UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                -----------------
                                   FORM 10-QSB
                                -----------------


(Mark One)

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

     For the quarterly period ended June 30, 2003

                                       OR

|_|  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934

     For the transition period from to

                        Commission file Number: 000-30090
                                -----------------


                            IMAGIS TECHNOLOGIES INC.
              (Exact name of small business issuer in its charter)
                                -----------------

    British Columbia, Canada                           Not Applicable
(State or other jurisdiction of               (IRS Employer Identification No.)
incorporation or organization)



                         1630 - 1075 West Georgia Street
                           Vancouver, British Columbia
                    (Address of principal executive offices)

                                 (604) 684-2449
                           (Issuer's telephone number)

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

As of August 14, 2003  20,679,705  common  shares of the Company were issued and
outstanding.

Transitional Small Business Disclosure Format (Check one): Yes |_| No |X|


<PAGE>

                            IMAGIS TECHNOLOGIES INC.

                                   FORM 10-QSB


                  For the Quarterly Period Ended June 30, 2003


                                      INDEX


PART I       Financial Information
  Item 1.    Financial Statements                                             1
  Item 2.    Management's Discussion and Analysis or Plan of Operations      17
  Item 3.    Controls and Procedures                                         24

PART II      Other Information
  Item 1.    Legal Proceedings                                               25
  Item 2.    Changes in Securities                                           25
  Item 3.    Defaults Upon Senior Securities                                 25
  Item 4.    Submission of Matters to a Vote of Security Holders             25
  Item 5.    Other Information                                               25
  Item 6.    Exhibits and Reports on Form 8-K                                25










<PAGE>

                    NOTE REGARDING 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. ("Intacta") to form Zixsys
Inc.; the Issuer's  agreements with OSI Systems Inc. ("OSI");  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 in
Exhibit 99.1 of this Form 10-QSB.

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.


<PAGE>

PART 1 - FINANCIAL INFORMATION

Item 1.   Financial Statements


The  Company's  financial  statements  for the three and six month periods ended
June 30,  2003 are  included in  response  to Item 1. The  financial  statements
should be read in conjunction with Management's  Discussion and Analysis or Plan
of  Operations  (Part  1,  Item  2) and  other  financial  information  included
elsewhere in this Form 10-QSB.


                                            IMAGIS TECHNOLOGIES INC.
                                                 BALANCE SHEETS
                                    AS AT JUNE 30, 2003 AND DECEMBER 31, 2002
                                         (expressed in Canadian dollars)



<TABLE>
                                                                           June 30,
                                                                             2003               December 31,
                                                                          (Unaudited)               2002
                                                                       ------------------      ----------------
                               ASSETS
<S>                                                                     <C>                     <C>
Current assets
   Cash and cash equivalents                                            $      43,425           $     547,831
   Accounts receivable                                                        364,607                 437,770
   Accrued revenue receivable                                                  85,277                       -
   Prepaid expenses and deposit                                                24,310                  75,537
                                                                       ---------------          --------------
                                                                              517,619               1,061,138
                                                                       ---------------          --------------
   Equipment (note 3)                                                         263,624                 328,402

   Other assets (note 4)                                                      485,468                 306,231

                                                                       ---------------          --------------
                                                                        $   1,266,711           $   1,695,771
                                                                       ---------------          --------------

              LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities
   Accounts payable and accrued liabilities                             $   1,719,757           $     648,901
   Credit facility (note 5)                                                   465,450                      -
   Advances payable (note 6)                                                  209,924                      -
   Capital lease obligations                                                   22,500                  19,123
   Deferred revenue                                                           211,216                 339,485
                                                                       ---------------          --------------
                                                                            2,628,847               1,007,509
                                                                       ---------------          --------------
Long-term liabilities
   Debentures payable (note 7)                                                 75,000                       -
   Capital lease obligations                                                   32,146                  41,720
                                                                       ---------------          --------------
                                                                              107,146                  41,720
                                                                       ------------------      ----------------
Shareholders' deficiency
    Share capital (note 8)                                                 17,657,156              17,361,118
    Contributed surplus                                                       421,123                 427,453
    Deficit                                                               (19,547,561)            (17,142,029)
                                                                       ---------------          --------------
                                                                           (1,469,282)                646,542
                                                                       ---------------          --------------
                                                                        $   1,266,711           $   1,695,771
                                                                       ---------------          --------------
</TABLE>


Operations (note 1)
Subsequent events (note 10)
Commitments (note 11)

See accompanying notes to financial statements.


                                       1


<PAGE>



                                   IMAGIS TECHNOLOGIES INC.
                             STATEMENTS OF OPERATIONS AND DEFICIT
               FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2003 AND 2002
                                (expressed in Canadian dollars)
                             (Unaudited - Prepared by Management)


<TABLE>
                                         Three months ended June 30,            Six months ended June 30,
                                          2003               2002               2003                2002
<S>                                  <C>               <C>                <C>               <C>
Revenues:
   Software sales                    $      188,497    $        922,622   $       324,480   $         1,908,576
   Support and services                     129,222              51,821           263,241               111,651
   Other                                        110              17,297             7,616                33,378
                                      --------------    ----------------   ---------------   -------------------
                                            317,829             991,740           595,337             2,053,605
                                      --------------    ----------------   ---------------   -------------------

Expenses:
   Administration                           352,109           1,014,145         1,303,760             2,011,323
   Amortization                              61,304              24,786           127,717                56,662
   Bad debt expense                           3,858                   -            45,932                     -
   Cost of materials                              -             143,172             3,014               153,461
   Interest                                  12,861               8,499            19,191                 3,672
   Sales and marketing                      315,990             836,177           889,986             1,393,925
   Technology development                    85,948             413,011           364,491               782,717
   Technical services                       106,190             209,822           246,778               449,219
                                      --------------    ----------------   ---------------   -------------------
                                            938,260           2,649,612         3,000,869             4,850,979
                                      --------------    ----------------   ---------------   -------------------

Loss for the period                       (620,431)         (1,657,872)       (2,405,532)           (2,797,374)

Deficit, beginning of period           (18,927,130)        (11,330,138)      (17,142,029)          (10,190,636)
                                      --------------    ----------------   ---------------   -------------------

Deficit, end of period               $ (19,547,561)    $   (12,988,010)   $  (19,547,561)   $      (12,988,010)
                                      --------------    ----------------   ---------------   -------------------

                                      --------------    ----------------   ---------------   -------------------
Loss per share - basic and diluted   $       (0.03)    $         (0.09)   $        (0.12)   $            (0.16)
                                      --------------    ----------------   ---------------   -------------------

                                      --------------    ----------------   ---------------   -------------------
Weighted average number of               20,666,364          17,713,530        20,575,498            17,213,938
shares outstanding
                                      --------------    ----------------   ---------------   -------------------
</TABLE>



See accompanying notes to financial statements.


                                       2


<PAGE>
                               IMAGIS TECHNOLOGIES INC.
                               STATEMENTS OF CASH FLOWS
           FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2003 AND 2002
                            (expressed in Canadian dollars)
                         (Unaudited - Prepared by Management)


<TABLE>

                                              Three months ended June 30,          Six months ended June 30,
                                                 2003             2002              2003              2002
<S>                                         <C>              <C>               <C>              <C>
Cash provided by (used in):

Operations:
   Loss for the period                      $    (620,431)   $  (1,657,872)    $  (2,405,532)   $   (2,797,374)
   Items not involving cash:
     Amortization                                   61,304           24,786           127,717            56,662
     Stock-based compensation                      (2,180)            2,150           (6,330)           225,932
     Accrued interest                                8,005                -             9,120                 -
   Changes in non-cash operating working
   capital:
     Accounts receivable                          (44,512)          659,690            73,163          (46,789)
     Accrued revenue receivable                   (85,277)        (362,296)          (85,277)         (362,296)
     Prepaid expenses                               14,623          (8,467)            51,227          (10,792)
     Accounts payable and accrued                  327,541         (49,030)         1,070,856            51,184
     liabilities
     Deferred revenue                             (68,002)          219,651         (128,269)           237,143
                                             --------------   --------------    --------------   ---------------
                                                 (408,929)      (1,171,388)       (1,293,325)       (2,646,330)
                                             --------------   --------------    --------------   ---------------
Investments:
   Purchase of equipment                           (1,141)        (142,289)           (7,061)         (205,183)
   Short-term investments                                -          772,098                 -         1,640,833
   Deferred acquisition costs                     (41,336)                -         (231,675)                 -
                                             --------------   --------------    --------------   ---------------
                                                  (42,477)          629,809         (238,736)         1,435,650
                                             --------------   --------------    --------------   ---------------
Financing:
   Advances under credit facility                  317,714                -           502,714                 -
   Repayments of credit facility                  (46,384)                -          (46,384)                 -
   Issuance of common shares for cash               30,500          792,126           296,038         1,315,874
   Share issue costs                                     -          (1,059)                 -           (1,059)
   Advances payable                                 63,144                -           209,924                 -
   Debentures payable                               75,000                -            75,000                 -
   Capital lease obligations                       (4,983)                -           (9,637)                 -
                                             --------------   --------------    --------------   ---------------
                                                   434,991          791,067         1,027,655         1,314,815
                                             --------------   --------------    --------------   ---------------

Increase (decrease) in cash                       (16,415)          249,488         (504,406)           104,135
Cash and cash equivalents, beginning of             59,840           55,306           547,831           200,659
period
                                             --------------   --------------    --------------   ---------------
Cash and cash equivalents, end of period    $       43,425   $      304,794    $       43,425   $       304,794
                                             =============    =============     ==============   ===============
</TABLE>


                                       3


<PAGE>


                                IMAGIS TECHNOLOGIES INC.
                          STATEMENTS OF CASH FLOWS (continued)
            FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2003 AND 2002
                             (expressed in Canadian dollars)
                          (Unaudited - Prepared by Management)


<TABLE>

<S>                                            <C>            <C>               <C>               <C>
Supplementary information and disclosures:
   Interest paid                               $       4,856  $            79   $        10,071   $      3,672

   Issuance of common shares on conversion of
   special warrants                                        -          652,320                 -      1,848,070

   Equipment acquired under capital lease                  -                -             3,440              -
</TABLE>


See accompanying notes to financial statements.


                                       4


<PAGE>



                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (expressed in Canadian dollars)
                      (Unaudited - Prepared by Management)



1.   Operations:

     Imagis Technologies Inc. (the "Company") was incorporated under the Company
     Act (British  Columbia) on March 23, 1998. The Company operates in a single
     segment,  being  the  development  and sale of  software  applications  and
     advanced biometric facial recognition software solutions.

     These  financial  statements  have been  prepared on a going  concern basis
     which includes the assumption  that the Company will be able to realize its
     assets and settle its liabilities in the normal course of business. At June
     30, 2003,  the Company has a working  capital  deficiency of $2,111,228 and
     has not made all its required  payments under its credit facility (note 5).
     For the six month period  ended June 30,  2003,  the Company has incurred a
     loss from  operations of $2,405,532 and a deficiency in operating cash flow
     of $1,293,325.  In addition, the Company has incurred significant operating
     losses and net  utilization  of cash in  operations  in all prior  periods.
     Accordingly,  the Company will require continued financial support from its
     shareholders  and creditors  until it is able to generate  sufficient  cash
     flow from  operations  on a  sustained  basis.  Failure  to obtain  ongoing
     support of its  shareholders and creditors may make the going concern basis
     of  accounting  inappropriate,  in which  case  the  Company's  assets  and
     liabilities would need to be recognized at their liquidation values.  These
     financial  statements  do not  include  any  adjustment  due to this  going
     concern uncertainty.

2.   Significant accounting policies:

     The Company prepares its financial  statements in accordance with generally
     accepted accounting principles in Canada and, except as set out in Note 14,
     also comply, in all material respects, with accounting principles generally
     accepted  in the  United  States.  The  financial  statements  reflect  the
     following significant accounting policies:

     (a)  Cash equivalents:

          The Company  considers  all highly liquid  investments  with a term to
          maturity  of  three   months  or  less  when   purchased  to  be  cash
          equivalents.  Investments  having a term in excess of three months but
          less than one year are classified as short-term investments.

     (b)  Equipment:

          Equipment  is recorded  at cost and is  amortized  over its  estimated
          useful life on a straight-line basis at the following annual rates:

         -----------------------------------------------------------------
         Asset                                                   Rate
         -----------------------------------------------------------------
         Computer hardware                                       30%
         Furniture and fixtures                                  20%
         Software                                                100%
         -----------------------------------------------------------------

     (c)  Other Assets:

          Other assets include patents and a license.  These assets are recorded
          at cost  and are  amortized  over  their  estimated  useful  life on a
          straight-line basis at the following annual rates:

         -----------------------------------------------------------------
         Asset                                                   Rate
         -----------------------------------------------------------------
         Patents                                                 33.3%
         License                                                 33.3%
         -----------------------------------------------------------------

          Included in other assets is $251,722 which  represents  costs incurred
          by the Company  through  June 30, 2003  (December  31, 2002 - $20,048)
          relating to a proposed acquisition (See Note 10(a)).


                                       5


<PAGE>

                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (expressed in Canadian dollars)
                      (Unaudited - Prepared by Management)



2.   Significant accounting policies, continued:

     (d)  Revenue recognition:

          (i)  Software sales revenue:

               The Company  recognizes  revenue  consistent  with  Statement  of
               Position 97-2, "Software Revenue Recognition". In accordance with
               this  Statement,  revenue is  recognized,  except as noted below,
               when all of the following criteria are met;  persuasive  evidence
               of a contractual  arrangement exists, title has passed,  delivery
               and customer acceptance has occurred, the sales price is fixed or
               determinable and collection is reasonably assured. Funds received
               in  advance of  meeting  the  revenue  recognition  criteria  are
               recorded as deferred revenue.

               When  a  software   product  requires   significant   production,
               modification or customization, the Company generally accounts for
               the  arrangement  using  the  percentage-of-completion  method of
               contract  accounting.  Progress to  completion is measured by the
               proportion  that  activities  completed  are  to  the  activities
               required under each  arrangement.  When the current estimate on a
               contract indicates a loss, a provision for the entire loss on the
               contract is made. In  circumstances  where amounts  recognized as
               revenue under such arrangements  exceed the amount invoiced,  the
               difference is recorded as accrued revenue receivable.

               When  software  is  sold  under  contractual   arrangements  that
               includes post contract customer support ("PCS"), the elements are
               accounted for separately if vendor  specific  objective  evidence
               ("VSOE") of fair value exists for all undelivered elements.  VSOE
               is  identified by reference to renewal  arrangements  for similar
               levels of support covering  comparable  periods. If such evidence
               does not exist, revenue on the completed  arrangement is deferred
               until the earlier of (a) VSOE being established or (b) all of the
               undelivered  elements  are  delivered  or  performed,   with  the
               following exceptions: if the only undelivered element is PCS, the
               entire fee is recognized  ratably over the PCS period, and if the
               only undelivered element is service, the entire fee is recognized
               as the services are performed.

               The Company  provides for estimated  returns and warranty  costs,
               which to date have been nominal, on recognition of revenue.

          (ii) Support and services revenue:

               Up front payments for contract  support and services  revenue are
               deferred  and are  amortized  to revenue over the period that the
               support and services are provided.

     (e)  Use of estimates:

          The  preparation of financial  statements in accordance with generally
          accepted  accounting  principles requires management to make estimates
          and assumptions  that affect the amounts  reported or disclosed in the
          financial statements. Actual amounts may differ from these estimates.

     (f)  Foreign currency:

          Monetary assets and liabilities  denominated in foreign currencies are
          translated  into Canadian  dollars at exchange  rates in effect at the
          balance sheet date.  Revenues and expenses are translated  using rates
          in effect at the time of the transactions.  Foreign exchange gains and
          losses are included in income.


                                       6


<PAGE>

                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (expressed in Canadian dollars)
                      (Unaudited - Prepared by Management)


2.   Significant accounting policies, continued:

     (g)  Income taxes:

          The Company  uses the asset and  liability  method of  accounting  for
          income taxes. Under the asset and liability method,  future tax assets
          and  liabilities  are  recognized  for  the  future  tax  consequences
          attributable to differences  between the financial  statement carrying
          amounts of existing assets and  liabilities  and their  respective tax
          bases.  Future tax assets and  liabilities  are measured using enacted
          tax rates  expected  to apply to taxable  income in the years in which
          those  temporary  differences are expected to be recovered or settled.
          The effect on future tax  assets  and  liabilities  of a change in tax
          rates is  recognized in income in the period that includes the date of
          substantive  enactment.  To the extent that it is not considered to be
          more  likely  than not that a future  tax asset  will be  realized,  a
          valuation  allowance  is provided.

     (h)  Unaudited interim financial information:

          The information  reported herein as at June 30, 2003 and for the three
          and six  month  periods  ended  June 30,  2003 and 2002 is  unaudited.
          However,   such  financial   information   reflects  all   adjustments
          (consisting  solely of normal recurring  adjustments)  necessary for a
          fair  presentation  of the  results  for the  periods  presented.  The
          unaudited interim  financial  statements are prepared using accounting
          policies  consistent  with and should be read in conjunction  with the
          Company's  financial  statements as at and for the year ended December
          31, 2002 which are  included in the  Company's  2002 Annual  Report on
          Form 10-KSB.  Certain  comparative  figures have been  reclassified to
          conform to the presentation  adopted in the current  reporting period.
          Results  for  the  interim   periods  ended  June  30,  2003  are  not
          necessarily  indicative  of what the results  will be for the complete
          2003 fiscal year.

          (i)  Stock-based compensation:

               Effective   January  1,  2002,   the  Company   adopted  the  new
               recommendations   of  the   Canadian   Institute   of   Chartered
               Accountants  with  respect  to  the  accounting  for  stock-based
               compensation   and   other   stock-based   payments.    The   new
               recommendations   require   direct   awards   of   stock,   stock
               appreciation  rights or awards  that call for the  settlement  in
               cash or other  assets  awarded to  employees  and the cost of the
               service  received as  consideration to be measured and recognized
               based  on the  fair  value  of  the  equity  instruments  issued.
               Compensation  expense  is  recorded  over the  period of  related
               employee  service,  usually  the  vesting  period  of the  equity
               instrument   awarded.   The  new   recommendations   permit   the
               measurement  of  compensation  expense for stock option grants to
               employees  and  directors  that are not  direct  awards of stock,
               stock  appreciation  rights or otherwise  call for  settlement in
               cash or other assets by an alternative  method and to provide pro
               forma  disclosure of the  financial  results using the fair value
               method.  The Company has elected to adopt an  alternative  method
               and  continue  with its  policy of not  recognizing  compensation
               expense  for stock  options  granted to  employees.  The  Company
               recognizes  compensation  expense for non-employees  based on the
               estimated  fair  value  of  the  equity  instruments  issued  and
               recognizes stock based compensation under Canadian GAAP.

               Had  compensation  expense for employees been determined based on
               the fair value  method,  the  Company's net loss and net loss per
               share for the three and six month periods ended June 30, 2003 and
               2002, would have been adjusted to the pro forma amounts indicated
               below:

<TABLE>
                                               Three months ended June 30,            Six months ended June 30,
                                            ----------------------------------    ----------------------------------
                                                  2003            2002                 2003             2002
                                            ----------------------------------    ----------------------------------

         <S>                               <C>                 <C>               <C>                <C>
         Net loss -  as reported           $   (620,431)       (1,657,872)       $  (2,405,532)     (2,797,374)
         Net loss -  pro forma                 (851,222)       (2,064,992)          (2,907,698)     (3,308,849)

         Net loss per share -  as reported $     (0.03)          (0.09)          $    (0.12)           (0.16)
         Net loss per share - pro forma          (0.04)          (0.12)               (0.14)           (0.19)
                                            ----------------------------------    ----------------------------------
</TABLE>


                                       7


<PAGE>

                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (expressed in Canadian dollars)
                      (Unaudited - Prepared by Management)


2.   Significant accounting policies, continued:

     (i)  Stock-based compensation, continued:

          The pro forma  amounts  exclude  the effect of stock  options  granted
          prior to January 1, 2002.  The fair value of each stock  option  grant
          was  estimated  on the date of grant  using the  Black-Scholes  option
          pricing model using the following  average inputs:  volatility - 120%,
          risk free  interest  rate - 5%,  option term - 5 years,  and  dividend
          yield - nil.

          The weighted  average  fair value of employee  stock  options  granted
          during 2002 is $2.05 per share purchase option.  No stock options were
          granted during the six months ended June 30, 2003.

     (j)  Loss per share:

          Loss per share is  calculated  using the  weighted  average  number of
          shares outstanding during the reporting period.  This average includes
          common  shares  issued  in a  reporting  period  from  their  date  of
          issuance.  Diluted per share  amounts are  calculated  by the treasury
          stock  method  whereby  the assumed  proceeds of dilutive  exercisable
          instruments  are applied to  repurchase  common  shares at the average
          market price for the period. The resulting net issuance is included in
          the  weighted  average  number for  purposes  of the diluted per share
          calculation. As all outstanding shares and warrants are anti-dilutive,
          there is no difference between basic and diluted loss per share.

     (k)  Comparative figures:

          Certain  comparative  figures have been reclassified to conform to the
          presentation adopted in the current quarter.


3.   Equipment:

<TABLE>
         ------------------------------ ------------------- ---------------------------- ----------------------------
                                                                    Accumulated                   Net Book
         At June 30, 2003                    Cost ($)            Amortization ($)                 Value ($)
         ------------------------------ ------------------- ---------------------------- ----------------------------
<S>                                          <C>                      <C>                          <C>
         Computer hardware                   348,717                  191,549                      157,168
         Furniture and fixtures              171,110                  68,112                       102,998
         Software                            112,868                  109,410                       3,458
         ------------------------------ ------------------- ---------------------------- ----------------------------
                                             632,695                  369,071                      263,624
         ------------------------------ ------------------- ---------------------------- ----------------------------

         ------------------------------ ------------------- ---------------------------- ----------------------------
                                                                    Accumulated                   Net Book
         At December 31, 2002                Cost ($)            Amortization ($)                 Value ($)
         ------------------------------ ------------------- ---------------------------- ----------------------------
         Computer hardware                   342,369                  155,878                      186,491
         Furniture and fixtures              168,782                  54,764                       114,018
         Software                            111,041                  83,148                       27,893
         ------------------------------ ------------------- ---------------------------- ----------------------------
                                             622,192                  293,790                      328,402
         ------------------------------ ------------------- ---------------------------- ----------------------------
</TABLE>


4.   Other assets:

<TABLE>
         ------------------------------ ------------------- ---------------------------- ----------------------------
                                                                    Accumulated                   Net Book
               At June 30, 2003              Cost ($)            Amortization ($)                 Value ($)
         ------------------------------ ------------------- ---------------------------- ----------------------------
<S>                                           <C>                     <C>                          <C>
         Patents                              78,227                  15,211                       63,016
         License                             236,395                  65,665                       170,730
         Deferred acquisition costs          251,722                     -                         251,722
         ------------------------------ ------------------- ---------------------------- ----------------------------
                                             566,344                  80,876                       485,468
         ------------------------------ ------------------- ---------------------------- ----------------------------
</TABLE>


                                       8


<PAGE>


                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (expressed in Canadian dollars)
                      (Unaudited - Prepared by Management)


4.   Other assets, continued:

<TABLE>

         ------------------------------ ------------------- ---------------------------- ----------------------------
                                                                    Accumulated                   Net Book
             At December 31, 2002            Cost ($)            Amortization ($)                 Value ($)
         ------------------------------ ------------------- ---------------------------- ----------------------------
<S>                                           <C>                      <C>                         <C>
         Patents                              78,227                   2,173                       76,054
         License                             236,395                  26,266                       210,129
         Deferred acquisition costs           20,048                     -                         20,048
         ------------------------------ ------------------- ---------------------------- ----------------------------
                                             334,670                  28,439                       306,231
         ------------------------------ ------------------- ---------------------------- ----------------------------
</TABLE>



5.   Credit facility:

     During the six month period ended June 30, 2003, the Company  received cash
     pursuant to a loan agreement with a previous director of the Company in the
     amount of  $367,000  and made  repayments  in the amount of  $20,000.  Also
     included in this loan are various  expenses paid by the former  director on
     behalf of the Company in the amount of  $135,714 of which  $26,384 has been
     repaid.  The loan has accrued  interest in the amount of $9,120 and remains
     unpaid as at June 30, 2003.  The loan bore  interest at the prime rate plus
     2% and is secured by a General  Security  Agreement  over the assets of the
     Company,  and a Source Code Escrow  Agreement  that requires the Company 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.  The  loan
     arrangement  under which the credit  facility was drawn  expired on May 31,
     2003 and the  Company  is in  discussions  with the  lender to  extend  and
     possibly  restructure  the terms of the debt  which was due to be repaid on
     May 31, 2003. At August 14, 2003,  the previous  director has not taken any
     action with respect to the security  for the loan  arrangement.  Due to the
     fact that the credit  facility has expired amounts owed under this facility
     now accrue interest at a rate of prime plus 5%.

6.   Advances payable:

     During the quarter  ended June 30, 2003,  the Company was advanced  $61,214
     from three  directors  of the  Company.  These  advances  are  non-interest
     bearing, are unsecured and have no set date for repayment.

     During the quarter ended March 31, 2003,  the Company  received  US$100,000
     (CDN$148,710)  from a director of the Company.  The Company had intended to
     issue  stock  as part a  proposed  private  placement  to the  director  in
     settlement of this advance.  However, the private placement as proposed did
     not  proceed  and both the Company  and the  director  anticipate  that the
     amount  advanced by the director will be converted into a debt  instrument.
     As at June 30, 2003 the advance is unsecured,  non-interest bearing and has
     no set date for repayment.

7.   Debentures payable:

     During the  quarter  ended June 30,  2003,  the  Company  received  $75,000
     through the issuance of a debenture. This debenture bears interest at prime
     plus 2%, requires  interest to be paid monthly and is repayable on November
     30,  2004.  The  debenture  is secured by the assets of the  Company but is
     subordinated to the credit facility loan agreement (See Note 5).

8.   Share capital:

     (a)  Authorized:

          100,000,000 common shares without par value


                                       9


<PAGE>

                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (expressed in Canadian dollars)
                      (Unaudited - Prepared by Management)


8.   Share capital, continued:

     (b)  Issued:

<TABLE>
                                                                       Number
                                                                     of shares                 Amount
                                                               -----------------------   -------------------

                                                               -----------------------   -------------------
<S>                        <C> <C>                                         <C>                   <C>
         Balance, December 31, 2001                                        16,419,131            10,142,041
                                                               -----------------------   -------------------

         Issued during year:
              On private placement                                          1,166,667             2,660,001
              Options exercised                                               375,110               423,193
              Warrants exercised                                              894,776             1,571,090
          Issued on conversion of special warrants                          1,427,682             3,098,070
          Issued as bonus for consulting agreement                             37,500                78,750
          Issued as bonus in consideration of loan                             10,000                19,000
          Issued as bonus to a director and officer                            20,000                25,000
          Share issuance costs                                                     --             (656,027)

                                                               -----------------------   -------------------
         Balance, December 31, 2002                                        20,350,866   $        17,361,118
                                                               -----------------------   -------------------

         Issued during the period:
              Options exercised                                               195,505               129,370
              Warrants exercised                                              133,334               166,668

                                                               -----------------------   -------------------
         Balance, June 30, 2003                                            20,679,705    $       17,657,156
                                                               -----------------------   -------------------
</TABLE>


     (c)  Escrowed shares:

          As at December  31,  2001,  266,669  common  shares were being held in
          escrow.  These common shares were released from escrow on February 23,
          2002.

     (d)  Special warrants:

          On November 9, 2001,  1,427,682  Special Warrants were sold at a price
          of $2.17 per Special  Warrant  (gross  proceeds  less  offering  costs
          equaled $2,822,861),  each of which entitled the holder, upon exercise
          and without  payment of further  consideration,  to acquire one common
          share of the Company and one-half of one common share purchase warrant
          (the  "Warrants")  of the Company.  These  Special  Warrants  were not
          issued as  compensation  for  services  rendered.  Each whole  Warrant
          entitled  the holder to purchase  one common share of the Company at a
          price of $2.55.  During 2002, all special warrants were converted into
          common  shares.  Also during  2002,  the Company  reduced the exercise
          price on some of the share purchase warrants as follows:

          (i)  288,018 share purchase warrants from $2.55 to $1.63;
          (ii) 220,200 share purchase warrants from $2.55 to $1.81;

          The securities  issued pursuant to the brokered private  placement and
          all underlying  securities  were subject to resale  restrictions  that
          expired on March 9, 2002.


                                       10


<PAGE>

                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (expressed in Canadian dollars)
                      (Unaudited - Prepared by Management)


8.   Share capital, continued:

     (e)  Warrants:

          At December 31, 2002 and June 30, 2003,  the  following  warrants were
          outstanding:

<TABLE>
         ---------------------------------------------------------------------------------------------------------
         December 31,                                           June 30,     Exercise
             2002       Granted    Exercised      Expired         2003         price          Expiry date
         ---------------------------------------------------------------------------------------------------------
<S>         <C>                    <C>                                         <C>
            133,334       --       (133,334)         --            --          $1.25       February 23, 2003
            220,200       --           --        (220,200)         --          $1.81         March 9, 2003
            15,633        --           --         (15,633)         --          $1.81         March 9, 2003
            50,000        --           --            --          50,000        $2.20        January 18, 2004
            291,667       --           --            --          291,667      US$1.50         July 8, 2004
            105,000       --           --            --          105,000      US$1.80        July 24, 2004
         ---------------------------------------------------------------------------------------------------------
            815,834       --       (133,334)     (235,833)       446,667
         =========================================================================================================
</TABLE>


          The Company  has  agreed,  subject to  regulatory  approval,  that the
          exercise  price of the warrants  for the  purchase of 291,667  shares,
          issued in  conjunction  with a private  placement will be reduced from
          US$1.50 to the same  price per share as that  afforded  the  investors
          under the Company's next equity offering.

     (f)  Options:

          The Company has granted stock options to certain employees, directors,
          officers,  advisors,  and consultants to buy an aggregate of 4,795,000
          (2002 -4,795,000)  common shares of the Company at prices ranging from
          $0.30  to $3.75  (2002 - $0.30 to  $3.75).  Of the  4,795,000  options
          granted,  at June 30, 2003,  940,331 have been cancelled and 1,308,619
          have  been  exercised  (December  31,  2002 -  674,998  and  1,113,114
          respectively).  All  options  expire five years from the date of grant
          with  the  exception  of  100,000  options  issued  during  2002  to a
          consultant  that expire two years from the date of grant. A summary of
          the  status  of the  Company's  stock  options  at June  30,  2003 and
          December 31, 2002 and changes  during the periods ended on those dates
          is presented below:

<TABLE>
                                                      June 30, 2003                    December 31, 2002
                                            ------------------------------------------------------------------------
                                                Shares     Weighted average        Shares        Weighted average
                                                            exercise price                        exercise price
         -----------------------------------------------------------------------------------------------------------
<S>                                           <C>                <C>             <C>                  <C>
         Outstanding, beginning of period     3,006,888          $1.68           1,953,664            $1.15
         -----------------------------------------------------------------------------------------------------------
            Granted                               -                -             1,610,000             2.23
            Exercised                         (195,505)          0.66            (375,110)             1.13
            Cancelled                         (265,333)          1.81            (181,666)             1.86
         -----------------------------------------------------------------------------------------------------------
         Outstanding, end of period           2,546,050          $1.75           3,006,888            $1.68
         -----------------------------------------------------------------------------------------------------------
</TABLE>


                                       11


<PAGE>
                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (expressed in Canadian dollars)
                      (Unaudited - Prepared by Management)


8.   Share capital, continued:

     (f)  Options, continued:

          At December 31, 2002 and June 30,  2003,  the  following  options were
          outstanding:

<TABLE>
         ---------------------------------------------------------------------------------------------------------
           December 31,                                          June 30,     Exercise
               2002        Granted   Exercised   Cancelled         2003        price          Expiry date
         ---------------------------------------------------------------------------------------------------------
<S>          <C>                     <C>                                       <C>
             155,000         --      (155,000)       --             --         $0.30          July 6, 2003
              50,000         --         --           --           50,000       $1.00       February 25, 2004
              45,000         --         --           --           45,000       $1.00         March 25, 2004
              60,000         --         --        (60,000)          --         $1.00         July 19, 2004
             196,999         --      (19,000)     (37,000)       140,999       $1.00        January 19, 2005
             546,666         --         --           --          546,666       $1.00        August 30, 2006
              15,000         --         --           --           15,000       $2.35       September 2, 2005
              15,000         --         --           --           15,000       $2.35        November 2, 2005
             160,000         --         --           --          160,000       $2.20       December 19, 2006
              15,000         --         --           --           15,000       $2.06        December 5, 2005
              27,000         --         --           --           27,000       $1.99       December 20, 2005
               8,400         --         --           --            8,400       $1.50       December 20, 2005
             245,833         --         --        (13,333)       232,500       $1.50          May 14, 2006
             305,000         --         --        (35,000)       270,000       $2.35         March 4, 2007
              56,990         --      (21,505)        --           35,485       $2.97        February 8, 2004
              10,000         --         --           --           10,000       $2.24        January 31, 2007
             170,000         --         --        (40,000)       130,000       $2.35          May 15, 2007
             155,000         --         --        (15,000)       140,000       $2.35         June 30, 2007
             385,000         --         --        (65,000)       320,000       $2.35         July 31, 2007
             300,000         --         --           --          300,000       $1.50        August 31, 2007
              85,000         --         --           --           85,000       $2.35        October 31, 2007
         ---------------------------------------------------------------------------------------------------------
            3,006,888        --      (195,505)   (265,333)      2,546,050
         =========================================================================================================
</TABLE>


9.   Related party transactions not disclosed elsewhere are as follows:

     (a)  Included  in  administration  expense  is $nil (2002 -  $178,300)  for
          payments  made to a company  with a director  in common  for  services
          rendered to the Company.


                                       12


<PAGE>


                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (expressed in Canadian dollars)
                      (Unaudited - Prepared by Management)



10.  Subsequent events:

     (a)  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.  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.
          Subsequently   the  Company  agreed  to  the   postponement,   pending
          amendments to the terms, of the acquisition of Briyante. The agreement
          to amend the terms was brought about by the Company  determining  that
          it did not have sufficient working capital for the combined entity, as
          a result of a poor financial environment over the past six months. The
          Arrangement  Agreement  expired on May 31, 2003. On June 20, 2003, the
          Company and Briyante  entered into a Memorandum  of  Understanding  to
          proceed  with the  acquisition  of Briyante  by the Company  under the
          following terms:

          (i)  The Company  will acquire all  outstanding  shares of Briyante in
               exchange for shares of the Company, such that former shareholders
               of Briyante will own 40% of the outstanding  share capital of the
               Company before the additional issuances to debt holders described
               below;

          (ii) The  Company  and  Briyante  will raise  capital by way of a debt
               offering  (the "Debt") to fund the  operations of the Company and
               Briyante,  the target for such offering being an aggregate amount
               of $1.63 million;

          (iii)As part of the  Acquisition,  the  holders  of the  Debt  will be
               offered a limited-time opportunity to convert the Debt for common
               shares of The  Company  (post-acquisition).  The total  number of
               shares issuable will be such that if the targeted  maximum amount
               of $1.63 million in Debt is converted into equity, the holders of
               the  Debt  will  be  issued  21% of  the  equity  of the  Company
               (post-acquisition),  with the current shareholders of the Company
               and  Briyante  being  diluted on a pro rata  basis.  If the total
               amount of Debt converted is more or less than $1.63 million,  the
               total  number  of  shares  issuable  to  holders  of the Debt who
               convert will be adjusted pro rata; and

          (iv) Following  the  Acquisition  and the  conversion of the Debt into
               shares of the Company,  the common  shares of the Company will be
               consolidated on a basis acceptable to the Company and Briyante.

          The  Company  and  Briyante  have  agreed to enter  into a  definitive
          agreement  by August 20,  2003 in  substantially  the same form as the
          earlier  Arrangement  Agreement,  subject  to  the  terms  above.  The
          completion  of  the   acquisition  is  subject  to  execution  of  the
          definitive  agreement,   regulatory  approval,  and  approval  by  the
          shareholders of both companies.

     (b)  Subsequent to June 30, 2003, the Company  entered into an agreement to
          issue an  aggregate  of  613,868  common  shares at a deemed  price of
          $0.2925  per  share in  settlement  of  $179,557  of debt  owed to two
          arms-length creditors.  The Company also agreed to issue common shares
          to its landlord in payment of the lease on its  Vancouver  head office
          through  December  2003.  The  shares are to be issued on the first of
          each month based on the formula of the number of shares being equal to
          the monthly  rent of $11,465  divided by the  weighted  average  share
          price of the previous month less the maximum allowable  discount under
          the rules of the TSX Venture Exchange.  The debt settlement agreements
          are subject to regulatory approval.


                                       13


<PAGE>

                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (expressed in Canadian dollars)
                      (Unaudited - Prepared by Management)


11.  Commitments:

     The Company is committed to the following lease payments over the next five
     years:

<TABLE>

     ---------------------------------- ------------------------------------ --------------------- ------------------
                                                     Equipment                     Building
                                        ------------------------------------ ---------------------
                  Period                    Capital          Operating            Operating              Total
     ---------------------------------- ---------------- ------------------- --------------------- ------------------
<S>                                         <C>                <C>                  <C>                 <C>
        July 1 to December 31, 2003         15,565             20,358               60,675              96,598
     ---------------------------------- ---------------- ------------------- --------------------- ------------------
                   2004                     31,131             24,528              121,350              177,009
     ---------------------------------- ---------------- ------------------- --------------------- ------------------
                   2005                     13,412             3,361                60,675              77,448
     ---------------------------------- ---------------- ------------------- --------------------- ------------------
                   2006                        -               2,928                  -                  2,928
     ---------------------------------- ---------------- ------------------- --------------------- ------------------
                   2007                        -               1,708                  -                  1,708
     ---------------------------------- ---------------- ------------------- --------------------- ------------------
                                            60,108             52,883              242,700              355,691
     ---------------------------------- ---------------- ------------------- --------------------- ------------------
</TABLE>

     The Company has entered into the following commitments with OSI Systems Inc
     ("OSI"):

     (a)  The  Company  has  entered  into a  strategic  alliance to develop and
          market  integrated  airport  and  security  products.  The Company has
          committed  to  expend a  minimum  of  USD$125,000  by July 8,  2004 on
          product  development and the operation of an Airport Security Group to
          market the products.

     (b)  The  Company  has   committed  to  engage  OSI  to  provide   software
          development  services.  The  Company has agreed to expend a minimum of
          USD$125,000,  based on  hourly  rates  charged  at 85% of fair  market
          value, prior to December 31, 2004.

     (c)  The  Company  has  entered  into a Letter  of  Intent  to form a joint
          venture for the purpose of establishing a manufacturing  and marketing
          operation in Brazil. The Company has agreed to invest USD$250,000 cash
          in the  joint  venture  in  order  to  acquire  a 20%  interest.  This
          investment is  contingent  upon the  Company's  joint venture  partner
          fulfilling certain obligations prior to July 8, 2004.

     (d)  The Company has agreed that, subject to regulatory approval, to modify
          the exercise price of the warrants issued to OSI in conjunction with a
          private placement for the purchase of 291,667 shares.  The Company has
          agreed to reduce the exercise  price from  USD$1.50  (CDN$2.28) to the
          same price per share as that  afforded  the  investors  under the next
          equity offering of the Company.

12.  Financial instruments and risk management:

     (a)  Fair values:

          The fair value of the Company's financial instruments,  represented by
          cash,  accounts  receivable,  accrued  revenue  receivable,   accounts
          payable and accrued  liabilities,  credit facility,  advances payable,
          and  debentures,  approximates  their  carrying  values  due to  their
          ability to be promptly  liquidated or their immediate or short term to
          maturity.  Based on current  interest rates relative to those implicit
          in the  leases,  the  fair  value  of  capital  lease  obligations  is
          estimated to not be materially different from their carrying values.

     (b)  Credit risk:

          The Company is exposed to credit risk only with respect to uncertainty
          as to timing and amount of collectability of accounts receivable.  The
          Company's  maximum  credit  risk is the  carrying  value  of  accounts
          receivable.

     (c)  Foreign currency risk:

          Foreign  currency  risk is the  risk to the  Company's  earnings  that
          arises from  fluctuations in foreign currency  exchange rates, and the
          degree of volatility of these rates.  Management  has not entered into
          any foreign exchange contracts to mitigate this risk.


                                       14


<PAGE>

                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (expressed in Canadian dollars)
                      (Unaudited - Prepared by Management)


13.  Segmented information:

     The  Company  operates in a single  segment,  the  development  and sale of
     software.  Management  of the  Company  makes  decisions  about  allocating
     resources based on this one operating segment.

     Substantially  all revenue is derived  from sales to  customers  located in
     Canada,  the United  States,  the  United  Kingdom  and  Japan.  Geographic
     information is as follows:

<TABLE>
                                           Six months ended June 30, 2003         Six months ended June 30, 2002
                                        -------------------------------------- --------------------------------------
<S>                                                    <C>                                    <C>
     Canada                                            58,130                                 148,630
     United States                                     383,160                                496,895
     United Kingdom                                    70,030                                 844,174
     Japan                                                -                                   485,317
     Other                                             84,017                                 78,589
                                        -------------------------------------- --------------------------------------
                                                       595,337                               2,053,605
</TABLE>


     Substantially all of the Company's fixed assets are in Canada.

     Major customers, representing 10% or more of total sales, include:

<TABLE>
                                           Six months ended June 30, 2003         Six months ended June 30, 2002
                                        -------------------------------------- --------------------------------------
<S>                                                    <C>                                    <C>
     Customer A                                        176,123                                414,626
     Customer B                                        14,668                                 828,191
     Customer C                                           -                                   485,191
</TABLE>



14.  United States generally accepted accounting principles:

     These financial  statements have been prepared in accordance with generally
     accepted accounting  principles in Canada ("Canadian GAAP") which differ in
     certain  respects  with  accounting  principles  generally  accepted in the
     United  States  ("U.S.  GAAP").  Material  issues  that  could give rise to
     measurement  differences to these consolidated  financial statements are as
     follows:

     (a)  Stock-based compensation:

          The Company has granted stock options to certain employees, directors,
          advisors,  and  consultants.  These  options are granted for  services
          provided to the Company. For options issued subsequent to December 31,
          2001,  the Company  amortizes  the  expense of all  options  issued to
          non-employees  based on the  Black-Scholes  model under Canadian GAAP.
          For U.S. GAAP  purposes,  an enterprise  recognizes or, at its option,
          discloses  the  impact of the fair  value of stock  options  and other
          forms of stock-based  compensation in the determination of income. The
          Company   has  elected   under  U.S.   GAAP  to  continue  to  measure
          compensation  cost for  stock  options  granted  to  employees  by the
          intrinsic  value method.  Options  granted to  non-employees  prior to
          January 1, 2002,  are required to be measured and  recognized at their
          fair value as the services are provided and the options are earned. In
          addition,  during  the year  ended  December  31,  2001 and 2002,  the
          Company  repriced certain options and  consequently,  under U.S. GAAP,
          such options are accounted  for as variable  options and net increases
          in the underlying  common shares market price since the repricing date
          are recognized as  compensation  cost until the options are exercised,
          expire or forfeited.


                                       15


<PAGE>

                            IMAGIS TECHNOLOGIES INC.
                          NOTES TO FINANCIAL STATEMENTS
                         (expressed in Canadian dollars)
                      (Unaudited - Prepared by Management)



14.  United States generally accepted accounting principles, continued:

     (b)  Beneficial conversion option:

          During  the  year  ended   December  31,  2000,   the  Company  issued
          convertible debentures with detachable warrants attached. For Canadian
          GAAP purposes, the issuance is considered to be of a compound debt and
          equity  instrument  and the proceeds  were  allocated  between the two
          elements based on their relative fair values.  For U.S. GAAP purposes,
          this allocation results in a beneficial  conversion option as the fair
          value of the shares issuable on conversion of the debt is in excess of
          the value at which such shares would be issuable  based on the reduced
          carrying value of the debt element.  This beneficial conversion option
          was amortized over the period to the first conversion date.

     (c)  Warrant issuance for services:

          During the year ended  December 31, 2000,  the Company  issued 200,000
          warrants having an exercise price of $3.50 each for services rendered.
          In accordance  with the Company's  accounting  policies,  for Canadian
          GAAP purposes no value was assigned to these  warrants.  For U.S. GAAP
          purposes,  the fair value of these warrants would be determined  based
          on an  option  pricing  model  and  recognized  as  the  services  are
          provided.

          The effect of these accounting  differences on deficit, net loss, loss
          per share and future  income  taxes  under  United  States  accounting
          principles are as follows:

<TABLE>
                                                                     --------------------      ---------------------
                                                                        June 30, 2003                  2002
                                                                     --------------------      ---------------------
<S>                                                               <C>                        <C>
     Deficit, Canadian GAAP                                       $         (19,547,561)     $         (17,142,029)
     Cumulative stock based compensation (a)                                 (1,319,286)                (1,295,024)
     Beneficial conversion options (b)                                         (208,200)                  (208,200)
     Warrants issued for services (c)                                          (722,000)                  (722,000)
                                                                     --------------------      ---------------------
     Deficit, U.S. GAAP                                           $         (21,797,047)     $         (19,367,253)
                                                                     --------------------      ---------------------
</TABLE>


<TABLE>
                                                      Three months ended                  Six months ended
                                                           June 30,                           June 30,
                                               --------------------------------- -----------------------------------
                                                     2003             2002              2003              2002
                                                 --------------   --------------    --------------   ---------------
<S>                                            <C>               <C>               <C>              <C>
     Loss for the period, Canadian GAAP        $     (620,431)   $  (1,657,872)    $  (2,405,532)   $   (2,797,374)
     Stock-based compensation (a)                      (3,519)           95,391          (24,262)         (388,633)
                                                 --------------   --------------   --------------   ---------------
     Loss for the period, U.S. GAAP                  (623,950)      (1,562,481)       (2,429,794)       (3,186,007)
                                                 --------------   --------------   --------------   ---------------
     Loss per share, U.S. GAAP - basic and
     diluted                                   $        (0.03)   $       (0.09)    $       (0.12)   $        (0.19)
                                                 --------------   --------------    --------------   ---------------

</TABLE>


                                       16


<PAGE>

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

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  world
events and concerns regarding security 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.

Critical Accounting Polices

On December 12, 2001, the Securities and Exchange Commission issued a cautionary
advice  regarding  the  disclosure  of critical  accounting  policies.  Critical
accounting  policies are those that management  believes are both most important
to the portrayal of the Company's  financial  conditions  and results,  and that
require difficult,  subjective, or complex judgements,  often as a result of the
need to make estimates about the effects of matters that involve uncertainty.

We believe  the  "critical"  accounting  policies we use in  preparation  of our
financial statements are as follows:

Revenue recognition

(i)  Software sales revenue:

     The Company  recognizes revenue consistent with Statement of Position 97-2,
     "Software Revenue Recognition".  In accordance with this Statement, revenue
     is recognized,  except as noted below,  when all of the following  criteria
     are met: persuasive evidence of a contractual arrangement exists, title has
     passed,  delivery and customer acceptance has occurred,  the sales price is
     fixed or determinable and collection is reasonably assured.  Funds received
     in advance of meeting  the revenue  recognition  criteria  are  recorded as
     deferred revenue.

     When a software product requires  significant  production,  modification or
     customization, the Company generally accounts for the arrangement using the
     percentage-of-completion   method  of  contract  accounting.   Progress  to
     completion is measured by the proportion that  activities  completed are to
     the activities  required under each arrangement.  When the current estimate
     on a contract  indicates  a loss,  a  provision  for the entire loss on the
     contract is made.  In  circumstances  where  amounts  recognized as revenue
     under such  arrangements  exceed the amount  invoiced,  the  difference  is
     recorded as accrued revenue receivable.


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<PAGE>


     When  software is sold under  contractual  arrangements  that includes post
     contract   customer  support  ("PCS"),   the  elements  are  accounted  for
     separately if vendor  specific  objective  evidence  ("VSOE") of fair value
     exists for all  undelivered  elements.  VSOE is  identified by reference to
     renewal  arrangements  for similar  levels of support  covering  comparable
     periods.  If  such  evidence  does  not  exist,  revenue  on the  completed
     arrangement is deferred until the earlier of (a) VSOE being  established or
     (b) all of the  undelivered  elements are delivered or performed,  with the
     following  exceptions:  if the only undelivered  element is PCS, the entire
     fee is recognized  ratably over the PCS period, and if the only undelivered
     element is  service,  the  entire fee is  recognized  as the  services  are
     performed.

     The Company  provides for estimated  returns and warranty  costs,  which to
     date have been nominal, on recognition of revenue.

(ii) Support and services revenue:

     Up front  payments for contract  support and services  revenue are deferred
     and are  amortized to revenue over the period that the support and services
     are provided.


Results of operations  for the three months ended June 30, 2003 compared to June
30, 2002:

Revenues

Imagis' total revenues  decreased 68% to $317,829 for the quarter ended June 30,
2003 over the  comparable  prior year level of $991,740,  and increased 15% over
the first quarter 2003 level of $277,508.  The lower revenues were  attributable
to lower software sales revenues.

Revenues from the Company's software products declined 80% to $188,497 this year
as compared  to $922,622  for 2002.  The quarter  ending June 30, 2002  included
$208,191 in revenue  from the Serco  installation,  $80,000  from the  Company's
Alameda  installation  and $483,091 from the Zixsys license sale.  There were no
comparable  large  contracts  during the same period this year.  The Alameda and
Serco  orders were  received  during  2001 and the  revenue was  recorded as the
installations progressed and were completed in 2002.

Support and services  revenues for 2003 were  $129,222 and were 149% higher than
in 2002 of $51,821.  The support  revenues are  increasing as the sales revenues
increased during 2002 and the deferred  revenue of $211,216  recorded as at June
30, 2003 consists solely of ongoing support  contracts,  this is consistent with
the June 30, 2002 deferred revenue balance of $296,327.

Other revenues were $110 for 2003, whereas  comparable  revenues of $17,297 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 $938,260 for 2003, which is 65% lower than the 2002
operating expenses of $2,649,612. The lower costs over the prior period resulted
from significant decreases in the areas of administration,  sales and marketing,
and technology  development and technical  services.  Management has implemented
significant  cost  reduction  strategies  during  the final  quarter of 2002 and
through  April  2003.  The month of May 2003 is the first month that the Company
fully realized all of the cost reductions. The current operating expense rate is
equivalent to approximately  $3,000,000 per annum, providing an expected expense
level of  approximately  $4,500,000  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 $352,109, which is 65% lower than for 2002 of
$1,014,145. 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 a significant reduction in travel costs and the use of
outside consultants.  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.


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<PAGE>


Interest and Amortization

Interest expense incurred this year primarily  related to financing of equipment
amounted  to $3,561,  down 58% from the prior year of $8,499.  Overall  interest
expense  increased  from $8,499 to $12,861 due to $9,120 in interest  charged on
the  Company's  credit  facility.  Amortization  in 2003  amounted to $61,304 as
compared to $24,786 for 2002.  The  increase in  amortization  expense  reflects
purchases  of  equipment  and  the  amortization  expense  associated  with  the
acquisition of the Intacta license and patents during 2002.

Cost of Materials

Cost of materials  during 2002 consisted of one-time costs  associated  with the
Alameda  installation  and Zixsys  license.  There was no comparable  expense in
2003.

Sales and marketing

Sales and marketing expenses for 2003 were $315,990,  and were 62% lower than in
2002 of $836,177. 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.  These
expected opportunities did not fully materialize.  The Company has now decreased
its sales team and streamlined its associated travel and marketing costs as part
of its strategy of utilizing a more targeted  marketing and sales  strategy.  No
further decreases are currently contemplated. The Company expects that sales and
marketing  expenses  will  continue at  approximately  the same levels in future
periods.  Sales and marketing  costs may be increased if  management  identifies
specific  opportunities  that require an increase in  resources  but only in the
event that identifiable revenues exist.

Technology development

The technology  development  expenses for 2003 were $85,948,  which is 79% lower
than the 2002 comparable costs of $413,011.  The 2003 total is net of a $100,000
recovery of software  consulting  fees  recognized  in the period ended June 30,
2003 relating to sub-contracted  software  development  written off during 2002.
Recurring  expenses  were  reduced to $185,948  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  $106,190 this year,  which is 49%
lower than the comparable 2002 costs of $209,822.  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 all areas.  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  second  quarter of 2003 of
$620,431  or $0.03  per  share,  which is 63% lower  than the net loss  incurred
during the second quarter of 2002 of $1,657,872 or $0.12 per share.  Even though
the  Company  experienced  reduced  revenues  during  the  period  the  loss was
dramatically reduced through management's cost reduction strategies.  Management
believes that the Company will be able to achieve break even  operations  during
the final quarter of 2003.

Results of  operations  for the six months ended June 30, 2003  compared to June
30, 2002:

Revenues

Imagis' total  revenues  decreased 71% to $595,337 for the six months ended June
30, 2003 over the comparable prior year level of $2,053,605.  The lower revenues
were attributable to lower software sales revenues.

Revenues from the Company's software products declined 83% to $324,480 this year
as compared to  $1,908,576  for 2002.  The period  ending June 30, 2002 included
$828,191 in revenue from the Serco  installation,  $380,009  from the  Company's
Alameda  installation  and $483,091 from the Zixsys license sale.  There were no
comparable  large  contracts  during the same period this year,  the Alameda and
Serco  orders were  received  during  2001 and the  revenue was  recorded as the
installations progressed and were completed in 2002.


                                       19


<PAGE>

Support and services  revenues for 2003 were  $263,241 and were 136% higher than
in 2002 of $111,651.  The support  revenues are increasing as the sales revenues
increased during 2002 and the deferred  revenue of $211,216  recorded as at June
30, 2003 consists solely of ongoing support  contracts,  this is consistent with
the June 30, 2002 deferred revenue balance of $296,327.

Other revenues were $7,616 for 2003, whereas comparable revenues of $33,378 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 $3,000,869 for 2003, which is 38% lower than the 2002
operating expenses of $4,850,979. 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.
2003 expenses also include a one-time expense  recovery of $100,000  relating to
sub-contracted software development expensed during 2002. Excluding these items,
the  operating  expenses  for  2003  were  $2,733,919,  which  represents  a 44%
reduction in expenses over the prior year. The lower costs over the prior period
resulted from significant  decreases in the areas of  administration,  sales and
marketing,  and technology  development and technical  services.  Management has
implemented  significant cost reduction  strategies  during the final quarter of
2002 and through  April  2003.  The month of May of 2003 is the first month that
the Company fully  realized all of the cost  reductions.  The current  operating
expense rate is equivalent to approximately  $3,000,000 per annum,  providing an
expected expense level of approximately  $4,500,000 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 $1,303,760,  which is 35% lower than for 2002
of  $2,011,323.  These costs include the one-time  management fee of USD$250,000
(CDN$366,950)  described above.  Excluding this charge, the administrative costs
were  $936,810,   which   represents  a  53%  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 a significant reduction in travel costs and the use of
outside  consultants.  Stock based  compensation  expense for the period was nil
during  2003 as opposed to an expense of $147,182  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 $45,932  consists of one customer that defaulted
on payment for software  licenses and one customer that  defaulted on payment of
reimbursable expenses. 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 $10,071.  This is due to the  acquisition of equipment  during 2002.
Overall  interest  expense also increased  $9,120 due to interest charged on the
Company's credit facility. Amortization in 2003 amounted to $127,717 as compared
to $56,662 for 2002. The increase in amortization  expense reflects purchases of
equipment and the  amortization  expense  associated with the acquisition of the
Intacta license and patents.

Cost of Materials

Cost of materials  during 2002 consisted of one-time costs  associated  with the
Alameda  installation  and Zixsys  license.  There was no comparable  expense in
2003.


                                       20


<PAGE>


Sales and marketing

Sales and marketing expenses for 2003 were $889,986,  and were 36% lower than in
2002 of  $1,393,925.  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.  These
expected opportunities did not fully materialize.  The Company has now decreased
its sales team and streamlined its associated travel and marketing costs as part
of its strategy of utilizing a more targeted  marketing and sales  strategy.  No
further decreases are currently contemplated. The Company expects that sales and
marketing  expenses will continue at the current level in future periods.  Sales
and  marketing  costs  may  be  increased  if  management   identifies  specific
opportunities  that require an increase in resources  but only in the event that
identifiable revenues exist.

Technology development

The technology  development expenses for 2003 were $364,491,  which is 53% lower
than the 2002 comparable costs of $782,717.  The 2003 total is net of a $100,000
recovery of software  consulting  fees  recognized  in the period ended June 30,
2003 relating to sub-contracted  software  development  written-off during 2002.
Recurring  expenses  were  reduced to $464,491  through a reduction in staff and
overhead costs.  Technology  development  expenses are expected to remain at the
current  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  $246,778 this year,  which is 45%
lower than the comparable 2002 costs of $449,219.  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 all areas.  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 six months of 2003 of
$2,405,532  or $0.12 per share,  which is 14% lower  than the net loss  incurred
during the second quarter of 2002 of $2,797,374 or $0.16 per share.  Even though
the Company  experienced reduced revenues during the period the loss was reduced
through management's cost reduction  strategies.  May of 2003 is the first month
that fully realizes all of the cost reductions and management  believes that the
Company will be able to achieve break even  operations  during the final quarter
of 2003.

Liquidity and Capital Resources

The Company's cash on hand at the beginning of the period  aggregated  $547,831.
During the period,  the Company  received  additional funds of $296,038 from the
exercise  of both stock  options and  warrants.  In total,  195,505  options and
133,334  warrants were  exercised  which  resulted in aggregate  proceeds to the
Company of  $129,370  and  $166,668,  respectively.  The Company  also  received
USD$100,000 (CDN$148,710) and $61,214 in unsecured loans from directors.

Under a credit  facility the Company  received cash pursuant to a loan agreement
with a previous  director  of the  Company in the  amount of  $367,000  and made
repayments  in the amount of  $20,000.  Also  included  in this loan are various
expenses  paid by the former  director on behalf of the Company in the amount of
$135,714 of which $26,384 has been repaid.  The loan has accrued interest in the
amount of $9,120 and the total of $465,450  remains  unpaid as at June 30, 2003.
The loan bore  interest  at the prime rate plus 2% per annum and is secured by a
General  Security  Agreement  over the assets of the Company,  and a Source Code
Escrow  Agreement  that  requires  the Company 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  the  Company  ceases  operations  or  enters
bankruptcy proceedings. The loan arrangement under which the credit facility was
drawn expired on May 31, 2003. At August 14, 2003, the previous director has not
taken any action with respect to the security for the loan  arrangement.  Due to
the fact that the credit  facility has expired  amounts owed under this facility
now accrue interest at a rate of prime plus 5% per annum.

During the quarter ended June 30, 2003, the Company received $75,000 through the
issuance of a  debenture.  This  debenture  bears  interest at prime plus 2% per
annum,  requires  interest to be paid  monthly and is  repayable on November 30,
2004. The debenture is secured by the assets of the Company but is  subordinated
to the credit facility loan agreement.


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<PAGE>

The Company  used these funds  primarily to finance its  operating  loss for the
period.  The  impact on cash of the loss of  $2,405,532,  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 $1,293,325. The Company also
used funds to purchase  capital  equipment  amounting to $7,061,  repay  capital
leases of $9,637,  and  deferred  acquisition  costs of $231,675  related to its
proposed  acquisition of Briyante Software Corp. The deferred  acquisition costs
consist  primarily of legal costs  associated  with the acquisition and advances
made to Briyante under the terms of the acquisition agreement.

In summary,  the Company's  cash position  declined by $504,406 from $547,831 at
the beginning of the period to $43,425 at June 30, 2003.

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.  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. Subsequently the Company agreed to the postponement, pending amendments to
the terms, of the acquisition of Briyante.  The agreement to amend the terms was
brought about by the Company determining that it did not have sufficient working
capital for the combined  entity,  as a result of a poor  financial  environment
over the past six months. The Arrangement  Agreement expired on May 31, 2003. On
June  20,  2003  the  Company  and  Briyante   entered  into  a  Memorandum   of
Understanding  to proceed with the  acquisition of Briyante by the Company under
the following terms:

     (i)  The  Company  will  acquire  all  outstanding  shares of  Briyante  in
          exchange for shares of the Company,  such that former  shareholders of
          Briyante will own 40% of the outstanding  share capital of the Company
          before the additional issuances to debt holders described below;

     (ii) The Company and Briyante  will raise capital by way of a debt offering
          (the "Debt") to fund the  operations of the Company and Briyante,  the
          target for such offering being an aggregate amount of $1.63 million;

     (iii)As part of the Acquisition,  the holders of the Debt will be offered a
          limited-time  opportunity to convert the Debt for common shares of The
          Company  (post-acquisition).  The total number of shares issuable will
          be such that if the targeted  maximum  amount of $1.63 million in Debt
          is converted  into equity,  the holders of the Debt will be issued 21%
          of the  equity of the  Company  (post-acquisition),  with the  current
          shareholders  of the Company and Briyante  being diluted on a pro rata
          basis.  If the  total  amount of Debt  converted  is more or less than
          $1.63 million,  the total number of shares  issuable to holders of the
          Debt who convert will be adjusted pro rata; and

     (iv) Following the  Acquisition  and the conversion of the Debt into shares
          of the Company,  the common shares of the Company will be consolidated
          on a basis acceptable to the Company and Briyante.

The Company and  Briyante  have agreed to enter into a  definitive  agreement by
August  20,  2003 in  substantially  the same  form as the  earlier  Arrangement
Agreement,  subject to the terms above.  The  completion of the  acquisition  is
subject to execution  of the  definitive  agreement,  regulatory  approval,  and
approval  by the  shareholders  of  both  companies.  In  conjunction  with  the
acquisition  of Briyante the Company will also be proposing a  consolidation  of
its share capital post-acquisition on a 4.5 old shares for one new share basis.

Management  of  the  Company  continues  its  organizational  restructuring  and
refocusing of its sales, marketing,  and development efforts and as a result has
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.  May of 2003 is the first month that fully realizes
all of the cost reductions and management believes that the Company will be able
to achieve break even operations during the final quarter of 2003.

The  Company  does not have  sufficient  cash flow from  operations  to fund its
operations  beyond  September  2003  and  will be  required  to seek  additional
financing.  In recognition of this situation,  the Company is currently actively
seeking  financing.  The Company is proposing to issue two debentures and a debt
settlement in order to consolidate its existing debt and raise additional funds.


                                       22


<PAGE>


The Company has entered into an agreement to settle $179,557 in outstanding debt
owed to two  creditors  for the  issuance of 613,868  common  shares at a deemed
price of $0.2925 per share.  The company has also entered into an agreement with
its landlord at its Vancouver  head office  whereby the Company may pay its rent
by issuing  common  shares to its  landlord  on the first of each month  through
December  2003.  The number of common  shares to be issued will be calculated by
dividing the rent by the  weighted  average  price of the common  shares for the
preceding  month  less the  maximum  permitted  discount  under the rules of the
regulatory authorities. This agreement is subject to regulatory approval.

A new Series A debenture is proposed that will  consolidate the credit facility,
the unsecured  loans from the  directors,  and the  debenture  issued during the
period.  These items total $750,374 as at June 30, 2003. The debenture will bear
interest  at the rate of the  greater of prime  plus 5%, or 10% per annum,  to a
maximum  of 12% per  annum,  payable  monthly.  It will be  secured by a general
security  agreement  over all the  assets  of the  Company  with  the  Company's
software  source  codes  held in escrow.  The  current  holders  of the  general
security agreement under the terms of the existing credit facility and debenture
have agreed to release their charges and participate in this new debenture.  The
debenture will be convertible to units  consisting of common shares,  and common
share  purchase  warrants  at  varying  ratios,  of the  Company at the ratio of
0.01557% of the equity of the Company per $1,000,  after the share  issuance for
the acquisition of Briyante and consolidation of the Company's share capital. It
will mature January 31, 2005.

A Series B  debenture  is also  proposed  to  raise  up to $1.5  million  in new
funding,  with the right of oversubscription to $2.0 million. The debenture will
bear interest at the rate of the greater of prime plus 5%, or 10% per annum,  to
a maximum of 12% per  annum,  payable  monthly.  It will be secured by a general
security  agreement  over all the  assets  of the  Company  with  the  Company's
software  source codes held in escrow.  This debenture will rank pari passu with
the Series A debenture in terms of security.  The debenture  will be convertible
to units  consisting of common  shares,  and common share  purchase  warrants at
varying  ratios,  of the  Company at the ratio of  0.01097% of the equity of the
Company per $1,000, after the share issuance for the acquisition of Briyante and
consolidation  of the Company's share capital.  It will mature January 31, 2005.
The  Company  is  in  currently  in   negotiations   with  four   investors  for
subscriptions to the Series B debenture.

The terms of the  debentures are subject to final  documentation  and regulatory
approval and the conversion  option will be subject to  shareholder  approval at
the next shareholder meeting.

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


                                       23


<PAGE>

Item 3.  Controls and Procedures

     (a)  Evaluation of Disclosure Controls and Procedures

          Under the  supervision  and with the  participation  of the  Company's
          management,  including the Company's Chief Executive  Officer and Vice
          President  Finance,  the Company  evaluated the  effectiveness  of the
          design and operation of its  disclosure  controls and  procedures  (as
          defined in Rule 13a-15(e)  under the Securities  Exchange Act of 1934,
          as amended (the  "Exchange  Act")) as of the end of the period covered
          by this report (the  "Evaluation  Date").  Based upon that evaluation,
          the Chief Executive Officer and Vice President Finance concluded that,
          as of the  Evaluation  Date,  the  Company's  disclosure  controls and
          procedures  were  effective  in timely  alerting  them to the material
          information relating to the Company (or its consolidated subsidiaries)
          required to be included in reports the Company  files or submits under
          the Exchange Act.

     (b)  Changes in Internal Control over Financial Reporting

          During the period  covered by this report,  there was no change in the
          Company's  internal  control over  financial  reporting (as defined in
          Rule 13a-15(f)  under the Exchange Act) that has materially  affected,
          or is reasonably likely to materially  affect,  the Company's internal
          control over financial reporting.


                                       24


<PAGE>


PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

As of the  date  of  this  report,  the  Company  is not a  party  to any  legal
proceedings, the adverse outcome of which, in management's opinion, individually
or in the aggregate,  would have a material  effect on the Company's  results of
operations or financial position.

Item 2.   Changes in Securities

     (a)  None

     (b)  None

     (c)  The Company  issued  83,000  common  shares upon the exercise of stock
          options  by one (1) person in two  private  transactions  outside  the
          United  States  for gross  proceeds  to the  Company of  $30,500.  The
          options  were  exercised  on the  following  dates  for the  following
          amounts:  April 11, 2003 - 75,000  options  for gross  proceeds to the
          Company  of  $22,500;  and May  29,  2003 - 8,000  options  for  gross
          proceeds  to the Company of $8,000.  The common  shares were issued in
          reliance  upon  an  exclusion  from   registration   available   under
          Regulation S ("Regulation S") promulgated  under the Securities Act of
          1933, as amended (the "Securities Act").

     (d)  None

Item 3.  Defaults Upon Senior Securities

As at June 30, 2003 the Company owed $465,450 pursuant to a loan agreement.  The
loan is 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. This loan arrangement expired on May 31, 2003 and the Company is in
discussions with the lender to extend and possibly  restructure the terms of the
debt which was due to be repaid on May 31, 2003.

Item 4.  Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders during the quarter ended
June 30, 2003.

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits

The following  exhibits are filed (or incorporated by reference  herein) as part
of this Form 10-QSB:

      Exhibit
      Number      Description
      ------      -----------
      3.1(1)      Articles of Incorporation
      4.1(1)      Shareholder Agreement dated February 23, 1999 among the
                  Original Shareholders and the Former Imagis Shareholders
      4.2(5)      Registration rights agreement dated July 8, 2002 between
                  Imagis and OSI
      10.1(1)*    Employment Agreement dated February 23, 1999 between the
                  Issuer and Iain Drummond
      10.2(2)*    Imagis Technologies Inc. 2000 Stock Option Plan
      10.3(3)     Form of Unit Subscription Agreement
      10.4(4)     Software Assets Sale and Assignment Agreement dated October
                  31, 2001 between Imagis and API Technologies, LLC.
      10.5(5)     Subscription Agreement dated July 8, 2002 between Imagis
                  and OSI
      10.6(5)     Letter of Intent dated July 8, 2002 between Imagis and OSI
      10.7(5)     Product Development and Marketing Agreement dated July 8, 2002
                  between Imagis and OSI
      10.8(5)     Software Developer Services Agreement dated July 8, 2002
                  between Imagis and OSI


                                       25


<PAGE>


      Exhibit
      Number      Description
      ------      -----------
      10.9(6)     Purchase Agreement dated August 30, 2002 between Imagis and
                  Intacta for certain data encoding technologies
      10.10(6)    Agreement to amend the terms of Item 10.9 dated
                  October 8, 2002
      10.11(6)    Agreement to amend the terms of Item 10.9 and 10.10 dated
                  October 9, 2002
      10.12(6)    Agreement between Imagis and Intacta for the purchase of
                  Intacta patents dated November 1, 2002
      10.13(6)*   Consulting Agreement between Imagis and Altaf Nazerali dated
                  October 1, 2002
      10.14(6)    Agreement between Imagis and Briyante for the development of a
                  query application dated July 30, 2002
      10.15(7)    Revolving Line of Credit dated February 23, 2003 between
                  Imagis and Altaf Nazerali
      10.16(7)    Amended and Restated Loan Agreement: Revolving Line of Credit
                  dated April 15, 2003 between Imagis and Altaf Nazerali
      10.17(7)    General Security Agreement dated April 15, 2003 between Imagis
                  and Altaf Nazerali
      10.18(7)    Grid Promissory Note dated February 21, 2003 between Imagis
                  and Altaf Nazerali
      10.19(7)    Grid Promissory Note Amended and Restated dated April 15, 2003
                  between Imagis and Altaf Nazerali
      10.20(7)    Source Code License Agreement dated April 15, 2003 between
                  Imagis and Altaf Nazerali
      10.21(7)    Source Code Escrow Agreement dated April 15, 2003 between
                  Imagis and Altaf Nazerali
      10.22       Debenture Agreement between the Company and 414826 B.C. Ltd.
                  dated May 30, 2003
      31.1        Section 302 Certifications
      32.1        Section 906 Certifications
      99.1        Risk Factors
      99.2        Form 51-901F as required by the British Columbia Securities
                  Commission

* Indicates a management contract or compensatory plan or arrangement

(1)  Previously  filed as part of Imagis'  Registration  Statement on Form 10-SB
     (File No. 000-30090).
(2)  Previously  filed as part of Imagis'  Annual  Report on Form 10-KSB for the
     year ended December 31, 2000.
(3)  Previously filed as part of Imagis' Quarterly Report on Form 10-QSB for the
     period ended June 30, 2001.
(4)  Previously filed as part of Imagis' Quarterly Report on Form 10-QSB for the
     period ended March 31, 2002.
(5)  Previously  filed as part of  Imagis'  Current  Report on Form 8-K filed on
     December 19, 2002.
(6)  Previously  filed as part of Imagis'  Annual  Report on Form 10-KSB for the
     year ended December 31, 2002.
(7)  Previously filed as part of Imagis' Quarterly Report on Form 10-QSB for the
     period ended March 31, 2003.

(b)  Reports on Form 8-K

     On April 25, 2003, the Company furnished on Form 8-K under Item 9 two press
     releases attached as exhibits thereto. The Company announced that Mr. Altaf
     Nazerali, an existing shareholder and previous director of the Company, has
     agreed to provide bridge  financing by way of a line of credit facility for
     up to CDN$500,000. The line of credit will be secured by a General Security
     Agreement  over  the  assets  of the  Company,  and a  Source  Code  Escrow
     Agreement that requires the Company 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 the  Company  ceases  operations  or
     enters  bankruptcy   proceedings.   The  Company  also  announced  that  in
     conjunction  with  this  financing,  it  is  undergoing  an  organizational
     restructuring  and  refocusing  of its sales,  marketing,  and  development
     efforts.  As part of this  restructuring,  the Company has temporarily laid
     off non-core  employees from its global operations.  Information  furnished
     pursuant  to Item 9 on  Form  8-K  shall  not be  deemed  filed  under  the
     Securities Exchange Act of 1934, as amended.

     On June 23, 2003, the Company  furnished on Form 8-K under Item 9 two press
     releases attached as exhibits  thereto.  The Company announced in its first
     press  release  its  intention  to raise  up to $1.0  million  through  the
     issuance of  subordinated  debentures  and that it had  received an initial
     investment of $75,000 and issued the first  debenture.  In the second press
     release the Company  announced that it is in default under the terms of its
     previously  announced  credit  facility and it is currently  negotiating to
     modify the terms of the  facility.  It also  announced  that certain of its
     directors  have made cash advances to the Company and in the case of two of
     these  directors  the cash was  generated  by  liquidating  their  personal
     holding of common stock of the Company.  Information  furnished pursuant to
     Item 9 on Form 8-K shall not be deemed filed under the Securities  Exchange
     Act of 1934, as amended.


                                       26


<PAGE>


                                   SIGNATURES

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

                                            IMAGIS TECHNOLOGIES INC.

Date: August  14, 2003
                                            /s/ Wayne Smith
                                            ------------------------------------
                                            Wayne Smith
                                            Vice President Finance, Chief
                                            Operating Officer
                                            (Principal Financial and Accounting
                                            Officer and Duly Authorized Officer)