UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-QSB

(Mark One)

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

For the quarterly period ended June 30, 2001
OR

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

For the transition period from __________ to __________

Commission File Number: 000-30090
_________________________

IMAGIS TECHNOLOGIES INC.



|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)
_________________________

As of August 8, 2001, 14,463,298 Common Shares were issued and
outstanding.

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

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IMAGIS TECHNOLOGIES INC.

FORM 10-QSB

For the quarterly period ended June 30, 2001

INDEX

|PART 1.  | FINANCIAL INFORMATION |                                                                                                                         
|-------- | --------------------- | ------------------------------------------------------------------------------------------------------------------------
|         |                       |                                                                                                                         
|         | Item 1.               | Financial Statements                                                                                                    
|         |                       |                                                                                                                         
|         |                       | Consolidated Balance Sheets as of June 30, 2001 
(unaudited) and December 31, 2000                                      
|         |                       |                                                                                                                         
|         |                       | Consolidated Statements of Operations and deficit (unaudited)
for the three and 
six months ended June 30, 2001 and 2000
|         |                       |                                                                                                                         
|         |                       | Consolidated Statements of Cash Flows (unaudited) for
the three and six months ended June 30, 2001 and 2000             
|         |                       |                                                                                                                         
|         |                       | Notes to Consolidated Financial Statements                                                                              
|         |                       |                                                                                                                         
|         | Item 2.               | Management's Discussion and Analysis or Plan of
Operation                                                               
|         |                       |                                                                                                                         
|PART II. | OTHER INFORMATION     |                                                                                                                         
|         |                       |                                                                                                                         
|         | Item 1.               | Legal Proceedings                                                                                                       
|         |                       |                                                                                                                         
|         | Item 2.               | Changes in Securities                                                                                                   
|         |                       |                                                                                                                         
|         | Item 3.               | Defaults upon Senior Securities                                                                                         
|         |                       |                                                                                                                         
|         | Item 4.               | Submission of Matters to a Vote of Security Holders                                                                     
|         |                       |                                                                                                                         
|         | Item 5.               | Other Information                                                                                                       
|         |                       |                                                                                                                         
|         | Item 6.               | Exhibits and Reports on Form 8-K                                                                                        
|         |                       |                                                                                                                         
|         | Signatures            | 19                                                                                                                      
|         |                       |                                                                                                                         
|         | Exhibit Index         | 20                                                                                                                      

2

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PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

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

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

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

See accompanying notes to consolidated financial
statements.

3

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

See accompanying notes to consolidated financial statements.

4

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

5

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

See accompanying notes to consolidated financial statements.

6

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

1.     Operations:

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

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

These financial statements have been prepared on a going
concern basis which includes the assumption that the Company will be able to
realize its assets and settle its liabilities in the normal course of business.
At June 30, 2001, the Company had a deficiency in net assets of $368,993 and had
working capital of $181,634.  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.

The Company prepares its consolidated financial statements in
accordance with generally accepted accounting principles in Canada and, except
as set out in note 8, also comply, in all material respects, with accounting
principles generally accepted in the United States.  The consolidated financial
statements reflect the following significant accounting policies:

(a)     Basis of presentation:

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

(b)     Equipment:

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

|Asset                  | Rate
|---------------------- | ----
|                       |     
|Computer hardware      | 30% 
|Furniture and fixtures | 20% 

7

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

(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 when persuasive evidence of a
contractual arrangement exists, title has passed, delivery and customer
acceptance has occurred, the sales price is fixed or determinable and collection
is reasonably assured.  When software is sold under contractual arrangements
that include post sales customer support, the elements are separated to the
extent of the existence of vendor specific objective evidence.  If such evidence
does not exist, all contracted revenue is recognized as support revenue.  The
Company provides for estimated return and warranty costs, which to date, have
been nominal, on recognition of revenue.

(ii)     Support revenue:

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

(d)     Use of estimates:

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

(e)     Foreign currency:

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

(f)     Income taxes:

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

(g)     Stock compensation:

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

(h)     Loss per share:

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

8

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

(i)     Unaudited interim financial
information:

The information as at June 30, 2001 and for the three and six
month periods ended June 30, 2001 and 2000 is unaudited.  However, such
financial information reflects all adjustments (consisting solely of normal
recurring adjustments) necessary for a fair presentation of the results for the
periods presented.  The unaudited interim consolidated financial statements are
prepared using accounting policies consistent with and should be read in
conjunction with the Company's consolidated financial statements as at and for
the year ended December 31, 2000 which are included in the Company's 2000 Annual
Report on Form 10-KSB.  Certain comparative figures have been reclassified to
conform with presentation adopted in the current reporting period.  Results for
the interim periods ended June 30, 2001 are not necessarily indicative of what
the results will be for the complete 2001 fiscal year.

Short-term



|                     |   | June 30, 2001 | 
|-------------------- | - | ------------- | 
|                     |   |               | 
|Valor Invest Limited | $ | 99,821        | 



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

Long-term



|                                        |   |         | 
|--------------------------------------- | - | ------- | 
|International Portfolio Management Inc. | $ | 157,940 | 
|Pacific Cascade Consultants Ltd.        |   | 444,094 | 
|                                        | $ | 602,034 | 



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

4.     Share capital:

(a)     Authorized:

100,000,000 common shares without par value

9

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

4.     Share capital, cont'd:

(b)     Issued:



|                                          | Number
of shares                                                     |           | Amount    |          
|----------------------------------------- | -------------------------------------------------------------------- | --------- | --------- | ---------
|                                          |                                                                      |           |           |          
|Balance, December 31, 1999                | 8,958,214                                                            |           | 3,223,995 |          
|Issued during the year for cash:          |                                                                      |           |           |          
|                                          | On private placement                                                 | 875,000   |           | 700,000  
|                                          | On debt conversion, including value assigned to
warrants on issuance | 930,000   |           | 730,200  
|                                          | Options exercised                                                    | 442,170   |           | 442,170  
|                                          | Warrants exercised                                                   | 1,749,000 |           | 1,261,200
|                                          | Issued for services related to private
placement                     | 11,581    |           | 7,296    
|                                          | Share issuance costs                                                 | --        |           | (35,706) 
|Balance, December 31, 2000                | 12,965,965                                                           |           | 6,329,155 |          
|Issued during the period for cash:        |                                                                      |           |           |          
|                                          | Options exercised                                                    | 6,333     |           | 6,333    
|                                          | Warrants exercised                                                   | 80,000    |           | 64,000   
|On
private placement                      | 1,391,000                                                            |           | 1,391,000 |          
|Issued as bonus shares per loan
agreement | 20,000                                                               |           | 29,000    |          
|Share issuance costs                      | --                                                                   |           | (90,775)  |          
|Balance, June 30, 2001                    | 14,463,298                                                           | $         | 7,728,713 |          

(c)     Escrowed shares:

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

(d)     Warrants:



|December 31, 
2000 | Granted   | Exercised |  | Expired   |  | June 30,
2001 | Exercise
price | Expiry date      
|------------------ | --------- | --------- |  | --------- |  | ------------- | -------------- | -----------------
|266,666            | --        | --        |  | --        |  | 266,666       | $1.25          | February 23, 2002
|133,334            | --        | --        |  | --        |  | 133,334       | $1.25          | February 23, 2003
|80,000             | --        | (80,000)  |  | --        |  | --            | $0.80          | --               
|200,000            | --        | --        |  | (200,000) |  | --            | --             | --               
|50,000             | --        | --        |  | --        |  | 50,000        | $4.00          | June 16, 2002    
|                   |           |           |  |           |  |               |                | Various to       
|--                 | 1,491,000 | --        |  | --        |  | 1,491,000     | $1.10          | May 6, 2003      
|730,000            | 1,491,000 | (80,000)  |  | (200,000) |  | 1,941,000     |                |                  

(e)     Options:



|December 31, 
2000 | Granted | Exercised |  | Expired  |  | June 30,
2001 | Exercise
price | Expiry date                  
|------------------ | ------- | --------- |  | -------- |  | ------------- | -------------- | -----------------------------
|230,000            | --      | --        |  | --       |  | 230,000       | $0.30          | July 6, 2003                 
|646,164            | --      | (6,333)   |  | (3,333)  |  | 636,498       | $1.00          | Various to 
February 21, 2006
|550,000            | 505,000 | --        |  | (15,000) |  | 1,040,000     | $1.50 to $2.90 | Various to 
May 13, 2006     
|1,426,164          | 505,000 | (6,333)   |  | (18,333) |  | 1,906,498     |                |                              

10

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

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

(a)     included in accounts payable
and accrued liabilities is $53,999 which is due to companies with a director in
common.

(b)     included in administration
expense is $123,862 for payments made to a company with a director in common for
services rendered to the Company.

7.     Subsequent events:

There have been no significant subsequent events.

These consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in Canada
("Canadian GAAP") which differ in certain respects with accounting
principles generally accepted in the United States ("U.S. GAAP").  See
note 14 of the Company's 2000 Annual Report on Form 10-KSB for a qualitative
description of material differences between Canadian and U.S. GAAP.  The effect
of these accounting differences on deficit, net loss and loss per share under
United States accounting principles are as follows:



|                                        |   | June 30, 
2001 |  |   | December 31, 
2000 | 
|--------------------------------------- | - | -------------- |  | - | ------------------ | 
|Deficit, Canadian GAAP                  | $ | (8,097,706)    |  | $ | (7,169,932)        | 
|Cumulative stock based compensation
(a) |   | (989,836)      |  |   | (904,501)          | 
|Beneficial conversion options           |   | (208,200)      |  |   | (208,200)          | 
|Warrants issued for services            |   | (722,000)      |  |   | (722,000)          | 
|Deficit, U.S. GAAP                      | $ | (10,017,742)   |  | $ | (9,004,633)        | 
|                                        |   |                |  |   |                    | 



|                                    | Three months ended
June 30, | Six months ended
June 30,
|----------------------------------- | --------------------------- | -------------------------
|                                    |                             | 2001                     
|                                    |                             |                          
|Loss for the year, 
  Canadian GAAP | $                           | (279,886)                
|Stock-based
compensation            |                             | (52,785)                 
|Warrants issued for
  services      |                             | -                        
|Loss for the year, U.S.
  GAAP      |                             | (322,671)                
|Net loss per share, U.S. 
  GAAP    |                             | (0.02)                   

11

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

Forward Looking Statements:

Statements in this Quarterly Report on Form 10-QSB, including
those concerning Imagis Technologies Inc.'s (the "Company" or
"Imagis") expectations of future sales, gross profits, sales and
marketing expenses, technical services expenses, technology development
expenses, administration expenses, product introductions and cash requirements
include certain forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended.  As such, the
Company's actual results may vary materially from expectations as a result of
certain factors including, but not limited to, variations in the level of orders
which can be affected by general economic conditions and in the markets served
by the Company's customers, international economic and political climates,
difficulties or delays in the functionality or performance of the Company's
products, the Company's timing of future product releases, the Company's failure
to respond adequately to either changes in technology or customer preferences,
changes in our pricing or that of the Company's competitors, the Company's
ability to manage growth, risk of nonpayment of accounts receivable, changes in
budgeted costs and the factors listed on Exhibit 99.1 to this Quarterly Report,
which are hereby incorporated by reference in this Quarterly Report.

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

Although the Company believes the expectations reflected in
its forward-looking statements are reasonable, it cannot guarantee future
results, levels of activity, performance or achievements or other future events.
Moreover, neither it nor anyone else assumes responsibility for the accuracy and
completeness of 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.

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

Revenues:

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

Operating Costs:

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

Cost of materials and services:

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

Sales and marketing:

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

12

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Technical services:

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

Technology Development:

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

Administration:

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

Amortization:

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

Interest:

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

Net Loss for the Period:

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

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

Revenues:

The Company's revenues for the six-month period ended June
30, 2001 were $1,097,461, compared to $453,781 for the six-month period ended
June 30, 2000, which represents an increase of approximately 142%.  Sales of the
Company's software increased approximately 224% to $849,092 for the six-month
period ended June 30, 2001, compared to $261,763 for the six-month period ended
June 30, 2000.  Support and services increased approximately 29% to $248,369 for
the six-month period ended June 30, 2001, compared to $192,018 for the six-month
period ended June 30, 2001.

Operating Costs:

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

Cost of materials and services:

The Company's materials and service costs in conjunction with
the support services that it provides to customers for the six-month period
ended June 30, 2001 were $69,467, compared to $54,599 for the six-month period
ended June 30, 2000. These costs are incurred primarily for outside services in
conjunction with the support provided to users. During the six-month

13

---

period
ended June 30, 2000, costs included $35,750 for equipment purchases made on
behalf of, and resold to customers in conjunction with, installations. The
Company discontinued such purchases in 2000 and now relies on its business
partners to provide any requisite equipment required by customers.

Sales and marketing:

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

Technical services:

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

Technology Development:

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

Administration:

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

Amortization:

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

Interest:

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

Net Loss for the Period:

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

Liquidity and Capital Resources:

The Company's cash position at the beginning of the year was
$59,497.  Due to a general weakening in financial markets in the first quarter
of this fiscal year, the completion of the Company's planned private placement
was delayed. In the interim, the Company arranged for a line of credit of up to
$200,000 from related parties and received $145,000 from this line during the
first quarter. As compensation for advancing funds by related parties under this
credit arrangement, the Company issued 20,000 common shares at the then current
market price for an aggregate value of $29,000.  This amount represents a
non-cash cost to the Company.  In addition, during the first quarter, the
Company received other advances which include: (i) $31,004 from related parties
outside of this credit arrangement, (ii) an advance on the intended private
placement of $48,500 and (iii) proceeds from the exercise of 6,333 options and
17,500 warrants which yielded an aggregate of $20,333 in gross proceeds to the
Company.

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

14

---

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

From these funds, the Company made partial payments totaling
$646,287 on various loans from related parties. Consequently, net cash inflows
from financing activities in the second quarter and for the first half of this
fiscal year aggregated $505,409 and $893,576, respectively.

In regard to operations, while the Company's operating loss
for the first half was $927,774, its impact on cash resources was significantly
reduced by adjustments for non-cash working capital items, primarily an increase
in accounts receivable of $635,518, such that the net reduction in cash for the
first half of this fiscal year was $377,927.

In summary, the Company has successfully increased revenues
and continues to maintain its functional costs at budgeted levels in accordance
with its plans for growth, while also reducing the level of its operating losses
from prior periods. The operating loss for the first six months after
adjustments as noted above caused a net draw down of Imagis' cash resources of
$377,927. As a result of the cash contribution from the financing closed in the
second quarter, however, subtracting the adjusted operating loss and loan
repayments made following the financing, the Company's overall cash balance has
grown from $59,497 at the beginning of this fiscal year to $573,510 at June 30,
2001.

Based on our projections at this time, management believes
that the Company will require approximately $400,000 in additional financing for
Company to fund its cash requirements for the balance of 2001.

There is no assurance that the Company will be able to secure
financing or that such financing will be obtained on terms favorable to the
Company.  Failure to obtain adequate financing could result in significant
delays in development of new products and a substantial curtailment of
operations.

PART II

Item 1.     Legal Proceedings.

As of the date of this Quarterly Report, the Company is
not a party to any legal proceedings, the adverse outcome of which, in
management's opinion, individually or in the aggregate, would have a material
effect on the Company's results of operations or financial position.  From time
to time, the Company may be involved in litigation relating to claims arising
out of its operations in the normal course of business.

Item 2.     Changes in Securities.

a)     None

b)     None

c)     During the quarter ended June
30, 2001, the Company sold 1,391,000 Units to related parties and other
individual investors at a price per unit of $1.00 pursuant to a private
placement.  This private placement had two closing dates, with 973,000 Units
sold on April 26, 2001 and 418,000 Units sold on May 7, 2001.  The agent for
this private placement was also granted a warrant to purchase 100,000 common
shares of the Company exercisable at a price per share of $1.10 for a period of
one (1) year.

On May 14, 2001, the Company granted 490,000 options under
its 2000 Stock Option Plan to employees and consultants of the Company that are
exercisable at a price of Cdn$1.50 and expire on May 14, 2006.

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

d)     None

Item 3.     Defaults Upon Senior
Securities.

None

15

---

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

At the Company's Annual General Meeting on June 29, 2001,
shareholders approved the following nominations and proposals:

A total of 1,085,590 shares were present in person or by
proxy at the Annual Meeting.

|                                                                                                                                           | Votes For            | Votes Against | VotesWithheld*
|------------------------------------------------------------------------------------------------------------------------------------------ | -------------------- | ------------- | --------------
|                                                                                                                                           |                      |               |               
|To fix the number of directors at six                                                                                                      | 1,084,590            | 1,000         | 0             
|To pass an ordinary resolution of 
     disinterested shareholders to approve 
     the amendment to the Company's 
     stock option plan | 1,080,490            | 5,100         | 0             
|To appoint and remunerate KPMG LLP, 
     Chartered Accountants                                                                            | 1,084,590            | 0             | 1,000         
|Nominations for director:                                                                                                                  |                      |               |               
|                                                                                                                                           | Iain Drummond        | 1,084,590     | 0             
|                                                                                                                                           | Altaf Nazerali       | 1,084,590     | 0             
|                                                                                                                                           | Rory Godinho         | 1,084,590     | 0             
|                                                                                                                                           | Frederick Clarke     | 1,084,590     | 0             
|                                                                                                                                           | Oliver "Buck" Revell | 1,084,590     | 0             
|                                                                                                                                           | Robert Gordon        | 1,084,590     | 0             

* includes abstentions and broker non-votes.

Item 5.     Other Information

None

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

a)     Exhibits

|3.1*  | Articles of Incorporation                                                                                                                                                                                        
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                  
|4.1*  | Shareholder Agreement dated February 23, 1999
among the Original Shareholders and the Former Imagis Shareholders                                                                                                 
|      |                                                                                                                                                                                                                  
|4.2*  | 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+  | Convertible Note Subscription Agreement dated
October 1, 1999                                                                                                                                                    
|      |                                                                                                                                                                                                                  
|10.1* | Incentive Stock Option Agreements dated July 7,
1998 between Imagis and each of Sandra E. Buschau, Altaf Nazerali and Ross
Wilmot                                                                                
|      |                                                                                                                                                                                                                  
|10.2* | 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* | Revenue Assignment Agreement dated December 15,
1998 among Imagis, Pacific, Imagis Solutions (US) Incorporated and Imagis North
West Solutions Inc.                                                              
|      |                                                                                                                                                                                                                  
|10.4* | Agency Agreement dated March 29, 1999 among
Imagis and the Agents                                                                                                                                                

16

---

|10.5*    | Subscription Agreement dated January 26, 1999
between Imagis and Pacific Cascade Consultants Ltd.                                                                                                 
|-------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                   
|10.6*    | Subscription Agreement dated January 26, 1999
between Imagis and First Capital Invest Corp.                                                                                                       
|         |                                                                                                                                                                                                   
|10.7*    | 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*    | Consulting Services Agreement effective February
25, 1999 between Imagis and Shafiq Nazerali-Walji                                                                                                
|         |                                                                                                                                                                                                   
|10.9*    | Warrant dated February 25, 1999 issued to Iain
Drummond                                                                                                                                           
|         |                                                                                                                                                                                                   
|10.10*   | Warrant dated February 25, 1999 issued to
Armitage and Associates                                                                                                                                 
|         |                                                                                                                                                                                                   
|10.11*   | Employment Agreement dated February 23, 1999
between Imagis and Iain Drummond                                                                                                                     
|         |                                                                                                                                                                                                   
|10.12*   | Technology Purchase Agreement dated March 6,
1998 among Imagis Technologies Ltd., Imagis Cascade Technologies Inc. and
Penelope Walker, Richard Graham and William Hawkes                         
|         |                                                                                                                                                                                                   
|10.13*   | Technology Purchase Agreement dated March 6,
1998 among Imagis, Imagis Cascade Consultants, Inc. and Former Imagis
Shareholders                                                                   
|         |                                                                                                                                                                                                   
|10.14*   | Share Purchase Agreement dated December 14, 1998
among Imagis, Imagis Cascade and the Former Imagis Shareholders                                                                                  
|         |                                                                                                                                                                                                   
|10.15*   | Confidentiality and Standstill Agreement dated
October 6, 1998 among Colloquim Capital Corp., Imagis Cascade Technologies Inc.
and Former Imagis Shareholders                                     
|         |                                                                                                                                                                                                   
|10.16**  | Loan Agreement dated October 15, 1999 between
Imagis and Rexton Corporation                                                                                                                       
|         |                                                                                                                                                                                                   
|10.17+   | Agreement dated May 1, 2000 between Imagis and
Somerset Financial Group Inc.                                                                                                                      
|         |                                                                                                                                                                                                   
|10.18+   | Agreement dated August 15, 2000 between Imagis
and GPC Communications                                                                                                                             
|         |                                                                                                                                                                                                   
|10.19+   | Agreement dated August 21, 2000 between Imagis
and Fleishman-Hillard Canada Inc.                                                                                                                  
|         |                                                                                                                                                                                                   
|10.20++  | Imagis Technologies Inc. 2000 Stock Option
Plan                                                                                                                                                   
|         |                                                                                                                                                                                                   
|10.21++  | Agreement dated October 11, 2000 between Imagis
and Orion Scientific Systems Inc.                                                                                                                 
|         |                                                                                                                                                                                                   
|10.22+++ | Imagis Technologies Inc. 1999 Stock Option
Plan                                                                                                                                                   
|         |                                                                                                                                                                                                   
|10.23    | Form of Share Purchase Warrant                                                                                                                                                                    
|         |                                                                                                                                                                                                   
|10.24    | Form of Unit Subscription Agreement                                                                                                                                                               
|         |                                                                                                                                                                                                   
|16.1*    | Letter to SEC dated December 10, 1998 from
Elliott Tulk Pryce and Anderson regarding change in certifying accounts                                                                                
|         |                                                                                                                                                                                                   
|99.1     | Risk Factors                                                                                                                                                                                      
|         |                                                                                                                                                                                                   
|99.2     | Form 51-901F as required by the British Columbia
Securities Commission                                                                                                                            

*     Previously filed as part of
Imagis' Registration Statement on Form 10-SB (File No. 000-30090).

17

---

**   Previously filed as part of Imagis'
Annual Report on Form 10-KSB for the year ended December 31, 1999.
+     Previously filed as part of Imagis' Quarterly
Report on Form 10-QSB for the period ended September 30, 2000.
++   Previously filed as part of Imagis' Annual Report on Form
10-KSB for the year ended December 31, 2000.
+++ Previously filed as part of Imagis' Quarterly Report on Form 10-QSB for the
period ended March 31, 2001.

b)     Reports on Form 8-K

On May 7, 2001, the Company filed a Form 8-K relating to a
(i) a press release dated May 2, 2001, in which the Company announced the
release of the ID-2000 SDK, a software development kit that provides biometric
facial recognition solutions for any application, including e-commerce,
airports, customs and immigration, access control, auto theft, etc., as well as
for existing Imagis markets in law enforcement and gaming, and (ii) a press
release dated May 7, 2001, in which the Company announced that, further to press
releases dated February 19 and March 22, 2001, the Company had completed the
first closing of its private placement of Units for total proceeds to the
Company of $973,000.

On May 23, 2001, the Company filed a Form 8-K relating to a
press release dated March 16, 2001, in which the Company announced its
partnering with API Gaming, one of North America's leading gaming consulting
firms, to market the world's leading casino surveillance software application,
Casino-ID, together with access to a central database of intelligence on
undesirable patrons, as well as preferred and advantage players.

On June 1, 2001, the Company filed a Form 8-K, incorporating
by reference, the Company's Notice of Annual General Meeting, Information
Circular, Proxy and Return Card.

18

---

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 9, 2001

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

19

---

EXHIBIT INDEX

|Exhibit No. | Description                                                                                                                                                                                                      
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |                                                                                                                                                                                                                  
|3.1*        | Articles of Incorporation                                                                                                                                                                                        
|            |                                                                                                                                                                                                                  
|4.1*        | Shareholder Agreement dated February 23, 1999
among the Original Shareholders and the Former Imagis Shareholders                                                                                                 
|            |                                                                                                                                                                                                                  
|4.2*        | 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+        | Convertible Note Subscription Agreement dated
October 1, 1999                                                                                                                                                    
|            |                                                                                                                                                                                                                  
|10.1*       | Incentive Stock Option Agreements dated July 7,
1998 between Imagis and each of Sandra E. Buschau, Altaf Nazerali and Ross
Wilmot                                                                                
|            |                                                                                                                                                                                                                  
|10.2*       | 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*       | Revenue Assignment Agreement dated December 15,
1998 among Imagis, Pacific, Imagis Solutions (US) Incorporated and Imagis North
West Solutions Inc.                                                              
|            |                                                                                                                                                                                                                  
|10.4*       | Agency Agreement dated March 29, 1999 among
Imagis and the Agents                                                                                                                                                
|            |                                                                                                                                                                                                                  
|10.5*       | Subscription Agreement dated January 26, 1999
between Imagis and Pacific Cascade Consultants Ltd.                                                                                                                
|            |                                                                                                                                                                                                                  
|10.6*       | Subscription Agreement dated January 26, 1999
between Imagis and First Capital Invest Corp.                                                                                                                      
|            |                                                                                                                                                                                                                  
|10.7*       | 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*       | Consulting Services Agreement effective February
25, 1999 between Imagis and Shafiq Nazerali-Walji                                                                                                               
|            |                                                                                                                                                                                                                  
|10.9*       | Warrant dated February 25, 1999 issued to Iain
Drummond                                                                                                                                                          
|            |                                                                                                                                                                                                                  
|10.10*      | Warrant dated February 25, 1999 issued to
Armitage and Associates                                                                                                                                                
|            |                                                                                                                                                                                                                  
|10.11*      | Employment Agreement dated February 23, 1999
between Imagis and Iain Drummond                                                                                                                                    
|            |                                                                                                                                                                                                                  
|10.12*      | Technology Purchase Agreement dated March 6,
1998 among Imagis Technologies Ltd., Imagis Cascade Technologies Inc. and
Penelope Walker, Richard Graham and William Hawkes                                        
|            |                                                                                                                                                                                                                  
|10.13*      | Technology Purchase Agreement dated March 6,
1998 among Imagis, Imagis Cascade Consultants, Inc. and Former Imagis
Shareholders                                                                                  
|            |                                                                                                                                                                                                                  
|10.14*      | Share Purchase Agreement dated December 14, 1998
among Imagis, Imagis Cascade and the Former Imagis Shareholders                                                                                                 
|            |                                                                                                                                                                                                                  
|10.15*      | Confidentiality and Standstill Agreement dated
October 6, 1998 among Colloquim Capital Corp., Imagis Cascade Technologies Inc.
and Former Imagis Shareholders                                                    

20

---

|10.16**  | Loan Agreement dated October 15, 1999 between
Imagis and Rexton Corporation                                       
|-------- | ------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                   
|10.17+   | Agreement dated May 1, 2000 between Imagis and
Somerset Financial Group Inc.                                      
|         |                                                                                                                   
|10.18+   | Agreement dated August 15, 2000 between Imagis
and GPC Communications                                             
|         |                                                                                                                   
|10.19+   | Agreement dated August 21, 2000 between Imagis
and Fleishman-Hillard Canada Inc.                                  
|         |                                                                                                                   
|10.20++  | Imagis Technologies Inc. 2000 Stock Option
Plan                                                                   
|         |                                                                                                                   
|10.21++  | Agreement dated October 11, 2000 between Imagis
and Orion Scientific Systems Inc.                                 
|         |                                                                                                                   
|10.22+++ | Imagis Technologies Inc. 1999 Stock Option
Plan                                                                   
|         |                                                                                                                   
|10.23    | Form of Share Purchase Warrant                                                                                    
|         |                                                                                                                   
|10.24    | Form of Unit Subscription Agreement                                                                               
|         |                                                                                                                   
|16.1*    | Letter to SEC dated December 10, 1998 from
Elliott Tulk Pryce and Anderson regarding change in certifying accounts
|         |                                                                                                                   
|99.1     | Risk Factors                                                                                                      
|         |                                                                                                                   
|99.2     | Form 51-901F as required by the British Columbia
Securities Commission                                            

*     Previously filed as part of
Imagis' Registration Statement on Form 10-SB (File No. 000-30090).
**   Previously filed as part of Imagis' Annual Report on
Form 10-KSB for the year ended December 31, 1999.
+     Previously filed as part of Imagis' Quarterly
Report on Form 10-QSB for the period ended September 30, 2000.
++   Previously filed as part of the Imagis' Annual Report
on Form 10-KSB for the year ended December 31, 2000.
+++	Previously filed as part of Imagis' Quarterly Report
on Form 10-QSB for the period ended March 31, 2001.