EXHIBIT 99.2

                                 BC FORM 51-901F

                                QUARTERLY REPORT


Incorporated as part of: Schedules B & C


ISSUER DETAILS:

--------------------------------------------------------------------
|Name of Issuer                    | IMAGIS TECHNOLOGIES INC.       |
|----------------------------------|--------------------------------|
|For Quarter Ended                 | March 31, 2003                 |
|----------------------------------|--------------------------------|
|Date of Report                    | May 15, 2003                   |
|----------------------------------|--------------------------------|
|Issuer Address                    | 1630 - 1075 West Georgia Street|
|                                  | Vancouver, British Columbia    |
|                                  | V6E 3C9                        |
|----------------------------------|--------------------------------|
|Issuer Fax Number                 | (604) 684-9314                 |
|----------------------------------|--------------------------------|
|Issuer Telephone Number           | (604) 684-2449                 |
|----------------------------------|--------------------------------|
|Contact Name                      | Wayne Smith                    |
|----------------------------------|--------------------------------|
|Contact Position                  | Chief Financial Officer        |
|----------------------------------|--------------------------------|
|Contact Telephone Number          | (604) 684-2449                 |
|----------------------------------|--------------------------------|
|Contact Email Address             | wsmith@imagistechnologies.com  |
|----------------------------------|--------------------------------|
|Web Site Address                  | www.imagistechnologies.com     |
--------------------------------------------------------------------


                                   CERTIFICATE


THE THREE  SCHEDULES  REQUIRED TO  COMPLETE  THIS  REPORT ARE  ATTACHED  AND THE
DISCLOSURE CONTAINED THEREIN HAS BEEN APPROVED BY THE BOARD OF DIRECTORS. A COPY
OF THIS REPORT WILL BE PROVIDED TO ANY SHAREHOLDER WHO REQUESTS IT.

Iain Drummond              /s/ Iain Drummond           03/05/15
-------------              -----------------           --------
Name of Director           Sign (typed)                Date Signed (YY/MM/DD)

Roy Trivett                /s/ Roy Trivett             03/05/15
-----------                ---------------             --------
Name of Director           Sign (typed)                Date Signed (YY/MM/DD)


<PAGE>


SCHEDULE B: SUPPLEMENTARY INFORMATION

1.   Analysis of expenses:

(a)  Cost of materials

      Supplies and services                                               2,911
      Other                                                                 103
      -------------------------------------------------------------------------
      Total                                                              $3,014
      -------------------------------------------------------------------------

(b)  Sales

      Salaries and benefits                                             340,509
      Travel                                                            123,056
      Other                                                              69,217
      -------------------------------------------------------------------------
      Total                                                            $532,782
      -------------------------------------------------------------------------

(c)  Marketing

      Salaries and benefits                                              16,248
      Tradeshows                                                          7,018
      Website and internet                                                7,267
      Other                                                              10,681
      -------------------------------------------------------------------------
      Total                                                             $41,214
      -------------------------------------------------------------------------

(d)  Technical services

      Salaries and benefits                                              98,936
      Travel                                                              9,704
      Other                                                              31,948
      -------------------------------------------------------------------------
      Total                                                            $140,588
      -------------------------------------------------------------------------

(e)  Technology development

      Salaries and benefits                                             211,858
      Travel                                                             25,048
      Other                                                              41,637
      -------------------------------------------------------------------------
      Total                                                            $278,543
      -------------------------------------------------------------------------


<PAGE>


(f)  Administration

      Consulting fees                                                   189,382
      Management fee                                                    366,950
      Rent and utilities                                                 22,086
      Insurance                                                          44,601
      Stock based compensation                                           (4,150)
      Salaries and benefits                                             164,315
      Audit and legal fees                                               57,081
      Telephone                                                           4,577
      Postage and courier                                                 3,580
      Transfer agent and filing fees                                      9,604
      Travel                                                             41,727
      Other                                                              51,898
      --------------------------------------------------------------------------
      Total                                                            $951,651
      --------------------------------------------------------------------------

2.   Related party transactions:

     During  the  quarter  ended  March 31,  2003 the  Company  borrowed  from a
     previous  director  of the  Company  an  amount of  $185,000.  This loan is
     secured  by the  accounts  receivable  of the  Company.  Also  included  is
     interest  payable of $1,115 (2002 - nil) which is payable  pursuant to this
     loan.  Subsequent to March 31, 2003, the terms of the note were modified to
     increase the total  borrowings  available  from  $200,000 to $500,000.  The
     interest  rate  remains at the prime rate plus 2%. In addition  the note is
     now secured by a General Security  Agreement over the assets of Imagis, and
     a Source Code Escrow  Agreement that requires Imagis to deposit into escrow
     its source codes together with a license to commercialize  the source codes
     on a  non-exclusive,  world-wide,  royalty-free  basis for a period of five
     years,  to be released only in the event that Imagis  ceases  operations or
     enters bankruptcy proceedings.

3.   Summary of securities  issued and options  granted  during the three months
     ended March 31, 2003

(a)  Summary of securities issued during the period:

<TABLE>
           Date        Type            Type
            Of          Of              Of                                  Total           Type of
          Issue      Security          Issue          Number    Price      Proceeds      Consideration  Commission
        <S>           <C>           <C>              <C>        <C>        <C>                <C>          <C>
         01/23/03     Common      Option exercise     21,505    $2.97       $63,870           Cash         Nil
         01/24/03     Common      Option exercise      5,000    $1.00        $5,000           Cash         Nil
         01/27/03     Common      Option exercise      6,000    $1.00        $6,000           Cash         Nil
         02/10/03     Common     Warrant exercise    133,334    $1.25      $166,668           Cash         Nil
         02/10/03     Common      Option exercise     50,000    $0.30       $15,000           Cash         Nil
         03/12/02     Common      Option exercise     30,000    $0.30        $9,000           Cash         Nil
</TABLE>

(b)  Options/warrants granted during the period:

     Nil

3.   Summary of securities as at March 31, 2003

(a)  Authorized share capital: 100,000,000 common shares without par value

(b)  Number and recorded value for shares issued and outstanding:

      Issued and outstanding          No. of shares             Amount
      ----------------------          -------------             ------
      Balance March 31, 2003          20,596,705                $17,626,656


<PAGE>


3.   Summary of securities as at March 31, 2003 (continued):

(c)  Description of options, warrants and convertible securities outstanding:

          Options
          -------

          ----------------------------------------------------------------------
            Number of Common Shares
                   Issuable             Exercise Price          Date of Expiry
          ----------------------------------------------------------------------
                   75,000                  $ 0.30                 07/06/03
                   50,000                  $ 1.00                 02/25/04
                   45,000                  $ 1.00                 03/25/04
                   60,000                  $ 1.00                 07/19/04
                  165,999                  $ 1.00                 01/19/05
                  546,666                  $ 1.00                 08/30/06
                   15,000                  $ 2.35                 09/02/05
                   15,000                  $ 2.35                 11/02/05
                  160,000                  $ 2.20                 12/19/06
                   15,000                  $ 2.06                 12/05/05
                   27,000                  $ 1.99                 12/20/05
                   8,400                   $ 1.50                 12/20/05
                  242,500                  $ 1.50                 05/14/06
                  270,000                  $ 2.35                 03/04/07
                   35,485                  $ 2.97                 02/08/04
                   10,000                  $ 2.24                 01/31/07
                  130,000                  $ 2.35                 05/15/07
                  155,000                  $ 2.35                 06/30/07
                  385,000                  $ 2.35                 07/31/07
                  300,000                  $ 1.50                 08/31/07
                   85,000                  $ 2.35                 10/31/07
          ----------------------------------------------------------------------
                2,796,050
          ----------------------------------------------------------------------

          Warrants
          --------

            Number of common shares
                    Issuable              Exercise Price      Date of Expiry
                     50,000                   $2.20          January 18, 2004
                    291,667                   $2.28            July 24, 2004
                    105,000                   $2.84            July 24, 2004
          ----------------------------------------------------------------------
                    446,667
          ----------------------------------------------------------------------


<PAGE>


4.   List of directors and officers as of May 15, 2003:

     ---------------------------------------------------------------------------
     | Name                  | Position                                        |
     | --------------------- |--------------------------------------------------
     | Oliver "Buck" Revell  | Director and Chairman of the Board              |
     | Iain Drummond         | Director, Chief Executive Officer, and President|
     | Wayne Smith           | Chief Financial Officer                         |
     | Tim Ruggles           | Vice President Business and Product Development |
     | Rory Godinho          | Corporate Secretary                             |
     | Andy Amanovich        | Chief Technology Officer                        |
     | Roy Trivett           | Director                                        |
     | Treyton Thomas        | Director                                        |
     ---------------------------------------------------------------------------


<PAGE>


SCHEDULE C:  MANAGEMENT DISCUSSION

DESCRIPTION OF BUSINESS

Forward-Looking Statements:

Except for statements of historical fact, certain  information  contained herein
constitutes   "forward-looking   statements,"   including   without   limitation
statements containing the words "believes," "anticipates," "intends," "expects,"
and words of similar import, as well as all projections of future results.

Such forward-looking  statements involve known and unknown risks,  uncertainties
and other  factors  which may cause the actual  results or  achievements  of the
Issuer to be materially different from any future results or achievements of the
Issuer  expressed or implied by such  forward-looking  statements.  Such factors
include,  but are not limited to the following:  the Issuer's limited  operating
history;  the Issuer's need for additional  financing;  the Issuer's  history of
losses; the Issuer's dependence on a small number of customers;  risks involving
new product  development;  competition,  management  of growth and  integration;
risks of technological  change; the Issuer's dependence on key personnel;  risks
involving  lengthy  sales  cycles;   marketing   relationships  and  third-party
suppliers;  the Issuer's  ability to protect its  intellectual  property rights;
risks  associated with exchange rate  fluctuations;  risks of software  defects;
risks   associated  with  product   liability;   the  directors'  and  officers'
involvement  in other  projects;  the Issuer's  strategic  alliances  with Sanyo
Semiconductor  Company and Intacta  Technologies  Inc. to form Zixsys Inc.;  the
Issuer's  agreements with OSI Systems Inc.; the volatility of the Issuer's share
price;  risks  associated  with certain  shareholders'  exercising  control over
certain  matters;  and  the  other  risks  and  uncertainties   described  under
"Description of Business - Risk Factors" in the Company's annual report. Certain
of the  forward-looking  statements  contained  in  this  quarterly  report  are
identified  with  cross-references  to this  section  and/or to  specific  risks
identified within the Company's 2002 Annual Report.

Although   the   Issuer   believes   that   expectations   reflected   in  these
forward-looking  statements are reasonable,  the Issuer cannot  guarantee future
results, levels of activity,  performance,  achievements or other future events.
Moreover,  neither the Issuer nor anyone  else  assumes  responsibility  for the
accuracy and  completeness of these  forward-looking  statements.  The Issuer is
under no duty to update any of these  forward-looking  statements after the date
of this  report.  You should not place undue  reliance on these  forward-looking
statements.

About Imagis

Imagis  Technologies  Inc. is a developer and marketer of software  applications
and advanced  biometric facial  recognition  software solutions both as products
and as a  Software  Development  Kit.  These  applications  provide  a range  of
security  solutions  in  various  industry  sectors  including   airports,   law
enforcement, customs, immigration and other government agencies, and gaming. The
Company  currently has over one hundred and forty  installations of its software
products.

Overview

Revenue for software and services has  historically  accounted for a substantial
portion of the Company's  revenue.  Typically,  the Company  enters into a fixed
price contract with a customer for the licensing of selected  software  products
and the provision of specific services.  The Company generally  recognizes total
revenue for software and services associated with a contract using percentage of
completion  method based on the total costs  incurred  over the total  estimated
costs to complete the contract.

The Company's revenue is dependent, in large part, on significant contracts from
a  limited  number  of  customers.  As a result,  any  substantial  delay in the
Company's  completion of a contract,  the inability of the Company to obtain new
contracts or the cancellation of an existing contract by a customer could have a
material  adverse  effect on the Company's  results of  operations.  The loss of
certain  contracts  could  have a  material  adverse  effect  on  the  Company's
business, financial condition,  operating results and cash flows. As a result of
these and other factors,  the Company's results of operations have fluctuated in
the past and may continue to fluctuate from period-to-period.

Recent events have increased awareness of and interest in products that have law
enforcement or other security applications.  There can be no assurance, however,
that  such  trends  will  continue  or will  result  in  increased  sales of the
Company's products and services.


<PAGE>


Results of  operations  for the three  months  ended March 31, 2003  compared to
March 31, 2002:

Revenues

Imagis' total revenues decreased 74% to $277,508 for the quarter ended March 31,
2003 over the comparable  prior year level of $1,070,284,  and decreased 4% over
the fourth quarter 2002 level of $289,774.  The lower revenues were attributable
to lower software sales revenues.

Revenues from the Company's software products declined 86% to $135,983 this year
as compared to $985,954 for 2002.  The quarter  ending  March 31, 2002  included
$620,000 in revenue from the Serco installation  during that period and $300,000
from  the  Company's  Alameda  installation.  There  were  no  comparable  large
contracts  during the same period this year,  these orders were received  during
2001 and the revenue was recorded as the installations  were completed.  The new
orders  received  during 2003 were $70,389 higher than in 2002, a 118% increase.

Support and services  revenues for 2003 were  $134,019 and were 124% higher than
in 2002 of $59,830.  The support  revenues are  increasing as the sales revenues
increased during 2002 and the deferred revenue of $279,218  recorded as at March
31, 2003 consists  solely of ongoing support  contracts,  this represents a 264%
increase over the 2002 deferred revenue balance of $76,676.  Other revenues were
$7,506 for 2003, whereas comparable revenues of $24,500 were earned in the prior
year.  These  revenues  were  primarily  earned  through  interest  revenue  and
fluctuate with the Company's cash balances.

Operating Costs

Operating  expenses totaled $2,062,609 for 2003, which is 7% lower than the 2002
operating expenses of $2,209,786. The 2003 expenses include a one-time charge of
USD$250,000 (CDN$366,950) incurred as a management fee owing to OSI Systems Inc.
("OSI") in consideration of renegotiating  the terms of the agreements with OSI.
Excluding this charge,  the operating  expenses for 2003 were $1,695,659,  which
represents a 23% reduction in expenses over the prior year. The lower costs over
the  prior  period  resulted  from   significant   decreases  in  the  areas  of
administration and technology development and technical services.  Management of
the Company has implemented  significant  cost reduction  strategies  during the
final quarter of 2002 and throughout 2003 and the current operating expense rate
is  equivalent  to  approximately  $3,000,000  per annum,  providing an expected
expense level of approximately $4,400,000 for fiscal 2003. Management intends to
continue to reduce costs wherever  possible without impinging upon the Company's
ability to make sales, continue product development, and service customers.

Administration

Administrative costs for 2003 were $951,651,  which is 5% lower than for 2002 of
$997,178.  These  costs  include  the  one-time  management  fee of  USD$250,000
(CDN$366,950)  described above.  Excluding this charge, the administrative costs
were  $584,701,   which   represents  a  41%  reduction  from  the  prior  year.
Administrative  costs  include staff  salaries and related  benefits and travel,
stock based compensation, consulting and professional fees, facility and support
costs,  shareholder,  regulatory  and investor  relations  costs.  Generally all
categories  were  lower  due to the  effects  of cost  reducing  strategies,  in
particular  including a  significant  reduction  in travel  costs and the use of
outside consultants. Stock based compensation for the period was nil during 2003
as opposed to an expense of $223,781  during 2002. The Company's  administrative
costs have declined since the second quarter of 2002, primarily due to no longer
using financial advisory services and contract support staff.

Bad debt expense

The bad debt  expense  in 2003 of $42,074  consists  of a single  customer  that
defaulted on payment for a software  license.  There was no  comparable  expense
during the same period in 2002.

Interest and Amortization

Interest expense incurred this year primarily  related to financing of equipment
amounted  to $6,330,  up 76% from the prior  year of $3,592.  This is due to the
acquisition of equipment  during 2002.  Amortization in 2003 amounted to $66,413
as compared to $31,876 for 2001. The increase in amortization  expense  reflects
purchases  of  equipment  and  the  amortization  expense  associated  with  the
acquisition of the Intacta license and patents.


<PAGE>


Sales and marketing

Sales and  marketing  expenses for 2003 were  $573,996,  and were  comparable to
those  in 2002  of  $557,748.  Imagis  significantly  increased  its  sales  and
marketing  efforts  during 2002 in order to  increase  market  awareness  of the
Company  and  its  products  and   capitalize   on  expected   increased   sales
opportunities.  The Company has decreased its sales team subsequent to March 31,
2003 as part of its strategy of utilizing a more  targeted  marketing  and sales
strategy  but no further  decreases  are  currently  contemplated.  The  Company
expects that sales and marketing  expenses will  continue at  approximately  the
same or reduced levels in future periods.

Technology development

The technology  development expenses for 2003 were $278,542,  which is 25% lower
than the 2002  comparable  costs of  $369,706.  Expenses  were  further  reduced
subsequent  to March 31, 2003 through a reduction  in staff and overhead  costs.
Technology development expenses are expected to remain at this approximate level
until such time as market demand for new products necessitates adding resources.
This will only occur when specific sales opportunities are identified.

Technical services

Costs for the technical  services  group were  $140,588 this year,  which is 41%
lower than the comparable 2002 costs of $239,397.  The technical  services group
generally  assists the Company's  strategic  partners in their  installation  of
Imagis' products and also provides  clients with any technical  support they may
require  under  annual  support  contracts,  and  includes  primarily  costs for
salaries,  facilities and travel.  The reduction is primarily due to a reduction
in staff  costs and  travel,  these  costs were  higher in 2002 due to  expenses
associated with completing the Alameda  installation.  Costs for future quarters
will be dependent on the sales levels achieved by the Company.

Net Loss for the Period

Overall,  the  Company  incurred  a net loss for the  first  quarter  of 2003 of
$1,785,101or  $0.09 per share,  which is 57% higher  than the net loss  incurred
during the first quarter of 2002 of $1,139,502 or $0.07 per share. Excluding the
one-time  charge of USD$250,000  (CDN$366,950)  the loss was $1,418,151 or $0.07
per  share.  The  primary  cause  of the  increased  loss  was the lack of large
contracts in progress during 2003, which resulted in a significant  reduction in
revenues.

SUBSEQUENT EVENTS

(a)  Subsequent to March 31, 2003, 75,000 options were exercised for proceeds to
     the Company of $22,500.

(b)  Subsequent  to March 31, 2003,  the terms of the note  payable  issued to a
     previous  director of the  Company  were  modified  to  increase  the total
     borrowings  available from $200,000 to $500,000.  The interest rate remains
     at the prime rate plus 2%. In addition the note is now secured by a General
     Security  Agreement  over the assets of Imagis,  and a Source  Code  Escrow
     Agreement  that  requires  Imagis to deposit  into escrow its source  codes
     together   with  a  license  to   commercialize   the  source  codes  on  a
     non-exclusive,  world-wide,  royalty-free basis for a period of five years,
     to be released  only in the event that Imagis  ceases  operations or enters
     bankruptcy proceedings.

(c)  Subsequent to March 31, 2003,  the Company has undergone an  organizational
     restructuring  and  refocusing  of its sales,  marketing,  and  development
     efforts and as a result has  temporarily  laid off non-core  employees from
     its global operations. The Company has also closed its Victoria, B.C office
     and consolidated its operations into its Vancouver,  B.C. head office,  and
     implemented  significant general administrative expense reduction measures,
     in order to substantially reduce the Company's monthly operating expenses.


<PAGE>


(d)  Pursuant to a Letter of Intent dated  December 6, 2002,  and an Arrangement
     Agreement dated February 14, 2003 the Company has agreed to acquire 100% of
     the issued and outstanding shares of Briyante Software Corp.  ("Briyante"),
     a  software  development  Company.  Under the terms of this  agreement  the
     Company  will  issue  0.2857 of a common  share for each 1 common  share of
     Briyante.  The  arrangement  agreement was approved by the  shareholders of
     Briyante at an annual and special  general  meeting  held on March 17, 2003
     and by an order of the Supreme Court of British Columbia on March 20, 2003.
     Subsequent  to March 31,  2003,  the  Company  agreed to the  postponement,
     pending  amendments to the terms, of the  acquisition of Briyante  Software
     Corp.  The  agreement  to amend the terms was brought  about by the Company
     determining that it does not currently have sufficient  working capital for
     the combined entity,  as a result of a poor financial  environment over the
     past six months.  The revised terms of the  acquisition are currently under
     negotiation.  Any amendments  will be subject to entering into a definitive
     amendment  agreement,  regulatory  approval  and any  required  shareholder
     approval.  The  Company is  committed  to  completing  its  acquisition  of
     Briyante  and, in the interim,  the Company and Briyante  will  continue to
     market each other's products and services.

(e)  Pursuant to a term sheet dated February 20, 2003, the Company  entered into
     a private placement agreement to obtain financing of up to USD$4.0 million,
     with an  initial  sale of up to  USD$1.5  million  in the form of a special
     warrant  and up to  USD$2.5  million  in the form of a  series  of sales of
     common  shares under an  effective  registration  agreement  filed with the
     Securities  and Exchange  Commission.  This  agreement was subject to final
     documentation,  approval  of the board of  directors  of the  Company,  and
     regulatory  approval.  Subsequent to March 31, 2003, the Company was unable
     to reach  agreement  with the  placee  on the  final  terms of the  private
     placement and the private placement was cancelled.

FINANCINGS, PRINCIPAL PURPOSES AND MILESTONES

On July 8, 2002,  the Company  received  $1,750,000 US from OSI Systems Inc. for
1,166,667  shares at a price of $1.50 US ($2.28 CDN).  OSI Systems also received
291,667  share  purchase  warrants  (expiring  July 7, 2004)  entitling  them to
purchase 291,677 common shares of the Company for $1.50 US. The proceeds of this
financing are being used for general working capital requirements.

LIQUIDITY AND SOLVENCY

The Company's cash on hand at the beginning of the period  aggregated  $547,831.
During the period,  the Company  received  additional funds of $265,538 from the
exercise  of both stock  options and  warrants.  In total,  112,505  options and
133,334  warrants were  exercised  which  resulted in aggregate  proceeds to the
Company of  $98,870  and  $166,668,  respectively.  The  Company  also  received
USD$100,000  (CDN$146,780)  as at March  31,  2003,  as an  advance  on a future
private placement and a loan from a related party of $185,000.

The Company  used these funds  primarily to finance its  operating  loss for the
period.  The  impact on cash of the loss of  $1,785,101,  after  adjustment  for
non-cash  items and  changes to other  working  capital  accounts in the period,
resulted in a negative cash flow from  operations of $884,396.  The Company also
used funds to purchase  capital  equipment  amounting to $5,921,  repay  capital
leases of $4,654,  and  deferred  acquisition  costs of $190,338  related to its
proposed  acquisition of Briyante Software Corp. In summary,  the Company's cash
position  declined by $487,991  from  $547,831 at the beginning of the period to
$59,840 at March 31, 2003.

During the quarter ended March 31, 2003, the company  received  $185,000 through
the  issuance of a note payable to a former  director of the Company.  This note
allows the Company to borrow up to $200,000 and bears interest at the prime rate
plus 2% and is due on the  earlier  of May 31,  2003 or upon  receipt  of  funds
pursuant to an equity  financing.  The note is secured by the receivables of the
Company.  Through March 31, 2003 this note has accrued interest in the amount of
$1,115.  Subsequent  to March  31,  2003,  the  terms of the note  payable  were
modified to increase the total  borrowings  available from $200,000 to $500,000.
The interest rate remains at the prime rate plus 2%. In addition the note is now
secured by a General Security  Agreement over the assets of Imagis, and a Source
Code Escrow  Agreement  that  requires  Imagis to deposit into escrow its source
codes  together  with  a  license  to  commercialize   the  source  codes  on  a
non-exclusive,  world-wide, royalty-free basis for a period of five years, to be
released  only in the event that Imagis ceases  operations or enters  bankruptcy
proceedings.


<PAGE>


Pursuant  to a Letter  of  Intent  dated  December  6,  2002 and an  Arrangement
Agreement  dated February 14, 2003 the Company has agreed to acquire 100% of the
issued  and  outstanding  shares of  Briyante  Software  Corp.  ("Briyante"),  a
software development Company. Under the terms of this agreement the Company will
issue  0.2857  of a  common  share  for each 1 common  share  of  Briyante.  The
arrangement  agreement was approved by the shareholders of Briyante at an annual
and  special  general  meeting  held on  March  17,  2003 and by an order of the
Supreme  Court of British  Columbia on March 20, 2003.  Subsequent  to March 31,
2003, the Company agreed to the postponement,  pending  amendments to the terms,
of the  acquisition of Briyante  Software Corp. The agreement to amend the terms
was brought about by the Company  determining  that it does not  currently  have
sufficient  working  capital  for the  combined  entity,  as a result  of a poor
financial  environment  over the  past  six  months.  The  revised  terms of the
acquisition are currently under  negotiation.  Any amendments will be subject to
entering  into a definitive  amendment  agreement,  regulatory  approval and any
required  shareholder  approval.  The Company is  committed  to  completing  its
acquisition  of Briyante  and, in the  interim,  the Company and  Briyante  will
continue to market each other's products and services.

Subsequent  to March 31,  2003,  the Company  has  undergone  an  organizational
restructuring and refocusing of its sales,  marketing,  and development  efforts
and as a result has  temporarily  laid off  non-core  employees  from its global
operations.   The  Company  has  also  closed  its  Victoria,   B.C  office  and
consolidated  its  operations  into  its  Vancouver,   B.C.  head  office,   and
implemented  significant general  administrative  expense reduction measures, in
order to substantially reduce the Company's monthly operating expenses.

The  Company  does not have  sufficient  cash flow from  operations  to fund its
operations  beyond June 2003 and will be required to seek additional  financing.
In  recognition of this  situation,  the Company is currently  actively  seeking
financing. Pursuant to a term sheet dated February 20, 2003, the Company entered
into a private placement agreement to obtain financing of up to USD$4.0 million,
with an initial sale of up to USD$1.5  million in the form of a special  warrant
and up to  USD$2.5  million  in the form of a series of sales of  common  shares
under an effective registration agreement filed with the Securities and Exchange
Commission.  This agreement was subject to final documentation,  approval of the
board of directors of the Company, and regulatory approval.  Subsequent to March
31, 2003, the Company was unable to reach agreement with the placee on the final
terms of the private placement and the private placement was cancelled.

There is no assurance  that the Company will be able to secure any  financing or
that any financing  secured will be obtained on terms  favorable to the Company.
Failure to obtain adequate  financing could result in a substantial  curtailment
of Imagis' operations.