FORM 10-Q SB
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1999
Commission file number: 0-29138
INTELLECTUAL TECHNOLOGY, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 84-1130227
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization )
1945 Camino Vida Roble, Suite O, Carlsbad, California 92008
(Address of principal executive offices)
(760) 929-9789
(Issuer's telephone number)
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 ---
As of August 13, 1999, 10,000,000 shares of common stock, par value
$0.00001 per share, were outstanding.
Transitional Small Business Disclosure Format (check one): Yes --- No -X-
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
Balance Sheet, September 30, 1999 3
Statements of Operations and Accumulated Deficit
(Unaudited) for the three and nine month periods ended
September 30, 1999 and 1998 4
Statements of Cash Flows (Unaudited) for the nine
month period ended September 30, 1999 and 1998 5
Notes to financial statements 6
Item 2 Management's Discussion and Analysis or
Plan of Operations 7-9
PART II. OTHER INFORMATION 10
Signatures 11
2
Intellectual Technology, Inc.
BALANCE SHEET
September 30, 1999
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 587,795
Accounts receivable 1,230,588
Inventory 192,615
Loans to stockholders 36,285
Prepaid expenses 11,220
----------
Total current assets 2,058,503
Property & Equipment
Contract equipment 5,994,733
Equipment - non-contract, office, furniture and improvements 107,986
----------
6,102,719
Less: Accumulated depreciation 4,579,889
----------
1,522,830
Other Assets
Patents and deferred charges, net of
accumulated amortization of $83,760 559,384
Deposits 4,950
----------
Total assets $4,145,667
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 369,437
Accrued expenses 258,641
Notes payable 1,690,336
Notes payable - related party 19,443
Accrued interest payable 10,927
----------
Total current liabilities 2,348,784
Other Liabilities
Long-term debt, net of current portion 1,136,140
----------
Stockholders' Equity
Preferred stock, $0.00001 par value, 10,000,000 shares
authorized, no shares issued or outstanding -
Common stock, $0.00001 par value, 20,000,000 shares
authorized, 10,000,000 shares issued and outstanding 100
Additional paid-in capital 1,186,250
Accumulated deficit (525,607)
----------
660,743
----------
Total liabilities and stockholders' equity $4,145,667
==========
The accompanying notes are an integral part of the financial statements.
3
Intellectual Technology, Inc.
STATEMENTS OF LOSS AND ACCUMULATED DEFICIT
(Unaudited)
For the quarter For the nine months
ended September 30, ended September 30,
------------------- -------------------
1999 1998 1999 1998
------------------ -------------------
REVENUES
Sales $1,845,614 $1,563,892 $5,356,703 $4,761,239
COST OF REVENUES
Depreciation and
amortization 592,820 532,429 1,758,226 1,726,001
Material costs 468,120 191,530 1,000,728 479,143
Maintenance and other
cost of sales 206,151 139,637 553,531 396,888
Royalties - 17,457 36,720 53,357
---------- ---------- ---------- ----------
Total cost of revenues 1,267,091 881,053 3,349,205 2,655,389
---------- ---------- ---------- ----------
Gross profit 578,523 682,839 2,007,498 2,105,850
OPERATING EXPENSES
Selling, general
& administrative 335,593 296,485 995,088 902,696
Research & development 14,974 17,068 149,327 148,809
Depreciation and
amortization 25,059 5,621 37,916 28,207
Amorization of patents 83,472 69,568 222,608 208,704
---------- ---------- ---------- ----------
459,098 388,742 1,404,939 1,288,416
---------- ---------- ---------- ----------
Income from operations 119,425 294,097 602,559 817,434
OTHER INCOME (EXPENSE)
Interest income 3,739 406 5,559 2,877
Impairment loss,
patents (2,816,942) - (2,816,942) -
Interest expense (82,410) (112,746) (296,821) (386,375)
Interest, patent
purchased debt (369) (80,000) (160,369) (240,000)
---------- ---------- ---------- ----------
Income (loss) before
income taxes (2,776,557) 101,757 (2,666,014) 193,936
Income tax benefit 1,926,000 - 1,926,000 -
---------- ---------- ---------- ----------
Income (loss) before
extraordinary item (850,557) 101,757 (740,014) 193,936
Extraordinary gain, net
of income taxes of
$1,926,000 2,889,702 - 2,889,702 -
---------- ---------- ---------- ----------
NET INCOME 2,039,145 101,757 2,149,688 193,936
Accumulated deficit
Balance, beginning
of period (2,564,752) (2,442,600) (2,675,295) (2,534,779)
---------- ---------- ---------- ----------
Balance, end
of period $ (525,607) $(2,340,843) $ (525,607) $(2,340,843)
========== ========== ========== ==========
Basic income (loss)
per share:
Income (loss) before
extraordinary
item $ (0.09) $ 0.01 $ (0.07) $ 0.02
Extraordinary item,
net of tax $ 0.29 $ - $ 0.29 $ -
---------- ---------- ---------- ----------
Net income (loss) $ 0.20 $ 0.01 $ 0.21 $ 0.02
========== ========== ========== ==========
Wtd. average shares
outstanding 10,000,000 10,000,000 10,000,000 10,000,000
========== ========== ========== ==========
The accompanying notes are an integral part of the financial statements.
4
Intellectual Technology, Inc.
STATEMENTS OF CASH FLOWS
(Unaudited)
For the nine months
ended September 30,
---------------------------
1999 1998
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES $ 1,250,391 $ 1,802,176
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in patents and other
intangibles - (3,805)
Purchase of non-contract equipment (13,047) (2,504)
Investment in contract costs
and equipment (650,137) (672,181)
----------- ----------
Net cash used by investing activities (663,184) (678,490)
CASH FLOWS FROM FINANCING ACTIVITIES
New borrowings 1,335,936 250,000
Debt repayments (1,378,105) (1,709,891)
Loan fees (142,000) -
----------- ----------
Net cash used by
financing activities (184,169) (1,459,891)
----------- ----------
NET INCREASE (DECREASE) IN CASH 403,038 (336,205)
CASH AND CASH EQUIVALENTS, beginning of period 184,757 404,240
----------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 587,795 $ 68,035
=========== ==========
The accompanying notes are an integral part of the financial statements.
5
Intellectual Technology, Inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
1. Management's representation of interim financial information
The accompanying financial statements have been prepared by Intellectual
Technology, Inc. without audit pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted as
allowed by such rules and regulations, and management believes that the
disclosures are adequate to make the information presented not misleading.
These financial statements include all of the adjustments which, in the
opinion of management, as necessary to a fair presentation of financial
position and results of operations. Except as indicated in notes 3 and 4
below, all such adjustments are of a normal and recurring nature. These
financial statements should be read in conjunction with the audited
financial statements at December 31, 1998.
2. Significant third quarter financing
During the third quarter of 1999, the Company refinanced $748,000 in
short-term equipment loans at 10.4% through April of 2004.
3. Loss on Reduction of Patent Carrying Amount
During the third quarter of 1999, management adjusted the carrying value
of a patent related to ITI printing system. The patent, with a
pre-adjustment unamortized cost of $2,946,942, was written down to fair
value, as determined by management by reference to valuation methods, and
an adjustment, in the third quarter, of $2,816,942 has been included in the
financial statement caption "impairment loss." The remaining patent cost
is being amortized into income through October, 2000.
4. Extraordinary Item
On September 13, 1999, ITI was awarded an entry of judgment against
defendent American Registration Systems, Inc. ("ARS"), rescinding the
purchase and sale agreement dated October 31, 1995, and its purported
addendum thereto dated March 11, 1997. As a result of this default
judgment, the agreement, which had required ITI to pay ARS or its assignees
$4,000,000, plus a $0.01 per transaction royalty, were determined to be of
no further force or effect.
The accompanying financial statements include an extraordinary gain of
$2,889,702, which represents the elimination of $4,693,335 in principal and
accrued interest and $122,367 in accrued royalties, net of an approximate
tax benefit of $1,926,000.
6
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Certain statements contained in this report, including statements
concerning the Company's future cash and financing requirements, and
other statements contained herein regarding matters that are not historical
facts, are forward looking statements; actual results may differ
materially from those anticipated.
Background
ITI is a provider of real-time printing systems specifically designed for
use by state departments of motor vehicles. These systems generate vehicle
registrations and license plate decals as needed, eliminating the need to
inventory and control such forms and decals. ITI's revenues are earned
(i) on a per-transaction basis for equipment leased to states, (ii) from
the sale of printers and components to other vendors within the industry,
and (iii) from the sale of media and supplies to these vendors. ITI also
earns revenue from the sale of drivers license photos.
Results of Operations
ITI's revenues through September 30, 1999 have been generated from:
(1) lease of printers and self service terminals for the automated
preparation and dispensing of motor vehicle registration forms and license
plate decals; and (2) lease of printer equipment for the automated
preparation and dispensing of drivers' licenses.
For the quarter ended September 30, 1999, contract revenues increased to
$1,845,614, a 18% increase over revenues of $1,563,892 earned during the
third quarter of 1998. Likewise, nine month revenues in 1999 totaled
$5,356,703, an increase of 13% over $4,761,239 earned during the first
nine months of 1998. The increase was directly related to the number of
transactions processed by the Company's equipment.
ITI's gross profit margin declined to 31% in the current quarter
from 44% in the third quarter of 1998. Gross profit was 37% for the first
nine months of 1999, as compared with 44% for the same period in 1998. The
decline in gross profits is primarily due to increases in the cost of
materials and maintenance required to support ITI's contracts.
Operating expenses, totaling $459,098 for the current quarter, were up 18%
from $388,742 incurred in the third quarter of 1998. A $40,000 increase in
selling, general and administrative costs for the quarter and an increase
in depreciation and amortization of $33,000 accounted for the difference.
For the nine months ended September 30, 1999, operating expenses increased
$116,000 over the same period in 1998, primarily due to (i) expenses of
relocating the Company's corporate offices; (ii) legal fees associated with
of settling litigation; (iii) increased travel for director and management
meetings; and (iv) increase marketing costs associated with efforts to
obtain additional state contracts.
7
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION
AND RESULTS OF OPERATIONS (continued)
Results of Operations (continued)
Research and development cost decreased in the current quarter to $14,974
from $17,068 incurred in the third quarter of 1998. Cumulative year to
date research and development expenditures totaled $149,327 at September
30, 1999 as compared with $148,809 for the first nine months of 1998.
ITI is committed to spend another $30,000 in research and development
costs for the remainder of the calendar year, although this amount could
substantially increase at the discretion of management. ITI will
engage in research and development of additional applications of its
products in related areas.
Total interest expense decreased to $457,190 for the first nine months of
1999 from $626,375 for a corresponding period in 1998, reflecting the pay
down of equipment financing, and the third quarter reduction of outstanding
indebtedness related to the ITI patents. Interest for the third quarter
totaled $82,779, as compared with $192,746 for the corresponding quarter
of the previous year.
Third quarter and year to date operating results include a provision for
loss for the impairment of a patent, which had a carrying value of
$2,946,942. Management has determined that a one-time adjustment of
$2,816,942 was necessary to reduce the carrying value of the patent to
fair value.
The current quarter also contains an extraordinary gain related to
September 13, 1999 default judgment rescinding ITI's agreement with
American Registration Systems, Inc. ("ARS") which resulted in the
elimination of $4,693,335 in principal and accrued interest and $122,367
in accrued royalties, net of an approximate tax effect of $1,926,000.
Management projects that future operating results will benefit from the
elimination of approximately $95,000 per quarter of interest and royalty
cost which had accrued under the rescinded agreement.
Income tax benefit of $1,926,000 differs from the amount of tax computed
by applying statutory rates to pre-tax financial statement income due to
the effects previously non-benefitted operating loss carryforwards of
approximately $800,000, which were offset by a full valuation allowance
for realization.
As a result of these changes described above, net income totaled
$2,149,688 for the nine months ended September 30, 1999, as compared with
$193,936 for the same period in 1998.
8
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION
AND RESULTS OF OPERATIONS (continued)
Liquidity and Capital Resources
Cash flow provided by operations was $1,250,391 for the nine months ended
September 30, 1999 versus $1,802,176 provided by operations in the nine
months ended September 30, 1998. The decrease in cash flow is due primarily
to an increased investment in in receivables due to (i) timing of
collections; (ii) increased monthly revenues in 1999 vs. 1998 and ; (iii)
adding another state contract.
ITI has refinanced its equipment loans and extended the repayment period
from November 1999 through December 2000. However, the Company from
time to time has used its cash flow from operations after debt service
to develop and purchase new printer equipment. Unless the Company secures
other forms of debt or equity financing, its cash flows may not be sufficient
to meet its operating expenses. Management believes that other sources of
financing will be available especially if the Company secures contracts
with other states.
Significant current debt service is $135,000 per month at 9.35% interest
through December 2000. $748,000 in interim financing originally due
September 1999 was refinanced during the quarter through April of 2004 at
an installment amount of approximately $18,000 per month at 10.4% interest.
9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On January 27, 1999, the Company filed a complaint with the Superior Court
of the State of California for the County of San Diego case number 727654
against American Registration Systems, Inc. ("ARS") and co-defendants,
thereby recording a complaint for rescission of a 1995 Purchase and Sale
Agreement between the Company and ARS. The suit challenges the validity
of certain material representations made by ARS and its affiliates at the
time of the Company's entering into the Purchase and Sale Agreement, and
asserts that such agreement was void or voidable due to a variety of defects.
Defendent ARS failed to respond to the complaint, and on September 13, 1999,
a default judgment for recission was entered by the court.
Item 5. Other Information
Effect of Inflation and Foreign Currency Exchange
The Company has not experienced material unfavorable effects on its
results of operations as a result of foreign currency fluctuations or
domestic inflation.
Year 2000 Issue
The Company's management has conducted an assessment of the impact of the
Year 2000 issue on its products and operations. Management believes that
all of the Company's products and internal operating systems are currently
Year 2000 compliant. The Company is also in the process of ascertaining
whether strategic vendor relationships will be affected by Y2K, and
projects that this assessment will be complete in the fourth quarter of
1999. The Company has been unable to ascertain whether its governmental
customers will be year 2000 compliant. In the event that one or more of
the Company's customers experiences a computer system disruption caused
by the year 2000 issue, the Company could experience significant loss
of revenues until such time as Y2K remediation is accomplished by the
customer. The Company will have no control over such remediation efforts
or their duration.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10.1 - Purchase and Sale Agreement
Exhibit 27 - Financial Data Schedule, filed herewith electronically
(b) Reports on Form 8-K None
10
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
INTELLECTUAL TECHNOLOGY, INC.
By: /s/ Craig Litchin
Principal Financial Officer
Date: November 19, 1999
11
EXHIBIT 10.1
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("agreement") is made and entered into this
13th day of September 1999, by and between AMERICAN REGISTRATION SYSTEMS, INC.,
an Indiana corporation ("ARS") and INTELLECTUAL TECHNOLOGIES, INC., a Delaware
corporation ("ITI") on the following terms and conditions:
RECITALS
A. ARS has previously sold and transferred to ITI that certain United States
Patent referable to the design and development of an automated form dispensing
machine for the automation of a process of issuing and renewing motor vehicle
licenses, more particularly: Patent N. 5,349,534, issued by the United States
Patent and Trademark Office as of September 20, 1994 (denominated "Automatic
Form Dispensing System").
B. That certain Purchase and Sale Agreement dated October 15, 1995 and
Addendum thereto, by which the aforementioned sale and transfer was previously
effectuated, have both been rescinded and declared void and of no further force
or effect by judgment entered on September 13, 1999, upon a complaint filed in
behalf of ITI seeding such rescission and related relief, in San Diego County
Superior Court action No. 727654.
C. ARS and ITI now desire to enter into a new agreement providing for the sale
and transfer to ITI of Patent No. 5,349,534, for a reduced consideration
reflecting the true value of Patent No. 5,349,534.
Now, therefore, in consideration of the agreements and covenants and upon
the conditions set forth herein, the parties agree as follows:
1.1 Incorporation By Reference. The Recitals set forth hereinabove are
incorporated herein as though fully set forth.
2.1 Sale and Assignment of Patent. Upon full payment by ITI to ARS of the
purchase price hereinbelow described, ARS hereby sells, assigns and transfers to
ITI all right, title and interest in and to U.S. Patent No. 5,349,534. ARS
intends by this sale transaction to accord to ITI all property rights pertaining
to such patent, including without limitation the right to utilize in such manner
as ITI may deem proper or expedient, all of the above-described intellectual
property rights, including the right to grant exclusive licenses and
sub-licenses thereof, and the right to manufacture, have manufactured, use and
sell any and all equipment which may be produced under said patent, in the
United States and such other countries or places in the world as ITI may select.
Such use rights shall include the entitlement of ITI to license or otherwise
authorize the use by franchisees, licensees, and/or sub-licensees for the
remaining term of said patent.
2.2 Termination of Agreement. This Agreement and the rights of ITI thereunder
as set forth in 2.1 immediately herein above, may be terminated only in
accordance with Paragraph 6.2 below.
3.1 Purchase Consideration. In consideration for the sale by ARS of U.S.
Patent No. 5,349,534 to ITI, ITI shall pay to ARS the sum of One Hundred Thirty
Thousand Dollars ($130,000). ITI shall pay this purchase consideration to ARS
as follows:
Down-payment of $10,000 upon execution of this Agreement;
Balance of $120,000 shall bear interest at the rate of 6.61% per annum,
with quarterly payments of $5,000, including interest, to commence on December
31, 1999 until paid in full. Interest shall accrue on the $130,000 purchase
price from October 31, 1995. There will be no late charge or penalty of any
nature incurred in connection with installment payments.
4.1 Warranty of Patent Rights. ARS hereby represents, covenants and warrants
to ITI that U.S. Patent No. 5,349,534, identified in the Recitals above, has
been duly issued and assigned as herein above set forth, and that all
proprietary property rights pertaining to U.S. Patent No 5,349,534 are
transferable to ITI without the consent or approval of any person or entity
other than ARS.
4.2 No Infringement. The use by ITI of the intellectual property rights
granted hereunder will not infringe upon any patent, trademark or proprietary
rights of any person or entity other than ARS.
5.1 Prosecution of Infringement Actions. Upon the effective date of this
Agreement, ARS authorizes ITI to file, and agrees to co-operate with ITI in the
prosecution of, such patent infringement and/or trade secret misappropriation
actions as may be necessary to protect from infringement the patent and other
proprietary rights granted hereunder. ARS agrees to join as a party plaintiff
or provide such other co-operation as may be necessary or reasonably required to
successfully pursue any such actions. ITI agrees to pay all such legal fees and
costs which are reasonably and necessarily incurred in the pursuit of any such
actions.
6.2 Term. Failure by ITI to pay the purchase consideration specified in
Paragraph 3.1 herein above, shall constitute an event of default subjecting ITI
to termination of all rights under this Agreement, and shall entitle ARS to an
immediate reassignment of U.S. Patent No. 5,349,534. On the occurrence of an
event of default as set forth above, ARS shall send notice of default and demand
for payment to ITI specifying the event(s) of default and notifying ITI that
failure to cure any such default(s) by payment of the full amount due will
result in termination of the sale transaction and all use, license and other
rights granted to ITI hereunder. Said notice of default shall be sent by
Federal Express, other overnight mail delivery service or by prepaid firs-class
U.S. Mail, return receipt requested, to the address for notice to ITI identified
below. Said notice of default shall be deemed served on the date of delivery to
the overnight delivery service or date of posting. ITI shall have thirty (30)
days from the date of service of notice of default in which to cure the event(s)
of default by payment in full of any and all amounts due to ARS. If cure is not
made in such time, the Agreement shall terminate without further action by ARS.
6.3 Result of Termination. If the Agreement is terminated in accordance with
the provisions of Paragraph 6.2 above, ITI shall no longer have any right, title
or interest in or to U.S. Patent No. 5,349,534, nor any entitlement to use,
license, or otherwise utilize such patent and/or rights pertaining thereto in
any respect. By its execution of this Agreement, ITI Covenants and agrees that
after any such termination and upon written demand by ARS, ITI will execute and
deliver, in proper form, a written reassignment of U.S. Patent No. 5,349,534 to
ARS or its designee.
7.1 Covenant of Further Assurance. The parties agree to execute and deliver,
or cause to be executed and delivered to the other party, such other instruments
and documents which may reasonably be requested or required to effectuate the
terms and provisions of this Agreement.
7.2 Notices. Any notice or document required or permitted to be served
hereunder by either party hereto may be served by mailing the same postpaid,
first-class mail to the other party at the party's last known address. Until
otherwise notified, the addresses for the parties hereto for the purpose of such
notice are as follows:
ARS: American Registration Systems, Inc.
6353 Constitution Drive
Fort Wayne, IN 46804
ITI: Intellectual Technologies, Inc.
1945 Camino Vida Roble, Suite O
Carlsbad, CA 92008
7.3 Governing Law. This agreement shall be interpreted and construed in
accordance with the laws of the State of California.
7.4 Entire Agreement; Amendments and Waivers. This Agreement constitutes the
entire agreement between the parties hereto and supersedes in all respects any
prior agreement and understanding of the parties relating to the subject matter
hereof. No supplement, modification or waiver of the Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other previsions hereto (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.
7.5 Severability. If any one or more of the provisions contained in this
Agreement or in any instrument referred to herein shall, for any reason, be held
to be invalid, illegal or unenforceable in any respect, (I) such provision will
be deemed amended to conform to applicable laws or such jurisdiction so as to be
valid and enforceable, or if it cannot be so amended without materially altering
the intention of the parties, it will be stricken, (ii) the validity, legality
and enforceability of such previsions will not in any way be affected or
impaired thereby in any other jurisdiction, (iii) such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or any
other such instrument, and (iv) the remainder of this Agreement will remain in
full force and effect.
7.6 Heading. The heading of the Paragraphs herein are inserted for convenience
of reference only and are not intended to be a part of or to affect the meaning
or interpretation of this Agreement.
7.7 No Assignments. This Agreement may not be assigned by operation of law or
otherwise without the written consent of the other party hereto.
7.8 Attorney's Fees. In the event either party hereto brings an action
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to his or its reasonable attorney's fees and court costs reasonably
incurred in connection therewith.
7.9 Confidentiality. Each of the parties hereto shall maintain as
confidential, and shall not disclose to any third party, any confidential or
non-public information concerning the aforementioned patents, "know-how" trade
secrets, other trade secrets and/or intellectual property or other proprietary
rights appurtenant to the digital imaging and automated form dispensing machines
which constitute the subject of such intellectual proprietary rights, without
the prior written consent of the other party hereto. Any such disclosure to
agents, contractors, subcontractors of and purchasers for ITI which is
permitted with the written consent of ARS shall be accompanied by appropriate
confidentiality or non-disclosure agreements executed by any such third party
persons or entities.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
duly executed and delivered as of the date and year first above written.
AMERICAN REGISTRATION SYSTEMS, INTELLECTUAL TECHNOLOGIES, INC.,
INC., an Indiana corporation a Delaware corporation
By BY
Nicholas Litchin Nicholas Denice
Vice President, Secretary Treasurer President
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BY REFERENCE TO SUCH 10QSB FOR THE QUARTER ENDED SEPTEMBER 30, 1999.
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