UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-QSB

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the quarterly period ended September 30, 2001

OR

 ̈TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the transition period from __________ to __________

Commission File Number: 000-30090

_________________________



|IMAGIS TECHNOLOGIES INC.
(Exact name of small business issuer as specified in its
charter)                  
|------------------------------------------------------------------------------------------------------------
|                                                                                                            
|British Columbia, Canada
(State or other jurisdiction of
incorporation or organization)                     
|                                                                                                            
|1300 - 1075 West Georgia Street
Vancouver, British Columbia
V6E 3C9
(Address of principal executive offices)
|                                                                                                            
|(604) 684-2449(Issuer's telephone number)                                                                   

_________________________

As of November 13, 2001, 15,969,799 Common Shares were issued and
outstanding.

Transitional Small Business Disclosure Format (Check one):
     Yes  [   ]  
  No  [X]

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IMAGIS TECHNOLOGIES INC.

FORM 10-QSB

For the quarterly period ended September 30, 2001

INDEX



|PART 1.  | FINANCIAL INFORMATION |                                                                                                                                      
|-------- | --------------------- | -------------------------------------------------------------------------------------------------------------------------------------
|         |                       |                                                                                                                                      
|         | Item 1.               | Financial Statements                                                                                                                 
|         |                       |                                                                                                                                      
|         |                       | Consolidated Balance Sheets as of September 30, 2001 
(unaudited) and December 31, 2000                                              
|         |                       |                                                                                                                                      
|         |                       | Consolidated Statements of Operations and Deficit (unaudited)
for the three and 
nine month periods ended September 30, 2001 and 2000
|         |                       |                                                                                                                                      
|         |                       | Consolidated Statements of Cash Flows (unaudited) for
the three and nine month periods ended September 30, 2001 and 2000             
|         |                       |                                                                                                                                      
|         |                       | Notes to Consolidated Financial Statements                                                                                           
|         |                       |                                                                                                                                      
|         | Item 2.               | Management's Discussion and Analysis or Plan of Operation                                                                            
|         |                       |                                                                                                                                      
|PART II. | OTHER INFORMATION     |                                                                                                                                      
|         |                       |                                                                                                                                      
|         | Item 1.               | Legal Proceedings                                                                                                                    
|         |                       |                                                                                                                                      
|         | Item 2.               | Changes in Securities                                                                                                                
|         |                       |                                                                                                                                      
|         | Item 3.               | Defaults upon Senior Securities                                                                                                      
|         |                       |                                                                                                                                      
|         | Item 4.               | Submission of Matters to a Vote of Security Holders                                                                                  
|         |                       |                                                                                                                                      
|         | Item 5.               | Other Information                                                                                                                    
|         |                       |                                                                                                                                      
|         | Item 6.               | Exhibits and Reports on Form 8-K                                                                                                     
|         |                       |                                                                                                                                      
|         | Signatures            | 26                                                                                                                                   
|         |                       |                                                                                                                                      
|         | Exhibit Index         |                                                                                                                                      

2

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PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL
STATEMENTS

The following unaudited financial statements for the period
ended September 30, 2001 are included in response to Item 1 and have been
compiled by management.

The financial statements should be read in conjunction with
the Management's Discussion and Analysis and other financial information
included elsewhere in this Form 10-QSB.



|IMAGIS TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
AS AT SEPTEMBER 30, 2001 AND DECEMBER 31, 2000
(expressed in Canadian dollars)
|-----------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   
|ASSETS                                                                                                                             
|Current assets:                                                                                                                    
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   
|LIABILITIES AND DEFICIENCY IN NET
ASSETS                                                                                           
|Current liabilities:                                                                                                               
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   
|Advances payable                                                                                                                   
|                                                                                                                                   
|Payable to related parties (note 3)                                                                                                
|                                                                                                                                   
|Deficiency in net assets:                                                                                                          
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   

See accompanying notes to consolidated financial
statements.

3

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|IMAGIS TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2001 AND 2000
(expressed in Canadian dollars)
(Unaudited - Prepared by Management)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                      
|                                                                                                                                                                                                                      
|                                                                                                                                                                                                                      
|                                                                                                                                                                                                                      
|Revenues:                                                                                                                                                                                                             
|                                                                                                                                                                                                                      
|                                                                                                                                                                                                                      
|                                                                                                                                                                                                                      
|                                                                                                                                                                                                                      
|Expenses:                                                                                                                                                                                                             
|                                                                                                                                                                                                                      
|                                                                                                                                                                                                                      
|                                                                                                                                                                                                                      
|                                                                                                                                                                                                                      
|                                                                                                                                                                                                                      
|                                                                                                                                                                                                                      
|                                                                                                                                                                                                                      
|                                                                                                                                                                                                                      
|                                                                                                                                                                                                                      
|Loss for the period                                                                                                                                                                                                   
|Deficit, beginning of period                                                                                                                                                                                          
|Deficit, end of period                                                                                                                                                                                                
|                                                                                                                                                                                                                      
|Loss per share                                                                                                                                                                                                        
|Weighted average number of
shares outstanding                                                                                                                                                                         

See accompanying notes to consolidated financial
statements.

4

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|IMAGIS TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2001 AND 2000
(expressed in Canadian dollars)
(Unaudited - Prepared by Management)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|Cash provided by (used in):                                                                                                                                                                               
|                                                                                                                                                                                                          
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|                                                                                                                                                                                                          
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|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|Cash flows from operating activities                                                                                                                                                                      
|                                                                                                                                                                                                          
|Cash flows from investing activities:                                                                                                                                                                     
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|Cash flows from financing activities:                                                                                                                                                                     
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
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|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|Increase (decrease) in cash for the 
   period                                                                                                                                                            
|Cash, beginning of period                                                                                                                                                                                 
|Cash, end of period                                                                                                                                                                                       

5

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|IMAGIS TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS, cont'd
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2001 AND 2000
(expressed in Canadian dollars)
(Unaudited - Prepared by Management)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                  
|                                                                                                                                                                                                                  
|                                                                                                                                                                                                                  
|                                                                                                                                                                                                                  
|Supplementary information and 
  disclosure of non-cash financing 
  and investing activities:                                                                                                                    
|                                                                                                                                                                                                                  
|                                                                                                                                                                                                                  
|                                                                                                                                                                                                                  
|                                                                                                                                                                                                                  
|                                                                                                                                                                                                                  

See accompanying notes to consolidated financial statements.

6

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

1.     Operations:

Imagis Technologies Inc. ("Imagis" or, subsequent
to the transaction described below, the "Company") was incorporated
under the Company Act (British Columbia) on March 23, 1998.  The common shares
of the Company were listed on the Vancouver Stock Exchange, now the Canadian
Venture Exchange (the "Exchange"), on September 9, 1998 as a venture
capital pool corporation ("VCP") as defined by the policies of the
exchange.

On October 6, 1998, Imagis, Imagis Cascade Technologies
("Imagis Cascade"), a private Canadian company which develops and
markets law enforcement and security software products, and the Imagis Cascade
shareholders entered into a Confidentiality and Standstill Agreement pursuant to
which Imagis was able to complete due diligence with respect to the business and
affairs of Imagis Cascade.  On October 16, 1998, Imagis gave notice to the
Imagis Cascade shareholders of its intention to acquire all of the issued and
outstanding shares of Imagis Cascade.  Effective February 23, 1999, Imagis
acquired 100% of the outstanding shares of Imagis Cascade and, consequently,
these consolidated financial statements reflect the assets, liabilities, results
of operations and cash flows of the Company and its wholly-owned subsidiary,
Imagis Cascade.  As the shares issued in this transaction resulted in the
recipients gaining voting control over Imagis, the acquisition is accounted for
as a reverse take-over in accordance with accounting principles generally
accepted in Canada.

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 September 30, 2001, the Company had a deficiency in net assets of $748,582
and had a working capital deficit of $148,900.  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 consolidated financial statements in
accordance with generally accepted accounting principles in Canada which, except
as set out in note 7, also comply, in all material respects, with accounting
principles generally accepted in the United States.  The consolidated financial
statements reflect the following significant accounting policies:

(a)     Basis of presentation:

These consolidated financial statements include the accounts
of the Company and its wholly owned subsidiary, Imagis Cascade Technologies,
Inc.  All material intercompany balances and transactions have been
eliminated.

(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% 

7

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

2.     Significant accounting policies,
continued:

(c)     Revenue recognition:

(i)     Software sales revenue:

The Company recognizes revenue consistent with Statement of
Position 97-2, "Software Revenue Recognition" issued by the
American Institute of Certified Public Accountants.   In accordance with this
Statement, revenue is recognized when 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.  When software is sold under contractual arrangements that include post
sales customer support, the elements are separated to the extent of the
existence of vendor specific objective evidence.  If such evidence does not
exist, all contracted revenue is recognized as support and services revenue.
The Company also provides for estimated return and warranty costs, which to
date, have been nominal, on recognition of revenue.

(ii)     Support and services
revenue:

Contract support and services revenue is deferred and is
amortized to revenue over the period that the support and services are
provided.

(d)     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.

(e)     Foreign currency:

Monetary items denominated in foreign currencies are
translated to 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.

(f)     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 or substantively 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 enactment or substantive enactment.  To the
extent that it is not considered to be more likely than not that a deferred tax
asset will be realized, a valuation allowance is provided.

(g)     Stock compensation:

The Company has a stock option plan.  No compensation expense
is recognized when stock options are issued.  Any consideration paid on exercise
of stock options is credited to share capital.

(h)     Loss per share:

Loss per share is calculated using the weighted average
number of shares outstanding during the reporting period.  This average includes
outstanding common shares issued in a reporting period from their date of
issuance.  Fully diluted per share amounts are not presented as the effect of
outstanding options and warrants is anti-dilutive.

8

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

2.     Significant accounting
policies, continued:

(i)     Unaudited interim financial
information:

The information reported herein as at September 30, 2001 and
for the three and nine month periods ended September 30, 2001 and 2000 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
consolidated financial statements are prepared using accounting policies
consistent with and should be read in conjunction with the Company's
consolidated financial statements as at and for the year ended December 31, 2000
which are included in the Company's 2000 Annual Report on Form 10-KSB.  Certain
comparative figures have been reclassified to conform with presentation adopted
in the current reporting period.  Results for the interim periods ended
September 30, 2001 are not necessarily indicative of what the results will be
for the complete 2001 fiscal year.

3.     Payable to related parties:

Short-term

|                     |   | September 30, 2001 |  |   | December 31, 2000 | 
|-------------------- | - | ------------------ |  | - | ----------------- | 
|                     |   |                    |  |   |                   | 
|Valor Invest Limited | $ | 51,022             |  | $ | --                | 

The amount owing to Valor Invest Limited bears
interest at 8% per annum and is repayable on December 31, 2001.

Long-term

|                                        |   | September 30, 2001 |  |   | December 31, 2000 | 
|--------------------------------------- | - | ------------------ |  | - | ----------------- | 
|                                        |   |                    |  |   |                   | 
|International Portfolio Management
Inc. | $ | 205,141            |  | $ | 578,222           | 
|Pacific Cascade Consultants Ltd.        |   | 444,094            |  |   | 494,095           | 
|                                        | $ | 649,235            |  | $ | 1,072,317         | 

The amounts owing to International Portfolio
Management Inc. and Pacific Cascade Consultants Ltd. are non-interest bearing,
unsecured and have no specific terms of repayment.

4.     Share capital:

(a)     Authorized:

100,000,000 common shares without par value

9

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

4.     Share capital,
continued:

(b)     Issued:

|                                          | Number
of shares                                                         |           | Amount    |          
|----------------------------------------- | ------------------------------------------------------------------------ | --------- | --------- | ---------
|                                          |                                                                          |           |           |          
|Balance, December 31, 1999                | 8,958,214                                                                |           | 3,223,995 |          
|Issued during the year for cash:          |                                                                          |           |           |          
|                                          | On private placement                                                     | 875,000   |           | 700,000  
|                                          | On debt conversion, including value assigned to
warrants on 
   issuance | 930,000   |           | 730,200  
|                                          | Options exercised                                                        | 442,170   |           | 442,170  
|                                          | Warrants exercised                                                       | 1,749,000 |           | 1,261,200
|                                          | Issued for services related to private
placement                         | 11,581    |           | 7,296    
|                                          | Share issuance costs                                                     | --        |           | (35,706  
|Balance, December 31, 2000                | 12,965,965                                                               |           | 6,329,155 |          
|Issued during the period for cash:        |                                                                          |           |           |          
|                                          | Options exercised                                                        | 28,000    |           | 28,000   
|                                          | Warrants exercised                                                       | 205,000   |           | 201,500  
|On private
placement                      | 1,501,000                                                                |           | 1,501,000 |          
|Issued as bonus shares per loan
agreement | 20,000                                                                   |           | 29,000    |          
|Share issuance costs                      | --                                                                       |           | (90,775   | )        
|Balance, September 30, 2001               | 14,719,965                                                               | $         | 7,997,880 |          

(c)     Escrowed
shares:

As at September 30, 2001, 270,670 common shares are being
held in escrow.  These shares will be released on February 23, 2002.

(d)     Warrants:

|December 
31, 
2000 | Granted   | Exercised |  | Expired   |  | September 30,
2001 | Exercise
price | Expiry date           
|------------------- | --------- | --------- |  | --------- |  | ------------------ | -------------- | ----------------------
|266,666             | --        | --        |  | --        |  | 266,666            | $1.25          | February 23, 2002     
|133,334             | --        | --        |  | --        |  | 133,334            | $1.25          | February 23, 2003     
|80,000              | --        | (80,000)  |  | --        |  | --                 | $0.80          | --                    
|200,000             | --        | --        |  | (200,000) |  | --                 | --             | --                    
|50,000              | --        | --        |  | --        |  | 50,000             | $4.00          | June 16, 2002         
|--                  | 1,601,000 | (125,000) |  | --        |  | 1,476,000          | $1.10          | Various to
May 6, 2003
|730,000             | 1,601,000 | (205,000) |  | (200,000) |  | 1,926,000          |                |                       

(e)     Options:

|December 
31, 
2000 | Granted   | Exercised |  | Expired   |  | September 
30,
2001 | Exercise
price | Expiry date                 
|------------------- | --------- | --------- |  | --------- |  | ------------------- | -------------- | ----------------------------
|230,000             | --        | --        |  | --        |  | 230,000             | $0.30          | July 6, 2003                
|646,164             | 650,000   | (28,000)  |  | (11,666)  |  | 1,256,498           | $1.00          | Various to 
August 30, 2006 
|575,000             | 480,000   | --        |  | (475,000) |  | 580,000             | $1.50 to $2.90 | Various to December 30, 2005
|1,451,164           | 1,130,000 | (28,000)  |  | (486,666) |  | 2,066,498           |                |                             

10

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

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

(a)     included in accounts payable
and accrued liabilities is $74,031 which is due to companies with a director in
common.

(b)     included in administration
expense is $182,137 for payments made to companies with a director in common for
services rendered to the Company.

6.     Subsequent events:

(a)     On October 5, 2001 11,667
options were exercised at a price of $1.00 per option for total proceeds to the
Company of $11,667.

(b)     On October 5, 2001 10,000
warrants were exercised at a price of $1.10 per warrant for total proceeds to
the Company of $11,000.

(c)     On October 12, 2001, the
Company paid $51,150 to Valor Invest Limited to retire the short-term loan that
was outstanding on September 30, 2001, including an additional $28 in interest
that was payable for the period from October 1 to October 12.

(d)     On October 15, 2001 145,500
warrants were exercised at a price of $1.10 per warrant for total proceeds to
the Company of $160,050.

(e)     On October 16, 2001 5,000
options were exercised at a price of $1.00 per option for total proceeds to the
Company of $11,667.

(f)     On October 22, 2001 8,500
options were exercised at a price of $1.00 per option for total proceeds to the
Company of $8,500.

(g)     On October 23, 2001 100,000
options were exercised at a price of $1.50 per option and 5,000 options were
exercised at a price of $1.00 per option for total proceeds to the Company of
$155,000.

(h)     On October 24, 2001 the
Company announced that it has arranged, subject to regulatory approval, a
private placement of 1,612,903 Special Warrants at a price of $2.17 per Special
Warrants for total proceeds of $3,500,000.  The Special Warrants will be
exercisable, for no additional consideration, into one common share and one half
of a non-transferable share purchase warrant.  Each whole warrant will entitle
the holder thereof to acquire on additional common share in the capital of the
Company at an exercise price of $2.55 for a period of one year from the date the
underlying shares are qualified by a prospectus.

(i)     On October 24, 2001 380,000
warrants were exercised at a price of $1.10 per warrant for total proceeds to
the Company of $418,000.

(j)     On October 29, 2001 100,000
options were exercised at a price of $1.50 per option for total proceeds to the
Company of $150,000.

(k)     On October 30, 2001 115,000
warrants were exercised at a price of $1.10 per warrant for total proceeds to
the Company of $126,500.

(l)     On October 31, 2001 the
Company announced that it has renegotiated the terms of the non-brokered portion
of the private placement that was announced on October 24, 2001.  The
non-brokered portion of the private placement has been increased to $497,650 and
will now be for units rather than Special Warrants at $2.17 per unit.  Each unit
consists of one common share and one half of a non-transferable share purchase
warrant, with each whole warrant entitling the holder thereof to acquire one
additional common share in the capital of the Company at an exercise price of
$2.55 for a period of one year from the date on which the warrants are
issued.

11

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

6.     Subsequent events,
continued:

(m)     On November 1, 2001 45,000
warrants were exercised at a price of $1.10 per warrant for total proceeds to
the Company of $49,500.

(n)     On November 6, 2001 the
Company announced that API Technologies LLC ("API") will purchase the
rights to Imagis' Casino-ID product and will pay royalty fees to Imagis
associated with API product sales that incorporate the Casino-ID software
application.

(o)     On November 8, 2001 49,500
warrants were exercised at a price of $1.10 per warrant for total proceeds to
the Company of $54,450.

(p)     On November 9, the Company
completed its private placement of Special Warrants, further to news releases
dated October 24, 2001 and October 31, 2001.  Under the brokered portion of the
private placement, Imagis has issued 1,427,682 special warrants at a price of
$2.17 per special warrant, with each special warrant being convertible into one
common share and one-half of a non-transferable share purchase warrant.  Each
whole warrant entitles the holder thereof to acquire an additional common share
for a period of one year from the date the underlying shares are qualified for
resale at a price of $2.55 per share.  Imagis paid its agents a cash commission
of the gross proceeds and has issued Agents' Compensation Options entitling them
to collectively purchase 142,768 common shares at a price of $2.17 per share for
a period of one year following the qualification date.

The non-brokered portion of the private placement was for
229,332 units at a price of $2.17 per unit, with each unit comprised of one
common share and one-half of a warrant.  Each whole warrant entitles the holders
thereof to acquire an additional common share at a price of $2.55 per share for
a term expiring on November 9, 2002.

(q)     On November 13, 2001 250,000
warrants were exercised at a price of $1.10 per warrant for total proceeds to
the Company of $275,000.

(r)     On November 13, 2001 24,667
options were exercised at a price of $1.00 per option for total proceeds to the
Company of $24,667.

12

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

These consolidated 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").  See
note 14 of the Company's 2000 Annual Report on Form 10-KSB for a qualitative
description of material differences between Canadian and U.S. GAAP.  The effect
of these accounting differences on deficit, loss and loss per share under United
States accounting principles are as follows:

|                                    |   | September 30, 
2001 |  |   | December 31, 2000 | 
|----------------------------------- | - | ------------------- |  | - | ----------------- | 
|Deficit, Canadian GAAP              | $ | (8,746,462)         |  | $ | (7,169,932)       | 
|Cumulative stock based compensation |   | (1,005,340)         |  |   | (904,501)         | 
|Beneficial conversion options       |   | (208,200)           |  |   | (208,200)         | 
|Warrants issued for services        |   | (722,000)           |  |   | (722,000)         | 
|Deficit, U.S. GAAP                  | $ | (10,682,002)        |  | $ | (9,004,633)       | 

|                                      | Three months ended
September 30, | Nine months ended
September 30,
|------------------------------------- | -------------------------------- | -------------------------------
|                                      |                                  | 2001                           
|                                      |                                  |                                
|Loss for the period, 
  Canadian GAAP | $                                | (648,756)                      
|Stock-based Compensation              |                                  | (15,504)                       
|Beneficial conversion 
  Options      |                                  | --                             
|Warrants issued for 
  Services       |                                  | --                             
|Loss for the year, U.S. 
  GAAP       |                                  | (664,260)                      
|Loss per share, U.S. 
  GAAP          |                                  | (0.04)                         

13

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

Forward Looking Statements:

Statements in this Quarterly Report on Form 10-QSB, including
those concerning Imagis Technologies Inc.'s (the "Company" or
"Imagis") expectations of results of the Company's operations in
future periods, the amount and timing of revenues and earnings in future
periods, future sales, gross profits, sales and marketing expenses, technical
services expenses, technology development expenses, administration expenses,
product introductions and cash requirements include certain forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended.  As such, the Company's actual results may vary materially
from expectations as a result of certain factors including, but not limited to,
the failure of the market for the Company's products to grow as anticipated;
product pricing or other initiatives of the Company's competitors; the
possibility that the Company's other customers defer purchasing decisions due to
economic or other conditions or will purchase products offered by the Company's
competitors; product development, product pricing or other initiatives of the
Company's competitors; variations in the level of orders which can be affected
by general economic conditions and in the markets served by the Company's
customers; international economic and political climates; difficulties or delays
in the functionality or performance of the Company's products; the Company's
timing of future product releases or improvements; the Company's failure to
respond adequately to either changes in technology or customer preferences;
changes in our pricing; the Company's ability to manage growth; risk of
nonpayment of accounts receivable; changes in budgeted costs and the factors
listed on Exhibit 99.1 to this Quarterly Report, which are hereby incorporated
by reference in this Quarterly Report.

In some cases, you can identify forward-looking statements by
the Company's use of words such as "may," "will,"
"should," "could," "expect," "plan,"
"intend," "anticipate," "believe,"
"estimate," "predict," "potential" or
"continue" or the negative or other variations of these words, or
other comparable words or phrases.

Although the Company believes the expectations reflected in
its forward-looking statements are reasonable, it cannot guarantee future
results, levels of activity, performance or achievements or other future events.
The Company is under no duty to update any of our forward-looking statements
after the date of this filing.  You should not place undue reliance on
forward-looking statements.

Unless otherwise indicated, all references herein are to
Canadian Dollars.

About Imagis

Imagis is a developer and marketer of software applications,
and of advanced biometric facial recognition software in a software development
toolkit.  These software applications provide a range of security solutions for
various industry sectors including airports, law enforcement, customs,
immigration and other government agencies.  Imagis currently has over 130
national and international installations with in excess of a thousand users of
its biometric facial recognition technology, including at Toronto's Pearson
International Airport, the world's sixteenth busiest airport and at Oakland
International Airport, which serves more than 10 million travelers per year.
Imagis markets its products through a network of business partners, located in
North America, Asia, Europe and Latin America. Imagis' Chairman is Oliver
"Buck" Revell, who served for over 30 years in the FBI, and during his
career advanced to the number two-career post of Associate Deputy Director.

About ID-2000

Imagis' ID-2000 uses more than 200 facial descriptors,
generated from its sophisticated image analysis algorithm, to capture, compare
and display an individual's face against a database quickly and efficiently.
ID-2000 allows an individual to be identified in seconds, using only an image or
photograph as the primary search criterion.  Extensive links enable the database
to be mined further to display details of aliases, associates, vehicles, as well
as images of other distinguishing features such as marks, scars and tattoos.

ID-2000 is available as an option within any of Imagis'
existing image software products, including CABS-Computerized Arrest and Booking
System, Secure-ID, and Envisage.  ID-2000 can also be embedded into existing
access control applications or other secure databases combined with encryption
protocols or other biometrics, by means of Imagis' ID-2000 SDK Toolkit.   This
multi-layered approach, allows users to enhance existing security solutions or
create new applications in response to today's global security issues.

14

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ID-2000

- Allows the user to search databases containing 1 million
records in under 5 seconds;
- Permits use of any image source - direct digital input, scanned photographs,
direct analog or digital camera input or any other source image with a minimum
of 200 pixels;
- Interfaces on a secure basis with local, regional, national and
international databases; and
- Provides an open architecture to allow ID-2000 to be easily integrated into
existing windows-based applications.

The Company believes that there is a growing interest in
biometric facial recognition products and other similar security products due to
the perceived need for increased security in certain venues worldwide, including
airports.  The Company believes that its commercially available ID-2000 product
group, including both custom applications of ID-2000 and an SDK format made
available this year are well-suited for these demanding security applications.
As part of the Company's progressing research and development, the Company has
increased its technology development staff count and continues to search for
qualified people to assist with further enhancement and increased performance
under adverse conditions, principally poor lighting, motion and non-frontal
images, and plans to introduce a significant upgrade in the fourth quarter of
this year.

There can be no assurance, however, that the Company's
products will compete successfully with alternative products and technologies or
that the market for sophisticated security products will continue to grow as
expected in the future.

Comparison of Results of Operations for the three months ended September
30, 2001 and 2000:

Revenues:

The Company's revenues for the quarter ended September 30,
2001 were $261,583, compared to $151,757 for the quarter ended September 30,
2000, which represents an increase of approximately 72%.  Sales of the Company's
software increased approximately 342% to $136,000 for the quarter ended
September 30, 2001, compared to only $30,750 for the quarter ended September 30,
2000.  The increase reflects increased sales of the Company's biometric ID-2000
product in the current year.  The Company's biometric ID-2000 was introduced in
2000 and sales were minimal in that year.  Support and services revenues were
$125,583 for the quarter ended September 30, 2001, which is slightly better when
compared to $121,007 for the quarter ended September 30, 2000.

Operating expenses:

The Company's operating expenses for the quarter ended
September 30, 2001 were $910,339, compared to $966,027 for the quarter ended
September 30, 2000, which represents an decrease of approximately 6%, primarily
due to lower sales and marketing costs.  Operating expenses include cost of
materials and services, sales and marketing, technical services, technology
development, administration, amortization and interest.

Cost of materials and services:

The Company's materials and service costs in conjunction with
the support services that it provides to customers for the quarter ended
September 30, 2001 were $42,746, compared to $47,309 for the quarter ended
September 30, 2000, which represents an decrease of approximately 10%. These
costs represent materials purchased in the quarter related to the Alameda
installation.

Sales and marketing:

The Company's sales and marketing costs for the quarter ended
September 30, 2001 were $180,021, compared to $257,936 for the quarter ended
September 30, 2000, which represents a decrease of approximately 30%. This
decrease resulted primarily from lower travel, tradeshow exhibit and marketing
material costs.   The Company expects that costs will increase somewhat in the
fourth quarter as a result of completion of a financing on November 9, 2001.

Technical services:

The Company's technical services costs for the quarter ended
September 30, 2001 were $156,920, compared to $159,805 for the quarter ended
September 30, 2000, representing a 2% reduction this quarter.  The technical
services group oversees and assists the Company's strategic partners with the
installation of Imagis' products and also provides users any technical support
they may require under annual support contracts. Technical services costs
include salaries, facilities and travel.

15

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Technology Development:

The Company's technology development costs for the quarter
ended September 30, 2001 were $294,245, compared to $223,482 for the quarter
ended September 30, 2000, which represents an increase of approximately 32%.
This increase over the prior period reflects costs associated with several
additions to staff over the prior period and higher infrastructure costs
incurred for additional space and equipment for these new staff members.
During the current year, the Company completed the conversion of its core
technology into a software development kit (SDK) format that permits a far
broader range of applications of this facial recognition software. In addition,
the group is developing greater functionality in the ID-2000 product for release
in the fourth quarter of this year.

Administration:

The Company's administration costs for the quarter ended
September 30, 2001 were $229,585, which is 10% lower than the costs of $255,327
incurred in the quarter ended September 30, 2000. Administrative costs include
staff salaries, professional fees, facility and support costs, and shareholder
and regulatory costs. The reduction is primarily the result of lower consulting
and travel costs in 2001. All other costs were essentially in line with the
prior year period.

Amortization:

The Company's amortization costs for the quarter ended
September 30, 2001 were $5,214, compared to $22,168 for the quarter ended
September 30, 2000. This decrease in amortization expense reflects a strategy,
following the acquisition of Imagis-Cascade, to lease all new equipment. The
Company's existing fixed assets are almost fully depreciated at this time.

Interest:

The Company's interest costs for the quarter ended September
30, 2001 were $1,608, compared to no such costs for the quarter ended September
30, 2000.   The interest costs are related to advances from related parties.

Net Loss for the Period:

The Company's net loss for the quarter ended September 30,
2001 was $648,756, or $0.04 per share, compared to $814,270, or $0.07 per share,
for the quarter ended September 30, 2000.

Comparison of Results of Operations for the nine-month periods ended
September 30, 2001 and 2000:

Revenues:

The Company's revenues for the nine-month period ended
September 30, 2001 were $1,359,044, compared to $605,538 for the nine-month
period ended September 30, 2000, which represents an increase of approximately
124%.  Sales of the Company's software increased approximately 236% to $985,092
for the nine-month period ended September 30, 2001, compared to $292,513 for the
nine-month period ended September 30, 2000.  As noted in the commentary for the
three-month period, the increase reflects increased sales of the Company's
biometric ID-2000 product in the current year.  ID-2000 was introduced in 2000
and sales were minimal in that year.  Support and services increased
approximately 19% to $373,952 for the nine-month period ended September 30,
2001, compared to $313,025 for the nine-month period ended September 30, 2000,
due to increased annual support revenues from the Company's growing customer
base.

Operating expenses:

The Company's operating expenses increased for the nine-month
period ended September 30, 2001 to $2,935,574, compared to $2,874,882 for the
nine-month period ended September 30, 2000, which represents an increase of
approximately 2%, essentially attributable to significantly higher technology
development expenditures.

Cost of materials and services:

The Company's materials and service costs in conjunction with
the support services that it provides to customers for the nine-month period
ended September 30, 2001 were $112,213, compared to $101,908 for the nine-month
period ended September 30, 2000. These costs are incurred primarily for outside
services in conjunction with the support provided to users. As noted above, the
costs for the nine months in 2001 include approximately $40,000 for purchases
related to the Alameda.

16

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Sales and marketing:

The Company's sales and marketing costs for the nine-month
period ended September 30, 2001 were $635,456, compared to $868,125 for the
nine-month period ended September 30, 2000, which represents a decrease of
approximately 27%. This decrease resulted primarily from lower travel, tradeshow
exhibit and marketing material costs.   The Company completed a financing on
November 9, 2001 to raise additional working capital to significantly expand its
sales and marketing efforts and also the development of its technology.

Technical services:

The Company's technical services costs for the nine-month
period ended September 30, 2001 were $549,351, compared to $462,260 for the
nine-month period ended September 30, 2000, which represents an increase of
approximately 19%.  The higher costs during the current period reflect the
travel costs incurred in support of the installation of the Company's Alameda
County sale.

Technology Development:

The Company's technology development costs for the nine-month
period ended September 30, 2001 were $823,767, compared to $607,636 for the
nine-month period ended September 30, 2000, which represents an increase of
approximately 36%. This increase in the current year reflects costs for several
additions to staff and higher infrastructure costs incurred for additional space
and equipment.

Administration:

The Company's administration costs for the nine-month period
ended September 30, 2001 were $758,023, compared to $777,896 for the nine-month
period ended September 30, 2000. Costs for travel were significantly higher in
2001, however, the increase was offset by lower consulting costs and
professional fees.  All other costs were essentially in line with the prior year
period.

Amortization:

The Company's amortization costs for the nine-month period
ended September 30, 2001 were $13,524, compared to $57,057 for the nine-month
period ended September 30, 2000. This decrease reflects the Company's use of
operating leases for virtually all of its equipment needs. The Company's
existing fixed assets are substantially depreciated at this time.

Interest:

The Company's interest costs for the nine-month period ended
September 30, 2001 were $43,240, compared to no such costs for the nine-month
period ended September 30, 2000.

Net Loss for the Period:

The Company's net loss for the nine-month period ended
September 30, 2001 was $1,576,530, or $0.11 per share, compared to $2,269,344,
or $0.20 per share, for the nine-month period ended September 30, 2000.

Liquidity and Capital Resources:

The Company finances its operations and capital expenditures
with cash generated from operations and private placements of its securities.
The Company's cash position at the beginning of the year was $59,497.  Due to a
general weakening in financial markets in the first quarter of this fiscal year,
the completion of the Company's planned private placement was delayed. In the
interim, the Company arranged for a line of credit of up to $200,000 from
related parties and received $145,000 from this line during the first quarter.
As compensation for advancing funds by the related parties under this credit
arrangement, the Company issued 20,000 common shares at the then current market
price for a net value of $28,473.  This amount represents a non-cash cost to the
Company.

During the second quarter, the Company was successful in
completing its private placement with net proceeds to the Company of $1,300,752,
after subtracting the funds already advanced to the Company. The Company sold
1,391,000 units (the "Units") at a price per Unit of $1.00, with each
Unit consisting of one (1) common share of the Company and one (1)

17

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non-transferable share purchase warrant of the Company
exercisable at a price per share of $1.10 for a period of one (1) year from the
closing date.

In the third quarter, a small private placement was completed
for 100,000 common shares of the Company raising $110,000. In addition, cash was
received in the quarter from the exercise of 21,667 options at $1.00 and 125,000
warrants priced at $1.10 that added cash aggregating $159,167. For the nine
month period ended September 30, 2001, gross proceeds from common stock
financing totaled $1,501,000, and from the exercise of options and warrants,
$229,500.

From these funds, the Company made partial payments totaling
$423,082 on various loans from related parties. Consequently, net cash inflows
from financing activities for the nine month period ended September 30, 2001
amounted to $1,164,944.

In regard to operating activities, while the Company's
operating loss for the nine months ended September 30, 2001 was $1,576,530, its
impact on cash resources was significantly reduced by adjustments for non-cash
working capital items.  These adjustments primarily consisted of an increase in
the Company's accounts receivable of $669,541, such that the net reduction in
cash from the Company's first nine months operating loss was lowered to
$1,074,327.

The Company's financing activities exceeded its operating
loss for the nine month period ended September 30, 2001 after adjustments, as
noted above, and as a result, Imagis' cash resources rose $85,622 in such nine
month period to $145,119 as of September 30, 2001.

On November 9, 2001, the Company completed a private
placement (the "Special Warrant Private Placement") of 1,656,914
special warrants (the "Special Warrants") at a purchase price of $2.17
per Special Warrant, with each Special Warrant consisting of one (1) Common
Share and one-half (1/2) of a non-transferable share purchase warrant, that
resulted in gross proceeds to the Company of $3,595,720.40.  Of the Special
Warrants, 1,427,682 were sold through placement agents (the "Brokered
Special Warrants").  As compensation for the sale of the Brokered Special
Warrants, the placement agents received (i) a cash commission of eight percent
(8%) of the gross proceeds received by the Company from the sale of the Brokered
Special Warrants and (ii) options entitling them to purchase up to an aggregate
of 142,768 Common Shares at a price per share of $2.17 for a period of one year
following the date on which the Brokered Special Warrants become qualified for
resale under applicable Canadian securities laws.

The Company intends to use the proceeds of the Special
Warrant Private Placement to expand its sales and marketing activities, to add
additional developers to its research and development department and to
accelerate its business opportunities in the law enforcement, airport and
security markets.  The Company believes that its projected revenues and proceeds
from the Special Warrant Private Placement will be sufficient to meet its
working capital requirements in fiscal 2002.

The Company believes that future cash flows, in addition to
funds on hand, will provide sufficient funds to meet the Company's cash
requirements for at least one (1) year on a going forward basis.  The Company
currently does not have any loans or lines of credit with third parties.  The
Company has no material additional capital expenditure commitments.  The Company
may look to obtain additional equity or debt financing to fund future growth,
which may or may not be available on attractive terms, or at all, and may be
dilutive to current or future shareholders.

Comparison of Results of Operations for the three months ended June 30,
2001 and 2000:

Revenues:

The Company's revenues for the quarter ended June 30, 2001
were $743,625, compared to $258,646 for the quarter ended June 30, 2000, which
represents an increase of approximately 188%.  Sales of the Company's software
increased approximately 288% to $656,047 for the quarter ended June 30, 2001,
compared to $169,021 for the quarter ended June 30, 2000.  Support and services
were $87,578 and were virtually unchanged for the quarter ended June 30, 2001
when compared to $89,625 for the quarter ended June 30, 2001, even though 2001
revenues from support contracts actually rose by approximately $20,000 as a
result of the overall increased number of installations.  This gain, however,
was offset by lower revenues from other sources.

Operating Costs:

The Company's operating costs decreased for the quarter ended
June 30, 2001 to $1,023,511, compared to $1,087,811 for the quarter ended June
30, 2000, which represents an decrease of approximately 6%.  Operating costs
include cost of materials and services, sales and marketing, technical services,
technology development, administration, amortization and interest.

18

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Cost of materials and services:

The Company's materials and service costs in conjunction with
the support services that it provides to customers for the quarter ended June
30, 2001 were $35,619, compared to $27,574 for the quarter ended June 30, 2000,
which represents an increase of approximately 29%.

Sales and marketing:

The Company's sales and marketing costs for the quarter ended
June 30, 2001 were $195,013, compared to $386,295 for the quarter ended June 30,
2000, which represents an decrease of approximately 50%. This decrease resulted
primarily from lower travel, tradeshow exhibit and marketing material costs.

Technical services:

The Company's technical services costs for the quarter ended
June 30, 2001 were $217,413, compared to $152,507 for the quarter ended June 30,
2000, which represents an increase of approximately 43%.  The technical services
group oversees and assists the Company's strategic partners with the
installation of Imagis' products and also provides users any technical support
they may require under annual support contracts. Costs include salaries,
facilities and travel. The increase during the current period reflects the
travel costs incurred in support of the installation of the Company's Alameda
County sale.

Technology Development:

The Company's technology development costs for the quarter
ended June 30, 2001 were $255,879, compared to $208,936 for the quarter ended
June 30, 2000, which represents an increase of approximately 22%. This increase
over the prior period reflects costs associated with several additions to staff
over the prior period and higher infrastructure costs incurred for additional
space and equipment for such new staff.  During the year, the Company completed
the conversion of its core technology into a software development kit (SDK)
format that permits a far broader range of applications of this facial
recognition software.

Administration:

The Company's administration costs for the quarter ended June
30, 2001 were $306,453, compared to $299,814 for the quarter ended June 30,
2000. Administrative costs include staff salaries, professional fees, facility
and support costs, and shareholder and regulatory costs. Costs for travel were
higher in the 2001 quarter, however, the increase was offset by lower consulting
costs. All other costs were essentially in line with the prior year period.

Amortization:

The Company's amortization costs for the quarter ended June
30, 2001 were $3,534, compared to $12,685 for the quarter ended June 30, 2000.
This decrease in amortization expenses reflects a strategy, following the
acquisition of Imagis-Cascade, to lease all new equipment. The Company's
existing fixed assets are almost fully depreciated at this time.

Interest:

The Company's interest costs for the quarter ended June 30,
2001 were $9,600, compared to no such costs for the quarter ended June 30, 2000.
The interest costs are related to the debt portion of the convertible loan.

Net Loss for the Period:

The Company's net loss for the quarter ended June 30, 2001
was $279,886, or $0.02 per share, compared to $829,165, or $0.07 per share, for
the quarter ended June 30, 2000.

Comparison of Results of Operations for the six-month periods ended June
30, 2001 and 2000:

Revenues:

The Company's revenues for the six-month period ended June
30, 2001 were $1,097,461, compared to $453,781 for the six-month period ended
June 30, 2000, which represents an increase of approximately 142%.  Sales of the
Company's software increased approximately 224% to $849,092 for the six-month
period ended June 30, 2001, compared to $261,763 for the six-

19

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month period ended June 30, 2000.  Support and services
increased approximately 29% to $248,369 for the six-month period ended June 30,
2001, compared to $192,018 for the six-month period ended June 30, 2001.

Operating Costs:

The Company's operating costs increased for the six-month
period ended June 30, 2001 to $2,025,235, compared to $1,908,855 for the
six-month period ended June 30, 2000, which represents an increase of
approximately 6%.

Cost of materials and services:

The Company's materials and service costs in conjunction with
the support services that it provides to customers for the six-month period
ended June 30, 2001 were $69,467, compared to $54,599 for the six-month period
ended June 30, 2000. These costs are incurred primarily for outside services in
conjunction with the support provided to users. During the six-month period
ended June 30, 2000, costs included $35,750 for equipment purchases made on
behalf of, and resold to customers in conjunction with, installations. The
Company discontinued such purchases in 2000 and now relies on its business
partners to provide any requisite equipment required by customers.

Sales and marketing:

The Company's sales and marketing costs for the six-month
period ended June 30, 2001 were $455,435, compared to $610,189 for the six-month
period ended June 30, 2000, which represents an decrease of approximately 25%.
This decrease resulted primarily from lower travel, tradeshow exhibit and
marketing material costs.

Technical services:

The Company's technical services costs for the six-month
period ended June 30, 2001 were $392,431, compared to $302,455 for the six-month
period ended June 30, 2000, which represents an increase of approximately 30%.
The higher costs during the current period reflect the travel costs incurred in
support of the installation of the Company's Alameda County sale.

Technology Development:

The Company's technology development costs for the six-month
period ended June 30, 2001 were $529,522, compared to $384,154 for the six-month
period ended June 30, 2000, which represents an increase of approximately 38%.
This increase in the current year reflects costs for several additions to staff
and higher infrastructure costs incurred for additional space and equipment.

Administration:

The Company's administration costs for the six-month period
ended June 30, 2001 were $528,438, compared to $522,569 for the six-month period
ended June 30, 2000. Costs for travel were significantly higher in the 2001,
however, the increase was offset by lower consulting costs and professional
fees.  All other costs were essentially in line with the prior year period.

Amortization:

The Company's amortization costs for the six-month period
ended June 30, 2001 were $8,310, compared to $34,889 for the six-month period
ended June 30, 2000. This decrease reflects the Company's use of operating
leases for all its equipment needs. The Company's existing fixed assets are
almost fully depreciated at this time.

Interest:

The Company's interest costs for the six-month period ended
June 30, 2001 were $41,632, compared to no such costs for the six-month period
ended June 30, 2000.

Net Loss for the Period:

The Company's net loss for the six-month period ended June
30, 2001 was $927,774, or $0.07 per share, compared to $1,455,074, or $0.13 per
share, for the six-month period ended June 30, 2000.

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Comparison of Results of Operations for the three months ended March 31,
2001 and March 31, 2000:

Revenues:

The Company's revenues for the quarter ended March 31, 2001
were $353,836, compared to $195,135 for the quarter ended March 31, 2000, which
represents an increase of approximately 81%. Sales of the Company's software
increased approximately 108% to $193,045 for the quarter ended March 31, 2001,
compared to $92,742 for the quarter ended March 31, 2000. Support and service
revenues increased approximately 57% to $160,791 for the quarter ended March 31,
2001, compared to $102,393 for the quarter ended March 31, 2000.

Operating Costs:

The Company's operating costs increased for the quarter ended
March 31, 2001 to $1,001,724, compared to $821,044 for the quarter ended March
31, 2000, which represents an increase of approximately 22%. Operating costs
include cost of materials and services, sales and marketing, technical services,
technology development, administration, amortization and interest.

Cost of Materials and Services:

The Company's materials and service costs in conjunction with
the support services that it provides to customers for the quarter ended March
31, 2001 were $33,848, compared to $27,025 for the quarter ended March 31, 2000,
which represents an increase of approximately 25%. This increase reflects costs
associated with the higher support revenues earned to date.

Sales and Marketing:

The Company's sales and marketing costs for the quarter ended
March 31, 2001 were $260,422, compared to $223,894 for the quarter ended March
31, 2000, which represents an increase of approximately 16%. This increase is
attributable to higher salary costs reflecting additions to staff over the prior
year. Travel and trade show costs also rose slightly due to the increase in
staff over the prior year level.

Technical Services:

The Company's technology services costs for the quarter ended
March 31, 2001 were $175,018, compared to $149,948 for the quarter ended March
31, 2000, which represents an increase of 17%. This increase reflects staff
additions to the technical services group. The technical services group assists
the Company's strategic partners in the installation of its products and also
provides clients with all technical support they may require under the Company's
annual support contracts, and includes costs for salaries, facilities and
travel.

Technology Development:

The Company's technology development costs for the quarter
ended March 31, 2001 were $273,643, compared to $175,218 for the quarter ended
March 31, 2000, which represents an increase of 56%. This increase over the
prior period reflects several additions to staff that were necessary, primarily
to continue the development of ID-2000. Recently, the Company completed the
conversion of its core technology into a software development kit (SDK) format
which permits a far broader range of applications of this facial recognition
software. Staff salaries accounted for approximately 73% of the total costs of
this function with the remainder attributable to support facilities.

Administration:

The Company's administration costs for the quarter ended
March 31, 2001 were $221,985, compared to $222,755 for the quarter ended March
31, 2000. Administrative costs include staff salaries, professional fees,
facility and support costs, shareholder and regulatory costs. Costs in each
category were generally consistent with the prior year period, except for
professional fees and travel costs which were higher in 2001. These increases,
however, were more than offset by a foreign exchange gain of $34,993 realized in
the quarter.

Amortization:

The Company's amortization costs for the quarter ended March
31, 2001 were $4,776, compared to $22,204 for the quarter ended March 31, 2000.
The decline in amortization costs reflects the Company's decision, following the
acquisition of Imagis Cascade, to initiate a lease-financing program for all
purchases of new equipment and, as a consequence, the Company's existing fixed
assets are almost fully depreciated at this time.

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Interest:

The Company's interest costs for the quarter ended March 31,
2001 were $32,032, compared to no such costs for the quarter ended March 31,
2000. The interest costs are related to the debt portion of the convertible
loan.

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PART II

Item 1.     Legal Proceedings.

As of the date of this Quarterly 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.  From time to time, the
Company may be involved in litigation relating to claims arising out of its
operations in the normal course of business.

Item 2.     Changes in Securities.

a)     None

b)     None

c)     During the quarter ended
September 30, 2001, the Company sold 110,000 Units to an individual investor at
a price per unit of $1.00 pursuant to a private placement.  This private
placement had three closing dates, with 973,000 Units sold on April 26, 2001,
418,000 Units sold on May 7, 2001, and 110,000 Units sold on August 15, 2001.
The agent for this private placement was also granted a warrant to purchase up
to 100,000 common shares of the Company at a price per share of $1.10 for a
period of one (1) year.

On August 30, 2001, the Company granted 650,000 options under
its 2000 Stock Option Plan to employees and consultants of the Company that are
exercisable at a price of Cdn$1.00 and expire on August 30, 2006.

During the quarter ended September 30, 2001, 21,667
previously granted stock options were exercised at a price of $1.00 for total
proceeds to the Company of $21,667.

Also during the quarter ended September 30, 2001, 125,000
previously granted warrants were exercised at a price of $1.10 for total
proceeds to the Company of $137,500.

In connection with each of the above issuances of securities,
the Company relied on the exemption from registration provided by Rule 903(b)(1)
of Regulation S under the Securities Act.  In each instance, the securities were
issued by the Company, a "foreign issuer," as defined by Regulation S,
to persons outside the United States.

d)     None

Item 3.     Defaults Upon Senior
Securities.

None

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

None

Item 5.     Other
Information

None

23

---

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

a)     Exhibits

|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(1)   | Escrow Agreement for a Venture Capital Pool
Issuer dated July 3, 1998 among Colloquium Capital Corp., CIBC Mellon Trust
Company and Sandra Buschau, Altaf Nazerali, Shafiq Nazerali, Rory Godinho and
Ross Wilmot
|4.3(3)   | Convertible Note Subscription Agreement
dated October 1, 1999                                                                                                                                                    
|10.1(1)  | Incentive Stock Option Agreements dated
July 7, 1998 between Imagis and each of Sandra E. Buschau, Altaf Nazerali and
Ross Wilmot                                                                                
|10.2(1)  | Confidentiality and Non-Competition
Agreement dated February 23, 1999 among Imagis, the Former Imagis Shareholders
and the principals of the Former Imagis Shareholders                                          
|10.3(1)  | Revenue Assignment Agreement dated December
15, 1998 among Imagis, Pacific, Imagis Solutions (US) Incorporated and Imagis
North West Solutions Inc.                                                              
|10.4(1)  | Agency Agreement dated March 29, 1999 among
Imagis and the Agents                                                                                                                                                
|10.5(1)  | Subscription Agreement dated January 26,
1999 between Imagis and Pacific Cascade Consultants Ltd.                                                                                                                
|10.6(1)  | Subscription Agreement dated January 26,
1999 between Imagis and First Capital Invest Corp.                                                                                                                      
|10.7(1)  | Incentive Stock Option Agreements dated
February 25, 1999 and March 25, 1999 between Imagis and certain directors,
employees and service providers of Imagis or affiliates or subsidiaries
thereof               
|10.8(1)  | Consulting Services Agreement effective
February 25, 1999 between Imagis and Shafiq Nazerali-Walji                                                                                                               
|10.9(1)  | Warrant dated February 25, 1999 issued to
Iain Drummond                                                                                                                                                          
|10.10(1) | Warrant dated February 25, 1999 issued to
Armitage and Associates                                                                                                                                                
|10.11(1) | Employment Agreement dated February 23, 1999
between Imagis and Iain Drummond                                                                                                                                    
|10.12(1) | Technology Purchase Agreement dated March 6,
1998 among Imagis Technologies Ltd., Imagis Cascade Technologies Inc. and
Penelope Walker, Richard Graham and William Hawkes                                        
|10.13(1) | Technology Purchase Agreement dated March 6,
1998 among Imagis, Imagis Cascade Consultants, Inc. and Former Imagis
Shareholders                                                                                  
|10.14(1) | Share Purchase Agreement dated December 14,
1998 among Imagis, Imagis Cascade and the Former Imagis Shareholders                                                                                                 
|10.15(1) | Confidentiality and Standstill Agreement
dated October 6, 1998 among Colloquim Capital Corp., Imagis Cascade Technologies
Inc. and Former Imagis Shareholders                                                    

24

---

|10.16(2) | Loan Agreement dated October 15, 1999
between Imagis and Rexton Corporation      
|-------- | ---------------------------------------------------------------------------------
|10.17(3) | Agreement dated May 1, 2000 between Imagis
and Somerset Financial Group Inc.     
|10.18(3) | Agreement dated August 15, 2000 between
Imagis and GPC Communications            
|10.19(3) | Agreement dated August 21, 2000 between
Imagis and Fleishman-Hillard Canada Inc. 
|10.20(4) | Imagis Technologies Inc. 2000 Stock Option
Plan                                  
|10.21(4) | Agreement dated October 11, 2000 between
Imagis and Orion Scientific Systems Inc.
|10.22(5) | Imagis Technologies Inc. 1999 Stock Option
Plan                                  
|10.23(6) | Form of Share Purchase Warrant                                                   
|10.24(6) | Form of Unit Subscription Agreement                                              
|99.1     | Risk Factors                                                                     
|99.2     | Form 51-901F as required by the British
Columbia Securities Commission           

(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, 1999.
(3)     previously filed as part of Imagis' Quarterly
Report on Form 10-QSB for the period ended September 30, 2000.
(4)     Previously filed as part of Imagis' Annual
Report on Form 10-KSB for the year ended December 31, 2000.
(5)     previously filed as part of Imagis' Quarterly
Report on Form 10-QSB for the period ended March 31, 2001.
(6)     previously filed as part of Imagis' Quarterly
Report on Form 10-QSB for the period ended June 30, 2001.

b)     Reports on Form 8-K

On August 2, 2001, the Company filed a Form 8-K relating to a
press release dated July 10, 2001, in which the Company announced that, along
with its business partner, ORION Scientific Systems, the Company had been chosen
to provide an integrated imaging-based law enforcement solution to the
Huntington Beach Police Department in California.

On August 16, 2001, the Company filed a Form 8-K relating to
a press release dated July 24, 2001, in which the Company announced that, along
with its business partner, ORION Scientific Systems, the Oakland Police
Department is now operational with Imagis' CABS/ID-2000 suite of law enforcement
products and facial recognition technology.

On August 24, 2001, the Company filed a Form 8-K relating to
(i) a press release dated July 31, 2001, in which the Company announced the
signing of a Master Distributor Agreement with the biometric subsidiary of the
Hong Kong-based Cheung Kong Infrastructure Holdings (CKI) group of companies;
and (ii) a press release dated August 15, 2001, in which the Company announced
that it had completed the final closing of its private placement in the amount
of 110,000 units at $1.00 per unit for total proceeds of $110,000.

25

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act
of 1934, the Issuer has duly caused this Quarterly Report to be signed on its
behalf by the undersigned thereunto duly authorized.

Dated:  November 13, 2001

| | IMAGIS TECHNOLOGIES INC.                          
| | --------------------------------------------------
| |                                                   
| |                                                   
| | /s/ Iain Drummond                                 
| | Iain DrummondPresident and Chief Executive Officer
| |                                                   
| |                                                   
| | /s/ Ross Wilmot                                   
| | Ross WilmotChief Financial Officer                

26

---

EXHIBIT INDEX

|Exhibit No. | 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(1)      | Escrow Agreement for a Venture Capital Pool
Issuer dated July 3, 1998 among Colloquium Capital Corp., CIBC Mellon Trust
Company and Sandra Buschau, Altaf Nazerali, Shafiq Nazerali, Rory Godinho and
Ross Wilmot
|4.3(3)      | Convertible Note Subscription Agreement dated
October 1, 1999                                                                                                                                                    
|10.1(1)     | Incentive Stock Option Agreements dated July
7, 1998 between Imagis and each of Sandra E. Buschau, Altaf Nazerali and Ross
Wilmot                                                                                
|10.2(1)     | Confidentiality and Non-Competition
Agreement dated February 23, 1999 among Imagis, the Former Imagis Shareholders
and the principals of the Former Imagis Shareholders                                          
|10.3(1)     | Revenue Assignment Agreement dated December
15, 1998 among Imagis, Pacific, Imagis Solutions (US) Incorporated and Imagis
North West Solutions Inc.                                                              
|10.4(1)     | Agency Agreement dated March 29, 1999 among
Imagis and the Agents                                                                                                                                                
|10.5(1)     | Subscription Agreement dated January 26,
1999 between Imagis and Pacific Cascade Consultants Ltd.                                                                                                                
|10.6(1)     | Subscription Agreement dated January 26,
1999 between Imagis and First Capital Invest Corp.                                                                                                                      
|10.7(1)     | Incentive Stock Option Agreements dated
February 25, 1999 and March 25, 1999 between Imagis and certain directors,
employees and service providers of Imagis or affiliates or subsidiaries
thereof               
|10.8(1)     | Consulting Services Agreement effective
February 25, 1999 between Imagis and Shafiq Nazerali-Walji                                                                                                               
|10.9(1)     | Warrant dated February 25, 1999 issued to
Iain Drummond                                                                                                                                                          
|10.10(1)    | Warrant dated February 25, 1999 issued to
Armitage and Associates                                                                                                                                                
|10.11(1)    | Employment Agreement dated February 23, 1999
between Imagis and Iain Drummond                                                                                                                                    
|10.12(1)    | Technology Purchase Agreement dated March 6,
1998 among Imagis Technologies Ltd., Imagis Cascade Technologies Inc. and
Penelope Walker, Richard Graham and William Hawkes                                        
|10.13(1)    | Technology Purchase Agreement dated March 6,
1998 among Imagis, Imagis Cascade Consultants, Inc. and Former Imagis
Shareholders                                                                                  
|10.14(1)    | Share Purchase Agreement dated December 14,
1998 among Imagis, Imagis Cascade and the Former Imagis Shareholders                                                                                                 
|10.15(1)    | Confidentiality and Standstill Agreement
dated October 6, 1998 among Colloquim Capital Corp., Imagis Cascade Technologies
Inc. and Former Imagis Shareholders                                                    

27

---

|10.16(2) | Loan Agreement dated October 15, 1999
between Imagis and Rexton Corporation      
|-------- | ---------------------------------------------------------------------------------
|10.17(3) | Agreement dated May 1, 2000 between Imagis
and Somerset Financial Group Inc.     
|10.18(3) | Agreement dated August 15, 2000 between
Imagis and GPC Communications            
|10.19(3) | Agreement dated August 21, 2000 between
Imagis and Fleishman-Hillard Canada Inc. 
|10.20(4) | Imagis Technologies Inc. 2000 Stock Option
Plan                                  
|10.21(4) | Agreement dated October 11, 2000 between
Imagis and Orion Scientific Systems Inc.
|10.22(5) | Imagis Technologies Inc. 1999 Stock Option
Plan                                  
|10.23(6) | Form of Share Purchase Warrant                                                   
|10.24(6) | Form of Unit Subscription Agreement                                              
|99.1     | Risk Factors                                                                     
|99.2     | Form 51-901F as required by the British
Columbia Securities Commission           

(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, 1999.
(3)     Previously filed as part of Imagis' Quarterly
Report on Form 10-QSB for the period ended September 30, 2000.
(4)     Previously filed as part of the Imagis' Annual
Report on Form 10-KSB for the year ended December 31, 2000.
(5)     previously filed as part of Imagis' Quarterly
Report on Form 10-QSB for the period ended March 31, 2001.
(6)     Previously filed as part of Imagis' Quarterly
Report on Form 10-QSB for the period ended June 30, 2001.

28