---

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-QSB

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(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2002

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

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IMAGIS TECHNOLOGIES INC.(Exact name of small business as specified in its charter)

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British Columbia, Canada(State or other jurisdiction of
incorporation or organization)

Not Applicable(I.R.S. Employer
Identification No.)


1300  1075 West Georgia Street
Vancouver, British Columbia
V6E 3C9(Address of principal executive offices)

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

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As of August 13, 2002, 19,279,370
Common Shares were issued and outstanding.

Traditional Small
Business Disclosure Format (Check one):    Yes   ̈  No  x



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IMAGIS TECHNOLOGIES INC.
FORM 10-QSB
For the quarterly period ended June 30, 2002

|                             |  |                                                                                                                   |  | Page No.
|---------------------------- |  | ----------------------------------------------------------------------------------------------------------------- |  | --------
|PART IFINANCIAL INFORMATION |  |                                                                                                                  
|Item 1.                      |  | Financial Statements                                                                                              |  |         
|                             |  | Balance Sheets as of June, 2002 (unaudited) and December 31, 2001                                                 |  | 1       
|                             |  | Statements of Operations and Deficit (unaudited) for the three and six
month periods ended June 30, 2002 and 2001 |  | 2       
|                             |  | Statements of Cash Flows (unaudited) for the three and six month
period ended June 30, 2002 and 2001              |  | 3       
|                             |  | Notes to Financial Statements                                                                                     |  | 4       
|Item 2.                      |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                             |  | 11      
|PART IIOTHER INFORMATION    |  |                                                                                                                  
|Item 1.                      |  | Legal Proceedings                                                                                                 |  | 22      
|Item 2.                      |  | Changes in Securities and Use of Proceeds                                                                         |  | 23      
|Item 3.                      |  | Defaults Upon Senior Securities                                                                                   |  | 24      
|Item 4.                      |  | Submission of Matters to a Vote of Security Holders                                                               |  | 24      
|Item 5.                      |  | Other Information                                                                                                 |  | 24      
|Item 6.                      |  | Exhibits and Reports On Form 8-K                                                                                  |  | 24      
|Signatures                   |  | 27                                                                                                               
|Exhibit Index                |  | 28                                                                                                               

ii

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PART I  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

The following unaudited financial statements for the three and six month periods ended
June 30, 2002 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.
BALANCE SHEETS
AS AT JUNE 30, 2002 AND DECEMBER 31, 2001
(expressed in Canadian dollars)
|-----------------------------------------------------------------------------------------------------------------
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Current assets:                                                                                                  
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|LIABILITIES AND SHAREHOLDERS DEFICIENCY                                                                         
|                                                                                                                 
|Current liabilities:                                                                                             
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Shareholders' equity (deficiency):                                                                               
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 



See accompanying notes to financial statements.

1

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|IMAGIS TECHNOLOGIES INC.
STATEMENTS OF OPERATIONS AND DEFICIT
FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2001
(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
financial statements.

2

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|IMAGIS TECHNOLOGIES INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2001
(expressed in Canadian dollars)
(Unaudited  Prepared by Management)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|Cash provided by (used for):                                                                                                                                                           
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
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|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|Cash flows from investing activities:                                                                                                                                                  
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|Cash flows from financing activities:                                                                                                                                                  
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|Increase (decrease) in cash for the period                                                                                                                                             
|Cash and cash equivalents, beginning of
period                                                                                                                                         
|Cash and cash equivalents, end of period                                                                                                                                               
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|Supplementary information and disclosure of non-cash financing
and investing activities:                                                                                               
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       
|                                                                                                                                                                                       

See accompanying notes to
financial statements

3

---

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

## 1.  Operations:

Imagis Technologies Inc.
(the Company) was incorporated under the Company Act (British
Columbia) on March 23, 1998. The Company operates in a single segment, being the
development and sale of software applications and advanced biometric facial
recognition software solutions. The Companys assets are based in Canada.
In the six month period ended June 30, 2002, three customers represented
approximately 18%, 24%, and 40% of total revenues (December 31, 2001  two
customers represented approximately 40% and 20% of total revenues).

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. For the six-month period ended June 30, 2002, the
Company has incurred a loss from operations of $2,797,374 and a deficiency in
operating cash flow of $2,646,330. In addition, the Company has incurred
significant operating losses and net utilization of cash in operations in all
prior periods. Accordingly, the Company will require continued financial support
from its shareholders and creditors until it is able to generate sufficient cash
flow from operations on a sustained basis. Failure to obtain ongoing support of
its shareholders and creditors may make the going concern basis of accounting
inappropriate, in which case the Companys assets and liabilities would
need to be recognized at their liquidation values. These financial statements do
not include any adjustment due to this going concern uncertainty.

## 2.  Significant
accounting policies:

The Company prepares its
financial statements in accordance with generally accepted accounting principles
in Canada and, except as set out in Note 7, also comply, in all material
respects, with accounting principles generally accepted in the United States.
The financial statements reflect the following significant accounting policies:

|(a) | Cash equivalents:
|--- | -----------------

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

|(b) | Equipment:
|--- | ----------

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

| | Asset | Rate
| | ----- | ----

| | Software | 100%
| | -------- | ----

| | Computer hardware | 30%
| | ----------------- | ---

| | Furniture and fixtures | 20%
| | ---------------------- | ---

4

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# IMAGIS TECHNOLOGIES INC.
NOTES TO 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. In accordance with this
Statement, revenue is recognized, except as noted below, when all of the
following criteria are met; persuasive evidence of a contractual arrangement
exists, title has passed, delivery and customer acceptance has occurred, the
sales price is fixed or determinable and collection is reasonably assured.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | When
a software product requires significant production, modification or
customization, the Company generally accounts for the arrangement using the
percentage-of-completion method of contract accounting. Progress to completion
is measured by the proportion that activities completed are to the activities
required under each arrangement. When the current estimate on a contract
indicates a loss, a provision for the entire loss on the contract is made.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

| | (ii) | Support and services revenue:
| | ---- | -----------------------------

| | Contract
support and services revenue is deferred and is amortized to revenue ratably
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
assets and liabilities denominated in foreign currencies are translated into
Canadian dollars at exchange rates in effect at the balance sheet date. Revenues
and expenses are translated using rates in effect at the time of the
transactions. Foreign exchange gains and losses are included in income.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(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 tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on future tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the date of substantive enactment. To the
extent that it is not considered to be more likely than not that a deferred tax
asset will be realized, a valuation allowance is provided.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5

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

## 2.  Significant accounting policies, continued:

|(g) | Stock-based compensation:
|--- | -------------------------

| | Effective
January 1, 2002, the Company adopted the new recommendations of the Canadian
Institute of Chartered Accountants with respect to the accounting for
stock-based compensation and other stock-based payments. The new recommendations
require equity instruments awarded to employees and the cost of the service
received as consideration to be measured and recognized based on the fair value
of the equity instruments issued. Compensation expense is recorded over the
period of related employee service, usually the vesting period of the equity
instrument awarded. Alternatively, the new recommendations permit the
measurement of compensation expense for stock option grants to employees and
directors that are not direct awards of stock, stock appreciation rights or
otherwise call for settlement in cash or other assets by an alternative method
and to provide pro forma disclosure of the financial results using the fair
value method. The Company has elected to follow an alternative method and
continue with the former accounting policy of recognizing no compensation
expense when stock options are granted to employees because the Company grants
stock options with an exercise price based on the market price at the date of
the grant. The Company recognizes compensation expense for consultants based on
the fair value of the equity instruments issued.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|                                  | Three months
ended
June 30, 2002 | Six months
ended
June 30, 2002
|--------------------------------- | -------------------------------- | ------------------------------
|                                  |                                  |                               
|Net loss   as reported           | $(1,657,872)                     | $(2,797,374)                  
|Net loss   pro forma             | (2,064,992)                      | (3,308,849)                   
|                                  |                                  |                               
|Net loss per share   as reported | $(0.09)                          | $(0.16)                       
|Net loss per share  pro forma    | (0.12)                           | (0.19)                        

| | The
pro forma amounts exclude the effect of stock options granted prior to January
1, 2002. The fair value of each stock option grant was estimated on the date of
grant using the Black-Scholes option pricing model. For options granted during
the quarter ended June 30, 2002 the Black-Scholes model incorporated the
following assumptions: risk-free interest rate of 5%, dividend yield of 0%,
expected life of 5 years, and volatility of 141%.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
weighted average fair value of employee stock options granted during the three
months ended June 30, 2002 was $3.04 per share.
| | ----------------------------------------------------------------------------------------------------------------------------------

|(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. Diluted per share
amounts are calculated by the treasury stock method whereby the assumed proceeds
of dilutive exercisable instruments are applied to repurchase common shares at
the average market price for the period. The resulting net issuance is included
in the weighted average number for purposes of the diluted per share
calculation.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6

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# IMAGIS TECHNOLOGIES INC.
NOTES TO 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 June 30, 2002 and for the three and six month
periods ended June 30, 2002 and 2001 is unaudited. However, such financial
information reflects all adjustments (consisting solely of normal recurring
adjustments) necessary for a fair presentation of the results for the periods
presented. The unaudited interim financial statements are prepared using
accounting policies consistent with and should be read in conjunction with the
Companys financial statements as at and for the year ended December 31,
2001 which are included in the Companys 2001 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
June 30, 2002 are not necessarily indicative of what the results will be for the
complete 2002 fiscal year.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

## 3.  Share
capital:

|(a) | Authorized:
|--- | -----------

| | 100,000,000 common shares without par value
| | -------------------------------------------

|(b) | Issued:
|--- | -------

|                                                 | Number
of shares     |           | Amount     |          
|------------------------------------------------ | -------------------- | --------- | ---------- | ---------
|                                                 |                      |           |            |          
|Balance, December 31, 2000                       | 12,965,965           |           | 6,329,155  |          
|Issued during the period for cash:               |                      |           |            |          
|                                                 | On private placement | 1,730,332 |            | 1,998,650
|                                                 | Options exercised    | 295,834   |            | 395,834  
|                                                 | Warrants exercised   | 1,407,000 |            | 1,523,700
|Issued for services related to private placement | 20,000               |           | 29,000     |          
|Share issuance costs                             | --                   |           | (134,298)  |          
|Balance, December 31, 2001                       | 16,419,131           | $         | 10,142,041 |          
|                                                 |                      |           |            |          
|Issued during the period for cash:               |                      |           |            |          
|                                                 | Options exercised    | 167,670   |            | 214,255  
|                                                 | Warrants exercised   | 606,757   |            | 1,101,618
|Issued on conversion of special warrants         | 851,645              |           | 1,848,070  |          
|Issued as bonus for consulting agreement         | 37,500               |           | 78,750     |          
|Share issuance costs                             | --                   |           | (1,059)    |          
|Balance, June 30, 2002                           | 18,082,703           | $         | 13,383,675 |          

|(c) | Escrowed shares:
|--- | ----------------

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

7

---

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

## 3.  Share capital, continued:

|(d) | Special warrants:
|--- | -----------------

| | (i) | On November 9, 2001, 1,427,682 Special Warrants were sold at a price of $2.17
per Special Warrant, each of which entitles the holder, upon exercise and
without payment of further consideration, to acquire one common share of the
Company and one-half of one common share purchase warrant (the
Warrants) of the Company. Each whole Warrant will entitle the holder
to purchase one common share of the Company at a price of $2.55 for a period of
one year from the date the underlying shares are qualified for resale.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | (ii) | Earnings per share  calculations do not include the underlying  common shares to
outstanding Special Warrants.
| | ---- | --------------------------------------------------------------------------------------------------------------

|(e) | Warrants:
|--- | ---------

|December 31,
2001 | Granted | Exercised |  | Expired  |  | June 30,
2002 | Exercise
price | Expiry date           
|----------------- | ------- | --------- |  | -------- |  | ------------- | -------------- | ----------------------
|                 
|266,666           | --      | --        |  | --       |  | 266,666       | $1.25          | August 31, 2002       
|133,334           | --      | --        |  | --       |  | 133,334       | $1.25          | February 23, 2003     
|50,000            | --      | --        |  | (50,000) |  | --            | $4.00          | June 16, 2002         
|274,000           | --      | (274,000) |  | --       |  | --            | $1.10          | Various to
May 6, 2003
|114,666           | --      | --        |  | --       |  | 114,666       | $2.55          | November 9, 2002      
|713,840           | --      | (205,622) |  | --       |  | 508,218       | $2.55          | November 9, 2002      
|--                | 142,768 | (127,135) |  | --       |  | 15,633        | $2.17          | November 9, 2002      
|--                | 50,000  | --        |  | --       |  | 50,000        | $2.20          | Jan 18, 2004          
|                 
|1,552,506         | 192,768 | (606,757) |  | (50,000) |  | 1,088,517     |                |                       
|                 

| | During
the period ended June 30, 2002, the expiry date of warrants exercisable at $1.25
each was extended from June 24, 2002 to August 31, 2002.
| | ------------------------------------------------------------------------------------------------------------------------------------------------

|(f) | Options:
|--- | --------

|December 31,
2001 | Granted | Exercised |  | Expired |  | June 30,
2002 | Exercise
price | Expiry date                      
|----------------- | ------- | --------- |  | ------- |  | ------------- | -------------- | ---------------------------------
|                 
|230,000           | --      | --        |  | --      |  | 230,000       | $0.30          | July 6, 2003                     
|1,183,664         | --      | (140,665) |  | --      |  | 1,042,999     | $1.00          | Various to
August 30, 2006       
|540,000           | --      | (5,500)   |  | --      |  | 534,500       | $1.50 to $2.90 | Various to December 30, 2005     
|--                | 440,000 | (21,505)  |  | --      |  | 418,495       | $2.24 to
$3.40 | February 8, 2004 to
March 4, 2007
|--                | 200,000 | --        |  | --      |  | 200,000       | $3.40 to
$3.50 | May 15, 2007                     
|                 
|1,953,664         | 640,000 | (167,670) |  | --      |  | 2,425,994     |                |                                  
|                 

8

---

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

## 4.  Related party transactions not disclosed elsewhere are as follows:

|(a) | included in accounts payable and accrued liabilities is $73,182 which is due to
directors, officers and companies with a director and/or officer in common.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

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

## 5.  Commitments:

| | The
Company has operating leases for certain of its office premises that covers the
period through to June 2005. The minimum annual lease payments for the fiscal
years ended December 31 are as follows:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2002 | $ | 25,000
|---- | - | ------
|2003 |   | 50,000
|2004 |   | 50,000
|2005 |   | 25,000

## 6.  
Subsequent events:

|(a) | On July 8, 2002, the Company received $1,750,000 US from OSI Systems Inc. for
1,166,667 shares at a price of $1.50 US ($2.28 CDN). OSI Systems also received
291,667 share purchase warrants (expiring July 7, 2004) entitling them to
purchase 291,677 common shares of the Company for $1.50 US.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | On July 12, 2002,  30,000 common stock purchase options were exercised for total
proceeds to the Company of $30,000.
|--- | --------------------------------------------------------------------------------------------------------------------

## 7.  United
States generally accepted accounting principles:

| | These
financial statements have been prepared in accordance with generally accepted
accounting principles in Canada (Canadian GAAP) which differ in
certain respects with accounting principles generally accepted in the United
States (U.S. GAAP). See note 12 of the Companys 2001 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:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                    |   | June 30,
2002 |  |   | December 31,
2001 | 
|----------------------------------- | - | ------------- |  | - | ----------------- | 
|Deficit, Canadian GAAP              | $ | (12,988,010)  |  | $ | (10,190,636)      | 
|Cumulative stock based compensation |   | (1,443,245)   |  |   | (1,054,612)       | 
|Beneficial conversion options       |   | (208,200)     |  |   | (208,200)         | 
|Warrants issued for services        |   | (722,000)     |  |   | (722,000)         | 
|Deficit, U.S. GAAP                  | $ | (15,361,455)  |  | $ | (12,175,448)      | 
|                                    |   |               |  |   |                   | 

9

---

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

## 8.  United States generally accepted accounting principles, continued:

|                                   | Three months ended
June 30, | Six months ended
June 30,
|---------------------------------- | --------------------------- | -------------------------
|                                   |                             | 2002                     
|                                   |                             |                          
|Loss for the period,
Canadian GAAP | $                           | (1,657,872)              
|Stock-based
compensation           |                             | 95,391                   
|Loss for the period, U.S.
GAAP     |                             | (1,562,481)              
|Loss per share, U.S.
GAAP          | $                           | (0.09)                   

## 9.  Recent
accounting pronouncements:

| | During 2001, the Financial Accounting Standards Board issued four new
pronouncements:
| | -------------------------------------------------------------------------------------

| | Statement
141, Business Combinations, requires the purchase method of accounting
for all business combinations and applies to all business combinations initiated
after June 30, 2001 and to all business combinations accounted for by the
purchase method that are completed after June 30, 2001.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Statement
142, Goodwill and Other Intangible Assets, requires that goodwill as well
as other indefinite life intangible assets be tested annually for impairment and
is effective for fiscal years beginning after December 15, 2001.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Statement
143, Accounting for Asset Retirement Obligations, requires entities to
record the fair value of a liability for an asset retirement obligation in the
period in which it is incurred and a corresponding increase in the carrying
amount of the related long-lived asset and is effective for fiscal years
beginning after June 15, 2001.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Statement
144, Accounting for the Impairment or Disposal of Long-Lived Assets,
provides that long-lived assets to be disposed of by sale be measured at the
lower of carrying amount or fair value less cost to sell, whether reported in
continuing operations or in discontinued operations to include all components of
an entity with operations that can be distinguished from the rest of the entity
and that will be eliminated from the ongoing operations of the entity in a
disposal transaction. Statement 144 is effective for fiscal years beginning
after December 15, 2001.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Currently,
the Company does not believe that the impact of these accounting pronouncements
would be material to the financial results.
| | --------------------------------------------------------------------------------------------------------------------------------------

10

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

## Forward-Looking
Statements:

Statements in this Quarterly report about the Company's future results, levels of
activity, performance, goals or achievements or other events constitute forward-
looking statements.  These statements involve known or unknown risks, uncertainties
and other factors that may cause actual results or events to differ materially from
those anticipated in such forwardlooking statements.  These factors include, among
others, those described in connection with the forward-looking statements, and
the factors described under the heading "Risk Factors" in Exhibit 99.1 to this
Quarterly Report, which is hereby incorporated by reference.

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. Moreover, neither the Company nor anyone
else assumes responsibility for the accuracy or completeness of such forward-
looking statements.  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 Technologies Inc. is
a developer and marketer of software applications and advanced biometric facial
recognition software solutions both as products and as a Software Development
Kit. These applications provide a range of security solutions in various
industry sectors including airports, law enforcement, customs, immigration and
other government agencies, and gaming. The Company currently has well over a
hundred installations, including Torontos Pearson International Airport,
the worlds 16th busiest airport.
The Company markets its products through a network of business partners located
in North America, Asia, Europe and Latin America, and has installations in the
U.S., Canada, Mexico and the UK.

ID-2000 - Image Detection and Biometric Facial Recognition

This software technology has
enabled the Company to enter the biometric market.

ID-2000 is a facial
recognition software system designed for the law enforcement, airport security,
gaming and security industries that captures an offenders image, typically
via a video camera, and then creates a biometric code that can be compared to
other encoded images in a database. ID-2000 allows an individual in a database
to be identified in seconds, using only an image or photograph as the search
criterion. Matching records will be displayed as a list, together with their
associated thumbnail images. From this list, any record can be selected and full
details, together with a full size image, will be displayed. Extensive linkages
enable the database to be mined to display details, such as aliases, known
associates and vehicles, as well as images of other distinguishing features,
such as marks, scars and tattoos. Where appropriate, details such as previous
crimes or gang memberships can also be displayed. ID-2000 also works with
Casino-ID and Envisage for use in the gaming and security sectors.

ID-2000 is also available
as a Software Development Kit, or SDK, which is designed to enable developers at
the Companys business partners to integrate its facial recognition
capabilities into their own applications.

13

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In addition, the Company
has adapted its facial recognition software to include the identification of
non-facial objects in background imagery and personally identifiable markings,
such as tattoos. The biometric solution purchased by the UKs National
Crime Squad will be used to crack down on international online child
pornography.

Secure-ID
(Airport Security)

Secure-ID is designed to
use ID-2000 to scan the faces of travellers entering or leaving an airport,
isolate individual faces, encode them and match them against a database of
serious criminals or known terrorists. A variation on the system is already in
use at Torontos Pearson International Airport, where the Royal Canadian
Mounted Police have successfully used it to identify wanted individuals trying
to enter Canada.

Secure-ID uses standard
surveillance cameras and requires no manual intervention. While it is possible
to identify individuals in a crowd, cameras should be positioned where they can
obtain clear images, such as the check-in desk, metal detector, gate and so on.
Where there is a possible match, a monitor in the security office will display
the image of the passenger, together with the image of the possible match in the
database. The security officer at the screen will visually compare the two
images and, if they match, take appropriate action.

CABS  
Computerized Arrest & Booking System

CABS is an integrated
information and imaging system developed for the Royal Canadian Mounted Police
(RCMP) and other law enforcement agencies. CABS currently has
separate modules for offenders, non-offenders, staff and evidence. The offender
module automates booking activities and reports, the production of mugshots and
the generation of line-ups. Pictures of criminal suspects, as well as their
marks, scars, tattoos and fingerprints, are all captured in the offender module
of CABS. The non-offender module provides an electronic database of persons,
such as teachers and day-care providers, who are required to be registered with
the police. The staff module provides for the creation and management of staff
identification. The evidence module provides for electronic management of
photographs of evidence obtained in connection with a criminal arrest.

The CABS system is designed
to collect the same information that would be recorded manually during a
traditional booking situation and to store all of the information and photo
images that are required in connection with arresting and prisoner reports.
Compared to manual bookings, CABS offers the following advantages:

| | captures more
information  than manual booking  systems and allows the  information to be retrieved
quickly from multiple locations;                                
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | allows offender information
to be used for multiple inquiries and report generating purposes;                                                                       
| | generates automated line-ups
based on user-specified criteria;                                                                                                      
| | provides a variety of
required reports and other documents with the offenders photograph;                                                                          
| | allows the collection and
retrieval of photographs of the offender, including identifying physical marks such as
tattoos, scars and other markings;                 
| | creates a database  of offender  information
for access in the case of  subsequent  arrests or for  generation  of suspect
     lists;                              
| | can be integrated with
livescan electronic fingerprinting systems and with other computer software
systems; and                                                     
| | integrates with key dispatch
systems, digital composite drawing programs and digital fingerprint systems to provide
a complete police information management system.

CABS advanced data sharing
capabilities allow different authorities to access decentralised information.
The Company has recently implemented its first regional data sharing system.
This allows RCMP detachments to share live information entered by their
individual detachments. The major advantage of this data sharing system is that
it allows one detachment to search a larger database containing offender
information when booking a suspect, increasing the probability that the booking
officer will discover prior arrests for the same individual. The RCMP does not
retain any ownership interest or residual rights over the CABS system.

## Overview

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

The Companys revenue
is dependent, in large part, on significant contracts from a limited number of
customers. As a result, any substantial delay in the Companys completion
of a contract, the inability of the Company to obtain new contracts or the

14

---

cancellation of an existing
contract by a customer could have a material adverse effect on the
Companys results of operations. The loss of certain contracts could have a
material adverse effect on the Companys business, financial condition,
operating results and cash flows. As a result of these and other factors, the
Companys results of operations have fluctuated in the past and may
continue to fluctuate from period-to-period.

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

Comparison of Results of
Operations for the three months ended June 30, 2002 and June 30, 2001:

## Revenues

Imagis total revenues increased
33% to $991,740 for the second quarter ended June 30, 2002 over the
comparable prior year second quarter level of $745,204. The higher revenues were
primarily attributable to higher software sales revenues, while support and
services revenues declined in the quarter from the prior year amount.

Sales of the Companys
software products rose 41% to $922,622 in the second quarter of this
year as compared to $656,047 for the second quarter in 2001. The increase in
software sales revenues this year primarily reflects the revenue generated
from the licensing contract with Zixsys Inc. ("Zixsys") announced in May of this year.

Support and services
revenues for the second quarter of 2002 were $51,821 and were 41% lower than
those in the comparable quarter in 2001 of $87,578. The lower 2002 level
resulted from reduced revenues derived from contract services this year, and is
solely attributable to the completion of a single special contract the Company
had taken on in 2000 directly rather than through a partner and which concluded
mid-2001. As stated last year, the Company is not seeking such contract work but
intends to remain focused on both development and more profitable sales of its
software products.

Other revenues were $17,297
for the second quarter of 2002, whereas comparable revenues of only $1,579 were
earned in the second quarter of the prior year. These revenues represent
primarily interest earned on short-term investments.

## Operating
Expenses

Operating expenses totaled
$2,649,612 for the second quarter in 2002, which is 158% higher than the
2001 second quarter operating expenses of $1,025,090. The higher costs over the
prior year second quarter resulted from increases in permanent and contracted
staff, greater travel in sales and marketing and administration, and exceptional
corporate costs included in the administrative category. Operating costs include
cost of materials and services, sales and marketing, technical services,
technology development, administration, interest and amortization.

## Cost of
Materials and Services

The costs of materials and
services are incurred in conjunction with the support services that the Company
provides to customers. These costs amounted to $143,172 in the second quarter of
2002, which is significantly higher than the level in the second quarter of 2001
of $35,619. The higher costs reflect a one-time purchase amounting to
approximately $71,700 of a component software package required for the
installation at Alameda, and a withholding tax charge of $49,000 applied to the
Zixsys revenues.

## Sales and
Marketing

Sales and marketing
expenses for the second quarter of 2002 were $836,177, and were 329% higher
than those in the comparable period in 2001 of $195,013. The increase is
attributable to higher costs incurred for new sales representatives in the US,
Europe and the Far East, all engaged on a contract basis in the past few months.
There were no contracted sales representatives prior to this time, and hence no
comparable 2001 contract costs. In addition, travel and trade show costs for
both staff and these representatives rose approximately 280% due to the
increase in the number traveling and overall activity this year over that in the
prior year when funds were limited. The Company may increase its sales team
further in the year through additions to its contract sales group should the
need arise but no further additions are currently contemplated. Consequently, the
Company expects that quarterly sales and marketing expenses will continue at
approximately the current level in future quarters.

15

---

## Technical
Services

Costs for the technical
services group were $209,822 in the second quarter of this year, which is 3%
lower than the comparable 2001 second quarter costs of $217,413. The
costs in both years reflect primarily the travel costs in support of the Alameda
installation, necessitated by the technical aspects of the application. This
installation is now completed and in the 30-day acceptance period. The technical
services group generally assists the Companys strategic partners in their
installation of Imagis products and also provides clients any technical
support they may require under annual support contracts, and includes primarily
costs for salaries, facilities and travel. As the Alameda project is essentially
complete at this time, costs for future quarters are expected to trend lower
than the second quarter level.

## Technology
Development

The technology development
expenses for the second quarter of 2002 were $413,011, which is 61%
higher than the 2001 comparable costs of $255,879. The increase over the prior
period reflects a number of additions to staff and higher travel costs incurred
this year. The Company has been adding to its development staff throughout 2001
and continues to increase its development group capability. Along with its
regular project development assignments, the group is providing special support
and enhancements to the UK National Crime Squad application. Technology development
expenses are expected to remain at this approximate level throughout the
remainder of the year.

## Administration

Administrative costs for
the second quarter of 2002 were $1,014,145, which is 229% higher than
for the comparable quarter in 2001 of $308,032. Administrative costs include
staff salaries and related benefits and travel, consulting and professional fees, facility and
support costs, shareholder, regulatory and investor relations costs and 2002
special financial advisory costs incurred related to the Companys
corporate strategies, which includes the new strategic partnership achieved with OSI
Systems, Inc. and a special corporate privatization proposal received in the
first quarter.

While staff costs remained
comparable to those of the prior year, generally all other categories were
higher due the higher level of corporate activity this year. Facility and
support costs generally rose approximately 140% due to the overall
permanent and contracted staff growth over the prior year, travel rose 49%,
consulting and professional fees rose approximately 500%, and shareholder,
regulatory and investor relations costs rose approximately 60%.  This last
increase primarily reflects the Companys continued corporate
branding efforts worldwide with greater focus during the second quarter in
United States. The Companys financial advisory services costs, incurred in
the second quarter 2002 and included in consulting and professional fees, aggregated
approximately $241,000 or 73% of total consulting and professional fees expense. No
comparable financial advisory costs were incurred in the 2001 second quarter.
The Companys administrative costs are expected to decline to some degree
from the second quarter level since the contracted advisory services are
concluded now.

## Interest and
Amortization

Interest expense incurred
this year related to financing of equipment amounted to $8,499, down slightly
from the level in the prior comparable quarter of $9,600. Amortization in the
second quarter of 2002 amounted to $24,786 as compared to $3,534 for the second
quarter of 2001. The increase in amortization expense reflects recent purchases
of equipment, whereas in the past the Company leased most of its equipment to
minimize initial cash outflows.

## Net Loss for
the Period

Overall, the Company
incurred a net loss for the 2002 second quarter of $1,657,872 or $.09 per share,
which is 492% higher than the net loss incurred in the second quarter of
2001 of $279,886 or $.02 per share. While revenues rose 33% in the
quarter, significantly higher operating costs incurred in sales and marketing,
technology development and administration significantly offset the revenue gain.

16

---

Comparison of Results of
Operations for the six months ended June 30, 2002 and June 30, 2001:

## Revenues

Imagis total revenues for
the first six months increased 87% to $2,053,605 over the comparable
prior year first half revenues of $1,100,262. As was the case for the second
quarter, the higher revenues were primarily attributable to higher software
sales, while other revenue categories were lower in the half than the prior year
amounts.

Sales of the Companys
software products rose 125% to $1,908,576 in the first six months of
this year as compared to $849,092 for the first six months in 2001. The increase in
software sales revenues this year primarily resulted from revenues generated from the
Alameda and NCS installations and the Zixsys licensing contract announced in the
second quarter of this year.

Support and services
revenues for the first half of 2002 were $111,651, which is 47% lower
than those in the comparable period in 2001 of $210,095. As noted for the
quarter, the lower 2002 level resulted from reduced revenues derived from
contract services this year, different from 2001 when revenues were also derived
from a special contract the Company had undertaken. First half 2002 revenues
from support contracts were virtually unchanged from those earned in the first
half of 2001.

Other revenues were $33,378
for the six months this year, whereas revenues of $41,075 were earned in the
first half of the prior year. These revenues represent both interest earned on
short-term cash investments and miscellaneous replacement parts sales.

## Operating
Expenses

Operating expenses totaled
$4,850,979 for the first six months in 2002, which is 139% higher than
the 2001 first half costs of $2,028,036. The higher costs over the prior year
first half resulted from increases in staff, greater travel for sales and
marketing and administration, and exceptional corporate finance costs included
in the administrative category.

## Cost of
Materials and Services

The costs of materials and
services amounted to $153,461 in the first half of 2002, which is 121%
higher than the level in the first half of 2001 of $69,467. As for the quarterly
results, the higher costs reflect primarily the one time expenditure in the
second quarter of $71,700 for software related to Alameda, and a withholding tax
charge of $49,000 applied on the Zixsys revenues.

## Sales and
Marketing

Sales and marketing expenses
for the first six months of 2002 were $1,393,925, which is 206% higher
than for the comparable six-month period in 2001 of $455,435. Of the increase,
approximately $313,000 represents costs incurred for new sales and marketing
representatives located throughout the world. There were no sales and marketing
representatives on contract prior to this time, and hence no comparable 2001
costs. In addition, travel and trade show costs for both staff and
representatives rose approximately 153% due to the increase in the
number traveling and overall activity this year over that in the prior year.

## Technical
Services

Costs for the technical
services group were $449,219 for the first half of this year, which is 14%
higher than the comparable 2001 first half costs of $392,431. As noted for
the quarter, the costs in both years reflect primarily the travel costs in
support of the Alameda installation, necessitated by the very technical aspects
of the application. The installation ultimately involved full system integration
of Imagis software with 31 regional detachments operating under varying
legacy database systems.

## Technology
Development

The Technology development
expenses for the first six months of 2002 were $782,717, which is 48%
higher than the 2001 comparable expenses of $529,522. The increase over the
prior period reflects a number of additions to permanent staff and higher travel
costs incurred this year.

17

---

## Administration

Administrative expenses for
the first six months of 2002 were $2,011,323, which is 281% higher than
the expenses incurred in the comparable six months in 2001 of $531,239. The
overall increase can be attributed to a number of factors. Facility costs rose
approximately 105%, travel rose 102%, consulting and professional fees rose
approximately 290%, and shareholder, regulatory and investor relations
costs rose approximately 80%, the increase primarily reflecting the
Companys continued corporate branding efforts worldwide with greater focus
during the second quarter in United States. As noted above, the Companys
financial advisory services costs, incurred in the 2002 second quarter and
included in consulting and professional fees, aggregated approximately $241,000 which
represents 40% of total consulting and professional fees expense. No comparable financial advisory
costs were incurred in the first half of 2001.

## Interest and
Amortization

Interest expense for the first
half this year for financed capital equipment amounted to $3,672, down 91%
from the level in the prior comparable six-month period of $41,632.
Amortization for the first six months of 2002 amounted to $56,662 as compared to
$8,310 for the first six months of 2001. The increase in amortization expense
reflects recent purchasing of equipment, whereas in the past the Company leased
most of its equipment to minimize cash outflows at the time of purchase.

## Net Loss for
the Period

Overall, the Company
incurred a net loss for the first six months of 2002 of $2,797,374 or $.16 per
share, which is 202% higher than the net loss incurred in the first six
months of 2001 of $927,774 or $.07 per share. As was the case for the second
quarter, while revenues rose 87% in the first half, the higher operating
costs incurred in sales and marketing, technology development and particularly
administration significantly offset this revenue gain.

## Liquidity and
Capital Resources

The Companys cash on
hand at the beginning of the year, including funds on deposit, aggregated
$2,760,659, and during the first six months of 2002, the Company received
additional funds of $1,315,874 from the exercise of both sotck options and warrants.
In total, 167,670 options and 606,757 warrants were exercised which resulted in
aggregate proceeds to the Company of $214,255 and $1,101,618, respectively.

The Company used these
funds primarily to finance its operating loss for the six-month period. The
impact on cash of the loss of $2,797,374, after adjustment for non-cash items
and changes to other working capital accounts in the period, primarily an
increase in trade and accrued accounts receivable aggregating $419,877, was
reduced to $2,646,330. The Company also used funds to purchase capital equipment
amounting to $205,183 during the first half of this year.

To meet the requirements of
the adjusted loss coupled with the equipment purchases, a call on the Company's short-term cash
deposits amounting to $1,640,833 was made.

In summary, the
Companys cash position rose by $104,135 from $200,659 at the beginning of
the year to $304,794 at June 30, 2002, and additional funds on deposit declined
from $2,560,000 at January 1, 2002, to $919,167 at the period end. The increase
of $104,135 resulted from the additions to cash from the option and warrant
exercises and the call on the Companys invested funds netted against the
demands on cash for the operations and the capital expenditures incurred during
the first six months of this year.

On July 9, 2002, the Company
announced the closing of a private placement of
1,166,667 common shares, priced at U.S.$1.50 per share, that resulted in gross
proceeds to the Corporation of US$1.75 million and a strategic partnership with
OSI Systems, Inc.

As indicated at year-end,
management continues to believe that based on current projections, the Company
will be able to sustain its operations over the near term with its present cash
resources and that no further financing for the remainder of the year will be
necessary to meet its internal targets for staffing and operations.

18

---

Comparison of results of
operations for the three months ended March 31, 2002 and 2001:

## Revenues

The Companys total
revenues increased 200% to $1,061,865 for the first quarter ended March 31, 2002
over the comparable prior year first quarter level of $353,836. The higher
revenues were directly attributable to higher software sales revenues while
other revenues declined in the quarter from the prior year amounts.

Sales of the Companys
software products rose 410% to $985,954 in the first quarter of this year as
compared to $193,045 in 2001. The large gain in software sales revenues this
year arose primarily from the inclusion of approximately 60% of the revenues
earned to March 31, 2002, through the Companys U.K. business partner,
Serco PLC, as a result of a significant order.

Support and services
revenues for the first quarter of 2002, at $59,830, were 48% lower than those in
the comparable quarter in 2001 of $114,696. The lower 2002 level masks a 14%
gain in annual support contract revenues this year over the 2001 first quarter
amount. The overall decline resulted from reduced revenues derived from contract
services this year, and is solely attributable to the completion of a single
special contract that the Company commenced in 2000 directly for BCIT, rather
than through a partner, which concluded in mid-2001. As stated last year, the
Company is not seeking such contract work but intends to remain focused on both
development and more profitable sales of its software products.

Other revenues were $16,081
for the first quarter of 2002, down from $46,095 earned in the first quarter of
2001. These revenues are earned from the sale of components, which are provided
in conjunction with the installation or ongoing support of the Companys
products, and the level of sales varies from period to period.

## Operating costs

Operating costs totaled
$2,201,367 for the first quarter in 2002, which is 120% higher than the total
2001 first quarter expenditures of $1,001,724. The higher costs over the prior
year first quarter resulted from increases in staff in most functions, greater
travel for both sales and marketing and technical support, and exceptional
corporate costs included in the administration category. Operating costs include
cost of materials, sales and marketing, technical Services, technology
development, administration, interest and amortization.

## Costs of
materials and services

The costs of materials and
services are incurred in conjunction with the support services that the Company
provides to customers. These costs amounted to $10,289 in the first quarter of
2002, down 70% from the costs incurred in the first quarter of 2001 of $33,848.

## Sales and
marketing

Sales and marketing costs
for the first quarter of 2002, at $557,748, were 114% higher than the comparable
period in 2001 of $260,422. The increase is attributable to higher costs
incurred for new sales and marketing representatives in the US, Europe and the
Far East, all engaged on a contract basis in the past few months. There were no
sales and marketing representatives on contract prior to this time and hence no
comparable 2001 costs. In addition, travel and trade show costs for both staff
and representatives rose 195% due to the increase in the number of staff members
traveling and overall increase in sales and marketing activity this year over
that in the prior year when funds were limited. The Company intends to further
increase its sales and marketing team during the year and, therefore, expects
that quarterly sales and marketing costs will increase in future quarters as a
result.

## Technical
services

Costs for the technical
services group were $239,397 in the first quarter of this year, which is 37%
higher than the comparable 2001 first quarter costs of $175,018. The 2002
increase reflects primarily a 51% increase in travel costs in support of the
installation in Alameda County, California (Alameda), necessitated
by the technical aspects of the application. The technical services group
generally assists the Companys strategic partners in their installation of
its products and also provides clients with any technical support that they may
require under annual support contracts. These costs primarily include expenses
related to salaries, facilities and travel. While the function costs have
increased over the prior year, costs for future quarters are expected to be in
line with the first quarter level.

19

---

## Technology
development

Technology development costs
for the first quarter ended March 31, 2002 were $369,706, which is 35% higher
than the 2001 comparable costs of $273,643. The increase over the prior period
reflects a number of additions to staff and higher travel costs incurred during
the quarter. The Company added to its development staff throughout 2001 and
continues to increase its development group capability. During the quarter, the
group finalized for commercial release Version 8 of its ID-2000 facial
recognition software, and is providing special support and enhancements for both
the Alameda and National Crime Squad applications. Technology development costs
are expected to remain at this level throughout the year.

## Administration

Administration costs for
the first quarter of 2002 were $997,178, which is 349% higher than for the
comparable quarter in 2001 of $221,985. Administrative costs include staff
salaries and related benefits and travel, professional fees, facility and
support costs, shareholder, regulatory and investor relations costs and special
financial advisory costs incurred related to the Companys corporate
strategies and a special corporate privatization proposal received in the
quarter.

While staff costs remained
comparable to those of the prior year, generally all other categories were
higher due the increased level of corporate activity this year. Facilities costs
rose approximately 50%, professional fees rose over 300%, and shareholder,
regulatory and investor relations costs rose approximately 200%, the increase
primarily reflecting the Companys continued corporate branding efforts
worldwide. The Companys financial advisory services costs incurred in the
2002 first quarter aggregated approximately $208,000, including a non-cash
component with an imputed value of $78,750, for 37,500 common shares granted as
partial compensation to one of the Companys advisors. No comparable
financial advisory costs were incurred in the 2001 first quarter. The
Companys administrative costs are expected to decline to some degree from
the first quarter level since such one-time costs as the non-cash share issuance
will not recur. Additionally, the Company incurred non-cash costs in 2002 of
$145,031 for stock-based compensation as a result of stock options and warrants
that were issued as compensation to non-employees. There were no comparable
costs incurred in the 2001 first quarter.

## Interest and
amortization

Interest was earned this year
on the additional funds on deposit amounting to $4,827 whereas in the prior
comparable quarter, the Company incurred an expense of $32,032 related to
outstanding advances that were liquidated late in 2001. Amortization in the
first quarter of 2002 amounted to $31,876 as compared to $4,776 for the first
quarter of 2001. The increase in amortization expense reflects recent purchasing
of equipment whereas in the past, the Company leased most of its equipment to
minimize cash outflows from month to month and software purchases that were
expensed in the period.

## Net loss for
the period

Overall, the Company
incurred a net loss for the 2002 first quarter of $1,139,502 or $.07 per share,
which is 75% higher than the net loss incurred in the first quarter of 2001 of
$647,888 or $.05 per share. While revenues rose 200% this period, significantly
higher operating costs incurred in virtually all categories to build the Company
aggressively served to offset the revenue gain.

## Liquidity and
capital resources

In the fourth quarter of
2001, the Company completed a financing to raise approximately $3 million. This
served to strengthen the Companys working capital significantly, such that
its cash on hand at the beginning of the quarter, including short-term
investments, aggregated $2,760,659. During the first quarter, the Company
received additional funds as reported in its financing activities from the
exercise of both stock options and warrants. In total, 133,165 stock options
were exercised which provided an aggregate of $134,415 in gross proceeds to the
Company and 184,135 warrants yielded an aggregate of $389,333 in gross proceeds
to the Company.

The Company used funds in
the quarter to finance its operating loss of $1,139,502 and working capital
changes. The loss, which after adjusting for non-cash items and the working
capital changes, primarily an increase in trade accounts receivable of $708,803,
negatively impacted cash in total by $1,474,942. The Company also used funds, as
reported in its investing activities, to purchase capital equipment amounting to
$62,894 in the quarter.

As a result of these
negative cash impacts for the adjusted operating loss, the working capital
changes and the capital expenditures, management determined that it needed
additional funds in the quarter and sold an aggregate of $868,735 of its
short-term investments.

20

---

In summary, the cash
requirements for the adjusted loss, working capital changes and capital
expenditures, even after cash infusions from the exercise of warrants and
options and the sale of short-term investments, caused a net cash reduction in
the first quarter of $145,353, lowering the Companys cash on hand at March
31, 2002 to $55,306. As a result of the sale of short-term investments, the
Companys temporary cash deposits declined from the opening level of
$2,560,000 to $1,691,265. In total, cash resources of $1,746,571 remained
available at March 31, 2002 for future operations.

As indicated at year end,
management believes that, based on current projections, the Company will be able
to sustain its operations over the near term with its present cash resources and
that no further financing for the remainder of the year will be necessary to
meet its internal targets for staffing and operations. Thereafter, the Company
will be required to seek additional financing to fund its operations. There can
be no assurance that such financing will be available on terms favourable to the
Company or at all.

On March 6, 2002, the
Company announced that it had received a proposal to discuss the privatization
of the Company from the Pembridge Group (Pembridge) of Boston, an
investment management group. In order to respond appropriately, the Company
formed a special committee of its board of directors and also engaged Raymond
James Ltd. to act as its financial adviser to assess this proposal and consider
all alternative strategies in light of this development. Currently, the Company
is in a 60-90 day evaluation period, granted by Pembridge, under which the
Company has an opportunity to evaluate, consider, or complete certain potential
strategic alternatives before continuing to engage in discussions regarding
Pembridges proposal to take Imagis private, or to make a potential
strategic investment. Management believes that the impact on the Company and the
related financial benefits and costs as a result of privatization or an
alternate strategy cannot be assessed at this time, but cautions that the
above-noted potential for corporate change may result in the need for additional
financing or other changes to the Companys corporate structure and equity
at any time during the year.

## Recent
accounting pronouncements

During 2001, the Financial
 Accounting Standards Board issued four new pronouncements:

Statement 141, Business
Combinations, requires the purchase method of accounting for all business
combinations and applies to all business combinations initiated after June 30,
2001 and to all business combinations accounted for by the purchase method that
are completed after June 30, 2001.

Statement 142, Goodwill
and Other Intangible Assets, requires that goodwill as well as other
indefinite life intangible assets be tested annually for impairment and is
effective for fiscal years beginning after December 15, 2001.

Statement 143,
Accounting for Asset Retirement Obligations, requires entities to record
the fair value of a liability for an asset retirement obligation in the period
in which it is incurred and a corresponding increase in the carrying amount of
the related long-lived asset and is effective for fiscal years beginning after
June 15, 2001.

Statement 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, provides
that long-lived assets to be disposed of by sale be measured at the lower of
carrying mount or fair value less cost to sell, whether reported in continuing
operations or in discontinued operations to include all components of an entity
with operations that can be distinguished from the rest of the entity and that
will be eliminated from the ongoing operations of the entity in a disposal
transaction. Statement 144 is effective for fiscal years beginning after
December 15, 2001.

Currently, the Company does
not believe that the impact of these accounting pronouncements would be material
to the financial results.

## Critical
Accounting Policies

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

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

21

---

Revenue recognition

Software sales revenue:

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

When a software product
requires significant production, modification or customization, the Company
generally accounts for the arrangement using the percentage-of-completion method
of contract accounting. Progress to completion is measured by the proportion
that activities completed are to the activities required under each arrangement.
When the current estimate on a contract indicates a loss, a provision for the
entire loss on the contract is made.

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

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

Support and services revenue:

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

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.

Stock-based compensation

Effective January 1, 2002,
the Company adopted the new recommendations of the Canadian Institute of
Chartered Accountants with respect to the accounting for stock-based
compensation and other stock-based payments. The new recommendations require
equity instruments awarded to employees and the cost of the service received as
consideration to be measured and recognized based on the fair value of the
equity instruments issued. Compensation expense is recorded over the period of
related employee service, usually the vesting period of the equity instrument
awarded. Alternatively, the new recommendations permit the measurement of
compensation expense for stock option grants to employees and directors that are
not direct awards of stock, stock appreciation rights or otherwise call for
settlement in cash or other assets by an alternative method and to provide pro
forma disclosure of the financial results using the fair value method. The
Company has elected to follow an alternative method and continue with the former
accounting policy of recognizing no compensation expense when stock options are
granted to employees because the Company grants stock options with an exercise
price based on the market price at the date of the grant. The Company recognizes
compensation expense for consultants based on the fair value of the equity
instruments issued.

# 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.

22

---

## Item 2.
Changes in Securities.

|a) | None
|-- | ----

|b) | None
|-- | ----

|c) | The Company issued 34,505 common shares upon the exercise of stock options by three
(3) non-U.S. persons in private transactions outside the United States for gross
proceeds to the Company of $79,840. The options were exercised on the following
dates for the following amounts: June 12, 2002  21,505 options for gross
proceeds to the Company of $63,870; June 12, 2002  3,000 options for gross
proceeds to the Company of $5,970; and June 17, 2002  10,000 options for
gross proceeds to the Company of $10,000. The common shares were issued in
reliance upon Regulation S (Regulation S) promulgated under the
Securities Act of 1933, as amended (the Securities Act).
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Company issued 422,622 common shares upon the exercise of warrants by fifteen
(15) non-U.S. persons in private transactions outside the United States for
gross proceeds to the Company of $712,286. These warrants were exercised on the
following dates for the following amounts: April 2, 2002  4,500 warrants
for gross proceeds to the Company of $4,950; April 8, 2002  5,000 warrants
for gross proceeds to the Company of $12,750; April 12, 2002  150 warrants
for gross proceeds to the Company of $165; April 12, 2002  3,350 warrants
for gross proceeds to the Company of $3,685; April 17, 2002  5000 warrants
for gross proceeds to the Company of $12,750; April 23, 2002  22,500
warrants for gross proceeds to the Company of $57,375; April 26, 2002 
3,000 warrants for gross proceeds to the Company of $3,300; May 8, 2002 
33,456 warrants for gross proceeds to the Company of $85,313; May 13, 2002
 34,562 warrants for gross proceeds to the Company of $88,133; May 23,
2002  72,500 warrants for gross proceeds to the Company of $79,750; May
23, 2002  12,500 warrants for gross proceeds to the Company of $31,875;
May 28, 2002  5000 warrants for gross proceeds to the Company of $5,500;
June 5, 2002  57,604 warrants for gross proceeds to the Company of
$146,890; June 7, 2002  7,000 warrants for gross proceeds to the Company
of $7,700; and June 27, 2002  156,500 warrants for gross proceeds to the
Company of $172,150. The common shares were issued in reliance upon Regulation S
promulgated under the Securities Act.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Company issued 300,608
common shares upon the conversion of special warrants into common shares by five
(5) non-U.S. persons in private non-cash transactions outside the United States
for deemed gross proceeds to the Company of $652,319. These special warrants
were exercised on the following dates for the following amounts: April 2, 2002
 50,000 special warrants for deemed gross proceeds to the Company of
$108,500; April 5, 2002  45,000 special warrants for deemed gross proceeds
to the Company of $97,650; April 5, 2002  115,208 special warrants for
deemed gross proceeds to the Company of $250,001; May 10, 2002  45,400
special warrants for deemed gross proceeds to the Company of $98,518; and May
13, 2002  45,000 special warrants for deemed gross proceeds to the Company
of $97,650. The common shares were issued in reliance upon Regulation S
promulgated under the Securities Act.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company granted stock options exercisable to acquire 340,000 common shares to
certain employees, directors and consultants who were non-U.S. persons in a
private offering outside the United States. The options were issued in reliance
upon Regulation S promulgated under the Securities Act.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|d) | None
|-- | ----

23

---

## Item 3.  
Defaults Upon Senior Securities.

None

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

None

## Item 5.  Other
Information

As reported in the first
quarter, the Company received a proposal to discuss privatization from the
Pembridge Group of Boston, an investment management group. As a consequence, the
Company had formed a special committee of its board and also engaged Raymond
James Ltd. to act as its financial adviser to assess the proposal and consider
alternative strategies. Subsequent to the period end, on July 9, 2002 the
Company announced that the discussions toward privatization had concluded by
mutual consent with Pembridge with the decision not to proceed further.

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

|a) | Exhibits
|-- | --------

| | ExhibitNumber | 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(1) | Warrant dated February 25, 1999 issued to Iain Drummond
| | ------ | -------------------------------------------------------

| | 4.4(1) | Warrant dated February 25, 1999 issued to Armitage & Associates
| | ------ | ---------------------------------------------------------------

| | 4.5(6) | Form of Share Purchase Warrant
| | ------ | ------------------------------

| | 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)* | Employment Agreement dated February 23, 1999 between the Issuer and Iain Drummond
| | -------- | ---------------------------------------------------------------------------------

| | 10.10(1) | Technology Purchase Agreement dated March 6, 1998 among Imagis Technologies Ltd.,
Imagis Cascade Technologies Inc. and Penelope
Walker, Richard Graham and William Hawkes
| | -------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

24

---

| | ExhibitNumber | Description
| | ------------- | -----------

| | 10.11(1) | Technology Purchase Agreement dated March 6, 1998 among Imagis, Imagis Cascade
Consultants, Inc. and Former Imagis Shareholders
| | -------- | -------------------------------------------------------------------------------------------------------------------------------

| | 10.12(1) | Share Purchase Agreement dated December 14, 1998 among Imagis, Imagis Cascade and the
Former Imagis Shareholders
| | -------- | ----------------------------------------------------------------------------------------------------------------

| | 10.13(1) | Confidentiality and Standstill Agreement dated October 6, 1998 among Colloquium Capital Corp.,
Imagis Cascade Technologies Inc. and Former Imagis Shareholders
| | -------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.14(1) | Loan Agreement dated October 15, 1999 between Imagis and Rexton Corporation
| | -------- | ---------------------------------------------------------------------------

| | 10.15(1) | Agreement dated May 1, 2000 between Imagis and Somerset Financial Group Inc.
| | -------- | ----------------------------------------------------------------------------

| | 10.16(2) | Agreement dated August 15, 2000 between Imagis and GPC Communications
| | -------- | ---------------------------------------------------------------------

| | 10.17(3) | Agreement dated August 21, 2000 between Imagis and Fleishman-Hillard Canada Inc.
| | -------- | --------------------------------------------------------------------------------

| | 10.18(4)* | Imagis Technologies Inc. 2000 Stock Option Plan
| | --------- | -----------------------------------------------

| | 10.19(4) | Agreement dated October 11, 2000 between Imagis and Orion Scientific Systems Inc.
| | -------- | ---------------------------------------------------------------------------------

| | 10.20(5)* | Imagis Technologies Inc. 1999 Stock Option Plan
| | --------- | -----------------------------------------------

| | 10.21(6) | Form of Unit Subscription Agreement
| | -------- | -----------------------------------

| | 10.22(2) | Convertible Note Subscription Agreement dated October 1, 1999
| | -------- | -------------------------------------------------------------

| | 10.23(7) | Software Assets Sale and Assignment Agreement dated October 31, 2001 between
Imagis and API Technologies, LLC.
| | -------- | --------------------------------------------------------------------------------------------------------------

| | 99.1 | Risk Factors
| | ---- | ------------

| | 99.2 | Form 51-901F as required by the British Columbia Securities Commission
| | ---- | ----------------------------------------------------------------------

| | 99.3 | Certification of Chief Executive Officer
| | ---- | ----------------------------------------

| | 99.4 | Certification of Chief Financial Officer
| | ---- | ----------------------------------------

---

| | (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.
| | --- | -------------------------------------------------------------------------------------------------------

| | (7) | Previously filed
as part of Imagis' Quarterly Report on Form 10-QSB for the period ended March 31, 2002.
| | --- | --------------------------------------------------------------------------------------------------------

25

---

|b) | Reports on Form 8K
|-- | -------------------

| | On April 5, 2002, the
Company filed a Form 8-K relating to two press releases. The first press release
was dated March 15, 2002, in which the Company announced that its law
enforcement software product, the CABS Computerized Arrest and Booking System,
was purchased by an additional four Royal Canadian Mounted Police detachments.
The second press release was dated March 25, 2002, in which the Company
announced the formation of a special committee of its board of directors to be
chaired by Roy Trivett. The special committee was formed to consider any
transaction or strategic opportunity that might arise, including a
publicly-announced going private proposal by Pembridge Group
(Pembridge). The Company further announced that it retained Raymond
James Ltd. to act as its financial advisor.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On April 8, 2002, the
Company filed a Form 8-K relating to four press releases. The first press
release was dated April 8, 2002, in which the Company announced that Pembridge
granted the Company a 60 to 90 day period to evaluate, consider or complete
certain potential strategic alternatives before continuing to engage in
discussions regarding Pembridges proposal to take Imagis private or to
make a potential strategic investment. The second press release was dated April
9, 2002, in which the Company announced that it received an order from T.C.
Vilsa S.A. (Imagis Latin American business partner) of Mexico City for
Imagis Computerized Arrest and Booking System (CABS), ID-2000
facial recognition and its evidence tracking module to classify and locate
incident-related evidence. The third press release was dated April 10, 2002, in
which the Company announced the appointment of Charles Giannetti as Regional
Director in Washington, D.C. The fourth press release was dated April 11, 2002,
in which the Company announced the appointment of Messrs. Murray Jamieson as
Vice-President, Product Development and Services, and Earl van As as Director of
Marketing.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

26

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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:  August 13, 2002

| | IMAGIS TECHNOLOGIES INC.
| | ------------------------

| | /s/ Ross Wilmot
Ross WilmotChief Financial Officer
(Principal Financial and Accounting Officer and Duly
Authorized Officer)
| | ---------------------------------------------------------------------------------------------------------------------------

27

---

EXHIBIT INDEX

| | ExhibitNumber | 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(1) | Warrant dated February 25, 1999 issued to Iain Drummond
| | ------ | -------------------------------------------------------

| | 4.4(1) | Warrant dated February 25, 1999 issued to Armitage &  Associates
| | ------ | ----------------------------------------------------------------

| | 4.5(6) | Form of Share Purchase Warrant
| | ------ | ------------------------------

| | 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)* | Employment Agreement dated February 23, 1999 between the Issuer and Iain Drummond
| | -------- | ---------------------------------------------------------------------------------

| | 10.10(1) | Technology Purchase Agreement dated March 6, 1998 among Imagis Technologies Ltd.,
Imagis Cascade Technologies Inc. and Penelope
Walker, Richard Graham and William Hawkes
| | -------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

28

---

| | ExhibitNumber | Description
| | ------------- | -----------

| | 10.11(1) | Technology Purchase Agreement dated March 6, 1998 among Imagis, Imagis Cascade
Consultants, Inc. and Former Imagis Shareholders
| | -------- | -------------------------------------------------------------------------------------------------------------------------------

| | 10.12(1) | Share Purchase Agreement dated December 14, 1998 among Imagis, Imagis Cascade and the
Former Imagis Shareholders
| | -------- | ----------------------------------------------------------------------------------------------------------------

| | 10.13(1) | Confidentiality and Standstill Agreement dated October 6, 1998 among Colloquium Capital Corp.,
Imagis Cascade Technologies Inc. and Former Imagis Shareholders
| | -------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.14(1) | Loan Agreement dated October 15, 1999 between Imagis and Rexton Corporation
| | -------- | ---------------------------------------------------------------------------

| | 10.15(1) | Agreement dated May 1, 2000 between Imagis and Somerset Financial Group Inc.
| | -------- | ----------------------------------------------------------------------------

| | 10.16(2) | Agreement dated August 15, 2000 between Imagis and GPC Communications
| | -------- | ---------------------------------------------------------------------

| | 10.17(3) | Agreement dated August 21, 2000 between Imagis and Fleishman-Hillard Canada Inc.
| | -------- | --------------------------------------------------------------------------------

| | 10.18(4)* | Imagis Technologies Inc. 2000 Stock Option Plan
| | --------- | -----------------------------------------------

| | 10.19(4) | Agreement dated October 11, 2000 between Imagis and Orion Scientific Systems Inc.
| | -------- | ---------------------------------------------------------------------------------

| | 10.20(5)* | Imagis Technologies Inc. 1999 Stock Option Plan
| | --------- | -----------------------------------------------

| | 10.21(6) | Form of Unit Subscription Agreement
| | -------- | -----------------------------------

| | 10.22(2) | Convertible Note Subscription Agreement dated October 1, 1999
| | -------- | -------------------------------------------------------------

| | 10.23(7) | Software Assets Sale and Assignment Agreement dated October 31, 2001 between
Imagis and API Technologies, LLC.
| | -------- | --------------------------------------------------------------------------------------------------------------

| | 99.1 | Risk Factors
| | ---- | ------------

| | 99.2 | Form 51-901F as required by the British Columbia Securities Commission
| | ---- | ----------------------------------------------------------------------

| | 99.3 | Certification of Chief Executive Officer
| | ---- | ----------------------------------------

| | 99.4 | Certification of Chief Financial Officer
| | ---- | ----------------------------------------

---

| | (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.
| | --- | -------------------------------------------------------------------------------------------------------

| | (7) | Previously filed
as part of Imagis' Quarterly Report on Form 10-QSB for the period ended March 31, 2002.
| | --- | --------------------------------------------------------------------------------------------------------

29

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