ITEM 1. BUSINESS
GENERAL
INOTEK Technologies Corp. (the Company), previously known as Entronics Corporation, was incorporated in Texas in June 1984 and began operations in October 1984. In October 1991, the Company merged with and assumed the name of its wholly owned subsidiary, INOTEK Technologies Corp. In June 1987, the Company entered into an Agreement and Plan of Reorganization whereby the Company was dissolved as a Texas corporation and incorporated as a Delaware corporation. The Texas Corporation transferred substantially all of its assets and liabilities to the Delaware Corporation in exchange for 3,806,250 shares of the Delaware Corporation's common stock, which was distributed to shareholders of the Texas Corporation. In addition, 10,000,000 shares of $.01 par value common stock were authorized and a three-for-two split of the Company's common stock was effected. In August 1987, the Company consummated its initial public offering with the registration of 1,000,000 shares of common stock with the Securities and Exchange Commission. The offering consisted of 400,000 shares sold by the Company and 600,000 shares sold by officers/shareholders.
In June 1989, the Company acquired INOTEK Corporation, a privately held Texas corporation, through the merger with the Company's wholly owned subsidiary, Entronics INOTEK Acquisition Corporation, which later changed its name to INOTEK Technologies Corp. In fiscal year 1990, INOTEK Technologies Corp. acquired three distribution and sales representative companies, which provide the same basic services as INOTEK Technologies Corp.
The Company had two principal operating divisions: (1) INOTEK, a marketing and service company for instrumentation, process controls, information management, and test and measurement equipment; and (2) Entronics, which designs, manufactures, and markets a line of Automatic Money Order Dispensers (AMOD's). The Entronics division was sold on March 16, 1995 as a result of an unsolicited offer from one of the division's largest customers. The Company's principal executive offices are located at 11212 Indian Trail, Dallas, Texas 75229.
DISTRIBUTION/REPRESENTATIVE SALES AND SERVICE
PRODUCTS AND OPERATIONS
INOTEK's role as a high technology marketing and service company is a function of meeting the needs of two constituencies: (1) the customers (end users) of its products and services; and (2) the product vendors that it represents. INOTEK's base distribution business covers a broad range of product lines from highly engineered technically advanced items to commodity-oriented components where customers purchase single or multiple quantities of specific products. Representative product lines are shipped by the manufacturer to the end customer with INOTEK receiving a commission for its marketing and support effort. The industrial marketplace includes: (1) Process controls and instrumentation - products utilized in the manipulation of pressures, temperatures, and flows and the measurement of their physical properties; (2) Test equipment - portable instrumentation used in diagnostic evaluation of electronic, process, or automation equipment; and (3) Information management - the computer hardware and software, the programmable logic controller, sensors, and final control devices responsible for the master control of a factory process. Among INOTEK's major product lines are IBM industrial computers, Action and OPTO 22-process instrumentation I/O, Fluke electronic test equipment and Tektronix oscilloscopes.
INOTEK operates a technical services business, which involves the repair and calibration of customer-owned factory equipment. Technical services also are provided for products manufactured in a semi-finished state (i.e. process control/information management products) which require final configuration to meet customer's specification. Many of these services are provided at an additional charge to the customer.
ITEM 1. BUSINESS (CONTINUED)
PATENTS AND TRADEMARKS
INOTEK believes that its corporate name and logo has significant recognition throughout the industry and has registered it as a trademark.
MAJOR CUSTOMERS
INOTEK was chosen by MCI Telecommunications to provide industrial computer and communication equipment. This contract was fulfilled on December 31, 1998. Sales to this customer for fiscal year 1999 for industrial equipment and assembly labor were $1,171,996.
MARKETING
At May 31, 1999, INOTEK had a sales force of 39 employees marketing in 21 southern and midwestern states. INOTEK's success as a high profile distributor/representative of medium-to-high technological products has been made possible through the establishment and cultivation of relationships with well-known product vendors. Already well established in the southwest, INOTEK expanded into the Midwest through the purchase of Pacific Indicator Company in August 1989; into the south and southeast in November 1989, through the acquisition of the Sesco Division of Austin-based Quinstar, Inc. and in April 1990, into Virginia, and North and South Carolina through the acquisition of Mill-Power Technologies, an affiliate of Charlotte-based Duke Power Company. In September 1998, INOTEK opened a new branch operation in Denver, Colorado to service the Rocky Mountain Region. In addition, INOTEK publishes a catalog that is distributed widely to current and potential customers.
COMPETITION
Competition in the high-technology, product distribution/representative market is based on product features, customer service, quality distribution channels, technical sales force, and consumer brand preferences. INOTEK competes with a large number of other distributors on primarily a local or regional basis. There are few national competitors. The ability to handle a broad range of products and services for those products has allowed INOTEK to compete in the existing market. In the process control and test equipment product lines, vendors and manufacturers are shifting their marketing direction to make greater use of the high tech sales and service channel. This channel continues to develop as manufacturers recognize the value that distributors with service capabilities have to offer, both to themselves and to their end user.
EMPLOYEES
At May 31, 1999, INOTEK had 77 full time employees. INOTEK's employees are not covered by collective bargaining agreements and management believes that its employee relations are good.
ITEM 2.
ITEM 2. DESCRIPTION OF PROPERTY
The Company leases a 24,000 square foot facility in Dallas, Texas at a base rent of $7,000 per month or $84,000 per year. Management believes that this facility, which houses the Company's corporate personnel and certain INOTEK operations, sales, and service personnel, will be adequate for the foreseeable future; however, the Company's future facilities requirements will depend upon the success of the Company's business.
INOTEK also has branch offices in the following locations:
Houston, Texas Chicago, Illinois Tulsa, Oklahoma Charlotte, North Carolina Kansas City, Missouri Denver, Colorado
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
None pending.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NO MATTERS WERE SUBMITTED TO A VOTE OF SECURITY HOLDERS DURING THE QUARTER ENDED MAY 31, 1999.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
On June 8, 1998 the Company's Common Stock was delisted from the National Association of Security Dealer's, Inc. Automatic Quotation System (NASDAQ) Small Cap Market due to the inability of the stock to trade above the minimum bid price of $1.00. As of June 9, 1998, the stock has been listed on the bulletin board under the symbol INTK. The following table sets forth the quarterly high and low prices reported on the NASDAQ Small Cap Market for the years ended May 31, 1999 and 1998.
QUARTERLY STOCK PRICES FISCAL YEARS ENDED MAY 31
At August 27, 1999, 4,604,088 shares of the Company's Common Stock were issued and outstanding to 752 holders of record.
DIVIDENDS
The Company has not declared cash dividends since inception and has no intention to do so in the foreseeable future.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with the financial statements and notes thereto, and Item 7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS 1999 VS. 1998
The 19.1% decrease in net sales in 1999 compared to 1998 is due to a combination of economic downturn in Southeast Asia, retrenchment in the Oil and Gas industry and project delays due to spending on the Y2K issues. These events have had a dramatic negative impact on our sales, as well as the entire process industry.
Sales and marketing expenses decreased by 2.4% to $3,543,226 in 1999 from $3,632,109 in 1998, due to lower compensation costs. General & administrative costs decreased by 14.7% to 2,792,938 in 1999 from $3,272,724 in 1998 due to lower compensation costs. We opened a new Denver, Colorado branch, while adding service to our existing Charlotte, North Carolina and Houston, Texas branches. During this period of decreased sales, we have been investing in repositioning our company for the last two years to increase our emphasis on service and calibration, which generates much higher profit margins. At each balance sheet date, the Company evaluates the realizability of goodwill based on a non-discounted cash flows and operating income. Based upon its most recent analysis, the Company believes that no impairment of goodwill exists at May 31, 1999.
Interest expense decreased from $23,191 in 1998 to 16,491 in 1999 due to lower average borrowings during the year.
Tax expense amounted to a $153,154 benefit in 1999 as compared with a $146,313 provision in 1998. The effective tax rates for 1999 and 1998 are (27%) and 45% respectively. The lower rate in 1999 is due to a net loss of earnings from operations.
1998 VS. 1997
Sales increased by 2.8% to $25,458,442 in 1998 from $24,757,619 in 1997, due primarily to higher distribution revenues from higher unit volume. Product sales increased 6.3% to $23,318,544 in 1998 from $21,942,508 in 1997 while service revenues decreased by 24% to $2,139,898 in 1998 from $2,815,111 in 1997. Duke Energy notified us that it was canceling maintenance service on most equipment under contract with INOTEK, effective March 1, 1998. The contract with Duke Energy was implemented December 1, 1993 with an expiration of November 30, 1998. The reduction in the contract from March 1, 1998 through November 30, 1998 was approximately $700,000. Gross margins from the Company's distribution operations increased slightly from 26.4% to 26.7% from 1997 to 1998. Gross margins from the Company's service operations also increased slightly from 46.2% in 1997 to 47.8% during 1998.
Sales and marketing expenses increased by 10.5% to $3,632,109 in 1998 from $3,288,072 in 1997 due to higher compensation costs. General and administrative costs increased by 14.2% to $3,272,724 in 1998 from $2,866,477 in 1997 due primarily to higher compensation costs in 1998 and the collection of insurance proceeds totaling $175,000, net of related expenses of which $150,000 is included in general and administrative expenses during 1997. The insurance recovery primarily reimbursed expenses incurred prior to fiscal year 1997. At each balance sheet date, the Company evaluates the realizability of goodwill based on non-discounted cash flows and operating income. Based upon its most recent analysis, the Company believes that no material impairment of goodwill exists at May 31, 1998.
Interest expense decreased from $27,309 in 1997 to $23,191 in 1998 due to lower average borrowings during the year.
Tax expense amounted to $146,313 in 1997 as compared with tax expense of $390,318 in 1997. The effective tax rates for 1998 and 1997 are 45% and 43%, respectively. The lower effective tax rate in 1997 is due to the effect of certain expenses, not deductible for income tax purposes, which were lower in 1997 as a percent of pretax income.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
INFLATION
The impact of inflation or changing prices has not had a material economic effect (other than normal industry trends) on past business operations or projected future activity.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash amounted to $173,668 and $362,830, at May 31, 1999 and 1998, respectively. Cash provided by or used in operations during the years ended May 31, 1999, 1998, and 1997 amounted to $408,131 $629,443 and $(33,873) respectively.
In September 1998, the Company renewed its agreement with Chase Bank of Texas to provide a one-year revolving credit facility of up to $3 million, depending on the value of the borrowing base, as defined in the agreement. Borrowings under the agreement bear interest at either a Eurodollar-based rate plus 250 basis points or the bank's prime rate +1% and are secured by the Company's account receivable and inventory. The agreement includes certain covenants specifying the maximum ratio of debt to tangible net worth and the minimum tangible net worth that the Company must maintain. As of May 31, 1999, there was no balance due under the revolving credit agreement, while the maximum available borrowings amounted to $1,790,936.
During 1996, the Company elected to purchase all the remaining shares of the Company's common stock held by a shareholder and former officer under an agreement allowing the shareholder to resell the stock to the Company at a price of $3.125 per share. The total cost of the transaction was $378,466 and allowed the Company to avoid certain expenses, which would have exceeded the cost of funding the stock purchase. There are no other commitments on behalf of the Company to acquire its stock.
In February 1991, two officer/shareholders agreed to make available to the Company an unsecured, ten-year, standby line of credit of $500,000, available on demand and renewable annually.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Other than that previously mentioned, the Company has not identified any matter out of the normal course of operations that may have an impact on the Company's future operations and has no material commitments of capital resources other than normal business operations. Expenditures for working capital and property and equipment should remain consistent with previous operating requirements and with the size of a company in our industry.
STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS NOT YET ADOPTED
In June 1997, the FASB also issued SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information," which establishes standards for reporting information about operating segments in annual financial statements and requires that selected information be reported about the operating segments in interim financial reports issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. SFAS No. 131 is effective for fiscal years beginning after December 15, 1997.
YEAR 2000 ISSUE
The Company has reviewed all of its current computer applications with respect to the Year 2000 issue. The Company believes all of its relevant applications are Year 2000 compliant and that no material costs with respect to Year 2000 compliance will be incurred by the Company. The Company is unable to determine the effects of the Year 2000 compliance issue, if any, by its suppliers and customers.
FORWARD LOOKING STATEMENTS
This Report may contain forward-looking statements based on current expectations, estimates and projections about INOTEK's industry, management's beliefs and assumptions made by management. Words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to forecast. Therefore actual results may differ materially from those expressed or forecast in any such forward-looking statements. INOTEK undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements on page 10.
INOTEK TECHNOLOGIES CORP.
All other schedules are omitted because they are not applicable or not required, or because the required information is included in the financial statements or notes thereto.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders INOTEK Technologies Corp.
We have audited the accompanying balance sheets of INOTEK Technologies Corp. as of May 31, 1999 and 1998 and the related statements of operations, shareholders' equity and cash flows for each of the three years in the period ended May 31, 1999. 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, as well as evaluating the overall financial statement presentation. 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 INOTEK Technologies Corp. as of May 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended May 31, 1999, in conformity with generally accepted accounting principles.
We have also audited Schedule II of INOTEK Technologies Corp. for each of the three years in the period ended May 31, 1999. In our opinion, this schedule presents fairly, in all material respects, the information required to be set forth therein.
GRANT THORNTON LLP Dallas, Texas August 13, 1999
INOTEK TECHNOLOGIES CORP.
BALANCE SHEETS
The accompanying notes are an integral part of these financial statements.
INOTEK TECHNOLOGIES CORP.
STATEMENTS OF EARNINGS
The accompanying notes are an integral part of these financial statements.
INOTEK TECHNOLOGIES CORP.
STATEMENT OF SHAREHOLDERS' EQUITY
The accompanying notes are an integral part of this financial statement.
INOTEK TECHNOLOGIES CORP. STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of these financial statements.
INOTEK TECHNOLOGIES CORP.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1999, 1998, AND 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
INOTEK Technologies Corp. (the Company) sells and services process controls and instrumentation, information management products, and test and measurement equipment.
Inventories
Inventories consist of finished goods and are valued at the lower of average cost or market.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed on a straight-line basis over the estimated lives of the individual assets, ranging from three to seven years.
Goodwill and Intangible Assets
The Company has classified as goodwill the cost in excess of fair value of the net assets of acquired companies. Goodwill is being amortized on a straight-line basis over 40 years. At each balance sheet date, the Company evaluates the realizability of goodwill based on non-discounted estimated future cash flows. Based upon its most recent analysis, the Company believes that no impairment of goodwill exists at May 31, 1999. Noncompete agreements and other intangible assets are being amortized on a straight-line basis over the estimated lives of the individual assets, ranging from one to seven years.
Revenue Recognition
Sales of products and services are recorded as products are shipped or services are rendered. Sales to one customer, Duke Energy Co., totaled approximately $1,439,652 and $3,045,941, in 1998 and 1997 respectively.
Earnings (Loss) per Share
Basic earnings per common share are based upon the weighted average number of shares of common stock outstanding. Diluted earnings per share is based upon the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if dilutive potential common shares had been issued.
Concentrations of Credit Risk
The Company markets its products and services to a diverse group of manufacturing companies. The Company performs ongoing credit evaluations of its customers and generally does not require collateral.
INOTEK TECHNOLOGIES CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial Instruments
The carrying amounts for cash, accounts receivable, and accounts payable approximate fair value because of the short-term nature of these financial instruments. The carrying amount reported for notes payable approximates fair value because substantially all of the instruments have variable interest rates which re-price frequently.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Stock-Based Compensation
Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for Stock-Based Compensation" encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has chosen to continue to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees" and provide the pro forma disclosures prescribed by SFAS 123.
INOTEK TECHNOLOGIES CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. PROPERTY AND EQUIPMENT
Property and equipment at May 31 consist of:
3. ACCRUED EXPENSES
Accrued expenses at May 31, 1999 and 1998, include accrued compensation costs of $163,340 and $461,583 respectively.
4. NOTES PAYABLE
Notes payable at May 31 consist of:
INOTEK TECHNOLOGIES CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. NOTES PAYABLE (CONTINUED)
The bank revolving credit agreement provides for borrowings up to $3,000,000, depending on the amount of the borrowing base, as defined ($1,790,936 maximum available borrowings at May 31, 1999), and bears interest at the bank's prime rate +1% at May 31, 1999. Alternatively, the Company may elect borrowings to bear interest at a Eurodollar-based rate plus 250 basis points; however, no borrowings are outstanding at May 31, 1999 at this rate. Borrowings are secured by all accounts receivable and inventory. The revolving credit agreement contains covenants specifying the maximum ratio of debt to tangible net worth and the minimum tangible net worth that the Company must maintain. The agreement expires on October 31, 1999.
5. LEASE COMMITMENTS
The Company leases office and manufacturing space and equipment under various non-cancelable lease agreements. Several of the space leases contain options for renewal or early termination. Total rent expense was $290,309, $240,556, and $315,719 for the years ended May 31, 1998, 1997 and 1996, respectively. As of May 31, 1998, the future minimum rental payments are as follows:
6. EARNINGS PER SHARE
A reconciliation of the numerators and denominators of the basic earnings per common share and diluted earnings per common share is as follows:
INOTEK TECHNOLOGIES CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. EARNINGS PER SHARE (CONTINUED)
7. EMPLOYEE BENEFIT PLANS
In 1987, the Company established the INOTEK Technologies Corp. 401(k) Savings Plan & Trust (the Plan) to provide eligible employees with a retirement savings plan. On January 1, 1993, the Plan was amended to allow employees to defer up to 15% of their compensation and provide for a matching contribution by the Company of up to 3% of each eligible employee's compensation. A vesting schedule was also adopted providing for participant's vesting in Company contributions over seven years with forfeitures allocated to remaining participants. All employees are eligible to participate in the Plan upon completing six months of service. The Company expensed $64,342, $88,496 and $82,168 for Plan contributions for the years ended May 31, 1999, 1998, and 1997, respectively.
INOTEK TECHNOLOGIES CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities as of May 31, 1999 and 1998 are as follows:
Significant components of the provision for income taxes as of May 31 are as follows:
The reconciliation of income tax at the U.S. federal statutory tax rate to income tax expense (benefit) is as follows:
INOTEK TECHNOLOGIES CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. STOCK-BASED COMPENSATION PLANS
The Company adopted an Incentive/Nonqualified Stock Option Plan (the 1987 Plan) in June 1987 and the INOTEK Technologies Corp. Stock Option Plan (the 1993 Plan) in October 1993 whereby the Company may grant up to 100,000 and 200,000 qualified and nonqualified incentive stock options, respectively, to key employees, excluding employees who own more than 10% of the Company's outstanding stock. Options covering 14,750 shares of the Company's common stock granted under the 1987 Plan had an exercise price of $.93 per share and expire between 1999 and 2001. Options covering 133,500 shares of the Company's common stock granted under the 1993 Plan vest over four years, are exercisable over a ten year period from the date of issuance, had an initial exercise price of $1.06 per share, and expire between 2003 and 2008. At May 31, 1999, outstanding options for 14,750 and 53,250 shares were exercisable under the 1987 and 1993 plans, respectively.
The Company granted two officers/shareholders warrants to purchase common stock at an initial exercise price of $1 per share for 250,000 shares each or a total of 500,000 shares. The warrants expire on February 11, 2001.
The exercise price of all options and warrants approximates the fair market value of the Company's common stock as of the date of grant. In December 1995, the exercise price of all options under both plans and warrants was reset to $.50 per share which represented the fair market value at the time. In October 1998, the exercise price of all options under both plans and all warrants was reset to 0.28 per share, which represented the fair market value at that time.
The Company has adopted only the disclosure provisions of SFAS 123. The Company will continue to apply APB 25 and related interpretations in accounting for its stock-based compensation plans. Had compensation costs for stock-based compensation plans been determined consistent with SFAS 123, the Company's net earnings and net earnings per common share for 1999, 1998 and 1997 would approximate the pro forma amounts indicated below:
INOTEK TECHNOLOGIES CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. STOCK-BASED COMPENSATION PLANS (CONTINUED)
The effects of applying SFAS 123 in this pro forma disclosure are not indicative of future disclosures because they do not take into effect pro forma compensation expense related to grants made before fiscal 1996. The fair value of these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants after 1995, expected volatility of 140%, risk-free rate of 5.8%, and expected life of 7 years. The weighted average fair value of options granted during 1996 was $.45.
The following table summarizes activity under the Plans:
Exercisable at May 31:
The following information applies to options at May 31, 1999:
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning the directors of the Company is set forth in the Proxy Statement to be delivered to stockholders in connection with the Company's Annual Meeting of Stockholders to be held on October 18, 1999 (the Proxy Statement) under the heading "Election of Directors," which information is incorporated herein by reference.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The information concerning executive compensation is set forth in the Proxy Statement under the heading "Executive Compensation," which information is incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information concerning security ownership of certain beneficial owners and management is set forth in the Proxy Statement under the heading "Security Ownership of Management and Principal Stockholders," which information is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated herein by reference from the Proxy Statement.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) AND (d) FINANCIAL STATEMENTS AND SCHEDULES
The financial statements and schedule are listed on the accompanying Index of Financial Statements at Item 8 and are filed as part of this Annual Report on Form 10-K.
(b) REPORTS ON FORM 8-K
There were no Form 8-K reports filed during the quarter ended May 31, 1999.
(c) EXHIBITS
Included as exhibits are the items listed in the Exhibit Index. The Company will furnish a copy of any of the exhibits below upon payment of $15.00 per exhibit to cover the costs to the Company of furnishing the exhibit.
EXHIBIT INDEX
- ------------------- * previously filed
INOTEK TECHNOLOGIES CORP.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED MAY 31, 1999, 1998, AND 1997
Note: During 1999, 1998 and 1997, deductions consist of the write-off of uncollectible accounts, net of recoveries.
Note: Deductions consist of the write-off of inventory determined to be obsolete.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
INOTEK Technologies Corp. (Registrant)
By: /s/ Neal E. Young ------------------------------ Neal E. Young, August 27, 1999 (Chairman of the Board)
Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
/s/ Wilson J. Prokosch - ----------------------------------- Wilson J. Prokosch, August 27, 1999 (Director)
/s/ Dennis W. Stone - ----------------------------------- Dennis W. Stone, August 27, 1999 (Director, Chief Executive Officer)
/s/ David L. White - ----------------------------------- David L. White, August 27, 1999 (Director)
/s/ H. P. McCoy - ----------------------------------- H. P. McCoy, August 27, 1999 (Director)
/s/ Neal E. Young - ----------------------------------- Neal E. Young, August 27, 1999 (Chairman of the Board)
INDEX TO EXHIBITS
- -----------------
* previously filed