<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                             ----------------------

                                 FORM 10-QSB/A


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

         For the quarterly period ended      MARCH 31, 2001
                                        ------------------------

[ ]      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: 0-18450

               ---------------------------------------------------

                               COLOR IMAGING, INC.
                        --------------------------------
             (Exact name of registrant as specified in its charter)

             DELAWARE                                   13-3453420
  ------------------------------            ----------------------------------
 (State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or organization)

4350 PEACHTREE INDUSTRIAL BOULEVARD, SUITE 100
NORCROSS, GEORGIA                                        30071
-----------------------------------------------        ---------
(Address of principal executive offices)               (Zip code)


                                 (770) 840-1090
                              ---------------------
              (Registrant's telephone number, including area code)

Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the 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 [ ]

As of June 30, 2001, there were 7,956,400 shares of Common Stock outstanding.


                                       1
<PAGE>   2

                               COLOR IMAGING, INC.
                         QUARTERLY REPORT ON FORM 10-QSB
                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

                                      INDEX


PART I:  FINANCIAL INFORMATION

Item 1.  Financial Statements

Consolidated Condensed Balance Sheets at March 31, 2001 (Unaudited)
 and December 31, 2000 (Audited) .........................................3

Consolidated Condensed Statements of Operations (Unaudited)
 for the Three Months ended March 31, 2001 and 2000 ......................4

Consolidated Condensed Statements of Cash Flows (Unaudited)
 for the Three Months ended March 31, 2001 and 2000 ......................5

Notes to Unaudited Consolidated Condensed Financial Statements ...........6

Item 2. Management's Discussion and Analysis or Plan of Operation ........7

PART II: OTHER INFORMATION

Item 1. Legal Proceedings................................................13

Item 2. Changes in Securities............................................14

Item 6. Exhibits and Reports on Form 8-K.................................14

Signatures...............................................................15


                                       2
<PAGE>   3

PART I: FINANCIAL INFORMATION
ITEM 1 -FINANCIAL STATEMENTS

                       COLOR IMAGING, INC. AND SUBSIDIARY
                      CONSOLIDATED CONDENSED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                               THREE MONTHS ENDED         YEAR ENDED
                         ASSETS                                                      31-Mar-01            31-Dec-00
                                                                                   (Unaudited)            (Audited)
                                                                                  ------------           ------------
                                                                                 (as restated,
                                                                                  see Note 7)
<S>                                                                               <C>                    <C>
CURRENT ASSETS
    Cash                                                                          $    168,509           $    339,348
    Accounts receivable, net                                                         3,345,063              3,562,121
    Inventory                                                                        5,612,928              5,181,248
    Refundable income taxes                                                             19,995                 19,995
    Deferred income taxes                                                              136,210                159,426
    Due from related party                                                              76,716                100,832
    Prepaid expenses and other current assets                                          310,833                381,146
                                                                                  ------------           ------------
          TOTAL CURRENT ASSETS                                                       9,670,254              9,744,116
                                                                                  ------------           ------------

PROPERTY, PLANT AND EQUIPMENT - NET                                                  7,315,342              7,384,679
                                                                                  ------------           ------------
OTHER ASSETS
    Patent/intellectual property                                                     1,014,404                876,751
    Deferred income taxes                                                              490,211                464,085
    Related party portion of IDR bond                                                  897,412                873,296
    Other assets                                                                       373,650                269,626
                                                                                  ------------           ------------
          TOTAL OTHER ASSETS                                                         2,775,677              2,483,758
                                                                                  ------------           ------------
                                                                                  $ 19,761,273           $ 19,612,553
                                                                                  ============           ============
           LIABILITIES & STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Revolving credit lines                                                        $  1,217,000           $  1,399,000
    Accounts payable                                                                 6,884,513              6,640,402
    Current portion of notes payable                                                   349,830                351,150
    Current portion of bonds payable                                                   320,000                320,000
    Other current liabilities                                                          400,735                400,276
                                                                                  ------------           ------------
           TOTAL CURRENT LIABILITIES                                                 9,172,078              9,110,828
                                                                                  ------------           ------------
LONG TERM LIABILITIES
    Notes payable                                                                    1,611,993              1,685,725
    Bonds payable                                                                    3,780,000              3,780,000
                                                                                  ------------           ------------
          LONG TERM LIABILITIES                                                      5,391,993              5,465,725
                                                                                  ------------           ------------
           TOTAL LIABILITIES                                                        14,564,071             14,576,553
                                                                                  ------------           ------------
COMMITMENTS & CONTINGENCIES

STOCKHOLDERS' EQUITY

   Common stock, $.01 par value, authorized 20,000,000 shares; 7,574,219 and
     7,490,948 shares issued and outstanding on March 31, 2001 and
     December 31, 2000, respectively                                                    75,742                 74,909
   Additional paid-in capital                                                        7,151,714              6,986,003
   Accumulated deficit                                                              (2,030,254)            (2,024,912)
                                                                                  ------------           ------------
          TOTAL STOCKHOLDERS' EQUITY                                                 5,197,202              5,036,000
                                                                                  ------------           ------------
                                                                                  $ 19,761,273           $ 19,612,553
                                                                                  ============           ============

</TABLE>


       See Notes to Unaudited Consolidated Condensed Financial Statements


                                       3
<PAGE>   4

                       COLOR IMAGING, INC. AND SUBSIDIARY
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                   FOR THE THREE MONTH PERIODS ENDED MARCH 31
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                        2001            2000
                                                    -----------       -----------
                                                    (as restated,
                                                     see Note 7)
<S>                                                 <C>               <C>
SALES                                               $ 5,528,316       $ 3,728,372

COST OF SALES                                         4,514,325         2,849,070
                                                    -----------       -----------
GROSS PROFIT                                          1,013,991           879,302
                                                    -----------       -----------
OPERATING EXPENSES:
    Administrative                                      456,181           280,878
    Research & development                              216,909           169,621
    Sales & marketing                                   225,681           256,187
                                                    -----------       -----------
                                                        898,771           706,686
                                                    -----------       -----------
INCOME FROM OPERATIONS                                  115,220           172,616
                                                    -----------       -----------
OTHER INCOME (EXPENSE):
    Interest and other income                             7,831           225,637
    Interest and financing costs                       (120,574)         (116,400)
    Non-recurring moving expenses                        (9,719)         (208,412)
                                                    -----------       -----------
                                                       (122,462)          (99,175)
                                                    -----------       -----------

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES          (7,242)           73,441

PROVISION (BENEFIT) FOR INCOME TAXES                     (1,900)           25,000
                                                    -----------       -----------
NET INCOME/(LOSS)                                   $    (5,342)      $    48,441
                                                    ===========       ===========

INCOME (LOSS) PER COMMON SHARE:
     Basic                                          $        --       $       .01
     Diluted                                        $        --       $       .01

</TABLE>

       See Notes to Unaudited Consolidated Condensed Financial Statements


                                       4
<PAGE>   5

                       COLOR IMAGING, INC. AND SUBSIDIARY
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                   FOR THE THREE MONTH PERIODS ENDED MARCH 31
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                             2001              2000
                                                         -----------       -----------
                                                         (as restated,
                                                          see Note 7)
<S>                                                       <C>               <C>
Cash flows from operating activities:
  Net income (loss)                                      $    (5,342)      $    48,441
  Adjustments to reconcile net income (loss)
    to net cash provided by operating activities:
      Depreciation and amortization                          152,200           240,941
      Deferred income taxes                                   (2,910)          (94,089)

  Decrease (increase) in:
        Accounts and other receivables                       217,058          (299,309)
        Inventories                                         (431,680)       (2,211,260)
        Prepaid expenses and other assets                     94,429           140,535
  Increase (decrease) in:
        Accounts payable and accrued liabilities             244,570         2,428,783
                                                         -----------       -----------
        Net cash provided by
             operating activities                            268,325           254,042
                                                         -----------       -----------
Cash flows from investing activities:
     Capital expenditures                                    (82,863)         (532,156)
     Other assets                                           (128,140)                0
     Patents and intellectual properties                    (137,653)          (86,079)
                                                         -----------       -----------
        Net cash (used in)
             investing activities                           (348,656)         (618,235)
                                                         -----------       -----------
Cash flows from financing activities:
  Net borrowings (payments) under line of credit            (182,000)          199,686
  Proceeds from issuance of bonds or long-term debt                0             7,930
  Proceeds from sale of stock                                166,544                 0
  Principal payments of long-term debt                       (75,052)                0
                                                         -----------       -----------
        Net cash provided by (used in)
             financing activities                            (90,508)          207,616
                                                         -----------       -----------
             Net (decrease) in cash                         (170,839)         (156,577)
Cash at beginning of year                                    339,348         1,096,512
                                                         -----------       -----------
Cash at end of period                                    $   168,509       $   939,935
                                                         ===========       ===========
</TABLE>


       See Notes to Unaudited Consolidated Condensed Financial Statements


                                       5
<PAGE>   6

                       COLOR IMAGING, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                 March 31, 2001
                                   (Unaudited)

NOTE 1. BASIS OF PRESENTATION

The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring accruals
and adjustments) considered necessary for a fair presentation have been
included. Operating results for the three months ended March 31, 2001 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2001.

NOTE 2. STOCK OPTIONS

On March 21, 2001, the Company granted options to acquire 535,000 shares of the
common stock of the Company to management and key employees of the Company. The
options vest over a three year period and expire, with respect to that portion
vested, 5 years from the date of vesting. Additionally the Company granted
options to acquire 125,000 shares of the common stock to non-employee directors
effective as of the date of their becoming a member of the Board of Directors.
The options vest in 5 equal annual increments from the effective date and
expire, with respect to that portion that has vested, 3 years from date of
vesting. The option price is $2.75 per share. The Company accounts for stock
option grants in accordance with APB Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations.

NOTE 3. INVENTORIES

Inventories consisted of the following components as of March 31, 2001 and
December 31, 2000:

<TABLE>
<CAPTION>
                                   March 31, 2001    December 31, 2000
                                   --------------    -----------------
<S>                                <C>               <C>
        Raw materials               $ 1,254,528       $   794,128
        Work-in-process               1,072,095         1,275,545
        Finished goods                3,408,960         3,234,230
        Obsolescence allowance         (122,655)         (122,655)
                                    -----------       -----------
           Total                    $ 5,612,928       $ 5,181,248
                                    ===========       ===========
</TABLE>

NOTE 4. CHANGES TO BORROWING ARRANGEMENTS

The Company has a $1.5 million revolving line of credit with an outstanding
balance as of March 31, 2001 of $717,000, which bears interest at the one month
Libor interest rate in effect two business days before the first day of each
month plus 2.50% (7.782% at March 31, 2001). The revolving line of credit has a
December 31, 2001 expiration date.

The Bank has made available an additional line of credit of $500,000. The
outstanding balance as of March 31, 2001 was $500,000. The additional line of
credit has an expiration date of December 31, 2001, and bears an interest rate
of the Bank's prime interest rate plus 0.5% (8.5% at March 31, 2001).

Under the lines of credit, the Company is permitted to borrow up to 85% of
eligible accounts receivable and 50 percent of eligible inventories (up to a
maximum of $1.1 million and not to exceed 60 percent of the total outstandings).
The Company has granted the Bank a security interest in all of the Company's
assets as security for the repayment of the lines of credit.

The Bank agreement contains various covenants which the Company is required to
maintain; fixed charge and cash flow leverage ratios of not less than 1.20:1 and
not greater than 4.00:1, respectively, and a minimum tangible net worth of $4.1
million. As of March 31, 2001, the Company was not in compliance with these
covenants and has received a waiver from the bank as regards these requirements
for the period ended March 31, 2001.


                                       6
<PAGE>   7

NOTE 5. SIGNIFICANT CUSTOMERS

In the three month period ended March 31, 2001, a reseller of imaging supplies
accounted for 52% of net sales. The Company does not have a written or oral
contract with this customer. All sales are made through purchase orders.

NOTE 6. SIGNIFICANT SUPPLIERS

In the three months ended March 31, 2001, the Company purchased 62% of its raw
materials, components and supplies from one supplier in connection with sales to
its largest customer. The Company also has an annually renewable Original
Equipment Manufacturer ("OEM") purchase agreement under which it purchases, adds
value and resells some of its technology to the web press market. The Company
intends to design and manufacture the products it now obtains under this OEM
purchase agreement. However, should this OEM purchase agreement not be renewed
before the Company has completed this product development, the Company's ability
to manufacture and deliver these products to its web press customers could be
severely limited.

NOTE 7. RESTATEMENT

Effective January 1, 2001, the Company changed its accounting estimates relating
to depreciation. The estimated service life for certain machinery, equipment and
fixtures was extended by three (3) to thirteen (13) years. The change in
estimated service life was based upon a study performed by the Company and the
effect of the Company's extensive capital investments, which have resulted in a
mix of assets with longer productive lives. The effect of this change reduced
depreciation expense for the quarter ended March 31, 2001 by $86,883. The
Company also reviewed the depreciation expense for manufacturing equipment and
determined that certain equipment on which depreciation was charged in 2001 had
not yet been placed in service since installation had not yet been completed. As
a result, depreciation expense was overstated by $24,758 for the quarter ended
March 31, 2001. Accordingly, the Company restated its March 31, 2001, financial
statements to reflect the reduced depreciation expense.

     The following tables present the impact of the restatements:

<TABLE>
<CAPTION>

                                                As Previously
                                                   Reported         As Restated
<S>                                             <C>                 <C>
Quarter Ended March 31, 2001:
Balance Sheet:

      Deferred Income Tax                       $   172,200         $   136,210
      Property, Plant and Equipment, Net          7,203,701           7,315,342
      Accumulated deficit                        (2,105,905)         (2,030,254)
Statement of Operations:
      Costs of sales                              4,625,966           4,514,325
      Net loss                                      (80,993)             (5,342)
      Basic loss per share                      $      (.01)        $        --
      Diluted loss per share                    $      (.01)        $        --

</TABLE>

Depreciation of the Company's property, plant, and equipment is computed
using the straight-line method. The average estimated useful lives (as restated)
are as follows:

<TABLE>
<CAPTION>
                                                       Years
                                                      --------


<S>                                                   <C>  <C>
         Leasehold improvements                        10 - 20
         Machinery and equipment                        7 - 20
         Research and development equipment             5 - 10
         Furniture and fixtures                         7 - 10

</TABLE>


ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION

BACKGROUND

    Color Imaging, Inc. (the "Company" or "Color"), OTCBB: CIMG, develops and
manufactures products used in electronic printing, analog and digital copiers
and high-speed digital variable data printing in real-time directly on web
presses. Products include formulations for black text and specialty toners,
including color and magnetic ink characters which are used on checks and other
financial documents, photoreceptors and imaging drums. The Company's subsidiary,
Logical Imaging Solutions, Inc. ("Logical") provides the commercial printer with
a complete printing system that, when installed directly on an offset printing
press, expands printing capabilities to include any variable data together with
bar codes, MICR, and unlimited alphanumeric sequencing. These functions for the
web press address the needs of commercial printers that require digital
processing and printing of variable data at extremely high speeds.

COLOR

     Color, since it's inception in 1983, has developed and manufactured
products used in electronic printing and formulates and produces, from raw
materials, black text and specialty toners, including color and MICR (magnetic
ink characters which are used on checks and other financial documents). Color
also supplies other consumable products, including toner cartridges, cartridge
components, photoreceptors and imaging drums.


                                       7
<PAGE>   8

     Color is continually expanding its product line and manufacturing
capabilities. This expansion has led to the creation of more than 130 different
toner formulations, including aftermarket toners and imaging products for
printers manufactured by Brother(TM), Canon(TM), Delphax(TM), Hewlett
Packard(TM), IBM(TM), Lexmark(TM), Oce'(TM), Sharp(TM), Xerox(TM) and printing
systems developed by Logical. Product enhancements offered also include imaging
supplies that enable standard laser printers to print MICR characters. Color's
production, product development and support activities are conducted from a
180,000 square foot facility located in a suburb of Atlanta, Georgia. Products
are marketed directly as branded products to Original Equipment Manufacturers
("OEMs") and as aftermarket products to end-users of laser printers supplied
through a worldwide network of distributors.

LOGICAL

     Logical's development efforts, since it's founding in 1993, have focused on
creating a revolutionary high-speed digital variable data printing process,
including software, hardware and consumable products for commercial offset
printing applications. Logical designs, manufactures and delivers a complete
printing system that when installed directly on an offset printing press expands
printing capabilities to include any variable data together with bar codes, MICR
and unlimited alphanumeric sequencing. These functions address the needs of
commercial printers that require digital processing and printing of variable
data at extremely high speeds. Logical's expansion plans include color printing
capabilities and the ability to print simultaneously on multiple print engines.
Further ambitions are to offer similar digital, high-speed color printing
solutions for data processing applications.

     Logical's product line includes software, hardware and consumable products.
The Company's printers' operating software, CREATE!, allows the commercial
printer to create any type of document, tag, ticket or label and control the
printing process on the press. CREATE! accomplishes all imaging functions in a
WindowsNT(TM) environment, enabling the user to create, edit, store, distribute,
proof and download documents in any industry-standard format. Logical's
companion hardware product is a proprietary Printer Control Unit ("PCU"),
incorporating the latest microprocessor technology, providing digital imaging
and the simultaneous control of multiple print engines. Logical's SOLUTION
series of variable data printing systems integrate CREATE! and the PCU in
real-time digital printing technology, featuring a non-impact, Electron Beam
Imaging ("EBI") printing process with imaging rates exceeding 1,000
pages-per-minute. Other products include a full line of consumable products;
black text and MICR toners, print cartridges and toner fusing assemblies.
Logical's strategy is to continually build a base of printer systems that will
generate a recurring demand for these high margin consumable products.

     Logical intends to expand its product line during 2001 by offering the
SOLUTION Series of printing systems with the ability to print variable data in
color at speeds exceeding 250 feet-per-minute, as an alternative product for
offset high-speed printing applications. In addition, Logical's color system,
the DIGITALCOLORPRESS ("DCP") will be offered to production printing sites
worldwide and as an upgrade alternative to the hundreds of current users of
Delphax Printing System's EBI technology.

OVERVIEW

Sales, for the three months ended March 31, 2001, were primarily generated from
the sale of Color's black text, color and MICR toners and related consumable
products, including toner cartridges and the re-filling of certain toner
cartridges. In the three month period ended March 31, 2001, a reseller of
imaging supplies accounted for 52% of net sales. The Company believes that this
concentration of sales to a single customer will be significantly reduced during
2001.


                                       8
<PAGE>   9

RECENT DEVELOPMENTS

The Company introduced several aftermarket black text toners for Xerox(TM),
Lexmark(TM) and Ricoh(TM) printers at the end of the quarter as well as color
toners and recharging kits for the HP4500(TM) color printer. These products
generated over $150,000 of sales through April 2001.

In April 2001, the Company introduced aftermarket MICR toners for HP(TM),
IBM(TM) and Samsung(TM) printers and is in beta test of additional aftermarket
toners for two Ricoh(TM) digital copiers and an Oce'(TM) wide format printer.
Management believes that collectively these recently introduced products will
result in sales of more than $2 million over the next twelve months.

The Company is a party to negotiations, and incurring financial obligations in
connection therewith, to acquire a manufacturing business. The parties have not
reached a final agreement and the Company cannot make any assurances that a
definitive agreement will be reached or reduced to writing.

RESULTS OF OPERATIONS

The following table sets forth certain information derived from the Company's
unaudited consolidated statements of operations:


<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED
                                                MARCH 31,
                                          2001              2000
                                          ----              ----
                                        (PERCENTAGE OF NET SALES)

<S>                                      <C>               <C>
Net sales                                 100               100
Cost of goods sold                         82                76
Gross profit                               18                24
Administrative expense                      8                 8
Research and development                    4                 5
Sales and Marketing                         4                 7
Operating income                            2                 5
Interest expense                            2                 3
Depreciation and amortization               5                 6
Income before taxes                         0                 2
Provision for taxes (Benefit)               0                 1

Net Income (Loss)                           0                 1

</TABLE>


THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

NET SALES. The Company's net sales were over $5.5 million for the three months
ended March 31, 2001, or an increase of 48% compared to $3.7 million for the
three month period ended March 31, 2000, with $5.4 million of net sales
attributable to imaging products manufactured by Color, inclusive of $2.9
million of product sold to Color's largest customer.

COST OF GOODS SOLD. Cost of goods sold increased by $1.7 million or 58% to $4.5
million in the three months ended March 31, 2001 from $2.8 million in the three
months ended March 31, 2000. This increase was primarily due to increased net
sales. Cost of goods sold as a percentage of net sales increased to 82% in the
first quarter of 2001 from 76% in the first quarter of 2000. This increase was
due to the sale of $2.9 million of imaging products to the Company's largest
customer at a reduced profit margin.

GROSS PROFIT. As a result of the above factors, gross profit increased to
$1,014,000 in the three months ended March 31, 2001 from $879,000 in the three
months ended March 31, 2000. Gross profit as a percentage of net sales, however,
decreased to


                                       9
<PAGE>   10

18% in the first quarter of 2001 from 24% in the first quarter of 2000. As
stated above, this decrease was largely due to the sale of a significant amount
of copier products to a single customer at a reduced profit margin.

GENERAL AND ADMINISTRATIVE, SELLING, AND R&D EXPENSES. General and
administrative, selling and R&D expenses increased $192,000 or 27% to $899,000
in the three months ended March 31, 2001 from $707,000 in the three months ended
March 31, 2000. General and administrative, selling and R&D expenses decreased,
as a percentage of net sales, to 16% in the first quarter of 2001 from 19% in
the first quarter of 2000 due primarily to the 48% increase in sales. R&D
expenses increased by $47,000 or 28% to $217,000 in the three months ended March
31, 2001 from $170,000 in the three months ended March 31, 2000. Research and
development expenses as a percentage of net sales decreased to 4% in the first
quarter of 2001, from 5% in the first quarter of 2000, reflecting the higher
sales level.

OPERATING INCOME. As a result of the above factors the operating income
decreased by $58,000, to a profit of $115,000 in the three months ended March
31, 2001 from a profit of $173,000 in the three months ended March 31, 2000.

INTEREST AND FINANCE EXPENSE. Interest expense increased $4,000 in the three
months ended March 31, 2001 from $116,000 in the three months ended March 31,
2000.

OTHER INCOME. Other income decreased by $218,000 in the three months ended March
31, 2001 from $226,000 in the three months ended March 31, 2000. This decrease
was primarily the result of a the Company's selling a technology license in the
first quarter of 2000.

INCOME TAXES. As the result of the Company's loss in the current year, income
tax credits increased to $2,000 in the three months ended March 31, 2001 from a
tax provision of $25,000 for the comparable period in 2000.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2001, the Company's working capital was approximately $498,000 and
its current ratio was 1.1 to 1. At December 31, 2000, working capital was
approximately $633,000 and its current ratio was 1.1 to 1.

Cash flows provided by operating activities were $268,000 in the three months
ended March 31, 2001, compared to $254,000 provided by operating activities in
the three months ended March 31, 2000. The cash flows provided by operating
activities in the three months ended March 31, 2001 were slightly higher than in
the three months ended March 31, 2000 due primarily to increases in inventories
in 2000. The increase in inventories resulted primarily from increased
purchasing levels to meet the production requirements of the Company's largest
customer.

Cash flows used in investing activities were $349,000 and $618,000 in the three
months ended March 31, 2001 and 2000, respectively. This includes $138,000 and
$86,000, respectively, invested in furthering the Company's patented toner and
digital color printing systems technologies.

The Company has a $1.5 million revolving line of credit with an outstanding
balance as of March 31, 2001 of $717,000, bearing interest at the bank's prime
interest rate less .25%. The revolving line of credit has a June 30, 2001
expiration date. Under the line of credit, the Company is permitted to borrow up
to 85% of eligible accounts receivable and 50% of eligible inventories (up to a
maximum of $1.1 million).

The Bank has made available an additional line of credit of $500,000. The
outstanding balance under this additional line as of March 31, 2001 was
$500,000. The additional line of credit has an expiration date of June 30, 2001,
and bears an interest rate of the Bank's prime interest rate plus .5%. The
Company has granted the Bank a security interest in all of the Company's assets
as security for the repayment of the lines of credit.


                                       10
<PAGE>   11
The Bank agreement contains various covenants which the Company is required to
maintain; fixed charge, cash flow leverage and debt to tangible net worth ratios
of not less than 1.20:1, not greater than 4.00:1 and 3.50:1, respectively, and a
minimum tangible net worth of $4.1 million. As of March 31, 2001, the Company
was not in compliance with these covenants and has received a waiver from the
bank as regards these requirements for the period ended March 31, 2001.

Cash flows used in or provided by financing activities for the three months
ended March 31, 2001 and 2000 were $91,000 used in and $208,000 provided by
financing activities respectively, and resulted primarily from payments under
the Company's various credit facilities and proceeds from the sale of the
Company's common stock.

To the extent that the funds generated from operating activities and
availability under credit facilities are insufficient to finance the operating
activities of the Company, the Company would need to raise additional funds
through public or private financing. There can be no assurance that additional
financing will be available on favorable terms, or at all. On March 21, 2001,
the Board of Directors authorized increasing the amount of the previously
authorized private placement by $1 million.

FACTORS THAT MAY AFFECT FUTURE RESULTS AND INFORMATION CONCERNING FORWARD-
LOOKING STATEMENTS

     Statements contained in this report which are not statements of historical
fact are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements are made based upon management's current expectations
and beliefs concerning future developments and their potential effects upon the
Company. There can be no assurance that future developments affecting the
Company will be those anticipated by management, and there are a number of
factors that could adversely affect the Company's future operating results or
cause the Company's actual results to differ materially from the estimates or
expectations reflected in such forward-looking statements, including without
limitation, the factors set forth below:

      Limited Operating History. The Company has a limited operating history
that makes it difficult to evaluate the Company's future prospects. The
Company's prospects are subject to risks and uncertainties frequently
encountered by new companies. Many of these risks and uncertainties are unknown,
but they include the uncertainty of the acceptance in the marketplace of the
Company's products or services, including but not limited to its high speed
color printer, if and when available for sale.

     Unproven Business Model. The Company's business model involving its
high-speed color printer, is new and its ability to generate profits therefrom
is unproven. The Company cannot assure that its strategy will be successful.
Nevertheless, the success of the Company's high speed color printer is dependent
on market acceptance of the Company's technology.

     Ability to Obtain Additional Financing. The Company does not anticipate
that its revenues in the foreseeable future will be sufficient to fulfill its
business plan without the need for additional capital. Therefore, the Company
needs to raise additional funds to finance its operations, fund expansion and
respond to competitive pressures. There can be no assurance that the Company
will be able to obtain additional financing, if needed, on acceptable terms, or
at all.

      Competitive and Rapidly Changing Marketplace. There is significant
competition in the toner and consumable products, and color printing systems
industries in which the Company conducts its business. In addition, the market
for color printers and related supplies is rapidly changing. Many of the
Company's competitors have longer operating histories, larger customer bases,
greater brand recognition and significantly greater financial, marketing and
other resources than the Company. These competitors may be able to devote
substantially more resources to developing their business than the Company. The
Company's ability to compete


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depends upon a number of factors within and outside of the Company's control,
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.

     Dependence on a Limited Number of Customers. In the three months ended
March 31, 2001, a reseller of imaging supplies accounted for 52% of the
Company's net sales. The Company does not have a written or oral contract with
this customer and all sales are made through purchase orders. The loss of this
customer could have a substantial and material adverse affect on the Company.
The Company has in the past, and might in the future, lose one or more of its
major customers. If the Company fails to continue to sell to its major customers
in the quantities anticipated, or if any major customer terminates its
relationship with the Company, the Company's reputation, the perception of the
Company's products and technology in the marketplace and the growth of the
business might be harmed.

     Dependence on Suppliers. The Company is responsible for procuring raw
materials for its products. The Company's products incorporate technologies that
are available from limited sources of supply. For the three months March 31,
2001, the Company purchased 62% of its raw materials, components and supplies
from one supplier. If the Company is unable to obtain its raw materials and
components from this one supplier, product shipments could be prevented or
delayed, which could result in a loss in sales. If the Company is unable to meet
existing orders or to enter into new orders because of a shortage of raw
materials and components, the Company will likely lose revenues and risk losing
customers and harming its reputation in the marketplace.

      Planned Growth through Acquisition. Management expects to grow the
business of the Company through, among other things, acquisitions. The
acquisition strategy is focused on businesses or technologies that management
believes complement or expand the Company's existing business. Acquisitions of
this type involve a number of risks, including the possibility that the
operations of the acquired company will be unprofitable or that management
attention will be diverted from the day-to-day operation of the Company's
business. An unsuccessful acquisition could reduce the Company's margins or
otherwise harm the Company's financial condition, including impairing its
liquidity and resulting in its being in non-compliance with financial
institution covenants. Any acquisition could result in a dilutive issuance of
equity securities, the incurrence of debt and the loss of key employees. In
addition, certain benefits of the acquisitions may be dependent on the Company
taking certain actions which will result in one-time or recurring charges or
expenses (including goodwill amortization) which, depending on the action taken,
may be material. The Company cannot make any assurances that any acquisitions
will be successfully completed or that, if one or more acquisitions are
completed, the acquired businesses, client lists, products or technologies will
generate sufficient revenue to offset the associated costs of other acquisitions
or other adverse effects.

     Short Product Life Cycles and Reductions in Unit Selling Prices. The
markets in which the Company competes are characterized by rapidly evolving
technology, frequent new product introductions and significant price
competition. Consequently, short product life cycles and reductions in unit
selling prices due to competitive pressures over the life of a product are
common. The Company's financial condition and results of operations could be
adversely affected if the Company is unable to manufacture new, competitive
products in a timely manner. The Company's future success will depend on its
ability to develop and manufacture technologically competitive products, price
them competitively, and achieve cost reductions for existing products. Advances
in technology will require increased investment to maintain or advance the
Company's market position.

     Key Personnel. The Company's future success depends to a significant extent
on the continued services of senior management and other key personnel. The loss
of the services of any of the Company's executive officers or other key
employees could harm the Company's business. The Company's future success also
depends on the


                                       12
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Company's ability to attract, retain and motivate highly skilled employees.
Competition for qualified employees in the industries in which the Company
engages is intense. If the Company fails to hire and retain a sufficient number
of qualified employees, the Company's business will be adversely affected.

     Delays in Customer Purchases, Market Acceptance; Increase in Inventories.
Delays in or reductions to customer purchases of existing products in
anticipation of new product introductions by the Company or its competitors,
market acceptance of new products and pricing programs, the reaction of
competitors to any such new products or programs, the life cycles of the
Company's products, as well as delays in product development and manufacturing;
(1) may cause a buildup in the Company's inventories, (2) may make the
transition from current products to new products difficult and (3) could
adversely affect the Company's future operating results. The competitive
pressure to develop technology and products also could cause significant changes
in the level of the Company's operating expenses.

     Inventory Levels and Customer Demand. The Company's performance depends in
part upon its ability to manage inventory levels to support the demands of new
customers as well as its established customer base and to address production and
supply difficulties. The Company's future operating results and its ability to
effectively grow or maintain its market share may be adversely affected if it is
unable to address these issues on a timely basis.

     Dependence on Intellectual Property. The Company's success depends in part
on its ability to obtain patents, copyrights and trademarks, maintain trade
secret protection and operate without infringing the proprietary rights of
others. Current or future claims of intellectual property infringement could
prevent the Company from obtaining technology of others and could otherwise
adversely affect its operating results, cash flows, financial position or
business, as could expenses incurred by the Company in enforcing its
intellectual property rights against others or defending against claims that the
Company's products infringe the intellectual property rights of others.

     Factors unrelated to the Company's operating performance, including
economic and business conditions; the loss of significant customers or
suppliers; the outcome of future litigation and currency exchange rates could
also adversely affect the Company's operating results. In addition, the
Company's stock price, like that of other technology companies can be volatile.
Trading activity in the Company's common stock, particularly due to low trading
volume and inter-day trading in the Company's common stock, may affect the
Company's common stock price.

     While the Company reassesses material trends and uncertainties affecting
the Company's financial condition and results of operations in connection with
the preparation of its quarterly and annual reports, the Company does not intend
to review or revise, in light of future events, any particular forward-looking
statement contained in this report.

     The information referred to above should be considered by investors when
reviewing any forward-looking statements contained in this report, in any of the
Company's public filings or press releases or in any oral statements made by the
Company or any of its officers or other persons acting on its behalf. The
important factors that could affect forward-looking statements are subject to
change, and the Company does not intend to update the foregoing list of certain
important factors. By means of this cautionary note, the Company intends to
avail itself of the safe harbor from liability with respect to forward-looking
statements that is provided by Section 27A and Section 21E referred to above.

PART II: OTHER INFORMATION

ITEM 1 -LEGAL PROCEEDINGS

The Company is not a party to any material legal proceedings.


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ITEM 2 -CHANGES IN SECURITIES

        From January 1, 2001 to March 31, 2001, previously issued warrants were
exercised at a price of $2.00 per share for an aggregate of $66,542. The warrant
exercise resulted in the issuance of 33,271 shares of common stock. The share
issuance upon warrant exercise was exempt from the registration provisions of
the Securities Act of 1933, as amended (the "Act") pursuant to Section 4(2)
thereof.

        From January 1, 2001 to March 31, 2001, the Company issued 50,000 Units
at a price of $2.00 per unit for an aggregate of $100,000. Each Unit consisted
of one share of common stock and one warrant to purchase once share of common
stock at a price of $2.00. No general forms of advertising were used in
connection with this issuance of the Units. No underwriters were used in
connection with the issuance of the Units and no commissions were paid to any
person. The sale and issuance of Units was exempt from the registration
provisions of the Act pursuant to Section 4(2) thereof.

ITEM 6 -EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS

11  Computation of Earnings Per Common Share

(b) REPORTS ON FORM 8-K

None.


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                                   SIGNATURES


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

                                           COLOR IMAGING, INC.


                                           /s/ MICHAEL W. BRENNAN
                                           ------------------------------------
July 31, 2001                              Michael W. Brennan
                                           Chairman and Chief Executive Officer


                                           /s/ MORRIS E. VAN ASPEREN
                                           ------------------------------------
                                           Morris E. Van Asperen
                                           Executive Vice President and
                                           Chief Financial Officer


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