Attached files
| file | filename |
|---|---|
| EX-31.2 - EXHIBIT 31.2 - INTEGRAL TECHNOLOGIES INC | ex31_2.htm |
| EX-31.1 - EXHIBIT 31.1 - INTEGRAL TECHNOLOGIES INC | ex31_1.htm |
| EX-32.1 - EXHIBIT 32.1 - INTEGRAL TECHNOLOGIES INC | ex32_1.htm |
| EXCEL - IDEA: XBRL DOCUMENT - INTEGRAL TECHNOLOGIES INC | Financial_Report.xls |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED September 30, 2011.
OR
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION FROM _______ TO ________.
COMMISSION FILE NUMBER 0-28353
INTEGRAL TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in its Charter)
|
Nevada
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98-0163519
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|
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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805 W. Orchard Drive, Suite 7, Bellingham, Washington 98225
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (360) 752-1982
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 o No T
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes T No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company T
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of September 30, 2011, there were 58,348,579 outstanding shares of the Registrant's Common Stock, $0.001 par value.
INTEGRAL TECHNOLOGIES, INC.
September 30, 2011 QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
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Page
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| PART I - FINANCIAL INFORMATION | |||
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| Item 1. |
Financial Statements
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||
| INTEGRAL TECHNOLOGIES, INC. | |||
| (A Development Stage Company) | |||
| Consolidated Financial Statements | |||
| September 30, 2011 | |||
| (U.S. Dollars) | |||
| (Unaudited) | |||
| Consolidated Balance Sheets | F-1 | ||
| Consolidated Statement of Operations | F-2 | ||
| Consolidated Statement of Stockholders’ Equity | F-3 | ||
| Consolidated Statement of Cash Flows | F-4 | ||
| Notes to Consolidated Financial Statements | F-5 | ||
| Item 2. |
1
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| Item 3. |
2
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| Item 4. |
2
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| PART II - OTHER INFORMATION | |||
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|||
| Item 1. |
3
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| Item 1A. |
3
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| Item 2. |
3
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| Item 3. |
3
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| Item 4. |
3
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| Item 5. |
3
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| Item 6. |
4
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| SIGNATURES |
5
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PART I
ITEM 1. FINANCIAL STATEMENTS
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Consolidated Balance Sheet
(US Dollars)
|
September 30,
2011
|
June 30,
2011
|
|||||||
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(Unaudited)
|
||||||||
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Assets
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||||||||
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Current
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||||||||
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Cash
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$ | 28,944 | $ | 61,365 | ||||
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Prepaid expenses
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1,868 | 0 | ||||||
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Total Assets
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$ | 30,812 | $ | 61,365 | ||||
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Liabilities
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||||||||
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Current
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||||||||
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Accounts payable and accruals
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$ | 1,249,163 | $ | 775,747 | ||||
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Total Current Liabilities
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1,249,163 | 775,747 | ||||||
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Stockholders’ Deficit (note 3)
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||||||||
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Preferred Stock and Paid-in Capital in Excess of $0.001 Par Value 20,000,000 shares authorized 308,538 issued and outstanding
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308,538 | 308,538 | ||||||
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Common Stock and Paid-in Capital in Excess of $0.001 Par Value 150,000,000 shares authorized 58,348,579 (June 30, 2011 - 58,296,760) issued and outstanding
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35,985,087 | 35,858,822 | ||||||
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Promissory Notes Receivable
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(29,737 | ) | (29,737 | ) | ||||
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Subscriptions Received
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177,308 | 0 | ||||||
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Other Comprehensive Income
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46,267 | 46,267 | ||||||
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Deficit Accumulated During the Development Stage
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(37,705,814 | ) | (36,898,272 | ) | ||||
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Total Stockholders’ Deficit
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(1,218,351 | ) | (714,382 | ) | ||||
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Total Liabilities and Stockholders’ Deficit
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$ | 30,812 | $ | 61,365 | ||||
See notes to consolidated financial statements.
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Consolidated Statement of Operations
(Unaudited)
(US Dollars)
|
Three Months Ended
September 30,
|
Period from
February 12,
1996
(Inception) to
September 30,
|
|||||||||||
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2011
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2010
|
2011
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||||||||||
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Revenue
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$ | 0 | $ | 0 | $ | 249,308 | ||||||
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Cost of Sales
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0 | 0 | 216,016 | |||||||||
| 0 | 0 | 33,292 | ||||||||||
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Other Income
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0 | 502 | 869,303 | |||||||||
| 0 | 502 | 902,595 | ||||||||||
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Expenses
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||||||||||||
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Consulting
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486,265 | 294,550 | 10,094,890 | |||||||||
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Salaries and benefits
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110,000 | 110,000 | 11,109,316 | |||||||||
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Legal and accounting
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58,165 | 32,881 | 4,853,482 | |||||||||
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General and administrative
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49,972 | 17,232 | 1,418,155 | |||||||||
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Research and development
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41,760 | 99,026 | 2,009,142 | |||||||||
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Travel and entertainment
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24,056 | 23,906 | 1,548,916 | |||||||||
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Rent
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16,717 | 12,465 | 601,472 | |||||||||
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Telephone
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9,610 | 5,128 | 521,195 | |||||||||
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Advertising
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4,139 | 0 | 349,478 | |||||||||
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Financing fees
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2,800 | 0 | 131,843 | |||||||||
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Bank charges and interest, net
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193 | 72 | 208,384 | |||||||||
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Remuneration pursuant to proprietary, non-competition agreement
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0 | 0 | 711,000 | |||||||||
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Write-off of investments
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0 | 0 | 1,250,000 | |||||||||
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Interest on beneficial conversion feature
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0 | 0 | 566,455 | |||||||||
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Write-down of license and operating assets
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0 | 0 | 1,855,619 | |||||||||
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Settlement of lawsuit
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0 | 0 | 45,250 | |||||||||
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Bad debts
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0 | 0 | 46,604 | |||||||||
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Amortization
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0 | 0 | 324,386 | |||||||||
| 803,677 | 595,260 | 37,645,587 | ||||||||||
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Net Loss for Period
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$ | (803,677 | ) | $ | (594,758 | ) | $ | (36,742,992 | ) | |||
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Loss Per Common Share (note 6)
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$ | (0.01 | ) | $ | (0.01 | ) | ||||||
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Weighted Average Number of Common Shares Outstanding
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58,304,000 | 54,963,262 | ||||||||||
See notes to consolidated financial statements.
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
(US Dollars)
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Shares
of Common
Stock
Issued
|
Common
Stock and
Paid-in Capital
in Excess
of Par
|
Shares of
Preferred
Stock
Issued
|
Preferred
Stock and
Paid-in Capital
in Excess
of Par
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Promissory
Notes
Receivable
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Share
Subscriptions
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Accumulated
Other
Comprehensive
Income
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Deficit
Accumulated
During the
Development
Stage
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Total
Stockholders'
Equity (Deficit)
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||||||||||||||||||||||||||||
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Balance, June 30, 2010
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54,838,921 | $ | 33,224,263 | 308,538 | $ | 308,538 | $ | (29,737 | ) | $ | 11,250 | $ | 46,267 | $ | (33,909,950 | ) | $ | (349,369 | ) | |||||||||||||||||
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Shares issued for
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||||||||||||||||||||||||||||||||||||
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Services
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446,118 | 619,284 | 0 | 0 | 0 | 0 | 0 | 0 | 619,284 | |||||||||||||||||||||||||||
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Cash
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1,820,042 | 1,101,720 | 0 | 0 | 0 | (11,250 | ) | 0 | 0 | 1,090,470 | ||||||||||||||||||||||||||
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Share issue costs
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330,879 | (122,497 | ) | 0 | 0 | 0 | 0 | 0 | 0 | (122,497 | ) | |||||||||||||||||||||||||
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Warrants exercised
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860,800 | 430,400 | 0 | 0 | 0 | 0 | 0 | 0 | 430,400 | |||||||||||||||||||||||||||
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Dividends on preferred stock
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0 | 0 | 0 | 0 | 0 | 0 | 0 | (15,460 | ) | (15,460 | ) | |||||||||||||||||||||||||
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Warrant extension
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||||||||||||||||||||||||||||||||||||
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Deemed dividend
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0 | 131,577 | 0 | 0 | 0 | 0 | 0 | 0 | 131,577 | |||||||||||||||||||||||||||
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Deemed dividend
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0 | 0 | 0 | 0 | 0 | 0 | 0 | (131,577 | ) | (131,577 | ) | |||||||||||||||||||||||||
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Stock-based compensation
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0 | 474,075 | 0 | 0 | 0 | 0 | 0 | 0 | 474,075 | |||||||||||||||||||||||||||
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Net loss for period
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0 | 0 | 0 | 0 | 0 | 0 | 0 | (2,841,285 | ) | (2,841,285 | ) | |||||||||||||||||||||||||
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Balance, June 30, 2011
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58,296,760 | 35,858,822 | 308,538 | 308,538 | (29,737 | ) | 0 | 46,267 | (36,898,272 | ) | (714,382 | ) | ||||||||||||||||||||||||
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Shares issued for
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||||||||||||||||||||||||||||||||||||
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Services
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10,000 | 7,800 | 0 | 0 | 0 | 0 | 0 | 0 | 7,800 | |||||||||||||||||||||||||||
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Cash
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41,819 | 23,000 | 0 | 0 | 0 | 0 | 0 | 0 | 23,000 | |||||||||||||||||||||||||||
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Dividends on preferred stock
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0 | 0 | 0 | 0 | 0 | 0 | 0 | (3,865 | ) | (3,865 | ) | |||||||||||||||||||||||||
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Subscriptions received
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0 | 0 | 0 | 0 | 0 | 177,308 | 0 | 0 | 177,308 | |||||||||||||||||||||||||||
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Stock-based compensation
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0 | 95,465 | 0 | 0 | 0 | 0 | 0 | 0 | 95,465 | |||||||||||||||||||||||||||
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Net loss for period
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0 | 0 | 0 | 0 | 0 | 0 | 0 | (803,677 | ) | (803,677 | ) | |||||||||||||||||||||||||
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Balance, September 30, 2011 (Unaudited)
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58,348,579 | $ | 35,985,087 | 308,538 | $ | 308,538 | $ | (29,737 | ) | $ | 177,308 | $ | 46,267 | $ | (37,705,814 | ) | $ | (1,218,351 | ) | |||||||||||||||||
See notes to consolidated financial statements.
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Consolidated Statement of Cash Flows
(Unaudited)
(US Dollars)
|
Three Months Ended
September 30,
|
Period from
February 12,
1996
(Inception) to
September 30,
|
|||||||||||
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2011
|
2010
|
2011
|
||||||||||
|
Operating Activities
|
||||||||||||
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Net loss
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$ | (803,677 | ) | $ | (594,758 | ) | $ | (36,742,992 | ) | |||
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Items not involving cash
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||||||||||||
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Write-down of investment
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0 | 0 | 1,250,000 | |||||||||
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Proprietary, non-competition agreement
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0 | 0 | 711,000 | |||||||||
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Amortization
|
0 | 0 | 349,941 | |||||||||
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Other income
|
0 | 0 | (658,305 | ) | ||||||||
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Consulting services
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7,800 | 5,000 | 2,108,386 | |||||||||
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Stock-based compensation
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95,465 | 112,050 | 7,628,049 | |||||||||
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Interest on beneficial conversion feature
|
0 | 0 | 566,456 | |||||||||
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Settlement of lawsuit
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0 | 0 | 60,250 | |||||||||
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Write-down of license and operating assets
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0 | 0 | 1,853,542 | |||||||||
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Bad debts
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0 | 0 | 77,712 | |||||||||
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Changes in non-cash working capital
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||||||||||||
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Due from affiliated company
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0 | 0 | (116,000 | ) | ||||||||
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Notes and accounts receivable
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0 | 0 | (109,213 | ) | ||||||||
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Inventory
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0 | 0 | (46,842 | ) | ||||||||
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Prepaid expenses
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(1,869 | ) | 6,541 | (1,868 | ) | |||||||
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Other
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0 | 0 | (2,609 | ) | ||||||||
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Accounts payable and accruals
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469,552 | 87,936 | 1,524,668 | |||||||||
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Cash Used in Operating Activities
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(232,729 | ) | (383,231 | ) | (21,547,825 | ) | ||||||
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Investing Activities
|
||||||||||||
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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
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0 | 0 | (2,000,000 | ) | ||||||||
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License agreement
|
0 | 0 | (124,835 | ) | ||||||||
|
Cash Used in Investing Activities
|
0 | 0 | (2,455,244 | ) | ||||||||
|
Financing Activities
|
||||||||||||
|
Redemption of preferred shares
|
0 | 0 | (50,000 | ) | ||||||||
|
Repayment of loan
|
0 | 0 | (11,000 | ) | ||||||||
|
Repayments to stockholders
|
0 | 0 | (91,283 | ) | ||||||||
|
Proceeds from issuance of common stock
|
23,000 | 150,000 | 22,182,428 | |||||||||
|
Advances from stockholders
|
0 | 0 | 1,078,284 | |||||||||
|
Share issue costs
|
0 | (3,600 | ) | (414,406 | ) | |||||||
|
Subscriptions received
|
177,308 | 33,750 | 691,723 | |||||||||
|
Proceeds from convertible debentures
|
0 | 0 | 600,000 | |||||||||
|
Cash Provided by Financing Activities
|
200,308 | 180,150 | 23,985,746 | |||||||||
|
Effect of Foreign Currency Translation on Cash
|
0 | 0 | 46,267 | |||||||||
|
Inflow (Outflow) of Cash
|
(32,421 | ) | (203,081 | ) | 28,944 | |||||||
|
Cash, Beginning of Period
|
61,365 | 350,235 | 0 | |||||||||
|
Cash, End of Period
|
$ | 28,944 | $ | 147,154 | $ | 28,944 | ||||||
Note 5 - Supplemental Disclosure of Cash Flow Information
See notes to consolidated financial statements.
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Three Months Ended September 30, 2011
(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, 2011 Form 10-K.
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 September 30, 2011 and June 30, 2011, and the consolidated results of operations cash flows for the three months ended September 30, 2011 and 2010. The results of operations for the three months ended September 30, 2011 and 2010 are not necessarily indicative of the results to be expected for the entire fiscal year.
|
2.
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GOING CONCERN
|
These consolidated financial statements have been prepared on the going concern basis, which assumes the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the ordinary course of business. The Company’s operations have resulted in a net loss of $803,677 for the three months ended September 30, 2011 (2010 - $594,758), and had an accumulated deficit of $37,705,814 (June 30, 2011 - $36,898,272) and a working capital deficiency of $1,218,351 as at September 30, 2011 (June 30, 2011 - $714,382). The Company has not yet commenced revenue-producing operations and has significant expenditure requirements to continue to advance research, developing and commercializing new antenna technologies. The Company estimates that, without further funding, it will deplete its cash resources in less than three months. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
These consolidated financial statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate because management believes that the actions already taken or planned will mitigate the adverse conditions and events that raise doubts about the validity of the going concern assumption used in preparing these consolidated financial statements. Management intends to raise additional capital through stock issuances to finance operations. If none of these events occur, there is a risk that the business will fail.
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Three Months Ended September 30, 2011
(Unaudited)
(US Dollars)
|
3.
|
STOCKHOLDERS’ EQUITY
|
|
|
(a)
|
Preferred stock
|
Cumulative dividends on preferred stock are accrued at a rate of 5% annually, payable at the option of the Company. Each holder has the right to convert preferred shares into common stock at the average trading price ten days prior to conversion. The Company has the right to redeem the preferred shares from date of issue as follows:
|
Within one year
|
$ | 1.50 | ||
|
2nd year
|
$ | 2.00 | ||
|
3rd year
|
$ | 2.50 | ||
|
4th year
|
$ | 3.00 | ||
|
5th year
|
$ | 3.50 | ||
|
6th year
|
$ | 4.00 | ||
|
increasing $0.50 per year thereafter.
|
|
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(b)
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Common stock
|
|
|
i.
|
During the period ended September 30, 2011, the Company completed a private placement of 41,819 units consisting of common stock at $0.55 per share and warrants at $0.001 per share of common stock underlying the warrant to purchase 41,819 shares of common stock on or before March 31, 2013 at an exercise price of $1.00 per share. Exercise of all the investment warrants may be required in the event that the market price for the common stock exceeds $1.50 per share.
|
The Company determined that the warrants did not contain any provisions that would preclude equity treatment.
|
|
ii.
|
During the period ended September 30, 2011, the Company completed a private placement of 434,285 units consisting of common stock at $0.35 per share and warrants at $0.001 per share of common stock underlying the warrant to purchase 434,285 shares of common stock on or before August 31, 2013 at an exercise price of $0.70 per share. Exercise of all investment warrants may be required in the event that the market price for the common stock exceeds $1.25 per share. As at September 30, 2011, these units have not been issued.
|
The Company determined that the warrants did not contain any provisions that would preclude equity treatment.
|
|
(c)
|
Stock-based compensation
|
During the period ended September 30, 2011, the Company recorded stock-based compensation expense with respect to vested stock options of $95,465 (three months ended September 30, 2010 - $112,050). Of this amount, $95,465 (three months ended September 30, 2010 - $112,050) is included in consulting fees.
Stock-based compensation not yet recognized at September 30, 2011 relating to non-vested stock options was $328,174, which will be recognized over a weighted average period of 1.38 years.
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Three Months Ended September 30, 2011
(Unaudited)
(US Dollars)
|
3.
|
STOCKHOLDERS’ EQUITY (continued)
|
|
|
(c)
|
Stock-based compensation (continued)
|
The fair value of the Company’s stock options was estimated on the date of grant or modification using the Black-Scholes option pricing model with the following weighted average assumptions:
|
September 30,
2011
|
September 30,
2010
|
|
|
Expected life (years)
|
N/A
|
1.42
|
|
Interest rate
|
N/A
|
0.56%
|
|
Volatility
|
N/A
|
121.46%
|
|
Dividend yield
|
N/A
|
0.00%
|
|
Estimated forfeitures
|
N/A
|
0.00%
|
|
|
(d)
|
Stock options
|
The following summarizes information about the Company’s options outstanding:
|
Number of
Options
|
Price Per
Option
|
Weighted
Average
Exercise Price
|
||||||||||
|
Outstanding, June 30, 2010
|
4,125,000 | $ | 0.25 to $ 1.00 | $ | 0.36 | |||||||
|
Granted
|
2,375,000 | $ | 0.25 to $ 0.85 | $ | 0.58 | |||||||
|
Outstanding, June 30, 2011 and September 30, 2011
|
6,500,000 | $ | 0.25 to $ 1.00 | $ | 0.44 | |||||||
|
Exercisable, September 30, 2011
|
3,950,000 | $ | 0.25 to $ 1.00 | $ | 0.38 | |||||||
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Three Months Ended September 30, 2011
(Unaudited)
(US Dollars)
|
3.
|
STOCKHOLDERS’ EQUITY (continued)
|
|
|
(d)
|
Stock options (continued)
|
The following summarizes the options outstanding and exercisable:
| Number of Options | ||||||||||||
| Expiry Date |
Exercise
Price
|
September 30,
2011
|
June 30,
2011
|
|||||||||
|
December 31, 2011(1)
|
$ | 1.00 | 110,000 | 110,000 | ||||||||
|
December 31, 2012
|
$ | 0.25 | 2,500,000 | 2,500,000 | ||||||||
|
November 15, 2013(2)
|
$ | 1.00 | 100,000 | 100,000 | ||||||||
|
March 9, 2014
|
$ | 0.25 | 125,000 | 125,000 | ||||||||
|
June 1, 2014
|
$ | 0.85 | 100,000 | 100,000 | ||||||||
|
October 15, 2014
|
$ | 0.50 | 100,000 | 100,000 | ||||||||
|
July 31, 2014(3)
|
$ | 1.00 | 415,000 | 415,000 | ||||||||
|
December 1, 2014
|
$ | 0.50 | 175,000 | 175,000 | ||||||||
|
December 1, 2014
|
$ | 0.85 | 100,000 | 100,000 | ||||||||
|
December 31, 2014
|
$ | 0.25 | 1,000,000 | 1,000,000 | ||||||||
|
April 15, 2015
|
$ | 0.50 | 100,000 | 100,000 | ||||||||
|
June 1, 2015
|
$ | 0.50 | 175,000 | 175,000 | ||||||||
|
June 1, 2015
|
$ | 0.85 | 100,000 | 100,000 | ||||||||
|
October 15, 2015
|
$ | 0.50 | 100,000 | 100,000 | ||||||||
|
December 1, 2015
|
$ | 0.50 | 175,000 | 175,000 | ||||||||
|
December 1, 2015
|
$ | 0.85 | 100,000 | 100,000 | ||||||||
|
April 15, 2016
|
$ | 0.50 | 100,000 | 100,000 | ||||||||
|
June 1, 2016
|
$ | 0.50 | 175,000 | 175,000 | ||||||||
|
June 1, 2016
|
$ | 0.85 | 100,000 | 100,000 | ||||||||
|
October 15, 2016
|
$ | 0.50 | 100,000 | 100,000 | ||||||||
|
December 1, 2016
|
$ | 0.50 | 175,000 | 175,000 | ||||||||
|
December 1, 2016
|
$ | 0.85 | 100,000 | 100,000 | ||||||||
|
April 15, 2017
|
$ | 0.50 | 100,000 | 100,000 | ||||||||
|
June 1, 2017
|
$ | 0.50 | 175,000 | 175,000 | ||||||||
|
Total outstanding
|
6,500,000 | 6,500,000 | ||||||||||
|
Total exercisable
|
3,950,000 | 3,950,000 | ||||||||||
|
|
(1)
|
During the year ended June 30, 2011, the expiry date of the 110,000 options was extended from August 31, 2010 to December 31, 2011.
|
|
|
(2)
|
During the year ended June 30, 2011, the expiry date of these options was extended from November 15, 2010 to November 15, 2013.
|
|
|
(3)
|
During the year ended June 30, 2010, the expiry date of these options was extended from December 31, 2010 to July 31, 2014.
|
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Three Months Ended September 30, 2011
(Unaudited)
(US Dollars)
|
3.
|
STOCKHOLDERS’ EQUITY (continued)
|
|
|
(d)
|
Stock options (continued)
|
The weighted average remaining contractual lives for options outstanding and exercisable at September 30, 2011 are 2.72 and 1.99 years, respectively.
The weighted average grant date fair value of options modified during the three months ended September 30, 2011 was $nil (three months ended September 30, 2010 - $0.38) and vested during the three months ended September 30, 2011 was $nil (three months ended September 30, 2010 - $0.42).
The total intrinsic value of options exercised during the three months ended September 30, 2011 was $nil (three months ended September 30, 2010 - $nil).
The aggregate intrinsic value of options outstanding as at September 30, 2011 was $688,750 of which $612,750 related to options that were exercisable. The aggregate intrinsic values exclude options having a negative aggregate intrinsic value due to awards with exercise prices greater than market value. The intrinsic value is the difference between the market value of the shares and the exercise price of the award as of the measurement date.
|
|
(e)
|
Stock purchase warrants
|
The following summarizes information about the Company’s stock purchase warrants outstanding:
|
Number of
Warrants
|
Price Per
Share
|
Weighted
Average
Exercise Price
|
||||||||||
|
Balance, June 30, 2010
|
8,763,952 | $ | 0.60 | |||||||||
|
Issued
|
1,316,553 | $ | 1.00 | $ | 1.00 | |||||||
|
Exercised
|
(860,800 | ) | $ | 0.50 | $ | 0.50 | ||||||
|
Expired
|
(2,970,000 | ) | $ | 0.50 | $ | 0.50 | ||||||
|
Balance, June 30, 2011
|
6,249,705 | $ | 0.74 | |||||||||
|
Issued
|
41,819 | $ | 1.00 | $ | 1.00 | |||||||
|
Balance, September 30, 2011
|
6,291,524 | $ | 0.74 | |||||||||
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Three Months Ended September 30, 2011
(Unaudited)
(US Dollars)
|
3.
|
STOCKHOLDERS’ EQUITY (continued)
|
|
|
(e)
|
Stock purchase warrants (continued)
|
| Number of Options | ||||||||||||
| Expiry Date |
Exercise
Price
|
September 30,
2011
|
June 30,
2011
|
|||||||||
|
December 31, 2011
|
$ | 0.50 | 670,000 | 670,000 | ||||||||
|
February 8, 2012
|
$ | 0.70 | 2,123,400 | 2,123,400 | ||||||||
|
May 14, 2012
|
$ | 0.70 | 507,853 | 507,853 | ||||||||
|
June 3, 2012
|
$ | 0.70 | 1,631,899 | 1,631,899 | ||||||||
|
December 31, 2012
|
$ | 1.00 | 503,490 | 503,490 | ||||||||
|
February 28, 2013
|
$ | 1.00 | 813,063 | 813,063 | ||||||||
|
August 10, 2013
|
$ | 1.00 | 41,819 | 0 | ||||||||
|
Total outstanding and exercisable
|
6,291,524 | 6,249,705 | ||||||||||
|
4.
|
INCOME TAXES
|
The Company has losses carried forward for income tax purposes to September 30, 2011. There are no current or deferred tax expenses for the three months ended September, 2011 due to the Company's loss position. The Company has fully reserved for any benefits of these losses. The deferred tax consequences of temporary differences in reporting items for financial statement and income tax purposes are recognized, as appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company's ability to generate taxable income within the net operating loss carry-forward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes.
|
5.
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
Three Months Ended
September 30,
|
Period from
February 12,
1996
(Inception) to
June 30,
|
|||||||||||
|
2011
|
2010
|
2011
|
||||||||||
|
Shares Issued for
|
||||||||||||
|
Redemption of preferred shares
|
$ | 0 | $ | 0 | $ | 415,000 | ||||||
|
Property and equipment
|
$ | 0 | $ | 0 | $ | 23,000 | ||||||
|
Proprietary agreement
|
$ | 0 | $ | 0 | $ | 711,000 | ||||||
|
Settlement of accounts payable
|
$ | 0 | $ | 57,719 | $ | 228,742 | ||||||
|
Services (provided by officers and directors)
|
$ | 0 | $ | 0 | $ | 120,000 | ||||||
|
Settlement of lawsuit
|
$ | 0 | $ | 0 | $ | 15,000 | ||||||
|
Services and financing fees
|
$ | 7,800 | $ | 5,000 | $ | 1,523,868 | ||||||
|
Subscriptions received
|
$ | 0 | $ | 0 | $ | 57,750 | ||||||
|
Acquisition of subsidiary
|
$ | 0 | $ | 0 | $ | 894,200 | ||||||
|
Interest paid
|
$ | 0 | $ | 0 | $ | 81,111 | ||||||
|
Income tax paid
|
$ | 0 | $ | 0 | $ | 0 | ||||||
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Three Months Ended September 30, 2011
(Unaudited)
(US Dollars)
|
6.
|
LOSS PER SHARE
|
|
Income
(Numerator)
|
Weighted
Average
Number of
Shares
(Denominator)
|
Loss Per
Share
|
||||||||||
|
Three months ended September 30, 2011
|
||||||||||||
|
Net loss for period
|
$ | (803,677 | ) | |||||||||
|
Preferred stock dividends (note 3(a))
|
(3,865 | ) | ||||||||||
|
Loss attributable to common shareholders
|
$ | (807,542 | ) | 58,304,000 | $ | (0.01 | ) | |||||
|
Three months ended September 30, 2010
|
||||||||||||
|
Net loss for period
|
$ | (594,758 | ) | |||||||||
|
Preferred stock dividends (note 3(a))
|
(3,865 | ) | ||||||||||
|
Loss attributable to common shareholders
|
$ | (598,623 | ) | 54,963,262 | $ | (0.01 | ) | |||||
Common share equivalents consisting of convertible preferred stock, stock options and warrants are not considered in the computation of diluted loss per share because their effect would be anti-dilutive.
|
7.
|
RESEARCH AND DEVELOPMENT
|
As the Company is considered to be in the development stage, all research and development costs are expensed as incurred.
During the three months ended September 30, 2011, the Company sold sample products totalling $2,640 (three months ended September 30, 2010 - $nil). This amount has been credited against research and development expenses.
|
8.
|
SEGMENT INFORMATION
|
The Company operates primarily in one business segment with operations located in the United States.
|
9.
|
SUBSEQUENT EVENT
|
The Company has evaluated subsequent events for the period after September 30, 2011 and determined that, there were no material subsequent events to be disclosed in these consolidated financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS
Forward Looking Statements
Statements contained herein that are not historical facts are forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, the forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected. We caution investors that any forward-looking statements made by us are not guarantees of future performance and that actual results may differ materially from those in the forward-looking statements. Such risks and uncertainties include, without limitation: well-established competitors who have substantially greater financial resources and longer operating histories, regulatory delays or denials, our ability to compete as a start-up company in a highly competitive market, our access to sources of capital, and other risks and uncertainties described in our annual report on Form 10-K for the fiscal year ended June 30, 2011 as filed with the Securities and Exchange Commission on September 28, 2011, and available at www.sec.gov.
This discussion and analysis should be read in conjunction with our financial statements and notes thereto included elsewhere in this Form 10-Q. Except for the historical information contained herein, the discussion in this Form 10-Q 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-Q should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-Q. Our actual results could differ materially from those discussed here. We undertake no obligation to update these forward-looking statements to reflect events or circumstances occurring after the date of this Form 10-Q.
Overview
Integral Technologies, Inc. (the “Company” or “we”) focuses the majority of our resources on researching, developing and commercializing our ElectriPlast™ technologies. Our business strategy focuses on leveraging our intellectual property rights and our strengths in product design and material innovation. We are focusing our marketing efforts on securing licensing agreements for applications of our ElectriPlast™ technologies with manufacturers of products which would benefit from the incorporation of any of the ElectriPlast™ applications.
ElectriPlast™ is an innovative, electrically-conductive resin-based material. The ElectriPlast™ polymer is a compounded formulation of resin-based materials, which are conductively loaded, or doped, with a proprietary-controlled, balanced concentration of micron conductive materials, then pelletized. The conductive loading or doping within this pellet is then homogenized using conventional molding techniques and conventional molding equipment. The end result is a product that can be molded into any of the infinite shapes and sizes associated with plastics and rubbers, and is non-corrosive, but which is as electrically conductive as if it were metal.
Various examples of applications for ElectriPlast™ are shielding, lighting circuitry, switch actuators, resistors, medical devices, thermal management and cable connector bodies, to name just a few. We have been working to introduce these new applications and the ElectriPlast™ technology to the global marketplace.
Patents/Trademarks on Technologies
Our intellectual property portfolio consists of over eleven years of accumulated research and design knowledge and trade secrets. We have sought United States (“US”) patent protection for many of our ideas related to our ElectriPlast™ technologies. Currently, we have filed 106 non-provisional US patent applications, 53 of which have been issued, with 49 of those issued still alive. No assurances can be given that all patent applications will be approved; however, to the extent that patents are not granted, we will continue to attempt to commercialize these technologies without the protection of patents. As patents are issued, we will have the exclusive right to use and license the design(s) described in each issued patent for the life of the patent in the US.
Of the 106 non-provisional applications filed that have not issued as patents, 11 are currently pending, and 42 are no longer pending. Integral continues to pursue intellectual property protection through its patent and trademark portfolio while constantly evaluating its filings to judiciously apply resources to our most critical technologies.
Integral also has a pending trademark application for ELECTRIPLASTTM and a registered trademark for INTEGRAL®. This application and registration establish rights for the use of these marks in commerce.
Financial Condition
To date we have recorded nominal revenues. We are still considered a development stage company for accounting purposes. From the Company’s incorporation on February 12, 1996 through September 30, 2011, we have accrued an accumulated deficit of approximately $37.8 million.
At September 30, 2011, our current assets of totaled $30,812, which consisted of cash equal to $28,944. All of our property and equipment has been fully depreciated.
At September 30, 2011 our current liabilities totaled $1,249,163, consisting of accounts payable and accruals. Of this amount, payables for legal fees (including associated filing fees) related to patent filings accounted for approximately $535,000 of the total.
At September 30, 2011, our total stockholder’s deficit was $1,218,351.
Results of Operations for the Three Months Ended September 30, 2011 compared to the Three Months Ended September 30, 2010
Our net loss for the quarter ended September 30 2011 was $803,677, compared to a net loss of $594,758 for the corresponding period of the prior fiscal year. The increase of $208,919 was primarily a result of increases in stock based compensation of approximately $84,344, increases in consulting fees in the amount of $144,000 associated with the establishment of an ElectriPlast sales office in Philadelphia, Pennsylvania.
Total expenses for the quarter ended September 30, 2011 were $803,677, compared to total expenses of $595,260 for the corresponding period of the prior fiscal year. The increase of $208,417 was primarily a result of increases in stock based compensation of approximately $84,344, increases in consulting fees in the amount of $144,000 associated with the establishment of an ElectriPlast sales office in Philadelphia, Pennsylvania.
Consulting expenses during the quarter ended September 30, 2011 were $486,265, which included issuances of shares in consideration for consulting services in the amount of $7,800, and $95,465 for non-cash stock based compensation charges. In the corresponding period of the prior fiscal year, consulting expenses were $294,550 which included issuances of shares in consideration for consulting services in the amount of $5,000, and $112,050 for non-cash stock based compensation charges for the vesting and modifications of options previously issued. The remaining increase relates to additional fees incurred with respect to the consulting agreements entered into by the Company.
Salaries and benefits expenses during the quarter ended September 30, 2011, were $110,000. In the corresponding period of the prior fiscal year, salaries and benefits expenses were $110,000.
Research and development costs of $41,760 during the quarter ended September 30, 2011, are attributable to refining the manufacturing process of our ElectriPlast™ material. In the corresponding period of the prior fiscal year, research and development costs totaled $99,026.
Critical Accounting Policies and Estimates
The details of the critical accounting policies relevant to the Company are set out in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended June 30, 2011, filed with the Securities and Exchange Commission on September 28, 2011. There have been no material changes to our critical accounting policies as described in Item 7 of our most recent annual report on Form 10-K for the year ended June 30, 2011.
Management does not believe that any new accounting pronouncements not yet effective will have any material effect on the Company’s financial statements if adopted.
Liquidity and Capital Resources
Since inception we have funded our operations through capital fundraising and loans from management. As of September 30, 2011, we had $28,944 in cash on hand.
Management believes that there is adequate cash on hand to fund operations over the next month and that further equity funding will be required thereafter. There can be no assurance that additional equity financing will be available on terms satisfactory to us, or at all, and if funds are raised in the future through issuance of preferred stock, these securities could have rights, privileges or preference senior to those of our common stock. Further, any sale of newly issued equity securities could result in additional dilution to our current shareholders.
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.
Off-Balance Sheet Arrangements
We have never entered into any off-balance sheet financing arrangements and have never established any special purpose entities. We have not guaranteed any debt or commitments of other entities, nor entered into any options or non-financed assets.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable to smaller reporting companies.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011, our management, including our principal executive officer and principal financial officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2011.
Changes in Internal Control over Financial Reporting
During our most recent fiscal quarter, no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II
We are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. None of our directors, officers or affiliates is involved, nor has a material interest, in a legal proceeding adverse to our business.
Not applicable for smaller reporting companies.
On August 10, 2011, the Company completed a private placement sale to two individuals, pursuant to the exemption from registration provided by Section 4(2) under the Securities Act of 1933. The sale consisted of 41,819 units of common stock at $0.55 per share and warrants to purchase 41,819 shares of common stock on or before March 31, 2013 at an exercise price of $1.00 per share. Exercise of all the investment warrants may be required in the event that the market price for the common stock exceeds $1.50 per share. The recipient took its securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.
On August 10 2011, the Company issued 10,000 shares of common stock to an individual as consideration of $7,800 for consulting services. We relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act for the issuance of these securities. The recipient took its securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.
None.
None.
None.
|
|
Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act is filed herewith.
|
|
|
|
|
|
|
31.2
|
|
Certification by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act is filed herewith.
|
|
|
|
|
|
32.1
|
|
Certification by Chief Executive Officer and Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code is filed herewith.
|
|
101#
|
The following materials from Integral’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) unaudited Consolidated Statements of Income for the three months ended September 30, 2011 and 2010, (ii) unaudited Consolidated Balance Sheet as of September 30, 2011 and audited Consolidated Balance Sheet as at June 30, 2011, (iii) unaudited Consolidated Statement of Cash Flow for the three months ended September 30, 2011 and audited Consolidated Statement of Cash Flow as at June 30, 2011, and (iv) Notes to Condensed Consolidated Financial Statements.
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Integral Technologies, Inc. | |||
|
|
By:
|
/s/ William S. Robinson | |
|
William S. Robinson, Chief Executive Officer and Principal Executive Officer
|
|||
| By: | /s/ William A. Ince | ||
| William A. Ince, Chief Financial Officer and Principal Accounting Officer | |||
Date: November 15, 2011
|
|
Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act is filed herewith.
|
|
|
|
|
|
|
|
Certification by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act is filed herewith.
|
|
|
|
|
|
|
|
Certification by Chief Executive Officer and Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code is filed herewith.
|
|
| 101# | The following materials from Integral’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) unaudited Consolidated Statements of Income for the three months ended September 30, 2011 and 2010, (ii) unaudited Consolidated Balance Sheet as of September 30, 2011 and audited Consolidated Balance Sheet as at June 30, 2011, (iii) unaudited Consolidated Statement of Cash Flow for the three months ended September 30, 2011 and audited Consolidated Statement of Cash Flow as at June 30, 2011, and (iv) Notes to Condensed Consolidated Financial Statements. |
6