UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2001
Commission file number 001-15301
INNOTECH CORPORATION
--------------------
(formerly known as EquityAlert.com, Inc.)
(Name of small business issuer as specified in its charter)
NEVADA 58-2377963
------------ ---------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1628 West 1st Avenue, Suite 216, Vancouver, B.C. V6J 1G1
- ------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (604) 659-5009
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act:
Common Stock, $.00001 par value, listed on the OTC Bulletin Board
-----------------------------------------------------------------
Indicate by check mark whether the registrant: (1) has filed all reports
required 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 for the
past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any
amendment to this Form 10-K [X]
Revenues for last fiscal year were $1,298,164
Aggregate market value of Common Stock, $0.00001 par value, held by
non-affiliates of the registrant as of March 15th, 2002: $100,804. Number of
shares of Common Stock, $0.00001 par value, outstanding as of March 26th, 2002:
1,648,081.
ANNUAL REPORT ON FORM 10-KSB
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
TABLE OF CONTENTS
PART I Page
Item 1. Description of Business 3
Item 2. Description of Property 5
Item 3. Legal Proceedings 5
Item 4. Submissions of Matters to a Vote of Security Holders 6
PART II
Item 5. Market for the Registrants' Common Equity and Related Stock-
holder Matters 6
Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations 6
Item 7. Financial Statements 9
Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure 21
PART III
Item 9. Directors and Executive Officers of the Registrant 21
Item 10. Executive Compensation 21
Item 11. Security Ownership of Certain Beneficial Owners and Management 21
Item 12. Certain Relationships and Related Transactions 21
PART IV
Item 13. Exhibits and Reports on Form 8-K 21
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Except for the historical information contained herein, the discussion in this
Annual Report on Form 10-KSB contains certain forward-looking statements that
involve risk and uncertainties, such as statements of the Company's plans,
objectives, expectations and intentions. The cautionary statements made in this
document should be read as being applicable to all related forward- looking
statements wherever they appear in this document. The Company's actual results
could differ materially from those discussed herein. Factors that could cause
differences include those discussed below in "Risk Factors", as well as those
discussed elsewhere herein.
THE COMPANY
Innotech Corporation (formerly known as EquityAlert.com, Inc.) ("Innotech" or
the "Company") operates as financial news redistribution website
(www.EquityAlert.com), and also provides, amongst other information, real time
news alerts on US stocks and mutual fund news and information alerts. The
Company was incorporated under the laws of the State of Florida on January 13,
1997, under the name of San Marino Minerals, Inc. On March 10, 1999, the Company
filed Articles of Merger in the State of Nevada to transfer domicile to Nevada
and on June 3, 1999, the Company amended its articles of incorporation to change
its name to EquityAlert.com, Inc. On September 8, 2000, Email Solutions, Inc.
was formed in the State of Nevada as a wholly owned subsidiary. On September 15,
2000 this subsidiary was sold to Entheos Technologies, Inc. for $283,000. The
director and majority shareholder of Innotech is also the director and majority
shareholder of Entheos.
At a shareholder's meeting held on July 12, 2001, a majority of the shareholders
approved a change in the company's name from Equityalert.com, Inc. to Innotech
Corporation. The shareholders also approved an increase in the company's
authorized shares of common stock, par value $0.00001, from one hundred million
(100,000,000) to three hundred million (300,000,000) shares, with the par value
remaining the same. Additionally, the shareholders approved a 25:1 reverse split
of the company's outstanding shares of common stock, to be effective as of July
30, 2001. On July 31, 2001, Innotech Corporation formed EquityAlert.com, Inc. as
a Nevada incorporated wholly owned subsidiary through which the operations of
its online business, www.equityalert.com, will be conducted.
With the proliferation of financial information on the Internet, more and more
individuals are taking greater control of their investments and trading
securities through an online broker versus the traditional securities broker.
The online investor represents one of the most desirable of any demographic on
the web, being better educated, having a higher income and net worth than most
other online users. The competition for online investors is intense, with many
better capitalized and well managed companies offering similar information
services as EquityAlert.com. This competition comes from direct competitors,
such as traditional media sources and websites like SmartMoney.com, Multex.com,
Moneycentral.com, Barrons.com, Morningstar.com and hundreds of others, as well
as from many indirect competitors, such as online brokerage firms and online
portals such as Yahoo and America Online.
Since launching EquityAlert.com on June 7, 1999, the Company's main focus has
been to build its subscriber base of online investors by offering individuals
free subscriptions to its website and to generate advertising revenues.
Subscribers to Innotech's free website enjoy a broad suite of financial news and
information, including insider trading information, insurance, mortgage and loan
information, online banking, consumer credit and charge card products, mutual
fund news alerts via email, conference calls, and much more, including the
Company's most popular feature - free real time public company news alerts via
email.
Employees
At December 31, 2001, the Company employed 6 full time and 1 part-time persons.
To the best of the Company's knowledge, none of the Company's officers or
directors is bound by restrictive covenants from prior employers. None of the
Company's employees are represented by labor unions or other collective
bargaining groups. The Company considers its relationship with its employees to
be excellent. Risk Factors of the Business
Lack of Operating History: Although we organized Innotech in 1997, we did not
become active until June 1999. As a result, our business is subject to the risks
inherent in the establishment of a new business. Specifically, in formulating
our business plan, we have relied on the judgment of our officers, directors and
consultants but have not conducted any formal independent market studies
concerning the demand for our services.
We have had limited revenues since inception. In 2001, we had revenues of
$1,298,164. We have not been profitable, experiencing an accumulated loss of
$1,181,895 through 2001. Even if we become profitable in the future, we cannot
accurately predict the level of, or our ability to sustain profitability.
Because we have not yet been profitable and cannot predict any level of future
profitability, you bear the risk of a complete loss of your investment in the
event our business plan is unsuccessful.
Inability to Obtain Funding: We may not be able to obtain additional funding
when needed, which could limit future expansion and marketing opportunities and
result in lower than anticipated revenues. If the market price of the common
stock declines, some potential financiers may either refuse to offer us any
financing or will offer financing at unacceptable rates or unfavorable terms. If
we are unable to obtain financing on favorable terms, or at all, this
unavailability could prevent us from expanding our business, which could
materially impact our future potential revenues.
Dividends: We have not paid and do not currently intend to pay dividends, which
may limit the current return you may receive on your investment in our common
stock. Since inception, we have paid no dividends to our stockholders. Future
dividends on our common stock, if any, will depend on our future earnings,
capital requirements, financial condition and other factors. We currently intend
to retain earnings, if any, to increase our net worth and reserves. Therefore,
we do not anticipate that any holder of common stock will receive any cash,
stock or other dividends on his shares of common stock at any time in the near
future. You should not expect or rely on the potential payment of dividends as a
source of current income.
Dependence on Executive Officers and Technical Personnel: The success of our
business plan depends on attracting qualified personnel, and failure to retain
the necessary personnel could adversely affect our business. We are highly
dependent on the services of our executive officer, Mr. Bill Mann. We do not
have any employment agreements with our executive officers. In addition,
competition for qualified personnel is intense, and we may need to pay premium
wages to attract and retain personnel. Attracting and retaining qualified
personnel is critical to our business. Inability to attract and retain the
qualified personnel necessary would limit our ability to implement our business
plan successfully.
Adverse Effect of Shares Eligible for Future Sale: Future sales of large amounts
of common stock could adversely effect the market price of our common stock and
our ability to raise capital.
Future sales of our common stock by existing stockholders pursuant to Rule 144
under the Securities Act of 1933, or following the exercise of outstanding
options, could adversely affect the market price of our common stock.
Substantially all of the outstanding shares of our common stock are freely
tradable, without restriction or registration under the Securities Act, other
than the sales volume restrictions of Rule 144 applicable to shares held
beneficially by persons who may be deemed to be affiliates. Our directors and
executive officers and their family members are not under lockup letters or
other forms of restriction on the sale of their common stock. The issuance of
any or all of these additional shares upon exercise of options will dilute the
voting power of our current stockholders on corporate matters and, as a result,
may cause the market price of our common stock to decrease. Further, sales of a
large number of shares of common stock in the public market could adversely
affect the market price of the common stock and could materially impair our
future ability to generate funds through sales of common stock or other equity
securities.
Potential Fluctuations in Quarterly Results: Significant variations in our
quarterly operating results may adversely affect the market price of our common
stock. Our operating results have varied on a quarterly basis during our limited
operating history, and we expect to experience significant fluctuations in
future quarterly operating results. These fluctuations have been and may in the
future be caused by numerous factors, many of which are outside of our control.
We believe that period-to-period comparisons of our results of operations will
not necessarily be meaningful and that you should not rely upon them as an
indication of future performance. Also, it is likely that our operating results
could be below the expectations of public market analysts and investors. This
could adversely affect the market price of our common stock.
Introduction of New Services Mandatory: Our future success will depend on our
ability to develop and enhance our services. We operate in a very competitive
industry in which the ability to develop and deliver advanced services through
the Internet is a key competitive factor. There are significant risks in the
development of new or enhanced services. If we are unable to develop and
introduce new or enhanced services quickly enough to respond to market or
customer requirements or to comply with emerging industry standards, or if these
services do not achieve market acceptance, our business could be seriously
harmed.
Intense Competition: There is intense competition in all aspects of our
business, and we expect this competition to increase. Many of our competitors
have longer operating histories and significantly greater financial, technical
and marketing resources than us. In addition, many of these competitors offer a
wider range of services and financial products. Many current and potential
competitors also have greater name recognition and more extensive customer bases
that could be leveraged to accelerate their competitive activity. We cannot
assure you that we will be able to compete effectively with current or future
competitors or that the competitive pressures faced by us will not harm our
business.
Dependence on Financial Advertisers: In fiscal 2001, substantially all of our
advertising revenues were derived from financial-services advertisers and public
companies. If we do not increase our revenue from non financial-services
advertisers or attract advertisers from non-financial industries, our business,
results of operations and financial condition could be materially adversely
affected.
Intellectual Property
- ---------------------
The Company relies on a combination of trademarks, copyright law, trade secret
protection, confidentiality agreements and other contractual arrangements with
employees, vendors and others to protect its rights to intellectual property.
Theses measures, however, may be inadequate to deter misappropriation of
proprietary information. Failure to adequately protect its intellectual property
could harm the Company's brand, devalue its proprietary content and affect the
Company's ability to compete effectively.
Environmental Matters
- ---------------------
The Company believes it conducts its business in compliance with all
environmental laws presently applicable to its facilities. To date, there have
been no expenses incurred by the Company related to environmental issues.
Government Regulation
- ----------------------
The Company is not subject to any direct governmental regulation other than the
securities laws and regulations applicable to all publicly owned companies, and
laws and regulations applicable to businesses generally.
ITEM 2: DESCRIPTION OF PROPERTY
The Company leases approximately 1500 square feet of office space located at
Suite 216, 1628 West 1st Avenue, Vancouver, BC, V6J 1G1. The office is leased
for a period of three years ending August 31, 2003, with an option to renew for
a further three years, from Tajinder Chohan and Kundan S. Rayat, the wife and
father, respectively, of the Company's Chairman, for a lease payment of
approximately $2,450 per month.
ITEM 3: LEGAL PROCEEDINGS
The Company is not involved in any pending legal proceedings.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the security holders in the fourth
quarter of the fiscal year covered by this report.
PART II
ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
(a) Market Information
The Company's Common Stock is listed on the OTC Bulletin Board under the symbol
"EINC". The following table sets forth the high and low closing prices for the
periods indicated:
High Low
---- ---
First Quarter 2000 $ 134.38 $ 87.50
Second Quarter 2000 $ 53.13 $ 25.25
Third Quarter 2000 $ 18.75 $ 15.63
Fourth Quarter 2000 $ 10.95 $ 2.50
First Quarter 2001 $ 2.00 $ 0.92
Second Quarter 2001 $ 1.00 $ 1.00
Third Quarter 2001 $ 0.26 $ 0.11
Fourth Quarter 2001 $ 0.35 $ 0.11
(b) Holders
As at March 21, 2001 there were approximately 70 registered stockholders of
record of the Company's Common Stock.
(c) Dividend Policy
The Company has never paid a dividend and does not anticipate paying any
dividends in the foreseeable future. It is the present policy of the Board of
Directors to retain the Company's earnings, if any, for the development of the
Company's business.
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements and notes thereto included in Item 7 of this Form 10-KSB. Except for
the historical information contained herein, the discussion in this Annual
Report on Form 10-KSB contains certain forward-looking statements that involve
risk and uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. The cautionary statements made in this document
should be read as being applicable to all related forward-looking statements
wherever they appear in this document. The Company's actual results could differ
materially from those discussed here. Factors that could cause differences
include those discussed in "Risk Factors of the Business", as well as discussed
elsewhere herein.
OVERVIEW
The Company operates a financial news and information website located at
www.EquityAlert.com. Since launching EquityAlert.com on June 7, 1999, the
Company's main focus has been to build its subscriber base of online investors
by offering individuals free subscriptions to its website and to generate
advertising revenues.
Subscribers to Innotech's free website enjoy a broad suite of financial news and
information, including insider trading, insurance, mortgage and loan
information, online banking, consumer credit and charge card products, mutual
fund news alerts via email, conference calls, and much more, including the
Company's most popular feature - free real time public company news alerts via
email.
The Company expects to generate substantially all of its future revenues from
advertising sales. To date, the Company has incurred significant ongoing
operating losses due to costs related to business development, sales and
marketing, website development and management and staff recruitment. Although
planned principal operations have commenced, substantial revenues have yet to be
realized.
RESULTS OF OPERATIONS
Revenues. The Company generated revenues of $1,298,164 for the year ended
December 31, 2001, versus $1,374,127 for the year ended December 31, 2000. This
decrease of $75,963, or 6%, is a direct result of lower advertising receipts
during the year.
Cost of Revenues. During 2001, the Company incurred $981,503 in cost of
revenues, a marginal increase of .005 %, or $4823, over 2000 expenses of
$976,680.
General and Administrative Expenses. During 2001, the Company incurred $479,164
in general and administrative expenses, a decrease of 2.8% over 2000 expenses of
$493,145.
Interest Income. Interest income was $20,073 and $37,262 for the years ended
December 31, 2001 and 2000, respectively. Interest earned in the future will be
dependent on Company funding cycles and prevailing interest rates.
Provision for Income Taxes. As of December 31, 2001, the Company's accumulated
deficit was $1,181,895 and as a result, there has been no provision for income
taxes to date.
Net Loss. For the year ended December 31, 2001, the Company recorded a net loss
of $142,430 versus a net loss of $55,845 for the same twelve month period ending
December 31, 2000. This increase in net of loss of $86,585, or 155%, is a direct
result of lower advertising receipts during the year.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2001, the Company had a cash balance of $623,691, compared to a
cash balance of $844,626 at December 31, 2000.
During 2000, net cash used in operating activities was $93,526, versus net cash
provided by operating activities of $308,865 in 2000. This change is primarily
due to an increase in accounts payable of $92,512, versus an increase in
accounts payable of $315,077 in the previous year.
Net cash flows used in investing activities for the year ended December 31, 2001
was $127,409 versus $56,219 the previous year, primarily due to difference of
$42,409 representing realized losses from the sale of marketable equity
securities versus their cost and an advance to a related party of $40,000.
The Company's principal source of liquidity is cash in bank, which is sufficient
to meet its operating needs for at least the next twelve months. The Company
incurs management fees from the services of its chairman and majority
shareholder at the rate of $12,000 per month, which will result in a decrease in
the Company's cash position unless the debt is converted to equity in lieu of
cash paid.
The Company's future funding requirements will depend on numerous factors. These
factors include the Company's ability to establish and profitably operate
EquityAlert.com, recruit and train qualified management, technical and sales
personnel, and the Company's ability to compete against other, better
capitalized corporations who offer similar web based services.
Due to the "start up" nature of the Company's businesses, the Company expects to
incur losses as it expands. The Company expects to raise additional funds
through private or public equity investment in order to expand the range and
scope of its business operations. The Company will seek access to private or
public equity but there is no assurance that such additional funds will be
available for the Company to finance its operations on acceptable terms, if at
all. These and other material factors are explained under the heading "Risk
Factors of the Business".
RELATED PARTY TRANSACTIONS
Advances to related parties of $40,500 at December 31, 2001 represents funds
advanced to a shareholder bearing interest at 4.75% per annum and due in full on
September 26, 2002.
Loans from related parties of $42,017 at December 31, 2000 represent unsecured
advances from the director and majority shareholder. The amounts bear no
interest and are due on demand. The amount was paid in full in March 2001.
On September 15, 2000, the Company sold 100% of the voting common stock of its
wholly-owned subsidiary, Email Solutions, Inc., a Nevada Corporation, to Entheos
Technologies, Inc., for $283,000. Email Solutions, Inc.'s assets consist
principally of software and computer hardware equipment used in the emailing of
Innotech's public company and mutual fund news alerts. Entheos provides emailing
services for the Company. The director and majority shareholder of Innotech is
also the director and majority shareholder of Entheos. Included in the statement
of operations is a gain on the sale of the transaction of $27,591.
During 2000, the Company charged $144,000 and $100,000 to operations for
management and consulting fees incurred for services rendered by the Chairman
and majority shareholder. Included in accounts payable at December 31, 2001 and
2000 is a payable of $220,667 and $88,000 for these fees. The Company also paid
$22,847 to one of the Company's stockholders for consulting services rendered.
The Company leases approximately 1500 square feet of office space located at
Suite 216, 1628 West 1st Avenue, Vancouver, BC, V6J 1G1. The office is leased
for a period of three years ending August 31, 2003, with an option to renew for
a further three years, from Tajinder Chohan and Kundan S. Rayat, the wife and
father, respectively, of the Company's Chairman, for a lease payment of
approximately $2,450 per month.
ITEM 7: FINANCIAL STATEMENTS
TABLE OF CONTENTS
Independent Auditors' Report.............................................................................. 10
Consolidated Balance Sheets at December 31, 2001 and 2000................................................. 11
Consolidated Statements of Operations for the years ended
December 31, 2001 and 2000................................................................................ 12
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 2001 and 2000................................................................................ 13
Consolidated Statements of Cash Flows for the years ended
December 31, 2001 and 2000................................................................................ 14
Notes to the Consolidated Financial Statements.............................................................15- 20
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Innotech Corporation
We have audited the consolidated balance sheets of Innotech Corporation
(formerly known as Equityalert.com, Inc.) (a Nevada corporation) as of December
31, 2001 and 2000 and the related statements of operations, stockholders' equity
and cash flows for the years then ended. 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 auditing standards generally accepted
in the United States. 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 that 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 consolidated financial position of Innotech
Corporation at December 31, 2001 and 2000, and the consolidated results of their
operations and their cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States.
/s/ Clancy and Co., P.L.L.C.
- -----------------------------
Clancy and Co., P.L.L.C.
Phoenix, Arizona
March 15, 2002
INNOTECH CORPORATION
(formerly known as Equityalert.com, Inc.)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
ASSETS 2001 2000
- ------ ---- ----
Current Assets
Cash and Cash Equivalents $ 623,691 $ 844,626
Accounts Receivable 0 6,875
Marketable Equity Securities (Note 3) 100,004 0
Advances to Related Party (Note 5) 40,500 0
Prepaid Expenses 2,333 0
----- -----
Total Current Assets 766,528 851,501
Property and Equipment, net (Note 4) 28,055 60,053
------ ------
Total Assets $ 794,583 $ 911,554
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 432,566 $ 340,054
Loans from Related Parties (Note 5) 0 42,017
- ------
Total Current Liabilities 432,566 382,071
Commitments and Contingencies (Note 8) - -
Stockholders' Equity
Preferred Stock: $0.001 Par Value; Authorized Shares, 1,000,000;
Issued and Outstanding: None 0 0
Common Stock: $0.00001 Par Value; Authorized Shares, 300,000,000;
Issued and Outstanding: 1,648,081 16 16
Additional Paid In Capital 1,568,932 1,568,932
Other Comprehensive Loss (25,036) 0
Accumulated Deficit (1,181,895) (1,039,465)
----------- -----------
Total Stockholders' Equity 362,017 529,483
------- -------
Total Liabilities and Stockholders' Equity $ 794,583 $ 911,554
======= =======
The accompanying notes are an integral part of these financial statements
INNOTECH CORPORATION
(formerly known as Equityalert.com, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
Year Ended December 31: 2001 2000
---- ----
Revenues $ 1,298,164 $ 1,374,127
Costs of Revenues 981,503 976,680
------- -------
Gross Margin 316,661 397,447
Selling, General and Administrative Expenses 479,164 493,145
------- -------
Operating Loss (162,503) (95,698)
Other Income (Loss)
Interest Income 20,073 37,262
Bad Debt Expenses 0 (25,000)
Gain on Sale of Subsidiary (Note 5) 0 27,591
- ------
Total Other Income (Expense) 20,073 39,853
------ ------
Net Loss Available to Common Stockholders $ (142,430) $ (55,845)
======== ========
Basic and Diluted Loss Per Common Share $ (0.09) $ (0.03)
====== ======
Weighted Average Number of Common Shares
Outstanding: Basic and Diluted 1,648,081 1,648,081
========= =========
The accompanying notes are an integral part of these financial statements
INNOTECH CORPORATION
(formerly known as Equityaler.com, Inc.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
Accumulated
Preferred Common Common Additional Other
Stock Stock Stock Paid In Accumulated Comprehensive
Shares Shares Amount Capital Deficit Loss Total
------ ------ ------ ------- ------- ---- -----
Balance, December 31, 1999 - 1,655,961 $ 17 $ 1,568,931 $ (983,620) - $ 585,328
Common Stock Canceled (7,880) (1) 1 0
Net Loss - (55,845) - (55,845)
----------------------------- - -------------- -------- --------------- --------
- - -
Balance, December 31, 2000 1,648,081 16 1,568,932 (1,039,465) - 529,483
Unrealized Losses on Marketable
Equity Securities (25,036) (25,036)
Net Loss - (142,430) - (142,430)
----------------------------- - --------------- --------- ------------ - ---------
- - -
Balance, December 31, 2001 - 1,648,081 $ 16 $ 1,568,932 $(1,181,895) $ (25,036) $ 362,017
========= ====== ========= ========== ======== =======
The accompanying notes are an integral part of these financial statements.
INNOTECH CORPORATION
(formerly known as Equityalert.com, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
Year Ended December 31: 2001 2000
---- ----
Cash Flows From Operating Activities
Net Loss $ (142,430) $ (55,845)
Adjustments to Reconcile Net Loss to Net Cash Provided By
(Used In) Operating Activities
Revenue Recognized from Services Rendered (82,631) 0
Depreciation 34,981 75,025
Gain on Sale of Subsidiary 0 (27,591)
Changes in Assets and Liabilities
(Increase) Decrease in Accounts Receivable 6,875 (6,875)
(Increase) Decrease in Prepaid Expenses (2,333) 9,074
(Increase) Decrease in Accrued Interest Receivable (500) 0
Increase (Decrease) in Accounts Payable 92,512 315,077
------ -------
Total Adjustments 48,904 364,710
------ -------
Net Cash Flows Provided By (Used In) Operating Activities (93,526) 308,865
Cash Flows From Investing Activities
Purchase of Property and Equipment (2,983) (371,236)
Proceeds from the Sale of Email Solutions, Inc. 0 283,000
Proceeds from the Sale of Marketable Equity Securities 884,255 0
Costs of Marketable Equity Securities Acquired (926,664) 0
Advances to Related Parties (40,000) 0
Advances from Related Parties 0 42,017
Repayments to Related Parties (42,017) 0
Repayments from Related Parties 0 (10,000)
------------ - --------
Net Cash Flows Used In Investing Activities (127,409) (56,219)
Cash Flows From Financing Activities - -
- ------------------------------------
Increase (Decrease) in Cash and Cash Equivalents (220,935) 252,646
Cash and Cash Equivalents, Beginning of Year 844,626 591,980
------- -------
Cash and Cash Equivalents, End of Year $ 623,691 $ 844,626
======= =======
Cash paid for interest and income taxes: - -
The accompanying notes are an integral part of these financial statements.
INNOTECH CORPORATION
(formerly known as Equityalert.com, Inc.)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization. Innotech Corporation (the Company) is a Nevada Corporation with an
authorized capital of 301,000,000 shares of which 300,000,000 shares are
$0.00001 par value common stock and 1,000,000 shares are $0.001 par value
preferred stock.
Nature of Operations. The Company provides online investors real time news
alerts on U.S. and Canadian stocks, mutual fund news and information alerts,
insider trading, SEC filings and IPO information.
Summary of Significant Accounting Policies.
Accounting Method - The Company uses the accrual method of accounting for
financial statement purposes.
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.
Principles of Consolidation - The accompanying consolidated financial statements
include the accounts of the Company and its wholly owned subsidiary,
Equityalert.com, Inc. All significant intercompany transactions and balances
have been eliminated in consolidation.
Cash and Cash Equivalents - The Company considers all highly liquid instruments
purchased with an original maturity of three months or less to be cash
equivalents.
Concentration of Credit Risk - The Company maintains U.S. Dollar cash balances
in Canadian banks that are not insured.
Revenue Recognition - Revenues are derived from the sale of prepaid,
nonrefundable advertising agreements and are recognized over the period the
services are performed, in accordance with Staff Accounting Bulletin No. 101,
"Revenue Recognition In Financial Statements." Additionally, in lieu of cash
payments and in the normal course of operations, the Company trades its
advertising services for shares of common stock in other public companies, which
are primarily over-the-counter bulletin board companies. The Company values the
shares received based on the five-day average closing price prior to the date of
a signed advertising agreement recognizes revenue equal to the fair market value
of the services rendered, but not more than the amount realized from the sales
of those related securities.
Property and Equipment - Property and equipment is stated at cost and is
depreciated under the straight-line method over their estimated useful lives
ranging from three to seven years.
Long-Lived Assets - The Company records impairment losses on long-lived assets
used in operation when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amount.
Advertising Costs - Advertising costs are expensed as incurred. Total
advertising costs charged to operations for 2001 and 2000 were $56,749 and
$129,796, respectively.
Income Taxes - The Company accounts for income taxes under the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes." Under SFAS No. 109, deferred income tax assets and liabilities
are computed for differences between the financial statements and tax bases of
assets and liabilities that will result in taxable or deductible amounts in the
future, based on enacted tax laws and rates applicable to the periods in
INNOTECH CORPORATION
(formerly known as Equityalert.com, Inc.)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
which the differences are expected to affect taxable income. Valuation
allowances are established when necessary, to reduce deferred income tax assets
to the amount expected to be realized.
Earnings Per Share - Basic earnings or loss per share is based on the weighted
average number of common shares outstanding. Diluted earnings or loss per share
is based on the weighted average number of common shares outstanding and
dilutive common stock equivalents. Basic earnings/loss per share is computed by
dividing income/loss (numerator) applicable to common stockholders by the
weighted average number of common shares outstanding (denominator) for the
period. All earnings or loss per share amounts in the financial statements are
basic earnings or loss per share, as defined by SFAS No. 128, "Earnings Per
Share." Diluted earnings or loss per share does not differ materially from basic
earnings or loss per share for all periods presented. Convertible securities
that could potentially dilute basic earnings per share in the future such as
options and warrants are not included in the computation of diluted earnings per
share because to do so would be antidilutive. All per share and per share
information are adjusted retroactively to reflect stock splits and changes in
par value.
Stock-Based Compensation - The Company accounts for stock-based compensation
using the intrinsic value method prescribed in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees." Compensation cost
for stock options, if any, is measured as the excess of the quoted market price
of the Company's stock at the date of grant over the amount an employee must pay
to acquire the stock. SFAS No. 123, "Accounting for Stock-Based Compensation,"
established accounting and disclosure requirements using a fair-value-based
method of accounting for stock-based employee compensation plans. The Company
has elected to remain on its current method of accounting as described above,
and has adopted the disclosure requirements of SFAS No. 123.
Comprehensive Income - The Company includes items of other comprehensive income
by their nature in a financial statement and displays the accumulated balance of
other comprehensive income separately from retained earnings and additional paid
in capital in the equity section of the balance sheet.
Capital Structure - The Company discloses its capital structure in accordance
with SFAS No. 129, "Disclosure of Information about Capital Structure," which
establishes standards for disclosing information about an entity's capital
structure.
Start-up Expenses - The Company expenses start-up costs and organization costs
for financial statement purposes pursuant to AICPA Statement of Position 98-5,
"Reporting on the Costs of Start-up Activities." For income tax purposes, the
Company has elected to treat its organization costs as deferred expenses and
amortize them over a period of sixty months, beginning in the first month the
Company was actively in business, which was January 2000.
Foreign Currency Translation - The Company maintains both U.S. Dollar and a
Canadian Dollar bank account at a financial institution in Canada. Transaction
gains and losses that arise from exchange rate fluctuations on transactions
denominated in a currency other than the functional currency, which is the U.S.
Dollar, are included in the results of operations as incurred. Revenues and
expenses are translated at average exchange rates in effect during each period.
Marketable Equity Securities - The Company has determined that all of its
investment securities are to be classified as available-for-sale in accordance
with SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." Available-for-sale securities are carried at fair value, with the
unrealized gains and losses reported in stockholders' equity under the caption
"Accumulated Other Comprehensive Income (Loss)." Realized gains and losses and
declines in value judged to be other-than-temporary on available-for-sale
securities are included in selling, general, and administrative expenses. The
cost of securities sold is based on the five-day average closing price for the
immediately preceding five days prior to the date an advertising agreement is
signed.
Fair Value of Financial Instruments - SFAS No. 107, "Disclosure about Fair Value
of Financial Instruments,"
INNOTECH CORPORATION
(formerly known as Equityalert.com, Inc.)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
defines the fair value of a financial instrument as the amount at which the
instrument could be exchanged in a current transaction between willing parties.
The fair value of the Company's cash and cash equivalents, accounts receivable,
related party advances and accounts payable amounts approximate their carrying
value.
Reclassification - Certain prior period amounts have been reclassified to
conform to the current year presentation.
Recent Accounting Pronouncements - The Financial Accounting Standards Board
("FASB") has issued the following pronouncements, none of which are expected to
have a significant affect on the financial statements:
SFAS No.141, "Business Combinations." SFAS No. 141 requires that all business
combinations be accounted for under the purchase method of accounting. SFAS No.
141 also changes the criteria for the separate recognition of intangible assets
acquired in a business combination. SFAS No. 141 is effective for all business
combinations initiated after June 30, 2001.
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 addresses
accounting and reporting for intangible assets acquired, except for those
acquired in a business combination. SFAS No. 142 presumes that goodwill and
certain intangible assets have indefinite useful lives.
Accordingly, goodwill and certain intangibles will not be amortized but rather
will be tested at least annually for impairment. SFAS No. 142 also addresses
accounting and reporting for goodwill and other intangible assets subsequent to
their acquisition. SFAS No. 142 is effective for fiscal years beginning after
December 15, 2001.
SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. SFAS No. 143 is effective for financial statements issued for fiscal
years beginning after June 15, 2002.
FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets." This statement addresses financial accounting and reporting
for the impairment or disposal of long-lived assets. SFAS No. 144 is effective
for financial statements issued for fiscal years beginning after December 15,
2001, and interim periods within those fiscal years.
Pending Accounting Pronouncements - It is anticipated that current pending
accounting pronouncements will not have an adverse impact on the financial
statements of the Company.
NOTE 2 - SUBSIDIARIES
On July 31, 2001, the Company filed articles of incorporation with the State of
Nevada to form Equityalert.com, Inc., a wholly owned subsidiary, through which
the operations of its online business, www.equityalert.com, are conducted.
On September 6, 2000, the Company filed articles of incorporation in the State
of Nevada to form a wholly owned subsidiary, Email Solutions, Inc., and
subsequently transferred a portion of the Company's assets, consisting of
software and computer hardware equipment used in the emailing of the Company's
public company and mutual fund news alerts, to the newly formed subsidiary at
net book value. On September 15, 2000, the Company sold 100% of the wholly owned
subsidiary to Entheos Technologies, Inc., for $283,000. See Note 5.
INNOTECH CORPORATION
(formerly known as Equityalert.com, Inc.)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTE 3 - MARKETABLE EQUITY SECURITIES
Marketable equity securities consist of common stock investments in public
corporations traded on the over-the-counter bulletin board. The estimated fair
value of marketable equity securities held at December 31, 2001 are based on
published closing prices.
The following is a summary of marketable equity securities classified as
"available-for-sale" securities as required by SFAS No. 115:
Cost $ 125,040
Gross Unrealized Losses (25,036)
-------
Estimated Fair Value $ 100,004
=======
For the year ended December 31, 2001, the Company recorded realized losses of
$42,409, which is included in selling, general and administrative expenses.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31:
2001 2000
---- ----
Computer Hardware $ 70,135 $ 70,135
Computer Software 12,139 12,139
Furniture and Fixtures 10,831 10,831
------ ------
Total 93,105 93,105
Less Accumulated Depreciation 65,050 33,052
------ ------
Net Book Value $ 28,055 $ 60,053
====== ======
Depreciation expense charged to operations during 2001 and 2000 was $34,981 and
$75,025, respectively.
NOTE 5 - RELATED PARTY TRANSACTIONS
Advances to related parties of $40,500 at December 31, 2001 represents funds
advanced to a shareholder bearing interest at 4.75% per annum and due in full on
September 26, 2002.
Loans from related parties of $42,017 at December 31, 2000 represent unsecured
advances from the director and majority shareholder. The amounts bear no
interest and are due on demand. The amount was paid in full in March 2001.
On September 15, 2000, the Company sold 100% of the voting common stock of its
wholly-owned subsidiary, Email Solutions, Inc., a Nevada Corporation, to Entheos
Technologies, Inc., for $283,000. Email Solutions, Inc.'s assets consist
principally of software and computer hardware equipment used in the emailing of
Innotech's public company and mutual fund news alerts. Entheos provides emailing
services for the Company. The director and majority shareholder of Innotech is
also the director and majority shareholder of Entheos. Included in the statement
of operations is a gain on the sale of the transaction of $27,591.
During 2001 and 2000, the Company charged $144,000 and $100,000 to operations
for management and consulting fees incurred for services rendered by the
Chairman and majority shareholder. Included in accounts payable at
INNOTECH CORPORATION
(formerly known as Equityalert.com, Inc.)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
December 31, 2001 and 2000 is a payable of $220,667 and $88,000 for these fees.
The Company also paid $22,847 to one of the Company's stockholders for
consulting services rendered.
The Company also rents office space from the wife and father of the Company's
Chairman, for a lease payment of approximately $2,450 per month. See Note 8.
NOTE 6- INCOME TAXES
There is no current or deferred tax expense for the years ended December 31,
2001 and 2000, due to the Company's loss position. The Company has fully
reserved for any benefits of these losses. The deferred tax consequences of
temporary differences in reporting items for financial statement and income tax
purposes are recognized, as appropriate. Realization of the future tax benefits
related to the deferred tax assets is dependent on many factors, including the
Company's ability to generate taxable income within the net operating loss
carryforward period. Management has considered these factors in reaching its
conclusion as to the valuation allowance for financial reporting purposes. The
income tax effect of temporary differences comprising the deferred tax assets
and deferred tax liabilities on the accompanying consolidated balance sheets is
a result of the following:
Deferred Taxes 2001 2000
- -------------- ---- ----
NOL Carryforwards $ 177,481 $ 78,732
Start-Up Costs 198,134 264,178
Nondeductible Expenses 0 (16,574)
----------- ----------
Total Deferred Tax Assets 375,615 326,336
Valuation Allowance (375,615) (326,336)
------- --------
Net Deferred Tax Assets $ 0 $ 0
=========== ==========
The net change in the valuation allowance for 2001 was an increase of $49,279
and for 2000 was a decrease of $3,886, which are principally the result of net
operating loss carryforwards and start-up costs.
A reconciliation between the statutory federal income tax rate (34%) and the
effective rate of income tax expense for each of the years during the period
ended December 31 follows:
2001 2000
---- ----
Statutory Federal Income Tax Rate (34.0)% (34.0)%
Valuation Allowance 34.0 % 34.0 %
---- ----
Effective Income Tax Rate 0.0 % 0.0 %
The Company has available net operating loss carryforwards of approximately
$500,000 for tax purposes to offset future taxable income which expire through
2021. Pursuant to the Tax Reform Act of 1986, annual utilization of the
Company's net operating loss carryforwards may be limited if a cumulative change
in ownership of more than 50% is deemed to occur within any three-year period.
NOTE 7- STOCK OPTIONS
The Company has four stock option plans that provide for the granting of stock
options to officers and key employees as follows: 1997 Stock Option Plan (SOP),
10,000 shares of authorized common stock; 1998 SOP 4,000,000 shares of
authorized common stock; 1999 SOP 10,000,000 shares of authorized common stock;
and the 2001 SOP, 20,000,000 shares of authorized common stock, all of which
expire ten years from the date of grant. The objectives of these plans include
attracting and retaining the best personnel, providing for additional
performance incentives, and promoting the success of the Company by providing
employees the opportunity to acquire common stock. Total options outstanding at
December 31, 2001 and 2000 were 479,360 at an option price of $2.00 per share.
INNOTECH CORPORATION
(formerly known as Equityalert.com, Inc.)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
The Company accounts for stock-based compensation using the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," under which no compensation cost for stock options
is recognized for stock options awards granted at or above fair market value.
Had compensation expense for the Company's stock-based compensation plans been
determined under SFAS No. 123, based on the fair market value at the grant
dates, the Company's pro forma net loss and pro forma net loss per share would
have been reflected as follows at December 31:
Net Loss 2001 2000
---- ----
As reported $ (142,430) $ (55,845)
Pro forma $ (303,018) $ (216,433)
Net Loss Per Share
As reported $ (0.09) $ (0.03)
Pro forma $ (0.18) $ (0.13)
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumption used for those options granted: dividend yield of 0%, expected
volatility of 273%, risk-free interest rate of 5%, and an expected life of 10
years.
NOTE 8 - COMMITMENTS
The Company leases office space located at 1628 West 1st Avenue, Suite 216,
Vancouver, B.C., for approximately $2,450 per month, for a period of three
years, with an option to renew for a further three years from the wife and
father of the Company's Chairman. Rent expense charged to operations for 2001
and 2000 was $28,824 and $10,716, respectively.
Future minimum rental commitments are: (2002:$28,000 and 2003:$18,667.)
NOTE 9-COMMON STOCK
On July 12, 2001, the shareholders approved a 25:1 reverse split of the
Company's common stock and approved an increase in the authorized common stock
from 100,000,000 to 300,000,000 common shares with the par value remaining the
same.
ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is certain information regarding each of the directors and
officers of the Company:
BHUPINDER S. MANN (Age 46). President and Chief Executive Officer, Director.
Between 1986 and 1989, Mr. Mann became engaged in the commodities and futures
markets as a registered broker for Evergreen Futures. During the period between
1989 and 1995, Mr. Mann served as the President of First College of Commodities,
which provided training and educational services. In 1995, Mr. Mann was
responsible for sales at Radd Multimedia and later in the year for investor
relations at Aqua One Beverage. Between 1996 and 1999, Mr. Mann served as the
Manager of investor relations for Enterprise Technologies, Inc., a healthcare
technology service company. Mr. Mann graduated in 1978 from Nottingham
University with a B.A. Hons. In Political Science. Mr. Mann has served as the
Company's President, Chief Executive Officer and Director since January 21st,
2000.
HARMEL S. RAYAT (Age 40). Chairman, Director. Between January 1993 and April
2001, Mr. Rayat served as the president of Hartford Capital Corporation, a
company that provides financial consulting services to emerging growth
corporations. Since January 2002, Mr. Rayat has been president of Montgomery
Asset Management Corporation, a privately held firm providing financial
consulting services to emerging growth corporations. Mr. Rayat is also a
Director of Entheos Technologies, Inc., Enterprise Technologies, Inc. and Zeta
Corporation. Mr. Rayat has served as a Director of the Company since March 18th,
1996.
JASBINDER CHOHAN (Age 39). Secretary, Treasurer, Director. During the period
from May 1993 to January 1995, Ms. Chohan did general accounting work for Elton
Advertising. Since January 1995, she has been employed as an accounts manager at
Graphic Packaging Canada. Ms. Chohan has served as a Director and the Company's
Secretary and Treasurer since April 11th, 2001.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's directors, officers and persons who own more than
10 percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission ("the Commission"). Directors, officers and greater than 10 percent
beneficial owners are required by applicable regulations to furnish the Company
with copies of all forms they file with the Commission pursuant to Section
16(a). Based solely upon a review of the copies of the forms furnished to the
Company, the Company believes that during fiscal 2001 the filing requirements
applicable to its directors and executive officers were not satisfied.
ITEM 10: EXECUTIVE COMPENSATION
Remuneration and Executive Compensation
The following table shows, for the three-year period ended December 31, 2001,
the cash compensation paid by the Company, as well as certain other compensation
paid for such year, to the Company's Chief Executive Officer and the Company's
other most highly compensated executive officers. Except as set forth on the
following table, no executive officer of the Company had a total annual salary
and bonus for 2001 that exceeded $100,000.
Summary Compensation Table
Securities
Underlying
Name and Options All Other
Principal Position Year Salary Bonus Other Granted Compensation
- ------------------ ---- ------ ----- ----- ------- ------------
Bhupinder S. Mann 2001 $88,483 $0 $0 0 $0
CEO, President, Director 2000 $73,446 $0 $0 0 $0
1999 $0 $0 $0 0 $0
Harmel S. Rayat* 2001 $12,000 $0 $23,894 0 $0
Chairman, Director 2000 $12,000 $0 $0 0 $0
1999 $0 $0 $0 0 $0
Jasbinder Chohan 2001 $0 $0 $0 0 $0
Secretary, Treasurer, Director 2000 $0 $0 $0 0 $0
1999 $0 $0 $0 0 $0
*During 2001 and 2000, the Company accrued $144,000 and $100,000 to operations
for management and consulting fees incurred for services rendered. Of the
$100,000 accrued in 2000, $12,000 was paid in 2000 and $12,000 in 2001.
Stock Option Grants in 2001
Shown below is further information regarding employee stock options awarded
during 2001 to the named officers and directors:
Number of % of Total
Securities Options
Underlying Granted to Exercise Expiration
Name Options Employees Price Date
- ---- ------- --------- ----- ----
None
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 15th, 2002, the beneficial ownership
of the Company's Common Stock by each director and executive officer of the
Company and each person known by the Company to beneficially own more than 5% of
the Company's Common Stock outstanding as of such date and the executive
officers and directors of the Company as a group.
Number of Shares
Person or Group of Common Stock Percent
- --------------- --------------- -------
Harmel S. Rayat (1) 1,167,110 70.8%
216-1628 West First Avenue
Vancouver, B.C. V6J 1G1 Canada
Bhupinder S. Mann 8,080 0.5%
216-1628 West First Avenue
Vancouver, B.C. V6J 1G1 Canada
Jasbinder Chohan 32,335 2.0%
216-1628 West First Avenue
Vancouver, B.C. V6J 1G1 Canada
Directors and Executive Officers 1,207,525 73.3%
as a group (3 persons)
(1) Includes 320,000 shares which may be acquired pursuant to options granted
and exercisable under the Company's 1998 and 1999 option plans and 47,110 shares
held by Tajinder Chohan, Mr. Rayat's wife. Additionally, other members of Mr.
Rayat's family hold 35,295 shares and 40,000 shares which may be acquired
pursuant to options granted and exercisable under the Company's 1998 option
plan. Mr. Rayat disclaims beneficial ownership of the shares beneficially owned
by his wife and other family members.
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Advances to related parties of $40,500 at December 31, 2001 represents funds
advanced to a shareholder bearing interest at 4.75% per annum and due in full on
September 26, 2002.
Loans from related parties of $42,017 at December 31, 2000 represent unsecured
advances from the director and majority shareholder. The amounts bear no
interest and are due on demand. The amount was paid in full in March 2001.
On September 15, 2000, the Company sold 100% of the voting common stock of its
wholly-owned subsidiary, Email Solutions, Inc., a Nevada Corporation, to Entheos
Technologies, Inc., for $283,000. Email Solutions, Inc.'s assets consist
principally of software and computer hardware equipment used in the emailing of
Innotech's public company and mutual fund news alerts. Entheos provides emailing
services for the Company. The director and majority shareholder of Innotech is
also the director and majority shareholder of Entheos. Included in the statement
of operations is a gain on the sale of the transaction of $27,591.
During 2001 and 2000, the Company charged $144,000 and $100,000 to operations
for management and consulting fees incurred for services rendered by the
Chairman and majority shareholder. Included in accounts payable at December 31,
2001 and 2000 is a payable of $220,667 and $88,000 for these fees. The Company
also paid $22,847 to one of the Company's stockholders for consulting services
rendered.
The Company leases office space located at 1628 West 1st Avenue, Suite 216,
Vancouver, B.C., for approximately $2,450 per month, for a period of three
years, with an option to renew for a further three years from the wife and
father of the Company's Chairman. Rent expense charged to operations for 2001
and 2000 was $28,824 and $10,716, respectively.
Future minimum rental commitments are $28,000 for 2002 and 18,667 for 2003.
PART IV
ITEM 13: EXHIBITS AND REPORTS ON FORM 8-K
The exhibits listed in the accompanying index to exhibits are filed as part of
this Annual Report on Form 10KSB.
No reports on Form 8-K were filed during the Company's fourth fiscal quarter.
SIGNATURES
Pursuant to the requirements of Sections 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 on this 15th day of
March, 2002.
INNOTECH CORPORATION
/s/ Bhupinder Mann
------------------
By: Bhupinder Mann
CEO and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Harmel S. Rayat Director and Chairman March 15, 2002
- ------------------------ --------------------- --------------
Harmel S. Rayat
/s/ Jasbinder Chohan Director, Secretary/Treasurer March 15, 2002
- ------------------------- ----------------------------- --------------
Jasbinder Chohan