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EXHIBIT (20)
INOTEK TECHNOLOGIES CORP.
REPORT FURNISHED TO SECURITY HOLDERS
TO OUR SHAREHOLDERS:
INOTEK Technologies Corp. reported a loss of $35,707 or $.01 per share on
revenues of $5,501,811 for its first quarter ended August 31, 1998 compared with
earnings of $38,117 or $.01 per share on revenues of $6,171,243 for the first
quarter of the previous year.
Distribution sales decreased 1.7% during the first quarter of the current fiscal
year as compared to the first quarter of the prior year or $92,027. Service
revenues decreased by 87.9% during the first quarter of fiscal year 1999
compared to the first quarter of fiscal year 1998. The reduction in service
revenues was due to the reduction in the service contract with Duke Energy that
is set to expire on November 30, 1998
INOTEK renewed its agreement with Chase Bank of Texas 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, 1998, we had drawn only $200,000 of the $3 million line.
Thank you for your continued support.
/s/ NEAL E.YOUNG /s/ DAVID L. WHITE
Neal E. Young David L. White
Chairman Chief Executive Officer
October 14,1998
INOTEK TECHNOLOGIES CORP.
STATEMENTS OF OPERATION (unaudited)
THREE MONTHS ENDED
AUGUST 31
1998 1997
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NET SALES $ 5,501,811 $ 6,171,243
COST AND EXPENSES:
COST OF SALES 4,017,001 4,402,348
SALES AND MARKETING 893,041 895,805
GENERAL AND ADMINISTRATIVE 628,191 785,223
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TOTAL COST AND EXPENSES 5,538,233 6,083,376
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OPERATING INCOME (LOSS) (36,422) 87,867
INTEREST EXPENSES (4,297) (7,131)
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EARNINGS (LOSS) BEFORE INCOME TAXES (40,719) 80,736
INCOME TAX PROVISION (5,012) 42,619
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NET EARNINGS (L0SS) $ (35,707) $ 38,117
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NET EARNINGS (LOSS) PER SHARE $ (0.01) $ 0.01
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INOTEK TECHNOLOGIES CORP.
BALANCE SHEETS
AUGUST 31 MAY 31
1998 1998
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(unaudited)
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 508,506 $ 362,830
TRADE RECEIVABLES, (NET OF
ALLOWANCE FOR DOUBTFUL
ACCOUNTS OF $51,322 AND $57,403) 2,848,875 3,207,384
INVENTORIES 1,708,763 2,131,155
DEFERRED TAX ASSET 114,400 117,820
PREPAID EXPENSES & OTHER ASSETS 49,152 133,138
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TOTAL CURRENT ASSETS 5,229,696 5,952,327
PROPERTY AND EQUIPMENT, NET 609,800 579,138
GOODWILL, NET 2,041,144 2,057,623
OTHER ASSETS 87,664 56,164
DEFERRED TAX ASSET 109,139 108,101
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TOTAL ASSETS $8,077,443 $8,753,353
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $1,286,362 $1,643,442
ACCRUED EXPENSES 381,651 664,774
CURRENT PORTION OF NOTES PAYABLE 200,000 200,000
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TOTAL CURRENT LIABILITIES 1,868,013 2,508,216
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 2,866,343 2,902,050
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TOTAL SHAREHOLDERS' EQUITY 6,209,430 6,245,137
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TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $8,077,443 $8,753,353
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