U. S. Securities & Exchange Commission
Washington, D.C. 20549

FORM 10-KSB

[ X ]    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND 
         EXCHANGE ACT OF 1934
    For the fiscal year ended September 30, 1998

[   ]    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT 

    For the transition period from _______ to _______

Commission file Number 0-11596

EXPERTELLIGENCE, INC.
(Exact name of small business issuer)
California                         95-3506403
(State of incorporation)  IRS Employer Identification number

203 Chapala Street,  Suite B, Santa Barbara, CA 93101
(Address of principal executive offices)

(805) 962-2558
(Issuer's telephone number)

Securities registered under Section 12(b) of the Exchange Act:
Title of each class            Name of each exchange on which registered
   None                                          None

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

    Preferred Stock, no par    Common Stock, no par
    (Title of class)           (Title of class)

Check whether the issuer (1) filed all reports required to be filed by 
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the 
preceding 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 there is no disclosure of delinquent filers in response to Item 
405 of Regulation S-B contained in this form and no disclosure will be 
contained, to the best of the registrant's knowledge, in definitive proxy 
statements or information statements incorporated by reference in Part III 
of this Form 10-KSB or in any amendment to this Form 10-KSB.   
[ X  ]

Issuer's revenues for the most recent fiscal year:  $897,226

State the aggregate market value of the voting stock held by non-
affiliates, computed by reference to the per share closing bid price 
thereof on the Over-the-Counter Exchange as of a specified date within the 
past 60 days:  Approximately $9,199,506 million based on a $6.25 per share 
closing bid price as of December 28,1998.

State the number of shares outstanding of each of the issuer's classes of 
common equity, as of the latest practical date. Class Outstanding at 
September, 30 1998   
      Preferred stock, no par    159,244 
      Common stock, no par     1,471,921    

<PAGE>
    

ExperTelligence, Inc.
Annual Report on Form 10-KSB
For the Fiscal Year Ended September 30, 1998

Table of Contents


Item number                                                Page Number

Part I
1.    Description of Business                                    iv
2.    Description of Property                                     v
3.    Legal Proceedings                                           v
4.    Submission of Matters to a Vote of Security Holders         v

Part II

5.    Market for Common Equity and Related Stockholder Matters  vii

6.    Management's Discussion and Analysis                      vii
7.    Financial Statements                                     1-15

8.    Changes In and Disagreements With Accountants on 
        Accounting and Financial Disclosure                      ix

Part III

9.     Directors, Executive Officers, Promoters and Control Persons;
       Compliance with Section 16(a) of the Exchange Act          x
10.    Executive Compensation                                     x

11.    Security Ownership of Certain Beneficial Owners and 
        Management                                                xi
12.    Certain Relationships and Related Transactions             xi  

13.    Exhibits and Reports on Form 8-K                           xi
<PAGE>



Part I

Item 1. Description of Business

The objective of ExperTelligence ( The Company) is to support its 
clients in  making their information needs or their information-driven 
products interactive on the World Wide Web.  The Company designs, 
develops, markets and implements software products for business 
applications based on advanced, object-oriented, Internet-aware 
technologies which are designed, developed, integrated, and sold by the 
Company and its partners. The Company now specializes in the development 
and hosting of Web/Database and Electronic Commerce application 
solutions using WebBaseTM and ExperForms.  The Company's extensive 
experience with eCommerce and database systems, combined with their web 
service WebdataR and the WebData Network, have given the Company the 
necessary experience to develop significant cutting edge Web software 
tools and high profile services.  The Company is uniquely qualified to 
develop and host complex "intelligent" web sites that take full 
advantage of databases and their potential for sophisticated, cost 
effective applications.

The Company has established a presence in the telecommunications 
industry through the sale of ANDE TM (Ameritech Network Design Expert).  
ANDE  has been licensed to Southwestern Bell  and Bell Canada, and is 
marketed to other telephone companies  by our development partner, 
Ameritech.  

In 1997 the Company acquired, Cerebral Systems Development, a Canadian 
corporation that produces software.   As a result of this acquisition 
the Company  introduced two new software products, WebberActive and 
Webber 32.  In May 1998 ExperTelligence, Inc. moved support of these 
products to Santa Barbara.

ExperTelligence employs eleven people full time.  Additional contract 
workers are hired as necessary to complete specific projects.

Business of Issuer

WebDataR, a comprehensive database - only portal for the Internet was 
announced by the company December 1, 1998.  Webdata.com is built on 
proprietary intelligent agent and HTML parsing technology that collects, 
organizes and builds relationships between searchable databases.  This 
allows 
the user who needs concrete data to locate the appropriate database 
immediately.  Webdata.com catalogues only databases and used patent-pending 
user interface to provide access to them.

WebData Network is a link exchange service featuring the industries only 
query-based banner ad exchange.  WebData Network is ideally suited to 
database sites because banner queries instantly send users to the related 
database and display the results.  The banner ads are not just a static 
image, but an interactive tool to draw users to our client's sites. 
 
This year the Company established Experdata.com, a  database web-hosting 
site.  This site is uniquely focused on hosting eCommerce, business to 
business, dynamic, database-enabled Web sites for real world applications.  
The Company is fully equipped to deliver high bandwidth connections, fast 
file servers, tip quality support services, site development  and database 
expertise.

WebBaseTM still continues to be the Company's premier product.  It is the 
basis for most of the consulting revenue and software sales.  WebBaseTM 
provides users the tools to develop easy access to database information 
over the Internet.  It includes full server capabilities and can interface 
with any of 50 database formats including Microsoft Access, Excel and SQL 
Server, Sybase SQL Server, Oracle, dBase, Paradox, and Btrieve. WebBaseTM 
provides for solutions ranging from simple access, to real estate listing, 
to complex enterprise-wide information system applications in human 
resources, finance, and sales.  It allows existing databases to be enhanced 
through the addition of hypertext links into other Internet publications.  
Full details about WebBaseTM may be found on our web site, 
http://www.expertelligence.com.

The Company's consulting group specializes in integrating networks and Web 
and Internet technology to produce powerful application solutions for 
forward thinking business organizations.  The Company has spent the last 
ten years combining Internet programming experience with real world 
business process understanding to produce well-engineered Internet, 
Intranet and Extranet applications.

ExperForms, based on WebBase TM, is revolutionary new software that 
converts scanned forms into complete web sites.  It creates database and 
all the web forms necessary to add, update, search and view any web 
browser on the Intra or Internet.  It is also resold through one of the 
Company's strategic partners, CAERE Corporation. The Company has 
participated with CAERE in major trade shows and other joint marketing 
activities this year allowing the Company to receive industry wide 
exposure. 

E-Merge, a WebBase TM add-on allows users to conveniently send mail 
directly from their WebBase TM web server.  E-Merge dynamically creates 
emails from databases.

WebberActive is a dynamic HTML editor and channel creation tool targeted 
directly at Microsoft and Netscape software standards.

Webber32 is a free HTML editor and validation tool the Company distributes 
internationally to introduce potential customers to the Company.  It is 
downloaded free at over 20 popular Internet sites.

Ameritech Network Design Expert (ANDE) is a fully integrated design tool 
which allows users to analyze and determine workable ISDN solutions by 
illustrating the equipment configurations required to run the applications.  
The ANDE co-marketing agreement signed in May of 1994 remains in force.  
This agreement establishes Ameritech and ExperTelligence as co-owners of 
ANDE with ExperTelligence entitled to a percentage of all gross sales of 
the product.

Competitive Information

The Company is a pioneer in web database server technology. The company has 
delivered proven solutions to many Fortune 500 customers.  The rapidly 
changing nature of the software industry and the fact that the Internet 
market is highly dynamic and competitive, requires that a significant 
effort be devoted to constantly developing new goods, services and 
partnerships.  The Company continues to seek every opportunity to solidify 
its marketbase.

Regulatory Information

Government approval is not required for the sale of any of the Company's 
products.  

There are no existing or probable government regulations, which will have a 
material effect on the Company, and there is no material cost of compliance 
to environmental laws.

Item 2. Description of Property

The Company does not own any real property.  The following is the Company's 
principle place of business:

Location                         Size               Lease Term

203 Chapala Street, Suite B     2,100 Sq. Ft.        Two Years
Santa Barbara, CA 93101


Item 3. Legal Proceedings

The Company is not a party to any litigation.


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

<PAGE>

Part II

Item 5. Market for Common Equity and Related Stockholder Matters

The Company's common stock is traded on the Over-the-Counter Exchange, 
under the symbol "EXGP".  At September 30, 1998 there were approximately 
1,051 holders of record (1,049 holding common stock and 2 holding preferred 
stock).

As of September 30, 1998 the Company's assets and equity are still below 
NASD's minimum requirements.  As such, quotations of the Company's security 
are not traded on NASDAQ.

The high and low bid price per share of the Company's common stock on the 
Exchange for the last two fiscal years was as follows (as these shares are 
traded on the OTC market, the prices indicated below are not necessarily 
reflective of actual transactions):

<TABLE>
<CAPTION>
For the fiscal year ended September 30,

                         1998             1997
<S>                <C>      <C>      <C>      <C>

                    High     Low     High      Low
First Quarter      $1.12    $1.62    $4.25    $3.25
Second Quarter     $2.12    $2.68    $5.00    $4.00
Third Quarter      $3.44    $3.44    $3.25    $2.75
Fourth Quarter     $2.13    $2.63    $2.50    $2.50
</TABLE>


There were no dividends declared during the past fiscal year.

No dividends shall be paid or other distributions made (other than those 
payable solely in Common Stock) with respect to the Common Stock during any 
fiscal year of the Corporation until dividends in the total amount of $.18 
per share on the outstanding shares of Series A Preferred shall have been 
paid.  The Corporation shall not declare or pay any dividends on any shares 
of Preferred Stock or any other class or series of stock of the Corporation 
ranking as to dividends on a parity with the Preferred Stock unless the 
Corporation shall pay a ratable dividend on the Preferred Stock and such 
parity stock in proportion to the full dividend preference amounts to which 
each is entitled.  After the payment of the full dividend preference amount 
on the Series A Preferred and on all other parity stock, and after payment 
in any fiscal year of the Corporation of $.18 per share of Common Stock 
(adjusted to 
reflect any subdivision or combination of the Common Stock after the 
Original Issue Date of the Series A Preferred) outstanding on such payment 
date, if any additional dividend is paid in such fiscal year on the Common 
Stock, the holders of Series A Preferred shall be entitled to receive, 
contemporaneously with such additional payment on the Common Stock, an 
amount per share equal to (i) the amount of such additional dividend paid 
on the Common Stock, multiplied by (ii) the number of shares of Common 
Stock into which a share of Series A Preferred is convertible on the date 
of the payment of the additional dividend on the Common Stock.

Item 6. Management's Discussion and Analysis

Results of Operations
The Company plans to expand its scope of business activities including the 
introduction of WebData(TM), a portal to web databases, and other Web 
Services.  The Company entered into a strategic marketing alliance with 
Saatchi & Saatchi, PLC ("Saatchi") in August 1998 which includes Saatchi's 
provision of strategic planning and marketing services related to WebData 
and the Web Services.


Comparison of Fiscal Year 1998 to Fiscal Year 1997

Sales decreased 6% from $955,246 to $897,226.  The Company often
sells its software's together with its consulting services to clients 
ranging from award winning HarrisInfoOnline, one of the largest 
international information brokers to Bagdasarian Productions, the creators 
of the Chipmunks to numerous municipalities, court and school systems.    
The Company's expansion into its new portal to web databases, 
"WebData.com" will generate revenue from advertising in the upcoming 
year.

Cost of Sales increased by 66% due to development salaries working more on 
contract services and less on development of software.  Selling and 
marketing expense decreased 281%. The Company's decision to market its 
products with the assistance of outside services resulted in the release of 
the Vice-President of Sales and the Vice-President of Marketing.  This year 
the Company entered into a strategic marketing alliance with Saatchi & 
Saatchi, PLC ("Saatchi"), which includes Saatchi's provision of strategic 
planning and marketing services related to WebData and the Web Services.  
The Company limited it trades show participation to joint efforts with 
strategic partners, suchas CAERE Corporation.  General and Administrative 
expenses were down 150% due to the Company's decision to review and analyze 
each expense category for optimum benefit and reduced cost.  Significant 
reduction in expenses was seen in communication costs, health benefits, 
travel and supplies.  General and Administrative costs in Canada were 
significantly lower due to the closure of this office in May 1998.  
Research and Development increased by 30% due to the development of WebData 
and its patent pending processes. Income from 
operations after taxes decreased its loss from $(281,162) to a current loss 
of $(103,139).  This loss includes a $50,000 non-cash non-recurring item.  

The decrease in net loss before taxes over the prior year is attributable 
to consistent revenue from contract services and decreases in operating 
expenses.  The change in net income after taxes is due to a deferred income 
tax benefit of $39,200 for 1998.

Liquidity and Capital Resources
Cash increased from $27,465 in 1997 to $130,149 in 1998.  The increase is 
due to collection of most of the Company's receivable.  Working capital 
decreased over the same period from $411,450 to $289,359.  Included in 
Accounts Payable is a $50,000 non-recurring non-cash item.  In addition a 
current receivable was reclassified to long term due to an agreement 
between the Company and its customer.

The net value of Capitalized Product Development Costs increased by 
$18,989.  The Company spent the year concentrating on consulting.  The next 
year will see the development of WebData and its development costs.  The 
Company believes product development costs will be recovered in the future 
as development costs are matched to sales.

Long term debt has been eliminated.

Item 7. Financial Statements

The Financial Statements as of September 30, 1997 and 1998 are presented on 
the pages that follow.


<PAGE>



EXPERTELLIGENCE, INC. AND SUBSIDIARY

SANTA BARBARA, CALIFORNIA
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 and 1997


TABLE OF CONTENTS

                                                                            
                                                      Page

Independent Auditor's Report                           1

Consolidated Financial Statements:

Consolidated Balance Sheets                            2

Consolidated Statements of Income                      3

Consolidated Statements of Shareholders' Equity        4

Consolidated Statements of Cash Flows                  5


Notes to Consolidated Financial Statements          6 - 18

<PAGE>

INDEPENDENT AUDITOR'S REPORT

Board of Directors and Shareholders
ExperTelligence, Inc.
Santa Barbara, California

We have audited the accompanying consolidated balance sheets of 
ExperTelligence, Inc., a California corporation, and subsidiary as of 
September 30, 1998 and 1997, and the related consolidated statements of 
income, shareholders' equity, and cash flows for the years then ended. 
These consolidated financial statements are the responsibility of the 
Company's management. Our responsibility is to express an opinion on these 
consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above 
present fairly, in all material respects, the financial position of 
ExperTelligence, Inc., and subsidiary at September 30, 1998 and 1997, and 
the results of their operations and their cash flows for the years then 
ended, in conformity with generally accepted accounting principles.


McGowan Guntermann
Santa Barbara, California
November 16, 1998

                                 -1-

<PAGE>
<TABLE>
<CAPTION>

EXPERTELLIGENCE, INC. AND SUBSIDIARY

    CONSOLIDATED BALANCE SHEETS
    September 30, 1998 and 1997


    ASSETS

                                                                               
                                          1998                1997
<S>                                    <C>                <C>

CURRENT ASSETS
Cash:
Non-interest bearing               $        5,659        $   16,355
Interest bearing                          124,490            11,110

Total Cash                                130,149            27,465

Accounts receivable - net of allowance 
  (Note 1E)                               102,409           271,312
Inventory (Note 1C)                        66,723            65,178
Prepaid expenses and other current assets  16,570            28,083
Deferred tax assets (Note 1J and 6)       125,000           110,000

Total Current Assets                      440,851           502,038

PROPERTY AND EQUIPMENT - Net 
  (Note 1I and 2)                          52,732            53,947

OTHER ASSETS
  Long-term accounts receivable (Note 14)  51,585                 -
Product development costs, net (Note 1D)  801,144           820,133
Deferred tax assets (Note 1J and 6)       353,000           328,000

Total Other Assets                      1,205,729         1,148,133

TOTAL ASSETS                           $1,699,312       $ 1,704,118


</TABLE>
<TABLE>
<CAPTION>

LIABILITIES AND SHAREHOLDERS' EQUITY


                                                                                    
                                                1998           1997
<S>                                     <C>                 <C>

CURRENT LIABILITIES
Accounts payable                        $      87,498       $ 33,174
Accrued vacation                               63,994         57,413

    Total Current Liabilities                 151,492         90,587


SHAREHOLDERS' EQUITY (Notes 3, 4 and 5):
Preferred stock, no par value, authorized 
1,000,000 shares;issued and outstanding 
159,244 shares for 1998 and 1997 (liquidation 
preference is $3 per share, see
Note 3)                                       318,487        318,487
Common stock, no par value, authorized
2,000,000 shares;issued and outstanding 
1,471,921 shares for 1998 and1,472,621 
shares for 1997                             3,651,890      3,653,627
Accumulated deficit                        (2,422,557)    (2,358,583)

Total Shareholders' Equity                  1,547,820      1,613,531

TOTAL LIABILITIES AND 
SHAREHOLDERS' EQUITY                      $ 1,699,312     $1,704,118

</TABLE>


SEE AUDITOR'S REPORT AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                      -2-

<PAGE>

EXPERTELLIGENCE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
 For the Years Ended September 30, 1998 and 1997

<TABLE>
<CAPTION>

                                                                        

                                         1998               1997
<S>                                   <C>             <C>

INCOME (Note 7)                      $    897,226    $    955,246

OPERATING COSTS AND EXPENSES
Cost of sales                             327,881          215,997
Selling and marketing                      81,514          229,231
General and administration                470,352          706,649
Research and development                  120,618           84,531

Total Operating Costs and Expenses      1,000,365        1,236,408


LOSS FROM OPERATIONS                     (103,139)        (281,162)

OTHER EXPENSES (INCOME)
Interest expense                            2,879              738
Interest income                            (2,807)         (10,916)
Loss on foreign currency exchange             -              1,125

Total Other Expenses (Income)                  72           (9,053)


LOSS BEFORE INCOME TAXES                 (103,211)        (272,109)

INCOME TAXES (Note 6)                     (39,200)        (125,200)

NET LOSS                            $     (64,011)     $  (146,909)


EARNINGS PER SHARE AND COMMON STOCK
EQUIVALENTS (Note 1G)

LOSS BEFORE INCOME TAXES            $      (.0633)     $    (.1721)
INCOME TAXES                               (.0240)          (.0792)


NET LOSS                            $      (.0393)     $    (.0929)

EQUIVALENT NUMBER OF SHARES              1,631,753        1,580,379
</TABLE>


SEE AUDITOR'S REPORT AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                                -3-

<PAGE>

EXPERTELLIGENCE, INC. AND SUBSIDIARY

<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years Ended September 30, 1998 and 1997

                                                                                                                 
                                                        Common Stock
                  Preferred Stock   Common Stock         Subscribed

                 Shares     Amount   Shares   Amount    Shares     Amount
<S>              <C>        <C>      <C>      <C>        <C>        <C>

Balance, 
September 30, 
1996            159,244  $ 318,487  1,331,321 $ 3,189,727  100,000  $300,000

Stock issued      -           -        41,300     163,900   -          -

Common stock 
subscribed        -           -       100,000     300,000 (100,000) (300,000)

Net loss          -           -         -            -        -        -

Balance, September 
30, 1997        159,244    318,487  1,472,621   3,653,627     -        -

Common stock 
redeemed          -          -          (700)      (1,737)    -        -

Net loss          -          -           -           -        -        -

Balance, September 
30, 1998        159,244  $ 318,487  1,471,921 $ 3,651,890      -    $  -
</TABLE>

<TABLE>
<CAPTION>
                                                                                                       
                                                         Net            	
				  Accum.             Shareholders
                                 (Deficit)             Equity
<S>                              <C>                <C>

Balance, September  30, 1996     $ 2,211,674)        $  1,596,540
Stock issued                          -                   163,900
Common stock subscribed               -                    -
Net loss                            (146,909)            (146,909)
Balance, September 30, 1997       (2,358,583)           1,613,531
Common stock redeemed                     37               (1,700)
Net loss                             (64,011)             (64,011)
Balance, September 30, 1998     $ (2,422,557)         $ 1,547,820
</TABLE>

SEE AUDITOR'S REPORT AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                      -4-

<PAGE>
EXPERTELLIGENCE, INC. AND SUBSIDIARY

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 1998 and 1997

CASH FLOWS FROM OPERATING ACTIVITIES         1998              1997
<S>                                     <C>            <C>


Collections from customers              $ 1,014,544    $     893,627
Interest collected                            2,807           10,916
Interest paid                                (2,879)            (738)
Taxes paid                                     (800)            (800)
Cash paid to suppliers and employees       (814,240)      (1,210,077)

NET CASH PROVIDED (USED) BY OPERATING 
ACTIVITIES                                  199,432         (307,072)

CASH FLOWS FROM INVESTING ACTIVITIES
Increase in product development costs       (75,710)        (176,791)
Purchase of property and equipment          (19,338)         (12,094)

NET CASH USED BY INVESTING ACTIVITIES       (95,048)        (188,885)

CASH FLOWS FROM FINANCING ACTIVITIES
Common stock redeemed                        (1,700)             -

NET CASH USED BY FINANCING ACTIVITIES        (1,700)             -

NET INCREASE (DECREASE) IN CASH             102,684         (495,957)
CASH AND EQUIVALENTS - BEGINNING OF YEAR     27,465          523,422
CASH AND EQUIVALENTS - END OF YEAR     $    130,149      $    27,465

RECONCILIATION OF NET LOSS TO NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES:

Net loss                              $     (64,011)     $   (146,909)
Adjustments to reconcile net loss
to net cash provided (used) by operating activities:
    Loss on disposition of fixed asset          425               -
Depreciation and amortization               114,827            64,832
Deferred tax expense (benefit)              (40,000)         (126,000)
Decrease (increase) in:
Accounts receivable                         117,318           (61,619)
Inventory                                    (1,545)            3,122
Prepaid expenses and other current assets    11,513           (10,803)
Increase (decrease) in:
Accounts payable and accrued expenses        54,324           (21,036)
Accrued vacation                              6,581            17,341
Deferred revenue                               -              (26,000)

NET CASH PROVIDED (USED) BY OPERATING 
ACTIVITIES                             $    199,432      $   (307,072)

</TABLE>


SEE AUDITOR'S REPORT AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    -5-
<PAGE>
    

EXPERTELLIGENCE, INC. AND SUBSIDIARY

    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    September 30, 1998 and 1997



Note 1    -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.    Business

ExperTelligence, Inc., (the Company) was incorporated in California on 
March 31, 1980.  The Company develops custom software applications for 
telecommunication and transportation companies, publishes general purpose 
software products for the Internet, and sets up and maintains web sites for 
business and other entities.

B.    Cash and Cash Equivalents

The Company considers all highly-liquid investments with a maturity of 
three months or less at the time of purchase to be cash equivalents.

C.    Inventory

Inventory consists primarily of product manuals, CD ROMs, and processing 
boards and is stated at the lower of average cost (determined on the FIFO 
basis) or market.  A reserve for obsolescence of $230,874 has been provided 
for both 1998 and 1997.

D.    Product Development Costs

Product development costs represent the costs of new products and new 
application enhancements to existing products incurred subsequent to 
establishing technological feasibility of the product and prior to the date 
the product is available for release to customers. Amortization is 
calculated using the straight-line method over its economic useful life, 
approximately five years, or on a product-by-product basis in the ratio 
that current period sales bear to the total of current and anticipated 
revenues.  This policy was adopted by the Company as of April 1, 1986, in 
accordance with the provisions of Financial Accounting Standards Board 
Statement No. 86, "Accounting for Software Development Costs." Total costs 
capitalized during the fiscal years ended September 30, 1998 and 1997, 
aggregated $75,710 and $336,791, respectively.  Related amortization, 
utilizing the straight-line method, for the year ended September 30, 1998 
and 1997, aggregated $94,699 and $46,916, respectively.  Accumulated 
amortization of product development costs aggregated $372,758 and $278,059, 
at September 30, 1998 and 1997, respectively.

E.    Allowance For Doubtful Accounts

The allowance for doubtful accounts at September 30, 1998 and 1997, is $0 
for both years.


    -6-
<PAGE>

EXPERTELLIGENCE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 and 1997



Note 1  -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

F.    Revenue

Revenue from software sales is recognized on delivery of the software when 
no further obligations remain under the sales or licensing agreement.  
Revenue from software license agreements that include significant product 
development is recognized upon the percentage of completion method.  As of 
September 30, 1998 and 1997, there were nocosts and estimated earnings in 
excess of billings or billings in excess of costs on uncompleted contracts.  
Product development services include postcontract customer support and 
software services.  Revenue from postcontract customer support is 
recognized ratably over the period of the postcontract support arrangement.  
Revenue from software services is recognized as the services are performed.
    
G.    Earnings Per Share

Earnings per common share and common equivalent share is computed by 
dividing net income by the weighted average number of shares of common 
stock and common stock equivalents outstanding during the year.  Preferred 
shares are considered in the computation of earnings per common and common 
equivalent shares for the years ended September 30, 1998 and 1997. Stock 
options were not considered in the computation of common equivalent shares 
for 1998 and 1997, because the stock options were considered antidilutive.

H.    Research and Development

Research and development expenses, not subject to capitalization, are 
charged to expense as incurred.

I.    Property and Equipment

Property and equipment is recorded at cost.  Depreciation expense is 
provided over the useful lives of the assets, which range from three to 
five years, using the straight-line method.

J.    Income Taxes

The Company uses Statement of  Financial Accounting Standards No. 109, 
"Accounting for Income Taxes"(SFAS No. 109) in reporting deferred income 
taxes.  SFAS No. 109 requires a company to recognize deferred tax 
liabilities and assets for the expected future income tax consequences of 
events that have been recognized in the company's financial statements.  
Under this method, deferred tax assets and liabilities are determined based 
on temporary differences between the financial carrying amounts and the tax 
basis of assets and liabilities using enacted tax rates in effect in the 
years in which the temporary differences are expected to reverse.
    -7-
<PAGE>

EXPERTELLIGENCE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 and 1997



Note 1  -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

K.    Use of Estimates

The preparation of financial statements in conformity with generally 
accepted accounting principles requires management to make estimates and 
assumptions that affect certain reported amounts and disclosures.  
Accordingly, actual results could differ from those estimates.

L.     Principles of Consolidation

The 1998 and 1997 consolidated financial statements include the accounts of 
ExperTelligence, Inc. and its wholly-owned subsidiary, ExperTelligence 
Canada, Inc.  All inter-company accounts and transactions have been 
eliminated in consolidation.

M.    Stock-Based Compensation

The Company accounts for compensation costs related to employee stock 
options and other forms of employee stock-based compensation plans in 
accordance with the requirements of Accounting Principles Board Opinion 25 
("APB 25").  APB 25 requires compensation  costs for stock-based 
compensation plans to be recognized based on the difference, if any, 
between the fair market value of the stock on the date of the grant and the 
option exercise price.  In October 1995, the Financial Accounting Standards 
Board issued Statement of Financial Accounting Standards 123, Accounting 
for Stock-Based Compensation ("SFAS 123").  SFAS 123 established a fair 
value-based method of accounting for compensation costs related to stock 
options and other forms of stock-based compensation plans.  However, SFAS 
123 allows an entity to continue to measure compensation costs using the 
principles of APB 25 if certain pro forma disclosures are made.  SFAS 123 
is effective for fiscal years beginning after December 15, 1995.  The 
Company adopted the provisions of pro forma disclosure requirements of SFAS 
123 in fiscal year 1997.  
Options granted to non-employees are recognized at their estimated fair 
value at the date of grant.



    -8-

<PAGE>

EXPERTELLIGENCE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 and 1997



Note 2    -    PROPERTY AND EQUIPMENT

Depreciation expense for the years ended September 30, 1998 and 1997, is 
$20,128 and $17,916, respectively.  Property and equipment at September 30, 
1998 and 1997, is summarized as 
follows:

                                        1998             1997

Furniture and fixtures               $   33,983     $   33,983
Purchased software                        9,662          8,929
Equipment                               391,667        373,486
                                        435,312        416,398

Less: Accumulated depreciation          382,580        362,451

                                     $   52,732      $  53,947



Note 3    -    SHAREHOLDERS' EQUITY

The preferred stockholders have voting rights equal to that of common 
stockholders.  The preferred stock is convertible into common stock on a 
one-for-one basis at any time.  No shares of preferred stock were issued 
during the year ended September 30, 1998 and 1997.  The preferred stock is 
nonredeemable, has a preference in liquidation equal to $3 per share plus 
any declared but unpaid dividends and provides for dividends to be 
declared at management's discretion.  As of September 30, 1998 and 1997, no 
dividends have been declared.



Note 4    -    STOCK OPTION PLANS

A.    1983 Incentive Stock Option Plan

In June 1983, the Company adopted an employee Incentive Stock Option Plan 
(1983 ISOP) and a Nonqualified Stock Option Plan (NSOP).  Under the 1983 
ISOP, the Company reserved a maximum of 55,000 shares to be issued upon the 
exercise of options.  The number of shares that may be issued pursuant to 
the NSOP is subject to determination of the Board of Directors. Both plans 
are administered by the Board of Directors.  As of 
September 30, 1997, the board has not granted any options under the NSOP.  
As of September 30, 1997, there are no options outstanding under the 1983 
ISOP. This plan was terminated as of September 30, 1997.



    -9-

<PAGE>

EXPERTELLIGENCE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 and 1997

Note 4    -    STOCK OPTION PLANS (continued)

B.    1988 Incentive Stock Option Plan

In August 1988, the Board of Directors adopted a new ISOP (1988 ISOP), 
whereby options may be granted to management and key employees at exercise 
prices equal to or greater than the fair market value of the Company's 
common stock on the date of grant.  The Company had reserved 200,000 shares 
of common stock for the exercise of options under this plan.   195,000 
options were granted at exercise prices per share of $.10 for options with 
a ten-year term and $.11 for those options with 
five-year terms (the estimated fair market value at the date of the grant).  
The plan was terminated as of September 30, 1997.

C.    1996 Equity Participation Plan

On August 15, 1996, the Board of Directors adopted the 1996 Equity 
Participation Plan, whereby options may be granted to employees, 
consultants, or independent directors.  For Incentive Stock Options the 
exercise price shall be equal to or greater than the fair market value of 
the Company's common stock on the date of the grant.  For Nonqualified 
Stock Options, the exercise price shall be not less than 85% of the fair 
market value of a share of common stock on the date the 
option is granted.  The board of directors shall determine whether options 
granted under this plan are to be Incentive Stock Options or Nonqualified 
Stock Options.  Options expire ten years after the date of grant unless an 
earlier expiration date is set at the time of grant.  The Company has 
reserved a total of 475,000 shares of common stock for the exercise of 
options under this Plan.  No options have been granted under the 
Nonqualified Stock Options plan.

    -10-

<PAGE>

EXPERTELLIGENCE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 and 1997

Note 4    -    STOCK OPTION PLANS (continued)

C.    1996 Equity Participation Plan

        Stock option activity is shown below:
<TABLE>
<CAPTION>

                                                        Weighted Average
                                                         Grant Date Fair
                                                        Value of Options
                         Number of    Weighted Average    Granted During
                        Shares         Exercise Price          Year
 <S>                   <C>            <C>                  <C>
 
1997

Outstanding at  
beginning of year       87,500          $ 4.00    
Granted                191,000            4.10              $ 4.78
Exercised                 -                 -
Cancelled               80,000            4.00
Outstanding at end
    of year            198,500            4.10
Exercisable at end of
    year                 7,500            4.00

1998
Outstanding at
beginning of year      198,500           $4.10
Granted                 60,000            1.435             $ 1.75
Exercised                                 -                      -
Cancelled               80,000            4.25
Outstanding at end
    of year            178,500            3.14
 Exercisable at end
    of year             29,700            4.00
</TABLE>

Statement of Financial Accounting Standards 123, "Accounting for Stock-
Based Compensation", encourages but does not require companies to record 
compensation cost for stock-based employee compensation plans at fair 
value.  The Company has chosen to continue to account for stock-based 
compensation using the intrinsic value method prescribed in Accounting 
Principles Board Opinion 25, "Accounting for Stock Issued to Employees", 
and related interpretations.  Accordingly, compensation cost for stock 
options is measured as the excess, if any, of the quoted market price of 
the Company's stock at the date of grant over the amount an employee must 
pay to acquire the stock.


-11-

<PAGE>

EXPERTELLIGENCE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 and 1997



Note 4    -    STOCK OPTION PLANS (continued)

C.    1996 Equity Participation Plan (continued)

Had compensation costs for the plan been determined based on the fair value 
of the options at the grant dates consistent with the method of SFAS 123, 
the Company's net income and earnings per share would have been:

                    1998          1997
Net loss
As reported    $   (64,011)    $   (146,909)
Pro forma         (242,516)        (231,904)

Primary earnings per share
As reported        (.0393)         (.0929)
Pro forma          (.1486)         (.1467)
  
These pro forma amounts may not be representative of future disclosures 
because they do not take into effect pro forma compensation expense related 
to grants made before 1996.  In addition, potential deferred tax expense 
and benefits of approximately $71,100 and $34,100, respectively, has not 
been reflected in the pro forma amounts.  The fair value of these options 
was estimated at the date of the grant using the 
Black-Scholes option-pricing model with the following weighted average 
assumptions for 1998 and 1997:

                        1998    1997


Expected life (years)    10    10
Risk-free interest rate  6%    6%
Volatility             160%   25%
Expected dividends     None    None



Note 5 -    COMMON STOCK

During the year ended September 30, 1998, the Company redeemed 700 of its 
own shares.  To properly record the redemption, common shares issued and 
outstanding was reduced by 700 shares, the dollar amount of common stock 
was reduced by $1,737 and retained earnings was increased by $37.



-12-

<PAGE>

EXPERTELLIGENCE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 and 1997



Note 6    -    INCOME TAXES (continued)

Income tax expense (benefit) for the years ended September 30, 1998 and 
1997, are as follows:
<TABLE>
<CAPTION>                        

                  1998               1997
<S>             <C>            <C>

Current          $      800     $       800
Deferred            (40,000)       (126,000)

Total            $  (39,200)    $   (125,200)
</TABLE>
Components of the deferred tax assets and (liabilities) recognized in the 
balance sheet at September 30, 1998, are as follows:

<TABLE>
<CAPTION>                        

                                            Current       Non-current
<S>                                        <C>           <C>

Accrued vacation pay                      $   26,000      $      -
Property and equipment                         -            (6,000)
Software costs                                 -          (265,000)
Investment in subsidiary                       -           (78,000)
Deferred state tax                              9,000       (2,000)
Net operating losses                           90,000      921,000
Deferred tax credits                           -           226,000
                                              125,000      796,000
Deferred tax assets valuation allowance        -          (443,000)

Deferred tax asset                         $ 125,000    $  353,000
</TABLE>

Reconciliation of the difference between income taxes computed at Federal 
statutory tax rates and provision for income taxes, for the year ended 
September 30, 1998, is as follows:

Income taxes computed at Federal statutory tax rate    $  (24,000)
State tax provision                                         3,000
Graduated tax rates                                        (7,000)
Net operating loss and deferred credits                    69,000
Valuation allowance                                       (80,200)

Provision for income taxes                             $  (39,200)


    -13-

<PAGE>
EXPERTELLIGENCE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 and 1997



Note 6    -    INCOME TAXES (continued)

Temporary differences have resulted between financial statement and income 
tax reporting including depreciation, capitalized software costs, non-
deductibility of accrued vacation wages not paid within seventy-five days 
of year end, and net operating loss carryforwards.


As of September 30, 1998, the Company had the following approximate net 
operating loss and tax credit carryforwards available to reduce future 
federal and state income taxes:
<TABLE>
<CAPTION>


                          Federal     Federal    State         State
    Expiring           Net Operating    Tax    Net Operating    Tax
    September 30           Losses     Credits    Losses       Credits
<S>                    <C>            <C>        <C>         <C>

    1999              $    28,000    $  56,000   $   -      $     -
    2000                  487,000       30,000       -            -
    2001                  390,000          -         -            -
    2002                  309,000          -       171,000        -
    2003                  125,000          -        38,000        -
    2004                      -          6,000       -            -
    2005                  614,000       30,000       -            -
    2006                  481,000       39,000       -         9,000
    2007                   68,000       14,000       -        16,000
    2008                      -         10,000       -            -
    2009                      -            -         -            -
    2010                      -          1,000       -            -
    2011                      -          4,000       -         8,000
    2012                  342,000        2,000       -         1,000
    2013                   76,000          -         -            -

                      $ 2,920,000    $ 192,000    $ 209,000 $ 34,000

</TABLE>

    -14-

EXPERTELLIGENCE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 and 1997



Note 6 -    INCOME TAXES (continued)

Components of the deferred tax assets (liabilities) recognized in the 
balance sheet at September 30, 1997, are as follows:
<TABLE>
<CAPTION>

                                           Current      Non-current
<S>                                       <C>          <C>

Accrued vacation pay                     $   24,000    $       -
Property and equipment                        -           (8,000)
Software costs                                -         (264,000)
Investment in subsidiary                      -          (91,000)
Deferred state tax                            8,000        2,000
Net operating losses                         78,000      992,000
Deferred tax credits                          -          223,000
                                              110,000    854,000
Deferred tax assets valuation allowance       -         (526,000)

Deferred tax asset                          $ 110,000  $ 328,000

</TABLE>

Reconciliation of the difference between income taxes computed at Federal 
statutory tax rates and provision for income taxes, for the year ended 
September 30, 1997, is as follows:

Income taxes computed at Federal statutory tax rate    $  (93,000)
State tax provision                                        10,000
Graduated tax rates                                       (16,000)
Net operating loss and deferred credits                     1,000
Valuation allowance                                       (27,200)

Provision for income taxes                             $ (125,200)



Note 7 -    SIGNIFICANT CUSTOMERS AND CREDIT RISK

For the year ended September 30, 1998, 68% of accounts receivable was 
concentrated between two customers. Three customers accounted for 
approximately 71% of total revenue.

For the year ended September 30, 1997, 69% of accounts receivable was 
concentrated among three customers.  These same three customers accounted 
for approximately 54% of total revenue.




    -15-

<PAGE>

EXPERTELLIGENCE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 and 1997



Note 8 -    CASH AND CASH EQUIVALENTS - CONCENTRATION OF CREDIT RISK

Uninsured cash balances were $31,985 at September 30, 1998, and $0 at 
September 30, 1997.

Note 9 -    LINE OF CREDIT

On October 14, 1997, the Company reactivated a line of credit that had 
expired January 31, 1996. The limit on this line of credit is $30,000.  The 
balance on this line of credit at September 30, 1998, was 0.

On February 25, 1998, the Company opened a second line of credit that 
expires February 1, 1999. The limit on this line of credit is $100,000.  It 
is secured by inventory, receivables, contract rights and furniture and 
fixtures.  The balance on this line of credit at September 30, 1998, was 0.


Note 10 -    NON-CASH TRANSACTIONS

During the year ended September 30, 1997, the Company issued 40,000 shares 
of common stock at $4.00 per share to acquire a wholly owned subsidiary 
(see Note 12).

During the year ended September 30, 1997, the Company issued 1,300 shares 
of common stock at $3.00 per share to pay for legal expenses.

Note 11 -    FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company has various financial instruments, none of which are held for 
trading purposes. The Company estimates that the fair value of all 
financial instruments at September 30, 1998 and 1997, does not differ 
materially from the carrying values of its financial instruments recorded 
in the accompanying balance sheet.  Considerable judgement is necessarily 
required in interpreting market data to develop the estimates of fair 
value, and accordingly, the estimates are not necessarily indicative of 
amounts the Company could realize in a current market exchange.

-16-

<PAGE>

EXPERTELLIGENCE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 and 1997

Note 12 -    BUSINESS ACQUISITION

On March 12, 1997, the Company acquired Cerebral Systems Development 
Corporation (formerly CSD, now ExperTelligence Canada, Inc.) for an 
aggregate purchase price of $188,052 (excluding acquisition costs of 
$44,473), consisting of $28,052 cash and the issuance of 40,000 shares of 
common stock of the Company at $4.00 per share. ExperTelligence Canada, 
Inc. (ET Canada) is a Canadian company that develops software, which is 
sold worldwide, mainly over the Internet.

The acquisition was accounted for as a purchase and, accordingly, the 
acquired assets and liabilities were recorded at their estimated fair 
market values at the date of acquisition.  The purchase price plus costs 
directly attributable to the completion of the acquisition have been 
allocated to the assets and liabilities acquired.  Approximately $210,000 
of acquisition costs represents product development costs that have reached 
the technological feasibility stage.  There is no goodwill deemed to be a 
part of the aggregate purchase price. The Company's consolidated results of 
operations include the operating results of ET Canada from the acquisition 
date.

The following unaudited pro forma condensed combining statements of 
operations of the Company and ET Canada for the year ended September 30, 
1997 has been prepared to illustrate the effect of the acquisition which is 
being accounted for as a purchase, as if the acquisition had occurred on 
October 1, 1996.  Adjustments have been made including the issuance of 
common stock as part of the acquisition.  The pro forma information is 
presented for illustrative purposes only, and is not necessarily indicative 
of what actual results of operations would have been during such periods.

                      Year Ended
                    September 30, 1997
Income Statement
Net sales          $    993,204
Net loss               (131,570)
Net loss per share      (.0833)




    -17-

<PAGE>

EXPERTELLIGENCE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998 and 1997



Note 13 -    COMMITMENTS AND CONTINGENCIES

Leases

Starting on January 1, 1997, the Company leased its office space under a 
non-cancelable operating lease through December 31, 1998 for monthly rental 
payments of $2,350.  The monthly rental rate will be adjusted on January 
1st of each subsequent year to reflect the year-to-year percentage change 
in the Los Angeles Consumer Price Index for September.  Total office rent 
expense for the years ended September 30, 1998 and 1997 is $28,494 and 
$28,200 ($21,150 under the non-cancelable lease), respectively.  It is the 
Company's intent to extend the lease for two years, to December 31, 2000.

Future minimum lease payments for the year ending September 30, are as 
follows:

    1999    $ 28,704
    2000      28,704
    2001       7,176

    Total   $ 64,584

Note 14 -    SUBSEQUENT EVENTS

On October 7, 1998, the Company issued 16,667, shares of common stock, 
valued at $50,000, in exchange for marketing and consulting services.  The 
$50,000 was included in accounts payable and expense as of September 30, 
1998.

The Company is in the process of converting an account receivable balance 
of $51,585 into a long-term note receivable.  This amount has been 
reclassified on the September 30, 1998, balance sheet to a long-term 
accounts receivable.  


-18-

<PAGE>



Item 8. Changes In and Disagreements With Accountants on 
Accounting and Financial Disclosure

    None.
<PAGE>



Part III


Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
                                                     Year first
Name             Age        Position                elected Director

Denison Bollay    46    President, Chairman of the Board    1980
Robert Reali      37    Vice President, Director            1988

Mr. Denison Bollay is the founder and has been the President of the Company 
and Chairman of its Board of Directors since March 1980.  He received his 
Bachelor of Science Degree in Engineering in 1974 from Harvey Mudd College.

Mr. Robert Reali was appointed to the Board on August 1, 1988. He is Vice 
President of Development.  He has been with ExperTelligence, Inc. since 
1981.  He majored in Computer Science Engineering at the University of 
California, Santa Barbara.

Mr. David Swan resigned in January 1998

Item 10. Executive Compensation

The following table sets forth as required all compensation to officers for 
services rendered in all capacities to the Company during or with respect 
to the 1997 fiscal year.

Name & Position      Year      Salary       Bonus  Other     Annual 
Compensation    

Denison Bollay, CEO   1997   $151,200        $0              $151,200
Robert Reali, VP Dev  1997  $  64,500        $0              $ 66,000
David Swan, VP Sales  1997  $  80,462        $0              $  6,415    

The table on the following page sets forth, as to individuals having 
received greater than 5% of options granted and as to all executive 
officers and directors as a group, the following information with respect 
to  stock options: (i) the aggregate number of shares of the Company's 
common stock subject to options granted under the 1988 Incentive Stock 
Option Plan and the 1996 Incentive Stock Option Plan through September 30, 
1997, (ii) the number of options exercised prior to September 30, 1997, 
iii) the number of options currently exercisable as of September 30, 1997, 
and iv) the average per share option exercise price.   As of September 30, 
1998 198,500 options had not been exercised.

<TABLE>
<CAPTION>
                       (i)            (ii)       (iii)        (iv)
                      Options    Options       Options        Average
Identity of group    Granted    exercised     exercisable  exercise price
<S>               <C>        <C>            <C>          <C>

Denison Bollay     95,000       0              0            $2.72
Robert Reali       25,000       0              0            $2.72
Ofelia Garcia       5,000       0              0            $4.00
George Barilla     18,000       0              0            $2.72
Beverly Pierson    25,500       0              0            $2.84
Brad Bradbury       5,000       0              0            $1.44
Sahap Yuzer         5,000       0              0            $1.44
</TABLE>
<PAGE>


Item 11. Security Ownership of Certain Beneficial Owners and 
Management


On September 30, 1998, no person owned beneficially more than five percent 
(5%) of the outstanding shares of the common stock of the Company except as 
set out below.  The Company has no securities other than its preferred 
stock and common stock.

                                          Number of    Percent of
Name and Address of Beneficial Owner    Shares Owned     Class

Denison Bollay, CEO
203 Chapala Street
Santa Barbara, CA 93101                     395,463    24.2%

BNP Venture Capital Corporation
c/o Bank of the West
50 W. San Fernando, 2nd Floor
San Jose, CA  95113                         150,000      9.2%

Officers and Directors as a Group           440,463     28.3%


Item 12. Certain Relationships and Related Transactions

    None.

Item 13.    Exhibits and Reports on Form 8-K. 




Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has duly caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.



ExperTelligence, Inc.
Denison Bollay, President, Chief     
Financial Officer and Chairman of the Board
December 29,1998    
    
Robert Reali, Director
December 29, 1998