INTACTA TECHNOLOGIES INC
424B4, 2000-07-07
COMPUTER PROGRAMMING SERVICES
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                                              Filed pursuant to Rule 424(b)(4)
                                                   Registration No. 333-30400

PROSPECTUS
----------

                           8,841,000

                   INTACTA TECHNOLOGIES INC.

                          Common Stock

                           8,841,000

     This is a public offering of 8,841,000 shares of the common stock of
Intacta Technologies Inc.  All of the shares being offered, when sold, will be
sold by selling shareholders as listed in this prospectus on page 15.  We will
not receive any of the proceeds from the sale of the shares.

     Our common stock is currently traded on the Nasdaq Over-the-Counter
Bulletin Board under the symbol "ITAC."  The average of our high and low
trading prices of our common stock on the Nasdaq Over-the-Counter Bulletin
Board on June 23, 2000 was $4.02 per share.

     Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete.  Any representation to the contrary
is a criminal offense.

     Investing in the shares involves risks.  See "Risk Factors" beginning on
page 6.

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

         The date of this prospectus is July 6, 2000.

<PAGE>

                       TABLE OF CONTENTS

PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . 3
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . .12
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . .13
DIVIDEND POLICY. . . . . . . . . . . . . . . . . . . . . . . . . . .13
CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . .14
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
SELLING SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . .15
SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . . . . . . . . .17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
  AND RESULTS OF OPERATION . . . . . . . . . . . . . . . . . . . . .18
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . .41
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . .42
DESCRIPTION OF CAPITAL STOCK . . . . . . . . . . . . . . . . . . . .44
SHARES ELIGIBLE FOR FUTURE SALE. . . . . . . . . . . . . . . . . . .47
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . .48
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . .50
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
WHERE YOU CAN FIND MORE INFORMATION. . . . . . . . . . . . . . . . .50
INDEX TO FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . F-1

<PAGE>

                       PROSPECTUS SUMMARY

     You should read the following summary together with the more detailed
information and financial statements and notes thereto appearing elsewhere in
this prospectus.

                            Intacta

     We provide software and hardware products for the secure electronic
transmission of documents and electronic document management and archiving
using our patented compression, error correction and encoding and decoding
technology.

     Intacta Technologies Inc. was incorporated in Nevada in 1997 under the
name InfoImaging Technologies Inc.  In August 1999, we changed our name to
Intacta Technologies Inc.  The terms "Intacta," "our company," and "we" in
this prospectus refer to Intacta Technologies Inc., a Nevada corporation,
Intacta Delaware Inc., our wholly owned subsidiary incorporated in Delaware,
and Intacta Labs Ltd., our wholly owned subsidiary incorporated in Israel,
collectively.

     On May 28, 1998, NASD Regulation, Inc. cleared West America Securities
Corp.'s request to submit a quote for our common stock on the Nasdaq
Over-the-Counter Bulletin Board.  Our common stock has been quoted on the
Nasdaq Over-the-Counter Bulletin Board since that time.

     The registration statement of which this prospectus forms a part is our
first public filing with the Securities and Exchange Commission.

     Our head office address is 235 Peachtree Street, N.E., 2215 North Tower,
Atlanta, Georgia, 30303, and our telephone number is (404) 880-9919.  We
maintain a World Wide Web site address at www.Intacta.com. Information on our
Web site is not part of this prospectus.

     We have applied for registration of the trademarks "INTACTA
TECHNOLOGIES," "INTACTA.MOBILECE," "INTACTA.COURIER," "INTACTA.BRIDGEWAY",
"INTACTA.SMARTFORM," "INTACTA.DOCMANAGER," "INTACTA.SMARTBAR," "INTACTA.CODE,"
and "INTACTA.COMPACTOR" in the United States.  We have also applied for
registration of the "INTACTA.CODE" trademark in Japan.  All other trademarks
or service marks appearing in this prospectus are trademarks or service marks
of the companies that use them.

-3-

<PAGE>

                          The Offering

Common stock offered by selling shareholders            8,841,000 shares

Common stock owned by the selling
shareholders after the offering                         zero shares (1)

Use of proceeds                                         We will not receive
                                                        any proceeds from the
                                                        sale of the shares.
                                                        See "Use of Proceeds."

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

(1)  This number assumes that each shareholder will sell all of its shares
available for sale during the effectiveness of the registration statement that
includes this prospectus.  Shareholders are not required to sell their shares.
See "Plan of Distribution."

     Unless otherwise specifically stated, information throughout this
prospectus excludes 1,375,000 shares issuable upon the exercise of outstanding
options and 1,667,100 shares reserved for future issuance under our stock
option plan.

-4-

<PAGE>

<TABLE>

<CAPTION>

                     Summary Financial Data

                                                 Years Ended                           Quarters Ended

                              December31, December 31, December 31, December 31,    March 31,    March 31,
                                 1996        1997         1998         1999            1999         2000
<S>                               <C>         <C>          <C>          <C>          <C>          <C>
Statement of Operations Data:
Net sales                    $ 1,019,600  $   894,900  $   137,800  $   137,400  $    59,500  $   153,600
Loss from operations          (1,958,400)  (1,455,900)  (2,914,500)  (3,733,500)    (719,800)    (784,000)
Net loss                      (2,529,800)  (2,199,700)  (3,145,800)  (3,617,600)    (722,100)    (766,700)
Basic and diluted loss per
  common share                     (0.22)       (0.19)       (0.19)       (0.20)       (0.04)       (0.04)
Book and diluted weighted average
  common shares outstanding   11,486,000   11,486,000   16,701,583   17,790,000   17,671,000   17,790,000

</TABLE>

                                            As of             As of
                                December 31, 1999    March 31, 2000

Balance Sheet Data:

Cash and cash equivalents              $  917,400        $  796,400
Working capital                           574,100           171,600
Total assets                            1,570,900         1,396,000
Long-term obligations                           0                 0
Total shareholders' equity                841,500           418,800

-5-

<PAGE>

                          RISK FACTORS

     This offering involves a high degree of risk.  You should carefully
consider the risks described below and the other information in this
prospectus before deciding to invest in shares of our common stock.

Our limited operating history makes it difficult to predict how our business
will develop and our future operating results.


     We commenced operations in October 1997.  We discontinued production and
sales of all of our retail products in late 1997 and focused on the research
and development of new products based on our existing technology.  Of our
current products, only one, Intacta.MobileCE, is commercially available.  We
have a limited operating history, and we face many of the risks and
uncertainties encountered by early-stage companies in rapidly evolving
markets.

     These risks and uncertainties include:

     - no history of profitable operations;

     - uncertain market acceptance of our products;

     - our reliance on a limited number of products;

     - the risks that competition, technological change or evolving customer
       preferences could adversely affect sales of our products;

     - the need to expand our sales and support capabilities;

     - our dependence on a limited number of key personnel, including our
       Executive Vice President of Research and Development; and

     - the risk that our management will not be able to effectively manage
       growth or any acquisition we may undertake.

     Our limited operating history makes it difficult to predict how our
business will develop and our future operating results.

Our independent auditors have expressed substantial doubt about our ability to
continue as a going concern.

     Primarily as a result of our recurring loses, our independent auditors
modified their opinion on our 1999 financial statements and in the two
preceding years to include an explanatory paragraph expressing substantial
doubt about our ability to continue as a going concern.

We have incurred net losses in each fiscal year since inception, we may incur
losses in the future and our losses may increase because of our plan to
increase operating expenses.

     We have incurred net losses in each fiscal year since inception.  In the
year ended December 31, 1998, we had a net loss of approximately $3.2 million.
And in the year ended December 31, 1999, we had a net loss of approximately
$3.6 million.  We have increased our operating expenses in recent periods and
plan further increases in the future.  Our planned increases in operating
expenses may result in larger losses in future periods.  As a result, we will
need to generate significantly greater revenues than we have to date to
achieve and maintain profitability.  We cannot assure you that our revenues
will increase.  Our business strategies may not be successful, and we may not
be profitable in any future period.

-6-

<PAGE>

Our total revenues have declined each year since 1996 and our revenues may
continue to decline in the future.

     Our total revenues have declined from $1,019,600 to $894,900 to $137,800
to $137,400 in the years ended December 31, 1996, 1997, 1998 and 1999,
respectively.  We expect revenues to increase in fiscal year 2000.  We
anticipate that the increased revenues will come from the following sources:

          - New licensing arrangements that we are currently
            negotiating; and

          - Sales of our Intacta.MobileCE, Intacta.Courier, Intacta.Bridgeway
            and Intacta.Compactor products, all of which we anticipate will be
            commercially available by the fourth quarter of 2000.

Intense competition in the market for our products may result in price
reductions, lower gross margins or loss of our market share, any of which
could materially adversely affect our business, financial condition and
operating results.

     The market for our software is intensely competitive, fragmented and
rapidly changing.  We face competition from companies in two distinct markets,
the document management market and the electronic communication market.  See
"Business - Competition."

     In addition, as we develop new products, particularly applications
focused on electronic communication, we may begin competing with companies
with whom we have not previously competed.  It is also possible that new
competitors will enter the market or that our competitors will form alliances
that may enable them to rapidly increase their market share.

     Some of our actual and potential competitors are larger, better
established companies and have greater technical, financial and marketing
resources.  Increased competition may result in price reductions, lower gross
margins or loss of our market share, any of which could materially adversely
affect our business, financial condition and operating results.

Our future revenue growth could be impaired if we are unable to expand our
direct sales infrastructure.

     Our future revenue growth will depend in large part on our ability to
successfully expand our direct sales force.  We may not be able to
successfully manage the expansion of this function or to recruit and train
additional direct sales support personnel.  There is presently a shortage of
qualified personnel to fill these positions.  If we are unable to hire and
retain additional highly skilled direct sales personnel, we may not be able to
increase our license revenue to the extent necessary to achieve profitability.
If we are unable to hire highly trained consulting and customer support
personnel we may be unable to meet customer demands.  We are not likely to be
able to increase our revenues as we plan if we fail to expand our direct sales
force.  Even if we are successful in expanding our direct sales force
capability, the expansion may not result in revenue growth.

The loss of our Executive Vice President of Research and Development or other
key personnel or our failure to attract and retain additional personnel could
adversely affect our business, results of operations and financial condition.

     Our success depends largely upon the continued service of our executive
officers and other key management, sales and marketing and technical
personnel.  The loss of the services of one or more of our executive officers
or other key employees could have a material adverse effect on our business,
results of operations and financial condition.  In particular, we rely on
Dr. Menachem Tassa, our Executive Vice President, Research and Development and
director.  Dr. Tassa does not have an employment agreement with us and,
therefore, could terminate his employment with us at any time without penalty.
We have key man insurance on the life of Dr. Tassa in the amount of
$2,000,000.  However, this insurance would not sufficiently compensate us for
the loss of services of Dr. Tassa.

-7-

<PAGE>

     Our future success also depends on our ability to attract and retain
highly qualified personnel.  The competition for qualified personnel is
intense, and we may be unable to attract or retain highly qualified personnel
in the future.  In addition, due to intense competition for qualified
employees, it may be necessary for us to increase the level of compensation
paid to existing and new employees to the degree that our operating expenses
could be materially increased.

We may be unable to adequately protect our proprietary rights and we may not
become aware of or have adequate remedies in the event of breaches or
unauthorized activities regarding our proprietary rights.

     Our success depends in part on our ability to protect our proprietary
software and our other proprietary rights from copying, infringement or use by
unauthorized parties.  To protect our proprietary rights we rely primarily on
a combination of copyright, trade secret and trademark laws, confidentiality
agreements with employees and third parties, and protective contractual
provisions such as those contained in license agreements with consultants,
vendors and customers, although we have not signed these types of agreements
in every case.  Despite our efforts to protect our proprietary rights,
unauthorized parties may copy aspects of our products and obtain and use
information that we regard as proprietary.  Other parties may breach
confidentiality agreements and other protective contracts we have entered
into.  We may not become aware of, or have adequate remedies in the event of,
these types of breaches or unauthorized activities.

Claims by other companies that our products infringe their copyrights or
patents could adversely affect our ability to sell our products and increase
our costs.

     If any of our products violates third-party proprietary rights,
including copyrights and patents, we may be required to reengineer our
products or obtain licenses from third parties to continue offering our
products without substantial reengineering.  If a patent has been issued or is
issued in the future to a third party that prevents us from using technology
included in our products, we would need to obtain a license or reengineer our
product to function without infringing the patent.  Any efforts to reengineer
our products or obtain licenses from third parties may not be successful and,
in any case, could substantially increase our costs, or force us to interrupt
product sales or delay product releases.

Our products and products we rely on may suffer from defects or errors and
these defects or errors could result in loss of revenues or delay in market
acceptance of our products, diversion of development resources, damage to our
reputation, increase service and warranty costs and liability claims.

     Software products as complex as ours may contain errors or defects,
especially when first introduced or when new versions are released.  Our new
products and product enhancements or new applications or features may not be
free from errors after commercial shipments have begun.  Any errors that are
discovered after commercial release could result in loss of revenues or delay
in market acceptance, diversion of development resources, damage to our
reputation, increased service and warranty costs and liability claims.

     In addition, third-party products we rely on, such as Microsoft platform
products, may contain defects or errors.  Our electronic communications
products rely on these products to operate properly.  Therefore, any defects
in these products could adversely affect the operation of and market for our
products, reduce our revenues, increase our costs and damage our reputation.

-8-

<PAGE>

We expect to experience rapid growth which will place a strain on our
resources, and any failure to manage our growth effectively could impair our
ability to efficiently manage our business, to maintain and expand important
relationships with third parties and to attract customers, and could cause us
to incur higher operating costs and delays in the execution of our business
plan or in the reporting or tracing of our financial results.

     We expect to experience rapid growth in our number of employees, the
scope of our operating and financial systems and the geographic area of our
operations.  Specifically, we plan to hire approximately 29 people by the end
of 2000.  This growth will result in an increase in the level of
responsibility for both existing and new management personnel.  To manage our
growth effectively, we will be required to continue to implement and improve
our operating and financial systems and to expand, train and manage our
employee base.  Any failure by us to properly manage our growth of these
systems could impair our ability to efficiently manage our business, to
maintain and expand important relationships with third parties and to attract
customers, and could cause us to incur higher operating costs and delays in
the execution of our business plan or in the reporting or tracing of our
financial results.

If the market for the Windows CE operating system fails to develop fully or
develops more slowly than we expect, our business and operating results will
be materially harmed.

     Windows CE is one of many operating systems developed for the
intelligent computing device, market, and the extent of its future acceptance
is uncertain.  Because all of our revenue to date has been generated by
software products and services dependent on the Windows CE operating system,
if the market for Windows CE fails to develop fully or develops more slowly
than we expect, our business and operating results will be significantly
harmed.  Market acceptance of Windows CE will depend on many factors,
including:

     - Microsoft's development and support of the Windows CE market.  As the
       developer and primary promoter of Windows CE, if Microsoft were to
       decide to discontinue or lessen its support of the Windows CE
       operating system, potential customers could select competing
       operating systems, which would reduce the demand for our Windows
       CE-based software products and services.  In addition, Microsoft has
       developed a version of its Windows NT operating system for
       intelligent computing devices and could decide to shift its support
       to this operating system to the detriment of Windows CE;

     - the ability of the Windows CE operating system to compete against
       existing and emerging operating systems for the intelligent computing
       device market including:  VxWorks from WindRiver Systems Inc., pSOS
       from Integrated Systems, Inc., VRTX from Mentor Graphics Corporation,
       JavaOS from Sun Microsystems, Inc. and LINUX.  In particular, in the
       market for palm-size devices, Windows CE faces intense competition
       from PalmOS used on 3Com Corporation's Palm devices and to date has
       had limited success in this market.  Windows CE may be unsuccessful
       in capturing a significant share of these two segments of the
       intelligent computing device market, or in maintaining its market
       share in those other segments of the intelligent computing device
       market on which our business currently focuses, including the markets
       for Internet-enabled television set-top boxes, handheld industrial
       devices, consumer Internet appliances such as kiosk terminals and
       vehicle navigational devices, and Windows-based terminals;

     - the acceptance by original equipment manufacturers and consumers of the
       mix of features and functions offered by Windows CE; and

     - the willingness of software developers to continue to develop and
       expand the applications that run on Windows CE.  To the extent that
       software developers write applications for competing operating systems
       that are more attractive to intelligent computing devise end users than
       those available on Windows CE, potential purchasers could select
       competing operating systems over Windows CE.

-9-

<PAGE>

If the market for intelligent computing devices fails to develop fully
or develops more slowly than we expect, our revenue will not grow as
fast as anticipated, if at all.

     The market for intelligent computing devices is emerging, and the
potential size of this market and the timing of its development are not known.
As a result, our profit potential is uncertain and our revenue may not grow as
fast as we anticipate, if at all.  We are dependent upon the broad acceptance
by businesses and consumers of a wide variety of Windows CE-based intelligent
computing devices, which will depend on many factors, including:

     - the development of content and applications for intelligent computing
       devices;

     - the willingness of large numbers of businesses and consumers to use
       devices such as handheld and palm-size personal computers and
       handheld industrial data collectors to perform functions currently
       carried out manually or by traditional personal computers, including
       inputting and sharing data, communicating among users and connecting
       to the Internet; and

     - the evolution of industry standards that facilitate the distribution of
       content over the Internet to these devices via wired and wireless
       telecommunications systems, satellite or cable.

If Microsoft adds features to its Windows CE operating systems that directly
compete with software products and services we provide, our revenue could be
reduced and our profit margins could suffer.

     As the developer of Windows CE, Microsoft could add features to its
operating system that directly compete with the software products and services
we provide to our customers.  Such features could include, for example,
faxing, hardware-support packages and quality assurance tools.  The ability of
our customers or potential customers to obtain software products and services
directly from Microsoft that compete with our software products and services
could harm our business.  Even if the standard features of future Microsoft
operating system software were more limited than our offerings, a significant
number of our customers and potential customers might elect to accept more
limited functionality in lieu of purchasing additional software.  Moreover,
the resulting competitive pressures could lead to price reductions for our
products and reduce our profit margins.

Unanticipated delays, or announcement of delays, by Microsoft of Windows CE
product releases could adversely affect our sales.


     Unanticipated delays, or announcement of delays, in Microsoft's delivery
schedule for new versions of its Windows CE operating system could cause us to
delay our product introductions and impede our ability to complete customer
projects on a timely basis.  These delays or announcements by Microsoft could
also cause our customers to delay or cancel their project development
activities or product introductions.  Any resulting delays in, or
cancellations of, our planned product introductions or in our ability to
commence or complete customer projects may adversely affect our revenue and
could cause our quarterly operating results to fluctuate.

Our stock price may be adversely affected by sales of our common stock by
selling shareholders.

     Upon effectiveness of this registration statement, selling shareholders
who own more than 48.5% of our common stock will be eligible to sell their
common stock in the secondary market.  Large sales volumes by selling
shareholders could adversely affect the market price of our common stock.

Investors in our common shares may not be able to readily resell their shares,
if at all, due to low liquidity in our stock.

     Our common shares trade only on the Nasdaq Over-the-Counter Bulletin
Board and therefore are subject to low liquidity.  As a result, investors may
not be able to readily resell their shares, if at all.

-10-

<PAGE>

We conduct the majority of our research and development in Israel, and
instability in Israel may adversely affect our research and development
activities.

     Our principal research and development facility is located in Beer
Sheva, Israel at the headquarters of our wholly owned Israeli subsidiary,
Intacta Labs Ltd.  Our research and development activities may be adversely
affected by economic, political and military conditions in Israel and the
Middle East.

We will need to raise significant additional capital in the next 4 months to
meet operating expenses.

     Our management anticipates that we will need to raise at least $1.5
million during the next 4 months to meet operating expenses.  Our success will
depend in part on our ability to obtain additional financing.  We may not be
able to obtain additional financing on terms favorable to us, if at all.  We
are currently negotiating the terms of a senior bridge note financing.  We
intend to raise $1,500,000.  In addition, we are negotiating with a financial
advisor to assist us in a private placement of our common stock to raise up to
an aggregate of $10,000,000.  We cannot assure you that we will be successful
in completing the bridge note financing or private placement of common stock.

-11-

<PAGE>

                   FORWARD-LOOKING STATEMENTS

     This prospectus contains forward-looking statements based on our current
expectations, assumptions, estimates and projections about our business and
industry.  These forward-looking statements involve risks and uncertainties.
Our actual results could differ materially from those anticipated in such
forward-looking statements as a result of the factors more fully described in
"Risk Factors," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business" and elsewhere in this prospectus.
We undertake no obligation to update publicly any forward-looking statements
for any reason, even if new information becomes available or other events
occur in the future.

-12-

<PAGE>

                        USE OF PROCEEDS

     This prospectus is part of a registration statement that permits selling
shareholders to sell their shares.  Because this prospectus is solely for the
purpose of selling shareholders, Intacta will not receive any proceeds from
the sale of stock being offered.

                        DIVIDEND POLICY

     We have never declared or paid any cash dividends on our capital stock.
We currently intend to retain any future earnings to fund the development and
growth of our business and we do not anticipate paying any cash dividends in
the foreseeable future.

-13-

<PAGE>

                         CAPITALIZATION

     The following table sets forth our capitalization as of December 31,
1999 and March 31, 2000:

                                          December 31,        March 31,
                                                 1999             2000

Cash and cash equivalents                 $   917,400      $   796,400

Long-term obligations,
  less current portion                              0                0

Shareholders' equity:
  Preferred stock, undesignated,
  $0.0001 par value; 50,000,000 shares
  authorized; no shares issued and
  outstanding                                       0                0
Common stock, $0.0001 par value,
  100,000,000 shares authorized,
  17,909,000 issued and outstanding             1,791            1,791
Additional paid-in capital                 19,710,553       19,821,506
Accumulated deficit                       (17,671,200)      18,437,900
Unamortized stock compensation             (1,199,644)        (966,597)
                                           ----------       ----------
  Total shareholders' equity (deficit)        841,500          418,800
                                           ----------       ----------
  Total capitalization                    $   841,500      $   418,800
                                           ==========       ==========

-14-

<PAGE>

                            DILUTION

     This offering is for sales of stock by existing Intacta shareholders on
a continuous or delayed basis in the future.  Sales of common stock by
shareholders will not result in any substantial change to the net tangible
book value per share before and after the distribution of shares by the
selling shareholders.  There will be no change in net tangible book value per
share attributable to cash payments made by purchasers of the shares being
offered.  Prospectus investors should be aware, however, that the price of
Intacta's shares may not bear any rational relationship to net tangible book
value per share.

                      SELLING SHAREHOLDERS

     The following are the shareholders for whose accounts the shares are
being offered; the amount of securities owned by each selling shareholder
prior to this offering; the amount to be offered for each selling
shareholder's account; and the amount to be owned by each selling shareholder
following completion of the offering:

                                                          Percent of Common
                                                            Shares Owned
                                                       -----------------------
                   Number of   Number of   Number of
Name                Shares      Shares   Shares After  Before the    After the
                     Owned      Offered     Sale (1)    Offering      Offering
----------------- ---------- ----------- ------------ ------------  ----------

Cybermind AG(2)    1,500,000  1,500,000       -          8.4%           -

Gestibroker
Consulting &
Financial
Management S.A       117,000    117,000       -           -             -

MFC Merchant Bank
SA(3)              1,000,000  1,000,000       -          5.6%           -

Zeljka Tepes         200,000    200,000       -          1.1%           -

Value Invest
Ltd.(4)              830,000    830,000       -          4.6%           -

Affaires Financieres
S.A.                 750,000    750,000       -          4.2%           -

Rahn & Bodmer        786,000    786,000       -          4.4%           -

Finter Bank          800,000    800,000       -          4.5%           -

Euroswiss Securities 810,000    810,000       -          4.5%           -

Mandate Management
Ltd.(5)              820,000    820,000       -          4.6%           -

PreVision Overseas
Management Ltd.(6)    50,000     50,000       -           *             -


Valor Invest
Limited(7)           538,000    538,000       -          3.0%           -

Pensbreigh Holdings
Ltd.(8)           640,000       640,000       -          3.6%           -

---------------
*Less than 1%

(1) This table assumes that each shareholder will sell all of its shares
available for sale during the effectiveness of the registration statement that
includes this prospectus.  Shareholders are not required to sell their shares.
See "Plan of Distribution."  Other than described in footnotes (2) and (3)
below, no other selling shareholder has held any position or office or had any
material relationship with Intacta during the past three years.
(2) Includes 238,000 shares issued by us to Valor Invest in repayment of a loan
of U.S.$952,000 pursuant to a loan conversion at the rate of $4.00 per share
on June 30, 1999.  Includes 300,000 shares purchased directly from Corsa S.A.
Holdings.
(3) MFC Merchant Bank is a wholly owned subsidiary of MFC Bancorp Ltd., a
public company traded on the Nasdaq National Market.
(4) Giovanni Trivella has sole voting and investment power over Value Invest
Ltd.

-15-

<PAGE>

(5) Yechiel Sharabi, a director of Intacta, has sole voting and investment
power over Mandate Management Ltd.
(6) Janete Elisa Steinberg has sole voting and investment power over PreVision
Overseas Management Ltd.
(7) Steve Popovics has sole voting and investment power over Valor Invest
Limited.
(8) Pensbreigh Holdings Ltd. and Intacta are parties to a contract dated March
1, 1999 under which the services of our President, Chief Executive Officer and
a Director, Mr. Altaf S. Nazerali, provides his services to us.  See
"Management - Employment Contracts - Altaf S. Nazerali."  Mr. Nazerali is a
shareholder and officer of Pensbreigh Holdings Ltd.

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

     On May 31, 1998, we entered into an exchange agreement with Corsa S.A.
Holdings.  Under the exchange agreement, Corsa S.A. Holdings transferred 100%
of the outstanding shares of Intacta Delaware Inc. and 99% of the outstanding
shares of Intacta Labs Ltd. to us.  In exchange, we issued 11,486,000 shares
of our common stock to Corsa S.A. Holdings.  See "Related Party Transactions."
Corsa S.A. Holdings subsequently sold 7,486,000 of the 11,486,000 shares to
some of the selling shareholders above.  Corsa S.A. Holdings is not a selling
shareholder under this registration statement.

-16-

<PAGE>

                    SELECTED FINANCIAL DATA

     The following selected financial data are qualified in their entirety by
reference to, and you should read them in conjunction with, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the audited financial statements and notes to such financial statements
included in this prospectus.  We have derived the statements of operations
data from our audited financial statements that appear in this prospectus, and
these data are qualified by reference to the financial statements.

<TABLE>

<CAPTION>

                                             Year ended December 31,             Quarter Ended March 31,

Statement of Operations Data:       1996        1997        1998        1999        1999        2000

<S>                                  <C>         <C>         <C>         <C>         <C>         <C>

Net sales                    $ 1,019,600  $  894,900  $  137,800  $  137,400  $   59,500  $  153,600
Operating Expenses:
  Cost of products and
    components                   514,100     357,500     336,300      90,500           -      72,100
  Research and development       331,900     343,200     903,500   1,047,400     265,500     300,400
  Sales and marketing            526,800     297,000     113,100     113,200       2,500     215,900
  General and administrative   1,605,200   1,353,100   1,699,400   2,619,800     541,000     349,200
                              ----------  ----------  ----------  ----------  ----------  ----------
Total operating expenses       2,978,000   2,350,800   3,052,300   3,870,900     809,000     937,600
                              ----------  ----------  ----------  ----------  ----------  ----------
Loss from operations
                              (1,958,400) (1,455,900) (2,914,500) (3,733,500)   (719,800)   (784,000)
Interest income (expense)       (578,700)   (755,300)   (210,000)     95,300      29,700      18,200
Taxes                              7,300      11,500     (21,300)    (20,600)     (2,300)       (900)
                              ----------  ----------  ----------  ----------  ----------  ----------
Net loss                     $(2,529,800)$(2,199,700)$(3,145,800)$(3,617,600)   (722,100)   (766,700)
                              ==========  ==========  ==========  ==========  ==========  ==========

Basic and diluted net loss per
common share                       (0.22)$     (0.19)$     (0.19)$     (0.20)$     (0.04)$     (0.04)
                              ==========  ==========  ==========  ==========  ==========  ==========

Basic and diluted weighted average
common shares outstanding
                              11,486,000  11,486,000  16,701,583  17,790,000  17,671,000  17,790,000
                              ==========  ==========  ==========  ==========  ==========  ==========

</TABLE>

<TABLE>

<CAPTION>                                                                                   As of

                                                As of December 31,              March 31,

                                    1996        1997        1998        1999        2000
<S>                                 <C>         <C>         <C>         <C>         <C>
Balance Sheet Data:

Cash and cash equivalents    $    58,000 $   169,100 $ 3,047,100 $   917,400 $   796,400
Working capital (deficiency)  (5,773,200) (9,693,400)  1,924,200     574,100     171,600
Total assets                     545,500   1,151,800   3,760,700   1,570,900   1,396,000
Long-term obligations          2,015,900           -           -           -           -
Total shareholders' equity
  (deficiency)                (5,677,800) (9,407,800)  2,268,600     841,500     418,800

</TABLE>

-17-

<PAGE>

              MANAGEMENT'S DISCUSSION AND ANALYSIS
        OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION

Forward Looking Statements

     Statements in this Form S-1, including those concerning our expectations
of future sales revenues, gross profits, research and development, sales and
marketing, and administrative expenses, product introductions and cash
requirements include forward-looking statements.  As such, our actual results
may vary materially from our expectations. Factors which could cause our
actual results to differ from expectations include variations in the level of
orders, which can be affected by general economic conditions and in the
markets served by our customers, and international economic and political
climates.  Additional factors would be the timing of future product releases,
difficulties or delays in product functionality or performance, our failure to
respond adequately to either changes in technology or customer preferences, or
to changes in our pricing or that of our competitors, our inability to manage
growth, from non-payment of accounts receivable and changes in budgeted costs.
All of the above factors constitute significant risks to our company.  There
can be no assurance that our results of operations will not be adversely
affected by one or more of these factors.

     Overview

     Our company was incorporated in October, 1997 in the State of Nevada
with the intent that it would apply for listing on an exchange and by means of
an acquisition become a fully operational public company.  Initially we raised
approximately $1 million to fund our activities, primarily to complete our due
diligence review of two target companies which have become our wholly-owned
subsidiaries, and to prepare all of the necessary documentation associated
with their acquisition.

     We acquired both subsidiaries after successful negotiation with Corsa S.
A. Holdings, which we refer to as Corsa, which owned both subsidiaries.  While
an agreement had been signed in October 1997, we did not complete the
acquisition until May 31, 1998.  The parties agreed to an exchange of shares
so that we would acquire all of the common shares of Intacta Delaware Inc., a
Delaware corporation, which we refer to as Intacta Delaware and all of the
common shares of Intacta Labs Ltd., an Israeli corporation, which we refer to
as Intacta Labs, from Corsa for total consideration of  $11,486,000, to be
paid through the issuance of 11,486,000 common shares of our capital stock
from treasury to Corsa, each share valued at $1.00.  This valuation of the
subsidiaries equated to the approximate aggregate accumulated deficits of the
two companies to that date which we accepted and in turn Corsa agreed to
accept the per common share value of $1.00 which approximated the market
trading value at the time of our initial discussions and signing of the letter
of intent.  We acquired both companies to acquire their core technology
developed by Intacta Labs and marketed through Intacta Delaware worldwide.
While Intacta Labs holds all of the patents and proprietary rights to the
technology, Intacta Delaware holds all of the marketing rights worldwide,
necessitating the acquisition of both companies.

     In late 1997, with our concurrence, the previous management of our two
wholly-owned subsidiaries, decided to cease production of their current
products, primarily two versions of a fax storage and retrieval unit termed
the FaxPal, each version having different amounts of onboard memory.  They
also decided to wind down all marketing efforts related to the FaxPal
products, and to begin development of new products based on our patented core
technology.  In the past, Intacta Delaware had been successful in negotiating
a licensing arrangement for use of this proprietary technology.  The terms of
this agreement provides for licensing royalties to be paid quarterly to us
based on the volume of the licensee's sales where our technology is imbedded.
This license provided royalty revenues in 1998 and 1999.

     Our management currently is negotiating additional licensing
arrangements to build on this utilization of our core technology.  At the same
time, we are intending shortly to launch our first two new products,
Intacta.MobileCE and Intacta.Courier developed by our Intacta Labs team and
anticipate launching other new products later in the current year.  We plan to
market both new products directly to consumers as downloadable files from the
internet as well as to license their use by manufacturers in the future.  We
also plan on selling some of our

-18-

<PAGE>

other new products directly to consumers, again as downloadable products via
the Internet, and to license the software to manufacturers for inclusion in
their software products.

     Our financial condition reported as at December 31, 1999 includes all
amounts for the parent company, Intacta Technologies Inc., and our two
wholly-owned subsidiary companies, Intacta Delaware, and Intacta Labs.  Our
reported earnings from operations include the combined earnings of Intacta
Technologies Inc. and our two subsidiaries for the full 1999 year.

     Because we had only approximately five million shares issued, the
11,486,000 new shares issued to Corsa represented a majority holding of our
stock and consequently Corsa obtained control of the parent and both
subsidiaries.  In instances like this, accounting principles require that the
transaction be reflected in financial statements as a "reverse acquisition"
where the subsidiaries essentially acquire the parent.  In this form of
accounting, the statements are created by aggregating the accounts of the
two subsidiaries, as would have been the case if Corsa had retained ownership,
and then adding the accounts of the parent for the relevant period when all
three companies came under common control.  In this case, common control
started immediately after the completion of the acquisition, effectively June
1, 1998.  Consequently, as noted above the 1999 earnings include the accounts
of all three companies for the full year but for 1998, the earnings include
the full year for the two subsidiaries but only the earnings for our parent,
Intacta Technologies Inc. for the seven months following the date of
acquisition. Also, according to proper accounting practice to portray all
three companies as if they were operating as a single entity, transactions
between the three companies have been eliminated.

     Regarding our most recent quarter ended March 31, 2000 our financial
condition reported includes all amounts for the parent company, Intacta
Technologies Inc., and our two wholly-owned subsidiary companies, Intacta
Delaware, and Intacta Labs, and our reported earnings from operations for the
quarter include the combined earnings of Intacta Technologies Inc. and our two
subsidiaries, consistent with the comparable quarter in 1999.

Results of Operations for the quarters ended March 31, 2000 and March 31,1999

     Revenues

     Our revenues for the first quarter of year 2000 aggregated $153,600, up
significantly from the 1999 level of $59,500. This year's revenues included
royalty revenues of $12,800 and unusually high products and components
revenues generated from sales primarily of chips in our Israeli inventory of
$140,800. By comparison in 1999, our royalty revenues were somewhat higher at
$44,800, while product and component sales revenues were much lower at only
$14,700. Included in this latter amount for 1999 were product sales revenues
for our discontinued FaxPal products amounting to $7,700. There were no sales
of the FaxPal product units in 2000. The remainder of $7,000 reflects sales of
Israeli components and some fees earned from providing special technical
services to another company using our technical staff because of their unique
expertise.  We do not anticipate this consulting revenue source to continue at
this high level throughout the remainder of the year. However we recently
signed another licensing agreement for use of our proprietary code in Japan
and consequently expect licensing revenues to increase significantly.

     Operating Expenses

     Our operating expenses for the first quarter were $937,600 which is
somewhat higher  than the costs of the first quarter of  1999 of $809,000. Our
expenses include Costs of Products and Components, Sales and Marketing,
Research and Development and General and Administration.

     Costs of Products and Components

     Our costs of products and components for the first quarter were $72,100
in year 2000 primarily as a result of the sale of computer chips on hand in
our inventories in Israel, the costs of which were $54,000. The remaining
costs are attributable to a few sales of other components and for components
used in our development programs. By comparison, there were no costs in the
first quarter of 1999.

-19-

<PAGE>

     Research and Development

     The Research and Development expenditures amounted to $300,400 in the
quarter, up from the 1999 level at $265,500. The cost level in the current
year represents the costs of our continuous research activity, salaries for
staff of $159,200 versus $159,800 in 1999, office and other support facility
costs of $50,800 in the current year as compared with $15,300 in 1999, and the
impact of our stock-based compensation of $90,400 in year 2000, the same
amount as in 1999. Our current staffing level has remained essentially
constant over the last two years and no changes are planned, and the costs of
operating this facility are also expected to remain at these approximate
levels.

     Sales and Marketing

     The Sales and marketing costs for the current quarter were $215,900. This
cost level reflects the activation of our Sales and Marketing function,
whereas in 1999, our costs were only $2,500, when there was no sales or
marketing activities taking place. We started to market our proprietary
technology late in 1999 and have transferred three staff members into this
function and engaged another. The results of their activities to date are
reflected in the most recent signing of a licensing agreement in Japan and
with other licensing discussions currently under way. Costs this quarter
include primarily salaries of $142,500, and the cost of our stock-based
compensation program as it affects options granted to the Sales and Marketing
staff amounting to $28,200. As previously reported, our management decided
late in 1997 to commence the wind down of all marketing efforts and to focus
on developing new products utilising the Company's core technology.
All sales staff were released in 1998 and senior management were released
later in the year. Consequently, costs in the prior year's quarter were
virtually nil.

     General and Administration

     Our first quarter General and Administration costs this year amounted to
$349,200 which is 35 per cent lower than the 1999 costs of $541,000.  This
decrease reflects primarily the transfer of the three staff members to the
Sales and Marketing function on a full time basis. In 1999, two of these staff
members were on board at the time. General and Administration costs for 2000
included salaries of $64,000, facility and support costs of $14,700,
professional fees and regulatory costs of $45,100, and option compensation
amortisation of $225,400. The 1999 costs included salaries of $117,300,
professional fees of $67,200, office, travel and general of $156,300, and the
stock compensation charge of $200,100.

     Other Income(Expense)

     We earned interest on funds held on deposit during the period amounting
to $18,200. In 1999, we earned $29,700, higher due to the higher level of
funds on deposit during the prior year.

     Net Losses

     Our net loss was $766,700 after taxes of $900 in the quarter, which is
only six per cent higher than the loss in 1999 of $722,100 when taxes were
$2,300. The slightly higher loss this year reflects the activation of the
marketing function and commensurate higher Sales and Marketing costs this
year.

Results of Operations for the years ended December 31, 1999 and December
31,1998

     Revenues

     Our total revenues in 1999 were $137,400, virtually the same as those in
1998 of $137,800.  The 1999 revenues include a small contribution for sales of
our discontinued FaxPal product group of only $9,500 and the sale of
electronic components held in inventory in Israel and related technical
support fees amounting to $54,500, these two sales aggregating $64,000, and
royalty revenues of $73,400.  In 1999, FaxPal product sales revenues for the

-20-

<PAGE>

year fell to only $9,500, a decline of approximately 90 per cent from those in
1998 when sales for the year were $89,300.  We had experienced sales volume
and gross margin declines throughout 1997 and this led to our decision to
wind-down our marketing efforts for these existing products late in that year.
The wind-down was effectively completed in the first quarter of 1998 and as a
result, our 1998 sales revenues were essentially earned all in the first
quarter and fell off significantly after that time.  Our sales in 1999,
without the benefit of any marketing support therefore reflect only the small
volume of units sold and shipped either directly by us or through a reseller
to end customers in accordance with our policy to reflect sales revenues only
upon ultimate shipment to the end user.  We do not anticipate initiating any
further promotional activity for the FaxPal unit and expect no future revenues
to be earned from sales of these products.

     As noted above however, we earned other 1999 revenues through the sale
of computer chips we had on hand in conjunction with the development of one of
our new products, which will be a hardware unit.  Revenues from this sale were
$54,500. No comparable revenue was generated in 1998.  Finally, our 1999
revenues were enhanced significantly by royalties from an existing licensing
arrangement for use of our source code by another software company and yielded
$73,400, a 51 per cent gain over the 1998 level of $48,500.  Revenues from
this licensing arrangement are recognized in our accounts at the time the
licensee reports the quarterly usage and remits payment.  As previously
stated, one of our near-term objectives is to add new licensees to increase
our royalty revenues.

     Operating Expenses

     Our Operating expenses overall for 1999 were $3,870,900.  This level is
27 per cent higher than that incurred in the prior year, of $3,052,300.
Operating costs include costs of products and components, Research and
development, Sales and marketing, and General and administrative for all three
companies including depreciation.  Our costs of products and components
amounted to $90,500 in 1999.  This amount included both costs related to
electronic components sold and the write off of materials used in the
production of FaxPal products also held in Israel and determined to no longer
be useful.   The original cost of the discontinued FaxPal unit materials
determined to no longer possess any resale value amounted to $46,100 with the
remainder of $44,400 representing the costs related to the electronic
components sold and other material costs.  By contrast, our 1998 costs, all
related to the discontinued FaxPal product group, aggregated $336,300.  This
1998 amount included actual costs of FaxPal products sold of $96,200, and a
write down of all of the remaining inventoried costs for the finished products
on hand amounting to $240,100.  This write off reflects the decision made in
1998, following the decline in FaxPal gross margins essentially to zero in the
latter part of 1997, to no longer manufacture and market the FaxPal product
group.  Since all product costs had thereby been expensed in 1998, no costs of
product were recorded for the 1999 sales.

     Research and Development

     Our 1999 Research and development expenditures, at $1,047,400, were 16
per cent higher than those for 1998 of $903,500.  In 1998, several research
staff were added early in the year and additional set-up expenditures on
equipment and staff costs were incurred as a result of our ramping up of
development efforts for new product applications.  The cost level in the
current year represents the costs for the full year of our continuous
development activity, salaries for our staff and for office and other support
facilities.  The salary costs represented 56 per cent of our total costs of
our Israeli operations this year, down from 72 per cent in 1998.  The current
staffing level is expected to be maintained and the costs of operating this
facility to remain approximately constant also over the next year.  The total
costs for both years include the impact of our stock compensation and
represents in 1999 $222,400 or 21 per cent of the total function costs, and
for 1998 the impact amounted to $129,700 or 14 per cent of the prior year
total cost amount.  The determination of these costs is more fully described
in conjunction with our discussion of Administration costs below.

     Sales and Marketing

     Our Sales and marketing costs were $113,200 in 1999, virtually the same
as those in the prior year of $113,100.  As noted above, we conducted no sales
efforts in 1999 but engaged design and marketing groups to assist with our
development of the new business strategy and to advise us regarding the launch
of our new software

-21-

<PAGE>

products.  In contrast, our 1998 costs related only to media and co-operative
advertising programs promoting the FaxPal products and were incurred
essentially all in the first quarter.   At this time, we have a number of new
product applications developed with two ready for release shortly. We
anticipate that new marketing staff will be engaged in the near future to
initiate product launching and manage our sales and marketing functions and
consequently salary and travel as well as promotional costs will increase
significantly in the future.

     General and Administrative

     General and administrative costs increased 54 per cent over the prior
year's amount of $1,699,400 to $2,619,400 in 1999, the increase brought about
primarily by our stock option compensation charge for the year, the addition
of several new executive staff and related office and travel expenses, and for
consulting and professional fees to support various corporate projects.  This
group is providing overall management of the public company as well as the
subsidiaries, and is also managing several key projects:

     - directing the development of our Company's new business strategy,
     - developing a new corporate identity with supporting documentation,
     - restructuring the corporate entities in line with the new business
       strategy,
     - generating interim financing and also additional financing options, and
     - identifying new technical and strategic partners.

     Our General and administrative costs include salaries and fees for
full-time and contract staff, professional and other consulting fees incurred
in support of the design and research for our new strategy and corporate
identity development, costs for shareholder information and regulatory
requirements as well as the preparation of our Form S-1 filing with the
Securities and Exchange Commission, our stock option compensation annual
charge and office support and travel costs for the staff.

     The 54 per cent increase over the 1998 level reflects primarily the
impact of our stock option compensation.  Other factors which caused the year
over year increase were associated with the increased activity related to the
above corporate redirections and includes increases primarily in consulting
and professional fees of 64 per cent to $449,000, coupled with higher salary
costs of $497,000, up 27 per cent over those of 1998 and higher travel of
$230,000, also up 27 per cent from last year's level.

     We had granted stock options to a number of management and research
staff as part of our incentive compensation program.  As a consequence, and in
accordance with the requirements of Accounting Principles Board (APB) Opinion
No. 25, Accounting for Stock Issued to Employees and with the requirements of
SFAS No. 123, Accounting for Stock-Based Compensation, we incurred total
expense of $1,238,400 which reflects the difference in fair market value of
our common stock at the grant date, as compared to the exercise price for
those accounted for in accordance with APB No. 25, and the fair value of the
options issued at the grant date using the Black-Scholes Option Pricing Model
for those accounted for in accordance with SFAS No. 234.  By comparison, the
expense recorded in 1998 amounted to $668,800.  Of the total 1999 amount of
$1,238,400, $222,400 was allocated to Research and development as it relates
to options granted to the technical staff and the remaining $1,016,000 relates
to options granted to directors, officers and others all charged to
Administration.  The 1998 comparable total charge equaled $668,800, of which
$129,700 was allocated to Research and development and the remaining amount of
$539,100 was allocated to Administration.

     Other Income (Expenses)

     In 1999, we earned $104,000 in interest income from funds on deposit
from a financing completed in December 1998.  No comparable interest revenues
were earned in 1998.  Also, in 1999, we incurred interest costs of $8,700 in
our Israeli operation related to the inventory purchases made in the year.  By
comparison, in 1998 we incurred $210,000.  This interest expense was incurred
by Intacta Delaware and Intacta Labs for advances from their previous parent
company, Corsa which had been made in prior years to sustain their operations.
These advances were extinguished prior to the closing of our acquisition and
consequently we incurred no interest expense in 1998 after that date.

-22-

<PAGE>

     Net Losses

     The 1999 Net Loss of  $3,617,600 was 15 per cent higher than the 1998
figure of $3,145,800.

Year Ended December 31, 1998 Compared To Year Ended December 31, 1997

     Revenues

     Consolidated revenues for the full year 1998 were only $137,800, down
significantly from the 1997 level of $894,900 when we were actively marketing
our FaxPal products.  In the fourth quarter of 1997, management of both
Intacta Delaware and Intacta Labs recognized that the market potential for its
primary product, FaxPal, and other related products was proving less than
forecast and they decided to reduce marketing efforts and initiate significant
design revisions to its core applications. Consequently, during all of 1998,
the marketing and sales effort was reduced and without this support, revenues
declined significantly.

     Operating Expenses

     Costs of Products and Components

     Because of this change in direction, management realized mid-year that
inventory levels conceived to support a high sales forecast early in the year,
were too high and recorded a write-down equal to the total value of the
current inventory of these products, amounting to approximately $240,100.  As
a consequence of this write-down, cost of products for 1998 totaled $336,300,
reflecting product costs of units sold in the year of $96,200, plus the above
reserve amount.  By contrast, the 1997 cost of sales was $357,500, all related
to units sold.

     Research and Development

     The 1998 Research and development costs of $903,500 were more than
double the $343,200 incurred in 1997, the increase due to the additional
developmental work performed to carry out the product revisions and to the
impact of our stock compensation plan.  Costs in both years include salaries,
the costs associated with the stock compensation plan and office support as
well as some development software and other equipment.  Several additions to
staff were made during 1998, the stock plan cost for the year of $129,700 and
the costs of computer equipment and software for these new staff members as
well as materials for hardware development work related to the new products,
caused overall costs to rise 163 per cent.

     Sales and Marketing

     Sales and marketing expenses are all incurred by Intacta Delaware.
Sales and marketing costs were only $113,100 in 1998, approximately 38 per
cent of the total incurred for 1997 of $297,000.  The lower 1998 expenditures
reflects our decision to revise and reposition our products and to reduce
marketing efforts.  Early in 1998, the sales staff was reduced and all were
released by year-end.

     General and Administrative

     General and administrative costs for 1998 were $1,699,400 representing
an increase of $346,300 or 26 per cent above the 1997 costs of $1,353,100.
General and administrative costs include primarily salaries and other office
costs, stock option compensation, professional and other consulting service
fees and travel.  The higher overall costs in the current year reflect the
impact of our stock option compensation and the corporate costs of our parent
company, salaries and office costs and professional fees, consulting support
and travel costs related to the restructuring and acquisition of the two
subsidiary companies mid-year.  These increases were offset to some degree by
savings from reduced staffing of Intacta Delaware, and general restraint
during the corporate restructuring.

     In 1998, we granted 1,005,000 common stock options to key management and
staff pursuant to our adopting an incentive stock option plan.  The options
have an exercise price of $1.50 per share.  As the market value on December
31, 1998 was higher than the exercise price, in accordance with Accounting
Principles Board Opinion

-23-

<PAGE>

No. 25, Accounting for Stock Issued to Employees and in accordance with the
requirements of SFAS No. 123, Accounting for Stock-Based Compensation, we
incurred a stock option compensation cost amounting to $668,800 in 1998, of
which $129,700 was allocated to Research and development and the remainder of
$539,100 to Administration.  As the plan was adopted in 1998, no costs were
incurred in 1997.

     Net Losses

     The 1998 net loss was $3,145,800 after provision for interest costs of
$210,000 incurred as a result of loans from Corsa prior to the acquisition,
other costs of $19,600 and state taxes of $1,700 for the year.  The 1997 net
loss of $2,199,700 was $946,100 or 43 per cent lower than that for 1998
primarily due to the large swing in the loss from operations which amounted to
$1,458,600 between the two years, offset by an interest charge of
approximately $755,300.

Liquidity and Capital Resources

     In 1999, we completed our restructuring and business planning, and were
negotiating additional licensing arrangements which we expect will provide
revenues in year 2000. We have successfully completed development of two of
our new software products, Intacta.MobileCE and Intacta.Courier and our
Intacta Labs staff have provided considerable design customization for
potential licensees of our core technology. We anticipate further additions to
staff to support several of these potential licensing commitments and to
expand our marketing force in the near future.

     As a result of our activities during 1999 and the first quarter of 2000,
our cash position at the beginning of 1999 of $3,047,100 has declined to the
relatively low position at December 31, 1999 of $917,400 and lower still at
March 31, 2000 at $796,400. The total drawdown of $2,250,700 over the fifteen
month period resulted from the impact of the losses in 1999 of $3,617,600 and
for the first quarter 2000 of $766,700, offset only by advances from a
shareholder of $436,000 received this past quarter, although the impact of the
stock compensation charges to 1999 of $1,238,400 and to 2000 of $344,000
included in these losses were non-cash in nature.

     While the losses in prior years have approximated the 1999 year level of
$3,617,600, due to the change in ownership and associated reverse merger
accounting, and the refocus of our business away from its predecessor FaxPal
products and to the development of new software applications, we don't
consider that comparisons between years would be meaningful as an indication
of future trends for both sources of funds and their use in operations.

     In May of 2000, our management anticipated that we would need to raise
at least $1.5 million during the ensuing four months to meet our operating
expenses, as our average monthly costs approximate $200,000 (primarily
salaries, travel, office and other similar expenses).  While we have recently
completed a licensing agreement which will generate larger revenues than
earned in the past and are presently negotiating with other potential
licensees, we recognized the need late in 1999 for additional funding to meet
operating expenses and to expand our activities in the coming months.  We
raised an additional $2,500,000 through a private placement of units with
closings on May 31, 2000 ($1,675,000) and June 15, 2000 ($825,000).  We plan
to raise up to an additional $10.0 million by means of a private placement of
our common stock in the next quarter and have had preliminary discussions with
potential broker sponsors.  These funds are intended to permit us to expand
our marketing efforts through additions to staff and to develop and execute a
comprehensive market exposure program to introduce our product applications in
the field of data management.  We cannot be assured that we will be successful
in completing the private placement of our common stock.

     Our independent auditors have expressed substantial doubt about our
ability to continue as a going concern. Primarily as a result of our losses,
our independent auditors modified their opinion on our 1999 financial
statements and the two preceding years to include an explanatory paragraph
expressing substantial doubt about our ability to continue as a going concern
at that time.

-24-

<PAGE>

Year 2000 Issues

     Even though the date is now past January 1, 2000 and we have not
experienced any immediate adverse impact from the transition to the Year 2000,
we cannot provide assurance that our suppliers and customers have not been
affected in a manner that is not yet apparent.  In addition, computer programs
that were date sensitive to the Year 2000 may not process the Year 2000 as a
leap year and any negative consequential effects remain unknown.  As a result,
we will continue to monitor our Year 2000 compliance and the Year 2000
compliance of our suppliers and customers.

Recent Accounting Pronouncements

     In March 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained For Internal Use," which is effective
for fiscal years beginning after December 15, 1998.  SOP No. 98-1 provides
guidance on accounting for the costs of computer software developed or
obtained for internal use and defines specific criteria that determine when
such costs are required to be expensed, and when such costs may be
capitalized.  The adoption of this standard has not had a material effect on
our capitalization policy, results of operations, financial position or cash
flows.

     In June 1998, the Financial Accounting Standards Board (FASB) issued
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities.
SFAS No. 133 require companies to recognize all derivatives contracts as
either assets or liabilities in the balance sheet and to measure them at fair
value.  If conditions under SFAS No. 133 are met, a derivative may be
specifically designated as a hedge, the objective of which is to match the
timing of gain or loss recognition on the hedging derivative with the
recognition of

     - the changes in the fair value of the hedged assets or liability that
       are attributable to the hedged risk, or

     - the earnings effect of the hedged forecasted transaction.

     For a derivative not designated as a hedging instrument, the gain or
loss is recognized in income in the period of change.  SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after June 15,
2000.  Historically, we have not entered into derivatives contracts either to
hedge existing risks or for speculative purposes.  Accordingly, we do not
expect adoption of the new standard on January 1, 2001 to affect its financial
statements.

     In February 1998, the FASB issued SFAS No. 132, Employer's Disclosures
about Pensions and Other Postretirement Benefits, which standardizes the
disclosure requirements for pension and other postretirement benefits.  The
adoption of SFAS No. 132 did not have a material impact on our current
disclosures.

     In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments
of an Enterprise and Related Information.  This statement established
standards for the way companies report information about operating segments in
its financial statements.  It also establishes standards for related
disclosures about products and services, geographic areas, and major
customers.  The disclosures prescribed by SFAS No. 131 did not have a material
impact on our financial statements as we operate as one business segment.

     In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive
Income.  SFAS No. 130 establishes standards for reporting comprehensive income
and its components in a financial statement that is displayed with the same
prominence as other financial statements.  Comprehensive income, as defined,
includes all changes in equity during the period from non-owner sources.
Examples of items to be included in comprehensive income, which are excluded
from net income, include foreign currency translation adjustments and
unrealized gain/loss on available-for-sale securities.  The disclosure
prescribed by SFAS No. 130 did not have a material impact on us.

-25-

<PAGE>

                            BUSINESS

Overview

     We develop and market products to

     - enable businesses to manage the production, distribution  and storage
       of content over Internet and paper-based media. Our technology also
       permits the seamless exchange of data between electronic and paper
       media.

     - reduce bandwidth and archiving requirements for content.  Transmission
       time and storage requirements of some types of large files and
       formats are significantly reduced using our compression and error
       correction techniques that offer advantages over other widely used
       methods such as TIFF and ZIP compression.

     - secure the management, authentication and archiving of sensitive
       business information.  Our technology and products apply equally to
       electronic and paper-based formats. We have developed specific
       products that have applications in registration forms that can then
       be sent electronically or via fax.

     - improve the performance and convenience of mobile wired and wireless
       telecommunications and applications. These include the emerging
       category of information and Internet devices such as palm/handheld
       computers, smart cell phones, etc.  Our compression technology lowers
       bandwidth requirements; our security technology protects transmission
       and our error-correction technology improves the integrity of content
       transmission under less than desirable environments.

     - enhance hardware and software server products that integrate our
       proprietary compression and error correction techniques.

     - increase user's satisfaction by improving convenience and time-savings.
       Our technology allows users to compress/decompress and encode/decode
       multiple-files containing different file formats with a single mouse
       click.

     Our products include:

     - Intacta.Courier, a software application that is installed in a personal
       computer, or network server, to enable a personal computer or network
       server to send and receive standard and color faxes, send faxes via
       email and send faxes with file attachments.  Intacta.Courier
       incorporates our compression and encoding technology.  It also
       provides the capability of automatic file conversion between Windows
       CE-based mobile communications and Windows 95/98/NT-based
       enterprises.

     - Our Intacta.Bridgeway product is a hardware version of Intacta.Courier.
       It can either stand alone or be integrated into an existing server
       environment. Additionally Intacta.Bridgeway integrates several
       functions that allow it to operate as an independent remote server.

     - Intacta.MobileCE is a software application that operates with Windows
       CE-powered intelligent computing devices to enable the devices to
       send and receive faxes, send faxes via email and send faxes with file
       attachments.

Each of these products provides our unique compression, encoding, decoding and
security features to local area network, wide area network and Internet faxes
and electronic messaging.  Intacta.MobileCE and our document management
solutions are the only products we are currently marketing. When these
products are used together, they provide end-to-end solutions between the
mobile workers and a business. We intend to begin marketing Intacta.Courier
and Intacta.Bridgeway in the third and fourth quarters of this year.

-26-

<PAGE>

Industry Background

     Document Management

     Historically businesses relied solely on paper-based document management
systems.  Today's computer-based business environment has altered the
historical business model, allowing businesses to manage, authenticate,
archive and transmit documents electronically.  Many businesses have
recognized the cost savings of implementing an electronic document management
system.  Electronic document management involves the application of imaging
and related technologies, to effectively convert unstructured paper-based
information into structured electronic data.  Eliminating or reducing reliance
on paper in document management, authentication and archiving allows
information to be controlled, distributed, and utilized in an efficient,
cost-effective manner.

     Our document management solution benefits businesses by providing a
comprehensive, cost-effective document management system.

     Electronic Communications

     The increasingly widespread use of electronic communications, including
the Internet, is enabling networks of businesses and consumers to collaborate,
access information and conduct business and personal interactions more
effectively.  To be successful in the electronic communications market, we
believe that a solution provider must adequately address the issues of data
integrity, security, authentication, bandwidth, storage and archiving, unified
messaging and multicast requirements for both electronic and paper-based data.
Our technology provides the building blocks for creating a range of solutions
in the electronic communications market from streamlined applications for
small businesses to highly complex systems for large businesses.  Our
technology is highly adaptable and customizable for incorporation into most
electronic software or hardware applications and into most non-electronic
printable media. With this inherent flexibility and scalability, our products
solve a variety of content management problems for businesses.

Solution

     We provide a solution by providing products that enable electronic
conversion of documents.  Our technology permits 100% of content and format to
be easily and efficiently exchanged between paper and electronic forms.  This
unique technology provides the "missing link" between paper-based document
management, electronic document management and electronic communication of
both paper-based and electronic documents.  We believe our solution delivers
the following benefits:

     - Savings in storage space since our compression techniques have the
       ability to compress, for example, a 50-page document as one or two
       equivalent pages depending on the graphic content of the original
       document.

     - We can transmit the original data in binary form either through fax
       or e-mail, permitting the recipient to edit and view the original
       document with its original formatting.

     - The transmitted documents can be encoded such that only the
       authorized or intended recipient will be able to view the data.

     - Reduction in bandwidth usage, and transmission time resulting in
       significant savings in telecommunications time for users. For
       example, a fifty-page document can be sent as a single page via fax
       protocol, or significantly compressed if sent by other electronic
       means, including e-mail.

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<PAGE>

Technology and Products

     Technology

     Our solution is based on our technology which compresses digital files
comprising text, video, graphics (including color) or sound into a
two-dimensional graphical grid, which we call an Intacta.Code.  Our patented
technology applies encoding and error correction applications to the digital
file creating a secure, damage resistant graphical representation of the
original digital file.  The key features of our patented technology are:

     - Compression.  The compression capability of our patented technology
       decreases the amount of bandwidth required to transmit information
       (in the form of an Intacta.Code) via a network, facsimile or the
       Internet. Our compression rates exceed the current capabilities of
       standard tagged information file format, or TIFF, and ZIP methods,
       enabling faster and more effective management of large databases and
       complex files. The compression not only increases the data density of
       the Intacta.Code image, but also improves the performance of the
       error correction algorithm.  For fax-based communications, our
       technology reduces transmission costs by enabling documents of up to
       110 kilobytes of digital data (approximately 100 pages) to be sent as
       a single page fax transmission.

     - Encoding and Decoding.  The encoding and decoding capabilities of our
       patented technology enable users to create an encoded Intacta.Code.
       Users can decode an Intacta.Code by viewing it with our special
       viewer or by printing it using a standard printer equipped with our
       special viewer.


     - Security.  The security capability of our technology enables users to
       protect information contained within an Intacta.Code.  The security
       features include the ability to restrict access to an Intacta.Code to
       particular users only and the ability to verify the sender and contents
       of an Intacta.Code containing sensitive information. Protection can
       also be layered such that a reader would require a separate and
       distinct password to access successive layers of information.

     Products

     Our solution, which is based on our patented technology, includes the
following products:

     Intelligent computing devices.  We intend to market a broad range of
software products that provide a variety of faxing functions to devices we
call intelligent computing devices, or intelligent computing devices, to
enhance the functionality of those devices.  Intelligent computing devices are
an emerging class of products with sophisticated processing power that are
designed for specific computing and communications applications.  These
devices are described as "intelligent" to distinguish them from rudimentary
single-purpose computing devices with only limited functionality.  Examples of
intelligent computing devices include

     - television "set-top boxes," which sit on top of television sets and
       provide users with advanced cable TV access services, sophisticated
       video gaming features and Internet access;

     - handheld and palm-size personal computers;

     - gaming systems;

     - handheld industrial data collectors;

     - consumer "Internet appliances" such as kiosk terminals and navigational
       devices in cars and trucks; and

     - terminals.

-28-

<PAGE>

     Compared to traditional computers intelligent computing devices are
often less expensive and more adaptable in terms of their size, weight and
shape, while still providing sophisticated computing and communications
capabilities, including Internet connectivity.

     Intacta.MobileCE.  Intacta.MobileCE is a communications software suite
developed to respond to the Enterprise need for robust communications software
that is bundled with intelligent computing devices to enable intelligent
computing devices to send and receive faxes, send faxes via email and send
faxes with file attachments. It is designed for use on any Windows CE-powered
system, with sufficient error correction capabilities for wireless and
satellite transmission. Intacta's unique compression process saves bandwidth
and transmission time, reduces communication costs and enhances the value of
mobile systems. Files, faxes and e-mail can be received, viewed, and printed.
A complementary product conversely allows desktop systems to open and read
files sent from a palm-top computer. Intacta.MobileCE provides our unique
compression, encoding, decoding and security features to intelligent computing
devices.   Intacta.MobileCE is the only product we currently market for use
with intelligent computing devices.

     Intacta.MobileCE is currently being evaluated by several U.S. and
Japanese manufacturers of Windows CE devices for integration into future
products.  We cannot assure you that these evaluations will result in these
manufacturers integrating Intacta.MobileCE into any of their Windows CE
devices.  We also intend to launch a version of Intacta.MobileCE for retail
customers in the third or fourth quarter of 2000.  We are currently evaluating
conversion of Intacta.MoblileCE to Palm OS and EPOC OS-based systems.

     Intacta.Courier.  Intacta.Courier is a software application that is
installed in a personal computer, or network server, to enable the personal
computer to send and receive faxes, send faxes via email and send faxes with
file attachments.  Intacta.Courier provides our unique compression, encoding,
decoding and security features to local area network, wide area network and
Internet faxes.  We are currently Beta-testing Intacta.Courier and anticipate
that it will be commercially available in the fourth quarter of 2000.  We are
developing a module to Intacta.Courier, called Intacta.Smartbar Fax Delivery
Solution, which we anticipate will be commercially available concurrently with
Intacta.Courier.  Intacta.Smartbar Fax Delivery Solution allows users to embed
digital information containing the identity and addressing information of the
sender and recipient of a fax into the cover sheet of the fax.  If a user
employs Intacta.Smartbar when sending a fax, the recipient can utilize the
information in the Intacta.SmartBar to:

     - automatically add the sender's contact information to his address book,

     - reply to the sender by fax without creating a fax cover sheet,

     - reply to the sender by email without addressing the email,

     - incorporate automatic sender determined encryption and automatic
       recipient determined decryption, and add additional macros for custom
       applications.

     Intacta.Bridgeway.  Intacta.Bridgeway is a hardware platform that
supports all common protocols in commercial and residential networks. It
embeds all the functionality of Intacta.Courier and our patented compression
and encryption technology.  Intacta.Bridgeway incorporates our softmodem
module that permits fax communication between two Intacta.Bridgeway units at
33.6kps.  Intacta.Bridgeway provides a wide degree of customization for both
vertical and horizontal markets. Once installed and configured, the sending
and receiving processes are totally transparent to the user's operation.
Examples of applications include:

     - creates a unique and efficient network that allows any of the 100
       million legacy fax devices to connect to local and wide-area
       networks;

     - provides color faxing capability and the ability to produce original
       quality documents by connecting to a color printer either directly or
       on a server;

-29-

<PAGE>

     - functions as a mini document server which compresses and routes
       outgoing documents using Intacta's proprietary technology, for cost
       efficiencies of up to 90 percent;

     - enables legacy fax and multi-functional peripherals to send and receive
       faxes via email and sends faxes with file attachments;

     - creates low-cost, secure closed-communications network with a unique
       encoding/decoding dynamic link library for a specific customer's
       network;

     - enables remote polling for various applications where each unit has
       its own unique Internet protocol address.

     We are currently developing Intacta.Bridgeway and anticipate that it
will be commercially available in the fourth quarter of 2000.

     Both Intacta.Courier and Intacta.Bridgeway allow seamless file
conversion between Windows CE-based intelligent computing devices and Windows
95/98/NT-based businesses.  The combination of our Intacta.MobileCE and
Intacta.Courier products form an end-to-end solution for businesses with
mobile workforces.

     Custom Designed Products.  We are currently developing the following
products which we intend to market to large enterprises:  Intacta.Compactor;
Intacta.Docmanager; Intacta.Smartform; and Intacta.Smartbar.  Each of these
products will be custom designed for each business purchaser.

     Intacta.Compactor.  Intacta.Compactor is a software application that
decreases the need for data storage space and data transmission time by
providing compression capabilities for document management systems. Our
Intacta.Compactor compression technology provides the user with a choice of
lossy and lossless compression.  Generally, lossy compression applies to image
and audio files where it is not imperative that 100% of the original content
is retrievable.  Users can choose what level of picture or sound quality is
acceptable.  Lossless compression dictates that 100% of the original content
is retrievable.  Intacta.Compactor provides the following features to document
management systems:

     - unique compression and security features of our patented technology,

     - lossless compression efficiency that can be up to 40% more effective
       than standard TIFF 4-file compression,

     - adjustable lossy compression up to 300%

     - easily customizable, and

     - can be used with any language.

     We anticipate that we will begin marketing Intacta.Compactor by the
fourth quarter of 2000.

     Intacta.Docmanager.  Intacta.Docmanager is a software application that
decreases the need for data storage space by converting paper documents to
digital documents for document management systems.  Intacta.Docmanager
converts paper documents to digital documents without optical character
recognition, and reconverts the digital documents to paper documents without
optical character recognition on an as-needed basis.  Intacta.Compactor
provides the following features to document management systems:

     - document authentication,

     - safeguards against falsification,

-30-

<PAGE>

     - compression efficiency that can be up to 40% more effective than
       standard TIFF 4-file compression,

     - 100% accurate file recovery, and

     - can be used with any language.

We are currently seeking strategic industry partners to commercialize
Intacta.Docmanager.

     Intacta.Smartform.  Intacta.Smartform is a software application that
simplifies and improves product registration between a business and its
customers by automating the generation, processing and storing of product
registration information.  Intacta.Smartform is easily customizable and can be
used with any language.  We have signed an initial licensing agreement with
DataLode Inc., a provider of registration services to Hewlett-Packard.

     Intacta.Smartbar.  Intacta.Smartbar virtually creates a document within
a document, or sub-document.  The  software application  compresses and
encodes information contained in financial, legal and personal identification
documents and provides digital authentication and verification of that
information at a later time.  Intacta.Smartbar creates a encrypted printed
code of the information that can be read with full accuracy by most standard
scanners.  Intacta.Smartbar can create documents within documents of various
sizes and densities to best fit a user's needs. Further benefits include
multi-level security in which a level can be read only by those with
appropriate clearance. All Intacta.Smartbar technology can be transmitted via
any media.  In addition, Intacta.Smartbar can be used with any language.  We
are integrating Intacta.Smartbar into our Intacta.Courier and
Intacta.Bridgeway applications and discussing with other developers the use of
this module in third party applications for embedding digital information in
various forms and security applications, e.g., insurance, health, secured
documents such as checks and bonds.  Versions of Intacta.Smartbar have been
licensed for use in Japan's Ministry of Health and other applications.

Customers and Markets

     Our large regional and international business customers are described
below:

     DataLode Inc.  In July 1999, we signed a license agreement for our
Intacta.Smartform module with DataLode Inc.  DataLode has a contract with
Hewlett-Packard and others to provide warranty registration services for
products in Europe and North America.  DataLode has agreed to utilize our
Intacta.Smartform to eliminate manual data entry and the need for optical
character recognition.  This is anticipated to lower their cost, assure 100%
data accuracy and increase the overall efficiency of their operations.

     Nippon Telegraph and Telephone Corporation.  Our communications software
has been selected by NTT Electronics Corporation, a subsidiary of Nippon
Telegraph and Telephone Corporation of Japan, for NTT Electronics
Corporation's new mobile communications technology, RZ SSB, a digitally
enhanced narrow band radio communications system.  NTT Electronics Corporation
has developed a new mobile radio technology that delivers transmission of
data, telephone, fax, and video under mobile conditions.

     Systems Nakashima Co., Ltd.  In April 2000, we entered into an agreement
to license our Intacta.Code technology to Systems Nakashima Co., Ltd.  Under
the agreement, Systems Nakashima has agreed to pay us a royalty fee in
exchange for the right to license the technology to newspaper publishers in
Japan.  Systems Nakashima has licensed the technology to Fujitsu, who has
announced that the Yomiuri Shimbun will be the first Japanese newspaper to
adopt the program.

-31-

<PAGE>

Sales and Marketing

     We plan to market and sell our products through a direct sales force and
through our Web site.  We plan to locate our direct sales force in the United
States, Canada, Europe, the Middle East and Asia Pacific.

     One of our key objectives is to create sales teams with a regional
presence to establish and build strong relationships with original equipment
manufacturers and systems integrators and to increase our responsiveness to
customers and local market opportunities.

     Our marketing efforts are directed at promoting our products, creating
market awareness and generating leads.  Our marketing activities include
online demonstrations, print and online advertising campaigns and attendance
at industry trade shows events and trade conferences.  We plan to use the
Internet extensively to increase awareness of Intacta and communicate with
potential customers, existing customers and others.  Through our Web site, we
plan to provide online access to our customer messages and  information
regarding products, respond to customer inquiries, conduct direct online sales
of our products and generate sales leads for our direct sales force.

     As of March 31, 2000, we employed a total of 3 people on our sales and
marketing team.

Strategic Relationships

     We plan to implement arrangements with third parties through which we
will grant the third parties the right to sell and implement our products.
Specifically, we seek to reach agreements with the following types of third
parties:

     - Solution Providers.  We plan to grant solution providers the right to
       market and resell our products and to provide education,
       implementation and customization for the solutions they sell as well
       as for sales made through our direct sales team.

     - Systems Integrators.  We plan to grant systems integrators the right to
       provide implementation, customization and training services to
       customers who have purchased solutions through our direct sales team.

     To date, we have not entered into any arrangements with third party
solution providers or systems integrators.

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<PAGE>

Research and Development

     Our research and development team is responsible for the design,
development and release of our products.  Our Vice President of Research and
Development works closely with our sales and marketing department as well as
with our customers and potential customers to better understand customer and
market needs.

     During 1999, a substantial majority of our research and development
scientists and engineers were involved in the development of Windows CE-based
products and providing custom solutions for our customers.  These members of
our research and development team have accumulated detailed knowledge of the
Windows CE environment.

     As of March 31, 2000, we employed a total of  12 scientists and
engineers on our research and development team.  Our research and development
team is located at our facilities in Beer Sheva, Israel.

Competition

     We believe that no one competitor of our technology dominates the
marketplace.

     Two dimensional bar coding technology, a technology that evolved from
conventional barcodes, is a competitive technology to our technology which
embeds digital information on paper or other printable surfaces.
Historically, the primary markets of two dimensional bar coding were
applications such as shipment tracking and inventory control.  However, two
dimensional bar coding technology requires that end-users must purchase
specific scanner devices from a manufacturer.  A manufacturers' primary
objective is to sell its hardware scanners, not its technology.   There are
approximately 20, 2-dimensional barcode technology companies of which we
believe only one, DataGlyph by Xerox, directly competes with our technology.
We believe the other 19 products do not compete with ours because none of them
offers a full range of functions and capabilities within its technology as we
provide in ours.  DataGlyph by Xerox has a significant market advantage due to
its large distribution systems, its mature operations, partner relationships
and substantial financial resources.

     Our competitor in the Windows CE mobile market is bsquare Corp.'s
product, bFAX-PRO 5.0.  Our product, Intacta.MobileCE, and bFAX-PRO 5.0 offer
the mobile user the ability to send and receive faxes.  The products differ in
that bFAX-PRO 5.0 offers internet faxing and our product offers fax by e-mail.

-33-

<PAGE>

Intellectual Property

     Our success is dependent upon our ability to protect our intellectual
property rights.  We rely principally on a combination of copyright,
trademarks, trade secret and patent laws, non-disclosure agreements and other
contractual provisions to establish and maintain our proprietary rights.  We
hold patents in Israel, the United States, Canada, Europe, Australia and South
Africa, related to our technology we use in our products in the areas of
producing, authenticating, transmitting, receiving, reading, and storing
compressed information.

     As part of our confidentiality and operating procedures, we generally
enter into nondisclosure and confidentiality agreements with each of our key
employees and consultants and limit access to and distribution of our core
technology, documentation and other proprietary information.  To protect
ourselves against any loss of essential information held by key personnel, we
have entered into provisions with our research and development employees with
regard to ownership of technological developments.  We have implemented a
secure document control system with appropriate safeguards and backups.  Our
source code for software and hardware products is maintained in a lock-box at
the offices of our Israeli law firm and is accessible only by members of our
board of directors.  Through our committee of the board of directors and our
Intellectual Property Policy, we will continue to pursue the development of
strong patent portfolio and trade marking of our products.

   Policing the unauthorized use of our technology is difficult. We will
use all viable and cost-permissive methods for defending and prosecuting any
suspected violators of  our technology.

Employees

    As of March 31, 2000, we employ a total of 24 employees, including 12 in
research and development and 12 in general, administrative and marketing
functions on a part and full-time basis.  We plan to hire 29 additional
employees in sales, marketing, and administration over the next fiscal year
and plan to hire additional research and development employees on an as-needed
basis.  If the need arises for additional research and development employees
and we are unable to hire qualified employees in a timely manner, we may
outsource non-critical research and development projects to third parties.

Facilities

     Our principal administrative and marketing facilities are located in
Atlanta, Georgia and consist of approximately 2,200 square feet of office
space held under a lease that expires November 8, 2000.  Our principal
research and development facility is located in Beer Sheva, Israel and
consists of approximately 3,000 square feet of office space held under a lease
that expires September 1, 2000.

Legal Proceedings

     We are not currently party to any pending legal proceedings.

-34-

<PAGE>

                           MANAGEMENT

Executive Officers and Directors

     The following table sets forth information, as of March 31, 2000,
regarding the executive officers and directors of the Corporation:

Name                        Age    Position


Yehoshua Sagi(1)(2)(4)      61     Chairman of the Board; Director

Altaf S. Nazerali(1)(2)(4)  46     President; Chief Executive Officer;
                                   Director

Noel Bambrough(3)(4)        61     Executive Vice President; Chief Operating
                                   Officer; Director

Menachem Tassa(3)(4)        57     Executive Vice President, Research and
                                   Development; Director

Ross Wilmot                 55     Vice President, Finance; Director

Marco Genoni                52     Vice President, Marketing

Yechiel Y. Sharabi(1)(2)(4) 66     Director

Amnon Shai                  65     Director

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

(1)Member of Audit Committee.
(2)Member of Compensation Committee.
(3)Member of Intellectual Property Committee.
(4)Member of Executive Committee.

     Yehoshua Sagi has served as Chairman of the Board and Director of
Intacta since May 29, 1998.  He was elected as a member of the Israeli Knesset
in 1988 and as the Mayor of Bat-Yam, Israel in 1993.  He continues to serve in
those capacities through to present. He previously headed Israeli Military
Intelligence, and was President of Tadiran Systems.

     Altaf S. Nazerali has served as President, Chief Executive Officer and
Director of Intacta since its incorporation in December 1997.  In addition,
Mr. Nazerali serves in the following capacities of other companies:

     - Chief Executive Officer (from November 1995 to present), President and
       Director (each from October 1995 to present) of Multivision
       Communications Corp, the operator of MMDS TV systems in Bolivia.;

     - Director of CTF Technologies, Inc. (from April 1998 to present), a
       company engaged in the servicing of electronic refueling technology
       in Brazil;

     - Chief Executive Officer and President of Canbras Communications Corp.
       (from November 1994 to October 1995), an operator of pay television
       and telephone systems in Brazil; and

     - Director of Imagis Technologies (from July 7, 1998 to present), a
       technology company that develops and markets biometric and imaging
       software to law enforcement, gaming and security sectors.

     Noel Bambrough has served as Executive Vice President, Chief Operating
Officer and Director of Intacta since April 1, 1999. From November 1998
through April 1999, Mr. Bambrough served as Consultant to Hunt Power
Corporation, a Texas-based utility company. Mr. Bambrough was responsible for
developing a Business Plan for the launch of telephone, internet and cable
television service to a mixed residential and industrial development owned by
Hunt's real estate subsidiary. From April 1995 through November 1998, Mr.
Bambrough was Executive Vice-President and Chief Operating Officer of Triax
Telecommunications Company L.L.C. From July 1993 to April

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<PAGE>

1995, he served as Senior Vice-President of Shaw Communications, Inc., a major
cable TV corporation. In January 1993, Mr. Bambrough was appointed Interim CEO
of Microcell Telecommunications, Inc., a PCS service provider, and served
until July 1993. Mr. Bambrough continues to serve as a member of the Board of
Directors of Microcell. From 1984 until its acquisition by Shaw Communications
in January 1993, Mr. Bambrough served as President and CEO of Cablecasting
Ltd.

     Menachem Tassa has served as Vice President, Research and Development
and Director of Intacta since May 29, 1998. He is General Manager of Intacta
Labs Ltd., our research and development subsidiary based in Beer Sheva,
Israel. Dr. Tassa has three PhDs in  applied mathematics, physics and
chemistry. He has been with us and our predecessors since 1994. Between 1990
and 1992, he was a telecom consultant. Prior to 1990, he occupied various
senior scientific positions with the Israeli government.

     Ross Wilmot is a chartered accountant providing financial management
services since August 1991 to public companies. He has special expertise in
international operations and high tech start-ups, and has completed numerous
business valuations and acquisitions in this sector. He is also experienced in
public company reporting practices in both the United States and Canada. He
has served as Vice President, Finance and Director of Intacta since its
incorporation in December, 1997.

     Marco Genoni has served as Vice President, Marketing of Intacta since
September 30, 1998.  Since 1997, he has served as President and Managing
Partner of Premier Stratatech Inc., a private marketing and consulting company
specializing in high technology products.  From 1994 to 1997, he served as
President and Chief Executive Officer of Memotec Communications Inc., a public
company that produces and sells telecommunications and network products for
medium and large enterprises. Dr. Genoni received his Masters of Science in
Physics from the Swiss Institute of Technology in 1971 and his Ph.D. in
Chemistry from the University of Basle (Switzerland) in 1974.

     Amnon Shai has served as a Director of Intacta since May 29, 1998. Mr.
Amnon Shai was Minister-Counselor for Commercial Affairs in the Israeli
Embassy in Paris from 1995 to 1998. From 1993 to 1995 he was Director of the
European Division, Foreign Trade Administration at the Ministry of Industry
and Trade. He completed his Masters in Business Administration at Columbia
University in New York in 1969. He graduated from the Hebrew University in
Jerusalem,  majored in Political Science and Economics.

     Yechiel Y. Sharabi has served as a Director of Intacta from May 29, 1998
to December 9, 1998. He rejoined the Board effective September 1, 1999. He was
managing director of Mandate Management Ltd. from 1991 to 1998. Mr. Sharabi
earned his Masters in Public Administration in New Haven University of
Connecticut in 1996. He graduated with a Bachelor of Arts in General History
from the University of Tel Aviv.

     Each director is elected for a period of one year at our annual meeting
of shareholders and serves until the next annual meeting or until his
successor is duly elected and qualified.  The executive officers serve at the
discretion of the board.  There are no family relationships among any of the
directors and executive officers of the Corporation.

Board Committees

     On September 9, 1998, our board of directors established an audit
committee, compensation committee, and executive committee.  Our board created
the intellectual property committee on September 21, 1999.

     Audit Committee.  The audit committee of the board of directors reviews
our internal accounting procedures and consults with and reviews the services
provided by our independent auditors.  Messrs. Nazerali, Sagi and Sharabi are
members of this committee.

     Compensation Committee.  The compensation committee of the board of
directors reviews and recommends to the board of directors the compensation
and benefits of all our executive officers and establishes and reviews general
policies relating to compensation and benefits of our employees.
Messrs. Nazerali, Sagi and

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<PAGE>

Sharabi are members of this committee.  Except as described in "Related Party
Transactions," no interlocking relationships exist between our board of
directors or compensation committee and the board of directors or compensation
committee of any other company, nor has any interlocking relationship existed
in the past.

     Intellectual Property Committee.  The intellectual property committee of
the board of directors establishes, amends and maintains guidelines of Intacta
regarding the handling of intellectual property matters.  Messrs. Bambrough
and Tassa are members of this committee.  In addition, the secretary of
Intacta, Ms. Sandra Buschau, serves on this committee.

     Executive Committee.  The executive committee of the board of directors
manages our day-to-day affairs and decides strategic direction.
Messrs. Bambrough, Nazerali, Sagi, Sharabi and Tassa are members of this
committee.

Director Compensation

     We do not currently pay any cash compensation to directors for serving
on our board, but we do reimburse directors for out-of-pocket expenses for
attending board and committee meetings.  We do not provide additional
compensation for committee participation or special assignments of the board
of directors.  Of our directors, only Messrs. Sagi, Shai and Sharabi received
stock options for their participation on our board.  Messrs. Sagi, Shai and
Sharabi each received options to purchase 50,000 shares at a price of $1.50
per share.

Executive Compensation

     The following table sets forth the compensation paid to our chief
executive officer and one other most highly compensated executive officer for
the years indicated.  No other executive officer of Intacta earned a salary
and bonus for such fiscal year in excess of $100,000.


                   Summary Compensation Table


                                      Annual       Long Term
                                   Compensation   Compensation

                                                   Securities     All Other
                                                   Underlying    Compensation
Name and Principal Position           Salary        Option/
                                                    SARs (#)

Altaf S. Nazerali                 $25,000(1)       150,000           -
President and CEO                $100,000(2)

Menachem Tassa                   $120,000(1)       150,000           -
Vice President, Research
  and Development                $120,000(2)

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

(1)Compensation in 1998
(2)Compensation in 1999.  This compensation is paid directly to Mr. Nazerali
   from Pensbreigh Holdings Ltd. from the monthly consulting fee we pay to
   Pensbreigh.  See "Employment Contracts   Altaf S. Nazerali."

Employment Contacts

     Altaf S. Nazerali

     We entered into a Consulting Agreement with Pensbreigh Holdings Ltd., an
independent contractor engaged in the business of providing various corporate
and consulting services to businesses, of which Mr. Nazerali is a shareholder
and officer ("Pensbreigh"), dated as of March 1, 1999.  Under the agreement,
Pensbreigh provides

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<PAGE>

the services of Mr. Nazerali and others to us.  During the initial term of the
agreement, we agreed to pay Pensbreigh a monthly fee of US$16,666.00.
Beginning in October 1999, this fee has been accrued and not paid.  Mr.
Nazerali is not an employee of Intacta and is therefore not entitled to any
benefit plans to which regular employees are entitled.

     Marco Genoni

     We entered into a letter agreement with Mr. Genoni, dated as of
September 30, 1998, governing Dr. Genoni's services to us as Vice-President of
Marketing, on a contracting basis.  Under the letter agreement, Dr. Genoni is
paid a monthly fee of US$5,000.  In addition to the monthly fee, we granted
Dr. Genoni options to purchase 30,000 shares of common stock of Intacta at
U.S.$1.50 per share.  Under the letter agreement, we and Dr. Genoni also
agreed to a bonus structure as follows:

     - 20% of any sales made by first reseller, including value added
       resellers ("VARs") and original equipment manufacturers ("OEMs"),
       during first year of employment;

     - 15% of any sales made by any reseller during first year of employment;

     - 10% of any sales made by any reseller during second year of employment;

     - 5% of any sales made by any reseller during third, fourth and fifth
       years year of employment;

     Noel Bambrough

     On March 31, 1999, we entered into an employment agreement with Noel
Bambrough, governing Mr. Bambrough's services to Intacta as Executive Vice
President and Chief Operating Officer.  Commencing April 1, 1999 through the
closing of our next round of financing, we will pay Mr. Bambrough U.S. $12,500
per month.  Commencing on the first full month of employment after the closing
of our next round of financing, we will pay Mr. Bambrough U.S. $20,833 per
month in base salary.  After the closing of our next round of financing, Mr.
Bambrough will also be eligible for a bonus not to exceed $U.S. 100,000 per
year based on the achievement of specific agreed upon business goals and
targets.  Under the agreement, we granted Mr. Bambrough an option to purchase
200,000 shares of common stock at a price of U.S. $4.00.  In addition, subject
to board of directors' approval, we must issue a minimum of 10% of any future
option pools to Mr. Bambrough.

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<PAGE>

Option Grants in Last Fiscal Year

     We did not grant any stock options to our chief executive officer or
other most highly compensated executive officer during the fiscal year ended
December 31, 1999.

Option Exercises and Fiscal Year-End Values

     The following table sets forth for our chief executive officer and one
other most highly compensated executive officer, the number of shares acquired
upon exercise of stock options during the fiscal year ended December 31, 1999
and the number of shares subject to exercisable and unexercisable stock
options held at December 31, 1999.

<TABLE>

<CAPTION>

        Aggregated Option Exercises in Last Fiscal Year
               And Fiscal Year-End Option Values




                                               Options at December 31,     December 31, 1998
                                                        1998
                    Shares
Name             Acquired on  Value Realized  Exercisable  Unexercisable  Exercisable  Unexercisable
                   Exercise

<S>                  <C>           <C>           <C>            <C>          <C>            <C>
Altaf S. Nazerali     -             -             -           150,000         -          $423,000
Menachem Tassa        -             -             -           150,000         -          $423,000


</TABLE>

Stock Option Plan

     On June 1, 1998, our board of directors approved the creation of the
1998 Stock Option Plan.  Under the plan, the board of directors may grant
incentive and non-qualified options to acquire up to a total of 1,667,100
common shares to our directors, officers, employees and consultants.  To date,
our board has granted options to acquire 1,375,000 common shares.

     The plan is intended to retain the services of our valued key employees
and consultants and others that the plan administrator may select to:

     - encourage our employees and consultants to acquire a greater
       proprietary interest in Intacta;

     - serve as an aid and inducement in the hiring of new employees; and

     - provide an equity incentive to consultants and others selected by the
       plan administrator.

     The primary difference between "incentive stock options" and
non-qualified options is the tax treatment of the option holder. If a holder
complies with Internal Revenue Service rules regarding incentive stock
options, a holder of an incentive stock can defer recognition of income for
tax purposes until the shares underlying the options

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<PAGE>

are sold.  A holder of a non-qualified option generally recognizes income on
the date of exercise.   Incentive stock options may be granted to any
individual who, at the time the option is granted, is an employee of Intacta
or any related corporation.  Non-qualified stock options may be granted to
employees and to others at the discretion of the plan administrator.  The plan
administrator fixes the exercise price for options in the exercise of its sole
discretion, except that the exercise price for an incentive stock option must
be at least the fair market value per share of the common stock at the date of
grant (as determined by the plan administrator in good faith), or in the case
of greater-than ten percent shareholders, at least one hundred ten percent of
the fair market value per share.  The exercise price may be paid in cash or,
with the approval of the plan administrator, by other means, including
withholding of option shares or delivery of previously held shares.  Options
granted under the plan vest over a three-year period, with one-third becoming
exercisable at the end of each of the three years following the date of grant.
The plan administrator may accelerate the vesting of options in its sole
discretion.

     Options are non-transferable except by will or the laws of descent and
distribution or subject to a qualified domestic relations order.  With some
exceptions, vested but unexercised options terminate upon the earlier of:

     - the expiration of the option term specified by the plan administrator
       at the date of grant (generally 10 years; or, with respect to incentive
       stock options granted to greater-than ten percent shareholders, a
       maximum of five years);

     - the expiration of 30 days from the date of an employee optionee's
       termination of employment with us or any related corporation "for
       cause" as defined in the plan;

     - the expiration of 90 days from the date of an employee optionee's
       termination of employment with us or any related corporation for any
       reason whatsoever other than for cause, death or disability (unless,
       in the case of non-qualified stock options, extended by the plan
       administrator); or

     - the expiration of one year from the date of death or disability (as
       defined in the plan) of the optionee.

     If an employee optionee's employment is terminated by death, any option
held by the optionee is exercisable only by the person or persons to whom such
optionee's rights under the option pass by the optionee's will or by the laws
of descent and distribution of the state or county of the employee optionee's
domicile at the time of death.  Unless accelerated in accordance with the
plan, unvested options terminate immediately upon termination of employment of
the optionee by us for any reason, including death or disability, and upon a
change of relationship between the optionee and us, such as from employee to
consultant.  The plan administrator may amend or modify the plan, except that
no amendment with respect to an outstanding option may be made over the
objection of the holder of the option (other than those provisions triggering
acceleration of vesting of outstanding options).

Indemnification of Directors, Officers and Others

     Our articles of incorporation provide that we shall have the right to
indemnify any person for any liability or expenses incurred by that person by
reason of the fact that he was a director, officer, employee or agent and has
the right to advance or pay the expenses of directors and officers in
defending civil or criminal suit or proceeding to the full extent provided by
the Private Corporation Law of Nevada.

     Our bylaws provide that to the fullest extent permitted by law we may
indemnify our directors, officers and others who were or are a party or are
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding.

     We do not maintain directors' and officers' liability insurance as of
the date of this prospectus.

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<PAGE>

                   RELATED PARTY TRANSACTIONS

     On May 31, 1998, we entered into an exchange agreement with Corsa S.A.
Holdings, an entity organized under the laws of Luxembourg.  Corsa owned 69%
of our common stock upon closing of the exchange agreement.  Corsa is 90%
controlled by Mr. Arie Halpern and 10% controlled by Shira Advising,
Communication and Investment Ltd., an Israeli corporation controlled by
Yechiel Y. Sharabi, one of our directors, and Hadassa Y. Sharabi, Mr.
Sharabi's wife.  Under the exchange agreement, Corsa transferred 100% of the
outstanding shares of Intacta Delaware Inc. and 99% of the outstanding shares
of Intacta Labs Ltd. to us.  In exchange, we issued 11,486,00 shares of common
stock to Corsa.  Corsa subsequently sold 7,486,000 shares of its common stock
to some of the selling shareholders whose shares we are registering for resale
under this prospectus, resulting in a decrease of Corsa's ownership to 22.3%.

     Under the exchange agreement, we agreed with Corsa that our board of
directors would be increased from three to seven persons, of which Corsa had
the right to appoint five directors (consisting of Yechiel Y. Sharabi, Amnon
Shai, Joshua Sagui, Marc Nehamkin and Menachem Tassa) and we maintained the
right to appoint two directors (consisting of Altaf Nazerali and Ross Wilmot).
Under the exchange agreement, we agreed to do the following:

     - enter into a Shareholders' Agreement governing the election of
       directors;

     - implement an equity incentive plan; and

     - raise an additional $5,000,000 gross through the sale of common stock
       following the closing date of the exchange agreement.

We raised an additional $5,000,000 gross through the sale of one million
shares of common stock to MFC Merchant Bank SA in December of 1998 for a total
of $4,000,000 and the conversion into shares of common stock of advances made
to us by Valor Invest Limited for approximately $1,000,000.  We are
registering for resale shares of our common stock by MFC Merchant Bank and
Valor Invest Limited under this prospectus.

     Through a series of loans, Valor Invest Limited loaned Intacta a total
of $952,100.  On June 30, 1999, Intacta issued 238,000 shares of common stock
on a private placement basis to Valor Invest Limited in repayment of the
$952,100, pursuant to a loan conversion at the rate of $4.00 per share.

     During 1999 and 1998, the Company received administrative, consulting,
management and marketing services from several organizations that are owned by
directors or shareholders of the Company.  These services aggregated
approximately $346,300 and $294,200 for the year ended December 31, 1999 and
1998, respectively of which $226,300 and $229,500 have been included in
research and development expenses and $120,000 and $64,700 have been included
in general and administrative expenses.  There were no similar related party
transactions for the year ended December 31, 1997.

     Included in the above amounts,  Intacta paid approximately $94,000 to
International Portfolio Management in connection with administrative services
provided to Intacta.  Altaf S. Nazerali, President, Chief Executive Officer
and a director of Intacta, is the sole shareholder of International Portfolio
Management.  Ross Wilmot, Vice President, Finance and a director of Intacta,
is the Vice President, Finance of International Portfolio Management.  Sandra
W. Buschau, the Secretary of Intacta, is a Vice President of International
Portfolio Management.

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<PAGE>

                     PRINCIPAL SHAREHOLDERS

     The following table sets forth information concerning the beneficial
ownership of our outstanding common stock as of March 31, 2000 for:

     - each person or group that we know owns beneficially more than 5% of our
       common stock;

     - each of our directors and executive officers individually; and

     - all directors and executive officers as a group.

     Rule 13d-3 under the Securities Exchange Act defines the term,
"beneficial ownership."  Under this rule, the term includes shares over which
the indicated beneficial owner exercises voting and/or investment power.  The
rules also deem common stock subject to options currently exercisable, or
exercisable within 60 days, to be outstanding for purposes of computing the
percentage ownership of the person holding the options but do not deem such
stock to be outstanding for purposes of computing the percentage ownership of
any other person.  The applicable percentage of ownership for each shareholder
is based on 17,909,000 shares of common stock outstanding as of March 31,
2000, together with applicable options for that shareholder.  Except as
otherwise indicated, we believe the beneficial owners of the common stock
listed below, based on information furnished by them, have sole voting and
investment power over the number of shares listed opposite their names.  The
information provided in the table below assumes no exercise of the
underwriters' over-allotment option.

                                                       Percent of
                                                   Shares Outstanding

Name and Address       Number of Shares            Before         After
of Beneficial Owner    Beneficially Owned         Offering     Offering

Yehoshua Sagi                   -                    -                 -
65 Ben-Gurion Street
Bat-Yam 59372, Israel

Altaf S. Nazerali(1)         192,000                 1%                1%
555 Palisade Drive
North Vancouver, B.C. V7R 2H9
Canada

Noel Bambrough                  -                    -                 -
670 Tuxedo Place N.W.
Atlanta, GA 30342
USA


Menachem Tassa                  -                    -                 -
26 Habani St., #16
Jerusalem 96264, Israel

Ross Wilmot                     -                    -                 -
13548 19th Avenue
South Surrey, B.C.
V4A 6B4
Canada

Marco Genoni                    -                    -                 -
4346 Westmount Avenue
Montreal, QC H3Y 1W5
Canada

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<PAGE>

                                                       Percent of
                                                   Shares Outstanding

Name and Address       Number of Shares            Before         After
of Beneficial Owner    Beneficially Owned         Offering     Offering

Yechiel Y. Sharabi           400,000                 2.3%         2.3%
Ha'techiya 12
Holon 58401, Israel

Amon Shai                       -                     -            -
20 Amzallag St.
Tel Aviv 65148, Israel

Corsa S.A. Holdings(2)     4,000,000                22.3%        22.3%
Rue Notre Dame
Luxembourg
Grand Duchy of Luxembourg

Cybermind AG(3)            1,500,000                 8.4%          -

MFC Merchant Bank SA       1,000,000                 5.6%          -

All Officers and             592,000                 3.3%         3.3%
Directors
as a Group (7 Persons)

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

(1)All of these shares are held indirectly by Mr. Nazerali through his partial
ownership of Pensbreigh Holdings Ltd.

(2)Corsa S.A. Holdings is a Luxembourg holding company 90% controlled by Mr.
Arie Halpern and 10%   controlled by Shira Advising, Communication and
Investments Ltd., a company controlled by Mr.   Yechiel Y. Sharabi.  Mr.
Halpern and Shira Advising, Communication and Investments Ltd. (a company
controlled by Mr. Sharabi) have shared voting and investment power over Corsa
S.A. Holdings.

(3)Cybermind AG is a selling shareholder whose shares are being registered for
resale on the registration statement of which this prospectus forms a part.
We are registering all 1,500,000 shares held by Cybermind AG; however,
Cybermind AG may sell any, all or none of its shares. Carsten Dujesiefken has
sole voting and investment power over Cybermind AG.

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<PAGE>

                  DESCRIPTION OF CAPITAL STOCK

     We are authorized to issue 100,000,000 shares of common stock, $0.0001
par value per share, and 50,000,000 shares of preferred stock, $0.0001 par
value per share.  The following is only a summary of provisions of the common
stock and the preferred stock.  It is not complete and may not contain all the
information you should consider before investing in the common stock.  You
should carefully read our articles of incorporation and bylaws, which are
included as an exhibit to the registration statement containing this
prospectus.

Common Stock

     As of March 31, 2000, we were authorized to issue 100,000,000 shares of
common stock, of which 17,909,000 shares were issued and outstanding held of
record by 45 shareholders.  This public offering consists solely of shares of
common stock being resold by selling shareholders.  Therefore, this offering
will not affect the total number of shares of common stock issued and
outstanding.

     Holders of shares of common stock are entitled to one vote per share on
all matters to be voted on by the shareholders.  Subject to preferences of any
outstanding preferred stock, the holders of shares of common stock are
entitled to receive any dividends the board of directors declares out of funds
legally available for the payment of dividends.  Upon the liquidation,
dissolution or winding up of Intacta, the holders of shares of common stock
are entitled to share all of our assets remaining after payment of liabilities
and after giving effect to the liquidation preferences of any outstanding
preferred stock.  All outstanding shares of common stock are fully paid and
nonassessable.

Preferred Stock

     Our articles of incorporation grant our board of directors the authority
to issue up to 50,000,000 shares of preferred stock.  Nevada law provides our
board of directors the authority to determine the price, rights, preferences,
privileges and restrictions, including voting rights of those shares without
any further vote or action by the shareholders.

Market Price of and Dividends on our Common Stock and Related Stockholder
Materials

                                   High Bid       Low Bid
1999
4th Quarter                             3 7/16         1 3/4
3rd Quarter                             3.8            1 7/8
2nd Quarter                             4 3/16         3
1st Quarter                             4 15/32        3 13/16

1998
4th Quarter                             4 3/4          3 7/8
3rd Quarter                             5 1/2          4
2nd Quarter(2)                          5 3/4          4

     1.   Source of trading information: Bloomberg.


     2.   Quotations commenced on the Nasdaq Over-the-Counter Bulletin Board
         on May 28, 1998.

     These over-the-counter market quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.

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<PAGE>

     The average of our high and low trading prices of our common stock on the
Nasdaq OTCBB on June 23, 2000 was $4.02 per share.

     We have never paid dividends on our common shares.  We do not anticipate
paying any dividends in the foreseeable future.

Anti-takeover Effects of Charter and Bylaws Provisions and the Nevada Business
Corporation Act

     Nevada law provides that any agreement providing for the merger,
consolidation or sale of all or substantially all of the assets of a
corporation be approved by the owners of at least the majority of the
outstanding shares of that corporation, unless a different vote is provided
for in our articles of incorporation.  Our articles of incorporation do not
provide for a super-majority voting requirement in order to approve any such
transactions.  Nevada law also gives appraisal rights for some mergers, plans
of reorganization, or exchanges or sales of all or substantially all of the
assets of a corporation.  Under Nevada law, a shareholder does not have the
right to dissent with respect to:

     - a sale of assets or reorganization, or

     - any plan of merger or any plan of exchange, if the shares held by the
       shareholder are part of a class of shares which are listed on a
       national securities exchange or the Nasdaq National Market Systems,
       or are held of record by note less than 2,000 shareholders, and the
       shareholder is not required to accept for his shares any
       consideration other than shares of a corporation that, immediately
       after the effective time of the merger or exchange, will be part of a
       class of shares which are listed on a national securities exchange or
       the Nasdaq National Market System, or are held of record by not less
       than 2,000 holders.

     The Nevada Private Corporation Law also has three provisions designed to
deter take-over attempts:

     Control Share Acquisition Program.  Under Nevada law, when a person has
acquired or offers to acquire one-fifth, one-third or a majority of the stock
of a corporation, a shareholders meeting must be held after delivery of an
"offerors" statement, at the offerors expense, so that the shareholders of the
corporation can vote on whether the shares proposed to be acquired can
exercise voting rights.  Except as otherwise provided in a corporation's
article of incorporation, the approval of the majority of the outstanding
stock not held by the offerors is required so that the stock held by the
offerors will have voting rights.  The control share acquisition provisions
are applicable to any acquisition of a controlling interest, unless the
articles of incorporation or by-laws of a corporation in effect on the tenth
day following the acquisition of a controlling interest by an acquiring person
provides that the control share acquisition provisions do not apply.  We have
not elected out of the control share acquisition provisions of Nevada law.

     Combination Moratorium Provision.  Nevada law provides that a
corporation may not engage in any "combinations," which is broadly defined to
include mergers, sales and leases of assets, issuances of securities and
similar transactions with an "interested stockholder," which is defined as the
beneficial owner of 10% or more of the voting power of the corporation, and
affiliates of their associates for three years after an interested
shareholder's date of acquiring the shares, unless the combination or the
purchase of the shares by the interested shareholder is first approved by the
board of directors.  After the initial three-year period, any combination must
still be approved by a majority of the voting power not beneficially owned by
the interested shareholder or the interested shareholders affiliates or
associates, unless the aggregate amount of cash and the market value of the
consideration other than cash that could be received by shareholders as a
result of the combination is at least equal to the highest of the highest bid
per share of each class or series of shares, including the common shares, on
the date of the announcement of the combination or on the date the interested
shareholder acquired the shares, or for holders of preferred stock, the
highest liquidation value of the preferred stock.

     Other Provisions.  Under Nevada law, the selection of a period for
achieving corporate goals is the responsibility of the directors.  In
addition, the directors and officers, in exercising their respective powers
with a view to the interest of the corporation may consider the interest of
the corporation's employees, suppliers, credits

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<PAGE>

and customers, the economy of the state and the nation, the interest of the
economy and of society and the long-term, as well as short-term, interests of
the corporation and its shareholders, including the possibility that those
interest may be best served by the continued independence of the corporation.
The directors may also resist any change or potential change of control of the
corporation if the directors, by majority vote of a quorum, determine that a
change or potential change is opposed to or not in the best interest of the
corporation "upon consideration of the interest of the corporation's
shareholders," or for one of the other reasons described above.  The directors
may also take action to protect the interests of the corporation's
shareholders.

Transfer Agent and Registrar

     The registrant and transfer agent for our shares of common stock is
Corporate Stock Transfer, Republic Plaza, 370 17th Street, Suite 2350, Denver,
Colorado, 80202-4614.

-46-

<PAGE>

                SHARES ELIGIBLE FOR FUTURE SALE

     There are 17,909,000 shares of common stock outstanding, 5,185,000 of
which are freely tradable and 8,841,000 of which are restricted securities
that may be offered by the selling shareholders under this prospectus as
described below.

     Subject to the registration statement being declared and remaining
effective, all of the selling shareholder shares that may be offered under the
registration statement will be immediately tradable without restriction or
further registration under the Securities Act.

     No prediction can be made as to the effect, if any, that sales of shares
of common stock by the selling shareholders, or even the availability of such
shares for sale will have on the market prices prevailing from time to time.
The possibility that substantial amounts of common stock may be sold in the
public market may adversely affect prevailing market prices for the common
stock and could impair our ability to raise capital through the sale of its
equity securities.

-47-

<PAGE>

                     PLAN OF DISTRIBUTION

     We are registering the shares on behalf of the selling shareholders.
When we refer to selling shareholders, we intend to include donees and
pledgees selling shares received from a named selling shareholder after the
date of this prospectus.  All costs, expenses and fees in connection with the
registration of the shares offered under this registration statement will be
borne by us.  Brokerage commissions and similar selling expenses, if any,
attributable to the sale of shares will be borne by the selling shareholders.
Sales of shares may be effected by selling shareholders from time to time in
one or more types of transactions (which may include block transactions) in
the over-the-counter market, in negotiated transactions, through put or call
options transactions relating to the shares, through short sales of shares, or
a combination of such methods of sale, at market prices prevailing at the time
of sale, or at negotiated prices.  Such transactions may or may not involve
brokers or dealers.  The selling shareholders have advised us that they have
not entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their securities, nor is
there an underwriter or coordinating broker acting in connection with the
proposed sale of shares by the selling shareholders.

     The selling shareholders may effect such transactions by selling shares
directly to purchasers or to or through broker-dealers, which may act as
agents or principals.  Such broker-dealers may receive compensation in the
form of discounts, concessions, or commissions from the selling shareholders
and/or purchasers of shares for whom such broker-dealers may act as agents or
to whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).

     The selling shareholders and any broker-dealers that act in connection
with the sale of shares might be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commissions received
by such broker-dealers and any profit on the resale of shares sold by them
while acting as principals might be deemed to be underwriting discounts or
commissions under the Securities Act.  We have agreed to indemnify each
selling shareholder against some liabilities arising under the Securities Act.
The selling shareholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the shares
against some liabilities arising under the Securities Act.

    Because selling shareholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the selling shareholders
will be subject to the prospectus delivery requirements of the Securities Act.
We have informed the selling shareholders that the anti-manipulative
provisions of Regulation M promulgated under the Exchange Act may apply to
their sales in the market.

     Selling shareholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of such Rule.

     Upon being notified by a selling shareholder that any material
arrangement has been entered into with a broker-dealer for the sale of Shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, we will file a supplement to
this prospectus, if required, under Rule 424(b) of the Act, disclosing

     - the name of each selling shareholder and of the participating
       broker-dealer(s),

     - the number of shares involved,

     - the price at which the shares were sold,

     - the commissions paid or discounts or concessions allowed to the
       broker-dealer(s), where applicable,

     - that the broker-dealer(s) did not conduct any investigation to verify
       information set out or incorporated by reference in this prospectus;
       and

-48-

<PAGE>

     - other facts material to the transaction.

     In addition, upon being notified by a selling shareholder that a donee
or pledgee intends to sell more than 500 shares, we will file a supplement to
this prospectus.

-49-

<PAGE>

                         LEGAL MATTERS

     McDonald Carano Wilson McCune Bergin Frankovich & Hicks LLP has acted as
special counsel on matters of Nevada law with respect to the legality of the
shares offered by this prospectus.

                            EXPERTS

     The consolidated financial statements of Intacta Technologies Inc. and
subsidiaries included in this prospectus and in the registration statement
have been audited by BDO Seidman, LLP, independent certified public
accountants, to the extent and for the periods set forth in their report
(which contains an explanatory paragraph regarding our ability to continue as
a going concern), appearing in this prospectus and in the registration
statement, and is included in reliance upon such report given upon the
authority of said firm as experts in accounting and auditing.

     The combined financial statements of Intacta Delaware Inc. and Intacta
Labs, Ltd. included in this prospectus and in the registration statement have
been audited by Meredith, Cardozo, Lanz & Chiu, LLP, independent certified
public accountants, to the extent and for the period set forth in their report
(which contains an explanatory paragraph regarding our ability to continue as
a going concern), appearing in this prospectus and in the registration
statement, and is included in reliance upon such report given upon the
authority of said firm as experts in accounting and auditing.

              WHERE YOU CAN FIND MORE INFORMATION

     We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 covering the shares being sold in this offering. We have
not included in this prospectus some information contained in the registration
statement, and you should refer to the registration statement, including
exhibits and schedules filed with the registration statement, for further
information.  You may review a copy of the registration statement from the
public reference section of the Securities and Exchange Commission in Room
1024, Judiciary Plaza, 450 5th Street, N.W., Washington, D.C. 20549; and at
the SEC's Regional Office located at: 7 World Trade Center, Suite 1300, New
York, New York 10048 and 1400 Citicorp Center, 500 West Madison Street,
Chicago, IL 60661.  You may also obtain copies of such materials at prescribed
rates from the public reference section at the Commission, Room 1024,
Judiciary Plaza, 450 5th Street, N.W., Washington, D.C. 20549.  In addition,
the Securities and Exchange Commission maintains a Web site on the Internet at
the address http://www.sec.gov that contains reports, proxy information
statements and other information regarding registrants that file
electronically with the Securities and Exchange Commission.

-50-

<PAGE>

                 INDEX TO FINANCIAL STATEMENTS

                   Intacta Technologies Inc.
                      Financial Statements

                                                       Page

Audited Consolidated Financial Statements              F-2

  Reports of Independent Accountants                   F-5

  Consolidated Balance Sheets for the periods
    ended December 31, 1999 and December 31,
    1998                                               F-7

  Consolidated Statements of Operations for
    the periods ended December 31, 1999,
    December 31, 1998 and December 31, 1997            F-9

  Consolidated Statements of Stockholders'
    Equity (Deficit) for the years ended
    December 31, 1999, December 31, 1998 and
    December 31, 1997                                  F-10

  Consolidated Statements of Cash Flows for
    the periods ended December 31, 1999,
    December 31, 1998 and December 31, 1997            F-11

  Notes to Consolidated Financial Statements           F-12

Unaudited financial statements for the three
  months ended March 31, 2000                          F-27

F-1

<PAGE>

Intacta Technologies Inc. and
Subsidiaries
(fka InfoImaging
Technologies, Inc.)









Consolidated Financial Statements
Years Ended December 31, 1999, 1998 and 1997

F-2

<PAGE>

Intacta Technologies Inc. and
Subsidiaries
(fka InfoImaging
Technologies, Inc.)









Consolidated Financial Statements
Years Ended December 31, 1999, 1998 and 1997

F-3

<PAGE>

Report of Independent Certified Public Accountants          2

Consolidated Financial Statements
Consolidated balance sheets                                 4
Consolidated statements of operations                       5
Consolidated statements of stockholders' equity             6
Consolidated statements of cash flows                       7
Notes to consolidated financial statements               8-22

F-4

<PAGE>

Report of Independent Certified Public Accountants


To The Board of Directors and Shareholders of
Intacta Technologies Inc.

We have audited the accompanying consolidated balance sheets of Intacta
Technologies Inc. and subsidiaries as of December 31, 1999 and 1998 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.  The combined
statements of operations, stockholders' equity and cash flows of Intacta
Delaware Inc. and Intacta Labs, Ltd., the predecessor entities, for the year
ended December 31, 1997, were audited by Meredith, Cardozo, Lanz & Chiu LLP
(MCLC), whose practice has been combined with our Firm and whose report
dated February 20, 1998 included an explanatory paragraph that discussed
conditions that raised substantial doubt about the Company's ability to
continue as a going concern.

We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform our audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe our audits, and the
reports of other auditors, provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Intacta
Technologies Inc. and subsidiaries as of December 31, 1999 and 1998, and the
consolidated results of their operations and cash flows for the years then
ended, in conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in
Note 1 to the financial statements, the Company has suffered recurring
losses from operations and, at December 31, 1999, has an accumulated deficit
that raises substantial doubt about its ability to continue as a going
concern. Management's plans in regards to these matters are also described
in Note 1. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

The 1998 financial statements have been restated for the correction on an
error as described in Note 7.


                                   /s/ BDO Seidman, LLP
April 14, 2000

F-5

<PAGE>

Report of Independent Certified Public Accountants


To The Board of Directors and Shareholders of
ITI InfoImaging Technologies, Inc.

We have audited the combined statements of operations, shareholders'
deficiency and cash flows of ITI InfoImaging Technologies, Inc. and Fontech
Ltd. for the year ended December 31, 1997. These financial statements are
the responsibility of the Companies' management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. These standards require that we plan and perform our audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe our audit provides a
reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined results of operations and
cash flows of ITI InfoImaging Technologies, Inc. and Fontech Ltd. for the
year ended December 31, 1997 in conformity with generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's recurring losses from operations and net
capital deficiency raise substantial doubt about its ability to continue as
a going concern. Management's plans regarding those matters are also
described in Note 1. The combined financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

/s/ Meredith, Cardozo, Lanz & Chiu, LLP

San Jose, California
February 20, 1998

F-6

<PAGE>

Intacta Technologies Inc.
(fka InfoImaging Technologies, Inc.)

Consolidated Balance Sheets

December 31,                                    1999         1998

                                                      As Restated
                                                          (Note 7)

Assets



Current
  Cash and cash equivalents               $  917,400  $ 3,047,100
  Accounts receivable, less allowance for
    doubtful accounts of $18,400 in 1998      31,700       11,400
  Inventories                                278,600      298,700
  Related party and employee receivables      45,000       44,400
  Other                                       30,800       14,700
                                          ----------   ----------
Total current assets                       1,303,500    3,416,300

Property and equipment, net                  156,100      231,700

Other assets, net                            111,300      112,700
                                          ----------   ----------

                                         $ 1,570,900  $ 3,760,700
                                          ==========   ==========

F-7

<PAGE>

Intacta Technologies Inc.
(fka InfoImaging Technologies, Inc.)

Consolidated Balance Sheets

December 31,                                    1999         1998
                                                      As Restated
                                                          (Note 7)

Liabilities and Stockholders' Equity

Current liabilities
  Accounts payable                       $   472,400  $    82,900
  Accounts payable - related parties          90,200       10,900
  Advances from shareholder                   89,000    1,321,000
  Accrued expenses                            77,800       77,300
                                          ----------   ----------
Total current liabilities                    729,400    1,492,100

Commitments                                        -            -

Stockholders' equity
  Preferred stock, $.0001 par value;               -            -
   50,000,000 shares authorized;
   no shares issued and outstanding
  Common stock, $.0001 par value;
   100,000,000 shares authorized;
   17,909,000 and 17,671,000 shares
   issued and outstanding, respectively        1,791        1,767
  Additional paid-in capital              19,710,553   18,492,199
  Deficit                                (17,671,200) (14,053,600)
  Unamortized stock compensation          (1,199,644)  (2,171,766)
                                          ----------   ----------
Total stockholders' equity                   841,500    2,268,600
                                          ----------   ----------
                                         $ 1,570,900  $ 3,760,700
                                          ==========   ==========

See accompanying notes to consolidated financial statements.

F-8

<PAGE>

Intacta Technologies Inc.
(fka InfoImaging Technologies, Inc.)

Consolidated Statements of Operations

Years ended December 31,                  1999        1998       1997
                                               As Restated
                                                   (Note 7)

Revenues
  Products and components          $    64,000 $    89,300 $   894,900
  Royalties from licensing
    arrangements                        73,400      48,500           -
                                    ----------  ----------  ----------
Total Revenues                         137,400     137,800     894,900
                                    ----------  ----------  ----------

Operating expenses
  Cost of products and components       90,500     336,300     357,500
  Research and development
    (including non-cash compensation
     expense of $222,400, $129,700
     and $0 in 1999, 1998 and 1997
     respectively)                   1,047,400     903,500     343,200
  Sales and marketing                  113,200     113,100     297,000
  General and administrative
    (including non-cash compensation
     expense of $1,016,000, $539,100
     and $0 in 1999, 1998 and 1997
     respectively)                   2,619,800   1,699,400   1,353,100
                                    ----------  ----------  ----------
Total operating expenses             3,870,900   3,052,300   2,350,800
                                    ----------  ----------  ----------
Loss from operations                (3,733,500) (2,914,500) (1,455,900)
                                    ----------  ----------  ----------
Other income (expense)
  Interest income                      104,000           -           -
  Interest (expense)                    (8,700)   (210,000)          -
  Interest expense - stockholder             -           -    (755,300)
  Other                                 21,400     (19,600)     13,100
                                    ----------  ----------  ----------
Total other income (expense)           116,700    (229,600)   (742,200)
                                    ----------  ----------  ----------
Loss before provision for
  income taxes                      (3,616,800) (3,144,100) (2,198,100)

Provision for income taxes                 800       1,700       1,600
                                    ----------  ----------  ----------
Net loss                           $(3,617,600)$(3,145,800)$(2,199,700)
                                    ==========  ==========  ==========

Basic and diluted loss per
  common share                     $     (0.20)$     (0.19)$     (0.19)
                                    ==========  ==========  ==========
Basic and diluted weighted -
  average common shares outstanding 17,790,000  16,701,583  11,486,000
                                    ==========  ==========  ==========

See accompanying notes to consolidated financial statements.

F-9

<PAGE>

Intacta Technologies Inc.
(fka InfoImaging Technologies, Inc.)

Consolidated Statements of Stockholders' Equity
Years Ended December 31, 1999, 1998 and 1997

<TABLE>

<CAPTION>

                                                     Additional   Unamortized
                                   Capital Stock        Paid-in         Stock
                                Shares       Amount     Capital  Compensation        Deficit        Total

<S>                               <C>         <C>        <C>           <C>           <C>           <C>
Balance, December 31, 1996    11,486,000  $   1,149 $ 1,498,851    $        -   $ (8,708,100) $(7,208,100)

  Net loss                             -          -           -             -     (2,199,700)  (2,199,700)
---------------------------------------------------------------------------------------------------------
Balance, December 31, 1997    11,486,000      1,149   1,498,851             -    (10,907,800)  (9,407,800)

  Contributed capital                  -          -     183,600             -              -      183,600

  Contributed capital from
    Principal stockholder for
    Retirement of debt                 -          -   8,929,800             -              -    8,929,800

  Common stock issued in
    Connection with reverse
    Acquisition                5,185,000        518   1,439,482             -              -    1,440,000

  Issuance of common stock
    in Private Placement,
    net of issuance costs of
    $400,000                   1,000,000        100   3,599,900             -              -    3,600,000

  Stock options granted - As
    Restated (Note7)                   -          -   2,840,566     (2,840,566)            -            -

  Amortization of stock
  Options - As Restated (Note 7)       -          -           -        668,800             -      668,800

  Net loss - As Restated (Note7)       -          -           -              -    (3,145,800)  (3,145,800)
---------------------------------------------------------------------------------------------------------
Balance, December 31, 1998    17,671,000      1,767  18,492,199     (2,171,766)  (14,053,600)   2,268,600
  As Restated (Note 7)

  Conversion of debt to equity -
    Stockholder                  238,000         24     952,076              -             -      952,100

  Stock options granted                -          -     266,278       (266,278)            -            -

  Amortization of stock
    Options                            -          -           -      1,238,400             -    1,238,400

  Net Loss                             -          -           -              -    (3,617,600)  (3,617,600)
---------------------------------------------------------------------------------------------------------
Balance, December 31, 1999    17,909,000   $  1,791 $19,710,553    $(1,199,644) $(17,671,200)   $ 841,500
=========================================================================================================

See accompanying notes to consolidated financial statements.

</TABLE>



F-10

<PAGE>

Intacta Technologies Inc.
(fka InfoImaging Technologies, Inc.)

Consolidated Statements of Cash Flows

Years ended December 31,                  1999         1998         1997
                                                As Restated
                                                    (Note 7)

Operating activities
  Net loss                         $(3,617,600) $(3,145,800) $(2,199,700)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
    Non-cash compensation expense    1,238,400      668,800            -
    Depreciation and amortization       94,200       92,100       89,200
    Provision for bad debts                  -            -       54,400
    Write-down of inventory             46,100      240,100            -
    Write-down of other assets               -       49,000            -
    Changes in operating assets and
      liabilities:
      Accounts receivable              (20,300)     184,400     (105,300)
      Inventories                      (26,000)     (64,100)      71,600
      Related party and employee
        receivables                       (600)     (35,100)      58,600
      Other current assets             (16,100)       2,600      (11,200)
      Accounts payable                 468,800     (168,000)      17,100
      Accrued interest on advances
       from shareholder                      -            -      568,300
      Accrued expenses                     500     (112,700)     (17,200)
      Deferred revenue                       -      (51,300)    (223,900)
                                    ----------   ----------   ----------
Cash used in operating activities   (1,832,600)  (2,340,000)  (1,698,100)
                                    ----------   ----------   ----------

Investing activities
  Cash acquired in purchase of business      -    1,440,000            -
  Capital expenditures                 (18,600)    (191,900)     (22,900)
  Other assets                           1,400       (8,000)     (70,400)
                                    ----------   ----------   ----------
Cash provided by (used in)
  investing activities                 (17,200)   1,240,100      (93,300)
                                    ----------   ----------   ----------

Financing activities
  Contributed capital                        -      183,600            -
  Net proceeds from private
    placement                                -    3,600,000            -
  Advances from shareholder                  -    3,062,000    2,064,100
  Repayment of shareholder advances   (279,900)  (2,731,000)           -
  Repayment of notes payable                 -     (136,700)    (161,900)
                                    ----------   ----------   ----------
Cash provided by (used in) financing
  activities                          (279,900)   3,977,900    1,902,200
                                    ----------   ----------   ----------
Net increase (decrease) in cash
  and cash equivalents              (2,129,700)   2,878,000      110,800
Cash and cash equivalents,
  beginning of year                  3,047,100      169,100       58,300
                                    ----------   ----------   ----------
Cash and cash equivalents,
  end of year                      $   917,400  $ 3,047,100  $   169,100
                                    ==========   ==========   ==========

See accompanying notes to consolidated financial statements.

F-11

<PAGE>

1. Summary of Significant Accounting Policies

The Company

Intacta Technologies Inc. (formerly InfoImaging Technologies, Inc.), (the
"Company"), a Nevada corporation, was incorporated in October 1997.

On May 31, 1998, the Company completed the acquisition of 100% of the
outstanding common stock of Intacta Delaware Inc.(formerly ITI InfoImaging
Technologies, Inc.) (Intacta), a Delaware corporation, and Intacta Labs Ltd.
(formerly Fontech Ltd.) (Intacta Labs) in exchange for 11,486,000 shares of
the Company's $.0001 par value common stock valued at $1.  The valuation of
Intacta and Intacta Labs equated to the approximate aggregate accumulated
deficits of the two companies to that date. The two companies agreed to accept
the per common stock value which approximated the market trading value at the
time of the initial discussions and signing of the letter of intent. For
accounting purposes, the acquisition has been treated as the acquisition of
the Company by Intacta and Intacta Labs, with the combined entity of Intacta
and Intacta Labs, companies under common control, as the acquirer (reverse
acquisition). As such, in conjunction with the acquisition, the historical
financial statements of the acquirer replaced the historical financial
statements of the Company. Since the Company prior to the reverse acquisition
was a public shell corporation with no significant operations, pro forma
information giving effect to the acquisition is not presented. All shares and
per share data prior to the acquisition have been restated to reflect the
stock issuance as a recapitalization of Intacta. The shares held by the
shareholders of the Company prior to the acquisition (5,185,000 shares) have
been recognized as if they were issued in connection with the acquisition of
the Company by Intacta. As the former shareholder of Intacta and Intacta Labs
received approximately 69% of the shares in the Company immediately after the
acquisition, the financial statements for periods prior to the
recapitalization are those of Intacta and Intacta Labs.

Intacta was incorporated in September 1994. The Company ceased production and
marketing of its advanced compression and imaging technology products
used for transmitting and storing information to begin development of new
products based on the Company's patented core technology.  The Company has
certain licensing arrangements in place to third parties for the use of this
proprietary technology.

Intacta Labs, an Israeli corporation, began operations in June 1992. The
Company conducts product research, development and manufacturing in the high
tech area of Beer Sheva, Israel, and is currently conducting research into
even greater time and cost savings techniques for easily transmitting and
storing data in secure formats.

F-12

<PAGE>

Consolidation and Combination

The accompanying consolidated financial statements for the years ended
December 31, 1999 and 1998 include the amounts of the Company and its wholly
owned subsidiaries. The financial statements are combined in accordance with
Accounting Research Bulletin No. 51 for the year ended December 31, 1997
and include the amounts of Intacta and Intacta Labs, companies under common
control. All intercompany accounts and transactions have been eliminated in
the consolidated and combined financial statements.  All references to
December 31, 1999 and 1998 reflect consolidated financial statements while
references to December 31, 1997 reflect combined financial statements.

Basis of Presentation

The accompanying consolidated financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As shown in the
consolidated financial statements, the Company has a deficit of $17,671,200 as
of December 31, 1999, and incurred losses of $3,617,600, $3,145,800 and
$2,199,700 for the years ended December 31, 1999, 1998 and 1997,
respectively.  These losses were caused by the realization in 1997 that the
market potential for the Company's primary product and other related products
was less than forecasted. During 1998 and 1999 the Company's  marketing and
sales efforts were reduced and the Company focused its efforts on design
revisions to its core applications without the benefit of cash flow from
operations.  As a result, the Company has absorbed significant cash in its day
to day operations and expects to continue to absorb cash in its operations
during 2000.

These conditions give rise to substantial doubt about the Company's ability to
continue as a going concern. The Company's continuation as a going concern
is dependent upon its ability to obtain additional financing as may be
required and ultimately to attain profitability. The Company is actively
marketing its new products, which it believes will ultimately lead to
profitable operations, and is seeking to raise additional funds through the
issuance of equity sufficient to sustain product development activities,
marketing functions and ultimately to enable the Company to increase revenues.
If this plan materializes as expected, the Company anticipates viability for
the year 2000 and beyond, though there can be no assurance that the Company
will be successful in these efforts. The financial statements do not include
any adjustments relating to the recoverability and classification

F-13

<PAGE>

of assets or the amount and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern.

Cash and Cash Equivalents

For purposes of the consolidated and combined statements of cash flows, the
Company considers all highly liquid investments with original maturities
of three months or less to be cash equivalents.

Inventories

Inventories are stated at the lower of cost (first in, first out) or market.

Property and Equipment

Property and equipment is stated at cost, net of accumulated depreciation and
amortization.  Depreciation is provided using the straight line method over
the estimated useful lives of the assets, generally ranging from three to
seven years.  Leasehold improvements are amortized using the straight-line
method over the lesser of the lease term or the estimated useful lives of the
related asset, generally three to seven years.

Other Assets

Other assets, consisting principally of patents, are amortized on a
straight-line basis over the estimated useful life of the patents, generally
ten years. As of December 31, 1999 and 1998, accumulated amortization
aggregated approximately $66,600 and $55,500, respectively.

Long Lived Assets

Long-lived assets, such as patents and property and equipment, are evaluated
for impairment when events or changes in circumstances indicate that the
carrying amount of the assets may not be recoverable through the estimated
undiscounted future cash flows resulting from the use of these assets. When
any such impairment exists, the related assets will be written down to fair
value.

Software Development Costs

In accordance with Statement of Financial Accounting Standards (SFAS) No. 86,
Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise
Marketed, costs related to the research and development of new products and
enhancements to existing products are expensed as incurred until technological
feasibility of the product has been established, at which

F-14

<PAGE>

time such costs are capitalized, subject to expected recoverabilty.  To
date, the Company has not had a general release of any of its new products nor
has it received overall market acceptance.  Therefore, the Company has not
capitalized any software development costs related to its products, since the
time period between technological feasibility and the general release of
a market accepted product is not significant.

Revenue Recognition

     The Company's revenue recognition policies are in compliance with
generally accepted accounting principles including Statement of Position (SOP)
97-2, Software Revenue Recognition.  As such, the Company recognizes product
revenue upon shipment if persuasive evidence of an arrangement exists,
delivery has occurred, the fees are fixed and determinable and collectibility
is probable.  During 1997 and 1998, a majority of revenues were derived from
the shipment of product, a portion of which was sold through resellers and
distributors.  Appropriate reserves were considered to effectively defer
revenue recognition when material amounts of inventory had not been sold
through to the end user.  Generally, the right of return of these products was
of short duration (90 days).  No provision for estimated product returns was
necessary based on historical experience.

     Maintenance and support arrangements and other post-delivery obligations
are insignificant to the Company's revenues.

     License revenues are recognized based on actual sales of the licensed
software by the customer/licensee and therefore are not recognized as revenue
until reported by the customer/licensee.  This is the time at which the
Company believes that revenue recognition in accordance with SOP 97-2, as
described above, has occurred.  Support revenue is not integral to the
functionality of the licensed software and is billed and recognized as
incurred.

Advertising Costs

The cost of advertising is expensed as incurred.  Advertising costs for the
years ended December 31, 1998 and 1997 were approximately  $48,100 and
$261,000, respectively.  There were no advertising costs during the year ended
December 31, 1999.

Income Taxes

The Company accounts for income taxes in accordance with Statement of

F-15

<PAGE>

Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes,
which requires an asset and liability approach. This approach results in the
recognition of deferred tax assets (future tax benefits) and liabilities for
the expected future tax consequences of temporary differences between the book
carrying amounts and the tax basis of assets and liabilities. The deferred tax
assets and liabilities represent the future tax return consequences of those
differences, which will either be deductible or taxable when the assets and
liabilities are recovered or settled.  Future tax benefits are subject to a
valuation allowance when management believes it is more likely than not that
the deferred tax assets will not be realized.

Loss Per Share

Basic earnings per share is computed using the weighted-average number of
common shares outstanding during the period. Diluted earnings per share is
computed using the weighted-average number of common and potentially dilutive
common shares outstanding during the period, if dilutive.

As a result of losses incurred during the years ended December 31, 1999 and
1998, 1,375,000 and 1,005,000 stock options, respectively were antidilutive
and accordingly, were excluded from the computation of loss per share. There
were no common equivalent shares outstanding during the year ended
December 31, 1997.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Impact of Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133
establishes accounting and reporting standards requiring that every derivative
instrument, including certain derivative instruments imbedded in other
contracts, be recorded in the balance sheet as either an asset or liability
measured at its fair value.  The statement also requires that changes in the
derivative's fair value be recognized in earnings unless specific hedge
accounting criteria are met.   SFAS No. 137 delayed the effective date of

F-16

<PAGE>

SFAS No. 133 to fiscal years beginning after June 15, 2000. The Company
expects that the adoption of SFAS No. 133 will not have a material impact on
its financial position or results of operations.

Foreign Currency

The Company has designated the U.S. dollar as its functional currency for
Intacta Labs, a foreign subsidiary.  Financial statements of this subsidiary
are translated into U.S. dollars for consolidation purposes using current
rates of exchange for monetary assets and liabilities and historical rates of
exchange for non-monetary assets and related elements of expense.  Sales and
other expenses are translated at rates that approximate the rates in effect on
the translation dates.  Immaterial translation gains and losses are included
in the consolidated and combined statement of operations.

Fair Values of Financial Instruments

The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:

     Cash and cash equivalents

     The carrying amount reported in the consolidated and combined balance
     sheets for cash and cash equivalents approximate fair values.

     Short term debt:

     The fair value of short term debt approximates cost because of the short
     period of time to maturity.

As of December 31, 1999 and 1998, the fair values of the Company's financial
instruments approximate their historical carrying amounts.

Reclassifications

Certain 1998 and 1997 amounts have been reclassified to conform to the 1999
presentation.

F-17

<PAGE>

2. Inventories

As of December 31, 1999 and 1998, inventories were comprised of:

                                                    1999        1998

Components                                   $   233,600 $   181,000
Work in process                                   45,000      59,100
Finished products                                      -      58,600
                                              ----------  ----------
                                             $   278,600 $   298,700
                                              ==========  ==========

Inventories at December 31, 1999 and 1998 relate substantially to computer
chips and boards appropriately capitalized in accordance with SFAS No. 2,
Accounting for Research and Development Costs which allows for the
capitalization of materials if they have alternative future uses.  The Company
believes this to be the case in regards to these inventories.

During 1999 and 1998, the Company wrote-off approximately $46,100 and
$240,100, respectively, of its inventory due to reduced sales and
obsolescence, which is included in cost of products and components.

3. Property and Equipment

As of December 31, 1999 and 1998, property and equipment was comprised of:

                                                     1999        1998

Equipment                                     $   459,300 $   405,800
Furniture and fixtures                             48,100      58,900
Vehicles                                           14,100      38,200
                                               ----------  ----------
                                                  521,500     502,900
Less accumulated depreciation                    (365,400)   (271,200)
                                               ----------  ----------
                                              $   156,100 $   231,700
                                               ==========  ==========

4. Advances from Shareholder

Advances from shareholder represent non-interest bearing cash advances for
operating expenses that are due upon demand. During the year ended December
31, 1999, the Company converted $952,100 of such debt into 238,000 shares of
common stock.  During the year ended December 31, 1998, the Company received
additional paid-in capital in exchange

F-18

<PAGE>

for the retirement of $8,929,800 of debt.  The 1998 debt included accrued
interest of approximately $1,200,000.

5. Accrued Expenses

As of December 31, 1999 and 1998, accrued expenses were comprised of:

                                                     1999       1998

Salaries and related expenses                $    32,900 $    45,500
Severance                                         27,800      23,300
Vacation                                          16,900       6,800
Other                                                200       1,700
                                              ----------  ----------
                                             $    77,800 $    77,300
                                              ==========  ==========

6.     Commitments

Leases

The Company leases its facilities and certain equipment under operating
leases, which expire through August 2000. The facility leases require the
Company to pay certain maintenance and operating expenses, such as utilities,
property taxes, and insurance costs. Rent expense related to these operating
leases was $135,709 and $111,400 and $120,500 for the years ended December 31,
1999, 1998 and 1997, respectively.

7. Stock Option Plan and Restatement of 1998 Financial Statements

In June 1998, the Company adopted its 1998 Incentive Stock Option Plan (ISO)
and Non-qualified Stock Option Plan (NSO) (collectively the "Plan") that
provides for the granting of stock options to employees, directors, officers,
outside consultants and other third parties. Options vest over a maximum
of five years and expire in a maximum of ten years. The Company has reserved
1,667,100 shares of its common stock for issuance under the Plan.

The Plan indicates that the options shall be granted at prices of at least
100% of the fair market value of the common shares on the date of the grant
or, in the case of greater than ten percent shareholders, of at least 110% of
the fair market value.  Notwithstanding the foregoing, a majority of the
options were actually issued at a discount from fair market value.  As options
were originally reported in error to have been granted at fair market value
in 1998, the Company has restated its 1998 financial statements to properly
reflect compensation expense that results from options being granted at a
discount. The fair market value of options granted in 1998 was improperly
reported to be $1.50 per share while actual fair market values ranged from
$4.00 - $4.28 per share. The effect of the restatement on 1998 operating
results is to

F-19

<PAGE>

increase operating expenses, loss from operations, net loss and deficit by
$668,800 and to increase basic and diluted loss per share by $(0.04) as
follows:

                                                As Reported  As Restated

Operating expenses                              $ 2,383,500  $ 3,052,300

Loss from operations                            $(2,245,700) $(2,914,500)

Net loss                                        $(2,477,000) $(3,145,800)

Basic and diluted loss
   per common share                              $    (0.15) $     (0.19)

A summary of stock option transactions for the above plan follows:

                                                     Weighted
                                                      average
                                        Number of    exercise
                                        shares          price

Outstanding at
  December 31, 1997                             -           -
Granted                                 1,005,000       $1.50
                                       ----------  ----------

Outstanding at
  December 31, 1998                     1,005,000        1.50
Granted                                   370,000        3.49
                                       ----------  ----------
Outstanding at
  December 31, 1999                     1,375,000       $2.03
                                       ==========  ==========

                                                     Weighted
                                                      average
                                       Number of     exercise
Options exercisable                    shares           price


December 31, 1999                         410,000       $1.50
                                       ==========  ==========

F-20

<PAGE>

Required disclosures for options outstanding at December 31, 1999 are as
follows:

                         Number     Weighted average
                 outstanding at            remaining    Weighted average
                    December 31,    contractual life      exercise price
Exercise Price             1999

$ 1.50                1,080,000                 1.01               $1.18
$ 4.00                  295,000                 2.05               $0.85
------------------------------------------------------------------------
$ 1.50-4.00           1,375,000                 1.33               $2.03
========================================================================

The weighted average fair value of all options, calculated using the
Black-Scholes Option Pricing Model, granted during 1999 and 1998 is $0.42 and
$2.21 per share, respectively.

The Company applies both Accounting Principles Board Opinion No. 25 (APB No.
25), Accounting for Stock Issued to Employees and related interpretations and
SFAS No. 123, Accounting for Stock-Based Compensation in accounting for its
stock option plans.  Options granted to employees and directors are accounted
for under APB No. 25 and compensation expense is recognized for the intrinsic
value of the options granted.  Options granted to all others are accounted
for in accordance with SFAS No. 123 and compensation expense is recognized for
the fair value of the options granted.  SFAS No. 123 also requires that the
Company provide pro forma information regarding the net loss as if the
compensation cost for the Company's Plan had been determined in accordance
with the fair market value  method for all options. The Company estimates the
fair value of all stock options at the grant date using the Black Scholes
option pricing model with the following weighted average assumptions
for 1999 and 1998 (years in which options were granted): Dividend yield of 0
in both years; expected volatility of 40% in both years; risk-free interest
rate of 5.23% in 1999 and 5.47% in 1998; and an expected life of 2.61 years in
1999 and 2.55 years in 1998.

F-21

<PAGE>

Under the accounting provisions of SFAS No. 123, the Company's net loss and
basic and diluted loss per common share would have been adjusted to the pro
forma amounts indicated below:


Years ended December 31,                      1999         1998         1997

Net loss, as reported                  $(3,617,600) $(3,145,800) $(2,199,700)
Pro forma                               (3,736,400)  (3,183,000)  (2,199,700)
                                        ----------   ----------   ----------
Basic and diluted loss per
  share, as reported                   $     (0.20) $     (0.19) $     (0.19)

Pro forma                                    (0.21)       (0.19)       (0.19)

8. Related Party Transactions

During 1999 and 1998, the Company received administrative, consulting,
management and marketing services from several organizations that are owned by
directors or shareholders of the Company. These services aggregated
approximately $346,300 and $294,200 for the years ended December 31, 1999 and
1998, respectively of which $226,300 and $229,500 have been included in
research and development expenses and $120,000 and $64,700 have been included
in general and administrative expenses. There were no similar related party
transactions for the year ended December 31, 1997.

F-22

<PAGE>

9. Income Taxes

For the years ended December 31, 1999, 1998 and 1997, the provision for income
taxes consists of current minimum state taxes.

The following table summarizes the differences between the income tax expense
and the amount computed by applying the Federal income tax rate of 34% in
1999, 1998 and 1997 to loss before income taxes:

Years Ending December 31,                     1999         1998        1997
                                                    As Restated
                                                        (Note 7)

Federal income tax benefit              $1,229,700) $(1,069,000) $ (747,300)
 at statutory rate
State income tax benefit,                 (210,000) $  (183,300) $ (128,100)
 net of federal tax benefit                316,700      277,000     179,100
Foreign operations not
 subject to taxes
Tax benefits not currently                  (4,600)      90,100     122,400
 recognizable
Change in valuation                      1,129,300      866,900     575,500
 allowance
                                        ----------   ----------  ----------
                                       $       800  $     1,700 $     1,600
                                        ==========   ==========  ==========

F-23

<PAGE>

As of December 31, 1999 and 1998, deferred tax assets (liabilities) comprised
the following:




                                                   1999           1998

Net operating loss                           $4,602,500     $3,965,000
 carryforward
Stock option compensation                       764,800        268,200
 not currently deductible
Accumulated depreciation                         13,300         10,300
 and amortization and other
                                             ----------     ----------
Total deferred tax assets                     5,380,600      4,243,500
                                             ----------     ----------
Reserves not currently
 Deductible                                    (204,000)      (193,500)
Other, net                                            -         (2,700)
                                             ----------     ----------
Total deferred tax liabilities                 (204,000)      (196,200)
                                             ----------     ----------
Net deferred tax asset                        5,176,600      4,047,300
Valuation allowance                          (5,176,600)    (4,047,300)
                                             ----------     ----------
                                            $         -    $         -
                                             ==========     ==========

The Company has net operating loss carryforwards available to reduce future
taxable income, if any, of approximately $12,399,300, $5,892,400 and
$3,760,000 for Federal, California state and foreign tax purposes,
respectively. The benefits from these carryforwards expire through 2014. As of
December 31, 1999, management believes it cannot be determined that it is more
likely than not that these carryforwards and its other deferred tax assets
will be realized, and accordingly, fully reserved for these deferred tax
assets.

10. Employee Profit Sharing Plan

The Company has a profit sharing plan covering all eligible employees meeting
certain age and service requirements. Under the profit sharing plan, the Board
of Directors, at their election, can authorize contributions up to a maximum
of 3% of eligible participants' total compensation. For the years ended
December 31, 1998 and 1997, the Company contributed $2,500 and $9,800,
respectively. The Company made no contributions for the year ended December
31, 1999.

F-24

<PAGE>

11. Major Customers and Export Sales

Major Customers

During 1999, two customers accounted for approximately 53% and 40% of net
sales.

During 1998, four customers accounted for approximately 27%, 26%, 15% and 12%
of net sales. The customer with 27% of net sales had an accounts receivable
balance of $7,200 as of December 31, 1998, while the other major customers had
no outstanding balance.

During 1997, two customers accounted for approximately 14% and 11% of net
sales, with accounts receivable of $5,400 and $28,800 as of December 31, 1997,
respectively.


Geographic Segments

The following table presents sales and other financial information of Intacta
Labs, located in Israel, for the years ended December 31, 1999, 1998 and 1997:

Years ended December 31,                       1999        1998        1997

Sales to unaffiliated customers         $    54,400 $         - $    26,100
                                         ==========  ==========  ==========
Inter-area sales to affiliates          $         - $    49,900 $   714,100
                                         ==========  ==========  ==========
Operating losses                        $  (783,000)$  (601,600)$  (272,900)
                                         ==========  ==========  ==========
Long-lived assets (gross)               $   363,700 $   325,200 $   185,500
                                         ==========  ==========  ==========

Export Sales

Years ended December 31,                       1999        1998        1997

Far East                                          - $    78,400 $    92,100
Africa/Middle East                                -           -      25,700
Other                                   $    54,400           -      12,900
                                         ----------  ----------  ----------
                                        $    54,400 $    78,400 $   130,700
                                         ==========  ==========  ==========

12. Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentration
of credit risk, consist principally of cash and cash equivalents

F-25

<PAGE>

and trade receivables. The Company places its cash and cash equivalents with
high quality financial institutions and, by policy, limits the amounts of
credit exposure to any one financial institution.

As of December 31, 1999 the Company's accounts receivable are limited.
However, the Company believes any risk of accounting loss is significantly
reduced due to provisions considered at the date of sale for returns and
allowances and ongoing credit evaluations of its customers' financial
condition as deemed necessary. The Company generally does not require cash
collateral or other security to support customer receivables.

13. Statement of Cash Flows

Cash was paid during the years ended December 31, 1999, 1998 and 1997 for:

                                          1999        1998        1997

Income taxes                       $       800 $     1,700 $  $  1,600
                                    ==========  ==========  ==========
Interest                           $         - $    68,300 $    52,100
                                    ==========  ==========  ==========

During the years ended December 31, 1999 and 1998, the Company's non-cash
financing activities included increases of additional paid-in capital in
exchange for the retirement of debt in the amount of approximately $952,100
and $8,929,800, respectively. There were no non-cash activities in the year
ended December 31, 1997.

14. Subsequent Events

In February 2000, the Company filed a registration statement on Form S-1 with
the Securities and Exchange Commission (SEC) under the Securities Act of 1933
to register 8,874,000 common shares.  The related prospectus is solely for the
purpose of selling shareholders and thus the Company will not receive any
proceeds from the sale of stock being offered.  The registration is currently
being reviewed by the SEC and there can be no assurances as to if and when the
registration may become effective.

F-26

<PAGE>

                   INTACTA TECHNOLOGIES, INC.
                  CONSOLIDATED BALANCE SHEETS
           AS AT MARCH 31, 2000 and DECEMBER 31, 1999
                          (Unaudited)

                                        March 31, 2000    Dec. 31, 1999

                             ASSETS

Current

  Cash and cash equivalents                $   796,400      $   917,400
  Accounts receivable                           42,300           31,700
  Inventories                                  234,300          278,600
  Related party and employee receivables        45,000           45,000
  Other                                         30,800           30,800
                                            ----------       ----------
Total current assets                         1,148,800        1,303,500

Property and equipment                         140,400          156,100

Other assets                                   106,800          111,300
                                            ----------       ----------
                                           $ 1,396,000      $ 1,570,900
                                            ==========       ==========

              LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

  Accounts payable                         $   319,000      $   472,400
  Accounts payable - related parties           133,200           90,200
  Advances from shareholder                    525,000           89,000
  Accrued expenses                                   -           77,800
                                            ----------       ----------
Total current liabilities                      977,200          729,400

Stockholders' equity
Preferred stock, $.0001 par value;                   -                -
 50,000,000 shares authorized;
 no shares issued and outstanding
Common stock $.0001 par value;                   1,791            1,791
 100,000,000 shares authorized;
 17,909,000 and 17,909,000 shares
 issued and outstanding; respectively
Additional paid-in capital                  19,821,506       19,710,553
Deficit                                    (18,437,900)     (17,671,200)
Unamortized stock compensation                (966,597)      (1,199,644)
                                            ----------       ----------
                                           $ 1,396,000      $ 1,570,900
                                            ==========       ==========

F-27

<PAGE>

                   INTACTA TECHNOLOGIES, INC.
       CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
       FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
                          (Unaudited)


                                        March 31, 2000   March 31, 1999

Revenues
  Products and components                  $   140,800      $    14,700
  Royalties from licensing arrangements         12,800           44,800
                                            ----------       ----------

Total revenues                                 153,600           59,500
                                            ----------       ----------

Operating Expenses
  Cost of products and components               72,100                -
  Research and development (including          300,400          265,500
    non-cash compensation expense of
    $90,400 and $90,400 in 200 and 1999
    respectively)
  Sales and marketing (including non-cash      215,900            2,500
    compensation expense of $28,200 and $0
    in 2000 and 1999 respectively
  General and administrative (including        349,200          541,000
    non-cash compensation expense of
    $225,4000 and $200,100 in 2000 and
    1999 respectively)
                                            ----------       ----------
Total operating expenses                       937,600          809,000
                                            ----------       ----------
Loss from operations                          (784,000)        (749,500)
                                            ----------       ----------
Other income (expense)
  Interest income                               18,200           29,700
                                            ----------       ----------
Loss before provision for income taxes        (765,800)        (719,800)

Provision for income taxes                         900            2,300
                                            ----------       ----------
Net loss                                      (766,700)        (722,100)
Deficit - Beginning of period              (17,671,200)     (14,053,600)
                                            ----------       ----------
Deficit - End of period                   $(18,437,900)    $(14,775,700)
                                            ==========       ==========
Basic and diluted loss per commons hare   $      (0.04)    $      (0.04)
                                            ==========       ==========
Basic and diluted weighted - average
  common shares outstanding                 17,790,000       17,671,000
                                            ==========       ==========

F-28

<PAGE>

                   INTACTA TECHNOLOGIES, INC.
             CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE THREE MONTHS ENDED MARCH 31, 2000
                          (Unaudited)

                                        March 31, 2000   March 31, 1999

Operating activities
Net loss                                   $  (766,700)     $  (722,100)
Adjustments to reconcile net loss
  to net cash used in operating activities
    Non-cash compensation expense              344,000          290,500
    Depreciation and amortization               20,000           33,200
    Changes in operating assets
      and liabilities
      Accounts receivable                      (10,600)           5,600
      Inventories                               44,300           (8,700)
     Accounts payable                         (110,400)         (58,800)
      Accrued expenses                         (77,800)               -
                                            ----------       ----------
                                              (557,000)        (460,300)
                                            ----------       ----------

Investing activities
Capital expenditures                                 -          (20,300)
                                            ----------       ----------

Financing activities
Advances from shareholder                      436,000                -
Repayment of shareholder advances                    -         (260,000)
                                            ----------       ----------
                                               436,000         (260,000)

Increase/(decrease) in cash during the period (121,000)        (740,600)
Cash, beginning of period                      917,400        3,047,100
                                            ----------       ----------
Cash, end of period                        $   796,400      $ 2,306,500
                                            ==========       ==========

F-29

<PAGE>

                  8,841,000 Shares To Be Sold
                    by Current Shareholders





                          Common Stock



                           PROSPECTUS






                         July 6, 2000



Dealer Prospectus Delivery Obligation:

Until July 31, 2000 (25 days after the date of this prospectus), all dealers
that buy, sell or trade these shares of common stock, whether or not
participating in this offering, may be required to deliver a prospectus.  This
is in addition to the dealers' obligation to deliver a prospectus when acting
as underwriters and with respect to their unsold allotments or subscriptions.




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