U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

          X ANNUAL REPORT UNDER SECTION 13 or 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

               For the Fiscal Year Ended December 31, 1997

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

                        Commission File Number: 0-29138

                          INTELLECTUAL TECHNOLOGY, INC.
           (Name of Small Business Issuer as specified in its charter)

             Delaware                                    84-1130227 
(State or Other Jurisdiction of           (I.R.S. Employer I.D. No.)
 Incorportion or Organization)

           10639 Roselle Street, Suite B, San Diego, California 92121
               (Address of Principal Executive Offices) (Zip Code)

                                 (619) 552-0001
               Registrant's Telephone Number, including Area Code

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

         Securities registered under Section 12(g) of the Exchange Act:
                         Common Stock, $.00001 par value
                     Class A Common Stock Purchase Warrants
                     Class B Common Stock Purchase Warrants
 
Check whether the Registrant: (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 there is no disclosure of delinquent filers in response to 
Item 405 of Regulation S-B contained in this form, and no disclosures 
will be contained, to the best of the 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 X


The Registrant's revenues for the fiscal year ended December 31, 1997 
were $3,011,370.

<PAGE>

The aggregate market value of the voting stock held by non-affiliates 
of the Registrant as of April 13, 1998 was $2,510,480.  For purposes of 
this computation, it has been assumed that the shares beneficially held 
by directors and officers of Registrant were "held by affiliates;" this 
assumption is not to be deemed to be an admission by such persons that 
they are affiliates of Registrant.

As of April 13, 1998, the Registrant had outstanding 10,000,000 shares 
of Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

Specified exhibits listed in Part III of this report are incorporated 
by reference to the Registrant's Registration Statement No. 33-33092-D, 
effective April 17, 1990, or to Registrant's Report on Form 8-K dated 
March 27, 1997.

         Transitional Small Business Disclosure Format: Yes ___ No X

                                         2

<PAGE>

                                     PART I
ITEM 1.   BUSINESS.

Historical Development

Image Technology, Inc., a Nevada corporation based in San Diego, 
California  ("ITI Nevada") was formed on April 23, 1992 to engage in 
the design, manufacture and sale of systems for the automated 
preparation and dispensing of motor vehicle registration forms and 
license plate decals.  On March 12, 1997, the shareholders of ITI 
Nevada, in a transaction accounted for as a reverse acquisition, 
exchanged all of the outstanding common stock of ITI Nevada for 
450,000,000 shares of the common stock of Bridgestone Corp., a Delaware 
corporation.  As a result of this transaction, ITI Nevada shareholders 
acquired collectively a 90% interest in Bridgestone Corp., and ITI 
Nevada became a wholly-owned subsidiary of Bridgestone Corp. 
Bridgestone Corp., which was formed on December 1, 1989, for the 
purpose of seeking out and acquiring a business opportunity, had 
completed a public offering of common stock and warrants on October 29, 
1990, realizing net proceeds of $80,341.  In April of 1997, Bridgestone 
Corp. changed its name to Intellectual Technology, Inc. and effected a 
1 for 50 reverse stock split.  References in this report to the Company 
and to ITI are references to Intellectual Technology, Inc., a Delaware 
corporation, and its predecessor and wholly owned subsidiary, ITI 
Nevada, on a consolidated basis.

Industry and Company Background

Vehicle registration services are operated by all 50 states, the 
District of Columbia, and many foreign governmental authorities. 
Governments use vehicle registration as a means of generating revenues 
and to provide an orderly method of regulating the ownership and 
transfer of motor vehicles.  Management of the Company believes that 
traditional methods of motor vehicle registration have resulted in 
delays experienced by members of the public, significant personnel and 
facility costs, the waste of preprinted materials and a generally 
inefficient disbursement process, as well as significant losses 
occasioned by fraud and theft.  Based upon discussion with law 
enforcement officials, the Company believes that losses attributable to 
these problems are in the hundreds of millions of dollars.

As early as 1987, ITI's founders envisioned streamlining the 
distribution of motor vehicle registrations through the development of 
an automated, self-service registration printing and dispensing device. 
From 1987 through 1991, the founders of ITI engaged in market research 
and product development.  Two patents resulting from these activities 
were assigned by their inventors to American Registration Systems, 
Inc., an Indiana corporation ("ARS").  See "Certain Relationships and 
Related Transactions."  In 1992, ITI was formed to continue this 
process and commercialize the concepts that had been developed.  One of 
the patents was acquired by ITI Nevada through the enforcement of a 
pledge agreement, and in October 1995, the remaining patent was 
assigned by ARS to ITI Nevada.  ARS subsequently assigned its interest 
in both patents to Intellectual Technology, Inc. in October 1995.

                                         3

<PAGE>

The ITI 2101A and Related Print Media

The result of the efforts of ITI and its founders is the ITI 2101A 
printing system, which allows for the real time, on-site creation of 
vehicle registration forms and license decals on blank stock, including 
the imprinting of the vehicle license plate number on the decal.  The 
Company believes that this on demand printing capability will allow 
Departments of Motor Vehicles to substantially  reduce fraud and theft, 
increase revenue collection, and reduce personnel, inventory, and 
facility costs as a consequence of increased efficiencies.  The ITI 
2101A is designed to operate both as a stand alone unit in a printer 
server environment within a Department of Motor Vehicles ("DMV") office 
and as a self-service terminal which can be placed in locations remote 
from DMV offices.  Both versions include user interface hardware and 
software and an operator panel to assist maintenance personnel while 
they load media, make print adjustments, and perform routine servicing.

The Company believes that the ITI 2101A resolves the problems described 
above in "Industry and Company Background," in that it prints a vehicle 
registration with an applied decal on blank stock, thereby eliminating 
the need to dispose of preprinted stock at year end.  Additionally, the 
ITI 2101A is designed to satisfy the security demands of Departments of 
Motor Vehicles in that it applies the vehicle license plate number to 
the decal, thus causing the decal to become significantly less valuable 
to thieves.  The ITI 2101A is also equipped with a software system 
which accounts for all transactions effected through the printer, which 
significantly reduces the likelihood of DMV employee fraud or theft. 
Finally, when combined with the automated teller technology of NCR 
Corporation ("NCR"), the ITI 2101A is capable of acting as a self 
service terminal for motor vehicle registrations which can be 
established in locations remote from DMV offices, thereby reducing 
personnel and facilities costs.


In the early 1990's, ITI worked with 3M Corporation of St. Paul, 
Minnesota ("3M") to develop a specially coated validation sheeting to 
be used in the printing of decals in real time at the point of issue.  
ITI's goal was to provide a validation decal which accepted thermally 
transferred printing and required no clear coating to meet industry 
standards for durability.  This product was developed, and, by a letter 
dated January 24, 1995, 3M acknowledged that ITI would be 3M's 
exclusive distributor for the product.  This exclusivity extends only 
to the product developed for ITI's system.  Although 3M has on-going 
programs the objective of which are to develop other products for the 
validation sticker market, it has expressed its intent to limit its 
development of other distinct validation sheeting products to those 
which will not interfere with the exclusive validation sheeting 
distribution plan of the Company.  This exclusivity permits the Company 
to serve as the sole source of the media in situations where a DMV 
might elect to purchase the ITI 2101A, rather than leasing it based on 
a per transaction pricing structure.

                                     4

<PAGE>

Marketing and Sales

The primary market for the Company's printing systems and services 
consists of the Department of Motor Vehicles in each of the 50 U.S. 
states.  The Company believes that the decision-making authority to 
purchase the Company's products is vested as to any Department, in a 
limited number of administrative personnel.  Accordingly, the persons 
to be contacted by the Company in making sales presentations and 
proposals are to be determined on a narrowly focused, strategic basis.

The Company believes that the historical relationships between key 
senior management and the State Motor Vehicle administrators and the 
limited number of competitors in this market permit the Company to 
approach the vehicle registration and renewal market with significant 
efficiencies.  Consequently, the Company plans to market its products 
and services through its in-house marketing and sales staff which 
consists of three senior sales and marketing employees.

As new accounts with additional states are established, however, the 
Company intends to supplement its sales staff to provide an expanded 
and ongoing range of contacts with each customer or client DMV.  The 
purpose of this expanded sales coverage will be to allow developments 
in the Company's product line to be brought to the attention of each 
client DMV in a timely fashion and to promote customer satisfaction and 
loyalty.

The Company solicits interest in its products primarily through direct 
contact with DMV officials and attendance at industry conferences.  The 
initial marketing package consists of brochures and color photographs, 
which are supplemented with an explanation of the product's evolution 
and a videotaped demonstration of its performance.  References of DMV 
officials of states where the Company has installed its products are 
supplied, along with an offer to demonstrate the products.

Once a state has accepted the concept of the real time, on-site 
printing of motor vehicle registrations and license decals, it must 
then decide whether to acquire the ITI 2101A in the form of self-
service terminals or as stand alone units operated by DMV personnel, or 
both.  Indiana has chosen to acquire both types of units.  Maryland 
utilizes self-service terminals only.  The Company also offers its 
customers the opportunity to acquire the ITI 2101A through leases using 
a transaction-based pricing mechanism, in which the Company is paid an 
amount which varies over time based upon the number of transactions for 
which the printer is used.

                                          5

<PAGE>

Contracts

In August 1996, ITI entered into an Equipment Lease, Support and 
Maintenance Agreement (the "Indiana Contract") with the Indiana Bureau 
of Motor Vehicles Commission (the "BMVC").  The Indiana Contract became 
effective by its terms on November 1, 1996, and provides for the BMVC 
to lease from ITI both self-service terminals and stand alone printers.  
It required ITI to install an initial group of 11 self-service 
terminals and 100 stand alone printers in locations designated by the 
BMVC.  Subsequently, the BMVC authorized the installation of an 
additional 25 self service terminals and 195 additional stand alone 
printers.

The installation of all of the stand alone printers was completed in 
November of 1997.  Currently, there are 14 self service terminals 
installed with the remaining 22 scheduled for installation by the 
fourth quarter of 1998.  Effective January 1, 1998, ITI equipment will 
process all of the approximately 5.7 million annual registration and 
renewal transactions in Indiana.

The Indiana Contract may be terminated only in the event of a breach by 
either party which has not been cured after 60 days written notice or 
if the Director of the Indiana State Budget Agency makes a written 
determination that funds are not appropriated or otherwise available to 
support the continuation or performance of the agreement.  The pricing 
of the Indiana Contract is on a per transaction basis, with the Company 
receiving an amount per transaction between $1.22 and $.85, with the 
amount per transaction generally decreasing as additional blocks of 
printers and self service terminals were leased but increasing with the 
passage of time.  Additionally, after installation of all of the 
blocks, the BMVC, at its option, may lease additional terminals or 
printers. Each such additional lease would result in an increase in the 
per transaction fee for each installed terminal or printer.

The term of the Indiana Contract is for a period of three years, 
subject to an option to renew on the part of the BMVC for an 
additional, fourth year. The Indiana Contract provides that title to 
the leased equipment and risk of its loss will remain with the Company.  
Shipping and delivery costs were paid by the Company.  Following 
delivery and installation of a printer or terminal and the Company's 
certification that it has been successfully installed and is ready for 
use, the BMVC is required to inspect the equipment and accept or reject 
it.  All equipment installed pursuant to the Indiana Contract through 
the date of this Report has been accepted by the BMVC.  The equipment 
may be rejected only if it fails to conform to the requirements of the 
agreement, including, but not limited to, the specifications of the 
Request for Proposal upon which the Indiana Contract is based.  The 
Company is required to keep the leased equipment in good operating 
condition and provide support and maintenance services.  Also, the 
Company is required to provide periodic maintenance as specified in its 
response to the BMVC Request for Proposal as well as remedial 
maintenance which satisfies response times set forth in the Company's 
response to the BMVC Request for Proposal.  Generally, service and 
replacement parts are to be provided without charge to the BMVC.

                                       6

<PAGE>

To assist it in performing its obligations under the Indiana Contract, 
effective as of August 1, 1996, ITI entered into a Subcontractor 
Agreement with NCR (the "NCR Agreement"), which generally requires the 
Company to provide the printers, printing media, facilities management, 
printer installation, customer billing, and self-service terminal 
provisioning aspects of the Indiana Contract, while NCR is responsible 
for providing the self service terminals, program management, software 
development, software maintenance, hardware maintenance, and self-
service terminal installation.  The NCR Agreement requires NCR to 
provide both remedial and preventative maintenance services with 
respect to the self service terminals.

The Maryland Department of Motor Vehicles contracted with NCR for the 
purchase of 11 self service terminals for the State of Maryland.  ITI 
supplied NCR with the printing systems necessary for the issuance of 
registrations and decals from the self service terminals.  As part of 
ITI's agreement with NCR in Maryland, all of the media (blank 
registration paper and decals) used by the state must be purchased from 
ITI.

ITI is negotiating with NCR to provide additional self service 
terminals to Maryland and directly with Maryland to lease ITI's over 
the counter, stand alone printing system.


Manufacturing and Supply

The Company does not manufacture its products and instead uses vendors 
to manufacture and supply all components and subassemblies of the ITI 
2101A, to perform final assembly of its product, and to provide the 
printing media used by the ITI 2101A.  The custom printing unit used 
for all existing ITI printing systems were manufactured by Zebra 
Technologies, Inc., of Vernon Hills, Illinois.  The custom printers 
produced by Zebra Technologies are modified by Contract Manufacturing 
Integration ("CMI") of Poway, California, which functions as a complete 
manufacturing facility for the Company and provides various services, 
including without limitation final assembly, firmware integration, 
final testing, and quality control.  CMI is responsible for employing 
the necessary manufacturing personnel.  The decal used by the ITI 2101A 
is produced exclusively for the Company by 3M Corporation of St. Paul, 
Minnesota. The paper materials on which the registrations are supplied 
by NCR (see "Business - The ITI 2101A and Related Print Media").  The 
Company has identified alternative vendor sources for all materials and 
assemblies used in its products other than the 3M printing media.  The 
Company believes the use of vendors for its manufacturing process has 
allowed it to limit the size of its fixed overhead and to respond 
quickly to the volatility of its market which consists of a relatively 
small number of significant customers who order products at irregular 
intervals.

                                      7

<PAGE>


Competition

The Company believes that it has a strong competitive position for the 
sale of its self service terminals, printing systems and related media 
supplies.  Although the market is relatively young, ITI has established 
a reputation for providing quality products.  ITI's innovative, 
successful solutions give it a significant lead over its competitors.  
None of ITI's competitors offer a solution incorporating both self 
service and real-time, over the counter or mail room applications.

The Company cannot guarantee that a better capitizated competitor will 
not develop a competitive product.  The Company's proprietary 
technology and leading position in the market, however, make it 
unlikely that a larger company would choose to devote the time and 
resources to develop the technology on its own.


Patents

The ITI 2101A is based in part on technologies which are proprietary to 
the Company and covered by two patents owned by ITI.  The first patent, 
which was issued in 1990 (the "1990  Patent), covers an automatic fee 
collecting and receipt dispensing system particularly designed for 
vehicle registration transactions, including a customer interface for 
displaying information and receiving customer input and fee payments 
and a dispenser assembly for storing forms having preprinted areas and 
blank areas for receiving information specific to a transaction, a 
printer for printing information, and a dispensing device for the 
delivery of printed forms to customers.  The second patent, which was 
issued in 1994 (the "1994 Patent"), covers an automatic form dispensing 
system for a variety of transactions which has a housing with an 
operator interface and form dispensing assembly and a roll of blank 
form stock and two rolls of carrier web containing blank stickers 
retained thereon by a pressure sensitive adhesive.  The Company has 
filed for analogous patent protection in Canada, the United Kingdom, 
France, Germany, and Mexico. United States patents are valid for a 
period of 17 years from the date of issue.  No assurance can be given 
that the Company's patents will be enforceable or provide the Company 
with meaningful protection from competitors.  Even if a competitor's 
product infringed upon patents owned by the Company, enforcement of the 
Company's rights under the patents in an infringement action would be 
costly and would require the Company to divert funds and resources from 
other uses.  Furthermore, there can be no assurance that the Company 
would be successful in enforcing such rights.  The Company has patent 
protection insurance in place to offset legal costs associated with any 
potential patent infringements or challenges.

The 1994 Patent was acquired by ITI from ARS in a transaction which 
originally required ITI to pay ARS $4,000,000 for the 1994 Patent by 
May 1997 (see "Business Industry and Company Background" and "Certain 
Relationships and Related Transactions").  The due date of that payment 
obligation has been extended to May 1, 1999.  If the Company is unable 
to pay this amount when it comes due and consequently loses control of 
the 1994 patent, such loss would have a material and adverse affect 
upon the business of the Company.

                                     8

<PAGE>

Employees

The Company has fourteen full-time employees, of whom three are in 
executive or administrative positions, two are in engineering, and two 
are in sales positions.  None of the Company's employees are currently 
represented by a union, and the Company believes that its relations 
with its employees are good.


ITEM 2.   PROPERTIES

The Company occupies approximately 3,800 sq. ft. of office space in San 
Diego, California.  The space is subject to a five year lease expiring 
in the year 2001.  The Company currently pays monthly rent of 
approximately $1,900 for this space.  The Company's Vice President of 
Sales and Marketing shares a suite of offices in Dayton, Ohio as to 
which the Company bears its share of nominal expenses.  The Company 
also leases approximately 1,875 square feet of office/warehouse space 
in Carmel, Indiana.  The lease is for two years at a cost of $1,054.69 
per month in year one, $1,107.81 per month in year two.  The Company 
believes that these facilities are adequate to meet its anticipated 
needs for the foreseeable future.


ITEM 3.   LEGAL PROCEEDINGS

The Company is not currently the subject of or party to any legal, 
proceeding.


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

No matters were submitted to a vote of security holders during the 
fourth quarter of the fiscal year ended December 31, 1997.

                                       9

<PAGE>


                                     PART II


ITEM 5.   MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED
          STOCKHOLDER MATTERS

Prior to the first quarter of 1998, there was no active market for the 
Company's securities, with transfers occurring on an infrequent and 
sporadic basis.  The common stock of the Company commenced trading in 
the over the counter market in September 1996.  The following table 
sets forth, for the periods indicated, the range of high and low bid 
quotations for the Company's common stock as reported by a market  
maker in the Company's securities.  The prices reflected in the 
following table have been adjusted to reflect the 1 for 50 reverse 
stock split in the Company's common stock which occurred in April 1997.


             Quarter Ended                 High Bid      Low Bid

          September 30, 1996                 $0.01         $0.01
          December 31, 1996                  $0.01         $0.01
          March 31, 1997                     $  -          $  -
          June 30, 1997                      $  -          $  -
          September 30, 1997                 $3.00         $1.125
          December 31, 1997                  $2.1875       $1.00
          March 31, 1998                     $2.25         $1.125

The quotations which appear above reflect inter-dealer prices, 
without retail mark-up, mark-down or commission.

The Company has not paid any dividends on its common stock, and the 
Board of Directors of the Company presently intends to retain earnings, 
if any, for use in the Company's operations and to finance expansion of 
its business.  The declaration and payment of dividends in the future, 
of which there can be no assurance, will be determined by the Board of 
Directors in light of conditions then existing, including the Company's 
earnings, financial condition, capital requirements and other factors. 

As of January 13, 1998, the Company had approximately 60 shareholders 
of record, which does not include shareholders whose shares are held in 
street or nominee names.

                                      10

<PAGE>

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS

Certain statements contained in this report, including statements 
concerning the Company's future cash and financing requirements, and 
other statements contained herein regarding matters that are not 
historical facts, are forward looking statements; actual results may 
differ materially from those anticipated.


Plan of Operations

The Company designs, manufactures and leases systems for the automated 
preparation and dispensing of motor vehicle registration forms and 
license plate decals.  

Effective November 1, 1996, the Company commenced its lease contract 
with the State of Indiana.  Prior to that date, the Company was engaged 
principally in research and development of its products and generated 
only limited operating revenues.  During 1997, the Company's focus was 
upon:

Completing the installation of the self service terminals required in 
the initial phase of the Indiana Contract,

Installation of all stand alone printers called for in the Indiana 
contract,

Expanding the Company's sales and marketing staff and increasing its 
marketing efforts,

Seeking agreements for the lease of its products to additional 
jurisdictions.

In the coming twelve months, the Company will focus its efforts on:

Completing the installation of the remaining self service terminals in 
Indiana,

Expanding the Company's sales and marketing staff and increasing its 
marketing efforts

Seeking agreements for the lease of its products to additional 
jurisdictions

Obtaining the equity capital necessary to complete its performance of 
its initial contracts and to repay the investment notes issued by it as 
part of its initial capitalization and to pay off debt associated with 
patent acquisition.

Initiating the development of new opportunities in related areas.

                                       11

<PAGE>

Liquidity and Capital Resources

During 1997, the Company's principal source of capital was from 
borrowings from third party investors, augmented by internally 
generated cash flows.  In 1998, the Company anticipates positive cash 
flows from operations.  The following is a summary of the company's 
cash flows from operating, investing and financing activities:

                                         Year ended December 31,
                                            1997           1996

       Operating Activities           $  (891,524)  $ 1,244,939
       Investing Activities           $(1,634,188)  $(2,742,001)
       Financing Activities           $ 2,924,344   $ 1,499,764

       Net increase in cash           $   398,632   $     2,702

Operating cash flows are primarily derived from the per transaction fee 
earned from the Company's contract with the State of Indiana, which 
extends for three years, with a one-year renewal at the option of the 
State.  Although management anticipates that the State will exercise 
its renewal option, there can be no guarantee that such renewal will 
occur.  Likewise, the Indiana contract contains a provision whereby the 
contract may be terminated in the event that the State of Indiana fails 
to obtain budget approval for its automated vehicle registration 
program.  Such termination would have a material adverse effect on the 
Company and its operations.

In 1997, the Company experienced cash flow deficits during 
installation, as the State was gradually automated with ITI equipment.  
As of December 31, 1997, all stand alone printers contracted for by 
Indiana had been installed and were operational.  The Company received 
revenue on approximately 2.4 million transactions in 1997, and 
anticipates total revenue generating transactions in 1998 to be 5.8 
million.  Total actual transactions for the first year of this contract 
exceeded management projections.

Since the inception of the Indiana contract, the Company has invested a 
total of $4,278,000 in equipment and lease-related costs.  To finance 
this investment, and to fund the repayment of bridge loans extended to 
the Company during its initial capitalization, the Company issued debt 
to third party investors totaling $4,968,000.  These notes are secured 
by the Indiana contract equipment, and a pledge of Indiana contract 
receivables.  The notes will be fully repaid by their terms in November 1999.  
The outstanding balance at December 31, 1997 was $4,443,229.  
Debt service on the third party financing is $225,000 per month.

The Company continues to seek equity financing to cure working capital 
deficiencies and to pay off $3,999,200 for the purchase of Company 
patents plus accrued interest ($213,000 at December 31, 1997).  These 
amounts plus additional accrued interest at 8% are due by May 1, 1999 
to a corporation which is 49% owned by a current officer of ITI.  The 
Company anticipates, in the event that funds are not available to 
retire this debt as of May 1, 1999, that the due date will be extended.

                                    12

<PAGE>

Results of Operations

During 1997, 82% of the Company's revenues were generated from the 
Indiana contract.  Other sources of revenue include revenue from the 
sale of printers and printer media to the State of Maryland, and 
transaction fees earned from the State of New Hampshire under the 
Company's automated drivers' license contract with that state.  
Projected revenues from these other sources are expected to remain the 
same in 1998.

The Company's cost of sales includes amortization of Indiana and New 
Hampshire contract costs, periodic costs for the Company's maintenance 
crew, vehicles, and office/warehouse facility in Indiana, costs of 
printing media sold or supplied under the various contracts, and costs 
of equipment sold to Maryland.

Gross profit as a percentage of revenues was 42% in 1997 vs. 20% in
1996.  Future profit margins are anticipated to equal or exceed 1997 
levels.

Operating expenses were up 92% in 1997 over 1996 levels.  This change 
is primarily due to increases in payroll and related costs, and 
consulting and legal costs related to public company compliance with 
regulatory requirements.


Effect of Inflation and Foreign Currency Exchange

The Company has not experienced material unfavorable effects on its 
results of operations as a result of foreign currency fluctuations or 
domestic inflation.


Year 2000 Issue

The Company's management does not believe that theCompany will be 
materially adversely affected by the computer software Y2K issue.


ITEM 7.   FINANCIAL STATEMENTS.


The financial statements set forth in pages F-1 to F-12 of this report 
are incorporated herein by reference.

                                     13

<PAGE>

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

The Company's principal independent auditors did not resign or decline 
to stand for reelection, nor were they dismissed during the Company's 
two most recent fiscal years.  The Company's financial statements for 
the year ended December 31, 1997 were audited by Comiskey & Company 
P.C., which had been the auditor for the registrant, Intellectual 
Technologies, Inc. (formerly known as Bridgestone Corp.), prior to the 
reverse acquisition of Image Technologies, Inc.

The financial statements of Image Technologies Inc. as of and for the 
year ended December 31, 1996, which have been presented in comparative 
form with the current year consolidated financial statements, were 
audited by Charles W. Butman, C.P.A.  There have been no disagreements 
between Image Technologies, Inc. and Charles W. Butman C.P.A. on 
matters of accounting and financial disclosure.

                                     14

<PAGE>

                                    PART III


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


Identification of Directors, Executive Officers, and Significant 
Employees

The directors and executive officers of the Company, their ages, and 
their positions held in the Company are as follows:

      Name              Age                Position

Christ M. Rousseff       78     Chairman and Chief Executive Officer

Nicholas Litchin         71     Vice Chairman

Walter G. Fuller         57     President and Director

Janice L. Welch          57     Secretary/Treasurer and Director

John F. Grim             42  Vice President Sales/Marketing and 
                                      Director

Family Relationships

Mr. Rousseff is the father of Ms. Welch.  No other family relationships 
exist between any directors or executive officers.


Business Experience

The following is a brief account of the business experience during at 
least the past five years of each director and executive officer, 
including his or her principal occupation and employment during that 
period, and the name and principal business of the organization in 
which such occupation and employment were carried out.

                                     15

<PAGE>


Christ M. Rousseff is the Chairman of the Board and Chief Executive 
Officer of the Company, positions which he has held since March 12, 
1997 and the formation of ITI in April 1992, respectively.  From 1987 
to 1992 he was the President of American Registration Systems, Inc., 
an Indiana corporation.  From 1990 to 1992, he was the President of 
Advanced Identification Management Systems, Inc., a California 
corporation involved in the production of photographic driver's 
licenses for the State of New Hampshire.  From 1985 to 1987, Mr. 
Rousseff was a consultant to Polaroid Corporation.  From 1957 to 
1970, Mr. Rousseff was the Chairman and Chief Executive Officer of 
DEK Processes, Inc., an Indiana corporation engaged in the production 
of photographic  driver's licenses.  In 1970, DEK was sold 
to Scott and Fetzer, a New York Stock Exchange Company, and Mr. 
Rousseff remained the President of DEK until 1977, at which time he 
repurchased DEK from Scott and Fetzer.  He was the Chief Executive 
Officer of DEK until 1982, when that company was sold to Mohawk Data 
Sciences, for which he consulted until 1984.  In 1967 Mr. Rousseff 
founded the Industry Advisory Support Committee, a private industry 
group formed to assist and advise Departments of Motor Vehicles.  He 
was the Chairman of that Committee from 1967 to 1977.

Nicholas Litchin is the Vice Chairman of the Board of Directors of the 
Company, positions which he has held since March 12, 1997 and the 
formation of ITI in April 1992, respectively.  From 1988 through 1992 
Mr. Litchin was in retirement.  Prior to that time from 1980 to 1989, 
Mr. Litchin was the President of Mercer Beverage Company of St. Henry, 
Ohio, an Ohio corporation engaged in beverage distribution.  From 1973 
to 1987, he was the Chairman of ABC Distributing Company of Defiance, 
Ohio, an Ohio corporation engaged in the distribution of beer, wine and 
soft drinks.  From 1982 to 1991 Mr. Litchin was a Vice President of WMCR 
corporation of Altena, Michigan, an owner/operator of 53 KFC outlets.

Walter G. Fuller is the President and a Director of the Company
positions which he has held since March 12, 1997 and the formation 
of ITI in 1992, respectively.  He is also the President of M&S Steel 
Co., Inc., an Indiana corporation, which is a supplier of structural 
steel to the construction industry.

Janice L. Welch is the Secretary/Treasurer and a Director of the 
Company.  She has held her position with the Company since March 12, 
1997 and with ITI since its formation on April 23, 1992.

John F. Grim is the Vice President - Sales and Marketing of the Company.
He has held his position with the Company since March 12, 1997 and with ITI 
since October 1, 1995.  Prior to this employment Mr. Grim worked for NCR 
Corporation for over fourteen years in various sales, marketing, and 
management capacities related to networking products and the Public Sector 
industry.  Prior to departing NCR Mr. Grim was the head of NCR's Public 
Sector worldwide marketing organization.  Mr. Grim is also a Director of the 
Company.

                                     16

<PAGE>

Involvement in Certain Legal Proceedings

No officer director, significant employee, promoter or control person 
of the Company has been involved in any event of the type described in 
Item 401(d) of Regulation SB during the past five years.


Compliance with Section 16(a) of the Exchange Act

Not applicable

                                     17

<PAGE>


ITEM 10.  EXECUTIVE COMPENSATION


Summary Compensation Table

The following table sets forth information regarding compensation paid 
to the Company's CEO and the other executive officers of the Company 
who received in excess of $100,000 of salary and bonus from the Company 
during the year ended December 31, 1997:

                                                       Long Term    
                     Annual Compensation         Compensation Awards

                                               Restricted              
                                               Stock   Options  Other  
Name and Position   Year    Salary     Bonus   Awards  & Sar's  Comp.

Christ M. Rousseff  1995      $-0-       $-0-     $-0-     $-0-  $-0-
CEO, Chairman of    1996      $-0-       $-0-     $-0-     $-0-  $-0-
the Board           1997      $-0-       $-0-     $-0-     $-0-  $-0-

John F. Grim        1995      $25,000    $-0-     $-0-     $-0-  $-0-
VP Marketing        1996     $125,000    $-0-     $-0-     $-0-  $-0-
and Director        1997     $125,000    $-0-     $-0-     $-0-  $-0-



Compensation of Directors

The Company has adopted a policy of paying non-employee directors $250 
per meeting plus expenses.


Employment Agreements

Mr. Grim has entered into an agreement with the Company to serve as its 
Vice President Sales/Marketing.  This agreement became effective on 
October 1, 1995 and has a term of two years.  It provides for monthly 
compensation of $8,333 and an annual bonus of $25,000.


Termination of Employment and Change of Control Arrangements

     None.

                                     18

<PAGE>



ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


As of April 14, 1998, other than certain of its officers and directors, 
no person was known by the Company to own or control beneficially more 
than five percent of its outstanding voting stock.  The table below 
sets forth the total number of shares of the Company's outstanding 
voting stock owned by each director and officer of the Company and of 
all officers and directors as a group.  The amounts set forth below 
reflect the 1 for 50 reverse stock split, which occurred in April 1997.


                                          Number of Shares
Name and Address of                       Owned Beneficially
Beneficial Owner         Title of Class   and of Record      % of Class

Janice L. Welch(1)     Common Stock        4,194,960            41.9%
10639 Roselle Street
Suite B
San Diego, CA 92121

Walter G. Fuller       Common Stock        2,999,880            30.0%
10639 Roselle Street
Suite B
San Diego, CA 92121

Nicholas Litchin (2)   Common Stock        1,294,920            12.9%
10639 Roselle Street
Suite B
San Diego, CA 92121

John F. Grim           Common Stock          180,000             1.8%
10639 Roselle Street
Suite B
San Diego, CA 92121

Christ M. Rousseff (3) Common Stock          574,920             9.7%
10639 Roselle Street
Suite B
San Diego, CA 92121


All Officers and 
Directors as a Group
 (5 persons)           Common Stock         8,669,760          87.4%


 (1) Includes 3,494,920 shares held of record by Ms. Welch as the 
     Trustee of the J&S Trust.

                                     19

<PAGE>

 (2) Includes 214,920 shares held of record by L&R Realty, an Indiana
     general partnership, of which Mr. Litchin is a partner, 699,840 
     shares held of record by the Litchin Family Partnership, of which 
     Mr. Litchin is a general partner, and 360,000 shares held of 
     record by Mercer Beverage Co., an Ohio corporation, of which Mr. 
     Litchin is the President, and of which Mrs. Litchin is a principal 
     shareholder.  Mr. Litchin disclaims beneficial ownership of these 
     shares.

 (3) Consists of 214,920 shares held of record by L&R Realty, of which 
     Mr. Rousseff, is a partner, and 360,000 shares, held of record by 
     Mercer Beverage Co. of which Mr. Rousseff's wife is a principal 
     shareholder. Mr. Rousseff disclaims beneficial ownership of such  
     shares.


                                     20

<PAGE>




ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


On October 31, 1995, ITI and American Registration Systems, Inc. 
("ARS"), and Indiana corporation 49% owned by the CEO of ITI, entered 
into a Purchase and Sale Agreement with regard to the 1994 Patent.  In 
consideration of the transfer of the 1994 Patent, ITI agreed to pay to 
ARS the sum of $4,000,000 before May 1, 1997 and to assume ARS's 
royalty obligation to Mr. Rousseff of $0.01 per transaction effected 
through any device incorporating the subject matter of the 1994 Patent.  
Failure by ITI to pay the purchase consideration would constitute an 
event of default, which, under the contract would entitle ARS to 
terminate ITI's rights to the 1994 Patent.  On March 11, 1997, this 
Agreement was amended to provide that ITI will have no payment 
obligation to ARS until May 1, 1999.

The Company from time to time has obtained temporary financing from its 
directors and officers.  A total of $600,000 was borrowed in 1996, and 
such amount was repaid in 1997 along with 12% interest.

During 1997, the Company obtained temporary financing from shareholders 
or parties related to shareholders.  The Company borrowed a total of 
$125,325 through December 31, 1997.


                                     21

<PAGE>


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K


(a) Financial Statements

The following Financial Statements are filed as part of this report:

  Report of Independent Certificate Public Accountants

  Balance Sheets - December 31, 1997 and 1996

  Statements of Loss for the years ended December 31, 1997 and 1996

  Statements of Stockholders' Equity (Deficit) for the years ended  
  December 31, 1997 and 1996

  Statements of Cash Flows for the years ended December 31, 1997 and 
  1996

  Notes to Financial Statements


(b)  Reports on Form 8-K:

None.


(c)  Exhibits

3.1(a)    Certificate of Incorporation (1).

3.1(b)    Amendment to Certificate of Incorporation (2).

3.2       Bylaws 4(i). Specimen Stock Certificate(1).

4.2       Specimen Class A Warrant Certificate (1).

          Specimen Class B Warrant Certificate (1).

 10.1 Purchase and Sale Agreement,  dated October 31, 1995, by and  
      between American Registration Systems, Inc. and Image Technology, 
      Inc. (3)

 10.2      Addendum to Purchase and Sale Agreement dated as of March 
           11, 1997. (3)

 10.3      Equipment Lease, Support and Maintenance Agreement, 
           effective November 1, 1996, by and between Indiana Bureau of 
           Motor Vehicles Commission and Image Technology, Inc. (3)

10.4      Subcontractor Agreement, effective as of August 1, 1996, by 
          and between NCR Corporation and Image Technology, Inc. (3)

10.5      Employment Agreement between Intellectual Technology and John 
          F. Grim. (3)

                                     22

<PAGE>


21.       Subsidiaries of Registrant. (3)



 (1)  Incorporated by reference to Registrant's Registration Statement 
      No. 33-33092-D, effective April 17, 1990.

 (2)  Incorporated by reference to Registrant's Registration on Form 
      8-K(A), filed April 10, 1997.

(3)  Incorporated by reference to Registrant's Form 10KSB for the year ended 
     December 31, 1996

                                     23

<PAGE>

                                  SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Exchange 
Act, the Registrant has caused this report to be signed on its behalf 
by the undersigned, thereunto duly authorized.


                                          INTELLECTUAL TECHNOLOGY, INC.


                                           By: /s/ Christ M. Rousseff
                                    ----------------------------------
                                           Christ M. Rousseff, Chairman
                                           Date:  April 15, 1998


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

Signature                     Title                              Date

By:/s/Christ M. Rousseff  Chairman and Chief Executive   April 15, 1998
Christ M. Rousseff        Officer (Principal Executive
                          Officer)


By:/s/Janice L. Welch     Secretary/Treasurer and        April 15, 1998
Janice L. Welch           Director
                         (Principal Financial Officer)


By:/s/Nicholas Litchin    Director                       April 15, 1998
Nicholas Litchin


By:/s/Walter G. Fuller    Director                       April 15, 1998
Walter G. Fuller


By:/s/John F. Grim        Director                       April 15, 1998
John F. Grim

<PAGE>

Index to Financial Statements

INTELLECTUAL TECHNOLOGY, INC.

Report of Comiskey & Company P.C. Independent 
Certified Public Accountants                                      F-1(a)

Report of Charles W. Butman, Independent Certified
Public Accountant                                                 F-1(b)

Balance Sheet                                                 F-2 and F-3

Statements of Operations                                          F-4

Statements of Cash Flows                                          F-5

Statements of Stockholders' Equity                                F-6

Notes to Financial Statements                                F-7 through F-12

<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



We have audited the accompanying balance sheet of 
Intellectual Technology, Inc. as of December 31, 1997, and 
the related statements of Loss and Accumulated Deficit, Cash 
Flows, and Stockholders' Equity 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.  
The financial statements of Image Technology, Inc., the 
predecessor of Intellectual Technology, Inc., for the year 
ended December 31, 1996, were audited by other auditors, 
whose report dated May 23, 1997 expressed an unqualified 
opinion on those financial statements.

We conducted our audit in accordance with generally accepted 
auditing standards.  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 examining on a test basis, 
evidence supporting the amounts and disclosures in the 
financial statements.  An audit also includes assessing the 
accounting principles used and significant estimates made by 
management.  We believe 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 Intellectual Technology Inc. as of December 31, 
1997, and the results of its operations, cash flows and 
changes in stockholders' equity for the year then ended in 
conformity with generally accepted accounting principles.

Denver, Colorado
January 28, 1998

COMISKEY & COMPANY
PROFESSIONAL CORPORATION


                                        F-1(a)
<PAGE>
INDEPENDENT AUDITOR'S REPORT


I have audited the accompanying balance sheet of Image
Technology, Inc. (a Nevada corporation) as of December 31, 
1996, and the related statements of income and retained 
earnings (deficit) and cash flows for the year then 
ended.  These financial statements are the responsibility of 
the Company's management.  My responsibility is to express 
an opinion on these financial statements based on my audit.  

I conducted my audit in accordance with generally accepted 
auditing standards.  Those standards require that I 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.  An audit also includes assessing the 
accounting principles used and significant estimates made by 
management.  I believe my audit provides a reasonable 
basis for my opinion.

In my opinion, the financial statements referred to above 
present fairly, in all material respects, the financial 
position of Image Technology Inc. as of December 31, 1996, 
and the results of its operations and its cash flows for the 
year then ended in conformity with generally accepted accounting 
principles.

Charles W. Butman
Certified Public Accountant
San Marcos, CA

May 23, 1997


                                        F-1(b)
<PAGE>

INTELLECTUAL TECHNOLOGY, INC.
Balance Sheet
December 31, 1997


ASSETS

Current Assets

   Cash and equivalents (including savings of $361,000)      $ 404,240
   Accounts receivable (net of uncollectible 
     allowance of $0)                                          317,538
   Inventories                                                 120,148
   Employee advances                                            15,500
   Restricted cash                                              21,202
   Prepaid expenses                                             31,464
                                                            ----------
    Total current assets                                       910,092

Property and Equipment
   Contract equipment                                        4,277,346
   Equipment - non contract                                     58,121
   Office equipment, furniture and improvements                 20,084
                                                           -----------
                                                             4,355,551
    Less accumulated depreciation                              828,887
                                                           -----------
Total property and equipment                                 3,526,664

Intangibles and Other Assets

    Patents, net of accumulated amortization of $607,000     3,657,117
    New Hampshire contract costs, net of amortization of 
        $107,000                                                16,075
    Deposits                                                    81,548
    Organization costs, net of amortization of $400              1,669
                                                          ------------
        Total other assets                                   3,756,409
                                                          ------------
  TOTAL ASSETS                                              $8,193,165
                                                            ==========

                                      F-2
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

    Accounts payable                                          $400,502
    Accrued expenses	                                           247,072
    Notes payable related parties                              125,325
    Notes payable other                                         59,000
    Current portion of long term debt                        2,156,192
    Accrued interest payable                                   268,466
                                                             ---------
       Total current liabilities                             3,256,557

Other liabilities

    Long term debt (net of current portion)                  2,287,037
    Due to related party                                     3,998,000
                                                             ---------
       Total other liabilities                               6,285,037

Stockholders' equity	
    Preferred stock, $0.00001 par value, 10,000,000 shares 
      authorized,no shares issued or outstanding                     -
    Common stock, $0.00001 par value, 20,000,000 shares 
      authorized, 10,000,000 shares issued and outstanding         100
    Additional paid in capital	                               1,186,250
    Accumulated deficit                                     (2,534,779)
                                                            ----------
      Total stockholders' equity                            (1,348,429)
                                                            ----------
       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            8,193,165
                                                            ==========
The accompanying notes are an integral part of the financial statements.

                                  F-3
<PAGE>

INTELLECTUAL TECHNOLOGY, INC.
Statements of Loss 
For the years ended December 31, 1997 and 1996

                                                     1997        	1996
Revenues 
    Leasing fees, registration equipment         $2,472,032     $22,550
    Leasing fees, drivers' license equipment        298,927      48,672
    Sales, registration equipment and media         240,411           - 
                                                 ----------     -------
  Total revenues                                  3,011,370      71,222 

Cost of Revenues
    Materials                                       609,211      25,093 
    Maintenance                                     314,293      10,732 
    Depreciation and amortization                   789,355      21,362 
    Insurance                                        12,604           - 
    Taxes                                             9,250           - 
    Royalties                                        24,442           - 
                                                -----------     -------
        Total Cost of Revenues                    1,759,155      57,187 
                                                -----------     -------
        Gross Profit                              1,252,215      14,035 

Operating Expenses:
    Selling                                         133,668     113,701 
    General and Administrative                      884,933     268,854 
    Research and Development                         32,220      34,936 
    Patent Amortization                             281,430     279,201 
    Depreciation                                     22,043       3,876 
                                                -----------    --------
        Total operating expenses                  1,354,294     700,568 
                                                -----------    --------
       Loss from operations                       (102,079)   (686,533)

Non-operating income and expense
    Interest income                                 (4,841)          - 
    Interest expense, including amortization of 
      loan fees                                    769,919     279,479 
                                               -----------    --------	
       Total non-operating expense                 765,078     279,479 
                                                -----------    --------
         Net loss before income taxes             (867,157)   (966,012)

          Income taxes                                   -           - 
                                                -----------    --------
         Net loss                                $(867,157)  $(966,012)
                                               ===========    ======== 
         Loss per share - basic                     $(0.09)     $(0.11)
                                                ===========    ========
Weighted average number of shares outstanding	    9,791,667   9,000,000 
                                                 =========   ==========
The accompanying notes are an integral part of the financial statements.

                                  F-4

<PAGE>

INTELLECTUAL TECHNOLOGY, INC.
Statements of Cash Flows
For the years ended December 31, 1997 and 1996

                                                       1997        1996

Cash Flows from Operating Activities
    Net Loss                                    $(867,157)   $(966,012)
     Adjustments to reconcile net loss to net 
      cash flows from operating activities:
         Depreciation and amortization          1,192,026      59,266
         Increase/Decrease in:
           Accounts receivable                   (268,427)     (49,111)
           Inventory                              (52,262)     (67,886)
           Prepaid expenses                       (19,521)      (7,651)
           Notes receivable / Employee advances   (15,100)       6,382
           Restricted cash                        (21,202)           - 
           Deposits and other assets               15,518            - 
           Accounts payable                    (1,245,653)   1,643,658 
           Accrued expenses and interest          390,254        6,293 
                                                 ---------    ---------
     Net cash provided (used) by operations      (891,524)   1,244,939 

Cash flows from investing activities
    Investment in patents and other intangibles    17,582        3,056
    Purchase of non-contract equipment             71,479       60,726
    Investment in contract costs and equipment  1,545,127    2,678,219
                                                ---------    ---------
     Net cash used by investing activities      1,634,188    2,742,001

Cash flows from financing activities
    Additional paid in capital                     53,000      295,553
    New borrowings                              7,296,398    1,254,211
    Debt repayments                            (4,425,054)           -
    Loan costs                                          -      (50,000)
                                                ---------    ---------
     Net cash provided by financing activities  2,924,344    1,499,764

       Net increase in cash                       398,632        2,702
                                                ---------    ---------
Cash and equivalents, beginning of year             5,608        2,906
                                                ---------    ---------
Cash and equivalents, end of year                $404,240       $5,608
                                                 =========    ========


The accompanying notes are an integral part of the financial statements.

                                   F-5

<PAGE>

INTELLECTUAL TECHNOLOGY, INC. 
Statement of Stockholders' Equity 
For the years ended December 31, 1997 and 1996 

<TABLE>
<S>          <C>      <C>     <C>      <C>      <C>        <C>          <C>
             Preferred Stock  Common Stock      Additional              Total 
             Number of        Number of         Paid In    Accumulated  Stockholders
Description   Shares   Amount Shares   Amount   Capital    Deficit      Equity 


Balance, 
January 1, 1996  -       $ -   25,000   $2,500    $835,297   $(701,610)     $136,187

Adjustment 
to give effect 
to the 
recapitalization 
of Image 
Technology, Inc. -         -  8,975,000  (2,410)     2,410           -             -

Balance, 
January 1, 1996,
as restated      -         -  9,000,000      90    837,707    (701,610)      136,187

Contribution to 
capital          -         -          -       -    295,553            -      295,553 

Net loss                                                       (966,012)    (966,012)

Balance December 
31, 1996         -        -   9,000,000      90  1,133,260   (1,667,622)    (534,272)

Stock issued in 
business combination 
with Bridgestone Corp. 
March 12, 1997   -        -   1,000,000      10     49,990            -       50,000 

Contribution to 
capital          -        -           -       -      3,000            -        3,000 


Net loss         -        -           -       -          -      (867,157)   (867,157)


Balance, 
December 31, 
1997            -         -  10,000,000    $100  $1,186,250  $(2,534,779)$(1,348,429)
</TABLE>

The accompanying notes are an integral part of the financial statements.

                                   F-6
<PAGE>

INTELLECTUAL TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996

1. Description of Business and Summary of Significant Accounting 
Policies

Corporate History
Intellectual Technology, Inc. ("ITI", "the Company") was incorporated 
in the State of Delaware under the name Bridgestone Corp. on December 
1, 1989.  It was formed for the purpose of acquiring an operating 
company.  In October, 1990, Bridgestone completed an initial public 
offering of stock and warrants which resulted in the sale of 10,000,000 
units for approximately $80,000.  On March 12, 1997,  ITI entered into 
a stock transfer and exchange with Image Technology, Inc., a privately 
held corporation incorporated in Nevada in 1992 and headquartered in 
San Diego California.  As a result of this transaction, the 
shareholders of the Nevada corporation acquired collectively a 90% 
interest in the ongoing entity and Image Technology Inc. became a 
wholly owned subsidiary of Intellectual Technology Inc.  The Company 
continues to operate under the name Intellectual Technology, Inc. 

Description of Business
ITI is engaged in the design, manufacture and sale or lease of 
equipment for the automated preparation and dispensing of motor vehicle 
registration forms and license plate decals.  The Company's printing 
systems are currently installed in the states of Indiana and Maryland.  
The printing system is designed as a stand-alone unit, which is used as 
such in individual motor vehicle registration offices and mailrooms, 
and has also been incorporated into a self-service terminal ("SST") 
assembly.

Effective November 1, 1996, the Company entered into a lease with the 
Indiana Bureau of Motor Vehicles Commission ("BMVC") to lease 
approximately 291 printers and 36 SST's for a period of three years, 
with a renewal clause for an additional year.  The lease requires ITI to 
provide the equipment and media required to print the registrations 
and decals, and to support and maintain the equipment during the period 
of the contract.  ITI will receive an all-inclusive per transaction 
lease fee for these services.  As of December 31, 1997, all of the 
stand-alone printers and 11 self-service terminals had been installed.

ITI printer systems were sold in Maryland on a subcontract basis for 
use in SST installations in that state.  ITI currently supplies the 
media for these printers.

The Company's printing system is based in part on proprietary 
technologies which are covered by two patents currently owned by the 
Company.  All of the Company's equipment is manufactured by 
subcontractors.

The Company has also purchased the rights to a contract with the state 
of New Hampshire to provide driver's licenses.  These amounts are 
billed on a per transaction basis.  This contract expires January 31, 
1999.

Significant Accounting Policies

Principles of consolidation
Unless otherwise indicated, all references to "the Company" in these 
financial statements are references to Intellectual Technology, Inc. 
and its wholly owned subsidiary, Image Technology, Inc.
Intercompany transactions have been eliminated in consolidation.

                                    F-7
<PAGE>
INTELLECTUAL TECHNOLOGY, INC.
Notes to Financial Statements
December 31, 1997 and 1996

Cost recovery - equipment and contract costs
Leased contract equipment costs have been capitalized, and include the 
manufactured cost of the printers and SST's, operating software, 
installation, freight, packaging, contract startup costs, and other 
costs incidental to making the equipment operational.

All costs are recovered in the ratio that transactions to date bear to 
total estimated transactions over the contract term.  For purposes of 
hardware and software costs, the Company is using the transactions 
expected over the period of the Indiana contract, plus the one year 
renewal, for a total of four years.  Installation and other costs which 
are directly associated with the state of Indiana project, are being 
depreciated using the projected number of transactions for the initial 
three year contract period only. 

The amount of cost recovery (depreciation) charged to operations in the 
current period is based on management's assumptions.  Significant 
additional transactions may occur throughout the remaining term of the 
contract.  Differences in actual results from those estimated by 
management could materially accelerate the rate of cost recovery 
charged to operations.

Material project management costs paid in advance have been deferred, 
and are being amortized on a per transaction basis based on the 
expected transaction volume over the period of the project management 
contract.

Repairs and maintenance
Maintenance costs are expensed as incurred.  All costs associated with 
maintenance contracts are being prorated over the period of the 
maintenance contract.

Inventory
Inventory consists of media (tag stock paper, ribbon, decals and 
laminates) used to produce the motor vehicle registration and driver
license forms and decals.  Inventory is stated at the lower of cost or
market on a first-in, first-out basis.

Non-contract equipment
Cost of equipment used in operations has been capitalized and is 
depreciated using the declining balance method over useful lives of 3 
to 7 years. 

Intangibles
Patent costs are capitalized, and are amortized over the remaining 
useful life of the patent, which is generally 17 years from issue.

New Hampshire contract costs are amortized ratably over the remainder 
of the existing contract, which expires January 31, 1999.

Certain costs to obtain debt financing have been deferred and are 
amortized over the length of the loan using the straight line method.

Research and Development
Research and development costs are expensed as incurred.

Cash and Equivalents
For purposes of the statement of cash flows, the Company considers 
highly liquid debt instruments purchased with an initial period of 
three months or less to be cash equivalents.

                                 F-8
<PAGE>

INTELLECTUAL TECHNOLOGY, INC.
Notes to Financial Statements
December 31, 1997 and 1996

Significant Concentrations
In 1997 the Company derived 82% of its total revenue from its contract 
with the state of Indiana.  The Company uses a single vendor to supply 
its primary printer component, and one vendor to supply all media for 
the ITI printing system.  Although alternate vendors have been found to 
manufacture printer parts, no other vendor is available to produce
certain of the printer media.

The company from time to time maintains cash balances in excess of FDIC 
insured limits.  The amount of such excess at December 31, 1997 was 
$261,000.

Earnings per share
Basic earnings per share are computed using the weighted average number 
of shares outstanding.  Shares issued in the stock transfer and 
exchange described in Note 7 are considered outstanding for all periods 
presented.  Diluted earnings per share have not been presented, since 
the effect of potentially dilutive securities is antidilutive.

Impact of Newly Issued Accounting Standards
The Financial Accounting Standards Board has recently released 
Statement of Financial Accounting Standards No. 130 - Reporting 
Comprehensive Income, and Statement of Financial Accounting Standards 
No. 131 - Segment Reporting.  SFAS 130 requires companies to present 
comprehensive income (consisting primarily of net income items plus 
other direct equity charges and credits) and its components as part of 
the basic financial statements.  SFAS 131 supercedes SFAS No. 14, and 
requires disclosure of disaggregated information by operating segment.  
Both standards are effective for years beginning after December 15, 
1997.  The Company has not elected early adoption of either standard, 
and does not anticipate a material impact on operations as a result of
its adoption of these standards in 1998.

2. Presentation as a Going Concern

The Company has experienced operating losses since its inception, and 
was in the development stage as defined by SFAS No. 7 until November 
1996.  It has a deficit in equity of $(1,348,429) at December 31, 1997, 
and its working capital is $(2,346,465).  These conditions are 
primarily as a result of losses incurred in the startup phase and 
during the initial year of the Indiana contract, during which the 
Company operated at reduced revenues while the printer installations 
were accomplished.  In addition, the Company experienced additional 
costs related to its efforts to raise capital for the manufacture of
the Indiana printers, and ultimately to obtain permanent financing,
which was secured during the second quarter of 1997.

Under the Company's current financing arrangement, receivables from the 
Indiana contract have been assigned to the note holder.  The amount of 
monthly cash flow from this contract is remitted net to the company 
after debt service is satisfied.  Management projects that this 
arrangement will continue to generate positive monthly cash flows for 
the remainder of the Indiana contract sufficient to support operations 
and the Company's sales effort.  It is not anticipated that significant 
additional financing will be necessary until the Company is successful 
in negotiating the sale or lease of contract equipment in other 
jurisdictions.

                                 F-9
<PAGE>

INTELLECTUAL TECHNOLOGY, INC.
Notes to Financial Statements
December 31, 1997 and 1996


3. Related Party Transactions

The Company is contractually obligated to pay a $0.01 per transaction 
royalty to a director, officer, and founder of the Company.  Amounts 
paid or payable were $24,442 and $ 185 for the years ended December 31, 
1997 and 1996.

The Company is obligated under a purchase agreement with a company 
under common control with ITI in the amount of $3,998,000 which was 
incurred as part of the transfer of proprietary technology to the 
Company in the form of patent assignments.  This obligation was non-
interest bearing until May 1, 1997, after which interest at 8% is 
accruing until May, 1999 when this obligation becomes due.  A total of 
$77,691 of imputed interest and $213,335 in accrued interest was 
incurred on this debt during the year ended December 31, 1997.

The Company from time to time has obtained temporary financing from its 
directors and officers.  A total of $600,000 was repaid at 12% interest 
in 1997.  Interest expense recognized in 1997 as payable to directors 
and officers totaled $32,351.  A loan fee of $50,000 was paid to an 
unrelated third party during 1997 in connection with this note.

The Company also obtained certain temporary financing from shareholders 
or parties related to shareholders.  The average interest rate on these 
obligations was 8%.  At December 31, 1997, principal amounts owed to 
shareholders totaled $125,325, and accrued interest was $26,417.  The 
amount of interest expense on these notes in 1997 totaled $19,792.

The Company leases service vehicles from a company owned by a relative 
to a shareholder.  The lease calls for monthly payments of $2,233.


4. Notes Payable and Long-Term Debt

The Company is obligated under the following notes at December 31, 
1997:
                                         Short Term         Long Term

13.05% Installment notes, 
secured by all printers, SSTs,
and miscellaneous equipment 
leased to Indiana, and the
assignment of accounts receivable 
from the Indiana contract, 
payable monthly in installments 
of $223,600. Maturity 
November 1999.                         $ 2,156,192         $ 2,287,037

8% debt obligation payable to 
related party, secured
by patents.  Interest and 
principal due and payable
May 1, 1999.                                     -           3,998,000

8% unsecured demand note                     5,000                   -

15% unsecured note, due 
June 15, 1997                               33,000                   -

8% note, secured by savings, 
due March 8, 1998                           21,000                   -

8% unsecured demand notes 
payable to related parties                 125,325                   -

Total notes payable                    $ 2,340,517         $ 6,285,037

                                       F-10
<PAGE>

INTELLECTUAL TECHNOLOGY, INC.
Notes to Financial Statements
December 31, 1997 and 1996


Scheduled note maturities debt over the next five years and in the 
aggregate are as follows:

      For the year ended
      December 31,

        1998                                    2,340,517
        1999                                    6,285,037
        2000                                            -
        2001                                            -
        2002                                            -



5. Leases

The Company leases for its own use office space, vehicles and office 
equipment under non-cancelable operating leases expiring in the years 
1999 to 2001.  Rent expense for the years ended December 31, 1997 and 
1996 was $34,227 and $7,928, respectively.  Future minimum lease 
payments on non-cancelable operating leases over the next five years 
are as follows:

      For the year ended
      December 31,

        1998                                       64,308
        1999                                       61,462
        2000                                       51,162
        2001                                       23,736
        2002                                            -

6. Income taxes

The Company has federal net operating loss carryforwards totaling 
approximately $1.8 million which expire between 2010 and 2012.  These 
carryforwards were generated by Image Technology, Inc.  Net operating 
losses generated by Bridgestone Corp. are limited under Section 381 of 
the Internal Revenue Code, and the tax effect thereof has been 
disregarded for financial reporting purposes. The following are the 
components of the Company's deferred tax assets and liabilities:

                                           1997            1996

    Non-benefitted net operating loss 
    Carryforwards                         612,000         246,000
    Valuation allowance                  (612,000)       (246,000)
                                          -------         -------
    Total deferred tax assets                   -               -
    Deferred tax liabilities                    -               -

                                        F-11
<PAGE>
INTELLECTUAL TECHNOLOGY, INC.
Notes to Financial Statements
December 31, 1997 and 1996


7. Stockholders' Equity

Preferred stock
At December 31, 1997, the Company has authorized a total of 1,000,000 
preferred shares to be issued in series with rights and privileges to 
be determined by the Board of Directors.  No preferred shares are 
outstanding, nor have any series of preferred shares been designated.

Common stock
At December 31, 1997, a total of 20,000,000 shares of $0.00001 par 
value common stock were authorized, and 10,000,000 were issued and 
outstanding.

Stock warrants
The Company has outstanding warrants to purchase a total of 400,000 
shares of common stock, in the form of 200,000 Class A warrants 
exercisable at $12.50 per share, and 200,000 Class B warrants at $12.50 
per share.  Both classes of warrants expire in April 1998.  The 
warrants are subject to redemption by the Company upon 30 days written 
notice at a price of $0.00001 per warrant.  Such warrants may not be 
exercised by the warrant holders unless a current registration 
statement is on file with the Securities and Exchange Commission.

Stock transfer and exchange with Image Technology Inc.
On March 12, 1997, the Company entered into a stock transfer and 
exchange agreement with Image Technology, Inc.  The Company issued a 
total of 450,000,000 shares of its common stock to acquire 100% of the 
issued and outstanding common stock of Image Technology Inc.  As a 
result of the transaction, the shareholders of Image Technology Inc. 
emerged as holders of 90% of the common shares of the parent company, 
with the former Bridgestone shareholders retaining 10% of the 
outstanding common shares.  The sole officer and directors of 
Bridgestone resigned in favor of persons appointed by ITI.

The stock transfer and exchange agreement also provided that certain 
members of pre-acquisition management of Bridgestone Corp. be engaged 
as consultants to the company after the transaction.
 
As a direct result of the transaction, and effective March 12, 1997, 
the Company changed its name from Bridgestone Corp. to Intellectual 
Technology, Inc.  The Company also underwent a 1 for 50 reverse split 
of common shares, and reduced the number of authorized shares from 
500,000,000 common shares to 20,000,000 common shares, and 20,000,000 
preferred shares to 1,000,000.

The transaction has been accounted for as a recapitalization of the 
private company, Image Technology, Inc.  The accompanying financial 
statements include the operations of Image Technology, Inc. prior to 
the acquisition and the operations of Intellectual Technology, Inc. and 
Image Technology, Inc. on a consolidated basis subsequent to the 
transaction.

                                  F-12