Pro 9000 printer. Epson will include
marketing materials with the printer identifying ColorBlind software and ITEC
will distribute Epson's ColorBlind ICC profiles to end users of the Pro 9000
printer from ITEC's web site.

         ITEC is working on the launch of an Internet site, color.com, as a
resource center to provide information on the highest quality correct color.
This site allows consumers to purchase ITEC products, including ColorBlind
Software. This ITEC web site also serves as a resource center for color imaging,
with information including white papers on color imaging and management, links
to color consultants and experts, and products.

PRINTER CONSUMABLES

         ITEC's printer consumables group consists of an e-commerce operation,
DealSeekers.com, which is part of ITEC's new subsidiary, ITEC Ventures. Soon to
be re-launched after its initial test marketing phase in 1999, DealSeekers.com
will be an interactive Internet catalog showroom that features thousands of
digital imaging products. The site will partner with manufacturers and other
market makers, offering them a single source for the efficient and orderly
liquidation of excess and previous-version inventory. The service will offer
this surplus through "Hot Deals" to its wholesale and retail customers. Printer
consumables represents an estimated $450 billion a year industry. ITEC believes
that DealSeekers.com provides significant growth potential by becoming a leading
source for printer consumable products.

MANUFACTURING, PRODUCTION, AND SOURCES OF SUPPLY

         ITEC continued to outsource the majority of its manufacturing. This
arrangement gives ITEC the latitude to expand its business base without the cash
drain of maintaining a state-of-the-art-manufacturing center. Also see "Risks
and Uncertainties."

         In addition to buying such items as printed circuit boards and other
components from outside vendors, ITEC purchases and/or licenses software
programs, including operating systems and intellectual property modules
(pre-written software code to execute a specifically defined operation). ITEC
purchases these products from vendors who have licenses to sell such software to
the Company from the originators of such software. The Company has, from time to
time, directly licensed system software that is either embedded or otherwise
incorporated in certain ITEC products.

RESEARCH AND DEVELOPMENT

         The markets for the Company's products are characterized by rapidly
evolving technology, frequent new product introductions, and significant price
competition. Accordingly, the Company monitors new technology developments and
coordinates with suppliers, distributors and dealers to enhance existing
products and lower costs. Advances in technology require ongoing investment.
Also see "Risks and Uncertainties."

COMPETITION

         The markets for the Company's products are highly competitive and
rapidly changing. The Company's ability to compete in its markets depends on a
number of factors, including the success and timing of product introductions by
the Company and its competitors, selling prices, product performance, product
distribution, marketing ability, and customer support. A key element of the
Company's strategy is to provide competitively-priced, quality products. Also
see "Risks and Uncertainties."

INTELLECTUAL PROPERTY

         ITEC's software products, hardware designs, and circuit layouts are
copyrighted. However, copyright protection does not prevent other companies from
emulating the features and benefits provided by the Company's software, hardware
designs or the integration of the two. The Company protects its software source
code as trade secrets and makes its Company proprietary source code available to
OEM

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customers only under limited circumstances and specific security and
confidentiality constraints. In many product hardware designs, the Company
develops application-specific integrated circuits (ASICs) which encapsulate
proprietary technology and are installed on circuit boards. This can serve to
reduce the risk of duplication by competitors. The Company currently holds no
patents. Computer and printer imaging technology is a rapidly changing business
environment. Consequently, the Company believes the effectiveness of patents,
trade secrets, and copyright protection are less important in influencing long
term success than the experience of the Company's technical team, contractual
relationships, and a continuous focus on technical advancement.

         The Company has obtained U.S. registration for several of its trade
names or trademarks, including PCPI, NewGen, ColorBlind, LaserImage, ColorImage,
ImageScript, ImageFont, ImagePress, and ImageNet. These trade names are used to
distinguish the Company's products in the marketplace. Pending trademarks for
which registration is currently being sought include dfilm, Xtinguisher,
ChroMATCH, ChromaxPro, ImagerPro, DuoSetter, ImagerPlus, and DesignXP.

         From time to time, certain competitors have asserted patent rights
relevant to the Company's business. The Company expects that this will continue.
The Company carefully evaluates each assertion relating to its products. The
Company relies on a combination of trade secret, copyright and trademark
protection, and non-disclosure agreements to protect its proprietary rights.
Also see "Risks and Uncertainties."

PERSONNEL

         ITEC employed a total of twenty-nine individuals worldwide as of June
30, 2000. None of ITEC's employees are represented by any union. Of this number,
ten are involved in sales, marketing, corporate administration and finance,
sixteen are in engineering, research and development, and technical support.

RISKS AND UNCERTAINTIES

OUR NEED FOR FUTURE CAPITAL

         ITEC's business has not been profitable in the past and it may not be
profitable in the future. The Company may incur losses on a quarterly or annual
basis for a number of reasons, some within and others outside its control. See
"Potential Fluctuation in Our Quarterly Performance." The growth of the
Company's business will require the commitment of substantial capital resources.
If funds are not available from operations, the Company will need additional
funds. ITEC 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 needed. Even if funds are available, the terms under which the
funds are available may not be acceptable to the Company. Insufficient funds may
require the delay, reduction, or elimination of some or all of the Company's
planned activities. Also see "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources."

POTENTIAL FLUCTUATION IN OUR QUARTERLY PERFORMANCE

         Quarterly operating results can fluctuate significantly depending on a
number of factors, any one of which could have a material adverse effect on the
Company's results of operations. The factors include: the timing of product
announcements and subsequent introductions of new or enhanced products by the
Company and by its competitors, the availability and cost of components, the
timing and mix of shipments of the Company's products, the market acceptance of
new products, seasonality, currency fluctuations, changes in the Company's
prices and in the Company's competitors' prices, price protection offered to
distributors and OEMs for product price reductions, 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.

         The Company may experience significant quarterly fluctuations in
revenues and operating expenses as it introduces new products. In addition,
component purchases, production and spending levels are based upon management's
forecast of future demand for the Company's products. Accordingly, any
inaccuracy in the Company's forecasts could adversely affect its financial
condition and results of operations. Demand for the Company's products could be
adversely affected by a slowdown in the overall demand for computer systems,
printer products or digitally printed images. The Company's failure to complete
shipments during a quarter could have a material adverse effect on its results
of operations for that quarter. Quarterly results are not necessarily indicative
of future performance for any particular period.


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HIGHLY COMPETITIVE INDUSTRY

         The markets for ITEC products are highly competitive and rapidly
changing. Some of the Company's current and prospective competitors have
significantly greater financial, technical, manufacturing and marketing
resources than ITEC. The Company's ability to compete in its markets depends on
a number of factors, some within and others outside its control. These factors
include: the frequency and success of product introductions by the Company and
by its competitors, the selling prices of ITEC products and of its competitors'
products, the performance of ITEC products and of its competitors' products,
product distribution by ITEC and by its competitors, ITEC's marketing ability
and the marketing ability of its competitors, and the quality of customer
support offered by ITEC and by its competitors.

         A key element of ITEC's strategy is to provide competitively priced,
quality products. The Company cannot be certain that its products will continue
to be competitively priced. The Company has reduced prices on certain 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 gross margins
and may adversely affect the Company's financial condition and results of
operations.

SHORT PRODUCT LIVES AND TECHNOLOGICAL CHANGE

         The markets for ITEC's 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. The future success of the Company will depend on its ability to continue
to develop and manufacture competitive products and achieve cost reductions for
existing products. In addition, the Company monitors new technology developments
and coordinates with suppliers, distributors and dealers to enhance its existing
products and to lower costs. Advances in technology will require increased
investment in product development to maintain the Company's market position. If
the Company is unable to develop and manufacture new, competitive products in a
timely manner, its financial condition and results of operations will be
adversely affected.

DEVELOPING MARKETS AND APPLICATIONS

         The markets for ITEC products are relatively new and are still
developing. Management believes that there has been growing market acceptance
for color printers, color management software and supplies. The Company cannot
be certain, however, that these markets will continue to grow. Other
technologies are constantly evolving and improving. The Company cannot be
certain that products based on these other technologies will not have a material
adverse effect on the demand for its products.

DEPENDENCE UPON SUPPLIERS

         At present, many of ITEC's products use technology licensed from
outside suppliers. The Company relies heavily on these suppliers for upgrades
and support. In the case of ITEC font products, the Company licenses the fonts
from outside suppliers, who also own the intellectual property rights to the
fonts. The Company's reliance on third-party suppliers involves many risks,
including limited control over potential hardware and software incompatibilities
with ITEC products. Furthermore, the Company cannot be certain that all of the
suppliers of products it markets will continue to license their products to
ITEC, or that these suppliers will not license their products to other companies
simultaneously.

RISKS RELATED TO ACQUISITIONS

         In order to grow the business, the Company may acquire businesses that
management believes are complementary. To successfully implement this strategy,
the Company must identify suitable acquisition candidates, acquire these
candidates on acceptable terms, integrate their operations and technology
successfully with the Company, retain existing customers and maintain the
goodwill of the acquired business. The Company may fail in its efforts to
implement one or more of these tasks. Moreover, in pursuing acquisition
opportunities, the Company 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 those of the Company.
Competition for these acquisition targets likely could also result in increased
prices of acquisition targets and a diminished pool of companies available for
acquisition. Overall financial performance will be materially and adversely
affected if the Company is unable to manage internal or acquisition-based growth
effectively.

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         Acquisitions involve a number of risks, including: integrating acquired
products and technologies in a timely manner; integrating businesses and
employees with the Company's business; managing geographically-dispersed
operations; reductions in the Company's 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; the Company's 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 the Company's reputation, and any
acquired business could significantly under perform relative to expectations.
The Company is currently facing all of these challenges and its ability to meet
them over the long term has not been established. As a result, the Company
cannot be certain that it will be able to integrate acquired businesses,
products or technologies successfully or in a timely manner in accordance with
its strategic objectives, which could have a material adverse effect on overall
financial performance.

         In addition, if the Company issues 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 ITEC common stock. See "Future Capital Needs."

DEPENDENCE ON KEY PERSONNEL

         The success of the Company is dependent, in part, upon its ability to
attract and retain qualified management and technical personnel. Competition for
these personnel is intense, and the Company will be adversely affected if it is
unable to attract additional key employees or if it loses one or more key
employees. The Company may not be able to retain its key personnel.

COMPONENT AVAILABILITY AND COST; DEPENDENCE ON SINGLE SOURCES

         The Company presently outsources the production of some of its
manufactured products through a number of vendors located in California. These
vendors assemble products, using components purchased by the Company from other
sources or from their own inventory. The terms of supply contracts are
negotiated separately in each instance. Although the Company has not experienced
any difficulty over the past several years in engaging contractors or in
purchasing components, present vendors may not have sufficient capacity to meet
projected market demand for ITEC products and alternative production sources may
not be available without undue disruption.

         Contract vendors generally perform multi-step quality control testing
prior to shipping their products to the Company. The Company, in turn, includes
appropriate software, performs additional tests on the products, then packages
and ships products into the distribution channels. In addition to buying such
items as printed circuit boards and other components from outside vendors, the
Company purchases and/or licenses software programs, including operating systems
and intellectual property modules (pre-written software code to execute a
specifically defined operation). The Company purchases these products from
vendors who have licenses to sell the software to the Company from the
originators of the software, and have, from time to time, directly licensed
system software that is either embedded or otherwise incorporated in certain
ITEC products.

         While most components are available locally from multiple vendors,
certain components used in ITEC products are only available from single sources.
Although alternative suppliers are readily available for many components, for
some components the process of qualifying replacement suppliers, replacing
tooling or ordering and receiving replacement components could take several
months and cause substantial disruption to operations. Any significant increase
in component prices or decrease in component availability could have a material
adverse effect on the Company's business and overall financial performance.

POSSIBILITY OF CHALLENGE TO OUR PRODUCTS OR INTELLECTUAL PROPERTY RIGHTS

         The Company currently holds no patents. The Company's software
products, hardware designs, and circuit layouts are copyrighted. However,
copyright protection does not prevent other companies from emulating the
features and benefits provided by its software, hardware designs or the
integration of the two. The Company protects its software source code as trade
secrets and makes its proprietary source code available to OEM customers only
under limited circumstances and specific security and confidentiality
constraints. In many product hardware designs, the Company develops
application-specific integrated

                                       9
<PAGE>   10
circuits (ASICs) which encapsulate proprietary technology and are installed on
the circuit board. This can serve to significantly reduce the risk of
duplication by competitors, but in no way ensures that a competitor will be
unable to replicate a feature or the benefit in a similar product.

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

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS

         The Company conducts business globally. Accordingly, 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 ITEC products
and intellectual property rights to the same extent as the laws of the United
States.

         In the Company's 1998 fiscal year, it experienced contract
cancellations and the write-off of significant receivables related to continuing
economic deterioration in foreign countries, particularly in Asia. Any or all of
these factors could have a material adverse impact on the Company's business and
overall financial performance.

DEPENDENCE ON EXPORT SALES

         The Company intends to pursue international markets as key avenues for
growth and to increase the percentage of sales generated in international
markets. In the Company's 2000, 1999, and 1998, fiscal years, sales outside the
United States represented approximately 2%, 56% and 57% of net sales,
respectively. The Company expects sales outside the United States to represent a
significant portion of its sales. As the Company continues to expand its
international sales and operations, the business and overall financial
performance may be adversely affected by factors such as those described under
"Risks Associated with International Operations."

RELIANCE ON INDIRECT DISTRIBUTION

         ITEC products are marketed and sold through an established distribution
channel of value added resellers, manufacturers' representatives, retail
vendors, and systems integrators. The Company has 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. The Company supports its
worldwide distribution network and end-user customers through centralized
manufacturing, distribution, and repair operations headquartered in San Diego.
As of October 6, 2000, the Company directly employed nine individuals involved
in marketing and sales activities.

         Sales are principally made through distributors, which may carry
competing product lines. These distributors could reduce or discontinue sales of
ITEC products, which could materially and adversely affect the Company. These
independent distributors may not devote the resources necessary to provide
effective sales and marketing support of ITEC products. In addition, the Company
is 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 the Company's markets. Management
believes that the future growth and success of the Company will continue to
depend in large part upon its distribution channels. The business could be
materially and adversely affected if the Company's distributors fail to pay
amounts to the Company that exceed reserves it has established. To expand its
distribution channels, the Company has entered into select OEM arrangements that
allow it to address specific market segments or geographic areas. To prevent
inventory write-downs in the event that OEM customers do not purchase products
as anticipated, the Company may need to convert such products to make them
salable to other customers.


                                       10
<PAGE>   11
VOLATILITY OF OUR STOCK PRICE

         The market price of ITEC's common stock historically has fluctuated
significantly. The Company's 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 ITEC's business; fluctuations in the
Company's operating results; a shortfall in revenues or earnings compared to the
estimates of securities analysts; announcements of technological innovations,
new products or enhancements by the Company or its competitors, general
conditions in the computer peripheral market and the imaging markets served by
the Company; general conditions in the worldwide economy; developments in
patents or other intellectual property rights; and developments in the Company's
relationships with its 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 ITEC common stock may
fluctuate significantly based upon factors unrelated to the Company's operating
performance.

ABSENCE OF DIVIDENDS

         The Company has not paid any cash dividends on its common stock to date
and it does not anticipate paying cash dividends in the foreseeable future.

APPOINTMENT AND REMOVAL OF OPERATIONAL RECEIVER

         On August 20, 1999, at the request of Imperial Bank, the Company's
primary lender, the Superior Court, San Diego appointed an operational receiver.
On August 23, 1999, the operational receiver took control of ITEC's day-to-day
operations. Through further equity infusion, primarily in the form of the
exercise of warrants to purchase ITEC common stock, operations have continued,
and on June 21, 2000, the Superior Court, San Diego issued an order dismissing
the operational receiver, determining that it was no longer necessary. However,
in the future, without additional funding sufficient to satisfy Imperial Bank
and other creditors, as well as providing for working capital, there can be no
assurances that such operations can continue. In addition, the Company may not
be able to satisfy all conditions required to sell shares to Impany under the
Private Equity Line of Credit Agreement. In that case, the Company would likely
need to raise money from other sources in order to continue to fund operations.
Such alternative funding may not be available. If such funding is not obtained,
the Company will need to reduce or suspend operations.

NASDAQ LISTING AND LIQUIDITY OF COMMON STOCK

         The Nasdaq(R) SmallCap(R) 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. 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. While
the Panel acknowledged that ITEC was in technical compliance with the bid price
and market capitalization requirements, the Panel was of the opinion that the
continued listing of ITEC common stock on The Nasdaq Stock Market was no longer
appropriate. This conclusion was based on the Panel's concerns regarding the
future viability of the Company. ITEC 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 ITEC common stock. This lack of liquidity also may make it
more difficult for the Company to raise capital in the future.

         Trading of ITEC 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.


                                       11
<PAGE>   12
         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 ITEC common stock falls within the definition of penny
stock, these regulations require the delivery, prior to any transaction
involving ITEC 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 ITEC common stock and the ability of shareholders to sell
ITEC common stock in the secondary market would be limited. As a result, the
market liquidity for ITEC common stock would be severely and adversely affected.
The Company can provide no assurance that trading in ITEC common stock will not
be subject to these or other regulations in the future, which would negatively
affect the market for ITEC common stock.


ITEM 2.

PROPERTIES

         ITEC owns no real property. The Company leases approximately 56,000
square feet of space in a facility located at 15175 Innovation Drive, San Diego,
California 92128, at a monthly lease rate of approximately $51,000. This
facility houses corporate management, marketing, sales, engineering, and support
offices. The lease expires on March 31, 2006.

ITEM 3.

LEGAL PROCEEDINGS

         On or about February 2, 1999, American Industries, Inc., Ellison Carl
Morgan and entities related to Ellison Carl Morgan (the "Plaintiffs") served the
Company and certain officers and directors of the Company (the "Defendants")
with a lawsuit filed in the Circuit Court of the State of Oregon for the County
of Multnomah, alleging that the Defendants violated certain Oregon Securities
Laws in connection with the Plaintiffs' investments in the Company, breached the
contracts with the Plaintiffs and committed fraud in connection with such
contracts. On or about February 22, 1999, the Plaintiffs served Defendants with
an Amended Complaint seeking approximately $1.3 million for added allegations
regarding alleged breaches of agreements between the Company and American
Industries providing the Company with letters of credit. On or about September
1, 1999 American Industries obtained a judgment on the issues in the case
relating to the letters of credit. On May 5, 2000, the jury in a Portland,
Oregon trial returned a verdict in favor of the Company and Brian Bonar, the
only remaining individual defendant, on all issues other than those related to
the letters of credit discussed above.

         On or about July 9, 1999, Imperial Bank (the "Plaintiff") served the
Company and its various operating units with a lawsuit filed in the Superior
Court of the State of California for the County of San Diego, alleging breach of
credit agreements and seeking foreclosure of personal property security
interest, appointment of a receiver, and injunctive relief. At the same time,
the Plaintiff filed a motion asking the Court for the appointment of an
operational receiver. On August 20, 1999, the Court granted the Plaintiff's
request and, on August 23, 1999, an operational receiver assumed control of the
day-to-day operations of the Company. On June 21, 2000, the Court dismissed the
litigation between the Company and Imperial Bank and relieved the operational
receiver of his responsibilities, thereby returning control of the Company to
its management.

         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 the Company 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 the Company. The Company has not yet
been required to file an answer or other pleading in response to the lawsuit.
The Company believes these claims are without merit and intends to vigorously
defend against them on its own behalf as well as on behalf of the other
defendants.

         Throughout fiscal 1999 and 2000, and through the date of this filing,
various creditors of the Company have made claims and/or served the Company with
lawsuits alleging the failure of the Company to pay its obligations to them in a
total amount exceeding $2.5 million. The lawsuits are in various stages.

                                       12
<PAGE>   13
Some have resulted in judgments being entered against the Company. Should the
Company be required to pay the full amount demanded in each of these claims and
lawsuits, such a requirement would have a material adverse impact on the
operations of the Company. However, the superior security interest held by
Imperial Bank has prevented these creditors from collecting on their judgments.

         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 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.




                                       13
<PAGE>   14
PART II

ITEM 5.


MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Company's Common Stock is traded in the over-the-counter market,
and quoted on the NASD Electronic Bulletin Board under the symbol: "ITEC."

         The following table sets forth the high and low bid quotations of the
Company's Common Stock for the periods indicated as reported by the Nasdaq
SmallCap Market or the NASD Electronic Bulletin Board. Prices shown in the table
represent inter-dealer quotations, without adjustment for retail markup,
markdown, or commission, and do not necessarily represent actual transactions.

<TABLE>
<CAPTION>
                                                            High        Low
                        ----------------------------------------------------
<S>                                                        <C>         <C>
                        Year ended June 30, 1998
                             First quarter                 $7.19       $5.50
                             Second quarter                 6.69        4.25
                             Third quarter                  4.63        2.75
                             Fourth quarter                 4.19        2.25
                        Year ended June 30, 1999
                             First quarter                 $3.88       $1.69
                             Second quarter                 2.06        0.25
                             Third quarter                  5.22        0.28
                             Fourth quarter                 2.28        0.59
                        Year ended June 30, 2000
                             First quarter                 $1.63       $0.28
                             Second quarter                 2.13        0.09
                             Third quarter                  3.22        0.36
                             Fourth quarter                 0.97        0.19

                        ----------------------------------------------------
</TABLE>

         The number of holders of record of the Company's Common Stock, $.005
par value, was approximately 53,000 at June 30, 2000.

DIVIDENDS

         The Company has never declared nor paid any cash dividends on its
Common Stock. ITEC currently intends to retain earnings, if any, after any
payment of dividends on its 5% Convertible Preferred Stock, for use in its
business and therefore, does not anticipate paying any cash dividends on its
Common Stock.

         Holders of the 5% Convertible Preferred Stock are entitled to receive,
when and as declared by the Board of Directors, but only out of amounts legally
available for the payment thereof, cumulative cash dividends at the annual rate
of $50.00 per share, payable semi-annually, commencing on October 15, 1986. ITEC
has never declared nor paid any cash dividends on the 5% Convertible Preferred
Stock. Dividends in arrears at June 30, 2000 were $538,000.




                                       14
<PAGE>   15
ITEM 6.


SELECTED FINANCIAL DATA

         The consolidated statement of operations data with respect to the years
ended June 30, 2000, 1999 and 1998 and the consolidated balance sheet data at
June 30, 2000, and 1999, set forth below are derived from the consolidated
financial statements of the Company included in Item 8 below, which have been
audited by Boros & Farrington APC, independent accountants. The selected
consolidated financial data set forth (in thousands, except per share data)
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained in Item 7 below, and
the Company's consolidated financial statements and the notes thereto contained
in Item 8 below. Historical results are not necessarily indicative of future
results of operations.

STATEMENT OF OPERATIONS DATA:

In thousands (except per share data)

<TABLE>
<CAPTION>
                                                              2000              1999             1998
                                                          --------          --------         --------
<S>                                                       <C>               <C>              <C>
NET REVENUES
     Sales of products                                    $  1,634          $ 16,417         $ 30,740
     Engineering Fees                                          125               150            2,327
     License fees and royalties                                788               730            1,350
                                                          --------          --------         --------

     Net total revenues                                      2,547            17,297           34,417
                                                          --------          --------         --------

COSTS AND EXPENSES
     Cost of products sold                                   2,346            14,064           22,536
     Selling, general, and administrative                    7,780            13,707           10,269
     Cost of engineering and purchased R&D                   2,054             2,183            2,475
     Amortization of capitalized software                    2,851             3,951               --
     Special charges                                            --             6,268            8,941
                                                          --------          --------         --------

LOSS FROM OPERATIONS                                       (12,484)          (22,876)          (9,804)
                                                          --------          --------         --------

NET LOSS                                                   (14,198)          (25,129)         (10,163)
                                                          ========          ========         ========

LOSS PER COMMON SHARE
     Basic                                                $  (0.20)         $  (1.62)        $  (0.90)
     Diluted                                              $  (0.20)         $  (1.62)        $  (0.90)
                                                          --------          --------         --------
</TABLE>

BALANCE SHEET DATA:

In thousands

<TABLE>
<CAPTION>
                                                              2000              1999
                                                          --------          --------
<S>                                                       <C>               <C>
     Cash                                                     $291               $75
     Working Capital                                       (14,532)          (16,519)
     Total assets                                            1,683             7,250
     Long-term obligations                                      --                --
     Preferred stock                                           420             6,875
     Total shareholders' deficit                           (13,854)          (12,432)
</TABLE>




                                       15
<PAGE>   16
ITEM 7.


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

         Imaging Technologies Corporation develops, manufactures, and
distributes high-quality digital imaging solutions. The Company produces 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 the design and development of controllers for
non-impact printers and multifunction peripherals. The Company has expanded its
product offerings to include monochrome and color printers, external print
servers, digital image storage devices, and software to improve the accuracy of
color reproduction.

         ITEC acquired several separate businesses during the past three years
that have expanded the Company's strategic position in the digital imaging
market. The Company has altered its focus away from some of its traditional
revenue sources and has been required to make expenditures to support these
changes. As of the end of Fiscal 2000, the Company's business continues to be in
a significant transitional phase and there are important short-term operational
and liquidity challenges. Accordingly, year-to-year financial comparisons may be
of limited usefulness now and for the next several quarters due to these
important changes in the Company's business.

         Historically, a portion of the Company's income has been derived from
non-recurring engineering fees and royalty income from a relatively small number
of OEM customers. Over the past three years, the Company has experienced
shortfalls in income as a result of engineering contracts with OEM manufacturers
for products that were not completed by the customer, were never introduced into
the market and shipped, or were cancelled by the customer before ITEC completed
its portion of the contract. The timing and amount of income from these
customers has ultimately depended upon sales levels and shipping schedules for
the OEM products into which the Company's products were incorporated. The
Company has not had control over the shipping date nor volumes of products
shipped by its OEM customers, and there have been no assurances that any OEM
would continue to ship products that incorporate the Company's technology.
Failure of these OEM customers to achieve significant sales of products
incorporating ITEC technology and fluctuations in the timing and volume of such
sales has had a materially adverse effect on the Company.

         The Company's current strategy is to develop and commercialize its own
technology. The Company intends to increase penetration of its current target
markets and to continue pursuing clearly defined commercial market opportunities
that enable it to leverage its core technologies. The Company has established a
number of strategic partnerships with industry leaders, such as Adobe Systems
and NEC Electronics for product development, marketing and sales. Through these
strategic partnerships, ITEC seeks to obtain specific market knowledge and
enhanced understanding of market demands and needs, access to funding for
continued product development, product and customer validation and a channel for
market penetration.

         To successfully execute its current strategy, the Company will need to
improve its working capital position. The report of the Company's independent
auditors accompanying the Company's June 30, 2000 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. To address the Company's working
capital needs, on July 12, 2000, the Company announced an agreement for a
financing facility providing commitments to purchase up to $36 million of its
common shares over the two years after the effective date of the registration
statement, September 25, 2000.

         The Company has also engaged a financial advisor to assist with
additional fund raising efforts and to help identify merger and acquisition
candidates. 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. See "Liquidity
and Capital Resources" and "Item 1. Business - Risks and Uncertainties - Future
Capital Needs."

                                       16
<PAGE>   17
RESTRUCTURING AND NEW BUSINESS UNITS

         In fiscal 1998, the Company implemented a plan to realign its
management and create a divisional structure within the organization. The
Company consolidated all of its independent operating subsidiaries under a
single financial and operational structure in order to improve the effectiveness
of its established sales channels and to enhance cross-selling opportunities. In
addition to the structural realignment, ITEC closed its 27,000 square-foot
printer manufacturing and distribution facility in Costa Mesa, California, and
relocated those operations to the Company's headquarters facilities in San
Diego. The Company also relocated its marketing and sales activities.

         During fiscal 1999, the Company launched an E-Commerce web site
designed to offer computer and imaging hardware, software, and consumables. The
Internet address is www.dealseekers.com.

         Also, during fiscal 1999, ITEC launched an additional web site,
COLOR.COM, as a resource center to provide information on the highest quality
correct color. The new ITEC Web site serves as a resource center for color
imaging, with information including white papers on color imaging and
management, links to color consultants and experts, and products. The Internet
address is www.color.com.

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

ACQUISITION AND SALE OF BUSINESS UNITS

         In fiscal 1998, the Company made several strategic acquisitions to
reinforce its technology position and expand sales channels. ITEC purchased
privately-held McMican Corporation to operate as the Storage Products Division
of ITEC, producing specialized memory modules. During fiscal 1999, the Company
sold its memory business operations, which consisted of McMican Memory and Prima
International, a distributor of memory modules that was acquired by PCPI
Technologies in fiscal 1993. The businesses sold and/or discontinued are
characterized by low margins and price instability, which were incompatible with
the strategic direction of the Company.

         In fiscal 1998 ITEC merged with Color Solutions, Inc., a software
development firm. Color Solutions' ColorBlind software allows users to precisely
profile peripherals such as scanners, monitors, digital cameras, printers and
other specialized color digital devices, all based on internationally-accepted
ICC color standards.

         Also in fiscal 1998, ITEC acquired the assets of AMT, the European
sales and distribution subsidiary of Singapore-based Lam Soon, a manufacturer of
dot matrix, inkjet and specialized laser printers. AMT had been ITEC's master
stocking distributor of printers and supplies in Europe. AMT's European
operations have being integrated into ITEC's Headquarters operations.

SPECIAL CHARGES

         In fiscal 1998, the Company wrote-off contract and license receivables
of approximately $5.2 million that were due from OEM customers and co-developers
who have been adversely affected by the downturn in the technology segment of
the market and the economic crisis in Asia.

         The Company's 1998 restructuring plan to streamline operations and
reduce costs resulted in a net charge of approximately $3.8 million including
$1.7 million relating to redundant compensation costs, $1.5 million relating to
the write-down of inventory, licenses, and other assets that are not central to
the Company's core business, and $0.3 million relating to the consolidation of
facilities.

         In fiscal 1999, due to its working capital shortage, the Company
wrote-off of costs associated with developed products that could not be
deployed.

         Special charges in the fiscal year ended June 30, 2000 include $18,000
related to restructuring.




                                       17
<PAGE>   18
RESULTS OF OPERATIONS

NET REVENUES

         Revenues were $2.5 million, $17.3 million, and $34.4 million for the
fiscal years ended June 30, 2000, 1999 and 1998, respectively. Sales of product
were $1.6 million, $16.4 million, and $30.7 million for the fiscal years ended
June 30, 2000, 1999 and 1998, respectively. The decrease in product sales in
fiscal 2000 from 1999 was due primarily to a lack of working capital to fund
inventory and sales and marketing operations, which is associated to the control
of an operational receiver for most of fiscal 2000. The decrease in product
sales in 1999 from 1998 was due primarily to the sale and discontinuation of
operations of the Company's memory products business units, which had
contributed approximately $12 million in revenues in prior fiscal years.

         Engineering fees were $125,000, $150,000, and $2.3 million for the
fiscal years ended June 30, 2000, 1999, and 1998, respectively. The decrease in
fiscal 2000 compared to 1999 was due primarily to the lack of capital resources
to support engineering personnel associated with these revenue sources. The
decrease in fiscal 1999 compared to fiscal 1998 was primarily the result of the
Company's ongoing change in strategic direction, focusing more on internal
product development and sales and less on engineering for third parties.

         License fees and royalties also decreased due to these changes in
strategic business practice. They were $788,000, $730,000, and $1.4 million for
the fiscal years ended June 30, 2000, 1999, and 1998, respectively. The increase
in fiscal 2000 from fiscal 1999 is due primarily to increases in shipments by
OEM customers' products based on ITEC controller technology. The decrease in
license fees and royalties in fiscal 1999 from 1998 was due primarily to the
Company's changes in strategic business practice.

COST OF PRODUCTS SOLD

         Cost of products sold were $2.3 million or 144% of product sales, $14.1
million or 84% of product sales, and $22.5 million or 73% of product sales, for
the fiscal years ended June 30, 2000, 1999, and 1998, respectively. The increase
in fiscal 2000 as compared to fiscal 1999 was due primarily to the sale of
products mandated by the operational receiver at liquidation prices. The
relative increase in fiscal 1999 as compared to fiscal 1998 is attributable to
competitive pressures to reduce selling prices on the Company's end-of-life
products.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

         Selling, general and administrative expenses were $7.8 million or 305%
of total revenues, $13.7 million or 79% of total revenues, and $10.3 million or
30% of total revenues for the fiscal years ended June 30, 2000, 1999, and 1998,
respectively. Selling, general and administrative expenses consisted primarily
of salaries and commissions of sales and marketing personnel, salaries and
related costs for general corporate functions, including finance, accounting,
facilities, advertising, and other marketing related expenses. The decrease to
total expenses and increase in percentage of total revenues in fiscal 2000
compared for fiscal 1999 was due primarily to the management of the
court-appointed operational receiver who controlled the operations of the
Company for nearly all of fiscal 2000. During this period, the Company vastly
cut its overall activities, including manufacturing, engineering, and sales and
marketing. The increase in fiscal 1999 as compared to fiscal 1998 is
attributable primarily to increases in marketing costs associated with the
Company's increased product sales activities. The Company also had a substantial
increase in fees for professional services, including legal fees and interest
costs of approximately $2 million.

COST OF ENGINEERING AND PURCHASED R&D

         Cost of engineering and purchased R&D was $2.1 million or 1643% of
engineering revenues, $2.2 million or 1466% of engineering revenues, and $2.5
million or 106% of engineering revenues for the fiscal years ended June 30,
2000, 1999, and 1998, respectively. The changes relate primarily to the change
in corporate strategy from a focus on engineering fees and royalties to that of
product sales. The Company's engineering resources were refocused during fiscal
1998 on proprietary product development rather than contract engineering. New
products from these activities were expected to being shipping to customers in
fiscal 2000; however, the presence of the operational receiver precluded release
of new products in fiscal 2000.

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.


                                       18
<PAGE>   19
         In August 1997, the Company completed a private placement of 500 shares
of Series C Convertible Preferred Stock providing aggregate proceeds of $5.0
million. A portion of the shares were converted by the holders and on September
18, 1998, the Company redeemed all 237 outstanding shares of the Series C
Convertible Preferred Stock. The Company paid $2.23 million in cash, issued $1.0
million in subordinated promissory notes and warrants to purchase 300,000 shares
of Common Stock to the holders of the Series C Convertible Preferred Stock in
connection with the redemption.

         To address the Company's working capital needs, on September 17, 1998,
the Company raised an aggregate of $4.38 million through the issuance of shares
of its Common Stock and subordinated notes to several private investors.

         In January 1999, the Company completed a private placement of 1,200
units, each unit consisting of one share of series D convertible preferred stock
and 2,000 warrants exercisable into shares of the Company's common stock. The
Company raised $1.8 million, less fees and expenses incurred in connection with
the private placement.

         In February 1999, the Company completed a private placement of 1,250
units, each unit consisting of one share of series E preferred stock and 5,000
warrants into shares of common stock. The terms of the series E preferred stock
were identical to the terms of the series D preferred stock. In connection with
this private placement, the Company raised $3.7 million in cash and retired $1
million of debt, which was exchanged, for series E preferred stock.

         On August 20, 1999, at the request of Imperial Bank, the primary lender
to the Company, the Court appointed an operational receiver for the Company. On
August 23, 1999, the operational receiver took control of the day-to-day
operations of the Company. Through further equity infusion into the Company,
primarily in the form of the exercise of warrants to purchase the common stock
of the Company, operations continued during fiscal 2000. On June 21, 2000, the
Court dismissed the litigation between the Company and Imperial Bank and
relieved the operational receiver of his responsibilities, thereby returning
control of the Company to its management.

         While these financings served to improve the Company's working capital
position when completed, the Company needs to raise additional funds to operate
its business effectively. On July 12, 2000, the Company announced it had signed
an agreement for a financing facility providing commitments to purchase up to
$36 million of its common shares over the next two years after the effective
date of the registration statement, September 25, 2000. As of October 6, 2000,
the Company has received $750,000 in funding pursuant to the agreement.

         The Company has engaged a financial advisor to assist with additional
fund raising efforts. 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. The Company's
inability to fund its capital requirements would have a material adverse effect
on the Company. Also see "Item 1. Business--Risks and Uncertainties--Future
Capital Needs."

         The Company has received and anticipates that it will continue to
receive some of its cash from collections of accounts receivable from its
customers, distributors, and OEMs based upon contracts that have been recently
negotiated. However, any failure of the Company's customers, distributors or
OEMs to pay, or any significant delay in the payment of, a material portion of
amounts owing to the Company could have a material adverse effect on the
Company.

         As of June 30, 2000, the Company had negative working capital of
approximately $14.5 million, an increase of approximately $2.0 million as
compared to June 30, 1999. The increase is primarily due the reduction of debt
(both bank notes and short-term debt) during fiscal 2000 compared to fiscal
1999.

         Net cash used in operating activities was $6.7 million in fiscal 2000
compared to $7.1 million during fiscal 1999. The decrease was due primarily to a
lack of operating capital. In fiscal 1999, the Company used approximately the
same operating cash during the year ended June 30, 1998.

         Net cash used in investing activities was $23 thousand in fiscal 2000 a
decrease of $3.4 million compared to fiscal 1999. The decrease is due primarily
to the overall reduction of investing activities due to the absence, during
fiscal 2000, of sufficient operating capital. Net cash used in investing
activities decreased approximately 10% to $3.4 million during fiscal 1999 from
$3.8 million during the year ended June 30, 1998. The decrease in fiscal 1999
from 1998 was primarily attributable to the Company's decrease in expenditures
for prepaid licenses and capital expenditures.


                                       19
<PAGE>   20
         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
June 30, 2000, was approximately $538,000.

         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 Company anticipates
that its capital requirements will increase in future periods as it continues to
develop new products and increases its sales and marketing efforts. The report
of the Company's independent auditors accompanying the Company's June 30, 2000
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.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.




                                       20
<PAGE>   21
ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                                         Page
<S>                                                                      <C>
Report of independent accountants                                         22

Consolidated balance sheets as of June 30, 2000 and 1999                  23

Consolidated statements of operations for the years ended
     June 30, 2000, 1999, and 1998                                        24

Consolidated statements of shareholders' equity for the years ended
     June 30, 2000, 1999, and 1998                                        25

Consolidated statements of cash flows for the years ended
     June 30, 2000, 1999, and 1998                                        26

Notes to consolidated financial statements                                27
</TABLE>




                                       21
<PAGE>   22
REPORT OF INDEPENDENT ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF IMAGING TECHNOLOGIES CORPORATION

We have audited the consolidated balance sheets of Imaging Technologies
Corporation and its subsidiaries as of June 30, 2000, and 1999 and the related
consolidated statements of operations, shareholders' net capital deficiency, and
cash flows for each of the three years in the period ended June 30, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Imaging
Technologies Corporation and its subsidiaries as of June 30, 2000 and 1999, and
the results of their operations and their cash flows for each of the three years
in the period ended June 30, 2000 in conformity with generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. Note 1 to the financial statements
describes various factors that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


BOROS & FARRINGTON APC
San Diego, California
October 10, 2000




                                       22
<PAGE>   23
                IMAGING TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             JUNE 30, 2000 AND 1999
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                 ASSETS

                                                                                  2000              1999
<S>                                                                           <C>               <C>
        Current assets
             Cash                                                             $    291          $     75
             Accounts receivable                                                   175             1,959
             Inventories                                                           203               552
             Prepaid expenses and other                                            333               577
                                                                              --------          --------
                  Total current assets                                           1,002             3,163

        Property and Equipment, net                                                531               986
        Capitalized software, net                                                   --             2,851
        Other                                                                      150               250
                                                                              --------          --------

                                                                              $  1,683          $  7,250
                                                                              ========          ========

                          LIABILITIES AND SHAREHOLDERS' NET CAPITAL DEFICIENCY

        Current liabilities
             Borrowings under bank notes payable                              $  5,765          $  6,469
             Short-term debt                                                     2,563             5,010
             Accounts payable                                                    5,378             5,532
             Accrued expenses                                                    1,828             2,671
                                                                              --------          --------
                  Total current liabilities                                     15,534            19,682
                                                                              --------          --------

        Commitments and contingencies (Note 9)

        Stockholders' net capital deficiency
             Series A preferred stock, $1,000 par value, 7,500 shares
                authorized, 420.5 shares issued and outstanding                    420               420
             Series D preferred stock, $2,000 stated value, 1,200
                shares authorized, 0 and 900 shares issued and
                outstanding                                                         --             1,800
             Series E preferred stock, $5,000 stated value, 1,250
                shares authorized, 0 and 931 shares issued and
                outstanding                                                         --             4,655
             Common stock, $0.005 par value, 200,000,000 shares
                Authorized; 101,481,876 shares issued and outstanding              507               110
             Paid-in capital                                                    58,641            39,804
             Shareholder loans                                                    (105)             (105)
             Accumulated deficit                                               (73,314)          (59,116)
                                                                              --------          --------
                  Total shareholders' net capital deficiency                   (13,851)          (12,432)
                                                                              --------          --------
                                                                              $  1,683          $  7,250
                                                                              ========          ========
</TABLE>

                 See Notes to Consolidated Financial Statements.



                                       23
<PAGE>   24
                IMAGING TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    YEARS ENDED JUNE 30, 2000, 1999, AND 1998
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                     2000              1999              1998
<S>                                                              <C>               <C>               <C>
Revenues
     Sales of products                                           $  1,634          $ 16,417          $ 30,740
     Engineering fees                                                 125               150             2,327
     Licenses and royalties                                           788               730             1,350
                                                                 --------          --------          --------
                                                                    2,547            17,297            34,417
                                                                 --------          --------          --------
Costs and expenses
     Cost of products sold                                          2,346            14,064            22,536
     Selling, general, and administrative                           7,780            13,707            10,269
     Cost of engineering fees, research, and development            2,054             2,183             2,475
     Amortization of capitalized software costs                     2,851             3,951                --
     Special charges
        Charge for uncollectible receivables                           --             2,233             5,157
        Disposal of subsidiaries                                       --             1,087                --
        Restructuring costs                                            --             2,948             3,784
                                                                 --------          --------          --------
                                                                   15,031            40,173            44,221
                                                                 --------          --------          --------

Loss from operations                                              (12,484)          (22,876)           (9,804)
                                                                 --------          --------          --------

Other income (expense):
     Interest and finance costs, net                               (1,853)           (1,989)             (341)
     Other                                                            139                --                --
                                                                 --------          --------          --------
                                                                   (1,714)           (1,989)             (341)
                                                                 --------          --------          --------

Loss before income taxes                                          (14,198)          (24,865)          (10,145)

Income tax benefit (expense)                                           --              (264)              (18)
                                                                 --------          --------          --------

Net loss                                                         $(14,198)         $(25,129)         $(10,163)
                                                                 ========          ========          ========

Earnings (loss) per common share
     Basic                                                       $  (0.20)         $  (1.62)         $  (0.90)
                                                                 ========          ========          ========
     Diluted                                                     $  (0.20)         $  (1.62)         $  (0.90)
                                                                 ========          ========          ========

Weighted average common shares                                     70,269            15,498            11,295
                                                                 ========          ========          ========
Weighted average common shares - assuming dilution                 70,269            15,498            11,295
                                                                 ========          ========          ========
</TABLE>

                 See Notes to Consolidated Financial Statements.


                                       24
<PAGE>   25


              IMAGING TECHNOLOGIES CORPORATION AND SUBSIDIARIES
       CONSOLIDATED STATEMENTS OF SHAREHOLDERS' NET CAPITAL DEFICIENCY
                  YEARS ENDED JUNE 30, 2000, 1999, AND 1998

                      (in thousands, except share data)


<TABLE>
<CAPTION>
                                   SERIES A       SERIES C         SERIES D        SERIES E
                                  PREFERRED      PREFERRED        PREFERRED        PREFERRED          COMMON         PAID-IN
                                    STOCK          STOCK            STOCK            STOCK             STOCK          CAPITAL

<S>                              <C>             <C>              <C>              <C>              <C>             <C>
BALANCE, JUNE 30, 1997           $    420        $     --         $     --         $     --         $     53        $ 31,368
Issuance of preferred stock
     (500 shares)                      --           5,000               --               --               --            (211)

Issuance of common stock               --              --               --               --               --              --

 Conversion of preferred stock
     (958,598 shares)                  --          (2,640)              --               --                5           2,617
  Conversion of note payable
     (64,516 shares)                   --              --               --               --               --             100
  Business acquisitions
     (240,000 shares)                  --              --               --               --                1             349
  Exercise of options
    and warrants
     (554,530 shares)                  --              --               --               --                3           1,636
Collection of
 shareholder loans                     --              --               --               --               --              --

Net loss                               --              --               --               --               --              --
                                 --------        --------         --------         --------         --------        --------
BALANCE, JUNE 30, 1998                420           2,360               --               --               62          35,859


Redemption of preferred stock          --          (2,360)              --               --               --            (870)

Issuance of preferred stock
    (900 shares)                       --              --            1,800               --               --              --
 Issuance of preferred stock
    (931 shares)                       --              --               --            4,655               --              --

Issuance of common stock

  Cash (4,105,800)                     --              --               --               --               21           1,922
  Services (3,167,500 shares)          --              --               --               --               16           1,854

  Conversion of note payable
     (2,000,000 shares)                --              --               --               --               10             940
  Exercise of options and
    warrants
     (270,660 shares)                  --              --               --               --                1             269
Stock issuance costs                   --              --               --               --               --            (170)
Collection of
  shareholder loans                    --              --               --               --               --              --
Net loss                               --              --               --               --               --              --
                                 --------        --------         --------         --------         --------        --------
BALANCE, JUNE 30, 1999                420              --            1,800            4,655              110          39,804

Conversion of Series D
and E preferred stock
 (900 and 931 shares)                  --              --           (1,800)          (4,655)             296           6,159
Issuance of common stock

  Cash (15,686,366)                    --              --               --               --               78           7,898
  Services (2,445,221 shares)          --              --               --               --               12           2,040

  Conversion of liabilities
     (2,259,836 shares)                --              --               --               --               11           2,740
Net loss                               --              --               --               --               --              --
                                 --------        --------         --------         --------         --------        --------
BALANCE, JUNE 30, 2000           $    420        $     --         $     --         $     --         $    507        $ 58,641
                                 ========         ========         ========         ========        ========         ========
</TABLE>


<TABLE>
<CAPTION>

                                                    ACCUM.
                                      LOANS         DEFICIT          TOTAL

<S>                               <C>              <C>              <C>
BALANCE, JUNE 30, 1997            $   (140)        $(23,824)        $  7,877
Issuance of preferred stock
     (500 shares)                       --               --            4,789

Issuance of common stock

 Conversion of preferred stock
     (958,598 shares)                   --               --              (18)
  Conversion of note payable
     (64,516 shares)                    --               --              100
  Business acquisitions
     (240,000 shares)                   --               --              350
  Exercise of options
    and warrants
     (554,530 shares)                  (53)              --            1,586
Collection of
  shareholder loans                     83                                83

Net loss                                --          (10,163)         (10,163)
                                  --------         --------         --------
BALANCE, JUNE 30, 1998                (110)         (33,987)           4,604


Redemption of preferred stock           --               --           (3,230)

Issuance of preferred stock
    (900 shares)                        --               --            1,800
 Issuance of preferred stock
    (931 shares)                        --               --            4,655

Issuance of common stock
  Cash (4,105,800)                      --               --            1,943
  Services (3,167,500 shares)           --               --            1,870

  Conversion of note payable
     (2,000,000 shares)                 --               --              950
  Exercise of options and
    warrants
     (270,660 shares)                   --               --              270
Stock issuance costs                    --               --             (170)
Collection of
shareholder loans                        5               --                5
Net loss                                --          (25,129)         (25,129)
                                  --------         --------         --------
BALANCE, JUNE 30, 1999                (105)         (59,116)         (12,432)

Conversion of Series D
and E preferred stock
 (900 and 931 shares)                   --               --               --
Issuance of common stock
  Cash (15,686,366)                     --               --            7,976
  Services (2,445,221 shares)           --               --            2,052
  Conversion of liabilities
     (2,259,836 shares)                 --               --            2,751
Net loss                                --          (14,198)         (14,198)
                                  --------         --------         --------
BALANCE, JUNE 30, 2000            $   (105)        $(73,314)        $(13,851)
                                   ========         ========         =======
</TABLE>



                                       25
<PAGE>   26



                IMAGING TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASHFLOWS
                    YEARS ENDED JUNE 30, 2000, 1999, AND 1998

                        (in thousands, except share data)


<TABLE>
<CAPTION>
                                                                                2000                   1999                 1998
                                                                                ----                   ----                 ----
<S>                                                                          <C>                    <C>                    <C>
Cash flows from operating activities
 Net loss                                                                    $(14,198)              $(25,129)              $(10,163)

 Adjustments to reconcile net loss to net
   cash from operating activities
    Non-cash special charges                                                       --                  3,440                  7,073
    Depreciation and amortization                                                 478                    761                    657
    Amortization of capitalized software                                        2,851                  3,951                     --
    Stock issued for services                                                   2,052                  1,870                     --
    Provision for income taxes                                                     --                    250                     --
    Changes in operating assets and liabilities

     Accounts receivable                                                        1,784                    (59)                  (973)
     Inventories                                                                  349                  5,197                 (3,263)
     Prepaid expenses and other                                                   344                    626                   (413)

     Accounts payable and accrued expenses                                       (347)                 2,043                    338

     Deferred revenue                                                              --                     --                   (356)
                                                                             --------               --------               --------
       Net cash from  operating activities                                     (6,687)                (7,050)                (7,100)
                                                                             --------               --------               --------
Cash flows from investing activities

   Prepaid licenses                                                                --                    (34)                  (274)
   Capitalized software                                                            --                 (3,147)                (3,106)
   Capital expenditures                                                           (23)                  (222)                  (413)
                                                                             --------               --------               --------
      Net cash from  investing activities                                         (23)                (3,403)                (3,793)
                                                                             --------               --------               --------
Cash flows from financing activities

   Cash acquired from business acquisitions                                        --                     --                     40
   Net borrowings under bank notes payable                                       (704)                (1,234)                 6,415
   Issuance of other notes payable                                                 --                  5,860                  1,000
   Net proceeds from issuance of common stock                                   7,976                  2,213                  1,586
   Net proceeds from issuance of preferred stock                                   --                  5,190                  5,000
   Stock issuance costs                                                            --                   (170)                  (229)
   Redemption of preferred stock                                                   --                 (3,230)                    --
   Collection of shareholder loans                                                 --                      5                     83
   Repayment of notes payable                                                    (346)                (1,129)                  (234)
                                                                             --------               --------               --------
       Net cash from financing activities                                       6,926                  7,505                 13,661
                                                                             --------               --------               --------

Net increase (decrease) in cash                                                   216                 (2,948)                 2,768
Cash, beginning of year                                                            75                  3,023                    255
                                                                             --------               --------               --------
Cash, end of year                                                            $    291               $     75               $  3,023
                                                                             ========               ========               ========
</TABLE>

                 See Notes to Consolidated Financial Statements.




                                       26
<PAGE>   27



                IMAGING TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

           (Dollar amounts expressed in thousands, except share data)

NOTE 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

OPERATIONS

Imaging Technologies Corporation, formerly Personal Computer Products, Inc., a
Delaware corporation, and its subsidiaries ("ITEC" or the "Company") (1) develop
and license laser printer technology; (2) manufacture, market, and distribute
laser printer controllers and accessories; (3) market and distribute
internationally a variety of personal computer accessory products; and (4)
market and distribute high resolution imaging and color digital proofing
products.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of ITEC and its
active subsidiaries, PCPI Technologies, Inc. ("PCPI"), NewGen Imaging
Systems, Inc. ("NewGen"), and Color Solutions, Inc. ("CSI"). All significant
inter-company accounts and transactions have been eliminated.

GOING CONCERN CONSIDERATIONS.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. At June 30, 2000, and for the year
then ended, the Company experienced a net loss and has deficiencies in working
capital and net worth which 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 is in the process of reestablishing management control of its
operations and resuming its strategic plan. In order to succeed, however,
Company must obtain additional funds to provide adequate working capital and
finance operations. To address the Company's working capital needs, on July 12,
2000, it announced an agreement for a financing facility providing commitments,
under specific conditions, to purchase up to $36 million of its common shares
over the two years after the effective date of a registration statement filed
September 25, 2000 with the Securities and Exchange Commission. The Company has
also

                                       27
<PAGE>   28

engaged a financial advisor to assist with additional fund raising efforts and
to help identify merger and acquisition candidates. There can be no assurance,
however, that the Company will be able to comply with the Imperial Bank
settlement agreement, meet the conditions under the financing facility, or
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. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.


ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results may differ from those estimates.

INVENTORIES

Inventories are valued at the lower of cost or market; cost being determined by
the first-in, first-out method.

PREPAID LICENSES

Up-front payments for licenses of software are recorded as prepaid licenses.
Amortization of prepaid licenses is recorded on a straight-line basis over
estimated useful lives generally ranging from three to five years, commencing
from the date the underlying technology is available for use by the Company. At
June 30, 2000, the Company had no prepaid licenses.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation, including
amortization of assets recorded under capitalized leases, is generally computed
on a straight-line basis over the estimated useful lives of assets ranging from
three to seven years. Amortization of leasehold improvements is provided over
the initial term of the lease, on a straight-line basis. Maintenance, repairs,
and minor renewals and betterments are charged to expense.

REVENUE RECOGNITION

Revenue from the sale of products is recognized as of the date shipments are
made to customers. Revenue from long-term software and technology license fees
is recognized once the collection is made, or is "probable" as prescribed in
AICPA Statement of Position 91-1 "Software Revenue Recognition," and there are
no further contractual obligations under the license agreement. Royalties are
recognized upon the sale of such products by the licensee.

Contract revenues, including the guaranteed portion of license fees, are
recognized based on the percentage-of-completion method, measured by the
percentage of costs incurred to date to estimated total costs for each contract.
Upon cancellation or termination of a contract, the customer is billed for the
entire guaranteed amount of contract revenue, and a provision for loss is
established based on management's estimate of collectability. The Company
provides for any anticipated losses on such contracts in the period in which
such losses are first determinable. Unbilled receivables arise when the revenue
recognized on a contract exceeds billing due to timing differences related to
billing milestones as specified in the contracts. Deferred revenue represents
billings in excess of costs and earned revenues on such contracts.

ADVERTISING COSTS

The Company expenses advertising and promotion costs as incurred. During fiscal
2000, 1999, and 1998, the Company incurred advertising and promotion costs of
approximately $243, $660, and $1,056 thousand, respectively.

RESEARCH AND DEVELOPMENT

Research and development costs are charged to expense as incurred.




                                       28
<PAGE>   29



CAPITALIZED SOFTWARE AND DEVELOPMENT COSTS

The Company has developed software technology and capitalized certain qualifying
costs pursuant to the provisions of Statement of Financial Accounting Standards
No. 86 "Accounting for Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed". The capitalized software development costs are related to
software contained in laser printer controllers. Capitalized software includes
emulations of existing software printer control languages currently in the
marketplace, as well as software included in laser printer controllers for
existing laser printers. The Company's software emulation products are generally
offered in different combinations that are designed to provide more value than
its competitors' products. Its printer controller products are generally
designed to allow existing laser printers to operate at higher performance
levels than originally configured. While the Company believes its new products
will be accepted in the marketplace and that it will recover its investment in
capitalized software, the ultimate realization of this investment is dependent
on such acceptance and the abilities of the Company and/or OEM's to successfully
market these new products.

Costs incurred prior to the establishment of technological feasibility, or
subsequent to the release to customers, are expensed as incurred. Capitalized
software costs are amortized on a product-by-product basis. The annual
amortization is the greater of the amount computed using (a) the ratio that
current gross revenues for a product bear to the total of current and
anticipated future gross revenues for that product, or (b) the straight-line
method over the estimated economic life of the product, generally three years.
Amortization begins when the product is available for general release to
customers.

Due to the financial difficulties discussed above, the Company has been unable
to meet its sales goals and management cannot provide any assurance that the
Company can obtain the resources necessary to achieve future sales goals.
Accordingly, the unamortized balance of capitalized software costs was charged
to expense in fiscal 2000.

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        SHARES          PER-SHARE
                                           (LOSS)      (DENOMINATOR)        AMOUNT

                                        (NUMERATOR)
<S>                                     <C>            <C>               <C>
JUNE 30, 1998
    Net loss                            $(10,163)
       Preferred dividends                   (21)
                                        --------
     Basic and diluted EPS              $(10,184)          11,295        $   (0.90)
                                        ========                         =========
JUNE 30, 1999
    Net loss                            $(25,129)
       Preferred dividends                   (21)
                                        --------
     Basic and diluted EPS              $(25,150)          15,498        $   (1.62)
                                        ========                         =========
JUNE 30, 2000
     Net loss                           $(14,198)
       Preferred dividends                   (21)
                                        --------
    Basic and diluted EPS               $(14,219)          70,269        $   (0.20)
                                        ========                         =========

</TABLE>



STOCK ISSUANCE COSTS

Stock issuance costs including distribution fees, due diligence fees,
wholesaling costs, legal and accounting fees, and printing are capitalized
before the sale of the related stock and then charged against gross proceeds
when the stock is sold.

DEBT ISSUANCE COSTS

Debt issuance costs are capitalized and amortization is provided over the life
of the related debt using the straight-line method.

STOCK-BASED COMPENSATION


                                       29
<PAGE>   30


In accordance with the provisions of Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation (FAS 123"), which the Company
adopted in fiscal 1997, the Company has elected to follow Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and
related interpretations in accounting for its employee stock option plans. Under
APB 25, if the exercise price of the Company's employee stock options equals or
exceeds the fair value of the underlying stock on the date of grant, no
compensation is recognized. Information regarding the Company's pro forma
disclosure of stock-based compensation pursuant to FAS 123 may be found in Note
8.

FOREIGN CURRENCY TRANSLATION

The Company translates the assets and liabilities of its foreign sales
subsidiaries at the year-end exchange rates. Any gains and losses from the
translations are credited or charged to "accumulated translation adjustment" in
shareholders' equity. Such amounts were immaterial in fiscal 2000, 1999, and
1998.

INCOME TAXES

The Company recognizes a liability or asset for the deferred tax consequences of
temporary differences between the tax bases of assets or liabilities and their
reported amounts in the financial statements. These temporary differences will
result in taxable or deductible amounts in future years when the reported
amounts of the assets or liabilities are recovered or settled. The deferred tax
assets are reviewed for recoverability and valuation allowances are provided, as
necessary.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107 "Disclosures about Fair
Value of Financial Instruments" requires the disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate that value. The carrying
value of the financial instruments on the consolidated balance sheets are
considered reasonable estimates of the fair value. RECLASSIFICATIONS Certain
prior year financial statement classifications have been reclassified to conform
with the current year's presentation.

NOTE 2. SPECIAL CHARGES

CHARGE FOR UNCOLLECTIBLE RECEIVABLES

In fiscal 1999, the Company took a charge for uncollectible receivables of
$2,233 thousand. The charge results primarily because certain distribution
channels have been closed to the Company due to its poor financial condition and
the Company has assumed higher credit risks. In addition, management believes
that the appointment of the operational receiver has had a negative impact on
the Company's ability to collect its receivables. In the fourth quarter of
fiscal 1998, the Company wrote-off contract and license receivables of $5,157
thousand that are due from OEMs and co-developers who have been adversely
affected by the downturn in the technology segment of the market and the
economic crisis in Asia. The following summarizes the nature and effect of these
write-offs.

AMT ACCEL UK, LTD. AMT is a European sales subsidiary formerly owned by
Singapore-based Lam Soon, manufacturer of dot matrix, laser and inkjet printer
and plotters for specialized application, printer manufacturer headquartered in
Singapore. The Company sold to AMT an exclusive license to distribute in the
United Kingdom and Europe certain Company products in return for guaranteed
payments of $1.25 million. AMT and its parent company began experiencing
financial difficulties and were unable to meet their obligations to the Company
under the licensing agreement. Effective May 31, 1998, the Company reached a
settlement with the parent whereby the Company acquired the net assets of AMT
totaling $359 thousand and released AMT's parent from its contract obligations,
resulting in a write-off of $891 thousand.

SOFTWARE TECHNOLOGY, INC. STI is a Korean corporation who manufactures and
distributes computer related products in Asia. STI has been a longstanding
customer of the Company and has acted as co-developer and representative on
various projects. STI owes the Company $954 thousand, but it is unable to pay at
this time due to the sharp decline in the Korean economy, which has had a
significant adverse impact on its operations and financial condition. As a
result, the Company wrote-off in the fourth quarter the amounts due from STI.

MITA DIGITAL DESIGN, INC. AND NIPPO LTD. The Company developed for Mita a
controller board that was to be used by Mita in a new multifunctional product.
Mita has refused to pay amounts totaling $954 thousand under the agreement.
According to a recent press release, Mita's parent company in Japan has filed
for

                                       30
<PAGE>   31

protection under bankruptcy laws. Based on this announcement, the Company
believes that Mita does not currently have sufficient resources to complete and
market the new product and is therefor seeking to avoid its contract
obligations. The company has entered into a settlement agreement with Mita which
the Company currently values at $328 thousand. As a result, the remaining
balance of $626 was written-off in the fourth quarter. Nippo is a Japanese
corporation who acted as a co-developer on the Mita project in exchange for a
share of product royalties and distribution rights. Nippo owes the Company $964
thousand under the co-development agreement, but it has refused to pay and has
abandoned the laser printer business altogether. As a result, the Company
wrote-off the receivable in the fourth quarter.

MINOLTA COMPANY LTD. The Company had a contract with Minolta, a Japanese
corporation, to develop a controller for a color laser printer product to be
manufactured and sold by Minolta. Minolta terminated the contract and is
disputing contract receivables of $260 thousand. In the fourth quarter, the
Company wrote-off the amount due from Minolta.

TOHOKU RICOH CO., LTD. Tohoku Ricoh is a Japanese corporation that entered into
a technology development agreement with the Company providing for guaranteed
payments of $674 thousand. Tohoku Ricoh has cancelled the contract and is
disputing the amount of the guarantee. The Company believes that it is owed the
full guaranteed contract amount and is pursuing collection. However, as a result
of this dispute, the Company wrote-off in the fourth quarter the amount due from
Tohoku Ricoh.

OTHER CONTRACT RECEIVABLES. In the fourth quarter, the Company wrote-off
additional contract receivables totaling $788 thousand that are past due.


RESTRUCTURING OF OPERATIONS

In fiscal 1999, the Company incurred additional charges relating to its
restructuring plan including $1,367 thousand relating to personnel reduction
costs, $1,207 thousand relating to the write-down of inventory, licenses, and
other assets that are not central to the Company's core business; and $374
thousand relating to the consolidation of facilities. In the fourth quarter of
fiscal 1998, the Company began to implement a restructuring plan aimed at
streamlining operations and reducing costs. The restructuring plan seeks to
combine and coordinate the efforts of the Company's subsidiaries, eliminate
redundant functions, promote operating efficiencies, and focus resources on the
new product lines. These actions resulted in a net charge of $3,784 thousand
including $1,692 thousand relating to redundant compensation costs; $1,480
thousand relating to the write-down of inventory, licenses, and other assets
that are not central to the Company's core business; and $296 thousand relating
to the consolidation of facilities.

NOTE 3. COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS

The following summarizes certain financial statement captions at June 30:

<TABLE>
<CAPTION>
                                                                  2000           1999
<S>                                                             <C>             <C>
Accounts receivable
          Trade                                                 $   334         $ 4,211
          Less allowance for doubtful accounts                     (159)         (2,252)
                                                                -------         -------
                                                                $   175         $ 1,959
                                                                =======         =======


Inventories
          Materials and supplies                                $    87         $    50
          Finished goods                                            116             502
                                                                -------         -------
                                                                $   203         $   552
                                                                =======         =======

Property and equipment
          Computers and other equipment                         $ 2,366         $ 2,416
          Office furniture and fixtures                             510             496
          Leasehold improvements                                    141             141
                                                                -------         -------
                                                                  3,017           3,053
          Less accumulated depreciation and amortization         (2,486)         (2,067)
                                                                -------         -------
                                                                $   531         $   986
                                                                =======         =======
Accrued liabilities
          Compensation and vacation                             $   631         $   791
          Interest                                                1,016             618
          Severance pay                                              --             650
          Other                                                     181             612
                                                                -------         -------
                                                                $ 1,828         $ 2,671
                                                                =======         =======
</TABLE>





                                       31
<PAGE>   32



NOTE 4. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS

<TABLE>
<CAPTION>
                                                             2000           1999          1998
<S>                                                        <C>           <C>            <C>
Non-cash financing activities
  Conversion of preferred stock into common stock         $ 6,455        $    --        $ 2,640
  Conversion of notes payable into preferred stock             --          1,000             --
  Conversion of notes payable into common stock             2,101            950            100
  Conversion of accounts payable and accrued
    liabilities into preferred stock                          650            265             --
  Conversion of accounts payable and accrued
    liabilities into notes payable                             --             --            987
  Stock issued for loans                                       --             --             53
  Fixed assets acquired in business combinations
     Accounts receivable                                       --             --          1,489
     Inventories                                               --             --          1,923
     Prepaid and other                                         --             --             51
     Property and equipment                                    --             --             97
     Borrowings under bank line of credit                      --             --           (333)
     Accounts payable and accrued liabilities                  --             --         (2,639)
Supplemental disclosure of cash flow information
     Cash paid during the year for interest                 1,455          1,371            370
     Cash paid during the year for income taxes                 5             23              5
</TABLE>


NOTE 5. SHORT-TERM DEBT

PAYABLE TO BANKS

On June 6, 2000, the Company entered into a settlement agreement with Imperial
Bank ("Imperial"). Under this agreement, the Company shall pay $150,000 per
month until the balance is paid in full. Due to the uncertainty regarding the
Company's ability to meet its obligations under this agreement as discussed
above under going concern considerations, the debt has been classified as
current. The debt is collateralized by substantially all assets of the Company.

The Company owes Export-Import Bank ("Ex-Im") $1,680 thousand plus interest
under a Working Capital Guarantee Facility whereby Imperial made a demand upon
Ex-Im who responded by making a claim payment to Imperial. Ex-Im had made a
demand for immediate payment.

NOTES PAYABLE

The following summarizes short-term notes payable at June 30:

<TABLE>
<CAPTION>
                                                          2000           1999

<S>                                                      <C>           <C>
Payable to suppliers, 7-8%                               $   --        $  448
Advances from stockholders, non interest bearing          1,063         1,387
Payable to stockholders, 16%, convertible into common
  stock at a price of $2.025 per share                       --           675
Payable to stockholders, 16%                                 --         1,000
Payable to a former director, 16%                         1,500         1,500
                                                         ------        ------
                                                         $2,563        $5,010
                                                         ======        ======
</TABLE>


NOTE 6. SHAREHOLDERS' EQUITY

5% SERIES A CONVERTIBLE PREFERRED STOCK

Holders of the 5% convertible preferred stock ("Series A") are entitled to
receive, when and as declared by the Board of Directors, but only out of amounts
legally available for the payment thereof, cumulative cash dividends at the
annual rate of $50.00 per share, payable semi-annually.

The 5% convertible preferred stock is convertible, at any time, into shares of
the Company's common stock, at a price of $17.50 per common share. This
conversion price is subject to certain anti-dilution adjustments, in the event
of certain future stock splits or dividends, mergers, consolidations or other
similar events. In addition, the Company shall reserve, and keep reserved, out
of its authorized but un-issued shares of common stock, sufficient shares to
effect the conversion of all shares of the 5% convertible preferred stock.

In the event of any involuntary or voluntary liquidation, dissolution, or
winding up of the affairs of the Company, the 5% convertible preferred
stockholders shall be entitled to receive $1,000 per share, together with
accrued dividends, to the date of distribution or payment, whether or not earned
or declared.

The 5% convertible preferred stock is callable, at the Company's option, at call
prices ranging from $1,050 to $1,100 per share. No call on the 5% convertible
preferred stock was made during fiscal 2000, 1999, or

                                       32
<PAGE>   33

1998. As of June 30, 2000, the accumulated dividend in arrears was approximately
$538,000 thousand on the Series A.

SERIES C REDEEMABLE CONVERTIBLE PREFERRED STOCK

On August 21, 1997, the Company closed a private placement of its newly
designated Series C Redeemable Convertible Preferred Stock ("Series C Shares")
in reliance upon the exemption from securities registration afforded by Rule 506
of Regulation D ("Regulation D") as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act"). In the initial closing of $5 million, ITEC issued 500 Series C
Shares and warrants to purchase up to 200,000 shares of the Company's common
stock. After satisfying certain holding periods, each of the newly issued Series
C Shares is convertible, at the option of its holder, into shares of Common
Stock of the Company based upon a conversion price equal to $9.00 or if lower,
the lowest closing market price of the Company's Common Stock during the 7
trading days prior to the conversion date. The warrants have an exercise price
of $7.50 per share. Subject to certain additional conditions, the Company had
the right to call for a second round of financing up to an aggregate amount of
$5 million, beginning on and including January 1, 1998 and ending June 30, 1998.
This additional round of financing would have involved the issuance of up to an
additional 500 Series C Shares and warrants for the purchase of up to 200,000
shares of Common Stock. Additionally, purchasers of the Series C Shares were
entitled to purchase additional Series C Shares up to 40% of the number of
Series C Shares held by each investor on December 31, 1997.

During fiscal 1998, 264 shares of Series C Shares were converted into 958,598
shares of common stock. On September 25, 1998, the Company redeemed all
outstanding shares of the Series C Convertible Preferred Stock.

SERIES D CONVERTIBLE PREFERRED STOCK

On January 13, 1999, the Company entered into a Securities Purchase Agreement
(the "Series D Agreement") with certain investors contemplating a potential
funding of up to $2.4 million (the "Series D Funding"). The Series D Funding
provides for the private placement by the Company of up to 1,200 units (the
"Units"), each Unit consisting of (i) one share of Series D Convertible
Preferred Stock (the "Series D Stock") and (ii) 2,000 warrants (the "Series D
Warrants" and, collectively, with the Series D Stock, the "Series D Securities")
exercisable for shares of Common Stock. Pursuant to the Series D Agreement, the
Company issued 900 units during fiscal 1999 for consideration totaling
$1,800,000. The Series D Stock is convertible into shares of the Company's
Common Stock at the lesser of (A) $.50 and (B) an amount equal to 70 percent of
the closing bid price per share of Common Stock on the Nasdaq SmallCap Market
(the "Series D Closing Price") for the three trading days having the lowest
closing price during the 30 trading days prior to the date on which the investor
gives to the Company a notice of conversion of Series D Stock; except that all
Series D Stock converted prior to February 26, 1999 would be converted at $.50.
However, each of the investors has agreed that in no event shall it be permitted
to convert any shares of Series D Stock in excess of the number of such shares
upon the conversion of which, the sum of (i) the number of shares of Common
Stock owned by such investor (other than shares of Common Stock issuable upon
conversion of Series D Stock or upon exercise of Series D Warrants) plus (ii)
the number of shares of Common Stock issuable upon conversion of such shares of
Series D Preferred Stock or exercise of Series D Warrants, would be equal to or
exceed 9.999 percent of the number of shares of Common Stock then issued and
outstanding, including the shares that would be issuable upon conversion of the
Series D Stock or exercise of Series D Warrants held by such investor. Each
investor in Series D Stock shall have the right to vote, except as otherwise
required by Delaware law, on all matters on which holders of Common Stock have
the right to vote on with each such investor having the right to cast one vote
for each whole share of Common Stock into which each share of the Series D
Preferred Stock held by such investor is convertible immediately prior to the
record date for the determination of stockholders entitled to vote; provided,
however, that in no event shall a holder be entitled to vote more than 9.999
percent of the number of shares entitled to be voted on any matter. Series D
Warrants are immediately exercisable upon issuance at an exercise price of $.875
per share and expire five years after the date of their issuance. In fiscal
2000, the issued and outstanding shares of Series D Stock was converted into
19,812,410 shares of common stock.

SERIES E CONVERTIBLE PREFERRED STOCK

In fiscal 1999, the Company entered into a Securities Purchase Agreement (the
"Series E Agreement") and an Exchange Agreement (the "Exchange Agreement")
(together the "Series E Funding") with certain investors (including one of whom
is a director of the Company) that provided funding and exchange of indebtedness
of $4,655,000. The Series E Funding provided for the private placement by the
Company of up to 1,250 units (the "Units"), each Unit consisting of (i) one
share of Series E Convertible Preferred Stock (the "Series E Stock") and (ii)
5,000 warrants (the "Series E Warrants" and, collectively, with the Series E


                                       33
<PAGE>   34

Stock, the "Series E Securities") exercisable for shares of Common Stock. The
Series E Stock is convertible into shares of the Company's Common Stock at the
lesser of (A) $.50 and (B) an amount equal to 70 percent of the closing bid
price per share of Common Stock on the Nasdaq SmallCap Market (the "Series E
Closing Price") for the three trading days having the lowest closing price
during the 30 trading days prior to the date on which the applicable investor
gives to the Company notice of conversion of Series E Stock; except that all
Series E Stock converted prior to February 26, 1999 would be converted at $.50.
Each investor in Series E Stock shall have the right to vote, except as
otherwise required by Delaware law, on all matters on which holders of Common
Stock have the right to vote on with each such investor having the right to cast
one vote for each whole share of Common Stock into which each share of the
Series E Preferred Stock held by such investor is convertible immediately prior
to the record date for the determination of stockholders entitled to vote. The
Series E Warrants are immediately exercisable upon issuance at an exercise price
of $.875 per share and expire five years after their date of issuance. In fiscal
2000, the issued and outstanding shares of Series E Stock was converted into
33,841,035 shares of common stock.


COMMON STOCK WARRANTS

The Company, from time-to-time, grants warrants to employees, directors, outside
consultants and other key persons, to purchase shares of the Company's common
stock, at an exercise price equal to no less than the fair market value of such
stock on the date of grant. The terms and vesting of these warrants are
determined by the Board of Directors on a case-by-case basis. The vesting period
is generally 48 months. However, during fiscal 2000 the Board has accelerated
vesting in order to induce the exercise of warrants and thereby raise needed
capital. Accordingly, all outstanding warrants have been treated as exercisable
at June 30, 2000. The following is a summary of the warrant activity:

<TABLE>
<CAPTION>
                                                               UNDERLYING
                                             PRICE PER        COMMON SHARES
                                               SHARE
<S>                                        <C>                <C>
   June 30, 1997                           $1.00 - $7.50        3,223
             Granted                       $2.25 - $7.50        1,930
             Exercised                     $1.00 - $5.50         (524)
             Canceled                      $4.00 - $6.25         (145)
                                                                -----
   June 30, 1998                           $1.00 - $7.50        4,484
             Granted                       $1.13 - $4.00        2,185
             Exercised                     $1.00 - $1.00         (271)
             Canceled                      $1.90 - $7.50         (658)
                                                                -----
   June 30, 1999                           $1.00 - $7.50        5,740
             Granted                       $0.40 - $0.91        8,773
             Exercised                     $0.87 - $2.03       (3,570)
             Canceled                      $1.00 - $6.25         (585)
                                                               ------
   June 30, 2000                           $0.41 - $7.50       10,358
                                                               ======

   Exercisable at June 30, 2000            $0.41 - $7.50        8,362
                                                               ======
</TABLE>

COMMON STOCK OPTION PLANS

In July 1984 ("1984 Plan"), November 1987 ("1988 Plan") and September, 1996
("1997 Plan"), the Company adopted stock option plans, under which incentive
stock options and non-qualified stock options may be granted to employees,
directors, and other key persons, to purchase shares of the Company's common
stock, at an exercise price equal to no less than the fair market value of such
stock on the date of grant, with such options exercisable in installments at
dates typically ranging from one to not more than ten years after the date of
grant.

Under the terms of the 1988 and 1997 Plans, loans may be made to option holders
which permit the option holders to pay the option price, upon exercise, in
installments. A total of 212,000 and 1,000,000 shares of common stock are
authorized for issuance under the 1988 and 1997 Plans, respectively.


                                       34
<PAGE>   35


No shares are available for future issuance under the 1984 Plan due to the
expiration of the plan during 1994. As of June 30, 1999, options to acquire
2,000 shares were outstanding under the 1984 Plan and options to acquire 670,000
shares remained available for grant under the 1988 and 1997 Plans.

In addition, the Board of Directors, outside the 1984, 1988 and 1997 Plans
("Outside Plan"), granted to employees, directors and other key persons of ITEC
or its subsidiaries options to purchase shares of the Company's common stock, at
an exercise price equal to no less than the fair market value of such stock on
the date of grant. Options are exercisable in installments at dates typically
ranging from one to not more than ten years after the date of grant.

In October 1995, the Board of Directors authorized the exercise price for
employee options and warrants to be reduced to the current market value.
Accordingly, the exercise price on an aggregate of 18,220 and 275,000 options
under the 1988 and Outside Plans, respectively, were canceled and reissued at an
exercise price of $1.00 per share.

COMMON STOCK PURCHASE PLAN

The 1997 Employee Stock Purchase Plan ("Purchase Plan") was approved by the
Company's shareholders in September 1996. The Purchase Plan permits employees to
purchase the Company's common stock at a 15% discounted price. The Purchase Plan
is designed to encourage and assist a broad spectrum of employees of the Company
to acquire an equity interest in the Company through the purchase of its common
stock. It is also intended to provide participating employees the tax benefits
under Section 421 of the Code. The Purchase Plan covers an aggregate of 500,000
shares of the Company's common stock.

All employees, including executive officers and directors who are employees,
customarily employed more than 20 hours per week and more than five months per
year by the Company are eligible to participate in the Purchase Plan on the
first enrollment date following employment. However, employees who hold,
directly or through options, five percent or more of the stock of the Company
are not eligible to participate.

Participants may elect to participate in the Purchase Plan by contributing up to
a maximum of 15 percent of their compensation, or such lesser percentage as the
Board may establish from time to time. Enrollment dates are the first trading
day of January, April, July and October or such other dates as may be
established by the Board from time to time. On the last trading day of each
December, March, June and September, or such other dates as may be established
by the Board from time to time, the Company will apply the funds then in each
participant's account to the purchase of shares. The cost of each share
purchased is 85 percent of the lower of the fair market value of common stock on
(i) the enrollment date or (ii) the purchase date. The length of the enrollment
period may not exceed a maximum of 24 months. No participant's right to acquire
shares may accrue at a rate exceeding $25,000 of fair market value of common
stock (determined as of the first trading day in an enrollment period) in any
calendar year. No shares have been issued under the Purchase Plan.

STOCK OPTION ACTIVITY

The following is a summary of the stock option activity:

<TABLE>
<CAPTION>
                                      1994, 1988 AND 1997 PLANS             OTHER OPTIONS
                                       PRICE           UNDERLYING         PRICE      UNDERLYING
                                        PER              COMMON            PER         COMMON
                                       SHARE             SHARES           SHARE        SHARES

<S>                                 <C>                <C>              <C>           <C>
JUNE 30, 1997                       $1.00 - $8.45           122         $   1.00        235
          Granted                   $1.95 - $4.88           373                          --
          Exercised                 $1.00 - $3.45            (5)        $   1.00        (37)
          Canceled                  $1.00 - $8.45           (94)        $   1.00         (3)
                                                          -----                        -----
JUNE 30, 1998                       $1.00 - $8.45           396         $   1.00        195
          Granted                   $0.91 - $1.90           619
          Exercised                                          --
          Canceled                  $1.06 - $6.90          (195)        $   1.00         (2)
                                                         ------                        -----
JUNE 30, 1999                       $0.91 - $8.45           820         $   1.00        193
          Granted                   $0.14 - $0.34         1,340
          Exercised                 $0.14 - $1.19        (1,265)        $   1.00       (138)
          Canceled                  $0.91 - $8.45          (660)        $   1.00        (55)
                                                         ------                        -----
JUNE 30, 2000                       $0.34 - $7.50           235                          --
                                                         ======                        =====
EXERCISABLE AT JUNE 30, 2000        $0.34 - $7.50           159         $   1.00         --
                                                         ======                        =====
</TABLE>






                                       35
<PAGE>   36



ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company applies Accounting Principles Board Opinion No. 25 and related
Interpretations in accounting for its stock option plans. The Company has opted
under Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123") to disclose its stock-based compensation
with no financial effect. The pro forma effects of applying SFAS 123 in this
initial phase-in period are not necessarily representative of the effects on
reported net income or loss for future years. Had compensation expense for the
Company's stock option plans been determined based upon the fair value at the
grant date for awards under these plans consistent with the methodology
prescribed under SFAS 123, the Company's pro forma net income (loss) and net
income (loss) per share would have been as follows for the years ended June 30:

<TABLE>
<CAPTION>
                                     2000        1999        1998
<S>                            <C>          <C>          <C>
Net income (loss)
          As reported          $ (14,198)   $ (25,129)   $ (10,163)
          Pro forma              (16,000)     (26,500)     (11,154)

Basic earnings (loss) per
share

          As reported          $   (0.20)   $   (1.62)   $ (0.90)
          Pro forma                (0.23)       (1.71)     (0.99)
</TABLE>

The weighted average fair value of the options granted during fiscal years 2000,
1999, and 1998 is estimated on the date of grant using the Black-Scholes option
pricing model. The weighted average fair values and weighted average assumptions
used in calculating the fair values were as follows for the years ended June 30:

<TABLE>
<CAPTION>
                                     2000        1999        1998
<S>                               <C>        <C>          <C>
Fair Value of options granted     $  2.50    $   2.50     $  2.37
Risk free interest rate                6%          6%          6%
Expected life (years)                   3           3           3
Expected volatility                   95%         95%         95%
Expected dividends                      -           -           -
</TABLE>

NOTE 7. SIGNIFICANT CUSTOMERS, REVENUE DATA, AND CONCENTRATION OF CREDIT RISK

As of and during the years ended June 30, 2000, 1999, and 1998 no customer
accounted for more than 10% of consolidated accounts receivable or total
consolidated revenues.

Sales to foreign customers are denominated in U.S. dollars. Revenues from
foreign customers as a percentage of total consolidated revenues were 2% in
2000, 16% in 1999, and 56% in fiscal 1998, as reflected in the following table
for the years ended June 30:

<TABLE>
<CAPTION>
                            2000                1999                1998
<S>                       <C>                 <C>                 <C>
Europe                    $    28             $   981             $13,912
Asia                           23               1,530               4,189
Others                         41                 326               1,223
                          -------             -------             -------
                          $    92             $ 2,837             $19,324
                          =======             =======             =======
</TABLE>



NOTE 8. INCOME TAXES

The Company's provision for income taxes is accounted for in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"). SFAS 109 requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under the SFAS 109 asset
and liability method, deferred tax assets and liabilities are determined based
upon the difference between the financial statement and tax bases of assets and
liabilities using the enacted tax rates in effect for the year in which the
differences are expected to reverse. A valuation allowance is then provided for
deferred tax assets which are more likely than not to not be realized.

The benefit (provision) for income taxes is as follows for the years ended June
30:

<TABLE>
<CAPTION>
                                        2000            1999             1998
<S>                                  <C>              <C>              <C>
Current - State                      $  --            $ (23)           $ (18)
Deferred benefit                        --             (241)              --
                                     -----            -----            -----
                                     $  --            $(264)           $ (18)
                                     =====            =====            =====
</TABLE>


                                       36
<PAGE>   37



The components of deferred income taxes are as follows at June 30:
<TABLE>
<CAPTION>
                                                       2000            1999              1998
<S>                                                 <C>              <C>              <C>
 Deferred tax assets
  Net operating loss carryforwards                  $ 25,000         $ 20,000         $  9,627
  Book reserves and accrued liabilities                  250              750              490
  Federal general business credits and other
         tax credits                                     500              517              517
  State R&D and other credits                            100              102              102
                                                     -------          -------          --------
                                                      25,850           21,369           10,736

Valuation allowance                                  (25,850)         (21,369)          10,495
                                                     -------          -------          --------
                                                    $     --         $     --         $    241
                                                    ========         ========         =========
</TABLE>

The Company's federal and state net operating loss carryforwards expire in
various years through 2014. Additionally, the Company's federal and state
research and development credits expire in various years through 2009. During
1991 the Company sustained a change in ownership as defined in Section 382 of
the Internal Revenue Code; as a result, an annual limitation of approximately
$350 thousand was imposed on the utilization of the net operating loss
carryforwards generated prior to the date of change. In addition, Section 383
places a limitation on the usage of tax credits generated prior to such a
change. Subsequent to the date of the ownership change in 1991, there have been
numerous additional equity issuances; as a result, the Company may have
experienced, or could experience in the future, similar ownership changes, which
could result in additional limitations on the annual utilization of the
Company's net operating loss carryforwards and tax credits generated prior to
the new change in ownership.

The provision for income taxes results in an effective rate which differs from
the federal statutory rate. A reconciliation between the actual tax provision
and taxes computed at the statutory rate is as follows for the years ended June
30:

<TABLE>
<CAPTION>
                                                                   2000            1999           1998
<S>                                                             <C>             <C>             <C>
Benefit (provision) at federal statutory income tax rate        $ 4,827         $ 8,544         $ 3,440
Losses for which no current benefit is available                 (4,827)         (8,544)         (3,440)
State income taxes                                                   --             (23)            (18)
                                                                -------         -------         -------
                                                                $    --         $    23         $   (18)
                                                                =======         =======         =======
</TABLE>

NOTE 9. COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

The Company and its subsidiaries lease operating facilities under lease
agreements that expire at various dates through March 2006. Total rental expense
was approximately $606 in fiscal 2000, $579 in fiscal 1999, and $574 thousand in
fiscal 1998.

Future minimum lease payments under these long-term non-cancelable operating
leases are as follows:

<TABLE>
<CAPTION>
YEAR ENDING JUNE 30,
<S>                                                       <C>
2001                                                      $    707
2002                                                           734
2003                                                           678
2004                                                           705
2005                                                           733
Thereafter                                                     565
                                                          --------
                                                          $  4,122
                                                          ========
</TABLE>

LEGAL MATTERS

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 the
Company 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 the Company. The Company has not yet been
required to file an answer or other pleading in response to the lawsuit. The
Company believes these claims are without merit and intends to vigorously defend
against them on its own behalf as well as on behalf of the other defendants.

Throughout fiscal 1999 and 2000, various creditors of the Company have made
claims and/or served the Company with lawsuits alleging the failure of the
Company to pay its obligations to them in a total amount exceeding $2.5 million.
The lawsuits are in various stages. Some have resulted in judgments being
entered against the Company, but the superior security interest held by Imperial
Bank has prevented these creditors from collecting on their judgments.. Should
the Company be required to pay the full amount demanded in

                                       37
<PAGE>   38

each of these claims and lawsuits, such a requirement would have a material
adverse impact on the operations of the Company. However, should the Company be
able to obtain sufficient funds, management believes that these claims and
judgments can be settled in a manner that will enable the Company to pursue its
strategic plan of operations.

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.

NOTE 10. RELATED PARTY TRANSACTIONS

A former director receives compensation as a consultant to the Company on
corporate matters and investment banking issues under an agreement expiring in
June 2002. These consulting fees amounted to $56 thousand in fiscal 2000 and
1999 and $120 thousand in fiscal 1998. Effective July 1, 1998, the annual
consulting fee under the agreement has been reduced to $56 thousand. During
fiscal 1998, as consideration for services provided relating to the private
placement of the Series C Preferred Stock, this former director received
commissions and expense reimbursement totaling $200 thousand of which $100
thousand was paid in cash and $100 thousand was used to exercise warrants for
100,000 shares at a price of $1.00 per share.

In June 1998, one of the Company's former directors converted a loan to the
Company of $100 thousand with interest at the rate of 7% per year into 64,516
shares of the Company's common stock.

In June 1998, a director of the Company loaned $1 million to the Company under a
10% note payable due on or after December 31, 1998 and convertible into the
Company's common stock at the lesser of $2.36 per share or 85% of the volume
weighted trade price on the date of conversion. In fiscal 1999, this loan plus
accrued interest and directors fees totaling $265 thousand were converted into
253 shares of Series E Preferred Stock.

NOTE 11. EVENTS SUBSEQUENT TO JUNE 30, 2000

On July 5, 2000, the Company entered into a Private Equity Line of Credit
Agreement with Impany Investment Limited ("Impany"). Pursuant to this agreement,
the Company has the right, subject to certain conditions, to sell up to
$36,000,000 of common stock over the next two years to Impany, which Impany may
resell to the public under a registration statement filed with the SEC in
September 2000. Additionally, the Company issued a warrant to Impany to purchase
up to 2,000,000 shares of its common stock at an exercise price equal to $.57
per share. Shares issuable upon exercise of Impany's warrant may also be resold
to the public under this registration statement. Beginning on the date the
registration statement is declared effective by the SEC, and continuing for two
years thereafter, the Company may in its sole discretion sell, or put, shares of
our common stock to Impany. From time to time during the two-year term, the
Company may make 18 monthly draw downs, by giving notice and requiring Impany to
purchase shares of our common stock, for the draw down amount. Impany's purchase
price will be based upon the average of the three lowest closing bid prices of
the common stock over the period of five (5) trading days during which the
purchase price of the common stock is determined with respect to the put date,
which period shall begin two (2) trading days prior to the put date and end two
(2) trading days following the put date.

In connection with the Private Equity Line of Credit Agreement, the Company
issued a warrant on July 5, 2000 to Impany to purchase up to 2,000,000 shares of
its common stock at an exercise price equal to $.57 per share. Impany may
exercise the warrant through January 5, 2003.

Impany is an "underwriter" within the meaning of the Securities Act in
connection with its resale of shares of the Company's common stock. In August
2000, the Company issued "retention" warrants to employees that allow the
purchase of up to 2,821,000 shares of common stock at a purchase price of $.01
per share. These warrants become exercisable in January 2001 for those employees
who have remained employed by the Company through that period. In addition,
subsequent to June 30, 2000, the Company issued warrants to officers and key
employees that allow the purchase of 2,136,000 shares of common stock at a
purchase price of $0.30 per share. These warrants are exercisable immediately.




                                       38
<PAGE>   39
ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None.

PART III

Pursuant to General Instruction G(3) to Form 10-K, the information required by
Items 10, 11, 12, and 13 of Part III is incorporated by reference from the
Company's definitive Proxy Statement with respect to its 2000 Annual Meeting of
Stockholders, to be filed pursuant to Regulation 14A within 120 days after June
30, 2000.

PART IV

ITEM 14.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)      DOCUMENTS FILED AS PART OF THIS FORM 10-K:

         (1) FINANCIAL STATEMENTS

         The financial statements of the Company are included herein as required
         under Item 8 of this Annual Report on Form 10-K. See Index to Financial
         Statements on page 20.

         (2) FINANCIAL STATEMENT SCHEDULES:

         Financial Statement Schedules have been omitted because they are not
         applicable or not required or the information required to be set forth
         therein is included in the financial statements or notes thereto.

(b)      REPORTS ON FORM 8-K.

         Form 8-K filed July 28, 2000.

(c)      EXHIBITS.

         The following exhibits are filed as part of, or incorporated by
         reference into, this Form 10-K.

<TABLE>
<S>      <C>                                                                         <C>
3(a)     Certificate of Incorporation of the Company, as amended, and currently
         in effect. See also below (Incorporated by reference to Exhibit 3(a) to     *
         1988 Form 10-K)

3(b)     Certificate of Amendment of Certificate of Incorporation of the
         Company, filed February 8, 1995, as amended, and currently in effect
         (Incorporated by reference to Exhibit 3(b) to 1995 Form 10-K)               *

3(c)     Certificate of Amendment of Certificate of Incorporation of the
         Company, filed May 23, 1997, as amended, and currently in effect
         (Incorporated by reference to 1997 Form 10-K)                               *

3(d)     Certificate of Amendment of Certificate of Incorporation, filed January     *
         12, 1999, as amended and currently in effect (Incorporated by reference
         to Form 10-Q for the period ended December 31, 1998)

3(e)     Certificate Eliminating Reference to Certain Series of Shares of Stock      *
         from the Certificate of Incorporation, filed January 12, 1999, as
         amended and currently in effect (Incorporated by reference to Form 10-Q
         for the period ended December 31, 1998)

3(f)     By-Laws of the Company, as amended, and currently in effect                 *
         (Incorporated by reference to Exhibit 3(b) to 1987 Form 10-K)
</TABLE>




                                       39
<PAGE>   40
<TABLE>
<S>      <C>                                                                         <C>
4(a)     Amended Certificate of Designation of Imaging Technologies Corporation      *
         with respect to the 5% Convertible Preferred Stock (Incorporated by
         reference to Exhibit 4(d) to 1987 Form 10-K)

4(b)     Amended Certificate of Designation of Imaging Technologies Corporation      *
         with respect to the 5% Series B Convertible Preferred Stock
         (Incorporated by reference to Exhibit 4(b) to 1988 Form 10-K)

4(c)     Certificate of Designations, Preferences and Rights of Series C             *
         Convertible Preferred Stock of Imaging Technologies Corporation
         (Incorporated by reference to Exhibit 4(c) to 1998 Form 10-K)

4(d)     Certificate of Designation, Powers, Preferences and Rights of the           *
         Series of Preferred Stock to be Designated Series D Convertible
         Preferred Stock, filed January 13, 1999 (Incorporated by reference to
         Form 10-Q for the period ended December 31, 1998)

4(e)     Certificate of Designation, Powers, Preferences and Rights of the           *
         Series of Preferred Stock to be Designated Series E Convertible
         Preferred Stock, filed January 28, 1999 (Incorporated by reference to
         Form 10-Q for the period ended December 31, 1998)

10(a.1)  1988 Stock Option Plan for the Company (Incorporated by reference to        *
         Exhibit 10(g) to 1989 Form 10-K)

10(a.2)  Amendment and Restatement of 1988 Stock Option Plan (Incorporated by        *
         reference to Exhibit 10(d) to 1991 Form 10-K)

10(a.3)  Forms of Standard Non-Qualified and Incentive Stock Option Agreement        *
         for 1988 Stock Option Plan (Incorporated by reference to Exhibit 10(e)
         to 1991 Form 10-K)

10(b)    Reference is made to the various stock options and warrants granted in      *
         1996 to directors and executive officers of the Company as described in
         Notes 6 and 7 to the 1996 Financial Statements (Incorporated by
         reference to Forms S-8 dated February 12, 1996, File Nos. 333-00871,
         333-00873 and 333-00879)

10(c.1)  Consulting Agreement, dated April I, 1994, between the Company and          *
         Irwin Roth (Incorporated by reference to Exhibit 10(az) to 1994 Form
         10-KSB)

10(c.2)  Amendment to Consulting Agreement dated June 12, 1998 between the           *
         Company and Irwin Roth (Incorporated by reference to Exhibit 10(g.3) to
         1998 Form 10-K)

10(d.1)  Warrant Purchase Agreement, dated September 17. 1993, between the           *
         Company and Robinson International, Ltd. (Incorporated by reference to
         Exhibit 10(ar) to 1994 Form 10-KSB)

10(d.2)  Warrant Certificate for 250,000 Warrants to Purchase Shares of Common       *
         Stock of the Company at $1.50 per share dated September 17, 1993,
         between the Company and Robinson International, Ltd. (Incorporated by
         reference to Exhibit 10(as) to 1994 Form 10-KSB)

10(d.3)  Warrant Certificate for 250,000 Warrants to Purchase Shares of Common       *
         Stock of the Company at $1.00 per share dated September 17, 1993,
         between the Company and Robinson International, Ltd. (Incorporated by
         reference to Exhibit 10(at) to 1994 Form 10KSB)
</TABLE>




                                       40
<PAGE>   41
<TABLE>
<S>      <C>                                                                         <C>
10(e)    ITEC/MEl License Agreement dated September 30, 1994 between the Company     *
         and Matsushita Electric Industrial Co., Ltd. (Incorporated by reference
         to Exhibit 10(aac) to 1994 Form 10-KSB)

10(f)    Form of Standard Warrant Agreement dated January 3, 1996 issued to          *
         Harry J. Saal as described in Note 6 to the 1996 Financial Statements
         (Incorporated by reference to Exhibit 10(o) to 1996 Form 10-KSB)

10(g)    Form of Standard Warrant and Consulting Agreement issued to consultants     *
         as described in Note 6 to the 1996 Financial Statements (Incorporated
         by reference to Form S-8 dated May 9, 1996, File Number 333-03375)

10(h)    Warrant to Purchase Stock between Imperial Bank and the Company dated       *
         June 23, 1998 (Incorporated by reference to Exhibit 10(w) to 1998 Form
         10-K)

10(i)    Form of Warrant to Purchase Common Stock between buyers and the Company     *
         dated August 21,1997 (Incorporated by reference to Exhibit 10(z) to
         1998 Form 10-K)

10(j)    Securities Purchase Agreement dated as of January 13, 1999, by and          *
         among the Company and the applicable parties named therein
         (Incorporated by reference to Exhibit 10.3 to Form 10-Q for the period
         ended December 31, 1998)

10(k)    Registration Rights Agreement dated as of January 13, 1999, by and          *
         among the Company and the applicable parties named therein
         (Incorporated by reference to Exhibit 10.4 to Form 10-Q for the period
         ended December 31, 1998)

10(l)    Form of Warrant to Purchase Shares of Common Stock of the Company at        *
         $.875 per share dated January 13, 1999, between the Company and each of
         the applicable parties named in Exhibit 10(j) hereto (Incorporated by
         reference to Exhibit 10.5 to Form 10-Q for the period ended December
         31, 1998)

10(m)    Securities Purchase Agreement dated as of February 2, 1999, by and          *
         among the Company and the applicable parties named therein
         (Incorporated by reference to Exhibit 10.6 to Form 10-Q for the period
         ended December 31, 1998)

10(n)    Registration Rights Agreement dated as of February 2, 1999, by and          *
         among the Company and the applicable parties named therein
         (Incorporated by reference to Exhibit 10.7 to Form 10-Q for the period
         ended December 31, 1998)

10(o)    Form of Warrant to Purchase Shares of Common Stock of the Company at        *
         $.875 per share dated February 2, 1999, between the Company and each of
         the applicable parties named in Exhibit 10(n) hereto (Incorporated by
         reference to Exhibit 10.8 to Form 10-Q for the period ended December
         31, 1998)

10(p)    Exchange Agreement dated as of February 19, 1999, by and among the          *
         Company and the applicable parties named therein (Incorporated by
         reference to Exhibit 10.9 to Form 10-Q for the period ended December
         31, 1998)

10(q)    Form of Warrant to Purchase 50,000 shares of Common Stock of ITEC at        *
         $1.50 per share, dated March 5, 1999, between ITEC and Carmel Mountain
         Environmental L.L.C. (Incorporated by reference to Exhibit 4.9 to
         Amendment No. 2 to Form S-3 filed July 16, 1999, File No. 333-77629)
</TABLE>




                                       41
<PAGE>   42
<TABLE>
<S>      <C>                                                                         <C>
10(r)    Form of Warrant to Purchase 50,000 Shares of Common Stock of ITEC at        *
         $1.50 per share dated March 5, 1999, between ITEC and Carmel Mountain
         #8 Associates, L.P. (Incorporated by reference to Exhibit 4.10 to
         Amendment No. 2 to Form S-3 filed July 16, 1999, File No. 333-77629)

10(s)    Form of Warrant to Purchase 5,000 Shares of Common Stock of ITEC at         *
         $1.50 per share, dated March 5, 1999 between ITEC and John P. Mulder
         (Incorporated by reference to Exhibit 4.12 to Amendment No. 2 to Form
         S-3 filed July 16, 1999, File No. 333-77629)

10(t)    Form of Warrant to Purchase 5,000 Shares of Common Stock of ITEC at         *
         $1.50 per share, dated March 5, 1999 between ITEC and Steve Tiritilli
         (Incorporated by reference to Exhibit 4.13 to Amendment No. 2 to Form
         S-3 filed July 16, 1999, File No. 333-77629)

10(u)    Common Stock Purchase Agreement (Incorporated by reference to Exhibit       *
         10.1 to the Company's Report on Form 10-Q for the period ended
         September 30, 1998)

10(v)    Form of Subordinated Note Purchase Agreement (Incorporated by reference     *
         to Exhibit 10.2 to the Company's Report on Form 10-Q for the period
         ended September 30, 1998)

10(w)    Registration Rights Agreement (Incorporated by reference to Exhibit         *
         10.6 to the Company's Report on Form 10-Q for the period ended
         September 30, 1998)

10(x)    Form of Convertible Subordinated Promissory Note (Incorporated by           *
         reference to Exhibit 10.4 to the Company's Report on Form 10-Q for the
         period ended September 30, 1998)

10(y)    Form of Common Stock Purchase Warrant (Incorporated by reference to         *
         Exhibit 10.12 to the Company's Report on Form 10-Q for the period ended
         September 30, 1998)

10(z)    Form of Common Stock Purchase Warrant (Incorporated by reference to         *
         Exhibit 10.9 to the Company's Report on Form 10-Q for the period ended
         September 30, 1998)

10(aa)   Form of Common Stock Purchase Warrant (Incorporated by reference to         *
         Exhibit 10.5 to the Company's Report on Form 10-Q for the period ended
         September 30, 1998)

10(ab)   Form of Warrant to Purchase 60,000 Shares of Common Stock of ITEC at        *
         $2.50 per share, dated June 23, 1998, between ITEC and Imperial Ban.
         (Incorporated by reference to Exhibit 4.40 to Amendment No. 2 to Form
         S-3 filed July 16, 1999, File No. 333-77629)

10(ac)   Standard Industries/Commercial Single-Tenant Lease-Net, dated February      *
         22, 1999 and addendum thereto, dated March 5, 1999, by and between
         Carmel Mountain #8 Associates, L.P. and ITEC (Incorporated by reference
         to Exhibit 10.10 to Form 10-Q for the period ended March 31, 1999)

10(ad)   1999 Special Compensation Plan for certain directors, officers and          *
         employees of the Company (Incorporated by reference to Form S-8, filed
         June 18, 1999)

10(ae)   Form of Restated and Amended Common Stock Purchase Warrants relating to     *
         Exhibit 10(bt) above (Incorporated by reference to Form S-8, filed June
         18, 1999)

10(af)   Form of Compensation Agreement relating to Exhibit 10(ad) above             *
         (Incorporated by reference to Form S-8, filed June 18, 1999)

10(ag)   Consulting Agreement dated July 1, 1999 between Howard Schraub and the      *
         Company (Incorporated by reference to Form S-8, filed August 4, 1999)
</TABLE>


                                       42
<PAGE>   43
<TABLE>
<S>      <C>                                                                         <C>
10(ah)   Consulting Agreement dated July 1, 1999 between George Furla and the        *
         Company (Incorporated by reference to Form S-8, filed August 4, 1999)

10(ai)   Consulting Agreement dated July 1, 1999 between Franz Herbert and the       *
         Company. (Incorporated by reference to Form S-8, filed August 4, 1999)

10(aj)   Consulting Agreement dated July 1, 1999 between Peter Benz and the          *
         Company (Incorporated by reference to Form S-8, filed September 22,
         1999)

10(ak)   Consulting Agreement dated July 1, 1999 between Richard Kaplan and the      *
         Company (Incorporated by reference to Form S-8, filed September 22,
         1999)

10(al)   Private Equity Line of Credit Agreement by and among certain Investors      *
         and the Company (Incorporated by reference to Form 8-K, filed July 28,
         2000)

21       List of Subsidiaries of the Company                                         **


23       Consent of Independent Accountants                                          **

27       Financial Data Schedule                                                     **
</TABLE>

*        Exhibit is incorporated by reference only and a copy is not included in
         this Form 10-K filing.

**       Filed herewith.

Exhibits 10(a.1), (a.2), (b.1), (b.2), (b.3), (d), (e.1), (e.2), (e.3), (e.4),
(f), (g.1), (g.2), (g.3), (q), and (q.1) are management contracts or
compensatory plans or arrangements.

The Company will furnish a copy of any exhibit to a requesting stockholder upon
payment of the Company's reasonable expenses in furnishing such exhibit.




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<PAGE>   44
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Annual Report on Form 10-K to be signed on its
behalf by the undersigned, thereunto duly authorized.

Date: October 13, 2000          IMAGING TECHNOLOGIES CORPORATION

                                By: /s/ BRIAN BONAR
                                    ---------------
                                        Brian Bonar
                                        Chief Executive Officer



                                POWER OF ATTORNEY

         KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints, Brian Bonar as his
attorney-in-fact, each with full power of substitution and resubstitution, for
him or her in any and all capacities, to sign any and all amendments to this
Annual Report on Form 10-K, and to file the same, with exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming that said attorney-in-fact, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons in the capacities and
on the dates indicated.

<TABLE>
<CAPTION>
       SIGNATURE                                 TITLE                                     DATE
       ---------                                 -----                                     ----
<S>                               <C>                                                <C>
/s/ Brian Bonar                   Chairman of the Board of Directors,                October 13, 2000
----------------------               Chief Executive Officer, and
    Brian Bonar                     Acting Chief Financial Officer
                                   (Principal Executive Officer and
                                     Principal Accounting Officer)

/s/ Robert A. Dietrich                         Director                              October 13, 2000
----------------------
    Robert A. Dietrich

/s/ Eric W. Gaer                               Director                              October 13, 2000
----------------------
    Eric W. Gaer

/s/ Stephen J. Fryer                           Director                              October 13, 2000
----------------------
    Stephen J. Fryer

/s/ Richard H. Green                           Director                              October 13, 2000
----------------------
    Richard H. Green
</TABLE>




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