INTEGRAL TECHNOLOGIES INC /CN/, 424B3, 2000-09-29

INTEGRAL TECHNOLOGIES INC /CN/
424B3, 2000-09-29
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<PAGE> 1
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-41938

Prospectus Supplement No. 1
Dated September 28, 2000 (to Prospectus dated August 9, 2000)

INTEGRAL TECHNOLOGIES, INC.

This Prospectus Supplement is part of the Prospectus dated August 9,
2000 related to an offering of up to 16,470,000 shares of our common stock by
the persons identified as "selling securityholders" in the Prospectus.

Annual Report.

A copy of our Annual Report on Form 10-KSB for the fiscal year ended
June 30, 2000 is attached hereto.

The date of this Prospectus Supplement is September 28, 2000

<PAGE> 2

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
13 Annual Report on Form 10-KSB for the fiscal year ended June 30, 2000.
</TABLE>
<PAGE> 3
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

For the fiscal year ended June 30, 2000

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from: to
------------ -----------

Commission file number: 0-28353
-------

INTEGRAL TECHNOLOGIES, INC.
-------------------------------------------------------------------------------
(Name of small business issuer as specified in its charter)

Nevada 98-0163519
-------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

805 W. Orchard Drive, Suite 3, Bellingham, Washington 98225
------------------------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)

Issuer's telephone number: (360) 752-1982

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: Common Stock

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year. $172,417

As of September 25, 2000, the aggregate market value of the voting stock
held by non-affiliates, approximately 22,380,196 shares of Common Stock, was
approximately $42,969,976 based on an average of the bid and ask prices of
approximately $1.92 per share of Common Stock on such date.

The number of shares outstanding of the issuer's Common Stock, $.001 par
value, as of September 25, 2000 was 26,332,062 shares.

DOCUMENTS INCORPORATED BY REFERENCE: None.

Transitional Small Business Disclosure Format (check one):

Yes [ ]; No [X]

<PAGE> 4

PART I

CAUTIONARY STATEMENT IDENTIFYING IMPORTANT FACTORS
THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO
DIFFER FROM THOSE PROJECTED IN FORWARD LOOKING STATEMENTS

In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, readers of this document and any
document incorporated by reference herein, are advised that this document and
documents incorporated by reference into this document contain both statements
of historical facts and forward looking statements. Forward looking statements
are subject to certain risks and uncertainties, which could cause actual results
to differ materially for those indicated by the forward looking statements.
Examples of forward looking statements include, but are not limited to (i)
projections of revenues, income or loss, earning or loss per share, capital
expenditures, dividends, capital structure and other financial items, (ii)
statements of the plans and objectives of the Company or its management or Board
of Directors, including the introduction of new products, or estimates or
predictions of actions by customers, suppliers, competitors or regulatory
authorities, (iii) statements of future economic performance, and (iv)
statements of assumptions underlying other statements and statements about the
Company or its business.

This document and any documents incorporated by reference herein also
identify important factors which could cause actual results to differ materially
from those indicated by forward looking statements. These risks and
uncertainties include price competition, the decisions of customers, the actions
of competitors, the effects of government regulation, possible delays in the
introduction of new products and services, customer acceptance of products and
services, the Company's ability to secure debt and/or equity financing on
reasonable terms, and other factors which are described herein and/or in
documents incorporated by reference herein.

The cautionary statements made pursuant to the Private Litigation
Securities Reform Act of 1995 above and elsewhere by the Company should not be
construed as exhaustive or as any admission regarding the adequacy of
disclosures made by the Company prior to the effective date of such Act. Forward
looking statements are beyond the ability of the Company to control and in many
cases the Company cannot predict what factors would cause results to differ
materially from those indicated by the forward looking statements.

Item 1. Description of Business.

BUSINESS DEVELOPMENT

Integral Technologies, Inc. (the "Company" or the "Registrant") is a
development stage company, incorporated under the laws of the State of Nevada on
February 12, 1996. Integral is in the business of researching, developing and
commercializing various technologies directly and through its three
subsidiaries, each of which is described later in this section.

To date, Integral, directly and through its subsidiaries, has expended
its resources on the research and development of four types of technologies:

(1) Antennas;

(2) Three Dimensional ("3D") Color Machine Vision;

(3) Two Dimensional ("2D") Color Machine Vision (Counterfeit
Currency/Document Detection); and

(4) RF Plasma Injection System (New Spark Plug).

Each of these technologies are described in detail later in this section.

Through two of its subsidiaries, Antek Wireless, Inc. ("Antek") and
Emergent Technologies Corp. ("Emergent"), Integral has been researching and
developing six new antenna technologies.

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Through a third subsidiary, Integral Vision Systems, Inc. ("Integral
Vision"), Integral has been researching and developing the 3D and 2D Color
Machine Vision technology.

Integral has directly been researching and developing the RF Plasma
Injection System technology.

RECENT DEVELOPMENTS

Focus on antenna products

As a result of the developments with Antek and the commercial interest
in its antenna products, specifically the first commercial order that will
result in revenue, Integral presently intends to focus substantially all of its
resources on the commercialization and sales of the Antek antenna products.

EMPLOYEES

Integral and its subsidiaries currently employ a total of twelve people
on a full-time basis. Research and development activities are conducted
primarily by four employees. However, Integral also relies on the expertise of
several technical advisors who are consulted as needed on a part-time, contract
basis.

SUBSIDIARIES

ANTEK WIRELESS, INC.

Company Background

Antek Wireless, Inc. ("Antek"), a wholly-owned subsidiary of Integral,
was incorporated in the State of Delaware on November 2, 1999 as
NextAntennas.Com, Inc. The change of name to Antek became effective July 7,
2000. Antek develops and commercializes new antenna technologies. The focus of
Antek will be to continue to develop and commercialize new antenna technologies
which will meet the needs of the wireless telecommunications industry.

The Antenna Industry

Antek has developed six new antenna designs for use in different
wireless technology markets:

o the "GPS" antenna is used in radio receivers on the ground to
receive 1.5 GHz signals from global positioning satellites
orbiting the earth at an altitude of approximately 23,000
miles;

o the "LEO" antenna is used for the VHF function in radio
transmitters/receivers on the ground, to transmit/receive
signals in the 145 MHz frequency range to Low Earth Orbit
satellites, orbiting the earth at an approximate altitude of
450 miles;

o the "GPS/LEO" antenna, as the name indicates is a dual purpose
antenna;

o the "CDPD" antenna is used in transmission/reception of
signals in the 824-894MHz/1.5MHz range. The Cellular Digital
Packet Data network is currently one technology on the market
today which facilitates wireless internet access; and

o the "GPS/CDPD" antenna, as the name indicates is a dual
purpose antenna;

o the "portable phone" antenna is used in cellular and cordless
phones, transmitting and receiving signals in the 820 MHz to
960 MHz range as well as the 1.5 GHz frequency range.

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The research and development costs associated with the development of
these new "antenna solutions" has been funded by Integral.

The GPS antenna is for use with asset "tracking" and/or location
identification technologies. The FCC has mandated that by 2002, US wireless
carriers provide their subscribers with the technology that will enable the
carrier to identify the subscriber's location in the event of an emergency such
as a vehicle crash in which the occupant is injured and possibly rendered
unconscious.

The LEO antenna is for use with asset tracking systems which handles
short bursts of data from such assets as shipping containers, tractor trailers
and electricity meters. As opposed to the GPS technology which identifies
location the LEO technology allows for the transmission of data. Such data would
indicate such things as to whether a tractor trailer is full, the doors are
open, or even that a refrigeration unit on a trailer is malfunctioning.

The CDPD antenna is for use in wireless internet access technologies.

The "portable phone" antenna is for use in digital cordless phones and
cellular phones operating in the 920MHz and 820-890MHz frequency ranges
respectively.

Patents on Antek Antenna Products

Integral has completed a patent review of each of these technologies
and has commenced preparation of U.S. patent applications, three of which have
been filed (two applications have been assigned U.S. Provisional Patent
Application Serial Nos. 60/168,732 and 60/168,775, the third application has not
yet been assigned a serial number). No assurances can be given that Integral
will be granted any patents on its technologies; however, in the event that
patents are not granted, Antek will continue to attempt to commercialize these
technologies without the protection of a patent. In the event that any patents
are issued, Antek will have the exclusive right to use in the U.S. the antenna
design(s) described in each issued patent for the 20-year life of the patent.

Product Manufacturing and Distribution

Antek is not in the manufacturing business. Antek relies on third-party
manufacturing companies to manufacture Antek's antenna products on a timely
basis, while protecting the intellectual properties of Antek's products and
providing the customer with a high quality product.

Antek antenna products will not be sold directly to the general public,
but rather to businesses and manufacturers who will use the antennas in their
products.

Barriers to Entry into Market Segment

In the antenna market, Integral will be competing with other
established antenna providers that are much larger and better capitalized than
Integral. In order to compete, management believes that Integral must
demonstrate to potential users that the Antek antenna products have an advantage
over other antennas on the market in terms of performance and cost.

EMERGENT TECHNOLOGIES CORP.

Company Background

Emergent Technologies Corp. ("Emergent") was incorporated in the State
of West Virginia on September 29, 1995 for the purpose of developing the
Contrawound Toroidal Helical Antenna ("CTHA") for commercialization to
government and/or military applications worldwide. Emergent's rights to
commercialize the CTHA technology is limited to these applications.

The CTHA technology was created at the Center for Industrial Research
Applications ("CIRA"), a research center run by West Virginia University
Research Corporation ("WVURC"), which is a subsidiary of West Virginia

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University ("WVU"). The technology was developed by students at WVU under the
direction of Dr. James Smith, who is a Director of CIRA and a professor at WVU
and is also a co-founder of Integral. The exclusive rights to commercialize the
CTHA technology were licensed by WVURC to a private company called Integral
Concepts, Inc., which is wholly-owned by Dr. Smith. On January 2, 1996, Integral
Concepts sublicensed the exclusive, worldwide rights to commercialize the CTHA
technology for governmental and military applications to Emergent, which was at
that time owned by Dr. Smith and Denzel Jack Parsons, who is presently a
director of Integral. Pursuant to the sublicense agreement, a modest annual
minimum royalty payment is due from Emergent to Integral Concepts.

On March 1, 1996, Integral acquired a 10% equity interest in Emergent
from Emergent in exchange for $100,000. By an agreement dated December 10, 1997,
Integral acquired an additional 70% equity interest in Emergent from Messrs.
Smith and Parsons (which represented 100% of their ownership of Emergent) in
exchange for 1,800,000 shares of common stock of Integral (see "Item 7. Certain
Relationships and Related Transactions" below for additional details), which
resulted in Integral owning 80% of Emergent. Presently, Integral owns 76.625% of
Emergent, as a result of the conversion of promissory notes into shares of
common stock of Emergent by non-affiliated minority shareholders of Emergent.

Product Development

Emergent's rights to commercialize the CTHA technology are limited to
government and/or military applications worldwide. While several U.S.
governmental agencies and military contractors have been testing prototypes of
the CTHA for various applications, the time delays caused by the requirement to
comply with governmental and military specifications and procedures have been
significant, and there is no way for Integral to predict when or if revenue will
be realized. There is also the possibility that additional research and
development will be required.

Presently, Integral is not pursuing further development of CTHA
technology and is focusing its research and development resources on other
antenna technologies.

INTEGRAL VISION SYSTEMS INC.

Company Background

Integral Vision Systems Inc. ("Integral Vision") was incorporated in
the State of West Virginia on January 20, 1994, for the purpose of researching,
developing and commercializing Color Machine Vision technology, which is
described below.

The Color Machine Vision technology was created at the Center for
Industrial Research Applications ("CIRA"), a research center run by West
Virginia University Research Corporation ("WVURC"), which is a subsidiary of
West Virginia University ("WVU"). This technology was developed by students at
WVU under the direction of Dr. James Smith, who is a Director of CIRA and a
professor at WVU and was also a co-founder of Integral. The exclusive rights to
commercialize this technology was licensed by WVURC to a private company called
Integral Concepts, Inc., which is wholly owned by Dr. Smith. On February 5,
1994, Integral Concepts sublicensed the exclusive, worldwide (excluding Canada)
rights to commercialize this technology to Integral Vision, which was at that
time owned by Mr. Smith and two other persons. Pursuant to the sublicense
agreement, a modest annual minimum royalty payment is due from Integral Vision
to Integral Concepts.

In March 1997, Integral acquired a 100% equity interest in Integral
Vision from Dr. Smith and two other persons in exchange for 100,000 shares of
common stock of Integral (see "Item 7. Certain Relationships and Related
Transactions" below for additional details).

A. 3D MACHINE VISION COLORIMETRY (ENSURES COLOR QUALITY CONTROL IN A
MANUFACTURING ENVIRONMENT).

Originally licensed to Integral Concepts from WVU on January 19, 1993,
all worldwide (excluding Canada) commercialization rights to the 3D machine
vision colorimetry technology were sub-licensed to Integral Vision on February
15, 1994.

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Development and Proprietary Rights

The 3D Machine Vision Colorimetry technology is protected by US patent
number 5,485,429 issued on February 27, 1996.

Product Description

The 3D Color Machine Vision is a system whereby computers can be given
"eyesight" to look for specific physical events or characteristics. For
instance, the system can be programmed to detect color inconsistencies, or to
detect optical inconsistencies in glass and plastic manufacturing processes. In
addition, the system uses extremely sophisticated pattern detection and
analysis, which can be used to find camouflaged shapes and patterns. The unit is
a combination of generic hardware (mini-lasers and computer processors) and
proprietary software. The scanning and analysis process is patented.

The Market

This technology is intended to be used to ensure the color consistency of any
products that comes off a production line.

Commercialization Objective

Management believes that additional research and development will be required
before the 3D Color Machine Vision Technology will be ready for
commercialization. Currently Integral is directing minimal resources on this
technology due to Integral's financial situation and limited resources, but is
seeking strategic partners who would be interested in financing the
commercialization of this technology.

Competitive Comparison

Examples of existing machine vision products include photoelectric
counters, laser measurement systems, and product speed calibration systems.
Management believes that none of these systems have the ability to perform
qualitative analysis on the objects in real time.

The color machine vision market is segmented along two lines:

o Spectrophotometers - devices which measure the ratio of
reflected light to incident light for one or many wavelengths
in the visible spectrum; but work only on flat surfaces.

o Human observers - still the preferred method despite obvious
shortcomings.

B. 2D COLOR MACHINE VISION (COUNTERFEIT CURRENCY/DOCUMENT DETECTION)

Development and Proprietary Rights

Originally licensed to Integral Concepts from WVU, on January 19, 1993,
all worldwide (excluding Canada) commercialization rights were sub-licensed to
Integral on February 15, 1994.

Product Description

The 2D Color Machine Vision system is a small, laser-based computerized
device which can be programmed to scan and validate printed documents, including
currencies, passports, tickets, and other secure or valuable documents. The
unique algorithms employed by the system make it possible to even allow for wear
and tear and fading. The entire device can be produced in a package roughly the
size of a credit card swipe unit. Scan rates of up to 1 per second have been
achieved in early prototypes; speeds of 10 per second are thought possible

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within a year. The unit is a combination of generic hardware (mini-lasers and
computer processors) and proprietary software.

The Market

This device employs spectral analysis and sophisticated numerical
algorithms. As a digital device, Integral's counterfeit detector can be
programmed and reprogrammed to change its processes.

Commercialization Objective

Management believes that additional research and development will be
required before the 2D Color Machine Vision Technology will be ready for
commercialization. Currently Integral is directing minimal resources on this
technology due to Integral's financial situation and limited resources, but is
seeking strategic partners who would be interested in financing the
commercialization of this technology.

Competitive Comparison

Currently available counterfeit detection instruments fall into these broad
categories:

o Chemical agents which react with the paper

o Devices which identify specific ink taggants (additives), usually
metallic

o Devices which identify magnetic elements in the printed document

Integral's device relies on patented sophisticated spectral analysis
processes. The unit can be programmed to analyze any printed document. A
multi-function system is planned which would allow a single scanner to be used
for multiple currency and documents.

Technology Under License Directly By Integral

Integral has directly (rather than through subsidiaries) acquired the
rights to commercialize the RF Plasma Ignition System technology, which is
described below. This technology was created at the Center for Industrial
Research Applications ("CIRA"), a research center run by West Virginia
University Research Corporation ("WVURC"), which is a subsidiary of West
Virginia University ("WVU"). This technology was developed by students at WVU
under the direction of Dr. James Smith, who is a Director of CIRA and a
professor at WVU and was also a co-founder of Integral. The exclusive rights to
commercialize this technology were licensed by WVURC to a private company called
Integral Concepts, Inc., which is wholly owned by Dr. Smith. On February 15,
1996, Integral Concepts sublicensed the exclusive, worldwide rights to
commercialize these technologies to Integral. Pursuant to the sublicense
agreements, a modest annual minimum royalty payment is due from Integral Vision
to Integral Concepts.

RF PLASMA IGNITION SYSTEM (NEW SPARK PLUG)

Originally licensed to Integral Concepts from WVU on April 12, 1994,
all worldwide commercialization rights to the RF Plasma Injection System were
sub-licensed to Integral on February 15, 1996.

Development and Proprietary Rights

The RF Plasma Injection System technology is protected by US patent
number 5,361,737 issued on November 8, 1994.

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Product Description

Using a patented process, microwave radio frequency emissions create a
plasma at the end of the emitter. A plasma is a small cloud of ions. It appears
to the eye as an electrical flame. The size of the plasma is in relation to the
power applied and the size of the emitter. The plasma can be created
instantaneously, or held for a sustained period and can be produced in mid-air,
in a combustion cylinder, a smokestack, etc.

The Market

In the opinion of management, the technology could offer an alternative
to conventional sparkplugs used in combustion engines. The emitter would be
manufactured to resemble the structure of a conventional spark plug. The
conventional electronic ignition system would be modified to activate the
RF-generation system, which would then send energy to the emitters.

The technology can also be used to produce and sustain a large plasma
area. Such large plasmas can be used for electronics cleaning, smokestack
scrubbing operations, and other industrial applications.

Commercialization Objective

Management believes that additional research and development will be
required before the RF Plasma Ignition System will be ready for
commercialization. Currently Integral is directing minimal resources on this
technology due to Integral's financial situation and limited resources, but is
seeking strategic partners who would be interested in financing the
commercialization of this technology.

INVESTMENT IN CONTINENTAL DIVIDE ROBOTICS, INC.

On July 21, 2000, Integral executed a Stock Purchase Agreement with
Continental Divide Robotics, Inc. ("CDR") related to the acquisition of a
minority interest in CDR. CDR has developed certain proprietary hardware and
software which may be used to track individuals. The technology is currently
being field-tested in the criminal justice system for the purpose of tracking
parolees. Future implementations of the technology include consumer and military
applications.

Pursuant to the agreement, Integral acquired a 21% interest in CDR on
June 30, 2000 for $500,000. Integral has the right to acquire up to an
additional 19% interest for an additional $2,300,000 on or before December 31,
2000, of which $375,000 has been paid to date.

INVESTMENT AGREEMENT WITH SWARTZ PRIVATE EQUITY, LLC

On May 11, 2000 we entered into an Investment Agreement and a
Registration Rights Agreement with Swartz Private Equity, LLC ("Swartz").
Pursuant to the terms of the Investment Agreement, we may, in our sole
discretion and subject to certain restrictions, periodically sell ("Put") shares
of Integral's common stock for up to $25,000,000 to Swartz, beginning on the
effective registration of such Put shares and continuing for a period of
thirty-six (36) months thereafter. The Investment Agreement allows us to choose
to sell common stock to Swartz at times which we decide are advantageous. The
Investment Agreement is not a debt instrument. Any Put exercised by us is the
sale of common stock and not a loan.

PUT RIGHTS. An advance put notice must be delivered to Swartz at least ten
business days prior to the date that we intend to sell the common stock to
Swartz. The advance put notice must state the put date as well as the number of
shares of common stock that we intend to put to Swartz. At our option, the
notice may also state a minimum purchase price per share which cannot be greater
than 80% of the closing bid price of our common stock on the date of the advance
put notice.

After the registration statement to which this prospectus relates is
declared effective, the number of shares of common stock sold to Swartz in a put
may not exceed the lesser of (i) the maximum put amount set forth in our Advance
Put Notice; (ii) $2,000,000 worth of common stock; (iii) 15% of the aggregate
reported trading volume of

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our common stock, excluding block trades of 20,000 or more shares of our common
stock, during the 20 business days after the date of our put notice, excluding
any trading days in which the common stock trades below a minimum price, if any,
that we specify in our put notice; (iv) 15% of the aggregate daily reported
trading volume of our common stock, excluding block trades of 20,000 or more
shares of our common stock, during the 20 business days before the put date; or
(v) a number of shares that, when added to the number of shares acquired by
Swartz under the investment agreement during the 31 days preceding the put date,
would exceed 9.99% of our total number of shares of common stock outstanding (as
calculated under Section 13(d) of the Securities Exchange Act of 1934).

PUT PRICE. The purchase price for the Put Shares will be equal to the lesser of
the Market Price for such Put minus $.25 or 91% of the Market Price (lowest
closing bid price for the Common Stock on the principal market during the twenty
day pricing period following the date of the Put Notice), but in no event can it
be less than our designated minimum put share price, if any, as set forth in the
Advance Put Notice.

WARRANTS. At the time of each Put, Swartz will be issued a Purchase Warrant
which will give the holder the right to purchase up to ten percent (10%) of the
number of Put shares issued to Swartz in that Put. Each Purchase Warrant will be
exercisable at a price equal to 110% of the Market Price for such put. Each
Purchase Warrant will be immediately exercisable and will terminate on a date
which is five years after the date of issuance. The terms of the Purchase
Warrants allow for a non-cash exercise (so long as the shares underlying the
warrants are not registered pursuant to an effective registration statement).
The shares underlying the Commitment Warrants are being registered pursuant to
the registration statement to which this Prospectus relates.

COMMITMENT WARRANTS. In partial consideration of the Investment Agreement, we
issued warrants to Swartz (the "Commitment Warrants") to purchase 495,000 shares
of our Common Stock. The Commitment Warrants are currently exercisable at the
price of $1.306 per share. Each Commitment Warrant is immediately exercisable
and terminates five years after the date of issuance. The shares underlying the
Commitment Warrants are being registered pursuant to the registration statement
to which this Prospectus relates.

SHORT SALES. Swartz and its affiliates are prohibited from engaging in short
sales of our Common Stock unless they have received a Put Notice and the amount
of shares involved in a short sale does not exceed the number of shares
specified in the Put Notice.

CANCELLATION OF PUTS. We must cancel a particular put if between the date of the
advance put notice and the last day of the pricing period:

- we discover an undisclosed material fact relevant to a shareholder's
investment decision;

- the registration statement registering resales of the Common Shares becomes
ineffective; or

- shares are delisted from the then primary exchange.

The pricing period for that Put shall end as of the preceding business day, and
the Put shall remain effective for the shortened pricing period.

NON-USAGE FEE. If we have not put a minimum of $1,000,000 in aggregate Put
Dollar Amount during any six month period of time during the term of the
Investment Agreement, we will be required to pay Swartz a non-usage fee equal to
the difference of $100,000 minus 10% of the aggregate Put Dollar Amount of the
Put Shares put to Swartz during such six month period. In the event that we
deliver a termination notice to Swartz or an automatic termination occurs, we
must pay Swartz a termination fee the greater of the non-usage fee for the
applicable period or the difference of $200,000 minus 10% of the aggregate Put
Dollar Amount of the Put Shares put to Swartz during all Puts to such date.

SHAREHOLDER APPROVAL. We may issue more than 20% of our outstanding shares. If
we become listed on the Nasdaq Small Cap Market or Nasdaq National Market, then
we must get shareholder approval to issue more than 20% of our outstanding
shares. Since we are currently a bulletin board company, we do not need
shareholder approval.

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TERMINATION OF INVESTMENT AGREEMENT. We may also terminate our right to initiate
further puts or terminate the Investment Agreement by providing Swartz with
notice of such intention to terminate; however, any such termination will not
affect any other rights or obligations we have concerning the Investment
Agreement or any related agreement.

RESTRICTIVE. During the term of the Investment Agreement and for a period of six
months thereafter, we are prohibited from certain transactions. These include
the issuance of any equity securities in a private transaction, or any debt in a
private transaction which are convertible or exercisable into shares of Common
Stock at a price based on the trading price of the Common Stock. We are also
prohibited from entering into any private equity line type agreements similar to
the Investment Agreement without obtaining Swartz's prior written approval.

RIGHT OF FIRST REFUSAL. Swartz has a right of first refusal to purchase equity
securities offered by us in a private transaction or any debt securities in a
private transaction which closes on or prior to six (6) months after the
termination of the Investment Agreement.

SWARTZ'S RIGHT OF INDEMNIFICATION. We are obligated to indemnify Swartz
(including their stockholders, officers, directors, employees and agents) from
all liability and losses resulting from any misrepresentations or breaches we
made in connection with the Investment Agreement, our Registration Rights
Agreement, other related agreements or the registration statement.

As required under the Registration Rights Agreement with Swartz, in
July 2000 we filed a registration statement to register for resale shares of our
common stock by Swartz and certain other selling shareholders who had similar
registration rights. This registration statement was declared effective by the
U.S. Securities and Exchange Commission on August 9, 2000.

Item 2. Description of Property.

Neither Integral nor its subsidiaries own any real property. Integral
and its subsidiaries lease office space in Vancouver, B.C., Canada, Bellingham,
Washington and San Jose, California.

Item 3. Legal Proceedings.

A. Pending litigation: Integral, NextAntennas.com, Inc. (now "Antek Wireless,
Inc."), Emergent Technologies Corporation and Jack Parsons are defendants in a
lawsuit filed in May 2000 in the United States District Court for the Northern
District of West Virginia by IAS Communications, Inc. IAS claims that, pursuant
to agreement by and among IAS, Integral Concepts, Inc. and Emergent, IAS
acquired the exclusive right to commercial applications of certain patented and
proprietary antenna technology developed at West Virginia University and
Emergent acquired exclusive rights to military applications of such technology.
IAS claims that Emergent breached its agreement by pursuing commercial
applications of the technology by entering into an agreement with ARINC, Inc., a
multinational aerospace technology company. IAS further claims that all
defendants misappropriated certain trade secrets and interfered with IAS's
economic relations with ARINC, Inc. In addition, IAS claims that Jack Parsons
breached certain fiduciary duties that he owed IAS due to his position as an
officer and director of an IAS/Emergent joint venture.

IAS seeks injunctive relief prohibiting the defendants from disclosing
certain information related to the technology; an order requiring defendants:
(1) to account for any profits from the alleged conduct; and (2) return any
proprietary materials to IAS and destroy all devices created in violation of
IAS's rights. IAS also seeks a money judgment in an amount to be determined at
trial, but no less than $15,000,000.

It is the opinion of management of Integral that the claims filed by
IAS have no factual basis and are groundless and frivolous. The defendants have
filed answers denying IAS's claims.

9
<PAGE> 13

B. Possible claim: a dispute exists between WVU and Integral with respect to the
development work performed by WVU on the Plasma Ignition System and Counterfeit
Detection Technology. The dispute in the amount of $354,244 relates to the
following:

o WVU advised Integral that development work had been halted as of August
1, 1997, but continued to bill Integral for $127,442 in costs for the
period August 1, 1997 to December 31, 1999;

o WVU billed Integral $226,802 for equipment related to the development
work done for Integral. WVU claims that it is entitled to retain
ownership of the equipment while Integral believes that title to the
equipment should be transferred to Integral if Integral is to pay for
the equipment; and

o To date Integral has paid $398,434 for development work to WVU, but WVU
has failed to deliver required prototypes.

Included in current liabilities is the amount of $397,296 alleged to be
owing to WVU for the development of the Plasma Ignition System and the
Counterfeit Detection Technology. For the reasons described above, it is the
opinion of management of Integral that the balance owing to West Virginia
University as reflected in these financial statements of $397,296 should be
reduced by at least $354,244 (the amount in dispute), to an amount no greater
than $43,052.

No lawsuit has been filed, and Integral is engaged in negotiations with
WVU. Integral intends to continue its efforts to resolve this matter without
resorting to litigation unless necessary.

Item 4. Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended June 30, 2000.

10
<PAGE> 14

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

(a) Market Information

Neither Integral nor its subsidiaries own any real property. Integral
and its subsidiaries lease office space in Vancouver, B.C., Canada, Bellingham,
Washington and San Jose, California.

There is a limited public market for the common stock of Integral which
historically has traded on the NASD OTC Bulletin Board under the symbol "ITKG"
where it began trading on February 27, 1997.

The following table sets forth the range of high and low bid quotations
for the Company's Common Stock on the OTC Bulletin Board for each quarter of the
fiscal years ended June 30, 1999 and 2000.

<TABLE>
<CAPTION>
Quarter Ended Low Bid High Bid
------------------ ---------- ----------
<S> <C> <C>
September 30, 1998 $ 0.25 $ 0.906
December 31, 1998 $ 0.125 $ 0.688
March 31, 1999 $ 0.141 $ 0.438
June 30, 1999 $ 0.25 $ 0.484

September 30, 1999 $ 0.234 $ 0.438
December 31, 1999 $ 0.34 $ 1.47
March 31, 2000 $ 0.687 $ 8.25
June 30, 2000 $ 1.50 $ 5.50
</TABLE>

The source of this information is America Online and Yahoo! quotation
services. These prices reflect inter-dealer prices, without retail markup,
markdown or commission and may not represent actual transactions.

(b) Holders

As of September 25, 2000 there were approximately 131 holders of record
of the Company's Common Stock (this number does not include beneficial owners
who hold shares at broker/dealers in "street-name").

To date, Integral has not paid any dividends on its common stock and
does not expect to declare or pay any dividends on such common stock in the
foreseeable future. Payment of any dividends will be dependent upon future
earnings, if any, the financial condition of Integral, and other factors as
deemed relevant by Integral's Board of Directors.

(d) Recent Sales of Unregistered Securities

Set forth below is information regarding the issuance and sales of
securities of Integral without registration within the past three fiscal years.

(a) In October 1997, Integral issued a total of 825,396 shares of its
common stock at $0.7875 per share to one person who was not an
affiliate of Integral, resulting in gross proceeds of $650,000.
Commissions of 12% of the gross proceeds ($78,000) were paid to a
placement agent. This transaction did not involve any public offering
and the offering was conducted in accordance with Regulation D of the
Securities Act of 1933, as amended. Integral believes that this
transaction was exempt from registration under Section 504 of
Regulation D.

(b) Pursuant to an agreement and plan of reorganization between
Integral and Emergent dated December 10, 1997, pursuant to which
Emergent became a controlled subsidiary of Integral, two persons owning

11
<PAGE> 15

100% of Emergent were issued a total of 1,800,000 shares of Common
Stock of Integral (valued at $619,200) in exchange for their interest
in Emergent. This transaction did not involve any public offering, no
sales commissions were paid, and a restrictive legend was placed on
each certificate evidencing the shares. Integral believes that the
transaction was consummated in reliance on Section 4(2) and/or Section
506 of Regulation D of the Securities Act of 1933.

(c) In August 1998, Integral issued 50,000 shares of its common stock
to one person who was not an affiliate of Integral for consulting
services rendered to Integral and valued at $10,000. This transaction
did not involve any public offering, no sales commissions were paid,
and a restrictive legend was placed on each certificate evidencing the
shares. Integral believes this transaction was exempt from registration
pursuant to Section 4(2) of the Securities Act.

(d) In November 1998, Integral issued 200,000 shares to two persons who
were not affiliates of Integral as compensation for services rendered,
valued at $39,000. This transaction did not involve any public offering
and the offering was conducted in accordance with Regulation D of the
Securities Act of 1933, as amended. No sales commissions were paid.
Integral believes that this transaction was exempt from registration
under Section 504 of Regulation D.

(e) In December 1998, Integral sold 200,000 shares to one person who
was not an affiliate of Integral for $50,000 cash. This transaction did
not involve any public offering and the offering was conducted in
accordance with Regulation D of the Securities Act of 1933, as amended.
No sales commissions were paid. Integral believes that this transaction
was exempt from registration under Section 504 of Regulation D.

(f) In January 1999, Integral issued and sold 1,683,788 shares of
common stock to one person in consideration of a $250,000 promissory
note. The promissory note was fully-secured, paid interest at the rate
of 6% per annum, and was due in two years. By December 1999 the note
had been pre-paid in full. This transaction did not involve any public
offering and the offering was conducted in accordance with Regulation D
of the Securities Act of 1933, as amended. No sales commissions were
paid. Integral believes that this transaction was exempt from
registration under Section 504 of Regulation D.

(g) Between January 1999 and March 1999, Integral issued and sold
Convertible Debentures totaling $600,000. A management fee of 6%
($36,000) was paid in connection with the sale of the Debentures. By
July of 1999, the Debentures and all accrued interest had been
converted into 4,316,212 shares of common stock. This transaction did
not involve any public offering and the offering was conducted in
accordance with Regulation D of the Securities Act of 1933, as amended.
Integral believes that this transaction was exempt from registration
under Section 504 of Regulation D.

(h) In April 1999, Integral issued a total of 666,666 shares of its
common stock, 333,333 to each of William S. Robinson and William A.
Ince in consideration of management fees owing in the amount of $50,000
to each of William S. Robinson and William A. Ince. Messrs. Robinson
and Ince are officers and directors of Integral and are therefore
considered accredited investors under applicable securities laws. This
transaction did not involve any public offering, no sales commissions
were paid, and a restrictive legend was placed on each certificate
evidencing the shares. Integral believes this transaction was exempt
from registration pursuant to Section 4(2) of the Securities Act.

(i) In April 1999, Integral issued a total of 150,000 shares of its
common stock (valued at $15,000) jointly to two persons who were not
affiliates of Integral in settlement of a litigation matter. This
transaction did not involve any public offering, no sales commissions
were paid, and a restrictive legend was placed on each certificate
evidencing the shares. Integral believes this transaction was exempt
from registration pursuant to Section 4(2) of the Securities Act.

(j) In May 1999, Integral issued a total of 445,000 shares of its
common stock to members of Integral's employee benefit and consulting
services plan who exercised in April their options previously granted
under the plan. The exercise price of the shares issued was between
$.15 and $.25 per share, and each person paid the exercise price in
cash (an aggregate of$80,500). This transaction did not involve any
public offering, the

12
<PAGE> 16

securities were issued under a Plan structured in compliance with Rule
701 of the Securities Act, no sales commissions were paid, and a
restrictive legend was placed on each certificate evidencing the
shares. Integral believes that transaction was exempt from registration
pursuant to Rule 701 of the Securities Act.

(k) In July 1999, Integral issued 50,000 shares of its common stock to
one person for consulting services rendered to Integral and value at
$12,500. This transaction did not involve any public offering, no sales
commissions were paid, and a restrictive legend was placed on each
certificate evidencing the shares. Integral believes this transaction
was exempt from registration pursuant to Section 4(2) of the Securities
Act.

(l) In September 1999, Integral issued an aggregate 654,401 shares of
its Series A Convertible Preferred Stock to officers and directors of
Integral. William S. Robinson received 175,000 shares of Series A in
lieu of $175,000 in accrued salaries through September 30, 1999 and
267,197 shares of Series A in repayment of $267,197 in loans made to
Integral. William A. Ince received 175,000 shares of Series A in lieu
of $175,000 in accrued salaries through September 30, 1999 and 47,213
shares of Series A in repayment of $47,213 in loans made to Integral.
Messrs. Robinson and Ince are officers and directors of Integral and
are therefore considered accredited investors under applicable
securities laws. This transaction did not involve any public offering,
no sales commissions were paid, and a restrictive legend was placed on
each certificate evidencing the shares. Integral believes this
transaction was exempt from registration pursuant to Section 4(2) of
the Securities Act.

(m) In November 1999, Integral issued a total of 405,000 shares of its
common stock to members of Integral's employee benefit and consulting
services plan who exercised in July and September 1999 their options
previously granted under the plan. The exercise price of the shares
issued ranged between $.15 and $.20 per share. One person paid the
exercise price in the form of services rendered (valued at $11,250) and
the other persons paid the exercise price in cash (an aggregate of
$65,750). This transaction did not involve any public offering, the
securities were issued under a Plan structured in compliance with Rule
701 of the Securities Act, no sales commissions were paid, and a
restrictive legend was placed on each certificate evidencing the
shares. Integral believes that transaction was exempt from registration
pursuant to Rule 701 of the Securities Act.

(n) In February 2000, Integral issued 50,000 shares of its common stock
pursuant to its employee benefit and consulting services plan to one
person. The exercise price of the shares issued was $.15 per share, and
the exercise price was paid in cash. The transaction did not involve
any public offering, the securities were issued under a plan structured
in compliance with Rule 701 of the Securities Act, no sales commissions
were paid, and a restrictive legend was placed on each certificate
evidencing the shares. Integral believes that the transaction was
exempt from registration pursuant to Rule 701 of the Securities Act.

(o) In February 2000, Integral issued 200,000 shares of its common
stock pursuant to its employee benefit and consulting services plan to
one person. The exercise price of the shares issued was $.20 per share,
and the exercise price was paid in cash. The transaction did not
involve any public offering, the securities were issued under a plan
structured in compliance with Rule 701 of the Securities Act, no sales
commissions were paid, and a restrictive legend was placed on each
certificate evidencing the shares. Integral believes that the
transaction was exempt from registration pursuant to Rule 701 of the
Securities Act.

(p) In March 2000, Integral issued 87,500 shares of its common stock
pursuant to its employee benefit and consulting services plan to one
person. The exercise price of the shares issued was $.23 per share, and
the exercise price was paid in the form of services rendered (valued at
$20,125). The transaction did not involve any public offering, the
securities were issued under a plan structured in compliance with Rule
701 of the Securities Act, no sales commissions were paid, and a
restrictive legend was placed on each certificate evidencing the
shares. Integral believes that the transaction was exempt from
registration pursuant to Rule 701 of the Securities Act.

(q) In March 2000, Integral completed a private placement with 10
investors and sold 2,650,000 shares of its common stock and warrants to
purchase 1,325,000 shares of its common stock at an exercise price of

13
<PAGE> 17

$1.80 per share. Aggregate proceeds were $3,976,325. The transaction
did not involve any public offering, no sales commissions were paid,
and a restrictive legend was placed on each certificate evidencing the
shares. Integral believes that the transaction was exempt from
registration pursuant to Section 4(2) and Section 4(6) of the
Securities Act and/or Rule 506 of Regulation D.

(r) In April 2000, Integral issued 287,500 shares of its common stock
pursuant to its employee benefit and consulting services plan to one
person. The exercise price of the shares ranged between $.15 and $.40
per share, and the exercise price was paid in the form of services
rendered (valued at $65,000). The transaction did not involve any
public offering, the securities were issued under a plan structured in
compliance with Rule 701 of the Securities Act, no sales commissions
were paid, and a restrictive legend was placed on each certificate
evidencing the shares. Integral believes that the transaction was
exempt from registration pursuant to Rule 701 of the Securities Act.

(s) In April 2000, Integral issued 80,000 shares of its common stock
pursuant to its employee benefit and consulting services plan to one
person. The exercise price of the shares was $.20 per share, and the
exercise price was paid in cash. The transaction did not involve any
public offering, the securities were issued under a plan structured in
compliance with Rule 701 of the Securities Act, no sales commissions
were paid, and a restrictive legend was placed on each certificate
evidencing the shares. Integral believes that the transaction was
exempt from registration pursuant to Rule 701 of the Securities Act.

(t) In May 2000, Integral entered into an Investment Agreement and a
Registration Rights Agreement with Swartz Private Equity, LLC
("Swartz"). Pursuant to the terms of the Investment Agreement, Integral
may, in its sole discretion and subject to certain restrictions,
periodically sell shares of common stock to Swartz for up to
$25,000,000. Integral believes that the transaction was exempt from
registration pursuant to Section 4(2) of the Securities Act and/or Rule
506 of Regulation D.

(u) In June 2000, Integral issued 135,000 shares to two individuals in
consideration for two one year promissory notes bearing an 8% interest
rate. The exercise price was $.20 per share. One promissory note is in
the amount of $20,000 and the other is in the amount of $7,500. These
transactions did not involve any public offering, the securities were
issued under a Plan structured in compliance with Rule 701 of the
Securities Act, no sales commissions were paid, and a restrictive
legend was placed on each certificate evidencing the shares. Integral
believes that transaction was exempt from registration pursuant to Rule
701 of the Securities Act.

Item 6 . Management's Plan of Operation.

The Company recorded revenues from operations for the first time in the
fourth quarter of the fiscal year ended June 30, 2000 in the amount of $172,417.
However, the Company is still considered a development stage company for
accounting purposes. From inception on February 12, 1996 through June 30, 2000,
the Company has incurred a cumulative net loss of approximately $5 million for
that period.

As a result of the commercial interest in the antenna products of the
Company's subsidiary, Antek Wireless, Inc., the Company presently intends to
focus substantially all of its resources on the commercialization and sales of
the Antek antenna products. As a result, the Company will devote only a limited
amount of its resources on the research, development and commercialization of
its other technologies during the next twelve months.

While management believes that each of the Antek antenna products is
ready to be commercialized, ongoing research and development will be necessary
over the next twelve months and will be focused on adapting and "fine-tuning"
the antenna products for different applications and uses. The Company
anticipates spending approximately $500,000 over the next twelve months on this
ongoing research and development. Also, the Company has filed three provisional
patent applications with the U.S. patent office for various Antek antenna
products, and anticipates filing additional provisional patent applications as
warranted over the next twelve months.

14
<PAGE> 18

The Company is not in the manufacturing business and does not expect to
make any capital purchases of a manufacturing plant or significant equipment in
the next twelve months. The Company will be relying on contract manufacturers to
produce the antenna products.

During the next twelve months, the Company's subsidiary, Antek, will
employ additional staff in order to further enhance its management team.
Additionally, it is anticipated that approximately five sales people and three
administration people will be added.

To date, the Company has relied on loans from management and
management's ability to raise capital through debt and equity private placement
financings to fund its operations. During the fiscal year ended June 30, 2000,
the Company completed the following financing transactions:

1. During the quarter ended March 31, 2000, the Company completed a
private placement of common stock and common stock purchase warrants which
resulted in aggregate cash proceeds to the Company of nearly $4 million.

2. In May 2000, the Company entered into an Investment Agreement and a
Registration Rights Agreement with Swartz Private Equity, LLC ("Swartz").
Pursuant to the terms of the Investment Agreement, the Company may, in its sole
discretion and subject to certain restrictions, periodically sell ("Put") shares
of common stock to Swartz for up to $25,000,000. On September 26, 2000, the
Company Put 300,000 shares to Swartz. Pursuant to the terms of the Investment
Agreement, the Put share price will be determined and paid to the Company twenty
business days after the date of the Put. The terms of the Investment Agreement
are more fully described in Item 1 (Description of Business) under the
subsection entitled "Investment Agreement with Swartz Private Equity, LLC."

As required under the Registration Rights Agreement with
Swartz, in July 2000 the Company filed a registration statement to register for
resale shares of common stock by Swartz and certain other selling shareholders
who had similar registration rights. This registration statement was declared
effective by the U.S. Securities and Exchange Commission on August 9, 2000.

As a result of these recent financing transactions, management believes
that the Company will have adequate financial resources to fund its operations
over the next twelve months.

Item 7. Financial Statements and Supplementary Data.

The information required by Item 7 and an index thereto commences on
page F-1, which pages follow this page.

Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

None.

15
<PAGE> 19

INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
(U.S. DOLLARS)

<TABLE>
<CAPTION>
INDEX PAGE
----- ----
<S> <C>
Report of Independent Accountants F-2

Financial Statements

Consolidated Balance Sheets F-3

Consolidated Statements of Operations F-4

Consolidated Statements of Stockholders' Equity (Deficiency) F-5 - F-6

Consolidated Statements of Cash Flows F-7

Notes to Consolidated Financial Statements F-8 - F-21
</TABLE>

F-1
<PAGE> 20

REPORT OF INDEPENDENT ACCOUNTANTS

TO THE DIRECTORS AND SHAREHOLDERS OF
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)

We have audited the accompanying consolidated balance sheets of Integral
Technologies, Inc. (A Development Stage Company) as of June 30, 2000 and 1999
and the related consolidated statements of operations, stockholders' equity
(deficiency) and cash flows for each of the years ended June 30, 2000, 1999 and
1998. 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 generally accepted auditing standards
in the United States. Those standards require that we plan and perform an audit
to obtain reasonable assurance 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, these consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Company as at June
30, 2000 and 1999 and the consolidated results of their operations and cash
flows for each of the years ended June 30, 2000, 1999 and 1998 in conformity
with generally accepted accounting principles in the United States.

The financial statements of the Company for the period from February 12, 1996
(inception) through June 30, 1996 were audited by other auditors. We have
compiled the cumulative amounts for the period from February 12, 1996
(inception) to June 30, 2000 from audited financial statements for the period
from February 12, 1996 (inception) to June 30, 1997 and the audited consolidated
financial statements for the years ended June 30, 2000, 1999 and 1998.

"Pannell Kerr Forster"

Chartered Accountants

Vancouver, Canada
September 6, 2000

F-2

See notes to consolidated financial statements.
<PAGE> 21

INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND 1999
(U.S. DOLLARS)

<TABLE>
<CAPTION>
2000 1999
----------- ----------
<S> <C> <C>
ASSETS

CURRENT
Cash $2,908,700 $647
Accounts receivable 75,641 0
Inventory 25,000 0
Prepaid expenses 5,395 0
---------- ----------
TOTAL CURRENT ASSETS 3,014,736 647
PROPERTY AND EQUIPMENT (note 4) 41,580 42,238
LICENSE AGREEMENTS AND INTANGIBLES (notes 3(a), 5(a) and 13(b)) 1,462,781 1,622,928
INVESTMENTS (note 3(b)) 300,000 0
---------- ----------
TOTAL ASSETS $4,819,097 $1,665,813
========== ==========
LIABILITIES

CURRENT
Accounts payable and accruals (note 10) $372,441 $544,511
Due to West Virginia University Research Corporation (note 13(a)) 397,296 397,296
Customer deposits 13,232 0
Short-term loan (note 6) 45,000 0
Due to minority interest (note 3(a)) 0 79,412
---------- ----------
TOTAL CURRENT LIABILITIES 827,969 1,021,219
LONG-TERM DEBT (note 7) 0 376,170
---------- ----------
TOTAL LIABILITIES 827,969 1,397,389
---------- ----------
CONTINGENCIES (note 13)

STOCKHOLDERS' EQUITY (DEFICIENCY) (note 8)

PREFERRED STOCK AND PAID-IN CAPITAL IN EXCESS OF $0.001 PAR VALUE
20,000,000 Shares authorized
664,410 (1999 - Nil) issued and outstanding (note 8(f)) 664,410 0
COMMON STOCK AND PAID IN CAPITAL IN EXCESS OF $0.001 PAR VALUE
50,000,000 Shares authorized
26,032,062 (1999 - 22,087,067) issued and outstanding 8,384,781 4,016,267
PROMISSORY NOTES RECEIVABLE (note 8(f)) (58,500) (284,068)
OTHER COMPREHENSIVE INCOME 46,293 44,679
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (5,045,856) (3,508,454)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) 3,991,128 268,424
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $4,819,097 $1,665,813
========== ==========
</TABLE>

F-3
See notes to consolidated financial statements.
<PAGE> 22

INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED JUNE 30, 2000, 1999 AND 1998 AND PERIOD FROM FEBRUARY 12, 1996
(INCEPTION) THROUGH JUNE 30, 2000
(U.S. DOLLARS)

<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 12,
1996
YEAR ENDED YEAR ENDED YEAR ENDED (INCEPTION)
JUNE 30, JUNE 30, JUNE 30, THROUGH
2000 1999 1998 JUNE 30, 2000
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
REVENUE $ 172,417 $ 0 $ 0 $ 172,417
COST OF SALES 197,188 0 0 197,188
------------ ------------ ------------ ------------
(24,771) 0 0 (24,771)
------------ ------------ ------------ ------------
EXPENSES
Salaries 454,630 280,600 233,759 968,989
Consulting 282,426 214,068 233,317 895,421
Legal and accounting 217,336 106,051 79,091 465,237
Research and development 155,250 64,521 258,384 1,063,364
General and administrative 94,679 20,656 54,284 236,016
Travel and entertainment 86,259 34,085 93,043 353,649
Rent 44,746 18,905 26,095 114,100
Telephone 44,468 26,341 42,319 148,397
Advertising 24,455 7,615 39,885 108,586
Bank charges and interest, net 13,932 55,760 41,385 150,275
Bad debts 2,568 0 0 2,568
Interest on beneficial
conversion feature (note 12) 0 566,456 0 566,456
Write-down of license and
operating assets 0 0 424,654 424,654
Depreciation and amortization 91,882 8,963 14,000 126,216
------------ ------------ ------------ ------------
1,512,631 1,404,021 1,540,216 5,623,928
------------ ------------ ------------ ------------
LOSS BEFORE EXTRAORDINARY ITEM (1,537,402) (1,404,021) (1,540,216) (5,648,699)
EXTRAORDINARY ITEM
Cancellation of debt (note 7(b)) 0 0 602,843 602,843
------------ ------------ ------------ ------------
NET LOSS FOR PERIOD $ (1,537,402) $ (1,404,021) $ (937,373) $ (5,045,856)
============ ============ ============ ============
LOSS PER COMMON SHARE
BEFORE EXTRAORDINARY ITEM $ (0.07) $ (0.08) $ (0.12)
EXTRAORDINARY ITEM PER COMMON
SHARE 0.00 0.00 0.05
------------ ------------ ------------
NET LOSS PER COMMON SHARE $ (0.07) $ (0.08) $ (0.07)
============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 23,133,541 17,285,785 12,343,346
============ ============ ============
</TABLE>

F-4

See notes to consolidated financial statements
<PAGE> 23

INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED JUNE 30, 2000, 1999 AND 1998 AND PERIOD FROM FEBRUARY 12, 1996
(INCEPTION) THROUGH JUNE 30, 1997
(U.S. DOLLARS)

<TABLE>
<CAPTION>
COMMON PREFERRED
STOCK AND STOCK AND
SHARES OF PAID-IN SHARES OF PAID-IN
COMMON CAPITAL PREFERRED CAPITAL PROMISSORY
STOCK IN EXCESS STOCK IN EXCESS NOTES
ISSUED OF PAR ISSUED OF PAR RECEIVABLE
--------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SHARES ISSUED FOR
Cash 1,000,000 $ 10,000 0 $ 0 $ 0
Property and equipment
(to officers and
directors) 1,500,000 15,000 0 0 0
Services (provided by
officers and directors) 2,000,000 20,000 0 0 0
Services 1,500,000 15,000 0 0 0
Foreign currency translation 0 0 0 0 0
Net loss for year 0 0 0 0 0
----------- ----------- -------- ----------- -----------
BALANCE, JUNE 30, 1996 6,000,000 60,000 0 0 0
SHARES ISSUED FOR
Cash 5,086,000 865,514 0 0 0
Share issue costs 0 (48,920) 0 0 0
Services 564,000 63,036 0 0 0
Acquisition of subsidiary 100,000 275,000 0 0 0
Foreign currency translation 0 0 0 0 0
Net loss for year 0 0 0 0 0
----------- ----------- -------- ----------- -----------
BALANCE, JUNE 30, 1997 11,750,000 1,214,630 0 0 0
SHARES ISSUED FOR
Cash 825,396 650,000 0 0 0
Share issue costs 0 (78,000) 0 0 0
Foreign currency translation 0 0 0 0 0
Net loss for year 0 0 0 0 0
----------- ----------- -------- ----------- -----------
JUNE 30, 1998 12,575,396 1,786,630 0 0 0
----------- ----------- -------- ----------- -----------

DEFICIT
ACCUMULATED
OTHER DURING THE TOTAL
COMPREHENSIVE DEVELOPMENT STOCKHOLDERS'
INCOME STAGE EQUITY
------------- ------------ -------------
<S> <C> <C> <C>
SHARES ISSUED FOR
Cash $ 0 $ 0 $ 10,000
Property and equipment
(to officers and
directors) 0 0 15,000
Services (provided by
officers and directors) 0 0 20,000
Services 0 0 15,000
Foreign currency translation (1,226) 0 (1,226)
Net loss for year 0 (344,843) (344,843)
----------- ----------- -----------
BALANCE, JUNE 30, 1996 (1,226) (344,843) (286,069)
SHARES ISSUED FOR

Cash 0 0 865,514
Share issue costs 0 0 (48,920)
Services 0 0 63,036
Acquisition of subsidiary 0 0 275,000
Foreign currency translation 12,601 0 12,601
Net loss for year 0 (822,217) (822,217)
----------- ----------- -----------
BALANCE, JUNE 30, 1997 11,375 (1,167,060) 58,945
SHARES ISSUED FOR

Cash 0 0 650,000
Share issue costs 0 0 (78,000)
Foreign currency translation 24,860 0 24,860
Net loss for year 0 (937,373) (937,373)
----------- ----------- -----------
JUNE 30, 1998 36,235 (2,104,433) (281,568)
----------- ----------- -----------
</TABLE>

F-5

See notes to consolidated financial statements.
<PAGE> 24

<TABLE>
<CAPTION>
COMMON PREFERRED
STOCK AND STOCK AND
SHARES OF PAID-IN SHARES OF PAID-IN
COMMON CAPITAL PREFERRED CAPITAL
STOCK IN EXCESS STOCK IN EXCESS
ISSUED OF PAR ISSUED OF PAR
---------- ----------- --------- ---------
<S> <C> <C> <C> <C>
BALANCE, JUNE 30, 1998 12,575,396 $ 1,786,630 0 $ 0

SHARES ISSUED FOR
Cash 200,000 50,000 0 0
Exercise of stock options 445,000 80,500 0 0
Promissory note 1,683,789 252,568 0 0
Settlement of lawsuit 150,000 15,000 0 0
Services (provided by
officers and directors) 666,666 100,000 0 0
Share issue costs 0 (100,500) 0 0
Services 250,000 50,000 0 0
Conversion of convertible
debentures (note 7(a)) 3,869,120 525,813 0 0
Acquisition of subsidiary 1,800,000 619,200 0 0
Held in escrow (note 7(a)) 447,091 0 0 0
Stock option benefit 0 70,600 0 0
Beneficial conversion feature 0 566,456 0 0
Foreign currency translation 0 0 0 0
Net loss for year 0 0 0 0
---------- ---------- ---- --------
BALANCE JUNE 30, 1999 22,087,062 4,016,267 0 0
SHARES ISSUED FOR

Cash on private placement 2,650,000 3,975,000 0 0
Exercise of options 1,245,000 256,700 0 0
Release from escrow (note 7(a)) 0 75,558 0 0
Services 50,000 13,000 0 0
On settlement of debt 0 0 664,410 664,410
Stock option benefit 0 48,256 0 0
Promissory note repayment 0 0 0 0
Foreign currency translation 0 0 0 0
Net loss for year 0 0 0 0
---------- ---------- ---- --------
BALANCE, JUNE 30, 2000 26,032,062 $ 8,384,781 664,410 $ 664,410
---------- ---------- ---- --------

DEFICIT
ACCUMULATED
PROMISSORY OTHER DURING THE TOTAL
NOTES COMPREHENSIVE DEVELOPMENT STOCKHOLDERS'
RECEIVABLE INCOME STAGE EQUITY
----------- ------------- ----------- -------------

<S> <C> <C> <C> <C>
BALANCE, JUNE 30, 1998 $ 0 $ 36,235 $(2,104,433) $ (281,568)

SHARES ISSUED FOR
Cash 0 0 0 50,000
Exercise of stock options 0 0 0 80,500
Promissory note (284,068) 0 0 (31,500)
Settlement of lawsuit 0 0 0 15,000
Services (provided by
officers and directors) 0 0 0 100,000
Share issue costs 0 0 0 (100,500)
Services 0 0 0 50,000
Conversion of convertible
debentures (note 7(a)) 0 0 0 525,813
Acquisition of subsidiary 0 0 0 619,200
Held in escrow (note 7(a)) 0 0 0 0
Stock option benefit 0 0 0 70,600
Beneficial conversion feature 0 0 0 566,456
Foreign currency translation 0 8,444 0 8,444
Net loss for year 0 0 (1,404,021) (1,404,021)
---------- ----------- ----------- -----------
BALANCE JUNE 30, 1999 (284,068) 44,679 (3,508,454) 268,424
SHARES ISSUED FOR

Cash on private placement 0 0 0 3,975,000
Exercise of options 0 0 0 256,700
Release from escrow (note 7(a)) 0 0 0 75,558
Services 0 0 0 13,000
On settlement of debt 0 0 0 664,410
Stock option benefit 0 0 0 48,256
Promissory note repayment 225,568 0 0 225,568
Foreign currency translation 0 1,614 0 1,614
Net loss for year 0 0 (1,537,402) (1,537,402)
----------- ----------- ----------- -----------
BALANCE, JUNE 30, 2000 $ (58,500) $ 46,293 $(5,045,856) $ 3,991,128
----------- ----------- ----------- -----------
</TABLE>

F-6

See notes to consolidated financial statements.
<PAGE> 25

INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2000, 1999 AND 1998 AND PERIOD FROM FEBRUARY 12, 1996
(INCEPTION) THROUGH JUNE 30, 2000
(U.S. DOLLARS)

<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 12,
1996
YEAR ENDED YEAR ENDED YEAR ENDED (INCEPTION)
JUNE 30, JUNE 30, JUNE 30, THROUGH
2000 1999 1998 JUNE 30, 2000
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $(1,537,402) $(1,404,021) $ (937,373) $(5,045,856)
Adjustments to reconcile net loss to
net cash used in operating activities
Extraordinary item 0 0 (602,843) (602,843)
Consulting services and financing fees 113,683 150,000 0 361,719
Depreciation and amortization 104,388 13,466 14,000 143,225
Stock option compensation benefit 48,256 70,600 0 118,856
Interest on beneficial conversion 0 566,456 0 566,456
Settlement of lawsuit 0 15,000 0 15,000
Write-down of license and operating assets 0 0 424,654 424,654
Changes in non-cash working capital
Due from affiliated company 0 0 (112,922) (116,000)
Notes and accounts receivable 176,926 (284,068) 0 (107,142)
Inventory (25,000) 0 0 (25,000)
Prepaid expenses (5,395) 0 0 (5,395)
Deferred revenue 13,232 0 0 13,232
Other 0 0 757 (2,609)
Accounts payable and accruals 236,171 217,967 208,737 780,682
Due to West Virginia University
Research Corporation 0 0 157,384 397,296
Due to affiliated companies 0 0 (50,000) 0
Due to officers and directors 0 (33,229) 23,229 0
----------- ----------- ----------- ------------
NET CASH USED BY OPERATING ACTIVITIES (875,141) (687,829) (874,377) (3,083,725)
----------- ----------- ----------- ------------
INVESTING ACTIVITIES
Purchase of property, equipment and
intangibles assets (22,995) (33,908) 0 (134,534)
Assets acquired and liabilities assumed
on purchase of subsidiary 0 (129,474) 0 (129,474)
Investment in and advances to affiliated
companies (300,000) 0 0 (1,050,000)
License agreements 0 0 0 (124,835)
----------- ----------- ----------- ------------
NET CASH USED BY INVESTING ACTIVITIES (322,995) (163,382) 0 (1,438,843)
----------- ----------- ----------- ------------
FINANCING ACTIVITIES

Advances from stockholders 0 79,412 240,705 1,078,284
Repayments to stockholders 0 (94,046) 0 (94,046)
Liability to issue common stock 0 (25,000) 25,000 0
Proceeds from issuance of common stock 4,104,575 383,068 650,000 6,028,157
Proceeds from convertible debentures 0 600,000 0 600,000
Share issue costs 0 (100,500) (78,000) (227,420)
----------- ----------- ----------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,104,575 842,934 837,705 7,384,975
----------- ----------- ----------- ------------
EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH 1,614 8,444 24,860 46,293
----------- ----------- ----------- ------------
INCREASE (DECREASE) IN CASH 2,908,053 167 (11,812) 2,908,700
CASH, BEGINNING OF PERIOD 647 480 12,292 0
----------- ----------- ----------- ------------
CASH, END OF PERIOD $ 2,908,700 $ 647 $ 480 $ 2,908,700
=========== =========== =========== ============
</TABLE>

Supplemental cash flow information (note 9)

F-7

<PAGE> 26

INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2000, 1999 AND 1998 AND PERIOD FROM FEBRUARY 12, 1996
(INCEPTION) THROUGH JUNE 30, 2000
(U.S. DOLLARS)

1. INCORPORATION AND NATURE OF OPERATIONS

The Company was incorporated under the laws of the State of Nevada on
February 12, 1996 and has its head office in Bellingham, Washington,
U.S.A. The Company is in the development stage as more fully defined in
Statement No. 7 of the Financial Accounting Standards Board. The
Company is in the business of researching, developing and
commercializing various technologies directly and through its three
subsidiaries.

To June 30, 2000, the Company directly and through its subsidiaries,
has expended its resources on the research and development of four
types of technologies:

(a) Antennas;

(b) Three Dimensional ("3D") Color Machine Vision;

(d) RF Plasma Ignition System (New Spark Plug).

Through two of its subsidiaries, Antek Wireless, Inc. ("Antek")
(formerly NextAntennas.com, Inc.) and Emergent Technologies Corporation
("ETC"), the Company has been researching and developing six new
antenna technologies.

Through a third subsidiary, Integral Vision Systems, Inc. ("IVSI"), the
Company has been researching and developing the 3D and 2D Color Machine
Vision technology.

The Company has been directly researching and developing the RF Plasma
Ignition System technology.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Principles of consolidation

These financial statements include the accounts of Integral
Technologies, Inc. (a development stage company), its
wholly-owned subsidiaries, IVSI (a development stage company)
and Antek (a development stage company) and its 76.625% owned
subsidiary ETC (a development stage company). All intercompany
balances and transactions have been eliminated.

(b) Inventories

Inventories are stated at the lower of cost and market. Cost
is determined using the first-in-first-out method.

Depreciation and amortization are provided using the
straight-line method based on the following estimated useful
lives:

Machinery, furniture and equipment - 5 Years
Computer hardware and software - 5 Years

The Company reviews long-term assets to determine if the
carrying amount is recoverable based on the estimate of future
cash flow expected to result from the use of the asset and its
eventual disposition. If in this determination there is an
apparent shortfall, the loss will be recognized as a current
charge to operations.

F-8
<PAGE> 27

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(d) Loss per share

Loss per share computations are based on the weighted average
number of common shares outstanding during the period. Common
share equivalents consisting of stock options are not
considered in the computation because their effect would be
anti-dilutive.

(e) Stock issued in exchange for services

The valuation of the common stock issued in exchange for
services is valued at an estimated fair market value as
determined by officers and directors of the Company based upon
other sales and issuances of the Company's common stock within
the same general time period.

(f) Revenue recognition

As the Company is continuing development of its technologies,
no significant revenues have been earned to date. The Company
recognizes revenues at the time of delivery of the product to
the customers.

(g) Foreign currency translation

Amounts recorded in foreign currency are translated into
United States dollars as follows:

(i) Monetary assets and liabilities are translated at the
rate of exchange in effect at the balance sheet date;
and,

(ii) Revenues and expenses, at the average rate of
exchange for the year.

Gains and losses arising from this translation of foreign
currency are excluded from net loss for the period and
accumulated as a separate component of shareholders' equity
(deficiency).

(h) License agreements and intangibles

The Company is in the development stage with respect to the
technologies acquired pursuant to the license agreements. At
such time as commercial production commences, those costs will
be charged to operations using the straight-line method over a
20 year period. When there is little prospect of further
development of the technology by the Company, the costs of
that license agreement will be charged to operations.

(i) Research and development

Research and development expenditures are charged to
operations as incurred.

(j) 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 disclosures 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 and would impact future results of operations
and cash flows.

F-9
<PAGE> 28

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(k) Financial instruments

The Company's financial instruments include cash, accounts
receivable, promissory notes receivable, investments, accounts
payable and accruals, due to West Virginia University Research
Corporation, short-term loan and long-term debt. Unless
otherwise noted, in the opinion of management, the carrying
value of these financial instruments approximates their fair
market values and the Company is not exposed to significant
credit, interest or currency risk.

(l) Income taxes

The Company uses the asset and liability approach in its
method of accounting for income taxes which requires the
recognition of deferred tax liabilities and assets for
expected future tax consequences of temporary differences
between the carrying amounts and the tax basis of assets and
liabilities. A valuation allowance against deferred tax assets
is recorded if, based upon weighted available evidence, it is
more likely than not that some or all of the deferred tax
assets will not be realized.

(m) Stock based compensation

The Company applies APB Opinion No. 25 and related
interpretations in accounting for its employee stock option
plans. Compensation expense is recorded when options are
granted to management at discounts to market.

(n) Interest on beneficial conversion

The beneficial conversion features relating to the 2%
convertible debenture (note 7) and promissory note are
accounted for as interest. This policy conforms to the
accounting for these transactions announced by the SEC staff
in March, 1997.

(o) Recent accounting pronouncements

(i) In June 1999, the Financial Accounting Standards
Board ("FASB") issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No.
133." This statement defers the effective date of
SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities," to fiscal years beginning
after June 15, 2000, although early adoption is
encouraged. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments. It
requires a company to recognize all derivatives as
either assets or liabilities in the statement of
financial position and to measure those instruments
at fair value. Additionally, the fair value
adjustments will effect either stockholders' equity
or net income depending on whether the derivative
instrument qualifies as a hedge for accounting
purposes and, if so, the nature of the hedging
activity. The Company will adopt this standard as of
July 1, 2000. Management does not expect the adoption
to have a material effect on the Company's results of
operations; however, the effect on the Company's
financial position depends on the fair values of the
Company's derivatives and related financial
instruments at the date of adoption.

F-10

<PAGE> 29

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(ii) In December 1999, the SEC issued Staff Accounting
Bulletin ("SAB") 101, "Revenue Recognition," which
outlines the basic criteria that must be met to
recognize revenue and provides guidance for
presentation of revenue and for disclosure related to
revenue recognition policies in financial statements
filed with the SEC. The Company believes the adoption
of SAB 101 will not have a material impact on the
Company's financial position and results of
operations.

(iii) In March 2000 the Financial Accounting Standards
Board issued "Interpretation #44, Accounting for
Certain Transactions Involving Stock Compensation".
Among other issues, this interpretation clarifies:

(a) The definition of employee for purposes of
applying APB Opinion No. 25.

(b) The criteria for determining whether a plan
qualifies as a noncompensatory plan.

(d) The accounting for an exchange of stock
compensation awards in a business
combination.

In relation to (c) the interpretation states, "if the
exercise price of a fixed stock option award is
reduced, the award shall be accounted for as a
variable from the date of the modification to the
date the award is exercised, is forfeited, or expired
unexercised, the exercise price of an option award
has been reduced if the fair value of the
consideration required to be remitted pursuant to the
award's original terms."

The interpretation is generally effective July 1,
2000 and the Company may incur additional
compensation expense in fiscal 2001.

3. ACQUISITIONS

(a) In September 1996, the Company entered into a letter agreement
to acquire a 10% interest in ETC (a development stage company)
from two related parties of the Company for consideration of
$100,000. The Company had an option to acquire the remaining
90% interest in ETC by issuing 1,800,000 shares of common
stock of the Company and by funding ETC's research and
development of the Contrawound Toroidal Helical Antenna for
government and military applications (note 1) to a minimum of
$1,200,000 (of which the Company advanced a total of
$650,000). The Company issued 1,800,000 shares which at the
1998 year-end were held by ETC's attorney in escrow subject to
the closing of the final agreement (which was closed March 11,
1999). The shares were released from escrow and are recorded
in these financial statements at $0.344 per share, the closing
market trading price on the NASD market on March 11, 1999. The
1,800,000 shares and the $650,000 advanced entitles the
Company to a further 70% interest in ETC.

During the year ended June 30, 1999, third party investors
contributed $470,588 in cash for a 20% interest in ETC. The
same investors contributed a further $79,412 which they
converted into common stock of ETC during the year ended June
30, 2000. This amount was recorded as due to minority interest
at June 30, 1999. This transaction diluted the Company's
ownership interest in ETC to 76.625%. No gain or loss was
recorded on the transaction. Any change resulting from this
transaction was recorded as an adjustment to the cost of
license.

F-11

<PAGE> 30

3. ACQUISITIONS (Continued)

(b) During the year ended June 30, 2000 the Company entered into a
stock purchase agreement with Continental Divide Robotics,
Inc. ("CDRI"), whereby the Company will acquire a total of
17,610 shares in common stock of CDRI representing a 30%
ownership interest. Consideration for this acquisition is as
follows:

(i) Upon payment of $500,000 issuance of 8,407 shares. As
at June 30, 2000 the Company had paid $300,000,
subsequent to June 30, 2000 the Company paid the
additional $200,000 and obtained the 8,407 shares of
CDRI.

(ii) On or before December 31, 2000 the Company will
subscribe for the right to purchase an additional
9,203 shares for total consideration of $2,300,000
payable on or before December 31, 2000. A minimum of
$750,000 of this amount is payable in monthly
instalments of $125,000 starting August 15, 2000
through December 15, 2000, the balance due December
31, 2000. For each cash payment of $125,000 the
Company will receive 500 shares of CDRI (the August
15, 2000 payment was paid).

4. PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
2000 1999
---- ----
ACCUMULATED
AMORTIZATION
AND
COST DEPRECIATION NET NET
-------- ------------ -------- --------
<S> <C> <C> <C> <C>
Machinery, furniture and equipment $ 79,577 $ 42,187 $ 37,390 $ 33,949
Computer hardware and software 21,419 17,229 4,190 8,289
-------- --------- -------- --------
$100,996 $ 63,083 $ 41,580 $ 42,238
======== ========= ======== ========
</TABLE>

5. LICENSE AGREEMENTS

(a) Toroidal Helical Antenna

ETC was formed to develop, commercialize, market and
manufacture certain proprietary Toroidal Helical Antenna
Technology ("the Technology"). The Company obtained an
exclusive sub-license to the technology from Integral
Concepts, Inc. ("ICI"), a company 100% controlled by a former
shareholder of ETC (note 3(a)), a significant shareholder of
the Company, and an employee of West Virginia University
Research Corporation ("WVURC") of its right, title and
interest in and to all worldwide government and military
applications and resulting procurement interests in the
Technology. ICI obtained the license to the Technology from
WVURC. WVURC has the proprietary interest in and holds the
patents to the technology.

F-12

<PAGE> 31

5. LICENSE AGREEMENTS (Continued)

Pursuant to an agreement dated January 2, 1996 with ICI, ETC acquired the
right to manufacture and market the Toroidal Helical Antenna Technology.
The Company is obligated to pay a $3,000 minimum annual royalty to WVURC to
maintain the license in good standing. In addition, a further 10% royalty
of any net revenues is payable to WVURC on behalf of ICI, such royalties to
be reduced by the $3,000 minimum annual royalty payment. To date there have
been no net revenues.

The license is automatically renewed for one year periods each December 31
as long as the required minimum royalty payments described above are paid
to WVURC on behalf of ICI.

Either party may terminate this agreement upon 90 days written notice. The
Company is responsible for the reimbursement of project development costs
incurred by WVURC.

(b) Plasma Ignition System

Pursuant to an agreement dated February 15, 1996 with ICI, the Company
acquired the rights to manufacture and market the Plasma Ignition System,
an ignition system for internal combustion engines, for a license fee of
$8,251. The Company is obligated to pay a $3,000 minimum annual royalty to
WVURC on behalf of ICI to maintain the license in good standing. In
addition, a further 10% royalty of any net revenues is payable to WVURC on
behalf of ICI and a 1% royalty of any gross revenues is payable to ICI.
Such royalties are to be reduced by the $3,000 minimum annual royalty. To
date there have been no net revenues.

The license is automatically renewed for one year periods each December 31
as long as the required minimum royalty payments described above are paid
to WVURC on behalf of ICI.

Pursuant to an agreement dated February 9, 1996 with WVURC, the Company is
responsible for the reimbursement of project development costs which are
incurred by WVURC. To June 30, 2000, $445,570 (1999 - $445,570) of project
development costs has been paid or is payable to WVURC (note 13). Either
party may terminate this agreement upon 90 days written notice.

The Company does not intend to further develop this technology in the
foreseeable future.

Pursuant to an agreement dated February 9, 1996 with ICI, the Company
acquired the right to manufacture and market the 2D Machine Vision
Colorimetry, a counterfeit currency determination software. The Company is
obligated to pay a $3,000 minimum annual royalty to WVURC to maintain the
license in good standing. In addition, a further 10% royalty of any net
revenues is payable to WVURC on behalf of ICI, such royalties to be reduced
by the $3,000 minimum annual royalty payment. To date there have been no
net revenues.

The license is automatically renewed for one year periods each December 31
as long as the required minimum royalty payments described above are paid
to WVURC on behalf of ICI.

Pursuant to an agreement dated February 9, 1996 with WVURC, the Company is
responsible for the reimbursement of project development costs incurred by
WVURC. To June 30, 2000, $350,151 (1999 - $350,151) of project development
costs has been paid or is payable to WVURC (note 13). Either party may
terminate this agreement upon 90 days written notice.

The Company does not intend to further develop this technology in the
foreseeable future.

F-13
<PAGE> 32

5. LICENSE AGREEMENTS (Continued)

(d) 3D Machine Vision Colorimetry

The Company's subsidiary, IVSI, acquired the right to manufacture and
market the 3D Machine Vision Colorimetry, a color quality control software.
IVSI is obligated to pay a $3,000 minimum annual royalty to WVURC to
maintain the license in good standing. In addition, a further 10% royalty
of any net revenues is payable to WVURC on behalf of ICI, such royalties to
be reduced by the $3,000 minimum annual royalty payment. To date there have
been no net revenues.

The license is automatically renewed for one year periods each December 31
as long as the required minimum royalty payments described above are paid
to WVURC on behalf of ICI. Either party may terminate this agreement upon
90 days written notice.

The operations of IVSI have ceased while management seeks a technology
partner.The Company does not intend to further develop this technology in
the foreseeable future.

6. SHORT-TERM LOAN

Unsecured 8% loan with no stated terms for repayment.

7. LONG-TERM DEBT

<TABLE>
<CAPTION>
2000 1999
-------- --------
<S> <C> <C>
2% convertible debenture, due
January 2004 convertible at the
holder's option into common
stock of the Company $0 $75,000

10% Loan repayable on demand
with one year's notice to two
officers and directors of the
Company (note 8(c)) 0 301,170
-------- --------
$0 $376,170
======== ========
</TABLE>

(a) During the year ended June 30, 1999, the Company issued $600,000, 2%
convertible debentures. Of this amount $525,000 was converted to
3,869,120 shares of common stock during the year ended June 30, 1999,
and a further 447,091 shares for the balance of $75,000 plus interest
during the year ended June 30, 2000.

F-14
<PAGE> 33

7. LONG-TERM DEBT (Continued)

(b) During the year ended June 30, 1998, all rights, title and interest in
a revolving line of credit, due to an officer and director of the
Company was conveyed to the Company for $1 and the loan was cancelled.
The line of credit balance of $563,843 and accrued interest of $39,000
is recorded as an extraordinary item in the consolidated statement of
operations for the year ended June 30, 1998.

8. STOCKHOLDERS' EQUITY

(a) Common stock

During the year ended June 30, 2000, the Company completed a private
placement whereby 2,650,000 shares of common stock were issued at a
price of $1.50 per share and 1,325,000 share purchase warrants for
$0.001 per warrant exercisable into common stock at a price of $1.80
for a period of two years. The warrants may be redeemed by the Company
at $.01 per warrant if the market value of the common stock of the
Company trades above $10.00 for 10 consecutive days.

(b) During the year ended June 30, 2000, the Company entered into a
private placement agreement with Swartz Private Equity, LLC ("Swartz")
which calls for periodic purchases over the next three years of up to
$25,000,000 of the Company's common stock. Each periodic purchase
("put") will have a purchase price equal to the lesser of the market
price minus $0.25, or 91% of the market price, but no less than a
stated minimum purchase price which cannot be greater than 80% of the
market price on that date.

Each put cannot exceed:

(i) $2,000,000 worth of common stock;

(ii) 15% of the aggregate reported trading volume of the Company's
common stock during the 20 business days before and after the
date of notice to exercise each put; and,

(iii) a number of shares acquired in a 31 day period would exceed
9.99% of the Company's total number of shares of common stock
outstanding at that time.

At the time of each put, the Company will issue Swartz a purchase
warrant which will give Swartz the right to purchase up to 10% of the
number of shares issued in the put, each warrant will be immediately
exercisable for a five year period for a price equal to 110% of the
market price for such put.

As partial consideration of the investment agreement the Company
issued warrants to Swartz to purchase 495,000 shares of common stock
(note 8(e)(ii)).

F-15
<PAGE> 34

8. STOCKHOLDERS' EQUITY (Continued)

The preferred stock may be issued in one or more series. The
distinguishing features of each series including preference, rights
and restrictions are to be determined by the Company's Board of
Directors upon the establishment of each such series.

During the year ended June 30, 2000, the Company designated 1,000,000
of its authorized 20,000,000 preferred shares as Series A Convertible
Preferred Stock with a par value of $0.001 each. Cumulative dividends
are accrued at the rate of 5% annually, payable at the option of the
Company. The shares may be converted to restricted shares of common
stock at the average trading price ten days prior to conversion, and
entitled to votes equal to the number of shares of common stock into
which each series of preferred stock may be converted. Each Series A
Convertible Preferred Stock may be redeemed by the Company for $1.50
each within one year after the date of issue, and for $2.00, $2.50,
$3.00 per share and $3.50 in each of the subsequent four years after
date of issue.

During the year ended June 30, 2000, the Company agreed to settle
$383,228 of accounts payable and $281,182 of long-term debt, both
amounts owed to officers and directors of the Company, by issuing
664,410 shares of Series A convertible preferred stock at $1.00 per
share.

(d) Stock options

Pursuant to the Company's 1996 Incentive Compensation Plan as
subsequently amended in 1999, the Company may issue stock options and
stock bonuses for common stock of the Company to provide incentives to
officers, directors, key employees and other persons who contribute to
the success of the Company. The exercise price of the Incentive
Options (employees of the Company or its subsidiaries) is no less than
the fair market value of the stock at the date of the grant and for
non-employees the exercise price is no less than 80% of the fair value
(defined as the most recent closing sale price reported by NASDAQ) on
the date of the grant.

F-16
<PAGE> 35

8. STOCKHOLDERS' EQUITY (Continued)

The following table summarizes the Company's stock option activity for the
years ended June 30, 2000, 1999 and 1998.

<TABLE>
<CAPTION>
WEIGHTED
EXERCISE AVERAGE
NUMBER PRICE EXERCISE
OF SHARES PER SHARE PRICE
--------- ---------------- --------
<S> <C> <C> <C>
BALANCE JUNE 30, 1998 AND 1997 1,990,000 $ 0.15 to $ 2.00 $ 0.24
Granted during year ended
June 30, 1999 1,635,000 $ 0.15 to $ 0.25 $ 0.17
Cancelled (1,260,000) $ 0.15 $ 0.15
Exercised (445,000) $ 0.15 to $ 0.25 $ 0.18
--------- ---------------- --------
BALANCE JUNE 30, 1999 1,920,000 $ 0.15 to $ 2.00 $ 0.26
Granted during year ended
June 30, 2000 960,000 $ 0.15 to $ 0.40 $ 0.19
Cancelled (25,000) $ 0.15 $ 0.15
Exercised (1,245,000) $ 0.15 to $ 0.40 $ 0.21
--------- ---------------- --------
BALANCE JUNE 30, 2000 1,610,000 $ 0.15 to $ 2.00 $ 0.27
========= ================ ========
</TABLE>

The following summarizes the options outstanding at June 30, 2000 and 1999 all
of which were fully vested at these dates:

<TABLE>
<CAPTION>
EXERCISE NUMBER
EXPIRY DATE PRICE 2000 1999
----------- ------- --------- ---------
<S> <C> <C> <C>
January 30, 2001 $ 0.15 1,270,000 1,320,000
January 30, 2001 $ 0.20 240,000 500,000
February 7, 2000 $ 2.00 100,000 100,000
</TABLE>

The exercise price per share at June 30, 1998 and 1997 ranged from $0.50 to
$2.00. During the year ended June 30, 1999, 1,260,000 of the 1,990,000 stock
options were cancelled, and 630,000 stock options were repriced to $0.15 to
$0.25. These changes have been retroactively adjusted above.

F-17
<PAGE> 36

8. STOCKHOLDERS' EQUITY (Continued)

The Company applies APB Opinion No. 25 and related interpretations in
accounting for its stock options granted to employees, and accordingly,
compensation expense of $10,800 (1999 - $9,200) was recognized as salaries
expense. Had compensation expense been determined as provided in SFAS 123
using the Black-Scholes option - pricing model, the pro-forma effect on the
Company's net loss and per share amounts would have been as follows:

<TABLE>
<CAPTION>
2000 1999
-------------- --------------
<S> <C> <C>
Net loss, as reported $ (1,537,402) $ (1,404,021)
Net loss, pro-forma (1,568,842) (1,415,061)
Net loss per share, as reported $ (0.07) $ (0.08)
Net loss per share, pro-forma $ (0.07) $ (0.08)
</TABLE>

The fair value of each option grant is calculated using the following
weighted average assumptions:

<TABLE>
<CAPTION>
2000 1999
-------------- --------------
<S> <C> <C>
Expected life (years) 3 3
Interest rate 6.00% 6.00%
Volatility 81.19% 81.19%
Dividend yield 0.00% 0.00%
</TABLE>

During the year the Company granted 460,000 (1999 - 1,275,000) stock
options to consultants. These options have been recognized applying SFAS
123 using the Black-Scholes option-pricing model which resulted in
additional legal and consulting fees of $37,455 (1999 - $67,400) in the
accounts.

(e) At June 30, 2000, the following stock purchase warrants were outstanding:

(i) 1,325,000 (1999 - Nil) with an exercise price of $1.80 exercisable for
a period of two years; and
(ii) 495,000 (1999 - Nil) with an exercise price of $1.306 exercisable for
a period of five years.

(f) Promissory notes receivable includes:

(i) $31,500 due on exercise of 210,000 stock options, interest at 10% per
annum, due November 1, 2001; and,

(ii) $27,000 due on exercise of 135,000 stock options, interest at 8% per
annum, due June 6, 2001.

F-18
<PAGE> 37

9. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 12,
1996
YEAR ENDED YEAR ENDED YEAR ENDED (INCEPTION)
JUNE 30, JUNE 30, JUNE 30, THROUGH
2000 1999 1998 JUNE 30, 2000
---------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
Issue of common stock
For property and equipment $ 0 $ 0 $ 0 $ 15,000
For services (provided by officers and directors) 0 100,000 0 120,000
For settlement of lawsuit 0 15,000 0 15,000
For services 113,125 50,000 0 261,161
For acquisition of subsidiary 0 619,200 0 894,200
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid 0 0 41,385 81,111
Income tax paid 0 0 0 0
</TABLE>

10. RELATED PARTY TRANSACTIONS

(a) Accounts payable at June 30, 2000 include $23,001 (1999 - $383,500)
due to two directors and officers of the Company. This amount includes
management salaries which bear interest at 10% per annum, due based on
normal commercial terms and accrued interest on the accrued management
salaries and long-term debt (note 8(c)).

(b) Long-term debt includes $Nil (1999 - $301,170; 1998 - $396,029) due to
officers and two directors of the Company (note 8(c)).

(c) The Company incurred $240,000 (1999 - $290,000; 1998 - $220,000) for
wages to two directors and officers of the Company and $42,090 (1999 -
$93,500) for interest for amounts owed to these directors. Of the 1999
amount, $100,000 was settled by issue of 666,666 shares of common
stock.

(d) The Company paid $Nil (1999 - $23,670; 1998 - $9,100) to two officers
and directors for consulting fees.

F-19
<PAGE> 38

11. INCOME TAXES

Deferred income taxes reflect the tax effects of the temporary differences
between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for tax purposes. The components of
the net deferred income tax assets are as follows:

<TABLE>
<CAPTION>
2000 1999 1998
------------- ------------- -------------
<S> <C> <C> <C>
Deferred income tax assets
Net operating loss and credit
carryforwards $ 1,933,000 $ 1,460,000 $ 984,000
Timing differences on property and
equipment depreciation (600) 2,600 2,900
------------- ------------- -------------
Gross deferred tax assets 1,932,400 1,462,600 986,900
Valuation allowance (1,932,400) (1,462,600) (986,900)
------------- ------------- -------------
$ 0 $ 0 $ 0
============= ============= =============
</TABLE>

As at June 30, 2000 the Company's net operating loss carryforwards for
income tax purposes were approximately $5,500,000. If not utilized, they
will start to expire in 2017.

12. INTEREST ON BENEFICIAL CONVERSION

During the year ended June 30, 1999 the Company converted debt into common
stock. The difference between the market value of the Company's shares on
the date of conversion and the conversion rate pursuant to $525,000 of the
convertible debenture (note 7(a)) issued during the year ended June 30,
1999 was $398,077.

During the year ended June 30, 1999 the Company issued 1,683,789 shares of
common stock for a promissory note in the amount of $252,568. The
difference between the market value of the Company's shares and the issue
price of 1,683,789 shares for a promissory note in the amount of $252,568
was $168,379. These amounts have been recorded as interest expense in the
statements of operations.

13. CONTINGENCIES

(a) A dispute exists between WVURC and the Company with respect to the
development work performed by WVURC on the Plasma Ignition System and
the Counterfeit Detection Technology. The Company has included in its
accounts the amount alleged by WVURC to be owing to WVURC of $397,296,
however, it is the opinion of management that this amount should be
reduced to an amount not greater than $43,052. Management intends to
defend this position. As the actual outcome cannot be determined at
this time, any adjustments required will be recorded by the Company
when settlement occurs.

F-20
<PAGE> 39

13. CONTINGENCIES (Continued)

(b) Integral Technologies, Inc., Antek, ETC. and Jack Parsons, a director
of the Company, are defendants in a lawsuit filed in May 2000 in the
United States District Court for the Northern District of West
Virginia by IAS Communications, Inc. ("IAS"). IAS claims that,
pursuant to agreement by and among IAS, ICI and ETC, IAS acquired the
exclusive right to commercial applications of certain patented and
proprietary antenna technology developed at West Virginia University
and ETC acquired exclusive rights to military applications of such
technology. IAS claims that ETC breached its agreement by pursuing
commercial applications of the technology. IAS further claims that all
defendants misappropriated certain trade secrets and interfered with
IAS's economic relations. In addition, IAS claims that Jack Parsons
breached certain fiduciary duties. IAS seeks injunctive relief
prohibiting the defendants from disclosing certain information related
to the technology; an order requiring defendants to account for any
profits from the alleged conduct, return any proprietary materials to
IAS and destroy all devices created in violations of IAS's rights; and
a money judgement in an amount to be determined at trial, but no less
than $15,000,000. It is the opinion of management of the Company that
the claims filed by IAS have no merit. The defendants have filed
answers denying IAS's claims. There is no assurance that the outcome
of the litigation will be favourable to the Company, and an
unfavourable outcome would have a material adverse effect on the
business of the Company. As the outcome cannot be determined at this
time, the adjustment required, if any, will be recorded by the Company
when settlement occurs.

14. COMPREHENSIVE LOSS

<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 12,
1996
(INCEPTION)
YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1999 1999 1998 2000
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net loss $ (1,537,402) $ (1,404,021) $ (937,373) $ (5,045,856)
Other
comprehensive
income 1,614 8,444 24,860 46,293
--------------- --------------- --------------- ---------------
Comprehensive
loss $ (1,535,788) $ (1,395,577) $ (912,513) $ (4,999,563)
</TABLE>

F-21
<PAGE> 40

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.

(a) Directors and Executive Officers of Registrant. Integral has a Board of
Directors which is currently comprised of three members. Each director
holds office until the next annual meeting of shareholders or until a
successor is elected or appointed. The members of the Board and the
executive officers of Integral and their respective age and position are as
follows:

<TABLE>
<CAPTION>
Director of
Name Age Position with Registrant Registrant Since
---- --- ------------------------ ----------------
<S> <C> <C>
William S. Robinson 43 Chairman, CEO and Treasurer February 1996

William A. Ince 49 Director, President, Secretary and Chief February 1996
Financial Officer

Denzel Jack Parsons 51 Director October 4, 1999
</TABLE>

(b) Directors and Executive Officers of Antek. Integral's subsidiary, Antek,
has a Board of Directors which is comprised of four members who hold office
until the next annual meeting of shareholders or until a successor is
elected or appointed. The members of the Board and the executive officers
of Antek and their respective age and position are as follows:

<TABLE>
<CAPTION>
Director of
Name Age Position with Antek Antek Since
---- --- ------------------------ -------------
<S> <C> <C> <C>
William S. Robinson 43 Chairman, CEO and Treasurer November 1999

William A. Ince 49 Director, President, Secretary and Chief November 1999
Financial Officer
Abraham Wei 40 Director July 2000

Joseph Jeng 45 Director July 2000
</TABLE>

(c) Directors and Executive Officers of Emergent. Integral's subsidiary,
Emergent, has a Board of Directors which is compromised of three members.
Each director holds office until the next annual meeting of shareholders or
until a successor is elected or appointed. The members of the Board and the
executive officers of Emergent and their respective age and position are as
follows:

<TABLE>
<CAPTION>
Director of
Name Age Position with Emergent Emergent Since
---- --- ------------------------ -------------
<S> <C> <C> <C>
Denzel Jack Parsons 51 Director and President October 1995

William S. Robinson 43 Director and Treasurer December 1997

William A. Ince 49 Director and Secretary December 1997
</TABLE>

16
<PAGE> 41

(d) Directors and Executive Officers or Integral Vision. Integral's subsidiary,
Integral Vision, has a Board of Directors which is comprised of two
members. Each director holds office until the next meeting of shareholders
or until a successor is elected or appointed. The members of the Board and
the executive officers of Integral Vision and their respective age and
position are as follows:

<TABLE>
<CAPTION>
Director of
Integral Vision
Name Age Position with Integral Vision Since
---- --- ------------------------ -------------
<S> <C> <C> <C>
William S. Robinson 43 Chairman, CEO and Treasurer March 11, 1997

William A. Ince 49 Director, President, Secretary and Chief March 11, 1997
Financial Officer
</TABLE>

(b) Family Relationships. None.

DIRECTORS AND EXECUTIVE OFFICERS OF INTEGRAL

WILLIAM ROBINSON
(Chairman, CEO and Treasurer)

As a co-founder, and significant shareholder of Integral, Mr. Robinson has been
responsible since the inception of Integral of securing funding, including the
commitment of personal funds, in order to ensure the ongoing operations of
Integral and its subsidiaries. Together with Mr. Ince, he has been responsible
for the development and implementation of corporate strategies.

During the period 1988 to 1996, Mr. Robinson was President of Achieva
Development Corporation. Achieva is a mining company with properties located in
various counties throughout the world.

Mr. Robinson brings many years of management experience in finance, banking and
corporate development. Previously, he acted as a director of a number of private
and public companies involved in natural resources, sales and marketing, and
computer technologies.

WILLIAM A. INCE
(Director, President, Secretary and Chief Financial Officer)

Mr. Ince, a co-founder and significant shareholder of Integral, is responsible,
along with Mr. Robinson for the development and implementation of corporate
strategies. He is responsible for cash management of Integral and its
subsidiaries.

Prior to his engagement with Integral, Mr. Ince was a self-employed management
consultant for a period of five years.

Mr. Ince brings with him a background as a professional accountant and
experience from management positions in finance and operations in several
private companies. He has held significant equity positions in companies in
various industries. He has consulted to both private and public companies in the
areas of marketing and finance, as well as turn-around situations. Mr. Ince has
been responsible for "team building" efforts to ensure that each project is
brought to fruition on a timely basis.

17
<PAGE> 42

JACK PARSONS
(Director)

Mr. Parsons' career began as a member of the US Army Special Forces from
1967-1981, serving in multiple countries, including Vietnam. From 1981 to 1987,
Mr. Parsons served in numerous leadership roles with the Joint Communications
Unit, including Requirements Manager for the Communications Enhancement Program
for Joint Special Operations Forces. Following military retirement, as a program
manager for Tracor Inc., Mr. Parsons established and managed the Field Technical
Unit for the direct support to US Joint Special Operations Forces. In his role
with Tracor, Mr. Parsons was responsible for the development and fielding of
Light Weight Deployable Communications and Table Top Base Station for Special
Forces' use. Mr. Parsons led the deployment of these systems in support of
Operation Desert Storm.

In 1991, Mr. Parsons established Wintec, Inc. to provide engineering development
services to the government base, relying on his knowledge of government contract
and procurement procedures. Wintec has secured, and continues to secure,
multi-million dollar, multi-year contracts with the Department of Defense. In
1995, Mr. Parsons left Wintec and has since served as President of Integral's
subsidiary, Emergent.

SIGNIFICANT EMPLOYEES OF THE COMPANY AND ITS SUBSIDIARIES

ABRAHAM WEI
(Director of Antek)

Mr. Wei, chairman of the board of Antek, serves as an advisor to Integral on a
variety of issues relating to market opportunities, product manufacturing and
ongoing corporate development of the company.

As the CEO and founder of Vpacket Communications, Inc., Mr. Wei brings 15 years
of diverse business experience in engineering, manufacturing and sales in the
networking industry. Mr. Wei has held various positions with increasing scope
and responsibility over the past seven years at Ascend Communications, Inc.,
most recently as Vice President, Worldwide Sales Operations. Prior to that
position, Mr. Wei was Vice President of Manufacturing Operations and managed
Ascend's manufacturing operations throughout the Company's astronomical growth
from $40.0 million in sales in 1994 to $1.2 billion in sales in 1997. As a
former Director of Ascend Communications, Mr. Wei maintains a personal and
professional relationship with the executive management of Ascend.

Mr. Wei holds an MBA from Pepperdine University and B.S. in Computer Science
from the University of California, Berkley.

DAVID WASSOM
(Vice-President of Worldwide Sales-Antenna Products, Antek)

The appointment of Mr. Wassom as Vice President Worldwide Sales is the first
step in the implementation of an infrastructure which will provide for the
commercialization of the Company's line of antenna products on a timely basis.

Mr. Wassom will assess the current status of the Company's antenna sales. He
will focus on (1) those customers who have placed orders and are awaiting
delivery; (2) potential customers who are in the process of testing the
Company's antennas; and 3) those prospective customers who have expressed an
interest in the antennas through the request of such information as performance,
form factor and cost. In addition, Mr. Wassom will set up a sales force
comprised of both full time sales representatives and sales agents. The
territories to be covered initially will be North America and the Far East.

Mr. Wassom has over 11 years of experience in the electronics industry. Prior to
joining the Integral team, Mr. Wassom was a Major Account Executive for TAARCOM,
one of the oldest and most respected Manufacturer's Representatives in the San
Francisco Bay Area. He was the recipient of the "Salesman of the Year" award at
TAARCOM and participated in the creation of the sales and marketing tools used
by a worldwide sales force.

18
<PAGE> 43

During his 5 years at TAARCOM, Mr. Wassom was responsible for growing the sales
in his territory from $100K to over $60M. At TAARCOM, he was the Worldwide Sales
Manager responsible for Ascend Communications (acquired by Lucent Technologies),
achieving sales growth with this TAARCOM customer from $19K to over $35M.

MR. JEFFRY PHILLIPS
(Vice-President of Worldwide Operations-Antenna Products, Antek)

Mr. Phillips is responsible for identifying market opportunities, and all
operational issues relating to the manufacturing, distribution and
productization of Integral's line of antenna products.

Mr. Phillips has over 18 years of successful experience in technology and
product management within the wireless and wired industries. In addition, he has
demonstrated a proven management ability to lead multi-functional teams in
assessing market requirements, identifying technology applications to meet
current and predicted market trends, and establishing product strategies and
effective product roadmaps for business optimization.

As a former Managing Director of TRW Wireless Communications of Sunnyvale CA,
Mr. Phillips successfully created a new ventures wireless unit within TRW. This
wireless division developed, marketed, manufactured, and serviced the new line
of anti-cellular fraud products, called PhonePrint. His key responsibility was
executing the "spin-out" of this business unit from TRW, into a new entity now
known as Corsair Communications. Corsair was capitalized by Kleiner Perkins
Caulfield & Byers, and Sevin Rosen Funds. Within five months of the new business
launch, Mr. Phillips captured the first major contract and sale ($10M) for
Corsair, with AirTouch Communications. Mr. Phillips later went on to
successfully develop strategic partner alliances with such companies as
AirTouch, AT&T, NYNEX and PhilTel, for product development, field trial
evaluations, and market acceptance in the U.S. and Asia.

DANIEL HARRELL
(Vice President Product Development and Operations, Antek)

Mr. Harrell is responsible for directing the daily activities of the development
team, in its research and development activities, in order to meet the market
needs. In addition, he is responsible for identification of new products, and
subsequently moving them from the conceptual to production stage.

Mr. Harrell enjoyed a 17 year career with the US Army. In his 8 year engagement
with HQ US Southcom, he was stationed in Panama. During his engagement as Site
Commander, Project Officer and Intelligence Collector, he received the Joint
Merious Service medal for outstanding performance during "Operation Just Cause"
in Panama.

During his last 4 years in the military, Mr. Harrell was Director of
Operations/Program Manager at HQ USA INSCOM, Ft. Belvoir, Virginia. In his
capacity, he planned, executed and managed a $4 million annual budget to include
a $1 million operational budget. He significantly improved resource utilization
during a period of fiscal reduction and reduced manpower.

JOSEPH JENG
(Director of Antek)

Mr. Jeng, a member of Antek's board of directors, serves as an advisor to
Integral on a variety of issues, including electronic commerce and strategic
planning. Mr. Jeng is a general partner at Atrix Investment, LLC, a private
equity investment firm, where he specializes in electronic commerce and enabling
technology sectors.

Mr. Jeng has several years of leadership experience in the technology sector,
including global strategic planning. Mr. Jeng has founded or co-founded numerous
companies, including Altatron, Inc., a leading electronics contract
manufacturer, Ultron Inc., a PC workstation and component company, and Kentek
Corporation. In addition, Mr. Jeng was the president of Digital Optics Inc. and
was an executive at Spectra-Physics, Inc.

19
<PAGE> 44

In addition to serving on Antek's board of directors, Mr. Jeng serves as the
chairman of the board at Kentek, Altatron and eTrons and Uhere, which are
electronic commerce companies. Mr. Jeng is a member of the board of Cashfac
Ltd., a banking software and electronics communications network company,
Advanced Telecommunication Components Ltd, Vista Land Development Corporation
and vpacket.com.

Mr. Jeng received his B.S. from National Taiwan University. He received an M.A.
in Physics and an M.B.A. from Harvard University.

THOR LARSEN
(Consultant)

Mr. Larsen continues to advise Integral regarding the potential roles of the new
antenna technologies in the telecommunications industry and the possibilities
for their technological "marriage" with other evolving wireless technologies.
Another role of Mr. Larsen is to assist in protecting the proprietary nature of
the new antenna technologies developed by Integral and its subsidiaries by
drafting documents for patent applications.

Mr. Larsen's career with IBM began in 1962 after his graduation from Columbia
University with a Masters of Science in Electrical Engineering. During his
career with IBM, he has been involved in a variety of projects with the focus
being on developing and implementing leading edge technologies which provide for
advancements in the data communication industry. He has been granted eleven US
patents. Since 1986, Mr. Larsen held the position of Senior Technical Staff
Member at IBM. From 1995 until his retirement from IBM on February 28, 1999, he
has been responsible for developing new application for IBM's silicon germanium
technology in wireless and wired communications.

RICHARD SLEZAK
(Consultant)

Mr. Slezak continues to advise Integral on a variety of issues relating to
market opportunities and ongoing corporate development of the Company.

Mr. Slezak manages the Enterprise Networking Unit product portfolio including
routers, ATM, VPN and Enterprise Network Switch products worldwide for Lucent
Technologies, Inc.

Prior to his engagement at Lucent, Mr. Slezak spent over twenty years at AT&T.
In his last position there he had managed the Advanced Intelligent Networks
business with annual revenues of over $600 million.

Mr. Slezak holds an MBA in International Business from the University of
Pittsburgh and is an Advisory Board Member of Telecommunications Magazine.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% 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 ("SEC"). Officers,
directors, and greater than 10% shareholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on its review of copies of such reports received or written
representations from certain reporting persons, the Company believes that,
during the year ended June 30, 2000, all Section 16(a) filing requirements
applicable to its officers, directors and ten percent shareholders were complied
with except for the failure of Jack Parsons to file a Form 4 for the months of
February and March 2000 to report 16 direct transactions regarding the sales of
an aggregate of 43,500 shares of common stock. Mr. Parsons has represented that
he intends to file these late reports on Form 4 and has also indicated that he
intends to amend his Initial Statement of Beneficial Ownership on Form 3 to
report that the actual number of shares he initially owned was at the time of
filing his Form 3 was 1,163,500, not 1,250,000 as previously reported.

20
<PAGE> 45

Item 10. Executive Compensation.

(a) General

The following information discloses all plan and non-plan compensation
awarded to, earned by, or paid to the executive officers of Integral for all
services rendered in all capacities to Integral and its subsidiaries.

(b) Summary Compensation Table

The following table

The following table sets forth all compensation, including bonuses, stock
option awards and other payments, paid or accrued by Integral and/or its
subsidiaries, during the fiscal years ended June 30, 2000, 1999 and 1998 to or
for Integral's Chief Executive Officer and each of the other executive officers
of Integral.

<TABLE>
<CAPTION>
Annual Compensation
------------------------------------------------------
(a) (b) (c) (d) (e)
Name Other
And Year Annual
Principal Ended Salary Bonus Compensation
Position June 30 ($) ($) ($)
-------------------------------- ------------ ---------------- ---------------- --------------------
<S> <C> <C> <C> <C>
William S. Robinson, Director, 2000 $120,000 -0- -0-
Chairman, CEO, Treasurer (n1) 1999 $105,000 -0- -0-
1998 $ 90,000 -0- -0-

William A. Ince, 2000 $120,000 -0- -0-
Director, President, 1999 $105,000 -0- -0-
Secretary, (n2) 1998 $ 90,000 -0- -0-
</TABLE>

(n1) Pursuant to an employment agreement entered into between Integral and
William Robinson, accrued salary for the fiscal year end June 30, 2000
was $120,000, of which no payments were made; accrued salary for the
fiscal year ended June 30, 1999 was $105,000 of which no payments were
made; and accrued salary for the fiscal year end June 30, 1998 was
$90,000, of which no payments were made. Portions of Mr. Robinson's
accrued salary were converted into shares common stock of Integral. In
April 1999, Mr. Robinson received 333,333 shares of common stock in
lieu of $50,000 salaries accrued in fiscal year ending June 30, 1998.
In September 1999, Mr. Robinson received 175,000 shares of Series A
Convertible Preferred Stock in lieu of $175,000 in accrued salaries
($40,000 from 1998, $105,000 from 1999, and 30,000 from 2000). As of
June 30, 2000, an aggregate of $90,000 remains accrued and payable to
Mr. Robinson..

(n2) Pursuant to an employment agreement entered into between Integral and
William Ince, accrued salary for the fiscal year end June 30, 2000 was
$120,000, of which no payments were made; accrued salary for the
fiscal year ended June 30, 1999 was $105,000 of which no payments were
made; and accrued salary for the fiscal year end June 30, 1998 was
$90,000, of which no payments were made. Portions of Mr. Ince's
accrued salary were converted into shares common stock of Integral. In
April 1999, Mr. Ince received 333,333 shares of common stock in lieu
of $50,000 salaries accrued in fiscal year ending June 30, 1998. In
September 1999, Mr. Ince received 175,000 shares of Series A
Convertible Preferred Stock in lieu of $175,000 in accrued salaries
($40,000 from 1998, $105,000 from 1999, and 30,000 from 2000). As of
June 30, 2000, an aggregate of $90,000 remains accrued and payable to
Mr. Ince.

21
<PAGE> 46

<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------------------------
Awards Payouts
------------------------------------ ----------------

(a) (b) (f) (g) (h) (i)
Name Restricted
And Year Stock Shares LTIP All Other
Principal Ended Award(s) Underlying Payouts Compensation
Position June 30 ($) Options ($) ($)
------------------------------- ----------------- ------------------ ----------------- --------------- -------------------
<S> <C> <C> <C> <C> <C>
William S. Robinson, 2000 -0- 120,000 -0- -0-
Chairman, CEO, Treasurer 1999 -0- 230,000(n1) -0- -0-
1998 -0- -0- -0- -0-

William A. Ince, Director, 2000 -0- 120,000 -0- -0-
President, Secretary, 1999 -0- 230,000(n1) -0- -0-
1998 -0- -0- -0- -0-
</TABLE>

(n1) 1999 option figures include options previously granted in 1997 with an
original exercise price of $.50 per share that were repriced in 1999
to provide for an exercise price of $.15 per share.

The information provided in the table below provides information with
respect to individual grants of stock options for the year ended June 30, 2000
to each of the executive officers named in the Summary Compensation Table above.
Integral did not grant any stock appreciation rights for the year ended June 30,
2000.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

Individual Grants

<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
% of Total
Number of Options/SARS
Securities Granted to
Underlying Employees Exercise or
Options/SARs in Fiscal Base Price Expiration
Name Granted (#) Year (n1) ($/Sh) Date
---------------------------------- ------------------- ------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
William S. Robinson, Chairman, 120,000(n2) 19% $.23 01/30/01
CEO, Treasurer

William A. Ince, Director, 120,000(n3) 19% $.23 01/30/01
President, Secretary
</TABLE>

(n1) The percentage of total options granted (635,000) in the fiscal year
is based upon all options granted to eligible participants, which
includes officers, directors, employees, consultants and advisors,
under Integral's employee stock option plan during the year ended June
30, 2000.

(n2) William S. Robinson: On August 10, 1999, Mr. Robinson was granted
120,000 options under Registrant's employee stock option plan at an
exercise price of $.23, expiring on January 30, 2001.

22
<PAGE> 47

(n3) William A. Ince: On August 10, 1999, Mr. Ince was granted 120,000
options under Registrant's employee stock option plan at an exercise
price of $.23, expiring on January 30, 2001.

(d) Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values

The information provided in the table below provides information with
respect to each exercise of stock options during most recent fiscal year by the
executive officers named in the Summary Compensation Table and the fiscal year
end value of unexercised options.

<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares Value FY-End (#) FY-End($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($)(n1) Unexercisable Unexercisable(n1)
-------------------------- --------------- -------------- ------------------------- -----------------------------
<S> <C> <C> <C> <C>
William S. Robinson -0- -0- 350,000/-0- $626,962/-0-
Director, Chairman, CEO,
Treasurer
350,000/-0- $626,962/-0-
William A. Ince -0- -0-
Director, President,
Secretary,
</TABLE>

(n1) The aggregate dollar values in columns (c) and (e) are calculated by
determining the difference between the fair market value of the common
stock underlying the options and the exercise price of the options at
exercise or fiscal year end, respectively.

(e) Long-Term Incentive Plans ("LTIP") - Awards in Last Fiscal Year

This table has been omitted, as no executive officers named in the Summary
Compensation Table above received any awards pursuant to any LTIP during the
fiscal year ended June 30, 2000.

(f) Compensation of Directors

No compensation was paid by Integral to its Directors for any service
provided as a Director during the fiscal year ended June 30, 2000. There are no
other formal or informal understandings or arrangements relating to
compensation; however, Directors may be reimbursed for all reasonable expenses
incurred by them in conducting Integral's business. These expenses would include
out-of-pocket expenses for such items as travel, telephone, and postage.

(g) Employment Contracts and Termination of Employment and Change-in-Control
Arrangements

Integral has entered into employment agreements with William S. Robinson
and William A. Ince. The term of both employment contracts is for five years
beginning July 1, 1997 and ending June 30, 2002. Pursuant to each agreement,
annual salary to each of William Robinson and William Ince is as follows:

<TABLE>

23
<PAGE> 48

Pursuant to the employment agreements, in the event Integral terminates the
employment of the executive without cause, then the executive shall be entitled
to severance pay equal to twelve month's base salary based on the base salary
then in effect at the termination. In addition, the employment agreements
provide that in the event Integral is indebted to the executive for a minimum of
three months salary, the executive shall have the option to convert such unpaid
salary into shares of common stock of Integral at market price (average daily
closing over the previous month).

Integral's Board of Directors has complete discretion as to the
appropriateness of (a) key-man life insurance, (b) obtaining officer and
director liability insurance, (c) employment contracts with and compensation of
executive officers and directors, (d) indemnification contracts, and (e)
incentive plan to award executive officers and key employees.

Integral's Board of Directors is responsible for reviewing and determining
the annual salary and other compensation of the executive officers and key
employees of Integral. The goals of Integral are to align compensation with
business objectives and performance and to enable Integral to attract, retain
and reward executive officers and other key employees who contribute to the
long-term success of Integral. Integral intends to provide base salaries to its
executive officers and key employees sufficient to provide motivation to achieve
certain operating goals. Although salaries are not specifically tied into
performance, incentive bonuses may be available to certain executive officers
and key employees. In the future, executive compensation may include without
limitation cash bonuses, stock option grants and stock reward grants.

(h) Employee Benefit and Consulting Services Compensation Plan

On February 20, 1997, Integral adopted an employee benefit and consulting
services compensation plan (the "Plan"), which, as amended, covers up to 15% of
the shares of Integral's outstanding common stock on any given date. Under the
Plan, Integral may issue common stock and/or options to purchase common stock to
certain officers, directors and employees and consultants of Integral and its
subsidiaries. The purpose of the Plan is to promote the best interests of
Integral and its shareholders by providing a means of non-cash remuneration to
eligible participants who contribute to operating progress and earning power of
Integral. The Plan is administered by Integral's Board of Directors or a
committee thereof which has the discretion to determine from time to time the
eligible participants to receive an award; the number of shares of stock
issuable directly or to be granted pursuant to option; the price at which the
option may be exercised or the price per share in cash or cancellation of fees
or other payment which Integral or its subsidiaries is liable if a direct issue
of stock and all other terms on which each option shall be granted. No options
may be granted on or after the effective date of the Company's registration
statement on Form 10-SB (February 1, 2000). As of the fiscal year ended June 30,
2000, options to acquire 1,610,000 shares covered by the Plan were outstanding,
all at exercise prices ranging from $.15 to $2.00 per share, and are fully
vested.

Shares of common stock issued pursuant to the Plan are deemed to be issued
pursuant to Rule 701 of the Securities Act of 1933 and are restricted securities
as defined in Rule 144(a)(3) of the Securities Act of 1933. Pursuant to Rule
701, participants in the Plan, including affiliates, may sell their shares in
accordance with the exemption provided by Rule 701 without being bound by the
one year holding period under Rule 144(d).

24
<PAGE> 49

Item 11. Security Ownership of Certain Beneficial Owners and Management.

A. Common Stock

The following table sets forth, as of September 25, 2000 the stock
ownership of each person known by Integral to be the beneficial owner of five
percent or more of Integral's common stock, each Officer and Director
individually and all Directors and Officers of Integral as a group. Each person
is believed to have sole voting and investment power over the shares except as
noted.

<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Beneficial
Beneficial Owner (1) Ownership(1)(2) Percent of Class (3)
-------------------- ------------------------------- --------------------
<S> <C> <C>
William S. Robinson (4) - 1,808,533 8.1%
#3 1070 West Pender St.
Vancouver, B.C. V6E 2N7

William A. Ince(5) - 1,763,333 7.9%
805 W. Orchard Dr., Suite#3
Bellingham, WA 98225

James Smith 1,857,140 7.1%
Route 4, Box E36
Bruceton Mills, WV 26330

Denzel Jack Parsons 1,080,000 4.1%
209 Joy Lane
Bridgeport, WV 26330

All officers and directors of Integral as a
group (3 persons) 4,651,866 17.2%
</TABLE>

(1) Unless otherwise indicated, all shares are directly beneficially owned and
investing power is held by the persons named.

(2) Includes vested options beneficially owned but not yet exercised and
outstanding. The table does not include the effects of conversion by Mr.
Robinson and Mr. Ince of their shares of Series A Convertible Preferred
Stock, which are convertible into shares of common stock at a conversion
rate that varies with the market price of the common stock at the time of
conversion. The conversion rate is determined by dividing the number of
shares of Series A being converted by the average of the high and low bid
prices of Integral's common stock reported by the OTC Bulletin Board over
the ten trading days preceding the date of conversion. Mr. Robinson owns
442,197 shares of Series A and Mr. Ince owns 222,213 shares of Series A The
actual number of shares of common stock receivable by Messrs. Robinson and
Ince upon conversion of the Series A would depend on the actual conversion
rate in effect at the time of conversion.

(3) Based upon 26,332,062 shares issued and outstanding, plus the amount of
shares each person or group has the right to acquire within 60 days
pursuant to options, warrants, conversion privileges or other rights.

(4) Mr. Robinson is an officer and director of Integral and each of its
subsidiaries. Beneficial ownership figure includes 350,000 shares
underlying options granted but not yet exercised.

(5) Mr. Ince is an officer and director of Integral and each of its
subsidiaries. Beneficial ownership figure includes 350,000 shares
underlying options granted but not yet exercised.

25
<PAGE> 50

B. Series A Convertible Preferred Stock

The following table sets forth, as of September 25, 2000, the stock
ownership of each person known by Integral to be the beneficial owner of five
percent or more of Integral's Series A Convertible Preferred Stock, each Officer
and Director individually and all Directors and Officers of Integral as a group.
Each person is believed to have sole voting and investment power over the shares
except as noted.

<TABLE>
<CAPTION>
Name and Address of Amount and Nature of
Beneficial Owner (1) Beneficial Ownership(1) Percent of Class (2)
-------------------------- ----------------------- --------------------
<S> <C> <C>
William S. Robinson (3) -
#3 1070 West Pender St. 442,197 66.6%
Vancouver, B.C. V6E 2N7

William A. Ince (4) - 222,213 33.4%
805 W. Orchard Dr., Suite #3
Bellingham, WA 98225

All officers and directors of Integral as a
group (2 persons) 664,410 100%
</TABLE>

(1) Unless otherwise indicated, all shares are directly beneficially owned and
investing power is held by the persons named.

(2) Based upon 664,410 Series A Convertible Preferred shares issued and
outstanding.

(3) Mr. Robinson is an officer and director of Integral and each of its
subsidiaries.

(4) Mr. Ince is an officer and director of Integral and each of its
subsidiaries.

Item 12. Certain Relationships and Related Transactions.

(a) On February 16, 1996, in connection with the formation of Integral, the
following affiliates were issued shares of common stock.

<TABLE>
<CAPTION>
Name Shares Consideration Received
<S> <C> <C>
William A. Ince 1,500,000 services valued at $15,000
William S. Robinson 1,500,000 cash of $10,000 and services valued at $5,000
Dr. James E. Smith 1,500,000 services valued at $15,000
</TABLE>

(b) Between July 1996 and October 1996, Integral issued 175,000 shares to each
of Dr. James Smith and Denzel Jack Parsons, each being affiliates of Integral.
These shares were issued for cash at a price of approximately $.11 per share.
These transactions were exempt from Registration under Section 504 of Regulation
D of the Securities Act of 1933, as amended.

(c) Pursuant to an agreement and plan of reorganization between Integral and
Integral Vision, dated March 11, 1997, pursuant to which Integral Vision became
a wholly-owned subsidiary of Integral, Dr. James Smith was issued 57,140 shares
of common stock of Integral in exchange for his 57.14% interest in Integral
Vision.

(d) In February 1997, in anticipation of Integral acquiring a controlling
interest in Emergent, Integral issued 1,800,000 shares of Common Stock, all of
which were held in escrow. Prior to closing, Integral agreed to release to

26
<PAGE> 51
Denzel Jack Parsons 300,000 shares. Upon closing of the acquisition in April
1999, 300,000 shares were delivered to Dr. James E. Smith, and 1,200,000 shares
were delivered to Denzel Jack Parsons.

(e) Dr. James E. Smith is a significant shareholder of Integral. He is a
professor of West Virginia University ("WVU"). Dr. Smith is also the sole
shareholder of Integral Concepts. Integral is a party to various agreements with
Integral Concepts, WVU and the West Virginia University Research Corporation
("WVURC").

On April 12, 1994, WVURC granted an exclusive license to Integral Concepts:
(1) to manufacture CTHAs and to license others to do so; and (2) to sublicense
others to manufacture, market, sell copies of, license and distribute CTHAs. The
consideration for the license was: (1) $1.00 and (2) a royalty of $3,000 per
year or 10% of the net revenues received by Integral Concepts whichever is
greater.

On January 2, 1996, Integral Concepts entered into a sublicense with
Registrant's subsidiary, Emergent, wherein Integral Concepts granted to Emergent
the exclusive worldwide right to manufacture, sell copies of, sublicense to and
distribute the process and equipment related to the design, construction and
operation of the CTHA and to further sublicense to others the rights to
manufacture, sell copies of, license and distribute the same, to military and
government applications worldwide. The term of the license agreement granted by
Integral Concepts is perpetual and requires the payment of a minimum annual
royalty of $3,000. Further, Emergent will pay a minimum annual royalty of 10% of
the net royalties derived from sales, licenses or sublicenses of the CTHA
technology with a credit for the minimum royalty.

(f) In April 1999, Integral issued a total of 666,666 shares of its common
stock, 333,333 to each of William S. Robinson and William A. Ince, in
consideration of management fees owing in the amount of $50,000 to each of them.
Messrs. Robinson and Ince are officers and directors of Integral.

(g) In September 1999, Integral issued an aggregate 654,401 shares of its Series
A Convertible Preferred Stock to officers and directors of Integral. William S.
Robinson received 175,000 shares of Series A in lieu of $175,000 in accrued
salaries through September 30, 1999 and 267,197 shares of Series A in repayment
of $267,197 in loans made to Integral. William A. Ince received 175,000 shares
of Series A in lieu of $175,000 in accrued salaries through September 30, 1999
and 47,213 shares of Series A in repayment of $47,213 in loans made to Integral.

Item 13. Exhibits and Reports on Form 8-K.

(a) List of Exhibits.

Exhibit Number Description

2.1 Agreement and Plan of Reorganization between Integral and Integral
Vision Systems, Inc. dated March 11, 1997. (Incorporated by reference
to Exhibit 2.1 of Integral's registration statement on Form 10-SB
(file no. 0-28353) filed December 2, 1999.)

2.2 Agreement and Plan of Reorganization between Integral and Emergent
Technologies Corporation dated December 10, 1997. (Incorporated by
reference to Exhibit 2.2 of Integral's registration statement on Form
10-SB (file no. 0-28353) filed December 2, 1999.)

3.1 Articles of Incorporation, as amended and currently in effect.
(Incorporated by reference to Exhibit 3.1 of Integral's registration
statement on Form 10-SB (file no. 0-28353) filed December 2, 1999.)

3.2 Bylaws, as amended and restated on December 31, 1997. (Incorporated by
reference to Exhibit 3.2 of Integral's registration statement on Form
10-SB (file no. 0-28353) filed December 2, 1999.)

4.1 Form of Securities Purchase Agreement between Integral and certain
parties related to the purchase of Integral common stock to be
registered pursuant to this offering (Incorporated by

27
<PAGE> 52
reference to Exhibit 4.1 of Integral's registration statement on Form
SB-2 (file no - 333-41938) filed July 21, 2000).

4.2 Form of Common Stock Purchase Warrant related to the offering of
securities described in Exhibit 4.1 (Incorporated by reference to
Exhibit 4.1 of Integral's registration statement on Form SB-2 (file no
- 333-41938) filed July 21, 2000).

4.3 Investment Agreement dated May 11, 2000, by and between Integral and
Swartz Private Equity, LLC (Incorporated by reference to Exhibit 4.1
of Integral's registration statement on Form SB-2 (file no -
333-41938) filed July 21, 2000).

4.4 Warrant to purchase common stock issued to Swartz Private Equity, LLC
on May 11, 2000, exercisable to purchase an aggregate of 495,000
shares of common stock at $1.306 per share (subject to adjustment)
until December 13, 2004, granted to Swartz in connection with the
offering of securities described in Exhibit 4.3 (Incorporated by
reference to Exhibit 4.1 of Integral's registration statement on Form
SB-2 (file no - 333-41938) filed July 21, 2000).

4.5 Registration Rights Agreement, dated May 11, 2000, by and between
Integral and Swartz Private Equity, LLC, related to the registration
of the common stock to be sold pursuant to Exhibit 4.3 (Incorporated
by reference to Exhibit 4.1 of Integral's registration statement on
Form SB-2 (file no - 333-41938) filed July 21, 2000).

4.6 Warrant to Purchase Common Stock to be issued from time to time in
connection with the offering of securities described in Exhibit 4.3
(Incorporated by reference to Exhibit 4.1 of Integral's registration
statement on Form SB-2 (file no - 333-41938) filed July 21, 2000).

4.7 Warrant Side Agreement dated May 11, 2000 between Integral and Swartz
related to the offering of securities described in Exhibit 4.3
(Incorporated by reference to Exhibit 4.1 of Integral's registration
statement on Form SB-2 (file no - 333-41938) filed July 21, 2000).

10.1 Sublicense Agreement between Integral's subsidiary, Emergent
Technologies Corporation, and Integral Concepts, Inc., dated January
2, 1996, relating to the Toroidal Helical Antenna. (Incorporated by
reference to Exhibit 10.1 of Integral's registration statement on Form
10-SB (file no. 0-28353) filed December 2, 1999.)

10.2 Agreement between Integral and West Virginia University Research
Corporation on Behalf of West Virginia University dated February 9,
1996, relating to RF Quarter-Wave Coaxial Cavity Resonator.
(Incorporated by reference to Exhibit 10.2 of Integral's registration
statement on Form 10-SB (file no. 0-28353) filed December 2, 1999.)

10.3 Agreement between Integral and West Virginia University Research
Corporation on Behalf of West Virginia University dated February 9,
1996, relating to Counterfeit Currency Determination Prototype.
(Incorporated by reference to Exhibit 10.3 of Integral's registration
statement on Form 10-SB (file no. 0-28353) filed December 2, 1999.)

10.4 Sublicense Agreement between Integral Concepts, Inc. and Integral
dated February 15, 1996, relating to the design, construction and
operation of a Plasma Ignition System. (Incorporated by reference to
Exhibit 10.4 of Integral's registration statement on Form 10-SB (file
no. 0-28353) filed December 2, 1999.)

10.5 Employment Agreement between Integral and William S. Robinson dated
October 1, 1997 and Addendum dated March 15, 1999. (Incorporated by
reference to Exhibit 10.5 of Integral's registration statement on Form
10-SB (file no. 0-28353) filed December 2, 1999.)

28
<PAGE> 53

10.6 Employment Agreement between Integral and William A. Ince dated
October 1, 1997 and Addendum dated March 15, 1999. (Incorporated by
reference to Exhibit 10.6 of Integral's registration statement on Form
10-SB (file no. 0-28353) filed December 2, 1999.)

10.7 Employee Benefit And Consulting Services Compensation Plan, as
restated January 10, 1999. (Incorporated by reference to Exhibit 10.7
of Integral's registration statement on Form 10-SB (file no. 0-28353)
filed December 2, 1999.)

10.8 Sublicense Agreement between Integral's subsidiary, Integral Vision
Systems, Inc., and Integral Concepts, Inc., dated February 15, 1994,
relating to vision system technologies. (Incorporated by reference to
Exhibit 10.8 of Integral's registration statement on Form 10-SB/A-1
(file no. 0-28353) filed February 8, 2000).

21.2 Subsidiaries of Integral (Incorporated by reference to Exhibit 21.2 of
Integral's registration statement on Form SB-2 (file no. 333-41938)
filed July 21, 2000.)

27 Financial Data Schedule. (Filed herewith).

(b) Reports on Form 8-K.

No current reports on Form 8-K were filed during the last quarter of the
fiscal year ended June 30, 2000.

29
<PAGE> 54

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the Registrant caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.

INTEGRAL TECHNOLOGIES, INC

Dated: September 28, 2000 /s/ William S. Robinson
-----------------------
William S. Robinson, CEO

/s/ William A. Ince
-------------------
William A. Ince, CFO

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Name Title Date
---- ----- -----
<S> <C> <C>
/s/ William S. Robinson Chairman, CEO and September 28, 2000
----------------------- Treasurer
William S. Robinson

/s/ William A. Ince Director, President, Secretary September 28, 2000
------------------- and CFO
William A. Ince

/s/ Denzel Jack Parsons Director September 28, 2000
-----------------------
Denzel Jack Parsons
</TABLE>