U.S. SECURITIES AND EXCHANGE COMMISSION

                           WASHINGTON, D.C. 20549
                           ----------------------

                                 FORM 10-KSB

[x]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2001

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 for the transition period from _________ to _________

                             Commission File No.

                                   1-13628

                         INTELLIGENT CONTROLS, INC.
               (Name of small business issuer in its charter)

               Maine                                 01-0354107
(State or other jurisdiction of                    (I.R.S. Employer
incorporation or organization)                   Identification No.)

                 74 Industrial Park Road, Saco, Maine 04072
             (Address of principal executive offices) (Zip code)

      Issuer's telephone number:  (207) 283-0156

      Securities registered under Section 12(b) of the Exchange Act:

      Title of each class    Name of each exchange on which registered
      -------------------    -----------------------------------------

      Common Stock,          American Stock Exchange (Emerging Company
      no par value           Marketplace)

Securities registered under Section 12(g) of the Exchange Act:  None

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes  X   No
    ---    ---

Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB.[ ]

Issuer's revenues for its most recent fiscal year: $10,016,934

The aggregate market value of common stock held by non-affiliates as of
February 28, 2002 was $1,353,822.

There were 4,739,399 shares of common stock of the issuer outstanding as of
February 28, 2002.

                     DOCUMENTS INCORPORATED BY REFERENCE

Part III:  Proxy Statement for the Annual Meeting of Shareholders to be held
in June 2002.

Transitional Small Business Disclosure Format:  Yes       No  X
                                                     ---     ---


<PAGE>  1


                                   PART I

ITEM 1.   DESCRIPTION OF BUSINESS.

Intelligent Controls, Inc. ("INCON" or the "Company") is a Maine corporation
founded in 1978.  INCON designs, manufactures, and sells electronic
measurement systems and software to the petroleum and power utility
industries as well as for general level measurement, monitoring and
predictive maintenance applications. The Company's products, including
related applications and communication software, enable the users to detect
leaks, measure liquid levels, and perform general and predictive maintenance
monitoring and protection of equipment, for position indication and as an
early indicator of wear and potential failure. The table below summarizes
sales for these product lines over the past three years.

                          NET SALES BY PRODUCT LINE
                           (Dollars In Thousands)

<TABLE>
<CAPTION>

                                  2001               2000              1999
                             --------------     -------------     --------------


                          <c>        <c>     <c>       <c>     <c>        <c>
Petroleum (FMS):
  OEMs                       $     -      0%    $   12      0%    $   337      3%
  End Users                    7,849     78%     7,429     75%     10,867     84%
                             -------            ------            -------
    Total FMS:                 7,849             7,441             11,204

Power Reliability (PRS):
  Power Utility                2,014     20%     2,260     23%      1,534     12%
  General Instrumentation        154      2%       240      2%        167      1%
                             -------            ------            -------
    Total PRS:                 2,168             2,500              1,701

      TOTAL NET SALES        $10,017    100%    $9,941    100%    $12,905    100%
                             =======            ======            =======

</TABLE>

Fuel Management Systems (FMS) for Petroleum Equipment Markets

INCON manufactures electronic instruments and software for use at retail
gasoline stations, traditional gasoline/convenience stores, and high volume
retailers that also sell gasoline (including certain supermarkets, mass
merchandisers and discount stores).  INCON's FMS products are also utilized
in other locations where petroleum fuels or chemicals are stored in
underground storage tanks ("USTs") and above ground storage tanks ("ASTs"),
including large private fleets, government agencies, municipalities, and
fuel distribution companies. The FMS products include automatic tank gauges
(some with remote communications features), dedicated leak detectors, liquid
level sensors, line leak detectors, user interface software, and various
accessories, all of which can be used to meet UST monitoring regulations
promulgated by the U.S. Environmental Protection Agency (the "EPA"). They
also provide important information for the tank owner to manage fuel
inventories on a real-time basis.  The manufacturing process for these and
other INCON products consists of basic mechanical and electronic assembly,
the embedding of software into the electronics and the duplication of CDs
that include the Company's client/server remote monitoring and polling
software.

INCON's automatic tank gauge ("ATG") systems consist of wall-mounted
electronic consoles, tank-mounted liquid level sensors, leak sensors, user
interface software, remote monitoring and polling software and associated
accessories. The systems provide very accurate measurement of inventory
(gasoline or other liquid) in a UST or AST. INCON tank gauges also perform
leak tests to determine whether product is escaping from the tank. ATG
systems can also monitor a wide variety of sensors which may be located
between the walls of double walled tanks, in sumps, under dispensers, or in
other locations where leaking product might collect.

The Company's electronic line leak detector ("LLD") monitors the pressurized
pipe between a submersible pump (located in the tank) and the dispenser (gas
pump). This product meets pipeline-monitoring requirements imposed by EPA
regulations and is an updated technology that can replace mechanical line
leak detectors. The LLD can interface with an ATG or operate as a stand-
alone device. Since its original 1995 introduction, the LLD product has been
enhanced, and the Company was granted Patent No. 5,918,268 for its
invention. In addition to the ATG

<PAGE>  2


consoles, line leak detectors and liquid level sensors, INCON offers a wide
variety of accessories, software, and leak detection sensors.  These provide
the ability to customize a system for specific customer applications, allow
the system to sense leaks and measure fuel inventory levels in many
different locations, and simplify installation. The Company assembles some
of these products, while others are fabricated by outside contractors to
INCON specifications.

The Company's liquid level sensors are based on magnetostrictive position
measurement technology that is widely proven in the industry.  The
manufacturing of its own probes has given INCON control of product quality
and significantly reduced the overall cost of this component to the Company.
In most cases, each UST or AST requires a liquid level sensor. INCON's ATG
consoles will support from one to eight liquid level sensors.  The average
North American retail gasoline station or gasoline/convenience store has
three USTs, while sites overseas may have five to eight USTs.

In 1998 the Company introduced a new ATG product line, the 1001 and 2001
models, marketed under the Company's Tank Sentinel registered trademark.
They were designed as the new generation product to replace INCON's model
1000 and 2000 series. These units have optional internal fax modem
communications capability and were designed to be easy to use and upgrade,
providing greater flexibility for the operator.  The Company believes they
provide more overall capability than any other tank gauge in their price
range, as well as upgraded display, printer, and keyboard functions.  This
contrasts to some competitive models that cannot be upgraded, or require
very expensive additional modules to accommodate needed features. The 1001
model can accommodate four liquid level sensor inputs and the 2001 model
accommodates eight. The 1001 and 2001 models are designed to be cost-
effective to manufacture and incorporate a large number of common
components. During 2001 on-going improvements have been made to the 1001 and
2001 models including incorporating the capability to monitor cathodic
protection systems installed when underground steel tanks are in use.  The
Company also introduced an AST-specific version of the ATG, designated as
models 504 and 508.  The first model can handle up to four above ground
tanks while the second handles up to eight tanks. As part of this new
offering, the Company incorporated a pressure transducer based liquid level
measurement capability, thus extending the height of tanks it could measure
to fifty feet.

Starting in 1998, the Company has been actively developing software product
capability that can be offered alone, or in combination with INCON hardware
products.  This capability will allow probe users to efficiently integrate
an overall system using equipment and software modules, which can interface
with their established or developing business information systems. This
software, originally called System Sentinel Version 1.0, was released
starting in February 1999 followed by System Sentinel Version 2.0 released
in November 1999 and Version 2.6 released in October 2001. As part of the
October 2001 release, System Sentinel incorporated improved features related
to inventory forecasting and sales tracking. In October 2000, the Company
introduced System Sentinel AnyWare, an Internet version of Windows NT based
System Sentinel. This innovative package enables a geographically diverse
and mobile organization to manage fuel inventory and compliance through any
combination of pagers, laptop PCs and personal digital assistants ("PDAs").
During 2001, System Sentinel AnyWare was deployed at several large users as
an upgrade and enhancement to the Windows NT based System Sentinel.  The
Company intends to offer both versions of their application software
package, since they target different size users with varying degrees of
sophistication and computer network infrastructure.

In late 1999 the Company introduced a power conditioning product line, Power
Sentinel. This device is manufactured for the Company by an outside supplier
and provides surge protection and noise reduction for the electrical
circuits.  The Company believes that as more sophisticated electronics are
installed in petroleum retailing sites, such TVSS (transient voltage surge
suppression) devices will be installed more frequently and, in some cases,
be a necessary condition for equipment manufacturer warranties.

The demand for ATGs and LLDs domestically had been strong in 1997, 1998 and
early 1999, bolstered by EPA and state regulations that require owners of
USTs to monitor tanks and related lines for leaks.  In addition to more
sophisticated and automated techniques (such as automatic tank gauging), the
EPA regulations permit the use of inventory reconciliation and manual (dip
stick) testing as a means of compliance. Although less expensive, these
methods do not provide for accurate inventory measurement and control and
are also subject to personnel variables affecting manual stick readings and
data recording.  INCON's management believes that UST owners will continue
to automate both inventory and leak detection systems to ensure accuracy and
reduce dependence on trained personnel.  Moreover, leak detection
requirements may become more stringent in the future, for example, due to
heightened concerns about MTBE contamination of groundwater.  After December
22, 1998, inventory


<PAGE>  3


reconciliation and manual testing is permissible only (i) during the first
ten years after a tank is newly installed or upgraded in accordance with EPA
performance standards or (ii) in the case of small tanks having less than
550 gallons of capacity.

All tanks had to meet EPA performance standards by December 1998, and
management believes this strengthened the market for ATGs and LLDs during
early 1999 as a certain amount of carryover activity took place.  New
gasoline and convenience store expansion continued in 1999 and part of 2000,
due to growth in the economy and upgrading of acquired sites by larger, more
aggressive convenience store marketers. Construction demand was also
favorably affected by non-traditional retailers, such as supermarkets and
wholesale clubs, entering the retail petroleum market. However, countering
this during 2001 and part of 2000 was a general slowdown in activity by both
major oil companies and convenience store chains, in line with a weakening
overall domestic economy.

Internationally, many countries follow the lead of the United States, in
terms of both environmental regulations and measurement technologies.  The
demand for ATGs and LLDs is expected to continue to grow in other parts of
the world.

Power Reliability Systems (PRS) for Power Utility and General Industrial
Markets

INCON's Power Utility Instrument lines consist of electronic instruments for
measurement and control in the power utility and general industrial markets.
Typical customers include large publicly owned electric power utilities,
municipal utilities, OEMs and manufacturing customers.

Historically, regulation has insulated utilities in the United States and
other developed countries from competitive market forces, creating
monopolies that permitted utilities to remain profitable despite their use
of inefficient or outdated technology. In the deregulated environment being
adopted across the United States, consumers will have greater freedom to
choose electricity suppliers, just as they now can choose among many long
distance telephone service providers.  This will place significant pressure
on utility company management to reduce costs and increase system
efficiency. The Company believes these factors will encourage the use of
products that help utilities operate more efficiently and perform predictive
maintenance in advance of system failures.

INCON's power utility product line includes three instruments, the Model
1250, the Optimizer and the CCSM (control circuit status monitor) offering
automated control and data collection for electrical substations. Two other
power utility products, the Model 1255 and Model 1810, are offered for use
in automating hydroelectric generating plants. The Model 1250 Tap Position
Monitor is used on large high-voltage transformers. These transformers are
typically equipped with "tap changers" that regulate the voltage on the
power transmission and distribution grid. The voltage is adjusted by
switching to any one of approximately 32 "voltage taps." The Model 1250
allows utilities to use their system control and data acquisition system
("SCADA") to monitor from a central station which tap has been selected.
Utilities can then establish interactive control over tap changing through
the system and can adjust and regulate the voltage being produced by the
transformer. This product is also sold directly to transformer manufacturers
and is mounted on many new units sold. During 2000 the Company received
three orders in excess of 100 units each that were part of utility upgrade
and infra-structure improvement programs.  No similar large orders were
received in 2001.

The Optimizer is a microprocessor-based monitoring device used to predict
life and schedule preventive maintenance for high-voltage circuit breakers
used by electric utilities. It measures the energy dissipated by the
contacts in large circuit breakers as they operate. The Optimizer product
can help power utilities reduce the cost of breaker maintenance and avoid
service interruptions.  The product was originally released in 1996 and a
second- generation version, the Optimizer+, was introduced in September
1998. This product continues to be evaluated by utilities, and there were a
number of program orders placed during 2000 to add Optimizer+ devices to
various critical circuit breakers. Program orders continued to be placed in
2001, but the adoption rate for continuous circuit breaker monitoring has
been slow.

The CCSM was developed and introduced in 2001 at the specific request of a
large electric utility located in the southeastern part of the US.  Its
purpose is to validate the condition of circuit breakers and confirm that,
in the event of a fault, the breaker is capable of opening.  Trial
installations were completed in 2001, although no program purchases were
made.  The Company has promoted this limited feature breaker monitoring
product to other electric utilities and the concept has been well received
on a trial basis.


<PAGE>  4


During 2001 the Company also undertook a paid design and supply contract
from a large customer to develop a specific electronic instrument for
incorporation into the customers system on an OEM basis.  The design was
completed and was under beta test at the end of the year.  Upon acceptance
by the customer, the Company has an agreement to supply a minimum of several
hundred units per year over a five year period.

Software/Systems Products

The petroleum market sector continues to bring electronic data interchange
and the power of the computer and networking to bear on its business
activities. Remote communication, via modem or RF, is becoming an important
capability as multiple-site enterprises seek to gather information and
control their activities in a standardized and centralized way.  Petroleum
product marketers, gasoline retailers, gas/convenience store operators, and
fuel wholesalers desire automated information and the ability to monitor and
plan their activities centrally with less dependence on local management and
employees.  Modem communications as well as local/host computer systems
allow some companies to manage inventories of liquid products, automatically
order new product, and comply with environmental monitoring and reporting
requirements.  In order to meet competitive business pressures as well as
regulatory requirements to monitor leaks, users are pushing this market
sector towards greater demand for multi-site systems.

INCON is actively providing software and systems capability to complement
its measurement and leak detection instruments. In 2000 the Company was
successful in working with a major oil company, with a large number of
retail petroleum sites, to supply a customized software and communication
system which linked environmental and business monitoring and reporting
through the customer's proprietary satellite communications network.  The
implementation of this system was completed at 750 of the major oil
company's sites in 2001. As a result of this successful experience and to
take advantage of the market trends, INCON began the development of System
Sentinel AnyWare, an Internet version of the Windows NT based System
Sentinel. This innovative software, which also allows users to employ
conventional browser technology to view their information, was debuted at
the National Association of Convenience Store Exhibition held in October
2000. During 2001, System Sentinel AnyWare was deployed at several large
users, including the major oil company noted above, as an upgrade and
enhancement to the Windows NT based System Sentinel. In October 2001,
Version 2.6 of System Sentinel was introduced and incorporated improved
features related to inventory forecasting and sales tracking. The Company
intends to offer both versions, Windows NT and Internet, of its System
Sentinel application software, since each targets different size users with
varying degrees of sophistication and computer network infrastructure.

Competition

The petroleum equipment market is very competitive, both for instrumentation
and software/system products. The Company's products compete with similar
offerings from other manufacturers in the industry. In addition to INCON,
there are at least three other meaningful suppliers of automatic tank gauge
systems, one of which (a division of a large public company) is believed to
have approximately a 65% market share. These suppliers, because they are
larger or part of a larger corporation, have potentially greater resources
than the Company. The number of minor suppliers of ATGs has actually
declined, due primarily to consolidation within the petroleum equipment
industry.  The Company believes it is the number two supplier in the market.
The market leader continues to offer customers the option of contracting out
some or all of their measurement and compliance management activities. In
such a case, a monthly service fee is charged and the products can be
installed and leased to the site owner.  Based on observations to date,
INCON's management believes that this concept is slowly being adopted, and
may be beneficial to certain types of UST and ATG owners and operators.
Although the Company has not provided this outsource service directly, some
of its customers are active in this area and the Company has and will
continue to benefit from this trend through increased hardware,
communications, and software sales.

INCON has a solid competitive position in the power utility market sector
for its particular product niche. The Company is the only supplier of
programmable tap position monitoring systems in the United States, and
competes only with older technologies. The competing products tend to be
lower in price, but are more difficult to install, are not programmable, and
have more parts that are subject to wear and replacement. There are many
types of transformers and tap changers in service in the United States today
that operate with the Model 1250, and the 1250's programmability gives it a
major advantage over non-programmable products.


<PAGE>  5


INCON owns exclusive rights to the U.S. patent on certain Optimizer
technology. Interest in the concept of circuit breaker monitoring has
resulted in several competing models being offered by other companies. These
competitive products, however, tend to be more expensive.

During 1999, GE Power Systems acquired two small companies that are
competitors to INCON in the circuit breaker monitoring product area. GE has
resources that are considerably greater than those of the Company.
Management believes that these acquisitions are evidence that the demand for
circuit breaker monitors is getting stronger and that electric utilities
will place increased emphasis on sub-station automation and reliability in
the future.

Customers

INCON's customer base remains highly diversified, with no one customer
accounting for more than 10% of the Company's business in 2001.  In the
petroleum equipment area the Company's customers are principally petroleum
equipment distributors that purchase products from INCON and are responsible
for installation and after-sales service.  These distributors range from
very large, regionally active organizations, to small organizations that
focus on a narrow customer group or geography.  Distributors usually handle
other complementary products sold to the same end-use customer base.
Examples of such products are gasoline dispensers, point-of-sale ("POS")
systems, vapor recovery systems, lighting, and canopies. Often the Company's
products are specified by end-users that choose to standardize their
equipment for all their locations. The distributors and end-use customers
are serviced by INCON's factory-based national selling and technical service
organization as well as by regionally based manufacturer's representatives.
In addition, the Company has a number of large direct national accounts.

In the power utility and predictive maintenance instruments product line,
INCON's customers consist of original equipment manufacturers ("OEMs") and
various electric utilities or large private system operators. These
customers are serviced by the Company's factory-based national selling
organization as well as by regionally based manufacturer's representatives.

International sales are normally made to distributors, which are then
responsible for importing the product to their respective countries, as well
as sales, installation, and after-sales service.

Intellectual Property

INCON markets its petroleum equipment products under the registered
trademark "Tank Sentinel." INCON holds a patent on its LLD (line leak
detector) product and has exclusive rights to certain Optimizer technology.
The Company has copyrights on certain software products; other key software
is highly technical and difficult to copy.

The Company has numerous trade secrets with regard to methods of detecting
leaks in tanks and pipelines. Among these are INCON's volumetric tank leak
test algorithm, its continuous automatic leak detection algorithm, and its
method of detecting leaks in pressurized piping. INCON's process for
producing the magnetostrictive wire, required by the liquid level sensor, is
a Company trade secret.

General

As of March 1, 2002 the Company employed 63 people, including 16 in sales,
marketing and technical service, 11 in research and product development, 8
in administration, and 28 in manufacturing operations.

In most of its products, INCON tries to utilize off-the-shelf electronic
components that are readily available from more than one distributor. There
are, however, some products that are designed around a particular
manufacturer, such as in the use of microprocessor chips and compact
printers.  If one of these manufacturers were suddenly to cease production
of a key component, the Company might need to find an alternate source or
redesign the product. Stainless steel and brass are major components in two
of the Company's products. Both of these commodities can fluctuate in price
due to supply and demand, thereby affecting the Company's future costs.

INCON continuously invests in the development of new products and software
as well as adapting existing products to new applications. During 1999, 2000
and 2001 the expenditures relating to the development of new products and
the improvement of existing products were approximately $1,188,000,
$1,192,000, and 1,255,000 respectively.  These research and product
development expenditures represent 9% to 13% of sales.


<PAGE>  6


Government Regulation/Other Certifications

The automatic tank gauge product line, used in gasoline stations and
convenience/gasoline stores, requires listing by Underwriters Laboratory
(UL) in the United States and by the Canadian Standards Association (CSA) in
Canada.  All major portions of the Tank Sentinel ATG product line, including
line leak detectors, are presently listed by UL and CSA.

The Tank Sentinel ATG products perform leak detection in accordance with EPA
regulation 40 CFR Part 280, Subpart D. To confirm compliance with the
federal and state regulations for tank tightness tests, the ATG system must
be tested by an independent laboratory in accordance with EPA/530/UST-90/006
and certified to meet the EPA performance requirements. The INCON TS-1000
system, TS-1001 system, TS-2000 system, TS-2001 system, and TS-LLD have been
tested by Ken Wilcox Associates, Inc., Blue Springs, Missouri and are
certified.

The Tank Sentinel ATG products also meet the much more stringent standards
for testing tank tightness.  To prove compliance with the federal and state
regulations for tank tightness test, the ATG system must be tested by an
independent laboratory in accordance with EPA/530/UST-90/006 and certified
to meet the performance requirements. The INCON TS-1000/1001 and TS-
2000/2001 systems have been tested and certified by Ken Wilcox Associates,
Inc.. In Canada the TS-1000/1001 system, TS-2000/2001 system, and TS-LLD are
certified by Underwriters Laboratory of Canada in accordance with ULC/ORD-
C58.12-1992, "Leak Detection Devices (Volumetric Type) For Underground
Flammable Liquid Storage Tanks." This standard is very similar to
EPA/530/UST-90/006.

With regard to INCON's own operations, the Company's cost of compliance with
federal, state, and local environmental law does not materially affect the
Company's financial condition.

ITEM 2.   DESCRIPTION OF PROPERTY.

The Company leases two modern 13,000 square foot facilities in an industrial
park in Saco, Maine.  One building serves as executive offices; the other as
manufacturing and quality control.  The executive office building is leased
from a corporation owned in part by two principal INCON shareholders, Alan
and Paul Lukas.  The other building is leased from an unrelated third party.
The leases on these buildings expire in October 2003; and the executive
office building includes an option to purchase at the then fair market
value, subject to certain minimum purchase price requirements.

The Company maintains no other direct or indirect investments in real estate
and has no current intentions to do so.

ITEM 3.   LEGAL PROCEEDINGS.

In April 2000 the Company commenced an arbitration against Practical Tank
Management (PTM) and a related-party guarantor of payment (FFP Partners, LP)
to collect approximately $62,193, as the unpaid balance for INCON probes and
other automatic tank gauge equipment sold to PTM.  As part of the
arbitration proceeding, PTM and related entities brought various claims
against the Company for more than $15,000,000 in alleged damages.  In
February 2002, the arbitration panel handed down its decision in this
matter.  The arbitrators awarded the sum of $446,402 against the Company,
plus prejudgment interest of $55,893.  By its terms, the arbitrators' ruling
extinguishes all other claims of PTM and its affiliates and business allies.
The Company accrued $502,295 in 2001 to recognize the cost of this award.
This amount will be paid in 2002.

In April 1999 the Company received notice of the filing of an action
entitled Omega Environmental, Inc. v. INCON International, Inc. in U.S.
Bankruptcy Court for the Western District of Washington.  The action was
brought for avoidance and recovery of approximately $60,000 of payments that
Omega had made to the Company for INCON products, as alleged preferential
transfers.  The Company is contesting the validity of this claim.

In June 1999 the owner and operator of a convenience/gasoline store (Q&E
LLC) filed a complaint in Illinois Circuit Court (Sangamon County) against
INCON and Pemco Service Co., seeking damages arising from a gasoline spill


<PAGE>  7


and the alleged failure of an electronic line leak detector manufactured by
INCON and installed by Pemco.  The complaint seeks just over $1,000,000 in
damages.  INCON's insurance carrier has assumed defense of the matter, which
is still in the pre-trial phase.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to the shareholders of the Company during the
fourth quarter of 2001.


<PAGE>  8


                                   PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

On February 15, 1995 the Company's common stock was accepted for listing and
began trading on the Emerging Company Marketplace of the American Stock
Exchange.  The trading symbol for INCON common stock is ITC (sometimes shown
as ITC.EC).

The high-low prices for the Company's stock for the last four quarters were
as follows:

<TABLE>
<CAPTION>

                                           High     Low
                                           ----     ---

      
                                 <c>      <c>
      Quarter Ended March 31, 2001        $1.50    $1.25

      Quarter Ended June 30, 2001         $1.35    $1.00

      Quarter Ended September 30, 2001    $1.35    $1.00

      Quarter Ended December 31, 2001     $1.12    $0.75

</TABLE>

As of March 1, 2002 the Company had 319 shareholders of record.

It has been INCON's policy to reinvest all earnings in the business, and the
Company has never paid dividends on its common stock.  Also, under credit
agreements with its bank, the Company may not declare or pay dividends to
shareholders without the prior consent of the bank.


ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

Results of Operations
---------------------

2001 Compared to 2000

Net sales for 2001 were $10.0 million, up slightly from $9.9 million for
2000.  There was an overall increase in the Company's Fuel Management
Systems ("FMS") products, offset by a decline in sales of the Company's
Power Reliability Systems ("PRS") products.

FMS sales revenue grew 5.5%, from $7.4 million in 2000 to $7.8 million in
2001.  The Company has seen growing success marketing to large end-use
customers such as convenience store chains and supermarkets that sell
gasoline.  These customers represent an increasingly larger part of the
Company's FMS sales revenue as more and more designate INCON as an approved
supplier.

PRS sales revenues declined 13.3%, from $2.5 million in 2000 to $2.2 million
in 2001.  Although basic demand for PRS was similar to the prior year, the
Company did not ship any large orders in 2001.  In 2000 the Company shipped
three large orders totaling $250,000. The Company believes that expansion of
distribution substations has slowed, which adversely affected year 2001
prospects of receiving large orders for this type of equipment.

Gross margins increased from 51.8% in 2000 to 54.3% in 2001.  Strong gross
margins are the result of the Company's continued efforts to control
overhead spending and align direct labor expenses to current production
volumes.  The two primary areas of savings were in reduced salary expense
for direct and indirect production departments and reduced warranty costs.

Total operating expenses increased 30% to $6.1 million in 2001, as compared
to $4.7 million in 2000.  The increase was in large part due to
approximately $483,000 in legal expenses and a $502,000 charge from an
arbitration award to PTM.  There also was a one-time $150,000 pre-tax charge
for salary and benefits continuation under the employment contract of an
executive officer who left the Company in September 2001.  In addition, the
Company has continued to invest in sales and marketing as well as research
and development, resulting in an overall increase in spending for these
categories of $265,000, or 7%.


<PAGE>  9


The Company had an operating loss of ($661,553), or (6.6%) of sales, for
2001, compared to operating income of $461,184, or 4.6% of sales, in 2000.
The decline in operating income was due to the increase in operating
expenses, in large part due to the nonrecurring PTM award and associated
legal expense, and was partially offset by increased gross margin on
slightly higher sales.

The net loss was ($281,645) in 2001 compared to net income of $435,271 in
2000, and included $209,000 of interest income (net), compared to $293,000
in 2000.

2000 Compared to 1999

Net sales for 2000 were $9.9 million, down from $12.9 million for fiscal
year 1999.  The $3 million, or 23%, decline was due to a continued slowdown
in sales of the Company's FMS products.  The decline was partially offset by
an increase in the Company's PRS sales revenue.

FMS sales revenue declined 34%, from $11.2 million in 1999 to $7.4 million
in 2000.  The overall market for petroleum equipment was weak throughout the
year, due to customer capital constraints caused by increased fuel inventory
costs and uncertain retail fuel price volatility.  The Company's FMS sales
were slightly stronger in the second half of 2000.  Petroleum equipment
spending by the major oil companies was adversely affected by impending
mergers and uncertainty over which sites might have to be divested as a
condition of government approval for those mergers.

PRS revenues grew by 47% to $2.5 million in 2000, up from sales of $1.7
million in 1999.  This growth in sales was primarily due to increased
marketing and sales efforts by the Company and increased spending for
capital equipment by utilities.  During 2000 the Company shipped three large
orders to that represented approximately $350,000 in revenue.

Despite declines in revenue, gross margins in 2000 were equal to 1999 gross
margins of 52.0%.  The strong margin performance was primarily due to a more
efficient manufacturing cost structure, reduced warranty spending, and a
favorable product mix.  Throughout 2000 the Company continued to carefully
monitor manufacturing expenditures to keep them consistent with current
sales levels.

Total operating expenses declined by $1 million from $5.7 million in 1999 to
$4.7 million in 2000.  This reduction in spending was undertaken to align
spending with the lower sales revenues experienced in 2000.  Approximately
$320,000 of the decline was due to lower sales commissions as a result of
revenues, $90,000 was due to reduced warranty service expense, and the
remainder was attributable to various reductions in selling, general and
administrative costs.  Throughout the year the Company continued to invest
in research & development at about the same level as 1999.

Operating income for 2000 was down almost $600,000 from 1999, due to the
decline in sales.  Operating income as a percent of sales fell from 8.2%, or
$1,057,000 in 1999 to 4.6%, or $461,000 in 2000.  Although sales were lower,
continued strong margins and a reduction in operating and warranty service
expenses allowed the Company to remain profitable.

Net income for 2000 was $435,000, compared to $798,000 in 1999, and included
$293,000 in interest income (net) versus $330,000 in 1999.

Liquidity and Capital Resources
-------------------------------

The Company did not utilize its $3.5 million working capital line of credit
in 2000 or 2001.  All operations were funded with the Company's internally
generated cash.  As of December 31, 2001 the Company had $3.5 million
available to be borrowed on its working capital line of credit, as well as a
cash balance of $5,329,000.

Total 2001 year-end inventories were valued at $1,380,000 up from
$1,125,000, due to inventories associated with the phase-in of improved
product designs.  Accounts receivable decreased to $1,564,000 at 2001 year-
end, down from  $1,755,000 at year-end 2000, due to reduced days-sales-
outstanding resulting from the collection of certain specific extended term
deals.

The Company has a $1 million equipment revolver, which remains fully
available.

The Company believes that current funds and existing lines of credit are
adequate to fund existing operations for the foreseeable future.


<PAGE> 10


Forward-Looking Statements
--------------------------

The "Management's Discussion and Analysis," "Description of Business" and
"Description of Property" sections of this report contain forward-looking
statements, as defined in Section 21E of the Securities Exchange Act of
1934.  Examples of such statements in this report include those relating to
estimates of future market demand and trends regarding Fuel Management
Systems and Power Reliability Systems products, intended future product
offerings, and future adequacy of the Company's capital resources.  The
Company cautions investors that numerous factors could cause actual results
and business conditions to differ materially from those reflected in such
forward-looking statements including, but not limited to, the following:
unanticipated shifts in market demand for ATG and LLD products or Power
Reliability Systems products, owing to competition, regulatory changes, or
changes in the overall economy; competitive pressures on sales margins for
INCON products; unanticipated warranty costs from existing products or newly
introduced products; and risks attendant to changes in the Company's
business from future product developments, marketing and sales efforts, or
corporate transactions.

ITEM 7.   FINANCIAL STATEMENTS.

Audited financial statements of the Company appear after the signature page
below, and are incorporated herein by reference.

ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

As previously reported, the Company as of April 13, 2001, hired Baker, Newman
& Noyes, LLC as its independent auditors for the fiscal year ending
December 31, 2001.


<PAGE> 11


                                  PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

Certain information with respect to the executive officers of the Company is
set forth below.  All other information required by this Item is
incorporated herein by reference to the Company's definitive proxy statement
for the Annual Meeting of Shareholders, to be held in June 2002.

Under the bylaws of the Company, all officers hold office until the next
Annual Meeting of Directors and until their successors are chosen and have
qualified, or until their earlier resignation or removal from office.

There are no family relationships among any executive officers or directors.

The executive officers of the Company are as follows:

<TABLE>
<CAPTION>

Name                 Age    Positions with Company
----                 ---    ----------------------


                   <c>   <c>
Roger E. Brooks       57    Chief Executive Officer and Director

Andrew B. Clement     32    Controller and Assistant Treasurer

Enrique Sales         38    Vice President Sales & Marketing

Dean Richards         53    Vice President Manufacturing

</TABLE>

Roger E. Brooks served as a consultant to INCON from February 5, 1998 until
he became President/CEO and a Director on May 1, 1998.  Previously he was
President/CEO and a Director of Dynisco, Inc. (1984-1996), a Director,
Executive Vice President/Chief Operating Officer and VP Marketing & Sales
for Thermo Electric Co. Inc. (1977-1984), and Marketing Manager for General
Cable Corporation (1970-1977).  Currently he is a Director of Moldflow
Corporation.

Andrew B. Clement has been with INCON since November of 1997, in the
position of Controller.  Previously he held positions as Controller at EDM,
Inc. (1997), Accountant at Portland Pipe Line Corp. (1996) and Cost
Accountant at Aero Tech Manufacturing, Inc. (1992-1995).

Enrique (Rick) Sales joined INCON in December 1998 as the Company's Vice
President of Sales & Marketing. Previously, he was Director of Sales &
Marketing for LMI, Inc. (1998), Vice President of Sales & Marketing for Lan
Technologies, Inc. (1992-1998), Sales Manager, Latin America and Product
Manager for BASF Corporation (1987-1989), and Sales Representative for
International Paper, Co. (1985-1987).  He is a Trustee of the Renssalaer
Alumni Association.

Dean Richards joined INCON in May 1999 as Vice President of Manufacturing.
Previously he held positions as Director of Manufacturing, Measurement &
Control Division of Analogic Corporation (1996-1999), Vice President of
Operations, a/d/s/ Inc. (1993-1996), Director of Manufacturing Industrial
Technology Group, Analogic Corporation (1986-1993), Director of
Manufacturing, Vicor Corporation (1983-1986), Operations Manager, Data
Precision Corporation (1981-1983), and Operations Manager of Intronics, Inc
(1971-1981).

On September 14, 2001, Alan Lukas left his full-time position as Vice
President Product Development of the Company.  He continues to serve as
Chairman of the Board of Directors of INCON and remains a consultant to the
Company.

ITEM 10.  EXECUTIVE COMPENSATION.

The information required by this Item is incorporated herein by reference to
the Company's definitive proxy statement for the 2002 Annual Meeting of
Shareholders.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information required by this Item is incorporated herein by reference to
the Company's definitive proxy statement for the 2002 Annual Meeting of
Shareholders.


<PAGE> 12


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this Item is incorporated herein by reference to
the Company's definitive proxy statement for the 2002 Annual Meeting of
Shareholders.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

An index of the exhibits filed with this report appears after the financial
statements below, and is incorporated herein by reference.

During the fourth quarter of 2001 the Company filed no reports on Form 8-K.


<PAGE> 13


                                 SIGNATURES

In accordance with Section 13 of the Exchange Act, the Company caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                       INTELLIGENT CONTROLS, INC.

                                       By:  /s Roger E. Brooks
                                            --------------------------------
                                            Roger E. Brooks, President and
                                            Chief Executive Officer
                                            Date:  March 20, 2002

                                       By:  /s Andrew B. Clement
                                            --------------------------------
                                            Andrew B. Clement, Controller
                                            (principal financial officer and
                                            principal accounting officer)
                                            Date:  March 20, 2002

In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Company and in the capacities and on
the dates indicated.


/s  Roger E. Brooks                    Date:  March 20, 2002
---------------------------------
Roger E. Brooks, President, Chief
Executive Officer and Director


/s  Andrew B. Clement                  Date:  March 20, 2002
---------------------------------
Andrew B. Clement, Controller


/s George E. Hissong                   Date:  March 20, 2002
---------------------------------
George E. Hissong, Director


/s  Alan Lukas                         Date:  March 20, 2002
---------------------------------
Alan Lukas, Director


/s Paul  F. Walsh                      Date:  March 20, 2002
---------------------------------
Paul F. Walsh, Director


/s  Charles D. Yie                     Date:  March 20, 2002
---------------------------------
Charles Yie, Director


<PAGE> 14


                        INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Intelligent Controls, Inc.
Saco, Maine


We have audited the accompanying balance sheet of Intelligent Controls, Inc.
as of December 31, 2001, and the related statements of operations,
stockholders' equity and cash flows for the year then ended.  These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our 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
financial statements are free of material misstatement.  An audit 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 financial statements referred to above present
fairly, in all material respects, the financial position of Intelligent
Controls, Inc. as of December 31, 2001, and the results of its operations
and its cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.





Portland, Maine                        Baker Newman & Noyes, LLC
February 14, 2002


<<PAGE>  15


                      REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors and Stockholders of
INTELLIGENT CONTROLS, INC.

In our opinion, the accompanying balance sheet and the related statements
of income, of stockholders' equity, and of cash flows present fairly, in
all material respects, the financial position of Intelligent Controls, Inc.
at December 31, 2000, and the results of its operations and its cash flows
for the year then ended in conformity with accounting principles generally
accepted in the United States of America. These financial statements are
the responsibility of the Company's management; our responsibility is to
express an opinion on the 2000 financial statements based on our audit. We
conducted our audit of these statements in accordance with auditing
standards generally accepted in the United States of America which require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.


PricewaterhouseCoopers LLP
Portland, Maine
February 9, 2001


<PAGE>  16


                         INTELLIGENT CONTROLS, INC.
                               BALANCE SHEETS
                As of December 31, 2001 and December 31, 2000

                           ASSETS (Notes 4 and 5)
                           ----------------------

<TABLE>
<CAPTION>

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


                                                           <c>             <c>
Current Assets:
  Cash and cash equivalents                                   $ 5,329,126     $ 5,182,325
  Accounts receivable, net of allowances of $85,000 in 2001
   and $137,500 in 2000                                         1,564,247       1,755,483
  Inventories (Note 2)                                          1,379,677       1,124,969
  Prepaid expenses and other current assets                       112,722          79,457
  Income taxes receivable                                         118,247               -
  Deferred income taxes (Note 6)                                  433,879         196,574
                                                               --------------------------
      Total current assets                                      8,937,898       8,338,808

Property and equipment, net (Note 3)                              409,275         568,144
Other assets                                                       45,153          40,440
                                                               --------------------------
       Total assets                                            $9,392,326     $ 8,947,392
                                                               ==========================

                    LIABILITIES AND STOCKHOLDERS' EQUITY
                    ------------------------------------

Current Liabilities:
  Accounts payable                                            $   598,289     $   554,745
  Accrued expenses (Notes 9 and 11)                             1,181,493         467,668
                                                               --------------------------

  Current portion of long-term debt (Note 5)                            -          12,535

      Total current liabilities                                 1,779,782       1,034,948

Deferred income taxes (Note 6)                                     10,470          28,725

Commitments and contingencies (Notes 9 and 11)

Stockholders' equity (Note 7):
  Common stock, no par value; 8,000,000 shares authorized,
   5,061,123 shares issued                                      7,758,310       7,670,207
  Retained earnings                                             2,090,900       2,372,545
  Receivable from stockholder (Note 8)                         (1,636,480)     (1,548,377)
  Treasury stock at cost, 321,724 shares                         (610,656)       (610,656)
                                                               --------------------------

      Total stockholders' equity                                7,602,074       7,883,719
                                                               --------------------------

        Total liabilities and stockholders' equity            $ 9,392,326     $ 8,947,392
                                                              ===========================

</TABLE>

The accompanying notes are an integral part of the financial statements


<PAGE>  F-1


                         INTELLIGENT CONTROLS, INC.
                          STATEMENTS OF OPERATIONS
               For the years ended December 31, 2001 and 2000

<TABLE>
<CAPTION>

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


                                               <c>            <c>
Net sales                                         $10,016,934    $9,941,378

Cost of sales                                       4,574,856     4,790,580
                                                  -------------------------

Gross profit                                        5,442,078     5,150,798

Operating expenses:
  Selling, general and administrative (Note 9)      4,346,229     3,497,197
  Research and development                          1,255,107     1,192,417
  Arbitration award (Note 11)                         502,295             -
                                                  -------------------------

                                                    6,103,631     4,689,614
                                                  -------------------------

Operating (loss) income                              (661,553)      461,184

Other income (expense):
  Interest income, net                                208,534       292,633
  Other expense                                       (61,213)      (52,913)
                                                  -------------------------

                                                      147,321       239,720
                                                  -------------------------
(Loss) income before income taxes                    (514,232)      700,904

Income tax (benefit) expense (Note 6)                (232,587)      265,633
                                                  -------------------------

Net (loss) income                                 $  (281,645)   $  435,271
                                                  =========================

Net (loss) income per share basic                 $     (0.06)   $     0.09
Net (loss) income per share diluted               $     (0.06)   $     0.09

Weighted average common shares outstanding          4,739,399     4,739,399
                                                  =========================

Weighted average common and
 common equivalent shares outstanding               4,739,399     4,744,735
                                                  =========================

</TABLE>

The accompanying notes are an integral part of the financial statements


<PAGE>  F-2


                         INTELLIGENT CONTROLS, INC.
                     STATEMENTS OF STOCKHOLDERS' EQUITY
               For the Years Ended December 31, 2001 and 2000

<TABLE>
<CAPTION>

                                        Common Stock                                           Treasury Stock            Total
                                   ----------------------    Retained    Receivable from   ----------------------    Stockholders'
                                     Shares      Amount      Earnings      Stockholder       Shares      Amount          Equity
                                     ------      ------      --------    ---------------     ------      ------      -------------


                                <c>         <c>          <c>            <c>             <c>         <c>           <c>
Balances at December 31, 1999      5,061,123   $7,585,534   $1,937,274     $(1,463,704)    (321,724)   $(610,656)    $7,448,448

Accrued interest on receivable
from stockholder                                   84,673                      (84,673)                                       -

Net Income                                                     435,271                                                  435,271
                                   ---------------------------------------------------------------------------------------------

Balances at December 31, 2000      5,061,123   $7,670,207   $2,372,545     $(1,548,377)    (321,724)   $(610,656)    $7,883,719

Accrued interest on receivable
 from stockholder                                  88,103                      (88,103)                                       -

Net Loss                                                      (281,645)                                                (281,645)
                                   ---------------------------------------------------------------------------------------------
Balances at December 31, 2001     5,061,123    $7,758,310   $2,090,900     $(1,636,480)    (321,724)   $(610,656)    $7,602,074
                                  =============================================================================================

</TABLE>

The accompanying notes are an integral part of the financial statements


<PAGE>  F-3


                         INTELLIGENT CONTROLS, INC.
                          STATEMENTS OF CASH FLOWS
               For the Years Ended December 31, 2001 and 2000

<TABLE>
<CAPTION>

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


                                                         <c>             <c>
Cash flows from operating activities:
  Net (loss) income                                         $  (281,645)    $  435,271
  Adjustments to reconcile net (loss) income to net cash
   provided by operating activities:
    Depreciation and amortization                               259,295        307,758
    Deferred income taxes                                      (255,560)        (7,759)
    Changes in assets and liabilities:
      Accounts receivable, net                                  191,236       (267,069)
      Inventories                                              (254,708)       (70,344)
      Prepaid expenses and other current assets                 (33,265)        10,519
      Income taxes receivable                                  (118,247)       105,292
      Income taxes payable                                            -         (6,763)
      Other assets                                               (4,713)        (4,407)
      Accounts payable and accrued expenses                     757,369        (17,808)
                                                            --------------------------

  Net cash provided by operating activities                     259,762        484,690

Cash flows from investing activities:
  Capital expenditures                                         (100,426)      (122,298)

Cash flows from financing activities:
  Repayment of long-term debt                                   (12,535)      (160,872)
                                                            --------------------------

Net increase in cash                                            146,801        201,520

Cash and cash equivalents at beginning of period              5,182,325      4,980,805
                                                            --------------------------

Cash and cash equivalents at end of period                  $ 5,329,126     $5,182,325
                                                            ==========================
Supplemental disclosures of cash flow information:
  Cash paid during the period for:
    Interest                                                $         -     $    8,036
    Income taxes                                            $   141,220       $197,000

  Non-cash investing and financing activities
    Interest on stockholder receivable                      $    88,103     $   84,673

</TABLE>

The accompanying notes are an integral part of the financial statements


<PAGE>  F-4


                         INTELLIGENT CONTROLS, INC.
                        NOTES TO FINANCIAL STATEMENTS

                         December 31, 2001 and 2000


1.    Summary of significant accounting policies:

      Organization and Operations
      ---------------------------

      The Company is engaged primarily in designing and manufacturing
      microprocessor-based control devices and systems for industrial,
      commercial and power utility applications.

      The Company primarily serves customers in the United States of
      America.  On occasion the Company sells to international customers.

      Use of Estimates
      ----------------

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

      Cash and Cash Equivalents
      -------------------------

      The Company considers all highly liquid debt instruments purchased
      with a maturity of three months or less to be cash equivalents.  Cash
      and cash equivalents at December 31, 2001 and 2000, include cash
      maintained in a bank checking account, a bank money market account,
      and short-term taxable adjustable rate notes.  Cash and cash
      equivalents at December 31, 2001 and 2000, outside of the $100,000
      FDIC limit were uninsured.

      Revenue Recognition
      -------------------

      Substantially all revenue is related to the sale of product and is
      recorded at the time of shipment (FOB shipping point).  The product is
      distributed through distributors and directly to customers. The
      Company provides its customers the right of return for its product
      under certain circumstances and records a reserve for products
      estimated to be returned.  The reserves estimated for product returns
      at December 31, 2001 and 2000 were approximately $23,000 and $20,000,
      respectively, and are included as a reduction in accounts receivable
      in the accompanying balance sheets at December 31, 2001 and 2000.
      Shipping and handling revenue and expenses are recorded as revenue.

      Advertising Costs
      -----------------

      The Company expenses all advertising costs as incurred.  The Company's
      advertising expense was approximately $90,000 and $122,000 in 2001 and
      2000, respectively.

      Inventories
      -----------

      Inventories are stated at the lower of cost or market using standard
      costs, which approximate actual costs on a first in first out basis.

      Property and Equipment
      ----------------------

      Property and equipment are stated at cost.  Depreciation is calculated
      using straight-line and accelerated methods over estimated useful
      lives of the equipment (three to ten years) and the lease terms for
      the leasehold improvements.

      Expenditures for maintenance, repairs and minor replacements are
      charged to operations while expenditures for major replacements and
      betterments are added to property and equipment accounts.  When fixed
      assets are sold, retired or otherwise disposed of, the asset cost and
      accumulated depreciation are removed from the accounts and any
      resulting gain or loss is reflected in income.


<PAGE>  F-5


                         INTELLIGENT CONTROLS, INC.
                        NOTES TO FINANCIAL STATEMENTS

                         December 31, 2001 and 2000

1.    Summary of significant accounting policies (continued):

      Net (Loss) Income Per Share
      ---------------------------

      The net (loss) income per common share has been computed in accordance
      with Statement of Financial Accounting Standards (SFAS) No. 128 -
      Earnings Per Share.  The Statement requires dual presentation of basic
      and diluted (loss) earnings per share of common stock on the
      statements of operations.  Basic (loss) earnings per share of common
      stock have been determined by dividing net (loss) earnings by the
      weighted average number of shares of common stock outstanding during
      the year.  Diluted earnings per share reflect the potential dilution
      that would occur if existing stock options were exercised.  The
      exercise of such options would be anti-dilutive for the year ended
      December 31, 2001.   The following is a reconciliation of the dual
      presentations of (loss) earnings per share for the fiscal years
      presented.

<TABLE>
<CAPTION>

                                            Net             Common       (Loss) Earnings
                                       (Loss) Income        Shares             Per
                                        (Numerator)     (Denominator)         Share
                                       -------------    -------------    ---------------

      
                                <c>              <c>                <c>
      December 31, 2001
      -----------------

        Basic loss per share             $(281,645)       4,739,399          $(0.06)
                                                                             ======
        Dilutive potential shares                -                -
                                         ---------        ---------
        Diluted loss per share           $(281,645)       4,739,399          $(0.06)
                                         =========        =========          ======

      December 31, 2000
      -----------------

        Basic earnings per share         $ 435,271        4,739,399          $ 0.09
                                                                             ======
        Dilutive potential shares                -            5,336
                                         ---------        ---------
        Diluted earnings per share       $ 435,271        4,744,735          $ 0.09
                                         =========        =========          ======

</TABLE>

      Fair Value of Financial Instruments
      -----------------------------------

      At December 31, 2001 and 2000, the carrying amounts of the Company's
      financial instruments included in current assets and current
      liabilities approximate the fair value due to the short maturity of
      those instruments. The carrying amounts of the Company's long-term
      debt also approximates fair value as of December 31, 2000 based upon
      the borrowing rates available to the Company for loans with similar
      terms and maturities.

      Impairment Accounting
      ---------------------

      In accordance with Statement of Financial Accounting Standard No. 121,
      Accounting for the Impairment of Long-Lived Assets and for Long-Lived
      Assets to be Disposed of, (SFAS No. 121), the Company reviews the
      recoverability of its long-lived assets when events or changes in
      circumstances occur that indicate that the carrying value of the
      assets may not be recoverable. The measurement of possible impairment
      is based on the Company's ability to recover the asset from expected
      future pre-tax cash flows (undiscounted and without interest charges)
      of the related operations. The measurement of impairment requires
      management to make estimates of expected future cash flows related to
      long-lived assets. It is at least reasonably possible that future
      events or circumstances could cause these estimates to change.  No
      long-lived assets were considered impaired by Company management in
      2001 or 2000.


<PAGE>  F-6


                         INTELLIGENT CONTROLS, INC.
                        NOTES TO FINANCIAL STATEMENTS

                         December 31, 2001 and 2000

2.    Inventories:


      Inventories consisted of the following at December 31, 2001 and 2000:

<TABLE>
<CAPTION>

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

      
                                               <c>           <c>
      Raw Material                                      $  812,962    $  717,558
      Work in Progress                                     278,754       272,420
      Finished Goods                                       287,961       134,991
                                                        ------------------------
                                                        $1,379,677    $1,124,969
                                                        ========================

</TABLE>

3.    Property and equipment:

      Property and equipment consisted of the following at December 31, 2001
      and 2000:

<TABLE>
<CAPTION>

                                                           2001          2000
                                                        ----------    ----------
      
                                               <c>           <c>
      Leasehold improvements                            $  165,553    $  154,344
      Equipment                                          1,334,980     1,269,134
      Computer software                                    217,307       199,969
      Furniture and fixtures                               226,512       191,637
      Construction in progress                                   -        28,842
                                                        ------------------------
                                                         1,944,352     1,843,926

      Less accumulated depreciation and amortization     1,535,077     1,275,782
                                                        ------------------------
                                                        $  409,275    $  568,144
                                                        ========================

</TABLE>

      During fiscal year 2000 the Company disposed of $96,873 of property
      and equipment, which was fully depreciated.  There were no
      dispositions in 2001.

4.    Line of Credit Agreement:

      The Company maintains a $3,500,000 working capital line of credit.
      Such borrowings are collateralized by all assets of the Company and
      are subject to certain restrictive covenants.  Interest is variable at
      the bank's base rate (4.75% at December 31, 2001).  At December 31,
      2001 and 2000, the line was not being utilized and all $3.5 million
      was available to be borrowed.  The line of credit is scheduled to
      expire on June 30, 2002.

5.   Long-term debt:

      Long-term debt consisted of the following at December 31, 2001 and
      2000:

<TABLE>
<CAPTION>

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


                                                                           <c>      <c>
      Borrowing under a $1,000,000 revolving credit agreement with a bank,
       interest at a variable rate (5.25% at December 31, 2001), with
       principal and interest payable monthly through January 2001            $   -    $ 12,535
                                                                              -----    --------

      Total Debt                                                                 -       12,535
                                                                              $---    ---------

      Less current portion                                                       -      (12,535)
                                                                              $---    ---------

      Long-term portion                                                       $  -    $      -
                                                                              ====    ========

</TABLE>

The revolving credit agreement is collateralized in the same manner and
subject to the same conditions as the line of credit agreement described in
Note 4.


<PAGE>  F-7


                         INTELLIGENT CONTROLS, INC.
                        NOTES TO FINANCIAL STATEMENTS

                         December 31, 2001 and 2000

6.    Income taxes:

      Income tax (benefit) expense consists of the following for the years
      ended December 31, 2001 and 2000:

<TABLE>
<CAPTION>

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

        
                                     <c>           <c>
        Current:

          Federal                               $  16,965     $228,112
          State                                     6,008       45,280
                                                ---------     --------

                                                   22,973      273,392
                                                ---------     --------

        Deferred:

          Federal                                (198,354)      (6,021)
          State                                   (57,206)      (1,738)
                                                ---------     --------

                                                 (255,560)      (7,759)
                                                ---------     --------

          Total income tax (benefit) expense    $(232,587)    $265,633
                                                =========     ========

</TABLE>

      The actual income tax (benefit) expense differs from the expected
      (benefit) tax computed by applying the U.S. federal corporate tax rate
      of 34% to (loss) income before income taxes as follows:

<TABLE>
<CAPTION>

                                                                   2001     2000
                                                                   ----     ----

      
                                                          <c>      <c>
      Computed expected income tax (benefit) expense               (34%)    34%
      State income (benefit) tax, net of federal benefit or tax     (6%)     6%
      Other, primarily tax credits                                  (5%)    (2%)
                                                                   ---      --
        Total income tax (benefit) expense rate                    (45%)    38%
                                                                   ===      ==

</TABLE>

      The tax effects of temporary differences that give rise to the
      deferred tax assets and liabilities consist of the following at
      December 31, 2001 and 2000:

<TABLE>
<CAPTION>

      Deferred tax assets:                    2001        2000
                                            --------    --------

      
                                   <c>         <c>
        Inventory                           $118,427    $ 77,894
        Reserves                              52,660      95,930
        Arbitration award (Note 11)          200,384           -
        Compensation                          62,408      22,750
                                            --------    --------

          Total deferred tax assets         $433,879    $196,574
                                            --------    --------

      Deferred tax liabilities:
       Depreciation                           10,470      28,725
                                            --------    --------

          Total deferred tax liabilities    $ 10,470    $ 28,725
                                            ========    ========

</TABLE>

      The Company believes that a valuation allowance for the net deferred
      tax asset is not necessary as the Company has substantial carry-back
      potential and believes it is more likely than not that taxable income
      can be generated in the future.


<PAGE>  F-8


                         INTELLIGENT CONTROLS, INC.
                        NOTES TO FINANCIAL STATEMENTS

                         December 31, 2001 and 2000


7.   Common stock:

      The Company has granted stock options to employees, directors and
      outside consultants and advisors under a 1984 Incentive Stock Option
      Plan, a 1993 Directors Stock Option Plan, an Advisory Board Stock
      Option Plan, and a 1998 Employee Stock Option Plan. Options granted
      under the 1984 Incentive Stock Option Plan vest at a rate of 20% per
      year, options granted under the 1998 Employee Stock Option Plan vest
      at a rate of 25% per year, and options granted under the other two
      plans vest immediately. Options granted under the 1984 Incentive Stock
      Option Plan, the Advisory Board Stock Option Plan, and the 1998
      Employee Stock Option Plan expire after 10 years, while options
      granted under the 1993 Directors Stock Option Plan expire after 5
      years.  As of December 31, 2001, 183,000 shares were available to be
      granted under these plans in the future. A summary of changes of
      common stock options during 2001 and 2000 is as follows:

<TABLE>
<CAPTION>

                                          Number of    Weighted Average
                                           Options      Exercise Price
                                          ---------    ----------------

      
                                  <c>               <c>
      Outstanding at December 31, 1999     405,468           $2.28

      Issued during 2000                    50,500           $1.81

      Lapsed during 2000                   (73,500)          $2.36
                                           -------

      Outstanding at December 31, 2000     382,468           $2.36

      Issued during 2001                    65,000           $1.39

      Lapsed during 2001                   (52,500)          $2.38
                                           -------

      Outstanding at December 31, 2001     394,968           $2.17
                                           =======

</TABLE>

      The following information is as of December 31, 2001:

<TABLE>
<CAPTION>

                                   Options Outstanding                         Options Exercisable
                   ---------------------------------------------------    ------------------------------
                   Outstanding    Weighted-Average                          Options
   Range of           as of           Remaining       Weighted-Average       as of      Weighted-Average
Exercise Prices    12/31/2001     Contractual Life     Exercise Price     12/31/2001     Exercise Price
--------------------------------------------------------------------------------------------------------


                  <c>                 <c>               <c>              <c>               <c>
$0.90 - $1.36         52,500             8.5               $1.16              6,625           $1.24
$1.36 - $1.81         41,000             8.2               $1.55             11,250           $1.39
$1.81 - $2.26        131,500             6.2               $2.06            108,250           $2.05
$2.26 - $2.71        109,500             6.6               $2.53             81,083           $2.54
$2.71 - $3.16         51,468             6.2               $2.88             33,468           $2.90
$3.62 - $4.07          4,000             4.3               $3.93              4,000           $3.93
$4.07 - $4.52          5,000             3.3               $4.45              5,000           $4.45
                     ------------------------------------------------------------------------------
                     394,968             6.8               $2.17            249,676           $2.36

</TABLE>


<PAGE>  F-9


                         INTELLIGENT CONTROLS, INC.
                        NOTES TO FINANCIAL STATEMENTS

                         December 31, 2001 and 2000

7.    Common stock  (continued):

      Statement of Financial Accounting Standards No. 123, Accounting for
      Stock Based Compensation (SFAS No. 123) requires a fair value based
      method of accounting for employee stock options and results in expense
      recognition for the Company's employee stock plans. It also permits a
      Company to continue to measure compensation expense for such plans
      using the method prescribed by Accounting Principles Board Opinion No.
      25, "Accounting for Stock Issued to Employees" (APB No. 25). The
      Company has elected to follow APB No. 25 in accounting for its
      employee stock plans, and accordingly, since all options were issued
      with an exercise price equal to fair value on the date of grant, no
      compensation cost has been recognized. Had compensation cost for the
      Company's stock plans been determined based on the fair value
      requirements under SFAS No. 123, the Company's net (loss) income and
      (loss) earnings per share would have been reduced to the pro forma
      amounts indicated below:

<TABLE>
<CAPTION>

                                                     2001                      2000
                                           -----------------------     --------------------
                                               As            Pro          As          Pro
                                            Reported        Forma      Reported      Forma
                                            --------        -----      --------      -----

      
                                  <c>           <c>           <c>         <c>
      Net (loss) income                    $(281,645)    $(352,368)    $435,271    $324,394

      Basic net (loss) income per share    $   (0.06)    $   (0.07)    $   0.09    $   0.06

</TABLE>

      The fair value of stock options in the pro forma accounts for 2001 and
      2000 is not necessarily indicative of the future effects on net (loss)
      income and (loss) earnings per share. The fair value of each stock
      option grant has been estimated on the date of the grant using the
      Black-Scholes option-pricing model with the following weighted-average
      assumptions used for grants in 2000:  no dividend yield; expected
      volatility of 62%; risk free interest rate ranging from 5.74% to
      6.63%; and expected life of 4 years.  The following assumptions were
      used for grants in 2001:  no dividend yield; expected volatility of
      62%; risk free interest rate ranging from 5.04% to 5.48%; and expected
      life of 4 years.

8.   Receivable from stockholder:

      In May 1998, the Company sold 486,923 shares of common stock at a
      price of $3.25 per share to its chief executive officer (CEO). The
      shares were paid for with a 5.69% promissory note for $1,332,500 and
      cash in the amount of $250,000. Principal and interest under the note
      become payable in five years except that the payment obligation may be
      accelerated if the CEO's employment with the Company is terminated for
      any reason. In such event, the note becomes due within either 90 days
      or one year, depending upon the reason for termination.  On December
      14, 2001, the Board of Directors of the Company agreed to extend the
      maturity of the promissory note by three years to May 6, 2006. The
      note is collateralized by the purchased shares and the CEO's personal
      guaranty, limited to $200,000 of principal (plus associated interest).
      The Company has the right to purchase some of the shares from the CEO
      at the initial purchase price of $3.25 per share. The repurchase right
      extends to 410,000 shares and lapses 25,625 shares for every three
      months of continued employment. The repurchase right lapses on May 1,
      2002 if the CEO is still employed. The repurchase rights also lapse in
      certain other instances, including change in control of the Company as
      defined.  Compensation expense is adjusted for increases or decreases
      in the market value of the common stock in excess of $3.25 per share
      for those shares relating to the unpaid nonrecourse portion of the
      promissory note.  There was no adjustment to expense in 2001 and 2000.


<PAGE>  F-10


                         INTELLIGENT CONTROLS, INC.
                        NOTES TO FINANCIAL STATEMENTS

                         December 31, 2001 and 2000

9.    Commitments and contingencies:

      The Company leases two facilities, including one from a related party,
      and various office equipment under non-cancelable operating leases.
      The Company has an option to purchase one of the facilities prior to
      October 2003, at its market value.  Future minimum lease payments over
      the fixed terms of these leases are $161,116, $128,835, and $9,420 in
      years 2002, 2003, and 2004, respectively.  Rent expense was
      approximately $142,000 and $131,000 in 2001 and 2000, respectively,
      including approximately $69,000 and $63,500 to a related party.

      The Company manufactures a certain product line under an exclusive
      license agreement that requires the Company to make royalty payments
      on such product sales through 2007.  Royalty expense related to this
      agreement was approximately $22,700 and $7,400 in 2001 and 2000,
      respectively.

       In September of 2001, the Company accrued $150,000 for continued
       salary and benefits for a former executive officer.  At December 31,
       2001, $106,250 of this liability was unpaid and is included in
       accrued expenses.

10.   Employee benefit plan:

      The Company has a 401(k) plan, which covers all eligible employees and
      includes a matching contribution by the Company.  The Company matches
      50% of an employee's contribution up to 5% of the employee's salary.
      Expenses associated with the plan were approximately $48,000 and
      $29,000 in 2001 and 2000, respectively.

11.   Litigation:

      In April 2000 the Company commenced an arbitration against Practical
      Tank Management (PTM) and a related-party guarantor of payment (FFP
      Partners, LP) to collect approximately $62,193, as the unpaid balance
      for INCON probes and other automatic tank gauge equipment sold to PTM.
      As part of the arbitration proceeding, PTM and related entities
      brought various claims against the Company for more than $15,000,000
      in alleged damages.  In February 2002, the arbitration panel handed
      down its decision in this matter.  The arbitrators awarded the sum of
      $446,402 against the Company, plus prejudgment interest of $55,893.
      By its terms, the arbitrators' ruling extinguishes all other claims of
      PTM and its affiliates and business allies.  The Company accrued
      $502,295 in 2001 to recognize the cost of this award.  This amount
      will be paid in 2002.

      In April 1999 the Company received notice of the filing of an action
      entitled Omega Environmental, Inc. v. INCON International, Inc. in
      U.S. Bankruptcy Court for the Western District of Washington.  The
      action was brought for avoidance and recovery of approximately $60,000
      of payments that Omega had made to the Company for INCON products, as
      alleged preferential transfers.  The Company is contesting the
      validity of this claim.

      In June 1999 the owner and operator of a convenience/gasoline store
      (Q&E LLC) filed a complaint in Illinois Circuit Court (Sangamon
      County) against INCON and Pemco Service Co., seeking damages arising
      from a gasoline spill and the alleged failure of an electronic line
      leak detector manufactured by INCON and installed by Pemco.  The
      complaint seeks just over $1,000,000 in damages.  INCON's insurance
      carrier has assumed defense of the matter, which is still in the pre-
      trial phase.


<PAGE>  F-11


                              Index to Exhibits
                              -----------------

<TABLE>
<CAPTION>

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


            <c>
3(i)           Conformed copy of Articles of Incorporation, as amended to
               date, incorporated by reference to Exhibit 3(i) to the
               Company's Form 10-KSB for the fiscal year ended December 26,
               1998.

3(ii)          Bylaws of the Company, as amended to date, incorporated by
               reference to Exhibit 3(ii) to the Company's Form 10-KSB for
               the fiscal year ended December 26, 1998.

4              See Exhibits 3(i) and 3(ii)

10.1           Investment Agreement, dated March 26, 1998, among the
               Company, Ampersand Specialty Materials and Chemicals III
               Limited Partnership, Ampersand Specialty Materials and
               Chemicals III Companion Fund Limited Partnership, and Roger
               E. Brooks; incorporated by reference to Exhibit 99.c(1) to
               the Company's Schedule 13E-4 Issuer Tender Offer Statement
               filed March 30, 1998

10.1A          Amendment No. 1 to Investment Agreement, dated as of May 1,
               1998, among the Company, Ampersand Specialty Materials and
               Chemicals III Limited Partnership, Ampersand Specialty
               Materials and Chemicals III Companion Fund Limited
               Partnership, and Roger E. Brooks; incorporated by reference
               to Exhibit 10.1A to the Company's Form 10-QSB for the quarter
               ended March 28, 1998

10.2           Stockholders Agreement, dated as of May 1, 1998, among the
               Company, Ampersand Specialty Materials and Chemicals III
               Limited Partnership, Ampersand Specialty Materials and
               Chemicals III Companion Fund Limited Partnership, Roger E.
               Brooks, Alan Lukas, Paul E. Lukas, and certain related
               parties; incorporated by reference to Exhibit 99.c(2) to the
               Company's Schedule 13E-4 Issuer Tender Offer Statement filed
               March 30, 1998

Note:  Compensatory plans and management contracts are filed as Exhibits
10.3 through 10.10 below.

10.3           Employment Agreement between the Company and Roger E. Brooks;
               incorporated by reference to Exhibit 10.3 to the Company's
               Form 10-QSB for the fiscal quarter ended March 28, 1998

10.3A          Employee Stock Restriction Agreement between the Company and
               Roger E. Brooks and related promissory note, pledge agreement
               and form of 83(b) election; incorporated by reference to
               Exhibit 10.3A to the Company's Form 10-QSB for the fiscal
               quarter ended March 28, 1998

10.3B          Amendment (dated December 14, 2001) to promissory note of
               Roger E. Brooks, extending the term of the note

10.4           Employment Agreement dated as of May 1, 1998 with Alan Lukas;
               incorporated by reference to Exhibit 10.2 to the Company's
               Form 10-QSB for the fiscal quarter ended June 27, 1998

10.4A          Letter agreement dated August 27, 2001 between the Company
               and Alan Lukas, regarding severance and consulting
               arrangements

10.5           1998 Employee Stock Option Plan; incorporated by reference to
               Exhibit 10.4 to the Company's Form 10-QSB for the quarter
               ended March 28, 1998

10.6           1984 Incentive Stock Option Plan; incorporated by reference
               to Exhibit 6.5 of the Company's Form 1-A, filed June 19,
               1993, as amended, SEC File No. 24B-3429 ("Company's Form 1-
               A")


<PAGE>  E-1


10.6A          Amendment No. 1 to 1984 Incentive Stock Option Plan;
               incorporated by reference to Exhibit 10.5A to the Company's
               Form 10-SB, filed February 2, 1995

10.6B          Amendment No. 2 to 1984 Incentive Stock Option Plan;
               incorporated by reference to Exhibit 10.6B to the Company's
               Form 10-KSB for the fiscal year ended December 31, 1996

10.7           1993 Director Stock Option Plan, as amended; incorporated by
               reference to Exhibit 10.7 to the Company's Form 10-KSB for
               the fiscal year ended December 31, 1999.

10.8           1994 Employee Stock Purchase Plan, amended and restated as of
               January 1, 1996; incorporated by reference to Exhibit 10.9 to
               the Company's Form 10-KSB for the fiscal year ended December
               31, 1996

10.9           Advisory Board Stock Option Plan; incorporated by reference
               to Exhibit 6.6 to the Company's Form 1-A

10.10          Form of Confidentiality and Nondisclosure Agreement;
               incorporated by reference to Exhibit 6.11 to the Company's
               Form 1-A

10.11          Lease Agreement with Apollo Development Corp., dated as of
               April 11, 1991; incorporated by reference to Exhibit 6.4 to
               the Company's Form 1-A

10.11A         Lease Extension Agreement, dated March 9, 2000 with Apollo
               Development Corp.; incorporated by reference to Exhibit 10.7
               to the Company's Form 10-KSB for the fiscal year ended
               December 31, 1999.

10.12          Lease Agreement with BJB Associates, dated June 21, 1994;
               incorporated by reference to Exhibit 10.4 to the Company's
               Form 10-KSB for the fiscal year ended December 31, 1994

10.12A         Addendum to Lease, executed March 20, 2000 with BJB
               Associates; incorporated by reference to Exhibit 10.7 to the
               Company's Form 10-KSB for the fiscal year ended December 31,
               1999.

21             Subsidiaries of the Company

23A            Consent of Accountants - Baker Newman & Noyes, LLC

23B            Consent of Accountants - PricewaterhouseCoopers LLP

</TABLE>


<PAGE>  E-2