SECURITIES AND EXCHANGE COMMISSION

(Mark One)



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



For the quarterly period ended June 30, 2001



OR



(   )   TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934

For the transition period from 
to



Commission file number:
0-30467



|INTACTA TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)                   
|---------------------------------------------------------------------------------------------------
|Nevada(State or other jurisdiction
of incorporation or organization)                               
|945 East Paces Ferry Road N.E. 
Suite 1445 
Atlanta Georgia(Address of principal executive offices)

Registrant's telephone number, including area code:
404-880-9919

Indicate by 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 requirement for the past 90 days.   
YES  X    NO___.

As of August 7, 2001, there were 20,345,924 shares of the registrant's Common
Stock, par value $.0001, outstanding.

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|TABLE OF CONTENTS             
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|PART I - FINANCIAL INFORMATION
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|Item 1.                       
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|Item 2.                       
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|Item 3.                       
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|PART II - OTHER INFORMATION   
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|Item 4.                       
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|Item 6.                       
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|Signatures                    

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PART I. - FINANCIAL INFORMATION

Item 1.     CONSOLIDATED
FINANCIAL STATEMENTS

The consolidated financial statements included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
The consolidated balance sheet as of June 30, 2001; the consolidated statements
of operations for the three and six months ended June 30, 2001 and June 30,
2000; and the consolidated statements of cash flows for the six months ended
June 30, 2001 and June 30, 2000 have been prepared without audit. The
consolidated balance sheet as of December 31, 2000 has been audited by
independent certified public accountants. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures herein are adequate to make the information presented not
misleading. It is suggested that these consolidated financial statements and
related notes be read in conjunction with the consolidated financial statements
and notes thereto, included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2000.

In the opinion of the Company, the statements for the unaudited interim periods
presented included all adjustments that were of a normal recurring nature
necessary to present a fair statement of the financial condition and results of
operations for such interim periods. The results of operations for the interim
periods presented are not necessarily indicative of the results of operations
for the entire year.

|INTACTA TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
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|Assets                                               
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|Current                                              
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|Total current assets                                 
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|Property and equipment,net                           
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|Patents,net                                          
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See accompanying notes to consolidated financial statements

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|INTACTA TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
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|Liabilities and Stockholders' Equity                 
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|Current Liabilities                                  
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|Total current liabilities                            
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|Commitments                                          
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|Stockholders' equity                                 
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|Total stockholders' equity                           
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See accompanying notes to consolidated financial statements.

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|INTACTA TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ended June 30, 2001 and 2000
(Unaudited)
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|Revenues                                                                                                                             
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|Total revenues                                                                                                                       
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|Operating expenses                                                                                                                   
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|Total operating expenses                                                                                                             
|Loss from operations                                                                                                                 
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|Other income                                                                                                                         
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|Total other income (expense)                                                                                                         
|Loss before provision for income taxes                                                                                               
|Provision for income taxes                                                                                                           
|Net loss                                                                                                                             
|Basic and diluted loss per common 
   share                                                                                          
|Basic and diluted weighted-average 
   common shares outstanding                                                                     

See accompanying notes to consolidated financial
statements.

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|INTACTA TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2001 and 2000
(Unaudited)
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|Cash used in operating activities                                                                                          
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|Cash provided by financing activities                                                                                      
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|Net increase (decrease) in cash and cash
equivalents                                                                       
|Cash and cash equivalents,beginning of
period                                                                              
|Cash and cash equivalents,end of period                                                                                    
|Cash received during the period for interest                                                                               
|Cash paid during the period for income taxes                                                                               

See accompanying notes to consolidated financial statements.

6

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INTACTA TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.     Summary of Significant
Accounting Policies

Nature of Operations

Intacta Technologies Inc. (the "Company"), a Nevada corporation, is a developer
and marketer of software products based on its patented technology that, through
its unique combination of compression, encoding and error correction processes,
the technology transforms any data format ranging from text, graphic, audio or
video from a binary file into INTACTA.CODETM which is language transparent
and platform independent.  The Company believes that its technology provides
solutions and applications that enable enterprises to bridge their
communications and management information systems across digital and non-digital
media by providing the secure bi-directional transmission and subsequent
recovery and storage of data.

Intacta Labs Ltd., an Israeli corporation and wholly owned subsidiary (Intacta
Labs), primarily conducts product research and development in the high tech area
of Beer Sheva, Israel, and is currently conducting new research projects
expected to produce significant time and cost savings through continued
development of a medium for transmitting and storing data in secure formats.

From late 1997 and through 1998, the Company ceased production and marketing of
its facsimile-based products used for transmitting and storing information, as a
result of changes in the fax market, which resulted in reduced demand for its
fax related products.  The Company altered its strategy to emphasize the
licensing of its core technology rather than the development and sale of
consumer products.

The Company

On May 31, 1998, the Company completed the acquisition of 100% of the
outstanding common stock of Intacta Delaware Inc. (Intacta), a Delaware
corporation, and Intacta Labs in exchange for 11,486,000 shares of the Company's
$.0001 par value common stock valued at $1.  The companies agreed that the value
per common stock share contemplated in the agreement approximated the market
trading value at the time of the initial discussions and the signing of the
letter of intent. For accounting purposes, the acquisition has been treated as
an acquisition of the Company by Intacta and Intacta Labs, with the combined
entity of Intacta and Intacta Labs, companies under common control, as the
acquirer (reverse acquisition). As such, in conjunction with the acquisition,
the historical financial statements of the acquirer replaced the historical
financial statements of the Company.

Principles of Consolidation

The accompanying consolidated financial statements for the three and six months
ended June 30, 2001 and 2000, and the year ended December 31, 2000 include the
accounts of the Company and its wholly owned subsidiaries.  All intercompany
accounts and transactions have been eliminated.

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INTACTA TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.     Summary of Significant
Accounting Policies, continued

Use of 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, the 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 could differ from those estimates.

Software Development Costs

In accordance with Statement of Financial Accounting Standards (SFAS) No. 86,
Accounting for the Costs of Computer Software to Be Sold, Leased, or
Otherwise Marketed, costs related to the research and development of new
products and enhancements to existing products are expensed as incurred until
technological feasibility of the product has been established, at which time
such costs are capitalized, subject to expected recoverability.    Therefore,
the Company has not capitalized any software development costs related to its
products, since the time period between technological feasibility and the
general release of a market accepted product is not significant.

Goodwill and Other Intangible Assets

In June 2001, the Financial Accounting Standards Board finalized FASB Statements
No. 141, Business Combinations (SFAS 141), and No. 142,
Goodwill and Other Intangible Assets (SFAS 142).  SFAS 141
requires the use of the purchase method of accounting and prohibits the use of
the pooling-of-interests method of accounting for business combinations
initiated after June 30, 2001.  SFAS 141 also requires that the Company
recognize acquired intangible assets apart from goodwill if the acquired
intangible assets meet certain criteria.  SFAS 141 applies to all business
combinations initiated after June 30, 2001 and for purchase business
combinations completed on or after July 1, 2001.  It also requires, upon
adoption of SFAS 142, that the Company reclassify the carrying amounts of
intangible assets and goodwill based on the criteria in SFAS 141.

SFAS 142 requires, among other things, that companies no longer amortize
goodwill, but instead test goodwill for impairment at least annually.  In
addition, SFAS 142 requires that the Company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life.  An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142.  SFAS 142 is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized at that date, regardless of when those assets were
initially recognized.  SFAS 142 requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption.  The Company is
also required to reassess the useful lives of other intangible assets within the
first interim quarter after adoption of SFAS 142. The adoption of SFAS No. 141
and SFAS No. 142 is not expected to have a material effect on the Company's
financial position, results of operations and cash flows in 2002 and subsequent
years.

Revenue Recognition

The Company's revenue recognition policies are in compliance with generally
accepted accounting principles including Statement of Position (SOP) 97-2,
Software Revenue Recognition.  As such, the Company recognizes product
revenue upon shipment if persuasive evidence of an arrangement exists, delivery
has occurred, the fees are fixed and determinable and collectibility is
probable.  Appropriate reserves were considered to effectively defer revenue
recognition when material amounts of inventory had not been sold through to the
end user.  Generally, the right of return of these

8

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INTACTA TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

products was of short
duration (90 days).  No provision for estimated product returns was necessary
based on historical experience.  Maintenance and support arrangements and other
post-delivery obligations are insignificant to the Company's revenues.

License revenues are recognized based on actual sales of licensed software by a
customer/licensee and are not recognized by the company as revenue until the
final sale is reported by the customer/licensee.  This is the time at which the
Company believes that revenue recognition in accordance with SOP 97-2, as
described above, has occurred.  Support revenue is not integral to the
functionality of the licensed software and is billed and recognized as
incurred.

The Company recognized consulting fee revenue during 2000 that was derived from
certain software development and programming projects performed on behalf of
customers. These projects were started and completed within the quarter.

The Company believes that it is in compliance with Staff Accounting Bulletin
("SAB") No. 101, Revenue Recognition, which outlines the basic criteria
that must be met to recognize revenue and provides guidance for presentation of
revenue and for disclosure related to revenue recognition policies in financial
statements filed with the SEC.

Loss Per Share

Basic earnings per share is computed by dividing net loss by the
weighted-average number of common shares outstanding during the period. Shares
issued during the period are weighted for the portion of the period that they
were outstanding.  Diluted earnings per share is computed in a manner consistent
with that of basic earnings per share while giving effect to all potentially
dilutive common shares outstanding during the period.  As a result of losses,
all stock options and warrants outstanding for the periods presented were
antidilutive and accordingly, were excluded from the computation of loss per
share.

2.     Going Concern

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As shown in the consolidated
financial statements, the Company has a cumulative deficit of $24,095,700
through June 30, 2001, and has incurred losses of $4,551,200, $3,617,600 and
$3,145,800 for the years ended December 31, 2000, 1999 and 1998, respectively
and $1,873,300 for the six months ended June 30, 2001.  These losses were
primarily the result of the decision by the Company in late 1997 to curtail
further production and marketing of its facsimile-based products upon
realization that the market potential for such products was diminished, and by
the significant overhead costs required to support research, development and
marketing efforts for the Company'sINTACTA.CODE related technology.
These conditions give rise to substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of assets or the
amount and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.

Through the first half of 2000, the Company's marketing and sales efforts were
reduced and the Company focused its efforts on design revisions to its core
applications without the benefit of significant cash flow from operations. In
the second half of 2000, primarily as a result of additional resources,
marketing efforts increased and, in addition to marketing its technology for
licensing arrangements, the Company focused on the marketing of its suite of
INTACTA.CODE Software Development Kit (SDK) products, which were subsequently
launched in March 2001. This marketing generated increased activity to its web
site and initiated downloads of the offered Trial SDK.  There is not yet any
revenue impact from this product line. In addition to the above, the Company
intends to launch, by the end of third quarter 2001,

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INTACTA TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

a suite of data
communications products targeted to the health care industry addressing new
healthcare information security regulations; the Health Insurance Portability
and Accountability Act of 1996 ("HIPAA").

The Company's capital requirements continue to be significant and it is not
currently generating revenues from operations to fund its operating
activities.  The Company anticipates incurring continuing losses in the future
as it expands the development and marketing of its software products and
technology.  Based upon current estimates, management believes that cash
and cash equivalents will be sufficient to fund
the Company's operating activities and capital requirements through the end of
its first quarter of 2002.  Unanticipated changes in economic conditions or
other unforeseen circumstances may cause the Company to expend its cash and cash
equivalents in a shorter period of time.

As a result of the above, the Company's continuation as a going concern is
substantially dependent upon its ability to obtain additional financing that
will be required to fund research and development and marketing of its new
products as well as to fund its current operating activities.  If significant
revenues materialize and adequate financing is obtained, the Company anticipates
viability for the year 2001 and beyond, though there can be no assurance that
that the Company will be successful in these efforts.  At this time, the Company
does not have any current arrangements with respect to potential sources
of additional financing and cannot assure you that additional financing will
be available to it on commercially reasonable terms or at all.

3.     Segment Information

During 1999, the Company adopted SFAS No. 131 "Disclosures about Segments
of an Enterprise and Related Information" which establishes standards for
the way that public business enterprises report information about operating
segments in their financial statements.  The standard defines operating segments
as components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance.  Based on these
standards the Company has determined that it operates in a single operating
segment: the development, marketing and licensing of software and sale of
ancillary components.

Geographic Segments:

The following table represents revenues and other financial information at and
for the periods designated below.  Revenues attributable to geographic areas are
based on the location of the customer.

|                          |                    |                    | June 30, 2001    | December 31, 2000
|------------------------- | ------------------ | ------------------ | ---------------- | -----------------
|Long-lived assets (gross) |                    |                    |                  |                  
|- United
States           |                    |                    | $   168,000      | $    69,500      
|- Israel                  |                    |                    | 373,150          | 281,700          
|                          | Three months ended | Three months ended | Six months ended | Six months ended 
|                          | 2001               | 2000               | 2001             | 2000             
|Revenues                  |                    |                   
|Asia                      | $   3,725          | 365,600            | $   8,025        | $374,800         
|Africa/Mid-East           | (3,700)            | 111,000            | 78,500           | 251,800          
|North
America             | 5,175              | 7,200              | 10,575           | 7,200            
|                          | $   5,200          | 480,200            | $ 97,100         | $633,800         

4.     Stock Option Plans

The Company at its Annual Meeting in May 2001 voted to increase the reserve of
its common stock for issuance under the 2000 Stock Option Plan to a total of
2,400,000 shares.  During June 2001, the Company granted to employees and
consultants 1,325,000 and 1,003,000 options to purchase its common stock under
its 1998 and 2000 Plans, respectively.  These
stock options were granted with an exercise price of $0.75, with vesting over a
maximum of three years and an expiration of five years.

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

The Private Securities Litigation Reform Act of 1995 provides a
"safe-harbor" for forward-looking statements.  Certain statements
contained in this report that are not historical fact, including, but not
limited to, those concerning our expectations of future sales revenues, gross
profits, research and development, sales and marketing, and administrative
expenses, product introductions and cash requirements are forward-looking
statements. These forward-looking statements are subject to risks and
uncertainties that may cause our actual results to differ from expectations
including variations in the level of orders, general economic conditions in the
markets served by our customers, international economic and political climates,
timing of future product releases, difficulties or delays in product
functionality of performance, our failure to respond adequately to changes in
technology or customer preferences, changes in our pricing or that of our
competitors and our inability to manage growth. All of the above factors
constitute significant risks to our operations. There can be no assurance that
our results of operations will not be adversely affected by one or more of these
factors. As a result, our actual results may vary materially from our
expectations.  The words "believe", "expect",
"anticipate", "intend", and "plan" and similar
expressions identify forward-looking statements.  Readers are cautioned not to
place undue reliance on these forward-looking statements which speak only as of
the date the statement was made.

General

The Company is a developer and marketer of software products based on its
patented technology that, through its unique combination of compression,
encoding and error correction processes, transforms any data format ranging from
text, graphic, audio or video from a binary file into INTACTA.CODETM
which is language transparent and platform independent.  The Company believes
that its technology provides solutions and applications that enable enterprises
to bridge their communications and management information systems across digital
and non-digital media, by providing the secure bi-directional transmission and
subsequent recovery and storage of data.

Intacta was organized in October 1997 to acquire two companies that marketed and
developed two related facsimile storage and retrieval products that incorporated
an early version of our technology.  Development and production of the facsimile
products were performed in Israel by Intacta Labs Ltd., and marketing and
distribution were performed in the United States by Intacta Delaware, Inc.
Intacta acquired the companies in May 1998 in exchange for approximately 70% of
its outstanding capital stock immediately after the acquisition.  The
acquisition was treated, for accounting purposes, as a reverse acquisition.  The
references to "the Company" and "Intacta" refer to the
operation of the acquired entities both before and after the acquisition.

During 1997 and part of 1998 the Company derived substantially all of its
revenues from the sale of facsimile-based products.  Beginning in the latter
part of 1997 and continuing into 1998 the Company began to wind down its
production and active marketing of the facsimile-based products due to reduced
profit margins and anticipated further deterioration of profit margins from
increased competition and costs of marketing the products to the retail market.
At that time, the Company initiated research and development of advanced
products and software applications based on its technology.  The Company also
began, on a very limited basis, licensing its technology for integration with
applications and solutions to end-users.  As a result, revenues declined
substantially from $894,900 for 1997 to $137,800 and $137,400 for each of 1998
and 1999, respectively, and research and development expenses increased
substantially from $343,200 in 1997 to $903,500 in 1998 and $1,047,400 in
1999.

In the middle of 1999, due to competitive pressures and our re-evaluation of our
business model and revenue/cost projections, the Company determined, except with
respect to certain products that were at or near completion of development, to
forego further development of early stage products based upon our technology and
to focus on direct marketing of the technology for licensing to large enterprise
and third party solution providers.    The Company's limited financial and other
marketing resources, however, prevented the Company from engaging in a
full-scale marketing campaign for the products that were at or nearing
completion and based upon the current business model and operating strategy the
Company does not intend to devote any significant financial or other resources
at this time to the further development or marketing of these products.

Through the second quarter of 2000, primarily as a result of the limited
financial resources and personnel available for marketing activities, the
Company made limited progress in establishing licensing arrangements
for its technology.  The majority of revenues during this time were generated
primarily from a consulting arrangement and the sale of discontinued hardware
products.  Beginning in the second quarter of fiscal 2000, as a result of
increased resources and a shift of personnel to marketing activities, the
Company entered into two licensing arrangements with third party

11

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enterprises for its
technology.  For the year ended December 31, 2000, licensing revenues accounted
for approximately 12% of the Company's revenues.

In March 2001, the Company launched a suite of INTACTA.CODE Software Development
Kits, or SDK's, making its technology available to software developers for
integration into both existing and new applications requiring features that
provide for the secure transmission and storage of compressed data across
various platforms and operating devices. The Company anticipates that the
licensing of SDK's to software developers will create an additional revenue
stream to its technology licensing arrangements with large enterprises and
third-party solution providers, independent software vendors and original
equipment manufacturers. This marketing generated increased activity to its web
site and initiated downloads of the offered Trial SDK.  There is not yet any
revenue impact from this product line. In addition to the above, by
the end of the third quarter the Company intends to launch a suite of data
communications products targeted to the health care industry addressing HIPAA
regulations.

The Company's independent auditors have included an explanatory paragraph in
their report on the Company's financial statements for each of the three years
in the period ended December 31, 2000, stating that recurring losses from
operations and an accumulated deficit at December 31, 2000 of $22,222,400 raise
substantial doubt the Company's ability to continue as a going concern. The
accumulative deficit as of June 30, 2001 is $24,095,700.

Results of Operations

Three months ended June 30, 2001 as compared to the three
months ended June 30, 2000

Revenues. Revenues decreased by $475,000 or 98.9% to $5,200 for the three
months ended June 30, 2001, from $480,200 for the three months ended June 30,
2000.  This decrease was primarily attributable to the lack of consulting
revenue as compared to the prior comparable period, the return of product of
$20,000 during the three months ended June 30, 2001, and the more limited sales
of products and components from the discontinued facsimile-based business as
compared to the prior comparable period.

Cost of products and components.  Cost of products and components was
$10,400 for the three months ended June 30, 2001; a decrease of $13,900, or
57.2%, compared to $24,300 of such costs for the three months ended June 30,
2000. The decrease in such costs was primarily attributable to the corresponding
reduction in sales of discontinued products and components.

Research and development expenses.  Research and development expenses
increased by $2,200 or 0.7% to $310,400 for the three months ended June 30,
2001, from $308,200 for the three months ended June 30, 2000.  The increase
resulted from increased personnel and related office and other support facility
costs related to research and development in the Company's Atlanta headquarters.
This increase was offset by a decrease in non-cash charges to $47,300 for the
second quarter of fiscal 2001 from $90,400 for the second quarter of fiscal
2000, to account for options previously granted below fair market value as
compensation to employees and consultants.

Sales and marketing expenses.  Sales and marketing expenses decreased by
$13,700 or 5.1%, to $255,000 for the three months ended June 30, 2001, from
$268,700 for the three months ended June 30, 2000. The decrease in sales and
marketing expenses was primarily attributable to the reduction in non-cash
charges to $2,000 for the second quarter of fiscal 2001 from $23,900 for the
second quarter of fiscal 2000, to account for options previously granted below
fair market value as compensation to employees and consultants.

General and administrative expenses.  General and administrative expenses
decreased by $147,000 or 25.3% to $433,800 for the three months ended June 30,
2001, from $580,800 for the three months ended June 30, 2000.  This decrease was
primarily attributable to the reduction of the non-cash stock option charges to
$5,800 for the second quarter of fiscal 2001 from $165,900 for the second
quarter of fiscal 2000.

Interest income (expense), net.  Net interest income was $26,700 for the
three months ended June 30, 2001 compared to ($4,800) of net interest expense
for the three months ended June 30, 2000.   The net increase was primarily the
result of earnings on funds received from the Company's private placement in
October 2000.

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Net loss.  As a result, net loss increased by $270,300 or 38.3 % to
$976,900, or $(0.05) per share, for the three months ended June 30, 2001, as
compared to a net loss of $706,600, or $(0.04) per share, for the three months
ended June 30, 2000.

Six months ended June 30, 2001 as compared to the six months
ended June 30, 2000

Revenues. Revenues decreased by $536,700 or 84.7% to $97,100 for the six
months ended June 30, 2001, from $633,800 for the six months ended June 30,
2000.  This decrease was primarily attributable to the lack of consulting
revenue as compared to the prior comparable period, along with more limited
sales of products and components from the discontinued facsimile-based business
as compared to the prior comparable period.

Cost of products and components.  Cost of products and components was
$24,100 for the six months ended June 30, 2001; a decrease of $72,300, or 75.0%,
compared to $96,400 of such costs for the six months ended June 30, 2000. The
decrease in such costs was primarily attributable to the corresponding reduction
in sales of discontinued products and components.

Research and development expenses.  Research and development expenses
decreased by $6,000 or 1.0% to $602,600 for the six months ended June 30, 2001,
from $608,600 for the six months ended June 30, 2000.  The decrease was
attributable to a decrease in non-cash charges to $94,600 for the first half of
fiscal 2001 from $180,800 for the first half of fiscal 2000, to account for
options previously granted below fair market value as compensation to employees
and consultants.  The foregoing decrease was partially offset by an increase in
expenses resulting from personnel and related office and other support facility
costs related to research and development in the Company's Atlanta
headquarters.

Sales and marketing expenses.  Sales and marketing expenses increased by
$26,400 or 5.4%, to $511,000 for the six months ended June 30, 2001, from
$484,600 for the six months ended June 30, 2000. The increase in sales and
marketing expenses was primarily attributable to (i) increased salaries and
related costs resulting from the hiring of additional personnel in connection
with the Company's focus on marketing its INTACTA.CODEtechnology, and
(ii) costs for the development of marketing materials and related market
research. The foregoing increase in expenses were partially offset by the
reduction in non-cash charges to $4,000 for the first half of fiscal 2001 from
$52,100 for the first half of fiscal 2000, to account for options previously
granted below fair market value as compensation to employees and
consultants.

General and administrative expenses.  General and administrative expenses
decreased by $38,000 or 4.1% to $892,000 for the six months ended June 30, 2001,
from $930,000 for the six months ended June 30, 2000.  This decrease was
attributable to the reduction of the non-cash stock option charges to $11,600
for the first half of fiscal 2001 from $391,300 for the first half of fiscal
2000. The foregoing decrease in expenses was partially offset by (i) additional
salaries and costs related to an increased administrative staff, and (ii) third
party consulting and professional fees in connection with business strategy
development and management and operation of the Company's business.

Interest income (expense), net.  Net interest income was $67,900 for the six
months ended June 30, 2001 compared to $13,400 of net interest income for the
six months ended June 30, 2000, an increase of 406.7% or $54,500.   The increase
was primarily the result of earnings on funds received from the Company's
private placement in October 2000.

Net loss.  As a result, net loss increased by $400,000 or 27.1 % to
$1,873,300, or $(0.09) per share, for the six months ended June 30, 2001, as
compared to a net loss of $1,473,300, or $(0.08) per share, for the six months
ended June 30, 2000.

Liquidity and Capital Resources

The Company's capital requirements continue to be significant and it is not
currently generating revenues from operations to fund its operating
activities.  The Company has incurred losses to date resulting in an accumulated
deficit as

13

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of June 30, 2001 of $24,095,700 and it anticipates incurring
continuing losses in the future as it expands the development and marketing of
its software products and technology.  Based upon current estimates, management
believes that cash and cash equivalents will
be sufficient to fund the Company's operating activities and capital
requirements through the company's first quarter of 2002.  Unanticipated changes
in economic conditions or other unforeseen circumstances may cause the Company
to expend its cash and cash equivalents in a shorter period of time.  At this
time, the Company does not have
any current arrangements with respect to potential sources of additional
financing and cannot assure you that additional financing will be available to
it on commercially reasonable terms or at all.

As a result of the above, the Company's continuation as a going concern is
substantially dependent upon its ability to obtain additional financing that
will be required to fund research and development and marketing of its new
products as well as to fund its current operating activities.  If significant
revenues materialize and adequate financing is obtained, the Company anticipates
viability for the year 2001 and beyond, though there can be no assurance that
that the Company will be successful in these efforts.  At this time, the Company
does not have any current arrangements with respect to other potential sources
of additional financing and cannot assure you that additional financing will
be available to it on commercially reasonable terms or at all.  Given the
foregoing, if the Company is then successful in its ability to market its new
suite of products, as well as its technology, it believes that it can increase
revenues, generate positive cash flows from operations, and result ultimately
in profitability.

Since inception, the Company has financed its capital requirements primarily
through the private sale of capital stock to various parties and from non
interest-bearing loans from Valor Invest Limited, ("Valor"), an
affiliate of the Company's President and Chief Executive Officer, a portion of
which was subsequently converted into equity, and from cash acquired in
connection with the acquisition of its subsidiaries.

At June 30, 2001 the Company had $2,148,600 in cash and cash equivalents
compared to $3,904,500 at December 31, 2000.  At June 30, 2001, the Company had
working capital of $1,879,400 as compared to working capital of $3,641,500 at
December 31, 2000.

Cash used in operating activities for the six months ended June 30, 2001 was
$1,715,000, primarily consisting of the net loss of $1,873,300 and an increase
of $47,100 in other current assets, partially offset by $110,100 of non-cash
compensation expense and a decrease in accounts receivable of $56,600.  Cash
used in investing activities was $40,900.  As a result, the Company had a net
decrease of $1,755,900 in cash and cash equivalents during the six months ended
June 30, 2001.

Cash used in operating activities for the six months ended June 30, 2000 was
$963,400, primarily consisting of the net loss of $1,473,300 and a decrease in
accounts payable and accrued expenses of an aggregate of $254,500, which was
partially offset by $624,200 of non-cash compensation expense and a decrease in
inventory of $53,200. Cash used in investing activities was $29,700.  Cash
provided by financing activities was $2,802,100, representing Bridge Financing
and the net of non-interest bearing loans from Valor.  As a result, the Company
had a net increase in cash and cash equivalents of $1,809,000 during the six
months ended June 30, 2000.

As of January 1, 2000, a balance of $89,000 of non-interest bearing loans from
Valor was outstanding.  During the first half of 2000, Valor loaned an
additional $704,500 to the Company on a non interest-bearing basis, of which
$312,000 was subsequently repaid.  In May 2000, Valor converted $250,000 of the
unpaid balance of these loans into 2.5 units identical to the units offered by
the Company in its Bridge Financing described immediately below.  Valor also
subordinated the balance of such loans to the repayment of the bridge notes.  As
discussed below, Valor converted the principal amount of the notes included in
the units it acquired in May 2000 as well as a substantial portion of its
subordinated loans into units offered in the Company's October Private
Placement.

In May and June 2000, the Company completed a Bridge Financing, in which it
issued 25 units, each unit consisting of a $100,000 principal amount bridge note
and bridge warrants to purchase 25,000 shares of common stock at an exercise
price of $3.50 per share, for aggregate gross proceeds of $2,500,000.

In October 2000, the Company completed a Private Placement in which it issued an
aggregate of 2,333,310 units consisting of one share of common stock and one
warrant to purchase one share of common stock at an exercise price of $3.50, for
aggregate gross proceeds of $7,000,000.  Approximately $2,267,000 of the gross
proceeds received in the Private Placement represented the conversion of the
principal and accrued interest of outstanding bridge notes by certain holders
thereof into units in the Private Placement.  A portion of the proceeds of the
Private Placement was used to repay the principal and accrued interest on the
balance of outstanding bridge notes not converted into units in the Private
Placement.  After deduction of cash commissions and related expenses as well as
the conversion of the bridge notes, the Company received approximately
$3,522,000 in net proceeds from the Private Placement.  In connection with the
Private Placement, Valor converted the principal amount of its notes into units
in the Private Placement.  Valor also converted a substantial portion of its
subordinated loans into units in the Private Placement.

Item 3.     QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not engage in trading market risk sensitive instruments, nor
does the Company purchase for investment, hedging or for purposes "other than
trading", instruments that are likely to expose it to market risk, whether it be
interest rate, foreign currency exchange, commodity price or equity price risk.
Consequently, management believes that as of June 30, 2001, the Company does not
have exposure to foreign currency exchange risk.

PART II. - OTHER INFORMATION



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

Pursuant to the solicitation of proxies in connection with a
Proxy Statement dated April 27, 2001, the Company held an annual meeting of
stockholders during the second quarter of 2001.

A.     The date of the annual
meeting of stockholders was May 31, 2001

B.     At the annual meeting Charles
Johnston and Bernard Girma were elected members of the Board of Directors of the
Company. In addition the following existing directors were elected and continued
as members of the Board:
Altaf Nazerali, Ross Wilmot, and Noel Bambrough.

C.     The following matters were
subject to vote at the annual meeting:

i.     Election of Directors of the
Company

Noel Bambrough 10,542,999 votes for and 12,175 withheld
Bernard Girma  10,542,999 votes for and 12,175 withheld
Charles Johnston 10,542,999 votes for and 12,175 withheld
Altaf Nazerali 10,542,999 votes for and 12,175 withheld
Ross Wilmot 10,542,999 votes for and 12,175 withheld

ii.     Ratification of BDO Seidman,
LLP as the Company's independent auditors for the fiscal year ended December 31,
2001 received 10,546,866 votes for, 7,300 against and 1,000 abstaining.

iii.     Approval of the Company's
2000 Stock Incentive Plan received 8,465,599 votes for, 30,175 against and 1,000
abstaining.

Item 6.     EXHIBITS AND REPORTS
FILED ON FORM 8-K

(a) Exhibits

none



(b) Reports on Form 8-K

On April 4, 2001 the registrant filed a Current Report on
Form 8-K reporting the availability of a free trial Software Developer Kit.

On May 7, 2001 the registrant filed a Current Report on Form
8-K reporting a marketing alliance with Edward Lowe and Associates, and the
availability of on-line demos on its web site.

On June 11, 2001 the registrant filed a Current Report on
Form 8-K reporting a segment featuring its technology in the on-line news
source Speed Magazine, and the integration of INTACTA.CODE with Imagis
Technologies biometric security technology.

15

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SIGNATURES

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

Dated: August 9, 2001

|    | INTACTA TECHNOLOGIES INC.
(Registrant)                       
|--- | -------------------------------------------------------------
|    |                                                              
|By: | /s/ Noel R. Bambrough
Noel R. Bambrough
President and CEO    
|    |                                                              
|By: | /s/ Graham E. Argott
Graham E. Argott
Chief Financial Officer
|    |                                                              

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