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EXHIBIT (20)
INOTEK TECHNOLOGIES CORP.
REPORT FURNISHED TO SECURITY HOLDERS
TO OUR SHAREHOLDERS:
INOTEK Technologies Corp. reported earnings of $38,117 or $.01 per share on
revenues of $6,171,243 for its first quarter ended August 31, 1997 compared
with earnings of $105,522 or $.02 per share on revenues of $5,745,324 for the
first quarter of the previous year.
Although revenues were up 7%, margins were lower due to continued price
competition. Expenses were higher due primarily to increased headcount and the
opening of our Kansas City office.
INOTEK renewed its agreement with Texas Commerce Bank for a one-year revolving
credit facility of up to $3 million. The credit line provides for borrowings
based on the value of the Company's receivables, at either the bank's prime
rate or a LIBOR-based rate and is secured by receivables and inventory. As of
August 31, 1997, we had drawn only $200,000 of the $3 million line.
Effective October 16, 1997, R. Lee Simpson, our Chief Financial Officer, is
resigning to pursue other business opportunities. Lee has been a valuable team
member for over five years and will be missed.
Thank you for your continued support.
Neal E. Young David L. White
Chairman Chief Executive Officer
October 3, 1997
INOTEK TECHNOLOGIES CORP.
STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED
AUGUST 31
1997 1996
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NET SALES $ 6,171,243 $ 5,745,324
COST AND EXPENSES:
COST OF SALES 4,402,348 4,030,008
SALES AND MARKETING 895,805 808,209
GENERAL AND ADMINISTRATIVE 785,223 705,315
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TOTAL COST AND EXPENSES 6,083,376 5,543,532
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OPERATING INCOME 87,867 201,792
INTEREST EXPENSES (7,131) (7,109)
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EARNINGS BEFORE INCOME TAXES 80,736 194,683
INCOME TAXES 42,619 89,161
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NET EARNINGS $ 38,117 $ 105,522
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NET EARNINGS PER SHARE $ 0.01 $ 0.02
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INOTEK TECHNOLOGIES CORP.
BALANCE SHEETS
AUGUST 31 MAY 31
1997 1997
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(unaudited)
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 435,746 $ 376,145
TRADE RECEIVABLES, (NET OF
ALLOWANCE FOR DOUBTFUL
ACCOUNTS OF $57,957 AND $45,182) 2,840,125 3,619,039
INVENTORIES 2,639,547 2,178,744
DEFERRED TAX ASSET 94,946 77,953
PREPAID INCOME TAXES -- 13,660
PREPAID EXPENSES & OTHER ASSETS 148,719 165,240
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TOTAL CURRENT ASSETS 6,159,083 6,430,781
PROPERTY AND EQUIPMENT, NET 472,740 370,837
GOODWILL, NET 2,107,056 2,123,534
OTHER ASSETS 57,445 64,590
DEFERRED TAX ASSET 161,968 193,395
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TOTAL ASSETS $8,958,292 $9,183,137
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $1,923,222 $1,865,089
ACCRUED EXPENSES 654,428 776,153
INCOME TAXES PAYABLE 3,970 --
CURRENT PORTION OF NOTES
PAYABLE 210,493 413,833
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TOTAL CURRENT LIABILITIES 2,792,113 3,055,075
NOTES PAYABLE 59,710 59,710
SHAREHOLDERS' EQUITY:
COMMON SHARES, $.01 PAR VALUE;
AUTHORIZED SHARES - 10,000,000
ISSUED SHARES - 4,354,088
OUTSTANDING SHARES - 4,354,088 43,541 43,541
ADDITIONAL PAID-IN CAPITAL 3,299,546 3,299,546
RETAINED EARNINGS 2,763,382 2,725,265
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TOTAL SHAREHOLDERS' EQUITY 6,106,469 6,068,352
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TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $8,958,292 $9,183,137
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