As Filed with the SEC on October 15, 2001

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-KSB



ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934



For the Fiscal Year Ended June 30, 2001	Commission File No. 0-28541



QUINTEK TECHNOLOGIES, INC.

(Name of Small Business Issuer in its charter)





|California                                                     |  | 77-0505346                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

537 Constitution Avenue, Suite B

Camarillo, California 93012

(Address of principal executive offices)

Issuer's telephone number: 805-383-3904



Securities registered pursuant to Section 12(b) of the Act:

None

Securities to be registered pursuant to Section 12(g) of the Act:

Common Stock, par value $.01 per share

(Title of Class)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes X;  No ___

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained herein, and will not be contained, to the best or registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [  ]

State issuer's revenues for its most recent fiscal year:  $675,145.

At June 30, 2001, the aggregate market value of registrant's Common Stock held by non-affiliates was $1,640,816.80, based on the closing OTC Bulletin Board bid price of $0.09 per share on that date.

At June 30, 2001, a total of 22,238,793 shares of registrant's Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:  None

Transitional Small Business Disclosure Format (check one):  Yes ; No X

Exhibit Index appears on page 27.



TABLE OF CONTENTS



|Item 1               | Business                                                                              | 3                                        
|-------------------- | ------------------------------------------------------------------------------------- | -----------------------------------------
|                     | 1.1                                                                                   | Forward-looking statements               
|                     | 1.2                                                                                   | Summary                                  
|                     | 1.3                                                                                   | Organizational history                   
|                     | 1.4                                                                                   | Aperture cards                           
|                     | 1.5                                                                                   | The Q4300 aperture card imaging system   
|                     | 1.6                                                                                   | Patents and intellectual property        
|                     | 1.7                                                                                   | Manufacturing                            
|                     | 1.8                                                                                   | Markets                                  
|                     | 1.9                                                                                   | Competition                              
|                     | 1.10                                                                                  | Customers                                
|                     | 1.11                                                                                  | Suppliers                                
|                     | 1.12                                                                                  | Regulation                               
|Item 2               | Description of Property                                                               | 15                                       
|Item 3               | Legal Proceedings                                                                     | 15                                       
|Item 4               | Submission of Matters to a Vote of Security Holders                                   | 15                                       
|Item 5               | Market for Common Equity and Related Stockholder Matters                              | 15                                       
|                     | 5.1                                                                                   | Market for common stock                  
|                     | 5.2                                                                                   | Dividends                                
|                     | 5.3                                                                                   | Recent sales of unregistered securities  
|                     |                                                                                       | 5.3.1                                    
|                     | 5.4                                                                                   | Description of securities                
|                     |                                                                                       | 5.4.1                                    
|                     |                                                                                       | 5.4.2                                    
|                     |                                                                                       |                                          
|                     |                                                                                       |                                          
|                     |                                                                                       |                                          
|                     | 5.5                                                                                   | Preferred stock                          
|Item 6               | Management's Discussion and Analysis of Financial Condition and Results of Operations | 21                                       
|                     | 6.1                                                                                   | Results of operations                    
|                     | 6.2                                                                                   | Liquidity and capital resources          
|Item 7               | Financial Statements                                                                  | 22                                       
|Item 8               | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  | 22                                       
|Item 9               | Directors, Executive Officers, Promoters and Control Persons                          | 22                                       
|                     | 9.1                                                                                   | Board of directors and executive officers
|                     | 9.2                                                                                   | Compensation of Directors                
|                     | 9.3                                                                                   | Management Committees                    
|                     | 9.4                                                                                   | Indemnification of Directors and Officers
|Item 10              | Executive Compensation                                                                | 24                                       
|Item 11              | Security Ownership of Certain Beneficial Owners and Management                        | 25                                       
|Item 12              | Certain Relationships and Related Transactions                                        | 26                                       
|Item 13              | Exhibits and Reports on Form 8-K                                                      | 27                                       
|                     | 13.1                                                                                  | Exhibits                                 
|                     | 13.2                                                                                  | Reports on Form 8-K                      
|Signatures           | 28                                                                                   
|Financial Statements | F-1                                                                                  







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Item 1  Business

1.1  Forward-looking statements

This annual report contains certain forward-looking statements within the meaning of section 21 of the Securities Act of 1934, as amended, including statements that indicate what the Company "believes," "expects," and "anticipates" or similar expressions.  These statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of the Company to differ materially from those expressed or implied by such forward-looking statements.  Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date of this annual report.  There can be no assurance that the forward looking information contained herein will in fact transpire.  The Company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events, or otherwise.

1.2  Summary

Quintek Technologies, Inc. ("Quintek"), the successor to Quintek Electronics, Inc. ("QEI"), was established for the primary purpose of developing, manufacturing, and distributing the Q4300 technology ("Q4300"), used for recording digital images on aperture card media. The Q4300 product line consists of: the Q4305 Aperture Card Plotter ("Q4305"), the Q4303 Universal Interface ("Q4303"), aperture card media, support software, and related services.

Aperture cards are small, rectangular cards (about the size of a timecard) each of which contain a 35mm chip of microfilm. The microfilm is used for storing visual information (drawings, documents, text, etc.) and the remainder of the card is used to identify pertinent aspects of the microfilmed image (drawing number, page number, revision, etc.).

Aperture cards are used to store documents for use as a working reference, or to back-up digital data for long term access and insurance against technology obsolescence or catastrophic events. The Q4300 aperture cards have an estimated life expectancy of over 100 years and are manufactured by the NB/Microseal division of Bell & Howell Corporation ("Bell & Howell") and Imation Corporation using "dry silver" film supplied by Eastman Kodak Company ("Kodak"). Dry silver film can be developed by application of heat rather than by a liquid or viscous process. The Q4305 plotter uses a low powered laser to etch the image on the film chip and a patented heat process to develop and fix the film.

We believe the aperture card will remain a preferred media for long term storage of engineering drawings because of its long term life expectancy and because microfilm is well known and established. Aperture cards are used extensively within a wide variety of industries, including automotive, utilities, aerospace, defense, government, electronics, highway and bridge construction, and railroads.

Almost all other aperture cards are made using a traditional microfilm photographic and development process that requires chemicals to develop the film after making a photographic image of the document being microfilmed. We believe that the chemistry involved with photographic film development can pose numerous problems for the user, since chemical solutions are typically stored, handled, and possibly inhaled by employees during use. We also believe the waste material resulting from the chemical process



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can be considered "hazardous waste material" by local government agencies, and may require costly handling and disposal methods. The Q4300 system eliminates these problems by producing aperture card media with a chemical-free process. Aperture cards produced with the Q4300 system can be used with conventional printing, duplicating and viewing equipment.

The Q4300 system is typically connected directly to the user system network and used like a paper printer to output drawings and other documents directly from digital files. The Q4300 can be adapted to a variety of user software applications and file formats, including: Vector, Raster, ASCII and Postscript.

Presently the Q4305 plotter is made in Sweden under a subcontractor agreement between Qtek Aperture Card AB ("Qtek AB") - our 49% owned subsidiary - and Kitron Electronics AB ("Kitron"), formerly Bofors Missiles AB. Kitron is an international supplier of military defense products and has incorporated the Q4305 into their production line as part of a program to diversify into non- military products. Our arrangements with Kitron are described in Section 1.7 Manufacturing, page 8.

Our corporate office is located in Southern California at 537 Constitution Ave. Suite B, Camarillo, CA, 93012.  Engineering and field support are based in Montpelier, Idaho, while sales and marketing operations are conducted out of the Camarillo facility. Our operation is currently supported through the Montpelier and Camarillo facilities by 6 full and part time employees and various consultants which are contracted on an "as required" basis.

Our common stock is quoted on the OTC Bulletin Board under "QTEK."

1.3  Organizational history

Quintek Electronics, Inc. (QEI) was founded on July 1, 1991, and in 1991 and 1992 it acquired licenses to use the Q4300 technology and related assets, know-how and patent rights developed by Micrographics Technology Corporation ("MTC"). In 1998, QEI purchased the Q4300 technology under a bulk asset and technology purchase agreement. Our president, Tom Sims, and our vice president for engineering, Kurt Kunz, have served in those capacities for QEI since it was founded in 1991, and became officers and directors of our company when the reorganized Quintek acquired the QEI assets in January 1999.

The Q4300 technology was originally developed by National Cash Register ("NCR") and transferred to MTC in 1990 as part of a leveraged buyout of NCR's Micrographics Systems Division. In 1996, the ownership of the Q4300 Technology was transferred from MTC to Johann Oosthuizen, MTC's CEO, as a part of the agreement to sell MTC to Softnet Corporation. In September of 1998, QEI purchased all of the Q4300 technology and remaining assets from Mr. Oosthuizen under a bulk-buy purchase asset agreement.

On January 14, 1999, QEI was acquired in a merger by Pacific Diagnostics Technologies, Inc. (PDX) as part of a Chapter 11 Plan of Reorganization (the "Plan"). Under the Plan, all assets of QEI were sold to PDX, all PDX management resigned once the Plan was confirmed, and QEI's management and operating plan were adopted by the new operating entity. Shortly after confirmation of the Plan, the name of the combined company was changed to Quintek Technologies, Inc. ("Quintek"). Through this process, we assumed the combined assets, liabilities, technology and public position of QEI and PDX.

PDX was in the business of manufacturing and distributing the Stat-K Analyzer, a hand-held device used in critical care medical facilities (e.g. cardiac and dialysis patients) to measure the potassium level in

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whole blood. PDX had completed development, limited production, and Beta testing of the product, but was unable to raise adequate funding for manufacturing, marketing, and supporting the product on a large scale. On December 15, 1997, PDX ceased operations and filed for protection under Chapter 11 of the United States Bankruptcy Code, Northern District of California, Case No. 97-14602. The Plan of Reorganization was submitted to the court for consideration on August 12, 1998 and was confirmed by the court on January 14, 1999.

We do not intend and have not ever intended to restart production and distribution of the Stat-K product line.  The equipment and technological assets we acquired during the merger with Pacific Diagnostic Technologies, Inc. are specific to an industry in which we do not operate and have been unusable in our normal business operations.  We attempted to find a company in the medical industry to license or purchase the Stat-K assets and technology, but have been unsuccessful.  We now believe it may not be able to sell the assets and thus we decided to write off the assets in our financial statements.  See Financial Statements, page F-10.

The Plan was structured to compensate PDX and QEI shareholders and other related parties with shares of our common stock, warrants, and units comprised of stock and warrants. Nonrestricted stock and warrants were issued to PDX shareholders, creditors, and affiliates pursuant to Section 1145 of the bankruptcy code. Restricted stock was issued to QEI shareholders and new investors in accordance with the Plan. The Plan was approved by the shareholders of both QEI and PDX prior to confirmation by the court. A detailed description of share distribution and terms is provided in Section 5.3 Recent Sales of Unregistered Securities, page 16, and Section 5.4, Description of Securities, page 16.

After confirmation of the Plan on January 14, 1999, we had a total of approximately 403 shareholders, including approximately 68 former shareholders of PDX.

On February 24, 2000, we acquired all of the outstanding shares of common stock of Juniper Acquisition Corporation from Juniper's sole shareholder in exchange for 400,000 shares of our common stock. As a result, Juniper became our wholly-owned subsidiary. We also paid the shareholder, TPG Capital Corporation ("TPG") $200,000 for services in 2000.

The consideration exchanged pursuant to the acquisition agreement was negotiated between Juniper and Quintek. In evaluating the acquisition, Juniper used criteria such as the value of our assets, our ability to compete in the market place, our current anticipated business operations, and our management's experience and business plan. In our evaluation of Juniper, we placed a primary emphasis on Juniper's status as a reporting company under Section 12(g) of the Securities Exchange Act, and Juniper's facilitation of our becoming a reporting company under that Act.  Our common stock is traded on the OTC Bulletin Board, and the OTC Bulletin Board's rules required us to become registered under the Securities Exchange Act of 1934 by March 7, 2000, to continue to be eligible for quotation on the OTC Bulletin Board.  The Juniper acquisition permitted us to satisfy the OTC Bulletin Board's requirement for SEC registration.  Juniper was a "blank check" corporation formed in 1999 for the purpose of locating a business, such as Quintek, with which to combine.  Prior to our acquisition of Juniper it had no history of operations, significant assets or financial resources.

Upon effectiveness of the acquisition, pursuant to Rule 12g-3(a) of the General Rules and Regulations of the Securities and Exchange Commission, we became the successor issuer to Juniper for reporting purposes under the Securities Exchange Act and elected to report under the Act effective February 24,

5

2000. We filed a report on Form 8-K dated February 24, 2000, as amended on April 24, 2000, reporting the acquisition. The 8-K contains information on our plan of business, properties, securities, and management. We filed a copy of the acquisition agreement as an exhibit to the 8-K.

1.4  Aperture cards

Most engineering drawings are created and maintained on computerized systems using Computer Aided Design (CAD) software applications. Once a drawing is completed, the master file is stored in digital format and also plotted out to paper. Most companies film the paper sheets, cut the film into 35mm film chips, and use the film chips to create aperture cards. The combining of digital data with aperture card media provides a complete solution for data management and storage of engineering drawings. The CAD system and stored files offer advantages in creating, revising, distributing, and duplicating drawings, and the aperture cards offer advantages for backup and long term storage of drawing content.

Aperture cards have been used as a worldwide standard for permanent storage of engineering plans and designs for more than 50 years. Development of the personal computer and improvements in electronic data imaging and storage, including diskettes, CD ROM and optical disks have vastly improved ways to manipulate and distribute records over the past ten years, but we believe this newer digital media does not have the storage longevity of microfilm. We believe that magnetic media can degrade over a 5 year period and information can be lost, even if stored under ideal conditions. Some manufacturers of optical disk media tout a 100 year life expectancy, but they can only speak for the nature of the media and provide no assurance there will be drives and software available for reading the media in 100 years. In

contrast, microfilm is eye readable and therefore access to the stored information is not dependant on file formats, software, computers, drives, technology, and vendors that may change over time.

We use the dry silver film produced by Kodak for its aperture cards because of the film's high contrast ratio, fine granularity, and ultra high resolving power. The film has received a life expectancy rating of over 100 years per ANSI standard ANSI/NAPM IT9.19-1994. However, Kodak's testing has shown the film to have a life expectancy of over 1,000 years if stored in accordance with ANSI Standard PH 1.43-1983 (below 70 degrees and less than 50% relative humidity). In addition, Kodak has found the dry silver film's resistance to oxidation and microspot formation to be superior when compared to conventional "wet silver" film. A continued supply of aperture card media is crucial to the success of the Company because without cards, customers have no use for the Company's equipment, services and software.

The Q4300 aperture card media can be used with most standard microfilm viewers, duplicators, and printers. Users of dry silver film are cautioned to avoid exposing the film to heat or light for long periods of time because these extreme conditions may reduce the film's contrast ratio. Drawings are typically recorded on the aperture card film chip at reduced sizes ranging from 10x to 30x magnification. Related information about the drawing (e.g. drawing size, revision level, sheet number, etc.) can be printed on the face of the card. Many users also punch this same information into the body of the card using Hollerith code, so the card can be identified when used with automated sorting and duplicating equipment. The filmed information and punch code can be converted back into digital data using conventional aperture card scanners.







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1.5  The Q4300 aperture card imaging system

Our principal product is the Q4300 Aperture Card Imaging System. The Q4300 is comprised of the Q4303 Universal Interface and the Q4305 Aperture Card Plotter. The two components operate together to provide a turn-key system for producing aperture media directly from Vector, Text ASCII, or Raster image files. The Q4300 is used by engineering departments to make the drawing design and release cycle more efficient, and to provide an efficient, convenient means to produce media for archiving and distributing engineering drawings.

The Q4303 is hosted on the standard PC Computer and functions to interface the Q4305 plotter with the operator and user system. Our software provides the controls necessary to retrieve digital files from the user network, convert the user files into Raster data, center and scale the image for film presentation, and output the appropriate information to the Q4305 plotter. In most cases the Q4303 software can be easily expanded and/or adapted to accommodate user files (compatible with over 100 different file formats) and system applications without modifying the customer's existing software.

The Q4305 uses a Helium-Neon laser to record image data directly onto dry silver film, which is premounted on blank aperture card stock and packaged in light-tight cassettes. The film is developed and fixed using a patented heat process and therefore requires no chemicals and emits no toxins into the atmosphere. The aperture cards are automatically labeled after film development using an internal print/punch module.

We believe that the Q4300 is the only "chemical free" aperture card production system available on the market today, providing a reliable and "environmentally friendly" alternative to competitive products which require storage, handling and disposal of chemical solutions.

Conventional processes for creating aperture cards typically include:

- Plotting the drawing on paper;

- Filming the paper;

- Developing the film using photo processing chemicals;

- Mounting the film onto the aperture card;

- Keypunching the card;

- Making duplicate cards using ammonia for diazo film development.

By using the Q4300 system, the customer can eliminate most of the equipment, floor space, operators, maintenance, and all chemicals required for conventional card production.

A basic Q4300 system, including a Q4303 Universal Interface and a Q4305 Aperture Card Plotter running at the rate of 20 cards/hr, retails for approximately $50,000. The Hollerith Punch and Performance Option (40 cards/hr) can be added for an additional cost of $10,000 each.













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1.6  Patents and intellectual property

The original patents covering the Q4300 technology were issued to NCR in the late 1980's. In 1990 MTC acquired these patents as part of a leveraged buyout of NCR's Micrographics Systems Division. In 1991, the rights to these patents were provided to QEI as part of a temporary licensing agreement, which evolved into a permanent license in January of 1992. In 1996, MTC was sold to Softnet Corporation and ownership of the Q4300 patents was transferred to Johann

Oosthuizen, MTC's CEO. In September 1998, QEI purchased the Q4300 technology from Mr. Oosthuizen for 50,000 shares of QEI restricted common stock and remaining inventory for 100,000 shares of restricted common stock and $200,000 in cash.

Although seven patents were originally issued to NCR, they all expired due to failure to pay maintenance fees at the time they were held by MTC and Mr. Oosthuizen. We appealed to the patent office for reinstatement of these patents and has recovered three patents to date. The following provides a summary of the recovered patents:



|Patent Number | Expiration Date | Name/Description                                         
|------------- | --------------- | ---------------------------------------------------------
|              |                 |                                                          
|4,794,224     | 04/09/07        | Dry Film Developer for an Aperture Card Printer          
|4,818,950     | 04/24/07        | Low Jitter Phase-Locked Loop (internal circuit board)    
|4,841,343     | 03/25/08        | Dry Film Development Process for an Aperture Card Printer

We believe that the three active patents and internal trade secrets will help in protecting the Q4300 technology from duplication. However, it is possible that others could duplicate the product, given enough time, money, and technical know-how. If that happens, we may not be able to maintain our current competitive edge.

1.7  Manufacturing

When QEI acquired its original licenses from MTC in 1991 and 1992, it also received rights to purchase MTC's existing inventory of piece-parts and tooling to make the Q4305 components. QEI manufactured Q4305 systems itself until 1997, using production facilities first in Southern California and later in Montpelier, Idaho. When PDX took over the assets and business of QEI as part of the January 14, 1999 reorganization, it inherited QEI's remaining inventory of piece-parts, tooling, equipment, and partnerships.

In November of 1997, QEI, through Qtek AB, a Swedish affiliate, entered into an alliance with Bofors AB, Missile Production (now Kitron) in which Kitron began to manufacture our equipment for us.  Kitron is a large Swedish Company, which manufactures military defense products, such as laser guided missiles, and anti-aircraft guns.  Bofors AB, Missile Production, was a subsidiary of Bofors AB and Bofors AB was a subsidiary of Celcius AB.  In 2000, Bofors AB, Missile Production was sold to Kitron, a Norwegian based corporation, and Celsius AB was sold to SAAB.  Because of the winding down of the "cold war," the Swedish government has encouraged large defense oriented companies, such as Kitron and Saab, to diversify into producing non-military products.  We believe the Q4300 is viewed by Kitron as an ideal fit for this program and for the Kitron production line because of Kitron's well proven expertise in mass producing high quality, laser based products, and their own dedication towards using aperture cards for archiving engineering information.

8

Kitron currently manufactures the Q4305 plotter units, internal modules, and spare parts at their missiles factory located in Karlskoga, Sweden. The production is done on an "as required" basis in support of our delivery requirements. Kitron is expected to deliver plotter units within 45 days ARO and no delays have been experienced so far. Kitron delivered 6 systems in fiscal year 2000 and 4 systems in fiscal year 2001.  We sell certain piece-parts, primarily from the original Q4305 inventory purchased from MTC, to Kitron to support Q4305 production, and buy spare part assemblies from Kitron to support our customer base. In addition to purchasing our parts, Kitron purchases components from a wide variety of suppliers and subcontractors.  In the future, we plan to phase out of manufacturing and focus primarily on sales and support of the product line.

Qtek AB was founded by QEI two Swedish businessman.  It is located within the Kitron campus in Karlskoga Sweden and was established to coordinate Kitron/Quintek transactions, distribute and support the Q4300 system in Europe, and establish/operate a Q4300 based service bureau for converting images from digital format into aperture card media for long term storage.  Kitron is supporting Qtek AB by bringing in sales and conversion business from internal divisions, other companies including Saab, and a worldwide customer base.

We currently hold a 49% equity position in Qtek AB.  We originally provided funding and know-how for operation start-up, and assigned Q4305 manufacturing rights to Qtek AB for our minority interest.  With these rights in hand, Qtek AB entered into a contracting agreement with Kitron (and its predecessor), allowing the Q4305 units to be manufactured at the Kitron factories.  In February 2000, we also issued 450,000 shares of our common stock to the Swedish founders of Qtek AB for an equal amount of Qtek AB stock, in order to maintain our overall interest of 49%.  The remaining 51% of Qtek AB is owned by Christer Karstrom, one of its Swedish founders, who is responsible for initiating and nurturing the relationship with Kitron and Saab, and conducting day to day operations at Qtek AB and Kitron.

We go through Qtek AB to purchase the majority of Q4305 units and spare parts produced at Kitron. For these transactions, Qtek AB receives $2,000 for each Q4305 plotter unit ordered and a 10% markup on spare parts.  Most transactions with Qtek AB are conducted on standard net 30 terms. We have established a licensing agreement with Qtek AB, under which we are required to purchase at least 25 of the 4305 units before our fiscal year end in 2004.  As of June 30, 2001, we have purchased 15 units under the agreement.

We believe that Saab plans to support Qtek AB by providing long term conversion contracts and allocating a large scale, environmentally controlled, storage facility for archiving the aperture cards produced by Qtek AB. The archiving facility is built into a mountain located in Karlskoga, Sweden. We believe that a significant amount of business may result from this relationship, as a direct result of Saab and their prestigious European associates (e.g. other Saab divisions, military customers, large European companies, etc). Saab is expected to take a small equity position in Qtek AB in the near term, with the possibility of advancing to a major shareholder in the long term.

It's possible that Qtek AB could be restructured and partially or completely sold to Saab or other investors in order to advance our overall strategic position. Transactions of this nature could substantially dilute our equity position in Qtek AB.

Kitron, as the manufacturer of our Q4300 equipment, is our main supplier. If Kitron ended its

9

relationship with Qtek AB and/or Qtek AB ended its relationship with us, we would attempt to negotiate

a new direct or indirect relationship with Kitron.  We believe that Kitron would be receptive to maintaining some type of relationship with us due to: (1) the extensive amount of time and money already expended on Q4305 manufacturing start-up, (2) a positive ongoing relationship with Kitron, and (3) the enthusiasm expressed by Kitron with regards to manufacturing the Q4300 product line.

There is nothing in our agreement to preclude restructuring the relationship with Kitron as long as the decision to terminate the agreement is mutual or initiated by Qtek AB.

If termination of our agreement is not mutual or if it is caused by us:

- Qtek AB would retain the exclusive right to manufacture, market and sell the 4300 system in

the Nordic countries (Sweden, Finland, Norway and Denmark);

- we would be unable to restructure a relationship with Kitron since they are located in the

Nordic countries; and

- we would retain the right to manufacture in the USA and distribute worldwide, except for

the Nordic countries.

It's highly conceivable that we would incur significant expense and delays in filling customer orders if the relationship with Qtek AB were terminated.

If Kitron ended its relationship with us, we would immediately revert back to manufacturing the Q4305 at our facility in Montpelier, Idaho, in order to meet short term production needs.  We would also try to negotiate with Qtek AB to restructure or terminate the Qtek AB / Quintek agreement and aggressively seek another manufacturing partner as a replacement for Kitron to meet long term and large scale production needs.

Loss of the Kitron relationship would cause significant expense, delays, and losses and could keep us from filling customer orders.   We cannot tell how severe the losses might be, but finding another manufacturer or restarting our own manufacturing operations would have a dramatic adverse effect on our operation.



1.8  Markets

Marketing efforts are focused primarily on large companies that have the need to distribute or store engineering drawings in a condensed, archival, and eye-readable format. Associated industries include: construction, electronics, defense, automotive, machinery, amusement parks, ship building, oil refineries, utilities, railroads, government, highway and bridge construction, and aerospace.

Companies which require engineering drawings, documents, or records to be stored for over seven (7) years are considered prime prospects for the Q4300 system, regardless of the type of system used for creating or accessing the information.

We believe the market for the Q4300 system is enormous, as most companies currently generate engineering drawings and have requirements for long term storage of critical information.  Further, we believe the need for long term storage of documentation will continue to grow, as advances in



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technology continue to drive hardware and software prices down, while improving computer processing power, flexibility, features, Internet access, and communication links.

We believe that approximately 500 million original, or master, aperture cards are printed each year, based on information from our card suppliers.  We believe that the majority of engineering, construction and manufacturing companies stores some drawings and plans in a microfilm format, such as aperture cards, microfilm rolls, and microfiche.

Smaller organizations often contract with service bureaus to microfilm and archive their permanent records.  Companies with operations large enough to require production of over 3,000 aperture cards per month can generally justify operating their own microfilming equipment rather than sending drawings to a service bureau for conversion. We believe that all companies that have microfilming operations, and particularly those which store drawings and plans on aperture cards, are potential customers for the Q4300 system and related products.

1.9  Competition

We have both indirect and direct competition. Indirect competition presents itself in the form of paper plotters, cameras, keypunch equipment and any other product which can be used as part of the conventional aperture card production process. We believe that the combined cost of all "indirect competitive" equipment required to generate an aperture card can run from 2-3 times higher than the cost of the Q4300 system. Further, we believe that many companies with conventional aperture card equipment can normally justify purchasing a Q4300 system by simply discarding existing equipment and eliminating the ongoing expenses associated with operation and maintenance.

Direct competitors are manufactures of equipment which produce aperture cards directly from a digital data source.  These include; Wicks and Wilson Limited (WWL) (produced in England), LaserScan (produced in England), and Microbox (produced in Germany). We believe that the aperture card plotters manufactured by all of these companies use chemicals for film development and as a result are more complex, larger, heavier, less reliable, and more expensive than the Q4300. We believe that all directly competitive products typically sell for over $75K, which includes card punch capability and 40 card/hr throughput rate as a part of the standard product. We sell our basic low speed system for $50K, with an additional $10K for card punch capability and $10K for performance improvement. This strategy allows Quintek to compete closely with competitors for high-end customers, and also provide a low-end product for customers that do not need nor want to pay for the punch or performance capability.

In the fiscal year ended June 30, 2000, the WWL aperture card equipment was distributed by Imation.  In July 2000, we replaced WWL as the supplier of aperture card equipment distributed by Imation.  This has provided us with a competitive advantage from the standpoint of equipment distribution.  As of October 12, 2001, Imation has purchased a total of 7 aperture card systems from us.  See, Section 6.1, Results of Operations, page 21.



CD-ROM technology is considered both competitive and complementary to the Q4300. It's competitive in the sense that drawing information can be digitized and stored on optical disk instead of aperture card. It's complementary because aperture cards provide a means to make optical disk information available to the outside world in an eye-readable format. Many early users of Electronic Image Management (EIM) systems are just now realizing there are some major drawbacks when it comes to long term survival of

11

digital data on optical disk (e.g. some drives and media used seven (7) years ago are no longer available).

We believe that users of electronic media must plan on a "never ending" evolution of new media types which will need to be supported by new drives, hardware controllers, standards, specifications, and software modules. Further, we believe that paper and microfilm will not easily become obsolete because the interpretation of information on paper and microfilm is truly independent of advances in new technology and the vendors associated with supplying new technology.

Many companies are finding that a hybrid system consisting of electronic access and aperture card backup provides the optimum solution. The electronic system provides the efficiency of on-line access and the aperture card media provides an insurance policy structured to protect and complement the electronic data base. We believe that aperture card advantages include; 1) long term storage of drawing data (over 100 years life expectancy), 2) eye-readable back-up of drawing data base, 3) immunity to future changes in vendor product offerings, standards and technology, 4) better assurance of court admissibility, and 5) distribution to vendors, clients and other outside entities with non-compatible or non-electronic systems.

1.10  Customers

Our customers are generally large manufacturers or utility companies that produce complex mechanical and electrical products in a variety of industries, such as: automobile, aerospace, shipbuilding, gas and oil, railroad, defense, road construction, etc. Existing customers include: Morgan Construction, TRW, US Navy, Pacific Gas & Electric, Southern California Gas Company, Lockheed-Martin, Smiths Industries, Caltrans, Zenith Electronics, Mallory Controls, Boeing, Whirlpool, GTE Airfone, Lufkin Industries, Salt River Project, York International, Dresser Industries, Century Microfilm, Document Management Solutions, Carroll Touch, Caltrans, Duke Power, Canadian Dept. Of Defense, Aqua-Chem, Aramco, NASA, Carolina Power & Light, Baltimore Gas & Electric, JPL, SCE, Westinghouse, Imation and National Machinery, among others.

These companies typically produce a myriad of products and use a documentation system based on aperture  cards to maintain and store the drawings used in design, maintenance and production of their products.

In the fiscal year ended June 30, 2001, more than 10% of revenues came from product sales through Imation. These revenues, totaling $675,145, were comprised primarily of sales of Q4300 related equipment, maintenance, software, and media.

Because our success will depend on continued expansion of sales, we do not expect to continue to receive large percentages of our business from any one customer. Our success will more likely depend on expanding sales and developing new customers than on continuing to service one or a few customers, and consequently, we do not believe that the loss of any one customer would have a long term adverse effect on our revenues or profitability.









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1. Suppliers

Q4305 Plotters

The Q4305 plotter is manufactured by Kitron under the arrangement described in Section 1.7, Manufacturing, page 8. The Q4305 units (about the size of a foot locker) are constructed from a variety of components, including: sheet metal pieces, metal castings, PC boards, mechanical devices, interconnect cables, optical components, and a low powered helium-neon laser. A small percentage of these parts have or shortly will become obsolete. Kitron, with Qtek AB's and our support, expects to continually seek second source suppliers, identify obsolete parts, find replacement parts, and redesign modules to accommodate new components. However, there is no guarantee that critical components will continue to be available to meet customer demand.



Q4305 Performance Option

The aperture card output rate of the Q4305 unit can be increased from 15-20 cards/hour to 30-40 cards/hour by ordering the Q4305 Performance Option. This feature can be incorporated in the delivered product or made by field upgrade by exchanging the standard internal optical bedplate (about the size and shape of a VCR) with a high speed version of the optical bedplate that has the same physical and electrical footprint. The components within each bedplate type are similar and, for the most part, purchased from the same vendors. We designed, manufactured and fielded a limited number of high speed bedplates from our facility in Idaho, and have recently released the design to Kitron to incorporate into the Q4305 production line. Kitron, with Qtek AB's and our support, expects to continually seek second source suppliers, identify obsolete parts, find replacement parts, and redesign modules to accommodate new components used with the performance option. However, there is no guarantee that critical components will continue to be available to meet customer demand.

Q4305 Hollerith Punch

The Hollerith punch provides the capability to print and punch indexing information on the aperture cards as a part of the Q4305's aperture card production process. The Hollerith punch can be incorporated into the original product or provided via field upgrade by exchanging the print module (about the size and shape of a small shoebox), which comes in every basic Q4305 unit, With the Hollerith punch module which has the same physical footprint and similar electrical footprint. About 30% of the components within the print module are similar to the punch module and are purchased from the same vendors. The remaining 70% of component parts are unique to the punch and purchased from a mixture of the same vendors and new vendors. We designed, manufactured and fielded a limited number of Hollerith punch modules from our facility in Idaho, and plan to release the design to Kitron to incorporate into the Q4305 production line. Kitron, with Qtek AB's and our support, expects to continually seek second source suppliers, identify obsolete parts, find replacement parts, and redesign modules to accommodate new components used with the Hollerith punch. However, there is no guarantee that critical components will continue to be available to meet customer demand.

Q4303 Universal Interface

The Q4303 is based on the standard PC platform and consists of a combination of "off the shelf" and customized hardware and software modules, including:

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Hardware

- latest IBM compatible PC computer platform and monitor

- Greensheet Interface board (links the internal computer bus with the Q4305 plotter)

- network interface board

Software

- Windows 98 operating system and associated "off the shelf" utilities

- Spicer Imagenation (provides file conversions and graphics workstation)

- Quintek application (controls operation of the Q4305 plotter, operator, and user network)

With the exception of the Greensheet interface Board, we have several sources for all purchased components within the Q4303 unit. We currently have one reliable vendor for the Greensheet Board. We plan to develop alternate interface methods in the near future to reduce the risk involved with single source components.

Aperture Card Media

A continued supply of aperture card media is crucial to the success of our business. This risk goes well beyond loss of income due to sales of cards, because without cards, our customers have no use for our equipment, services and software.

The Q4300 aperture cards are manufactured by Bell & Howell and Imation Corporation, who buy dry silver film "off the shelf" from Kodak, mount the film on blank card stock, cut and print the cards per customer instruction, pack the cards in cassettes of 250 cards per cassette, package the cassettes in light tight and moisture proof containers, and deliver the cards in cases with four cassettes per case. We are a distributor for the blank aperture cards and may purchases cards from Bell & Howell or Imation for resale to the Q4300 customer base. We believe this business is profitable for Bell & Howell and Imation and that these two companies are the only suppliers of aperture cards using dry silver film.

Dry silver film is used extensively for microfiche applications and we believe the Q4300 is the only device available today for producing aperture cards with dry silver film. If the microfiche market declines, it's conceivable that suppliers of dry silver film could discontinue supplying dry silver film products. A continued supply of aperture card media is crucial to the success of the Company because without cards, customers have no use for the Company's equipment, services and software.

We believe that Kodak is the leading supplier of dry silver film and that Kodak will continue to supply dry silver film in the long term. However, there is no assurance this will happen. In the event that Kodak discontinues to supply dry silver film, it may be possible to use dry silver film produced by other vendors. However, there is no assurance that other vendors will be able to supply dry silver film which is compatible with the Q4300 system or that the quality of the film they supply will be acceptable to our customers.

1.12  Regulation

Our business is not subject to any special regulatory regime, other than general laws and regulations, such as employment and safety regulations, that apply generally to manufacturers and distributors of industrial equipment. The Q4305 unit was certified under UL, FCC, TUV, and GS standards while in

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production at NCR and we are in the process of transferring the UL and FCC certifications into our name.  We believe that Kitron will obtain a CE certification on Q4305 units produced in their factory, and this will provide additional product certification, applying to customers in the USA and Europe. The Q4305 units produced at Kitron are expected to meet the same ISO 9000 standards for production quality and consistency as imposed on other products assembled in the Kitron factory.

U.S. and Swedish laws and regulations regarding importation, exportation, and customs will apply to any units imported from Sweden.

Item 2  Description of Property

We lease premises for our executive office in Camarillo, California, our warehouse in Montpelier, Idaho, and our sales office in Washington, D.C.

We lease 3,120 square feet for our executive offices at 537 Constitution Avenue, Suite B, Camarillo, California. The lease expires March 31, 2002, with an option to extend it for three years. Our current monthly lease rate is $2,737.

We lease 1,800 square feet of office and warehouse space at 720 N. 4th Street, Montpelier, Idaho, to store parts, conduct engineering operations, and perform small scale assembly and administrative tasks to support the Q4300 system. Our current monthly lease rate is $1,195.  The lease expired on August 2000 and we are now renting on a month to month basis.

On July 1, 1999, we entered into a long-term non-cancelable operating lease of our facilities in Virginia.  The lease requires monthly payments of $2,690 and carries an escalation clause of 3.5% per year.  The lease expires in September 2003.

Item 3  Legal Proceedings

At June 30, 2001, we were not involved in any legal proceedings.



Item 4  Submission of Matters to a Vote of Security Holders

No shareholder meeting was held in the fiscal year ended June 30, 2001.

Item 5  Market for Common Equity and Related Stockholder Matters

5.1  Market for common stock

Since confirmation of the PDX plan of reorganization on January 14, 1999, our common stock has been traded on the OTC Bulletin Board (symbol "QTEK"). On June 30, 2001, there were three major market makers for our stock, and 498 shareholders of record holding a total of 22,238,793 outstanding shares. The high and low bid prices per share for our stock since June 31, 2000 are as follows:









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|     | 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter
|---- | ----------- | ----------- | ----------- | -----------
|     | High        | Low         | High        | Low        
|1999 |             |             |             |            
|2000 | $1.88       | $1.06       | $1.38       | $0.63      
|2001 | $0.31       | $0.11       | $0.16       | $0.08      

No market exists for the sale of any of our Warrants or debt securities, and none is expected to develop.

5.2  Dividends

We have not declared or paid any dividends to our common shareholders and do not presently intend to do so. Any future decision whether to pay dividends will depend on our financial condition and any other factors that our Board of Directors deems relevant.

5.3  Recent sales of unregistered securities

5.3.1  Shares Issued in Private Placements for Cash and as Compensation for Services.

Since filing our last 10-QSB, we have issued the following equity securities:

(a) In April, May, and June 2001 we issued 559,990 shares of restricted stock to two individuals and three companies for a total consideration of $ 52,677.44. Consulting services were received as consideration for these transactions.

(b) In May 2001 we issued 20,000 Class J warrants to one individual in return for consulting services.

The sale of the above securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act, or Regulation D promulgated thereunder, or, with respect to issuances to employees, directors and consultants, Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving a public offering or transactions pursuant to compensatory benefit plans and contracts relating to compensation as provided under such Rule 701. The recipients of securities in each such transaction represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the instruments representing such securities issued in such transactions. All recipients either received adequate information about Quintek or had adequate access, through their relationships with Quintek to such information.

5.4  Description of securities

We are authorized to issue 50,000,000 shares of no par common stock and 10,000,000 shares of no par preferred stock. As of June 30, 2001, 22,238,793 shares of our common stock were issued and outstanding and no preferred stock was issued and outstanding.





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5.4.1  Common stock

Each shareholder of the common stock is entitled to one vote for each share of common stock held on all matters to be voted on by our shareholders. In the election of directors, no shareholder shall be entitled to cumulate votes (i.e., cast for any one or more candidates a number of votes greater than the number of shares) unless a shareholder has given notice of the intention to cumulate votes prior to the commencement of voting. If any shareholder has given notice of the intent to cumulate votes, then each shareholder has the right to give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of shares held by the shareholder, or distributing such number of votes among as many candidates as the shareholder sees fit.

Shareholders have no preemptive rights or other rights to subscribe for additional shares. There are no conversion rights, redemption rights, or sinking fund provisions with respect to shares of the common stock. Shareholders are entitled to receive dividends, when declared by our board of directors, out of funds legally available therefore, subject to the restrictions set forth in the California Corporations Code. If we were to liquidate, dissolve, or wind up, the holders of the common stock would be entitled to receive, pro rata, our net assets remaining after we satisfy our obligations with our creditors and any preferred stockholders. Under Article VII of our Articles of Incorporation, we have eliminated the potential liability of directors and indemnified our directors against any liability for monetary damages, to the extent allowed by California law. The California Corporations Code allows corporations, including our Company, to eliminate or limit the liability of directors for monetary damages except to the extent that the acts of the director are in bad faith, constitute intentional or reckless misconduct, result in an improper personal benefit, or amount to an abdication of the director's duty. The Corporations Code provisions do not affect the availability of equitable remedies against directors nor change the standard of duty to which directors are held.  See, Indemnification of Directors and Officers, page 24.  All outstanding shares of our common stock are fully paid and not subject to further calls or assessments.

5.4.2  Warrants

We have issued ten series of Warrants to purchase common stock. Four of these series were issued to holders of PDX claims and interests upon confirmation of the PDX plan. The remaining six series of Warrants were issued to QEI shareholders upon confirmation of the PDX Plan.



5.4.2.1  Warrant Terms and Conditions

The following provisions apply to all ten series of our Warrants:

Exercise of Warrant.  Our Warrants may be exercised in whole or in part, but not for less than One thousand (1,000) Warrant Shares (or such lesser number of Warrant Shares as may at the time of exercise constitute the maximum number exercisable) and in excess of 1,000 Warrant Shares in increments of 1,000 Warrant Shares.  Our Warrants are exercisable, subject to the satisfaction of applicable securities laws, at any time during the Exercise Period by the surrender of the Warrant to our Corporation at its principal office together with the Form of Exercise (provided on the warrant certificate) duly completed and executed on behalf of the Holder and accompanied by payment in full of the amount of the aggregate Exercise Price of the Warrant Shares in immediately available funds.



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Fractional Interest.  We are not required to issue any fractional shares on exercise of the Warrants.

Warrant Confers No Rights of Shareholder.  The Holder shall not have any rights as a Shareholder of our Corporation, with regard to the Warrant Shares, prior to actual exercise resulting in the purchase of the Warrant Shares.

Reservation of Shares.  We will have a sufficient number of shares of common stock authorized and reserved, at all times during the Exercise Period, for the exclusive purpose of issuance and delivery upon exercise of all outstanding Warrants.

Adjustment for Re-Classification of Capital Stock. If we, at any time during the Exercise Period, by subdivision, combination or re-classification of securities, change any of the securities to which the purchase rights under our Warrants exist under the same or different number of securities of any class or classes, our Warrants shall thereafter entitle the Holder to acquire such number and kind of securities as would have been issuable as a result of such change with respect to the Warrant Shares immediately prior to such subdivision, combination, or re-classification.  If the shares of our common stock are subdivided into a greater number of shares of common stock, the purchase price for the Warrant Shares upon exercise of our Warrants shall be proportionately reduced and the Warrant Shares shall be proportionately increased; and conversely, if the shares of our common stock are combined into a smaller number of common stock shares, the price shall be proportionately increased, and the Warrant Shares shall be proportionately decreased.

Loss, Theft, Destruction or Mutilation of Warrant.  Upon our receipt of reasonably satisfactory evidence as to the loss, theft, destruction or mutilation of any Warrant or stock certificate, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory, and upon reimbursement to our Corporation of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, we will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of the original Warrant or stock certificate.

Assignment.  With respect to any offer, sale or other disposition of our Warrants or any underlying securities, the Holder agrees to give us written notice, prior thereto, describing briefly the manner thereof, together with a written opinion of such Holder's counsel (if we request it), to the effect that such offer, sale or other distribution may be effected without registration or qualification (under any applicable federal or state law then in effect). Each Warrant thus transferred shall bear the same legends as appearing on the original or preceding Warrant.

Governing Law.  Our Warrants shall be governed by and construed in accordance with the laws of the state of California applicable to contracts between California residents entered into and to be performed entirely within the State of California. Venue for any and all actions or disputes arising out of this Agreement shall be the County of Ventura, State of California.

Amendments.  Certain terms of our Warrants may be amended with mutual agreement and written consent between the Holder and us.

Notices.  Unless otherwise provided, any notice required or permitted under our Warrants shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified by



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hand or professional courier service or five (5) days after deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party in our Corporate records, or at such other address as such party may designate by ten (10) days' advance written notice to the other parties.

Attorneys' Fees.  If any action at law or in equity is necessary to enforce or interpret the terms of our Warrants, the prevailing party shall be entitled to reasonable attorneys' fees, costs and disbursements in addition to any other relief to which such party may be entitled.

Repurchase Right.  We have the right to repurchase (the "Repurchase Right"), exercisable at any time during the Exercise Period, at $0.10 per share, any Warrant Shares not exercised and not purchased by Holder ("Repurchased Shares") on or before the Repurchase Date (defined below).

a. Exercise of the Repurchase Right.  The Repurchase Right shall be exercisable by written notice ("Repurchase Notice") delivered by our Corporation to the Holder prior to the expiration of the Exercise Period.  The Repurchase Notice shall indicate the number of Repurchased Shares to be repurchased by our Corporation and the date ("Repurchase Date") on which the repurchase is to be effected, such date to be not less than thirty (30) days after the date of the Repurchase Notice. On the Repurchase Date, Holder shall deliver and surrender the Warrant to us, and we shall, concurrently with the receipt of the Warrant, pay to Holder in cash or cash equivalents, an amount equal to the Repurchase Price for the Repurchased Shares which are to be repurchased.

b. Purchaser's Right To Exercise Warrant Prior To Repurchase Date. Notwithstanding delivery of the Repurchase Notice by our Company to Holder, at any time prior to the Repurchase Date, Holder may exercise the Warrant with respect to all unexercised Warrant Shares in accordance with the warrant terms.

c. Adjustments.  In the event of any adjustments, appropriate changes to reflect the adjustment shall be made to the number of Warrant Shares subject to the Repurchase Right and to the Repurchase Price to be paid by our Corporation upon the exercise of the Repurchase Right in order to reflect the effect of any such Adjustment.

5.4.2.2  Warrants to PDX Claimants

The series A, B, C and D Warrants were issued to the unsecured creditors and the shareholders of PDX pursuant to the PDX Plan of Reorganization. Each of the A, B, C, and D Warrants entitles the holder to receive one share of our common stock for each Warrant share on payment of the Warrant exercise price. A total of 7,196,816 A, B, C and D Warrants were issued to PDX creditors and shareholders on confirmation of the Plan, of which 4,027,462 remained outstanding at June 30, 2001. The following shows the terms for each class of Warrants:



|Series  | Strike price | Expiration Date | Warrants Issued(Original Issue) | Warrants Outstanding
(as of 6/30/01)
|------- | ------------ | --------------- | ------------------------------- | ------------------------------------
|Class A | $1.00        | 01/14/00 [1]    | 1,821,704                       | 0                                   
|Class B | $2.00        | 03/31/02 [2]    | 1,791,704                       | 1,405,413                           
|Class C | $3.00        | 03/31/02 [2]    | 1,791,704                       | 1,283,786                           
|Class D | $4.00        | 03/31/02 [2]    | 1,791,704                       | 1,338,263                           

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Notes:

[1] The Class A warrants were extended at the original strike price until April 14, 2000, prior to their expiration on April 14, 2000.

[2] The Class B,C,D warrants were extended at their original strike prices until March 31, 2002.

5.4.2.3  Warrants Issued to QEI Shareholders

Under the PDX Plan and subsequent issuances, a total of 9,718,475 Series E, F, G, H, I, J Warrants were issued to investors and QEI shareholders in exchange for all of the assets and liabilities of QEI, of which a total of 12,582,446 warrant shares remained outstanding as of June 30, 2001. The following shows the terms for each class of Warrants:





|Series    | Strike price | Expiration Date | Warrants Issued(Original Issue) | Warrants Outstanding
(as of 6/30/01)
|--------- | ------------ | --------------- | ------------------------------- | ------------------------------------
|          |              |                 |                                 |                                     
|Class E   | $1.00        | 03/31/02 1      | 812,544                         | 686,544                             
|Class F   | $2.00        | 03/31/02 1      | 812,544                         | 812,544                             
|Class G   | $3.00        | 03/31/02 1      | 1,026,844                       | 1,026,844                           
|Class H   | $4.00        | 10/01/02        | 1,026,844                       | 1,026,844                           
|Class I   | $1.00        | 03/31/02 1      | 2,744,199                       | 2,571,286                           
|Class J 2 | $1.00        | 01/14/04        | 3,295,500                       | 6,458,384                           

Notes:

1 The Class E,F,G,I Warrants were extended at their original strike prices until March 31, 2002.

2 On the financial statements, we treated the employee options differently than non-employee warrants.  There were 2,015,000 of the J warrants issued to employees in prior years.  Thus, the number of J warrants here is exactly 2,015,000 higher than disclosed in Note 7(a) of the Financial Statements because of this.

The Series E through J Warrants were issued as a part of the Plan of Reorganization but are not included under Section 1145 of the Bankruptcy Code since QEI shareholders were not claimants to the debtor. Therefore, the Series E through J Warrants and the underlying common stock cannot be sold unless they are registered under the Securities Act of 1933 or unless some exemption is available, such as Rule 144 of the Act.

5.5  Preferred stock

No preferred stock is outstanding at present, but if we decide to issue preferred stock in the future it could affect the rights of existing common stockholders. Our board of directors is authorized, without further action by stockholders, to issue the preferred stock in one or more series and to fix the dividend rights, dividend rate, conversion rights, voting rights, rights nd terms and conditions of redemption (including sinking fund provisions), preemptive rights, liabilities, liquidation preferences and other rights, qualifications, limitations and restrictions of any wholly unissued series of preferred stock,

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together with the designation of each series and the number of shares to constitute the series. The board of directors, without shareholder approval, can issue preferred stock with voting and conversion

rights which could adversely affect the voting power of the holders of common stock. This could dilute the voting strength of the holders of the common stock and may help our management impede a takeover or attempted change in control.

Item 6  Management's Discussion and Analysis of Financial Condition and Results of Operations

6.1  Results of operations

Our revenues totaled $675,145 and $934,214 for the twelve months ended June 30, 2001 and 2000, respectively, a decrease of $259,069 (28%) in 2001 due primarily to a decrease in service revenue and to a lessor extent, sales of aperture cards and equipment.

For the twelve months ended June 30, 2001 and 2000, cost of sales was $459,701 and $743,906, respectively, a decrease of $284,205 (38%). Our cost of sales for both periods consisted mostly of labor and production costs. Cost of sales decreased and consequently gross margin increased in 2001 due to substantially lower sales commissions.  In addition, cost of sales in 2000 was inflated by a large adjustment to the reserve for obsolescent inventory.

Operating expenses totaled $1,310,352 for the twelve-month period ended June 30, 2001 as compared to $6,363,957 for the prior twelve-month period. The $5,053,605 (79%) decrease in operating expenses is due primarily to a substantial decrease in stock-based compensation for consulting, legal and professional services, marketing, and other outside services.



We incurred acquisition expenses of $100,000 and $600,000 in the twelve months ended June 30, 2001 and 2000, respectively.  In the quarter ended March 31, 2000, we acquired Juniper Acquisition Corporation, a blank check corporation that was registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934.  We incurred acquisition expenses of $600,000 in the nine months ended March 31, 2000, and $100,000 in the six months ended June 30, 2001, in connection with the Juniper acquisition.  We acquired Juniper in order to comply with the OTC Bulletin Board requirement that all issuers must be registered with the SEC under the Exchange Act, in order to continue to be quoted on the OTC Bulletin Board.

6.2  Liquidity and capital resources

We have historically financed operations from the sale of common stock and the conversion of common stock Warrants.  At June 30, 2001, we had cash on hand of $3,073 and working capital of $(1,022,410) as compared to cash on hand of $9,355 and working capital of $(813,323) at year-end, June 30, 2000.

Net cash used in operating activities of $380,616 for the twelve months ended June 30, 2001, is attributable primarily to operating losses as adjusted for stock issued for services of $354,322, warrants issued for services of $224,776, loss on impairment of assets of $98,019, and depreciation of $32,732.

Net cash provided by investing activities of $64,659 for the twelve months ended June 30, 2001 consists of collections on notes receivable from stockholders and proceeds from the sale of fixed assets.

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Net cash provided by financing activities of $309,675 for the twelve months ended June 30, 2001 represents cash received from the issuance of common stock of $233,511, and cash received from issuance of convertible bonds of $76,164.

Management believes the Company's current cash and cash generated from operations will only be sufficient to meet its anticipated cash needs until November 15, 2001.  Accordingly, the Company will require an additional capital infusion or revenues from additional sales to continue operations.  Management is not certain if additional capital or sales proceeds will become available and is considering other strategic alternatives, which may include a merger, asset sale, or another comparable transaction, or financial restructuring.  If unsuccessful in completing a strategic transaction, the Company may be required to cease operations.

Item 7  Financial Statements

See, pages F-1, et seq., included herein.

Item 8  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Effective February 25, 2000, we dismissed Brown, Armstrong, Randall, Reyes, Pauldin & McCown Accountancy Corporation (Brown Armstrong) as its independent public accountants.  Our board of directors ratified the decision to dismiss Brown Armstrong on March 2, 2000.

We had retained Brown Armstrong to audit and report on our financial condition for the fiscal years ended June 30, 1999 and 1998.  At the date of their dismissal, the audits were incomplete and no such reports had been made. Therefore, no such reports contained any opinion, adverse opinion or disclaimer of an opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.  There were no disagreements between our company and Brown Armstrong on any matters of accounting principles or practices, financial statement disclosure or auditing scope and procedures which, if not resolved to the satisfaction of Brown Armstrong, would have caused Brown Armstrong to make reference to the matter in their reports.

During 1999 and 1998 and the subsequent interim period through February 25, 2000, Brown Armstrong did not advise us with respect to any of the matters listed in paragraphs (a)(1)(v)(A) through (D) of Item 304 of Regulation S-K.

Item 9  Directors, Executive Officers, Promoters and Control Persons

9.1  Board of directors and executive officers

Our board of directors consists of three members, each of whom serve three year terms. The following is a summary description of our directors and executive officers:

Tom Sims, President & CEO, Chairman

Mr. Sims, 50, co-founder of QEI in 1991, has served as our President, CEO, and Chairman since QEI's inception and continued in this role following the merger with PDX. Prior to QEI/Quintek, Tom was

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involved with system engineering, corporate development, and strategic positioning at two start-up companies: Alpharel and PMT Corporation. While at Alpharel, Tom played a key role in pioneering, developing and marketing technologies required for Electronic Information Management Systems (i.e. scanners, plotters, optical disk storage, network communication, etc). Tom held the positions of Design Engineer, Project Engineer, Program Manager, and VP of Operations while working for Bunker Ramo (1973-1985), Alpharel (1985-1990), and PMT (1990-1991) and was responsible for the management and development of complex electronic systems for radar DOA analysis, radar signature analysis, automatic test equipment, high speed recording and scanning equipment (roll film and aperture card), and

software for data compression. Tom received his BS degree in Electronics Engineering Technology from the University Of Southern Colorado in 1973.

Kurt Kunz, VP Engineering, Director

Mr. Kunz, 41, co-founder of QEI in 1991, has served as our Vice President of Engineering and Corporate Director since QEI's inception and continued in this role following the merger with PDX. Prior to QEI, Kurt held the positions of Software Design Engineer, Mechanical Design Engineer, Systems Engineer and Engineering Manager at three high tech companies; QED Systems (1986-1987), Alpharel(1987-1990), and PMT (1990-1991). Kurt received his BS degree in Mechanical Engineering from the University of Utah in 1986.

Kelly Kunz - VP Manufacturing, Director

Mr. Kunz currently serves as our VP of Manufacturing and Corporate Director. Prior to joining us in 1997, Kelly held positions in manufacturing, engineering, and management while working for BYU Motion Picture Studios, A.C. Electronics, Lane TV and Electronics, N. E. Wolff, and Montpelier School District. Kelly received his Associate of Arts Degree in Electrical Engineering from Ricks College in 1975 and his Bachelor of Science Degree from Idaho State University in 1989.

Catherine Sims - Corporate Secretary

Mrs. Sims, 51, has served as our Corporate Secretary since QEI's inception and continued in this role following the merger with PDX, with the exception of the time period between February 1998 and October 1999. Mrs Sims has taken courses on corporate secretary duties and responsibilities and received her AA degree in Nursing from Ventura college in 1985. Catherine is the wife of Tom Sims, our President & CEO.

Teresa Kunz - Corporate Treasurer

Mrs. Kunz, 40, has served as our Corporate Treasurer since QEI's inception and continued in this role following the merger with PDX. During the latter part of CY 00 Mrs Kunz assumed the role of Controller and has served our company in that capacity since. Mrs Kunz received her AA degree in accounting from Ricks College in 1981. Teresa is the wife of Kurt Kunz, our Vice President of Engineering and Director and sister-in-law of Kelly Kunz, Vice President and Director.









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9.2  Compensation of Directors

All of our directors are full time employees of Quintek.  Because we have no independent directors, we pay no compensation to any director for their service on the board over and above their employment compensation.

9.3  Management Committees

We have not established audit, compensation or executive committees.

9.4  Indemnification of Directors and Officers

Pursuant to Section 317 of the California Corporations Code, we may indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the corporation to procure a judgment in its favor) by reason of the fact that he or she is or was our officer, director, employee or other agent, against expenses, judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with such proceeding, if he or she acted in good faith and in a manner such person reasonably believed to be in the best interests of our corporation and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of such person was unlawful. In addition, we may indemnify, subject to certain exceptions, any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action by or in the right of our Company to procure a judgment in its favor by reason of the fact that such person is or was our officer, director, employee or other agent, against expenses actually and reasonably incurred by such person in connection with the defense or settlement of such action if such person acted in good faith, in a manner such person believed to be including reasonably inquiry, as an ordinarily prudent person in a like position would use under similar circumstances, provided that court approval is obtained in

the case of an adverse judgment or settlement. We must advance expenses incurred by an officer or director in defending any proceeding prior to final disposition upon receipt of an undertaking to repay, unless it shall be determined ultimately that the officer or director is entitled to indemnification.

Article VII of our Articles of Incorporation requires that we indemnify our officers and directors to the maximum extent permitted by California law and authorizes us to indemnify our officers and directors in excess of the provisions of Section 317 of the California Corporations Code.

The Securities and Exchange Commission has stated that, in its opinion, agreements to indemnify corporate officers and directors against violations of federal securities laws are void because they are against public policy.

Item 10  Executive Compensation

None of our executive officers received a total annual salary and bonus of more than $100,000 for the year ended June 30, 2001. The following table summarizes the yearly compensation of our President for the three years ended June 30, 2001.









24



|          |      |         | Annual Compensation | Long Term Compensation       
|--------- | ---- | ------- | ------------------- | -----------------------------
|(a)       | (b)  | (c)     | (d)                 | (e)                          
|Name      | Year | Salary  | Bonuses             | Other Annual Compensation (1)
|Tom Sims  | 2001 | $60,000 | 0                   |                              
|President | 2000 | $60,000 | 0                   | $6,293(1)                    
|          | 1999 | $60,000 | 0                   | $7,765(1)                    

(1) These amounts represent the Company's payments to purchase an automobile for Mr. Sims for business and personal use.

(2) Includes 35,000 options granted to Mr. Sims' wife, who is also our corporate secretary.

(3) This represents an issuance of 10,000 shares of restricted stock valued at $1.00 per share.

No Stock Options Were Granted in Fiscal 2001

Quintek did not grant any stock options or stock appreciation rights or Long-Term Incentive Plan Awards to its officers or employees, in the fiscal year ended June 30, 2001.

Aggregated 2001 Option Exercises and Year-End Values

The following table summarizes the number and value of all unexercised stock options held by Mr. Sims at  June 30, 2001.  No stock appreciation or similar rights were exercised during or remained outstanding at the end of Fiscal 2001.





|(a)      | (b)                         | (c)            | (d)                                                                    | (e)                                                         
|-------- | --------------------------- | -------------- | ---------------------------------------------------------------------- | ------------------------------------------------------------
|         |                             |                | Number of Securities Underlying Unexercised Options/SARs at FY-End (#) | Value of Unexercised In-the-Money Options/SARs at FY-End ($)
|Name     | Shares Acquired on Exercise | Value Realized | Exercisable/Unexercisable                                              | Exercisable/Unexercisable                                   
|         |                             |                |                                                                        |                                                             
|Tom Sims | 0                           | $0             | 285,000*/0                                                             |                                                             

*  Includes options and shares granted to Mr. Sims' wife, who is also our corporate secretary.

** Based on a closing bid price on the OTC Bulletin Board on June 30, 2001.

Item 11  Security Ownership of Certain Beneficial Owners and Management

The following table sets forth the ownership of our common stock, as of June 30, 2001, by our directors, named executive officer, Tom Sims, and by two shareholders who owned more than 5% of the outstanding shares. This information was given to us by the transfer agent and the numbers are based on definitions found in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934.



On June 30, 2001, 22,238,793 shares of our common stock were outstanding.



25

|                                                   | Shares Owned (1)
|-------------------------------------------------- | ----------------
|Shareholder (2)                                    | Number          
|                                                   |                 
|Tom Sims, President, CEO and Chairman (1), (4)     | 1,514,495       
|                                                   |                 
|Kurt Kunz, VP Engineering and Director (2), (4)    | 1,953,000       
|                                                   |                 
|Kelly Kunz, VP Manufacturing and Director (3), (4) | 540,000         
|                                                   |                 
|Alex Black (5)                                     | 2,300,000       
|                                                   |                 
|TPG Corporation (6)                                | 2,358,490       
|                                                   |                 
|All directors as a group (4) (3 persons)           | 4,007,495       

(1) Includes 1,173,668 shares beneficially owned by a family trust for Tom Sims, his wife, Catherine, and their children, 20,827 shares owned by Tom Sims, and 35,000 shares owned by Catherine Sims.  Catherine Sims serves as our corporate secretary.



(2) These shares are beneficially owned equally by Kurt Kunz, his wife, Teresa, and their children. Teresa Kunz serves as our corporate Treasurer.

(3) These shares are beneficially owned equally by Kelly Kunz and his wife and their children.

(4)  Includes options and warrants to purchase shares by directors, officers and their spouses exercisable within 60 days after June 30, 2001, as follows: Tom and Catherine Sims   285,000; Kurt and Teresa Kunz 350,000; Kelly Kunz 280,000.

(5) Includes warrants to purchase 1,800,000 shares of common stock.

(6) These represent shares issued (400,000 share) and reserved (1,958,490) for issuance to TPG Corporation in consideration for acquisition of Juniper Corporation, a reporting company acquired by our company to become a reporting company and insure continued trading on the OTCBB (Refer to Section 1.3, page 4).

Item 12  Certain Relationships and Related Transactions

We have made unsecured loans to our directors and officers, listed below. These loans were all renegotiated as of June 30, 1999. The current loan terms each provide that they are due in 20 years, on June 30, 2019. They bear interest at 4% per annum. Each officer is obligated to pay $100 per month until the loan matures and to pay the remaining unpaid balance in one balloon payment on June 30, 2019. At June 30, 2000, and June 30, 2001, the following amounts of principal and interest on these loans were unpaid:









26





|            | 6/30/01         | 6/30/00     
|----------- | --------------- | ------------
|Tom Sims    | $  180,685      | $  181,767  
|Kurt Kunz   | $    54,566     | $    53,616 
|Kelly Kunz  | $    17,971     | $      7,421
|Tom Salahub | $            -- | $    27,464 



These loans were not made in arms-length negotiations between us and the borrowers. The borrowers could not have obtained unsecured loans on similar terms from unrelated third parties. Because of the unsecured nature and length of these loans, they have been discounted by $256,664 (99%) on our financial statements. See, Note 3 to our Financial Statements for the Years ended June 30, 2001 and 2000. To the extent that the interest rate, maturity and other terms of these loans are more favorable than could be obtained from third parties, the benefit received by the directors and officers can be considered additional compensation to them.



Item 13  Exhibits and Reports on Form 8-K

13.1  Exhibits



|2.1 #  | Agreement and Plan of Reorganization between Quintek Technologies, Inc., and Juniper Acquisition Corporation.                     
|------ | ----------------------------------------------------------------------------------------------------------------------------------
|3.1 *  | Articles of Incorporation.                                                                                                        
|3.2 *  | Bylaws.                                                                                                                           
|10.1 * | Cooperation Agreement between Quintek Electronics, Inc., Qtek Aperture AB, and Bofors AB, Missiles Production (November 21, 1997).
|10.2 * | 4300 License Agreement between Quintek Technologies, Inc. and Qtek Aperture Card AB (January 18, 2000).                           
|10.3 * | Additional Agreement between Quintek Technologies, Inc. and Qtek Aperture Card AB (January 18, 2000).                             

#  Incorporated by reference to Exhibit 2.1 to the Form 8-K dated February 24, 2000.

*  Incorporated by reference the Form 10-KSB for the fiscal year ended June 30, 2000.

13.2  Reports on Form 8-K

None.























27



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 hereunto duly authorized.







QUINTEK TECHNOLOGIES, INC.



Date:	October 15, 2001

Tom W. Sims

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

Tom W. Sims, President & CEO



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

|Date:  October 15, 2001 | Tom Sims            
|----------------------- | --------------------
|                        | Tom Sims, Chairman  
|                        |                     
|                        |                     
|Date:  October 15, 2001 | Kurt Kunz           
|                        | Kurt Kunz, Director 
|                        |                     
|                        |                     
|Date:  October 15, 2001 | Kelly Kunz          
|                        | Kelly Kunz, Director







































28



S

Certified Public Accountants

|Daniel Sprayberry, C.P.A. | Members:                                           | Martin J. Marietta, C.P.A.
|------------------------- | -------------------------------------------------- | --------------------------
|Mark Luttrell, C.P.A.     | American Institute of Certified Public Accountants | Dana Boutain, C.P.A.      
|Gregory G. Braun, C.P.A.  | SEC Practice Section                               | Dwayne Schiellack, C.P.A. 
|Ann M. Braun, C.P.A.      | California Society of Certified Public Accountants | Jeffrey Freeman, C.P.A.   
|Jennifer Haney, C.P.A.    |                                                    | William Duerksen, C.P.A.  
|Laima Swanson, C.P.A.     |                                                    | Audrey Tamekazu, C.P.A.   
|Michael Luxton, C.P.A.    |                                                    | Matthew Davis, C.P.A.     
|Veronica Quintana, C.P.A. |                                                    | Lisa Pereira, C.P.A.      
|Deborah Blann, C.P.A.     |                                                    | Kimberly Alvarado, C.P.A. 
|David Beall, C.P.A.       |                                                    | Stephanie Peters, C.P.A.  
|Andrew Kiefer, C.P.A.     |                                                    | William Sablan, C.P.A.    

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Stockholders

Quintek Technologies, Inc.

Camarillo, California



We have audited the accompanying balance sheet of Quintek Technologies, Inc., as of June 30, 2001, and the related statements of operations, stockholders' deficit, and cash flows for the years ended June 30, 2001 and 2000.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit.

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

In our opinion, based on our audit, the financial statements referred to above present fairly, in all material respects, the financial position of Quintek Technologies, Inc., as of June 30, 2001 and 2000, in conformity with generally accepted accounting principles of the United States of America.

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern; however, the Company has experienced losses from operations and substantial doubt exists as to its ability to continue as a going concern.  Continuation is dependent upon the success of future operations.  Management's plans in regard to those matters are described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



Oxnard, California

September  30, 2001



|QUINTEK TECHNOLOGIES, INC.                                              
|------------------------------------------------------------------------
|                                                                        
|BALANCE SHEET - JUNE 30, 2001                                           
|                                                                        
|ASSETS                                                                  
|                                                                        
|Current Assets:                                                         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Property and Equipment, At Cost:                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Other Assets:                                                           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|The accompanying notes are an integral part of the financial statements.













F-2





|QUINTEK TECHNOLOGIES, INC.                                              
|------------------------------------------------------------------------
|                                                                        
|BALANCE SHEET - JUNE 30, 2001                                           
|                                                                        
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                   
|                                                                        
|Current Liabilities:                                                    
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Commitments and Contingencies                                           
|                                                                        
|Stockholders' Deficit:                                                  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|The accompanying notes are an integral part of the financial statements.









F-3



|QUINTEK TECHNOLOGIES, INC.                                              
|------------------------------------------------------------------------
|                                                                        
|Statements of Operations                                                
|For the Years Ended June 30, 2001 and 2000                              
|                                                                        
|                                                                        
|                                                                        
|Sales                                                                   
|                                                                        
|Cost of Sales                                                           
|                                                                        
|                                                                        
|                                                                        
|Operating Expenses:                                                     
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Other Income (Expenses):                                                
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Provision For Income Taxes                                              
|                                                                        
|                                                                        
|                                                                        
|Net Loss Per Share:                                                     
|                                                                        
|                                                                        
|The accompanying notes are an integral part of the financial statements.









F-4





|QUINTEK TECHNOLOGIES, INC.                                              
|------------------------------------------------------------------------
|                                                                        
|Statement of Stockholders' Deficit                                      
|For the Years Ended June 30, 2001 and 2000                              
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Balance, June 30, 1999                                                  
|                                                                        
|Stock issuances                                                         
|                                                                        
|Warrant issuances                                                       
|                                                                        
|Net loss                                                                
|                                                                        
|Balance, June 30, 2000                                                  
|                                                                        
|Stock issuances                                                         
|                                                                        
|Warrant issuances                                                       
|                                                                        
|Net loss                                                                
|                                                                        
|Balance, June 30, 2001                                                  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|The accompanying notes are an integral part of the financial statements.













F-5







|QUINTEK TECHNOLOGIES, INC.                                                 
|---------------------------------------------------------------------------
|                                                                           
|Statements of Cash Flows                                                   
|For the Years Ended June 30, 2001 and 2000                                 
|                                                                           
|                                                                           
|Cash Flows From Operating Activities:                                      
|>Net loss                                                                  
|>Adjustments to reconcile net loss to net cash used in operating activities
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|>Net change in operating assets and liabilities                            
|                                                                           
|                                                                           
|                                                                           
|Cash Flows From Investing Activities:                                      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Cash Flows From Financing Activities:                                      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Net Decrease in Cash                                                       
|                                                                           
|Cash, Beginning of Year                                                    
|                                                                           
|Cash, End of Year                                                          
|                                                                           
|The accompanying notes are an integral part of the financial statements.   







F-6



QUINTEK TECHNOLOGIES, INC.



Notes to Financial Statements

June 30, 2001 and 2000



(1)	Summary of Significant Accounting Policies

This summary of significant accounting policies of Quintek Technologies, Inc. ("the Company") is presented to assist in understanding the Company's financial statements.  These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements.

1. Nature of Business

The Company was originally incorporated under the laws of the state of California on April 16, 1993, as Quintek Electronics, Inc.  On January 14, 1999, the Company merged with Pacific Diagnostic Technologies, Inc. in a business combination accounted for as a purchase.  The acquisition took place under a plan of reorganization. Quintek Electronics, Inc. ("QEI") became public when it was acquired by Pacific Diagnostic Technologies, Inc. ("PDX") through a reverse merger and Chapter 11 Plan of Reorganization.  Under the plan, all assets of QEI were sold to PDX, all PDX management resigned once the Plan was confirmed, and QEI's management and operating plan were adopted by the new operating entity.  Shortly after the confirmation of the plan, the name of the reorganized debtor was changed to Quintek Technologies, Inc. ("QTI").  QTI assumed the assets, liabilities, technology and public position of both QEI and PDX.  At the time of the merger, PDX was a non-operating public entity and QTI has no intention of carrying on the former operations of PDX.

The plan was structured to compensate all related parties with common stock and units.  Each unit consisted of one share of common stock, one Class A warrant, one Class B warrant, one Class C warrant and one Class D warrant.  PDX shareholders received unrestricted units at a ratio of one QTI unit for 25 shares of PDX stock, resulting in a distribution of 310,535 units. PDX creditors received unrestricted QTI units at a ratio of one QTI unit for $3 of previous PDX debt, resulting in a net distribution of 885,549 units.  Chapter 11 administrators and consultants received approximately 610,000 unrestricted QTI shares, attorneys received 220,000 unrestricted units and market-makers received 200,000 unrestricted units.  QEI shareholders received 11,096,167 shares of restricted common stock.

On February 24, 2000, the Company acquired all of the outstanding common stock of Juniper Acquisition Corporation ("Juniper").  For accounting purposes the acquisition has been treated as a recapitalization of the Company with the Company as the acquirer (reverse acquisition).  The historical financial statements prior to February 24, 2000 are those of the Company.









F-7

QUINTEK TECHNOLOGIES, INC.



Notes to Financial Statements

June 30, 2001 and 2000



1. Summary of Significant Accounting Policies (Continued)

(a)	Nature of Business (continued)

The Company was established for the primary purpose of developing, manufacturing, and distributing the 4300 Aperture Card Imaging System technologies, used for recording digital images on aperture card media ("the 4300 system").  Aperture cards are small, rectangular cards each of which contain a 35mm strip of microfilm which is used for storing visual information.  The 4300 system is intended to eliminate the problems of conventional aperture card manufacturing by producing aperture card media with a chemical free process.  The chemistry and fumes involved with conventional photographic film development may be hazardous and the waste material resulting from the chemical process may be considered hazardous material.  The Company's 4300 system does not use a chemical process and does not produce any hazardous material.

(b)	Basis of Accounting

The Company reports on the accrual basis of accounting for both financial statement and income tax purposes. Revenue from product sales is recognized upon shipment of the product.  Revenue from services is recognized as the service is provided using the straight-line method over the life of the contract.  A related liability is recorded for the unearned portion of service revenue received.

(c)	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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.



(d)	Major Customers

The Company had one customer that accounted for more than 10 percent of revenue.  For the year ended June 30, 2001, revenues from the Company's major customer amounted to approximately $208,000.  Accounts receivable from this major customer was approximately $200 at June 30, 2001. For the year ended June 30, 2000, revenues from the Company's three major customers amounted to approximately $141,700, $122,300 and $85,000.  Accounts receivable from these major customers totalled approximately $7,900 at June 30, 2000.



F-8

QUINTEK TECHNOLOGIES, INC.



Notes to Financial Statements

June 30, 2001 and 2000



(1) 	Summary of Significant Accounting Policies (Continued)

(e)	Major Suppliers

There are currently only two known suppliers of aperture cards that use dry silver film.  A continued supply of aperture card media is crucial to the success of the Company because without cards, customers have no use for the Company's equipment, services and software.

(f)	Concentration of Credit Risk - Cash

The Company maintains its cash balances in various financial institutions.  The balances are insured by the Federal Deposit Insurance Corporation up to $100,000.  At various times throughout the year ended June 30, 2001, the Company has maintained balances in excess of federally insured limits.

(g)	Accounts Receivable

The allowance for bad debt is established through a provision for bad debt charged to expense.  Receivables are charged off against the allowance when management believes that the collectibility of the account is unlikely.  Recoveries of amounts previously charged off are credited to the allowance.

(h)	Inventory

Inventory consists of aperture cards, parts and supplies, and completed machines, and is stated at the lower of cost or market.  Cost is determined on a FIFO (first-in, first-out) basis.

Inventories are summarized as follows at June 30, 2001:



|                         |  |          
|------------------------ |  | ---------
|Parts and supplies       |  | $	333,854
|Aperture cards           |  | 3,877    
|                         |  |          
|                         |  | 337,731  
|Reserve for obsolescence |  | (297,644)
|                         |  |          
|                         |  | $	40,087 











F-9

QUINTEK TECHNOLOGIES, INC.



Notes to Financial Statements

June 30, 2001 and 2000



(1)	Summary of Significant Accounting Policies (Continued)



1. Property, Equipment, and Depreciation



Property and equipment are recorded at cost.  Depreciation of property and equipment is provided using the straight line and accelerated methods over the following estimated useful lives:



|Asset Classification          |  | Estimated
Useful Life
|----------------------------- |  | ---------------------
|                              |  |                      
|Equipment                     |  | 5 Years              
|Computer and office equipment |  | 3-7 Years            
|Furniture and fixtures        |  | 7 Years              

Expenditures for maintenance and repairs are charged against operations when incurred. Major renewals and betterments are capitalized.



(j)	Intangible Assets

The cost of patents and purchased proprietary processes acquired are being amortized using the straight-line method over their remaining useful lives, ranging from 7 to 14 years.

1. Payroll Taxes Assumed in Merger

The Company assumed $205,618 of payroll tax liabilities in the merger with Pacific Diagnostic Technologies, Inc.  The balance at June 30, 2001 is $156,792.

(l)	Equity Method of Accounting for Investments

Investments in companies in which the Company has a 20% to 50% interest are carried at cost, adjusted for the Company's proportionate share of undistributed earnings or losses.

(m)	Research and Development

Research and development costs are charged to operations when incurred and are included in operating expenses.  The amounts charged to operations for the years ended June 30, 2001 and 2000 were $63,776 and $80,170, respectively.

(n)	Advertising

The Company expenses advertising costs as they are incurred.  Advertising expense was $921 and $1,239 for the years ended June 30, 2001 and June 30, 2000, respectively.

F-10

QUINTEK TECHNOLOGIES, INC.



Notes to Financial Statements

June 30, 2001 and 2000



(1)	Summary of Significant Accounting Policies (Continued)



1. Impairment Loss



The Company acquired equipment and technological assets during the merger with Pacific Diagnostic Technologies, Inc.  The assets are specific to an industry in which the Company does not operate and are therefore unusable by the Company in its normal business operations.  The assets were listed as idle property and were recorded at estimated net realizable value at the time of the merger.  The Company has since attempted to sell the assets, but has been unsuccessful.  Management now believes it may not be able to sell the assets and has determined that the net realizable value should be reduced to zero.  Accordingly, an impairment loss of $98,019 has been recognized in the accompanying financial statements and included in operating expenses.

(p)	Income Taxes

The Company accounts for income taxes using the liability approach to financial accounting and reporting.  Current income taxes are based on the year's income taxable for federal and state reporting purposes.

The Company has a deferred tax asset due to net operating loss carryforwards and temporary taxable differences due to stock-based compensation for income tax purposes.

The deferred tax asset is $2,303,538 and $2,109,926 as of June 31, 2001 and 2000, respectively.  However, due to the ongoing nature of the losses and the potential inability of the Company to ever realize the benefit, a valuation allowance has been established for 100% of the deferred tax asset.  Net operating loss carryforwards expire at various times through the year 2017.

The effects of temporary differences that give rise to significant portions of the deferred tax benefit are presented below:



|                                | 2001      |  | 2000     
|------------------------------- | --------- |  | ---------
|                                |           |  |          
|Net operating loss carryforward | $	168,262 |  | $	376,565
|Stock-based compensation        | 32,594    |  | 300,975  
|                                |           |  |          
|                                | 200,856   |  | 677,540  
|Less valuation allowance        | (200,856) |  | (677,540)
|                                |           |  |          
|Total                           | $	--      |  | $	--     



F-11

QUINTEK TECHNOLOGIES, INC.



Notes to Financial Statements

June 30, 2001 and 2000



(1)	Summary of Significant Accounting Policies (Continued)

1. Stock-Based Compensation

The Company accounts for stock-based employee compensation arrangements in accordance with the provisions of APB 25, Accounting for Stock Issued to Employees, and complies with the disclosure provisions of SFAS 123, Accounting for Stock-Based Compensation.  Under APB 25, compensation cost is recognized based on the difference, if any, on the date of grant between the fair value of the Company's stock and the amount an employee must pay to acquire the stock.

The Company's board of directors authorized a stock award and long-term incentive plan which includes stock appreciation rights and certain stock incentive awards.  Nothing has been issued under the plan and the plan has not been approved by the shareholders as of June 30, 2001.

(r)	Net Loss Per Share

Basic net loss per share is based on the weighted average number of common shares outstanding of 22,237,793 and 15,843,499 at June 30, 2001 and 2000, respectively.  The basic and diluted earnings per share calculations are the same because potential dilutive securities would have had an antidilutive effect.

Securities that were not included in the earnings per share calculation because they were antidilutive consist of the convertible bonds, stock options, and warrants.

(s)	Recent Accounting Pronoucements



In June 2001, the Financial accounting Standards Board issued SFAS No. 142, "Goodwill and Other Intangible Assets."  SFAS 142 is effective January 1, 2002, and requires goodwill and certain intangible assets to remain on the balance sheet and not be amortized. On an annual basis, or when there is reason to suspect that their values have been diminished or impaired, these assets must be tested for impairment, and write-downs may be necessary.  The Company is currently evaluating the provisions of SFAS 142 and has not yet determined the impact on the Company's financial position and results of operations.



(2)	Going Concern

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern; however, the Company has sustained substantial operating losses.  In view of this matter, realization of a major portion of the assets in the accompanying

F-12

QUINTEK TECHNOLOGIES, INC.



Notes to Financial Statements

June 30, 2001 and 2000



1. Going Concern (Continued)

balance sheet is dependent upon continued operations of the Company, which in turn is

dependent upon the Company's ability to meet its financing requirements, and the success of its future operations.

Management believes the Company's current cash and cash generated from operations will only be sufficient to meet its anticipated cash needs until November 15, 2001.  Accordingly, the Company will require an additional capital infusion or revenues from additional sales to continue operations.  Management is not certain if additional capital or sales proceeds will become available and is considering other strategic alternatives, which may include a merger, asset sale, or another comparable transaction, or financial restructuring.  If unsuccessful in completing a strategic transaction, the Company may be required to cease operations.



(3)	Employee Receivables



|                                                                                       |  | 2001     
|-------------------------------------------------------------------------------------- |  | ---------
|                                                                                       |  |          
|Notes receivable from officers, unsecured, due on June 30, 2019, plus interest at 4%.  |  | $	235,251
|                                                                                       |  |          
|Notes receivable from employees, unsecured, due on June 30, 2019, plus interest at 4%. |  | 23,813   
|                                                                                       |  | 259,064  
|                                                                                       |  |          
|Valuation allowance                                                                    |  | (256,664)
|                                                                                       |  | $	2,400  



1. Investment



The investment held by the Company consists of a 49% ownership interest in Qtek Aperture Card AB, a Swedish corporation.  The investment is accounted for on the equity method.

Pertinent financial information for the Company as of June 30, 2001 and 2000, is as follows:





















F-13



QUINTEK TECHNOLOGIES, INC.



Notes to Financial Statements

June 30, 2001 and 2000



1. Investment (Continued)



|                              |  | 2001      |  | 2000     
|----------------------------- |  | --------- |  | ---------
|Balance sheet:                |  |           |  |          
|Assets                        |  | $147,926  |  | $155,892 
|                              |  |           |  |          
|Liabilities                   |  | $100,510  |  | $95,891  
|Equity                        |  | 47,416    |  | 60,001   
|                              |  |           |  |          
|                              |  | $147,926  |  | $155,892 
|                              |  |           |  |          
|Income statement:             |  |           |  |          
|Revenues                      |  | $202,057  |  | $285,600 
|Expenses                      |  | (190,073) |  | (278,621)
|                              |  |           |  |          
|Net income                    |  | 11,984    |  | 6,979    
|                              |  | x	49%     |  | x	49%    
|                              |  |           |  |          
|Company's share of net income |  | $	5,872   |  | $	3,420  





(5)	Convertible Bonds

Convertible bonds consists of the following:



|                                                                                                                                                                       |  | 2001     
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------
|Bonds payable with interest at 9%, due on various dates in 2001, convertible to shares of common stock in increments of $1,000 or more at the rate of $1.00 per share. |  | $	206,064
|                                                                                                                                                                       |  |          
|Bonds payable with interest at 12%, due July 2000, convertible to shares of common stock in increments of $500 or more at the rate of $.75 per share.                  |  | 41,141   
|                                                                                                                                                                       |  |          
|                                                                                                                                                                       |  | $	247,205



(6)	Commitments and Contingencies

(a)	Operating Leases

The Company leases its office facilities under a non-cancelable operating lease that requires total monthly rental payments of $2,737.  The lease expires on March 31, 2002 with an option to extend the lease an additional 36 months.  The lease contains a rental payment escalation clause.

F-14

QUINTEK TECHNOLOGIES, INC.



Notes to Financial Statements

June 30, 2001 and 2000



(6) 	Commitments and Contingencies (Continued)

On July 1, 1999, the Company entered into a long-term non-cancelable operating lease of its facilities in Virginia.  The lease requires monthly rental payments of $2,690 and carries an escalation clause of 3.5% per year.  The lease expires September 2003.

For the years ended June 30, 2001 and 2000, rent expense for these operating leases totaled $64,184 and $55,279, respectively.

Minimum future rental payments under the non-cancelable operating leases are as follows:



|Years ended June 30, |  |          
|-------------------- |  | ---------
|2002                 |  | $	58,041 
|2003                 |  | 34,841   
|2004                 |  | 8,949    
|                     |  |          
|                     |  | $	101,831

(b)	Purchase Obligation

The Company has established a licensing agreement with Qtek Aperture Card AB ("Qtek").  Under the agreement the Company is required to purchase at least 30 of the 4305 units at approximately $18,000 each before June 30, 2004.  As of June 30, 2001, the Company had purchased 15 units under the agreement.

(c)	Purchase Agreement

At February 24, 2000 the Company entered into an agreement with TPG Capital Corporation ("TPG"), the shareholder of Juniper Acquisition Corporation ("Juniper"), to acquire Juniper in order to effect transactions intended to combine the Company with a United States reporting company and for related matters.  The original consideration for the acquisition was $200,000 in cash and 400,000 shares of the Company's common stock (the "Exchange Shares").  Per the agreement, at February 24, 2001 (the "Reset Date"), the number of Exchange Shares shall be increased so that the number of Exchange Shares multiplied by the average closing bid price of the Company's common stock for the 30 days immediately prior to February 24, 2001, shall equal a value of $500,000.

The Company is negotiating an amendment to the original purchase agreement.  Although the amendment has not yet been finalized, management expects to issue 1,958,490 shares of the Company's common stock to TPG in satisfaction of the original agreement and as consideration for a release from the antidilution provisions



F-15

QUINTEK TECHNOLOGIES, INC.



Notes to Financial Statements

June 30, 2001 and 2000



(6) 	Commitments and Contingencies (Continued)

contained in the agreement.  Accordingly, a liability has been recorded in the

accompanying financial statements for this accrued purchase expense.

(d)	Income Tax Return Filings

The Company has not filed income tax returns for several years.  Due to operating losses, income tax liability and penalties would not be substantial.  However, the state of California could potentially revoke the Company's charter if the Company does not become current on its income tax return filings.

(7)	Stockholders' Deficit

(a)	Common Stock and Warrants

The Company has authorized 50 million shares of $0.01 par value common stock.  Each share entitles the holder to one vote.  There are no dividend or liquidation preferences, participation rights, call prices or rates, sinking fund requirements, or unusual voting rights associated with these shares.  At June 30, 2001 there were 22,237,793 shares of common stock issued and outstanding.

During the year ended June 30, 1999 the Company issued warrants in connection with its Plan of Reorganization and in connection with the issuance of restricted common stock.  Upon surrender of a warrant, the holder is entitled to purchase one share of the Company's common stock at the strike price.  For each class, the number of warrants outstanding, the strike price and the expiration dates are as follows:



Class B - 1,405,413 warrants on non-restricted stock with a strike price of $2.00 per share, expiring on March 31, 2002.

Class C - 1,283,786 warrants on non-restricted stock with a strike price of $3.00 per share, expiring on March 31, 2002.

Class D - 1,338,263 warrants on non-restricted stock with a strike price of $4.00 per share, expiring on March 31, 2002.

Class E  - 686,544 warrants on restricted stock with a strike price of $1.00 per share, expiring on March 31, 2002.

Class F - 812,544 warrants on restricted stock with a strike price of $2.00 per share, expiring on March 31, 2002.

Class G - 1,026,844 warrants on restricted stock with a strike price of $3.00 per share, expiring on March 31, 2002.

F-16

QUINTEK TECHNOLOGIES, INC.



Notes to Financial Statements

June 30, 2001 and 2000



(7) 	Stockholders' Deficit (Continued)

Class H - 1,026,844 warrants on restricted stock with a strike price of $4.00 per share, expiring on October 1, 2002.

Class I - 2,571,286 warrants on restricted stock with a strike price of $1.00 per share, expiring on March 31, 2002.

Class J - 4,443,384 warrants on restricted stock with a strike price of $1.00 per share, expiring on January 14, 2004. (On these financial statements, we treated the employee options differently than non-employee warrants.  There were 2,015,000 of the J warrants issued to employees in prior years.  Thus, the number of J warrants here is exactly 2,015,000 less than disclosed in Item 5.4 of the Form 10-KSB because of this.)

(b)	Common Stock Reserved

At June 30, 2001, common stock was reserved for the following reasons:



|Conversion of bonds               |  | 247,205    | shares
|--------------------------------- |  | ---------- | ------
|Exercise of stock options         |  | 2,015,000  | shares
|Exercise of common stock warrants |  | 14,595,908 | shares





(c)	Stock Option Agreements

The Company has granted fixed employee stock-based compensation options. The fixed option agreements typically have a maximum term of 5 years and are fully vested at the date of grant.



The fair value of each option granted is estimated on the grant date using the Black-Scholes Model.  The following assumptions were made in estimating fair value:



|                            | Fixed    
|--------------------------- | ---------
|                            | Options  
|                            |          
|Dividend yield (%)          | 0.00%
%  
|Risk-free interest rate (%) | 6.27%
%  
|Expected life (years)       | 5
Years  
|Expected volatility (%)     | 112.20%
%







F-17



QUINTEK TECHNOLOGIES, INC.



Notes to Financial Statements

June 30, 2001 and 2000



(7) 	Stockholders' Deficit (Continued)

Had compensation cost been determined on the basis of fair value pursuant to FASB Statement No. 123, net loss and loss per share would have been reduced as follows:

|                        |  | 2001          |  | 2000         
|----------------------- |  | ------------- |  | -------------
|Net loss:               |  |               |  |              
|As reported             |  | $	(1,175,814) |  | $	(6,814,681)
|                        |  |               |  |              
|Pro forma               |  | $	(1,175,814) |  | $	(8,399,508)
|                        |  |               |  |              
|Basic loss per share:   |  |               |  |              
|As reported             |  | $	(0.06)      |  | $	(0.43)     
|                        |  |               |  |              
|Pro forma               |  | $	(0.06)      |  | $	(0.53)     
|                        |  |               |  |              
|Diluted loss per share: |  |               |  |              
|As reported             |  | $	(0.06)      |  | $	(0.43)     
|                        |  |               |  |              
|Pro forma               |  | $	(0.06)      |  | $	(0.53)     



The following is a schedule of the weighted average exercise price and weighted average fair value in accordance with SFAS 123:

|                       |  | Weighted Average |  | Weighted Average
|---------------------- |  | ---------------- |  | ----------------
|                       |  | Exercise Price   |  | Fair Value      
|Exercise price:        |  |                  |  |                 
|Equals market price    |  | $	--             |  | $	--            
|Exceeds market price   |  | $	1.00           |  | $	0.81          
|Less than market price |  | $	--             |  | $	--            

The Company applies APB Opinion 25 in accounting for its fixed stock compensation.   Compensation cost charged to operations for the year ended June 30, 2001 was $0.





F-18

QUINTEK TECHNOLOGIES, INC.



Notes to Financial Statements

June 30, 2001 and 2000



(7) 	Stockholders' Deficit (Continued)

Following is a summary of the status of the stock option agreements during the year ended June 30, 2001:

|                                     |  | Number of |  | Weighted Avg. 
|------------------------------------ |  | --------- |  | --------------
|                                     |  | Shares    |  | Exercise Price
|                                     |  |           |  |               
|Outstanding at July 1, 2000          |  | 2,015,000 |  | $	1.01        
|                                     |  |           |  |               
|Granted                              |  | --        |  | --            
|Exercised                            |  | --        |  | --            
|Forfeited                            |  | --        |  | --            
|                                     |  |           |  |               
|Outstanding at June 30, 2001         |  | 2,015,000 |  | 1.01          
|                                     |  |           |  |               
|Options exercisable at June 30, 2001 |  | 2,015,000 |  | 1.01          

Following is a summary of the status of the stock option agreements outstanding at June 30, 2001:



|                     |           | Weighted Average |                 
|-------------------- | --------- | ---------------- | ----------------
|                     |           | Remaining        | Weighted Average
|Exercise Price Range | Number    | Contractual Life | Exercise Price  
|                     |           |                  |                 
|$1.00 - $4.00        | 2,015,000 | 31 months        | $1.01           

(8)	Related Party Transactions

During the year ended June 30, 2001, the Company sold aperture cards to Qtek Aperture Card AB, a related party, for $18,480. Additionally, during the year ended June 30, 2001, the Company purchased two machines at a total cost of $42,000. These prices represent the retail price less the normal discount given to third-party dealers.









F-19

QUINTEK TECHNOLOGIES, INC.



Notes to Financial Statements

June 30, 2001 and 2000

(9)	Statements of Cash Flows - Supplemental Disclosures

The net changes in operating assets and liabilities shown on the statement of cash flows consist of the following:

|                                  |  | 2001      |  | 2000     
|--------------------------------- |  | --------- |  | ---------
|(Increase) Decrease:              |  |           |  |          
|Accounts receivable               |  | $	746     |  | $	47,261 
|Inventory                         |  | 162,725   |  | 23,752   
|Other current assets              |  | 7,326     |  | (4,909)  
|Deposits                          |  | 4,669     |  | (6,553)  
|Idle property                     |  | --        |  | 1,981    
|Increase (Decrease):              |  |           |  |          
|Accounts payable                  |  | (164,899) |  | 115,999  
|Payroll and payroll taxes payable |  | 44,926    |  | 8,846    
|Payroll taxes assumed in merger   |  | (26,047)  |  | (22,779) 
|Accrued contingency payable       |  | 100,000   |  | --       
|Accrued expenses                  |  | 30,336    |  | 11,948   
|Other current liabilities         |  | (35,622)  |  | (43,345) 
|Unearned revenue                  |  | 9,864     |  | (7,618)  
|                                  |  |           |  |          
|                                  |  | $	134,024 |  | $	124,583
|                                  |  |           |  |          
|Operating activities reflect:     |  |           |  |          
|                                  |  |           |  |          
|Interest paid                     |  | $	43,149  |  | $	51,860 
|                                  |  |           |  |          
|Income taxes paid                 |  | $	--      |  | $	--     

For the year ended June 30, 2000, the Company had non-cash financing transactions related to the conversion of bonds into common stock for $330,100.

(10)	Subsequent Events

Subsequent to June 30, 2001, 41,333 of B, C, and D warrants each were exercised into free-trading stock.  Additionally, the Company issued 5,167,035 shares of restricted common stock.  The Company also issued 1,958,490 shares of common stock in satisfaction of the agreement with TPG Capital Corporation described in Note 6(c).

Subsequent to June 30, 2001, several of the outstanding convertible bonds have become due and payable.  The Company plans to raise funds through additional equity transactions in order to repay these bonds.

F-20