|United StatesSECURITIES
AND EXCHANGE COMMISSIONWashington,
DC 20549
FORM 10-QSB

Quarterly
Report Pursuant to Section 13 or 15(d)0f the
Securities Exchange Act of 1934
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                    | 
|----------------------------------- | 
|For Quarter Ended February 28, 2001 | 
|                                    | 

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

|                                | 
|------------------------------- | 
|Delaware                        | 
|(State or other jurisdiction of | 
|incorporation or organization)  | 

|                                         | 
|---------------------------------------- | 
|11212 Indian Trail, Dallas, Texas        | 
|(Address of principal executive offices) | 

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



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



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

| |  |         
| |  | --------
| |  | Yes  _x_

|4,754,088 shares of common
stock,$.01 par value (the issuers only class of common stock),
were outstanding as of February 28, 2001.
|------------------------------------------------------------------------------------------------------------------------------------

|INOTEK
Technologies Corp.


INDEX
|---------------------------------

|                                                                      | PageNo.
|--------------------------------------------------------------------- | -------
|Part I.  Financial information                                        |        
|                                                                      |        
|Item 1.  Financial Statements:                                        |        
|                                                                      |        
|Balance Sheets as of February 28, 2001 (unaudited) and May 31, 2000   |        
|                                                                      |        
|Statements of Operations for the Three Months Ended February 28, 2001 |        
|and February 29, 2000 (unaudited)                                     |        
|                                                                      |        
|Statements of Operations for the Nine Months Ended February 28, 2001  |        
|and February 29, 2000 (unaudited)                                     |        
|                                                                      |        
|Statements of Cash Flows for the Nine Months Ended February 28, 2001  |        
|and February 29, 2000 (unaudited)                                     |        
|                                                                      |        
|Notes to Financial Statements                                         |        
|                                                                      |        
|Item 2.  Managements Discussion and Analysis of Financial            |        
|Condition and Results of Operations                                   |        
|                                                                      |        
|Part II.  Other Information                                           |        
|                                                                      |        
|Item 1.  Legal Proceedings                                            |        
|                                                                      |        
|Item 4.  Submission of Matters to a Vote of Security Holders          |        
|                                                                      |        
|Item 6.  Exhibits and Reports on Form 8-K                             |        
|                                                                      |        
|Signatures                                                            |        
|                                                                      |        
|Index to Exhibits                                                     |        
|                                                                      |        
|Exhibit (20)-Report Furnished to Security Holders                     |        

|INOTEK
Technologies Corp.


Balance
Sheets
|------------------------------------------

|                                                          | February 282001(unaudited) | May 312000  
|--------------------------------------------------------- | -------------------------- | ------------
|                                                         
|ASSETS                                                    |                            |             
|Current assets:                                           |                           
|Cash and cash equivalents                                 |                            | $    320,837
|Trade receivables, net of allowance for doubtful accounts |                           
|of $125,422 at February 28 and $111,837 at May 31         |                            | 2,572,858   
|Inventories                                               |                            | 1,249,946   
|Deferred taxes                                            |                            | 66,685      
|Income tax receivable                                     |                            | 48,235      
|Prepaid expenses and other assets                         |                            | 97,334      
|                                                         
|Total current assets                                      |                            | 4,355,895   
|                                                          |                           
|Property and equipment, net                               |                            | 758,115     
|Goodwill, net of accumulated amortization of $765,593 at  |                           
|February 28 and $716,157 at May 31                        |                            | 1,876,359   
|Other assets                                              |                            | 39,561      
|                                                         
|Total assets                                              |                            | $ 7,029,930 
|                                                         
|                                                          |                           
|LIABILITIES AND SHAREHOLDERS EQUITY                      |                           
|Current liabilities:                                      |                           
|Accounts payable                                          |                            | $ 1,353,769 
|Accrued expenses                                          |                            | 277,434     
|                                                         
|Total current liabilities                                 |                            | 1,631,203   
|Deferred tax liability                                    |                            | 18,070      
|Shareholders equity:                                     |                           
|Common shares, $.01 par value:                            |                           
|Authorized shares, 10,000,000                             |                           
|Issued and Outstanding shares                             |                           
|4,854,088 at February 28 and 4,604,088 May 31             |                            | 48,541      
|Additional paid-in-capital                                |                            | 3,434,547   
|Retained earnings                                         |                            | 1,936,949   
|                                                         
|Total shareholders equity                                |                            | 5,420,037   
|                                                         
|Less:  Common stock in treasury at cost, 100,000 shares   |                            | (39,380     
|                                                         
|                                                          |                            | $ 5,380,657 
|Total Liabilities and Shareholders Equity                |                            | $ 7,029,930 
|                                                         

|See accompanying notes
|----------------------

|INOTEK
Technologies Corp.


Statements
of Operations


(unaudited)
|------------------------------------------------------------------

|                                       | Three Months Ended
|-------------------------------------- | ------------------
|
|                                      
|                                       |                   
|Net Sales                              |                   
|                                      
|Cost of goods sold:                    |                   
|                                      
|Gross margin                           |                   
|Operating expenses:                    |                   
|Sales and marketing                    |                   
|General and administrative             |                   
|                                      
|                                       |                   
|                                      
|Operating loss                         |                   
|                                       |                   
|Interest income                        |                   
|                                      
|Loss before income taxes               |                   
|                                       |                   
|Income tax benefit                     |                   
|                                      
|                                       |                   
|Net loss                               |                   
|                                      
|                                       |                   
|Net loss per share - basic and diluted |                   
|                                      
|                                       |                   
|Weighted average shares outstanding    |                   
|                                      

|See accompanying notes


2
|--------------------------

|INOTEK
Technologies Corp.


Statements
of Operations


(unaudited)
|------------------------------------------------------------------

|                                       | Nine Months Ended
|-------------------------------------- | -----------------
|
|                                      
|                                       |                  
|Net sales                              |                  
|                                      
|Cost of goods sold:                    |                  
|                                      
|Gross margin                           |                  
|Operating expenses:                    |                  
|Sales and marketing                    |                  
|General and administrative             |                  
|                                      
|                                       |                  
|                                      
|Operating loss                         |                  
|                                       |                  
|Interest income                        |                  
|                                      
|Loss before income taxes               |                  
|                                       |                  
|Income tax benefit                     |                  
|                                      
|Net loss                               |                  
|                                      
|                                       |                  
|Net loss per share - basic and diluted |                  
|                                      
|                                       |                  
|Weighted average shares outstanding    |                  
|                                      

|See accompanying notes



3
|---------------------------

|INOTEK
Technologies Corp.


Statements
of Cash Flows


(unaudited)
|------------------------------------------------------------------

|                                                        | Nine Months Ended
|------------------------------------------------------- | -----------------
|
|                                                       
|Operating Activities                                    |                  
|Net loss                                                |                  
|                                                        |                  
|Adjustments to reconcile net earnings                   |                  
|to net cash provided by (used in) operating activities: |                  
|Depreciation and amortization                           |                  
|Deferred taxes                                          |                  
|Provision for losses on accounts receivable             |                  
|Net changes in operating assets and liabilities:        |                  
|Accounts receivable                                     |                  
|Inventories                                             |                  
|Prepaid expenses and other assets                       |                  
|Accounts payable                                        |                  
|Accrued expenses                                        |                  
|Income tax receivable                                   |                  
|Other assets                                            |                  
|                                                       
|Net cash provided by (used in) operating activities     |                  
|                                                        |                  
|Investing Activities                                    |                  
|Purchase of property and equipment                      |                  
|                                                       
|Net cash used in investing activities                   |                  
|                                                        |                  
|Financing Activities                                    |                  
|Proceeds from stock issued                              |                  
|                                                       
|Net cash (used in) financing activities                 |                  
|                                                       
|Change in cash and cash equivalents                     |                  
|Cash and cash equivalents beginning period              |                  
|                                                       
|Cash and cash equivalents, end of period                |                  
|                                                       
|                                                       
|Supplemental Disclosures of Cash Flow Information:      |                  
|                                                       
|Cash received during the period for:                    |                  
|Interest                                                |                  

|See accompanying notes


4
|--------------------------

|INOTEK
Technologies Corp.
Notes to
Financial StatementsNine Months
Ended February 28, 2001(UNAUDITED)



1.   Basis of
Presentation
|-----------------------------------------------------------------------------------------------------------------------------------

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

|2.   Line of
Credit
|-------------------

| | On
September 15, 2000, the Company secured a new agreement with Bank One, Texas, N.A. for a
one-year revolving credit arrangement of up to $500,000. The credit arrangement provides
for borrowings based on the Companys trade receivables, at the banks prime
rate plus one per cent and is collateralized by trade receivables and inventories.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5
|-

|Item 2.  
Managements Discussion and Analysis of FinancialCondition
and Results of Operations


Results of
Operations


Nine Months ended
Feb 28,2001, Compared to Nine Months ended Feb 29,2000


The Companys total
sales decreased by (2.8%) to $13,871,266 for the nine months ended February 28,
2001 from $14,265,490 for the same period of the prior year, while gross margin
increased 1.68% to $4,260,858 from $4,190,242 for the same period. Sales
decreased during the third quarter of fiscal year 2001 as compared to the third
quarter of fiscal year 2000 by $81,471 due primarily to a soft market. The oil
and gas market is beginning to show signs of a turnaround in spending on our
types of products. However, softness of the overall U.S. economy is off setting
any of our potential gain from oil and gas. Our initiatives placed on improving
our gross margin has begun to pay off with a slight increase of 1.68% while our
G&A costs increased $86,932 over prior period.


Three Months ended
Feb 28, 2001, Compared to Three Months ended Feb 29, 2000


Our quote activity is
picking up, especially in the market areas that have a large share of oil and
gas business. Sales and marketing costs during the third quarter of fiscal year
2001 increased 3.71% or $32,603 as compared with the third quarter of the
previous year. General and administrative costs increased 10.83% or $65,298
during the third quarter ending February 28, 2001 as compared with the third
quarter of fiscal year 2000.


Financial
Condition, Liquidity and Capital Resources


Cash and cash equivalents
were $320,837 and $632,970 at February 28, 2001 and May 31, 2000, respectively.
At February 28, 2001 the maximum available borrowings under the revolving credit
arrangement amounted to $500,000. The Companys current assets exceeded its
current liabilities at February 28, 2001 and May 31, 2000 by $2,724,692 and
$2,948,024, respectively.


The Companys funding
requirements during the quarter were met through cash on hand. On September 15,
2000, the Company secured a new agreement with Bank One, Texas, N.A. for a
one-year revolving credit arrangement of up to $500,000. The credit arrangement
provides for borrowings based on the value of the Companys trade
receivables, at the banks prime rate plus one per cent and is
collateralized by trade receivables and inventories. The
Company has no material commitment for capital expenditures as of February 28,
2001.
6
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Part II
 Other Information


Item 1.   Legal
Proceedings


None pending


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


None


Item 6.  
Exhibits and Reports on Form 8-K
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | (a) |  | Exhibits:
| |  |  |  | --- |  | ---------

| |  |  |  |  |  | 1. |  | Exhibit
(20)-Report furnished to security holders.
| |  |  |  |  |  | -- |  | --------------------------------------------------

| |  |  |  | (b) |  | Reports
on 8-K:
| |  |  |  | --- |  | ---------------

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

|7
|-

|Signatures


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

|Date:  April 15, 2001 |  | INOTEK Technologies Corp. (Registrant)By: /s/ Neal E. Young
(Officer)Neal E. YoungChairman of the Board
|--------------------- |  | ---------------------------------------------------------------------------------------------------------------------

|Date:  April 15, 2001 |  | By: /s/ Dennis W. Stone 
(Officer)Dennis W. StoneCheif Executive Officer
|--------------------- |  | --------------------------------------------------------------------------------------

|8
|-