================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998 ------------------ [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________ TO ______________ COMMISSION FILE NUMBER: 0-28420 --------- Integ Incorporated ------------------ (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Minnesota 41-1670176 --------- ---------- (State of Incorporation) (I.R.S. Employer Identification No.) 2800 Patton Road, St. Paul, MN 55113 ------------------------------- ------------ (Address of principal executive offices) (Zip Code) Telephone Number: (651) 639-8816 --------------------------------- (Registrant's telephone number, including area code) 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 the filing requirements for at least the past 90 days. Yes _X_ No ___ As of October 30, 1998, the registrant had 9,526,267 shares of $.01 par value common stock issued and outstanding. ================================================================================ INTEG INCORPORATED INDEX ----- PART I. FINANCIAL INFORMATION Page ---- Item 1. Financial Statements Balance Sheets as of September 30, 1998 and December 31, 1997 3 Statements of Operations for the three and nine months ended September 30, 1998 and 1997 and for the period from April 3, 1990 (inception) through September 30, 1998 4 Statements of Cash Flows for the three and nine months ended September 30, 1998 and 1997 and for the period from April 3, 1990 (inception) through September 30, 1998 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION Item 2. Changes in Securities (Use of proceeds from public offering) 11 Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURES 13 2 INTEG INCORPORATED (A Development Stage Company) BALANCE SHEETS SEPTEMBER 30 December 31 1998 1997 ------------ ------------ (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 12,736,009 $ 21,776,757 Prepaid expenses 113,707 137,037 ------------ ------------ Total current assets 12,849,716 21,913,794 ------------ ------------ Furniture and equipment 9,732,176 8,464,943 Less accumulated depreciation (2,441,419) (1,644,051) ------------ ------------ 7,290,757 6,820,892 Other assets 151,836 481,607 ------------ ------------ TOTAL ASSETS $ 20,292,309 $ 29,216,293 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 1,263,094 $ 1,384,551 Current portion of capital lease obligations 164,422 155,901 Current portion of long-term debt 1,115,245 799,913 ------------ ------------ Total current liabilities 2,542,761 2,340,365 ------------ ------------ Long-term liabilities: Capital lease obligations, less current portion 35,859 159,673 Long-term debt, less current portion 2,683,654 2,870,061 ------------ ------------ Total long-term liabilities 2,719,513 3,029,734 ------------ ------------ Shareholders' equity: Common Stock 95,263 93,667 Additional paid-in capital 54,538,629 54,518,671 Deficit accumulated during the development stage (39,479,175) (30,438,348) ------------ ------------ 15,154,717 24,173,990 Deferred compensation (124,682) (327,796) ------------ ------------ Total shareholders' equity 15,030,035 23,846,194 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 20,292,309 $ 29,216,293 ============ ============ 3 INTEG INCORPORATED (A Development Stage Company) STATEMENT OF OPERATIONS (UNAUDITED) Period from Three Months Ended Nine Months Ended April 3, 1990 September 30 September 30 (Inception) to ---------------------------- ---------------------------- September 30 1998 1997 1998 1997 1998 ------------ ------------ ------------ ------------ ------------ OPERATING EXPENSES: Research and development $ 1,092,630 $ 1,176,786 $ 4,395,774 $ 3,472,858 $ 20,481,923 Manufacturing development 472,628 614,512 1,755,799 1,753,453 6,752,988 Clinical and regulatory 400,028 285,784 1,023,226 861,554 3,392,600 General and administrative 350,485 506,436 1,401,789 1,558,530 8,205,973 Sales and marketing 30,393 179,675 372,741 628,194 2,568,591 ------------ ------------ ------------ ------------ ------------ OPERATING LOSS (2,346,164) (2,763,193) (8,949,329) (8,274,589) (41,402,075) ------------ ------------ ------------ ------------ ------------ OTHER INCOME (EXPENSE): Interest income 197,275 378,018 722,785 1,217,111 4,261,663 Interest expense (303,321) (150,222) (908,931) (463,149) (2,207,511) Other (net) -- -- 94,648 -- (131,252) ------------ ------------ ------------ ------------ ------------ (106,046) 227,796 (91,498) 753,962 1,922,900 ------------ ------------ ------------ ------------ ------------ NET LOSS FOR THE PERIOD AND DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE $ (2,452,210) $ (2,535,397) $ (9,040,827) $ (7,520,627) $(39,479,175) ============ ============ ============ ============ ============ NET LOSS PER SHARE: Basic and diluted ($0.26) ($0.27) ($0.96) ($0.81) ($14.61) ============ ============ ============ ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: Basic and diluted 9,517,034 9,312,865 9,459,875 9,296,197 2,701,337 ============ ============ ============ ============ ============ 4 INTEG INCORPORATED (A Development Stage Company) STATEMENTS OF CASH FLOWS Period from Three Months Ended Nine Months Ended April 3, 1990 September 30 September 30 (Inception) to --------------------------- --------------------------- September 30 1998 1997 1998 1997 1998 --------------------------- --------------------------- ------------ OPERATING ACTIVITIES: Net loss $ (2,452,210) $ (2,535,397) $ (9,040,827) $ (7,520,627) $(39,479,175) Adjustments to reconcile net loss to cash used in operating activities: Depreciation 272,596 228,546 798,034 569,305 2,478,250 Deferred compensation amortization 19,016 73,622 71,243 221,475 1,068,772 Amortization of loan committment fee 96,207 -- 293,029 77,463 543,103 (Gain) Loss on sale of equipment and deposit write-off -- (537) -- (537) 95,645 Value of options and warrants related to debt financing, lease guarantee, extension of options and consulting services 4,567 5,750 13,779 17,251 384,915 Changes in operating assets and liabilities: Receivables -- 30,596 -- 85,718 (28,829) Prepaid expenses and other assets 6,418 (35,911) 24,264 (6,446) (205,743) Accounts payable and accrued expenses (101,674) (178,415) (121,457) (530,290) 1,263,094 ------------ ------------ ------------ ------------ ------------ Net cash used in operating activities (2,155,080) (2,411,746) (7,961,935) (7,086,688) (33,879,968) ------------ ------------ ------------ ------------ ------------ INVESTING ACTIVITIES: Purchase of furniture and equipment (107,159) (930,101) (1,269,010) (3,936,271) (9,063,725) Proceeds from sale of furniture and equipment 1,111 3,750 1,111 3,750 47,940 ------------ ------------ ------------ ------------ ------------ Net cash used in investing activities (106,048) (926,351) (1,267,899) (3,932,521) (9,015,785) ------------ ------------ ------------ ------------ ------------ FINANCING ACTIVITIES: Proceeds from sale of Convertible Preferred Stock -- -- -- -- 22,789,732 Proceeds from bridge loan debt -- -- -- -- 2,900,000 Proceeds from borrowings under loan agreement -- 1,246,285 754,989 2,995,879 5,103,142 Payments on long-term debt (221,072) (124,875) (604,034) (256,719) (1,134,897) Payments on capital lease obligations (39,412) (35,907) (115,293) (106,016) (493,784) Proceeds from sale of Common Stock 71,225 18,085 153,424 39,397 26,467,569 ------------ ------------ ------------ ------------ ------------ Net cash provided by financing activities (189,259) 1,103,588 189,086 2,672,541 55,631,762 ------------ ------------ ------------ ------------ ------------ (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (2,450,387) (2,234,509) (9,040,748) (8,346,668) 12,736,009 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 15,186,396 27,767,449 21,776,757 33,879,608 -- ------------ ------------ ------------ ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 12,736,009 $ 25,532,940 $ 12,736,009 $ 25,532,940 $ 12,736,009 ============ ============ ============ ============ ============ 5 INTEG INCORPORATED (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (1) BASIS OF PRESENTATION The accompanying financial statements, which are unaudited except for the balance sheet as of December 31, 1997, have been prepared in accordance with instructions to Form 10-Q and do not include all the information and notes required by Generally Accepted Accounting Principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the financial statements and accompanying notes from the Company's Annual Report on Form 10-K for the year ended December 31, 1997 filed with the Securities and Exchange Commission. (2) NET LOSS PER SHARE Net loss per share is computed using the weighted average number of shares of common stock outstanding during the periods presented. In 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share. Statement 128 replaced the calculation of primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants and convertible securities. Diluted earnings per share is very similar to the previously reported fully diluted earnings per share. All earnings per share amounts for all periods have been presented, and where appropriate, restated to conform to the Statement 128 requirements. (3) EQUIPMENT LOAN AGREEMENT During 1996, the Company entered into an equipment loan agreement which provides for borrowings up to $12.5 million to finance the purchase of equipment and fixtures including automated manufacturing equipment and tooling. Loans are paid back monthly over a four year period. The obligation of the lender to make additional loans expires December 31, 1998. The Company has borrowed a total of $5.1 million under this agreement as of September 30, 1998. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CAUTIONARY STATEMENT This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this Form 10-Q and in future filings by the Company with the Securities and Exchange Commission, in the Company's press releases and in oral statements made with the approval of an authorized executive officer of the Company, the words or phrases "believes," "anticipates," "expects," "intends," "will likely result," "estimates," "projects" or similar expressions are intended to identify such forward-looking statements, but are not the exclusive means of identifying such statements. These forward-looking statements involve risks and uncertainties that may cause the Company's actual results to differ materially from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, the following: risks associated with the development of a new technology; dependence on the LifeGuide System and the uncertainty of market acceptance; history of operating losses and expectation of future losses; limited clinical testing and sales and marketing experience; uncertainty of obtaining Food and Drug Administration clearances; heightened competition and risk of technological obsolescence; risks associated with the lack of manufacturing capability and dependence on contract manufacturers and suppliers; risks associated with the company's dependence on proprietary technology, including those related to adequacy of patent and trade secret protection; risks associated with retaining key personnel and attracting additional qualified skilled personnel; and the risks associated with raising additional funds. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to revise any forward-looking statements in order to reflect events or circumstances after the date of such statements. Readers are urged to carefully review and consider the various disclosures made by the Company in this report and in the Company's other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect the Company's business. Such forward- looking statements are qualified in their entirety by the cautions and risk factors set forth under "Cautionary Statement" filed as Exhibit 99.1 to this Form 10-Q. GENERAL Integ, a development stage company, was incorporated on April 3, 1990 to develop the LifeGuide System, a next generation, hand-held glucose monitoring product for use by people with diabetes that avoids the pain and blood associated with conventional "finger-stick" technologies. Utilizing the Company's proprietary interstitial fluid sampling technology, the LifeGuide System will allow people with diabetes to frequently self-monitor their glucose levels without repeatedly enduring the pain of lancing their fingers to obtain a blood sample. From inception through September 30, 1998, the Company has incurred losses totaling $39.5 million, consisting of $20.5 million of research and development expenses, $8.2 million of general and administrative expenses, $6.8 million of manufacturing development expenses and $4 million of other expenses net of interest income. The Company's activities have consisted primarily of research and product development, product design, and development of the manufacturing equipment and processes and marketing strategies needed for the introduction of the LifeGuide System. The Company has 7 generated no revenue and has sustained significant operating losses each year since inception. The Company expects such losses to continue for the next several years. Based on the results of a large-scale internal study, the Company announced in August 1998 that it would be replacing the LifeGuide infrared measurement system with an alternate proven measurement technology. Furthermore, the Company announced that it would explore potential corporate alliances that could expedite this change. As a result of this decision, the Company restructured in August to reduce the cash burn rate and the financial statements for the three month period ended September 30, 1998 reflect this reduction. The Company's future success is entirely dependent upon the successful development, commercialization and market acceptance of the LifeGuide System, the development of which is ongoing and the complete efficacy of which has not yet been demonstrated. The Company is currently focused on the research and development activities necessary to modify the current design in order for the LifeGuide System to meet the Company's product specifications. RESULTS OF OPERATIONS Comparison of Three and Nine Months Ended September 30, 1998 and 1997 General: The Company's net loss totaled $2,452,210 and $9,040,827 during the three and nine months ended September 30, 1998, as compared to $2,535,397 and $7,520,627 during the same periods in 1997. The Company expects net losses to continue for the next several years. Research and development expenses: Research and development expenses decreased 8% to $1,092,630 during the three months ended September 30, 1998 from $1,176,786 during the same period in 1997. This decrease was primarily due to decreased staffing costs ($141,000) as well as reductions in prototype expenses ($138,000). The impact of these decreases was partially offset by increases in the amount of pilot plant costs allocated to research and development ($97,000) and the one-time charge for the workforce reduction ($93,000). For the first nine months of 1998, research and development expenses increased 26% to $4,395,774, up from $3,472,858 during the first nine months of 1997. The year- to-date increase in research and development expenses is a combination of pilot plant costs allocated to research and development ($616,000), increases in consulting and contract expenses ($467,000), the one-time charge for the workforce reduction ($188,000) and increased staffing costs ($50,000). These were offset by decreases in prototype expenses ($347,000) and depreciation expense ($27,000). Manufacturing development expenses: Manufacturing development expenses decreased 30% to $472,628 during the three months ended September 30, 1998 from $614,512 during the same period in 1997. The decrease in manufacturing development expenses is primarily attributable to decreased staffing costs ($112,000), the allocation of pilot plant costs to research and development ($97,000), decreased travel expenses ($37,000) and decreased prototype tooling expenses ($23,000). These decreases were partially offset by increases in depreciation expense ($79,000) and samples and prototype expenses ($62,000). Manufacturing development expenses increased slightly to $1,755,799 during the nine months ended September 30, 1998 from $1,753,453 during the same period in 1997. There were increases in samples and prototype expenses ($447,000), depreciation expense ($275,000) as well as the one-time charge for the workforce reduction ($78,000). These increases were partially offset by the allocation of pilot plant costs to research and development ($616,000) as well as decreases in staffing costs ($89,000) and prototype tooling expenses ($74,000). 8 Clinical and regulatory expenses: Clinical and regulatory expenses increased 40% to $400,028 during the three months ended September 30, 1998 from $285,784 during the same period in 1997. This increase is primarily attributable to the one-time charge for the workforce reduction ($183,000) partially offset by decreased staffing costs ($36,000) and recruitment expenses ($8,000). For the first nine months of 1998, clinical and regulatory expenses increased 19% to $1,023,226 from $861,554 during the same period in 1997. This increase is primarily the result of the one-time charge for the workforce reduction ($222,000) offset by decreases in recruitment ($41,000) and travel ($24,000) expenses. General and administrative expenses: General and administrative expenses decreased 45% to $350,485 during the three months ended September 30, 1998 from $506,436 during the same period in 1997. This decrease is primarily attributable to decreased staffing costs ($150,000), bad debt expense recorded in the third quarter of 1997 ($29,000) and decreases in recruitment expenses ($16,000). These decreases were partially offset by increases in legal and audit expenses ($23,000) as well as the one-time charge for the workforce reduction ($12,000). General and administrative expenses decreased 11% to $1,401,789 for the nine months ended September 30, 1998 from $1,558,530 during the same period in 1997. This decrease is primarily due to decreased staffing costs ($284,000) which were partially offset by increases in legal and audit expenses ($56,000), recruitment expenses ($52,000) and the one-time charge for the workforce reduction ($28,000). Sales and marketing expenses: Sales and marketing expenses decreased 491% to $30,393 during the three months ended September 30, 1998 from $179,675 during the same period in 1997. This decrease was the result of decreases in staffing costs ($104,000), advertising and promotion expenses ($18,000) and consulting expenses ($17,000). For the first nine months of 1998, sales and marketing expenses decreased 69% to $372,741 from $628,194 during the first nine months of 1997. This decrease was primarily due to decreases in staffing costs ($228,000), advertising and promotion expenses ($62,000), website development expenses ($50,000), consulting expenses ($38,000) and travel expenses ($15,000). These decreases were partially offset by the one-time charge for the workforce reduction ($173,000). Interest income: Interest income decreased to $197,275 and $722,785 for the three and nine month periods ended September 30, 1998, compared to $378,018 and $1,217,111 during the comparable 1997 periods. The decrease resulted from lower average balances of cash and cash equivalents. Interest expense: Interest expense increased to $303,321 and $908,931 for the three and nine month periods ended September 30, 1998, compared to $150,222 and $463,149 for the same periods in 1997. The increase in interest expense is attributable to increased borrowings against the equipment loan agreement signed in 1996. Approximately $5.1 million was borrowed as of September 30, 1998 as compared to $4.3 million as of September 30, 1997. Other income: Other income totaled $94,648 for the nine months ended September 30, 1998. These amounts primarily consisted of a receivable written off in a prior year which was paid in full ($26,000) and money received from the state of Minnesota for a sales tax refund claim filed for prior years ($66,000). LIQUIDITY AND CAPITAL RESOURCES The Company's operations since inception have been funded by net proceeds from the sale of Common and Preferred Stock totaling approximately $52 million and proceeds from borrowing under an equipment loan agreement totaling approximately $5.1 million. As of September 30, 1998 the 9 Company had cash and cash equivalents of approximately $12.7 million and working capital of $10.3 million. The Company believes that its current cash balances, when the impact of the reduction in headcount implemented in August is taken into account, will be sufficient to fund its operations until sometime in mid 2000. The Company's future liquidity and capital requirements will depend on numerous factors, including when or if the performance of the LifeGuide System meets the required performance specifications, the extent to which the Company's LifeGuide System gains market acceptance, the timing of regulatory actions regarding the LifeGuide System, the costs and timing of expansion of sales, marketing and manufacturing activities, the results of clinical trials and competition. See Exhibit 99.1 to this Form 10-Q for a more detailed description of the factors that may affect the Company's future liquidity and capital requirements. GENERAL DESCRIPTION OF THE YEAR 2000 ISSUE AND THE NATURE AND EFFECTS OF THE YEAR 2000 ON INFORMATION TECHNOLOGY (IT) AND NON-IT SYSTEMS The Year 2000 Issue is the result of computer programs that were written using two digits rather than four to define the applicable year. Any of the Company's computer programs or hardware that have date-sensitive software or embedded chips may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices, or engage in similar normal business activities. The Company's plan to resolve the Year 2000 Issue involves the following four phases: assessment, remediation, testing and implementation. To date, the Company has completed its assessment of 65% of its systems that could be significantly affected by the Year 2000. Assessments will be completed by the end of the year on the remaining systems. The completed assessments indicated that one of the Company's network servers will need to be upgraded to be compliant. The Company's phone system as well as the shipping computer system will also need to be upgraded. For its information technology (IT) exposures, the Company plans on completing the remediation phase by the end of the year. Once software is replaced, the Company intends to begin testing and implementation. The remediation of operating equipment (non-IT) is expected to be completed by April 15, 1999, followed by verification testing which the Company expects to complete by June 30, 1999. The Company is in the process of gathering information about the Year 2000 compliance status of its significant suppliers and subcontractors (external agents). This assessment will be completed by the end of the year. The inability of external agents to complete their Year 2000 resolution process in a timely fashion could materially impact the Company. The potential effect on the Company of non-compliance by external agents has not yet been determined. The Company will utilize both internal and external resources to reprogram or replace, test and implement its software and operating equipment for Year 2000 modifications. The total cost of the Year 2000 project has not yet been determined. To date, the Company has incurred no expense related to the Year 2000 project. Management of the Company believes it has an effective program in place to resolve the Year 2000 issue in a timely manner. As noted above, the Company has not yet completed all necessary phases of its Year 2000 program. In the event that the Company does not complete any additional phases, the 10 Company would be unable to take customer orders or manufacture and ship products after January 1, 2000. In addition, disruptions in the economy generally resulting from Year 2000 issues could also materially adversely affect the Company. The Company currently has no contingency plans in place in the event it does not complete all phases of its Year 2000 program. The Company plans to evaluate the status of its efforts in June 1999 to determine whether such a plan is necessary. II. OTHER INFORMATION Item 2: Changes in Securities (Use of proceeds from public offering) The net offering proceeds to the Company from its initial public offering in 1996, after deducting expenses, were approximately $26.1 million. The Company has used the net offering proceeds to the Company for the following purposes in the approximate amounts set forth below: Investment in short-term, interest bearing securities primarily investment grade commercial paper $12,680,000 and money market funds Capital expenditures 2,680,000 Research and development and clinical and regulatory preparation 6,775,000 Manufacturing scale-up and marketing activities 2,815,000 Working capital and other general corporate purposes 1,150,000 ----------- Total use of proceeds $26,100,000 ----------- Except for officer compensation and relocation payments totaling $1,198,887 in the aggregate, director compensation totaling $143,500 in the aggregate, and consulting fees paid to a director totaling $91,125, none of such payments were paid directly or indirectly to (i) officers or directors of the Company or their affiliates, (ii) persons owning 10% or more of the Company's equity securities or (iii) affiliates of the Company. 11 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits filed herewith. 3.1 Amended and Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-1 (SEC File No. 333-4352)). 3.2 Amended Bylaws of the Company (incorporated by reference to Exhibit 3.3 to the Company's Registration Statement of Form S-1 (SEC File No. 333-4352)). 10.1 Integ Incorporated 1994 Long-Term Incentive and Stock Option Plan, as revised and restated June 17, 1998. 10.2 Integ Incorporated 1996 Directors' Stock Option Plan, as revised and restated June 17, 1998. 10.3 Separation Agreement and General Release between Katia P. Breslawec and the Company. 27 Financial Data Schedule. 99.1 Cautionary Statement. (b) No reports on Form 8-K were filed during the quarter ended September 30, 1998. 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INTEG INCORPORATED (Registrant) Date: November 5, 1998 By: /s/ Susan L. Critzer -------------------- Susan L. Critzer Interim President and Interim Chief Financial Officer (principal executive officer, principal financial and accounting officer) 13 EXHIBIT INDEX Exhibit Description - ------- ----------- 10.1 Integ Incorporated 1994 Long-Term Incentive and Stock Option Plan, as revised and restated June 17, 1998. 10.2 Integ Incorporated 1996 Directors' Stock Option Plan, as revised and restated June 17, 1998. 10.3 Separation Agreement and General Release between Katia P. Breslawec and the Company. 27. Financial Data Schedule (Electronically Filed). 99.1 Cautionary Statement.