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, 1998

                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)

             1945 Camino Vida Roble, Suite O, Carlsbad, CA  92008
             (Address of Principal Executive Offices)  (Zip Code)

                             (760) 929-9789
             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.  Yes  X   No      .

The Registrant's revenues for the fiscal year ended December 31, 1998
were $5,521,827.

<PAGE>


The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of April 13, 1999 was $735,001.  For purposes of this
computation, it has been assumed that the shares beneficially held by
directors and officers of Registrant were "held by affiliates;" this
assumption is not to be deemed to be an admission by such persons that
they are affiliates of Registrant.

As of April 13, 1999, the Registrant had outstanding 10,000,001 shares
of Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

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

      Transitional Small Business Disclosure Format:  Yes        No  X	

                                      2
<PAGE>

ITEM 1.	BUSINESS

Historical Development

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


Industry and Company Background

Vehicle registration services are operated by all 50 states, the District
of Columbia, and many foreign governmental authorities.  Governments use 
vehicle registration as a means of 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 discussion with law enforcement officials, the Company 
believes that losses attributable to these problems are in the hundreds
of millions of dollars.

As early as 1987, ITI's founders envisioned streamlining the distribution 
of motor vehicle registrations through the development of an automated, 
self-service registration printing and dispensing device.  From 1987 
through 1991, the founders of ITI engaged in market research and product 
development. 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.  This 
on-demand printing capability allows Departments of Motor Vehicles to
substantially 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 as a 
stand-alone unit in a printer server environment within a Department of 
Motor Vehicles ("DMV") office and as self-service terminals which can 
be placed in locations remote from DMV offices.  

                                      3
<PAGE>

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 which 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.


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 and Canada.  

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

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.


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 term of the Indiana Contract was for 
a period of three years through October of 1999, subject to an option 
to renew on the part of the BMVC for an additional, fourth year.  Indiana 
has exercised its option to renew for the fourth year with a new 
termination date of October 31, 2000.

The Maryland Department of Motor Vehicles contracted with the NCR 
Corporation for the purchase of self-service registration terminals for 
the State of Maryland.  ITI supplied NCR with the printing systems 
necessary for the issuance of registrations and decals from the 
self-service terminals.  As part of ITI's agreement with NCR in Maryland,
all of the media (blank registration paper and decals) used by the state 
must be purchased from ITI.  ITI is negotiating to provide additional 
self-service terminals to Maryland and to lease ITI's over-the-counter, 
stand-alone printing systems to Maryland.

                                      4
<PAGE>


Contracts (continued)

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.  Beginning April 1, 1999, ITI will begin processing all of the
approximately 950,000 annual registrations in South Dakota.

The Company processes and distributes drivers' licenses for the State 
of New Hampshire.  The contract, which the Company has held for over 
five years, has been extended several times and is currently set to 
expire in May, 1999.


Manufacturing and Supply

The Company uses subcontractors to manufacture and supply all components 
and subassemblies of ITI's printing system and to provide the required 
printing media. The decal used by the ITI printing system is produced 
by 3M Corporation of St. Paul, Minnesota.  The paper materials on which 
the registrations are printed are supplied by NCR (see "Business - The 
ITI printing system 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.


Competition

The Company has identified the automation of vehicle registrations 
and registration decal printing as its primary market.  Currently there 
is only one major competitor 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.

Employees

The Company has fourteen full-time employees, of whom two are in 
executive or administrative positions, two are in engineering, and 
three 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 2,500 square feet of office space 
in Carlsbad, California pursuant to a three year lease entered into in 
March, 1999.  Monthly rent during the first year of the lease is $2,876. 
The Company is also obligated through 2001 under a lease for its previous
corporate headquarters, which calls for monthly payments of $1,900.  
Management is in the process of locating a sub-tenant for this space. 
The Company's Vice President of Sales and Marketing shares a suite of 
offices in Dayton, Ohio as to which the Company bears its share of 
nominal expenses.  The Company also leases approximately 1,875 square 
feet of office/warehouse space in Carmel, Indiana.  The lease is for 
two years at a cost of $1,054.69 per month in year one, $1,107.81 per 
month in year two.  The Company believes that these facilities are 
adequate to meet its anticipated needs for the foreseeable future.



ITEM 3.      LEGAL PROCEEDINGS

On January 27, 1999, the Company filed a complaint with the Superior 
Court of the State of California for the County of San Diego case number 
727654 against American Registration Systems, Inc. ("ARS") and 
co-defendents, thereby recording a complaint for rescission of a 1995 
Purchase and Sale Agreement between the Company and ARS.  The suit 
challenges the validity of certain material representations made by ARS 
and its affiliates at the time of the Company's entering into the 
Purchase and Sale Agreement, and asserts that such agreement was void 
or voidable due to a variety of defects, including but not limited to 
improper authorization, failure by an interested party to disclose a 
gross conflict of interest, and fraud.

To date, ARS has filed no response to the complaint.  If ARS does not 
respond to the complaint, a default may be entered in the San Diego 
County Superior Court after April 30 1999, and ITI will then attempt to 
Secure favorable judgment by prove-up after the entry of such default,
if default occurs.

The Purchase and Sale Agreement which the Company seeks to rescind 
provides that the Company shall pay to ARS or its assigns $4,000,000, 
plus a $0.01 per transaction royalty.   Judgement in favor of the 
Company would result in the cancellation of approximately $4,600,000 
of currently outstanding indebtedness.


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, 1998.

                                      6
<PAGE>

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

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

               Quarter Ended       High  Bid         Low  Bid

            March 31, 1997         $      -          $      -
            June 30, 1997          $      -          $      -
            September 30, 1997     $      3.0000     $      1.1250
            December 31, 1997      $      2.1875     $      1.0000
            March 31, 1998         $      2.2500     $      1.1250
            June 30, 1998          $      3.2500     $      1.7500
            September 30, 1998     $      2.5000     $      0.7500
            December 31, 1998      $      1.2500     $      0.6250
            March 31, 1999         $      0.8875     $      0.6250

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

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

As of April 13, 1999, the Company had approximately 76 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, and 
other statements contained herein regarding matters that are not 
historical facts, are forward looking statements; actual results may 
differ materially from those anticipated.


Plan of Operations

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

Effective November 1, 1996, the Company commenced its lease contract 
with the State of Indiana.  Prior to that date, the Company was engaged
principally in research and development of its products and generated 
only limited operating revenues.  Subsequently, the Company has entered 
into contracts to supply equipment and material to the State of Maryland, 
and has entered into a five year contract with South Dakota.

                                      7
<PAGE>

Liquidity and Capital Resources

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

                                Year ended December 31,
                              1998                1997     

Operating Activities    $     2,710,906   $     (891,524)
Investing Activities         (1,062,555)      (1,634,188)
Financing Activities         (1,867,834)       2,924,344

Net effect on cash      $      (219,483)  $      398,632

Operating cash flows are derived from lease revenues and from sales of 
the Company's printers and supplies.  In 1998, the Company processed a 
full year of motor vehicle registrations under its contract with Indiana
resulting in positive cash flows from operations, as compared an 
operating cash flow deficit in 1997, which was a phase-in year for the 
Company's equipment in Indiana.

Current liabilities includes a $4,000,000 obligation, payable to a 
related party, which is due by its terms in May, 1999.  The obligation 
arose as a result of a 1995 Purchase and Sale Agreement between the 
Company and American Registration Systems, Inc. ("ARS") whereby the 
Company acquired certain patents for $4,000,000, plus a $0.01 per 
transaction royalty payable to ARS. 

On January 27, 1999, the Company filed a complaint with the Superior 
Court of the State of California for the County of San Diego against 
ARS, seeking to rescind the Purchase and Sale Agreement. The suit 
challenges the validity of certain material representations made by 
ARS and its affiliates at the time of the Company's entering into the 
Purchase and Sale Agreement, and asserts that such agreement was void 
or voidable due to a variety of defects, including but not limited to 
improper authorization, failure by an interested party to disclose a 
gross conflict of interest, and fraud.

To date, ARS has filed no response to the complaint.  If ARS does not 
respond to the complaint, a default may be entered in the San Diego 
County Superior Court after April 30 1999, and ITI will then attempt to 
Secure favorable judgment by prove-up after the entry of such default,
if default occurs.

Judgement for the Company in this case will result in debt relief of
approximately $4,600,000, representing the purchase liability, accrued 
interest thereon of $533,000, and accrued royalties of $86,000.  Because 
the amount is in dispute, and since ARS has made no demand for payment 
of this amount, management anticipates no current cash requirement 
related to this obligation. 


Results of Operations

Revenues increased  83% from $3,011,000 in 1997 to $5,522,000 in 1998. 
The increase is primarily due to a proportional increase in the number 
of vehicle registrations processed by the Company in 1998 as compared 
with 1997.

Gross profit increased 113% from $1,252,000 (41.5% of sales) in 1997 
to $2,333,000 (42.2% of sales) in 1998.  The overall increase in gross 
profit is due to greater sales volume in 1998.  The increase in gross 
profit as a percentage of sales results from savings in insurance and 
materials costs in 1998.

                                      8
<PAGE>

Operating expenses increased 24% from $1,354,000 in 1997 to $1,679,000 
in 1998.  General and administrative expenses accounted for the majority 
of the increase, primarily due to increased salary and consultant fees 
for 1998 versus 1997.

Interest expense increased slightly as a result of higher average debt 
balances.  Net loss decreased from $867,000 to $140,000 as a result of 
the factors discussed above.




Effect of Inflation and Foreign Currency Exchange

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


Year 2000 Issue

The Company's management has conducted an assessment of the impact of 
the Year 2000 issue on its products and operations.  Management believes 
that all of the Company's products and internal operating systems are 
currently Year 2000 compliant.  The Company is also in the process of
ascertaining whether strategic vendor relationships will be affected 
by Y2K, and projects that this assessment will be complete in the third 
quarter of 1999.  The Company has been unable to ascertain whether 
its governmental customers will be year 2000 compliant.  In the event 
that one or more of the Company's customers experiences a computer 
system disruption caused by the year 2000 issue, the Company could 
experience significant loss of revenues until such time as Y2K 
remediation is accomplished by the customer.  The Company will have 
no control over such remediation efforts or their duration.


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.

                                      9
<PAGE>



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

Identification of Directors, Executive Officers, and Significant Employees

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


     Name                     Age        Position


Nicholas Litchin              72    Chairman of the Board of Directors

Walter G. Fuller              58    President, Director, 
                                    Chief Executive Officer

Janice L. Welch               58    Secretary/Treasurer

John F. Grim                  43    Vice President Sales/Marketing and Director

Robert Neece                  51    Director

Christopher M. Welch          30    Director

Family Relationships

Christopher M. Welch is the son of Janice L. 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.

                                      10
<PAGE>


Business Experience (continued)

Nicholas Litchin is the Chairman of the Board of Directors of the 
Company, a position which he has held since July 1998.  He was Vice 
Chairman since March 12, 1997, and has been a director of the Company 
since the formation of Image Technology in April 1992.  From 1988 to 
1989, 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 
Image Technology, positions which he has held since March 12, 1997 
and the formation of Image Technology 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.  She has held her position with the Company since March 12, 
1997 and with Image Technology since its formation on April 23, 1992.

John F. Grim is the Vice President - Sales and Marketing of the Company. 
He has held his position with the Company since March 12, 1997 and with 
Image Technology since October 1, 1995.  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.  Mr. Grim is also a Director of the Company.

Robert Neece has been a Director of the Company since July of 1998. 
He has been engaged in the private practice of law in Denver, Colorado 
since 1981.  Throughout that period of time, he has concentrated his 
practice in the areas of corporation, commercial, and securities law. 
Since 1992, Mr. Neece has been Special Counsel with the Denver law 
firm of Burns, Wall, Smith and Mueller, P.C.

Christopher M. Welch was elected a Director of the Company in February 
1999...He is the grandson of Company founder Christ M. Rousseff.  Mr. 
Welch graduated with honors from San Diego State University in 
1994 with a degree in accountancy.  He is currently an executive 
council agent with New York Life, where he has worked for the past 
three years.


Involvement in Certain Legal Proceedings

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


Compliance with Section 16(a) of the Exchange Act

Not applicable.

                                      11
<PAGE>


ITEM 10.    EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth information regarding compensation paid 
to the Company's CEO and the other executive officers of the Company 
who received in excess of $100,000 of salary and bonus from the Company 
during the year ended December 31, 1998:

                      Annual Compensation    Long-term Compensation Awards

                                            Restricted    Options
                                            Stock         and    Other
Name and Position   Year  Salary  Bonus     Awards        Sar's  Compensation

Walter G. Fuller  1996    $  -       $  -   $  -          $  -   $  -
CEO, Director     1997    $  -       $  -   $  -          $  -   $  -
                  1998    $  -       $  -   $  -          $  -   $  -

John F. Grim      1996    $ 125,000  $  -   $  -          $  -   $  -
VP Marketing      1997    $ 125,000  $  -   $  -          $  -   $  -
and Director      1998    $ 125,000  $  -   $  -          $  -   $  -


Compensation of Directors

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


Employment Agreements

None.


Termination of Employment and Change of Control Arrangements

None.

                                      12
<PAGE>


ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
            AND MANAGEMENT

As of April 13, 1999, 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 
by all officers and directors as a group. 

                                        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      4,194,960        41.9%
c/o 1945 Camino Vida 
Roble Suite O
Carlsbad, CA 92008

Walter G. Fuller        Common Stock      2,654,880        26.5%
217 E. Railroad
P.O. Box 299
Garrett, IN  46738

Nicholas Litchin(2)     Common Stock      1,294,920        12.9%
6332 Constitution Ave.
Ft. Wayne, IN  46804

John F. Grim            Common Stock        180,000         1.8%
270 Regency Ridge #210
Centerville, OH  45459

Robert Neece            Common Stock        214,000         2.1%
c/o 303 East 17th Ave.
Denver, Colorado 80202

Christopher M. Welch
c/o 1945 Camino Vida
Roble Suite O
Carlsbad, CA  92008          n/a          none             0.0%

All Officers and        Common Stock      8,538,760       85.4%
Directors as a Group
(6 persons)

(1) Includes 3,424,920 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 of which Mrs. Litchin is a principal
      shareholder.  Mr. Litchin disclaims beneficial ownership of these 
      shares.

                                      13
<PAGE>



ITEM 12.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

ITI and American Registration Systems, Inc. ("ARS"), entered into a 
Purchase and Sale Agreement with regard to certain patented technology.  
In consideration of the assignment of patents, ITI agreed to pay to ARS 
the sum of $4,000,000 before May 1, 1997 and to assume ARS's royalty 
obligation of $0.01 per transaction effected through any device 
incorporating the subject matter of the 1994 patent. On March 11, 1997, 
this Agreement was amended to provide that ITI will have no payment 
obligation to ARS until May 1, 1999.

On January 27, 1999, the Company filed a complaint with the Superior 
Court of the State of California for the County of San Diego case 
number 727654 against ARS and co-defendants, thereby recording a 
complaint for rescission of the Purchase and Sale Agreement between 
the Company and ARS.  The suit challenges the validity of certain 
material representations made by ARS and its affiliates at the time 
of the Company's entering into the Purchase and Sale Agreement, and 
asserts that such agreement was void or voidable due to a variety of 
defects, including but not limited to improper authorization, failure 
by an interested party to disclose a gross conflict of interest, 
and fraud.

To date, ARS has filed no response to the complaint.  If ARS does not 
respond to the complaint, a default may be entered in the San Diego 
County Superior Court after April 30 1999, and ITI will then attempt to 
Secure favorable judgment by prove-up after the entry of such default,
if default occurs.

From time to time, the Company has obtained temporary financing from 
its directors and officers.  A total of $118,126 and $600,000 was 
repaid at interest rates of 8% in 1998 and 12% interest in 1997.  
Interest expense recognized in 1998 and 1997 as payable to directors 
and officers totaled $16,609 and $32,351.  

The Company also obtained certain temporary financing from shareholders 
or parties related to shareholders.  The average interest rate on these
obligations was 8%.  At December 31, 1998 and 1997, principal amounts 
owed to shareholders totaled $16,200 and $125,325, and accrued interest 
was $12,593 and $26,417.  The amount of interest expense on these notes 
in 1998 and 1997 totaled $2,785 and $19,792.

The Company leases service vehicles from a company owned by a relative 
of ITI's Chairman.  The lease calls for monthly payments of $2,233.

                                      14
<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, 1998
          
      Statements of Loss and Accumulated Deficit for the years ended 
      December 31, 1998 and 1997

      Statements of Stockholders' Equity (Deficit) for the years ended 
      December 31, 1998 and 1997

      Statements of Cash Flows for the years ended December 31, 1998
      and 1997

         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.  (3).

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

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

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

                                      15
<PAGE>

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

21.   Subsidiaries of Registrant.  (3).

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

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

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


                                      16
<PAGE>


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/ Nicholas Litchin 
                                             Nicholas Litchin, Chairman
                                             Date:  April 14, 1999



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/Nicholas Litchin     Chairman of the Board             April 14, 1999
Nicholas Litchin

By:/s/Janice L. Welch      Secretary/Treasurer               April 14, 1999
Janice L. Welch            (Principal Financial Officer)

By:/s/Walter G. Fuller     President, Chief Executive        April 14, 1999
Walter G. Fuller           Officer, and Director (Principal
                           Executive Officer)

By:/s/John F. Grim         Director                          April 14, 1999
John F. Grim

By:/s/Robert Neece         Director                          April 14, 1999
Robert Neece

By:/s/Christopher M. Welch Director                          April 14, 1999
Christopher M. Welch


                                      17
<PAGE>

Index to Financial Statements



                         INTELLECTUAL TECHNOLOGY, INC.



                                                        Page

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


Balance Sheet                                            F-2


Statements of Loss and Accumulated Deficit               F-3


Statements of Cash Flows                                 F-4


Statements of Stockholders' Equity                       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, 1998, and the related statements of 
loss and accumulated deficit, cash flows, and stockholders' equity for 
each of the years ended December 31, 1998 and 1997.  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 generally accepted auditing 
standards.  Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are 
free of material misstatement.  An audit includes examining on a test 
basis, evidence supporting the amounts and disclosures in the financial 
statements.  An audit also includes assessing the accounting principles 
used and significant estimates made by management.  We believe our 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, 1998, and the results of its 
operations, cash flows, and changes in stockholders' equity for each of 
the years ended December 31, 1998 and 1997 in conformity with generally 
accepted accounting principles.


Denver, Colorado
February 18, 1999

                                               /s/ Comiskey & Company
                                               PROFESSIONAL CORPORATION


                                     F-1

<PAGE>
                              BALANCE SHEET
                            December 31, 1998


        ASSETS
 Current Assets
   Cash and cash equivalents (including savings of $33,040)   $184,757
   Accounts receivable                                         156,645
   Inventory                                                   262,045
   Prepaid expenses                                             19,186
                                                              --------
       Total current assets                                    622,633


 Property & Equipment
   Contract equipment                                        5,323,167
   Equipment - non-contract                                     58,101
   Office equipment, furniture and improvements                 36,838
                                                              --------
                                                             5,418,106
   Less: Accumulated depreciation                            2,803,814
                                                              --------
                                                             2,614,292
 Other Assets 
   Patents, net of accumulated amortization of $886,198      3,377,695
   Deposits                                                     25,755
   Organization costs, net of accumulated
   amortization of $791                                          1,259
                                                             ---------
       Total assets                                         $6,641,634
                                                            ==========

       LIABILITIES AND STOCKHOLERS' EQUITY 
 Current Liabilities 
   Accounts payable                                           $492,602
   Accrued expenses                                            311,056
   Notes payable                                             1,198,344
   Notes payable - related party                                16,200
   Due to related party                                      4,000,000
   Accrued interest payable                                    569,201
                                                              --------
Total current liabilities                                    6,587,403

 Other Liabilities 
   Long-term debt, net of current portion                    1,543,176

                                                             1,543,176
                                                             ---------

 Stockholders' Equity 
   Preferred stock, $0.00001 par value,
     10,000,000 shares authorized,
     no shares issued or outstanding 
   Common stock, $0.00001 par value, 20,000,000 
     shares authorized, 10,000,001 shares 
     issued and outstanding                                        100
   Additional paid-in capital                                1,186,250
   Deficit accumulated during the development stage         (2,675,295)
                                                            ----------
                                                            (1,488,945)
                                                            ----------
       Total liabilities and stockholders' equity           $6,641,634
                                                            ==========


                                     F-2
<PAGE>

                           Intellectual Technology, Inc.
                      STATEMENT OF LOSS AND ACCUMULATED DEFICIT
                   For the years ended December 31, 1998 and 1997


                                                1998             1997 
                                              ----------      ----------
 REVENUES 
   Registration decals income                 $5,198,174      $2,472,032 
   License income                                299,953         298,927 
   Equipment/material sales                       23,700         240,411 
                                              ----------      ----------

       Total revenues                          5,521,827       3,011,370 

 COST OF REVENUES 
   Depreciation and amortization               1,965,286         789,355 
   Insurance                                      19,886          12,604 
   Maintenance                                   599,378         314,293 
   Materials                                     511,392         609,211 
   Royalties                                      61,205          24,442 
   Taxes                                          31,250           9,250 
                                              ----------      ----------
       Total cost of revenues                  3,188,397       1,759,155 
                                              ----------      ----------

       Gross profit                            2,333,430       1,252,215 

 OPERATING EXPENSES 
   Depreciation                                   25,716          22,043 
   General & administrative expenses           1,036,531         884,933 
   Patent amortization                           279,832         281,430 
   Research & development                        188,817          32,220 
   Selling                                       148,120         133,668 
                                              ----------      ----------
                                               1,679,016       1,354,294 
                                              ----------      ----------

       Income (loss) from operations             654,414        (102,079)

 OTHER INCOME (EXPENSE) 
   Interest income                                 3,516           4,841 
   Interest expense                             (798,446)       (769,919)
                                              ----------      ----------
       Loss before income taxes                 (140,516)       (867,157)

   Income tax expense                                  -               - 
                                              ----------      ----------
       NET LOSS                               $ (140,516)     $ (867,157)
                                              ==========      ==========
       Loss per share - basic                 $    (0.01)     $    (0.09)
                                              ==========      ==========
       Weighted average number 
         of shares outstanding                10,000,001       9,791,667 
                                              ==========      ==========


                                    F-3

<PAGE>
                           Intellectual Technology, Inc.
                         STATEMENT OF STOCKHOLDERS' EQUITY
                   For the years ended December 31, 1998 and 1997


                         Common Stock   
                  ----------------------
                                            Additional 
                  Number                     paid-in    Accumulated 
                  of shares      Amount      capital      deficit     Totals
                   -----------   -----  ----------   ----------   ----------
 Balances as of
  January 1, 1997    9,000,001   $  90  $1,133,260   $(1,667,622) $(534,272)

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

 Contributed capital       -        -        3,000            -       3,000


 Net loss                  -        -         -         (867,157)  (867,157)
                   ----------    -----  ----------   ----------   ----------
 Balances as of
 December 31, 1997  10,000,001     100   1,186,250    (2,534,779)(1,348,429)

 Net Loss                -         -           -        (140,516)  (140,516)
                   ----------    -----  ----------   ----------   ----------
 Balances as of  
 December 31, 1998  10,000,001   $ 100  $1,186,250   $(2,675,295)$(1,488,945)
                    ==========   =====  ==========   ===========  ===========


                                       F-4

<PAGE>
                         Intellectual Technology, Inc.
                           STATEMENTS OF CASH FLOWS
                   For the years ended December 31, 1998 and 1997


                                                     1998         1997
 CASH FLOWS FROM OPERATING ACTIVITIES 
 Net loss                                         $(140,516)   $(867,157)
 Adjustments to reconcile net loss to net cash 
   used by operating activities:
     Amortization                                   295,907      281,430
     Depreciation                                 1,974,927      910,596
     Decrease (increase) in accounts receivable     160,893     (268,427)
     Increase in inventory                         (141,897)     (52,262)
     Decrease (increase) in prepaid expenses         12,278      (19,521)
     Decrease (increase) in 
       notes receivable/employee advances            15,500      (15,100)
     Decrease (increase) in restricted cash          21,202      (21,202)
     Decrease in deposits and other assets           55,793       15,518
     Increase (decrease) in accounts payable         92,100   (1,245,653)
     Increase in accrued expenses and interest      364,719      390,254
                                                  ---------    ----------
       Net cash provided (used) 
         by operating activities                  2,710,906     (891,524)

 CASH FLOWS FROM INVESTING ACTIVITIES 
     Investment in patents and other intangibles          -      (17,582)
     Purchase of non-contract equipment             (16,734)     (71,479)
     Investment in contract costs and equipment  (1,045,821)  (1,545,127)
                                                  ----------   ----------
       Net cash used by investing activities     (1,062,555)  (1,634,188)

 CASH FLOWS FROM FINANCING ACTIVITIES 
     Issuance of common stock 
     and capital contributions                            -       53,000
     New borrowings                                 563,000    7,296,398
     Debt repayments                             (2,430,834)  (4,425,054)
     Loan costs                                           -            -
                                                  ----------   ----------
       Net cash provided (used) 
         by financing activities                 (1,867,834)   2,924,344
                                                  ----------   ----------
 NET INCREASE (DECREASE) IN CASH                   (219,483)     398,632

CASH AND CASH EQUIVALENTS, beginning of period      404,240        5,608
                                                  ----------   ----------
CASH AND CASH EQUIVALENTS, end of period           $184,757     $404,240
                                                  ==========   ==========
 SUPPLEMENTAL DISCLOSURE OF CASH 
     FLOW INFORMATION:
     Cash paid during the year for interest        $497,081     $354,221
                                                  ==========   ==========
     Cash paid during the year for income taxes    $      -     $      -
                                                  ==========   ==========

                                     F-5

<PAGE>
INTELLECTUAL TECHNOLOGY, INC.
Notes to Financial Statements
December 31, 1998


1.   Description of Business and Summary of Significant Accounting Policies
     Corporate History
Intellectual Technology, Inc. ("ITI," "the Company") was incorporated 
in the State of Delaware under the name Bridgestone Corp. on 
December 1, 1989.  Image Technology, Inc., a Nevada corporation ("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.  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. had completed a public offering of 
common stock and warrants on Octover 29, 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 ot 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.

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

Effective November 1, 1996, the Company entered into a lease with the 
Indiana Bureau of Motor Vehicles Commission ("BMVC") for a period of 
three years, with a renewal clause for an additional year.  The lease 
requires ITI to provide the equipment and media required to print 
the registrations and decals, and to support and maintain the equipment 
during the period of the contract.  ITI will receive an all-inclusive 
pper transaction lease fee for these services. 

Effective November 15, 1998, the Company entered into a Letter of 
Agreement for Consultant Services with the South Dakota Department of 
Revenue.  This agreement called for the initial lease of printers 
for a period of five years, commencing April 1, 1999 and terminating 
March 31, 2004.  The lease require ITI to provide the equipment and media
required to print automobile registrations and validation decals including, 
but not limited to, motorcycles, commercial and non-commercial trucks, 
boats and trailers, and to support and maintain the equipment during the 
period of the contract.  ITI will receive an all-inclusive per transaction 
lease fee for these services.  

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

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

                                        F-6
<PAGE>
INTELLECTUAL TECHNOLOGY, INC.
Notes to Financial Statements
December 31, 1998


1. Description of Business and Summary of Significant Accounting 
     Policies (continued)
Significant Accounting Policies
Principles of Consolidation
Unless otherwise indicated, all references to "the Company" in these 
financial statements are references to Intellectual Technology, Inc. 
and its wholly owned subsidiary, Image Technology, Inc.  Intercompany
transactions have been eliminated in consolidation.

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

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

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

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

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

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

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

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

New Hampshire contract costs were amortized ratably 
through January of 1999.

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

                                     F-7
<PAGE>
INTELLECTUAL TECHNOLOGY, INC.
Notes to Financial Statements
December 31, 1998


1.     Description of Business and Summary of Significant Accounting 
       Policies (continued)
Research and Development
Research and development costs are expensed as incurred.

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

Significant Concentrations
For the years ended December 31, 1998 and 1997, the Company derived 
94% and 82% of total revenues from a single contract.

From time-to-time, the Company maintains cash balances in excess of 
FDIC insured limits.  The amount of such excess at December 31, 1998 
was approximately $203,000.

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

Consideration of Comprehensive Income Items
The Financial Accounting Standards Board has recently released Statement 
of Financial Accounting Standards No. 130 - Reporting Comprehensive 
Income.  SFAS 130 requires companies to present comprehensive income 
(consisting primarily of net income items plus other direct equity charges 
and credits) and its components as part of the basic financial statements.
For the year ended December 31, 1998, the Company's financial statements 
do not include any changes in equity that are required to be reported 
separately in comprehensive income.

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.

                                       F-8
<PAGE>
INTELLECTUAL TECHNOLOGY, INC.
Notes to Financial Statements
December 31, 1998


2.    Presentation as a Going Concern
The Company has experienced operating losses since its inception, and 
was in the development stage as defined by SFAS No. 7 until November 
1996.  It has a deficit in equity of $(1,488,945) at December 31, 1998, 
and a working capital deficit of $(5,964,770).  These conditions are 
primarily as a result of losses incurred in the startup phase and 
during the initial year of the Indiana Contract, during which the 
Company operated at reduced revenues while the printer installations 
were accomplished.

Under the Company's current financing arrangement, receivables from the 
Indiana Contract have been assigned to the note holder.  The amount of 
monthly cash flow from this contract is remitted net to the Company 
after debt service is satisfied.  Management projects that this 
arrangement will continue to generate positive monthly cash flows 
from the remainder of the Indiana Contract sufficient to support 
operations and the Company's sales effort.  

In the first quarter of 1999, the Company filed for rescission of the 
Purchase and Sale Agreement between the Company and American Registration
Systems.  (See Note 8)  The debt of $4,000,000 associated with this 
agreement, approximately $85,000 of accrued royalties, and approximately
$533,000 of accrued interest, which are included in the accompanying 
financial statements as part of current liabilities, may be reduced 
or eliminated if the Company is successful in rescinding this transaction.

3.     Related Party Transactions
The Company entered into a Purchase and Sale Agreement with American
Registration Systems, Inc. ("ARS"), a for the assignment of two 
patents related to ITI's printing system whereby the Company was 
to pay a total of $4,000,000 plus a $0.01 per transaction royalty to 
ARS or its assigns. This obligation was non-interest bearing until 
May 1, 1997, after which interest at 8% has been accrued until 
May 1999 when this obligation becomes due.  A total of $-0- and 
$77,691 of imputed interest and $533,335 and $213,335 in accrued interest 
was incurred on this debt during the year ended December 31, 1998 
and 1997.

Amounts charged to operations for the per transaction royalty were 
$61,205 and $24,442 for the years ended December 31, 1998 and 1997.  
The amount payable at December 31, 1998 was $85,647.

This agreement is in dispute.  See Note 8.

From time to time, the Company has obtained temporary financing from 
its directors and officers.  A total of $118,126 and $600,000 was 
repaid at interest rates of 8% in 1998 and 12% interest in 1997.  
Interest expense recognized in 1998 and 1997 as payable to directors 
and officers totaled $16,609 and $32,351.  

The Company also obtained certain temporary financing from shareholders 
or parties related to shareholders.  The average interest rate on these
obligations was 8%.  At December 31, 1998 and 1997, principal amounts 
owed to shareholders totaled $16,200 and $125,325, and accrued interest 
was $12,593 and $26,417.  The amount of interest expense on these notes 
in 1998 and 1997 totaled $2,785 and $19,792.

The Company leases service vehicles from a company owned by a relative 
of ITI's Chairman.  The lease calls for monthly payments of $2,233.

                                       F-9
<PAGE>
INTELLECTUAL TECHNOLOGY, INC.
Notes to Financial Statements
December 31, 1998


4.     Notes Payable and Long-term Debt
The Company is obligated under the following notes at December 31, 1998:

                                            Short-term        Long-term

13.05% Installment notes, secured 
by all printers, SSTs, and miscellaneous 
equipment leased to Indiana, and the 
assignment of accounts receivable
from the Indiana Contract, payable 
monthly in installments of $243,368. 
 Refinanced in March, 1999
through December 2000.                      $  1,166,144     $  1,537,376

8% debt obligation payable 
to related party, secured by patents. 
 Interest and principal due
and payable May 1, 1999.                       4,000,000               -

8% unsecured demand note.                          5,000               -

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

11% note, secured by computers 
purchased in December 1998, 
interest and principal due
monthly at $513, matures December 2000             5,200            5,800

8% unsecured demand 
notes payable to related parties.                  5,200               -
                                            ------------     ------------
Total notes payable                         $  5,214,544     $  1,543,176
                                            ============     ============

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

      For the year ended
         December 31,                             Amount    

             1999                            $  5,214,544
             2000                               1,543,176
             Thereafter                                 -


In the first quarter of 1999, the Company refinanced the debt associated 
with the Indiana contract, and obtained financing for its South Dakota
installation.  As a result, $1,537,000 of current installment payments 
on equipment related debt have been reclassified from current to long 
term to reflect the December, 2000 revised due date for existing debt.

The above amounts reflect the ARS obligation as a current liability due 
May, 1999.  The Company is disputing this amount.  See Note 8.

5. Leases
The Company leases for its own use office space, vehicles, and office 
equipment under non-cancelable operating leases expiring in the years 
1999 to 2002. Subsequent to year-end the Company relocated its corporate 
offices to Carlsbad, California.  The Company continues to be obligated 
under its original office lease through 2001.

                                  F-10
<PAGE>
INTELLECTUAL TECHNOLOGY, INC.
Notes to Financial Statements
December 31, 1998


5. Leases (continued)
Future minimum lease payments on non-cancelable operating leases 
over the next five years are as follows:

      For the year ended
         December 31,                              Amount    
       -----------------                        ------------
            1999                                $  90,815
            2000                                   86,720
            2001                                   67,391
            2002                                   22,948
            2003                                        -

Rent expense for the years ended December 31, 1998 and 1997 was 
$68,399 and $34,277, respectively.

6.     Income Taxes
The Company has federal net operating loss carryforwards totaling 
approximately $2.7 million which expire between 2010 and 2018.  These
carryforwards were generated by Image Technology, Inc.  Net operating 
losses generated by Bridgestone Corp. are limited under Section 381 
of the Internal Revenue Code, and the tax effect thereof has been 
disregarded for financial reporting purposes.  The following are the 
components of the Company's deferred tax assets and liabilities:

                                                 1998            1997
      Non-benefited net operating loss
           Carryforwards                    $  910,000      $  612,000
      Valuation allowance                     (910,000)       (612,000)
                                            ----------      ----------
      Total deferred tax assets             $        -      $        -
                                            ==========      ==========
      Deferred tax liabilities              $        -      $        -
                                            ==========      ==========

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

Common Stock
At December 31, 1997, a total of 20,000,000 shares of $0.00001 par 
value common stock were authorized, and 10,000,001 were issued 
and outstanding.

                                   F-11
<PAGE>
INTELLECTUAL TECHNOLOGY, INC.
Notes to Financial Statements
December 31, 1998


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

The stock transfer and exchange agreement also provided that certain 
members of pre-acquisition management of Bridgestone Corp. be engaged 
as consultants to the Company after the transaction.

As a direct result of the transaction, and effective March 12, 1997, 
the Company changed its name from Bridgestone Corp. to Intellectual 
Technology, Inc.  The Company also underwent a 1 for 50 reverse split 
of common shares, and reduced the number of authorized shares from 
500,000,000 common shares to 20,000,000 common shares, and 20,000,000 
preferred shares to 10,000,000.

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

8. Subsequent Events
Proposed Rescission of ARS Purchase and Sale Agreement
On January 27, 1999, the Company filed a complaint with the Superior 
Court of the State of California for the County of San Diego case number 
727654 against American Registration Systems, Inc. ("ARS") and 
co-defendants, thereby recording a complaint for rescission of a 1995 
Purchase and Sale Agreement between the Company and ARS.  The suit 
challenges the validity of certain material representations made by ARS 
and its affiliates at the time of the Company's entering into the 
Purchase and Sale Agreement, and asserts that such agreement was void 
or voidable due to a variety of defects, including but not limited to 
improper authorization, failure by an interested party to disclose a 
gross conflict of interest, and fraud.

To date, ARS has filed no response to the complaint.  If ARS does not 
respond to the complaint, a default may be entered in the San Diego 
County Superior Court after April 30 1999, and ITI will then attempt to 
Secure favorable judgment by prove-up after the entry of such default,
if default occurs.

The Purchase and Sale Agreement which the Company seeks to rescind 
provides that the Company shall pay to ARS or its assigns $4,000,000, 
plus a $0.01 per transaction royalty.   Judgement in favor of the 
Company would result in the cancellation of approximately $4,600,000 
of currently outstanding indebtedness.

The accompanying financial statements reflect the $4,000,000 obligation, 
plus accrued interest and royalties, as current obligations of the 
Company according to the terms of the Purchase and Sale Agreement. 
Based on amounts outstanding at December 31, 1998, the resolution of 
this matter in a manner favorable to the Company will have the following 
effects on the financial position of the Company:

      Decrease in Other Assets                3,355,355

      Decrease in Current Liabilities         4,618,983

      Increase in Equity                      1,263,628

                                     F-12
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INTELLECTUAL TECHNOLOGY, INC.
Notes to Financial Statements
December 31, 1998




8.     Subsequent Events (continued)
Post year-end financing
In the first quarter of 1999, the Company refinanced $2,600,000 in 
installment debt previously maturing in November of 1999 through 
December of 2000 at a rate of 9.35%.  The new debt is secured by 
leased equipment and calls for monthly installments of $134,695.

In the first quarter of 1999, the Company obtained $800,000 in new 
equipment financing at 10.4%.  This debt calls for monthly installments 
of $17,225 through April 15, 2004.

Corporate relocation
In the first quarter of 1999, the Company entered into a three year 
lease for approximately 2,500 square feet of office space in Carlsbad,
California at $2,786 per month.

                                    F-13
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