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, 2002

                   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.)
 Incorporation or Organization)

                        1040 Joshua Way, Vista, CA 92083
                        --------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                 (760) 599-8080
                                 --------------
               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

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, 2002 were
$6,316,957.



<PAGE>






The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of April 11, 2003 was $885,000. 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 11, 2003, the Registrant had outstanding 9,842,680 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


                                     PART I


ITEM 1.    DESCRIPTION OF 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 in
1990. In April 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 51 US & many foreign
jurisdictions. Governments use vehicle registration as a means of collecting
revenues and to provide an orderly method of regulating the ownership and
transfer of motor vehicles. Management of the Company recognizes 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




<PAGE>






discussions with law enforcement officials, ITI believes that losses
attributable to these problems are in the 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. In 1992, ITI
was formed to continue this process and commercialize the concepts that had been
developed.

The ITI Printing System and Related Print Media

The ITI printing system 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. Materials used in the
preparation of vehicle registration or other forms are referred to as "media"
(blank roll or sheet paper, decal and printer ribbon). This on-demand printing
capability allows Departments of Motor Vehicles to reduce fraud and theft,
increase revenue collection, and reduce personnel, inventory, and facility costs
as a result of increased efficiencies. The ITI printing system is designed to
operate both from stand-alone units in a printer server environment within a
Department of Motor Vehicles ("DMV") office and from self-service terminals
(SST's) that can be placed in locations remote from DMV offices. One of the ITI
stand-alone printers was patented September 20, 1994. The self-service terminal
was patented on November 13, 1990. The Company purchased both of these patents
on October 31, 1995.

The ITI Printing System and Related Print Media (continued)

The Company believes that the ITI printing system 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
inventory and inventory management, as well as the need to dispose of preprinted
stock at year-end. Additionally, it satisfies the security demands of
Departments of Motor Vehicles in that it applies the vehicle license plate
number to the decal, causing the decal to become significantly less valuable to
thieves. The ITI printing system is equipped with software that accounts for all
transactions effected through the printer, significantly reducing the likelihood
of DMV employee fraud or theft. Finally, when combined with automated teller
technology, the ITI printer system is capable of acting as a self-service
terminal for motor vehicle registrations, which can be established either in DMV
offices or in remote locations, reducing personnel and facilities' costs. None
of the Company's products or services requires government approval. The Company
is not aware of any existing or probable government regulations that would
affect its business.

Other printing products and technologies

For two of the Company's contracts, the Company purchased stand-alone printers
from the manufacturer. The Company does not own the patents on these printers.
These printers are also operated in a printer server environment. ITI furnishes
blank paper stock with a blank decal affixed for the printing process.





<PAGE>






Whether the ITI printing system or other printing technology is employed depends
upon the size of registration, the number of decals issued per transaction and
the desired speed of printing. ITI also provides the software to integrate the
printing system with the State's computer system.

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 District of
Columbia and Canada.

The Company believes that its experience working with 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 markets its products and services
through its in-house marketing and sales staff.

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. References of DMV officials
of states where the Company has installed its products are supplied, along with
an offer to demonstrate these products.

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") to implement ITI's printing system solution in Indiana.
The initial term of the Indiana Contract was for a period of three years.
Several amendments have extended the contract through October 31, 2004.

In the fourth quarter of 1998, the Company entered into a five-year Agreement
with the State of South Dakota to implement ITI's printing system. On April 1,
1999, ITI supplied the equipment and media to process 100% of the annual
registrations in South Dakota. This contract expires on March 31, 2004.

Effective January 1, 2001, the Company entered into a Subcontractor Agreement
with a contractor for the State of Louisiana Department of Public Safety and
Corrections Office of Motor Vehicles. In June 2001, ITI supplied the equipment
and media to begin production of 100% of the mail-in vehicle registrations and
in September 2001, branch installation began. In 2002, the installation of ITI's
equipment statewide was completed. The Company expects this subcontractor
agreement to be in effect at least through December 2004.

In April 2002, the Company signed a contract with the State of Ohio to supply
the equipment and media to begin production of 100% of the mail-in vehicle
registrations. This contract expires June 30, 2003, but is subject to annual
renewal by the State at the end of each contract year.

In March 2002, the Company signed a contract, effective through June 30, 2007,
with the State of New Hampshire to produce "Safe Boating Certificate Cards". The
State reserves the right to terminate the contract for any reason by giving
thirty days written notice.

For the year ended December 31, 2002, 96% of ITI's total revenues were derived
from the above contracts and agreements.





<PAGE>






Manufacturing and Supply

The Company has used subcontractors to manufacture and supply most components
and subassemblies of ITI's printing system. Other stand-alone printers are
purchased from Datamax Corporation, the manufacturer. 3M Corporation produces
the decal used by all printing systems. NCR CORPORATION, Moore North America and
Data Papers supply the paper materials on which the registrations are printed.
Dai Nippon IMS America through its distributor system supplies the thermal
ribbon used in the printing process. The Company has identified alternative
vendor sources for the print media.

Competition

The Company has identified the automation of vehicle registrations and
registration decal printing as its primary market. Currently there are few
competitors targeting this niche market. In some markets, however, state
agencies have decided to bundle the automation of the vehicle registration
process into an overall upgrade of state computer and information systems
projects. In these situations, where the business targeted by the Company is a
component of a larger technology project, there are many potential competitors,
primarily large computer manufacturers and information technology companies.
Several of these larger companies have approached the Company seeking to partner
on these opportunities.

In addition to motor vehicle registrations, the Company believes its technology
is suitable for other types of government issued registrations or certificates.
An example of this is the New Hampshire contract mentioned above. The successful
fulfillment of existing government contracts and resulting customer satisfaction
may allow the Company a competitive advantage in these areas.

Research & Development

For the years ended December 31, 2002 and 2001, the Company spent approximately
$199,000 and $96,000, respectively on research and development activities. None
of these costs were borne directly by customers.

Environmental laws

The Company's cost of compliance with environmental laws (federal, state, local)
is estimated to be insignificant.

Employees

The Company has fourteen full-time employees and three part-time employees,
excluding directors, of which four are in executive or administrative positions,
five are in engineering, R&D or information technology, two are marketing
personnel and six are maintenance personnel. The Company also retains four
marketing consultants and one business consultant. No union currently represents
any of the Company's employees, and the Company believes that its relations with
its employees are good.

REPORTS TO SECURITY HOLDERS




<PAGE>






The Company will send an annual report consisting of the form 10-KSB containing
the annual audited financial statements with the notice of annual meeting and
proxy statements.

The Company is a "reporting company" as defined by the Securities Act of 1933.
The Company files form 10-Q on a quarterly basis and form 10-KSB annually.

The public may read and copy any materials filed by the Company with the SEC at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The Company electronically
files its reports with the SEC. The SEC maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC. The address of that site is
http://www.sec.gov. The Company's web site is http://www.iti4dmv.com.
------------------                            ----------------------


ITEM 2.    PROPERTIES

The Company occupies 5,948 square feet of office and light industrial space in
Vista, California for administrative, customer support, engineering, equipment
maintenance and research and development activities. The monthly rental is
$4,700, subject to cost of living adjustments and maintenance expenses, through
February 2007. The Company also leases approximately 1,875 square feet of
office/warehouse space in Carmel, Indiana for maintenance and customer support.
The monthly rental is $1,233 per month through October 2004. The Company
believes that these facilities are adequate to meet its anticipated needs for
the foreseeable future. In the opinion of management, the Company's properties
are adequately covered by insurance.


ITEM 3.    LEGAL PROCEEDINGS

There are no legal proceedings currently pending.


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

At the annual meeting of shareholders on October 23, 2002, the following actions
were taken:

     1)   Nicholas Litchin, Walter G. Fuller, Bradford A. Morrow and Christopher
          M. Welch were reelected to the Board of Directors.
     2)   Comiskey & Company P.C., of Denver, CO was ratified to serve as
          auditors of the Company for the year ended December 31, 2002.


                                     PART II

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

The principal market for the Company's common stock is the Over the Counter
Bulletin Board. 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 Quicken.com




<PAGE>






                Quarter Ended         High Bid             Low Bid

                March 31, 2001        $   0.65            $   0.13
                June 30, 2001         $   0.51            $   0.21
                September 2001        $   0.24            $   0.24
                December 2001         $   0.40            $   0.20
                March 31, 2002        $   0.51            $   0.08
                June 30, 2002         $   0.20            $   0.09
                September 30, 2002    $   0.25            $   0.09
                December 31, 2002     $   0.09            $   0.09
                March 31, 2003        $   0.09            $   0.09

The quotations, which appear above, reflect inter-dealer prices, without retail
mark-up, markdown, or commission, and reflect all stock splits.

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 April 11, 2003, the Company had approximately 67 shareholders of record,
which does not include shareholders whose shares are held in street or nominee
names.


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

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. For
ease in presenting the financial data, figures have been rounded to the nearest
thousand.

Plan of Operation

In 2003, the Company expects to continue to respond to "Requests For Proposal"
from various government agencies. The Company anticipates that the capital
requirements of any new contracts and existing debt service will be funded from
present cash balances, future cash flows from operations or, if necessary, by
borrowing from lenders, with which, the Company has existing or past
relationships. The Company does not expect any significant capital requirements
from existing contracts in 2003. The Company has committed additional resources
in 2003 to complete the design (which began in 2002) and manufacture of
prototypes of a next generation stand-alone printer. The Company will continue
to engage in research and development of additional applications of its products
in related areas and new product development and the testing of present products
for potential new customers. The Company does not expect to purchase any other
significant plant or equipment or make significant changes in the number of
employees.

Liquidity and Capital Resources

During the last two fiscal years, the Company has been able to utilize cash




<PAGE>






flows from operations to repay debt and fund all new investment in contract
costs and equipment.

On May 15, 2002 the Company utilized a $400,000 line-of-credit with a bank to
prepay the remaining balance of contract cost financing in the amount of
$379,000. This line of credit was converted to a 36-month term loan with monthly
payments of $12,370, including interest at 7%, through July 2005. This loan is
secured by accounts receivable, equipment and general intangibles

The Company has available a $300,000 line-of-credit with a bank secured by
accounts receivable, equipment and general intangibles. The Company has utilized
this credit line at various times in 2002 to meet short-term borrowing needs.
However, as of December 31, 2002 and the date of this filing, there was no
outstanding balance. The line bears interest at Prime plus two percent (with a
minimum interest rate of 7%) and is subject to renewal in December 2003.

The following is a summary of the Company's cash flows from operating,
investing, and financing activities:

                                      Year ended December 31,
                                    2002                 2001
                                    ----                 ----

Operating Activities         $     908,000       $     719,000
Investing Activities              (274,000)         (1,038,000)
Financing Activities              (322,000)              9,000
                                  --------             -------

Net effect on cash           $     312,000       $    (310,000)
                                   -------       --------------


Cash flows provided by operations increased from $719,000 in 2001 to $908,000,
an increase of $189,000 due primarily to a combination of the following factors:
(1) increase in net profits before depreciation and other non-cash charges or
credits-$226,000; (2) lower increased investment in inventory and accounts
receivable in 2002 versus 2001 due to additional contracts-$107,000; and (3)
higher utilization of deferred assets in 2001 to reduce income tax
payments-($139,000). Cash used in investing activities decreased from $1,038,000
to $274,000 primarily due to the differences in investment in the Louisiana
subcontract in 2001 and the Ohio and New Hampshire contracts in 2002. Cash used
in financing activities in 2002 was $322,000 in 2002 as the Company continued to
pay down long-term debt in excess of new borrowings.

Results of Operations

For the year ended December 31, 2002 contract revenues increased from $4,843,000
to $6,317,000, an increase of $1,474,000. This increase in revenue was primarily
due to: (1) the installation phase of the Louisiana subcontract in 2001 versus
almost a full year of operations in 2002-$864,000; (2) Additional revenue from
the Ohio and New Hampshire contracts-$288,000; and (3) Additional revenue from
sale of printer equipment-$209,000.

Gross profit increased from $2,144,000 (44.3% of sales) to $2,327,000 (36.8% of
sales), an increase of $183,000. Due to a change in management's estimates,
$260,000 of a $310,000 contract loss provision accrued in 2000 was reversed in
2001 and $22,000 was reversed in 2002. Impairment losses from the write down of
excess equipment parts were $93,000 in 2001 and $22,000 in 2002. Considering the
effect of the contract loss provisions and impairment losses on a two-year




<PAGE>






comparison, gross profit would have increased by $357,000 in 2002 over 2001 and
the gross profit percentage in 2001 would have been 40.7% rather than 44.3%. The
Company expects that 2003 gross profit margins will improve as existing
contracts mature. However, overall future gross margins are also dependent on
the timing and magnitude of new contracts and the Company's ability to control
media and maintenance costs for existing contracts.

Operating expenses increased 26% from $1,339,000 in 2001 to $1,695,000 in 2002,
an increase of $356,000. Selling, general and administrative expenses increased
from $1,168,000 to $1,444,000, an increase of $276,000 or 24%. This is primarily
due to: (1) Increase in payroll of $101,000 due the hiring of additional
personnel, bonuses and changes in cost allocations of the payroll of existing
personnel from R&D to product demonstration and support, (2) Increased use of
outside consultants for the evaluation of new business, demonstration of the
Company's products and project coordination of new contracts ($96,000); and (3)
Increased marketing expenses for product demonstration, attending industry
conferences and meeting with state officials-$51,000. Research and development
increased from $96,000 (2% of sales) in 2001 to $199,000 (3.2% of sales), an
increase of $103,000. The Company committed additional resources in 2002 to a
next generation stand-alone printer and self-service terminal. The Company will
continue to engage in research and development of additional applications of its
products in related areas and new product development.

The Company has $28,000 in loss reserves as of December 31, 2002 that were
recognized in 2000. The Company is hopeful that, as in 2002, these anticipated
losses will not materialize.

The Company recorded $22,000 and $93,000 in impairment losses in 2002 and 2001,
respectively for the loss in value of printer parts. These parts can be used
both for the repair of existing printers and the manufacture of the next
generation printer. The value of these parts as of December 31, 2002 is
estimated to be $53,000. The Company may need to record additional impairment
charges in 2003.

The Company maintains on average, at least a three months' supply of media for
each contract. The failure of a State to extend a contract or an early contract
termination could result in the write-down of inventory left over at the end of
the contract period or the write-off of the book value of contract costs and
equipment. The Company has no knowledge at this time that these events will
occur. If these events do occur, the Company believes that the transition period
of replacing contractors will allow reduction of these losses. As of December
31, 2002, the book value of contract costs and equipment and inventory of
contracts expiring in 2003 is $39,000 and $74,000, respectively.

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.

Critical Accounting Policies

Financial Reporting Release No. 60, which was recently issued by the Securities
and Exchange Commission ("SEC"), requests companies to include a discussion of
critical accounting policies or methods used in the preparation of financial
statements. The SEC indicated that a critical accounting policy is one that is




<PAGE>






both important to the portrayal of the Company's financial condition and results
and requires management's most difficult, subjective or complex judgments, often
as a result of the need to make estimates about the effect of matters that are
inherently uncertain. Our significant accounting policies are described in Note
1 to the Notes to the Financial Statements included in this Form 10-KSB.
Although not all of these significant accounting policies require management to
make difficult, subjective or complex judgments or estimates, we have identified
the policies below as critical to our business operations and understanding of
our results of operations. Note that the preparation of our financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. There can be no assurance that actual results will
not differ from those estimates.

Property, Equipment and Depreciation

Contract costs and equipment have been capitalized, and include the manufactured
cost of the printers and other support equipment, SST's, operating software,
installation, freight, 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 terms including renewals. The amount of
cost recovery (depreciation) charged to operations in the current period is
based on management's estimates of future transactions.


ITEM 7.    FINANCIAL STATEMENTS

The financial statements set forth in pages F-1 to F-13 of this report are
incorporated herein by reference.


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.


                                    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:



<PAGE>






Name                    Age           Position


Walter G. Fuller        61            Director, Chairman of the Board

Nicholas Litchin        74            Director

Bradford A. Morrow      47            Director

Christopher M. Welch    33            Director

Other Officers:

Craig Litchin           47            President, Chief Operating Officer,
                                      Treasurer, Principal Financial Officer,
                                      Principal Accounting Officer

George McGill           67            Vice President & Secretary


Family Relationships

Craig Litchin is the son of Nicholas Litchin. Walter M. Fuller was once married
to the maternal aunt of Christopher M. Welch. There are no other family
relationships 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.

Nicholas Litchin is a director of the Company. He was Chairman of the Board of
Directors from July 1998 to April 1999. He was Vice Chairman from March 12, 1997
to June 1998, and has been a director of the Company since the formation of
Image Technology, Inc., a Nevada corporation and wholly owned subsidiary of the
Company, ("Image Technology") in April 1992. Mr. Litchin has been a retired
investor since 1991.

Walter G. Fuller has been a Director of the Company and Image Technology since
March 12, 1997 and the formation of Image Technology in 1992, respectively. He
was appointed Chairman of the Board and Chief Executive Officer of the Company
in August of 2001. He is the President of M&S Steel Co., Inc., an Indiana
corporation that is a supplier of structural steel to the construction industry
since 1971.

Christopher M. Welch was elected Director of the Company in February 1999. Mr.
Welch was an agent with New York Life from 1995-2000. He attended graduate
school during 2001. He is now employed as a staff accountant with Sound Image
Inc., a private company in Escondido, CA.





<PAGE>






Bradford A. Morrow was elected Director in December 2000. He has been the
Managing Director of Paradigm Capital LLC since the Fall of 1997 ("Paradigm").
Paradigm is involved in private placements, mergers and acquisitions and
providing consulting services to emerging companies, primarily software and
satellite based technologies.

Craig Litchin has been President, Chief Operating Officer, Treasurer, Principal
Financial Officer and Principal Accounting Officer of the Company since November
30, 2000. Mr. Litchin joined the Company as Vice President in July 1997. Prior
to that, he served for eight years as Legal Counsel to the Bitove Corporation
("Bitove"). Bitove, a Canadian company, operated several different businesses
throughout Canada.

George McGill was appointed Vice-President and Secretary of the Company on
August 30, 2000. He is an attorney in private practice in Cardiff, California
and has advised the Company since its inception. Mr. McGill has been practicing
law since 1961.

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.


ITEM 10.   EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth information regarding compensation paid to the
Company's Chief Executive Officer. No other executive officers of the Company
received in excess of $100,000 of salary and bonus from the Company during the
year ended December 31, 2002:

                      Annual Compensation       Long-term Compensation Awards
                   ------------------------   ----------------------------------
                                              Restricted   Options
                          Director's          Stock        and      Other
Name and Position  Year   Fees        Bonus   Awards       Sar's    Compensation
-----------------  ----   ----------  -----   ----------   -------  ------------

Walter Fuller      2000   $   1,750   $  -      -             -     $     -
CEO, Director      2001   $   7,250   $  -      -             -     $     -
                   2002   $   6,750   $  -      -             -     $     -






<PAGE>






Compensation of Directors

Until October 1, 2002, the Company had adopted a policy of paying directors $250
per meeting plus directors fees of $500 per month as employees. Effective
October 1, 2002, all directors are treated as independent contractors, but
receive the same remuneration.

Employment Agreements

Mr. Keith Winn entered into an employment agreement with the Company to serve as
its Chief Technology Officer. This agreement became effective May 1, 2001 and
had a term of one year. The agreement was renewed for an additional year on
April 30, 2002 subject to termination and severance clauses. The agreement
provides for annual compensation of $150,000.

Termination of Employment and Change of Control Arrangements

None.


ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The table below sets forth the total number of shares of the Company's
outstanding voting stock owned by beneficial owners owning more than 5% and each
director and officer of the Company, and by all officers and directors as a
group.

                                              Number of Shares
Name and Address of                           Owned Beneficially  Percent of
Beneficial Owner              Title of Class  and of Record       Class (6)
------------------            --------------  ------------------  ------------

Beneficial owners owning more than 5% other than management
-----------------------------------------------------------

Sandra K. Leatherman           Common Stock      1,601,820 (8)        13.9%
3345 Fosca St.
Carlsbad, CA 92009

Kelly Manoccio
1027 Orchard Lane
Broadview Heights, OH 44147    Common Stock      1,231,610 (9)        10.7%


Beneficial ownership of officers and directors
----------------------------------------------

Walter G. Fuller               Common Stock      2,974,880(4)         25.7%
217 E. Railroad St.
P.O. Box 299 Garrett, IN 46738

Nicholas Litchin               Common Stock      1,589,760(2)(4)      13.8%
6401 Constitution Dr.
Ft. Wayne, IN 46804





<PAGE>






Christopher M. Welch
920 Sycamore Avenue, #62
Vista, CA  92083               Common Stock      1,379,410(1)(9)      11.9%

Craig Litchin
c/o 1040 Joshua Way
Vista, CA 92083                Common Stock         85,000(5)           .7%

George E. McGill
120 Birmingham, #240
Cardiff, CA 92007              Common Stock        439,920(4)          3.8%

Bradford A. Morrow
9025 E. Jenan Dr.
Scottsdale, AZ 85260           Common Stock        130,000(3)          1.1%

All Officers and               Common Stock      6,598,970            57.1% (6)
Directors as a Group
(6 persons)

(1)  Includes options to purchase 195,000 common shares under the Company's
stock option plan

(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)  Includes options to purchase 130,000 common shares under the Company's
stock option plan

(4)  Includes options to purchase 315,000 common shares under the Company's
stock option plan

(5)  Includes options to purchase 85,000 common shares under the Company's stock
option plan

(6)  Adjusted for the effect of 1,717,500 shares issuable upon exercise of
outstanding stock options plus 9,842,680 shares outstanding for a total of
11,560,180 shares.

(8)  Includes 1,601,820 shares held as trustee of the J&S Trust

(9)  Includes 465,020 shares held as beneficial owner of the Janice Welch Trust


ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.





<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 Public Accountants

     Balance Sheet - December 31, 2002

     Statements of Operations for the years ended December 31, 2002 and 2001

     Statements of Stockholders' Equity for the years ended December 31, 2002
and 2001

     Statements of Cash Flows for the years ended December 31, 2002 and 2001

     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).

21.       Subsidiaries of Registrant. (3).

99.1      Certification of Chief Executive Officer and Chief Financial Officer
          of the Company, pursuant to 18 U.S.C. Section 1350, as adopted
          pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

     (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-A,
filed April 10, 1997.

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


ITEM 14.    CONTROLS AND PROCEDURES

Based on their evaluation as of a date within 90 days of the filing date of this
Annual Report on Form 10-KSB, the principal financial officer of the Company has
concluded that the Company's disclosure controls and procedures (as defined in
Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934) are
effective to ensure that the information required to be disclosed by the Company
in reports that it files or submits under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in SEC rules and forms.




<PAGE>






There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their most recent evaluation.

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/ Craig Litchin
Craig Litchin, President, Chief Operating Officer and Principal Financial
Officer

Date:  April 14, 2003



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/Craig Litchin          President, Chief Operating
                             Officer, Treasurer, Principal    April 14, 2003
Craig Litchin                Principal Financial Officer,
                             Principal Accounting Officer

By:/s/Nicholas Litchin       Director                         April 14, 2003

Nicholas Litchin

By:/s/George McGill          Vice President, Secretary        April 14, 2003

George McGill

By:/s/Walter G. Fuller       Chief Executive Officer,         April 14, 2003
                             Chairman of the Board,
Walter G. Fuller             Director

By:/s/Bradford Morrow        Director                         April 14, 2003

Bradford Morrow

By:/s/Christopher M. Welch   Director                         April 14, 2003

Christopher M. Welch


<PAGE>






                                 Certifications


I, Craig Litchin, certify that:

1.   I have reviewed this annual report on Form 10-KSB of Intellectual
Technology, Inc.;

2.   Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.   Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.   I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:

     a)   designed such disclosure controls and procedures to ensure that
     material information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is being
     prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
     and procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and

     c)   presented in this annual report my conclusions about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5.   I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent functions):

     a)   all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

     b)   any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

6.   I have indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.


Date: April 14, 2003                     /s/ Craig Litchin
                                         Principal Executive Officer
                                         Principal Financial Officer


<PAGE>






Index to Financial Statements

                                                                     Page


         Report of Comiskey & Company, P.C.
         Independent Public Accountants                              F-1

         Balance Sheet                                               F-2

         Statements of Operations                                    F-3

         Statement of Stockholder's Equity                           F-4

         Statements of Cash Flows                                    F-5

         Notes to Financial Statements                         F-6 through F-13




<PAGE>






                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                    ----------------------------------------



We have audited the accompanying balance sheet of Intellectual Technology,  Inc.
as of December 31, 2002, and the related statements of operations, stockholders'
equity,  and cash flows for each of the years ended  December 31, 2002 and 2001.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits 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  audits  provide 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, 2002,  and the results of its  operations,  cash flows,  and
changes in  stockholders'  equity for each of the years ended  December 31, 2002
and 2001 in conformity  with  accounting  principles  generally  accepted in the
United States of America.


Denver, Colorado
February 28, 2003
                                                        PROFESSIONAL CORPORATION



















                                       F-1
<PAGE>



<TABLE>
<CAPTION>
                          Intellectual Technology Inc.
                                  BALANCE SHEET
                                December 31, 2002

  ASSETS
  ------
<S>                                                                             <C>
Current Assets
  Cash and cash equivalents                                                     $      518,220
  Accounts receivable                                                                  457,225
  Inventory                                                                            723,648
  Deferred income tax benefits                                                           4,977
  Prepaid income taxes                                                                   4,681
  Prepaid expenses                                                                      83,761
                                                                                ----------------

   Total current assets                                                              1,792,512

Property and Equipment
  Contract equipment                                                                 7,426,294
  Non-contract equipment - office, warehouse equipment, furniture and vehicles         103,628
                                                                                ----------------
                                                                                     7,529,922
  Less: accumulated depreciation                                                     6,535,957
                                                                                ----------------
                                                                                       993,965

Other Assets
  Patents trademark and loan fee, net of accumulated amortization of $715,747           19,334
  Deferred income tax benefits, net of current portion                                  22,306
  Due from related party, net allowance for doubtful account of $31,887                      -
  Deposits                                                                               6,347
                                                                                ----------------

    Total assets                                                                $    2,834,464
                                                                                ================

  LIABILITIES AND STOCKHOLDERS' EQUITY
  ------------------------------------
Current Liabilities
  Accounts payable                                                              $      180,954
  Accrued expenses and interest                                                         67,205
  Income taxes payable                                                                   7,154
  Accrued loss reserve                                                                  22,000
  Note payable                                                                         128,775
  Due to related party                                                                  15,007
                                                                                ----------------

    Total current liabilities                                                          421,095

Long-term Liabilities
  Note payable, net of current portion                                                 210,425
  Accrued loss reserve, net of current portion                                           5,788
  Due to related party, net of current portion                                         111,844
                                                                                ----------------
                                                                                       328,057
                                                                                ----------------

Stockholders' Equity
  Preferred stock, $0.00001 par value, 1,000,000 shares authorized,
    no shares issued or outstanding                                                          -
  Common stock, $0.00001 par value, 20,000,000 shares authorized,
    9,842,680 shares issued and outstanding                                                 98
  Additional paid-in capital                                                         1,154,452
  Retained earnings                                                                    930,762
                                                                                ----------------

                                                                                     2,085,312
                                                                                ----------------

    Total liabilities and stockholders' equity                                  $    2,834,464
                                                                                ================
</TABLE>


    The accompanying notes are an integral part of the financial statements.
                                       F-2
<PAGE>



<TABLE>
<CAPTION>
                          Intellectual Technology Inc.
                             STATEMENT OF OPERATIONS
                 For the years ended December 31, 2002 and 2001


                                                                    2002                2001
                                                              ----------------    ----------------
REVENUES
<S>                                                           <C>                 <C>
  Transaction fees                                            $    5,930,859      $    4,695,304
  Other revenue                                                      386,098             148,061
                                                              ----------------    ----------------

    Total revenues                                                 6,316,957           4,843,365

COST OF REVENUES
  Depreciation and amortization - contract costs                     611,426             416,677
  Insurance                                                           18,387              18,870
  Maintenance                                                      1,221,204             935,359
  Materials                                                        1,758,587           1,170,187
  Costs of other revenue                                             270,330              98,435
  Other contract expenses                                             49,009             193,408
  Impairment loss - equipment parts                                   22,212              92,699
  Reduction in provision for contract losses                         (22,212)           (266,263)
  Property taxes                                                      60,536              40,410
                                                              ----------------    ----------------

    Total cost of revenues                                         3,989,479           2,699,782
                                                              ----------------    ----------------

    Gross profit                                                   2,327,478           2,143,583

OPERATING EXPENSES
  Depreciation                                                        16,347              13,818
  Amortization of patent                                              35,214              61,620
  Selling, general and administrative expenses                     1,444,148           1,167,886
  Research and development                                           199,254              96,013
                                                              ----------------    ----------------

                                                                   1,694,963           1,339,337
                                                              ----------------    ----------------

    Income from operations                                           632,515             804,246

OTHER INCOME (EXPENSE)
  Interest income                                                      7,077              20,282
  Loss on uncollectible advance to affiliate                               -             (31,887)
  Interest expense                                                   (82,218)            (84,724)
                                                              ----------------    ----------------

    Income before income taxes                                       557,374             707,917

  Income tax expense                                                 197,997             267,651
                                                              ----------------    ----------------

  NET INCOME                                                  $      359,377      $      440,266
                                                              ================    ================

  Income per share: (Basic)                                   $         0.04      $         0.04
                                                              ================    ================

  Income per share: (Diluted)                                 $         0.04      $         0.04
                                                              ================    ================

    Weighted average number of shares outstanding - basic          9,842,680           9,842,680
                                                              ================    ================

    Weighted average number of shares outstanding - diluted        9,842,680           9,919,246
                                                              ================    ================
</TABLE>


    The accompanying notes are an integral part of the financial statements.
                                       F-3
<PAGE>



<TABLE>
<CAPTION>
                          Intellectual Technology Inc.
                        STATEMENT OF STOCKHOLDERS' EQUITY
                 For the years ended December 31, 2002 and 2001




                              Common Stock
                       ---------------------------    Additional
                          Number                       paid-in        Retained
                        of shares        Amount        capital        earnings        Totals
                       ------------   ------------   ------------   ------------   ------------

<S>                     <C>           <C>            <C>            <C>            <C>
Balances as of
  January 1, 2001       10,000,000    $       100    $ 1,186,250    $   131,119    $ 1,317,469

Stock redeemed for
cash during year          (157,320)            (2)       (31,798)             -        (31,800)

Net income                       -              -              -        440,266        440,266
                       ------------   ------------   ------------   ------------   ------------

Balances as of
  December 31, 2001      9,842,680             98      1,154,452        571,385      1,725,935

Net income                       -              -              -        359,377        359,377
                       ------------   ------------   ------------   ------------   ------------

Balances as of
  December 31, 2002      9,842,680    $        98    $ 1,154,452    $   930,762    $ 2,085,312
                       ============   ============   ============   ============   ============
</TABLE>






























    The accompanying notes are an integral part of the financial statements.
                                       F-4
<PAGE>



<TABLE>
<CAPTION>
                          Intellectual Technology Inc.
                            STATEMENTS OF CASH FLOWS
                 For the years ended December 31, 2002 and 2001


                                                                2002                2001
                                                          ----------------    ----------------
<S>                                                       <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                              $      359,377      $      440,266
  Adjustments to reconcile net income to net cash flows
   from operating activities
    Amortization of loan fees                                     12,056              10,798
    Depreciation and amortization                                662,987             492,115
    Deferred income taxes                                          3,256             142,461
    Decrease in loss reserves                                    (22,212)           (260,000)
    Impairment loss - equipment parts                             22,212              92,699
    Loss on uncollectible advance to affiliate                         -              31,887
    Other adjustments                                             (1,826)              4,471
    Decrease (increase) in current assets
      Certificate deposit                                              -             128,677
      Accounts receivable                                        (40,050)           (120,477)
      Accounts receivable - related party                              -              13,802
      Prepaid expenses and other current assets                   26,414                 531
      Prepaid income taxes                                        63,723             (44,704)
      Inventory                                                   10,683            (406,236)
    Increase (decrease) in current liabilities
      Accounts payable                                          (211,626)            199,766
      Accrued expenses and interest                               17,061               7,644
      Income taxes payable                                         5,597             (14,286)
                                                          ----------------    ----------------

      Net cash flows from operating activities                   907,652             719,414

CASH FLOWS FROM INVESTING ACTIVITIES
  Investment in trademark                                         (2,153)             (1,040)
  Purchases of non-contract equipment                            (32,721)             (9,241)
  Investment in contract costs and equipment                    (238,888)         (1,028,132)
                                                          ----------------    ----------------

    Net cash flows from investing activities                    (273,762)         (1,038,413)

CASH FLOWS FROM FINANCING ACTIVITIES
  Net borrowings                                                 400,000             214,600
  Debt repayments                                               (721,704)           (168,216)
  Repayment by related party                                           -               8,774
  Redemption of common stock                                           -             (31,800)
  Loan costs                                                           -             (14,600)
                                                          ----------------    ----------------

    Net cash flows from financing activities                    (321,704)              8,758
                                                          ----------------    ----------------


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS             312,186            (310,241)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                   206,034             516,275
                                                          ----------------    ----------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                  $      518,220      $      206,034
                                                          ================    ================


SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
  Cash paid during the year for interest                  $       60,896      $       69,550
                                                          ================    ================
  Cash paid during the year for income taxes              $      137,311      $      192,096
                                                          ================    ================
</TABLE>


    The accompanying notes are an integral part of the financial statements.
                                       F-5
<PAGE>


                          Intellectual Technology, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2002



1.   Description of Business and Summary of Significant Accounting Policies
     ----------------------------------------------------------------------
     Description of Business
     -----------------------
     Intellectual   Technology,   Inc.   ("ITI,"  "the  Company"),   a  Delaware
     corporation,  is engaged in the design,  manufacture,  and sale or lease of
     printer  systems  and media for the  automated  printing  of motor  vehicle
     registration forms and license plate decals. The Company's printing systems
     are currently installed in the states of Indiana, Louisiana, Ohio and South
     Dakota. These printing systems are designed both as stand-alone units which
     are used in individual  motor vehicle  registration  offices and mailrooms,
     and have been incorporated into self-service terminal ("SST") machines. ITI
     provides equipment, software, media, training and support for the operation
     of all installed systems.

     Principles of Consolidation
     ---------------------------
     The accompanying financial statements include Intellectual Technology, Inc.
     and  its  wholly  owned  subsidiary,   Image  Technology,  Inc.,  a  Nevada
     corporation.  There are no inter-company transactions due to the inactivity
     of Image Technology, Inc.

     Property, Equipment and Depreciation
     ------------------------------------
     Contract  costs  and  equipment  have been  capitalized,  and  include  the
     manufactured  cost of the  printers  and other  support  equipment,  SST's,
     operating  software,  installation,  freight,  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 terms including  renewals.
     The amount of cost  recovery  (depreciation)  charged to  operations in the
     current period is based on management's  estimates of future  transactions.
     Differences in actual transactions from those estimated by management could
     materially change the rate of cost recovery charged to operations.

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

     Inventory
     ---------
     Inventory consists of media (paper, ribbon, and decals) used to produce the
     motor  vehicle  registration  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.

     Advertising Costs
     -----------------
     Costs associated with advertising are expensed in the year incurred.













                                       F-6
<PAGE>


                          Intellectual Technology, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2002



1.   Description  of Business  and Summary of  Significant  Accounting  Policies
     ---------------------------------------------------------------------------
     (continued)
     -----------
     Intangibles
     -----------
     Patent costs are  capitalized,  and are amortized over the remaining useful
     lives of the  patents,  which  originally  had been 17  years  from  issue.
     However,  as of June 30, 2002,  the lives of these patents were extended by
     24 months,  as determined by management,  due to the extension of a related
     contract.

     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  statements  of cash flows,  the Company  considers all
     highly liquid debt  instruments  purchased  with an initial period of three
     months or less to be cash equivalents.

     Significant Concentrations
     --------------------------
     For the year ended December 31, 2002, transaction fees from three contracts
     accounted for 91% of total revenues.  For the year ended December 31, 2001,
     transaction fees from three contracts accounted for 98% of total revenues.

     As of December 31, 2002, accounts receivable from three customers accounted
     for approximately 90% of accounts receivable.

     From  time-to-time,  the Company  maintains cash balances in excess of FDIC
     insured  limits.  The  amount  of such  excess  at  December  31,  2002 was
     approximately $461,000.

     Earnings per Share
     ------------------
     Basic earnings per share are computed using the weighted  average number of
     shares outstanding. Fully diluted earnings per share are computed using the
     treasury stock method as to potential dilutive securities.

     Fair Value of Financial Instruments
     -----------------------------------
     Unless  otherwise  indicated,  the fair  value of all  reported  assets and
     liabilities which represent  financial  instruments (none of which are held
     for trading purposes) approximate the carrying values of such instruments.

2.   Working Capital
     ---------------
     At December 31, 2002, the working capital of the Company was $1,371,417 and
     the current ratio was 4.26 to 1.













                                       F-7
<PAGE>


                          Intellectual Technology, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2002



3.   Related Party Transactions
     --------------------------
     As of September  1999, the Company  entered into an agreement with ARS, for
     the purchase of a patent for $130,000 plus accrued interest.  For the years
     ended  December  31, 2002 and 2001,  $8,431 and $10,616 of this amount were
     repaid,   and  $8,665  and  $9,384  were   charged  to  interest   expense,
     respectively.  The remainder of the payable, $126,851 plus accrued interest
     of  $2,096,  is due in  quarterly  installments  of  $5,000,  inclusive  of
     interest of 6.61%.

     For the year ended  December  31,  2002,  the Company  has a related  party
     receivable  totaling $31,887,  including interest of $3,602. As of December
     31, 2002,  this amount had been fully  offset by an allowance  for doubtful
     account.

4.   Notes Payable and Long-term Debt
     --------------------------------
     The Company converted a $400,000 line-of-credit into an installment note in
     June 2002.  The Company is obligated  under the following  note at December
     31, 2002:

                                                        Short-term    Long-term
                                                        ----------    ---------

     Prime plus two percent
     (minimum of 7% at December 31, 2002).
     Secured by miscellaneous equipment and
     assignment of certain accounts receivable.
     Principal and interest are payable in monthly
     installments of $12,370.
     Matures June 2005,                                 $ 128,775     $ 210,425
                                                        ==========    =========

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

          For the year ended
              December 31,                          Amount
              ------------                          ------

                 2003                            $   128,775
                 2004                                126,206
                 2005                                 84,219
                                                 ------------

                                                 $   339,200
                                                 ============

5.   Line-of-Credit
     --------------
     The Company has available a $300,000  line-of-credit with a bank secured by
     accounts  receivable,  equipment  and general  intangibles.  The line bears
     interest at Prime plus two percent with a minimum  interest  rate of 7% (7%
     at  December  31,  2002)  and  matures  in  December  2003.  There  was  no
     outstanding balance on this line at December 31, 2002.













                                       F-8
<PAGE>


                          Intellectual Technology, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2002



6.   Leases
     ------
     As of December  31, 2002,  the Company  leases for its own use office space
     and office equipment under non-cancelable  operating leases expiring in the
     years 2003 to 2007.

     Future minimum lease payment on  non-cancelable  operating  leases over the
     next five years are as follows:


               For the year ended
                   December 31,                           Amount
                   ------------                           ------

                        2003                          $    88,999
                        2004                               78,633
                        2005                               62,650
                        2006                               56,400
                        2007                                9,400


     Rent expense for the year ended December 31, 2002 was $88,229. Rent expense
     for the year ended December 31, 2001 was $85,574, net of sublease income of
     $6,710.

7.   Income Taxes
     ------------
     The components of the provision for income taxes are as follows:

                                                      2002              2001
                                                      ----              ----

          Current federal income tax expense       $  171,418       $  116,154
          State and local income taxes currently
              paid or payable                          39,898           25,298
          Flow through credits and other              (16,575)         (12,279)
          Deferred tax increase                         3,256          138,478
                                                   -----------      -----------


              Income tax expense                   $  197,997       $  267,651
                                                   ===========      ===========

     The Company has $27,788 of projected  contract losses deductible for income
     tax purposes in 2003 and 2004. The Company also has  approximately  $50,000
     in  California  Credits for  Increasing  Research  Activities  available to
     offset  future  California  tax. The  following  are the  components of the
     Company's deferred tax assets and liabilities:













                                       F-9
<PAGE>


                          Intellectual Technology, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2002



7. Income Taxes (continued)
   ------------------------
                                                               2002
                                                               ----
            Projected losses, depreciation,
               allowances and miscellaneous                 $  15,283
            Research and development credits                   50,000
            Valuation allowance - Research and
               development credits                            (38,000)
                                                            ----------
            Total deferred tax assets                       $  27,283
                                                            ----------

            Deferred tax liabilities                        $       -
                                                            ==========

     Reconciliation  between statutory federal income tax rate and the effective
     income tax rates  based on income  before  income  taxes and  extraordinary
     items:

                                                               2002       2001
                                                               ----       ----

            Statutory federal income tax rate                  34.0%      34.0%
            Federal income tax credits and other adjustments   (2.7%)      0.9%

            State income taxes, net of federal tax benefit      4.2%       2.9%
                                                            ---------    -------
            Effective income tax rates                         35.5%      37.8%
                                                            =========    =======

8.   Stockholders' Equity
     --------------------
     Preferred Stock
     ---------------
     At December  31,  2002,  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, 2002,  a total of  20,000,000  shares of $0.00001 par value
     common stock were authorized, and 9,842,680 were issued and outstanding.

     Warrants
     --------
     The following warrants to purchase common shares expired April 17, 2002:

              Number               Type                     Exercise
            of Warrants         of Warrant                   Price
            -----------         ----------                   -----
              200,000             Class A                 $ 12.50/share
              200,000             Class B                 $ 12.50/share












                                      F-10
<PAGE>


                          Intellectual Technology, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2002



8.   Stockholder' Equity (continued)
     -------------------------------
     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. As a result of the transaction,  the
     shareholders of Image Technology, Inc. acquired collectively a 90% interest
     in the reporting company,  with the remaining 10% ownership retained by the
     original  shareholders.  The  transaction  has  been  accounted  for  as  a
     recapitalization  of  the  private  company,  Image  Technology,  Inc.  The
     accompanying   financial  statements  include  the  cumulative  results  of
     operations  of Image  Technology,  Inc.  prior to the  acquisition  and the
     cumulative and current  results of operations of  Intellectual  Technology,
     Inc. and Image Technology,  Inc. on a consolidated  basis subsequent to the
     transaction.

     Stock Options
     -------------
     In a  transaction  more  fully  described  in Note 9,  the  Company  issued
     1,567,500 stock options to purchase shares of stock in the Company at $0.38
     and $0.18 per share.

     Stockholders Equity and Comprehensive Income
     --------------------------------------------
     SFAS 130 requires  companies to present  comprehensive  income  (consisting
     primarily of net income items plus other direct equity changes and credits)
     and its components as part of the basic financial statements.  For the year
     ended December 31, 2002, the Company's financial  statements do not contain
     any  changes in equity  that are  required  to be  reported  separately  in
     comprehensive income.
































                                      F-11
<PAGE>


                          Intellectual Technology, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2002



9.   Stock Option Plan
     -----------------
     On December 8, 2000, the directors of Intellectual Technology,  Inc. issued
     options under the 2000 Stock Option Plan ("2000 Plan") consisting of a pool
     of  2,500,000  stock  options.  This pool of options will be reduced by the
     shares issued upon the exercise of the options  issued under the 1999 Stock
     Option Grant Plan ("1999  Plan").  The 1999 Plan will remain in full effect
     until no options awarded under this plan remain outstanding. As of December
     31, 2002,  5,000  non-qualified  options  issued under the 1999 plan remain
     outstanding.  During the year ended December 31, 2001 170,000 stock options
     were forfeited and the remaining  1,350,000 stock options  outstanding were
     voluntarily  relinquished and reissued with substantially the same exercise
     features under the 2000 Plan.

     A summary of option  activity is as follows (all values  restated for stock
     splits).

<TABLE>
<CAPTION>
                                                  Weighted                      Weighted
                                    Shares        Average                       Average
                                    Under         Exercise      Options         Exercise
                                    Option        Price         Exercisable     Price
                                    ---------     ---------     -----------     ---------

<S>                                <C>            <C>            <C>            <C>
     December 31, 2000             1,882,500      $   0.32         977,500      $   0.38

     Options granted                 150,000          0.25               -             -
     Previous options vesting              -             -         442,500          0.38
     Options forfeited                     -             -               -             -
     Options exercised                     -             -               -             -
                                   ----------     ---------     -----------     ---------

     Options outstanding as of
       December 31, 2001           2,032,500          0.32       1,420,000          0.38

     Options granted                       -             -               -             -
     Previous options vesting              -             -         447,500          0.19
     Options forfeited              (315,000)         0.34        (250,000)         0.38
     Options exercised                     -             -               -             -
                                   ----------     ---------     -----------     ---------

     Options outstanding as of
       December 31, 2002           1,717,500      $   0.32       1,617,500      $   0.33
                                   ==========     =========     ===========     =========
</TABLE>

     Options have exercise prices of $0.38, $0.25 and $0.18.


     All of the options  granted  expire at various  times over a period of five
     years from the date of grant in the case of  significant  shareholders  and
     five  years  from the date of vest for all  others  and have the  following
     vesting characteristics:



<TABLE>
<CAPTION>
          Number of options         Vesting period         Vested at December 31, 2002
          -----------------         --------------         --------------------------

<S>           <C>           <C>                                     <C>
              1,170,000              Immediately                    1,170,000
                397,500                1 year                         397,500
                150,000     one third over each of 3 years             50,000
              ---------                                             ---------

              1,717,500                                             1,617,500
              =========                                             =========
</TABLE>




                                      F-12
<PAGE>


                          Intellectual Technology, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2002



9.   Stock Option Plan (continued)
     -----------------------------
     Pro Forma Disclosure
     --------------------
     The Company  applies  Accounting  Principles  Board No. 25,  Accounting for
     Stock Issued to Employees,  and related  interpretations  in accounting for
     its plan.  Accordingly,  no  compensation  costs were  recorded for options
     issued  at  prices  which  reflect  no  intrinsic  value  at the  grant  or
     modification  date.  The  Company  considered  the  effects of  recognizing
     compensation  cost  pursuant to the  provisions  of  Statement of Financial
     Accounting  Standards No. 123,  Accounting  for  Stock-Based  Compensation,
     (SFAS No. 123). Using the Black-Scholes  option pricing model,  which takes
     into account the  exercise  price of the options,  expected  life,  current
     price of the underlying stock, its expected  volatility and dividends,  and
     the risk free interest  rate,  net income would have been  decreased to the
     pro forma amounts as follows for the years ending December 31:


                                 2002                         2001
                      --------------------------   --------------------------
                      As              Pro          As              Pro
                      Reported        Forma        Reported        Forma
                      -----------     ----------   -----------     ----------

     Net income       $  359,377      $  347,877   $  440,266      $  433,558
                      ===========     ==========   ===========     ==========

     Net income
     per share        $     0.04      $     0.04   $     0.04      $     0.04
                      ===========     ==========   ===========     ==========

     The average fair value of options  granted during fiscal 2001 was $0.23; no
     options  were  granted or  modified  in 2002.  The fair value of options is
     estimated on the date of grant using the Black-Scholes option pricing model
     with the following weighted average assumptions: risk-free interest rate of
     7.0 percent for fiscal 2001; expected life of 1,825 days for the year ended
     December 31, 2001;  dividend yield percentage of 0%; and volatility of 333%
     for the year ended December 31, 2001.






















                                      F-13