EXHIBIT 99.2

                                BC FORM 51-901F


                                QUARTERLY REPORT


Incorporated as part of: Schedules B & C


ISSUER DETAILS:

------------------------------------------ -------------------------------------
Name of Issuer                             IMAGIS TECHNOLOGIES INC.
------------------------------------------ -------------------------------------
For Quarter Ended                          June 30, 2003
------------------------------------------ -------------------------------------
Date of Report                             August 14, 2003
------------------------------------------ -------------------------------------
Issuer Address                             1630 - 1075 West Georgia Street
                                           Vancouver, British Columbia
                                           V6E 3C9
------------------------------------------ -------------------------------------
Issuer Fax Number                          (604) 684-9314
------------------------------------------ -------------------------------------
Issuer Telephone Number                    (604) 684-2449
------------------------------------------ -------------------------------------
Contact Name                               Wayne Smith
------------------------------------------ -------------------------------------
Contact Position                           Vice President Finance
------------------------------------------ -------------------------------------
Contact Telephone Number                   (604) 684-2449
------------------------------------------ -------------------------------------
Contact Email Address                      wsmith@imagistechnologies.com
------------------------------------------ -------------------------------------
Web Site Address                           www.imagistechnologies.com
------------------------------------------ -------------------------------------


                                   CERTIFICATE


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

Iain Drummond              /s/ Iain Drummond            03/08/14
-------------              -----------------            --------
Name of Director           Sign (typed)                 Date Signed (YY/MM/DD)

Roy Trivett                /s/ Roy Trivett              03/08/14
-----------                ---------------              --------
Name of Director           Sign (typed)                 Date Signed (YY/MM/DD)


<PAGE>

SCHEDULE B: SUPPLEMENTARY INFORMATION

1.   Analysis of expenses:

     (a)  Cost of materials

<TABLE>
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
                                         Q1             Q2            Q3           Q4             Total
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
<S>                                    <C>             <C>                                        <C>
    Supplies & Services                2,911            -                                         2,911
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Other                                103            -                                           103
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Total                             $3,014          $ -                                        $3,014
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
</TABLE>

     (b)  Sales

<TABLE>
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
                                         Q1             Q2            Q3           Q4             Total
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
<S>                                   <C>            <C>                                         <C>
    Salaries and benefits             340,509        196,285                                     536,794
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Travel                            123,056         30,901                                     153,957
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Other                              69,217         46,946                                     116,163
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Total                            $532,782       $274,132                                    $806,914
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
</TABLE>

     (c)  Marketing

<TABLE>
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
                                         Q1             Q2            Q3           Q4             Total
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
<S>                                    <C>            <C>                                        <C>
    Salaries and benefits              16,248         14,855                                     31,103
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Tradeshows                          7,018         13,889                                     20,907
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Website and internet                7,267          7,645                                     14,912
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Other                              10,681          5,469                                     16,150
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Total                             $41,214        $41,858                                    $83,072
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
</TABLE>

     (d)  Technical services

<TABLE>
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
                                         Q1             Q2            Q3           Q4             Total
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
<S>                                    <C>            <C>                                        <C>
    Salaries and benefits              98,936         77,200                                     176,136
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Travel                              9,704          3,064                                      12,768
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Rent & Utilities                   18,224         11,318                                     29,542
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Other                              13,724         14,608                                     28,332
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Total                            $140,588       $106,190                                   $246,778
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
</TABLE>

     (e)  Technology development

<TABLE>
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
                                         Q1             Q2            Q3           Q4             Total
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
<S>                                   <C>            <C>                                         <C>
    Salaries and benefits             211,858        150,312                                     362,170
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Travel                             25,048          4,744                                      29,792
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Consulting                              -        (97,900)                                    (97,900)
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Other                              41,637         28,792                                     70,429
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Total                            $278,543        $85,948                                    $364,491
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
</TABLE>


<PAGE>


1.   Analysis of expenses, continued:

     (f)  Administration

<TABLE>
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
                                         Q1             Q2            Q3           Q4             Total
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
<S>                                   <C>             <C>                                        <C>
    Consulting fees                   189,382         64,253                                     253,635
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Management fee                    366,950              -                                     366,950
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Salaries and benefits             164,315        149,506                                     313,821
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Audit and legal fees               57,081         98,197                                     155,278
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Other                             173,923         40,153                                     214,076
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
    Total                            $951,651       $352,109                                  $1,303,760
    ------------------------------ --------------- ------------- ------------- ------------ ------------------
</TABLE>


2.   Related party transactions:

     (a)  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% 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 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% per annum.

     (b)  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.

     (c)  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.

3.   Summary of  securities  issued and  options  granted  during the six months
     ended June 30, 2003

     (a)  Summary of securities issued during the period:

<TABLE>
  --------------- ------------ --------------------- ----------- ----------- ------------- ----------------------- ------------
       Date          Type              Type
        Of            Of                Of                                      Total
      Issue        Security            Issue           Number      Price       Proceeds    Type of Consideration     Commission
  --------------- ------------ --------------------- ----------- ----------- ------------- ----------------------- ------------
<S>  <C>                                                 <C>       <C>            <C>
     01/23/03       Common        Option exercise        21,505    $2.97          $63,870           Cash                 Nil
  --------------- ------------ --------------------- ----------- ----------- ------------- ----------------------- ------------
     01/24/03       Common        Option exercise         5,000    $1.00           $5,000           Cash                 Nil
  --------------- ------------ --------------------- ----------- ----------- ------------- ----------------------- ------------
     01/27/03       Common        Option exercise         6,000    $1.00           $6,000           Cash                 Nil
  --------------- ------------ --------------------- ----------- ----------- ------------- ----------------------- ------------
     02/10/03       Common       Warrant exercise       133,334    $1.25         $166,668           Cash                 Nil
  --------------- ------------ --------------------- ----------- ----------- ------------- ----------------------- ------------
     02/10/03       Common        Option exercise        50,000    $0.30          $15,000           Cash                 Nil
  --------------- ------------ --------------------- ----------- ----------- ------------- ----------------------- ------------
     03/12/02       Common        Option exercise        30,000    $0.30           $9,000           Cash                 Nil
  --------------- ------------ --------------------- ----------- ----------- ------------- ----------------------- ------------
     04/11/03       Common        Option exercise        75,000    $0.30          $22,500           Cash                 Nil
  --------------- ------------ --------------------- ----------- ----------- ------------- ----------------------- ------------
     06/03/03       Common        Option exercise         8,000    $1.00           $8,000           Cash                 Nil
  --------------- ------------ --------------------- ----------- ----------- ------------- ----------------------- ------------
</TABLE>


<PAGE>


3.   Summary of  securities  issued and  options  granted  during the six months
     ended June 30, 2003, continued

     (b)  Options/warrants granted during the period:

     Nil

4.   Summary of securities as at June 30, 2003

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

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


      Issued and outstanding           No. of shares                Amount
      ----------------------           -------------                ------
      Balance June 30, 2003            20,679,705                   $17,657,156

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

     Options
     -------

<TABLE>
                  ------------------------------------------------------------------------------------
                    Number of Common Shares               Exercise Price          Date of Expiry
                           Issuable
                  ------------------------------------------------------------------------------------
<S>                          <C>                          <C>                    <C>   <C>
                             50,000                       $ 1.00                 02/25/04
                             45,000                       $ 1.00                 03/25/04
                            140,999                       $ 1.00                 01/19/05
                            546,666                       $ 1.00                 08/30/06
                             15,000                       $ 2.35                 09/02/05
                             15,000                       $ 2.35                 11/02/05
                            160,000                       $ 2.20                 12/19/06
                             15,000                       $ 2.06                 12/05/05
                             27,000                       $ 1.99                 12/20/05
                              8,400                       $ 1.50                 12/20/05
                            232,500                       $ 1.50                 05/14/06
                            270,000                       $ 2.35                 03/04/07
                             35,485                       $ 2.97                 02/08/04
                             10,000                       $ 2.24                 01/31/07
                            130,000                       $ 2.35                 05/15/07
                            140,000                       $ 2.35                 06/30/07
                            320,000                       $ 2.35                 07/31/07
                            300,000                       $ 1.50                 08/31/07
                             85,000                       $ 2.35                 10/31/07
                  --------------------------------------------------------------------------------
                           2,546,050                       $1.75
                  --------------------------------------------------------------------------------
</TABLE>


<PAGE>


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

     Warrants
     --------

<TABLE>
                        Number of common shares
                                Issuable                   Exercise Price            Date of Expiry
<S>                              <C>                           <C>
                                 50,000                        $2.20                January 18, 2004
                                291,667                       US$1.50                 July 24, 2004
                                105,000                       US$1.80                 July 24, 2004
                  ------------------------------------- --------------------- ------------------------------
                                446,667
                  ------------------------------------- --------------------- ------------------------------
</TABLE>

5.   List of directors and officers as of August 14, 2003:

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


<PAGE>


SCHEDULE C: MANAGEMENT DISCUSSION AND ANALYSIS

DESCRIPTION OF BUSINESS

Forward-Looking Statements:

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

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

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

About Imagis

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

Overview

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

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

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


<PAGE>


Results of operations  for the three months ended 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.

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.


<PAGE>


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.

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.


<PAGE>


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.

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.


<PAGE>


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.


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.


<PAGE>


(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.

LIQUIDITY AND SOLVENCY

The Company's cash on hand at the beginning of the period  aggregated  $547,831.
During the period,  the Company  received  additional funds of $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.

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;


<PAGE>


     (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.

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.