United States |
For Quarter Ended August 31, 2000 | Commission File Number 0-16101 |
INOTEK Technologies Corp. |
Delaware (State or other jurisdiction of incorporation or organization) | 75-1986151 (I.R.S. Employer Identification No.) |
11212 Indian Trail, Dallas, Texas (Address of principal executive offices) | 75229 (Zip Code) |
Registrant’s telephone number including area code, 972-243-7000. Not Applicable Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ___ 4,854,088 shares of common stock, $.01 par value (the issuer’s only class of common stock), were outstanding as of August 31, 2000. |
INOTEK Technologies Corp.INDEX |
Page No. | |||||
---|---|---|---|---|---|
Part I. Financial information | |||||
Item 1. Financial Statements: | |||||
Balance Sheets as of August 31, 2000 (unaudited) and May 31, 2000 | 1 | ||||
Statements of Operation for the Three Months Ended August 31, 2000 | |||||
and August 31, 1999 (unaudited) | 2 | ||||
Statements of Cash Flows for the Three Months Ended August 31, 2000 | |||||
and August 31, 1999 (unaudited) | 3 | ||||
Notes to Financial Statements | 4 | ||||
Item 2. Management’s Discussion and Analysis of Financial | |||||
Condition and Results of Operations | 5 | ||||
Part II. Other Information | |||||
Item 1. Legal Proceedings | 6 | ||||
Item 4. Submission of Matters to a Vote of Security Holders | 6 | ||||
Item 6. Exhibits and Reports on Form 8-K | 6 | ||||
Signatures | 7 |
INOTEK Technologies Corp.Balance Sheets |
August 31 2000 (unaudited) | May 31 2000 | ||||
---|---|---|---|---|---|
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $363,628 | $632,970 | |||
Trade receivables, net of allowance for doubtful accounts | |||||
of $117,952 at August 31 and $111,837 at May 31 | 2,467,412 | 2,336,758 | |||
Inventories | 1,185,001 | 1,247,903 | |||
Deferred taxes | 80,789 | 89,028 | |||
Income tax receivable | 86,628 | 74,899 | |||
Prepaid expenses and other assets | 171,948 | 156,314 | |||
Total current assets | 4,355,406 | 4,537,872 | |||
Property and equipment, net | 786,476 | 801,553 | |||
Goodwill, net of accumulated amortization of $732,636 at | |||||
August 31 and $716,157 at May 31 | 1,909,316 | 1,925,795 | |||
Other assets | 131,808 | 63,332 | |||
Total assets | $7,183,006 | $7,326,552 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||
Current liabilities: | |||||
Accounts payable | $1,147,326 | $1,281,474 | |||
Accrued expenses | 266,601 | 308,374 | |||
Total current liabilities | 1,413,927 | 1,589,848 | |||
Deferred Tax Liability | 30,230 | 38,191 | |||
Shareholders’ equity: | |||||
Common shares, $.01 par value: | |||||
Authorized shares, 10,000,000 | |||||
Issued and Outstanding shares | |||||
4,854,088 at August 31 and 4,604,088 at May 31 | 48,541 | 46,041 | |||
Additional paid-in-capital | 3,434,547 | 3,367,046 | |||
Retained earnings | 2,295,141 | 2,326,806 | |||
Total shareholders’ equity | 5,778,229 | 5,739,893 | |||
Less: Common stock in treasury at cost, 100,000 shares in 1999 | (39,380 | ) | (39,380 | ) | |
Total Shareholders’ equity | 5,738,849 | 5,700,513 | |||
Total liabilities and shareholders’ equity | $7,183,006 | $7,328,552 | |||
See accompanying notes |
INOTEK Technologies Corp.Statements of Operations(unaudited) |
Three Months Ended | |||||
---|---|---|---|---|---|
August 31 2000 | August 31 1999 | ||||
Net sales | $4,819,624 | $4,288,119 | |||
Cost of goods sold | 3,600,092 | 3,258,733 | |||
Gross margin | 1,219,532 | 1,029,386 | |||
Operating expenses: | |||||
Sales and marketing | 729,702 | 728,149 | |||
General and administrative | 542,717 | 568,061 | |||
1,272,419 | 1,296,210 | ||||
Operating loss | (52,887 | ) | (266,824 | ) | |
Interest income | 13,693 | 4,837 | |||
Loss before income taxes | (39,194 | ) | (261,987 | ) | |
Income tax benefit | (7,527 | ) | (49,140 | ) | |
Net loss | $(31,667 | ) | $(212,847 | ) | |
Net loss per share – basic and diluted | $(.01 | ) | $(.05 | ) | |
Weighted average shares outstanding | 4,612,240 | 4,392,131 | |||
See accompanying notes |
INOTEK Technologies Corp.Statements of Cash Flows(unaudited) |
Three Months Ended August 31 | |||||
---|---|---|---|---|---|
2000 | 1999 | ||||
Operating Activities | |||||
Net loss | (31,667 | ) | $(212,847 | ) | |
Adjustments to reconcile net loss | |||||
to net cash provided by (used in) operating activities: | |||||
Depreciation and amortization | 80,404 | 70,678 | |||
Deferred taxes | (4,918 | ) | (38,752 | ) | |
Provision for losses on accounts receivable | 6,115 | 4,683 | |||
Net changes in operating assets and liabilities: | |||||
Accounts receivable | (136,769 | ) | 590 | ||
Inventories | 62,903 | 60,990 | |||
Prepaid expenses and other assets | (10,438 | ) | (132,242 | ) | |
Accounts payable | (134,311 | ) | 263,058 | ||
Accrued expenses | (45,536 | ) | 19,795 | ||
Income Tax Payable | (7,805 | ) | 61,100 | ||
Net cash provided by (used in) operating activities | (222,022 | ) | 97,053 | ||
Investing Activities | |||||
Purchase of property and equipment | (46,558 | ) | (43,249 | ) | |
Increase in other assets | (70,762 | ) | (6,833 | ) | |
Net cash used in investing activities | (117,320 | ) | (50,082 | ) | |
Financing Activities | |||||
Exercise of warrants | 70,000 | 70,000 | |||
Net cash provided by financing activities | 70,000 | 70,000 | |||
Change in cash and cash equivalents | (269,342 | ) | 116,971 | ||
Cash and cash equivalents, beginning of period | 632,970 | 173,668 | |||
Cash and cash equivalents, end of period | $363,628 | $290,639 | |||
Supplemental Disclosures of Cash Flow Information: | |||||
Cash received during the period for: | |||||
Interest | $13,693 | $4,837 |
3 |
INOTEK Technologies Corp. |
1. | Basis of Presentation |
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the results for the interim periods presented have been made. The results of operations for such interim periods are not necessarily indicative of the results of operations for a full year. The interim unaudited financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended May 31, 2000. |
2. | Long-term debt |
On September 15, 2000, the Company secured a new agreement with Bank One, Texas, N.A. for a one-year revolving credit arrangement of up to .5 million. The credit arrangement provides for borrowings based on the Company’s trade receivables, at the bank’s prime rate plus one percent and is collateralized by trade receivables and inventories. |
4 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsResults of OperationsFirst Quarter 2001 Compared to First Quarter 2000The Company’s total sales increased 12.4% to $4,819,624 for the first quarter ended August 31, 2000 from $4,288,119 for the first quarter of the prior year, while gross margins increased 18.5% to $1,219,532 from $1,029,386 for the same period. The oil and gas industry is beginning to show signs of a turnaround as the price of oil has stabilized at higher levels. Improvement is most evident in the upstream process segment of this industry, which is defined as drilling, exploration and pipeline. This segment is beginning to increase its expenditures on our type of products. The downstream process segment, which is defined as the petrochemical processing plants, while operating at full capacity, is negatively affected in its profitability by the higher price of oil. Once oil stabilizes in the mid $20‘s/barrel range, the downstream processing segment should begin to increase its MRO (maintenance, repair and operation) spending and some plant expansion. As the upstream and downstream business climate improves, so should that of their supply chain, which is one of our primary customer categories. Areas of concern and of which we should be cautious are the impact of e-commerce, vendor consolidation, integrated supplier contracts and margin pressure created by a low inflation economy. We are in the process of developing our Internet strategy, expanding our product lines to compete in the integrated supply market and reducing our exposure to vendor consolidation. As for margin pressure, we are continually monitoring our costs and improving our productivity in order to compete effectively. Sales and marketing costs during the first quarter of fiscal year 2000 remained the same when compared with the first quarter of the previous year. General and administrative costs decreased 4.5% or $25,344 for the first quarter ending August 31, 2000 when compared with the first quarter of fiscal year 2000. Financial Condition, Liquidity and Capital ResourcesCash and cash equivalents were $363,628 and $632,970 at August 31, 2000 and May 31, 2000, respectively. The Company’s current assets exceeded its current liabilities at August 31, 2000 and May 31, 2000 by $2,941,479 and $2,948,024 respectively. The Company’s funding requirements during the quarter were met through cash on hand and the sale of common stock. On September 15, 2000, the company secured a new credit arrangement with Bank One, Texas, N.A. for a one-year revolving credit facility of up to .5 million. Their were no outstanding borrowings under the Company’s revolving credit agreement at August 31, 2000 or May 31,2000. The Company has no material commitment for capital expenditures as of August 31, 2000. |
5 |
Part II - Other InformationItem 1. Legal ProceedingsNone pending Item 4. Submission of Matters to a Vote of Security HoldersNone Item 6. Exhibits and Reports on Form 8-K |
(a) | Reports on 8-K: |
No reports on Form 8-K were filed in the quarter for which this report is filed. |
6 |
SignaturesPursuant to the requirements 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) |
Date: August 15, 2000 | /s/ Neal E. Young ———————————— (Officer) Neal E. Young Chairman of the board |
Date: August 15, 2000 | /s/ Dennis W. Stone ———————————— (Officer) Dennis W. Stone Chief Executive Office |
7 |