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, 1996

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

                        Commission File Number: 001-12887

                          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 Identification 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, 1996 were
$1,989.

     The aggregate  market value of the voting stock held by  non-affiliates  of
the  Registrant  as of April  11,  1997 was  $1,255,240.  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, 1997, 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
<PAGE>
                                     PART I
ITEM 1.   BUSINESS.

Historical Development

     Intellectual  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 are
references to Intellectual Technology, Inc., a Delaware corporation.

     Pursuant to and as a result of the acquisition of ITI Nevada, the Company's
sole  director  resigned,  a new Board of  Directors  designated  by ITI  Nevada
management was elected,  and the Company's  business focus and operations became
that of ITI Nevada.

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  discussions  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  Nevada'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 Nevada 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
Nevada 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.

The ITI 2101A and Related Print Media

     The result of the  efforts of ITI Nevada 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.

                                       1
<PAGE>

     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 Nevada 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 Nevada'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  Nevada  would be 3M's  exclusive  distributor  for the  product.  This
exclusivity  extends  only to the product  developed  for ITI  Nevada'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.

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 which its Chairman,
Christ M. Rousseff,  has maintained  with various  Departments of Motor Vehicles
and  various  administrators  within  those  Departments,  originating  with Mr.
Rousseff's   involvement  in  the  photographic  driver's  license  market  (see
"Directors and Executive Officers - Business Experience"),  afford the Company a
basis to address the vehicle  registration-and-renewal  market with  significant
efficiencies and a limited marketing staff. As a result,  the Company intends to
market its products and services  primarily  through an in-house  marketing  and
sales staff,  led by Mr. Rousseff.  This staff currently  consists of 2 members,
and is anticipated to grow to 4 members in the coming 12-month period.

     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.

                                       2
<PAGE>

     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 and Maryland have chosen to
acquire  both  types of  units.  The  Company  also  offers  its  customers  the
opportunity  to acquire the ITI 2101A  through an outright  purchase or to lease
the device through 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. The Company believes that most jurisdictions will
choose to lease its  products  and pay for them  through the  transaction  based
pricing system.

Contracts

     In August 1996,  ITI Nevada  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 Nevada
both self-service  terminals and stand alone printers. It requires ITI Nevada to
install  an  initial  group of 10  self-service  terminals  and 100 stand  alone
printers in  locations  to be agreed upon by the BMVC and ITI Nevada with a view
to causing  the  installed  terminals  and  printers  to  perform  an  estimated
1,400,000 vehicle registration transactions on an annual basis, based on vehicle
registration  figures from 1995.  Following  this  initial  phase of the Indiana
Contract,  the BMVC, at its option, may lease additional  terminals and printers
beyond  those  leased  as part of the  initial  phase.  Generally,  the  Indiana
Contract  provides for such  additional  terminals  and printers to be leased in
blocks of five additional terminals and 39 additional printers and for five such
additional  blocks.  The BMVC has notified the Company of its agreement to lease
all five  additional  blocks and has  directed  that such  additional  blocks be
installed and implemented by November 1, 1997.

     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  are  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  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  will be paid by the
Company,  and delivery  must be made pursuant to a schedule to be agreed upon by
the Company and the BMVC.  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.

                                       3
<PAGE>

     To assist it in  performing  its  obligations  under the Indiana  Contract,
effective  as of  August  1,  1996,  ITI  Nevada  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.
However,  its pricing for maintenance of the Company's printers is based in part
upon the  Company's  assumptions  regarding the quantity and duration of service
calls per printer per year. If actual failure rates exceed these estimates,  the
Company  will be charged an hourly rate per  service  call.  Generally,  the NCR
Agreement  requires  NCR to provide all of the support and service  required for
use of the system by the BMVC,  including  that  associated  with  hardware  and
software  designed or installed by the Company and third parties.  However,  the
Company and certain software  subcontractors  are required to provide support to
NCR in the servicing of components of the system contributed by them.

     The NCR  Agreement,  as amended by the parties,  provides  that the Company
will pay NCR approximately $2,400,000 for its participation in the initial phase
of the Indiana Contract. $600,000 of this amount is to be paid at the end of the
contract  term;  $800,000 has been paid;  and the remaining  $1,000,000 is being
paid at the rate of  $100,000  per month.  The fixed  price for the first  phase
includes the costs of all hardware, software,  maintenance,  program management,
system  development,  associated  back  office  hardware,  and  11  self-service
terminals  provided by NCR. The NCR Agreement  also provides a schedule of fixed
prices for each of the remaining five blocks of printers and terminals which may
be leased by the Indiana BMVC.  This pricing,  which is identical for each block
and  generally  declines  over  time,  includes  pricing  for five  self-service
terminals and any associated hardware,  software,  installation and maintenance,
as well as maintenance  for 39 of the Company's stand alone printers and 90 days
of program  management.  The NCR  Agreement  provides  that the Company  will be
invoiced  by NCR for any such  additional  block  after the  equipment  included
within that block has been installed and accepted by the BMVC. The NCR Agreement
also  provides for the  installation  of  additional  terminals  and  standalone
printers,  beyond those  contained  in the five blocks,  the pricing of which is
consistent with the pricing for the five blocks.

     The  Department of Motor Vehicles of the State of Maryland has also entered
into an agreement  to acquire  self-service  terminals  from NCR and stand alone
printers  and print media from the  Company.  On  November 1, 1996,  the Company
received  its first order for 11 ITI 2101A  printing  systems to be installed by
NCR in self service  terminals in the State of Maryland.  The first self service
terminals  incorporating  the ITI 2101A  printer are  scheduled  to be installed
there on April 17, 1997.

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 ITI printing  systems is
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 printing media used by the ITI 2101A is produced exclusively for
the Company by 3M  Corporation  of St. Paul,  Minnesota (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.

                                       4
<PAGE>

Competition

     The Company believes that it possesses a strong competitive position in the
sale of the ITI 2101A and its related printing media.  While the market is still
in its infancy,  the Company has established a reputation for providing  quality
products  and  is  not  aware  of  any  active  competitor  within  the  market.
Nevertheless,  a risk of new market entrance by domestic and foreign competitors
exists.  While the Company believes that it possesses a significant lead time by
virtue of its proprietary position, initial installed base and reputation, there
can be no assurance that a better  capitalized  competitor will not successfully
establish  itself  in the  market or  develop a  technology  which  renders  the
Company's technology obsolete.

Patents

     The ITI 2101A is based in part on technologies which are proprietary to the
Company and covered by two patents owned by ITI Nevada. 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, and Germany. 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 1994 Patent was acquired by ITI Nevada from ARS in a transaction  which
originally  required ITI Nevada 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.

Employees

     The Company has nine full-time employees, of whom three are in executive or
administrative  positions 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.

                                       5
<PAGE>

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 have a
suite of  offices  in  Dayton  Ohio as to which the  Company  bears its share of
nominal  expenses.  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, 1996.


                                       6
<PAGE>

                                     PART II

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

     Prior to the third  quarter  of 1996,  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 not 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                 $.01           $.01
          December 31, 1996                  $.01           $.01

     The  quotations  which appear above reflect  inter-dealer  prices,  without
retail  mark-up,   mark-  down  or  commission  and  may  not  represent  actual
transactions.

     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 March 31, 1997,  the Company had  approximately  48  shareholders  of
record,  which does not include  shareholders whose shares are held in street or
nominee names.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS

     Certain  statements   contained  in  this  report,   including   statements
concerning the Company's future cash and financing  requirements,  the Company's
ability to obtain market acceptance of its products, and the market for sales of
the Company's products,  and other statements contained herein regarding matters
that are not historical  facts, are forward looking  statements;  actual results
may differ materially from those anticipated in the forward looking  statements,
which statements involve risks and uncertainties.  In particular, the Company is
subject to the following risks:

     1. The  Company's  success to date has depended in large part of the skills
and efforts of Mr. Christ M. Rousseff, Chairman of the Board and Chief Executive
Officer of the Company.  The business of the Company would be significantly  and
adversely  affected if it were to be deprived of the  services of Mr.  Rousseff.
The Company has not obtained key man life insurance  coverage with regard to Mr.
Rousseff.

2.   As a consequence of the Company's  transaction base pricing structure,  the
     Company  will be required  to raise a  significant  amount of capital.  See
     "Management's  Discussion and Analysis - Liquidity and Capital  Resources."
     There can be no  assurance  that the  Company  will be able to obtain  such
     capital on acceptable terms or at all.

3.   As a  consequence  of its limited  operating  history  and current  working
     capital deficit,  there can be no assurance as to the future  profitability
     of the Company.

                                       7
<PAGE>

4.   Substantially  all  of  the  Company's  revenues  have  been,  and  in  the
     foreseeable future will be, derived from contracts with a limited number of
     state Departments of Motor of Vehicles. The inability to obtain or maintain
     such  contracts  would have a material and adverse  effect on the Company's
     financial condition and prospects.

5.   The Company's  revenues currently depend upon a limited product line. While
     the Company is seeking to develop,  and will consider the  acquisition  of,
     new and related  products,  there can be no assurance that the Company will
     be successful in these efforts.

6.   While the  Company's  products  have been  purchased by two  jurisdictions,
     there  can  be no  assurance  that  its  products  will  be  accepted  by a
     significant number of additional jurisdictions.

7.   The  Company's  printers,  whether  operating in a stand alone format or as
     part of a self-service  terminal,  require periodic maintenance and repair.
     If the rate of failure of its printers  were to exceed  current  estimates,
     such  failures  could  increase the cost of the  Company's  operations  and
     potentially jeopardize existing and future contracts.

8.   The  sales  price,  lease  payments,  and  service  fees  contained  in the
     Company's agreements are fixed. Therefore,  the Company will not be able to
     pass along any increases in its manufacturing and services costs during the
     terms of these agreements.

Plan of Operations

     The Company is a development  stage  enterprise  the purpose of which is to
design,   manufacture  and  sell  systems  for  the  automated  preparation  and
dispensing of motor vehicle  registration forms and license plate decals.  Since
its  inception,  the  Company  has been  engaged  principally  in  research  and
development of its products. As a result, the Company has generated only limited
operating revenues to date and has incurred losses from such activities.

     During the next 12 months,  the Company intends to focus its efforts in the
following areas:

     *    To complete the installation of self service  terminals which are part
          of the initial phase of the Indiana Contract.

     *    To cause the  installation of the additional  stand alone printers and
          self-service terminals called for by the Indiana Contract.

     *    To expand its sales and  marketing  staff and increase  its  marketing
          efforts.

     *    To enter into  agreements  for the sale or lease of its products  with
          additional jurisdictions.

     *    To obtain 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.

     *    To initiate development of new opportunities in related areas, such as
          driver records, voter registration,  tax payments,  electronic benefit
          vouchers, driver's license extensions,  traffic fine payments, fishing
          and hunting licenses, and utility payments.

                                       8
<PAGE>

Liquidity and Capital Resources

     To date the Company has financed its  activities  primarily  through equity
contributions and the incurrence of debt. The Company has only recently begun to
generate operating revenue as a consequence of the Indiana Contract and the sale
of printers to NCR in connection with the installation of self-service terminals
in the State of Maryland.  The Company  believes  that it would have  sufficient
liquidity  from its  existing  stream of  contractual  lease  payments  from the
Indiana  Contract to maintain a minimal level of continuing  operations  without
additional  financing.  However, to continue to deliver stand alone printers and
self-service  terminals  under lease  arrangements,  which requires  significant
capital  outlays,  to repay its investment  notes, and to increase its sales and
marketing  efforts,  the Company will be required to adopt one or more financing
alternatives,  such as incurring  additional  debt,  selling leases,  or seeking
additional equity capital contributions.  Should additional sources of financing
not be obtainable, the Company's liquidity would be adversely affected. Although
management of the Company believes that the Company will have sufficient funding
alternatives to finance its intended activities,  there can be no assurance that
any such alternatives will be effected on satisfactory terms or at all.

Impact of Inflation

     Inflation has not had any  significant  effect on the  Company's  expenses.
However,  the sales price,  lease  payments and service fees contained and to be
contained in the Company's agreements with various jurisdictions are and will be
fixed,  and  the  Company  will  be  unable  to  pass  along  any  increases  in
manufacturing or service costs during the term of these agreements.


ITEM 7.   FINANCIAL STATEMENTS.

                          INDEX TO FINANCIAL STATEMENTS

                                                                        Page
                                                                       Number

Report of Independent Accountants                                        10
Balance Sheet                                                            11
Statements of Loss and Accumulated Deficit                               12
Statement of Stockholders' Equity                                        13
Statements of Cash Flows                                                 14
Notes to Financial Statements                                            15

                                       9
<PAGE>


                                BRIDGESTONE CORP.
                          (A Development Stage Company)


                      REPORT OF CERTIFIED PUBLIC ACCOUNTANT



The Board of Directors
Bridgestone Corp.

We  have  audited  the  accompanying  balance  sheet  of  Bridgestone  Corp.  (a
development  stage  company),  as of December 31, 1996 and 1995, and the related
statements of loss and accumulated deficit, cash flows, and stockholders' equity
for  each of the two  years  then  ended,  and for  the  period  from  inception
(December 1, 1989) to December  31, 1996.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with 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,  as well as evaluating the overall financial statement presentation.
We believe that our audit  provides a reasonable  basis for our  opinion.In  our
opinion,  the  financial  statements  referred to above present  fairly,  in all
material  respects,  the financial  position of Bridgestone Corp. as of December
31, 1996 and 1995, and the results of its operations and its cash flows for each
of the two years then ended,  and for the period  from  inception  (December  1,
1989) to December 31, 1996, in conformity  with  generally  accepted  accounting
principles.


Aurora, Colorado
March 18, 1997

COMISKEY & COMPANY
PROFESSIONAL CORPORATION

                                       10
<PAGE>

                                BRIDGESTONE CORP.
                          (A Development Stage Company)

                                  BALANCE SHEET
                                December 31, 1996



<TABLE>
                                     ASSETS
<S>                                                                  <C>   

CURRENT ASSETS
  Cash and cash equivalent                                           $54,912
     Total current assets                                             54,912

OTHER ASSETS
  Organizational costs (net)                                             500
     Total other assets                                                  500
     TOTAL ASSETS                                                    $55,412

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                                       $40
  Accounts payable - related party                                        49
      Total current liabilities                                           89

STOCKHOLDERS' EQUITY
   Preferred stock, $0.00001 par value;
      20,000,000 shares authorized; no
      shares issued and outstanding                                       --
   Common stock, $0.00001 par value;
      500,000,000 shares authorized;
      55,000,000 shares issued and
      outstanding                                                        550
   Additional paid-in capital                                         89,791
   Deficit accumulated during the
      development stage                                              (35,018)
         Total stockholders' equity                                   55,323
         TOTAL LIABILITY AND STOCKHOLDERS                            $55,412
</TABLE>



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

                                       11
<PAGE>

                                BRIDGESTONE CORP.
                          (A Development Stage Company)

                   STATEMENTS OF LOSS AND ACCUMULATED DEFICIT


<TABLE>
                                  Period from
                                December 1, 1989
                                 (inception) to        Year ended           Year ended
                                December 31, 1996   December 31, 1996    December 31, 1995
                                -----------------   ------------------   -----------------
<S>                              <C>                 <C>                  <C>  

REVENUES
  Investment income                   $14,696              $1,989              $2,368

EXPENSES
  General & Administrative             49,714               8,615               6,228
     Total expenses                    49,714               8,615               6,228

NET LOSS                              (35,018)             (6,626)             (3,860)

Accumulated deficit
   Balance, beginning of year              --             (28,392)            (24,532)
   Balance, end of year              $(35,018)           $(35,018)           $(28,392)

NET LOSS PER SHARE                    $  (NIL)            $  (NIL)            $  (NIL)

WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING                 53,716,660          55,000,000              55,000


</TABLE>



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

                                       12
<PAGE>

                                Bridgestone Corp
                          (A Development Stage Company)

                        STATEMENT OF STOCKHOLDERS' EQUITY


<TABLE>
                                                                       Deficit
                                                                     Accumulated
                                   Common               Additional    During the      Total
                                Stock Number             Paid-In     Development   Stockholders'
                                  of Shares    Amount    Capital        Stage         Equity
                               --------------  ------  -----------   -----------   -------------
<S>                             <C>            <C>      <C>           <C>           <C>          

Stock issued to officer/sole
director for cash,
$0.00022 per share               13,500,000     $135      $2,865      $                $3,000

Stock issued to related
parties for cash, $0.00022
per share                        15,750,000      158       3,342                         3,500

Stock issued to related
parties for cash, $0.00022
per share                        15,750,000      157       3,343                         3,500

Balance at Dec. 31, 1998         45,000,000      450       9,500                        10,000

Stock issued upon closing
of public offering, Oct. 29,
1990 $0.01 per share             10,000,000      100      99,900                       100,000

Deferred offering costs                                  (19,659)                      (19,659)

Loss for the period ended
Dec. 31, 1990                                                            (3,597)        (3,597)

Balance at Dec. 31, 1990         55,000,000      550      89,791         (3,597)        86,744

Loss for the period ended
Dec. 31, 1991                                                            (7,992)        (7,992)

Balance at Dec. 31, 2991         55,000,000      550      89,791        (11,589)        78,752

Loss for the period ended
Dec. 31, 1992                                                            (5,445)        (5,445)

Balance at Dec. 31, 1992         55,000,000      550      89,791        (17,034)        73,307

Loss for the period ended
Dec. 31, 1993                                                            (3,770)        (3,770)

Balance at Dec. 31, 1993         55,000,000      550      89,791        (20,804)        69,537

Loss for the period ended
Dec. 31, 1994                                                            (3,728)        (3,728)

Balance at Dec. 31, 1994         55,000,000      550      89,791        (24,532)        65,809

Loss for the period ended
Dec. 31, 1995                                                            (3,860)        (3,860)

Balance at Dec. 31, 1995         55,000,000      550      89,791        (28,392)        61,949

Loss for the period ended
Dec. 31, 1996                                                            (6,626)        (6,626)

Balance at Dec. 31, 1996         55,000,000      550      89,791        (35,018)        55,323

</TABLE>


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

                                       13
<PAGE>
                                BRIDGESTONE CORP.
                          A Development Stage Company)

                            STATEMENTS OF CASH FLOWS

 
<TABLE>
                                       Period from December
                                      1, 1989 (Inception) to        Year Ended             Year Ended
                                         December 31, 1996        December 31, 1996      December 31, 1995
                                     -------------------------   -------------------   --------------------
<S>                                   <C>                         <C>                   <C>  

CASH FLOWS FROM OPERATING
ACTIVITIES
   Net loss                                    $(35,018)               $(6,626)               $(3,860)
   Adjustments to reconcile net loss
     to net cash used by operating
     activities:
        Decrease in accounts payable                 40                   (225)                  (158)
        Decrease in accounts payable -
           related party                             49                     49                   (217)
        Decrease in prepaid expenses                 --                    233                   (233)
        Net cash used by operating
           activities                           (34,929)                (6,569)                (4,468)
CASH FLOWS FROM INVESTING
ACTIVITIES
   Increase in organizational costs                (500)                    --                     --
        Net cash used by investing
           activities                              (500)                    --                     --
CASH FLOWS FROM FINANCING
ACTIVITIES
   Issuance of common stock                     110,000                     --                     --
   Deferred offering costs paid                 (19,659)                    --                     --
        Net cash provided by financing
          activities                             90,341                     --                     --
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS                            --                 (6,569)                (4,468)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD                                  --                 61,481                 65,949
CASH AND CASH EQUIVALENTS,
END OF PERIOD                                   $54,912                $54,912                $61,481

</TABLE>


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

                                       14
<PAGE>

                                BRIDGESTONE CORP.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

1.   Summary of Significant Accounting Policies Development Stage

Company

     Bridgestone  Corp. (the "Company") was  incorporated  under the laws of the
     State of Delaware on December 1, 1989.  Its office is located at the office
     of its  President  at 303 East 17th  Avenue,  Suite 800,  Denver,  Colorado
     80203.

     The  Company is a new  enterprise  in the  development  stage as defined by
     Statement No. 7 of the  Financial  Accounting  Standards  Board and has not
     engaged in any business other than  organizational  efforts.  The Company's
     year end is December  31. It has no  full-time  employees  and owns no real
     property.  The Company  intends to seek out and take  advantage of business
     opportunities  that may have potential for profit and, to that end, intends
     to acquire  properties or businesses,  or a controlling  interest  therein.
     Management  of the Company  will have  virtually  unlimited  discretion  in
     determining the business activities in which the Company might engage.

     On March 12,  1997,  the Company  acquired  Image  Technology,  Inc. in the
     transaction more fully described in Note 5.

Organization Costs

     Organization costs will be amortized over a 60-month period commencing with
     the date the Corporation begins business.

Loss per Share

     Loss per  share has been  computed  using the  weighted  average  number of
     shares outstanding.

Statement of Cash Flows

     For purposes of the  statement  of cash flows,  the Company  considers  all
     highly liquid debt instruments  purchased with an original maturity date of
     three months or less to be cash equivalents.

Use of Estimates

     The  preparation of the Company's  financial  statements in conformity with
     generally accepted accounting  principles requires the Company's management
     to make estimates and assumptions that affect the amounts reported in these
     financial  statements and accompanying  notes.  Actual results could differ
     from those estimates.

                                       15
<PAGE>

2.   Public Offering

     On October 29, 1990,  the Company  completed  its initial  public  offering
     after selling  10,000,000  units. Each unit consists of one share of common
     stock,  one Class A warrant  and one Class B warrant.  Each Class A warrant
     and each Class B warrant will be exercisable  for one share of common stock
     at a price of $0.25 per share for a period  commencing with the date of the
     offering and terminating  April 17, 1997 and may be transferred  separately
     from the common  stock.  The Company may redeem the  warrants at a price of
     $0.00001 per warrant upon thirty days' written notice,  reduce the exercise
     price,  or  indefinitely  extend the exercise  period of the  warrants.  At
     December 31, 1996, no warrants have been exercised.

     The Company  received  net  proceeds  from the  offering  of $80,341  after
     deducting offering costs of $19,659.
3.   Related Party Transactions

     Heather Zane  Anderson,  P.C., a law firm,  provided legal services for the
     Company,  and was paid $32 and $2,069  during  each of the two years  ended
     December  31,  1996  and  1995,  respectively.  The  amount  paid  in  1996
     represents  residual  office expenses and was not a result of legal counsel
     provided.  The sole principal of Heather Zane Anderson,  P.C. owned 185,000
     shares of the Company's common stock during the entire fiscal year.

     As of December 31, 1996,  the  Company's  officer and sole  director  owned
     12,500,000  shares of common  stock  during the entire  1996  fiscal  year,
     representing  approximately  23% of the  Company's  issued and  outstanding
     common stock.

     The  Company  maintains  its  offices  at the office of its  President  and
     Treasurer, for which it pays no rent.

4.   Income Taxes

     The Company has net operating loss  carryforwards of approximately  $34,500
     expiring  between  2005  and  2011.  The  carryforward  may be  limited  or
     prohibited  upon a  reorganization  or change in corporate  ownership.  The
     approximate income tax benefit from these  carryforwards,  totaling $6,641,
     has  been  offset  by  a  valuation  allowance.  This  valuation  allowance
     increased by $1,216 during the year ended December 31, 1996.

5.   Subsequent Event

     On  March  7,  1997,  the  Company  entered  into a plan  of  agreement  of
     reorganization among the Company, Image Technology,  Inc. ("ITI"), a Nevada
     Corporation, and the shareholders of ITI.

     The transaction was designed to qualify as a  reorganization  under Section
     368(a)(1)(B)  of the  Internal  Revenue  Code  of  1986,  as  amended.  The
     agreement  provided  that the  Company  would  acquire  all  25,000  of the
     outstanding   shares  of  ITI  in  exchange   for  the  issuance  to  ITI's
     shareholders  of  450,000,000  restricted  shares of the common stock,  par
     value  $0.00001 per share,  of the Company,  such  restricted  shares being
     sufficient to invest the ITI shareholders with a 90% ownership  interest in
     the Company.  The agreement also contemplated that a 1 for 50 reverse stock
     split of the  outstanding  common stock of the Company would be implemented
     within 10 days following the closing of the transaction.

                                       16
<PAGE>

     The agreement  provided  that finders  working on behalf of the Company and
     ITI,  respectively,  would be  issued  stock  in  consideration  for  their
     pre-closing  services.  The agreement  provided that the finder  working on
     behalf of ITI would be issued shares of ITI stock, while the finder working
     on behalf of the Company would be issued not more than 1,000,000  shares of
     Company  common stock.  Neither  finder is a principal  stockholder  of the
     Company within the meaning of SFAS No. 24, paragraph 24e.

     The  agreement  provided  also that the  Company or ITI would  enter into a
     consulting agreement with both Robert Neece, the Company's  president,  and
     Ronald J. Miller, a principal stockholder of the Company.

     The  transactions  contemplated by the agreement were  consummated on March
     12, 1997,  as a result of which ITI became the wholly owned  subsidiary  of
     the Company,  and the sole officer and director of the Company  resigned in
     favor of ITI designees.

     ITI has its headquarters in San Diego, California, and provides systems for
     the automated  preparation  and  dispensing  of motor vehicle  registration
     forms and license plate sticker decals.

                                       17


<PAGE>
                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS

Directors and Executive Officers of the Company

     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          76             Chairman and Chief Executive Officer

Nicholas Litchin            69             Vice Chairman

Walter G. Fuller            55             President and Director

Janice L. Welch             55             Secretary/Treasurer and Director

John F. Grim                40             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.

     Christ M. Rousseff is the Chairman of the Board and Chief Executive Officer
of the Company and ITI Nevada,  positions which he has held since March 12, 1997
and the formation of ITI Nevada 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 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.

                                       18
<PAGE>

     Nicholas  Litchin is the Vice  Chairman  of the Board of  Directors  of the
Company and ITI Nevada, positions which he has held since March 12, 1997 and the
formation of ITI Nevada 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 and ITI
Nevada,  positions  which he has held since March 12, 1997 and the  formation of
ITI Nevada 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
and ITI Nevada.  She has held her position with the Company since March 12, 1997
and with ITI Nevada since its formation on April 23, 1992.

     John F. Grim is the Vice President - Sales and Marketing of the Company and
ITI Nevada.  He has held his position  with the Company since March 12, 1997 and
with ITI Nevada since  October 1,  1995. Prior to his employment with ITI Nevada
and for a period of five years.  Previous 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.

ITEM 10.  EXECUTIVE COMPENSATION

     During the fiscal year ended  December 31, 1996,  no officer or director of
the Company  received cash  compensation or compensation of any type pursuant to
any stock option or other similar plan.

Compensation of Directors

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

Employment Agreements

     Mr. Grim has entered into an agreement  with the ITI Nevada 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.

                                       19
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     As of April 11, 1997, 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        Percent of Class

Janice L. Welch(1)       Common Stock        4,269,960               42.7%
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        8,744,760               87.4%


(1)       Includes  3,499,290  shares held of record by Ms. Welch as the Trustee
          of the J&S Trust.

(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 a principal shareholder.

(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 Nevada and American  Registration  Systems,  Inc.
("ARS"),  an Indiana  corporation owned and controlled by Mr. Rousseff,  entered
into a  Purchase  and  Sale  Agreement  with  regard  to  the  1994  Patent.  In
consideration  of the transfer of the 1994 Patent,  ITI Nevada  agreed to pay to
ARS the sum of  $4,000,000  on or before May 1, 1997 and to assume ARS'  royalty
obligation to Mr. Rousseff of $.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 Nevada will have
no payment obligation to ARS until May 1, 1999.

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, 1996 and 1995

          Statements  of  Operations  for the years  ended  December  31,  1996,
          December 31, 1995,  and for the period from  inception to December 31,
          1996

          Statements  of  Stockholders'  Equity  (Deficit)  for the years  ended
          December  31,  1996,  December  31,  1995,  and  for the  period  from
          inception to December 31, 1996

          Statements  of Cash  Flows  for the years  ended  December  31,  1996,
          December 31, 1995, and the period from inception to December 31, 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).

          4.3       Specimen Class B Warrant Certificate (1).

          4.4       Unit Warrant Agreement (1).
                    
          10.1      Purchase and Sale Agreement,  dated October 31, 1995, by and
                    between  American   Registration  Systems,  Inc.  and  Image
                    Technology, Inc.

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

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<PAGE>

          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.

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

          10.5      EmploymentEmployment Agreement between Intellectual
                    Technology and John F. Grim.

          11.       Statement re Computation of Pre-Share Earnings.

          21.       Subsidiaries of Registrant.

(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.

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<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, 1997

     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, 1997
   Christ M. Rousseff         Officer (Principal Executive
                              Officer)

By:/s/Janice L. Welch         Secretary/Treasurer and            April 15, 1997
    Janice L. Welch           Director
                              (Principal Financial Officer)

By:/s/Nicholas Litchin        Director                           April 15, 1997
    Nicholas Litchin


By:/s/Walter G. Fuller        Director                           April 15, 1997
    Walter G. Fuller


By:/s/John F. Grim            Director                           April 15, 1997
     John F. Grim


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