INOTEK TECHNOLOGIES CORP
10QSB, 2000-10-13
INDUSTRIAL MACHINERY & EQUIPMENT
Previous: AFFILIATED RESOURCES CORP, 8-K, EX-10.1, 2000-10-13
 Next: LIBERTY TAX CREDIT PLUS LP, 10-Q, 2000-10-13


United States
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-QSB

Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934


For Quarter Ended August 31, 2000 Commission File
Number 0-16101

INOTEK Technologies Corp.
(Exact name of registrant as specified in its charter)


Delaware
(State or other jurisdiction of
incorporation or organization) 		75-1986151
(I.R.S. Employer
Identification No.)

11212 Indian Trail, Dallas, Texas
(Address of principal executive offices)		 75229
(Zip Code)

Registrant’s telephone number including area code, 972-243-7000.

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes _X_         No ___

4,854,088 shares of common stock, $.01 par value (the issuer’s only class of common stock), were outstanding as of August 31, 2000.


INOTEK Technologies Corp.

INDEX

Page
No.
 
Part I.  Financial information    
      
     Item 1.  Financial Statements: 
      
        Balance Sheets as of August 31, 2000 (unaudited) and May 31, 2000  1  
      
        Statements of Operation for the Three Months Ended August 31, 2000 
           and August 31, 1999 (unaudited)   2  
      
        Statements of Cash Flows for the Three Months Ended August 31, 2000 
           and August 31, 1999 (unaudited)   3  
      
        Notes to Financial Statements  4  
      
     Item 2.  Management’s Discussion and Analysis of Financial 
      
        Condition and Results of Operations  5  
      
Part II.   Other Information 
      
     Item 1.  Legal Proceedings  6  
      
     Item 4.  Submission of Matters to a Vote of Security Holders   6  
      
     Item 6.  Exhibits and Reports on Form 8-K  6  
      
Signatures  7  

INOTEK Technologies Corp.

Balance Sheets

August 31
2000
(unaudited)		 May 31
2000
ASSETS      
Current assets: 
    Cash and cash equivalents  $363,628   $632,970  
    Trade receivables, net of allowance for doubtful accounts 
        of $117,952 at August 31 and $111,837 at May 31  2,467,412   2,336,758  
    Inventories  1,185,001   1,247,903  
    Deferred taxes  80,789   89,028  
    Income tax receivable  86,628   74,899  
    Prepaid expenses and other assets  171,948   156,314  
Total current assets  4,355,406   4,537,872  
Property and equipment, net  786,476   801,553  
Goodwill, net of accumulated amortization of $732,636 at 
    August 31 and $716,157 at May 31  1,909,316   1,925,795  
Other assets  131,808   63,332  
Total assets  $7,183,006   $7,326,552  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY 
Current liabilities: 
    Accounts payable  $1,147,326   $1,281,474  
    Accrued expenses  266,601   308,374  
Total current liabilities  1,413,927   1,589,848  
Deferred Tax Liability  30,230 38,191
Shareholders’ equity: 
    Common shares, $.01 par value: 
        Authorized shares, 10,000,000 
        Issued and Outstanding shares 
           4,854,088 at August 31 and 4,604,088 at May 31  48,541   46,041  
Additional paid-in-capital  3,434,547   3,367,046  
Retained earnings  2,295,141   2,326,806  
Total shareholders’ equity  5,778,229   5,739,893  
Less: Common stock in treasury at cost, 100,000 shares in 1999  (39,380 ) (39,380 )
Total Shareholders’ equity  5,738,849   5,700,513  
Total liabilities and shareholders’ equity  $7,183,006   $7,328,552  

See accompanying notes

1



INOTEK Technologies Corp.

Statements of Operations

(unaudited)

Three Months Ended
August 31
2000		 August 31
1999
Net sales   $4,819,624   $4,288,119  
Cost of goods sold  3,600,092   3,258,733  
Gross margin  1,219,532   1,029,386  
Operating expenses: 
    Sales and marketing  729,702   728,149  
    General and administrative  542,717   568,061  
   1,272,419   1,296,210  
Operating loss  (52,887 ) (266,824 )
Interest income  13,693   4,837  
Loss before income taxes  (39,194 ) (261,987 )
Income tax benefit  (7,527 ) (49,140 )
Net loss  $(31,667 ) $(212,847 )
Net loss per share – basic and diluted  $(.01 ) $(.05 )
Weighted average shares outstanding  4,612,240   4,392,131  

See accompanying notes

2



INOTEK Technologies Corp.

Statements of Cash Flows

(unaudited)
Three Months Ended
August 31
2000 1999
Operating Activities      
   Net loss  (31,667 ) $(212,847 )
   Adjustments to reconcile net loss 
      to net cash provided by (used in) operating activities: 
         Depreciation and amortization  80,404   70,678  
         Deferred taxes  (4,918 ) (38,752 )
         Provision for losses on accounts receivable   6,115   4,683  
         Net changes in operating assets and liabilities:  
            Accounts receivable  (136,769 ) 590  
            Inventories  62,903   60,990  
            Prepaid expenses and other assets  (10,438 ) (132,242 )
            Accounts payable  (134,311 ) 263,058  
            Accrued expenses  (45,536 ) 19,795  
            Income Tax Payable  (7,805 ) 61,100  
Net cash provided by (used in) operating activities  (222,022 ) 97,053  
  
Investing Activities 
   Purchase of property and equipment  (46,558 ) (43,249 )
   Increase in other assets  (70,762 ) (6,833 )
Net cash used in investing activities  (117,320 ) (50,082 )
  
Financing Activities 
Exercise of warrants  70,000   70,000  
Net cash provided by financing activities  70,000   70,000  
Change in cash and cash equivalents  (269,342 ) 116,971  
Cash and cash equivalents, beginning of period  632,970   173,668  
Cash and cash equivalents, end of period  $363,628   $290,639  
  
Supplemental Disclosures of Cash Flow Information: 
   Cash received during the period for: 
         Interest  $13,693   $4,837  


3




INOTEK Technologies Corp.
Notes to Financial Statements
Three Months Ended August 31, 2000
(UNAUDITED)

1. Basis of Presentation

  The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the results for the interim periods presented have been made. The results of operations for such interim periods are not necessarily indicative of the results of operations for a full year. The interim unaudited financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended May 31, 2000.

2. Long-term debt

  On September 15, 2000, the Company secured a new agreement with Bank One, Texas, N.A. for a one-year revolving credit arrangement of up to .5 million. The credit arrangement provides for borrowings based on the Company’s trade receivables, at the bank’s prime rate plus one percent and is collateralized by trade receivables and inventories.

4





Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

First Quarter 2001 Compared to First Quarter 2000

The Company’s total sales increased 12.4% to $4,819,624 for the first quarter ended August 31, 2000 from $4,288,119 for the first quarter of the prior year, while gross margins increased 18.5% to $1,219,532 from $1,029,386 for the same period.

The oil and gas industry is beginning to show signs of a turnaround as the price of oil has stabilized at higher levels. Improvement is most evident in the upstream process segment of this industry, which is defined as drilling, exploration and pipeline. This segment is beginning to increase its expenditures on our type of products. The downstream process segment, which is defined as the petrochemical processing plants, while operating at full capacity, is negatively affected in its profitability by the higher price of oil. Once oil stabilizes in the mid $20‘s/barrel range, the downstream processing segment should begin to increase its MRO (maintenance, repair and operation) spending and some plant expansion. As the upstream and downstream business climate improves, so should that of their supply chain, which is one of our primary customer categories.

Areas of concern and of which we should be cautious are the impact of e-commerce, vendor consolidation, integrated supplier contracts and margin pressure created by a low inflation economy. We are in the process of developing our Internet strategy, expanding our product lines to compete in the integrated supply market and reducing our exposure to vendor consolidation. As for margin pressure, we are continually monitoring our costs and improving our productivity in order to compete effectively.

Sales and marketing costs during the first quarter of fiscal year 2000 remained the same when compared with the first quarter of the previous year. General and administrative costs decreased 4.5% or $25,344 for the first quarter ending August 31, 2000 when compared with the first quarter of fiscal year 2000.

Financial Condition, Liquidity and Capital Resources

Cash and cash equivalents were $363,628 and $632,970 at August 31, 2000 and May 31, 2000, respectively. The Company’s current assets exceeded its current liabilities at August 31, 2000 and May 31, 2000 by $2,941,479 and $2,948,024 respectively.

The Company’s funding requirements during the quarter were met through cash on hand and the sale of common stock. On September 15, 2000, the company secured a new credit arrangement with Bank One, Texas, N.A. for a one-year revolving credit facility of up to .5 million. Their were no outstanding borrowings under the Company’s revolving credit agreement at August 31, 2000 or May 31,2000. The Company has no material commitment for capital expenditures as of August 31, 2000.



5





Part II - Other Information

Item 1.  Legal Proceedings

None pending

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

None

Item 6.  Exhibits and Reports on Form 8-K
(a) Reports on 8-K:

  No reports on Form 8-K were filed in the quarter for which this report is filed.

6




Signatures

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


INOTEK Technologies Corp.
(Registrant)

Date: August 15, 2000 /s/ Neal E. Young
————————————
(Officer)
Neal E. Young
Chairman of the board

Date: August 15, 2000 /s/ Dennis W. Stone
————————————
(Officer)
Dennis W. Stone
Chief Executive Office


7





© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission