Integral Technologies, Inc. (ITKG) 2024 10-K Review

In an environment where investors seek companies with clear operations, sustainable revenues, and sturdy balance sheets, Integral Technologies, Inc. (OTC Pink: ITKG) represents a stark departure from that ideal. Its 2024 Form 10-K filing reveals a shell company whose only business plan today is to find a partner or acquire an operating business. This post delves into the most critical elements of ITKG’s annual report, from its “blank check” status to its financial statements and risk factors, and offers an investment score.

Warren.AI 💰 1.0 / 10

1. Business Overview (Item 1)

Created in 1996, Integral Technologies, Inc. has minimal current operations beyond limited royalties from two license agreements. It has not generated material revenue since 2018 and remains a “blank check” or “shell” company with no specific business purpose beyond seeking a business combination in the U.S.

Its core asset—ElectriPlast®—is a patented, electrically and thermally conductive resin-based material that can replace metal components in various applications. In 2019, Integral sold its bipolar plate (“biplate”) technology for $2 million plus stock to Pivotal Battery Corp., a company led by Integral’s Chairman. However, Pivotal’s payments have been sporadic and diluted by default and renegotiation.

Key takeaways:

• No current operations or revenue stream beyond minimal royalties
• Primary plan: reverse merger or acquisition of an operating business
• ElectriPlast® remains uncommercialized in meaningful volume

2. Financial Results & Trends (Items 8, 7, 7A)

Income Statement

• Revenue: $7,055 in fiscal 2024 vs. $40,000 in 2023.
• Operating Expenses: $328,282 in SG&A (down $56,715).
• Interest Expense: $321,965 (down sharply due to debt restructuring).
• Other Gains: $3.52 million in non-operational gains (troubled debt restructure, extinguishment of preferred-share obligations and liabilities).
• Net Income: $2.88 million vs. a net loss of $1.63 million in 2023. This positive bottom line is driven entirely by one-time gains, not operating performance.
• EPS: $0.01 basic and diluted, on 246 million shares.

Balance Sheet

• Cash: $1,869 (vs. $22,124).
• Total Liabilities: $6.98 million (down from $9.88 million).
• Convertible Debt: $74,000 remaining after restructuring $6.14 million of debt into a $3 million promissory note (in default).
• Working Capital Deficit: $6.98 million.
• Stockholders’ Deficit: $(6.98) million.

Cash Flow

• Operating Cash Flow: $(52,955) vs. $(48,259).
• Financing Cash Flow: $32,700 raised through small loans.

Integral consumes cash in operations, relies on debt, and has almost no liquidity. The one-time accounting gains that produced a net income figure do not reflect any improvement in the underlying business.

3. Liquidity & Going Concern

The auditors issued a going concern warning. Management admits the Company:

• Has recurring net losses and negative operating cash flow
• Lacks material revenue
• Carries $4.24 million of debt in default
• Depends on raising cash through acquisitions or equity issuances that are improbable without a business combination

Absent a successful reverse merger or acquisition, Integral likely cannot continue as a going concern beyond 12 months.

4. Risk Factors (Item 1A)

The 10-K catalogues numerous serious risks:

1. Blank check status: No operating history means no basis for evaluating future performance.
2. Going concern doubts: Requires capital infusion to survive.
3. Blank check & penny stock regulations: May hamper trading, depress liquidity, and deter broker-dealers.
4. Competitive disadvantage: Can’t match SPACs, VCs, or strategic buyers in bidding for targets.
5. No shareholder approval: Business combinations can occur without investor consent.
6. Tax & legal hurdles: Future mergers could generate unexpected tax liabilities.
7. Ownership dilution: New financing deals will dilute investors or subordinate their rights.
8. Financial reporting compliance: History of late filings and halted OTC quotation.
9. Cybersecurity & internal controls: No formal program or policies.

These factors pose material threats to any investor, especially retail participants.

5. Related-Party & Insider Transactions

Integral’s Chairman, James Eagan, sits on Pivotal’s board, and the Company’s debt restructuring was negotiated with SBI Investments LLC, a 9.99% owner. Management fees totaling $150,000 per year are unpaid and accrued. Director and officer relationships with creditors create inherent conflicts.

6. Management & Governance

• Board: Two members, both executives, with no independent directors or audit committee.
• Control weaknesses: One-person accounting function, lack of documented policies and procedures.
• Codes & compliance: Basic code of ethics in place but no robust oversight.

Investment Score: 1.0/10

Why a 1/10?

• No core operations or revenue
• Massive leverage with defaulted debt
• Reliance on a single business combination that may never occur
• Penny stock & “blank check” hurdles to liquidity
• Going concern and repeated filing delinquencies

At best, Integral is a speculative shell with no clear path to commercial success. Investors should treat its shares with extreme caution or avoid them altogether.