Filed Pursuant to Rule 424(b)(3)
Registration No. 333-112767
Prospectus Supplement No. 2
Dated May 18, 2005 (to Prospectus dated December 3, 2004)
INTEGRAL TECHNOLOGIES, INC.
This Prospectus Supplement No. 2 is part of the Prospectus dated December
3, 2004 related to an offering of up to 11,556,938 shares of our common stock by
the persons identified as "selling securityholders" in the Prospectus.
A copy of our Quarterly Report on Form 10-QSB for the fiscal quarter ended
March 31, 2005 is attached hereto.
The date of this Prospectus Supplement No. 2 is May 18, 2005.
1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2005
[ ] 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.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in it charter)
NEVADA 98-0163519
- ---------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
805 W. ORCHARD DRIVE, SUITE 7, BELLINGHAM, WASHINGTON 98225
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(360) 752-1982
---------------------------
(issuer's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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 such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the issuer filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: AS OF MAY 13, 2005, THE ISSUER HAD
----------------------------------
41,939,149 SHARES OF $.001 PAR VALUE COMMON STOCK OUTSTANDING.
---------------------------------------------------------------------
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
INDEX
PAGE
----
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements. . . . . . . . . . . . . . . . F-1
Item 2. Management's Plan of Operation. . . . . . . . . . . 1
Item 3. Controls and Procedures . . . . . . . . . . . . . . 2
PART 2 - OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . 3
Item 2. Changes in Securities and Use of Proceeds . . . . . 3
Item 3. Defaults upon Senior Securities . . . . . . . . . . 3
Item 4. Submission of Matters to a Vote of Security Holders 3
Item 5. Other Information . . . . . . . . . . . . . . . . . 3
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . 4
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 5
i
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
(US DOLLARS)
(UNAUDITED)
INDEX PAGE
- ----- ----
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets 1
Consolidated Statements of Operations 2
Consolidated Statements of Stockholders' Equity (Deficit) 3
Consolidated Statements of Cash Flows 4
Notes to Consolidated Financial Statements 5-6
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(US DOLLARS)
================================================================================================
MARCH 31, JUNE 30,
2005 2004
================================================================================================
(UNAUDITED)
ASSETS
CURRENT
Cash $ 2,249,978 $ 3,905,773
Prepaid expenses 18,711 26,091
- ------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 2,268,689 3,931,864
PROPERTY AND EQUIPMENT 13,975 31,250
INVESTMENTS 1 1
- ------------------------------------------------------------------------------------------------
$ 2,282,665 $ 3,963,115
================================================================================================
LIABILITIES
CURRENT
Accounts payable and accruals $ 255,548 $ 522,337
Due to West Virginia University Research Corporation 0 397,296
- ------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 255,548 919,633
- ------------------------------------------------------------------------------------------------
CONTINGENCIES (NOTE 3)
STOCKHOLDERS' EQUITY
PREFERRED STOCK AND PAID-IN CAPITAL IN EXCESS OF $0.001 PAR VALUE
20,000,000 Shares authorized
308,538 (June 30, 2004 - 321,036) issued and outstanding 308,538 321,038
COMMON STOCK AND PAID-IN CAPITAL IN EXCESS OF $0.001 PAR VALUE
50,000,000 Shares authorized
40,225,849 (June 30, 2004 - 40,181,849) issued and outstanding 20,252,085 20,197,085
PROMISSORY NOTES RECEIVABLE (66,500) (66,500)
OTHER COMPREHENSIVE INCOME 46,267 46,267
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (18,513,273) (17,454,408)
- ------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 2,027,117 3,043,482
- ------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,282,665 $ 3,963,115
================================================================================================
See notes to consolidated financial statements.
1
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(US DOLLARS)
=========================================================================================================
PERIOD FROM
FEBRUARY 12,
1996
THREE MONTHS NINE MONTHS (INCEPTION) TO
ENDED MARCH 31, ENDED MARCH 31, MARCH 31,
2005 2004 2005 2004 2005
- ---------------------------------------------------------------------------------------------------------
REVENUES $ 0 $ 807 $ 0 $ 1,483 $ 238,150
COST OF SALES 0 0 0 0 216,016
- ---------------------------------------------------------------------------------------------------------
0 807 0 1,483 22,134
OTHER INCOME (note 3) 33,969 0 33,969 0 636,812
- ---------------------------------------------------------------------------------------------------------
33,969 807 33,969 1,483 658,946
- ---------------------------------------------------------------------------------------------------------
EXPENSES
Consulting 77,468 94,767 213,930 260,592 2,906,175
Salaries and benefits 176,637 161,795 427,536 369,295 4,369,007
Legal and accounting 142,923 226,667 529,117 382,921 2,614,684
Travel and entertainment 26,866 72,001 83,645 122,432 960,445
General and administrative 36,323 39,104 111,178 81,117 741,191
Rent 9,186 9,838 23,630 24,823 310,879
Telephone 8,088 14,247 21,040 30,857 316,715
Advertising 5,000 5,000 5,000 6,000 282,255
Bank charges and
interest, net 489 (191) 8,084 502 171,313
Research and development (note 4) (397,296) 0 (397,296) 0 847,459
Interest on beneficial
conversion rate 0 0 0 0 566,456
Write-down of license and
operating assets 0 0 0 0 1,855,619
Bad debts 0 0 0 0 52,613
Remuneration pursuant to
proprietary, non-competition
Agreement 0 0 0 0 711,000
Financing fees 0 0 0 0 129,542
Settlement of lawsuit 0 0 0 0 45,250
Write-off of investments 0 0 0 0 1,249,999
Depreciation and amortization 5,767 5,759 17,275 17,276 310,411
- ---------------------------------------------------------------------------------------------------------
91,451 628,987 1,043,139 1,295,815 18,441,013
- ---------------------------------------------------------------------------------------------------------
NET LOSS FOR PERIOD $ 57,482 $ 628,180 $ 1,009,170 $ 1,294,332 $ 17,782,067
- ---------------------------------------------------------------------------------------------------------
NET LOSS PER COMMON SHARE $ 0.00 $ 0.02 $ 0.03 $ 0.04
- ---------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 40,225,849 38,885,903 40,215,572 35,141,383
=========================================================================================================
See notes to consolidated financial statements.
2
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
(US DOLLARS)
==================================================================================================================================
COMMON PREFERRED
STOCK AND STOCK AND
SHARES OF PAID-IN SHARES OF PAID-IN
COMMON CAPITAL PREFERRED CAPITAL PROMISSORY OTHER
STOCK IN EXCESS STOCK IN EXCESS NOTES SHARE COMPREHENSIVE
ISSUED OF PAR ISSUED OF PAR RECEIVABLE SUBSCRIPTIONS INCOME
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 2003 32,923,855 $13,335,752 439,610 $ 439,610 $ (66,500) $ 211,915 $ 46,267
SHARES ISSUED FOR
Cash on private placement 6,609,336 6,042,935 0 0 0 (211,915) 0
Cash on exercise of options 25,000 25,000 0 0 0 0 0
Settlement of lawsuit 37,500 35,250 0 0 0 0 0
Services 25,000 21,873 0 0 0 0 0
Redemption of preferred shares 415,000 415,000 (118,572) (118,572) 0 0 0
Exercise warrants 288,298 0 0 0 0 0 0
Shares returned to treasury for
cancellation (142,140) 0 0 0 0 0 0
Stock option compensation 0 321,275 0 0 0 0 0
Dividends on preferred shares 0 0 0 0 0 0 0
Net loss for period 0 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 2004 40,181,849 20,197,085 321,038 321,038 (66,500) 0 46,267
SHARES ISSUED FOR
Settlement of debt 44,000 55,000 0 0 0 0 0
Redemption of preferred shares 0 0 (12,500) (12,500) 0 0 0
Dividends on preferred shares 0 0 0 0 0 0 0
Net loss for period 0 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, MARCH 31, 2005 40,225,849 $20,252,085 308,538 $ 308,538 $ (66,500) $ 0 $ 46,267
==================================================================================================================================
================================================================
DEFICIT
ACCUMULATED
DURING THE TOTAL
DEVELOPMENT STOCKHOLDERS'
STAGE EQUITY
- ----------------------------------------------------------------
BALANCE, JUNE 30, 2003 $(14,595,116) $ (628,072)
SHARES ISSUED FOR
Cash on private placement 0 5,831,020
Cash on exercise of options 0 25,000
Settlement of lawsuit 0 35,250
Services 0 21,873
Redemption of preferred shares (296,428) 0
Exercise warrants 0 0
Shares returned to treasury for
cancellation 0 0
Stock option compensation 0 321,275
Dividends on preferred shares (19,016) (19,016)
Net loss for period (2,543,848) (2,543,848)
- ----------------------------------------------------------------
BALANCE, JUNE 30, 2004 (17,454,408) 3,043,482
SHARES ISSUED FOR
Settlement of debt 0 55,000
Redemption of preferred shares (37,500) (50,000)
Dividends on preferred shares (12,195) (12,195)
Net loss for period (1,009,170) (1,009,170)
- ----------------------------------------------------------------
BALANCE, MARCH 31, 2005 $(18,513,273) $ 2,027,117
================================================================
See notes to consolidated financial statements.
3
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(US DOLLARS)
=================================================================================================================
PERIOD FROM
FEBRUARY 12,
NINE MONTHS ENDED 1996
MARCH 31, (INCEPTION) TO
2005 2004 MARCH 31, 2005
=================================================================================================================
OPERATING ACTIVITIES
Net loss $(1,009,170) $(1,294,332) (17,782,067)
Adjustments to reconcile net loss to net cash used by
operating activities
Write-down of investment 0 0 1,249,999
Proprietary, non-competition agreement 0 0 711,000
Depreciation and amortization 17,275 17,275 335,966
Write-off of accounts payable (33,969) 0 (636,812)
Shares issued for consulting and financing fees 0 36,873 957,273
Stock option compensation 0 0 1,133,483
Interest on beneficial conversion feature 0 0 566,456
Settlement of lawsuit 0 0 60,250
Write-down of license and operating assets 0 0 1,853,542
Bad debts 0 0 77,712
Dismissal of lawsuit (note 4) (397,296) 0 0
CHANGES IN NON-CASH WORKING CAPITAL
Due from affiliated company 0 0 (116,000)
Notes and account receivable 0 0 (109,213)
Inventory 0 0 (46,842)
Prepaid expenses 7,380 (23,637) (18,711)
Other 0 0 (2,609)
Accounts payable and accruals (190,015) (246,934) 556,880
- -----------------------------------------------------------------------------------------------------------------
CASH USED IN OPERATING ACTIVITIES (1,605,795) (1,510,755) (11,209,693)
- -----------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of property, equipment and intangible assets 0 0 (200,935)
Assets acquired and liabilities assumed on purchase of subsidiary 0 0 (129,474)
Investment purchase 0 0 (2,000,000)
License agreement 0 0 (124,835)
- -----------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 0 0 (2,455,244)
- -----------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Redemption of preferred shares (50,000) 0 (50,000)
Repayments to stockholders 0 0 (139,046)
Subscriptions received 0 0 226,665
Issuance of common stock 0 5,876,270 14,405,165
Advances from stockholders, net of repayments 0 0 1,078,284
Share issue costs 0 0 (227,420)
Proceeds from convertible debentures 0 0 600,000
- -----------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (50,000) 5,876,270 15,893,648
- -----------------------------------------------------------------------------------------------------------------
EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH 0 0 46,267
- -----------------------------------------------------------------------------------------------------------------
INFLOW (OUTFLOW) OF CASH (1,655,795) 4,365,515 2,274,978
CASH, BEGINNING OF PERIOD 3,905,773 174,210 0
- -----------------------------------------------------------------------------------------------------------------
CASH, END OF PERIOD $ 2,249,978 $ 4,539,725 2,274,978
=================================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION
Settlement of debt for shares 0 35,250 263,992
Services paid with shares 55,000 36,873 689,911
Preferred shares redeemed 0 415,000 927,000
=================================================================================================================
See notes to consolidated financial statements.
4
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED MARCH 31, 2005
(UNAUDITED)
(US DOLLARS)
================================================================================
1. BASIS OF PRESENTATION
These unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in the United
States for interim financial information. These financial statements are
condensed and do not include all disclosures required for annual financial
statements. The organization and business of the Company, accounting
policies followed by the Company and other information are contained in the
notes to the Company's audited consolidated financial statements filed as
part of the Company's June 30, 2004 Form 10-KSB.
In the opinion of the Company's management, these consolidated financial
statements reflect all adjustments necessary to present fairly the
Company's consolidated financial position at March 31, 2005 and June 30,
2004, and the consolidated results of operations, stockholders' equity and
the consolidated statements of cash flows for the three and nine months
ended March 31, 2005 and 2004. The results of operations for the three
months and nine months ended March 31, 2005 and 2004 are not necessarily
indicative of the results to be expected for the entire fiscal year.
2. STOCKHOLDERS' EQUITY
During the nine month period ended March 31, 2005, the Company:
(a) issued 44,000 shares to settle $55,000 of debt;
(b) extended the expiry date of 790,000 options. In accordance with FIN
44, this results in a new measurement of compensation cost. Since the
fair value as well as the intrinsic value at the new measurement date
resulted in a value lower than the original amount recorded, no
additional compensation expense is required; and
(c) redeemed 12,500 shares of Series A convertible preferred stock from
two officers of the Company. The board of directors can offer to
redeem the preferred shares at a higher price than the original
agreement of $3.50. As such, the board offered to redeem the preferred
shares at a value of $4.00 for a total payment of $50,000.
3. OTHER ITEMS
During the nine month period, the Company reversed $33,969 payable to a
company that became bankrupt.
5
INTEGRAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED MARCH 31, 2005
(UNAUDITED)
(US DOLLARS)
================================================================================
4. SETTLEMENT OF DEBT
During the period, the Company settled all past and present claims that the
Company and Mr. James Smith and his personal company, Integral Concepts,
Inc., have against each other. All parties will release all claims against
each other. In addition, Mr. Smith will return to the Company 40,000 shares
of its common stock.
As part of a global settlement, the Company, West Virginia University (WVU)
and West Virginia University Research Corp. ("WVURC") have mutually agreed
to release all past and present claims that each has against the other
under the following terms:
(i) WVU and WVURC release all past and present claims it has against the
Company, including $397,296 in claimed amounts, vigorously contested
by the Company for past research and development work performed by
WVURC on the Plasma Ignition Technology, the Colorvision Technology
and the CTHA Technology.
(ii) Cancellation of the licensing agreement between WVU and Integral
Concepts, Inc., for the Plasma Ignition Technology, the Colorvision
Technology and the CTHA Technology, which had been previously
sub-licensed by Integral Concepts, Inc. to the Company or its
subsidiaries; and
(iii) WVU will issue new licensing agreements for the aforementioned
technologies directly to the Company.
In return, the Company agrees to issue 40,000 restricted shares of its
common stock to WVU.
As a result of this settlement, the Company reversed an accrual of $397,296
presently recorded in its accounts.
5. RELATED PARTY TRANSACTIONS
During the period ended March 31, 2005, two individuals who are also
members of the board of directors redeemed 12,500 preferred shares (note
2(c)) in addition to receiving a $50,000 bonus.
6
ITEM 2. PLAN OF OPERATION.
The following discussion and analysis should be read in conjunction with our
financial statements and notes thereto included elsewhere in this Form 10-QSB.
Except for the historical information contained herein, the discussion in this
Form 10-QSB contains certain forward-looking statements that involve risks and
uncertainties, such as statements of our plans, objectives, expectations and
intentions. The cautionary statements made in this Form 10-QSB should be read as
being applicable to all related forward-looking statements wherever they appear
in this Form 10-QSB. Our actual results could differ materially from those
discussed here.
To date we have recorded nominal revenues from the sales of prototypes. We are
still considered a development stage company for accounting purposes. From
inception on February 12, 1996 through March 31, 2005, we have accrued an
accumulated deficit of approximately $18.5 million.
For the nine month period ended March 31, 2005, cash has decreased by
$1,655,795, from $3,905,773 on June 30, 2004, to $2,249,978 on March 31, 2005.
Our net loss for the quarter ended March 31, 2005 was $57,482, compared to a net
loss of $628,180 in the corresponding period of the prior fiscal year. This
decrease is primarily attributable to a credit applied to research and
development expenses due to the write-off of an accrued liability development
due to the West Virginia University of $397,296, in accordance with a January
2005 settlement agreement (which was disclosed in the last quarterly report), as
well as decreases in legal and accounting expenses ($226,667 compared to
$142,923, a $83,744 decrease), and travel and entertainment expenses ($72,001
compared to $26,866, a $45,135 decrease).
The primary expenses during the quarter were salaries ($176,637), consulting
fees ($77,468) and legal and accounting ($142,923). Legal fees were primarily
related to costs associated with pursuing and maintaining technology patent
filings (approximately $118,000).
We continue to focus substantially all of our resources on the research,
development, and commercialization of our Plastenna and Electriplast
technologies. We will not be devoting any of our resources on the further
research, development and commercialization of the other technologies in which
we have an interest during the next twelve months.
Plastenna is a radio frequency conductive antenna made of resin-based material.
Plastenna can be molded and used in wireless handheld devices such as cellular
phones and PDAs, enabling the antenna to be molded into the device or being the
device's molded body itself, replacing the traditional detachable metal antenna.
Plastennas can also add covertness to numerous other antenna applications by
concealing them to be handles, buttons, racks, mirror housings, moldings and or
many other parts within vehicles, boats, aircraft, etc.
Electriplast is an electrically conductive composite polymer technology. The
Electriplast polymer is a compounded, pelletized formulation of resin-based
materials, which are combined with a proprietary controlled, balanced
concentration of micron conductive materials contained within the manufactured
pellet. The pellets can then be formed, like plastic or rubber, using
conventional molding techniques and conventional molding equipment.
Electriplast can be molded into infinite shapes and sizes and is electrically
conductive as if it were metal.
We have filed over 85 patent submissions for a variety of applications of
Electriplast such as; antennas, shielding, lighting circuitry, switch actuators,
resistors, medical devices and cable connectors.
We are not in the manufacturing business and do not expect to make any capital
purchases of a manufacturing plant or significant equipment in the next twelve
months. We will be relying on contract manufacturers to produce products.
1
We anticipate spending approximately $250,000 over the next twelve months on
ongoing research and development (primarily salaries) of the different
applications and uses of our technologies.
During the next twelve months, we do not anticipate increasing staff.
To date, we have relied on loans from management and management's ability to
raise capital through debt and equity private placement financings to fund our
operations. During the last fiscal year, we raised capital through two private
placements by selling common stock and common stock purchase warrants:
1. In September 2003, we completed a private placement with ten investors and
sold 898,336 shares of our common stock at $.75 per share and warrants to
purchase 449,168 shares of common stock within two years at an exercise price of
$1.00 per share. Aggregate proceeds from the sale of the common stock was
$673,752. Pursuant to the terms of the offering, we filed a registration
statement to register the shares of common stock (including the shares of common
stock underlying the warrants), for resale by the investors.
2. On January 14, 2004, we completed a private placement of our securities and
raised $5,711,000 in gross proceeds. The transaction was completed pursuant to a
Securities Purchase Agreement dated December 26, 2003, with Wellington
Management Company, LLP, for a private offering of 57,115 units ("Units") of
equity securities, each Unit consisting of 100 shares of common stock (the
"Common Stock"), and one warrant (the "Warrant") convertible into 30 shares of
Common Stock, at a purchase price of $100.00 per Unit. Wellington Management
Company, LLP acted as an investment advisor on behalf of eleven institutional
investors. By mutual agreement with the Investors, closing occurred on January
14, 2004. Each Warrant may be exercised in whole or in part at any time, and
from time to time, during the period commencing on April 30, 2004 and expiring
on December 31, 2009, and entitles the holder to receive shares of common stock
for no additional consideration. Pursuant to the Securities Purchase Agreement,
we filed a registration statement to register the shares of Common Stock
(including the share of common stock underlying the Warrants), for resale by the
investors. Wells Fargo Securities, LLC, served as placement agent for us and
was paid a fee of six percent of the gross proceeds raised from the offering.
With approximately $2.2 million in cash at March 31, 2005, we have adequate
funds available to fund our operations over the next twelve months.
ITEM 3. CONTROLS AND PROCEDURES
Based on their most recent evaluation, which was completed as of the end of the
period covered by this periodic report on Form 10-QSB, the Company's Chief
Executive Officer and Chief Financial Officer believe the Company's disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) are
effective to ensure that information required to be disclosed by the Company in
this report is accumulated and communicated to the Company's management,
including its principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required disclosure. During the
fiscal quarter to which this report relates, there were no changes in the
Company's internal controls or other factors that could significantly affect
these controls subsequent to the date of their evaluation and there were no
corrective actions with regard to deficiencies and material weaknesses.
2
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There have been no material developments in the pending legal proceeding
previously described in the Company's periodic reports. As previously
disclosed, dismissal of the lawsuit is pending completion of the conditions of
the settlement agreement by the parties.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None.
ITEM 5. OTHER INFORMATION.
On May 6, 2005, the Company issued an aggregate of 1,713,300 shares of common
stock in connection with the exercise of outstanding common stock purchase
warrants that had been issued to eleven institutional investors pursuant to a
private placement financing transaction with Wellington Management Company, LLP
in January 2004. The Company did not receive any proceeds from the exercise of
the warrants.
The transaction did not involve any public offering, and a restrictive legend
was placed on each certificate evidencing the securities. The Company believes
that the transaction was exempt from registration pursuant to Section 4(2) of
the Securities Act and/or Rule 506 of Regulation D.
3
ITEM 6. EXHIBITS.
Exhibit No. Description
- ----------- -----------
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.)
10.12 Integral Technologies, Inc. 2001 Stock Plan dated January 2, 2001, as amended December
17, 2001. (Incorporated by reference to Exhibit 10.12 of Integral's registration statement on
Form S-8 (file no. 333-76058).)
10.15 Integral Technologies, Inc. 2003 Stock Plan dated April 4, 2003 (Incorporated by reference to
Exhibit 10.15 of Integral's registration statement on Form S-8 (file no. 333-104522).)
10.16 Securities Purchase Agreement dated December 26, 2003, between the Registrant and
Wellington Management Company, LLP. (Incorporated by reference to Exhibit 10.16 of Integral's
Current Report on Form 8-K dated January 14, 2004 (filed January 28, 2004).)
10.17 Form of Common Stock Purchase Warrant related to the offering of securities described in
Exhibit 10.16. (Incorporated by reference to Exhibit 10.17 of Integral's Current Report on Form
8-K dated January 14, 2004 (filed January 28, 2004).)
31.1 Section 302 Certification by the Corporation's Chief Executive Officer. (Filed herewith).
31.2 Section 302 Certification by the Corporation's Chief Financial Officer. (Filed herewith).
32.1 Section 906 Certification by the Corporation's Chief Executive Officer. (Filed herewith).
32.2 Section 906 Certification by the Corporation's Chief Financial Officer. (Filed herewith).
4
SIGNATURES
In accordance with the requirements of the Exchange Act, the Company caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
INTEGRAL TECHNOLOGIES, INC.
By: /s/ William S. Robinson
----------------------------------------------
William S. Robinson, Chief Executive Officer
By: /s/ William A. Ince
----------------------------------------------
William A. Ince, Chief Financial Officer and
Principal Accounting Officer
Date: May 17, 2005
5
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
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.)
10.12 Integral Technologies, Inc. 2001 Stock Plan dated January 2, 2001, as amended December
17, 2001. (Incorporated by reference to Exhibit 10.12 of Integral's registration statement on
Form S-8 (file no. 333-76058).)
10.15 Integral Technologies, Inc. 2003 Stock Plan dated April 4, 2003 (Incorporated by reference to
Exhibit 10.15 of Integral's registration statement on Form S-8 (file no. 333-104522).)
10.16 Securities Purchase Agreement dated December 26, 2003, between the Registrant and
Wellington Management Company, LLP. (Incorporated by reference to Exhibit 10.16 of Integral's
Current Report on Form 8-K dated January 14, 2004 (filed January 28, 2004).)
10.17 Form of Common Stock Purchase Warrant related to the offering of securities described in
Exhibit 10.16. (Incorporated by reference to Exhibit 10.17 of Integral's Current Report on Form
8-K dated January 14, 2004 (filed January 28, 2004).)
31.1 Section 302 Certification by the Corporation's Chief Executive Officer. (Filed herewith).
31.2 Section 302 Certification by the Corporation's Chief Financial Officer. (Filed herewith).
32.1 Section 906 Certification by the Corporation's Chief Executive Officer. (Filed herewith).
32.2 Section 906 Certification by the Corporation's Chief Financial Officer. (Filed herewith).
Exhibit 31.1
CERTIFICATION PURSUANT TO
18 U.S.C. ss.1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, William S. Robinson, Chief Executive Officer of Integral Technologies, Inc.,
certify that:
1. I have reviewed this quarterly report on Form 10-QSB for the period ended
March 31, 2005 of Integral Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(c) disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
May 17, 2005
/s/ William S. Robinson
- ------------------------------------------------------------
William S. Robinson, Chief Executive Officer
Exhibit 31.2
CERTIFICATION PURSUANT TO
18 U.S.C. ss.1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, William A. Ince, Chief Financial Officer of Integral Technologies, Inc.,
certify that:
1. I have reviewed this quarterly report on Form 10-QSB for the period ended
March 31, 2005 of Integral Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(c) disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
May 17, 2005
/s/ William A. Ince
- ------------------------------------------------------------
William A. Ince, Chief Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. ss.1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Solely for the purposes of complying with, and the extent required by 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the
undersigned certifies, in his capacity as the Chief Executive Officer of
Integral Technologies, Inc., that, to his knowledge, the quarterly report of the
company on Form 10-QSB for the period ended March 31, 2005, fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934 and that the information contained in the report fairly presents, in all
material respects, the company's financial condition and results of operations.
May 17, 2005
/s/ William S. Robinson
- ------------------------------------------------------------
William S. Robinson, Chief Executive Officer
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. ss.1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Solely for the purposes of complying with, and the extent required by 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the
undersigned certifies, in his capacity as the Chief Financial Officer of
Integral Technologies, Inc., that, to his knowledge, the quarterly report of the
company on Form 10-QSB for the period ended March 31, 2005, fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934 and that the information contained in the report fairly presents, in all
material respects, the company's financial condition and results of operations.
May 17, 2005
/s/ William A. Ince
- ------------------------------------------------------------
William A. Ince, Chief Financial Officer