Edgar Filing: COLOR IMAGING INC

As filed with the Securities and Exchange Commission on March 14, 2002

Registration No. 333-76090

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________

AMENDMENT NO. 2 TO

FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
_______________________________

COLOR IMAGING, INC.
(Name of Small Business Issuer in Its Charter)
____________________

Delaware 3861 13-3453420
(State or Jurisdiction of (Primary Standard Industrial (IRS Employer Identification
Incorporation or Organization) Classification Code Number) Number)

____________________

4350 Peachtree Industrial Boulevard, Suite 100
Norcross, Georgia 30071
(770) 840-1090
(Address and Telephone Number of Principal Executive Offices)

____________________

Michael W. Brennan, Chief Executive Officer
Color Imaging, Inc.
4350 Peachtree Industrial Boulevard, Suite 100
Norcross, Georgia 30071
(770) 840-1090
(Name, Address and Telephone Number of Agent for Service)

____________________

Copies to:
Gerald M. Chizever, Esq.
Kresimir Peharda, Esq.
Richman, Mann, Chizever, Phillips & Duboff
9601 Wilshire Boulevard, Penthouse
Beverly Hills, California 90210
(310) 274-8300; Fax: (310) 274-2831)

____________________

Approximate Date of Commencement of Proposed Sale to the Public:
As soon as practicable from time to time after the effective date of this
registration statement.

____________________

If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of earlier effective registration
statement for the same offering. [_]

If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]

CALCULATION OF REGISTRATION FEE

Proposed Maximum Proposed Maximum
Title of Each Class Amount To Be Offering Price Aggregate Offering Amount Of
of Securities to be Registered Registered Per Share Price (1) Registered Fee
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Common Stock, $.01 par value 5,410,532 $ 3.10 $16,772,649 $4,010*
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(1) Estimated solely for purpose of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933. Based on the
average of the bid and ask price per share of Common Stock of the
registrant as reported on the OTC Bulletin Board on December 24, 2001.

* Previously paid

__________________________

The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a),
may determine.

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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

5,410,532 SHARES

COLOR IMAGING, INC.

COMMON STOCK

Our selling stockholders (the "Selling Stockholders") are offering to sell up to
5,410,532 shares of our common stock (the "Stock"). We are not offering or
selling any of the Stock. The Selling Stockholders may sell the Stock on the
open market at market price in ordinary broker transactions or in negotiated
transactions, and they may pay broker commissions in connection with such
transactions. We will not receive any of the proceeds of sale of the Stock nor
pay any broker commissions in connection with such sales. Our common stock is
quoted on the OTC Bulletin Board under the symbol CIMG. On December 24, 2001,
the closing price of our stock was $ 3.40 per share.

_________________________

You should carefully consider each of the risk
factors described under RISK FACTORS beginning
on page 3 of this prospectus.

_________________________

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.

_________________________

Wall Street Consulting Corp. and any broker-dealer purchasing or executing
selling orders on behalf of Wall Street Consulting Corp. may be deemed to be an
underwriter within the meaning of the Securities Act. Commissions received by
any such broker-dealer may be deemed to be underwriting commissions or discounts
under the Securities Act.

The date of this prospectus is March , 2002

TABLE OF CONTENTS

Page
----

PROSPECTUS SUMMARY........................................................................... 1

FORWARD-LOOKING STATEMENTS................................................................... 3

RISK FACTORS................................................................................. 3

USE OF PROCEEDS.............................................................................. 7

THE COMPANY.................................................................................. 8

PROPERTY..................................................................................... 14

LEGAL PROCEEDINGS............................................................................ 14

MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS...................................... 14

MANAGEMENT'S DISCUSSION AND ANALYSIS......................................................... 14

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS................................. 18

EXECUTIVE COMPENSATION....................................................................... 20

SECURITY OWNERSHIP OF CERTAIN PERSONS........................................................ 22

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................................... 24

DESCRIPTION OF SECURITIES OFFERED............................................................ 24

SELLING STOCKHOLDERS......................................................................... 26

PLAN OF DISTRIBUTION......................................................................... 28

LEGAL MATTERS................................................................................ 29

INDEMNIFICATION.............................................................................. 29

FURTHER INFORMATION.......................................................................... 29

FINANCIAL STATEMENTS......................................................................... F-1

PROSPECTUS SUMMARY

You should read this summary together with the other information contained in
other parts of this prospectus. Because it is a summary, it does not contain all
of the information that you should consider before investing in our common
stock.

The Company

We develop, manufacture and market products used in electronic printing,
analog and digital copiers and supply high-speed digital printing systems. These
high speed digital printing systems print in real-time directly on offset
presses. Offset presses are presses that utilize plates and ink to print on
paper and other materials. We conduct our business through two separate
operating units, Color and Logical Imaging Solutions, Inc. Color develops,
purchases from others and markets electronic printing products, including black
text, color magnetic ink character recognition and specialty toners, and
provides other parts and accessories for laser printers and digital copiers.
Logical designs, manufactures and integrates components made by third parties
into a complete printing system and offers technical support and supplies in
connection therewith. Logical's printing system allows commercial printers to
digitally process and print data that may change from page to page, also known
as variable data, and images at very high speeds directly on commercial offset
web presses. This capability saves time and money for the printer and
customer.

Color

Since 1989, Color has developed and manufactured products used in electronic
printing. Color formulates and produces black text and specialty toners,
including color and magnetic ink character recognition toners for numerous laser
printers. Color's toners permit the printing of a wide range of user-selected
colors and also the full process color printing of cyan, yellow, magenta and
black. Magnetic ink character recognition toners enable the printing of magnetic
characters which are required for the high-speed processing of checks and other
financial documents. Color also supplies other consumable products used in
electronic printing, including toner cartridges, cartridge components,
photoreceptors and imaging drums.

Color has continually expanded its product line and manufacturing
capabilities. This expansion has led to the creation of more than 130 different
black text, color, magnetic ink character recognition and specialty toner
formulations, including aftermarket toners and imaging products for printers and
facsimile machines manufactured by Brother(TM), Canon(TM), Delphax(TM), Hewlett
Packard(TM), IBM(TM), Lexmark(TM), Sharp(TM), Xerox(TM), Minolta(TM), Mita(TM),
Panafax(TM), Pentax(TM), Pitney Bowes(TM), Epson(TM), Fuji-Xerox(TM),
Toshiba(TM), Kyocera(TM), Okidata(TM), Panasonic(TM), and printing systems
developed by Logical. Color also manufacturers and or markets toners for use in
Ricoh, Sharp(TM), Xerox(TM) and Cannon(TM) copiers. Color also offers product
enhancements, including imaging supplies that enable standard laser printers to
print magnetic ink character recognition. Color markets its branded products
directly to OEMs and its aftermarket products worldwide to distributers and
remanufacturers of laser printer toner cartridges and to dealers and
distributers of copier products.

Logical

Logical designs, assembles and markets a complete printing system,
SOLUTION2000, to commercial printers. When installed directly on an offset
printing press, the SOLUTION2000 expands printing capabilities to include the
printing of variable data and images text together including bar codes, magnetic
ink character recognition and unlimited alphanumeric sequencing. These functions
allow commercial printers to digitally process and print variable data at
extremely high speeds where previously they were able to only print fixed images
from printing plates or cylinders installed on their offset printing presses.
Since its founding in 1993, Logical's development efforts have focused on
creating a revolutionary high-speed digital variable data printing system for
commercial printing applications that combines software, hardware and consumable
products. Logical also offers a full line of consumable products, including
toners, print cartridges and toner fusing assemblies. Our strategy is to
continually build an installed base of printer systems that will generate a
recurring demand for these consumable products.

Logical is developing and intends to beta test the DigitalColorPress, a
Solution series of printing systems incorporating color printing capabilities in
the first quarter of 2002. The DigitalColorPress can print variable data in
color at rates exceeding 250 pages-per-minute. This is in contrast to other
products which do not print directly on the press and print at speeds of
approximately 85 pages per minute. We believe that this represents an attractive
alternative for high-speed offset printing applications because it reduces steps
and labor in the print process. We intend to market Logical's DigitalColorPress
color printing system during 2002 as an enhancement to existing Solution series
installations and as an upgrade for other printing systems.

The Offering

This prospectus concerns an offering of up to 5,410,532 shares of our common
stock (the "Stock") by certain of our

current stockholders (the "Selling Stockholders"). We are not offering or
selling any of the Stock. We have registered this offering in compliance with
registration rights which we granted to the Selling Stockholders when we sold
the Stock to them. The Selling Stockholders are not required to sell the Stock;
sales of the Stock are entirely at the discretion of the Selling Stockholders.
The Selling Stockholders may sell the Stock either on the open market at market
price in ordinary broker transactions or in negotiated transactions, and they
may pay broker commissions in connection with such transactions. We will not
receive any of the proceeds of sale of the Stock nor will we pay any broker
commissions in connection with such sales. Our common stock is quoted on the OTC
Bulletin Board under the symbol CIMG. On December 24, 2001, the closing price
for our stock was $3.40 per share. We will pay the costs of registering the
offer and sale of the Stock with the Securities and Exchange Commission and any
required state securities agencies.

Common Stock Offered by the Selling Stockholders............................................ 5,410,532 Shares

NASDAQ OTC Bulletin Board Symbol......................................................................... CIMG

Michael W. Brennan, Chief Executive Officer
Color Imaging, Inc.
4350 Peachtree Industrial Boulevard, Suite 100
Norcross, Georgia 30071
(770) 840-1090

RISK FACTORS

Investing in our common stock involves a significant degree of risk. You
should carefully consider the following risk factors and all the other
information contained in this prospectus or incorporated by reference before
investing in our common stock. If any of the following risks actually occurs,
our business, financial condition and results of operations could suffer, in
which case the trading price of our common stock may decline.

Factors That May Affect Future Results and Information Concerning Forward -
Looking Statements

Statements contained in this prospectus which are not statements of historical
fact are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements may be identified by the use of forward-looking
terms such as "believes," "expects," "may", "will," "should" or "anticipates" or
by discussions of strategy that involve risks and uncertainties. From time to
time, we have made or may make forward-looking statements, orally or in writing.
These forward-looking statements include statements regarding anticipated future
revenues, sales, operations, demand, competition, capital expenditures, credit
arrangements, and other statements regarding matters that are not historical
facts, involve predictions which are based upon a number of future conditions
that ultimately may prove to be inaccurate. Our actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward-looking statements. Forward-looking statements are made based
upon management's current expectations and beliefs concerning future
developments and their potential effects upon our business. We cannot predict
whether future developments affecting us will be those anticipated by
management, and there are a number of factors that could adversely affect our
future operating results or cause our actual results to differ materially from
the estimates or expectations reflected in such forward-looking statements,
including without limitation, those discussed in the sections titled "The
Company" and "Management's Discussion and Analysis" and the factors set forth
below:

Risks related to our business:

We anticipate that we will need to raise additional capital or obtain funding
to finance our operating and investing activities over the next twelve months.

Unless we are able to raise additional capital or otherwise obtain funding in
the amount of $1.4 million, we anticipate that our cash on hand, funds available
under our bank line of credit will be insufficient to finance our investing and
operating activities over the next twelve months. While we have obtained the
consent of our bank to borrow up to $1.4 million from affiliates to meet these
investing and operating needs until such time as the proceeds from notes
receivable have been collected, we cannot guarantee that we will in fact be able
to obtain such funding. In the event we are unable to obtain additional funds in
the amounts or at the times they are needed, our business, financial condition
and results of operations would be materially adversely affected.

We anticipate that we may need to raise additional capital to expand our
operations.

Our failure to raise additional capital will significantly limit our ability
to conduct marketing activities and generate revenues. To conduct research and
development, manufacturing and marketing activities and generate revenues, we
may be required to raise additional funds. We may not be able to obtain
additional financing at commercially reasonable rates, or at all. Our failure to
obtain additional funds would significantly limit or eliminate our ability to
conduct the foregoing activities. We anticipate that we may seek additional
funding through public or private sales of our securities. That could include
financing through equity securities, or through commercial or private financing
arrangements. Adequate funds may not be available when needed or on terms
acceptable to us, or at all. In the event that we are not able to obtain
additional funding on a timely basis, we may be required to limit any proposed
operations, research and development or expansion.

The success of our business depends on a limited number of suppliers approved
by our customers.

Our products incorporate technologies that are available from a limited number
of suppliers which have been approved by certain of our customers. Approximately
40% of our sales for the nine months ended September 30, 2001 are derived from
products limited to a specific supplier. For the nine months ended September 30,
2001, we purchased 54% of our raw materials, components and supplies from a
single supplier. We do not have a written agreement with any of these suppliers.
We rely on purchase orders to provide us with the supplies we need. If we are
unable to obtain raw materials and components from this supplier, product
shipments could be prevented or delayed, which could result in a loss of sales.
If we are unable to fulfill existing orders or accept new orders because of a
shortage of raw materials and components, we will likely lose revenues and risk
losing customers.

The success of our business depends on a limited number of customers.

In the nine months ended September 30, 2001, three customers accounted for 45%
of our net sales. We do not have contracts with these customers and all of our
sales to them are made through purchase orders. While our products typically go
through our customer's required qualification process, which we believe gives us
an advantage over other suppliers, this does not guarantee that the customer
will continue to purchase from us. The loss of any of these customers, including
through an acquisition or other business combination could have a substantial
and adverse effect on our business. We have in the past, and may in the future,
lose one or more of our major customers. If we do not sell products or services
to our customers in the quantities anticipated, or if a major customer
terminates its relationship with us, market perception of our products and
technology, our growth prospects, and our financial condition and results of
operation could be harmed.

Our success is dependent on our ability to successfully develop, or acquire
from third parties products that we can commercialize and that achieve market
acceptance.

The challenges we face in implementing our business model include establishing
market acceptance of our existing products and services and successfully
developing or acquiring new product lines that achieve market acceptance. We
must successfully commercialize the products that we are currently developing,
and continue to acquire from third parties parts, materials and finished product
that we can integrate into our finished products or sell as our products. While
we have successfully developed toners in the past and are in the late stages of
developing and testing several new toners and prototypes of the electron beam
imaging system, we have not commercialized many of the toners that we are
developing or begun commercial manufacturing of the electron beam imaging
system. While we have in the past acquired from third parties materials and
products that we have been successful in selling, there can be no assurance that
parts, materials or products for new products will be available or will achieve
market acceptance. If we fail to successfully commercialize products we develop
or acquire from third parties, or if these products fail to achieve market
acceptance, our financial condition and results of operation would be seriously
harmed.

Our success is dependent on our ability to utilize available manufacturing
capacity.

We recently expanded our manufacturing capacity by acquiring new
manufacturing equipment. We intend to continue to expand capacity by acquiring
additional manufacturing equipment through the end of the first quarter of
2002. To fully utilize these new additions to the factory, new formulations for
toner have to be developed specifically for manufacture on this new equipment.
While we have been successful in developing formulas for new equipment in the
past, our continued success will be dependent on our ability to develop
additional formulations and manufacture the toners with the new equipment to
achieve a reduction in production costs. We cannot assure you that we will be
successful in developing all of the formulations needed in the future or that we
will be able to manufacture toner at a lower production cost on a regular basis
or that such products will achieve market acceptance. If we are not successful,
or if our historical business declines as the result of our efforts in this
area, our business will be materially and adversely affected.

We intend to grow our business through an acquisition strategy that may
prove unsuccessful.

We intend to pursue acquisitions of businesses or technologies that
management believes complement or expand our existing business. Acquisitions of
this type involve a number of risks, including the possibility that the
operations of any business that we acquire will be unprofitable or that
management attention will be diverted from the day-to-day operation of our
existing business. An unsuccessful acquisition could reduce our margins or
otherwise harm our financial condition, by, for example, impairing our liquidity
and causing non-compliance with our financial covenants. In addition, any
acquisition could result in a dilutive issuance of equity securities, the
incurrence of debt or the loss of key employees. Certain benefits of any
acquisition may depend on us taking one-time or recurring accounting charges
which may be material. We cannot predict whether any acquisition undertaken by
us will be successfully completed or, if one or more acquisitions are completed,
whether the acquired assets will generate sufficient revenue to offset the
associated costs or other adverse effects.

Our success depends on our ability to develop or acquire intellectual
property rights.

Our success depends in part on our ability to develop proprietary toner
formulas and manufacturing processes, obtain patents, copyrights and trademarks,
maintain trade secret protection and operate without infringing the proprietary
rights of others. Current or future claims of intellectual property infringement
could prevent us from obtaining technology of others and could otherwise
adversely affect our operating results, cash flows, financial position or
business, as could expenses incurred by us in enforcing our intellectual
property rights against others or defending against claims that our products
infringe the intellectual property rights of others.

Our intellectual property protection is limited.

While we have one patent and have filed a patent application for another
patent on the whole we do not rely on patents to protect our proprietary
right. We do rely on a combination of laws such as trade secrets and
contractual restrictions such as confidentiality agreements to protect our
proprietary rights. Despite any precautions we have taken:

. laws and contractual restrictions might not be sufficient to prevent
misappropriation of our technology or deter others from developing
similar technologies; and

. policing unauthorized use of our products is difficult, expensive and
time-consuming and we might not be able to determine the extent of this
unauthorized use.

Therefore, there can be no assurance that we can meaningfully protect our
rights in such unpatented proprietary technology or that others will not
independently develop substantially equivalent proprietary products or processes
or otherwise gain access to our proprietary technology. Reverse engineering,
unauthorized copying or other misappropriation of our proprietary technology
could enable third parties to benefit from out technology without paying us
which could significantly harm our business.

Acts of domestic terrorism and war have impacted general economic
conditions and may impact our industry and our ability to operate profitably.

On September 11, 2001, acts of terrorism occurred in New York City and
Washington, D.C. On October 7, 2001, the United States launched military attacks
on Afghanistan. As a result of those terrorist acts and acts of war, there has
been a disruption in general economic activity. The demand for printing products
and services may decline as layoffs in the transportation and other industries
affect the economy as a whole. There may be other consequences resulting from
those acts of terrorism, including civil disturbance, war, riot, epidemics,
public demonstration, explosion, freight embargos, governmental action,
governmental delay, restraint or inaction, quarantine restrictions,
unavailability of capital, equipment, personnel, which we may not be able to
anticipate. These terrorist acts and acts of war may continue to cause a slowing
of the economy, and in turn, reduce the demand for printing products and
services, which would harm our ability to make a profit. We are unable to
determine the long-term impact, if any, of these incidents or of any acts of war
or terrorism
4

in the United States or worldwide on the U.S. economy, on us or on the price of
our common stock.

We depend on the efforts and abilities of certain of our officers and
directors to continue our operations and generate revenues.

Our success depends to a significant extent on the continued services of
senior management and other key personnel. While we do have employment, non-
compete and confidentiality agreements with our executive officers and certain
other key individuals, these agreements may be terminated by either party upon
giving the required notice. The loss of the services of any of our executive
officers or other key employees could harm our business. Our success also
depends on our ability to attract, retain and motivate highly skilled employees.
Competition for qualified employees in the industries in which we operate is
intense. If we fail to hire and retain a sufficient number of qualified
employees, our business will be adversely affected.

Compliance with government regulations may cause us to incur unforeseen
expenses.

Our black text, color and M toner supplies and manufacturing operations are
subject to domestic and international laws and regulations, particularly
relating to environmental matters that impose limitations on the discharge of
pollutants into the air, water and soil and establish standards for treatment,
storage and disposal of solid and hazardous wastes. In addition, we are subject
to Federal and State regulations for storm water discharge, and as a requirement
of the State of Georgia have developed and implemented a Storm Water Pollution
Prevention Plan. We are also required to have permits from governmental agencies
in order to conduct various aspects of our business. Compliance with these laws
and regulations has not in the past had a material adverse affect on our capital
expenditures, earnings or our competitive position. There can be no assurance,
however, that future changes in environmental laws or regulations, or in the
criteria required to obtain or maintain necessary permits, will not have a
material adverse affect on our operations.

We sell a significant portion of our products internationally, which
exposes us to currency fluctuations.

We sell a significant amount of our products to customers outside of the
United States. International sales accounted for 20.5% of our net sales in the
nine months ended September 30, 2001 and 10.8% in the fiscal year ended December
31, 2000. We expect that shipments to international customers will continue to
account for a material portion of our net sales. Most of our products are priced
in U.S. dollars, but because we do sell products in Europe denominated in Euros,
fluctuations in the Euro could also cause our products there to become less
affordable or less competitive or we may sell some products at a loss to
otherwise maintain profitable business from a customer. We cannot assure you
that these factors will not have a material adverse effect on our international
sales and would, as the result, adversely impact our results of operation and
financial condition.

Our quarterly operating results fluctuate as a result of many factors.

Our quarterly operating results fluctuate due to various factors. Some of
these factors include the mix of products sold during the quarter, the
availability and costs of raw materials or components, the costs and benefits of
new product introductions, and customer order and shipment timing. Because of
these factors, our quarterly operating results are difficult to predict and are
likely to vary in the future.

Risks relating to our industry:

We operate in a competitive and rapidly changing marketplace.

There is significant competition in the toner and consumable products, and
color printing systems industries in which we operate. In addition, the market
for digital color printers and copiers and related consumable products is
subject to rapid change. Many of our competitors, both the original equipment
manufacturers and other after market firms, have longer operating histories,
larger customer bases, greater brand recognition and significantly greater
financial, marketing and other resources than we do. These competitors may be
able to devote substantially more resources to developing their business than we
can. Our ability to compete depends upon a number of factors, including the
success and timing of product introductions, our marketing and distribution
capabilities and the quality of our customer support. Some of these factors are
beyond our control. In addition, competitive pressure to develop new products
and technologies could cause our operating expenses to increase substantially.

Our products have short life cycles and are subject to frequent price
reductions.

The markets in which we operate are characterized by rapidly evolving
technologies, frequent new product introductions and significant price
competition. Consequently, our products have short life cycles, and we must
frequently reduce prices in response to product competition. Our financial
condition and results of operations could be adversely affected if we are unable
to manufacture new and

competitive products in a timely manner. Our success depends on our ability to
develop and manufacture technologically advanced products, price them
competitively, and achieve cost reductions for existing products. Technological
advances require sustained research and development efforts, which may be
costly.

Our financial performance depends on our ability to successfully manage our
inventory levels, which is affected by factors that may be beyond our control.

Our financial performance depends in part on our ability to manage our
inventory levels to support the needs of new and existing customers. Our ability
to maintain appropriate inventory levels depends on factors that may be beyond
our control, including unforeseen increases or decreases in demand for our
products and production and supply difficulties. Demand for our products can be
affected by product introductions or price changes by our competitors or us, the
life cycle of our products, or delays in the development or manufacturing of our
products. Our operating results and ability to increase the market share of our
products may be adversely affected if we are unable to address inventory issues
on a timely basis. In addition, competitive pressure to develop new products and
technologies could cause our operating expenses to increase substantially.

Risks relating to owning our common stock:

Our officers, directors and principal stockholders own approximately 48%
of our outstanding shares of common stock, allowing these stockholders to
control matters requiring approval of our stockholders.

As a result of such ownership as of December 2001 by our officers,
directors and principal stockholders, investors will have limited control over
matters requiring approval by our stockholders, including the election of
directors. Such concentrated control may also make it difficult for our
stockholders to receive a premium for their shares of our common stock in the
event we enter into transactions which require stockholder approval. In
addition, certain provisions of Delaware law could have the effect of making it
more difficult or more expensive for a third party to acquire, or of
discouraging a third party from attempting to acquire, control of us.

Exercise of warrants and options will dilute existing stockholders and
could decrease the market price of our common stock.

As of December 27, 2001, we had issued and outstanding 11,124,175 shares of
common stock and outstanding warrants and options to purchase 1,145,102
additional shares of common stock. In addition, we have agreed to issue up to
500,000 warrants to purchase our common stock to Wall Street Consulting, Corp,
one of our Selling Stockholders, in connection with the resale of common stock
it has purchased from us. The existence of these warrants and options may
adversely affect the market price of our common stock and the terms under which
we could obtain additional equity capital.

Our ability to raise additional capital through the sale of our stock may
be harmed by competing resales of our common stock by the Selling Stockholders.

The price of our common stock could fall if the Selling Stockholders sell
substantial amounts of our common stock. These sales would make it more
difficult for us to sell equity or equity-related securities in the future at a
time and price that we deem appropriate because the Selling Stockholders may
offer to sell their shares of common stock to potential investors for less than
we do. Moreover, potential investors may not be interested in purchasing shares
of our common stock if the Selling Stockholders are selling their shares of
common stock.

Our common stock is listed on the Over-The-Counter Bulletin Board, which
may make it more difficult for you to sell your shares and may cause the market
price of our common stock to decrease.

Because our common stock is listed on the Over-The-Counter (OTC) Bulletin
Board, the liquidity of our common stock is impaired, not only in the number of
shares that are bought and sold, but also through delays in the timing of
transactions, and coverage by security analysts and the news media, if any, of
our company. As a result, prices for shares of our common stock may be lower
than might otherwise prevail if our common stock was traded on NASDAQ or a
national securities exchange, like the American Stock Exchange.

Our stock price may be volatile and your investment in our common stock
could suffer a decline in value.

The market price of our common stock may fluctuate significantly in
response to a number of factors, some of which are beyond our control. These
factors include:

. progress of our products through development and marketing;

. announcements of technological innovations or new products by us or our
competitors;

. government regulatory action affecting our products or our
competitors' products in both the United States and foreign countries;

. developments or disputes concerning patent or proprietary rights;

. actual or anticipated fluctuations in our operating results;

. the loss of key management or technical personnel;

. the loss of major customers or suppliers;

. the outcome of any future litigation;

. changes in our financial estimates by securities analysts;

. fluctuations in currency exchange rates;

. general market conditions for emerging growth and technology
companies;

. broad market fluctuations;

. recovery from natural disasters; and

. economic conditions in the United States or abroad.

Our charter documents and Delaware Law may have the effect of making it
more expensive or more difficult for a third party to acquire us or to acquire
control of us.

Our certificate of incorporation makes it possible for our Board of
Directors to issue preferred stock with voting or other rights that could impede
the success of any attempt to change control of our company. Our certificate of
incorporation and bylaws eliminate cumulative voting which may make it more
difficult for a minority shareholder to gain a seat on our Board of Directors
and to influence our Board of Directors' decision regarding a takeover.
Delaware Law prohibits a publicly held Delaware corporation from engaging in
certain business combinations with certain persons, who acquired our securities
with the intent of engaging in a business combination, unless the proposed
transaction is approved in a prescribed manner. This provision has the effect
of discouraging transactions not approved by our Board of Directors as required
by the statute which may discourage third parties from attempting to acquire us
or to acquire control of us even if the attempt would result in a premium over
market price for the shares of common stock held by our stockholders.

While we reassesses material trends and uncertainties affecting our
financial condition and results of operations in connection with the preparation
of our quarterly and annual reports, we do not intend to review or revise, in
light of future events, any particular forward-looking statement contained in
this prospectus.

The information referred to above should be considered by investors when
reviewing any forward-looking statements contained in this report, in any of our
public filings or press releases or in any oral statements made by us or any of
our officers or other persons acting on our behalf. The important factors that
could affect forward-looking statements are subject to change, and we do not
intend to update the foregoing list of certain important factors. By means of
this cautionary note, we intend to avail itself of the safe harbor from
liability with respect to forward-looking statements that is provided by Section
27A and Section 21E referred to above.

USE OF PROCEEDS

The Selling Stockholders will receive all of the proceeds from selling the
Stock. We will not receive any sales proceeds. Some of the shares to be sold are
already owned by the Selling Stockholders, and the remainder are issuable to
them upon exercise of warrants. See the table in "Selling Stockholders." We
would receive the proceeds of sale upon the exercise of these warrants. The
total amount we would receive if all of these warrants were exercised is
approximately $1,776,000 (assuming that warrant holders do not utilize a
cashless exercise). We have not made any plans for use of these proceeds other
than to add them to working capital.

THE COMPANY

Overview

Color Imaging, Inc., formerly known as Advatex Associates, Inc., was
incorporated in Delaware in 1987. On May 16, 2000, Advatex, Logical Acquisition
Corp., Color Acquisition Corp., Logical Imaging Solutions, Inc. and Color Image,
Inc. entered into a Merger Agreement and Plan of Reorganization, as amended
("Merger Agreement") pursuant to which Logical Acquisition Corp. merged with and
into Logical and Color Acquisition Corp. merged with and into Color Image (the
"Merger"). Pursuant to the Merger Agreement, shareholders of Logical and Color
Image exchanged their shares for shares of common stock of Advatex. Logical
shareholders converted their shares into shares of common stock of Advatex at
the ratio of 1.84843 shares of common stock of Advatex for each one share of
Logical. Color Image shareholders converted their shares into shares of common
stock of Advatex at the ratio of 15 shares of common stock of Advatex for each
one share of Color Image. Following the conversion of shares by Logical and
Color Image shareholders, shareholders of Logical and Color Image owned
approximately 85% of the outstanding shares of common stock of Advatex and
shareholders of Advatex before the Merger owned approximately 15%.

Pursuant to the Merger Agreement, Logical Acquisition Corp. merged with
Logical and Color Acquisition Corp. merged with Color Image whereby Logical and
Color Image became wholly-owned subsidiaries of Advatex. After the Merger,
shareholders of Logical and Color Image each owned approximately 43% of the
outstanding shares of common stock of Advatex.

On July 7, 2000, pursuant to a vote of our stockholders, we changed our
name to Color Imaging, Inc. On December 31, 2000, Color Image, Inc. was merged
with and into Color Imaging, Inc.

Logical designs, manufacturers and integrates components made by third
parties into a complete printing system and offers technical support and
supplies in connection therewith. Logical's printing system allows commercial
printers to digitally process and print data that may change from page to page,
also known as variable data, and images at very high speeds directly on
commercial offset web presses. Thus, the same system that typically prints only
fixed images has the ability to print computer generated data that may vary from
page to page. This capability save time and money for the printer and the
customer.

Logical is developing and intends to beta test the Solution series of color
printing systems called the DigitalColorPress during the first quarter of 2002.
The Digital Color Press can print variable data in color at speeds exceeding 250
pages-per-minute, and we believe, represents an attractive alternative for high-
speed offset printing applications. The DigitalColorPress can print without
plate preparation, ink mixing or the labor intensive setup and cleanup typical
of commercial offset presses. This reduction in steps and labor saves time and
money. We intend to market Logical's DigitalColorPress color printing system
during 2002 as a stand-alone product and as an upgrade to Logical's installed
printing systems and other printing systems. During the third quarter of 2001,
we completed developmental testing of our digital electron beam imaging color
toning system and are preparing to beta test this system at two commercial
printing installations during the first quarter of 2002. We anticipate that
these presses will be capable of printing computer driven high-speed digital
variable data color applications directly on an unmodified commercial offset
press.

In addition, during the third quarter, we successfully finished the
engineering evaluation of a new print head configuration for electron beam
imaging printing. This print head (patent pending) incorporates a proprietary
curved surface and, when printing on an imaging cylinder, generates a more
uniform dot than prior technology. Accompanying the development of the print
head was the introduction of an enhanced black text toner designed for two-sided
or duplex electron beam imaging printing applications. We intend to have both of
these products available for delivery during the first quarter 2002. We believe
that initial sales of our color toning systems and related color, for spot or
enhanced printing, or non-magnetic black text toner will be into the electron
beam imaging installed base of Delphax Printing Systems, their OEMs and our
existing electron beam imaging customers. The existing electron beam imaging
market is limited and will require us to identify additional potential customers
who do not now have this technology and need either digital printing capability
or the added capability of printing any data in a particular color, also known
as variable text spot color on their web press.

Market Overview

Commercial offset presses print fixed data from printing plates which are
prepared prior to the printing process and every printed item or page is a
replication. Offset printing is further characterized by full cyan, yellow,
magenta blended discuss and black color printing using inks that are transferred
from plates to paper with print rates around and exceeding 500 pages per minute.
Offset printed products include; newspapers, books, stationary, forms,
brochures, advertising materials, etc. Data processing printers print variable
data, primarily black text, which can produce an unlimited stream of variable
data or images at typical print rates of 150 pages per minute. We believe that
the value of the printed materials produced by commercial printers was
approximately $160 billion in 2000. We also believe that the 2000 market for
press and data processing printing equipment was approximately $7 billion.

Color's market for imaging products is the installed base of electronic
printing devices; laser printers and facsimile machines and analog and digital
copiers. Color competes within this market with products supplied by the OEM
manufacturer of the electronic printing device and with other suppliers of
aftermarket imaging products. Additional products in this category include
enhancement products that extend the capabilities of the OEM's product, such as
magnetic ink character recognition toners which enable the printing of magnetic
characters on checks and other financial documents. Products are marketed on an
OEM-basis directly to several worldwide suppliers of imaging products and sold
to end-users through a distributor network. We believe that the worldwide
aftermarket for imaging products during 2001 will be approximately $1.25 billion
with an annual growth rate of 8 percent per annum.

Logical's market for printing systems, upgrades and consumable products is
our installed base of Solution series printing systems. Each of these systems
represents an opportunity to upgrade to a DigitalColorPress, and represents a
continued and expanding revenue source for our evolving line of consumable
products. Logical's long-term objective is to provide an upgrade option for
offset commercial presses that replaces the conventional printing plate and
inking processes with a computer controlled pre-press and on-press production
color printing capability.

Strategy

Our objective is to become the leading independent supplier of imaging
products and to alter the landscape in the commercial printing industry by
providing a faster and more economical method of high-speed color production
printing.

The key elements of our strategy with regard to imaging products include
expanding our toner product offerings, increasing vertical integration by
supplying complete toner and cartridges subsystems, capitalizing on the
expertise of producing speciality toners, exploiting the efficiencies associated
with the investment in our new manufacturing facilities and expanding into new
geographic markets.

Color's development of new toner products is focused on providing an
aftermarket product for electronic printing devices that achieves a high level
of market acceptance. We endeavor to offer equivalent toner products with equal
print quality, but price positioned under the OEM's toner product.

Color is committed to increasing the value added to our toner products by
providing a "plug-compatible" product for the end-user. We believe that by
developing toner cartridges and canisters for specific electronic printing or
copying devices and integrating those subsystems with our toners the market for
our toner products will expand. We also believe that this approach will increase
our gross margins.

Color will continue to emphasize its high margin speciality toner
capability, primarily color and magnetic ink character recognition toners, while
providing lower margin black text toners in commodity bulk to a number of large
customers. The bulk quantity of black text toners are required to maximize the
efficiencies of our total "from raw materials to finished product" manufacturing
cycle and justify the capital investment in our production equipment. The
availability of this complete manufacturing process and equipment allows for the
continued expansion of speciality toner products.

Color believes that significant opportunities for imaging product sales
exist and will continue to develop in the Asian market. Further, there are
opportunities for production efficiencies due to shipping, storage and
employment costs if toner products are either sourced or manufactured in Asia
for the Asian market. Color is currently exploring the possibility of both
expanding into the Asian market and establishing a manufacturing facility in
China.

Logical's strategy is to provide a continuing series of software, hardware
and consumable products for the existing base of commercial printers employing
electron beam imaging printing on their offset presses. This product strategy
envisions replacement of those offset press by the DigitalColorPress, which will
bring full digital color printing capabilities at press speeds, with the
advantages of a data processing operation and elimination of all conventional
pre-press functions. Logical intends is to continue to place production printing
equipment in service thereby creating a market for our consumable products.

Color

Since 1989, Color has developed and manufactured products for use in
facsimile, printer and copier applications, used by consumers with their
personal computers and by business as standalone and networked devices. More
specifically, Color formulates and produces black text and specialty toners,
including color and magnetic ink characters, which are used on checks and other
financial documents, used in the above devices. Color also supplies other
consumable products used in electronic printing, including toner cartridges,
cartridge components, photoreceptors and imaging drums. These products are
generally considered the consumables of the printing devices that need to be
replaced periodically as they are either used up or wear out in order for the
printing device to continue to function. As the result, there is continuing
demand for these products in the marketplace, and the original manufacturer of
the electronic device and after market companies, such as Color, compete for
these sales. In addition to new and replacement print cartridges and parts
produced by OEMs, remanufactured cartridges and new after market print
cartridges, toner and parts all compete in the market.

Color has continually expanded its product line and manufacturing
capabilities. This expansion has led to the creation of more than 130 different
black text, color, magnetic ink character recognition and specialty toner
formulations, including aftermarket toners and imaging products for printers and
facsimile machines manufactured by Brother(TM), Canon(TM), Delphax(TM), Hewlett
Packard(TM), IBM(TM), Lexmark(TM), Sharp(TM), Xerox(TM), Minolta(TM), Mita(TM),
Panafax(TM), Pentax(TM), Pitney Bowes(TM), Epson(TM), Fuji-Xerox(TM),
Toshiba(TM), Kyocera(TM), Okidata(TM), Panasonic(TM), and printing systems
developed by Logical. Color also manufactuers toner for use on Ricoh(TM),
Sharp(TM), and Xerox(TM) copiers and markets toners used in Canon(TM) copiers.
Color also offers product enhancements, including imaging supplies that enable
standard laser printers to print magnetic ink character recognition. Color
markets its branded products directly to Sub-Original Equipment Manufacturers
MICRizing digital printer. Color markets its aftermarket products worldwide to
distributers and remanufacturers of laser printers toner cartridges and to
dealers and distributers for copier toner products. Remanufacturers, or
"rechargers," purchase after market toner, cartridge and cartridge components to
remanufacture the "used" OEM's cartridge. The remanufactured print cartridge is
usually less expensive than the OEM's, which is accepted by many users as a low
cost alternative even if the print quality does not always match that of the
OEM.

Logical

Since its founding in 1993, Logical's development efforts have focused on
creating a unique high-speed digital variable data printing system for
commercial printing applications that combines software, hardware and consumable
products. Logical designs and manufactures a complete printing system,
SOLUTION2000, marketed to commercial printers. The SOLUTION2000 system is
comprised of software, a printer control unit and the print engine. When
installed directly on an offset printing press, the SOLUTION2000 system expands
printing capabilities to include variable data such as text, images, bar codes,
magnetic ink character recognition characters and unlimited alphanumeric
sequencing. These functions allow commercial printers to do what was not
previously possible digitally process and print variable data at high speeds
directly on the web press without employing any additional post-press
operations. Unlike commercial press printing where each page is the same and
derived from a printing plate in an offset printing process, variable data
printing involves printing documents where each page may contain completely
different data than any other page. The commercial printing system market
includes printers, both print for profit and in-house printing organizations,
that print everything from manuals, brochures, books, tags, tickets, labels and
transactional and financial documents like invoices, statements and checks to
advertising material.

Logical's product line includes software, hardware and consumable products.
The operating software, Create!, allows the commercial printer to create any
type of form, tag, ticket or label and control the printing process on the
press. Create! operates in a WindowsNT(TM) environment, enabling the user to
create, edit, store, distribute, proof and download documents in any industry-
standard format. Logical's companion hardware product is a proprietary Printer
Control Unit (PCU), which incorporates the latest microprocessor technology, and
provides digital imaging capability as well as the ability to simultaneously
control multiple print engines. Logical's Solution series of printing systems
integrates Create! and the PCU offers with a high speed electron beam imaging
print engine manufactured by Delphax Printing Systems. We have an arrangement
with Delphax that is not in writing to supply us with the print engine. Electron
beam imaging is the only toner-based process that has successfully competed with
xerography in the variable data high speed printing arena. Electron beam imaging
uses a beam of electrons focused on an imaging drum to create the image.
Xerography on the other hand uses focused light beams on a photoelectric drum to
create the image.

Logical also offers a full line of consumable products, black text and
magnetic ink character recognition toners, print cartridges and toner fusing
assemblies. Our strategy is to continually build a base of printer systems that
will generate a recurring demand for these high margin consumable products.

Logical is presently developing the DigitalColorPress, a Solution series of
printing systems for variable data color printing at speeds exceeding 250 pages-
per-minute, as an alternative to existing high-speed offset printing
applications. We intend to beta test the DigitalColorPress by the first quarter
of 2002 and we intend to market it in 2002. In addition, Logical will offer its
DigitalColorPress system to production printing sites worldwide and as a color
upgrade for other printing systems. Logical's Solution color series of electron
beam imaging printers will permit the commercial printer to add color variable
data in synchronization with other printing tasks performed on an offset press,
a capability that the commercial printer does not currently have. We intend to
market the Digital Color Press in 2002 as an enhancement to existing Solution
Series installations and as an upgrade for other printing systems.

Products

========================================================================================================================
Product Family Net Revenues for the Primary Product Function Products or Services
Nine Months Ended
September 30, 2001
------------------------------------------------------------------------------------------------------------------------

Data processing, financial After market black text,
Toner $20,926,790 document printing and color, specialty and magnetic
copying ink character recognition toners
------------------------------------------------------------------------------------------------------------------------
Laser printer cartridge Printer parts for
Laser printer kits & parts $ 2,129,445 remanufacturing remanufacturing OEM
print cartridges
------------------------------------------------------------------------------------------------------------------------
Commercial printing electron beam imaging Toner, print cartridges,
products and services $ 437,939 consumable products and erase rods and system
technical support services support services
========================================================================================================================

Marketing and Distribution

We market and distribute our products worldwide through our own direct
sales force. We market Color's products primarily to distributors, OEMs and
rechargers. We market Logical's products directly to commercial printers.

In the nine months ended September 30, 2001, our sales were primarily
generated from the sale of black text, color and magnetic ink character
recognition toners and related consumable products, including toner cartridges
and the re-filling of certain toner cartridges. During this period, three toner
customers accounted for 45% of net sales. Though our sales are on purchase
orders, these customers issue purchase orders three months in advance of the
product delivery date and provide us with a two month rolling forecast. While
the forecasts indicate that future orders may vary by up to 20%, it has been our
experience that the orders generally coincide with the customer's forecast.

Competition

The markets for our products are competitive and subject to rapid changes
in technology. We compete principally on the basis of quality, flexibility and
service, and position ourselves as a full-service provider with a pricing
strategy that reflects quality and reliability.

Color's competitors in the toner market include large businesses with
significantly greater resources in the high-volume commodity toner market, as
well as smaller companies in the specialty, color and magnetic ink character
toner markets. In addition, other companies offer remanufactured toner
cartridges and printer parts that are lower priced.

Our strategy requires us to continue to develop and market new and
innovative products at competitive prices. New product announcements by our
principal competitors, however, can have, and in the past have had, a material
adverse effect on our financial results. Such new product announcements can
quickly undermine any technological competitive edge that one manufacturer may
enjoy over another and set new market standards for quality, speed and function.
Furthermore, knowledge in the marketplace about pending new product
announcements by our competitors may also have a material adverse effect on us
inasmuch as purchasers of these products may defer purchasing decisions until
the announcement and subsequent testing of such new products.

In recent years, we and our principal competitors, all of which have
significantly greater financial, marketing and technological resources than us,
have regularly lowered prices on both printer and copier imaging supplies and
are expected to continue to do so in the future. We are vulnerable to these
pricing pressures which, if not mitigated by cost and expense reductions, may
result in lower profitability and could jeopardize our ability to grow or
maintain market share. We expect that, as we compete more successfully with our
larger competitors, our increased market presence may attract more frequent
challenges, both legal and commercial, from its competitors, including claims of
possible intellectual property infringement.

Canon, Xerox and Ricoh are the market leaders in the toner market whose
aggregate sales we believe represent approximately 75% to 85% of worldwide toner
sales. As with our other products, if pricing pressures are not mitigated by
cost and expense reductions, our ability to maintain or build market share and
our profitability could be adversely affected.

Like certain of our competitors, we are a supplier of laser printer kits
and parts. We cannot assure you that we will be able to compete effectively for
a share of this business. In addition, we cannot assure you that our competitors
will not develop new compatible laser printer products. Independent
manufacturers compete for the aftermarket business under either their own brand,
private label, or both, using price, aggressive marketing programs, and flexible
terms and conditions to attract customers. Depending on the product, prices for
compatible products produced by other manufacturers are offered below our
prices, in some cases significantly below our prices.

Logical's commercial printing products and services have few direct
competitors due to the specialization of these products. Logical's indirect
competitors offer alternative products that use other printing technologies such
as inkjet or xerography with different speed and print resolution capabilities.
Unlike xerography, electron beam imaging prints on the offset press and at
higher speeds than xerography. Electron beam imaging also requires less system
maintenance than an inkjet system. Delphax Printing Systems, a wholly owned
subsidiary of Check Technology Corporation who recently acquired Delphax from
Xerox Corporation, is a supplier of electron beam imaging print engines to
Logical and others, but to our knowledge does not market a system to commercial
printers for on-press applications. Delphax, considered the leader in electron
beam imaging technology, has been supplying systems to the data processing
market for over twenty-five years, and does not, to our knowledge, supply
software or systems capable of printing in color. Check Technology Corporation,
a supplier of check printing equipment, does not to our knowledge, offer
software or systems capable of printing in color or any other on-press
application. However, in view of this sale, Delphax could become a direct
competitor of Logical or could stop supplying its products to us.

We believe that the synergy between Color and Logical with respect to
printing systems and proprietary consumable products will enhance both
operations as our consumable supply side grows with printing system sales.

Manufacturing

We operate a toner manufacturing facility in Norcross, Georgia, which was
constructed during 1999 and 2000. We have made significant capital investment in
this facility to enable us to maintain proprietary processes within our own
facility. We enlarged the factory and purchased more efficient manufacturing
equipment to provide increased production capacity to lower our processing costs
of our toner products. The installation and successful testing of additional
equipment to be completed by the end of the first quarter 2002 is an integral
part of our plan to improve production capacity and efficiency and to
significantly lower the costs of our toner products. Our goal for the last three
years has been to reduce average toner product costs by one-half, in response to
our assessment of the continuing price reductions for these products in the
marketplace.

Our electron beam imaging, DigitalColorPress and Solution series printer
system development and support organization is located in Santa Ana, California.
Our strategy at this facility is to integrate the best technical expertise and
components available for the products that comprise our printing system. Our
software and product design and development activities are in the Santa Ana
facility.

Materials

We procure a wide variety of components in our manufacturing processes,
including raw materials, such as chemicals and resins, electro-mechanical
components and assemblies. Although many of these components are standard off-
the-shelf parts that are available from multiple sources, we often utilize
preferred supplier relationships to ensure more consistent quality, cost and
delivery. Often our toner formulations are dependent on one or more materials
produced by only one vendor, since the formula was developed based on that
material's unique characteristics. Alternative materials exist, but the
differences in performance characteristics could require us to modify the
original formula and/or our manufacturing processes to obtain a marketable
product based on the new material. In the event that these components are not
available to us, our production could be disrupted. Such a disruption could
materially harm our business.

Research and development

Our research and development activities for the past several years have
focused on black text, specialty, color and magnetic ink character ink toner
formulations, and the development of electron beam imaging technologies and
supplies. Our commitment to growing our business through research and
development requires innovative designs, significant development and testing
activities and functional solutions.

Our research and development expenditures increased to $1.89 million in
2000 from $1.33 million in 1999. We must make strategic decisions from time to
time as to which technologies will produce products with the greatest future
potential. Occasionally, a customer will ask us to develop toner products for
their exclusive resale, and in that event the customer will generally
financially support our development activities. In turn, we will also
occasionally work with suppliers to develop proprietary technology for our
exclusive use. These strategic relationships have benefitted us in the past, and
we intend to continue to pursue such relationships for new products. Our
software, electrical and mechanical engineers, chemists and consultants are
focused on development of printing systems and consumables that will increase
efficiency, lower production costs or improve the quality of our electron beam
imaging commercial printing products. With certain products, we may elect to
purchase key components from third party suppliers, such as electron beam
imaging print engines or related parts and consumables under our existing
annually renewal OEM agreement for electron beam imaging technology until we
have proprietary products of our own. We cannot predict whether we can continue
to develop the technologically advanced products required to remain competitive
or that such products will achieve market acceptance.

Intellectual Property

We seek to protect technology, inventions and improvements that we consider
important through the use of trade secrets and in some cases patents. We
currently hold. U.S. patent number 5,834,150 issued on November 10, 1998 and
expiring in July 2014. This patent covers toners for our high speed printing
system and certain other toner fusing methods. We have also filed another patent
application for other technology related to high speed digital printing. There
can be no assurance, however, that our patents will provide competitive
advantages for our products, or that such rights will not be challenged or
circumvented by competitors. In addition, there can be no assurance that any
patents covered under any pending patent applications will be issued. Claims
made under patent applications may be denied or significantly narrowed and the
issued patents, if any, may not provide significant commercial protection to us.
We could incur substantial costs in proceedings before the U.S. Patent and
Trademark Office, including interference proceedings. These proceedings could
result in adverse decisions as to the priority of our inventions.

While we do not believe that any of our products infringe any valid claims
of patents or other proprietary rights held by third parties, there can be no
assurance that we do not infringe any patents or other proprietary rights held
by third parties. If an infringement claim were made, the costs incurred to
defend the claim could be substantial and adversely affect our business, even if
we were ultimately successful in defending the claim. If our products were found
to infringe any proprietary right of a third party, we could be required to pay
significant damages or license fees to the third party or cease production.
Litigation may also be necessary to enforce patent rights held by us, or to
protect trade secrets or techniques owned by us. Any such claims or litigation
could result in substantial costs and diversion of effort by management.

While we are seeking to protect our electron beam imaging technology, we
are not pursuing patent protection for other technology beacuse the benefit of
doing so is out weighed by the cost. Specifically, we believe patent protection
is of limited usefulness in areas other than electron beam imaging technology
because competitors have the ability (even if we had a patent) to develop
substantially equivalent technology. Therefore we rely on trade secrets and
other unpatented proprietary technology. There can be no assurance that we can
meaningfully protect our rights in such unpatented proprietary technology or
that others will not independently develop substantially equivalent proprietary
products or processes or otherwise gain access to our proprietary technology. We
seek to protect our trade secrets and proprietary know-how, in part, with
confidentiality agreements with employees and consultants. There can be no
assurance that the agreements will not be breached, that we will have adequate
remedies for any breach or that our trade secrets will not otherwise become
known to or independently developed by competitors.

Employees

As of September 30, 2001, we had 96 employees, including 2 part-time
employees. None of our employees is represented by a labor union or is covered
by a collective bargaining agreement. We have not experienced any work stoppages
and consider relations with our employees to be good.

Environmental and Regulatory Matters

Our toner supplies manufacturing operations are subject to numerous
domestic and international laws and regulations, particularly relating to
environmental matters that impose limitations on the discharge of pollutants
into the air, water and soil and establish standards for the treatment, storage
and disposal of solid and hazardous wastes. We are also required to have a
permit from the State of Georgia and licenses from a number of governmental
agencies in order to conduct various aspects of our business. Of these only the
permit issued by the State of Georgia is material to our business and
operations. The Air Protection Branch of the State of Georgia's Department of
Natural Resources Environmental Protection Division (the "Division") issued a
permit to us in 2000 to construct and operate a copier and printer toner
manufacturing facility at our headquarters location. The permit is conditioned
upon compliance by us with all the provisions of the Georgia Air Quality Act,
and specifically the Rules, Chapter 391-3-1, in effect. In addition to operating
and maintaining the equipment, in a manner consistent with good air pollution
control practice to minimize emissions, we must maintain records, conduct tests
as directed by the Division, and comply with certain allowable emissions and
operational limitations. The permit is subject to revocation, suspension,
modification or amendment for cause, including evidence of noncompliance by us.
Compliance with these laws and regulations in the past has not had a material
adverse effect on our capital expenditures, earnings or our competitive
position. There can be no assurance, however, that future changes in
environmental laws or regulations, or in the criteria required to obtain or
maintain necessary permits, will not have a material adverse effect on our
operations.

Facilities

We currently lease an approximately 180,000 square foot facility in
Norcross, Georgia from an affiliated party. This facility serves as our
executive headquarters and houses our manufacturing facilities, as well as our
research and development and sales and marketing departments. The lease for this
facility expires in March of 2009 and includes three options at our election to
extend the term for five years each. We also lease an approximately 4,000 square
foot facility in Santa Ana, California under a lease that expired in October
2001. Currently the Santa Ana facility lease is month-to-month. Management
considers these facilities to be sufficient for our current operations.

LEGAL PROCEEDINGS

We are not a party to any material legal proceedings.

MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Our Common Stock is traded on the Over the Counter Bulletin Board (the OTC
Bulletin Board) under the symbol CIMG. Prior to July 7, 2000, the Common Stock
was traded on the OTC Bulletin Board under the symbol ADTX. The following table
sets forth the high and low prices of the Common Stock for the quarters
indicated as quoted on the OTC Bulletin Board.

1999 2000 2001
--------------- --------------- ---------------
HIGH LOW HIGH LOW HIGH LOW
------ ------ ------ ------ ------ ------

First Quarter................................ 0.3191 0.1896 2.2792 1.2344 3.0000 2.5000

Second Quarter............................... 0.4747 0.2851 5.6980 1.3298 2.6500 1.9000

Third Quarter................................ 2.0896 0.2851 6.2500 2.0000 2.7500 1.9000

Fourth Quarter (through December 28, 2001)... 2.2792 1.1396 5.1250 2.0000 4.3000 2.0000

The above quotations represent prices, adjusted for stock splits, between
dealers without adjustments for retail markups, markdowns or commissions and may
not represent actual transactions.

As of February 1, 2002, there were approximately 350 holders of record of
our common stock.

We do not anticipate paying cash dividends on our common stock in the
foreseeable future. We currently intend to retain future earnings to finance our
operations and fund the growth of its business. Any payment of future dividends
will be at the discretion of our Board of Directors and will depend upon, among
other things, our earnings, financial condition, capital requirements, level of
indebtedness, contractual restrictions with respect to the payment of dividends
and other factors that our Board of Directors deems relevant.

MANAGEMENT'S DISCUSSION AND ANALYSIS

Overview

Net sales, for the year that ended on December 31, 2000, were primarily
generated from the sale of Color's black text, color and magnetic ink character
recognition toners and related consumable products, including toner cartridges
and the re-filling of certain toner cartridges. Revenue is recognized from the
sale of products when the goods are shipped to the customer. In the year ended
December 31, 2000, a reseller of imaging supplies accounted for 57% of net
sales. We believe that this concentration with a single customer will be
significantly reduced with the successful diversification of its customer base
in the coming year. All sales are made through purchase orders.

Logical's sales for printing systems and related software and consumable
products for the year that ended on December 31, 2000 represented 3 percent of
our net revenue.

Cost of goods sold includes direct material and labor, warranty expenses,
license fees and manufacturing and service overhead. Inventories are stated at
the lower of cost (first-in, first-out) or market. Equipment is depreciated
using the straight-line method over the estimated useful lives of the equipment.
Improvements to leased property are amortized over the lesser of the life of the
lease or the life of the improvements.

Selling, general and administrative expenses include marketing and customer
support staff, other marketing expenses, management and administrative personnel
costs, professional services, legal and accounting fees and administrative
operating costs. Selling, general and administrative costs are expensed when the
costs are incurred.

Research and development expenses include costs associated with the
development of new products and significant enhancements of existing products,
and consist primarily of employee salaries, benefits, consulting expenses and
depreciation of laboratory equipment. With the exception of certain patented
products that are coming to market, all research and development costs are
expensed as they are incurred.

Results of Operations

The following table sets forth, for the periods indicated, certain
information derived from our consolidated statements of operations and expressed
as a percentage of net sales:

Twelve Months Ended Nine Months Ended
December 31, September 30,
2000 1999 1998 2001 2000
----- ----- ----- ----- -----
Percent of net sales

Net sales 100 100 100 100 100
Cost of goods sold 85 72 68 86 84
Gross profit 15 28 32 14 16
Administrative expense 7 15 13 5 7
Research and development 5 12 14 3 4
Sales and marketing 4 9 10 4 4
Operating income -1 -7 -4 3 1

Interest and Bond expense 2 2 3 1 2
Depreciation and amortization 4 9 7 2 4
Income before taxes -3 -12 -6 1 0
Provision for taxes (credit) -1 -4 0 0 0
Net Income (Loss) -2 -8 -6 1 0

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Net Sales. Our net sales were $21.2 million for the year ended December 31,
2000, or an increase of 89% compared to $11.2 million for the year ended
December 31, 1999. Of the $21.2 million in net sales, $20.5 million were
attributable to laser printer and copier products of Color, inclusive of $12.1
million of new copier product sold to Color's largest customer. The revenue
increase from new copier products from $1 million to $12.1 million from 1999 to
2000 was offset by a decrease in sales of our laser printing and other products
from $10.2 million to $9.1 million in the same period. The decrease in sales
from laser printing and other products was partially attributable to the move
into our new facility and related problems with the installation of certain
production equipment. We believe that sales of laser printing products will
increase in future periods as a result of the completion of our relocation in
year 2000 and we expect to complete our factory

expansion by the end of the first quarter of 2002. We further believe that
completion of these tasks, with the resulting added capacity and increased
production, will increase manufacturing efficiencies and competitiveness and
reduce cost of sales. As the result of the significant increase in net sales
derived from the sale of copier products, our accounts receivable as of December
31, 2000 increased by $2.2 million to $3.6 million, compared to $1.4 million as
of December 31, 1999. Inventory, to support the increased sale of copier
products, increased by $1.3 million as of December 31, 2000 compared to December
31, 1999. Accounts payable, to support the increases in accounts receivable and
inventory, increased $3.8 million to $6.6 million as of December 31, 2000
primarily because of the increase in copier product net sales.

The remainder of the sales of $723,000 was generated by Logical's sales of
high speed printing systems, software and related consumable products, which
represented a 28 percent increase over the sales of $567,000 for the prior year.

Cost of Goods Sold. Cost of goods sold increased by $9.9 million or 124% to
$17.9 million in the year ended December 31, 2000 from $8.0 million in the year
ended December 31, 1999. This increase was primarily due to increased net sales
and higher factory costs. Cost of goods sold as a percentage of net sales
increased to 85% in the year ended December 31, 2000 from 72% in the year ended
1999. This increase was due to the sale of $12.1 million of imaging products to
a new customer at a reduced profit margin and higher factory costs without the
related capacity.

Gross Profit. As a result of the above factors, gross profit increased to
$3.3 million in the year ended December 31, 2000 from $3.2 million in the year
ended December 31, 1999. Gross profit as a percentage of net sales, however,
decreased to 15% in the year ended December 31,2000, from 28% in the year ended
December 31, 1999. As stated above, this decrease was due to the sale of a
significant amount of new product to a new customer at a reduced profit margin,
the inefficiencies associated with the relocation to the new manufacturing
facility, the unavailability of certain production equipment and the increased
factory costs.

General and Administrative, Selling, and R&D Expenses. General and
administrative, selling and R&D expenses decreased $736,000 or 18% to $3,363,000
in the year ended December 31, 2000 from $4,099,000 in the year ended December
31, 1999. General and administrative, selling and R&D expenses decreased, as a
percentage of net sales, to 16% in the year 2000 from 37% in the year ended
December 31, 1999. R&D expenses decreased by $136,000 or 13% to $881,000 in the
year ended December 31, 2000 from $1,017,000 in the year ended December 31,
1999. General and administrative expenses decreased by $270,000, or 15%,
primarily as the result of the reclassification of interest expense of $306,000
as other expense. Selling expenses decreased by $130,000, or 13%, in the year
ended December 31, 2000 compared to the year ended December 31, 1999, as the
result of savings in payroll and bad debt related expenses. Research and
development expenses as a percentage of net sales decreased to 5% in the year
2000, from 12% in the year 1999, reflecting the significantly higher sales level
and the capitalization of $877,000 of R&D expenses in furthering our patented
toner and digital color printing systems technologies.

Operating Income. As a result of the above factors the operating income
increased by $823,000, to a loss of $105,000 in the year ended December 31, 2000
from a loss of $928,000 in the year ended December 31, 1999.

Interest and Finance Expense. Interest expense increased $216,000 in the
year ended December 31, 2000 from $273,000 in the year ended December 31, 1999.
This was primarily the result of the financing arranged for the new factory and
production equipment.

Other Income. Other income increased by $239,000 in the year ended December
31, 2000 from $112,000 in the year ended December 31, 1999. This increase was
primarily the result of a technology licensing fee and a gain on the sale of
toner production equipment.

Income Taxes. As the result of our decreased loss in the current year,
income tax credits decreased to $214,000 for the year ended December 31, 2000
from a tax credit of $396,000 for the comparable period in 1999.

Nine Months Ended September 30, 2001 Compared to Nine Months Ended September 30,
2000

Net Sales. Net sales were $23.5 million for the nine months ended
September 30, 2001, or an increase of 51% compared to $15.5 million for the
nine month period ended September 30, 2000, inclusive of $6.1 million, or 26%
of net sales, sold to our largest customer. The $6.1 million in sales in the
nine months ended September 30, 2001, exceeded the sales made to our largest
customer for the same period in 2000, a re-marketer that we no longer sell to,
by $3.2 million. By mutual agreement, we have discontinued selling to the re-
marketer, since we now sell these copier products direct to the distributors who
were formerly the re-marketer's customers. None of the increase in net sales for
the nine month period ended September 30, 2001 compared to the same period in
2000 is attributable to price increases, and for the most part were the result
of increased sales of copier products introduced in the fourth quarter of
1999.

Cost of Goods Sold. Cost of goods sold increased by $7.1 million or 55% to
$20.1 million in the nine months ended September 30, 2001 from $13.0 million in
the nine months ended September 30, 2000. This increase in cost was primarily
due to increased net sales. Cost of goods sold as a percentage of net sales
increased to 86% in the nine months ended September 30, 2001 from 84% in the
same nine month period of 2000. This increase in cost of sales is attributable
to our higher sales associated with new business at a reduced profit margin.

Gross Profit. As a result of the above factors, gross profit increased by
$820,000 to $3,360,000 in the nine months ended September 30, 2001 from
$2,540,000 in the nine months ended September 30, 2000. However, gross profit as
a percentage

of net sales decreased to 14% for the first nine months of 2001, from 16% for
the similar period in 2000. This decrease in gross margin is primarily due to
the sale of a significant amount of product to new customers at a reduced profit
margin.

General and Administrative, R&D, and Selling Expenses. General and
administrative, R&D and selling expenses increased $453,000, or 20%, to
$2,767,000 in the nine months ended September 30, 2001 from $2,314,000 in the
nine months ended September 30, 2000. General and administrative, selling and
R&D expenses decreased, as a percentage of net sales, to 12% in the first nine
months of 2001 from 15% in the similar nine month period of 2000. Administrative
expenses increased $142,000 or 13% to $1,263,000 for the first nine months of
2001, or 5% of total revenues compared to 7% for the same period of 2000. R&D
expenses increased by $36,000, or 6%, to $621,000 in the nine months ended
September 30, 2001 from $585,000 in the nine months ended September 30, 2000.
However, during the nine month period ended September 30, 2001, we invested and
capitalized an additional $371,000 in development, related to patented (U.S.
Patent 5,834,150) toners for our digital high speed printing system. Total R&D
inclusive of investments in patented technology totaled $992,000 in the nine
months ended September 30, 2001, compared to $1,169,000 in the period ended
September 30, 2000, or an overall decrease of 15%. Selling expenses increased by
$275,000, or 45%, to $883,000 for the nine months ending September 30, 2001 from
the nine months ended September 30, 2000, compared to a 51% increase in revenues
for the same period. Notwithstanding the reduction in the provision for doubtful
accounts made in the third quarter 2000, the increase in selling expenses are
primarily due to increased staff, advertising, promotion, and conference
expenses.

Operating Income. As a result of the above factors, operating income
increased by $367,000, to a profit of $593,000 for the nine months ended
September 30, 2001, compared with a profit of $226,000 in the nine months ended
September 30, 2000.

Interest Expense. Interest expense decreased by $55,000 to $3,000 in the
nine months ended September 30, 2001 from $381,000 in the nine months ended
September 30, 2000. This decrease was primarily due to the decline in interest
rates in this period, decreasing our borrowing costs.

Other Income and Expense. Other income decreased by $244,000 for the nine
months ended September 30, 2001, compared with 2000. The primary components of
other income at September 30, 2000 were income from the sale of toner production
equipment and a toner technology license to an unaffiliated company. Other
expenses, non-recurring moving expenses, decreased from $243,000 to $10,000 for
the periods ending September 30, 2000 to 2001.

Income Taxes. Income taxes increased by $87,000 to $98,000 for the nine
months ended September 30, 2001 from a provision of $11,000 for the comparable
period in 2000. This increase resulted from our increased profitability.

Liquidity and Capital Resources

At December 31, 2000, our working capital was approximately $633,000 and
our current ratio was 1.1 to 1. At the year ended December 31, 1999, working
capital was approximately $2,763,000 and our current ratio was 1.7 to 1. The
decrease in our liquidity was primarily due to over $1,000,000 of cash flow from
operations used in investing activities. $4.8 million of current liabilities for
inventory purchased on extended terms from suppliers to support the increased
business from a new, large customer, contributed significantly to the decrease
in the current ratio at December 31, 2000.

At September 30, 2001, our working capital was approximately $1,057,000 and
our current ratio was 1.1 to 1. The increase in our liquidity was primarily due
to sales of our securities.

Cash flows provided by operating activities were $417,000 in the year ended
December 31, 2000 compared to $1,194,000 used by operating activities in the
year ended December 31, 1999. The cash flows provided by operating activities in
the year ended December 31, 2000 were comparatively greater than those in the
year ended December 31, 1999 due primarily to a smaller net loss and the
significant increase in trade payables in support of our expanded business
operations. The receivable increase resulted primarily from higher sales in
2000. The increase in inventories resulted primarily from increased purchasing
levels to meet the production requirements of our largest customer.

Cash flows provided by operating activities were $622,000 in the nine
months ended September 30, 2001, compared to $154,000 in the nine months ended
September 30, 2000. The cash flows provided by operating activities in the nine
months ended September 30, 2001 were higher than in the nine months ended
September 30, 2000 due primarily to improved

profitability and less of an increase in accounts and inventories in 2001
associated with the 51% growth in revenues in 2001 compared to 98% growth for
the same period in 2000.

Cash flows used in investing activities were $3.1 million in the year ended
December 31, 2000. Included in cash flows used in investing activities in the
year ended December 31, 2000, was $877,000 invested in furthering our patented
toner and digital color printing systems technologies.

Cash flows used in investing activities were $770,000 and $2,292,000 in the
nine months ended September 30, 2001 and 2000, respectively. This includes
$396,000 and $584,000, respectively, invested in furthering our patented toner
and digital color printing systems technologies. Included in investing
activities at September 30, 2000 were $1,692,000 expended to acquire capital
assets.

We have a $1.5 million revolving line of credit with an outstanding balance
as of September 30, 2001 of $732,000. At the end of each month, for the
following month, the Company has an interest rate option of either the one month
Libor interest rate in effect two business days before the first day of the
month plus 2.50% or the Bank's prime interest rate minus 0.25%. As of September
30, 2001, the interest rate was the one month Libor rate plus 2.50% (6.08%).
This revolving line of credit had a December 31, 2001 expiration date. On
December 31, 2001, the $500,000 revolving line of credit was consolidated with
the $1.5 million revolving line of credit the amount was increased to $2.5
million and the date was extended to June 30, 2002.

The Bank has made available an additional line of credit of $500,000. The
outstanding balance as of September 30, 2001 was $500,000. The additional line
of credit has an expiration date of December 31, 2001, and bears an interest
rate of the Bank's prime interest rate plus 0.5% (6.50% at September 30, 2001).
As discussed above this line of credit has been consolidated, renewed and
extended to June 30, 2002.

Under the lines of credit, we are permitted to borrow up to 85% of eligible
accounts receivable and 50 percent of eligible inventories (up to a maximum of
$1.1 million and not to exceed 60 percent of the total outstanding). We have
granted the Bank a security interest in all of our assets as security for the
repayment of the lines of credit.

The Bank agreement contains various covenants which we are required to
maintain fixed charge and cash flow leverage ratios of not less than 1.20:1 and
not greater than 4.00:1, respectively. As of September 30, 2001, we were not in
compliance with these covenants and have received a waiver from the bank of
these requirements for the period ended September 30, 2001. We expect to
continue to be in non-compliance with these covenants until such time as we
either increase our net income or the bank makes the covenants more lenient. We
have made a request of the bank to modify these covenants to fixed charge and
cash flow leverage ratios of not less than 1.05:1 and not greater than 5.00:1,
respectively. On February 7, 2002, the Bank approved the modification of these
covenants. Therefore, upon execution of the loan documents we will be in
compliance.

Cash flows provided by financing activities for the twelve months ended
December 31, 2000 and December 31, 1999 were $1,930,000 and $4,921,000
respectively, and resulted primarily from borrowings under our various credit
facilities, proceeds from issuance of IDR bonds and proceeds from the sale of
common stock.

Cash flows provided by financing activities for the nine months ended
September 30, 2001 and 2000 were $453,000 and $1,122,000 respectively, and
resulted primarily from $1,157,000 of proceeds from the sale of our common stock
in 2001 and net borrowings of $883,000 under our various credit facilities and
$346,000 of proceeds from the sale of our common stock in 2000.

Through September 30, 2001, we have raised $1,157,000 from the sale of our
common stock. However, funds generated from operating activities and
availability under credit facilities are expected to be insufficient to finance
our operating and investing activities in the first half of 2002. During the
first quarter of 2002 we have $200,000 in supplier commitments for inventory for
new products and $300,000 in commitments in connection with the installation of
manufacturing equipment. The bank has given us its consent to our borrowing up
to $1.4 million from affiliates for our operating and investing needs. Our funds
will be insufficient until we either have borrowed the needed funds from
affiliates or have collected substantially all of the approximately $2.2 million
due under notes receivable in connection with the sale of our common stock.
There can be no assurance that additional financing will be available on
favorable terms, or at all to meet these commitments.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Our directors and executive officers are as specified on the following table:

Name Age Position

Michael W. Brennan 58 Chief Executive Officer and Chairman of the Board
Sueling Wang, PhD 48 President, Chief Operating Officer and Vice
Morris E. Van Asperen 58 Executive Vice President, Chief Financial Officer
Charles R. Allison 68 Vice President, Sales and Marketing, and Director

Edwin C. St. Amour 60 Director
Robert L. Langsam 56 Director
Jui-Chi Jerry Wang 45 Director
Jui-Kung Wang 58 Director
Jui-Hung Wang 54 Director
Victor A. Hollander, CPA 69 Director

Michael W. Brennan became Chairman of the Board and Chief Executive Officer
of Color Imaging, Inc. ("Color") in June 2000, when Logical Imaging Solutions,
Inc. ("Logical") became a wholly owned subsidiary of Color. From 1997 to 2000,
he served as a director and President of Logical. From 1991 to 1995 he served as
President of Interscience Computer Corporation ("Interscience"). Mr. Brennan has
a B.S. degree in electrical engineering from the University of Southern
California, an M.B.A. degree from Pepperdine University, is a Fellow of the
Institute of Directors (London, England) and an adjunct faculty member of the
University of Phoenix. He has over twenty years of experience within the
computer industry and participated in the founding of four companies that became
publicly held corporations; three in the U.S. (Computer Automation, Datum, Inc.
and Interscience) and one on the London International Stock Exchange (Optim
PLC). Mr. Brennan has developed many successful products within the computer
industry and holds patents on processes that are widely used in high-speed
printing.

Sueling Wang, PhD., became President, Chief Operating Officer and Vice-
Chairman of Color in June 2000. From 1989 to 2000, he served as President and
director of Color Image, Inc. Dr. Wang is also a founder of Color Image Inc. Dr.
Wang received a M.S. degree from the University of Windsor, in Ontario, Canada
and a PhD degree from the University of Detroit. Dr. Wang's expertise in resin
synthesis brought him into the toner industry and led to the formation of Color
Image, Inc. in 1989.

Morris E. Van Asperen has served as Executive Vice President, Chief
Financial Officer, Secretary and director of Color since June 2000. Since 1998,
he has served as director of Logical. From 1986 to 2000, he was employed by
National Bank of California in various positions most recently as Executive Vice
President and Credit Administrator. Mr. Van Asperen also has extensive
experience as a financial and management consultant to businesses of up to $50
million in revenues and 1,000 employees in construction, household goods,
industrial glass, and electronics manufacturing and software development. From
1977 to 1984, he served as Vice President & Chief Financial Officer of ATE
Associates, Inc., a supplier of test fixtures and software for numerous military
aircraft programs. Mr. Van Asperen received a B.S. degree in Mathematics from
the University of Oklahoma and an M.B.A. degree from Pepperdine University.

Charles R. Allison has served as Vice President, Marketing and Sales and
director of Color since June 2000. From 1992 to 2000, he served as Vice
President of Marketing and Sales of Color Image, Inc., which was merged with and
into Color. From 1982 to 1991, he served as Vice President of Sales and
Marketing, and general manager, at Synfax Manufacturing, Inc., an early
developer of consumable products for EBI-based printing technologies. Mr.
Allison has held other senior positions in the printing/imaging industry,
including positions with Minolta Corporation, Litton Business Systems and Royal
McBee.

Edwin C. St. Amour has served as a director of the Color since June 2000.
In 1979 he founded American Computer Hardware Corporation and has served as is
its Chairman and President since then. Mr. St. Amour began developing and
marketing Electron Beam Imaging ("EBI") related products in the 1980's. He
founded Logical in 1993 to develop EBI compatible hardware and software products
and adapt this technology to produce plug-and-play products for form
manufacturers. He served as Logical's' President from 1993 until 1997 and
Chairman from 1993 until June 2000. Mr. St. Amour entered the printing industry
in the early sixties and began marketing forms and documents for Moore Business
Forms and Standard Register Corp.

Robert L. Langsam has served as a director of Color since June 2000. In
1980, he founded Diversified Financial Management ("DFM"), a financial planning
services organization, and has served as its President since then. From 1975
to1979, he was Assistant Corporate Controller for MCI Communications and was
responsible for the operational accounting controls and systems, as well as
extensive involvement in products pricing and filings. From 1970 to 1975, Mr.
Langsam was Chief Financial Officer of the copier products division of SCM. Mr.
Langsam holds a B.S. degree in

Marketing/Accounting from Pace University and double MBA degrees in Finance and
Taxation from Adelphi and St. John's Universities.

Jui-Chi Wang has served as a director of Color since June 2000. From 1994
until 2000, he served as a director of Color Image, Inc., which was merged with
and into Color. Since 1984, Mr. Wang has served as President of General Plastic
Industrial Co. Ltd ("GPI"), a Taiwan-based plastics manufacturer specializing in
injection moldings and more particularly toner cartridges and accessories for
copiers and laser printers. Mr. Wang received a Master's Degree in Computer
Engineering from the University of Southern California.

Jui-Kung Wang has served as a director of Color since September 2001. He
was a founder of Color Image, Inc. and its Chairman until its merger with Color
He is a co-founder and has served as a director of General Plastic Industrial
Co., Ltd, a leading Taiwan based manufacturer of after market injection molded
cartridges and accessories for copiers and laser printers since 1978. Mr. Wang
was a founding member of Kings Brothers LLC, which leases space to Color we use
for our headquarters and manufacturing facilities in Norcross, Georgia. Mr. Wang
has been a professor of management with Tung-Hai University, Taiwan for over 20
years. He has received a bachelors degree in economics, and MBA and PhD degrees
in management.

Jui-Hung Wang has served as a director of Color since June 2001. He was a
founder and director of Color Image, Inc. until its merger with Color. He is a
founder and serves as Chairman of General Plastic Industrial Co., Ltd, a leading
Taiwan based manufacturer of after market injection molded cartridges and
accessories for copiers and laser printers. Since January 2001, Mr. Wang has
served as a director of Taiwan Yu-Tzu Company, a food company. Mr. Wang is a
founding member of Kings Brothers LLC, which leases space to Color used for our
headquarters and manufacturing facilities in Norcross, Georgia. From 1986 to
1994, Mr. Wang was governor of Wu-Chi Town, Taiwan.

Victor A. Hollander, CPA, has served as a director of Color since March
2001. Mr. Hollander has been licensed to practice public accounting in
California as a certified public accountant since 1958. Since February 2001,
Mr. Hollander has been the manager of the securities group at Good Swartz
Brown & Berns LLP, an accounting firm. From 1978 to 2001, he was a partner in
the accounting firm he founded Hollander, Lumer & Co. LLP. Mr. Hollander has
been involved with over twenty initial and secondary public offerings since
1990. Mr. Hollander has served on various Los Angeles Chapter, California
Society of Certified Public Accounts and American Institute of Certified
Public Accountants securities, ethics, accounting and auditing committees.
He specializes in securities and merger and acquisition matters.

EXECUTIVE COMPENSATION

The following Summary Compensation Table sets forth the compensation earned
by our Chief Executive Officer and the three other most highly compensated
executive officers who were serving as such as of December 31, 2001 and December
31, 2000 (collectively, the Named Executive Officers), whose aggregate
compensation for fiscal years 2001 and 2000 exceeded $100,000 for services
rendered in all capacities to the Company and its subsidiaries for that fiscal
year.

Summary Compensation Table
----------------------------------------------------------------------------------------------------------------
Long-Term
Compensation
Awards
------
Annual Compensation Shares of
------------------- Common Stock
Other Underlying
Name Year Salary Bonus Compensation(1) Options(#)
----------------------------------------------------------------------------------------------------------------

Michael W. Brennan 2001 $151,442 n/a $ 6,403 150,000 (5)
Chief Executive Officer 2000 $146,485 n/a $25,591 (2) None

Dr. Sueling Wang 2001 $158,423 n/a $22,313 (3) 100,000 (5)
President & 2000 $149,159 n/a $18,887 (3) 200,000 (6)
Chief Operating Officer

Morris E. Van Asperen 2001 $146,714 n/a $ 5,461 100,000 (5)
Executive Vice President 2000 $ 54,294 n/a $ n/a 200,000 (7)
Chief Financial Officer &
Secretary

Charles R. Allison 2001 $106,379 n/a $28,145 (4) 50,000 (5)
Vice President, Sales 2000 $101,996 n/a $25,902 (4) 50,000 (8)

________________
(1) For named officers the amount reported represents the cost of group
insurance benefits, the Company's matching contribution to the 401(k) plan
for the officer and other life insurance policies maintained for him, as
further described in the notes for each officer, respectively.
(2) The split dollar life insurance policy is no longer in force. Premiums paid
during 2000 were $15,584.
(3) The split dollar life insurance premiums were $13,526 and $16,505 during
2001 and 2000, respectively. Pursuant to the policies the Company will,
upon his death or earlier liquidation of each such policy, be entitled to
the refund of all premium payments made by the Company on the policies, and
the balance of the proceeds will be paid to Mr. Wang's designated
beneficiaries.
(4) The life insurance premiums paid by the Company in 2001 and 2000 were
$21,977 and $22,476, respectively. The Company owns and is the beneficiary
of this policy and maintains it to fund the deferred compensation agreement
with Mr. Allison. Upon Mr. Allison's retirement, he, or his beneficiaries,
are to receive 120 monthly payments of $2,000 per month or, as provided,
the net present value of any unpaid amounts.
(5) Options granted by action of the Board of Directors on March 21, 2001. 25%
vest upon grant and the balance vest 25% per year upon each anniversary of
the date of grant. The options expire five years after their respective
vesting date(s).
(6) The options were granted as part of the officer's employment agreement on
June 28, 2000. 100,000 vested immediately and the remainder vested ratably
over the next two years upon the anniversary date of the grant.
(7) The options were granted as part of the officer's employment agreement on
June 28, 2000. 100,000 vested immediately and the remainder vested ratably
over the next four years upon the anniversary date of the grant.
(8) The options were granted as part of the officer's employment agreement on
June 28, 2000. 25,000 vested immediately and the remainder vested ratably
over the next two years upon the anniversary date of the grant.

--------------------------------------------------------------------------------------------------
Option Grants in Last Fiscal Year
--------------------------------------------------------------------------------------------------
Number of Percent of
Securities Total Options Exercise Market
Underlying Granted to or Price on
Options Employees in Base Grant Expiration
Name Granted Fiscal Year Price Date Date
--------------------------------------------------------------------------------------------------

37,500 3/21/06
37,500 3/21/07
37,500 3/21/08
37,500 3/21/09
---------
Michael W. Brennan 150,000 28% $ 2.75 $ 2.50
--------------------------------------------------------------------------------------------------
25,000 3/21/06
25,000 3/21/07
25,000 3/21/08
25,000 3/21/09
---------
Sueling Wang 100,000 19% $ 2.75 $ 2.50
--------------------------------------------------------------------------------------------------
25,000 3/21/06
25,000 3/21/07
25,000 3/21/08
25,000 3/21/09
---------
Morris E. Van Asperen 100,000 19% $ 2.75 $ 2.50
--------------------------------------------------------------------------------------------------
12,500 3/21/06
12,500 3/21/07
12,500 3/21/08
12,500 3/21/09
---------
Charles R. Allison 50,000 9% $ 2.75 $ 2.50

The above options were granted on March 21, 2001, become fully vested after
three years and expire five years, respectively, from the vesting date(s).

Aggregated Option Exercises in Last Fiscal Year and Year End Option Holdings
------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options Options ($)(1)
------------------------------------------------------------------------------------------
Shares
Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------------------------------------------------------------------------------------------

Michael W. Brennan N/A N/A 37,500 112,500 13,125 39,375
------------------------------------------------------------------------------------------
Sueling Wang N/A N/A 175,000 125,000 173,750 81,250
------------------------------------------------------------------------------------------
Morris E. VanAsperen N/A N/A 150,000 150,000 146,250 108,750
------------------------------------------------------------------------------------------
Charles R. Allison N/A N/A 50,000 50,000 45,625 26,875
-----------------------------------------------------------------------------------------

(1) Based on the closing price of our common stock of $3.10 on December 28,
2001.

Employment Agreements

On June 28, 2000, we entered into employment agreements with Michael W.
Brennan, Dr. Sueling Wang, Morris E. Van Asperen, and Charles R. Allison. Each
of these employment agreements has a 5 year term. We are obligated to pay Mr.
Brennan and Dr. Wang annual salaries of $150,000 each with a guaranteed increase
of 5% per annum over the term of the agreements. We are obligated to pay Mr.
Van Asperen an annual salary of $144,000 with a guaranteed increase of 5% per
annum over the term of his agreement. In addition to commissions earned under
our sales incentive program, we are obligated to pay Mr. Allison an annual
salary of $89,250 with a guaranteed increase of 5% per annum over the term of
his agreement. Each employee may terminate the agreement upon 6 months notice to
us. We may terminate each employee upon 6 months notice, provided, however, that
we are obligated to pay to the employee his annual base salary, commissions or
bonuses earned, and benefits for a period of 12 months after the date of such
notice.

SECURITY OWNERSHIP OF CERTAIN PERSONS

The following table sets forth information known to us with respect to the
beneficial ownership of our common stock as of January 31, 2002 (not adjusted to
reflect the sales of shares of common stock offered hereby), by the following:

. each stockholder known by us to own beneficially more than 5% of our
common stock;
. each of our executive officers named in the compensation table above;
. each of our directors; and
. all directors and executive officers as a group.

Except as otherwise indicated, we believe that the beneficial owners of the
common stock listed below, on the information furnished by such owners, have
sole voting power and investment power with respect to such shares. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission. In computing the number of shares beneficially owned by a
person and the percent ownership of that person, shares of common stock subject
to options or warrants held by that person that are currently exercisable or
will become exercisable within 60 days after January 31, 2002 are deemed
outstanding, while such shares are not deemed outstanding for purposes of
computing percent ownership of any other person. Percent of beneficial ownership
is based upon 11,124,175 shares of our common stock outstanding prior to this
offering. Unless otherwise indicated in the footnotes below, the persons and
entities named in the table have sole voting and investment power with respect
to all shares beneficially owned, subject to community property laws where
applicable. The address for those individuals for which an address is not
otherwise indicated is Color Imaging, Inc., 4350 Peachtree Industrial Boulevard,
Suite 100, Norcross, Georgia 30071. To our knowledge, except as indicated in the
footnotes to the table and under applicable community property laws, the
stockholders named in the table have sole voting and investment power over all
shares listed in the table.

Percentage of
Name of Beneficial Owner No. of Shares Ownership
------------------------ ------------- -----------------

Michael W. Brennan (1) 961,715 8.6%
Sueling Wang (2) 1,341,551 11.9%
Morris E. Van Asperen (3) 260,906 2.3%
Charles R. Allison (4) 50,000 *
Edwin St. Amour (5) 984,768 8.8%
Robert L. Langsam (6) 143,632 1.3%
Jui-Chi Wang (7) 684,450 6.2%
Jui-Hung Wang 699,178 6.3%
Jui-Kung Wang 316,209 2.8%
Victor A. Hollander (8) 105,000 *
Wall Street Consulting Corp. (9) 1,000,000 9.0%
Executive Officers and Directors (10) 5,547,409 47.6%
_____________________________________

* Less than 1%

(1) Includes options to purchase 37,500 shares of common shares.

(2) Includes: (a) 60,000 shares owned by Sueling Wang's four children, (b)
141,204 shares owned by Yik-Li Sih, Sueling Wang's wife, in which Sueling Wang
may be deemed to have pecuniary interest. Mr. Wang disclaims beneficial
ownership of such 201,204 shares. Also includes options to purchase 175,000
shares of common stock.

(3) Includes options to purchase 150,000 shares of common stock.

(4) Includes options to purchase 50,000 shares of common stock.

(5) Edwin St. Amour holds 979,768 shares as co-trustee (Mr. St. Amour's wife
Annette is the other co-trustee) of the St. Amour Revocable Trust. Also
includes options to purchase 5,000 shares of common stock.

(6) Includes warrants and options to purchase 60,453 shares of common stock.

(7) Includes options to purchase 5,000 shares of common stock.

(8) Includes warrants to purchase 50,000 shares of common stock and options
to purchase 5,000 shares of common stock.

(9) Wall Street Consulting Corp.'s address is 2121 E. Pacific Coast Highway,
Suite 220, Corona Del Mar, CA 92625.

(10) Excludes the number of shares of common stock underlying options or
warrants specified in notes 1 through 8.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Prior to the merger of June 28, 2000, while operating as Advatex
Associates, Inc. we had an accounts receivable due from an affiliate of
$161,019, which were collected.

Directors, Sueling Wang and Jui-Chi Wang, own beneficial interests of 37.2%
and 12.6% respectively in Kings Brothers, LLC, the company from which we lease
our Norcross, GA plant. For the year ended December 31, 2001, lease payments for
the plant were $505,836. For the year ended December 31, 2000, lease payments
for this plant were $264,072. The lease was made on April 1, 1999 and expires in
April 2009.

On November 19, 2001, we borrowed $200,000 on an unsecured basis from Kings
Brothers LLC. The loan bears interest at the rate of 9% per annum, matures on
November 18, 2002 and is evidenced in writing. As of December 10, 2001, we paid
$790.38 in interest to Kings Brothers and the principal had been repaid. We
borrowed this amount for general Corporate purposes, including working
capital.

We also had a short-term unsecured loan, due July 26, 2000, evidenced in
writing from Kings Brothers LLC of $240,000 with interest at 8%, paying $5,576
of interest for the year. As of December 31, 2000 all amounts outstanding under
the loan have been repaid. We used the proceeds of this loan for working
capital.

On June 1, 1999, the Development Authority of Gwinnett County, Georgia
issued $4,100,000 of industrial development revenue bonds on behalf of us and
Kings Brothers LLC. Pursuant to a certain joint debtor agreement we are jointly
and severally liable with Kings Brothers to pay the amounts borrowed under the
bond. The 3.5% revenue bonds are payable in varying annual principal and monthly
interest payments through July 2019. The bonds are collateralized by all of our
assets and the real property leased by us and owned by Kings Brothers. The
majority of the proceeds (76.2%) from the bond issue were used by us to relocate
our manufacturing plant, make leasehold improvements at the new facility and to
purchase certain manufacturing equipment. The remaining proceeds (23.8%) were
used by Kings Brothers LLC to pay down the mortgage for certain land and
buildings being leased to us. The proceeds used by Kings Brothers LLC have been
recorded as a receivable on our financial statements. We have entered into a
Joint Debtor Agreement with Kings Brothers LLC concerning our respective rights,
duties and obligations in connection with the bonds. We and Kings Brothers LLC,
collectively, are obligated to repay any outstanding debt under the bonds.
Amounts receivable from Kings Brothers are secured by a lien on all of Kings
Brothers' real estate, including the part we lease from them, and by personal
guarantees by the members of Kings Brothers.

Director, Jui-Chi Wang, is an owner and President of General Plastic
Industrial Co., LTD (GPI), a Taiwanese manufacturer of injection molded
cartridges and accessories for copiers and laser printers. GPI also owned and
operated GPI-USA, Inc. (GPI-USA) a wholly-owned United States distributor of
GPI's products. In 2000, we purchased from GPI and GPI-USA $690,558 and
$392,775, respectively, of copier and laser printer products. In 2001 (through
December 10), we purchased $3,142,296 of copier and laser printer products from
GPI.

Directors, Sueling Wang and Jui-Chi J. Wang, have beneficial ownership
interests of 7.28% and 2.47% respectively in AccuRec, LLC, a distributor of
digital versatile disks. From time to time during the year ending December 31,
2000 we had short-term unsecured loans evidenced in writing and due on demand
from AccuRec LLC aggregating $ 1,850,000 and a maximum outstanding at any one
time of $500,000. The interest rate on these loans was 8%, and we paid a total
of $7,244 in interest during 2000. As of December 31, 2000 all amounts
outstanding under such loans have been repaid. We used the proceeds from these
loans for working capital purposes.

During the last two years, Director, Sueling Wang, as trustee for two of
his children, loaned us a total of $252,000 at an interest rate of 12%. During
the year ending December 31, 2000, we paid $16,604 in interest on these loans.
As of December 31, 2000, all amounts outstanding under such loans have been
repaid. We used the proceeds of this loan for working capital purposes.

We believe that the terms of the loans and borrowings from affiliates were
on terms more favorable than were otherwise available from third parties.

DESCRIPTION OF SECURITIES

Our articles of incorporation authorize the issuance of up to 20,000,000
shares of common stock, $0.01 par value per share. As of January 31, 2002
11,124,175 shares of our common stock are issued and outstanding and no
preferred stock is outstanding. Our articles of incorporation also authorize the
issuance of up to 1,000,000 shares of preferred stock, $0.01 par value per
share. As of the date of this prospectus, we have no issued and outstanding
preferred stock, and we currently have no plans to issue any shares of preferred
stock. The board of directors does, however, have the authority, without action
by the stockholders, to issue all or any portion of the authorized but unissued
preferred stock in one or more series and to determine the voting rights,
preferences as to dividends and liquidation, conversion rights, and other rights
of such series. Such preferred stock, if and when issued, may carry rights
superior to those of the common stock.

On all matters submitted to a vote of the stockholders, each holder of
common stock has the right to one vote for each share held of record. Subject to
any dividend preferences granted to any preferred stock that may be outstanding
in the future,

holders of our common stock are entitled to receive ratably such dividends as
may be declared by the board of directors. In the event of a liquidation,
dissolution or winding up of our company, holders of our common stock are
entitled to share ratably in all assets remaining after payment of liabilities
and the liquidation preferences of any outstanding shares of preferred stock.
Holders of our common stock have no preemptive rights and no right to convert
their common stock into any other securities. There are no redemption or sinking
fund provisions applicable to our common stock.

Warrants

Up to 888,007 shares of our common stock are issuable pursuant to warrants
that we have issued to the Selling Stockholders, and the shares underlying
these warrants are being offered hereby. These warrants are exercisable for two
years from the date of issuance at an exercise price of $2.00 per share. The
warrants provide for adjustments in the event of certain stock dividends, stock
splits, consolidations, reclassifications or recapitalizations, and entitle the
holders to receive, upon exercise of the warrant, certain distributions made to
our stockholders in the event of certain significant transactions such as a
reorganization or merger, the sale or lease of a significant portion of our
assets or any dissolution, liquidation or winding up of our company.

Charter Provisions and Delaware Laws That May Have an Anti-Takeover Effect

Some provisions of Delaware law and our amended and restated certificate of
incorporation and bylaws could make the following more difficult:

. acquisition of us by means of a tender offer;

. acquisition of us by means of a proxy contest or otherwise; or

. removal of our incumbent officers and directors.

These provisions, summarized below, are expected to discourage coercive
takeover practices and inadequate takeover bids. These provisions are also
designed to encourage persons seeking to acquire control of us to first
negotiate with our Board of Directors. We believe that the benefits of increased
protection of our potential ability to negotiate with the proponent of an
unfriendly or unsolicited proposal to acquire or restructure us outweigh the
disadvantages of discouraging such proposals because negotiation of such
proposals could result in an improvement of their terms.

Delaware Anti-Takeover Law. We are subject to Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, Section 203 prohibits
a publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years following the date
the person became an interested stockholder, unless the "business combination"
or the transaction in which the person became an interested stockholder is
approved in a prescribed manner. Generally, a "business combination" includes a
merger, asset or stock sale, or other transaction resulting in a financial
benefit to the interested stockholder. Generally, an "interested stockholder" is
a person who, together with affiliates and associates, owns or within three
years prior to the determination of interested stockholder status, did own, 15%
or more of a corporation's voting stock. The existence of this provision may
have an anti- takeover effect with respect to transactions not approved in
advance by the Board of Directors, including discouraging attempts that might
result in a premium over the market price for the shares of common stock held by
stockholders.

Elimination of Cumulative Voting. Our amended and restated certificate of
incorporation and bylaws do not provide for cumulative voting in the election of
directors. Cumulative voting provides for a minority stockholder to vote a
portion or all of its shares for one or more candidates for seats on the Board
of Directors. Without cumulative voting, a minority stockholder will not be able
to gain as many seats on our Board of Directors based on the number of shares of
our stock that such stockholder holds than if cumulative voting were permitted.
The elimination of cumulative voting makes it more difficult for a minority
stockholder to gain a seat on our Board of Directors and to influence the Board
of Directors' decision regarding a takeover.

Undesignated Preferred Stock. The authorization of undesignated preferred
stock makes it possible for the Board of Directors to issue preferred stock with
voting or other rights or preferences that could impede the success of any
attempt to change the control of our company. These and other provisions may
have the effect of deterring hostile takeovers or delaying

changes in control or management of our company.

Transfer Agent

The transfer agent and registrar for our common stock is American Stock
Transfer and Trust, New York, New York.

SELLING STOCKHOLDERS

All of the Stock being offered in this prospectus is being offered by the
Selling Stockholders listed below. We have registered this offering because of
registration rights which we granted to the Selling Stockholders when we sold
the Stock to them. Some of the common stock listed in the table is not presently
owned by the Selling Stockholders, but is issuable upon exercise of warrants.
The Selling Stockholders are not required to sell all or any of the Stock. We
believe that the registration of the shares underlying the warrants, even though
we may not be obligated to do so, will encourage the warrant holders to exercise
the warrants, thereby benefitting us through the warrant stock sales.

Percentage of Shares
Shares Owned Shares to be Shares Owned Outstanding
Name Before Offering (1) Sold in Offering After Offering (2) After Offering
---- --------------- ------------------ -------------- --------------

The Blaine Group, Inc. 10,000 10,000 - n/a

Sueling Wang (3) 1,200,347 856,847 343,500 3.0%

Gerald M. Chizever (4) 45,000 45,000 - n/a

Allan Duboff (5) 10,000 10,000 - n/a

Kresimir Peharda (6) 5,455 5,455 - n/a

Fredric N. Richman (7) 25,000 25,000 - n/a

Yik-Li Sih (8) 141,204 95,204 46,000 *

Sal G. Giacinto (9) 15,000 15,000 - n/a

Patrick D. Salas (10) 15,000 15,000 - n/a

Brian N. Hollander (11) 20,000 20,000 - n/a

Howard Kaufman (12) 2,629 2,000 629 *

Jui-Chi Wang (13) 684,450 618,835 65,615 *

Maynard Hollander (14) 50,000 50,000 - n/a

Shobha Patel (15) 9,760 7,260 2,500 *

Mark Edward Palmer (16) 9,000 9,000 - n/a

Victor A. Hollander (17) 105,000 100,000 5,000 n/a

Jui-Hung Wang D 699,178 563,173 136,005 1.2%

Chechang Yeh 445,205 145,205 300,000 2.7%

Jui-Kung Wang D 316,209 120,204 196,005 1.8%

Burns Hoffman (18) 200,000 200,000 - n/a

Doug Casey (19) 100,000 100,000 - n/a

Morris H. Wolf (20) 25,000 25,000 - n/a

Arash Khalili (21) 2,000 2,000 - n/a

Howard N. Addison (22) 30,000 30,000 - n/a

Neal McNally (23) 25,000 25,000 - n/a

Carl H. Spatz (24) 8,697 5,000 3,697 *

Lancing Holdings Ltd. (25) 40,000 40,000 - n/a

Thomas D. Hesselbrock (26) 8,697 5,000 3,697 *

Lionel Brown (27) 25,000 25,000 - n/a

Flora Chung (28) 7,022 3,529 3,493 *

Chia-An L. Shieh (29) 14,696 7,058 7,638 *

John G. Myers (30) 58,951 58,951 - n/a

Larry Gordon (31) 70,886 70,886 - n/a

Stephen Chromik (32) 450,000 450,000 - n/a

Colin J. Reynolds (33) 10,000 10,000 - n/a

Michael Edson (34) 38,880 38,880 - n/a

IndustriCorp and Co., Inc. FBO 50,000 50,000 - n/a
David N. Kunz IRA Rollover (35)

Total 3,859,487

___________________________
* Less that 1%

D Director of our company.

Percentage of ownership for each holder is calculated based on 11,124,175
shares of common stock outstanding on January 31, 2002. Beneficial ownership is
determined in accordance with the SEC Rule 13d-3 and generally includes shares
over which the holder has voting or investment power, subject to community
property laws. All shares of common stock obtainable upon conversion of
securities or exercise of stock options or warrants (including those that are
not currently exercisable but will become exercisable within 60 days hereafter)
are considered to be beneficially owned by the person holding the options or
warrants for computing that person's percentage, but are not treated as
outstanding for computing the percentage of any other person.

(1) Includes shares of common stock covered by this prospectus.

(2) Assumes the completion of this offering and that the Selling Stockholders
dispose of all of their shares of common stock covered by this prospectus, that
they do not dispose of common stock owned but not covered by this prospectus and
that they do not acquire any additional shares of common stock.

(3) Includes: (a) 60,000 shares owned by Sueling Wang's four children, and
(b) options to purchase 175,000 shares of common stock. Excludes 141,204 shares
of common stock beneficially owned by his wife, Yik-Li Sih. Dr. Wang is a
director and officer of our company.

(4) Includes 22,500 shares of common stock underlying warrants to purchase
common stock. Mr. Chizever is a partner of Richman Mann Chizever Phillips and
Duboff our legal counsel.

(5) Includes 5,000 shares of common stock underlying warrants to purchase
common stock. Mr. Richman is a partner of Richman Mann Chizever Phillips and
Duboff our legal counsel.

(6) Includes 1,500 shares of common stock underlying warrants to purchase
common stock. Mr. Peharda is an attorney at Richman Mann Chizever Phillips and
Duboff

(7) Includes 12,500 shares of common stock underlying warrants to purchase
common stock. Mr. Duboff is a partner of Richman Mann Chizever Phillips and
Duboff our legal counsel.

(8) The 141,204 shares of common stock beneficially owned by Ms. Sih are not
included in the totals for Dr. Wang as described in note 3 above. Of the
141,204 shares owned by Ms. Sih, 95,204 will be registered for sale in this
offering.

(9) Includes 7,500 shares of common stock underlying warrants to purchase
common stock.

(10) Includes 7,500 shares of common stock underlying warrants to purchase
common stock.

(11) Includes 10,000 shares of common stock underlying warrants to purchase
common stock.

(12) Includes 1,000 shares of common stock underlying warrants to purchase
common stock.

(13) Includes options to purchase 5,000 shares of common stock. Mr. Wang is one
of our directors.

(14) Includes 25,000 shares of common stock underlying warrants to purchase
common stock.

(15) Includes 5,000 shares of common stock underlying options to purchase
common stock.

(16) Includes 4,500 shares of common stock underlying warrants to purchase
common stock.

(17) Includes 50,000 shares of common stock underlying warrants to purchase
common stock and options to purchase 5,000 shares of common stock. Mr Hollander
is one of our directors.

(18) Includes 100,000 shares of common stock underlying warrants to purchase
common stock.

(19) Includes 50,000 shares of common stock underlying warrants to purchase
common stock.

(20) Includes 12,500 shares of common stock underlying warrants to purchase
common stock.

(21) Includes 1,000 shares of common stock underlying warrants to purchase
common stock. Mr Khalili is an attorney at Richman Mann Chizever Phillips &
Duboff.

(22) Includes 15,000 shares of common stock underlying warrants to purchase
common stock.

(23) Includes 12,500 shares of common stock underlying warrants to purchase
common stock.

(24) Includes 2,500 shares of common stock underlying warrants to purchase
common stock.

(25) Includes 20,000 shares of common stock underlying warrants to purchase
common stock.

(26) Includes 2,500 shares of common stock underlying warrants to purchase
common stock.

(27) Includes 12,500 shares of common stock underlying warrants to purchase
common stock.

(28) Includes 5,000 shares of common stock underlying options to purchase common
stock.

(29) Includes 5,138 shares of common stock in which Ms. Shieh may be deemed to
have a beneficial ownership interest which are beneficially owned by Ms. Shieh's
husband, Shiuh An Shieh and 5,000 shares of common stock underlying options to
purchase common stock.

(30) Includes 58,951 shares of common stock underlying warrants to purchase
common stock.

(31) Includes 70,886 shares of common stock underlying warrants to purchase
common stock.

(32) Includes 300,000 shares of common stock underlying warrants to purchase
common stock.

(33) Includes 5,000 shares of common stock underlying warrants to purchase
common stock.

(34) Includes 25,920 shares of common stock underlying warrants to purchase
common stock.

(35) Includes 25,000 shares of common stock underlying warrants to purchase
common stock.

PLAN OF DISTRIBUTION

We are registering the sale of the Stock on behalf of the Selling
Stockholders, who are free to offer and sell the Stock at such times, in such
manner and at such prices as they may determine. We will pay the costs of
registering the sales of the Stock. The Stock may be offered by the Selling
Stockholders in one or more types of transactions, which may or may not involve
brokers, dealers or cash transactions. The Selling Stockholders may also use
Rule 144 under the Securities Act to sell the Stock, if they meet the criteria
and conform to the requirements of that rule. There is no underwriter or
coordinating broker acting in connection with the proposed sale of the Stock by
the Selling Stockholders. The sales of the Stock may be effected from time to
time by the following means:

. transactions on the OTC Bulletin Board at market price through
ordinary broker transactions, including block transactions;

. negotiated transactions; or,

. a combination of the above methods of sale at fixed prices, which may
be changed, at market prices prevailing at the time of sale, or at
negotiated prices

The Selling Stockholders may sell common stock directly to purchasers or
through broker-dealers which may act as agents or principals. Broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Stockholders.

The Selling Stockholders and any broker-dealers that act in connection with
the sale of its common stock may be deemed to be underwriters within the meaning
of Section 2(11) of the Securities Act, and any commissions received by them and
any profit on the resale of the Stock as principal may be deemed to be
underwriting discounts and commissions under the Securities Act. The Selling
Stockholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the Stock against certain
liabilities, including liabilities arising under the Securities Act. Because the
Selling Stockholders may be deemed to be underwriters, they will be subject to
prospectus delivery requirements under the Securities Act. Furthermore, in the
event of a distribution of the Stock, the Selling Stockholders, any selling
broker-dealer and any affiliated purchasers may be subject to Regulation M,
which prohibits any stabilizing bid or stabilizing purchase for the purpose of
pegging, fixing or stabilizing the price of our common stock in connection with
that distribution.

LEGAL MATTERS

The law firm of Richman, Mann, Chizever, Phillips & Duboff, of Beverly
Hills, California, will pass upon the validity of the securities offered by this
prospectus. Although the firm does not own any stock or warrants to purchase
stock in Color Imaging, Inc., five attorneys of the firm collectively own
44,955 shares and warrants to purchase an additional 42,500 shares and all
of them are included among the Selling Stockholders. These individuals paid for
such securities in cash on the same terms as other investors.

INDEMNIFICATION

Our certificate of incorporation allows us to indemnify our officers and
directors to the maximum extent allowed under Delaware law. This includes
indemnification for liability which could arise under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling the
registrant under these provisions, the registrant has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.

FURTHER INFORMATION

You should rely only on the information in this prospectus or any
prospectus supplement or incorporated by reference in them. We have not
authorized anyone else to provide you with different information. Offers of the
securities are being made only in states where the offers are permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents. If information in incorporated documents conflicts with information
in this prospectus, you should rely on the most recent information.

This prospectus is part of a Registration Statement on Form SB-2 that has
been filed with the SEC. It does not include all of the information that is in
the registration statement and the additional documents filed as exhibits with
it. For more detailed information, you should read the exhibits themselves.

We are subject to the informational requirements of the Exchange Act and,
in accordance with it, are required to file reports, proxy and information
statements, and other information with the SEC. Such reports, proxy and
information statements and other information can be inspected and copied at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
The public may obtain information about the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. We electronically file reports, proxy
and information statements, and other information with the SEC. The SEC
maintains an Internet website that contains our electronically filed reports,
proxy and information statements, and other information at http://www.sec.gov.
We maintain Internet websites at http://www.colorimage-micr.com and at
http://www.logical-imaging.com. Our common stock is traded on the NASDAQ OTC
Bulletin Board under the symbol CIMG.

Index to Consolidated Financial Statements
------------------------------------------

Page
----

Consolidated Condensed Balance Sheets at September 30, 2001
(Unaudited) and December 31, 2000 (Audited).............................. F-1

Consolidated Condensed Statements of Operations (Unaudited)
for the three and nine months ended September 30, 2001 and 2000.......... F-2

Consolidated Condensed Statements of Cash Flows (Unaudited)
for the nine months ended September 30, 2001 and 2000.................... F-3

Notes to Interim Unaudited Consolidated Condensed Financial
Statements............................................................... F-4

Independent Auditors' Report............................................. F-6

Consolidated Balance Sheets at December 31, 2000 and
December 31, 1999........................................................ F-7

Consolidated Statement of Operations for the years
ended December 31, 2000 and December 31, 1999............................ F-8

Consolidated Statement of Stockholder's Equity
for the years ended December 31, 2000 and December 31, 1999.............. F-9

Consolidated Statement of Cash Flows
for the years ended December 31, 2000 and December 31, 1999.............. F-10

Notes to Consolidated Financial Statements............................... F-11

COLOR IMAGING, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS

ASSETS 30-Sep-01 31-Dec-00
(Unaudited) (Audited)
----------- ------------

CURRENT ASSETS
Cash $ 645,746 $ 339,348
Accounts receivable, net 3,928,136 3,562,121
Inventory 6,663,141 5,181,248
Refundable income taxes 19,995 19,995
Deferred income taxes 68,664 159,426
Due from related party 79,596 100,832
Prepaid expenses and other current assets 354,825 381,146
------------ ------------
TOTAL CURRENT ASSETS 11,760,103 9,744,116
------------ ------------

PROPERTY, PLANT AND EQUIPMENT - NET 7,194,027 7,384,679
------------ ------------
OTHER ASSETS
Patent/intellectual property 1,272,389 876,751
Deferred income taxes 458,111 464,085
Related party portion of IDR bond 818,500 873,296
Other assets 442,734 269,626
------------ ------------
TOTAL OTHER ASSETS 2,991,734 2,483,758
------------ ------------
$21,945,864 $19,612,553
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Revolving credit lines $ 1,232,194 $ 1,399,000
Accounts payable 8,380,653 6,640,402
Current portion of notes payable 400,405 351,150
Current portion of bonds payable 335,000 320,000
Other current liabilities 354,774 400,276
------------ ------------
TOTAL CURRENT LIABILITIES 10,703,026 9,110,828
------------ ------------
LONG TERM LIABILITIES
Notes payable 1,419,623 1,685,725
Bonds payable 3,445,000 3,780,000
------------ ------------
LONG TERM LIABILITIES 4,864,623 5,465,725
------------ ------------
TOTAL LIABILITIES 15,567,649 14,576,553
------------ ------------
COMMITMENTS & CONTINGENCIES

STOCKHOLDERS'EQUITY
Common stock, $.01 par value, authorized 20,000,000
shares; 8,106,400 and 7,490,948 shares issued and
outstanding on September 30, 2001 and
December 31, 2000, respectively 81,064 74,909
Additional paid-in capital 8,136,724 6,986,003
Accumulated deficit (1,839,573) (2,024,912)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 6,378,215 5,036,000
------------ ------------
$ 21,945,864 $ 19,612,553
============ ============

See Accompanying Notes

F-1

COLOR IMAGING, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30
(UNAUDITED)

THREE MONTH PERIODS ENDED NINE MONTH PERIODS ENDED
----------------------------------------------------
30-Sep-01 30-Sep-00 30-Sep-01 30-Sep-00
---------- ---------- ----------- -----------

SALES $9,867,704 $6,006,335 $23,494,174 $15,542,691
COST OF SALES 8,550,785 5,115,834 20,133,737 13,002,584
---------- ---------- ----------- -----------
GROSS PROFIT 1,316,919 890,501 3,360,437 2,540,107
---------- ---------- ----------- -----------
OEPRATING EXPENSES:
Administrative 418,940 382,553 1,262,897 1,121,296
Research & development 219,627 230,724 621,467 584,643
Sales & marketing 375,485 197,630 882,878 608,182
---------- ---------- ----------- -----------
1,014,052 810,907 2,767,242 2,314,121
---------- ---------- ----------- -----------
OPERATING PROFIT 302,867 79,594 593,195 225,986
---------- ---------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest and other income (expense) 15,230 (2,006) 26,216 270,368
Interest & financing expense (92,532) (123,486) (326,466) (380,762)
Disposal of assets - (66,000) - 161,481
Non-recurring moving expense - (10,360) (9,570) (243,002)
---------- ---------- ----------- -----------
(77,302) (201,852) (309,820) (191,915)
---------- ---------- ----------- -----------

INCOME (LOSS) BEFORE TAXES 225,565 (122,258) 283,375 34,071

PROVISION (BENEFIT) FOR TAXES 79,726 (67,000) 98,036 11,000
---------- ---------- ----------- -----------
NET INCOME (LOSS) $ 145,839 $ (55,258) $ 185,339 $ 23,071
========== ========== =========== ===========

INCOME (LOSS) PER COMMON SHARE
Basic $ .02 $ (.01) $ .02 $ .00
Diluted $ .02 $ (.01) $ .02 $ .00

COMMON SHARES OUTSTANDING
WEIGHTED AVERAGE SHARES:

Basic 8,070,136 7,007,604 7,774,391 7,002,517
========== ========== =========== ===========
Diluted 8,273,417 7,007,604 7,940,595 7,002,517
========== ========== =========== ===========

See Accompanying Notes

F-2

COLOR IMAGING, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30
(UNAUDITED)

2001 2000
----------- -----------

Cash flows from operating activities:
Net income $ 185,339 $ 23,071
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 446,483 600,667
Deferred income taxes 96,736 (161,119)
Decrease (increase) in:
Accounts receivable (366,015) (3,594,859)
Inventories (1,481,893) (1,629,668)
Prepaid expenses and other assets 47,557 495,954
Increase (decrease) in:
Accounts payable and accrued liabilities 1,694,749 4,419,635
----------- -----------
Net cash provided by operating activities 622,956 153,681
----------- -----------
Cash flows from investing activities:
Capital expenditures (255,831) (1,691,526)
Other assets (118,312) ( 16,847)
Patents and intellectual properties (395,638) (583,596)
----------- -----------
Net cash (used in)
investing activities (769,781) (2,291,969)
----------- -----------
Cash flows from financing activities
Net (payments) borrowings under line of credit (166,806) 882,662
Net proceeds from sale of common stock 1,156,876 346,021
Principal payments of long-term debt (536,847) (106,667)
----------- -----------
Net cash provided by
financing activities 453,223 1,122,016
----------- -----------
Net increase (decrease) in cash 306,398 (1,016,272)
Cash at beginning of year 339,348 1,096,512
----------- -----------
Cash at end of period $ 645,746 $ 80,240
=========== ===========

SUPPLEMENTAL DISCLOSURES, NON-CASH FINANCING ACTIVITIES

During the period ending September 30 2001, the Company issued 10,000
shares of common stock to an investor relations firm for services rendered in
the amount $25,000.

See Accompanying Notes

F-3

COLOR IMAGING, INC. AND SUBSIDIARY
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
September 30, 2001
(Unaudited)

NOTE 1. BASIS OF PRESENTATION

The accompanying unaudited interim consolidated condensed financial statements
have been prepared in accordance with interim accounting principles generally
accepted in the United States of America for interim financial information and
with the instructions to Form 10-QSB. Accordingly, they do not include all of
the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals and adjustments) considered necessary for a fair presentation have been
included. Operating results for the three and nine months ended September 30,
2001 are not necessarily indicative of the results that may be expected for the
year ended December 31, 2001.

NOTE 2. PROPERTY, PLANT AND EQUIPMENT

Effective January 1, 2001, the Company changed its accounting estimates relating
to depreciation. The estimated service life for certain machinery, equipment and
fixtures was extended by three (3) to thirteen (13) years.

Property, plant and equipment are stated at cost. Depreciation of the Company's
property, plant, and equipment is computed using the straight-line method. The
estimated useful lives are as follows:

Years
-------
Leasehold improvements 10 - 20
Machinery and equipment 7 - 20
Research and development equipment 5 - 10
Furniture and fixtures 7 - 10

NOTE 3. STOCK OPTIONS

On September 19, 2001, the Company granted options to acquire 25,000 shares of
the common stock of the Company to a non-employee director effective as of the
date of his becoming a member of the Board of Directors. The options vest in 5
equal annual increments from the effective date and expire, with respect to that
portion that has vested, 3 years from date of vesting. The option price is $2.75
per share. The Company accounts for stock option grants in accordance with APB
Opinion No. 25, "Accounting for Stock Issued to Employees," including Financial
Accounting Standards Board Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation". Interpretation No. 44 clarifies: the
application of APB No. 25 for the definition of an employee for purposes of
applying APB No. 25; the criteria for determining whether a plan qualifies as a
non-compensatory plan; the accounting consequence of various modifications to
the terms of previously fixed stock options or awards; and the accounting for an
exchange of stock compensation awards in a business combination. The effect of
the adoption of this interpretation was not material.

NOTE 4. INVENTORIES

Inventories consisted of the following components as of September 30, 2001 and
December 31, 2000:

September 30, 2001 December 31, 2000
------------------- ------------------

Raw materials $ 913,604 $ 794,128
Work-in-process 911,360 1,275,545
Finished goods 4,960,832 3,234,230
Obsolescence allowance (122,655) (122,655)
---------- ----------
Total $6,663,141 $5,181,248
========== ==========

F-4

NOTE 5. CHANGES TO BORROWING ARRANGEMENTS

The Company has a $1.5 million revolving line of credit with an outstanding
balance as of September 30, 2001 of $732,000. At the end of each month for the
following month, the Company has the interest rate option of either the one
month Libor interest rate in effect two business days before the first day of
the month plus 2.50% or the Bank's prime interest rate minus 0.25%. As of
September 30, 2001, the interest rate was the one month Libor rate plus 2.50%
(6.08%). This revolving line of credit has a December 31, 2001 expiration date.
The Bank has made available an additional line of credit of $500,000. The
outstanding balance as of September 30, 2001 was $500,000. The additional line
of credit has an expiration date of December 31, 2001, and bears an interest
rate of the Bank's prime interest rate plus 0.5% (6.50% at September 30, 2001).

Under these lines of credit, the Company is permitted to borrow up to 85% of
eligible accounts receivable and 50 percent of eligible inventories (up to a
maximum of $1.1 million and not to exceed 60 percent of the total outstandings).
The Company has granted the Bank a security interest in all of the Company's
assets as security for the repayment of the lines of credit.

The Bank agreement, which also covers a term loan, contains various covenants
that the Company is required to maintain; including fixed charge and cash flow
leverage ratios of not less than 1.20:1 and not greater than 4.00:1,
respectively. As of September 30, 2001, the Company was not in compliance with
these covenants and has received a waiver from the bank as regards these
requirements for the period ended September 30, 2001, and by amendment, for all
periods through December 31, 2001.

In December 2001, the revolving line of credit agreement was extended to provide
for an expiration date of June 30, 2002. The bank and the Company are also
entering into an amendment to the existing agreement to amend the covenant
requirements to be effective December 31, 2001. As such, the Company does not
believe that it will be in violation of its agreements with the bank.

NOTE 6. SIGNIFICANT CUSTOMERS

In the nine month period ended September 30, 2001, three customers accounted for
25%, 16% and 14% of net sales. The Company does not have a written or oral
contract with these customers. All sales are made through purchase orders.

NOTE 7. SIGNIFICANT SUPPLIERS

In the nine months ended September 30, 2001, the Company purchased 54% of its
raw materials, components and supplies from one supplier in connection with
sales to its largest customers.

NOTE 8. STOCKHOLDERS' EQUITY:

From January 1, 2001 to September 30, 2001, the Company issued 550,000 Units at
a price of $2.00 per unit for an aggregate of $1,100,000. Each Unit consisted
of one share of common stock and one warrant to purchase one share of common
stock at a price of $2.00. For the nine-month period ended September 30, 2001,
the Company received gross proceeds aggregating $110,906 as a result of the
exercise of warrants.

On September 19, 2001, the Board of Directors authorized the sale of 1,000,000
shares of the Corporation's common stock, par value $.01, at a price of $2.00
per share to an unaffiliated entity.

NOTE 9. FOREIGN CURRENCY TRANSACTIONS:

The Company sells to customers located overseas and such transactions are
recorded in U.S. dollars at the time of occurrence. As of December 31, 2000,
gains and/or losses associated with foreign currency translation adjustments
were not applicable.

During 2001, the Company began selling its products in certain overseas markets
where the prices were denominated in Euros. All balance sheet accounts resulting
from foreign transactions are translated into U.S. dollars at the rate of
exchange in effect at the balance sheet date and statements of operations items
are translated at the weighted average exchange rates for the year. The
resulting translation adjustments are made directly to a separate component of
stockholders' equity. Gains and losses from foreign currency transactions, such
as those resulting from the settlement of foreign receivables (or payables) are
included in the consolidated statements of operations. As of September 30, 2001,
there were no balance sheet items resulting from foreign currency transactions.
Losses from the settlement of foreign receivables aggregated $2,617 for the
nine-month period ended September 30, 2001 and is included in other expense on
the statements of operations.

F-5

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders Color Imaging, Inc.
Norcross, Georgia

We have audited the accompanying consolidated balance sheet of Color Imaging,
Inc. (a Delaware corporation) and subsidiary as of December 31, 2000, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides 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 Color Imaging, Inc.
and subsidiary as of December 31, 2000, and the results of their operations and
their cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.

We previously audited and reported on the balance sheet of Color Imaging, Inc.
(formerly Advatex Associates, Inc.) as of December 31, 1999 and the related
statements of operations, stockholders' equity and cash flows for the year then
ended, prior to their restatement for the merger (see Note 1). The contribution
of Color Imaging, Inc. to the total assets, revenues and net income represented
7%, 0% and 0% of the respective restated totals. Separate financial statements
of the other companies included in the 1999 restated consolidated balance sheet
and consolidated statements of operations and cash flows were audited and
reported on separately by other auditors who issued unqualified opinions
thereon. We also audited the combination of the accompanying consolidated
balance sheet and consolidated statements of operations and cash flows for the
year ended December 31, 1999 after restatement for the merger. In our opinion,
such consolidated statements have been properly combined on the basis described
in Note 1 of the notes to the consolidated financial statements.

LAZAR LEVINE & FELIX LLP

New York, New York
February 9, 2001, except for
the fourth paragraph of Note 6,
the date of which is October 31, 2001

F-6

COLOR IMAGING, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999

2000 1999
----------- -----------

- ASSETS -
CURRENT ASSETS:
Cash $ 339,348 $ 1,096,512
Accounts receivable - net of allowance for doubtful accounts
of $100,000 and $150,000, for 2000 and 1999, respectively 3,562,121 1,404,160
Inventory 5,181,248 3,890,352
Refundable income taxes 19,995 163,135
Deferred taxes 159,426 183,297
Due from related party 100,832 21,600
Other current assets 381,146 122,643
----------- -----------
TOTAL CURRENT ASSETS 9,744,116 6,881,699
----------- -----------
PROPERTY, PLANT AND EQUIPMENT - NET 7,384,679 5,439,329
----------- -----------
OTHER ASSETS:
Patent/intellectual property 876,751 --
Deferred income tax 464,085 248,233
Related party portion of IDR bond 873,296 952,528
Other assets 269,626 829,576
----------- -----------
2,483,758 2,030,337
----------- -----------

$19,612,553 $14,351,365
=========== ===========
- LIABILITIES & STOCKHOLDERS' EQUITY -

CURRENT LIABILITIES:
Revolving credit lines $ 1,399,000 $ 458,000
Accounts payable 6,640,402 2,760,567
Current portion of notes payable 351,150 388,199
Current portion of bonds payable 320,000 90,000
Other current liabilities 400,276 422,542
----------- -----------
TOTAL CURRENT LIABILITIES 9,110,828 4,119,308
----------- -----------

LONG TERM LIABILITIES:
Notes payable 1,685,725 1,650,044
Bonds payable 3,780,000 4,010,000
----------- -----------
LONG TERM LIABILITIES 5,465,725 5,660,044
----------- -----------
TOTAL LIABILITIES 14,576,553 9,779,352
----------- -----------
COMMITMENTS & CONTINGENCIES

STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, authorized 20,000,000 shares;
7,490,948 and 6,999,987 shares issued and outstanding on
December 31, 2000 and 1999, respectively 74,909 70,000
Additional paid-in capital 6,986,003 6,008,991
Accumulated deficit (2,024,912) (1,506,978)
----------- -----------
5,036,000 4,572,013
----------- -----------

$19,612,553 $14,351,365
=========== ===========

See notes to consolidated financial statements.

F-7

COLOR IMAGING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

2000 1999
----------- -----------

SALES $ 21,204,435 $11,191,120

COST OF SALES 17,946,605 8,020,238
----------- -----------

GROSS PROFIT 3,257,830 3,170,882
----------- -----------

OPERATING EXPENSES:
Administrative 1,478,075 1,747,356
Research and development 1,003,565 1,334,236
Sales and marketing 881,176 1,017,489
----------- -----------
3,362,816 4,099,081
----------- -----------

LOSS FROM OPERATIONS (104,986) (928,199)
----------- -----------

OTHER INCOME (EXPENSE):
Interest and other income 351,062 112,115
Interest and financing costs (488,948) (273,310)
Non-recurring moving expenses (488,854) (254,842)
----------- -----------
(626,740) (416,037)
----------- -----------

(LOSS) BEFORE PROVISION FOR INCOME TAXES (731,726) (1,344,236)

PROVISION (BENEFIT) FOR INCOME TAXES (213,792) (395,800)
----------- -----------

NET (LOSS) $ (517,934) $ (948,436)
=========== ===========

(LOSS) PER COMMON SHARE:
Basic $ (.07) $ (.14)
Diluted $ (.07) $ (.14)

WEIGHTED AVERAGE SHARES OUTSTANDING 7,055,763 6,999,987
=========== ===========

See notes to consolidated financial statements.

F-8

COLOR IMAGING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

Additional Total
Common Paid-In Accumulated Stockholders'
Shares Stock Capital Deficit Equity
--------- -------- ----------- ------------ --------------

Balance at December 31, 1998, as restated 6,999,987 $70,000 $6,008,991 $ (558,542) $5,520,449

Net loss for year -- -- -- (948,436) (948,436)
--------- ------- ---------- ----------- ----------

Balance at December 31, 1999 6,999,987 70,000 6,008,991 (1,506,978) 4,572,013

Exercise of stock warrants 46,211 462 91,959 -- 92,421

Common stock issued in private placement 444,750 4,447 885,053 -- 889,500

Net loss for the year -- -- -- (517,934) (517,934)
--------- ------- ---------- ----------- ----------

Balance at December 31, 2000 7,490,948 $74,909 $6,986,003 $(2,024,912) $5,036,000
========= ======= ========== =========== ==========

See notes to consolidated financial statements.

F-9

COLOR IMAGING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

2000 1999
----------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (517,934) $ (948,436)
Adjustments to reconcile net (loss)
to net cash provided (used) by operating activities:
Depreciation and amortization 863,534 958,089
Deferred income taxes 68,801 (262,100)
Loss on disposal of fixed assets -- 132,322
Decrease (increase) in:
Accounts and other receivables (1,978,313) (1,817,392)
Inventories (1,290,896) (814,122)
Prepaid expenses and other assets (540,643) (101,676)
Increase (decrease) in:
Accounts payable and accrued liabilities 3,812,946 1,611,646
Deferred revenue -- 48,050
----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 417,495 (1,193,619)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,227,577) (3,529,315)
Patents and intellectual properties (876,751) -
----------- -----------
NET CASH (USED IN) INVESTING ACTIVITIES (3,104,328) (3,529,315)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit 712,505 315,025
Proceeds from issuance of bonds and long-term debt 235,243 6,028,334
Proceeds from sale of stock 981,921 1,197,500
Principal payments of long-term debt -- (2,619,912)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,929,669 4,920,947
----------- -----------
NET (DECREASE) INCREASE IN CASH (757,164) 198,013
Cash at beginning of year 1,096,512 898,499
----------- -----------
CASH AT END OF YEAR $ 339,348 $ 1,096,512
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Income taxes $ 2,643 $ 2,065
=========== ===========
Interest $ 55,166 $ 338,445
=========== ===========

See notes to consolidated financial statements.

F-10

COLOR IMAGING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999

NOTE 1. DESCRIPTION OF COMPANY:

On May 16, 2000, Color Imaging, Inc., formerly known as Advatex
Associates, Inc. ("Advatex"), Logical Acquisition Corp. ("LAC"), Color
Acquisition Corp. ("CAC"), Logical Imaging Solutions, Inc. ("Logical")
and Color Image, Inc. ("Image") entered into a Merger Agreement and
Plan of Reorganization, as amended ("Merger Agreement"), pursuant to
which LAC merged with and into Logical and CAC merged with and into
Image (the "Merger"). Pursuant to the Merger Agreement, stockholders
of Logical and Image exchanged their common stock for shares of common
stock of Advatex. A reverse stock split of one share of common stock
for 6.0779 shares of common stock was simultaneously approved for the
then existing Advatex common stock. Subsequently, the equity interests
in Logical were converted by virtue of the Logical Merger into
approximately 3,000,000 newly issued shares of Advatex common stock,
on the basis of 1.84843 Advatex Common Shares for each one share of
common stock of Logical. The equity interests in Image were converted
by virtue of the Image Merger into approximately 3,000,000 newly
issued shares of the Advatex common stock on the basis of 15 Advatex
common shares for each one share of common stock of Image. Even though
Image and Logical each received the same number of shares, Logical was
determined to be the accounting acquirer based on other criteria and
guidance provided by the Securities and Exchange Commission (SEC)
Staff Accounting Bulletin (SAB) Topic 2A regarding Business
Combinations.

Following the conversion of common stock by Logical and Image
stockholders, stockholders of Logical and Image owned approximately 85
percent of the outstanding shares of common stock of Advatex and
stockholders of Advatex after the Merger owned approximately 15
percent. At the time of the merger which is being treated as a reverse
acquisition (under the provisions of APB Opinion No. 16 and SAB Topic
2A), the common stock of Advatex was not actively trading, thus the
cost of the assets acquired in the merger was based on the fair value
which was determined to be the issuer's net assets at book value.
Consequently, no further fair value adjustment was made. The Merger
was accounted for retroactively as a recapitalization rather than a
business combination and accordingly, no goodwill has been recognized
in this transaction. Additionally, historical information presented
herein, for periods prior to the merger, reflects the operations of
Logical and Image.

On July 7, 2000, by a vote of the majority of stockholders, Advatex
Associates, Inc. ("Advatex"), changed its name to Color Imaging, Inc.
(the "Company" or "Color") and approved the reverse stock split. On
December 31, 2000, Image merged into Color with Color being the
surviving entity. At December 31, 2000, there were 7,490,948 shares of
the common stock of the Company issued and outstanding.

Color develops and manufactures products used in electronic printing.
Color designs, manufactures and delivers black text toners, specialty
toners, including color and MICR (magnetic ink characters used on
checks and other financial documents), and also provides toner
cartridges, cartridge components, photoreceptors and imaging drums.

Logical's development efforts have focused on creating a revolutionary
digital variable printing process that provides high-speed, color
printing systems for commercial applications. Logical designs,
manufactures and delivers complete printing systems, including
software, control units and print engines to its customers.

NOTE 2. Summary Of Significant Accounting Policies:

A. PRINCIPLES OF CONSOLIDATION:

The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, Logical Imaging Solutions,
Inc. All significant intercompany balances and transactions have been
eliminated in consolidation.

B. ESTIMATES AND ASSUMPTIONS:

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America (GAAP)
requires management to make estimates and assumptions that affect the

F-11

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.

C. FINANCIAL INSTRUMENTS:

The carrying amount of the Company's financial instruments, which
include cash equivalents, marketable securities, accounts receivable,
accounts payable and long-term debt, approximates their fair value at
December 31, 2000 and 1999.

D. CONCENTRATION OF CREDIT RISK:

Financial instruments which potentially subject the Company to
concentrations of credit risk are cash equivalents, marketable
securities and accounts receivable. The Company attempts to limit its
credit risk associated with cash equivalents and marketable securities
and at December 31, 2000 its investments were in cash held in highly
rated financial institutions. With respect to accounts receivable, the
Company limits its credit risk by performing ongoing credit
evaluations and, when deemed necessary, requiring cash in advance,
payment by credit card, letters of credit or guarantees. The Company's
customer base is comprised principally of domestic distributors and
commercial printers. Management does not believe significant risk
exists in connection with the Company's concentrations of credit at
December 31, 2000.

E. CASH AND CASH EQUIVALENTS:

The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.

F. INVENTORIES:

Inventories are stated at the lower of cost or market with cost
determined by the first-in, first-out ("FIFO") method for raw
materials, work-in-process and finished goods. Costs in inventory
include materials, direct labor, and applied manufacturing overhead.

F-12

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

G. PROPERTY, PLANT AND EQUIPMENT:

Property, plant, and equipment are recorded at cost. Replacements and
major improvements are capitalized; maintenance and repairs are
expensed as incurred. Gains or losses on asset dispositions are
included in the determination of net income.

Depreciation of the Company's property, plant, and equipment is
computed using the straight-line method. The average estimated useful
lives are as follows:

Years
------
Leasehold improvements 10
Machinery and equipment 7 - 10
Research and development equipment 5 - 10
Furniture and fixtures 7 - 10

H. INTANGIBLE ASSETS:

Intangible assets are comprised of patents and intellectual property.
All intangible property is amortized by the straight line method, over
their respective useful lives, commencing upon completion of
commercialization. Intangibles are periodically reviewed to assess
recoverability from future operations using undiscounted cash flows in
accordance with SFAS 121 "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to be Disposed Of". To the extent
carrying values exceed fair values, an impairment loss is recognized
in operating results.

I. STOCK-BASED COMPENSATION:

The Company grants stock options for a fixed number of shares of
common stock to employees with an exercise price equal to the fair
value of the common stock at the date of grant. The Company accounts
for stock option grants in accordance with APB Opinion No. 25,
Accounting for Stock Issued to Employees (APB 25) and related
Interpretations because the Company believes the alternative fair
value accounting provided for under FASB Statement No. 123, Accounting
for Stock-Based Compensation, (FAS 123) requires the use of option
valuation models that were not developed for use in valuing employee
stock options. Under APB 25, because the exercise price of the
Company's employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is
recognized.

F-13

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

J. INCOME TAXES:

The asset and liability method is used in accounting for income taxes.
Under this method, deferred tax assets and liabilities are recognized
for operating loss and tax credit carry forwards and for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the results of
operations in the period that includes the enactment date. A valuation
allowance is recorded to reduce the carrying amounts of deferred tax
assets unless it is more likely than not that such assets will be
realized.

K. REVENUE RECOGNITION:

Color designs, manufactures and sells toner used in electronic
printing. Revenue from such product sales is recognized when
persuasive evidence of an arrangement exists, delivery has occurred,
the fee is fixed or determinable and collectibility is probable. At
this time the earnings process is complete and the risks and rewards
of ownership have transferred to the customer, which is generally when
the related goods are shipped and all significant obligations of the
Company have been satisfied. Both Logical and Color supply consumable
products used in electronic printing and revenue from the sale of such
consumables is also recognized when the goods are shipped. Sales of
the printing systems designed and manufactured by Logical have been
negligible through December 31, 2000, and accordingly, the Company has
not generated revenues from warranty contracts and/or services
provided for installation and maintenance.

The Company recognizes revenues in accordance with Staff Accounting
Bulletin 101, "Revenue Recognition in Financial statements" (SAB 101).
As a result, the publication of SAB 101 did not have a impact on the
Company's financial statements.

L. ADVERTISING COSTS:

In accordance with SOP No. 93-7, "Reporting on Advertising Costs," the
Company expenses all advertising expenditures as incurred. The Company
incurred $62,089 and $101,884 in advertising costs during 2000 and
1999, respectively.

M. RESEARCH AND DEVELOPMENT EXPENSES:

Research and development costs are charged to expense when incurred
and aggregated $1,003,565 and $1,334,236 for 2000 and 1999,
respectively.

N. EARNINGS (LOSS) PER COMMON SHARE:

Earnings per common share are calculated under the provisions of SFAS
No. 128, "Earnings per Share," which established new standards for
computing and presenting earnings per share. Adopted by the Company
during 1998, SFAS No. 128 requires the Company to report both basic
earnings per share, which is based on the weighted-average number of
common shares outstanding, and diluted earnings per share, which is
based on the weighted-average number of common shares outstanding plus
all potential dilutive common shares outstanding. Since the Company is
reporting losses from operations, the exercise of stock options and
warrants is not assumed since the result would be antidilutive.
Earnings per share amounts for all periods are presented.

F-14

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

O. NEW ACCOUNTING STANDARDS:

Accounting standards adopted during 1999 include SFAS No. 130,
"Reporting Comprehensive Income," SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information," and SFAS No. 132,
"Employers' Disclosures about Pensions and Other Postretirement
Benefits." The adoption of these standards had no effect on the
Company's consolidated results of operations, financial position, or
cash flows.

SFAS No. 130 establishes standards for the reporting and display of
comprehensive income, which is defined as all changes in stockholders'
equity during a period except those resulting from investments by and
distributions to stockholders. The standard requires reporting certain
transactions that result in a change in stockholders' equity to be
included in other comprehensive income and displayed as a separate
component in the consolidated statement of stockholders' equity.

SFAS No. 131 establishes new standards for determining operating
segments and disclosure requirements for those segments, products,
geographic areas, and major customers. As required by SFAS No. 131, the
Company has revised certain disclosures included in its Business
Segments footnote.

SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits," revises the disclosure requirements related to
pension and other postretirement benefits. The new standard does not
change the measurement or accounting recognition for such plans. As
required by SFAS No. 132, the Company has revised the disclosures
included in its Pension Plans and Postretirement Benefits footnote.

The Company also adopted SOP 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," which requires that
certain costs related to developing or obtaining internal use software
should be capitalized. The adoption of this standard did not have a
material effect on the Company's consolidated results of operations,
financial position, or cash flows.

In March 2000, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 44 (FIN 44), "Accounting for Certain Transactions
involving Stock Compensation, an Interpretation of APB Opinion No. 25."
FIN 44 clarifies the application of APB No. 25 for certain issues,
including the definition of an employee, the treatment of the
acceleration of stock options and the accounting treatment for options
assumed in business combinations. FIN 44 became effective on July 1,
2000, but is applicable for certain transactions dating back to December
1998. The adoption of FIN 44 did not have a material impact on the
Company's financial position or results of operations .

In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in
Financial Statements." (SAB No. 101). SAB No. 101 expresses the views of
the SEC staff in applying generally accepted accounting principles to
certain revenue recognition issues. Subsequently, SAB Nos. 101A and 101B
were issued delaying the implementation of SAB No. 101 to the fourth
quarter of 2001. The SAB requires companies to report any changes in
revenue recognition as a cumulative change in accounting principle at
the time of implementation in accordance with Accounting Principles
Board ("APB") Opinion 20, "Accounting Changes". The adoption of SAB
No. 101 did not have a material impact on the Company's financial
position or results of operations.

F-15

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

O. NEW ACCOUNTING STANDARDS (CONTINUED):

New accounting standards issued include SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which establishes a
comprehensive standard for the recognition and measurement of
derivatives and hedging activities. The new standard requires that all
derivatives be recognized as assets or liabilities in the statement of
financial position and measured at fair value. Gains or losses resulting
from changes in fair value are required to be recognized in current
earnings unless specific hedge criteria are met. SFAS No. 133 will
become effective for the Company beginning in the first quarter of
fiscal year 2001. The Company has not determined the effect of this new
standard; however, due to the Company's limited use of derivatives, the
impact is not expected to be material.

P. FOREIGN CURRENCY TRANSACTIONS:

The Company sells to customers located overseas and such transactions
are recorded in U.S. dollars at the time of occurrence. As of December
31, 2000, gains and/or losses associated with foreign currency
translation adjustments are not applicable.

NOTE 3. INVENTORIES:

Inventories consisted of the following components as of December 31,
2000 and 1999:

2000 1999
----------- -----------
Raw materials $ 794,128 $ 457,059
Work-in-process 1,275,545 1,646,974
Finished goods 3,234,230 1,994,667
Obsolescence allowance (122,655) (208,348)
----------- -----------
Total $ 5,181,248 $ 3,890,352
=========== ===========

NOTE 4. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following as of December 31,
2000 and 1999:

2000 1999
----------- -----------

Furniture and fixtures $ 272,038 $ 271,730
Equipment - research and development 737,628 688,467
Machinery and equipment 9,344,135 7,661,487
Leasehold improvements 1,288,021 586,178
----------- -----------
11,641,822 9,207,862
Less: accumulated depreciation
and amortization (4,257,143) (3,768,533)
----------- -----------
$ 7,384,679 $ 5,439,329
=========== ===========

Depreciation and amortization expense amounted to $863,534 and $958,089
in 2000 and 1999, respectively.

NOTE 5. PATENT AND INTELLECTUAL PROPERTY:

The Company has capitalized $876,751 of research and development expense
through December 31, 2000, in furthering its patented toner and digital
color printing systems technologies. The Company expects to begin
amortizing patent and intellectual property assets when sales of the
color toning system commence.

F-16

NOTE 6. BORROWING ARRANGEMENTS:

As a condition of its Bank's consent to the merger, on August 30, 2000,
the Company entered into an amended and restated borrowing arrangement, granting
to the bank a security interest in all of the Company's assets as security for
the payment of the obligations owed the bank.

The Company has a $1.5 million revolving line of credit with an
outstanding balance as of December 31, 2000 of $899,000, which bears interest at
the Bank's prime interest rate (9.5% as of December 31, 2000) less .25%. The
revolving line of credit has a June 30, 2001 expiration date. Under the line of
credit, the Company is permitted to borrow 85% of eligible accounts receivable
and 50% of eligible inventories (up to a maximum of $1.1 million).

The Bank has made available an additional line of credit of $500,000. The
outstanding balance as of December 31, 2000 was $500,000. The additional line of
credit has an expiration date of June 30, 2001, and bears an interest rate of
the Bank's prime interest rate plus .5 percent.

The Bank agreement contains various covenants which the Company is
required to maintain; fixed charge and cash flow leverage ratios of not less
than 1.20:1 and not including greater than 4.00:1, respectively, a minimum
tangible net worth of $4.1 million and a capital expenditure limit of $1.6
million. As of December 31, 2000, the Company was not in compliance with these
covenants and has received a waiver from the bank as regards these requirements.
The Company has received additional waivers from the bank as of the end of each
subsequent quarter through December 31, 2001 with respect to those covenant
violations existing at the end of such periods.

Long-term debt was comprised of the following as of December 31:

2000 1999
---------- ----------

Term note payable to a financial institution due in monthly
installments of principal and interest of $848 through March
2003; bears interest at 8.0%, collateralized by automobile with a
net book value of $26,386 $ 20,810 $ 28,927

Term note payable to a financial institution due in monthly
installments of principal and interest of $10,676 through
November 2005; bears interest at 10.215%; collateralized by
inventory, accounts receivable and equipment 500,000 101,636

Term note payable to a financial institution in monthly
installments of principal and interest of $27,205 through June
2006 bears interest at 7.90%; collateralized by inventory,
accounts receivable and equipment (see Note 7) 1,444,105 1,655,680

Various equipment notes maturing in 2002 71,960 --

Note payable to a related party due in October 2000; bears
interest at 12% per annum; collateralized by all properties of
the Company -- 162,000

Note payable to a related party due in June 2001; bears interest
at 12% per annum; collateralized by all properties of the Company -- 90,000
---------- ----------
2,036,875 2,038,243
Less current maturities 351,150 388,199
---------- ----------
$1,685,725 $1,650,044
========== ==========

The aggregate scheduled maturities of long-term debt for each of
the next five years are as follows:

2001 $ 351,150
2002 359,034
2003 357,651
2004 389,375
2005 424,312
Thereafter 155,353
------------------
Total $ 2,036,875
==================

F-17

NOTE 7. INDUSTRIAL DEVELOPMENT REVENUE BOND:

On June 1, 1999, the Development Authority of Gwinnett County (the "Authority"),
issued $4,100,000 of industrial development revenue bonds on behalf of the
Company and a Related Party. The 3.5% revenue bonds are payable in varying
annual principal and monthly interest payments through July 2019. The bond is
secured by all the assets of the Company and by real property owned by the
Related Party. The bonds along with the line of credit and term loan (see Note
6) are held by two related financial institutions.

A loan agreement between the Authority and the Company and a Related Party
allows funds to effectively pass through the Authority to the Company. The
majority of the proceeds, $3,125,872, were used by the Company to purchase and
install certain manufacturing equipment, while $974,128 was used by the Related
Party to pay down the mortgage on the real property leased to the Company. The
Company and the Related Party are jointly obligated to repay any outstanding
debt. Under the Joint Debtor Agreement of June 28, 2000, between the Company and
the Related Party, each has agreed to be responsible to the other for their
share of the bond obligations and that any party causing an act of default shall
be responsible for 100% of the bond obligations. The amount for which the
Related Party is responsible to the Company is reflected in current and other
assets of the Company. Amounts receivable from the Related Party are secured by
a lien on the real property leased by the Company and by personal guarantees
executed by members of the Related Party. At this time, the Company believes
that the Related Party portion of the bond is fully collectible. As of December
31, 2000, the bond principal outstanding was $4,100,000 and the portion due from
the Related Party was $974,128.

The aggregate maturities of bonds payable for each of the next five years are as
follows:

Company Related Party Total
---------- ------------- ----------

2001 $ 243,200 $ 76,800 $ 320,000
2002 254,600 80,400 335,000
2003 266,000 84,000 350,000
2004 281,200 88,800 370,000
2005 296,400 93,600 390,000
Thereafter 1,774,600 560,400 2,335,000
---------- -------- ----------
Total $3,116,000 $984,000 $4,100,000
========== ======== ==========

NOTE 8. STOCKHOLDERS' EQUITY:

A. COMMON STOCK:

As discussed in Note 1, the Company issued an aggregate of 6,000,000 shares of
its common stock to the stockholders of Logical and Image in exchange for their
shares in Logical and Image in a merger transaction accounted for retroactively
as a recapitalization. Simultaneously with this recapitalization, the Company
effected a reverse stock split of one for 6.0779 shares of common stock. All
share and per share amounts have been restated to reflect the stock split and
recapitalization for all periods presented.

See also Note 8c regarding additional sale of equity securities.

B. STOCK OPTION PLANS:

After the Merger, the Company granted options to acquire 500,000 shares of the
common stock of the Company to senior members of the Company's management at an
exercise price of $2.00 per share. The options will vest over a two to four year
period.

Pro forma information regarding net income and earnings per share is required by
Financial Accounting Standards Board Statement 123, and has been determined as
if the Company had accounted for its employee stock options under the fair value
method of that Statement.

F-18

NOTE 8. STOCKHOLDERS' EQUITY (CONTINUED):

B. STOCK OPTION PLANS (CONTINUED):

The fair value for these options was estimated at the date of grant using
a Black-Scholes option pricing model with the following weighted-average
assumptions for 2000, risk-free interest rate of 6.02%, dividend yield of
0%, volatility factor of the expected market price of the Company's
common stock of .49, and a weighted-average expected life of the option
of 3 years.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options, which have no vesting
restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions including
the expected stock price volatility. Because the Company's employee
stock options have characteristics significantly different from those
of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its employee stock
options.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The
Company's pro forma information follows:

2000
----------

Pro forma net loss $(700,137)
Pro forma loss per common share:
Basic (.10)
Diluted (.10)

A summary of the Company's stock option activity, and related
information for the year ended December 31 follows:

2000
---------------------
WEIGHTED-
AVERAGE
EXERCISE
OPTIONS PRICE
-------- -----------

Outstanding at the beginning of the year -- $ --
Granted 500,000 2.00
Exercised -- --
--------
Outstanding at the end of the year 500,000 2.00
========

Exercisable at the end of the year 250,000 $ 2.00
========

Weighted-average fair value of options granted
during the year $ 2.05
========

The weighted-average remaining contractual life of these options is 3
years.

F-19

C. STOCK WARRANTS:

As part of the Merger, the Company granted warrants (the "New Warrant")
to purchase up to 100,000 shares of the common stock of the Company to
professional advisors to the Merger. The New Warrant entitles the
warrant holder to purchase, at any time and for a five-year period, a
share of common stock of the Company for $2.00 per share. In addition,
current stockholders at December 31, 2000, own 225,507 similar warrants
(the "Old Warrant"). The Old Warrant entitles the warrant holder to
purchase, at any time until September 15, 2001, a share of common stock
of the Company for $2.70 per share. On August 29,2000, the Board of
Directors approved a warrant exercise price of $2.00 per share on the
Old Warrant, provided it is exercised by November 15, 2000. As of
December 31, 2000, the Company had received $92,421 in proceeds from
the exercise of warrants.

The Company issued warrants to purchase shares of common stock of the
Company to investors in a private placement approved by the Board of
Directors on August 29, 2000. Each Unit in the private placement was
priced at $2.00 and consisted of one common share of the Company's
common stock and one warrant to purchase one share of common stock at
an exercise price of $2.00. From October 22, 2000 to December 31, 2000,
the Company issued and sold 444,750 Units for a total of $889,500. The
warrants expire November 30, 2003. No underwriting discounts or
commissions were paid to any person.

D. RETAINED EARNINGS:

The Company is limited in its ability to declare and pay dividends by
the terms of certain debt agreements.

NOTE 9. PENSION PLANS AND POSTRETIREMENT BENEFITS:

The Company has adopted the Color Image, Inc. Profit Sharing Retirement
Plan. Under this defined contribution plan, employees with one year or
more of service who have worked at least 1,000 hours and have reached
age 21 are eligible for participation. Participants may contribute
between 1% and 15% of their compensation as basic contributions. The
Company will match 50% of the first 3% deferred by any participant.
Company contributions vest from 20% in the second year of service to
100% in the sixth year. For the years ended December 31, 2000 and 1999,
the Company incurred expense of $19,261 and $19,510, respectively.

NOTE 10. RELATED-PARTY TRANSACTIONS:

A. LEASE

The Company leases certain facilities under a ten-year real property
lease agreement from Kings Brother LLC. (the "Related Party" - see Note
7) which expires on April 30, 2009. The lease term provides for three
phases as the Company increases its use of space. The Company is
currently in its third and final phase which commenced on May 1, 2000
and will terminate upon expiration of the lease. The monthly rental
cost throughout this phase aggregates approximately $35,000. See also
Note 12.

B. PURCHASES

The Company purchases copies and laser printer products from two
entities in which a director has a beneficial ownership interest.
Purchases for the 2000 and 1999 years aggregated approximately
$1,083,000 and $902,000 respectively.

F-20

NOTE 11. INCOME TAXES:

The provision for income taxes is composed of the following

2000 1999
--------- ---------

Current:
Federal $(231,372) $(111,932)
State (51,221) (21,768)

Deferred:
Federal 56,331 (210,440)
State 12,470 (51,660)
--------- ---------
$(213,792) $(395,800)
========= =========

The components of the net deferred income tax asset as of December 31, 2000 and
1999, are as follows:

2000 1999
--------- ---------

Deferred tax assets: $ 65,603 $ 58,695
Inventory 35,980 23,748
Accounts receivable 58,313 77,654
Accrued expenses 195,915 193,648
Federal tax credits 537,600 256,000
Net operating loss carryforward --------- ---------
893,411 609,745
Valuation allowance for deferred tax assets (90,000) --
--------- ---------
803,411 609,745
Deferred tax liabilities:
Fixed assets (179,900) (178,215)
--------- ---------
Net deferred tax asset $ 623,511 $ 431,530
========= =========

At December 31, 2000, the Company has recorded a net deferred tax asset of
$623,511, which is reflected in "Current Assets" and "Other Assets" in the
consolidated balance sheet. Realization of the asset is dependent on generating
sufficient taxable income in future periods. Inasmuch as the Company has
experienced operating losses for the 2000 and 1999 years, a significant portion
of the loss sustained in 2000 was a result of non-recurring moving expenses.
Management does not foresee any such unusual charges for the next few years and
has projected taxable income for 2001 and 2002 years. Accordingly, the Company
believes that it is more likely than not that a substantial portion of the
deferred tax asset will be realized, and consequently, has established a
valuation allowance of only $90,000 as of December 31, 2000.

At December 31, 2000, the Company had net operating loss carryforwards (NOLs) of
$730,000 for income tax purposes that expire in years beginning 2020.

The reconciliation of income tax computed at the U.S. federal statutory tax
rates to income tax expense attributable to income before cumulative effect of
accounting changes is:

2000 1999
------- -------

Tax at U.S. statutory rates (34.00)% (34.00)%
State income taxes net of federal tax benefit (4.26) (4.29)
Other - net 9.04 8.84
------- -------
(29.22)% (29.45)%
======= =======

F-21

NOTE 12. COMMITMENTS AND CONTINGENCIES:

A. LEASES:

The Company currently leases approximately 180,000 square feet in
Norcross, Georgia that serves as executive headquarters and houses
manufacturing facilities, research and development and sales and
marketing under a lease that expires April 2009. The lease includes
three options to extend the term for five years each, and contains
provisions for annual rent increases through each term. The Company
also leases approximately 4,000 square feet in Santa Ana, California
under a lease that expires in October 2001.

Minimum lease commitments are as follows:
2001 $ 536,566
2002 518,481
2003 531,444
2004 544,730
2005 558,348
Thereafter 1,914,280
-----------
Total minimum lease payments $ 4,603,849
===========

Rental expense aggregated $332,760 and $281,936 for 2000 and 1999,
respectively.

B. EMPLOYMENT AGREEMENTS:

On June 28, 2000, the Company entered into employment agreements with
its Chief Executive Officer, Michael W. Brennan, President, Dr.
Sueling Wang, Executive Vice President and Chief Financial Officer,
Morris E. Van Asperen, and Vice President of Marketing and Sales
Charles R. Allison. All four of the employment agreements have a 5
year term. The Company is obligated to pay Mr. Brennan and Dr. Wang
annual salaries of $150,000 with a guaranteed increase of 5% per annum
over the term of the agreements. The Company is obligated to pay Mr.
Van Asperen an annual salary of $144,000 with a guaranteed increase of
5% over the term of his agreement. In addition to commissions earned
under the Company's sales incentive program, the Company is obligated
to pay Mr. Allison an annual salary of $89,250 with a guaranteed
increase of 5% per annum over the term of his agreement. Each employee
may terminate the agreement upon 6 months notice to the Company. The
Company may terminate each employee upon 6 months notice by the
Company; provided, however, that the Company is obligated to pay to
the employee his annual base salary, commissions or bonuses earned,
and benefits for a period of 12 months after the date of such notice.

NOTE 13. SIGNIFICANT CUSTOMERS:

For the year ended December 31, 2000, a reseller of imaging supplies
accounted for 57% of net sales. The Company does not have a written or
oral contract with this customer. All sales are made through purchase
orders.

NOTE 14. SIGNIFICANT SUPPLIERS:

For the year ended December 31, 2000, the Company purchased 38% of its
raw materials, components and supplies from one supplier in connection
with sales to its largest customer.

F-22

NOTE 15. FINANCIAL REPORTING FOR BUSINESS SEGMENTS:

The Company believes that its operations are in a single industry
segment and involve the development and manufacture of products used
in electronic printing. All of the Company's assets are domestic. The
sales to unaffiliated customers by geographic region are as follows:

2000 1999
----------- -----------

Sales to Unaffiliated Customers
United States $18,923,102 $ 8,665,351
Europe 1,133,317 1,288,424
All Other 1,148,016 1,237,345
---------- ----------
Total $21,204,435 $11,191,120

F-23

____________________

No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained in this prospectus in
connection with the offering covered by this prospectus. If given or made, such
information or representations must not be relied upon as having been authorized
by Color Imaging, Inc., a Selling Stockholder, or any underwriter. This
prospectus does not constitute an offer to sell, or a solicitation of any offer
to buy, common stock in any jurisdiction to any person to whom, it is unlawful
to make such an offer or solicitation in such jurisdiction. Neither the delivery
of this prospectus nor any sale made under this prospectus shall, under any
circumstances, create any implication that the information contained in this
prospectus is correct as of any time after the date of the prospectus or that
there has been no change in the affairs of Color Imaging, Inc. after the date of
this prospectus.

____________________

5,410,532 SHARES

COLOR IMAGING, INC.

COMMON STOCK

____________________

PROSPECTUS

____________________

March , 2002

PART II

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law authorizes a corporation
generally to indemnify any person ("indemnitee") who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (other than an action by or in the right of the corporation)
by reason of the fact that such person is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation, in a similar position with another corporation or entity, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe such person's conduct was unlawful. With respect to
actions or suits by or in the right of the corporation, however, an indemnitee
who acted in good faith and in a manner such person reasonably believed to be in
or not opposed to the best interests of the corporation is generally limited to
attorneys' fees and other expenses, and no indemnification shall be made if such
person is adjudged liable to the corporation unless and only to the extent that
a court of competent jurisdiction determines that indemnification is
appropriate. Section 145 further provides that any indemnification shall be
made by the corporation only as authorized in each specific case upon a
determination by the (i) stockholders, (ii) board of directors by a majority
vote of directors who were not parties to such action, suit or proceeding or
(iii) independent counsel, that indemnification of the indemnitee is proper
because such has met the applicable standard of conduct. Section 145 provides
that indemnification under its provisions is not exclusive of other rights of
indemnification to which a person may be entitled under any by-law, agreement,
vote of stockholders or disinterested directors or otherwise.

Our Certificate of Incorporation provides that we will indemnify, to the
fullest extent permitted by law, any person or such person's heirs, executors
and administrators who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director, officer, employee or agent of our company, or is or
was serving at the our request as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, or other enterprise,
domestic or foreign, against expenses, attorneys' fees, court costs, judgments,
fines, amounts paid in settlement and other losses actually and reasonably
incurred by such person in connection with such action, suit or proceeding.

The Certificate of Incorporation also provides that none of our directors will
be personally liable to us or our stockholders for monetary damages for any
breach of fiduciary duty by such a director as a director other than for: (i)
any breach of the director's duty of loyalty to us or our stockholders, (ii)
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) liability under Section 174 of the General
Corporation Law of Delaware, or (iv) any transaction from which such director
derived an improper personal benefit.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth an itemized estimate of fees and expenses
payable by the registrant in connection with the offering described in this
registration statement:

SEC registration fee.................................... $ 4,010

Counsel fees and expenses............................... $75,000

Accounting fees and expenses............................ $ 7,500

Blue Sky fees and expenses.............................. $ 3,000

Printing expenses....................................... $10,000

Miscellaneous........................................... $ 5,000

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Total................................................... $104,510
--------
All of the above expenses will be paid by the registrant.

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

From October 1, 2001 to December 31, 2001, we issued 962,960 Units at a price
of $2.00 per unit for an aggregate of $1,925,920. Each Unit consisted of one
share of common stock and one warrant to purchase one share of common stock at a
price of $2.00. The offer and sale, inclusive of finder's fees, was made to
approximately 20 investors each of whom was either an affiliate, temporary
insider, or an accredited investor. We also issued additional warrants at no
cost to five investors to purchase a total of 1,312,880 shares of common stock
at a price of $2.00. The additional warrants were issued to each investor
because each had made a total investment in our securities of at least $300,000.
No general forms of advertising were used in connection with the issuance of the
Units. We paid a cash finder's fee to J.G. Myers & Company and Lexington
Ventures, Inc. in the amount of $5,280 and $28,320, respectively. We also paid a
cash finder's fee to Michael Edson, an individual, in the amount of $25,920. We
also paid a finder's fee to two individuals, John G. Myers and Larry Gordon, in
the form of warrants to purchase 58,951 and 70,886 shares, respectively, of our
common stock at a price of $2.00 per share. Exclusive of finder's fees, all but
4 investors paid cash. Of the 4 investors that paid by recourse note promissory
without interest, 2 have paid their notes in full and 2 have outstanding
balances as of the date hereof. In each case of payment by promissory note
except one, the investor paid the par value in cash. The one investor
subsequently paid the promissory note in full. The sale and issuance of the
Units was exempt from the registration provisions of the Securities Act of
1933,as amended (the"Act"), pursuant to Section 4(2) thereof.

From October 1, 2001 to December 31, 2001,previously issued warrants to
purchase 2,462,500 shares of common stock were exercised via a cashless
exercise resulting in the issuance of 1,104,815 shares of common stock. The
issuance of the shares upon exercise of such warrants was exempt from the
registration provisions of the Act pursuant to Section 4(2) thereof.

On October 30, 2001, we issued and sold 1,000,000 shares of our common stock
to one accredited investor in exchange for $2 million. The purchase price was
$2.00 per share, of which $10,000 was payable in cash and $1,990,000 was payable
in the form of a promissory note, payable at the earlier to occur of (i) six
months after the registration statement covering the shares offered hereby is
declared effective or (ii) twelve months from the date of the purchase
agreement. We also agreed to issue up to 500,000 warrants to purchase our
common stock to the investor in the event it resells the shares at a purchase
price of at least $2 per share. These warrants are exercisable for one year at
an exercise price of $2 per share. The sale and issuance of such securities was
exempt from the registration provisions of the Act, as amended, pursuant to
Section 4(2) thereof.

From July 1, 2001 to September 30, 2001, we issued and sold 150,000 Units at a
price of $2.00 per unit for an aggregate of $300,000. Each Unit consisted of one
share of common stock and one warrant to purchase one share of common stock at a
price of $2.00. No general forms of advertising were used in connection with
this issuance of the Units. No underwriters were used in connection with the
issuance of the Units and no commissions were paid to any person. The offer and
sale was made to 2 accredited investors. The sale and issuance of Units was
exempt from the registration provisions of the Act pursuant to Section 4(2)
thereof.

From April 1, 2001 to June 30, 2001, previously issued warrants were exercised
at a price of $2.00 per share for an aggregate of $44,362. The warrant exercise
resulted in the issuance of 22,181 shares of common stock. The share issuance
upon warrant exercise was exempt from the registration provisions of the Act
pursuant to Section 4(2) thereof.

From April 1, 2001 to June 30, 2001, we issued and sold 350,000 Units at a
price of $2.00 per unit for an aggregate of $700,000. Each Unit consisted of one
share of common stock and one warrant to purchase one share of common stock at a
price of $2.00. No general forms of advertising were used in connection with
this issuance of the Units. No underwriters were used in connection with the
issuance of the Units and no commissions were paid to any person. The offer and
sale was made to 3 accredited investors. The sale and issuance of Units was
exempt from the registration provisions of the Act pursuant to Section 4(2)
thereof.

On June 11, 2001 we issued 10,000 shares of its common stock to one entity in
partial consideration of certain services including consulting, administrative
and corporate structuring. Such investor was prior to the issuances of the
shares, fully informed about our company, including its business, financial
affairs and other matters. The share issuance was exempt from the registration
provisions of the Act pursuant to section 4(2) thereof.

From January 1, 2001 to March 31, 2001, previously issued warrants were
exercised at a price of $2.00 per share for an aggregate of $66,542. The warrant
exercise resulted in the issuance of 33,271 shares of common stock. The share
issuance

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upon warrant exercise was exempt from the registration provisions of the Act
pursuant to Section 4(2) thereof.

From January 1, 2001 to March 31, 2001, we issued 50,000 Units at a price of
$2.00 per Unit for an aggregate of $100,000. Each Unit consisted of one share of
common stock and one warrant to purchase once share of common stock at a price
of $2.00. No general forms of advertising were used in connection with this
issuance of the Units. No underwriters were used in connection with the issuance
of the Units and no commissions were paid to any person. The offset and sale was
made to 1 accredited investor. The sale and issuance of Units was exempt from
the registration provisions of the Act pursuant to Section 4(2) thereof.

From October 22, 2000 to December 31, 2000, we issued and sold 444,750 Units,
priced at $2.00 per Unit, for a total of $889,500. Each Unit consisted of one
share of common stock and one warrant to purchase one share of common stock at
an exercise price of $2.00. No underwriting discounts or commissions were paid
to any person. The offer and sale of Units was made to approximately 13 persons
all of whom were either affiliates, associates or temporary insiders. The sale
and issuance of such Units was exempt from the registration provisions of the
Act pursuant to Section 4(2) thereof.

In June 2000, we issued, in connection with the merger agreement, warrants to
purchase 271,719 shares of our common stock at an exercise price of $2.70 per
share in exchange for warrants to purchase 147,000 shares of Logical Imaging
Solutions, Inc. common stock at an exercise price of $5.00. The issuance of
such warrants was exempt from the registration provisions of the Act pursuant to
Section 4(2) thereof.

In June 2000, Color Imaging, Inc. (formerly known as Advatex Associates, Inc.)
entered into a merger agreement and plan of reorganization whereby it acquired
two wholly owned subsidiaries. In connection with the merger agreement, we
issued 3,000,000 shares of our common stock to the stockholders of Color Image,
Inc. in exchange for 200,000 shares of Color Image common stock and 3,000,000
shares of our common stock to the stockholders of Logical Imaging Solutions,
Inc. in exchange for 1,622,999 shares of common stock of Logical Imaging
Solutions, Inc. to a total of 55 persons. The issuance of our common stock in
connection with these transactions was exempt from the registration provisions
of the Act pursuant to Section 4(2) thereof.

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ITEM 27. EXHIBITS

Exhibit No. Description
----------- -----------

2.1 Merger Agreement and Plan of Reorganization dated May 16, 2000,
by and between Advatex Associates, Inc., Logical Acquisition
Corp., Color Acquisition Corp., Logical Imaging Solutions, Inc.,
and Color Image, Inc., contained in the Company's Form 8-K filed
on July 17, 2000

2.2 Amendment No. 1 to the Merger Agreement and Plan of
Reorganization dated June 15, 2000, contained in the Company's
Form 8-K filed on July 17, 2000

2.3 Amendment No. 2 to the Merger Agreement and Plan of
Reorganization dated June 26, 2000, contained in the Company's
Form 8-K filed on July 17, 2000

3.1 Certificate of Incorporation, as amended contained in the
Company's Form 10-KSB filed on March 30, 2001.

3.2 Bylaws contained in the Company's Form 10-KSB filed on March 30,
2001.

4.1* Stock Purchase Agreement between the Company and Wall Street
Consulting Corp. dated October 30, 2001

4.2* Promissory Note of Wall Street Consulting Corp. dated October 30,
2001

4.3* Form of Warrant issued to Selling Stockholders

4.4* Loan and Security Agreement between the Company and Southtrust
Bank dated May 5, 2000

4.5* Amendment of Loan Documents between the Company and SouthTrust
Bank dated August 30, 2000

4.6* Second Amendment of Loan Documents between the Company and
SouthTrust Bank dated November 30, 2000

4.7* Third Amendment of Loan Documents between the Company and
SouthTrust Bank dated June 30, 2001

4.8* Fourth Amendment of Loan Documents between the Company and
SouthTrust Bank dated November 1, 2001

4.9* Fifth Amendment of Loan Documents between the Company and
SouthTrust Bank dated December 31, 2001

4.10* $500,000 Line of Credit Promissory Note issued to Southtrust
Bank dated May 5, 2000

4.11* $500,000 Amended and Restated Line of Credit Promissory Note
issued to Southtrust Bank dated August 30, 2000

4.12* $500,000 Revolving Note Modification Agreement dated November
30, 2000

4.13* $500,000 Second Revolving Note Modification Agreement dated July
5, 2001

4.14* $1,500,000 Revolving Note between the Company and SouthTrust
Bank dated June 24, 1999

4.15* $1,500,000 Revolving Note Modification Agreement between the
Company and SouthTrust Bank dated May 5, 2000

4.16* $1,500,000 Second Revolving Note Modification Agreement between
the Company and SouthTrust Bank dated August 30, 2000

4.17* $1,500,000 Third Revolving Note Modification Agreement between
the Company and SouthTrust Bank dated November 30, 2000

4.18* $1,500,000 Fourth Revolving Note Modification Agreement between
the Company and SouthTrust Bank dated July 5, 2001

4.19* $2,500,000 Fifth Revolving Note Modification Agreement between
the Company and SouthTrust Bank dated December 31, 2001

4.20* $1,752,000 Installment Note between the Company and SouthTrust
Bank dated June 24, 1999

4.21* $1,752,000 Term Loan Documents Modification Agreement between the
Company and SouthTrust Bank dated August 30, 2000

4.22* SouthTrust Bank waiver letter dated March 26, 2001

4.23* SouthTrust Bank waiver letter dated May 8, 2001

4.24* SouthTrust Bank waiver letter dated August 13, 2001

4.25* SouthTrust Bank waiver letter dated October 31, 2001

4.26* Development Authority of Gwinnett County, Georgia Industrial
Development Trust Indenture dated June 1, 1999

4.27* Loan Agreement between the Company, Kings Brothers LLC and the
Development Authority of Gwinnett County, Georgia dated June 1,
1999

4.28* Joint Debtor Agreement dated June 28, 2000 by and among Color
Image, Inc., Kings Brothers, LLC, Dr. Sueling Wang, Jui-Chi Wang,
Jui-Kung Wang, and Jui-Hung Wang

4.29* First Amendment to Joint Debtor Agreement dated January 1, 2001
by and among the Company, Kings Brothers, LLC, Dr. Sueling Wang,
Jui-Chi Wang, Jui-Kung Wang, and Jui-Hung Wang

4.30* Master Security Agreement between the Company and General
Electric Capital Corporation dated November 30, 2000

4.31* Promissory Note issued to General Electric Capital Corporation
dated November 30, 2000

4.32* $200,000 Promissory Note between the Company and Kings Brothers
LLC dated November 19, 2001

5* Opinion of Richman, Mann, Chizever, Phillips & Duboff

10.1* Employment Agreement between the Company and Michael W. Brennan
dated June 28, 2000

10.2* Employment Agreement between the Company and Dr. Sueling Wang
dated June 28, 2000

10.3* Employment Agreement between the Company and Morris E. Van
Asperen dated June 28, 2000

II-4

10.4* Employment Agreement between the Company and Charles R. Allison
dated June 30, 2000

10.5* Lease Agreement between the Company and Kings Brothers LLC dated
April 1, 1999

10.6* Amendment No. 1 to Lease Agreement between the Company and Kings
Brothers LLC dated April 1, 1999

21.1 Logical Imaging Solutions, Inc., a California corporation

23.1* Consent of Richman, Mann, Chizever, Phillips & Duboff. (included

in Exhibit 5)

23.2* Consent of Lazar Levine & Felix LLP

99* Report of Grant Thornton LLP for the Company's fiscal year ended
December 31, 1999

* Previously filed

ITEM 28. UNDERTAKINGS

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-
effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.

II-5

(4) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 24, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

II-6

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Norcross, State of Georgia, on this 14th day of
March, 2002.

Color Imaging, Inc.

By: /s/ Michael W. Brennan
-----------------------------------
Michael W. Brennan, Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

/s/ MICHAEL W. BRENNAN Chairman of the Board and Chief March 14, 2002
------------------------------------ Executive Officer (Principal
Michael W. Brennan Executive Officer)

* President, Chief Operating Officer March 14, 2002
------------------------------------ and Vice-Chairman of the Board
Sueling Wang, Ph.D

/s/ MORRIS E. VAN ASPEREN Executive Vice President, Chief March 14, 2002
------------------------------------ Financial Officer (Principal
Morris E. Van Asperen Financial and Accounting Officer),
Secretary and Director

* Vice President and Director March 14, 2002
------------------------------------
Charles R. Allison

* Director March 14, 2002
------------------------------------
Edwin C. St. Amour

* Director March 14, 2002
------------------------------------
Robert L. Langsam

II-7

* Director March 14, 2002
----------------------------------------
Jui-Chi Wang

* Director March 14, 2002
----------------------------------------
Jui-Kung Wang

* Director March 14, 2002
----------------------------------------
Jui-Hung Wang

* Director March 14, 2002
----------------------------------------
Victor A. Hollander

By: /s/ MICHAEL W. BRENNAN
------------------------------------
Attorney-in-fact

/s/ MORRIS VAN ASPEREN
------------------------------------
Attorney-in-fact

II-8