<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 5 TO FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Commission File No. 333-48659
SUMMIT ENVIRONMENTAL CORPORATION, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Texas 42269 73-1537206
- -------------- ---------------------------- --------------
(state of (Primary Standard Industrial (IRS Employer
incorporation) Classification Code Number) I.D. Number)
</TABLE>
4334 Northwest Expressway, Suite 202
Oklahoma City, OK 73116
405-840-1585
- --------------------------------------------------------------------------------
(Address and telephone number of registrant's
principal executive offices)
Dave Dischiavo
7312 Authon Drive, Dallas, TX 75248
972-233-6574
- --------------------------------------------------------------------------------
(Name, address and telephone number of agent for service)
Copies to:
Thomas J. Kenan, Esq. B. Keith Parker
Suite 3300 Suite 7
100 North Broadway 414 East Loop 281
Oklahoma City, OK 73102-8805 Longview, TX 75605
Approximate date of proposed sale to the public: As soon as practicable
after the Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================
<S> <C> <C> <C> <C>
Title of Proposed Proposed
each class maximum maximum
of securities Amount offering aggregate Amount of
to be to be price offering registration
registered registered per unit price fee
- -------------------------------------------------------------------------------------------------------------
Common Stock 5,810,840 $0.114 $662,514 $195.44(1)
=============================================================================================================
</TABLE>
(1) These 5,810,840 shares are to be offered in exchange for all the issued
and outstanding shares of capital stock of Summit Technologies, Inc. in
a proposed merger. The registration fee is based upon the book value of
Summit Technologies, Inc., $662,514, on April 30, 1998.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said section 8(a)
may determine.
<PAGE> 3
PROSPECTUS-PROXY STATEMENT
SUMMIT ENVIRONMENTAL CORPORATION, INC.
(a Texas corporation)
5,810,840 Shares of Common Stock
(Par value, $0.001 per Share))
This Prospectus-Proxy Statement provides information needed by each
shareholder of Summit Technologies, Inc. ("Summit Technologies"), a Texas
corporation. The directors of Summit Technologies have agreed to cause it to
merge with another Texas corporation, Summit Environmental Corporation, Inc.
(the "Company" herein), provided the shareholders of Summit Technologies vote
to approve the proposed merger (the "Merger"). Summit Technologies' management
has voting power over 50.4 percent of the shares of stock entitled to vote on
this matter but has agreed to vote their shares in accordance with the majority
vote of the other shareholders. Should the proposed Merger be approved and
effected, each shareholder of Summit Technologies effectively will exchange his
or her Summit Technologies shares of common stock for an equal number of shares
of common stock of the Company (the "Shares"). The proposed Merger transaction
has been registered with the Securities and Exchange Commission (the
"Commission") as has the distribution (the "Spinoff") of 500,000 additional
shares of common stock of the Company to the approximately 650 shareholders of
SuperCorp Inc. in 35 states. The Spinoff is intended to create a broad
distribution of the stock of the Company and lay the foundation for trading in
the Company's stock on the OTC Bulletin Board. By merging with the Company and
receiving the Company's Shares in exchange for shares of Summit Technologies,
the Summit Technologies shareholders will suffer a dilution of 11.4 percent in
their percentage ownership and book value of the post-Merger company solely in
exchange for the possible creation of a public market for their Shares. Each
Summit Technologies shareholder should carefully read the information set forth
herein before voting on the proposed Merger at the stockholders' meeting being
called to vote on this matter.
-------------------------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
ON PAGE 6.
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS-PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
==================================================================================================================
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND OTHER
RECIPIENT COMMISSIONS PERSONS(1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Per Share $0.114(2) $0 $0.114
- ------------------------------------------------------------------------------------------------------------------
5,810,840 Merger Shares(3) $662,514 $0 $662,514
==================================================================================================================
</TABLE>
(1) The estimated expenses of the transaction described herein are $46,100,
all of which are being borne by Summit Technologies, Inc., a Texas
corporation with whom the Company proposes to merge. These expenses are
federal and state registration fees - $100; printing and engraving -
$1,000; legal fees - $20,000; auditor's fee - $2,000; filing expenses
(EDGAR) - $4,000; finder's fee - $18,500; and mailing cost - $500.
(2) Based upon the book value of Summit Technologies, Inc. ("Summit
Technologies") on April 30, 1998.
(3) These 5,810,840 shares (the "Merger Shares") will be exchanged for all
the capital stock of Summit Technologies should the shareholders of
Summit Technologies approve a proposed merger (the "Merger") between it
and Summit Environmental Corporation, Inc. (the "Company"). See
"Summary of Proposed Transaction" and "Terms of the Transaction."
Prior to the date of this Prospectus-Proxy Statement the Company was
not a "reporting Company," as such term is employed in the Securities Exchange
Act of 1934, and its Common Stock was neither listed on any exchange nor
eligible for quotation on the Nasdaq Stock Market. There presently is no public
market for the Common Stock of the Company, and there can be no assurance that
such a market will develop or can be sustained should there be a completion of
the proposed Merger. Should the proposed Merger be approved and effected, it is
expected that the Common Stock of the Company will then be eligible for
quotation on the OTC Bulletin Board. Should the proposed Merger not be effected,
there will be
<PAGE> 4
no public market for the securities of the Company because of the
above-described escrow arrangement. See "Summary of Proposed Transaction - Plan
of Distribution."
The date of this Prospectus-Proxy Statement is ___________________, 1998, and
the approximate date on which it and a form of proxy shall first be sent or
given to shareholders for a vote on the proposed Merger described herein is
___________________, 1998.
ADDITIONAL INFORMATION
REGISTRATION STATEMENT. The Company has filed with the Securities and
Exchange Commission in Washington, D.C., a Registration Statement under the
Securities Act of 1933, as amended, with respect to the Common Stock offered by
this Prospectus-Proxy Statement. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement and the exhibits listed in the Registration Statement.
The Registration Statement can be examined at the Public Reference Room of the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and copies may be obtained upon payment of the prescribed fees. The
Company is an electronic filer, and the Securities and Exchange Commission
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The address of such site is http://www.sec.gov.
REPORTS TO SHAREHOLDERS. The Company will file reports with the
Securities and Exchange Commission and intends to furnish shareholders with
annual reports containing financial statements audited by independent public or
certified accountants and such other periodic reports as it may deem appropriate
or as required by law.
STOCK CERTIFICATES. It is expected that certificates for the securities
offered hereby will be ready for delivery within one week after the date of the
approval of the proposed Merger and the filing of the necessary merger documents
with the Secretary of State of Texas, should the proposed Merger be approved by
the requisite shareholder vote of each of the Company and Summit Technologies,
Inc., with respect to the Shares to be distributed in the Merger to the existing
shareholders of Summit Technologies, Inc.
UNTIL _____________________, 1998 (90 DAYS AFTER THE REGISTERED SECURITIES ARE
RELEASED FROM ESCROW PURSUANT TO RULE 419 UNDER THE SECURITIES ACT OF 1933) ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES MAY BE REQUIRED TO
DELIVER A PROSPECTUS.
ii
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus-Proxy Statement....................................................i
Additional Information.......................................................ii
Summary of Proposed Transaction...............................................1
Risk Factors.........................................................4
The Three Companies..................................................4
Summit Environmental Corporation, Inc.......................4
Summit Technologies, Inc....................................5
SuperCorp Inc...............................................5
Degree of Management Control of Vote on Merger.......................6
Dissenters' Rights of Appraisal......................................6
Compliance with Governmental Regulations.............................7
Tax Consequences of the Transaction..................................7
Risk Factors..................................................................7
1. Dilution....................................................7
2. Development Stage Corporation...............................7
3. No Assurance of a Public Market and Likelihood
of a Volatile Market........................................7
4. Penny Stock Regulations ....................................8
5. Market Restrictions on Broker-Dealers.......................8
6. No Assurance of Success of Business.........................8
7. Company's Contingent Liability for Possible
Violation of Registration Requirements of
Securities Act.....................................9
8. Need for Additional Funding ................................9
9. Risk of Loss of License to Sell Fire Suppressant
Product ...........................................9
10. Significant Amount of Transactions with Affiliates.........10
11. Reliance on Key Personnel..................................10
12. Management Control.........................................10
13. Tax Consequences...........................................11
14. Dividends Not Likely.......................................11
Terms of the Transaction.....................................................11
Terms of the Merger.................................................12
Reasons for the Merger and Spinoff..................................12
Accounting Treatment of Proposed Merger.............................13
Dissenters' Rights of Appraisal.....................................13
Agreement and Plan of Merger........................................13
Differences Between Rights of Shareholders of the Company
and of Summit Technologies.................................14
Description of Securities...........................................14
Common Stock...............................................14
Voting Rights.....................................14
Dividend Rights...................................14
Liquidation Rights................................14
Preemptive Rights.................................14
Registrar and Transfer Agent......................14
Dissenters' Rights................................14
Preferred Stock............................................15
Federal Income Tax Consequences.....................................15
The Merger.................................................15
Shareholders of Summit Technologies...............15
</TABLE>
iii
<PAGE> 6
<TABLE>
<S> <C>
Pro Forma Financial Information and Dilution.......................................................................15
Material Contacts Among the Companies..............................................................................20
Interest of Counsel................................................................................................20
Indemnification....................................................................................................21
Penny Stock Regulations ....................................................................................................22
Information About the Company...............................................................................................23
Course of Business Should the Merger Not Occur.....................................................................24
Legal Proceedings..................................................................................................24
Market for the Company's Common Stock and Related
Stockholder Matters.......................................................................................24
Rule 144 and Rule 145 Restrictions on Trading......................................................................25
Dividends.................................................................................................26
Financial Statements...............................................................................................26
Information About Summit Technologies.......................................................................................26
Overview ..........................................................................................................26
Management's Plan of Operation ....................................................................................27
Description of Summit Technologies' Business ......................................................................29
Properties ........................................................................................................36
Office Facilities .................................................................................................36
Seasonality .......................................................................................................36
Research and Development ..........................................................................................36
Environmental Controls ............................................................................................36
Year 2000 Computer Problem ........................................................................................36
Number of Employees ...............................................................................................37
Legal Proceedings .................................................................................................37
Market for Summit Technologies' Capital Stock and Related
Stockholder Matters ......................................................................................37
Financial Statements...............................................................................................37
Voting and Management Information...........................................................................................38
Date, Time and Place Information ..................................................................................38
The Company...............................................................................................38
Summit Technologies.......................................................................................38
Voting Procedure..........................................................................................38
Revocability of Proxy..............................................................................................38
Dissenters' Rights of Appraisal....................................................................................38
Persons Making the Solicitation....................................................................................38
Voting Securities and Principal Holders Thereof....................................................................39
Security Ownership of Certain Beneficial Owners and
Management................................................................................................40
Directors, Executive Officers and Significant Employees............................................................44
Summit Technologies.......................................................................................44
The Company...............................................................................................44
Remuneration of Directors and Officers.............................................................................46
The Company...............................................................................................46
Summit Technologies.......................................................................................46
Employment Contracts......................................................................................46
Stock Options.............................................................................................46
Certain Relationships and Related Transactions.....................................................................46
Company's Transactions with Insiders and Promoters........................................................46
Summit Technologies' Transactions with Management.........................................................47
Parents of Summit Technologies ....................................................................................47
</TABLE>
iv
<PAGE> 7
<TABLE>
<S> <C>
Interests of Named Experts and Counsel .....................................................................................48
Indemnification ............................................................................................................48
Financial Statements Index .................................................................................................49
Appendix A - Agreement of Merger...........................................................................................A-1
Part II...................................................................................................................II-1
Other Expenses of Issuance and Distribution......................................................................II-1
Indemnification of Directors and Officers........................................................................II-1
Exhibits and Financial Statement Schedules.......................................................................II-1
Undertakings.....................................................................................................II-3
Signatures.......................................................................................................II-4
</TABLE>
v
<PAGE> 8
SUMMARY OF PROPOSED TRANSACTION
The following summary should be read in conjunction with, and is
qualified in its entirety by, the more detailed information and financial
statements (including the notes thereto) appearing elsewhere in this Prospectus-
Proxy Statement. All financial statements set forth herein for Summit
Environmental Corporation, Inc. (the "Company") and Summit Technologies, Inc.
have been prepared in accordance with U.S. generally accepted accounting
principles ("GAAP").
<TABLE>
<S> <C>
The transaction - A Spinoff and a proposed Merger.
The proposed Merger - Subject to shareholder approval of both
companies, the Company will merge with
Summit Technologies, Inc. ("Summit
Technologies"), another Texas corporation.
Vote required to approve
the Merger - An affirmative vote of at least two-thirds
of the outstanding shares of each of the
Company and Summit Technologies is required
to approve the Merger. Summit Technologies'
management and control persons will vote
their 50.4% of the outstanding shares in
accordance with the majority vote of the
other voting shareholders.
The survivor of the Merger - The Company, but the historical financial
statements of the post-Merger Company shall
be those of Summit Technologies.
Business of the Company - None. A development-stage, shell
corporation, organized to merge with Summit
Technologies.
Business of Summit Technologies - Marketing products, under license to it,
through television infomercials, radio
spots, and a national industrial
distribution company.
Management of the Company
after the Merger - Summit Technologies' management.
</TABLE>
1
<PAGE> 9
<TABLE>
<S> <C>
Terms of the Merger - Summit Technologies' shareholders would
exchange their existing shareholdings in
Summit Technologies for 5,810,840 shares of
Common Stock of the Company, which is
equivalent to 88.6% of the equity of the
Company.
Merger Exchange Formula for
Summit Technologies' 5,810,840
Shares of Common Stock - 5,810,840 shares of Company Common Stock. 1
Company Common Stock share for 1 Summit
Technologies Common Stock share.
Fractional Shares - None. Rounded up or down to the nearest
whole number.
The Spinoff - A pro rata distribution by SuperCorp Inc.
("SuperCorp") to its approximately 650
shareholders of 500,000 shares of Common
Stock of Summit Environmental Corporation,
Inc. ("the Company"), which SuperCorp
purchased for $0.001 a share.
The Spinoff Shares - The 500,000 shares of Common Stock of the
Company held by SuperCorp.
Terms of the Spinoff - 1 Spinoff Share for each 14 shares of
Common Stock of SuperCorp held of record on
the date of this Prospectus-Proxy
Statement.
Other securities of the Company - 250,000 shares of Common Stock held by a
"promoter" and by an "insider" of both the
Company and SuperCorp.
Promoter and Insider to
the transaction - George W. Cole may be deemed to be an
"insider" to the transaction, and Dave
Dischiavo may be deemed to be a "promoter"
of the transaction. Each of them may be
deemed to own, directly or indirectly
through family members, 125,000 shares of
Common Stock of the Company. George W.
Cole, indirectly through his spouse and
family, may also be deemed to receive
27,550 shares of Common Stock through the
pro rata distribution of the Spinoff Shares
and 23,750 shares of Common Stock
</TABLE>
2
<PAGE> 10
in the proposed Merger through the
ownership of 23,750 shares of common stock
of Summit Technologies. See "Transactions
with Insiders" and "Terms of the
Transaction - Material Contacts Among the
Companies."
Securities to be outstanding
after the Merger - See table below:
<TABLE>
<CAPTION>
PROMOTER AND OTHER SUMMIT
TYPE SUPERCORP SUPERCORP TECHNOLOGIES
COMPANY'S SECURITY INSIDER SHAREHOLDERS SHAREHOLDERS TOTAL
<S> <C> <C> <C> <C>
Common Stock 301,300(1) 472,450(2) 5,810,840(3) 6,560,840
Percent 4.6% 7.2% 88.6% 100%
</TABLE>
(1) 27,550 of these shares are Spinoff Shares, registered with the
Securities and Exchange Commission ("the Commission"). 250,000 of these
shares are restricted securities and are held 125,000 by Dave Dischiavo
and 125,000 by George W. Cole's spouse, who is a shareholder of
SuperCorp. See, also, footnote (3) with respect to 23,750 additional
shares to be received by Mr. Cole's spouse in the Merger through her
ownership of stock of Summit Technologies.
(2) Registered with the Commission and unrestricted for transfer in the
stock market.
(3) Includes 23,750 Merger Shares to be received by the SuperCorp
"insider's" spouse. All 5,810,840 shares are registered with the
Commission and unrestricted for transfer in the stock market; provided,
however, that 2,930,545 of these 5,810,840 shares would be held by
affiliates of the post-Merger Company (officers and directors and
controlling shareholders) and would be subject to the limitations on
resale imposed by Rule 145 of the Commission. See "Information About
the Company - Rule 144 and Rule 145 Restrictions on Trading."
Plan of Distribution - Certificates representing the 500,000
shares of Common Stock to be distributed to
the SuperCorp shareholders will be
delivered to Bank One Trust Company, NA,
Oklahoma City, Oklahoma, to be held in
escrow, pursuant to SEC Regulation 230.419,
until the Merger should be approved by
Summit Technologies. Should it be so
approved, Bank One will then transmit such
certificates to their owners.
3
<PAGE> 11
<TABLE>
<S> <C>
Tax consequences of the Spinoff - Taxable both to SuperCorp and to the
SuperCorp shareholders receiving the
500,000 Spinoff Shares. Based upon the
opinion of counsel, SuperCorp believes the
value of the Spinoff Shares for federal
income tax purposes is negligible - $0.001
a share. See "Federal Income Tax
Consequences."
Tax consequences of the Merger - Not taxable. See "Federal Income Tax
Consequences."
Tax consequences of the Spinoff - Taxable both to SuperCorp and to the
SuperCorp shareholders receiving the
500,000 Spinoff Shares. Based upon the
opinion of counsel, SuperCorp believes the
value of the Spinoff Shares for federal
income tax purposes is negligible - $0.001
a share. See "Federal Income Tax
Consequences."
Tax consequences of the Merger - Not taxable. See "Federal Income Tax
Consequences."
Address of SuperCorp - Suite 202
4334 Northwest Expressway
Oklahoma City, OK 73116
Telephone: 405-840-1585
Address of Summit Technologies - Suite 7
414 East Loop 281
Longview, TX 75605
Telephone: 800-522-7841
Address of the Company - Suite 202
4334 Northwest Expressway
Oklahoma City, OK 73116
Telephone: 405-840-1585
</TABLE>
RISK FACTORS.
Ownership of the Common Stock of the Company is speculative and
involves a high degree of risk, whether the Merger with Summit Technologies be
effected or not. See "Risk Factors" below.
THE THREE COMPANIES.
Three companies and their shareholders are affected by the transaction
proposed in this Prospectus-Proxy Statement.
Summit Environmental Corporation, Inc. ("the Company"). The Company was
incorporated under the laws of the State of Texas on February 24, 1998, for the
purpose of merging with Summit Technologies, Inc. ("Summit Technologies") should
the Merger transaction described herein be approved. The Company has no business
operations or significant capital and has no present intention of engaging in
any active business until and unless it merges with Summit Technologies.
The business office of the Company is located at 4334 Northwest
Expressway, Suite 202, Oklahoma City, OK 73116. Its telephone number is
405-840-1585.
4
<PAGE> 12
Summit Technologies, Inc. ("Summit Technologies"). Summit Technologies
was incorporated in Texas on August 14, 1997. It distributes and markets
products, made by other companies or developed by itself or an affiliated Texas
corporation, Moonlighting Distribution Corporation.
The principal products distributed and marketed by Summit Technologies
are as follows:
o FirePower 911(TM) and FlameOut(TM). These are fire
suppressants developed and manufactured by BioGenesis
Enterprises, Inc. of Springfield, Virginia. These products are
EPA-approved replacements for Halon 1211, which was the most
widely used fire suppression and explosion protection agent
but is now banned for almost all uses.
o Stressex(TM) and Poder 24(TM). This product is marketed as one
that increases energy, alleviates stress and promotes hormonal
balance and libido.
o Trim-Away(TM). This product is a weight reducing agent. Its
principal ingredient is chitosan, a fat absorbent agent made
from the shells of shellfish such as crab and shrimp.
o Industrial chemicals and cleaners. These products are
manufactured by BioGenesis Enterprises and are designed to be
environmentally safe. Summit Technologies markets its products
through joint ventures with established marketing
organizations, through infomercials and radio "spots," through
direct advertising and internationally through a network of
persons and companies who contract with Summit Technologies
for distribution rights.
Summit Technologies markets its products through joint ventures with
established marketing organizations, through infomercials and radio "spots,"
through direct advertising and internationally through a network of persons and
companies who contract with Summit Technologies for distribution rights.
The business office of the Summit Technologies is located at 414 East
Loop 281, Suite 7, Longview, TX 75605. Its telephone number is 800-522-7841.
SuperCorp Inc. SuperCorp Inc. ("SuperCorp") was organized under the
laws of the State of Oklahoma on October 21, 1988. SuperCorp has approximately
650 shareholders in 35 states, almost all of which it acquired in early 1989
when it purchased all the assets of Naturizer, Inc., through a chapter 11 plan
of reorganization, in exchange for shares of common stock of SuperCorp, which
shares were distributed to the creditors and shareholders of Naturizer, Inc. One
of the purposes for which SuperCorp was organized, and its only purpose at
present, is to engage in "spinoff" activities such as are described herein, such
5
<PAGE> 13
spinoffs to involve the distribution, by way of stock dividends or otherwise, of
registered shares of stock of other companies.
SuperCorp has assets consisting of approximately $50,000 in cash. Each
of its five directors, Albert L. Welsh, John E. Adams, T.E. King, Thomas J.
Kenan, and Ronald D. Wallace, either directly or by attribution through
ownership by family members, owns 375,000 shares of common stock of SuperCorp,
which amount is less than six percent of the number of outstanding shares. See
"Management Information - Security Ownership of Certain Beneficial Owners and
Management."
SuperCorp is not subject to the reporting requirements imposed by
Section 15(d) of the Securities Act of 1933 or Section 13 of the Securities
Exchange Act of 1934. Its common stock does not trade in the stock market, and
it has never sought a market maker for its stock.
SuperCorp organized the Company in February 1998 as a vehicle
specifically for the proposed Merger. The Company has no business history, $750
in assets, no liabilities, and three shareholders - SuperCorp; George W. Cole, a
shareholder of SuperCorp; and Dave Dischiavo, who is not a shareholder of
SuperCorp. See "Information About the Company." Should the proposed Merger not
be effected, see "Plan of Distribution - The Escrow Arrangement Consequences
Should the Merger Not Occur" below for an explanation of what disposition would
be made of the company.
SuperCorp's address is 4334 Northwest Expressway, Suite 202, Oklahoma
City, OK 73116. Its telephone number is 405-840-1585.
DEGREE OF MANAGEMENT CONTROL OF VOTE ON MERGER.
The Merger must be approved by an affirmative vote of the holders of at
least two-thirds of the outstanding shares of Common Stock of each of the
Company and Summit Technologies. With respect to such companies, the percentage
of outstanding shares entitled to vote and held by officers, directors and their
affiliates are as follows: the Company - 66.7%; and Summit Technologies - 50.4%.
Summit Technologies' officers, directors and affiliates, even though they are
recommending approval of the Merger, have agreed to vote their shares to approve
or disapprove the proposed Merger in accordance with the majority vote of the
other voting shareholders.
DISSENTERS' RIGHTS OF APPRAISAL.
Those shareholders of Summit Technologies who vote against the Merger
have the right to dissent and to exercise certain rights of appraisal, which, if
exercised, and if the Merger is effected, would cause Summit Technologies to pay
these dissenters the appraised value of their shareholdings. See "Voting and
Management Information - Dissenters' Rights of Appraisal."
6
<PAGE> 14
COMPLIANCE WITH GOVERNMENTAL REGULATIONS.
No federal or state regulatory requirements, other than securities laws
and regulations, must be complied with or federal or state approval obtained in
connection with the Spinoff and Merger, other than the filing of articles of
merger with the Secretary of State of Texas after a favorable vote might be
obtained on the proposed Merger.
TAX CONSEQUENCES OF THE TRANSACTION.
The Merger should be a "tax-free" reorganization under the U.S.
Internal Revenue Code. See "Terms of the Transaction - Federal Income Tax
Consequences."
RISK FACTORS
The shareholders of Summit Technologies, all of whom shall be asked to
vote on the proposed Merger, are making an investment decision that involves a
high degree of risk and should carefully consider the following factors the
Merger, the surviving corporation, and its business in determining whether to
approve the Merger:
1. Dilution. Should the Merger be approved and effected, the
shareholders of Summit Technologies shall suffer an 11.4% dilution in their
percentage ownership and book value of the surviving company solely for
obtaining shares of Common Stock registered under the Securities Act to be
exchanged for their shares of capital stock of Summit Technologies. While Summit
Technologies' management postulates that a public market will develop for the
5,810,840 Merger Shares to be received in the Merger and that this will add
value to the Merger Shares, there can be, and is, no assurance that a public
market for the securities will develop. See Risk Factors Nos. 3 and 4 below -
"No Assurance of a Public Market and Likelihood of a Volatile Market" and
"Market Restrictions on Broker-Dealers." No consideration will be received by
the Company for the thirteen percent ownership of Summit Technologies received
by SuperCorp's shareholders in the Spinoff and by the two insiders or promoters.
2. Development Stage Corporation. The company with which the Company
proposes to merge, Summit Technologies, is a development stage corporation. It
was organized in late 1997 and is not currently operating at a profit. There
can be, and is, no assurance that profitable operations can be achieved or, if
achieved, maintained.
3. No Assurance of a Public Market and Likelihood of a Volatile Market.
While the shares of Common Stock of the Company to be issued or distributed
pursuant to this Prospectus-Proxy Statement will be free of restrictions on
transferability for all persons except "affiliates" of the Company and Summit
Technologies (and with respect to such "affiliates" such shares may be
transferred subject to certain restrictions), there is presently no public
market for the Common Stock of the Company and there
7
<PAGE> 15
is no assurance that a public market for such securities will develop after the
occurrence of the Merger described in this Prospectus-Proxy Statement, or, if
one develops, that it will be sustained. It is likely that any market that
develops for the Common Stock, should it develop, will be highly volatile and
that the trading volume in such market will be limited.
4. Penny Stock Regulations. The Company anticipates that its Common
Stock will be listed on the OTC Bulletin Board, but no assurance can be given
that this will occur or, if it occurs, that such listing can be maintained.
Further, should the Company's Common Stock trade on the OTC Bulletin Board at
less than $5 a share - and it is expected that this will be the case, the stock
will be a so-called "penny stock," which subjects broker-dealer firms to certain
restrictions and a strict regimen if they recommend the stock to certain of
their customers. Because of these restrictions, trading in the stock will likely
be inhibited and a shareholder's ability to resell the stock in the stock market
could be limited, which itself could tend to further inhibit the creation of
market interest in the stock and act as a depressant on its price in the stock
market. See "Penny Stock Regulations."
5. Market Restrictions on Broker-Dealers. The Company's Common Stock is
covered by a Securities and Exchange Commission rule that imposes additional
sales practice requirements on broker-dealers who sell such securities to
persons other than established customers and accredited investors (generally
institutions with assets in excess of $5 million or individuals with net worth
in excess of $1 million or annual income exceeding $200,000 or $300,000 jointly
with their spouse). For transactions covered by the rule, the broker-dealer must
make a special suitability determination for the purchaser and receive the
purchaser's written agreement to the transaction prior to the sale.
Consequently, the rule may affect the ability of broker-dealers to sell the
Company's securities and also may affect the ability of persons receiving shares
in this offering to sell their shares in the secondary market. Further, the
Company's Common Stock, after the Merger, will initially be quoted on an NASD
inter-dealer system called "the Bulletin Board," will not have $4 million in net
tangible assets which is required for it to qualify for quotation on Nasdaq, and
is not expected to command a market price of $5 a share, the price required for
a non-Nasdaq-quoted security to escape the trading severities imposed by the
Securities and Exchange Commission on so-called "penny stocks." These trading
severities tend to reduce broker-dealer and investor interest in penny stocks
and could operate (a) to inhibit the ability of the Company's stock to reach a
$4 per share trading price that would make it eligible for quotation on Nasdaq
even should it otherwise qualify for quotation on Nasdaq and (b) to inhibit the
ability of the Company to use its stock for business acquisition purposes. See
"Information About the Company - Market for the Company's Common Stock and
Related Stockholders Matters."
6. No Assurance of Success of Business. Should the proposed Merger
occur, the post-Merger Company will be engaged in the business of marketing
products produced by others but under license to sell. This business, only
commenced in the second half of 1997 by Summit Technologies, is not operating at
a profit. There can be, and is, no assurance that this business will be
profitable. See "Information About Summit Technologies."
7. Company's Contingent Liability for Possible Violation of
Registration Requirements of Securities Act. Subsequent to the filing with the
Securities and Exchange Commission of the registration statement of which this
Prospectus is a part, Summit Technologies, Inc., with whom the Company proposes
to merge, sold $1,072,428 worth of its common stock to 42 persons. Summit
Technologies believed that such offering was exempt from registration under
Section 5 of the Securities Act of 1933 (the "Act") by reason of the provisions
of Section 4(2) of the Act and Regulation D, Rule 506 thereunder. It is
possible - but not conceded by either the Company or Summit Technologies - that
such exemptions from registration were not available to Summit Technologies
because of the public nature of the registration statement and also because the
relationships between Summit Technologies and some of the purchasers in such
offering may not have satisfied the requirement of the Commission that such
relationships be of a pre-existing, substantive nature.
Should no exemption from Section 5 registration have been available for
such offering, Summit Technologies - and the Company, should the proposed Merger
be approved and effected - as well as the persons controlling Summit
Technologies at the time of such sales of securities could be held liable under
Section 12(1) of the Act to the 42 purchasers of such common stock for their
purchase price, with interest thereon, less any income received thereon, upon
the tender of their shares of common stock, or for damages if they no longer own
the securities. Such an action would have to be brought in a court within one
year after the purchase of the securities.
To the extent that any such actions should be filed and successfully
litigated, Summit Technologies' and, should the Merger be approved and effected,
the Company's operations, plans and ability to finance business operations would
be adversely affected.
8
<PAGE> 16
8. Need for Additional Funding. Should the proposed Merger be
approved, the post-Merger Company will require additional funding to achieve its
plan of operations for the next twelve months. Even should Summit Technologies'
operations become profitable, Summit Technologies' contingent liability for
possible violations of the registration requirements of the Securities Act of
1933 (see Risk Factor No. 7 immediately above), could impose a future
requirement for additional funding. If additional funding is needed, whether
during the next twelve months or later, the source for this funding has not been
identified or committed, and no assurance can be given that the needed funds
could be obtained. Failure to obtain the funds could result in a contraction of
future advertising, an inability to fill orders for merchandise, a loss of
sales, poor relations with business customers and possible failure of the
business. See "Information About Summit Technologies - Management's Plan of
Operation; - Cash Requirements."
9. Risk of Loss of Right to Sell Fire Suppressant Product. Summit
Technologies, with whom the Company proposes to merge, is primarily engaged in
the business of marketing a fire suppressant product. Summit Technologies bought
and was assigned the patent and trademark rights to the product from an
unaffiliated party on an installment payment basis. Still owed by Summit
Technologies are cash payments of $200,000 by February 1, 1999; $300,000 by
April 1, 1999; and $300,000 by August 1, 1999; and 750,000 shares of common
stock of Summit Technologies (common stock of the Company, should the Merger
described herein be effected) to be delivered the first business day after
payment of the $200,000 payment due February 1, 1999. Should Summit Technologies
fail to make all the above installment payments, it is possible that the
transferor of the patent and trademark rights to the fire suppressant product
would assert, and possibly sustain, a claim that it has a legal right to a
rescission of the installment payment agreement through which Summit
Technologies obtained an assignment of such rights. The fire suppressant
product is deemed by Summit Technologies to be important to its future. Even
though Summit Technologies has on hand the cash funds required to make the
February 1, 1999 installment payment of $200,000 and intends to make such
payment, there can be no assurance that Summit Technologies will continue to be
able to make the required periodic cash payments. A failure to make one or more
of the periodic payments followed by the successful assertion of a rescission
claim by the transferor of the patent and trademark rights could lead to the
loss of the right to distribute the fire suppressant product, which could have a
materially adverse effect upon the post-Merger Company.
10. Significant Amount of Transactions with Affiliates. Summit
Technologies is affiliated with Moonlighting Distribution Corporation
("Moonlighting"), a Longview, Texas corporation under the control and 52.5
percent ownership of B. Keith Parker and his spouse, Paula Parker, who are
officers and directors of Summit Technologies. Should the proposed merger
described herein be approved and effected, the management of Summit
Technologies will become the management of the Company, and the Company will
then be affiliated with Moonlighting as Summit Technologies is today.
Summit Technologies acquired its distribution rights to its
FirePower 911(TM), FlameOut(TM), Stressex(TM), Poder 24(TM) and Trim-Away(TM)
products from Moonlighting in exchange for $30,000 and 350,000 shares of common
stock of Summit Technologies. Summit Technologies pays - and should the proposed
Merger be approved, the Company will be obligated to pay - to Moonlighting a
royalty of $0.50 for each 16-ounces of FirePower 911(TM) and $0.50 for each
gallon of FlameOut(TM). Summit Technologies buys its Stressex(TM), Poder 24(TM)
and Trim-Away(TM) products from Moonlighting (which does not itself manufacture
these products), which marks up the price of these products to Summit
Technologies approximately 37 percent over its own cost.
Because both Summit Technologies and Moonlighting are under the
common direction and control of B. Keith Parker and his spouse, Paula Parker,
there can be no assurance that negotiations between the two companies
concerning the pricing of the Stressex(TM), Poder 24(TM) and Trim-Away(TM)
products bought from Moonlighting by Summit Technologies or concerning other
matters will, or can be, conducted in an arm's-length manner on behalf of
Summit Technologies or that the result of such negotiations will be as
advantageous to Summit Technologies as they could have been had the two
companies not been under common control.
11. Reliance on Key Personnel. Should the Merger occur, the post-Merger
Company will be reliant on the continued services of several key personnel, and
the loss of any of them could have a materially adverse effect on the future
operations of the Company. These persons are B. Keith Parker, chief executive
officer of Summit Technologies; Don Hendon, president and treasurer, and Paula
Parker, corporate secretary. There can be no assurance that the loss of key
personnel will not materially and adversely affect its operations and,
particularly, its expansion. See "Management Information - Directors, Executive
Officers and Significant Employees."
12. Management Control. Should the proposed Merger be approved and
effected, after the Merger the Company's officers and directors and their
affiliates will own approximately 44.7 percent of the Common Stock of the
Company and thereby may be able to determine the outcome of any vote affecting
the control of the Company.
13. Tax Consequences. In the opinion of tax counsel to the Company (see
"Federal Income Tax Consequences"), the proposed Merger will be a tax-free
reorganization for both companies and for the shareholders of Summit
Technologies. These anticipated favorable tax consequences are not supported by
an advance ruling by the Treasury Department but are based upon the opinion of
tax counsel to the Company and to SuperCorp. Should the actual tax consequences
be different than as represented herein, Summit Technologies' shareholders, to
whom would be distributed Company shares (the "Merger Shares"), could recognize
taxable income or loss equal to the
9
<PAGE> 17
difference between their undivided tax basis in the Summit Technologies' stock
exchanged for the Company's Merger Shares and the value of the Merger Shares on
the date of the exchange. See "Federal Income Tax Consequences -The Merger -
Shareholders of Summit Technologies."
14. Dividends Not Likely. Should the Merger be effected, for the
foreseeable future it is anticipated that any earnings which may be generated
from Operations of the emergent company will be used to finance the growth of
such company, and cash dividends will not be paid to holders of the Common
Stock.
TERMS OF THE TRANSACTION
The Company, SuperCorp, and Summit Technologies, pursuant to approval
by their respective boards of directors, have entered into an agreement of
merger between the Company and Summit Technologies, a copy of which is included
herein (see "Appendix A - Agreement of Merger"). In order for the merger
contemplated by the Agreement of Merger to become effective, it is necessary
that each of the following occur:
(i) a registration statement covering the 5,810,840 Merger
Shares offered herein and a registration statement covering 500,000
Spinoff Shares (for distribution pro rata to SuperCorp's securities
holders) must be filed with the Securities and Exchange Commission and
with appropriate state securities regulatory agencies and must become
effective;
(ii) the shareholders of each of the Company and of Summit
Technologies must, by a two-thirds affirmative vote of the shares
outstanding, approve the merger contemplated by the Agreement of
Merger; and
(iii) certain documents evidencing the approved merger must be
prepared and filed with the Secretary of State of Texas.
TERMS OF THE MERGER.
The terms of the proposed merger ("the Merger") are as follows:
1. Summit Technologies shall merge into the Company.
2. Upon the effectiveness of the Merger, all the outstanding shares of
capital stock of Summit Technologies shall be converted into 5,810,840 shares of
Common Stock of the Company ("the Merger Shares"). See "Description of
Securities." The conversion shall be on a pro rata basis. As of the date of this
Prospectus-Proxy Statement, the following table sets forth the number of
outstanding shares of each class of Summit Technologies' capital stock and the
number of shares of Company Common Stock into which each share of Summit
Technologies capital stock will be converted in the Merger:
10
<PAGE> 18
<TABLE>
<CAPTION>
NUMBER OF COMPANY
NUMBER OF SUMMIT NUMBER OF SHARES SHARES FOR 1 SUMMIT
CLASS OF STOCK TECHNOLOGIES SHARES OF COMPANY TECHNOLOGIES SHARE
-------------- ------------------- ---------- -------------------
<S> <C> <C> <C>
Common 5,810,840 5,810,840 1
</TABLE>
3. Fractional shares shall not be issued but shall be rounded up or
down to the nearest whole number.
4. The business of Summit Technologies shall be conducted, after the
Merger, by the Company, into which Summit Technologies shall have merged, but
Summit Technologies' management and directors shall become the management and
directors of the Company. See "Management Information."
5. Prior to the Merger, SuperCorp shall have distributed to its
shareholders ("the Spinoff"), on a basis proportionate to their shareholders in
SuperCorp, 500,000 Shares ("the Spinoff Shares") of Common Stock of the Company
now held by SuperCorp. Each SuperCorp shareholder shall receive one share of the
company for each fourteen shares of SuperCorp held of record on the date of this
Prospectus-Proxy Statement.
6. The historical financial statements of the post-Merger Company
shall be those of Summit Technologies. See "Financial Statements - Summit
Technologies."
7. Should the Merger not be approved by the shareholders of Summit
Technologies, none of Summit Technologies, the Company, or SuperCorp shall be
liable to any of the others, but it shall be the sole obligation of Summit
Technologies to pay all three parties' expenses relating to the registration of
the Shares described herein.
REASONS FOR THE MERGER AND SPINOFF.
The management of Summit Technologies believes that Summit
Technologies' shareholders will benefit from receiving shares of the Company
that have been registered under the Securities Act in exchange for their shares
of capital stock of Summit Technologies. It believes that the distribution of
the Spinoff Shares to the stockholders of SuperCorp in the Spinoff will provide
the basis for the creation of a public market for the Common Stock of the post-
Merger Company and that the existence of such a public market will facilitate
the raising of expansion funds for the post-Merger Company. No assurance can be
given, however, that a market will develop for the Common Stock or, if it
develops, that it will be sustained. See "Risk Factors - No Assurance of a
Public Market."
SuperCorp, which controls the Company, believes that the SuperCorp
shareholders will benefit by receiving, for no consideration, the 500,000
Spinoff Shares.
This transaction with Summit Technologies, should it be approved by the
shareholders of Summit Technologies, will be the third such "spinoff-merger"
transaction effected by SuperCorp with subsidiaries it creates for such
purposes. The first spinoff-merger transaction concerned Lark Technologies, Inc.
("Lark"), a SuperCorp-created subsidiary that merged with a Houston, Texas
company engaged in DNA sequencing whose major shareholders are affiliates of the
Baylor School of Medicine. The second spinoff-merger transaction concerned
Dransfield China Paper Corporation ("Dransfield"), a Supercorp-created
subsidiary that merged with a Hong Kong company engaged in distributing hygienic
paper products in Hong Kong and building integrated paper mills in China and
whose major shareholder is a Hong Kong Stock Exchange-listed company. Lark's
common stock trades on the OTC Bulletin Board under the symbol "LDNA," and
Dransfield's common stock trades on the Nasdaq SmallCap Market under the symbol
"DCPCF." Subsequent to the Lark spinoff-merger, Lark raised $1 million in a
rights offering to its shareholder base. Subsequent to the Dransfield
spinoff-merger, Dransfield raised $750,000 in a private placement to investors
in the U.S. and Hong Kong. Both Lark and Dransfield are operating today, their
common stock prices are quoted daily, and both file reports with the Commission
pursuant to the requirements of the Securities Exchange Act of 1934.
Effectively, shareholders of Summit Technologies will suffer an 11.4
percent dilution in their equity in Summit Technologies solely for the
perceived, but not assured, benefits of having a public market created for
11
<PAGE> 19
their securities and of having created what may be a superior position from
which to raise additional capital for the post-Merger Company.
ACCOUNTING TREATMENT OF PROPOSED MERGER.
Because the Company is only a corporate shell and not an operating
entity, the proposed Merger will be accounted for as if Summit Technologies
recapitalized.
DISSENTERS' RIGHTS OF APPRAISAL.
Those shareholders of Summit Technologies who vote against the Merger
have the right to dissent and to exercise certain rights of appraisal, which, if
exercised, and if the Merger is effected, would cause Summit Technologies to pay
these dissenters the appraised value of their shareholdings. See "Voting and
Management Information - Dissenters' Rights of Appraisal."
AGREEMENT AND PLAN OF MERGER.
The complete Agreement of Merger among the Company, Summit
Technologies, and SuperCorp is included in this Prospectus-Proxy Statement. See
"Appendix A - Agreement of Merger."
DIFFERENCES BETWEEN RIGHTS OF SHAREHOLDERS OF THE COMPANY AND OF SUMMIT
TECHNOLOGIES.
There are no material differences between the rights of holders of the
Common Stock of the Company and of Summit Technologies. See "Terms of the
Transaction - Description of Securities."
DESCRIPTION OF SECURITIES.
COMMON STOCK. Each of the Company and Summit Technologies is a Texas
corporation. The Company is authorized to issue 40 million shares of Common
Stock, $0.001 par value and has 750,000 shares of Common Stock issued and
outstanding. Summit Technologies is authorized to issue ten million shares of
common stock, no par value, and has 5,810,840 shares of its Common Stock issued
and outstanding.
VOTING RIGHTS. Holders of the shares of Common Stock are entitled to
one vote per share on all matters submitted to a vote of the shareholders.
Shares of Common Stock do not have cumulative voting rights, which means that
the holders of a majority of the shares voting for the election of the board of
directors can elect all members of the board of directors.
DIVIDEND RIGHTS. Holders of record of shares of Common Stock are
entitled to receive dividends when and if declared by the board of directors out
of funds of the Company legally available therefor.
LIQUIDATION RIGHTS. Upon any liquidation, dissolution or winding up,
holders of shares of Common Stock are entitled to receive pro rata all of the
assets of the Company available for distribution to shareholders,
12
<PAGE> 20
subject to the prior satisfaction of the liquidation rights of the holders of
outstanding shares of Preferred Stock.
PREEMPTIVE RIGHTS. Holders of Common Stock do not have any preemptive
rights to subscribe for or to purchase any stock, obligations or other
securities of the Company.
REGISTRAR AND TRANSFER AGENT. Bank One Trust Company, NA, Oklahoma
City, Oklahoma, serves as the transfer agent and registrar of the Common Stock
of the Company. Summit Technologies serves as its own registrar and transfer
agent.
DISSENTERS' RIGHTS. Under current Texas law, a shareholder is afforded
dissenters' rights which, if properly exercised, may require the corporation to
repurchase its shares. Dissenters' rights commonly arise in extraordinary
transactions such as mergers, consolidations, reorganizations, substantial asset
sales, liquidating distributions, and certain amendments to the company's
memorandum and articles of association.
PREFERRED STOCK. The Company is authorized to issue 10 million shares
of Preferred Stock, $0.001 par value. The Preferred Stock may be issued from
time to time by the directors as shares of one or more series. The description
of shares of each series of Preferred Stock, including any preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption shall be set
forth in resolutions adopted by the directors.
There are no shares of Preferred Stock of the Company issued and
outstanding.
FEDERAL INCOME TAX CONSEQUENCES.
THE MERGER. In the opinion of Thomas J. Kenan, counsel to the Company
and to SuperCorp, the Merger should qualify as a type "A" reorganization under
Section 368(a)(1) of the Internal Revenue Code. However, when consideration is
given to the fact that the Company is newly organized, the "step transaction
doctrine" might be applied and, accordingly, the Company might be considered a
continuation of Summit Technologies with only a change of name or place of
incorporation, a type "F" reorganization under Section 368(a)(1).
SHAREHOLDERS OF SUMMIT TECHNOLOGIES. Whether the Merger be
characterized as a type "A" or "F" reorganization, the Company believes that
there should be no recognition of taxable gain or loss to the shareholders of
Summit Technologies by reason of the Merger. Each shareholder of Summit
Technologies would have a carryover tax basis and a tacked holding period for
the Company's securities received in the Merger. Further, Summit Technologies
itself would not recognize any taxable gain or loss, since its liabilities are
not in excess of the tax basis of its assets.
It is anticipated that the distribution by SuperCorp to its
shareholders of the 500,000 Spinoff Shares will not adversely affect the
non-recognition of gain or loss to Summit Technologies or its shareholders in
the Merger.
13
<PAGE> 21
The above discussion is not based upon an advance ruling by the
Treasury Department but upon an opinion of Thomas J. Kenan, esquire, in his
capacity as tax counsel to the Company (which tax opinion is one of the exhibits
to the registration statement of which this Prospectus-Proxy Statement is a
part). See "Risk Factors - Tax Consequences."
PRO FORMA FINANCIAL INFORMATION AND DILUTION.
The following sets forth certain pro forma financial information giving
effect to the Merger:
14
<PAGE> 22
PRO FORMA STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SUMMIT SUMMIT
ENV. CORP. TECH. PRO FORMA PRO FORMA
(HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
ASSETS
Current assets $ -- $ 92,388 $1,473,178 $1,565,566
Property and equipment -- -- -- --
Other assets, net -- 9,500 -- 9,500
---------- ---------- ---------- ----------
TOTAL ASSETS $ -- $ 101,888 $1,473,178 $1,575,066
========== ========== ========== ==========
LIABILITIES, COMMON STOCK SUBJECT TO A CONTINGENCY,
AND STOCKHOLDERS' EQUITY
Current liabilities $ -- $ 15,126 $ -- $ 15,126
Long term liabilities -- -- -- --
---------- ---------- ---------- ----------
Total liabilities -- 15,126 -- 15,126
---------- ---------- ---------- ----------
Common stock subject to a contingency:
Common stock (810,840 shares) -- -- 811 811
Additional paid in capital -- -- 1,071,617 1,071,617
---------- ---------- ---------- ----------
Total common stock subject to a contingency -- -- 1,072,428 1,072,428
---------- ---------- ---------- ----------
Stockholders' equity:
Common stock -- 1,000 4,750 5,750
Additional paid in capital -- 45,000 396,000 441,000
Retained earnings -- 40,762 -- 40,762
---------- ---------- ---------- ----------
Total stockholders' equity -- 86,762 400,750 487,512
---------- ---------- ---------- ----------
TOTAL LIABILITIES, COMMON STOCK
SUBJECT TO A CONTINGENCY, AND
STOCKHOLDERS' EQUITY $ -- $ 101,888 $1,473,178 $1,575,066
========== ========== ========== ==========
PRO FORMA BOOK VALUE PER SHARE $ 0.0743
==========
</TABLE>
NOTE:
Pro forma book value per share is calculated by dividing Total Stockholders'
Equity ($487,512) by the total number of shares outstanding (6,560,840).
15
<PAGE> 23
PRO FORMA STATEMENT OF INCOME
FOR THE PERIOD AUGUST 14, 1997 TO DECEMBER 31, 1997
SUMMIT SUMMIT
<TABLE>
<CAPTION>
ENV. CORP. TECH. PRO FORMA PRO FORMA
(HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
Sales $ -- $ 74,349 $ -- $ 74,349
Cost of sales -- 9,465 -- 9,465
---------- ---------- ---------- ----------
Gross profit -- 64,884 -- 64,884
Operating expenses -- 16,870 -- 16,870
---------- ---------- ---------- ----------
Net income from operations -- 48,014 -- 48,014
Income tax -- 7,252 -- 7,252
---------- ---------- ---------- ----------
NET INCOME $ -- $ 40,762 $ -- $ 40,762
========== ========== ========== ==========
EARNINGS PER SHARE
Net income $ -- $ 40,762 $ -- $ 40,762
Weighted-average number of shares outstanding -- 87,435 6,473,405 6,560,840
Earnings per share $ -- $ 0.47 $ -- $ 0.01
</TABLE>
NOTES:
(1) Earnings per share data shown above are applicable for both primary and
fully-diluted; there were no common stock equivalents outstanding as of
December 31, 1997.
(2) Weighted-average number of shares outstanding for the combined entity
includes all shares issued as of July 6, 1998 as if outstanding as of the
beginning of the period.
16
<PAGE> 24
PRO FORMA STATEMENT OF FINANCIAL CONDITION
JUNE 30, 1998
<TABLE>
<CAPTION>
SUMMIT SUMMIT
ENV. CORP. TECH. PRO FORMA PRO FORMA
(HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets $ 750 $ 1,345,611 $ -- $ 1,346,361
Property and equipment -- 15,401 -- 15,401
Other assets, net -- 253,697 -- 253,697
------------ ------------ ------------ ------------
TOTAL ASSETS $ 750 $ 1,614,709 $ -- $ 1,615,459
============ ============ ============ ============
LIABILITIES, COMMON STOCK SUBJECT TO A CONTINGENCY,
AND STOCKHOLDERS' EQUITY
Current liabilities $ -- $ 98,375 $ -- $ 98,375
Long term liabilities -- -- -- --
------------ ------------ ------------ ------------
Total liabilities -- 98,375 -- 98,375
------------ ------------ ------------ ------------
Common stock subject to a contingency:
Common stock (810,840 shares) -- 811 -- 811
Additional paid in capital -- 1,071,617 -- 1,071,617
------------ ------------ ------------ ------------
Total common stock subject to a contingency -- 1,072,428 -- 1,072,428
------------ ------------ ------------ ------------
Stockholders' equity:
Common stock (5,750,000 shares combined) 750 5,000 -- 5,750
Additional paid in capital -- 441,000 -- 441,000
Retained earnings -- (2,094) -- (2,094)
------------ ------------ ------------ ------------
Total stockholders' equity 750 443,906 -- 444,656
------------ ------------ ------------ ------------
TOTAL LIABILITIES, COMMON STOCK
SUBJECT TO A CONTINGENCY, AND
STOCKHOLDERS' EQUITY $ 750 $ 1,614,709 $ -- $ 1,615,459
============ ============ ============ ============
PRO FORMA BOOK VALUE PER SHARE $ 0.0678
============
</TABLE>
NOTE:
Pro forma book value per share is calculated by dividing Total Stockholders'
Equity ($444,656) by the total number of shares outstanding (6,560,840).
17
<PAGE> 25
PRO FORMA STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
SUMMIT SUMMIT
ENV. CORP. TECH. PRO FORMA PRO FORMA
(HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales $ -- $ 59,187 $ -- $ 59,187
Cost of sales -- 38,149 -- 38,149
------------ ------------ ------------ ------------
Gross profit -- 21,038 -- 21,038
Operating expenses -- 170,449 -- 170,449
------------ ------------ ------------ ------------
Net loss from operations -- (149,411) -- (149,411)
Other income -- 100,000 -- 100,000
------------ ------------ ------------ ------------
Net loss before income tax -- (49,411) -- (49,411)
Income tax benefit -- 6,555 -- 6,555
------------ ------------ ------------ ------------
NET LOSS $ -- $ (42,856) $ -- $ (42,856)
============ ============ ============ ============
EARNINGS PER SHARE
Net loss $ -- $ (42,856) $ -- $ (42,856)
Weighted-average number of shares outstanding -- 4,495,089 2,065,751 6,560,840
Earnings (loss) per share $ -- $ (0.01) $ -- $ (0.01)
</TABLE>
NOTES:
(1) Earnings per share data shown above are applicable for both basic and
fully-diluted; there are no common stock equivalents outstanding as of June
30, 1998.
(2) Weighted-average number of shares outstanding for the combined entity
includes all shares issued as of June 30, 1998 as if outstanding as of the
beginning of the period.
18
<PAGE> 26
Essentially, the immediate effect of the Merger is to dilute by 11.4
percent the equity of the shareholders of Summit Technologies by transferring
this equity to the present shareholders of SuperCorp and two persons, both of
whom are either "promoters" or "insiders" of the Company. See "Summary
Information - Securities to be Outstanding After the Merger."
MATERIAL CONTACTS AMONG THE COMPANIES.
In December 1997 Summit Technologies was engaged in raising capital for
its marketing business through a private placement of Common Stock being sold
through the efforts of its president, Keith Parker. Mr. Parker was introduced to
Mr. Dave Dischiavo by Marshall Southerland of Canton, Texas, a retired banker.
Mr. Dischiavo was described as a person who could introduce Mr. Parker to
persons who could help capitalize Summit Technologies. Mr. Dischiavo arranged a
meeting in Dallas, Texas on December 17, 1997 at which Mr. Dischiavo, Mr.
Parker, Mr. Parker's attorney, Jay Lucas, and George W. Cole were present. Mr.
Cole is a stockbroker and the spouse of Marjorie Cole who is a significant
shareholder of SuperCorp.
Mr. Cole advised Mr. Parker that Mr. Cole's brokerage firm and most
brokerage firms would not authorize their representatives to act as brokers in
the sale of stock of Summit Technologies unless extensive "due diligence"
efforts were first conducted - at Summit Technologies' expense. He then advised
Mr. Parker of a method of obtaining a public market for its shares through a
spinoff-merger transaction such as the transaction described in this
Prospectus-Proxy Statement. Mr. Parker became convinced that such a transaction
could benefit his company as could, for instance, a rights offering to its
expanded shareholder base at some indefinite time in the future after the
conclusion of the spinoff-merger transaction.
An agreement was reached that day to pursue, with SuperCorp, the
spinoff-merger transaction described herein. Part of the agreement provided that
Mr. Dischiavo and Mr. Cole, as compensation for their services in advising
Summit Technologies with respect to the spinoff-merger transaction and with
respect to introducing Summit Technologies to SuperCorp, would each receive
125,000 shares of the Company and $18,500 cash. Later, Mr. Cole exchanged
$14,250 of his cash fee for 23,750 shares of Common Stock of Summit Technologies
at $0.60 a share. These 23,750 shares were transferred by Mr. Cole to his
spouse, Marjorie Cole.
Other than the proposed Spinoff and Merger described herein, there have
been no material contracts, arrangements, understandings, relationships,
negotiations or transactions among Summit Technologies, the Company, and
SuperCorp during the periods for which financial statements appear herein.
INTEREST OF COUNSEL.
Thomas J. Kenan, Esquire, counsel to the Company and a director of
SuperCorp, is named in this Prospectus-Proxy Statement as having given an
opinion on legal matters concerning the registration or offering of the
securities described herein. Mr. Kenan's spouse, Marilyn C. Kenan, is the
trustee and sole beneficiary of the Marilyn C. Kenan Trust, a testamentary
19
<PAGE> 27
trust which is the beneficial owner (i) of 28,333 shares of Common Stock of
Summit Technologies and (ii) of 375,000 shares of the issued and outstanding
shares of Common Stock of SuperCorp and, by reason of this ownership, shall
become the beneficial owner of 26,786 Shares of the Company by way of the
Spinoff and 28,333 shares of Common Stock of the Company by way of the Merger,
should it be approved. Mr. Kenan disclaims any beneficial ownership in the
securities beneficially owned by his spouse's trust.
INDEMNIFICATION.
Under Texas corporation law, a corporation is authorized to indemnify
officers, directors, employees and agents who are made or threatened to be made
parties to any civil, criminal, administrative or investigative suit or
proceeding by reason of the fact that they are or were a director, officer,
employee or agent of the corporation or are or were acting in the same capacity
for another entity at the request of the corporation. Such indemnification
includes expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such persons if they acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the corporation or, with respect to any criminal action or
proceeding, if they had no reasonable cause to believe their conduct was
unlawful. In the case of any action or suit by or in the right of the
corporation against such persons, the corporation is authorized to provide
similar indemnification, provided that, should any such persons be adjudged to
be liable for negligence or misconduct in the performance of duties to the
corporation, the court conducting the proceeding must determine that such
persons are nevertheless fairly and reasonably entitled to indemnification. To
the extent any such persons are successful on the merits in defense of any such
action, suit or proceeding, Texas law provides that they shall be indemnified
against reasonable expenses, including attorney fees. A corporation is
authorized to advance anticipated expenses for such suits or proceedings upon an
undertaking by the person to whom such advance is made to repay such advances if
it is ultimately determined that such person is not entitled to be indemnified
by the corporation. Indemnification and payment of expenses provided by Texas
law are not deemed exclusive of any other rights by which an officer, director,
employee or agent may seek indemnification or payment of expenses or may be
entitled to under any by-law, agreement, or vote of shareholders or
disinterested directors. In such regard, a Texas corporation is empowered to,
and may, purchase and maintain liability insurance on behalf of any person who
is or was a director, officer, employee or agent of the corporation. As a result
of such corporation law, Summit Technologies or, should the proposed merger
become effective, the Company may, at some future time, be legally obligated to
pay judgments (including amounts paid in settlement) and expenses in regard to
civil or criminal suits or proceedings brought against one or more of its
officers, directors, employees or agents, as such, with respect to matters
involving the proposed Merger or, should the Merger be effected, matters that
occurred prior to the Merger with respect to Summit Technologies.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions or otherwise, the Company has
been advised that in the opinion of the
20
<PAGE> 28
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
PENNY STOCK REGULATIONS
There is no way to predict a price range within which the Company's
Common Stock will trade. The Company expects trading to commence on the OTC
Bulletin Board at a price less than $5 a share. Accordingly, the Company's
Common Stock initially, at least, would be subject to the rules governing "penny
stocks."
A "penny stock" is any stock that sells for less than $5 a share, is
not listed on an exchange or authorized for quotation on The Nasdaq Stock
Market, and is not a stock of a "substantial issuer." The Company is not now a
"substantial issuer" and cannot become one until it has been in continuous
operation for three years - August 14, 2000 at the earliest - unless it has net
tangible assets of at least $5 million, which it does not now have.
The Congress has enacted statutes and the Commission has adopted
regulations that impose a strict regimen to be complied with by brokers in
recommending penny stocks.
The Penny Stock Suitability Rule
Prior to the sale of a penny stock recommended by a broker-dealer to a
new customer who is not an institutional accredited investor, the broker-dealer
must approve the customer's account for transactions in penny stocks in
accordance with procedures set forth in the Commission's Penny Stock Suitability
Rule. The broker-dealer must obtain from the customer information concerning the
person's financial situation, investment experience and investment objectives.
Then, the broker-dealer must "reasonably determine" that transactions in penny
stocks are suitable for the person and that the person, or his advisor, is
capable of evaluating the risks in penny stocks.
After making this determination, the broker-dealer must furnish the
customer with a written statement setting forth the basis for this suitability
determination. The customer must sign and date a copy of the written statement
and return it to the broker-dealer.
Finally the broker-dealer must also obtain from the customer a written
agreement to purchase the penny stock, identifying the stock and the number of
shares to be purchased.
The above exercise, if applied to a transaction, not only delays a
proposed transaction but has caused many broker-dealer firms to adopt a policy
of not allowing their representatives to recommend penny stocks to their
customers.
The Penny Stock Suitability Rule, described above, and the Penny Stock
Disclosure Rule, described below, do not apply, however, to transactions not
recommended by the broker-dealer, to sales to institutional accredited
investors, or to sales to "established customers" of the broker-dealer -
21
<PAGE> 29
persons either who have had an account with the broker-dealer for at least a
year or who have effected three purchases of penny stocks with the broker-dealer
on three different days involving three different issuers. Also exempt from this
rule are transactions in penny stocks by broker-dealers whose income from penny
stock activities does not exceed five percent of their total income during
certain defined periods.
The Penny Stock Disclosure Rule
Another Commission rule - the Penny Stock Disclosure Rule - requires a
broker-dealer, who recommends the sale of a penny stock to a customer in a
transaction not exempt from the suitability rule described above, to furnish the
customer with a "risk disclosure document" including, among other things, a
description of the penny stock market and how it functions, its inadequacies and
shortcomings, and the risks associated with investments in the penny stock
market. The broker-dealer must also disclose the stock's bid and ask price
information and the dealer's and salesperson's compensation related to the
proposed transaction. Finally, the customer must be furnished with a monthly
statement including prescribed information relating to market and price
information concerning the penny stocks held in the customer's account.
Effects of the Rule
The above penny stock regulatory scheme is a response by the Congress
and the Commission to known abuses in the telemarketing of low-priced securities
by "boiler shop" operators. The scheme imposes market impediments on the sale
and trading of penny stocks and has a limiting effect on a stockholder's ability
to resell a penny stock.
The Company's Spinoff Shares and Merger Shares likely will trade below
$5 a share on the OTC Bulletin Board and be, for some time at least, shares of a
"penny stock" subject to the trading market impediments described above.
INFORMATION ABOUT THE COMPANY
The Company was incorporated under the laws of the State of Texas on
February 28, 1998. It is a development-stage company, has no business or
significant assets, and was organized for the purpose of entering into the
Merger proposed herein (see "Terms of the Transaction - Terms of the Merger").
It has no employees; its management will serve without pay until the Merger
should become effective.
Should the Merger be approved and effected, the Company shall be the
surviving company, but the Company's management shall not remain as the
management of the Company. Control of the Company, through the voting power to
elect the entire board of directors and thereby to replace management, shall
pass to the present shareholders of Summit Technologies, and Summit
Technologies' present management shall become the management of the Company. See
"Management Information - Directors, Executive Officers, and Significant
Employees."
It is the intention of Summit Technologies' present management to
continue the business of Summit Technologies as the business of the Company
22
<PAGE> 30
(see "Information about Summit Technologies - Description of Business and
Properties") after the Merger.
The Company's present management consists of one person, Albert L.
Welsh. Mr. Welsh is a registered representative of Birchtree Financial Services,
Inc., an NASD broker-dealer firm of Kansas City, Missouri, that has offices in
75 cities, including Oklahoma City, Oklahoma, where Mr. Welsh offices. Mr. Welsh
is the president and a director of SuperCorp.
COURSE OF BUSINESS SHOULD THE MERGER NOT OCCUR.
Should the Merger not be approved and effected, the Company will be
without any property or business. The Company's management would seek to
acquire, in exchange for stock of the Company, a business or assets that would
constitute a business. Should no acquisition that would cause the Company to
become a going concern by made within 18 months after the date of the
Registration Statement of which this Prospectus-Proxy Statement is a part, the
holders of the majority of the issued and outstanding shares of Common Stock
will have the voting power to cause a dissolution of the Company, and persons
who are today the holders of a majority of these shares have indicated their
intention to do so.
LEGAL PROCEEDINGS.
Neither the Company nor its property is a party to or the subject of
pending legal proceedings.
MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.
As of the date of this Prospectus-Proxy Statement there is no public
trading market in the U.S. or elsewhere for the Company's Common Stock. After
the Spinoff and before any vote on the Merger by the shareholders of Summit
Technologies, all certificates representing the 500,000 Spinoff Shares shall be
held in escrow by the Escrow Agent.
Should the Merger be approved and effected, (i) the Escrow Agent will
release from escrow the certificates representing the ownership of the escrowed
securities, which certificates would be delivered to the approximately 650
persons owning the securities represented by the certificates, and (ii) the
shareholders of Summit Technologies will receive 5,810,840 Shares of Common
Stock of the Company in exchange for all the issued and outstanding shares of
capital stock of Summit Technologies.
Should the Merger be effected, the Common Stock is expected to be
eligible for quotation on the OTC Bulletin Board. There can be, and is, no
assurance that market makers will make or maintain a market in the stock or
that, even if a market is made and maintained in the stock, that the stock will
trade at prices deemed attractive or reasonable to the present shareholders of
Summit Technologies or the Company.
The Company's stock will not be eligible for quotation on the Nasdaq
SmallCap Market ("Nasdaq") (i) until it trades at a bid price of $4 a share or
higher and (ii) unless it meets other Nasdaq requirements regarding assets and
shareholders' equity, which it will not meet even if the Merger
23
<PAGE> 31
is approved and effected. No assurance can be made that the Common Stock will
ever become eligible for quotation on Nasdaq.
The Company's stock is expected to be quoted on an NASD inter-dealer
system called "the Bulletin Board." While some Bulletin Board stocks are
actively traded, they do not draw the interest of the substantial portion of the
brokerage community that concentrates its attention on Nasdaq-quoted stocks or
exchange-listed stocks. The eligibility requirements for listing the Company's
stock on exchanges are generally as high or higher than the requirements for
eligibility for quotation on Nasdaq, and the Company has no present plans to
list its stock on an exchange.
Further, holders of the Shares offered herein face the prospect, should
the Merger be approved and effected, of an indefinite period during which the
Shares will be subject to trading severities imposed on Bulletin Board,
so-called "penny stocks" (stocks that trade at less than $5 per share) by
regulations of the Securities and Exchange Commission. The effect of these
trading severities is to reduce broker-dealer and investor interest in trading
or owning "penny stocks" and, hence, could inhibit the ability of the Company's
stock to reach a trading level of $4 per share or higher and thereby become
eligible for quotation on Nasdaq even if the Company meets Nasdaq's assets and
shareholders' equity requirements in the future.
RULE 144 AND RULE 145 RESTRICTIONS ON TRADING.
Should the Merger and Spinoff transaction described herein be approved
and effected, all issued and outstanding shares of Common Stock of the Company
shall have been issued or distributed pursuant to registration with the
Commission. Nevertheless, some of the Shares, even though deemed not to be
"restricted securities," as such term is used by the Commission, will be subject
to certain restrictions on their transfer for value.
Holders of the Shares who are deemed to be affiliates of Summit
Technologies at the time of the vote on the Merger, in order to sell their
Shares, must either register them for sale or comply with the resale provisions
set forth in paragraph (d) of the Commission's Rule 145, unless some other
exemption-from-registration provision is available. The resale provisions of
paragraph (d) of Rule 145 refer to certain provisions of the Commission's Rule
144 which require that:
o there must be available, to the public, current
information about the Company of a quality meeting
certain Commission requirements,
o transfers for value by such affiliates can occur only
either through broker transactions not involving the
solicitation of buyers or directly to market-makers,
and
o each such affiliate can transfer for value, during a
90-day period, no more Shares than the greater of one
percent of all issued and outstanding shares of
Common Stock of the Company (65,608 Shares
immediately after the Merger) or the average weekly
volume of trading in such Common Stock reported
through the automated quotation system of Nasdaq
24
<PAGE> 32
or the Bulletin Board during the four calendar weeks
prior to placing the sell order with a broker-dealer.
The above described resale provisions of Rule 145 shall continue, for
persons who are affiliates of Summit Technologies at the time of the vote on the
Merger, for one year after the Merger, at which time only the current public
information requirement shall continue. At such time as any such affiliate has
ceased to be an affiliate of the post-merger company for at least three months,
and provided at least two years have elapsed since the date of the Merger, then
even the current public information requirement will no longer be required for
such a former affiliate to sell any of the Shares acquired in the Merger.
The Company believes that none of the 500,000 Spinoff Shares will be
subject to any restrictions on trading or transfers for value, by reason of
these Shares' being registered for the Spinoff. Further, none of the 5,810,840
Shares of the Company to be distributed in the Merger to Summit Technologies
shareholders other than 2,930,545 shares to Summit Technologies officers and
directors and to affiliates of Summit Technologies prior to the Merger will be
subject to any restrictions on transfer. Accordingly, after the effective date
of the Merger and the redistribution of the Spinoff Shares, there shall be
3,380,295 shares in the "public float," i.e., subject to no Rule 144, Rule 145
or other applicable securities law restrictions on their being traded or
transferred for value. It is estimated that approximately 775 persons will own
these shares of record, the offering of which for sale could have a materially
adverse effect on the market price of the Company's stock. Further, an
additional 2,930,545 shares will be held by affiliates of Summit Technologies
who will be able to sell these shares pursuant to Rule 144 and Rule 145 of the
Securities Act.
There is no equity of the Company subject to outstanding options or
warrants to purchase, or securities convertible into, equity of the Company.
DIVIDENDS. The Company has had no operations or earnings and has
declared no dividends on its capital stock. Should the Merger be approved and
effected, there are no restrictions that would, or are likely to, limit the
ability of the Company to pay dividends on its Common Stock, but the Company has
no plans to pay dividends in the foreseeable future and intends to use earnings
for business expansion purposes (see "Information about the Company -
Description of Business and Properties").
FINANCIAL STATEMENTS.
The financial statements of the Company appear later in this
Prospectus-Proxy Statement on pages F-1 through F-3.
INFORMATION ABOUT SUMMIT TECHNOLOGIES
OVERVIEW.
Summit Technologies, Inc. ("Summit Technologies") was incorporated in
Texas on August 14, 1997. Its fiscal year ends December 31.
25
<PAGE> 33
Summit Technologies is affiliated with another Texas corporation,
Moonlighting Distribution Corporation, through B. Keith Parker and his spouse,
Paula Parker, who control both corporations through their positions as officers
and directors and major shareholders of both corporations.
<TABLE>
<S> <C> <C>
Officers, directors and ------------------- Officers, directors and
major shareholders Mr. and Mrs. Parker major shareholders
--------------------------------------------------
------------------------- -------------------------
Summit Technologies, Inc. Moonlighting Distribution
------------------------- Corporation
-------------------------
</TABLE>
MANAGEMENT'S PLAN OF OPERATION.
The following plan of operation should be read in conjunction with the
financial statements and the accompanying notes thereto and is qualified in its
entirety by the foregoing and by more detailed financial information appearing
elsewhere. See "Financial Statements."
For the next twelve months, Summit Technologies plans to accomplish the
following:
o Commence sales of FirePower 911(TM) and FlameOut(TM) in the U.S.
and Canada through the use of infomercials and through placing
the products in retail chain stores.
o Introduce FirePower 911(TM) and FlameOut(TM) in Mexico through
infomercials.
o Introduce FirePower 911(TM) and FlameOut(TM) in China, South
America and South Africa and other Asian countries through joint
ventures with companies who have established a presence in the
region.
o Introduce one of its fire suppressant products - FlameOut(TM) -
in ten pound and twenty pound fire extinguishers in the
Philippines through a joint venture there with an unaffiliated
company, Moonlighting International (Philippines).
o Complete its installment purchase obligation of the earlier
assignment to it of the patent and trademark rights to FirePower
911(TM) and FlameOut(TM) by paying $800,000 and 750,000 shares of
its common stock still owed on such assignment.
o Expand sales of its Stressex(TM) product - marketed under the
"Poder 24(TM)" brand name in Spanish-speaking areas - in the
U.S., Mexico and Central American countries, primarily through
infomercials.
o Develop marketing alliances with other companies for the
distribution of a chitosan-based weight management pill and
topical application.
o Develop marketing alliances for bio-degradable and non-toxic
industrial chemicals and cleaning agents developed by BioGenesis
Enterprises, Inc. of Springfield, Virginia.
26
<PAGE> 34
CASH REQUIREMENTS.
Summit Technologies raised $1,072,428 through the sale of shares of
its common stock during May and June 1998. The circumstances of the sale of
these shares were such that there may not have been an exemption from
registration available for the sales. See "Risk Factors - Company's Contingent
Liability for Possible Violation of Registration Requirements of Securities
Act." Summit Technologies does not concede that no exemption from registration
was available, but the contingency exists that the purchasers of these shares
could seek - and might prevail in seeking - rescissions of their purchases of
stock and a return of their purchase amounts plus interest and attorney fees.
Even if such a demand for rescission is made, Summit Technologies
estimates it will have to raise additional funds in the next twelve months
to satisfy the cash requirements to fulfill all the above-outlined business
objectives. Its current cash funds - $397,792 as of October 31, 1998 - are
sufficient to sustain its present operations for only approximately six months
unless additional cash is obtained through significant sales or through equity
or debt financing. Summit Technologies has made no effort to identify a
possible source of such additional capital and can give no assurance that it
could be raised should it be required. Should a demand for rescission be made by
the purchasers of the stock sold for $1,072,428, Summit Technologies would
simultaneously oppose such a demand for rescission, seek to raise additional
capital to cover the contingency that rescissions might have to be made, but
continue to use its cash assets to pursue its business objectives, as outlined
above (see "Management's Plan of Operation").
PRODUCT RESEARCH AND DEVELOPMENT.
On November 2, 1998, Summit Technologies acquired all patent and other
intellectual property rights to the FirePower 911(TM) and FlameOut(TM) products.
It plans to spend approximately $175,000 in certifying these products for sale
in Canada, to the U.S. Coast Guard and to the U.S. Air Force.
PURCHASES OF PLANT AND EQUIPMENT.
Summit Technologies does not expect to purchase or sell any plant or
significant equipment during the next twelve months.
CHANGES IN NUMBER OF EMPLOYEES.
Summit Technologies does not expect to increase significantly the
number of its employees in the next twelve months. On May 1, 1998, it added a
full-time president and chief financial officer (Don Hendon), an office manager
and a fulfillment manager.
The annual addition to salaries and wages to fill these positions is
estimated to be $159,000.
Summit Technologies' future results of operations and the other
forward-looking statements contained in this Outlook and Offering Circular, in
particular the statements regarding projected operations for the next twelve
months, involve a number of risks and uncertainties. In addition to the factors
discussed above, among the other factors that could cause actual results to
differ materially are the following: the inability of Summit Technologies to
obtain its necessary capital; the loss of any of several key personnel; the
emergence of competition not now detected; and a general economic turndown.
DESCRIPTION OF SUMMIT TECHNOLOGIES' BUSINESS.
BUSINESS DEVELOPMENT.
Summit Technologies is affiliated with Moonlighting Distribution
Corporation, a closely held Texas corporation ("Moonlighting"). Moonlighting is
under the 52.5 percent ownership and control of B. Keith Parker and his spouse,
Paula Parker, who are directors and, respectively, the chief executive officer
and secretary of Summit Technologies. Moonlighting develops and markets health
and well-being products designed to improve the quality of an individual's life
and also markets other products.
In 1993, before Summit Technologies was organized, the Parkers and
Moonlighting began to assess several products developed by BioGenesis
27
<PAGE> 35
Enterprises, Inc. of Springfield, Virginia ("BioGenesis"). BioGenesis develops
and manufactures industrial products that are environmentally safe - generally,
products that are biodegradable and nontoxic. By middle 1997, the Parkers and
Moonlighting concluded that BioGenesis' products merited commercial
exploitation. A trip to the Philippines was planned to determine if a fire
suppressant product of BioGenesis could be marketed there through personal
contacts the Parkers had there. A license was obtained from BioGenesis to market
the fire suppressant. The named licensee was "B. Keith Parker and Moonlighting
Distribution Corporation dba Moonlighting International." Moonlighting
International was a trade name to be used by Moonlighting for any overseas
marketing business.
The trip to the Philippines resulted in the organization by local
businessmen there of Moonlighting International Philippines, a company not
affiliated with the Parkers' company, Moonlighting Distribution Corporation
("Moonlighting"). Moonlighting determined that the scope of activities that
should be undertaken for the fire suppressant product exceeded the capabilities
or business plan of Moonlighting, and Summit Technologies was incorporated in
August 1997 to organize, finance, and direct the marketing of BioGenesis' fire
suppressant product and other products for which marketing licenses could be
obtained and for which marketing expenses could be raised.
After the organization of Summit Technologies, Moonlighting licensed to
Summit Technologies the exclusive right to market a product newly developed by
Moonlighting and tested for marketing - Stressex(TM) and Poder 24(TM) - and the
non-exclusive right to market BioGenesis' fire suppressant product - FirePower
911(TM) and FlameOut(TM) - for which Moonlighting had earlier obtained certain
distribution rights. Later, in April 1998 Summit Technologies entered into an
agreement with BioGenesis which would enable Summit Technologies to obtain
ownership of all patent and other intellectual property rights associated with
the fire suppressant upon the payment by November 15, 1998 of $1 million cash
(of which amount $200,000 has been paid) and 750,000 shares of Common Stock of
Summit Technologies. Then, on November 2, 1998 Summit Technologies and
BioGenesis amended their April 1998 agreement as follows:
o BioGenesis assigned to Summit Technologies the fire suppressant's
patent and other intellectual property rights.
o The remaining $800,000 owed for the purchase is to be paid on an
installment basis as follows: $200,000 by February 1, 1999; $300,000
by April 1, 1999; and $300,000 by August 1, 1999.
o The 750,000 shares of stock are to be delivered the first business day
after the February 1, 1999 payment is made.
See "Risk Factors: 9. Risk of Loss of Right to Sell Fire Suppressant Product,"
and "Information About Summit Technologies - Principal Products" and
"- Patents, Trademarks and Licenses" below.
PRINCIPAL PRODUCTS. Summit Technologies distributes and markets or has
initiated activities to distribute and market the following licensed products.
All of the products are manufactured by the licensors of the products.
FirePower 911(TM) and FlameOut(TM). These products are fire
suppressants developed and manufactured by BioGenesis. They were developed by
BioGenesis to be a replacement for Halon 1211. Halon 1211 was a widely used fire
suppression and explosion protection agent. It is applied primarily as a wetting
agent and was the fire extinguishing agent of choice for many uses, such as most
fire extinguishers. Its production was halted in 1994 by the Environmental
Protection Agency ("EPA") primarily because Halon 1211 has one of the higher
ozone depletion potentials of any compound. Halon 1211 is still approved for
certain, limited mission-critical uses (such as ship- and shore-based crash,
fire and rescue), but existing installations of Halon 1211 that are not mission
critical must switch to an approved, acceptable alternative.
28
<PAGE> 36
In March 1994 the first alternative to Halon 1211 was approved
by the EPA - BioGenesis's Surfactant Blend A. This product is marketed under
several trade names by companies licensed by BioGenesis. Two of these trade
names are FirePower 911(TM) and FlameOut(TM).
The EPA has now approved at least eleven other accepted
substitutes to Halon 1211. Three of these are water, foam and carbon dioxide.
Other than these three, BioGenesis's Surfactant Blend A is approved for all
wetting agent uses and is the only substitute approved for residential use. Some
of the substitutes were approved only for a limited time and then must be phased
out. Flameout(TM) was certified in May 1997 by Underwriter Laboratories (listing
number 7P21).
FirePower 911(TM) and FlameOut(TM) contain the same Surfactant
Blend A formula. FlameOut(TM) is marketed at three percent strength for use in
fire extinguishers to fight, generally, Class A fires (wood, cloth, paper,
rubber and plastics) and is marketed at six percent strength for suppression of
Class B fires (combustible liquids, gases and greases). Surfactant Blend A is
also effective at ten percent strength in suppressing Class D fires (metals) but
has not yet been submitted to Underwriters Laboratory for certification for
Class D fire suppression.
FirePower 911(TM) and FlameOut(TM) suppress and extinguish
fire quickly. They reduce toxic smoke by encapsulating poisonous hydrocarbons,
reduce heat approximately 70 percent faster than water does, prevent reflash,
are safe to store and handle, leave virtually no residue, are biodegradable and
otherwise are environmentally safe. They are nontoxic but may irritate the eyes.
They store at between 25 degrees and 120 degrees Fahrenheit for prolonged
periods.
From August 1997 through April 1998, Summit Technologies sold
1,558 units of FirePower 911(TM) for $10,285 and 1,183 units of FlameOut(TM) for
$64,752. All sales were to parties unrelated to Summit Technologies.
Stressex(TM) and Poder 24(TM).
These are the same products. Stressex(TM) is the
English-language brand name and Poder 24(TM) is the Spanish-speaking brand name.
The product combines six herbs - saw palmetto, sarsaparilla, nettle leaf,
damiana, buckthorn and avena sativa - in tablets marketed to women and
substitutes Yohimbe for damiana in the capsules marketed to men. Summit
Technologies markets the product as one that increases energy, alleviates stress
and promotes hormonal balance and libido.
From August 1997 through April 1998, Summit Technologies sold
thirteen units of Poder 24(TM) for $150. Of these units, twelve were sold to an
affiliated company, Moonlighting Distribution Corporation, for its resale, and
one unit was sold to a party unrelated to Summit Technologies.
Trim-Away(TM).
This product was recently developed by Moonlighting
Distribution Corporation, an affiliate of Summit Technologies. Its main
ingredient is Chitosan, which is mixed with aloe vera, aminophylline, and other
botanical ingredients to make a topical product. Chitosan is a fat absorbent
agent.
29
<PAGE> 37
It is non-caloric and indigestible. After absorbing fat - up to ten times its
weight - it passes through the body. Aloe vera is a transportation agent,
enabling the topically applied Trim-Away(TM) ointment to penetrate the fat
reserve beneath the skin. Aminophylline signals the body to release fat reserves
for the Chitosan to absorb.
Chitosan is made from chitin. The most abundant source of
chitin is the shells of shellfish such as crab and shrimp. Chitosan is made by
cooking chitin in alkali. Chitosan binds fat to itself and acts like a "fat
sponge." Being indigestible and non-absorbable by the human body, it passes
through the body carrying with it any fat it has absorbed.
Summit Technologies will market Trim-Away(TM) on the basis
both of testimonials of persons who have used it and of scientific literature
that supports the proposition that chitosan binds fat to itself.
Moonlighting is developing a Chitosan-based chewable tablet to
be marketed as a dietary supplement for weight loss. When developed, Summit
Technologies will market it.
Industrial Chemicals and Cleaners.
Summit Technologies distributes BioGenesis's industrial
chemicals and cleaners. BioGenesis concentrates its activities on developing and
then manufacturing, for marketing by other companies, industrial-use products
that are environmentally safe. BioGenesis has developed several industrial
chemicals and cleaners that Summit Technologies proposes to market as soon as
funds are available to launch marketing efforts.
DISTRIBUTION METHODS.
Summit Technologies markets products primarily through the efforts of
Keith Parker, its chief executive officer, and of five regional sales directors.
A sales director for its sixth region has not yet been selected. It also is
preparing to launch sales efforts through infomercials and radio "spots" and
through direct advertising. Internationally, it markets products through a
network of persons and companies who contract with Summit Technologies for
distribution rights.
Summit Technologies markets FlameOut(TM) in the Philippines through a
joint venture with Moonlighting International Philippines ("Moonlighting
Philippines"). Neither Summit Technologies nor the Texas-based Moonlighting
Distribution Corporation ("Moonlighting") has any ownership interest in
Moonlighting Philippines, but Summit Technologies has a 40 percent net revenue
interest in the joint venture.
Moonlighting Philippines is under the direction, ownership, and control
of experienced Philippine marketers. It has obtained the approval and
endorsement of the Philippine National Bureau of Fire Protection for
FlameOut(TM). Surfactant Blend A is shipped, f.o.b. point of U.S. origin, to the
Philippines in concentrated form. It is there mixed with water and placed in
fire extinguishers.
30
<PAGE> 38
Summit Technologies is preparing to launch an infomercial campaign to
sell FirePower 911(TM) in the U.S. Summit Technologies recently purchased twelve
months of five commercials a day (30- and 60-second commercials) in infomercial
advertising from American Independent Network of Fort Worth, Texas ("AIN") in
exchange for 100,000 shares of Summit Technologies common stock and twenty
percent of the gross selling price of each sale made in response to the
infomercials. AIN is a television broadcaster that has created a network of 150
television stations in 48 states for whom AIN provides all their programming
needs.
Prior to the organization of Summit Technologies, Moonlighting
commenced marketing Poder 24(TM) through K-MEX, a Spanish-speaking radio station
in the Los Angeles area and in Mexico. Summit Technologies is preparing a
prime-time infomercial campaign through Hispanic Television Network to be aired
in 450 markets.
Sales of FirePower 911(TM) have been made to Home Depot for it to test
market this product in its Northeast U.S. Region.
FirePower 911(TM) has been accepted by Wal-Mart Corporation as a
product for sale in Wal-Mart stores. Initial orders have been received by Summit
Technologies to deliver the product to Wal-Mart stores in Florida, Georgia and
Mississippi.
COMPETITION.
BioGenesis has granted to other companies distribution rights of its
Surfactant Blend A fire suppressant for various parts of the world and under two
other trade names. Summit Technologies will potentially be in competition with
these companies. To the extent that any of these companies fails to meet
periodic sales requirements, Summit Technologies will acquire from BioGenesis
the expired licenses. However, Summit Technologies on November 2, 1998 acquired
from BioGenesis all patent and other intellectual property rights associated
with the fire suppressant, and the other companies which have licenses to market
the fire suppressant are now distributors for Summit Technologies. See
"-Patents, Trademarks and Licenses."
The demise of the former fire suppressant of choice, Halon 1211, is a
consequence of the 1992 Geneva Peace Conference, which mandated the phaseout of
Halon 1211 in all United Nations states participating in the Conference.
Summit Technologies believes that FirePower 911(TM) and FlameOut(TM)
are the finest fire suppressants in existence today and proposes to expand its
licensing agreement with BioGenesis to be exclusive in as many countries as it
can serve.
31
<PAGE> 39
In the Spanish-speaking countries in the Western Hemisphere, Summit
Technologies is in direct competition with Unispan with respect to Summit
Technologies' Poder 24(TM) product. Unispan is a large and well-capitalized
marketing company based in Mexico. Moonlighting contracted with Unispan in 1996
to test market Poder 24(TM) in Mexico through infomercials. Following a
successful test (33,000 bottles sold in a seven-week market test), Unispan
attempted to duplicate Poder 24(TM) and sells it under a similar brand name.
Summit Technologies and Moonlighting have served notice on Unispan that Summit
Technologies will sue Unispan for these activities when Summit Technologies can
afford such litigation.
Competition is intense throughout the world in the markets for diet
programs and industrial chemicals and cleaners. Summit Technologies'
Trim-Away(TM) topical fat reducer and BioGenesis's industrial chemicals and
cleaners will be in competition with products marketed by large companies with
established products with well-known brands. Summit Technologies is unable at
this time to predict the degree of market acceptance of these products or its
ability to successfully compete with the companies already established in these
markets.
RAW MATERIALS AND SUPPLIERS.
Summit Technologies buys from BioGenesis its FirePower 911(TM) and
FlameOut(TM) products.
Summit Technologies buys its Stressex(TM), Poder 24(TM) and
Trim-Away(TM) products from its affiliate, Moonlighting, which developed the
products. The products are manufactured for Moonlighting by an unaffiliated
company, Summa Laboratories, Inc., of Mineral Wells, Texas, from readily
available herbs and natural substances. For infomercial sales, scheduled to
commence in August 1998, an inventory of 5,000 bottles is on hand to fill
orders. Approximately 17 days lead time is required to replenish inventory
stock.
BioGenesis manufactures and supplies its industrial chemicals and
cleaners. These products are shipped in concentrated form to Houston, Texas, for
bottling by Bishop's Original Products. Summit Technologies' arrangement with
this bottler allows bottling in any amounts - small or large - for tests in each
new market.
DEPENDENCE ON MAJOR CUSTOMERS.
Summit Technologies' markets are insufficiently developed to determine
if it will be dependent on one or a few major customers.
PATENTS, TRADEMARKS AND LICENSES.
In mid-1997 Moonlighting and B. Keith Parker obtained a nearly
worldwide license from BioGenesis for its fire suppressant products and
improvements. See "Description of Summit Technologies' Business - Business
Development." The excepted countries were most Arabic countries and the
Scandinavian countries. On May 1, 1998, both of these areas, then under
exclusive license to other companies, became available due to the existing
licensees' failure to meet periodic sales quotas, and Parker and Moonlighting
acquired licenses in these areas pursuant to the terms of their agreement with
BioGenesis.
32
<PAGE> 40
In October 1997 this license from BioGenesis was assigned to Summit
Technologies in exchange for the payment to Moonlighting of $10,000,the
issuance to Moonlighting of 350,000 shares of common stock of Summit
Technologies and the obligation to pay to Moonlighting a royalty of $0.50 for
each 16-ounce can of FirePower 911(TM) and $0.50 for each gallon of
FlameOut(TM). The license was for a four-year initial term, renewable annually
for twenty years. The licensing fee was $500,000, (of which amount $200,000
has been paid) and $100,000 on June 1 of each of the next three years. Annual
sales quotas were to have been set on November 15, 1998 should Summit
Technologies not exercise an option it had to acquire all patents and
intellectual property rights associated with the fire suppressant.
On November 2, 1998 BioGenesis assigned to Summit Technologies all
patents and intellectual property rights associated with the fire suppressant
products. See " - Business Development" above. The obligation to pay
licensing fees to BioGenesis merged with the acquisition of the patent rights
and, accordingly, was extinguished. The obligation to pay the above-described
annual royalties to Moonlighting, however, did not so merge and will continue
in effect during the term of the exclusive license obtained from Moonlighting.
Summit Technologies paid $20,000 for a perpetual license from its
affiliated company, Moonlighting, for its Stressex(TM), Poder 24(TM) and
Trim-Away(TM) products. The license has no sales quota. Product prices are set
at the prices Moonlighting was charging unrelated persons when the license was
given to Summit Technologies, subject to adjustment only to the extent
Moonlighting's manufacturing costs for the products should increase due to
increased product ingredient prices.
Summit Technologies has no written license from BioGenesis for its
industrial chemical and cleaner products.
GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS.
BioGenesis obtained EPA approval in 1994 and Underwriter Laboratories
certification in 1997 for FlameOut(TM) (Listing No. 7P21). Moonlighting
Philippines has obtained the approval of these products from the Philippine
National Bureau of Fire Protection.
No governmental approval is required in the U.S. or Mexico for the
manufacture for sale of Stressex(TM), Poder 24(TM) or Trim-Away(TM). These
products are made from herbs and other dietary ingredients that enable the
products to be marketed as "dietary supplements" that contain no drugs,
antibiotics or biologics that require prior governmental approval.
BioGenesis has obtained the necessary U.S. Government approvals for its
industrial chemical and cleaning products.
GOVERNMENT REGULATIONS.
The fire suppressant products Summit Technologies distributes are
subject to government regulation in most countries of the world. The existence
of this regulation is of benefit to Summit Technologies, because the BioGenesis
fire suppressants are the favored substitute for Halon 1211, the fire
suppressant of choice in most of the world before most countries agreed at the
1992 Geneva Peace Conference to phase out its use.
Summit Technologies' Stressex(TM), Poder 24(TM) and Trim-Away(TM)
products also are subject to government regulations. Until 1997 the Food, Drug
and Cosmetic Act prohibited the use of a health claim or a nutrient content
33
<PAGE> 41
claim in the labeling of dietary supplements unless the Food and Drug
Administration (the "FDA") published a regulation authorizing such a claim. The
Food and Drug Administration Modernization Act of 1997 ("FDAMA") now allows
distributors and manufacturers to use nutrient content claims in the labeling of
dietary supplements if such claims are based on current, published,
authoritative statements from certain federal scientific bodies, as well as from
the National Academy of Sciences. A process is now administered by the FDA by
which the scientific basis for such nutrient claims is established. Summit
Technologies makes no nutrient claims in its labeling of Stressex(TM), Poder
24(TM) or Trim-Away(TM) and, thus, is not subject to obtaining prior government
approval in its labeling of these products. It is required to label these
products as "dietary supplements" if they are sold as such.
The FDAMA does not provide a similar regimen for health claims in the
labeling of dietary supplements but defers such to a procedure and standard to
be established by regulation by the FDA. The FDA has not proposed any such
regulations but has announced that it does propose that health claims based on
authoritative statements be permitted for dietary supplements. Summit
Technologies makes no health claims in its labeling of Stressex(TM),
Poder 24(TM) or Trim-Away(TM) and, thus, should not be subject to such
regulation when the FDA regulations in this regard are adopted.
The Dietary Supplement Health and Education Act of 1994 ("DSHEA")
provides that dietary supplements, without FDA authorization, may carry truthful
and not misleading claims about the effect of a dietary supplement on the
structure or function of the body for the maintenance of good health and
nutrition. Dietary supplements may not carry claims that they can treat,
diagnose, cure or prevent a disease. Recently proposed FDA regulations define
the criteria for structure or function claims that DSHEA permits and the disease
claims that it prohibits. Summit Technologies believes that its claims for its
dietary supplements clearly fall within permissible limits as well as the
proposed regulations and that the adoption of the proposed regulations will have
no effect on its sale of Stressex(TM), Poder 24(TM) or Trim- Away(TM) products.
PROPERTIES.
Summit Technologies owns no plants or real property. It leases space
for its offices and for storing inventory.
OFFICE FACILITIES.
Summit Technologies leases 1,815 square feet of space in Longview,
Texas for its offices and for inventory storage at $1,159 a month and 300 square
feet of space for additional inventory at $138 a month. Additional space is
available for leasing should more storage space be required for inventory.
Summit Technologies believes all space requirements can be met at its present
location for at least the next year.
SEASONALITY.
There is no known seasonal aspect to Summit Technologies' business.
34
<PAGE> 42
RESEARCH AND DEVELOPMENT.
Summit Technologies conducts no research and development.
ENVIRONMENTAL CONTROLS.
Summit Technologies is subject to no environmental controls or
restrictions that require the outlay of capital or the obtaining of a permit in
order to engage in business operations.
YEAR 2000 COMPUTER PROBLEM.
Summit Technologies has determined that it does not face material
costs, problems or uncertainties about the year 2000 computer problem. This
problem affects many companies and organizations and stems from the fact that
many existing computer programs use only two digits to identify a year in the
date field and do not consider the impact of the year 2000. Summit Technologies
is newly organized, presently uses off-the-shelf and easily replaceable software
programs, and has yet to devise its own software programs.
NUMBER OF EMPLOYEES.
On July 15, 1998, Summit Technologies employed six persons full time
and no persons part time.
LEGAL PROCEEDINGS.
Neither Summit Technologies nor any of its property is a party to, or
the subject of, any material pending legal proceedings other than ordinary,
routine litigation incidental to its business.
MARKET FOR SUMMIT TECHNOLOGIES' CAPITAL STOCK AND RELATED STOCKHOLDER MATTERS.
There is no public trading market for Summit Technologies' capital
stock. There are 126 holders of record of Summit Technologies' issued and
outstanding capital stock. Should the Merger not be approved and effected, no
public trading market is expected to develop. Summit Technologies has declared
no dividends on its common stock. There are no restrictions that would or are
likely to limit the ability of Summit Technologies to pay dividends on its
common stock, but Summit Technologies has no plans to pay dividends in the
foreseeable future and intends to use earnings for the expansion of its present
business.
There are no shares of Common Stock subject to outstanding options or
warrants to purchase, or securities convertible into, Common Stock of Summit
Technologies.
Should the proposed Merger be approved, the "public float" would
consist of the 500,000 Spinoff Shares and 2,826,615 of the Merger Shares (those
distributed to persons not in control of Summit Technologies), or a total of
3,326,615 shares. However, 2,984,225 Merger Shares will be distributed to the
persons in control of Summit Technologies, who will be able to sell these shares
pursuant to Rule 144 and Rule 145 under the
35
<PAGE> 43
Securities Act. See "Information About the Company - Rule 144 and Rule 145
Restrictions on Trading."
FINANCIAL STATEMENTS.
See "Financial Statements - Summit Technologies" for the financial
statements of Summit Technologies containing (i) a balance sheet at December 31,
1997, and statements of income, cash flows, and changes in shareholders' equity
for the period August 14, 1997 to December 31, 1997, and (ii) a statement of
financial condition at June 30, 1998, and statements of income, changes in
stockholders' equity and cash flows for the six months ended June 30, 1998,
which have been prepared in accordance with generally accepted accounting
principles.
The financial statements of Summit Technologies appear later in this
Prospectus-Proxy Statement on pages F-4 through F-11.
36
<PAGE> 44
VOTING AND MANAGEMENT INFORMATION
Proxies are to be solicited by Summit Technologies' management with
respect to the proposed Merger described herein.
DATE, TIME AND PLACE INFORMATION.
THE COMPANY. Shareholder voting on the proposed Merger by the
shareholders of the Company is assured and shall be taken by their written,
unanimous consent. It is expected that written consent to the Merger, without a
meeting being taken, shall be obtained from the three shareholders of the
Company within one day after the date of this Prospectus-Proxy Statement.
SUMMIT TECHNOLOGIES. Shareholder voting on the proposed Merger by the
shareholders of Summit Technologies shall be taken at a special meeting of the
shareholders of Summit Technologies to be held on __________________,
_____________________, 1998, at Summit Technologies' offices at 414 East Loop
281, Suite 7, Longview, TX 75605. Summit Technologies' officers, directors and
their affiliates are entitled to vote 49.8% of the outstanding shares entitled
to vote. Nevertheless, these persons have agreed to vote their shares to approve
or disapprove the proposed Merger in accordance with the majority vote of the
other voting shareholders. Accordingly, management is unable to provide
assurance that the Merger will be approved.
VOTING PROCEDURE. Voting by Summit Technologies shareholders may be by
written ballot at the meeting or by written proxy. Shareholders of record as of
the date of this Prospectus-Proxy Statement shall be entitled to vote. Provided
a quorum is present in person or by proxy (as determined by the aggregate voting
rights of the common stock, considered as a whole), abstentions shall not be
counted in determining a majority vote of the common stock of Summit
Technologies represented at the meeting in person but shall be counted as a vote
for rejecting the Merger. None of the shares are held of record by brokers.
REVOCABILITY OF PROXY.
A person giving a proxy has the power to revoke it. A revocation of a
proxy earlier given can be accomplished either (i) by written notification by
the giver of the proxy of an intent to revoke it, or (ii) by attendance at the
special shareholders' meeting called to vote on the proposed Merger and either
oral or written instruction to the person counting ballots on the Merger vote of
an intention to revoke the earlier given proxy.
DISSENTERS' RIGHTS OF APPRAISAL.
Shareholders of Summit Technologies who do not vote for or consent in
writing to the proposed Merger, and who continuously hold their shares through
the effective date of the Merger (should it be effected), are entitled to
exercise dissenters' rights of appraisal. Generally, any shareholder of Summit
Technologies is entitled to dissent from consummation of the plan of Merger and
to obtain payment of the fair value of his shares should the Merger be
consummated. The notice of the special meeting of
37
<PAGE> 45
shareholders of Summit Technologies, at which the vote shall be taken whether to
approve the proposed Merger, must state that all shareholders are entitled to
assert dissenters' rights, and the notice must be accompanied by a copy of the
relevant portions of Texas corporation law describing dissenters' rights, the
procedure for exercise of dissenters' rights, and the procedure for judicial
appraisal of the value of the shares of Common Stock of Summit Technologies
should a dissenter and Summit Technologies not agree on the value of such
shares.
All shareholders of Summit Technologies who desire to consider whether
their dissenters' rights should be exercised should carefully read the relevant
portions of Section 5.11 of the Texas Business Corporation Act that will
accompany the notice of the special meeting of shareholders. Each shareholder
should especially be alert to the requirement that a shareholder who wishes to
assert dissenters' rights must deliver to the corporation, before the vote is
taken, written notice of ones intent to demand payment for ones shares if the
proposed action is effectuated and must not vote ones shares in favor of, or
consent in writing to, the proposed Merger, although a shareholder does not lose
dissenter's rights by failing to vote. Other procedures are required and will be
described in detail in the relevant portions of Texas corporation law that
describe dissenters' rights and will accompany the notice of the special meeting
of shareholders called to vote on the proposed Merger. A mere vote against the
proposed Merger does not satisfy the requirement of delivering written notice
before the meeting of intent to demand payment for ones shares if the proposed
Merger is effectuated.
PERSONS MAKING THE SOLICITATION.
Solicitations of proxies will be made by members of management of
Summit Technologies for that entity (see "Voting and Management Information -
Date, Time and Place Information - Summit Technologies).
Proxy solicitation shall be made by the mails, by telephone, or by
personal solicitation. The cost of the solicitation will be borne by Summit
Technologies.
Signed but otherwise unmarked proxies shall be voted by management to
approve the Merger. Management will vote its shares in accordance with the
majority vote of non-management shareholders.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF.
The proposed Merger must be approved by an affirmative vote of the
holders of at least two-thirds of the outstanding shares of Common Stock of the
Company and of Summit Technologies.
There are presently outstanding 750,000 shares of Common Stock of the
Company, 500,000 of which are held of record by SuperCorp and 250,000 of which
are held by persons affiliated or associated with two insiders or promoters of
the Company. A vote approving the proposed Merger by the Company is assured.
38
<PAGE> 46
There are presently outstanding 5,810,840 shares of Common Stock of
Summit Technologies held of record by 126 shareholders. Each share is entitled
to one vote on the proposed Merger.
The record date for determining the right to vote on the proposed
Merger is the date on the cover of this Prospectus-Proxy Statement for the
Company and for Summit Technologies.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table shows information as of July 15, 1998 with respect
to each beneficial owner of more than 5% of each class of voting stock of the
Company and of Summit Technologies, and to each of the officers and directors of
the Company and of Summit Technologies individually and as a group, and as of
the same date with respect to the same persons as adjusted to give effect to the
Spinoff and to the proposed Merger between the Company and Summit Technologies
(6,560,840 shares):
39
<PAGE> 47
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY OWNED
-------------------------------
BEFORE COMPANY COMMON
SPINOFF-MERGER AFTER MERGER
-------------- ------------
NO. OF % OF NO. OF % OF
THE COMPANY SHARES CLASS SHARES CLASS
- ----------- ------ ----- ------ -----
<S> <C> <C> <C> <C>
SuperCorp Inc.
100 North Broadway, Suite 3300
Oklahoma City, OK 73102 500,000 67 0 0(1)
Albert L. Welsh
3832 Northwest 69th
Oklahoma City, OK 73116 500,000(2) 67 26,786 0.4
John Adams
1205 Tedford
Oklahoma City, OK 73116 500,000(2) 67 26,786(3) 0.4
Thomas J. Kenan
212 Northwest 18th Street
Oklahoma City, OK 73103 500,000(2) 67 55,119(4) 0.8
T.E. King
49 Strawberry Lane, Suite 200
Palos Verdes Peninsula, CA 90274 500,000(2) 67 26,786 0.4
Ronald D. Wallace
One Buckhead Plaza, 19th Floor
3060 Peachtree Street, NW
Atlanta, GA 30305 500,000(2) 67 26,786(5) 0.4
George W. Cole
3535 Northwest 58th, Suite 770
Oklahoma City, OK 73112 125,000(6) 17 176,300(7) 2.7
David Dischiavo
7312 Authon Drive
Dallas, TX 75248 125,000 17 125,000 1.9
Officers and Directors as a Group (1 person
before Merger, 0 persons after Merger) 500,000 67 0 0
</TABLE>
- -------------------------
(1) After allocating one share of Common Stock of the Company for each
fourteen shares of common stock of SuperCorp, SuperCorp will have 232
shares available for rounding fractional shares.
(2) These shares are attributed to this person through his position as a
director of SuperCorp, which owns 500,000 shares of Common Stock of the
Company, and accordingly represents voting and investment power shared
with the other directors of SuperCorp.
(3) These shares are attributed to Mr. Adams by reason of his being a
controlling person of Meridyne, Inc., which owns 375,000 shares of
Common Stock of SuperCorp and will receive 26,786 Spinoff Shares.
40
<PAGE> 48
(4) These shares would be owned by the Marilyn C. Kenan Trust, which trust
is under the control of Marilyn C. Kenan, its sole trustee and sole
beneficiary for her life. Mrs. Kenan is the spouse of Thomas J. Kenan,
an officer and director of SuperCorp. Mr. Kenan disclaims any
beneficial interest in shares of capital stock of the Company owned by
this trust, which is a testamentary trust established in the 1980s by
the estates of her deceased parents. The Marilyn C. Kenan Trust owns
375,000 shares of common stock of SuperCorp and 28,333 shares of common
stock of Summit Technologies and would receive 26,786 shares of Common
Stock of the Company in the Spinoff and 28,333 shares of Common Stock
of the Company in the Merger. Mr. Kenan provides legal services to the
Company and to SuperCorp.
(5) These shares are attributed to Mr. Wallace through his controlling
interest in Sackville Advisors, Ltd., which owns 375,000 shares of
Common Stock of SuperCorp and will receive 26,786 Spinoff Shares.
(6) These shares are owned of record by Marjorie Cole, Mr. Cole's spouse.
Mr. Cole disclaims any beneficial ownership in shares of capital stock
of the Company owned by his spouse. These 125,000 shares were received
for Mr. Cole's services as a "promoter" of the Company. See
"Transactions with Insiders."
(7) 27,550 of these shares would be received in the Spinoff, 23,750 shares
would be received in the Merger, and 125,000 shares are owned now. See
footnote (6). The 27,550 Spinoff Shares are attributed to Mr. Cole
through the holdings of 385,700 shares of Common Stock of SuperCorp
held by his spouse, Marjorie J. Cole - 375,000 shares, the Cole Family
Limited Partnership - 1,500 shares, Mr. Cole - 1,600 shares, Marjorie
J. Cole and George W. Cole - 1,600 shares, George W. Cole and a son,
George B. Cole - 1,500 shares, George W. Cole and a daughter, Margaret
A. Cole - 1,500 shares, Marjorie J. Cole and a son, George B. Cole -
1,500 shares, and Marjorie J. Cole and a daughter, Margaret A. Cole -
1,500 shares. The 23,750 Merger shares are attributed to Mr. Cole
through the holdings of 23,750 shares of Common Stock of Summit
Technologies held by his spouse, Marjorie J. Cole.
41
<PAGE> 49
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY OWNED
-------------------------------
BEFORE COMPANY COMMON
SPINOFF-MERGER AFTER MERGER
--------------- ------------
NO. OF % OF NO. OF % OF
SUMMIT TECHNOLOGIES SHARES CLASS SHARES CLASS
- ------------------- ------ ----- ------ -----
<S> <C> <C> <C> <C>
B. Keith Parker 2,360,805(1) 40.6 2,360,805(1) 36.0
414 East Loop 281, Suite 7
Longview, TX 75605
Don Hendon 111,240 1.9 111,240 1.7
414 East Loop 281, Suite 7
Longview, TX 75605
Paula Parker 510,000(2) 8.8 510,000(2) 7.8
414 East Loop 281, Suite 7
Longview, TX 75605
Dean Haws 247,100 4.3 247,100 3.8
P. O. Box 1071
Gilmer, TX 75644
Ty Bishop 211,400 3.6 211,400 3.2
Suite 194
660 Preston Forest Center
Dallas, TX 75230
James J. Roach 0 0 0 0
1255 Middlebury Road
Middlebury, CT 06762
Moonlighting Distribution 350,000 6.0 350,000 5.3
Corporation(3)
414 East Loop 281, Suite 7
Longview, TX 75605
Officers and Directors 2,930,545 50.4 2,930,545 44.7
as a group (5 persons)
</TABLE>
- -------------------------
(1) Mr. Parker directly owns 1,850,805 shares of common stock of Summit
Technologies. He is attributed the beneficial ownership of 80,000
shares owned by a minor son, Casey Joe Parker, and 80,000 shares owned
by a minor daughter, Leslie Nicole Parker, who share his residence. He
beneficially owns an additional 350,000 shares through his controlling
stock ownership and position as a director of Moonlighting Distribution
Corporation, which directly owns such 350,000 shares. These same
510,000 shares are attributed to Paula Parker. See footnote (2).
(2) Mrs. Parker, who is the spouse of B. Keith Parker, is attributed
350,000 shares through her controlling stock ownership and position as
a director of Moonlighting Distribution Corporation, the record owner
of the shares. She is attributed the beneficial ownership of 80,000
shares owned by a minor son, Casey Joe Parker, and 80,000
42
<PAGE> 50
shares owned by a minor daughter, Leslie Nicole Parker, who share her
residence. These same 510,000 shares are attributed to Mr. Parker.
(3) Some 52.5 percent of the stock of Moonlighting Distribution Corporation
is owned by B. Keith Parker and Paula Parker, husband and wife, who
also are directors of such company. These 350,000 shares are also
attributed to Mr. and Mrs. Parker by reason of their controlling stock
ownership of such company and their positions as directors of it.
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES.
Set forth below are the names, and terms of office of each of the directors,
executive officers and significant employees of both the Company and Summit
Technologies and a description of the business experience of each.
SUMMIT TECHNOLOGIES:
<TABLE>
<CAPTION>
OFFICE HELD TERM OF
PERSON OFFICE SINCE OFFICE
------ ------ ----- -------
<S> <C> <C> <C>
B. Keith Parker, 49 Chief Executive Officer and 1997 4-99
Director
Don Hendon, 55 President, Chief Financial Officer 1997 4-99
and Director
Paula Parker, 44 Secretary, Treasurer and Director 1997 4-99
Dean Haws, 28 Director 1997 4-99
Ty Bishop, 27 Director 1997 4-99
James J. Roach, 51 Director 1998 4-99
</TABLE>
THE COMPANY.
<TABLE>
<CAPTION>
OFFICE HELD TERM OF
PERSON OFFICE SINCE OFFICE
------ ------ ----- -------
<S> <C> <C> <C>
Albert L. Welsh, 66 President, Secretary and Director 1998 2-99
</TABLE>
DIRECTORS OF SUMMIT TECHNOLOGIES.
B. KEITH PARKER. Mr. Parker graduated from Texas A & M University and
pursued graduate studies in tax law, estate planning and philosophy at Southern
Methodist University and Southwest Texas State University. He began a career in
financial and tax planning in 1973, is a licensed financial planner and has
earned numerous industry awards for production. In 1995 he and Paula Parker, his
spouse, organized Moonlighting Distribution Corporation and began the
distribution of more than 30 products, many of which products they developed
themselves. In July 1997 they organized Summit Technologies, Inc.
43
<PAGE> 51
DON HENDON. Mr. Hendon received a B.B.A. degree in 1965 from Sam
Houston State University and began a career in accounting. From July 1966 until
September 1973 he was a field agent for the Internal Revenue Service. From 1973
until 1978 he was a partner in the Longview, Texas accounting firm of Langston,
Delouche, Hayes & Hendon. From 1978 until the present he has been a partner in
the Longview accounting firm of Hendon and Russell.
PAULA PARKER. Mrs. Parker received a bachelor of arts degree in 1975
and a master's degree in education, marketing and finance in 1977 from Stephen
F. Austin University and a master's of finance degree in 1980 from the
University of Colorado. While a runway model for seventeen years, she worked
also on numerous contract jobs, primarily in banking in the promotion of
automatic teller machines, and as an instructor for the American Banking
Association. She developed a franchise program for a restaurant and increased
the restaurant business from three units to 46 units in five states in two
years. She served as the liaison between then Arkansas Governor William J.
Clinton and the catfish industry in Arkansas. In 1995 she and Keith Parker, her
spouse, organized Moonlighting Distribution Corporation and began the
distribution of more than 30 products, many of which products they developed
themselves. In July 1997 they organized Summit Technologies, Inc.
DEAN HAWS. Mr. Haws has been the owner and operator of a satellite dish
sales and installation company, Gilmer Satellites of Gilmer, Texas, for the last
nine years. He has also been active in the oil field service business and the
ostrich business.
TY BISHOP. Mr. Bishop graduated from Texas Tech University in 1993 and
majored in marketing and public relations. After graduation he organized Ty
Bishop Management, which managed an alternative musical band. In 1995 he became
a partner in Bishop Cellular Plus, an authorized agent for Southwestern Bell
Mobile Systems. In 1996 he organized and owned Global Cartridge Sales, a
reseller for new jumbo toner cartridges for laser printers and for
remanufactured toner cartridges. In 1997 he became a partner in WorldWide Link,
an international trade company that represents inventors, manufacturers and
exclusive distributors of products and services that save lives and help the
world's environment.
JAMES J. ROACH. Mr. Roach is the regional director of Summit
Technologies' Northeast Marketing Region. He is currently the President of
Electrical Generation Technologies, which specializes in the development and
installation of network communications. He is a retired Connecticut State police
sergeant and owns a private detective and security company. His clients include
many insurance companies in the state of Connecticut.
THE COMPANY.
ALBERT L. WELSH. Mr. Welsh received a bachelor of arts degree in 1953
from the University of Oklahoma and a master of business administration degree
in 1958 from Stanford University. From 1958 until 1963 he was a financial
analyst for Ford Motor Company in Dearborn, Michigan. From 1963 until 1970 he
was a partner and principal of Parker Bishop & Welsh, an NASD-member
broker-dealer and underwriter. From 1970 to 1974 he was a private investor. From
1974 through 1985 he was a real estate developer.
44
<PAGE> 52
From 1986 to 1989 he was a registered investment adviser. From 1989 to 1991 he
was an investor in SuperCorp Inc. From 1991 until the present he has been the
Oklahoma City, Oklahoma branch manager of Birchtree Financial Services, Inc., a
Kansas City, Missouri-based broker-dealer firm with approximately 75 offices. In
1997 he also began to serve as president of SuperCorp Inc.
REMUNERATION OF DIRECTORS AND OFFICERS.
THE COMPANY.
Mr. Welsh, the sole officer and director of the Company, has received
and is receiving no compensation for his services for the Company. No
compensation is proposed to be paid to any officer or director of the Company
prior to the proposed Merger with Summit Technologies.
SUMMIT TECHNOLOGIES.
The directors of Summit Technologies receive no compensation for their
services as directors. The officers of Summit Technologies received from it an
aggregate of $9,000 of compensation in the last fiscal year for their services
in all capacities. Should the Merger be effected, they shall become the officers
of the post-merger Company.
Mr. Parker, the chief executive officer of Summit Technologies,
receives a salary of $5,000 a month. Mr. Hendon, the president, receives a
salary of $3,000 a month.
EMPLOYMENT CONTRACTS.
Summit Technologies has no employment contracts with any of its
officers or other employees.
STOCK OPTIONS.
The Company has adopted a stock option plan ("the Plan") which shall
survive the Merger, the major provisions of which Plan are as follows:
The directors of the Company have adopted a "1998 Stock Option Plan"
pursuant to which options granted under the plan may be incentive stock options
as defined under Section 422 of the Internal Revenue Code or non-qualified stock
options, as determined by the Option Committee of the board of directors at the
time of grant of an option and subject to the applicable provisions of Section
422 of the Internal Revenue Code and regulations promulgated thereunder. The
Plan enables the Option Committee of the board of directors to grant up to
500,000 stock options to employees and consultants from time to time. As of the
date of this Offering Circular, the Option Committee has granted no options.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
COMPANY'S TRANSACTIONS WITH INSIDERS AND PROMOTERS.
The following persons may be deemed to be a "promoter" or an "insider"
of the Company: Dave Dischiavo and George W. Cole. Each of such persons
45
<PAGE> 53
or his spouse has purchased, at $0.001 a share, 125,000 shares of Common Stock
of the Company. George W. Cole's spouse and family shall receive 27,550 of the
Spinoff Shares, such Spinoff Shares to be received pro rata with all other
shareholders of SuperCorp. See "Transactions with Insiders" and "Management
Information - Security Ownership of Certain Beneficial Owners and Management."
Each of Mr. Dischiavo and Mr. Cole received $18,500 from Summit Technologies by
May 1, 1998, for finder's fees and consulting services rendered in connection
with the Spinoff and Merger. Mr. Cole exchanged $14,250 of such $18,500 fee for
23,750 shares of Common Stock of Summit Technologies at $0.60 a share and
transferred the shares to his spouse, Marjorie Cole. See "Terms of the
Transaction - Material Contacts Among the Companies."
SUMMIT TECHNOLOGIES' TRANSACTIONS WITH MANAGEMENT.
Summit Technologies paid $20,000 to Moonlighting Distribution Corporation
for the exclusive license to distribute products manufactured by Moonlighting
Distribution Corporation - Stressex(TM), Poder 24(TM) and Trim-Away(TM). B.
Keith Parker and his spouse, Paula Parker, who are officers and directors of
Summit Technologies, own 52.5 percent of the capital stock of Moonlighting.
Summit Technologies will pay prices for these products earlier established in
arms' length transactions with non-affiliated third parties.
Summit Technologies' distribution rights to BioGenesis's fire suppression
products were acquired not from BioGenesis but, rather, from Moonlighting
Distribution Corporation, which had acquired these rights before Summit
Technologies was formed. In exchange for the transfer of these rights to Summit
Technologies, it issued 350,000 shares of its common stock to Moonlighting
Distribution Corporation, paid $10,000 to Moonlighting, and will pay to
Moonlighting a royalty of $0.50 for each 16-ounce can of FirePower 911(TM) and
$0.50 for each gallon of FlameOut(TM).
On November 2, 1998 BioGenesis assigned to Summit Technologies all
patents and intellectual property rights associated with the fire suppressant
products. See "Information About Summit Technologies - Description of Summit
Technologies' Business - Business Development" and " - Patents, Trademarks and
Licenses." The obligation to pay licensing fees to BioGenesis merged with the
acquisition of the patent rights and accordingly, was extinguished. The
obligation to pay the above-described annual royalties to Moonlighting, however,
did not so merge and will continue in effect during the term of the exclusive
license obtained from Moonlighting.
PARENTS OF SUMMIT TECHNOLOGIES.
Summit Technologies and Moonlighting Distribution Corporation
("Moonlighting") are affiliated through the common control of them by B. Keith
Parker and Paula Parker, husband and wife, who are directors of each
corporation, own 52.5% of the capital stock of Moonlighting (which itself owns
seven percent of the capital stock of Summit Technologies) and own of record
37.5 percent of the capital stock of Summit Technologies.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Thomas J. Kenan, Esquire, counsel to the Company and a director of
SuperCorp, is named in this Prospectus as having given an opinion on legal
matters concerning the registration or offering of the securities described
herein. Mr. Kenan's spouse, Marilyn C. Kenan, is the trustee and sole
beneficiary of the Marilyn C. Kenan Trust, a testamentary trust which is the
beneficial owner (i) of 28,333 shares of Common Stock of Summit Technologies and
(ii) of 375,000 of the issued and outstanding shares of Common Stock of
SuperCorp and, by reason of these ownerships, shall become the beneficial owner
of 26,786 Shares of the Company by way of the Spinoff and 28,333 shares of
Common Stock of the Company by way of the Merger,
46
<PAGE> 54
should it be approved. Mr. Kenan disclaims any beneficial ownership in the
securities beneficially owned by his spouse's trust.
INDEMNIFICATION
Under Texas corporation law, a corporation is authorized to indemnify
officers, directors, employees and agents who are made or threatened to be made
parties to any civil, criminal, administrative or investigative suit or
proceeding by reason of the fact that they are or were a director, officer,
employee or agent of the corporation or are or were acting in the same capacity
for another entity at the request of the corporation. Such indemnification
includes expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such persons if they acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the corporation or, with respect to any criminal action or
proceeding, if they had no reasonable cause to believe their conduct was
unlawful. In the case of any action or suit by or in the right of the
corporation against such persons, the corporation is authorized to provide
similar indemnification, provided that, should any such persons be adjudged to
be liable for negligence or misconduct in the performance of duties to the
corporation, the court conducting the proceeding must determine that such
persons are nevertheless fairly and reasonably entitled to indemnification. To
the extent any such persons are successful on the merits in defense of any such
action, suit or proceeding, Texas law provides that they shall be indemnified
against reasonable expenses, including attorney fees. A corporation is
authorized to advance anticipated expenses for such suits or proceedings upon an
undertaking by the person to whom such advance is made to repay such advances if
it is ultimately determined that such person is not entitled to be indemnified
by the corporation. Indemnification and payment of expenses provided by Texas
law are not deemed exclusive of any other rights by which an officer, director,
employee or agent may seek indemnification or payment of expenses or may be
entitled to under any by-law, agreement, or vote of shareholders or
disinterested directors. In such regard, an Texas corporation is empowered to,
and may, purchase and maintain liability insurance on behalf of any person who
is or was a director, officer, employee or agent of the corporation. As a result
of such corporation law, Summit Technologies or, should the proposed merger
become effective, the Company may, at some future time, be legally obligated to
pay judgments (including amounts paid in settlement) and expenses in regard to
civil or criminal suits or proceedings brought against one or more of its
officers, directors, employees or agents, as such, with respect to matters
involving the proposed Merger or, should the Merger be effected, matters that
occurred prior to the Merger with respect to Summit Technologies.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable.
47
<PAGE> 55
FINANCIAL STATEMENTS INDEX
The financial statements of the Company and of Summit Technologies
appear as follows:
<TABLE>
<CAPTION>
SUMMIT ENVIRONMENTAL CORPORATION, INC.
<S> <C>
Independent Auditors' Report............................................................ F-1
Balance Sheet July 17, 1998............................................................. F-2
Notes to Balance Sheet July 17, 1998.................................................... F-3
SUMMIT TECHNOLOGIES, INC.
Independent Auditors' Report ........................................................... F-5
Statement of Financial Condition December 31, 1997 ..................................... F-6
Statement of Income December 31, 1997 .................................................. F-7
Statement of Changes in Stockholders' Equity for the
Period August 14, 1997 to December 31, 1997 ................................... F-8
Statement of Cash Flows for the Period August 14, 1997
to December 31, 1997 .......................................................... F-9
Notes to Financial Statements .......................................................... F-10
Independent Auditors' Report ........................................................... F-12
Statement of Financial Condition June 30, 1998 ......................................... F-13
Statement of Income June 30, 1998 ...................................................... F-14
Statement of Changes in Stockholders' Equity for the
for the Six Months Ended June 30, 1998 ........................................ F-15
Statement of Cash Flows for the Six Months
Ended June 30, 1998 ........................................................... F-16
Notes to Financial Statements .......................................................... F-17
</TABLE>
48
<PAGE> 56
INDEPENDENT AUDITORS' REPORT
To the Director and Stockholders
Summit Environmental Corporation, Inc.
We have audited the balance sheet of Summit Environmental Corporation,
Inc. (a Texas corporation), a majority-owned subsidiary of Supercorp, Inc. and a
development stage company, as of July 17, 1998. This balance sheet is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosure in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in
all material respects, the financial position of Summit Environmental
Corporation, Inc. as of July 17, 1998, in conformity with generally accepted
accounting principles.
/S/ HOGAN & SLOVACEK
Oklahoma City, Oklahoma
July 17, 1998
F-1
<PAGE> 57
SUMMIT ENVIRONMENTAL CORPORATION, INC.
(A Development Stage Company)
BALANCE SHEET
JULY 17, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash - on deposit in trust account $ 750
=====
STOCKHOLDER'S EQUITY
Preferred Stock - Authorized 10,000,000 shares,
$0.001 par value - none issued
Common Stock - 40,000,000 shares authorized,
$0.001 par value, 750,000 shares issued 750
-----
$ 750
</TABLE>
The accompanying notes are an integral part
of this balance sheet.
F-2
<PAGE> 58
SUMMIT ENVIRONMENTAL CORPORATION, INC.
(A Development Stage Company)
NOTES TO BALANCE SHEET
JULY 17, 1998
(1) ORGANIZATION
Summit Environmental Corporation, Inc. (the Company) was organized in
accordance with the Business Corporation Act of the State of Texas on February
24, 1998, for the purpose of merging (the "Merger") with Summit Technologies,
Inc. (Summit Technologies), a Texas corporation. The Company has no business
operations or significant capital and has no intention of engaging in any active
business until it merges with Summit Technologies. Should the Merger not occur,
the Company would seek other business opportunities, and if none were found,
could be dissolved within 18 months by a vote of the majority of its common
stockholders. The Company is a development-stage company organized for the
merger described below.
The sole officer and director of the Company is a shareholder,
president and director of SuperCorp Inc., the Company's parent.
Stock of the Company is owned by SuperCorp Inc. and will be
distributed to its shareholders upon the effectiveness of the registration
statements to be filed with the Securities and Exchange Commission and a
favorable vote of SuperCorp Inc.'s shareholders on the proposed merger. The
distributed stock will initially be held in escrow according to an Escrow
Agreement dated March 16, 1998, among SuperCorp Inc., the Company, and Bank One
Trust Company, NA, Oklahoma City, Oklahoma.
(2) MERGER AGREEMENT
The Company agreed on July 14, 1998, to merge with Summit
Technologies. Summit Technologies is an operating company in the business of
marketing products, under license to it, through television infomercials, radio
spots, and a national industrial distribution company. The Company will be the
surviving corporation (Survivor), but Summit Technologies will elect all
directors and officers of the Survivor. All currently outstanding stock of
Summit Technologies in the hands of its shareholders will be cancelled and
converted into 5,810,840 shares of common stock of the Company, all authorized
but unissued, to be owned by the shareholders of Summit Technologies, when the
Merger is effective. The Merger of Summit Technologies and the Company should
qualify as a nontaxable reorganization under the tax laws of the United States.
The Merger is contingent upon the effectiveness of the registration
statements, and upon the shareholders of the Company and Summit Technologies
approving the proposed Merger. Because the Company is only a corporate shell and
not an operating entity, the proposed Merger will be accounted for as if Summit
Technologies recapitalized. Additionally, the historical financial statements
for the Company prior to the Merger will be those of Summit Technologies. Upon
completion of the proposed Merger, the shareholders of Summit Technologies will
own 5,810,840 shares of Common
F-3
<PAGE> 59
Stock of the Company or 88.6% of its voting shares. The fiscal year of the
Company will be December 31.
(3) COMMON STOCK OPTIONS
The sole director and stockholders approved the 1998 Stock Option Plan
of the Company whereby, at the discretion of the directors or of a Stock Option
Committee appointed by the board of directors, invited employees of the Company
or directors of the Company or consultants to the Company will have the option
of subscribing to common shares of the Company based on a price determined by
the directors or Stock Option Committee. The number of shares subject to the
Plan are 500,000. No options have been granted in accordance with this Plan.
F-4
<PAGE> 60
[GARNER & LAWRENCE, LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
Mr. Keith Parker
Summit Technologies, Inc.
Longview, Texas
We have audited the accompanying statement of financial condition of Summit
Technologies, Inc. as of December 31, 1997, and the related statements of
income, retained earnings, and cash flows for the period August 14, 1997 to
December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Summit Technologies, Inc. as of
December 31, 1997, and the results of its operations and its cash flows for the
period August 14, 1997 to December 31, 1997, in conformity with generally
accepted accounting principles.
/s/ GARNER & LAWRENCE, LLP
---------------------------------------
Garner & Lawrence, LLP
January 5, 1998
F-5
<PAGE> 61
SUMMIT TECHNOLOGIES, INC.
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1997
ASSETS
<TABLE>
<S> <C> <C>
CURRENT ASSETS
Cash in banks $ 5,001
Accounts receivable 72,811
Inventory 14,576
-----------
Total current assets $ 92,388
PROPERTY AND EQUIPMENT -
OTHER ASSETS
Licenses (Note 2) 10,000
Less: Accumulated amortization (500)
-----------
Total other assets 9,500
=============
TOTAL ASSETS $ 101,888
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 7,874
Accrued income tax (Note 5) 7,252
-----------
Total current liabilities $ 15,126
LONG TERM LIABILITIES -
-------------
Total liabilities 15,126
STOCKHOLDERS' EQUITY
Capital stock (no par; 100,000 common shares authorized,
issued and outstanding; stated value $.01 per share) 1,000
Additional paid in capital 45,000
Retained earnings 40,762
-----------
Total stockholders' equity 86,762
=============
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 101,888
=============
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE> 62
SUMMIT TECHNOLOGIES, INC.
STATEMENT OF INCOME
FOR THE PERIOD AUGUST 14, 1997 TO DECEMBER 31, 1997
<TABLE>
<S> <C> <C>
SALES $ 74,349
COST OF SALES 9,465
------------
Gross profit $ 64,884
OPERATING EXPENSES
Advertising 600
Amortization 500
Automobile expense 600
Office expenses 1,730
Officer compensation 9,000
Marketing 900
Miscellaneous 995
Postage and delivery 1,361
Printing and reproduction 884
Professional fees 300
------------
Total operating expenses 16,870
------------
Net income from operations 48,014
Income tax expense (Note 5) 7,252
------------
NET INCOME $ 40,762
============
</TABLE>
See accompanying notes to financial statements.
F-7
<PAGE> 63
SUMMIT TECHNOLOGIES, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD AUGUST 14, 1997 TO DECEMBER 31, 1997
<TABLE>
<CAPTION>
CAPITAL RETAINED
STOCK EARNINGS TOTAL
------------ ------------ -----------
<S> <C> <C> <C>
BALANCES - AUGUST 14, 1997 $ - $ - $ -
Stock issued (100,000 shares) 46,000 - 46,000
Net income for the period - 40,762 40,762
============ ============ ============
BALANCES - DECEMBER 31, 1997 $ 46,000 $ 40,762 $ 86,762
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
F-8
<PAGE> 64
SUMMIT TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD AUGUST 14, 1997 TO DECEMBER 31, 1997
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 40,812
Adjustments to reconcile net income to cash used in
operating activities:
Amortization 500
Increase in accounts receivable (72,811)
Increase in inventory (14,576)
Increase in accounts payable 7,874
Increase in accrued income taxes 7,202
------------
Net cash used in operating activities (30,999)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of license (10,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of stock issue 46,000
------------
Net increase in cash and cash equivalents 5,001
Cash and cash equivalents - August 14, 1997 -
============
CASH AND CASH EQUIVALENTS - DECEMBER 31, 1997 $ 5,001
============
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest -
Income tax -
</TABLE>
See accompanying notes to financial statements.
F-9
<PAGE> 65
SUMMIT TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity - Summit Technologies, Inc. ("the Company") is a Texas
corporation formed on August 14, 1997, which is engaged in the business of
marketing technologically advanced products, including fire prevention and
extinguishment materials, various herbal health products, and others. The
products are proprietary or are under licensing contracts. Marketing efforts
include "infomercials" and other television promotion, videotapes, and personal
demonstrations. Products are marketed domestically and internationally.
Inventory - Inventory is reported at the lower of cost or market using the
first-in, first-out method.
Intangible Assets - Licenses are recorded at cost. Amortization is computed on
the straight-line method over sixty months.
Income Taxes - For federal income tax purposes, the Company uses the accrual
method of accounting. The tax year end is December 31. The only difference
between tax and financial reporting involves the length of the amortization
period for intangible assets. If the difference becomes material, deferred taxes
will be reported.
Cash and Cash Equivalents - For purposes of the statement of cash flows, cash
and cash equivalents include cash on hand and in banks and any short-term debt
securities purchased with a maturity of three months or less.
Advertising - Advertising costs are expensed as incurred.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
NOTE 2 - LICENSES
A license for limited exclusive marketing rights to various fire prevention and
extinguishment products has been acquired for a fee of $10,000. An annual
production quota, which is still being negotiated as of December 31, 1997, must
also be complied with to maintain the license.
NOTE 3 - RELATED PARTY TRANSACTIONS
The following transactions occurred between the Company and related parties
during the period :
- Sales totaling $65,610 were made to Flameout International, with special
90-day payment terms not available to other customers. The Company and Flameout
International have common members of management.
- Sales totaling $2,336 were made to various Company shareholders or their
related businesses.
- Purchases of inventory items totaling $13,645 were made from the related
parties mentioned above.
- The Company and another business with common shareholders share office space
and the related expenses.
At year end, receivables from related parties totaled $67,947, and payables to
related parties totaled $1,742.
NOTE 4 - CONCENTRATIONS
Approximately 88% of sales during the period were made to Flameout
International. As of the year end, approximately 90% of accounts receivable were
due from Flameout International.
F-10
<PAGE> 66
SUMMIT TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
NOTE 5 - FEDERAL INCOME TAX
Significant components involved in the calculation of income tax for the period
August 14, 1997 through December 31, 1997 are shown below:
<TABLE>
<S> <C>
Net financial income before income tax $48,014
Adjustments to arrive at regular taxable income:
Amortization adjustment 333
-------
Regular taxable income $48,347
=======
Regular tax at statutory rates $ 7,252
Alternative minimum tax -
-------
Net current income tax expense 7,252
Less tax deposits -
-------
Net tax liability $ 7,252
=======
</TABLE>
F-11
<PAGE> 67
[GARNER & LAWRENCE, LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
Mr. Keith Parker
Summit Technologies, Inc.
Longview, Texas
We have audited the accompanying statement of financial condition of Summit
Technologies, Inc. as of June 30, 1998, and the related statements of income,
retained earnings, and cash flows for the six month period then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Summit Technologies, Inc. as of
June 30, 1998, and the results of its operations and its cash flows for the six
month period then ended in conformity with generally accepted accounting
principles.
/s/ GARNER & LAWRENCE, LLP
----------------------------------------------
September 25, 1998
(Except for Note 12 as to which the date is November 3, 1998)
F-12
<PAGE> 68
SUMMIT TECHNOLOGIES, INC.
STATEMENT OF FINANCIAL CONDITION
JUNE 30, 1998
ASSETS
<TABLE>
<S> <C> <C>
CURRENT ASSETS
Cash in banks $ 289,412
Accounts receivable 119,116
Due from stockholders (Note 3) 804,350
License fee receivable (Note 4) 80,000
Inventory 46,178
Accrued income tax refund (Note 10) 6,555
------------
Total current assets $ 1,345,611
PROPERTY AND EQUIPMENT
Office furniture and equipment 14,446
Leasehold improvements 2,856
Accumulated depreciation (1,901)
------------
Net property and equipment 15,401
OTHER ASSETS
Due from officers 1,500
Merger costs (Note 2) 94,719
Licenses (Note 4) 165,000
Accumulated amortization (7,522)
------------
Total other assets 253,697
------------
TOTAL ASSETS $ 1,614,709
============
LIABILITIES, COMMON STOCK SUBJECT TO A CONTINGENCY,
AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 35,271
Accrued liabilities 58,871
Note payable (Note 11) 4,233
------------
Total current liabilities $ 98,375
LONG TERM LIABILITIES --
------------
Total liabilities 98,375
COMMON STOCK SUBJECT TO A CONTINGENCY (Note 9)
810,840 shares issued and outstanding 811
Additional paid in capital 1,071,617
------------
Total common stock subject to a contingency 1,072,428
STOCKHOLDERS' EQUITY
Capital stock (no par; 10,000,000 common shares authorized,
5,000,000 shares issued and outstanding) 5,000
Additional paid in capital 441,000
Retained earnings (2,094)
------------
Total stockholders' equity 443,906
------------
TOTAL LIABILITIES, COMMON STOCK SUBJECT TO A
CONTINGENCY, AND STOCKHOLDERS' EQUITY $ 1,614,709
============
</TABLE>
See accompanying notes to financial statements.
F-13
<PAGE> 69
SUMMIT TECHNOLOGIES, INC.
STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<S> <C> <C>
SALES $ 59,187
COST OF SALES 38,149
---------
Gross profit $ 21,038
OPERATING EXPENSES
Advertising 850
Amortization 7,022
Automobile expense 8,228
Consulting fees 1,950
Contract services 1,310
Depreciation 1,901
Insurance 5,992
Marketing 19,731
Miscellaneous 1,202
Office expenses 5,328
Officer compensation 38,197
Postage and delivery 5,413
Printing and reproduction 1,549
Professional fees 12,100
Rent 7,731
Repairs 1,337
Salaries - office 15,744
Taxes 3,876
Telephone and utilities 6,351
Travel and entertainment 24,637
---------
Total operating expenses 170,449
---------
Net loss from operations (149,411)
OTHER INCOME
Sale of license 100,000
---------
Net loss before income tax (49,411)
Income tax benefit (Note 10) 6,555
---------
NET LOSS $ (42,856)
=========
</TABLE>
See accompanying notes to financial statements.
F-14
<PAGE> 70
SUMMIT TECHNOLOGIES, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
CAPITAL ADDITIONAL RETAINED
STOCK PAID IN EARNINGS TOTAL
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
BALANCES - DECEMBER 31, 1997
(100,000 shares outstanding) $ 1,000 $ 45,000 $ 40,762 $ 86,762
Adjustment for 35-for-1 stock split - January 23, 1998
(3,500,000 shares outstanding) 2,500 (2,500) -- --
Sale of 1,500,000 shares - January 24, 1998 through
March 26, 1998 1,500 398,500 -- 400,000
Net loss for the period -- -- (42,856) (42,856)
--------- --------- --------- ---------
BALANCES - JUNE 30, 1998 $ 5,000 $ 441,000 $ (2,094) $ 443,906
========= ========= ========= =========
</TABLE>
COMMON STOCK SUBJECT TO A CONTINGENCY (NOTE 9)
<TABLE>
<CAPTION>
CAPITAL ADDITIONAL RETAINED
STOCK PAID IN EARNINGS TOTAL
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sale of 250,000 shares - April 1998 $ 250 $ 149,750 $ -- $ 150,000
Sale of 384,840 shares - June 1998 385 917,043 -- 917,428
Sale of 176,000 shares for services rendered 176 4,824 -- 5,000
---------- ---------- ---------- ----------
TOTALS $ 811 $1,071,617 $ -- $1,072,428
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-15
<PAGE> 71
SUMMIT TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (42,856)
Adjustments to reconcile net income to cash used in operating activities:
Amortization 7,022
Depreciation 1,901
Increase in accounts receivable (46,305)
Increase in license fee receivable (80,000)
Increase in inventory (31,602)
Increase in accrued income tax refund (6,555)
Increase in accounts payable 27,397
Increase in accrued expenses 6,946
Increase in commission payable 44,673
-----------
Net cash used in operating activities $ (119,379)
CASH FLOWS FROM INVESTING ACTIVITIES
Due from stockholders (804,350)
Acquisitions of property and equipment (17,302)
Advances to officers (1,500)
Merger costs (94,719)
Licenses acquired (155,000)
-----------
Net cash used in investing activities (1,072,871)
CASH FLOWS FROM FINANCING ACTIVITIES
Loan proceeds 6,554
Loan principal repayments (2,321)
Proceeds from sale of stock 1,472,428
-----------
Net cash provided by financing activities 1,476,661
------------
Net increase in cash and cash equivalents 284,411
Cash and cash equivalents - December 31, 1997 5,001
------------
CASH AND CASH EQUIVALENTS - JUNE 30, 1998 $ 289,412
============
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 351
Income tax 7,252
</TABLE>
See accompanying notes to financial statements.
F-16
<PAGE> 72
SUMMIT TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity - Summit Technologies, Inc. ("the Company") is a Texas
corporation formed on August 14, 1997, which is engaged in the business of
marketing technologically advanced products, including fire suppression
materials, various herbal health products, and others. The products are
proprietary or are under licensing contracts. Marketing efforts include
"infomercials" and other television promotion, videotapes, and personal
demonstrations. Products are marketed domestically and internationally.
Inventory - Inventory is reported at the lower of cost or market using the
first-in, first-out method.
Intangible Assets - Licenses are recorded at cost. Amortization is computed on
the straight-line method over sixty months.
Merger Costs - The Company capitalizes all costs incurred in connection with a
proposed merger transaction. Upon consummation of the merger, the costs will be
treated in accordance with the accounting policies of the new entity. If the
merger is not accomplished under the current proposal, the costs will be
expensed by the Company.
Income Taxes - For federal income tax purposes, the Company uses the accrual
method of accounting. The tax year end is December 31. Differences between tax
and financial reporting include the length of the amortization period for
intangible assets and depreciation methods and lives for property and equipment.
If the differences become material, deferred taxes will be reported.
Cash and Cash Equivalents - For purposes of the statement of cash flows, cash
and cash equivalents include cash on hand and in banks and any short-term debt
securities purchased with a maturity of three months or less.
Advertising and Promotion - Advertising and promotion costs are expensed as
incurred.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
NOTE 2 - MERGER COSTS
The Company is involved in a proposed merger transaction with Summit
Environmental Corporation, Inc. ("SECI"). SECI is currently a majority-owned
subsidiary of SuperCorp Inc., a publicly traded company, which would "spin off"
its shares of SECI prior to the vote by the Company's shareholders on the
proposed merger. The purpose of the proposed transaction is to create an active
public market for the common stock of the new corporation. As of June 30, 1998,
the Company has incurred related costs of $94,719.
NOTE 3 - DUE FROM STOCKHOLDERS
The Company issued 384,840 shares of its stock during June 1998 for net proceeds
of $922,428. Of this amount, $804,350 was not collected and deposited until July
1998. This amount due from stockholders is presented in the Statement of
Financial Condition as a current asset.
F-17
<PAGE> 73
SUMMIT TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1998
NOTE 4 - LICENSES
A license for limited exclusive marketing rights to various fire suppression
products was acquired by the Company. As of June 30, 1998, the Company had paid
fees totaling $135,000 for the license. The license agreement requires
additional payments of $75,000 during 1998 and $100,000 during each of the three
years 1999 - 2001. However, the Company has signed a letter of intent with the
licensor to purchase the patent rights. If this purchase is consummated, the
license for marketing rights will be rendered obsolete and all payments
remaining under that agreement will be canceled.
The aforementioned license agreement authorizes the Company to sell marketing
rights to third parties for international distribution of the products. As of
June 30, 1998, one license covering the China/Hong Kong area had been sold for
$100,000, with $20,000 collected.
Licenses for limited exclusive marketing rights to various herbal health
products have been acquired for fees totaling $30,000. Under the agreements, the
Company must meet annual production quotas. The grantor of the licenses is the
manufacturer/supplier of the products.
NOTE 5 - LEASES
The Company has a lease agreement for the office space it occupies; the lease is
month-to-month, under which the Company pays $1,185 per month, with a 30-day
notice required for termination. The Company leases office equipment on a
month-to-month basis; the amount of the required monthly payment is determined
by actual usage; monthly payments during the six months ended June 30, 1998
averaged $171. The Company signed a lease agreement on May 20, 1998 for storage
space for a monthly payment of $1,100 for two years plus an optional two year
extension.
Minimum required rentals for the twelve months ended June 30, 1999 total
$13,200. Minimum required rentals for the twelve months ended June 30, 2000
total $12,100.
NOTE 6 - STOCK RESTRICTIONS
As of June 30, 1998, all shares of stock of the Company are "restricted stock,"
as such term is employed by the Securities and Exchange Commission ("the
Commission"). As such, these shares may not be transferred for value unless
registered with the Commission or an exemption from registration is available.
Each shareholder of these restricted securities, however, may transfer for value
pursuant to the SEC's Rule 144 after holding the stock for a one-year period.
F-18
<PAGE> 74
SUMMIT TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1998
NOTE 7 - RELATED PARTY TRANSACTIONS
The following transactions occurred between the Company and related parties
during the six months ended June 30, 1998:
- - The Company purchased the licenses for herbal health products mentioned in
Note 4 from an entity with common shareholders and management members with the
Company.
- - The Company and another business with common shareholders share office space
and the related expenses.
NOTE 8 - CONCENTRATIONS
As of June 30, 1998, approximately 55% of accounts receivable was due from
Flameout International resulting from sales made in 1997, and 39% was due from
Proformance Marketing resulting from 1998 sales.
NOTE 9 - CONTINGENCIES
As mentioned in Note 2, the Company is involved in a proposed merger transaction
with Summit Environmental Corporation, Inc. ("SECI"). SECI filed a registration
statement with the Securities and Exchange Commission ("the Commission") on
March 26, 1998 related to the proposed merger, naming the Company as the entity
proposed to be merged into SECI. The Company subsequently sold 810,840 shares of
its common stock in an offering intended to be exempt from registration pursuant
to the provisions of Section 4(2) of the Securities Act of 1933 and of
Regulation D, Rule 506 of the Commission. It is possible, but not certain, that
the filing of the registration statement by SECI and the manner in which the
Company conducted the sale of the 810,840 shares of common stock constituted
"general advertising or general solicitation" by the Company. General
advertising and general solicitation are activities that are prohibited when
conducted in connection with an offering intended to be exempt from registration
pursuant to the provisions of Regulation D, Rule 506 of the Commission. The
Company does not concede that there was no exemption from registration available
for this offering. Nevertheless, should the aforementioned circumstances have
constituted general advertising or general solicitation, the Company would be
denied the availability of Regulation D, Rule 506 as an exemption from the
registration requirements of the Securities Act of 1933 when it sold the 810,840
shares of common stock after March 26, 1998. Should no exemption from
registration have been available with respect to the sale of these shares, the
persons who bought them would be entitled, under the Securities Act of 1933, to
the return of their subscription amounts if actions to recover such monies
should be filed within one year after the sales in question. Accordingly, the
amounts received by the Company from the sale of these shares are set apart from
Stockholders' Equity to indicate this contingency.
As mentioned in Note 4, the Company has signed a letter of intent to purchase
the patent rights to the fire prevention and extinguishment products for which
it currently holds the limited marketing license. If the purchase is
consummated, the Company would be required to pay cash of $925,000 plus 750,000
shares of Company stock; the limited marketing license would become obsolete and
the Company's remaining obligations related to it would be canceled.
F-19
<PAGE> 75
SUMMIT TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1998
NOTE 10 - FEDERAL INCOME TAX
The Company files federal income tax returns on a calendar year basis. The
accrued income tax calculation is based on the six month period ended June 30,
1998. Significant components involved in this calculation are shown below:
<TABLE>
<S> <C>
Net financial income before income tax $(49,411)
Adjustments to arrive at regular taxable income:
Amortization adjustment 4,681
Meals and entertainment limitation 1,032
--------
(43,698)
Annualize x 2
--------
Annualized net operating loss (87,396)
========
Accrued income tax at statutory rates $ --
========
Accrued refund from carryback of $43,698 net operating loss to 1997 $ 6,555
========
</TABLE>
NOTE 11 - NOTE PAYABLE
As of June 30, 1998, the Company was obligated under one note payable, described
as follows:
<TABLE>
<CAPTION>
INTEREST MONTHLY CURRENT LONG TERM
CREDITOR COLLATERAL RATE PAYMENT PORTION PORTION TOTAL
-------- ---------- -------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
The Mortgage Center Computer equipment 12% $ 445 $ 4,233 $ -- $ 4,233
========= ========= ========= ========
</TABLE>
NOTE 12 - SUBSEQUENT EVENTS
On November 2, 1998 the Company acquired an assignment from BioGenesis
Enterprises, Inc. of the patents, trademarks and other intellectual property
rights (the "Intellectual Property") related to the fire suppressant products
that, until then, were only licensed to the Company. One effect of the
assignment was to merge the license into the patent and cancel the obligation
of the Company to make future license payments of $375,000 (see Note 4 above).
The assignment was made pursuant to an amendment to an April 27, 1998 letter of
intent between the Company and BioGenesis (see Note 9 - Contingencies, last
paragraph), which amendment acknowledged that the Company had earlier paid
$125,000 toward the purchase of the Intellectual Property and revised the
payment schedule of the balance of the purchase price to be as follows:
February 1, 1999 - $200,000; February 2, 1999 - 750,000 shares of common stock
of the Company; April 1, 1999 - $300,000; and August 1, 1999 - $300,000.
F-20
<PAGE> 76
APPENDIX A
AGREEMENT OF MERGER
This Agreement of Merger ("the Agreement") is made and entered into as
of July 14, 1998, by and among Summit Environmental Corporation, Inc., a Texas
corporation ("the Company"); Summit Technologies, Inc., a Texas corporation
("Summit Technologies"); and SuperCorp Inc., an Oklahoma corporation
("SuperCorp").
WHEREAS, the Directors of the Company and the Directors of Summit
Technologies have each agreed to submit to their respective shareholders, for
such shareholders' approval or rejection, the merger of Summit Technologies
into the Company ("the Merger") in accordance with the provisions of the Texas
General Corporation Act, other applicable law and the provisions of this
Agreement; and
WHEREAS, SuperCorp is the controlling shareholder of the Company;
NOW, THEREFORE, in consideration of the promises, undertakings and
mutual covenants set forth herein, the Company, Summit Technologies, and
SuperCorp agree as follows:
1. Merger; Effective Date. Pursuant to the terms and provisions
of this Agreement and of the Texas Business Corporation Act, and subject to the
prior approval by the shareholders of each of the Company and Summit
Technologies, Summit Technologies shall be merged with and into the Company, as
confirmed by the filing of articles of merger with the Secretary of State of
the State of Texas ("the Effective Date"). The Company shall be the surviving
corporation ("the Surviving Corporation"). The Company and Summit Technologies
shall be referred to hereinafter collectively as the "Constituent
Corporations." On the Effective Date, the separate existence and corporate
organization of Summit Technologies, except insofar as it may be continued by
statute, shall cease and the Company shall continue as the Surviving
Corporation, which shall succeed, without other transfer or further act or deed
whatsoever, to all the rights, property and assets of the Constituent
Corporations and shall be subject to and liable for all the debts and
liabilities of each, including, without limitation, (i) the obligation to make
payment for the fair value of any shares held by a shareholder of either of the
Constituent Corporations who has complied with the requirements of Article 5.12
of the Texas Business Corporation Act for the recovery of the fair value of his
shares, and (ii) the obligation to make payment for all fees and franchise
taxes as required by law; otherwise, the Company's identity, existence,
purposes, rights, immunities, properties, liabilities and obligations shall be
unaffected and unimpaired by the Merger except as expressly provided herein.
This Agreement supersedes all previous agreements among the parties hereto
relating to the Merger.
2. Articles of Incorporation and Bylaws. The Articles of
Incorporation and Bylaws of the Surviving Corporation shall be the Articles of
Incorporation and Bylaws of the Company as in effect on the Effective Date.
A-1
<PAGE> 77
3. Directors. The directors of Summit Technologies on the
Effective Date shall become the directors of the Surviving Corporation from and
after the Effective Date, who shall hold office subject to the provisions of
the Articles of Incorporation and Bylaws of the Surviving Corporation, until
their successors are duly elected and qualified.
4. Officers. The officers of Summit Technologies on the Effective
Date shall become the officers of the Surviving Corporation from and after the
Effective Date, subject to such powers with respect to the designation of
officers as the directors of the Surviving Corporation may have under its
Articles of Incorporation and Bylaws.
5. Manner of Conversion. The manner of converting the shares of
capital stock of the Constituent Corporations into shares of the Surviving
Corporation shall be as follows:
5.1. The shares of capital stock of Summit Technologies
which shall be issued and outstanding on the Effective Date shall, on the
Effective Date, be cancelled and exchanged for 5,810,840 shares of Common Stock
("the Merger Shares") of the Company.
5.2. There shall be 500,000 shares of Common Stock, $0.001
par value, of the Company issued and outstanding prior to the Effective Date
("the Spinoff Shares") and held of record by SuperCorp, which shares shall, on
the Effective Date, continue to be outstanding and which shall have been
distributed by the record holder thereof, SuperCorp, to its shareholders ("the
Spinoff").
5.3 There shall be 250,000 shares of Common Stock of the
Company issued and outstanding prior to the Effective Date and held by Dave
Dischiavo and George W. Cole or their designees or assignees ("the Consultants'
Shares"), which shares, on the Effective Date, shall continue to be issued and
outstanding.
5.4 There shall be no options or warrants to purchase
shares of Common Stock of the Company or Summit Technologies outstanding on the
Effective Date.
6. Representations and Warranties. SuperCorp and the Company
jointly represent and warrant to, and agree with, Summit Technologies that:
6.1 The Company has been duly organized and is validly
existing under the Texas Business Corporation Act. The Company has no
subsidiary and does not own an equity interest in any entity.
6.2 The authorized capital of the Company is 50,000,000
shares of capital stock, which is of two classes as follows:
<TABLE>
<CAPTION>
Number of Par value
Class Series Shares of shares
----- ------ --------- ---------
<S> <C> C> <C>
Common None 40,000,000 $0.001
Preferred To be designated 10,000,000 $0.001
by the directors
</TABLE>
A-2
<PAGE> 78
file
6.3 As of the Effective Date but immediately before
giving effect to the Merger, the Company has outstanding capital as follows:
750,000 shares of Common Stock, $0.001 par value. No other shares, options,
warrants or any rights to acquire the Company's capital stock will be issued
and outstanding as of the Effective Date but immediately before giving effect
to the Merger. The shares of Common Stock to be issued in connection with the
Merger, when issued, delivered and sold, will be duly and validly issued and
outstanding, fully paid and non-assessable, will not have been issued in
violation of or subject to any preemptive or similar rights and will be free
from any lien, charge, encumbrance or other security interest or third party
right or interest.
6.4 The Company has no liabilities or obligations,
whether absolute, contingent or otherwise.
6.5 As of the Effective Date, the financial statements of
the Company shall not vary in any particular from the Company's financial
statements that appear in the registration statement described in paragraph 7
below.
6.6 As of the Effective Date, the Merger and the
Agreement will have been duly authorized and approved by the Company's
directors and shareholders.
6.7 The Company is not an "investment company" or an
entity "controlled" by an "investment company" as such terms are defined in the
United States Investment Company Act of 1940, as amended.
7. Conditions of Summit Technologies' obligations. The
obligations of Summit Technologies to complete the Merger as provided herein
shall be subject to the accuracy of the representations and warranties of
SuperCorp and the Company herein contained as of the Effective Date, to the
performance by the Company and SuperCorp of their obligations hereunder and to
the following additional conditions:
7.1 The Merger Shares and the Spinoff Shares of Common
Stock of the Company to be distributed pursuant to the provisions of paragraph
5.1 and 5.2 above shall, prior to the distribution thereof, be registered
pursuant to the provisions of the Securities Act of 1933, as amended, by virtue
of the filing of the appropriate registration statements with the U.S.
Securities and Exchange Commission.
7.2 SuperCorp shall have distributed the Spinoff Shares
to an escrow agent, as described in the registration statements filed with the
SEC.
7.3 The directors and the shareholders of Summit Technologies
are free to approve or disapprove the Merger in their full discretion.
8. Tax Treatment. The merger of the Company and Summit
Technologies shall be accomplished as a tax-free reorganization.
9. Certificate of Merger. Upon the approval of the merger by the
shareholders of the Company and of Summit Technologies, the officers of the
Company shall file with the Secretary of State, State of Texas either a
A-3
<PAGE> 79
certified copy of this Agreement, Articles of Merger, or other required filing
containing terms and provisions consistent with this Agreement of Merger;
provided, however, that at any time prior to the filing of this Agreement (or a
certificate in lieu thereof) with the Secretary of State, State of Texas, the
Agreement may be terminated by the board of directors of Summit Technologies
notwithstanding approval of this Agreement by the shareholders of Summit
Technologies or of the Company.
Summit Environmental Corporation,
a Texas corporation
By: /s/ Albert L. Welsh
---------------------------------
Albert L. Welsh, President
Summit Technologies, Inc.,
a Texas corporation
By: /s/ B. Keith Parker
---------------------------------
B. Keith Parker, Chief Executive
Officer
SuperCorp Inc.
By: /s/ Albert L. Welsh
---------------------------------
Albert L. Welsh, President
A-4
<PAGE> 80
PART II
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following are all expenses of this issuance and distribution.
There are no underwriting discounts or commissions. None of the expenses are
being paid by the distributing security holder, SuperCorp Inc. All expenses
are being paid by Summit Technologies, Inc., the company with which the
Registrant proposes to merge.
<TABLE>
<CAPTION>
Item Amount
---- ------
<S> <C>
Registration fees $ 100
Filing expenses (EDGAR) 4,000
Printing and engraving 1,000
Postage 500
Legal 20,000
Accounting and auditors 2,000
Finder's fee 18,500
--------
Total Expenses $ 46,100
</TABLE>
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
There is set forth in the Prospectus under "Terms of the Transaction
- -Indemnification for Securities Act Liabilities" a description of the laws of
the State of Texas with respect to the indemnification of officers, directors,
and agents of corporations incorporated in the State of Texas.
Both the Company and Summit Technologies, Inc. have articles of
incorporation and bylaws provisions that insure or indemnify, to the full
extent allowed by the laws of the State of Texas, directors, officers,
employees, agents or persons serving in similar capacities in other enterprises
at the request either of the Company or Summit Technologies, Inc., as the case
may be.
To the extent of the indemnification rights provided by the State of
Texas statutes and provided by the Company's and Summit Technologies, Inc.'s
articles of incorporation and bylaws, and to the extent of Summit Technologies,
Inc.'s and the Company's abilities to meet such indemnification obligations,
the officers, directors and agents of Summit Technologies, Inc. or the Company
would be beneficially affected.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Separately bound but filed as part of this Registration Statement are
the following exhibits:
II-1
<PAGE> 81
<TABLE>
<CAPTION>
Exhibit Item
------- ----
<S> <C> <C>
2 - Agreement of Merger of March 16, 1998, between Summit Environmental Corporation, Inc.
and Summit Technologies, Inc. (Superseded by Exhibit 2.1).
2.1 - Agreement of Merger of July 14, 1998, between Summit Environmental Corporation, Inc.
and Summit Technologies, Inc.**
3.1 - Articles of Incorporation of Summit Environmental Corporation, Inc.*
3.1.1 - Amendment to Articles of Incorporation of Summit Environmental Corporation, Inc.**
3.2 - Bylaws of Summit Environmental Corporation, Inc.*
3.3 - Amended Articles of Incorporation of Summit Technologies, Inc.*
3.4 - Bylaws of Summit Technologies, Inc.*
5 - Opinion of Thomas J. Kenan, Esq., as to the legality of the securities covered
by the Registration Statement.*
8 - Opinion of Thomas J. Kenan, Esq., as to tax matters and tax consequences.
(Superseded by Exhibit 8.1.)
8.1 - Opinion of Thomas J. Kenan, Esq., as to tax matters and tax consequences.**
10 - Escrow Agreement among Summit Environmental Corporation, Inc.; SuperCorp Inc.;
and Bank One Trust Company, NA, Oklahoma City, Oklahoma.*
10.1 - 1998 Stock Option Plan adopted by Summit Environmental Corporation, Inc.*
10.2 - Representative agreement among certain shareholders of SuperCorp relating to
compliance with SEC Rule 419.*
10.3 - Limited Exclusive Marketing Bilateral Agreement between Moonlighting Distribution
Corporation-USA and Summit Technologies, Inc. (Poder Sexual, Ultimate Stressex and/or
Poder 24)*
10.4 - Limited Exclusive Marketing Bilateral Agreement among B. Keith Parker, individually
and as Chairman of the Board and CEO of Moonlighting Distribution Corporation-USA,
d/b/a Moonlighting International, and Summit Technologies, Inc. (FireKare, FirePower
911, Super Cold Fire, and Flame Out)*
</TABLE>
II-2
<PAGE> 82
<TABLE>
<S> <C> <C>
10.5 - Television Commercial Agreement between American Independent Network ("AIN") and
Summit Technologies, Inc.**
10.6 - Exclusive Marketing Bilateral Agreement between Moonlighting Distribution Corporation-USA and
Summit Technologies, Inc. (Trim-Away).**
10.7 - November 2, 1998 Amendment to April 27, 1998 Letter of Intent between BioGenesis Enterprises,
Inc. and Summit Technologies, Inc., and April 27, 1998 Letter of Intent.
23 - Consent of Thomas J. Kenan, Esq. to the reference to him as an attorney who has passed
upon certain information contained in the Registration Statement. (Superseded by
Exhibit 23.8.)
23.1 - Consent of Garner & Lawrence, LLP, independent auditors of Summit Technologies, Inc.
(Superseded by Exhibit 23.9.)
23.2 - Consent of Hogan & Slovacek, independent auditors of Summit Environmental Corporation,
Inc. (Superseded by Exhibit 23.10.)
23.3 - Consent of B. Keith Parker to serve as a director of Summit Environmental Corporation,
Inc. should the proposed Merger with Summit Technologies, Inc. become effective.*
23.4 - Consent of Don Hendon to serve as a director of Summit Environmental Corporation, Inc.
should the proposed Merger with Summit Technologies, Inc. become effective.*
23.5 - Consent of Paula Parker to serve as a director of Summit Environmental Corporation,
Inc. should the proposed Merger with Summit Technologies, Inc. become effective.*
23.6 - Consent of Dean Haws to serve as a director of Summit Environmental Corporation, Inc.
should the proposed Merger with Summit Technologies, Inc. become effective.*
23.7 - Consent of Ty Bishop to serve as a director of Summit Environmental Corporation, Inc.
should the proposed Merger with Summit Technologies, Inc. become effective.*
23.8 - Consent of Thomas J. Kenan, Esq. to the reference to him as an attorney who has passed
upon certain information contained in the Registration Statement.**
23.9 - Consent of Garner & Lawrence, LLP, independent auditors of Summit Technologies, Inc.
(Superseded by Exhibit 23.12).
23.10 - Consent of Hogan & Slovacek, independent auditors of Summit Environmental Corporation,
Inc. (Superseded by Exhibit 23.13).
</TABLE>
II-3
<PAGE> 83
<TABLE>
<S> <C> <C>
23.11 - Consent of James J. Roach to serve as a director of Summit Environmental Corporation,
Inc. should the proposed Merger with Summit Technologies, Inc. become effective.**
23.12 - Consent of Garner & Lawrence, LLP, independent auditors of Summit Technologies, Inc.
(Superseded by Exhibit 23.14).
23.13 - Consent of Hogan & Slovacek, independent auditors of Summit Environmental Corporation,
Inc. (Superseded by Exhibit 23.15).
23.14 - Consent of Garner & Lawrence, LLP, independent auditors of Summit Technologies, Inc.
(Superseded by Exhibit 23.16).
23.15 - Consent of Hogan & Slovacek, independent auditors of Summit Environmental Corporation, Inc.
(Superseded by Exhibit 23.17).
23.16 - Consent of Garner & Lawrence, LLP, independent auditors of Summit Technologies, Inc.
23.17 - Consent of Hogan & Slovacek, independent auditors of Summit Environmental Corporation, Inc.
27 - Financial Data Schedule (Superseded by Exhibit 27.1).
27.1 - Financial Data Schedule.**
</TABLE>
* Previously filed with Form S-4; incorporated herein.
** Previously filed with Amendment No. 1 to Form S-4; incorporated
herein.
UNDERTAKINGS
Summit Environmental Corporation, Inc. will:
1. File, during any period in which it offers or sells
securities, a post-effective amendment to this Registration Statement to:
(a) include any prospectus required by Section
10(a)(3) of the Securities Act;
(b) reflect in the prospectus any facts or events
which, individually or together, represent a
fundamental change in the information in the
Registration Statement; and
(c) include any additional or changed material
information on the plan of distribution.
2. For determining liability under the Securities Act,
treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the
initial bona fide offering.
3. File a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("the Act") may be permitted to directors, officers and
controlling persons of Summit Environmental Corporation, Inc. pursuant to the
foregoing provisions, or otherwise, Summit Environmental Corporation, Inc. has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Summit Environmental
Corporation, Inc. of expenses incurred or paid by a director, officer or
controlling person of Summit Environmental Corporation, Inc. in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, Summit Environmental Corporation, Inc. will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit to
a court of jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-4
<PAGE> 84
Summit Environmental Corporation, Inc. hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject to
and included in the Registration Statement when it became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Oklahoma City,
Oklahoma.
Date: November 3, 1998 Summit Environmental Corporation, Inc.
By /s/ Albert L. Welsh
----------------------------------
Albert L. Welsh, president
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Date: November 3, 1998 /s/ Albert L. Welsh
------------------------------------
Albert L. Welsh, president, sole
director, principal financial officer,
and authorized representative of the
Registrant
II-5
<PAGE> 85
SUMMIT ENVIRONMENTAL CORPORATION, INC.
COMBINED EXHIBIT INDEX (AMENDMENT NO. 5 TO SB-2 AND S-4)
<TABLE>
<CAPTION>
Exhibit Item
------- ----
<S> <C>
10.7 - November 2, 1998 Amendment to April 27, 1998 Letter of Intent
between BioGenesis Enterprises, Inc. and Summit Technologies,
Inc., and April 27, 1998 Letter of Intent
23.16 - Consent of Garner & Lawrence, LLP, independent auditors of Summit
Technologies, Inc.
23.17 - Consent of Hogan & Slovacek, independent auditors of Summit
Environmental Corporation, Inc.
</TABLE>
<PAGE> 1
EXHIBIT 10.7
AMENDMENT TO LETTER OF INTENT
With reference to the Letter of Intent dated April 27, 1998, by and between
BIOGENESIS ENTERPRISES, INC. and SUMMIT TECHNOLOGIES, INC., the parties hereto
do mutually agree to the following amendment to said original Letter of Intent:
1. TRANSFER: BioGenesis hereby conveys and transfers unto Summit
the Patent Rights and Intellectual Property described in the
Letter of Intent.
2. PAYMENT: Summit has met the requirements stipulated in the
Payment section Parts A and B of paragraph 3 of the original
Letter of Intent.
Part C of paragraph 3, the Balance shall be amended as follows:
A. $200,000 to be paid on or before February 1, 1999;
B. $300,000 to be paid on or before April 1, 1999;
C. $300,000 to be paid on or before August 1, 1999;
D. The Common Stock shall be delivered to BioGenesis on or
before the first business day after the payment of the
February 1, 1999 payment.
This Amendment and the original Letter of Intent supersede the exclusive
licensing agreement between the parties hereto.
All other aspects of the original Letter of Intent dated April 27, 1998,
shall remain in effect.
IN WITNESS WHEREOF, the parties have executed this Amendment to Letter of
Intent as of the date contained herein.
BIOGENESIS ENTERPRISES, INC.
By: /s/ MOHSEN C. AMIRAN
----------------------------
Mohsen C. Amiran, President
Date: November 2, 1998
SUMMIT TECHNOLOGIES
By: /s/ B. KEITH PARKER
---------------------------
B. Keith Parker, CEO
Date: November 2, 1998
Exhibit 10.7
Page 1 of 4 Pages
<PAGE> 2
LETTER OF INTENT
Letter of Intent dated this 27th day of April, 1998, by and between
BIOGENESIS ENTERPRISES, INC., an Illinois corporation with an office at 330
South Mt. Prospect Road, Des Plaines, Illinois 60016, and SUMMIT TECHNOLOGIES,
INC., a Texas corporation with an office at 414 East Loop 281, Longview, Texas
75605.
BACKGROUND
A. Biogenesis is the owner of certain technology and proprietary rights
in and to a unique fire suppressant technology;
B. Summit and BioGenesis desire to enter into an agreement whereby
ownership of the technology and related trademarks, patents, patent
applications and all enhancements thereto (hereinafter the
"Intellectual Property") is transferred from BioGenesis to Summit.
NOW, THEREFORE, subject to the terms and conditions set forth herein, and to
the execution of formal agreements consistent with the terms of this letter of
intent, the parties agree as follows:
1. TRANSFER. Biogenesis will transfer to Summit (or its successor) the
Intellectual property and will execute and deliver to Summit all data,
formulas and information relevant thereto.
2. CONSIDERATION. Summit will pay to BioGenesis, in consideration for
the transfer of the Intellectual Property, the following:
A. Cash in the amount of $425,000.00, representing the balance of a
one-time, non-refundable royalty (the "Initial Royalty");
B. Cash, in the amount of $500,000, representing an advance payment
of periodic royalties (the "Advanced Royalty"), as set forth
herein; and
C. 750,000 shares of common stock of Summit.
3. PAYMENT. Payment of the Initial Royalty and Advance Royalty fees
shall be made as follows:
A. $25,000 on or before May 1, 1998;
B. $100,000 on or before June 1, 1998; and
Exhibit 10.7
Page 2 of 4 Pages
<PAGE> 3
C. the balance of $800,000 upon the earlier of November 15, 1998, or
ten (10) days following the completion of a secondary stock
offering by Summit intended to finance the transfer (the
"Closing"); and
D. the Common Stock shall be delivered to BioGenesis at the Closing.
4. ADVANCE ROYALTY AND PERIODIC ROYALTIES. Summit shall pay to BioGenesis
a periodic royalty of $.50 per 16-oz can and an equivalent
(approximately 7%) on all other product categories using the fire
suppressant technology. One-half of all periodic royalty fees due to
BioGenesis shall be credit against the Advance Royalty fee (until
fully recovered) and one-half shall be paid to BioGenesis in cash on
the 30th of each month based upon invoiced sales through the close of
the preceding month.
5. EXISTING SALES AND MARKETING AGREEMENTS. Summit acknowledges that the
transfer is subject to certain existing sales, marketing and
distribution agreements previously entered into by BioGenesis. The
parties agree to cooperate concerning the administration and/or
termination of these arrangements, as appropriate. Between the
execution of formal agreements confirming this letter of intent and
the Closing, BioGenesis shall be entitled to all profits from such
arrangements. Following the Closing, all net profits shall be the
Property of Summit; provided, however, BioGenesis shall be entitled to
an administration fee of ten (10%) percent of the direct cost of goods
on such sales so long as it administers such arrangements.
6. OPTION ON FUTURE PRODUCTS. Summit shall have an option to acquire the
rights to a biodegradable anti-freeze and neutralizing agent and a
deicer product created by BioGenesis upon the periodic royalty
structure set forth herein.
7. FORMAL AGREEMENT. The parties obligation hereunder are subject to the
completion of due diligence and to the preparation and execution of
formal agreements consistent with the terms of this letter of intent
and otherwise acceptable in form to their respective counsel.
8. TERMINATION. If the Closing does not take place on or before November
15, 1998, or such other date thereafter as the parties shall agree,
then this letter of intent
Exhibit 10.7
Page 3 of 4 Pages
<PAGE> 4
shall be terminated and the parties shall revert to the existing
license arrangement between them, with all sums paid by Summit
hereunder credited to amounts due under that agreement.
IN WITNESS WHEREOF, the parties have executed this letter of intent at
Dallas, Texas, as of the date first above written.
BIOGENESIS ENTERPRISES, INC.
By: /s/ MOHSEN C. AMIRAN
---------------------------------
Mohsen C. Amiran, President
SUMMIT TECHNOLOGIES, INC.
By: /s/ B. KEITH PARKER
---------------------------------
B. Keith Parker, CEO
Exhibit 10.7
Page 4 of 4 Pages
<PAGE> 1
EXHIBIT 23.16
[GARNER & LAWRENCE, LLP LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our reports dated September 25, 1998, and January
5, 1998, with respect to the financial statements of Summit Technologies, Inc.
included in two Registration Statements (Amendment No. 5 to Form SB-2 and
Amendment No. 5 to Form S-4) and related Prospectus of Summit Environmental
Corporation, Inc. for the registration of 500,000 common shares (Form SB-2) and
5,810,840 common shares (Form S-4).
/s/ GARNER & LAWRENCE, LLP
----------------------------
Garner & Lawrence, LLP
November 3, 1998
<PAGE> 1
EXHIBIT 23.17
[HOGAN & SLOVACEK LETTERHEAD]
INDEPENDENT AUDITOR'S CONSENT
We consent to the use of our report dated July 17, 1998, with respect to
the financial statements of Summit Environmental corporation, Inc. included in
two Registration Statements (Amendment No. 5 to Form SB-2 and Amendment No. 5
to Form S-4) of Summit Environmental Corporation, Inc.
/s/ HOGAN & SLOVACEK
Oklahoma City, Oklahoma
November 3, 1998
