UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 8-K
                                 CURRENT REPORT
                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


     Date of report (Date of earliest event reported):     July 8, 2005
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                               SCAN-OPTICS, INC.
- --------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

          Delaware                     000-05265                06-0851857
          --------                     ---------                ----------
(State or other jurisdiction   (Commission File Number)      (I.R.S. Employer
      of incorporation)                                     Identification No.)

          169 Progress Drive, Manchester, CT                     06040
          ----------------------------------                     -----
       (Address of principal executive offices)               (Zip Code)



    Registrant's telephone number, including area code:  (860) 645-7878
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- --------------------------------------------------------------------------------
         (Former Name or Former Address, if Changed Since Last Report)

Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
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[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
    230.425)


[ ] Soliciting  material  pursuant to Rule 14a-12 under the Exchange Act (17 CFR
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[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-(b))


[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))





Item 8.01         Other Events.

         As of July 1, 2005,  Scan-Optics,  Inc. failed to repay certain amounts
due under that certain Third Amended and Restated Credit Agreement,  dated March
30, 2004, as amended by the First  Amendment  thereto,  dated June 27, 2005 (the
"Credit Agreement") and is in breach of certain other provision under the Credit
Agreement. On July 8, 2005, Patriarch Partners Agency Services, LLC, as agent to
the lenders under the Credit Agreement (the "Lenders"), submitted to the company
a draft foreclosure  agreement (the "Draft Foreclosure  Agreement")  pursuant to
which Scan-Optics,  Inc. would surrender  substantially all of its assets to the
Lenders or their  assignee(s) in full  satisfaction of the outstanding debt owed
by Scan-Optics,  Inc. to the Lenders under the Credit Agreement.  In response to
the Lenders' proposal,  Scan-Optics, Inc. has entered into negotiations with the
Lenders  regarding  possible terms and conditions under which it would surrender
substantially all of its assets. No final agreement has been reached or approved
by  either  party.  The  company  is also  discussing  with  the  Lenders  their
assumption  of all of  Scan-Optics,  Inc.'s  obligations  to its existing  trade
creditors  and certain  other  unsecured  obligations  in order to maximize  the
enterprise value of Scan-Optics Inc.'s assets.

Based on discussions  with the Lenders,  Scan-Optics,  Inc.  believes that it is
most likely the  intention  of the Lenders to continue  operating  the  acquired
assets  following any surrender of assets by  Scan-Optics,  Inc. and to continue
servicing Scan-Optics Inc.'s customer base. However,  following any surrender of
the company's  assets to the Lenders there is unlikely to be any value remaining
in  Scan-Optics,  Inc. for the company's  stockholders  and remaining  unsecured
creditors.  The company is also considering other available  alternatives to the
Lenders' proposal.


                                   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 hereunto duly authorized.



                                SCAN-OPTICS, INC.




                                By:
                                   --------------------------------------------
                                Name: Peter H. Stelling
                                Title:  Chief Financial Officer, Vice President,
                                          Treasurer and Secretary



Date:  July 14, 2005