SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
TechLite, Inc.
(Name of small business issuer in its charter)
Oklahoma 23531 73-1522114
(state of (Primary Standard Industrial (IRS Employer
incorporation) Classification Code Number) I.D. Number)
4334 Northwest Expressway, Suite 202
Oklahoma City, OK 73116
405-840-1585
(Address and telephone number of registrant's principal
executive offices and principal place of business)
Albert L. Welsh, 4334 Northwest Expressway, Suite 202
Oklahoma City, Oklahoma 73116 telephone: 405-840-1585
(Name, address and telephone number of agent for service)
Copies to:
Thomas J. Kenan, Esq. J. D. Arvidson
100 North Broadway, Suite 3300 6106 East 32nd Place, Suite 101
Oklahoma City, OK 73102-8805 Tulsa, OK 74135
Approximate date of proposed sale to the public: As soon as practicable
after the Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(c) under the Securities Act, please 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(c)
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. [ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
<PAGE>
<TABLE>
<CAPTION>
Calculation of Registration Fee
====================================================================================================================================
Title of Proposed Proposed
each class maximum maximum
of securities Dollar amount offering aggregate Amount of
to be to be price offering registration
registered registered per unit price fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock $196 $0.001 $196 $0.06(1)
-----
====================================================================================================================================
</TABLE>
(1) The 195,556 shares being registered are owned by SuperCorp Inc., the
controlling shareholder of the Registrant, and are to be distributed
by SuperCorp Inc. to its shareholders as a stock dividend. The
registration fee is based upon the book value of the Registrant as of
September 30, 1998. Reg. 230.457(a).
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.
2
<PAGE>
PROSPECTUS
TechLite, Inc.
195,556 Shares of Common Stock
(For the account of a distributing shareholder,
SuperCorp Inc.)
TechLite, Inc. ("the Company") is a recently formed, development-stage
shell company without significant assets or any business. It was formed by
SuperCorp Inc., an Oklahoma corporation, for the purpose of (i) creating a
public market for the Company's securities by distributing to SuperCorp's
approximately 650 shareholders ("the Spinoff") 195,556 shares of the Company's
Common Stock ("the Spinoff Shares"), (ii) merging with another Oklahoma
corporation, TechLite Applied Sciences, Inc. ("TechLite Applied Sciences") ("the
Merger"), which other corporation is a viable company with significant assets
and an ongoing business, and (iii), following the Merger, engaging in the
business and activities now being conducted by TechLite Applied Sciences -
retrofitting lighting fixtures to obtain reductions in electricity consumption.
There is no assurance the Merger will be approved by the shareholders of
TechLite Applied Sciences. Should it not be approved, the Company would be what
the Securities and Exchange Commission calls a "blank check company" without
significant assets or a business. Because of this, regulations of the Commission
require that the certificates representing the 195,556 Spinoff Shares be placed
in escrow and be delivered to the SuperCorp shareholders (1) only in the event
the proposed Merger is approved by the TechLite Applied Sciences shareholders or
(2), should such Merger not be approved, in the event the Company acquires
significant assets or a business within 18 months of the date of this
Prospectus.
(continued on next page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
ON PAGE ____.
-------------------------
<TABLE>
<CAPTION>
===========================================================================================================
Underwriting Proceeds to
Price to Discounts and Other
Recipient Commissions Persons(1)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share $0.001(2) $0 $0.001
- -----------------------------------------------------------------------------------------------------------
195,556 Shares $196(3) $0 $196(4)
===========================================================================================================
</TABLE>
The date of this Prospectus is __________________, 1998.
i
<PAGE>
(1) The estimated expenses of the transaction described herein are
$65,300, all of which is being borne by TechLite Applied Sciences,
Inc., an Oklahoma corporation with whom the Company proposes to merge.
These expenses are federal and state registration fees - $100; filing
expenses (EDGAR) - $4,000; stock transfer agent's fee - $4,000; escrow
agent's fee - $500; printing and engraving - $10,000; legal fees -
$29,000; auditor's fee - $4,000; mailing cost - $5,400; and Moody's
OTC Industrial Manual publication fee - $2,300.
(2) Based upon the book value of TechLite, Inc. ("the Company") on
September 30, 1998.
(3) These 195,556 Shares ("the Spinoff Shares") of Common Stock are owned
by SuperCorp Inc. ("SuperCorp"), a shareholder of the Company.
Certificates evidencing these Spinoff Shares will be distributed to
an escrow agent ("the Spinoff") for delivery to the approximately 650
shareholders of SuperCorp at such time as (i) a proposed merger ("the
Merger") between the Company and TechLite Applied Sciences should be
effected, (ii) this Prospectus is supplemented to indicate the date
the Merger was effected, and (iii) information concerning the
surviving Company shall have been made available to the public and to
National Association of Securities Dealers member firms. See "Plan
of Distribution."
(4) These funds represent the aggregate book value, at $0.001 a Share, of
the Spinoff Shares at the time of the Spinoff (and before the proposed
Merger), which Shares shall be received by the shareholders of
SuperCorp.
In addition to the 195,556 Spinoff Shares registered herein and to be
distributed pro rata to SuperCorp's shareholders, an additional 24,444 shares of
the Company are held by each of two persons. One of those persons is a SuperCorp
director and its president. The other is a "finder." Both may be deemed to be
"insiders" of the Company. Each received his 24,444 shares of the Company in
connection with the Spinoff and Merger described herein.
Following the Merger, should it be approved by TechLite Applied Sciences's
shareholders, the SuperCorp shareholders receiving the Spinoff Shares and two
"insiders" of the Company, who also are SuperCorp shareholders and who each have
earlier received 24,444 shares of Common Stock of the Company for consulting
services performed in connection with the proposed Merger, would own an
aggregate of 264,444 shares of Common Stock or 10.8 percent of the outstanding
2,454,347 shares of Common Stock of the Company. Of these 2,454,347 shares, the
two "insiders" would own, directly or indirectly through members of their
families, 3.7 percent, or 90,742 shares - 21,854 shares of which they would have
received through the pro rata spinoff distribution, 48,088 shares they would
have received for services rendered to the Company, and 20,000 shares they would
have received in the Merger in exchange for 20,000 shares of TechLite Applied
Sciences they purchased in 1997. The other SuperCorp shareholders would own 7.1
percent, or 173,702 shares, which they would have received as a dividend through
the pro rata spinoff distribution. See "Certain Insider Transactions."
ii
<PAGE>
Prior to the date of this Prospectus 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 NASD OTC
Bulletin Board. Should the proposed Merger not be effected, there will be no
public market for the securities of the Company because of the above-described
escrow arrangement. See "Summary of Proposed Transaction - Plan of
Distribution."
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. 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 this Prospectus (see "The
Escrow Arrangement").
Post-Effective Amendment and Prospectus Stickers Concerning Proposed
---------------------------------------------------------------------------
Merger.
- -------
Should the proposed merger described herein be approved by the requisite
shareholder vote and become effective, the Company will file a post-effective
amendment to the Registration Statement described above or a supplement to the
Prospectus, as appropriate, and cause stickers to be placed on the front cover
page of all copies of the Prospectus, which stickers will describe the results
of the vote and the effective date of the merger.
UNTIL _____________________, 1999 (90 DAYS AFTER THE EFFECTIVE DATE OF THE
MERGER), ALL U.S. DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES
MAY BE REQUIRED TO DELIVER A PROSPECTUS.
iii
<PAGE>
TABLE OF CONTENTS
Page
Additional Information................................................. ii
Summary Information.................................................... 1
Risk Factors.................................................. 4
Risk Factors ............................................ 4
1. Accumulated Deficit.................................. 4
2. No Assurance the Proposed Merger Will be
Approved; Blank Check Company Status
Possible ................................... 4
3. No Assurance of a Public Market and Likelihood
of a Volatile Market........................ 4
4. Penny Stock Regulations ............................. 4
5. Market Restrictions on Broker-Dealers ............... 5
6. No Assurance of Success of Business.................. 5
7. Possible Need for Additional Funding ................ 5
8. Reliance on Key Personnel............................ 6
9. Management Control................................... 6
10. Tax Consequences..................................... 6
11. Dividends Not Likely................................. 6
12. Possible Future Dilution ............................ 6
13. Restrictions on Net Operating Loss
Carryforwards............................... 6
14. Dependence on Major Suppliers ....................... 7
SuperCorp - The Distributing Shareholder............................... 7
SuperCorp May be Deemed to be an Underwriter.................. 8
SuperCorp's Exposure as a Control Person............. 8
Terms of the Transaction............................................... 8
Terms of the Merger........................................... 9
Reasons for the Merger and Spinoff............................ 10
Accounting Treatment of Proposed Merger....................... 11
Degree of Management Control of Vote on Merger................ 11
Dissenters' Rights of Appraisal............................... 11
Compliance with Governmental Regulations...................... 11
Agreement and Plan of Merger.................................. 11
Transactions with Insiders............................................. 11
Services Rendered by Insiders................................. 12
Plan of Distribution................................................... 12
The Escrow Agreement.......................................... 12
Should the Merger Occur.............................. 12
Consequences Should the Merger Not Occur............. 13
Description of Securities.............................................. 14
Common Stock.................................................. 14
Voting Rights........................................ 14
Dividend Rights...................................... 14
Liquidation Rights................................... 14
iv
<PAGE>
Preemptive Rights.................................... 14
Registrar and Transfer Agent......................... 14
Dissenters' Rights................................... 14
Preferred Stock............................................... 15
Federal Income Tax Consequences........................................ 15
The Merger.................................................... 15
Shareholders of TechLite Applied Sciences............ 15
The Spinoff................................................... 15
Shareholders of SuperCorp..................................... 15
Other Financial Considerations......................................... 16
Pro Forma Information and Dilution............................ 16
Material Contacts Among the Companies......................... 19
Penny Stock Regulations ............................................... 20
Information About the Company.......................................... 21
Description of Business and Properties........................ 21
Course of Business Should the Merger Not Occur................ 22
Legal Proceedings............................................. 22
Market for the Company's Common Stock
and Related Stockholder Matters...................... 22
Rule 144 and Rule 145 Restrictions on Trading................. 23
Dividends............................................ 25
Financial Statements.......................................... 25
Information About TechLite Applied Sciences............................ 25
Overview ............................................ 25
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 25
Results of Operations................................ 25
Sales................................................ 26
Interim Results ............................ 26
Gross Margin......................................... 26
Interim Results ............................ 27
Selling, General and Administrative Expenses......... 27
Interim Results ............................ 27
Net Income Before Taxes.............................. 27
Interim Results ............................ 27
Balance Sheet Items.................................. 27
Interim Results ............................ 28
Liquidity and Capital Resources ..................... 29
Interim Results ............................ 29
Outlook.............................................. 29
Description of TechLite Applied Sciences's Business.................... 29
The Light Fixture Retrofitting Industry ...................... 29
The Market ................................................... 30
Environmental Considerations ................................. 30
Saving Money ................................................. 31
Other Benefits ............................................... 32
Current Trends ............................................... 32
Financing a Retrofit ......................................... 33
Sales Methods ................................................ 34
v
<PAGE>
Production Costs.............................................. 35
Competition .................................................. 35
Government Approval of Principal Products .................... 36
Government Regulations ....................................... 36
Properties.................................................... 36
Office Facilities............................................. 36
Dependence on Major Customers and Suppliers................... 36
Seasonality................................................... 36
Research and Development...................................... 36
Environmental Controls........................................ 37
Year 2000 Computer Problem ................................... 37
Number of Employees........................................... 37
Venue of Sales................................................ 37
Patents, Copyrights and Intellectual Property................. 37
Legal Proceedings............................................. 37
Market for TechLite Applied Sciences's Capital Stock
and Related Stockholder Matters...................... 37
Financial Statements.......................................... 38
Management Information................................................. 38
Security Ownership of Certain Beneficial Owners and
Management........................................... 38
Directors, Executive Officers and Significant
Employees............................................ 41
TechLite Applied Sciences..................................... 42
The Company................................................... 42
Directors of TechLite Applied Sciences........................ 42
Senior Executives of TechLite Applied Sciences................ 43
The Company................................................... 43
Albert L. Welsh...................................... 43
Remuneration of Directors and Officers................................. 44
The Company................................................... 44
TechLite Applied Sciences..................................... 44
Employment Contracts ......................................... 44
Stock Options................................................. 44
Certain Relationships and Related Transactions......................... 44
Company's Transactions with Promoters......................... 44
TechLite Applied Sciences's Transactions with
Management .......................................... 45
Interests of Named Experts and Counsel................................. 45
Indemnification........................................................ 45
Financial Statements Index............................................. 46
Appendix A - Agreement of Merger....................................... A-1
vi
<PAGE>
================================================================================
SUMMARY INFORMATION
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. All
financial statements set forth herein for TechLite, Inc. (the "Company") and
TechLite Applied Sciences, Inc. have been prepared in accordance with U.S.
generally accepted accounting principles ("GAAP").
The transaction - A Spinoff and a proposed Merger.
The proposed Merger - Subject to shareholder approval of
both companies, the Company will
merge with TechLite Applied
Sciences, Inc. ("TechLite Applied
Sciences"), another Oklahoma
corporation.
The survivor of the Merger - The Company, but the historical
financial statements of the post-
Merger Company shall be those of
TechLite Applied Sciences.
Business of the Company - None. A development-stage, shell
corporation, organized to merge
with TechLite Applied Sciences.
Business of TechLite Applied Retrofitting lighting fixtures to
Sciences - obtain reductions in electricity
consumption.
Terms of the Merger - TechLite Applied Sciences's
shareholders would exchange their
existing shareholdings in TechLite
Applied Sciences for 2,209,903
shares of Common Stock of the
Company.
Management of the Company TechLite Applied Sciences's
after the Merger - management.
The Spinoff - A pro rata distribution by
SuperCorp Inc. ("SuperCorp") to
its approximately 650 shareholders
of 195,556 shares of Common Stock
of TechLite, Inc. ("the Company"),
which SuperCorp purchased for
$0.001 a share.
The Spinoff Shares - The 195,556 shares of Common
Stock of the Company held by
SuperCorp.
================================================================================
1
<PAGE>
================================================================================
Terms of the Spinoff - 1 Spinoff Share for each 34.81
shares of Common Stock of
SuperCorp held of record on the
date of this Prospectus.
Other securities of the Company - 48,888 shares of Common Stock held
by two "insiders" of the Company
and of SuperCorp.
Insiders to the Company - The following persons may be
deemed to be "insiders" to the
Company: Albert L. Welsh and
George W. Cole. Each of them
owns, directly or indirectly
through family members, 24,444
shares of Common Stock of the
Company, and each shall receive,
directly or indirectly through
family members, additional shares
of Common Stock through the pro
rata distribution of the Spinoff
Shares. See "Transactions with
Insiders" and "Other Financial
Considerations - Material Contacts
Among the Companies."
Securities to be outstanding
after the Merger - See table below:
<TABLE>
<CAPTION>
Two Company Insiders
----------------------------------------
Other
TechLite
Type of Other Applied
Company's Spinoff Merger SuperCorp Sciences
Security Held Now Shares Shares Shareholders Shareholders Total
------------ ----------- ---------- ---------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Common 48,888(1) 21,854(2) 20,000(2) 173,702(2) 2,189,903(3) 2,448,444
Stock
Percent 2.0% 0.9% 0.8% 7.1% 89.2% 100%
</TABLE>
(1) Restricted securities.
(2) Registered with the Commission and unrestricted for transfer in the
stock market.
(3) Registered with the Commission and unrestricted for transfer in
the stock market; provided, however, that 825,789 of these 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."
================================================================================
2
<PAGE>
================================================================================
Plan of Distribution - Certificates representing the
195,556 shares of Common Stock to
be distributed to the SuperCorp
shareholders will be delivered to
Bank One Trust Company, NA,
Oklahoma City to be held in
escrow, pursuant to SEC Regulation
230.419, until the Merger should
be approved by TechLite Applied
Sciences. Should it be so
approved, Bank One will then
transmit such certificates to
their owners.
Tax consequences of the Spinoff - Taxable both to SuperCorp and to
the SuperCorp shareholders
receiving the 195,556 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 the Company - Suite 202
4334 Northwest Expressway
Oklahoma City, OK 73116
Telephone: 405-840-1585
Address of TechLite Applied
Sciences - 6106 East 32nd Place, Suite 101
Tulsa, OK 74135
Telephone: 918-664-1441
Facsimile: 918-664-0191
================================================================================
3
<PAGE>
================================================================================
Risk Factors.
- -------------
Ownership of the Common Stock of the Company is speculative and involves a
high degree of risk, whether the Merger with TechLite Applied Sciences be
effected or not. See "Risk Factors" below.
================================================================================
RISK FACTORS
Any person acquiring securities of the company in the open market is making
an investment decision that involves a high degree of risk and should carefully
consider the following factors:
1. Accumulated Deficit.
--------------------
The company with which the Company proposes to merge, TechLite Applied
Sciences, has operated at a loss for most of its six years of existence. Its
accumulated deficit at the end of its 1998 fiscal year (January 31, 1998) was
$1,436,018. It operated at a profit (unaudited) of approximately $332,000 the
first six months of the present year, but there can be, and is, no assurance
that profitable operations can be maintained.
2. No Assurance the Proposed Merger Will be Approved; Blank Check Company
------------------------------------------------------------------------
Status Possible.
- ----------------
There is no assurance the proposed merger (the "Merger") between the
Company and TechLite Applied Sciences will occur. It must be approved by the
shareholders of TechLite Applied Sciences at a special meeting of its
shareholders, and TechLite Applied Sciences' management has agreed to vote its
shares in accordance with the majority vote of non-management shareholders.
Should the proposed Merger not be approved, the Company would be what the
Securities and Exchange Commission calls a "blank check company" - a company
without significant assets or a business whose sole purpose is to acquire
significant assets or a business by merger or otherwise. Because of this,
regulations of the Commission require that the certificates representing the
195,556 Spinoff Shares be placed in escrow and be delivered to the SuperCorp
shareholders (1) only in the event the proposed Merger is approved by the
TechLite Applied Sciences shareholders or (2), should such Merger not be
approved, in the event the Company acquires significant assets or a business
within 18 months of the date of this Prospectus. No assurance can be given that
such would occur within eighteen months of the date of this Prospectus, and if
it should not occur, the Company would be dissolved.
3. No Assurance of a Public Market and Likelihood of a Volatile Market.
--------------------------------------------------------------------
There is presently no public market for the Spinoff Shares and there is no
assurance that a public market for such securities will develop after the
occurrence of the Merger described in this Prospectus 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
4
<PAGE>
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 retrofitting lighting fixtures to obtain reductions in
electricity consumption. This business, now being conducted by TechLite Applied
Sciences, operated at a loss for most of its six years of existence, operated at
a profit the first six months of the present year, and is operating at a profit
today. There can be, and is, no assurance that this business will continue to be
run profitably. See "Information About TechLite Applied Sciences."
7. Possible Need for Additional Funding.
-------------------------------------
Should the proposed Merger be approved, there can be no assurance the
post-Merger Company will have no need for funding to achieve its plan of
operations for the next twelve months. If additional funding is needed, 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 an inability to meet contractual obligations or obtain new
business.
5
<PAGE>
See "Information About TechLite Applied Sciences - Management's Discussion and
Analysis of Financial Condition and Results of Operations - Cash Requirements."
8. 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 J. D. Arvidson, chief executive officer of Techlite Applied
Sciences; John F. Bodkin, president and chief financial officer; C. O. Sage,
executive vice president and chief operating officer; Carol E. Sage, corporate
secretary; and Mark Galvin, vice president for administration. The Company is
continually identifying and sourcing experienced personnel, but 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."
9. 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
33.6 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.
10. 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 TechLite Applied Sciences. 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, TechLite Applied Sciences' shareholders, to whom would be
distributed Company shares (the "Merger Shares"), could recognize taxable income
or loss equal to the difference between their undivided tax basis in the
TechLite Applied Sciences' 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 TechLite Applied Sciences."
11. 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.
12. Possible Future Dilution.
-------------------------
In addition to the Shares registered for the proposed Merger and for the
Spinoff, the Company has registered 1,500,000 shares to be available for
issuance in possible business combinations or asset acquisitions, the issuance
of which would dilute the percentage ownership and could dilute the net tangible
book value per share of shareholders of the surviving company.
13. Restrictions on Net Operating Loss Carryforwards.
---------------------------------------------------
TechLite Applied Sciences had a net operating loss carryforward of
$1,436,018 at January 31, 1998, for income tax purposes that expire in ______.
6
<PAGE>
This net operating loss carryforward may be used to offset otherwise taxable
income. However, if the ownership of more than 50 percent in value of the stock
of TechLite Applied Sciences changes during a three-year period, this limits the
amount of taxable income of any "post-change year" that may be offset using
"pre-change losses." The proposed merger transaction with the Company will
effect a 10 percent change in such ownership and, while it will not of itself
trigger such a restriction, must be taken into account during the next three
years for these income tax purposes.
14. Dependence on Major Suppliers.
------------------------------
TechLite depends upon three non-affiliated companies to fabricate and
supply lighting-enhancement reflectors it prefers to use in its light fixture
retrofitting business. Should the Merger be approved and effected, the business
of the post-Merger Company could be materially affected by conditions not under
its control that should affect the ability of these companies to supply their
reflectors. While alternate suppliers of these reflectors could be used, the
quality of such products is deemed to be inferior to that of the three companies
whose reflectors are preferred and could affect the future competitive condition
of the post-Merger Company.
SUPERCORP - THE DISTRIBUTING SHAREHOLDER
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 is to engage in "spinoff" activities such as are
described herein, such 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, Ronald D. Wallace, T.E. King
and Thomas J. Kenan, either directly or by attribution through ownership by
family members, owns 375,000 shares of common stock of SuperCorp, which amount
is approximately 5.5 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 May 1997 as a vehicle specifically for
the proposed Merger. The Company has no business history, $196 in assets, no
liabilities, and three shareholders - SuperCorp; Albert L. Welsh, the sole
officer and director of the Company and a shareholder of SuperCorp; and George
W. Cole, whose spouse, Marjorie Cole, is 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.
7
<PAGE>
SuperCorp May be Deemed to be an Underwriter.
- --------------------------------------------
The 195,556 Spinoff Shares described herein are owned by SuperCorp and are
to be redistributed by SuperCorp, who might be deemed to be an underwriter by
reason of its intent to distribute such Shares.
After the distribution by SuperCorp of the Spinoff Shares to its
shareholders, SuperCorp will no longer own any shares of capital stock of the
Company, except to the extent that 657 Spinoff Shares, reserved for rounding-up
purposes, would not be allocated in the rounding-up process (see "Terms of the
Merger").
A consequence to SuperCorp, should it be deemed to be an underwriter of the
Shares to be distributed to its shareholders, is that any person who purchases
the registered Shares within three years after the distribution could assert a
claim against SuperCorp under Section 11 of the Securities Act of 1933. The
purchase could be in the open market as long as the shares purchased can be
traced to the registered Shares SuperCorp distributes to its shareholders. Such
a claim, to be successful, must be based upon a showing that statements in the
registration statement were false or misleading with respect to a material fact
or that the registration statement omitted material information required to be
included therein.
Open market purchasers may have to prove reliance upon the alleged
misstatement or omission, but reliance may not necessarily require a showing
that the purchaser actually read the registration statement but, instead, that
the misstatements or omissions in the registration statement were a substantial
factor in the purchase of the shares.
SuperCorp's Exposure as a Control Person.
-----------------------------------------
SuperCorp organized the Company and, since its organization and until the
proposed Merger should become effective, has been and will be a "control person"
of the Company, as that term is defined in Section 15 of the Securities Act of
1933 ("the Act").
Section 15 of the Act imposes joint and several liability on persons who
control other persons substantively liable under other sections of the Act:
Section 11, for misrepresentations in a registration statement, Section 12(1) -
the unlawful sale of unregistered securities, and Section 12(2) -
misrepresentations in the sale of securities. A controlling person can avoid
liability by proving "he had no knowledge of or reasonable grounds to believe in
the existence of the facts by reason of which the liability of the controlled
person is alleged to exist."
TERMS OF THE TRANSACTION
The Company, SuperCorp, and TechLite Applied Sciences, pursuant to Approval
by their respective boards of directors, have entered into an agreement of
merger between the Company and TechLite Applied Sciences, 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:
8
<PAGE>
(i) a registration statement covering 195,556 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 TechLite
Applied Sciences must, by a requisite 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 Oklahoma.
Terms of the Merger.
- --------------------
The terms of the proposed merger ("the Merger") are as follows:
1. TechLite Applied Sciences shall merge into the Company.
2. Upon the effectiveness of the Merger, the outstanding shares of
common stock of TechLite Applied Sciences shall be exchanged for 2,209,903
shares of Common Stock of the Company ("the Merger Shares"). See "Description
of Securities."
3. The business of TechLite Applied Sciences shall be conducted,
after the Merger, by the Company, into which TechLite Applied Sciences shall
have merged, but TechLite Applied Sciences's management and directors shall
become the management and directors of the Company. See "Management
Information."
4. Prior to the Merger, SuperCorp shall have distributed to its
shareholders ("the Spinoff"), on a basis proportionate to their shareholders in
SuperCorp, 195,556 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 34.81 shares of SuperCorp held of record on the date of this
Prospectus.
5. The historical financial statements of the post-Merger Company
shall be those of TechLite Applied Sciences. See "Financial Statements -
TechLite Applied Sciences."
6. There shall also be registered as part of the Merger registration
statement filed with the Securities and Exchange Commission, 1.5 million
additional shares of Common Stock of the Company ("the Shelf Shares"), which
Shelf Shares shall be available after the Merger for issuance, upon the filing
of post-effective amendments to the Merger registration statement, in
subsequent, possible mergers or acquisitions with companies engaged in business
activities of types related or similar to those now conducted by TechLite
Applied Sciences. Management of TechLite Applied Sciences (who shall become the
management of the Company after the Merger) has no current plans, arrangements
or understandings with respect to possible merger, acquisitions or business
combinations for which the Shelf Shares would be used.
7. Should the Merger not be approved by the shareholders of TechLite
Applied Sciences, none of TechLite Applied Sciences, the Company, or
9
<PAGE>
SuperCorp shall be liable to any of the others, but it shall be the sole
obligation of TechLite Applied Sciences to pay all three parties' expenses
relating to the registration of the Shares described herein.
Reasons for the Merger and Spinoff.
- -----------------------------------
The managements of the Company and of TechLite Applied Sciences believe
that TechLite Applied Sciences's shareholders will benefit from receiving shares
that have been registered under the Securities Act in exchange for their shares
of capital stock of TechLite Applied Sciences. They believe that the
distribution of 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 195,556
Spinoff Shares.
This transaction with TechLite Applied Sciences, should it be approved by
the shareholders of TechLite Applied Sciences, will be the fourth 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. The third spinoff-transaction concerned Summit Environmental
Corporation, Inc. ("Summit"), a SuperCorp- created subsidiary that merged with a
Longview, Texas company engaged in the business of marketing products licensed
to it or owned by it. Lark's common stock trades on the OTC Bulletin Board under
the symbol "LDNA." Dransfield's common stock trades on the Nasdaq SmallCap
Market under the symbol "DCPCF." Summit's common stock trades on the OTC
Bulletin Board under the symbol "______." 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. The Summit spinoff-merger transaction was effective only
recently, on November 10, 1998.
Effectively, shareholders of TechLite Applied Sciences will suffer a ten
percent dilution in their equity in TechLite Applied Sciences solely for the
perceived, but not assured, benefits of having a public market created for their
securities and of having created what may be a superior
10
<PAGE>
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 TechLite Applied Sciences
recapitalized.
Degree of Management Control of Vote on Merger.
- -----------------------------------------------
The Merger must be approved by a vote of a majority of the outstanding
shares of Common Stock of each of the Company and TechLite Applied Sciences.
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 - 90%; and TechLite Applied Sciences - 37.4%. TechLite Applied
Sciences's 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
shareholders.
Dissenters' Rights of Appraisal.
- --------------------------------
Those shareholders of TechLite Applied Sciences 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 TechLite Applied Sciences
to pay these dissenters the appraised value of their shareholdings. See "Voting
and Management Information - Dissenters' Rights of Appraisal."
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 Oklahoma after a favorable vote might be
obtained on the proposed merger.
Agreement and Plan of Merger.
- -----------------------------
The complete Agreement of Merger among the Company, TechLite Applied
Sciences, and SuperCorp is included in this Prospectus. See "Appendix A -
Agreement of Merger."
TRANSACTIONS WITH INSIDERS
The 195,556 Spinoff Shares will be distributed pro rata to all SuperCorp
shareholders of record on the date of this Prospectus. An additional 48,888
shares of Common Stock of the Company are already owned by two persons, either
directly or by attribution to their family members or family controlled
entities.
Both of these two persons, either directly or by attribution, are
shareholders of SuperCorp, and will each receive Spinoff Shares in the pro rata
Spinoff distribution. Further, each owns 10,000 shares of common
11
<PAGE>
stock of TechLite Applied Sciences, which each purchased in 1997 in exchange for
financial consulting services. Both of these persons, by reason of their earlier
receipt of securities of the Company and of TechLite Applied Sciences, may be
deemed to be "promoters" or "insiders" of the Company who will receive benefits
from the transaction not received by other SuperCorp shareholders who are not
insiders.
The identities of the insiders, their positions with the Company and with
SuperCorp, the securities of the Company and of TechLite Applied Sciences each
owns, and his pro rata receipt of Spinoff Shares are as follows:
<TABLE>
<CAPTION>
Shares Now Owned
----------------------------------
Position with Company TechLite Applied Spinoff
Insider or SuperCorp Company Sciences Shares
- --------------- ------------------------------ -------- ---------------- -------
<S> <C> <C> <C>
Albert L. Welsh President and Director of the 24,444 10,000 10,773
Company and President and a
Director of SuperCorp
George W. Cole None 24,444 10,000 11,081
</TABLE>
Services Rendered by Insiders.
- ------------------------------
Mr. Welsh and Mr. Cole may be deemed to be "insiders" or "promoters" in
connection with the purchase by each of 24,444 shares of Common Stock of the
Registrant for $25, or $0.001 a share. Each also performed services for the
Registrant and SuperCorp Inc. See "Other Financial Considerations - Material
Contacts Among the Companies."
For a comparison of the securities to be received by the insiders and to be
received by other SuperCorp shareholders, see the table under "Summary
Information - Securities to be Outstanding After the Merger." For details
concerning the direct ownership and the attribution of ownership of Company
securities by the insiders, see "Management Information Security Ownership of
Certain Beneficial Owners and Management."
PLAN OF DISTRIBUTION
The Escrow Arrangement.
- -----------------------
A vote to approve the Merger by the shareholders of the Company is assured.
After such vote but before any vote by the shareholders of TechLite Applied
Sciences, SuperCorp shall declare a dividend to its shareholders of the 195,556
shares of Common Stock of the Company held by it ("the Spinoff Shares").
Certificates representing the 195,556 Spinoff Shares shall be distributed by
SuperCorp to Bank One Trust Company, NA, Oklahoma City ("the Escrow Agent") to
be held in escrow pursuant to the provisions of Securities and Exchange
Commission Regulation 230.419. Later distribution by the Escrow Agent would be
as follows:
Should the Merger Occur.
------------------------
Upon the legal effectiveness of the Merger (should TechLite Applied
Sciences's shareholders approve the Merger), the Company shall supplement this
Prospectus to indicate the fact and date of
12
<PAGE>
the Merger. At such time as the Company's Common Stock is declared eligible for
quotation on the NASD OTC Bulletin Board, the Company shall provide to the
Escrow Agent the Company's representation that the requirements of Securities
and Exchange Commission Regulation ss.230.419(e) have been met, and the Escrow
Agent shall distribute the escrowed certificates representing the 195,556
Spinoff Shares to the owners of such securities.
Consequences Should the Merger Not Occur.
-----------------------------------------
There can be no assurance that the proposed Merger between the Company and
TechLite Applied Sciences will occur, since a favorable shareholder vote of
TechLite Applied Sciences's shareholders must be obtained, and no assurance can
be given that such will be obtained.
Should the Merger not become effective, (i) TechLite Applied Sciences will
continue as a separate corporation with its existing assets and business, and
(ii) the Company will have no significant assets or business, and there will be
no trading market for its securities, which will still be held in escrow by the
Escrow Agent. As long as this escrow continues, no transfer or other disposition
of the securities held in escrow shall be permitted other than by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986, as amended, or Title 1 of
the Employee Retirement Income Security Act or the rules thereunder. The
Company's management has no specific plans for an alternative to a rejection of
the proposed Merger but would seek to acquire a business or assets that would
constitute a business, using funds contributed by management to pay the costs of
such search. Upon execution of any agreement for the acquisition of a business
or assets that would constitute a business, the Company shall file with the
Securities and Exchange Commission (the "Commission") a post-effective amendment
to the Registration Statement that discloses information required by the
Commission's applicable registration form (such as Form S-1 or Form SB-2) and
Industry Guides, which would include information about the alternative business
or assets acquisition, including financial statements of the Company and of the
company to be acquired as well as pro forma financial information. Upon the
legal effectiveness of the acquisition described in the amended registration
statement, the Escrow Agent would distribute the certificates held in escrow
together with the Prospectus contained in the amended Registration Statement. No
later than 90 days after the end of the first full fiscal year of operations
following consummation of an acquisition, as described above, the Company shall
furnish its shareholders audited financial statements for such year as well as
the Company's plan of operation for the next year and file such information with
the Commission on a Form 10-K or 10-KSB. See "Penny Stock Regulations."
Should no alternative to the Merger be effected within eighteen months
after the effective date of the initial Registration Statement of which this
Prospectus is a part, Rule 419 of the Securities and Exchange Commission
requires that the acquisition effort be abandoned. In such event, the
certificates held in escrow would not be delivered to the record owners thereof.
The holders of a majority of the Company's Common Stock will have voting rights
to cause a dissolution of the Company, and persons who will constitute such a
majority have indicated their intentions to so exercise these voting rights to
that effect at that time. Such persons are
13
<PAGE>
Albert L. Welsh, president and a director of SuperCorp; Nita Kaye Adams, Renee
Adams, Chris Adams, and Meridyne Corp., all of whom are related to or affiliated
with John E. Adams, a director of SuperCorp; the Marilyn C. Kenan Trust, which
is under the control of the spouse of Thomas J. Kenan, a director of SuperCorp,
and Mary M. Kenan and Joseph N. Kenan, the adult daughter and son of Thomas J.
Kenan; Patrick D. and Julia V. Kenan; Ronald D. Wallace, a director of SuperCorp
and the beneficial owner of SuperCorp shares held by Sackville Advisors, Ltd.,
which is under his control; T.E. King, a director of SuperCorp; George W. Cole;
Marjorie Cole; George B. Cole; Judith Rader, Gary E. Bryant, Mary N. Jackson;
Suzanne Kerr; Marshall A. Pierson; and Susanne Peterson, shareholders of
SuperCorp. See "The Escrow Arrangement."
DESCRIPTION OF SECURITIES
Common Stock.
-------------
Each of the Company and TechLite Applied Sciences is an Oklahoma
corporation. The Company is authorized to issue 40 million shares of Common
Stock, $0.001 par value and has 244,444 shares of Common Stock issued and
outstanding. TechLite Applied Sciences is authorized to issue 5 million shares
of common stock, $0.001 par value, and has 2,209,903 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, 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 serves as the transfer agent and
registrar of the Common Stock of the Company. TechLite Applied Sciences serves
as its own registrar and transfer agent.
Dissenters' rights.
-------------------
Under current Oklahoma 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.
14
<PAGE>
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
TechLite Applied Sciences with only a change of name or place of incorporation,
a type "F" reorganization under Section 368(a)(1).
Shareholders of TechLite Applied Sciences.
------------------------------------------
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 TechLite Applied Sciences by reason of the Merger. Each
shareholder of TechLite Applied Sciences would have a carryover tax basis and a
tacked holding period for the Company's securities received in the Merger.
Further, TechLite Applied Sciences 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 195,556 Spinoff Shares will not adversely affect the non-recognition of gain
or loss to TechLite Applied Sciences or its shareholders in the merger.
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 is a part). See "Risk Factors -
Tax Consequences."
The Spinoff.
------------
In the opinion of Thomas J. Kenan, U.S. counsel to SuperCorp and to the
Company, the distribution by SuperCorp to its shareholders of the 195,556
Spinoff Shares will be a taxable event to SuperCorp and to each of its
shareholders receiving any of the Spinoff Shares. Gain (but not loss) would be
recognized by SuperCorp under Section 311 of the Internal Revenue Code for any
excess of the fair market value of the Company's stock on the date of actual
distribution over the tax basis to SuperCorp of such stock.
Shareholders of SuperCorp.
--------------------------
As for SuperCorp's shareholders who receive Spinoff Shares of the Company,
the spinoff shall occur prior to the vote by TechLite Applied Sciences's
shareholders to accept or reject the
15
<PAGE>
Merger. Since the result of the vote by TechLite Applied Sciences's shareholders
cannot be forecast, and since the Merger cannot and shall not become effective
until after a favorable vote is obtained on the Merger, it is Mr. Kenan's
opinion that it is more likely than not that the fair market value of the
Spinoff Shares on the date of the Spinoff should not have increased over the
$0.001 price paid by SuperCorp for the 195,556 Spinoff Shares.
SuperCorp has no current or accumulated earnings, and the distribution is
being made from excess capital. Each shareholder of SuperCorp should reduce the
adjusted basis of his SuperCorp stock by the fair market value of the
distribution to him, and any remaining portion will be treated as capital gain
in the same manner as a sale or exchange of the stock. This fair market value is
assumed to be $0.001 per share. SuperCorp undertakes to advise its shareholders
in early 2000 should it deem the fair market value of the distributed Spinoff
Shares on the date of distribution to have been different than $0.001 per share
or should it have had earnings in 1999 which would cause the distribution, to
the extent of such earnings, to be taxed as a dividend and as ordinary income.
The above discussion as to U.S. income tax consequences is not based upon
an advance ruling by the Treasury Department but upon the opinion of tax counsel
to the Company (which tax opinion is an exhibit to the registration statement of
which this Prospectus is a part). See "Risk Factors - Tax Consequences."
OTHER FINANCIAL CONSIDERATIONS
Pro Forma Financial Information and Dilution.
- ---------------------------------------------
The following sets forth certain pro forma financial information giving
effect to the Merger:
16
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA STATEMENT OF FINANCIAL CONDITION
July 31, 1998
TechLite
TechLite Applied
Inc. Sciences Pro Forma Pro Forma
(Historical) (Historical) Adjustments Combined
---------- ---------- ----------- ------------
ASSETS
<S> <C> <C> <C> <C>
Current assets $245 $ 211,819 $ - $ 212,064
Property and equipment - 185,981 - 185,981
Other assets - 91,231 - 91,231
---- ----------- ---------- -----------
TOTAL ASSETS $245 $ 489,031 $ - $ 489,276
==== =========== ========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities $ - $ 367,853 $ - $ 367,853
Long term liabilities - 130,003 - 130,003
----- ----------- ---------- -----------
Total liabilities - 497,856 - $ 497,856
----- ----------- ---------- -----------
Stockholders' equity:
Common stock 245 220,400 - 220,645
Additional paid-in capital - 874,795 - 874,795
Retained earnings (deficit) - (1,104,020) - (1,104,020)
----- ----------- ---------- -----------
Total stockholders' equity 245 (8,825) - (8,580)
---- ----------- ---------- ----------
TOTAL LIABILITIES AND $245 $ 489,031 $ - $ 489,276
==== =========== ========== ===========
STOCKHOLDERS' EQUITY
Pro forma book value per share $ (0.0035)
============
</TABLE>
NOTE: Pro forma book value per share is calculated by dividing Total
Stockholders' Equity - ($8,580) - by the total number of shares
that would have been outstanding on July 31, 1998 (2,448,444), giving
effect to the proposed Merger.
17
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA STATEMENT OF INCOME
Fiscal Year Ended January 31, 1998
and
Six-Month Period Ended July 31, 1998
Fiscal Year Ended January 31, Six Months Ended July 31, 1998 (Unaudited)
-------------------------------------------------------- -----------------------------------------------------
1998
TechLite TechLite TechLite TechLite
Inc. App. Sci. Pro Forma Pro Forma Inc. App. Sci. Pro Forma Pro Forma
(Historical) (Historical) Adjustments Combined (Historical) (Historical) Adjustments Combined
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $ - $1,714,514 $ - $1,714,514 $ - $2,589,042 $ - $2,589,042
Cost of Sales - 1,516,927 - 1,516,927 - 1,843,989 - 1,843,989
---------- ---------- ------------ ---------- ---------- ---------- ------------ ----------
Gross profit - 197,587 - 197,587 - 745,053 - 745,053
Operating expenses - 930,763 - 930,763 - 413,055 - 413,055
---------- ---------- ------------ ---------- ---------- ---------- ------------ ----------
Income from
operations - (733,176) - (733,176) - 331,998 - 331,998
Other income - 2,962 - 2,962 - - - -
---------- ---------- ------------ ---------- ---------- ---------- ------------ ----------
Income (loss)
before taxes (730,214) - (730,214) 331,998 - 331,998
Provision for taxes - - - - - - - -
---------- ---------- ------------ ------------ ---------- ---------- ------------ ----------
NET INCOME (LOSS) $ - $ (730,214) $ - $ (730,214) $ - $ 331,998 $ - $ 331,998
========== ========== ============ ========== ========== ========== ============ ==========
EARNINGS PER SHARE
Net income
(loss) - $ (730,214) - $ (730,214) $ 331,998 - $ 331,998
Weighted-average
number of shares
outstanding 2,204,000 244,444 2,448,444 2,204,000 244,444 2,448,444
Earnings per share - (0.33) - (0.30) - 0.15 0.135
</TABLE>
NOTES:
(1) Earnings per share data shown above are applicable for both primary and
fully diluted.
(2) Weighted-average number of shares outstanding for the combined entity
includes all shares issued as of July 31, 1998 as if outstanding as of the
beginning of the period.
18
<PAGE>
Essentially, the immediate effect of the Merger is to dilute by 10 percent
the equity of the shareholders of TechLite Applied Sciences by transferring this
equity to the present shareholders of the Company and of SuperCorp. See "Summary
Information - Securities to be Outstanding After the Merger."
Material Contacts Among the Companies.
- --------------------------------------
In 1995 Thomas J. Kenan of Oklahoma City, Oklahoma, a director and general
counsel of SuperCorp, was introduced to J.D. Arvidson, president of TechLite
Applied Sciences, by Rex Frates of Tulsa, Oklahoma, an investor and
industrialist who was then considering investing funds in TechLite Applied
Sciences. Mr. Kenan followed the development of TechLite Applied Sciences
thereafter. In 1996 Mr. Kenan advised Albert L. Welsh, president and a director
of SuperCorp, and George W. Cole, whose spouse, Marjorie J. cole is a
significant shareholder of SuperCorp, that they should contact Mr. Arvidson, as
his company was in need of financial advisers with respect to its structure and
direction. Mr. Welsh and Mr. Cole both are stockbrokers and former underwriters
of registered stock offerings.
Mr. Welsh and Mr. Cole became financial advisers to TechLite Applied
Sciences in 1997, and Mr. Kenan performed legal services for it from time to
time in 1996 and in 1997. In early 1997 Mr. Kenan accepted 90,000 shares (giving
effect to a subsequent 35-for-one stock split) of common stock of TechLite
Applied Sciences in exchange for legal services performed with regard to
reorganizing the capital structure of TechLite Applied Sciences. Mr. Welsh and
Mr. Cole each received 10,000 shares (giving effect to a subsequent 35-for-one
stock split) of common stock of TechLite Applied Sciences for providing
financial advice with regard to reorganizing its capital structure.
Mr. Kenan subsequently transferred 85,000 shares of his TechLite Applied
Sciences stock to a trust, the Marilyn C. Kenan Trust, whose trustee and primary
beneficiary is Mr. Kenan's spouse, Marilyn C. Kenan, and 5,000 of his shares to
Sherie Adams, Mr. Kenan's legal assistant, as a bonus to her regular salary. Mr.
Cole transferred his 10,000 shares to his spouse, Marjorie J. Cole.
Mr. Welsh and Mr. Cole, in approximately March 1997, persuaded the
directors of TechLite Applied Sciences to consider recommending to their
shareholders the Merger described in this Prospectus. The directors favorably
considered the matter and ordered an audit of their financial records to be made
in order that a spinoff-merger transaction could proceed.
The SuperCorp directors also favorably considered the proposition of
creating a subsidiary corporation to merge with TechLite Applied Sciences and
distributing to the SuperCorp shareholders the stock SuperCorp would own in the
subsidiary. At the time the SuperCorp directors authorized the organization of
such subsidiary corporation, which is the Company, they authorized the sale of
24,444 shares of common stock of the Company to each of Mr. Welsh and Mr. Cole
in recognition of their services in persuading the directors of TechLite Applied
Sciences to consider the Merger described herein.
19
<PAGE>
Other than the proposed Spinoff and Merger described herein, there have
been no material contracts, arrangements, understandings, relationships,
negotiations or transactions among TechLite Applied Sciences, the Company, and
SuperCorp during the periods for which financial statements appear herein.
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 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 -
20
<PAGE>
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 Oklahoma on
June 3, 1997. 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.
Description of Business and Properties.
- ---------------------------------------
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 TechLite Applied Sciences, and TechLite
Applied Sciences's present management shall become the management of the
Company. See "Management Information - Directors, Executive Officers, and
Significant Employees."
21
<PAGE>
It is the intention of TechLite Applied Sciences's present management to
continue the business of TechLite Applied Sciences as the business of the
Company (see "Information about TechLite Applied Sciences - 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.,
a broker-dealer firm with principal offices in Kansas City, Missouri, and branch
offices in several cities, including Oklahoma City, Oklahoma, where Mr. Welsh is
employed. Mr. Welsh is 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 be made within 18 months after the effective date of the Registration
Statement of which this Prospectus is a part, Rule 419 of the Securities and
Exchange Commission requires that the acquisition effort be abandoned. In such
event, the certificates held in escrow would not be delivered to the record
owners thereof. 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 agreed to do so. See "Plan of Distribution - The Escrow Arrangements -
Consequences Should the Merger Not Occur." It is contemplated that such a
dissolution would have insignificant consequences for the persons receiving the
Spinoff Shares. The assets of the Company today consist of $245. Assuming the
proposed Merger is not approved by the shareholders of TechLite Applied Sciences
and that the expenses of future efforts to acquire a business are advanced by
the Company's management (as is proposed) or are borrowed from other sources,
the Company would have no assets to distribute to its shareholders upon such a
dissolution. Each shareholder would receive nothing in the dissolution and would
have a capital loss equal to $0.001 a share for each share of the Company
received in the Spinoff.
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 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 TechLite Applied Sciences, all
certificates representing the 195,556 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
22
<PAGE>
certificates, and (ii) the shareholders of TechLite Applied Sciences will
receive 2,209,903 Shares of Common Stock of the Company in exchange for all the
issued and outstanding shares of capital stock of TechLite Applied Sciences.
Should the Merger be effected, the Common Stock is expected to be eligible
for quotation on the NASD 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 TechLite
Applied Sciences or the Company.
The Company's stock will not be eligible for quotation on the Nasdaq Small
Cap Market ("Nasdaq") (i) until it trades at a price of $4 a share or higher and
(ii) unless it meets other Nasdaq requirements regarding assets and
shareholders' equity, which it will not yet meet even if the Merger 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,
except the 48,888 shares held by the two insiders, 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 TechLite Applied
Sciences 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
23
<PAGE>
provisions of paragraph (d) of Rule 145 refer to certain provisions of the
Commission's Rule 144 which require that:
o the Company must have been subject to the reporting
requirements of Section 15(d) of the Securities Exchange Act
for at least 90 days and must have filed all reports with
the Commission required by such rule during the twelve
months preceding such sale (or shorter period that the
Company was required to file such reports), and
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 (24,448 Shares immediately after the Merger) or the
average weekly volume of trading in such Common Stock
reported through the automated quotation system of Nasdaq 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 TechLite Applied Sciences 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 requirement of filing reports with the Commission by the
Company 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 195,556 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 2,209,903
Shares of the Company to be distributed in the Merger to TechLite Applied
Sciences shareholders other than 825,789 shares to TechLite Applied Sciences
officers and directors and to affiliates of TechLite Applied Sciences 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 1,285,624 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 675 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 825,789 shares will be held by affiliates of TechLite Applied
Sciences 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.
24
<PAGE>
Dividends.
----------
The Company has had no annual 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.
- ---------------------
See "Financial Statements - TechLite, Inc." for the independent auditor's
report dated October 31, 1998, with respect to the Company's balance sheet as of
October 31, 1998, such balance sheet, and the notes to the balance sheet.
INFORMATION ABOUT TECHLITE APPLIED SCIENCES
Overview.
- ---------
TechLite Applied Sciences, Inc. ("TechLite Applied Sciences") was
incorporated in Oklahoma on November 9, 1992. Its fiscal year ends January 31.
TechLite Applied Sciences has been engaged since 1993 in the business of
retrofitting existing lighting fixtures in buildings used for commercial,
education, manufacturing, institutional and health care purposes. Using highly
efficient reflectors, improved electronic ballasts, and energy-efficient
fluorescent lamps, TechLite Applied Sciences's retrofitting improvements make
possible a 60 percent or greater reduction in electricity consumption while
maintaining or improving existing light levels.
TechLite Applied Sciences has its headquarters in Tulsa, Oklahoma, and
branch offices in Dallas, Texas; Tecumseh, Oklahoma; Kearney, Nebraska; and
Brazilia and Rio de Janeiro, Brazil. TechLite Applied Sciences operated at a
loss from inception through the fiscal year that ended January 31, 1998.
Operations became profitable in the first six months of the fiscal year that
will end January 31, 1999.
Management's Discussion and Analysis of Financial Condition and Results of
- --------------------------------------------------------------------------------
Operations.
- -----------
The following discussion and analysis 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."
Results of operations.
----------------------
The following table presents, as a percentage of sales, certain selected
financial data for each of the two years in the period ended January 31, 1998
and for the six-month period ended July 31, 1998:
25
<PAGE>
<TABLE>
<CAPTION>
Six Months
Ended
Year ended January 31 1997 1998 7-31-98
---------------------------------------------------------------- ---------
<S> <C> <C> <C>
Sales 100% 100% 100%
Cost of sales 86% 88% 71%
--- --- ---
Gross margin 14% 12% 29%
Selling, general and
administrative expenses 26% 54% 16%
Net income (loss) before taxes (12)% (43)% 13%
</TABLE>
Sales.
------
Sales of $1,714,514 for fiscal year 1998 decreased by $86,139 from fiscal
1997's sales of $1,800,653, a decrease of five percent. Most operations in
fiscal year 1998 were affected by two events:
o In July 1997 TechLite Applied Sciences was the successful
bidder on a $3.95 million contract to retrofit most of the
buildings of the Tulsa, Oklahoma Independent School District
Number One. The contract was signed on October 6, 1997, and
TechLite Applied Sciences quickly increased its staff to
enable it to perform its contractual obligations. Yet, the
school district, through bureaucratic delays, prevented
TechLite Applied Sciences from commencing work on the
contract until January 27, 1998 - five days before the end
of fiscal year 1998.
o From October 1997 through the end of that fiscal year
(1998), and even through October 1998, TechLite Applied
Sciences diverted significant personnel and some monetary
resources to the pursuit of perceived opportunities in
Brazil. The objects of the opportunities are retrofitting
contracts with the postal system in Brazil and with a large,
French-owned chain store company, Carrefour Comercio E
Industria LT ("Carrefour"). As of October 31, 1998, TechLite
Applied Sciences has retrofitted the lighting fixtures in
demonstration areas of the postal system's main office and
in one of Carrefour's stores (one that has 80 checkout
counters), has made specific proposals to each both for a
single building retrofit and for a system-wide retrofit.
TechLite Applied Sciences awaits a response from each.
Interim Results.
----------------
Sales for the six months ended July 31, 1998 were $2,589,042, an increase
of $1,289,116, or 99%, over the $1,299,926 in sales for the six months ended
July 31, 1997. The increase was due to work being commenced on the Tulsa,
Oklahoma public school contract.
Gross margin.
-------------
Gross margin decreased from $247,221 in fiscal 1997 to $197,587 in fiscal
1998, a decrease of twenty percent. The decrease was due primarily to the gross
margin realized on work performed in fiscal 1998 on buildings owned by the
Houston Independent School District. Another company had received the contract
to perform this work but had been dismissed due to
26
<PAGE>
its unsatisfactory work performance. TechLite Applied Sciences assumed the
obligation to complete the work - and did so, but the contract price was for a
lower piece price than TechLite Applied Sciences offers or otherwise accepts.
The Houston contract was performed from September 1996 through March 1997.
Interim Results.
----------------
Gross margin for the six months ended July 31, 1998 was $745,053, an
increase of $621,423, or 503%, over the gross margin of $123,630 for the six
months ended July 31, 1997. The gross margin, as a percentage of sales,
increased from 9.5% for the 1997 six-month period to 28.8% for the 1998 first
six-months period. The increase in gross margin is attributable to the increase
in sales. The increase in gross margin percentage is attributable to the
difference in margin, as a percentage of sales, between the Tulsa public schools
contract and the Houston public schools contract.
Selling, general and administrative expenses.
---------------------------------------------
Selling, general and administrative expenses increased from $467,391 in
fiscal 1997 to $930,763 in fiscal 1998, or 99%. This reflects the increase in
staff made in anticipation of commencing work on the Tulsa public schools
contract. See " - Sales," above.
Interim Results.
----------------
Selling, general and administrative expenses for the six months ended July
31, 1998 dropped slightly to $413,055 from $465,382 during the same six-month
period the previous year, a decrease of eleven percent. This dramatic decrease,
at a time when sales doubled, was due to a concerted effort by TechLite Applied
Sciences' management to reduce these expenses at all levels.
Net income (loss) before taxes.
-------------------------------
A net loss before taxes of $219,965 in fiscal 1997 increased to a net loss
of $730,214 in 1998, an increase of 232%. The increase in loss was due to
TechLite Applied Sciences' increasing its staff in fiscal 1998 for the Tulsa
public schools contract and holding this staff for several months before work
could be commenced only five days before the end of the fiscal year.
Interim Results.
----------------
Net income before taxes for the six months ended July 31, 1998 was
$331,998, a significant reversal from a loss of $340,252 for the same period
ended July 31, 1997. This gain was due to a doubling of sales (a reflection of
work having commenced on the Tulsa public schools contract), a greater gross
margin obtained from the Tulsa public schools contract than from the Houston
public schools contract, and some reductions made in general and administrative
expenses.
Balance sheet items.
--------------------
Significant changes in several balance sheet items occurred from fiscal
1997 to fiscal 1998, in particular the following:
o a cash position of $150,272 at the end of fiscal year 1997
deteriorated to a bank overdraft of $10,191 at the end of fiscal
1998,
27
<PAGE>
o accounts receivable of $122,638 at the end of fiscal 1997
increased 240% to $416,809 at the end of fiscal 1998,
o property and equipment of $91,630 at the end of fiscal 1997
doubled to $184,477 at the end of fiscal 1998,
o payroll and sales tax payable of $74,444 at the end of fiscal
1997 leaped 185% to $212,521 at the end of fiscal 1998,
reflecting management's severe cash flow situation,
o notes payable and accrued interest of $394,853 at the end of
fiscal 1997 were reduced by $235,258, or 60%, by the end of
fiscal 1998, and
o stockholders' equity received an infusion of $1,005,216 from the
sale of stock during fiscal 1998, of which amount $688,767
represents stock sold for cash and $316,449 represents stock sold
for the cancellation of notes payable.
Interim Results.
----------------
There were several significant changes in balance sheet items that occurred
from July 31, 1997 to July 31, 1998, but it is more revealing to compare July
31, 1998 balance sheet items with those of only six months earlier, at the
fiscal year end of January 31, 1997:
o A bank overdrawn position of $10,191 at the end of fiscal 1998
improved to a cash position of $44,482 on July 31, 1998,
o accounts receivable of $416,809 on January 31, 1997 were
collected, and receivables of $20,020 were recorded on July 31,
1998,
o payroll and sales tax payable of $212,521 at the end of fiscal
1998 had been paid in full by July 31, 1998 with only current
taxes of $16,176 being on the books on July 31, 1998,
o billings in excess of costs and estimated earnings on uncompleted
contracts totaling $330,074 at the end of fiscal 1998 had been
eliminated by July 31, 1998,
o total liabilities of $1,088,929 at the end of fiscal 1998 had
been more than halved to $497,856 by July 31, 1998,
o the retained deficit had been reduced, by reason of six months'
earnings of $331,998, from $1,436,018 to $1,104,020 at July 31,
1998, and
o a stockholders' deficit of $430,322 on January 31, 1997 had been
reduced to near zero - $8,825.
The above improvements in balance sheet items were due to the facts that
TechLite Applied Sciences increased its sales and gross margin, effected
reductions in costs, and made a profit of $331,998 for the six months ended July
31, 1998.
28
<PAGE>
Liquidity and Capital Resources.
--------------------------------
TechLite Applied Sciences had positive cash flow from operations in fiscal
1997 of $182,053 but negative cash flow from operations of $786,400 in fiscal
1998. The principal component of this negative cash flow in fiscal 1998 was the
year's net loss of $730,214. This drain on liquidity and capital resources was
covered by the sale of $688,767 of common stock, by new borrowings of $128,427,
and by holding back payroll and sales tax payables of $212,521. A positive item
at fiscal 1998 year-end was contracts receivable of $416,809.
Interim Results.
----------------
TechLite Applied Sciences had a positive cash flow of $9,947 for the six
months ended July 31, 1998, as compared to a negative cash flow of $676,226 for
the same six months the previous year. The principal components of this
significant change in liquidity were the $331,998 net income for the six months
ended July 31, 1998 as compared with a loss of $340,252 for the same six months
the previous year, and a decrease of $396,789 in contract receivables for the
most recent six months.
Outlook.
--------
The statements contained in this Outlook are based on current expectations.
These statements are forward-looking, and actual results may vary materially.
TechLite Applied Sciences is rapidly increasing its sales and improving its
gross margin. It expects sales to increase from $1,714,514 in fiscal 1998 (which
ended January 31, 1998) to approximately $5.2 million in the fiscal year to end
January 31, 1999.
TechLite Applied Sciences's future results of operations and the other
forward-looking statements contained in this Outlook and Offering Circular, in
particular the statements regarding projected operations in the fiscal year
beginning February 1998, 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 loss of any of
several key personnel; unexpected costs in establishing branch offices; the
emergence of competition not now detected; and a general economic turndown.
DESCRIPTION OF TECHLITE APPLIED SCIENCES'S BUSINESS
The Light Fixture Retrofitting Industry.
- ----------------------------------------
In 1992 the Congress enacted the National Energy Policy Act which mandated
that many inefficient lighting products, such as the commonly used 40-watt, T-12
fluorescent lamp, be eliminated and replaced with new technology. Also affected
by this legislation are electric motors, other lamps, luminaries, distribution
transformers and electromagnetic fields research.
Also, in 1992 the Environmental Protection Agency (the "EPA") initiated its
"Green Lights" program, a voluntary pollution-reduction program that assists
electricity users by providing them with the most current information about
energy-efficient lighting technologies and how upgrades or retrofitting can be
financed.
29
<PAGE>
These two government initiatives - the National Energy Policy Act of 1992
and the EPA's Green Lights program - provided the impetus for the development of
three significant energy-efficient products:
o energy-efficient fluorescent lamps,
o improved electronic ballasts, and
o highly efficient silver reflectors.
The retrofitting of existing fixtures with these three improvements makes
possible up to a 60 percent or greater reduction in power consumption while
maintaining or even improving current light levels. The business of TechLite
Applied Sciences is selling and installing these and related products, which
involves designing or adapting the silver reflectors for each lighting fixture
in a customer's building. Frequently, electricity savings pay for the cost of
retrofitting in one to three years.
The Market.
- -----------
There are more than 2.5 billion light fixtures in the nation that would
benefit from energy-efficient lighting retrofit. Of that number, only
approximately 50 million, or less than two percent, have been converted.
TechLite Applied Sciences estimates that more than 1 billion of these
retrofittable units are in the central U.S. States, where TechLite Applied
Sciences has targeted its business plan.
The estimated one billion fixtures for the central U.S. States that are
retrofittable provide a total available market of approximately $50 billion.
TechLite Applied Sciences's five-year business plan projects that it will have
sales aggregating $239 million, which is less than 0.5 percent of the market in
this area.
Environmental Considerations.
- -----------------------------
Generating electricity involves burning fossil fuels - coal, oil, or
natural gas - or running a nuclear reactor or a hydroelectric plant. The mining
and transportation of fossil fuels can result in various types of pollution.
Burning fossil fuels emits air pollutants from smokestacks, including carbon
dioxide, sulfur dioxide, and nitrogen oxides. Today the EPA is increasingly
focusing on pollution prevention. If the nation uses less electricity to deliver
an energy service - such as lighting - the power plants that produce the
electricity burn less fuel and thus generate less pollution.
Lighting accounts for 20 to 25 percent of all electricity sold in the U.S.
Lighting for industry, stores, offices and warehouses represents 80 to 90
percent of total lighting electricity use. Every kilowatt hour of lighting
electricity not used prevents emissions of 1.5 pounds of carbon dioxide, 5.8
grams of sulfur dioxide, and 2.5 grams of nitrogen oxides. If energy efficient
lighting were used where profitable, the nation's demand for electricity would
be cut by more than 10 percent. This would result in annual reductions of 2.2
million metric tons of carbon dioxide the equivalent of taking 44 million cars
off the road; 1.3 million metric
30
<PAGE>
tons of sulfur dioxide; and 600,000 metric tons of nitrogen oxides. These
reductions represent twelve percent of U.S. utility emissions.
Saving Money.
- -------------
The Green Lights upgrade program focuses on achieving energy savings under
circumstances that save money for the electricity user. Businesses which have
made the investment in retrofit lighting, because of the development of highly
efficient silver reflectors, improved electronic ballasts, and energy-efficient
fluorescent lamps, have cut their electric bills by up to 60 percent or more and
have experienced an average return on their retrofit investment of 35 percent or
more.
For instance, the new electronic ballast is ten to fifteen percent more
efficient than the standard magnetic ballast which is in widespread use. Newly
developed compact fluorescent lamps convert most of their electricity into light
- - not heat, are four times more efficient than standard incandescent lights, and
can last nine to fifteen times longer. New lighting systems that include the
smaller diameter "T-8" fluorescent lamps that replace the old 40-watt T-12 "cool
white" fluorescent lamps can increase lumens per watt to over 100, as opposed to
the current standard of 60. By substituting these new systems, offices can
improve their lighting quality while reducing energy costs. Further, occupancy
sensors, which are motion-sensing devices that automatically turn on lights when
motion is detected, keep lights on when motion is detected, and turn lights off
when motion is not detected, can insure that lights are in use only when needed.
Of a special importance is the development of lighting enhancement reflectors
for fluorescent light fixtures. Utilizing a mirror- like permanent specular
coating on a metal substrate and ray-tracing software, reflector manufacturers
can bend the mirrored strips into intricate shapes to achieve desired
photometric results. TechLite Applied Sciences makes use of these lighting
enhancement reflectors, which requires a fixture-by-fixture retrofitting by
TechLite Applied Sciences but, together with the other energy-efficient
improvements noted above, enables TechLite Applied Sciences to provide the
ultimate energy-efficient and cost saving retrofitting services available
anywhere.
Consider, for example, a convenience store, operating 24 hours a day, seven
days a week, and paying the highest commercial rates because of the relatively
small space occupied and a commensurate small usage. Retrofitting the lights of
this business can be most cost-effective, generating a return on investment of
over 120 percent with a nine- to eleven-month payback. Lighting is one of the
largest hidden costs of a total electric bill for large office buildings -
approximately 40 percent. With an energy efficient lighting retrofit, this cost
can be reduced up to 60 percent or more. Further, if better light is provided,
and at less than one-half the cost, this makes buildings more competitive in
today's lease market. This also provides an increase in property value. Reducing
lighting costs in a facility by $100,000 annually would increase the property
value by one million dollars with a CAP rate of 10 percent.
The retrofit market is currently growing at a 52 percent rate a year.
TechLite Applied Sciences estimates that by the turn of the century, less than
fourteen percent of the total fixture population will have been replaced or
retrofitted. Retrofit revenues in 1999 should be approximately
31
<PAGE>
$7 billion nationwide. TechLite Applied Sciences estimates that while the east
and west coasts may now be six to seven percent retrofitted, the central,
southwest and southeast areas are less than one percent retrofitted, probably
because of lower electric rates and fewer rebate programs in these areas.
Other Benefits.
- ---------------
The new electronic ballasts operate at a higher frequency, 20,000 cycles
per second, as opposed to the magnetic predecessors which operate at 60 cycles
per second. The fluorescent lighting system the electronic ballasts operate can
convert power to light more efficiently than systems run by standard magnetic
ballasts. The higher cycle rate eliminates flicker and hum while using less
energy.
The electronic ballasts prompted the development of the new, smaller-
diameter, fluorescent tube, called the T-8. This new tube takes advantage of the
characteristics of the new electronic ballast and incorporates the use of
tri-phosphor coatings for enhanced color rendition.
-------------------------
Because the new electronic ballasts operate 50 degrees cooler, and because
the new T-8 lamps operate 20 degrees cooler with only half as many needed,
air-conditioning costs in a building may be reduced by 20 percent and
- --------------------------------------------------------------------------------
replacement parts by 50 percent.
- -------------------------------
The development of mini-fluorescent compact lamps allows replacement of
many sizes of incandescent lamps. Power reductions may be as high as 80 percent,
and with lower prices and minimal installation costs, these units have become
the most cost-effective of all retrofits. For example, 100-watt incandescent
lamps can be replaced with 22- to 28-watt fluorescent compacts without any light
loss. Ballast life for these mini-fluorescent compacts is expected to be 50,000
hours and lamp life is expected to be 10,000 hours.
Current Trends.
- ---------------
While there are many electric light retrofit companies that do no more in
retrofitting than replacing four old lamps with two new lamps, the most advanced
energy-efficient retrofit lighting companies, such as TechLite Applied Sciences,
are concerned with total systems engineering. These companies sell the concept
of re-engineering a building's lighting system to meet the lighting requirements
of the tasks performed in the buildings and to use whichever retrofit is most
cost-effective.
Being used by TechLite Applied Sciences are the latest ballasts which
provide a range of ballast factors (wattages) and proportionate light levels for
two T-8 lamps of 49, 54, 58, 62, 71 and 84 watts. Thus, there is immense
flexibility for the systems integrators to achieve desired light levels.
TechLite Applied Sciences's systems engineers literally custom-design the
retrofit for each fixture, dependent on its task. The five to fifteen percent
savings advantage over a single-type retrofit more than compensates for added
costs, if any. Lamps are now available in several intensity levels and at least
six color temperatures ratings.
32
<PAGE>
Another technical product recently improved to the point of viability is
the motion sensor. Early problems with the sensors have been corrected, and the
inability to accurately predict savings from these sensors has been overcome.
The manufacturers of lighting enhancement reflectors have continued to
improve their products. Single lamp reflectors for two-foot by four- foot
fixtures have added even more low-end versatility, and three-, four-, or
six-lamp high-intensity reflectors are now designed for ceilings in excess of 25
feet. These reflectors have dispelled the myth that those heights were the
exclusive territory of 400- to 1,600-watt metal halide lamps. These improvements
and a growing population of other products, while further enhancing system
efficiency, have also increased design complexity. This makes the market more
and more the domain of the systems engineers.
The business of designing and installing energy efficient lighting retrofit
has become very sophisticated. It demands operatives of a higher level in both
engineering and business. It is no longer sufficient to send inexperienced
salesmen door to door with brochures and big promises; the leaders in today's
industry are sending in teams of highly trained lighting professionals. TechLite
Applied Sciences utilizes sophisticated lighting demonstration units to perform
presentations, and its engineers identify and measure extensive lists of data
for a computerized design process.
In 1997, the competitive climate began to change with the emergence of
"energy service companies," called "ESCOs". Steps toward the deregulation of the
electricity supply companies - the electrical utility companies - were taken in
several states. One response of the utility companies has often been their
creation of ESCO subsidiaries that act as general contractors that seek energy
supply contracts. Sometimes the ESCOs negotiate contracts to replace a
building's heating, air conditioning and ventilation systems, to replace the
electronic controls that govern such systems, and to retrofit the lighting
fixtures. One feature of the contracts is to require the purchase of the
electricity from the ESCO's parent company. The lighting retrofitting is
generally subcontracted out to companies such as TechLite Applied Sciences, and
financing for the package is generally provided. TechLite Applied Sciences has
no strategic alliances with any ESCOs at present, and such alliances could prove
to be critical in getting business in the future.
Financing a Retrofit.
- ---------------------
A candidate for an electrical fixture retrofit may need funding. In today's
market, funding plans offer a repayment schedule derived from the energy savings
with the customer realizing a positive cash flow from the savings.
Significant advantages are provided by informal strategic alliances between
heating, ventilation and air-conditioning companies, such as Carrier
Corporation, and energy efficient lighting retrofit companies, such as TechLite
Applied Sciences. Typically, the largest consumption of power in large buildings
comes from the heating, ventilation and air conditioning units. The EPA has
mandated replacement of refrigerants containing chlorofluorocarbons (CFCs),
which is an expensive process. The replacement
33
<PAGE>
of this equipment may be essential for many buildings, but the building owners
might not save enough from the efficiency of new systems to pay for them in the
short term. Heating, ventilation and air-conditioning industry leaders, such as
Carrier, York, Trane, Honeywell and Johnson Controls, have recently begun to
include lighting retrofits with their own replacement projects.
The reason for the joint ventures is economics. Typically, when a building
installs new heating, ventilation and air-conditioning equipment and
simultaneously retrofits its electric lighting, the lighting retrofit will
provide 30 to 40 percent of the total electricity savings while contributing
only ten to twelve percent of the total cost. A company such as Carrier is
interested in selling the large heating, ventilation and air-conditioning
equipment and, perhaps, financing the total project, but it needs the
participation of the electric light retrofitter to provide the necessary savings
to make the entire project feasible.
Often, the large heating, ventilation and air-conditioning company will
provide the financing for the entire project; thus, the lighting retrofit
company gets the advantage of the larger company's financing resources which
provide building owners the opportunity to upgrade their heating, ventilation
and air conditioning systems and upgrade their lighting to state-of-the-art
systems with no out-of-pocket expense or risk. These large companies, such as
Carrier Corporation, will guarantee the building owner that the savings
generated will pay for the entire system, or they will make up the difference.
These proposals are highly advantageous to a small lighting retrofit company
such as TechLite Applied Sciences. In October 1995, Carrier Corporation's Tulsa
branch asked TechLite Applied Sciences to help with the lighting portion of a
complete heating, ventilation and air-conditioning replacement and lighting
retrofit project for Oral Roberts University in Tulsa. The entire project
investment for ORU was $5.9 million with an annual energy savings of $1 million
guaranteed by Carrier. TechLite Applied Sciences's portion of the project was
approximately twelve percent of the total investment, but provided 30 percent of
the annual savings.
Sales Methods.
- --------------
TechLite Applied Sciences operates out of six offices: Tulsa, Oklahoma;
Tecumseh, Oklahoma; Dallas, Texas; Kearney, Nebraska; and Brazilia and Rio de
Janeiro, Brazil. Each of the U.S. offices has a demonstration machine which is
used as a sales device. Within a single portable unit, there is a television set
with VCR for showing Green Lights and TechLite Applied Sciences videos, a
rotating watt meter, a light level indicator, a laser pointer for demonstration
of reflectivity, an audio amplifier for demonstration of hum characteristics,
and two two-by-four recessed troffers mounted on a motorized mast so that
fixtures can be raised to a normal position at ceiling height. The demonstration
machine vividly demonstrates the improvement in lighting obtained from a
retrofit as well as the substantial reduction in electricity usage.
Sales procedures employed today typically commence with a walk-through by
an experienced sales engineer to determine if a building is a good prospect.
Then, a demonstration using the demonstration machine is scheduled. After the
demonstration, depending upon the size of the
34
<PAGE>
building, the types of fixtures observed, the hours of usage and rates for
electricity demonstrated by the building's electricity bills, an estimate of
available savings is made. The potential customer is asked, based upon these
savings, if it wishes to proceed with a comprehensive feasibility and
engineering study. If the answer is positive, then TechLite Applied Sciences and
the potential customer enter into a memorandum of understanding, which offers
the customer several options. If the feasibility study shows that all the
project goals cannot be met, or if funding repayable from savings is not
available, there is no charge for the study. If the feasibility study shows that
all of the listed goals can be met, funding is available, and the customer
decides not to proceed with the lighting upgrade, the customer must agree to
reimburse TechLite Applied Sciences a predetermined amount for the feasibility
study and engineering work done up to that point. Should the customer agree that
the project should move forward, there is no added cost for the initial
feasibility study. Using data from the engineering study, the systems engineer
can determine the best retrofit solution for the over-lit areas and the under-
lit areas and which solution is most cost-effective.
In October 1997 TechLite Applied Sciences commenced a sales effort in
Brazil that resulted in its retrofitting, for demonstration purposes, the
eighteenth floor of the central post office building in Brazilia and a portion
of a large discount store for a French commercial concern, Carrefour Comercio E
Industria LT ("Carrefour"). Following the demonstrations, TechLite Applied
Sciences made proposals in July 1998 to each of the Brazil postal system and
Carrefour to retrofit a single building for each and, in the case of Carrefour,
50 stores for Carrefour.
Production Costs.
- -----------------
The cost of materials - lamps, ballasts, reflectors and motion sensors -
should account for approximately 59 percent of a project's costs. Installation
and supervisory labor should account for an additional fifteen percent of a
project's costs. Selling, general and administrative expenses are currently
running at approximately sixteen percent of contract revenue. During the first
six months of the current fiscal year, TechLite Applied Sciences had a pre-tax
profit on sales of approximately sixteen percent. TechLite Applied Sciences
estimates that selling, general and administrative expenses will decrease to
approximately ten percent of contract revenue as the volume increases.
Competition.
- ------------
Numerous companies throughout the U.S. are engaged in the business of
retrofitting light fixtures. Many of these are small businesses that operate
only locally, but they can have personal and political contacts that make them
quite competitive with TechLite Applied Sciences. Few of these competitors offer
custom-designed reflectors that add so much to a retrofit; they merely replace
existing fluorescent lamps and ballasts with the new, improved models. TechLite
Applied Sciences has obtained its retrofit contracts in most instances when it
was able to demonstrate what it offered in contrast to what a competitor
offered. Competition in the future, however, could arise from strategic
alliances between TechLite Applied Sciences' competitors and the emerging
"energy supply companies" - "ESCOs". See " - Current Trends," above.
35
<PAGE>
Government Approval of Principal Products.
- ------------------------------------------
No government approval is required in the U.S. for TechLite Applied
Sciences's products. It buys from others the fluorescent lamps, ballasts, and
reflectors it installs in its retrofitting business.
Government Regulations.
- -----------------------
TechLite Applied Sciences, as an electrical contractor, is subject to
regulation as such. State, county or city statutes and ordinances usually
require that it have a qualified and licensed electrician present and
supervising each retrofit job. Further, all installations of electrical fixtures
are subject to compliance with electrical codes in force in virtually all
jurisdictions in the U.S.
Properties.
- -----------
TechLite Applied Sciences owns no plants or real property.
Office Facilities.
- ------------------
TechLite Applied Sciences leases 5,000 square feet of a 13,000 square- foot
office building in Tulsa, Oklahoma; 400 square feet in Tecumseh, Oklahoma; 644
square feet of space in Kearney, Nebraska; 300 square feet in Dallas, Texas; a
10,000 square-foot warehouse and 400 square feet of office space in Brazilia,
and 250 square feet of office space in Rio de Janeiro, Brazil. It also leases
4,000 square feet of warehousing capacity in Tulsa, Oklahoma. The space is
deemed adequate for TechLite Applied Sciences's foreseeable needs. As branches
are opened in additional cities, facilities will be leased for the branch
operations.
Dependence on Major Customers and Suppliers.
- --------------------------------------------
TechLite Applied Sciences has been dependent, and expects to continue to be
dependent, upon single customers for ten percent or more of its consolidated
revenues. However, such customers would not be expected to be repeat customers
once the work for such customers is completed. It has had and anticipates
significant backlogs, but additional staff is taken on to meet all contract
needs. It is dependent upon a limited number of non-affiliated companies for the
lighting-enhancement reflectors TechLite Applied Sciences prefers to use in the
retrofitting of light fixtures. TechLite Applied Sciences believes that all
foreseeable demand for reflectors can be met. Other suppliers of reflectors are
available, but their product is not of as high a quality as that of the present
suppliers in the view of TechLite Applied Sciences.
Seasonality.
- ------------
There is no seasonal aspect to TechLite Applied Sciences's business.
Research and Development.
- -------------------------
TechLite Applied Sciences conducts no research and development.
36
<PAGE>
Environmental Controls.
- -----------------------
TechLite Applied Sciences 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.
- ---------------------------
Techlite Applied Sciences 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. TechLite Applied
Sciences presently uses off-the-shelf and easily replaceable software programs
and has determined that all software is year 2000 compliant.
Number of Employees.
- --------------------
On October 31, 1998, TechLite Applied Sciences employed 45 persons full
time, one person part time, and had twelve persons under contract as sales
associates who receive commissions on new business they bring to the company.
Venue of Sales.
- ---------------
None of TechLite Applied Sciences's sales are attributable to exports. It
is making a concerted effort, however, to obtain business in Brazil. See " -
Sales Methods," above. Should it obtain a significant contract to retrofit the
lighting fixtures in one or more post office buildings in Brazil, TechLite
Applied Sciences believes it will be able to obtain Export-Import Bank
guarantees for up to 85 percent of the cost of materials exported to Brazil.
TechLite Applied Sciences has not yet identified the source of any additional
financing it might require to complete a significant contract with the Brazil
postal system. Any contract it might obtain from Carrefour, the French-owned
chain store company, would require Carrefour's periodic payments in amounts
calculated to cover all of TechLite Applied Sciences' costs in advance of its
payment of these costs.
Patents, Copyrights and Intellectual Property.
- ----------------------------------------------
TechLite Applied Sciences has no patents, copyrights or intellectual
property.
Legal Proceedings.
- ------------------
Neither TechLite Applied Sciences 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 TechLite Applied Sciences's Capital Stock and Related Stockholder
- --------------------------------------------------------------------------------
Matters.
- --------
There is no public trading market for TechLite Applied Sciences's capital
stock. There are 52 holders of record of TechLite Applied
37
<PAGE>
Sciences's issued and outstanding capital stock. Should the Merger not be
approved and effected, no public trading market is expected to develop. TechLite
Applied Sciences has declared no dividends on its common stock. There are no
restrictions that would or are likely to limit the ability of TechLite Applied
Sciences to pay dividends on its common stock, but TechLite Applied Sciences 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 TechLite
Applied Sciences.
Should the proposed Merger be approved, all of the 2,209,903 shares of
Common Stock of the Company that would be distributed to the shareholders of
TechLite Applied Sciences could be sold, either without any restrictions or
pursuant to Rule 144 and Rule 145 under the Securities Act. See "Information
About the Company - Rule 144 and Rule 145 Restrictions on Trading."
Financial Statements.
- ---------------------
See "Financial Statements - TechLite Applied Sciences" for the audited
financial statements of TechLite Applied Sciences containing balance sheets at
January 31, 1997 and 1998, and statements of income, cash flows, and changes in
shareholders' equity for the period ended January 31, 1997 and 1998, which have
been prepared in accordance with generally accepted accounting principles in the
United States, and for its unaudited interim financial statements containing
balance sheets at July 31, 1997 and 1998, and statements of income and cash
flows for the six months ended July 31, 1997 and 1998, which have been prepared
in accordance with generally accepted accounting practices in the United States.
MANAGEMENT INFORMATION
Security Ownership of Certain Beneficial Owners and Management.
- ---------------------------------------------------------------
The following table shows information as of October 31, 1998 with respect to
each beneficial owner of more than 5% of each class of voting stock of the
Company and TechLite Applied Sciences, and to each of the officers and directors
of the Company and of TechLite Applied Sciences 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 TechLite
Applied Sciences (2,454,347 shares):
38
<PAGE>
<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 195,556 80 0 0(1)
Thomas J. Kenan
212 Northwest 18th
Oklahoma City, OK 73103 195,556(2) 80 95,773(3) 3.9
Ronald D. Wallace
One Buckhead Plaza, 19th Floor
3060 Peachtree Street, NW
Atlanta, GA 30305 195,556(2) 80 10,773 0.4
John E. Adams
1205 Tedford
Oklahoma City, OK 73116 195,556(2) 80 10,773 0.4
T.E. King
49 Strawberry Lane, Suite 200
Palos Verdes Peninsula, CA 90274 195,556(2) 80 10,773 0.4
Albert L. Welsh
3832 Northwest 69th
Oklahoma City, OK 73116 220,000(4) 90 45,217(5) 1.8
George W. Cole
3535 Northwest 58th, Suite 770
Oklahoma City, OK 73112 24,444 10 45,525(6) 1.9
Officers and Directors as a Group (1 person
before Merger, 0 persons after Merger) 220,000 90 0 0
- -------------------------
</TABLE>
(1) After allocating one share of Common Stock of the Company for each
34.81 shares of common stock of SuperCorp, SuperCorp will have 659
shares available for rounding up fractional shares.
(2) These shares are attributed to this person through his position as a
director of SuperCorp, which owns 195,556 shares of Common Stock of the
Company and accordingly represents voting and investment power shared
with the other directors of SuperCorp.
(3) 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
39
<PAGE>
owns 85,000 shares of common stock of TechLite Applied Sciences and
would exchange these shares for 85,000 shares of Common Stock of the
Company in the Merger as well as 10,773 shares of Common Stock of the
Company in the Spinoff. Mr. Kenan provides legal services to the
Company and to SuperCorp.
(4) 195,556 of these shares are attributed to this person through his
position as a director of SuperCorp. See footnote (2) above. 24,444
of these shares are owned directly by him and were received for his
services as a "promoter" of the Company. See "Transactions With
Insiders."
(5) 10,773 of these shares would be received in the Spinoff, 24,444 shares
are directly owned by him and were received for his services as a
"promoter" of the Company (see "Transactions with Insiders"), and
10,000 shares would be received in the Merger in exchange for 10,000
shares of TechLite Applied Sciences now owned by this person by way of
direct purchase from TechLite Applied Sciences.
(6) 11,081 of these shares would be received in the Spinoff, 24,444 shares
are directly owned by him and were received for his services as a
"promoter" of the Company (see "Transactions with Insiders"), and
10,000 shares would be received in the Merger in exchange for 10,000
shares of TechLite Applied Sciences now owned by this person by way
of direct purchase from TechLite Applied Sciences. The 11,081 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.
Mr. Cole disclaims any beneficial ownership in shares of capital stock
of the Company owned by his spouse.
40
<PAGE>
<TABLE>
<CAPTION>
Common Stock Beneficially Owned
-------------------------------
Before Company Common
Spinoff-Merger After Merger
-------------- --------------
No. of % of No. of % of
TechLite Applied Sciences Shares Class Shares Class
- ------------------------- ------ ----- ------- -----
<S> <C> <C> <C> <C>
J. D. Arvidson 528,400 23.9 528,400 21.5
9316 N. 147th E. Ave.
Owasso, OK 74136
John F. Bodkin 0(1) 0 0 0
25668 Lo Lane
Twin Peaks, CA 92391
C. O. Sage 222,292(2) 10.1 222,292(2) 9.1
7902 S. 70th E. Pl.
Tulsa, OK 74133
Gen. Gerald Hahn 1,000 0 1,000 0
3744 S. Niagara Way
Denver, CO 80237-1248
Carol E. Sage 222,292(2) 10.1 222,292(2) 9.1
7902 W. 70th E. Pl.
Tulsa, OK 74133
Mark D. Galvin 74,097 3.4 74,097 3.0
5412 Harvard
Bartlesville, OK 74006
Rex D. Frates 388,056(3) 17.6 388,056 15.8
2626 East 28th Street
Tulsa, OK 74114
Officers and Directors 825,789 37.4 825,789 33.6
as a group (6 persons)
- -------------------------
</TABLE>
(1) The Company has adopted a stock option plan and proposes to grant
options to this officer in an as yet undetermined amount or exercise
price.
(2) These shares are held in joint tenancy with right of survivorship by C.
O. Sage and Carol E. Sage, husband and wife, who own 222,292 shares in
the aggregate.
(3) Of these shares, 240,000 are held of record in three trusts, the
beneficiaries of which are descendants of Mr. Frates.
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 TechLite
Applied Sciences and a description of the business experience of each.
41
<PAGE>
<TABLE>
<CAPTION>
TechLite Applied Sciences:
--------------------------
Office Held Term of
Person Office Since Office
------ ------ ----- ------
<S> <C> <C>
J. D. Arvidson, 60 Chief Executive Officer and 1992 1999
Director
John F. Bodkin, 60 President, Chief Financial 1997 1999
Officer and Director
C. O. Sage, 65 Executive Vice President, Chief 1992 1999
Operating Officer, and Director
General Gerald Hahn, Chairman of the Board of 1997 1999
USAF (Ret.), 61 Directors
Carol E. Sage, 62 Secretary 1994 1999
Mark D. Galvin, 45 Vice President 1993 1999
Lee Arehart, 64 Sales Director, Tulsa Office 1997 1999
</TABLE>
<TABLE>
<CAPTION>
The Company.
------------
Office Held Term of
Person Office Since Office
------ ------ ----- ------
<S> <C> <C>
Albert L. Welsh, 67 President, Secretary and 1997 9-98
Director
</TABLE>
Directors of TechLite Applied Sciences.
---------------------------------------
J. D. "Jim" Arvidson.
---------------------
Mr. Arvidson has 33 years of experience in construction contracting and
management. He was engaged for 23 years in the design and construction of grain
silos, forage silos and mechanical conveyance systems. He was then involved in
the construction of commercial buildings, which construction involved interior
lighting design. Mr. Arvidson is the principal founder of TechLite Applied
Sciences and has been its chief executive officer since its founding in 1992.
John F. Bodkin.
---------------
Mr. Bodkin has more than 36 years' experience in corporate management and
marketing. Prior to joining the Company in February 1997, he was self-employed
as a business consultant from 1992 to 1994, and from July 1994 until the present
he has served as the Chief Executive Officer of Logistech, Inc., a software
development company specializing in import and export software, maquiladora
manufacturing, and international trade. Mr. Bodkin presently serves full time
with TechLite Applied Sciences. His duties with Logistech, Inc. do not involve a
substantial amount of his time.
C. O. Sage.
-----------
Mr. Sage has more than 25 years' experience in various agriculture-related
businesses, one being the building and management of a 35,000-head cattle
feeding business. He served for almost ten years as Assistant to the State
Treasurer of Oklahoma in charge of the operations of the State Treasurer's
office. Mr. Sage was one of the founders of
42
<PAGE>
TechLite Applied Sciences and has been employed by it in his present capacity
since it was founded in 1992.
General Gerald Hahn.
---------------------
General Hahn retired from the U.S. Air Force in 1994 after a 32-year
career, during which he developed expertise in the area of logistics and
financial management. From 1994 until the present, he has been employed as
president of Hahn Consulting and acts as an independent consultant to the
management of companies.
Senior Executives of TechLite Applied Sciences.
-----------------------------------------------
Carol E. Sage.
--------------
Ms. Sage's early professional experience was as the office manager for W-W
Feeders, a cattle feeding business. Then, she managed for ten years the audit
department of the Office of the State Treasurer of Oklahoma. Prior to joining
the Company, she served as a legal secretary from 1988 until 1994 in the law
firm of Paula Sage, attorney. In 1994 she joined TechLite Applied Sciences as
its Secretary and as a bookkeeper. She is the spouse of C. O. Sage, a director,
executive vice president, and chief operating officer.
Mark G. Galvin.
---------------
Mr. Galvin received a Master of Business Administration degree from
Oklahoma State University in 1994. Prior to joining the Company in May 1993 and
while still a student, he designed and developed custom software. He is the
co-developer of the Company's software which automated the presentation
materials of the Company and its lighting survey functions. He served as the
project manager for the Oral Roberts University and Edmond, Oklahoma public
schools lighting projects, which were completed ahead of schedule and below
budget. He presently serves as the project manager of the Company's Tulsa,
Oklahoma Public Schools project.
Lee Arehart.
------------
Prior to joining the Company in 1993, Mr. Arehart was the owner of
businesses involved in retail management, recreational facility management, and
franchise operations.
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 1967 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. 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.
43
<PAGE>
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 TechLite Applied Sciences.
TechLite Applied Sciences.
--------------------------
The directors of TechLite Applied Sciences receive no compensation for
their services as directors. The officers of TechLite Applied Sciences received
from it an aggregate of $229,537 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. Arvidson, the chief executive officer of TechLite Applied Sciences,
receives a salary of $6,667 a month. Mr. Bodkin, the president, receives a
salary of $6,000 a month.
Employment Contracts.
---------------------
TechLite Applied Sciences has no employment contracts with any 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
250,000 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 "insiders" and "promoters" of the
Company: Albert L. Welsh and George W. Cole. Each of such persons or his spouse
has purchased 24,444 shares of Common Stock of the Company at $0.001 a share,
which shares are in addition to what will be received on a pro rata basis with
other SuperCorp shareholders through the Spinoff, all as set forth above under
"Transactions with Insiders" and "Management Information - Security Ownership of
Certain Beneficial Owners and Management." Each of such persons or his spouse
also received 10,000 shares of Common Stock of TechLite Applied Sciences in
exchange for
44
<PAGE>
consulting services performed in 1997 for that company. See "Terms of the
Transaction - Material Contacts Among the Companies."
TechLite Applied Sciences's Transactions with Management.
--------------------------------------------------------------
Since its inception in November 1992, TechLite Applied Sciences has had no
material transactions with management.
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 presently
owns 86,000 shares of Common Stock of TechLite Applied Sciences and is the
beneficial owner of 5.8% of the issued and outstanding shares of Common Stock of
SuperCorp and, by reason of these ownerships, shall become the beneficial owner
of 97,369 Shares of the Company by way of the Merger and SuperCorp's
distribution of the 195,556 Spinoff Shares to its shareholders. Mr. Kenan
disclaims any beneficial ownership in the securities beneficially owned by his
spouse's trust.
INDEMNIFICATION
Under Oklahoma 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, Oklahoma 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 Oklahoma
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 Oklahoma corporation is empowered
to, and may, purchase and maintain liability insurance on behalf of any person
who is or was a
45
<PAGE>
director, officer, employee or agent of the corporation. As a result of such
corporation law, TechLite Applied Sciences 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 TechLite Applied Sciences.
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.
FINANCIAL STATEMENTS INDEX
The financial statements of the Company and of TechLite Applied Sciences
appear as follows:
TechLite, Inc.
Independent Auditors' Report.................................... F-1
Balance Sheet November 6, 1998.................................. F-2
Notes to Balance Sheet November 6, 1998......................... F-3
TechLite Applied Sciences, Inc.
Report of Independent Auditors.................................. F-5
Balance Sheets as of July 31, 1998 (unaudited) and
January 31, 1998 and 1997.............................. F-6
Statements of Income for the six months ended
July 31, 1998 and 1997 (unaudited) and the
years ended January 31, 1998 and January 31, 1997...... F-7
Statements of Cash Flows for the six months ended
July 31, 1998 and 1997 (unaudited) and
the years ended January 31, 1998 and
January 31, 1997....................................... F-8
Statements of Changes in Shareholders' Equity
for the period ended January 31, 1996 to
January 31, 1998....................................... F-9
Notes to Financial Statements................................... F-10
46
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Director and Stockholder
TechLite, Inc.
We have audited the balance sheet of TechLite, Inc., a majority-owned
subsidiary of Supercorp, Inc. and a development stage company, as of November 6,
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 in the United States of America. 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 disclosures 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 TechLite, Inc. as of November 6,
1998, in conformity with generally accepted accounting principles.
/S/ HOGAN & SLOVACEK
Oklahoma City, Oklahoma
November 6, 1998
F-1
<PAGE>
TECHLITE, INC.
--------------
(A Development Stage Company)
BALANCE SHEET
-------------
NOVEMBER 6, 1998
----------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash - on deposit in trust account $ 245
=====
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, 244,444 shares issued 245
-----
$ 245
=====
</TABLE>
The accompanying notes are an
integral part of this
balance sheet.
F-2
<PAGE>
TECHLITE, INC.
--------------
(A Development Stage Company)
NOTES TO BALANCE SHEET
----------------------
NOVEMBER 6, 1998
----------------
(1) ORGANIZATION
TechLite, Inc. (the Company) was organized in accordance with the General
Corporation Act of the State of Oklahoma on June 3, 1997, for the purpose of
merging (the "Merger") with TechLite Applied Sciences, Inc. (TechLite Applied
Sciences), an Oklahoma corporation. The Company has no business operations or
significant capital and has no intention of engaging in any active business
until it merges with TechLite Applied Sciences. 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, vice
president and director of SuperCorp Inc., the Company's parent.
Stock of the Company is owned 80 percent by SuperCorp Inc. and 20 percent
by two insiders. The 80 percent of the stock owned by SuperCorp Inc. 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 April 17, 1998, among SuperCorp Inc., the Company, and Bank One
Trust Company, NA, Oklahoma City.
(2) MERGER AGREEMENT
The Company agreed on October 16, 1998, to merge with TechLite Applied
Sciences. TechLite Applied Sciences is an operating company in the business of
retrofitting lighting fixtures to obtain reductions in electricity consumption.
The Company will be the surviving corporation (Survivor), but TechLite Applied
Sciences will elect all directors and officers of the Survivor. All currently
outstanding stock of TechLite Applied Sciences in the hands of its shareholders
will be cancelled and converted into 2,209,903 shares of common stock of the
Company when the Merger is effective. The Merger of TechLite Applied Sciences
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 TechLite Applied
Sciences 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 TechLite Applied Sciences recapitalized. Additionally, the historical
financial statements for the Company prior to the Merger will be those of
TechLite Applied Sciences. Upon completion of the
F-3
<PAGE>
proposed Merger, TechLite Applied Sciences will own 2,209,903 shares of Common
Stock of the Company or 90% of its voting shares. The fiscal year of the Company
will be December 31.
F-4
<PAGE>
Independent Accountants' Report
-------------------------------
Board of Directors
TechLite Applied Sciences, Inc.
Tulsa, Oklahoma
We have audited the accompanying balance sheets of TECHLITE APPLIED SCIENCES,
INC. as of January 31, 1998 and 1997, and the related statements of income,
statements of changes in stockholders' equity, and cash flows for the years 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require we plan and perform the audits 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 our audits provide 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 TECHLITE APPLIED SCIENCES, INC.
as of January 31, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
/s/ Causon & Westhoff
---------------------
CAUSON & WESTHOFF
Tulsa, Oklahoma
June 29, 1998
F-5
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
At July 31 At January 31
-------------- ---------------------------------
1998 1998 1997
-------------- --------------- --------------
(Unaudited)
ASSETS
<S> <C> <C> <C>
Cash 44,482 150,272
Accounts receivable 20,020 416,809 122,638
Inventory 47,283 46,378 22,305
Costs and estimated earnings in excess
of billings on uncompleted contracts 100,034
Property & equipment, net 185,981 184,477 91,630
Other assets 91,231 10,943 31,800
-------------- --------------- --------------
Total Assets 489,031 658,607 418,645
============== =============== ==============
LIABILITIES
Bank overdraft 10,191
Accounts payable 287,560 312,048 289,660
Accrued wages 31,303 31,445 49,231
Taxes payable 16,176 212,521 74,444
Billings in excess of costs and estimated
earnings on uncompleted contracts 0 330,074 315,781
Notes payable 130,003 159,595 394,853
Other liabilities 32,814 33,055
-------------- --------------- --------------
Total Liabilities 497,856 1,088,929 1,123,969
-------------- --------------- --------------
EQUITY
Common stock 220,400 220,400 480
Paid-in-capital 874,795 785,296
Retained earnings(deficit) (1,104,020) (1,436,018) (705,804)
-------------- --------------- --------------
Total Equity (8,825) (430,322) (705,324)
-------------- --------------- --------------
Total Liabilities & Equity 489,031 658,607 418,645
============== =============== ==============
</TABLE>
See Notes to Financial Statements
F-6
<PAGE>
<TABLE>
<CAPTION>
TECHLITE APPLIED SCIENCES, INC.
STATEMENTS ON INCOME
Six Months Ended
July 31 Years Ended January 31
------------------ ----------------------------------
-------------- -------------- --------------- --------------
1998 1997 1998 1997
-------------- -------------- --------------- --------------
(Unaudited)
<S> <C> <C> <C> <C>
Contract revenue earned 2,589,042 1,299,926 1,714,514 1,800,653
Cost of revenue earned 1,843,989 1,176,296 1,516,927 1,553,432
-------------- -------------- --------------- --------------
Gross profit 745,053 123,630 197,587 247,221
General & administrative expenses 413,055 465,382 930,763 467,391
-------------- -------------- --------------- --------------
Income from operations 331,998 (341,752) (733,176) (220,170)
Other income 0 1,500 2,962 205
-------------- -------------- --------------- --------------
Income(Loss) before taxes 331,998 (340,252) (730,214) (219,965)
-------------- -------------- --------------- --------------
Provision for income taxes 0 0 0 0
-------------- -------------- --------------- --------------
Net Income(Loss) 331,998 (340,252) (730,214) (219,965)
============== ============== =============== ==============
Net Income(Loss) per common share 0.15 (0.33)
============== ===============
</TABLE>
See Notes to Financial Statements
F-7
<PAGE>
<TABLE>
<CAPTION>
TECHLITE APPLIED SCIENCES, INC.
STATEMENTS OF CASH FLOWS
Six Months Ended
July 31 Years Ended January 31
-------------------------------- ---------------------------------
-------------- -------------- --------------- --------------
1998 1997 1998 1997
-------------- -------------- --------------- --------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C> <C>
Net income 331,998 (340,252) (730,214) (219,965)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 23,868 16,955 40,983 10,064
Decrease (increase) in contract receivables 396,789 (2,835) (294,171) (122,638)
Decrease (increase) in inventory (905) (18,385) (24,073) (22,305)
Decrease (increase) in other assets (80,288) 10,050 20,857 (29,022)
Net increase (decrease) in billings related to
costs and estimated earnings on
uncompleted contracts (430,108) (240,781) 14,293 315,781
Increase (decrease) in accounts payable (34,679) (124,238) 32,579 260,093
Increase (decrease) in other accrued liabilities (196,728) 23,260 153,346 (9,955)
-------------- -------------- --------------- --------------
Net cash provided by operating activities 9,947 (676,226) (786,400) 182,053
-------------- -------------- --------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment (25,372) (62,600) (133,830) (61,826)
-------------- -------------- --------------- --------------
Net cash used in investing activities (25,372) (62,600) (133,830) (61,826)
-------------- -------------- --------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principle payments on notes payable (29,592) (157,225) (47,236) (60,563)
New borrowings 0 78,236 128,427 88,261
Sale of stock 89,499 804,321 688,767
-------------- -------------- --------------- --------------
Net cash used in financing activities 59,907 725,332 769,958 27,698
-------------- -------------- --------------- --------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 44,482 (13,494) (150,272) 147,925
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 0 150,272 150,272 2,347
-------------- -------------- --------------- --------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD 44,482 136,778 0 150,272
============== ============== =============== ==============
</TABLE>
See Notes to Financial Statements
F-8
<PAGE>
<TABLE>
<CAPTION>
TECHLITE APPLIED SCIENCES, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Additional
Common Paid-in Retained
Stock Capital Earnings Total
------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 31, 1996 480 (485,839) (485,359)
NET INCOME(LOSS) (219,965) (219,965)
------------------------------------------------------------
BALANCE, JANUARY 31, 1997 480 (705,804) (705,324)
NET INCOME(LOSS) (730,214) (730,214)
SALE OF STOCK 93,822 594,945 688,767
DEBT/EQUITY CONVERSION 126,098 190,351 316,449
------------------------------------------------------------
BALANCE, JANUARY 31, 1998 220,400 785,296 (1,436,018) (430,322)
============================================================
</TABLE>
See Notes to Financial Statements
F-9
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Nature of Operations
- --------------------
The Company is organized as an Oklahoma corporation located in Tulsa,
Oklahoma. The Company is an energy efficient lighting specialist primarily
engaged in performing retrofits of lighting systems in commercial, educational
and health care facilities. The work is performed primarily under fixed-price
contracts. The length of the contracts vary, typically between 1 and 18 months.
Revenue Recognition
- -------------------
Revenues from fixed-price construction contracts are recognized on the
percentage- of-completion method, measured by the percentage of costs incurred
to date to estimated total costs for each contract. This method is used because
the Company considers expended costs to be the best available measure of
progress on these contracts. Because of the inherent uncertainties in estimating
costs, it is at least reasonably possible that the estimates used will change
within the near term.
Cost Recognition
- ----------------
Contract costs include all direct material, labor, and equipment costs and
those indirect costs related to contract performance such as indirect labor,
supplies, and tool costs. Provisions for estimated losses on uncompleted
contracts are made in the period in which such losses are determined. Changes in
job performance, job conditions, estimated profitability, including those
arising from contract penalty provisions, and final contract settlements may
result in revisions to costs and income and are recognized in the period in
which the revenues are determined.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally
accepted accounting principles require management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
F-10
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Depreciation
- ------------
Furniture and equipment are depreciated using the straight-line method over
the estimated useful life of each asset, which is generally from five to seven
years.
Income Taxes
- ------------
Provisions for income taxes are based on taxes payable or refundable for
the current year and deferred taxes on temporary differences between the amount
of taxable income and pretax financial income and between the tax bases of
assets and liabilities and their reported amounts in the financial statements.
Deferred tax assets and liabilities are included in the financial statements at
currently enacted income tax rates applicable to the period in which the
deferred tax assets and liabilities are expected to be realized or settled as
prescribed in FASB Statement No. 109, Accounting for Income Taxes. A valuation
allowance is established to reduce deferred tax assets if it is more likely than
not that a deferred tax asset will not be realized, as explained in Note 6. As
changes in tax laws or rates are enacted, deferred tax assets and liabilities
are adjusted through the provision for income taxes.
NOTE 2: CONTRACT RECEIVABLES
<TABLE>
<CAPTION>
Contract receivables consist of:
1998 1997
---- ----
Billed
<S> <C> <C>
Completed contracts $ 106,596 $ 19,638
Contracts in progress 310,213 103,000
------------ ------------
$ 416,809 $ 122,638
=========== ============
</TABLE>
Subsequent to January 31, 1998, approximately $404,000 was collected on the
outstanding receivable balance.
F-11
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 3: COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED
CONTRACTS
<TABLE>
<CAPTION>
Costs, estimated earnings, and billings on uncompleted contracts are summarized
as follows:
1998 1997
---- ----
<S> <C> <C>
Costs incurred on uncompleted contracts $ 163,551 $ 1,027,003
Estimated earnings 40,888 62,568
------ ------
204,439 1,089,571
Billings to date 534,513 1,405,352
-------------- -------------
$ (330,074) $ (315,781)
============== =============
Included in the accompanying balance sheet
under the following captions:
Billings in excess of costs and estimated
earnings on uncompleted contracts $ 330,074 $ 315,781
============== ==============
</TABLE>
NOTE 4: PAYROLL AND SALES TAXES PAYABLE
The Company owed the Internal Revenue Service and the Oklahoma Tax
Commission a combined total of $212,521 and $74,444 at January 31, 1998 and
1997, respectfully. The balances include current year and prior years amounts
related to payroll taxes, sales taxes, penalties and interest. Subsequent to
January 31, 1998, the Company reached a settlement agreement with the Oklahoma
Tax Commission and settled the outstanding debt in full. Additionally, the
Company has entered into a payment arrangement with the Internal Revenue
Service. The Company has made payments to the Internal Revenue Service since
January 31, 1998 in response to the payment arrangement and the outstanding debt
has been paid in full.
F-12
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 5: NOTES PAYABLE
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Unsecured notes payable, due on demand $ 100,563 $ 75,961
Notes payable to banks, collateralized by equipment,
due in monthly installments plus interest through
March 2000 49,607 18,545
Shareholder notes receivable, various loans made in
association with stock purchases 225,179
---------- ----------
$ 150,170 $ 319,685
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Aggregate annual maturities of long-term debt at January 31, 1998, are:
<S> <C>
1999 $ 123,669
2000 24,885
2001 1,616
------------
$ 150,170
============
</TABLE>
NOTE 6: INCOME TAXES AND DEFERRED INCOME TAXES
Based on the Company's reoccurring net operating losses it appears it is
more likely than not that the deferred tax asset created by the net operating
losses may not be realized. Therefore, a 100% allowance has been applied to the
net deferred tax asset.
There is no provision for income taxes included in these financial
statements. The net operating losses will be carried forward.
A reconciliation of the income tax expense (refund) at the statutory rate
to income tax expense at the Company's effective tax rate is shown below:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Computed at the statutory rate of 34% $ (248,272) $ (74,788)
Increase (decrease) in tax resulting from:
Net operating loss carryforward 248,272 74,788
----------- ------------
$ 0 $ 0
=========== ============
</TABLE>
F-13
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 7: DEBT TO EQUITY CONVERSION
During 1993, the Company borrowed funds in conjunction with a private stock
offering. The simultaneous stock purchases and borrowings were evidenced by a
document entitled Stock Sale and Stockholder's Agreement, which gave preemptive
shareholder rights to each person who subscribed for stock and loaned money to
the Company. The Board of Directors of the Company recognized that the
preemptive shareholder rights inhibited any significant expansion of the Company
and prevented it from raising funds from the public through the stock market.
All stockholders recorded at January 31, 1997 were requested to exchange (1)
their promissory notes of the Company and (2) their preemptive shareholder
rights for additional shares of common stock in the Company. $316,449 of
outstanding debt and accrued interest was converted to equity as a result of
this transaction.
NOTE 8: BACKLOG
The following schedule summarizes changes in backlog on contracts during
the years ended January 31, 1998 and 1997. Backlog represents the amount of
revenue the Company expects to realize from work to be performed on uncompleted
contracts in progress at year end and from contractual agreements on which work
has not yet begun.
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Backlog, beginning of year $ 823,540 $ 0
New contracts during the year 1,485,954 2,624,193
Contract adjustments 0 0
------------ -------------
2,309,494 2,624,193
Less contract revenues earned during the year 1,714,514 1,800,653
----------- -------------
Backlog, end of year $ 594,980 $ 823,540
============ =============
</TABLE>
The Company entered into additional contracts with estimated revenues of
$3,315,000 between February 1, 1998 and June 29, 1998.
F-14
<PAGE>
APPENDIX A
AGREEMENT OF MERGER
This Agreement of Merger ("the Agreement") is made and entered into as of
October 16, 1998, by and among TechLite, Inc., an Oklahoma corporation ("the
Company"); TechLite Applied Sciences, Inc., an Oklahoma corporation ("TechLite
Applied Sciences"); and SuperCorp Inc., an Oklahoma corporation ("SuperCorp").
WHEREAS, the Directors of the Company and the Directors of TechLite Applied
Sciences have each agreed to submit to their respective shareholders, for such
shareholders' approval or rejection, the merger of TechLite Applied Sciences
into the Company ("the Merger") in accordance with the provisions of the
Oklahoma 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, TechLite Applied Sciences, and
SuperCorp agree as follows:
1. Merger; Effective Date.
-----------------------
Pursuant to the terms and provisions of this Agreement and of the Oklahoma
General Corporation Act, and subject to the prior approval by the shareholders
of each of the Company and TechLite Applied Sciences, TechLite Applied Sciences
shall be merged with and into the Company, as confirmed by the filing by the
Company of a certified copy of this Agreement, a certificate of merger, or
articles of merger with the Secretary of State of the State of Oklahoma ("the
Effective Date"). The Company shall be the surviving corporation ("the Surviving
Corporation"). The Company and TechLite Applied Sciences shall be referred to
hereinafter collectively as the "Constituent Corporations." On the Effective
Date, the separate existence and corporate organization of TechLite Applied
Sciences, 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; otherwise, its 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.
3. Directors.
----------
The directors of TechLite Applied Sciences 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.
A-1
<PAGE>
4. Officers.
---------
The officers of TechLite Applied Sciences 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 TechLite Applied Sciences
which shall be issued and outstanding on the Effective Date shall, on the
Effective Date, be cancelled and exchanged for 2,209,903 shares of Common Stock
("the Merger Shares") of the Company.
5.2. There shall be 195,556 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 48,888 shares of Common Stock of the
Company issued and outstanding prior to the Effective Date and held by Albert L.
Welsh 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 TechLite Applied Sciences outstanding on the
Effective Date.
6. Representations and Warranties.
-------------------------------
SuperCorp and the Company jointly represent and warrant to, and agree with,
TechLite Applied Sciences that:
6.1 The Company has been duly organized and is validly
existing under the Oklahoma General 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>
Common None 40,000,000 $0.001
Preferred To be designated 10,000,000 $0.001
by the directors
</TABLE>
6.3 As of the Effective Date but immediately before giving
effect to the Merger, the Company has outstanding capital as follows: 244,444
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
A-2
<PAGE>
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 TechLite Applied Sciences's obligations.
------------------------------------------------------
The obligations of TechLite Applied Sciences 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 TechLite Applied
Sciences are free to approve or disapprove the Merger in their full discretion.
8. Tax Treatment.
--------------
The merger of the Company and TechLite Applied Sciences 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
TechLite Applied Sciences, the officers of the Company shall file with the
Secretary of State, State of Oklahoma either a certified copy of this Agreement,
a Certificate 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 Oklahoma, the Agreement may be
terminated by
A-3
<PAGE>
the board of directors of TechLite Applied Sciences notwithstanding approval of
this Agreement by the shareholders of TechLite Applied Sciences or of the
Company.
TechLite, Inc., an Oklahoma
corporation
By:/s/ Albert L. Welsh
------------------------
Albert L. Welsh,
President
TechLite Applied Sciences,
Inc., an Oklahoma
corporation
By:/s/ J. D. Arvidson
------------------------
J. D. Arvidson, Chief
Executive Officer
SuperCorp Inc.
By:/s/ Albert L. Welsh
------------------------
Albert L. Welsh,
President
A-4
<PAGE>
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
TechLite Applied Sciences, Inc., the company with which the Registrant proposes
to merge.
<TABLE>
<CAPTION>
Item Amount
---- ------
<S> <C>
Registration fees $ 100
Escrow agent's fee 500
Filing expenses (EDGAR) 10,000
Stock transfer agent's fee 4,000
Printing and engraving 10,000
Postage 5,400
Legal 29,000
Accounting and auditors 4,000
Moody's OTC Industrial Manual
publication fee 2,300
--------
Total Expenses $ 65,300
</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 Oklahoma with respect to the indemnification of officers, directors,
and agents of corporations incorporated in the State of Oklahoma.
Both the Company and TechLite Applied Sciences, Inc. have articles of
incorporation and bylaws provisions that insure or indemnify, to the full extent
allowed by the laws of the State of Oklahoma, directors, officers, employees,
agents or persons serving in similar capacities in other enterprises at the
request either of the Company or TechLite Applied Sciences, Inc., as the case
may be.
To the extent of the indemnification rights provided by the State of
Oklahoma statutes and provided by the Company's and TechLite Applied Sciences,
Inc.'s articles of incorporation and bylaws, and to the extent of TechLite
Applied Sciences, Inc.'s and the Company's abilities to meet such
indemnification obligations, the officers, directors and agents of TechLite
Applied Sciences, Inc. or the Company would be beneficially affected.
Recent Sales of Unregistered Securities.
- ----------------------------------------
On May 29, 1997, the Registrant issued 195,556 shares of its Common Stock
to its corporate parent, SuperCorp, Inc., an Oklahoma corporation, for a cash
consideration of $196, or $0.001 a share, and on May 29, 1997, issued 24,444
shares of its Common Stock to Albert L. Welsh and 24,444
II-1
<PAGE>
shares of its Common Stock to George W. Cole for a cash consideration of $49, or
$0.001 a share.
Services Rendered by Insiders.
- ------------------------------
Mr. Welsh and Mr. Cole may be deemed to be "insiders" or "promoters" in
connection with the purchase by each of 24,444 shares of Common Stock of the
Registrant for $24.50, or $0.001 a share. Each also performed services for the
Registrant and SuperCorp Inc.
Mr. Welsh's and Mr. Cole's services consisted of introducing TechLite
Applied Sciences to SuperCorp in early 1997 and in advising TechLite Applied
Sciences of the advantages to it of entering into the Agreement of Merger with
the Company (see "Appendix A - Agreement of Merger").
There was no underwriter, and none of the above-described securities were
offered to any persons other than the present holders of these securities.
The securities were not registered under the Securities Act of 1933 in
reliance upon the exemption from registration provided by Section 4(2) of the
Securities Act and by Regulation D, Rule 506.
Exhibits and Financial Statement Schedules.
- -------------------------------------------
Separately bound but filed as part of this Registration Statement are the
following exhibits:
Exhibit Item
2 - Agreement of Merger of October 16, 1998, between
TechLite, Inc. and TechLite Applied Sciences,
Inc.
3.1 - Articles of Incorporation of TechLite, Inc.
3.2 - Bylaws of TechLite, Inc.
3.3 - Amended Articles of Incorporation of TechLite
Applied Sciences, Inc.
3.4 - Bylaws of TechLite Applied Sciences, 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.
10 - Escrow Agreement among TechLite, Inc.; SuperCorp
Inc.; and Bank One Trust Company, NA, Oklahoma
City.
10.1 - 1998 Stock Option Plan adopted by TechLite, Inc.
II-2
<PAGE>
10.2 - Representative agreement among certain
shareholders of SuperCorp relating to
compliance with SEC Rule 419.
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.
23.1 - Consent of Causon & Westhoff, independent
auditors of TechLite Applied Sciences, Inc.
23.2 - Consent of Hogan & Slovacek, independent
auditors of TechLite, Inc.
23.3 - Consent of J. D. Arvidson to serve as a
director of TechLite, Inc. should the proposed
Merger with TechLite Applied Sciences, Inc.
become effective.
23.4 - Consent of John F. Bodkin to serve as a
director of TechLite, Inc. should the proposed
Merger with TechLite Applied Sciences, Inc.
become effective. (To be filed by amendment.)
23.5 - Consent of C. O. Sage to serve as a director of
TechLite, Inc. should the proposed Merger with
TechLite Applied Sciences, Inc. become
effective.
23.6 - Consent of General Gerald Hahn to serve as a
director of TechLite, Inc. should the proposed
Merger with TechLite Applied Sciences, Inc.
become effective.
27 - Financial Data Schedule.
Undertakings.
-------------
TechLite, 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
II-3
<PAGE>
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.
4. File a post-effective amendment to the registration statement to
include any financial statements required by Regulation 210.3- 19 under the
Securities Act of 1933 at the start of a delayed offering or throughout a
continuous 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 TechLite, Inc. pursuant to the foregoing provisions, or otherwise,
TechLite, 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 TechLite,
Inc. of expenses incurred or paid by a director, officer or controlling person
of TechLite, 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, TechLite, 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.
TechLite, 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 9, 1998 TECHLITE, INC.
By:/s/Albert L. Welsh
---------------------
Albert L. Welsh,
president
II-4
<PAGE>
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 9, 1998 /s/ Albert L. Welsh
---------------------
Albert L. Welsh,
president, sole
director, principal
financial officer,
and authorized
representative of the
Registrant
II-5
AGREEMENT OF MERGER
This Agreement of Merger ("the Agreement") is made and entered into as of
October 16, 1998, by and among TechLite, Inc., an Oklahoma corporation ("the
Company"); TechLite Applied Sciences, Inc., an Oklahoma corporation ("TechLite
Applied Sciences"); and SuperCorp Inc., an Oklahoma corporation ("SuperCorp").
WHEREAS, the Directors of the Company and the Directors of TechLite Applied
Sciences have each agreed to submit to their respective shareholders, for such
shareholders' approval or rejection, the merger of TechLite Applied Sciences
into the Company ("the Merger") in accordance with the provisions of the
Oklahoma 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, TechLite Applied Sciences, and
SuperCorp agree as follows:
1. Merger; Effective Date.
-----------------------
Pursuant to the terms and provisions of this Agreement and of the Oklahoma
General Corporation Act, and subject to the prior approval by the shareholders
of each of the Company and TechLite Applied Sciences, TechLite Applied Sciences
shall be merged with and into the Company, as confirmed by the filing by the
Company of a certified copy of this Agreement, a certificate of merger, or
articles of merger with the Secretary of State of the State of Oklahoma ("the
Effective Date"). The Company shall be the surviving corporation ("the Surviving
Corporation"). The Company and TechLite Applied Sciences shall be referred to
hereinafter collectively as the "Constituent Corporations." On the Effective
Date, the separate existence and corporate organization of TechLite Applied
Sciences, 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; otherwise, its 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.
Exhibit 2
Page 1 of 4 Pages
<PAGE>
3. Directors.
----------
The directors of TechLite Applied Sciences 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 TechLite Applied Sciences 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 TechLite Applied Sciences
which shall be issued and outstanding on the Effective Date shall, on the
Effective Date, be cancelled and exchanged for 2,209,903 shares of Common Stock
("the Merger Shares") of the Company.
5.2. There shall be 195,556 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 48,888 shares of Common Stock of the
Company issued and outstanding prior to the Effective Date and held by Albert L.
Welsh 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 TechLite Applied Sciences outstanding on the
Effective Date.
6. Representations and Warranties.
-------------------------------
SuperCorp and the Company jointly represent and warrant to, and agree with,
TechLite Applied Sciences that:
6.1 The Company has been duly organized and is validly
existing under the Oklahoma General 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:
Exhibit 2
Page 2 of 4 Pages
<PAGE>
Number of Par value
Class Series Shares of shares
----- ------ ---------- ---------
Common None 40,000,000 $0.001
Preferred To be designated 10,000,000 $0.001
by the directors
6.3 As of the Effective Date but immediately before giving
effect to the Merger, the Company has outstanding capital as follows: 244,444
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 TechLite Applied Sciences's obligations.
------------------------------------------------------
The obligations of TechLite Applied Sciences 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.
Exhibit 2
Page 3 of 4 Pages
<PAGE>
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 TechLite Applied
Sciences are free to approve or disapprove the Merger in their full discretion.
8. Tax Treatment.
--------------
The merger of the Company and TechLite Applied Sciences 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
TechLite Applied Sciences, the officers of the Company shall file with the
Secretary of State, State of Oklahoma either a certified copy of this Agreement,
a Certificate 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 Oklahoma, the Agreement may be
terminated by the board of directors of TechLite Applied Sciences
notwithstanding approval of this Agreement by the shareholders of TechLite
Applied Sciences or of the Company.
TechLite, Inc., an Oklahoma
corporation
By:/s/ Albert L. Welsh
------------------------
Albert L. Welsh,
President
TechLite Applied Sciences,
Inc., an Oklahoma
corporation
By:/s/ J. D. Arvidson
------------------------
J. D. Arvidson, Chief
Executive Officer
SuperCorp Inc.
By:/s/ Albert L. Welsh
------------------------
Albert L. Welsh,
President
Exhibit 2
Page 4 of 4 Pages
FILED
Jun 3 1997
OKLAHOMA SECRETARY
OF STATE
CERTIFICATE OF INCORPORATION
OF
TECHLITE, INC.
TO THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA:
THE UNDERSIGNED, Thomas J. Kenan, for the purpose of forming a corporation
pursuant to the Oklahoma General Corporation Act, hereby certifies:
1. Name.
----
The name of the corporation is:
TechLite, Inc.
2. Registered Office.
-----------------
The address of its registered office in the State of Oklahoma, County of
Oklahoma, is 201 Robert S. Kerr Avenue, Suite 800, Oklahoma City, Oklahoma
73102-4292; and the name of its registered agent at that address is Thomas J.
Kenan.
3. Purpose.
-------
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the Oklahoma General Corporation
Act.
4. Capital Stock.
-------------
The Corporation is authorized to issue two classes of stock, both of which
shall be voting. One class of stock shall be Common Stock, par value $0.001. The
second class of stock shall be Preferred Stock, par value $0.001. The Preferred
Stock, or any series thereof, shall have such designations, preferences and
relative, participating, optional or other special rights and qualifications,
limitations or restrictions thereof as shall be expressed in the resolution or
resolutions providing for the issue of such stock adopted by the board of
directors and may be made dependent upon facts ascertainable outside such
resolution or resolutions of the board of directors, provided that the manner in
which such facts shall operate upon such designations, preferences, rights and
qualifications, limitations or restrictions of such class or series of stock is
clearly and expressly set forth in the resolution or resolutions providing for
the issuance of such stock by the board of directors.
Exhibit 3.1
Page 1 of 3 Pages
<PAGE>
The total number of shares of stock of each class which the corporation
shall have authority to issue and the par value of each share of each class of
stock are as follows:
Number of
Par Authorized
Class Value Shares Total
Common $0.001 40,000,000 $40,000
Preferred $0.001 10,000,000 10,000
---------- -------
Totals: 50,000,000 $50,000
5. Incorporator.
------------
The name and address of the single incorporator is Thomas J. Kenan, 201
Robert S. Kerr Avenue, Suite 800, Oklahoma City, Oklahoma 73102-4292.
6. Bylaws.
------
The Bylaws of the corporation may be adopted, amended, or repealed by the
Board of Directors without the assent or vote of the stockholders.
7. Directors.
---------
The number of directors of the Corporation shall be such as from time to
time shall be fixed by, or in the manner provided in, the Bylaws. Elections of
directors need not be by ballot unless the Bylaws so provide.
8. Indemnification.
---------------
The corporation shall, to the full extent permitted by Section 1031 of the
Oklahoma General Corporation Act, as amended from time to time, indemnify all
persons whom it may indemnify pursuant thereto.
9. Amendment.
---------
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate in the manner now or hereafter
prescribed by law, and all rights and powers conferred herein on stockholders,
directors and officers are subject to this reserved power.
10. Compromise or Arrangement by Corporation with Creditors or
---------------------------------------------------------------------
Shareholders.
- ------------
Whenever a compromise or arrangement is proposed between the Corporation
and its creditors or any class of them or between the Corporation and its
shareholders or any class of them, any court of equitable jurisdiction within
the State of Oklahoma, on the application in a summary way of the Corporation or
of any creditor or shareholder thereof or on the application of any receiver or
receivers appointed for the Corporation under the provisions of Section 106 of
the Act or on the application of trustees in dissolution or of any receiver or
receivers appointed for the Corporation under the provisions of Section 100 of
the Act, may order a meeting of the creditors or class of creditors, or of the
shareholders or class of shareholders of the Corporation, as the case may be, to
be summoned in such manner as the court
Exhibit 3.1
Page 2 of 3 Pages
<PAGE>
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, or of the shareholders or class of shareholders
of the Corporation, as the case may be, agree to any compromise or arrangement
and to any reorganization of the Corporation as a consequence of such compromise
or arrangement, the compromise or arrangement and the reorganization, if
sanctioned by the court to which the application has been made, shall be binding
on all the creditors or class of creditors, or on all the shareholders or class
of shareholders, of the Corporation, as the case may be, and also on the
Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand the 29th day of May, 1997,
and acknowledge that this certificate is my act and deed and that the facts
stated herein are true.
/s/ Thomas J. Kenan
-----------------------
Thomas J. Kenan
Exhibit 3.1
Page 3 of 3 Pages
BYLAWS
OF
TECHLITE, INC.
ARTICLE I
OFFICES
-------
SECTION 1. REGISTERED OFFICE. The registered office of the corporation
shall be established and maintained at 201 Robert S. Kerr, Suite 800, in
Oklahoma City, Oklahoma County, Oklahoma.
SECTION 2. OTHER OFFICES. The corporation may have other offices, either
within or without the State of Oklahoma, at such place or places as the Board of
Directors may from time to time appoint or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders for the
election of directors and for such other business as may be stated in the notice
of the meeting, shall be held at such place, either within or without the State
of Oklahoma, and at such time and date as the Board of Directors, by resolution,
shall determine and as set forth in the notice of the meeting. In the event the
Board of Directors fails to so determine the time, date and place of meeting,
the annual meeting of stockholders shall be held at the registered office of the
corporation in Oklahoma on the first Friday in May of each year at 10:00 A.M.
Exhibit 3.2
Page 1 of 17 Pages
<PAGE>
If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors and
they may transact such other corporate business as shall be stated in the notice
of the meeting.
SECTION 2. OTHER MEETINGS. Meetings of stockholders for any purpose other
than the election of directors may be held at such time and place, within or
without the State of Oklahoma, as shall be stated in the notice of the meeting.
SECTION 3. VOTING. Each stockholder entitled to vote in accordance with the
terms of the Certificate of Incorporation and in accordance with the provisions
of these Bylaws shall be entitled to one vote, in person or by proxy, for each
share of stock entitled to vote held by such stockholder, but no proxy shall be
voted after three years from its date unless such proxy provides for a longer
period. Upon the demand of any stockholder, the vote for directors and the vote
upon any question before the meeting, shall be by ballot. All elections for
directors shall be decided by plurality vote of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors; and all other questions shall be decided by the affirmative vote of
the majority of shares present in person or represented by proxy at the meeting
and entitled to vote on the
Exhibit 3.2
Page 2 of 17 Pages
<PAGE>
subject matter, except as otherwise provided by the Certificate of Incorporation
or the laws of the State of Oklahoma.
A complete list of the stockholders entitled to vote at the ensuing
election, arranged in alphabetical order, with the address of each, and the
number of shares held by each, shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
SECTION 4. QUORUM. Except as otherwise required by law, by the Certificate
of Incorporation or by these Bylaws, the presence, in person or by proxy, of
stockholders holding a majority of the stock of the corporation entitled to vote
shall constitute a quorum at all meetings of the stockholders. In case a quorum
shall not be present at any meeting, a majority in interest of the stockholders
entitled to vote thereat, present in person or by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting until the requisite amount of stock entitled to vote shall be
present. At
Exhibit 3.2
Page 3 of 17 Pages
<PAGE>
any such adjourned meeting at which the requisite amount of stock entitled to
vote shall be represented, any business may be transacted which might have been
transacted at the meeting as originally noticed; but only those stockholders
entitled to vote at the meeting as originally noticed shall be entitled to vote
at any adjournment or adjournments thereof.
SECTION 5. SPECIAL MEETINGS. Special meetings of the stockholders for any
purpose or purposes may be called by the President or Secretary, or by
resolution of the directors.
SECTION 6. NOTICE OF MEETINGS. Written notice, stating the place, date and
time of the meeting, and the general nature of the business to be considered,
shall be given to each stockholder entitled to vote thereat at his address as it
appears on the records of the corporation, not less than ten (10) nor more than
sixty (60) days before the date of the meeting. No business other than that
stated in the notice shall be transacted at any meeting without the unanimous
consent of all the stockholders entitled to vote thereat.
SECTION 7. ACTION WITHOUT MEETING. Unless otherwise provided by the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any annual
or special meeting, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
Exhibit 3.2
Page 4 of 17 Pages
<PAGE>
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE III
DIRECTORS
---------
SECTION 1. NUMBER AND TERM. The number of directors shall be one or more.
The directors shall be elected at the annual meeting of the stockholders and
each director shall be elected to serve until his or her successor shall be
elected and shall qualify. Directors need not be stockholders.
SECTION 2. RESIGNATIONS. Any director, member of a committee or other
office may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time specified therein, and if no time be specified, at
the time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES. If the office of any director, member of a committee
or other officer becomes vacant, the remaining directors in office, though less
than a quorum by a majority vote, may appoint any qualified person to fill such
Exhibit 3.2
Page 5 of 17 Pages
<PAGE>
vacancy, who shall hold office for the unexpired term and until his successor
shall be duly chosen.
SECTION 4. REMOVAL. Any director or directors may be removed either for or
without cause at any time by the affirmative vote of the holders of a majority
of all the shares of stock outstanding and entitled to vote, at a special
meeting of the stockholders called for the purpose and the vacancies thus
created may be filled, at the meeting held for the purpose of removal, by the
affirmative vote of a majority in interest of the stockholders entitled to vote.
SECTION 5. INCREASE OF NUMBER. The number of directors may be increased by
amendment of these Bylaws by the affirmative vote of a majority vote of a
majority in interest of the stockholders, at the annual meeting or at a special
meeting called for that purpose, and by like vote the additional directors may
be chosen at such meeting to hold office until the next annual election and
until their successors are elected and qualify.
SECTION 6. POWERS. The Board of Directors shall exercise all of the powers
of the corporation except such as are by law, or by the Certificate of
Incorporation of the corporation or by these Bylaws conferred upon or reserved
to the stockholders.
SECTION 7. COMMITTEES. The Board of Directors may, by resolution or
resolutions passed by a majority of the whole board, designate one or more
committees, each committee to consist of one
Exhibit 3.2
Page 6 of 17 Pages
<PAGE>
or more of the directors of the corporation. Any such committee, to the extent
provided in the resolution of the Board of Directors, or in these Bylaws, shall
have and may exercise all the powers and authority of the Board of Directors in
the management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may require it;
but no such committee shall have the power or authority in reference to amending
the Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, recommending
to the stockholders a dissolution of the corporation or a revocation of a
dissolution, or amending the Bylaws of the corporation; and, unless the
resolution, these Bylaws or the Certificate of Incorporation expressly so
provide, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
SECTION 8. ANNUAL MEETINGS. The annual meeting of the Board may be held at
such time and place, either within or without the State of Oklahoma, as shall be
fixed by a vote of the shareholders at the annual meeting and no notice of such
meeting shall be necessary to the newly elected directors in order to legally
constitute such meeting.
Exhibit 3.2
Page 7 of 17 Pages
<PAGE>
SECTION 9. REGULAR MEETINGS. Regular meetings of the directors may be held
without notice at such places and times as shall be determined from time to time
by resolution of the directors.
SECTION 10. SPECIAL MEETINGS. Special meetings of the board may be called
by the President or by the Secretary on the written request of any two (2)
directors on at least two (2) days' notice to each director and shall be held at
such place or places as may be determined by the directors, or as shall be
stated in the call of the meeting.
SECTION 11. QUORUM. A majority of the directors shall constitute a quorum
for the transaction of business. If at any meeting of the board there shall be
less than a quorum present, a majority of those present may adjourn the meeting
from time to time until a quorum is obtained, and no further notice thereof need
be given other than by announcement at the meeting which shall be so adjourned.
SECTION 12. COMPENSATION. Directors shall not receive any stated salary for
their services as directors or as members of committees, but by resolution of
the board a fixed fee and expenses of attendance may be allowed for attendance
at each meeting. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer, agent
or otherwise, and receiving compensation therefor.
Exhibit 3.2
Page 8 of 17 Pages
<PAGE>
SECTION 13. ACTION WITHOUT MEETING. Any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee thereof, may
be taken without a meeting, if prior to such action a written consent thereto is
signed by all members of the board, or of such committee as the case may be, and
such written consent is filed with the minutes of proceedings of the board or
committee.
ARTICLE IV
OFFICERS
--------
SECTION 1. OFFICERS. The officers of the corporation shall be a President,
a Treasurer, and a Secretary, all of whom shall be elected by the Board of
Directors and who shall hold office until their successors are elected and
qualified. In addition, the Board of Directors may elect a Chairman, one (1) or
more Vice Presidents and such Assistant Secretaries and Assistant Treasurers as
they may deem proper. None of the officers of the corporation need be directors.
The officers shall be elected at the first meeting of the Board of Directors
after each annual meeting. More than two (2) offices may be held by the same
person.
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint
such other officers and agents as it may deem advisable, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.
Exhibit 3.2
Page 9 of 17 Pages
<PAGE>
SECTION 3. CHAIRMAN. The Chairman of the Board of Directors, if one be
elected, shall preside at all meetings of the Board of Directors and he shall
have and perform such other duties as from time to time may be assigned to him
by the Board of Directors.
SECTION 4. PRESIDENT. The President shall be the chief executive officer of
the corporation and shall have the general powers and duties of supervision and
management usually vested in the office of President of a corporation. He shall
preside at all meetings of the stockholders if present thereat, and in the
absence or non-election of the Chairman of the Board of Directors, at all
meetings of the Board of Directors, and shall have general supervision,
direction and control of the business of the corporation. Except as the Board of
Directors shall authorize the execution thereof in some other manner, he shall
execute bonds, mortgages and other contracts in behalf of the corporation, and
shall cause the seal to be affixed to any instrument requiring it and when so
affixed the seal shall be attested by the signature of the Secretary or an
Assistant Secretary.
SECTION 5. VICE PRESIDENT. Each Vice President shall have such powers and
shall perform such duties as shall be assigned to him by the directors.
SECTION 6. TREASURER. The Treasurer shall have the custody of the corporate
funds and securities and shall keep full
Exhibit 3.2
Page 10 of 17 Pages
<PAGE>
and accurate accounts of receipts and disbursements in books belonging to the
corporation. He shall deposit all monies and other valuables in the name and to
the credit of the corporation in such depositories as may be designated by the
Board of Directors.
SECTION 7. SECRETARY. The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors, and all other notices
required by law or by these Bylaws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the President, or by the directors, or stockholders, upon whose requisition
the meeting is called as provided in these Bylaws. He shall record all the
proceedings of the meetings of the corporation and of the directors in a book to
be kept for that purpose, and shall perform such other duties as may be assigned
to him by the directors or the President. He shall have custody of the seal of
the corporation and shall affix the same to all instruments requiring it, when
authorized by the directors or the President, and attest the same.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the directors.
Exhibit 3.2
Page 11 of 17 Pages
<PAGE>
SECTION 9. SALARIES. The salaries of all officers of the corporation shall
be fixed by the Board of Directors.
SECTION 10. REMOVAL. Any officer elected or appointed by the Board of
Directors may be removed from office, with or without cause, at any time by the
affirmative vote of a majority of the directors present at any meeting of the
Board at which a quorum is present.
ARTICLE V
MISCELLANEOUS
-------------
SECTION 1. CERTIFICATES OF STOCK. Certificates of stock, signed by the
President or Vice President, and the Treasurer or an Assistant Treasurer, or
Secretary or an Assistant Secretary, shall be issued to each stockholder
certifying the number of shares owned by him in the corporation. Any of or all
the signatures may be facsimiles.
SECTION 2. LOST CERTIFICATES. A new certificate of stock may be issued in
the place of any certificate theretofore issued by the corporation, alleged to
have been lost or destroyed, and the directors may, in their discretion, require
the owner of the lost or destroyed certificate, or his legal representatives, to
give the corporation a bond, in such sum as they may direct, not exceeding
double the value of the stock, to indemnify the corporation against any claim
that may be made against it on
Exhibit 3.2
Page 12 of 17 Pages
<PAGE>
account of the alleged loss of any such certificate, or the issuance of any such
new certificate.
SECTION 3. TRANSFER OF SHARES. The shares of stock of the corporation shall
be transferable only upon its books by the holders thereof in person or by their
duly authorized attorneys or legal representatives, and upon such transfer the
old certificates shall be surrendered to the corporation by the delivery thereof
to the person in charge of the stock and transfer books and ledgers, or to such
other person as the directors may designate, by whom they shall be cancelled,
and new certificates shall thereupon be issued. A record shall be made of each
transfer and whenever a transfer shall be made for collateral security, and not
absolutely, it shall be so expressed in the entry of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporation
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other
Exhibit 3.2
Page 13 of 17 Pages
<PAGE>
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
SECTION 5. REGISTERED STOCKHOLDERS. The corporation shall be entitled to
treat the holder of record of any share or shares as the holder in fact thereof,
and, accordingly, shall not be bound to recognize any equitable or other claim
to or interest in such share on the part of any other person, whether or not it
shall have express or other notice thereof, except as may be otherwise expressly
provided by the laws of Oklahoma.
SECTION 6. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the directors from or as a reserve fund to
meet contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.
SECTION 7. SEAL. The corporate seal shall be circular in form and shall
contain the name of the corporation and the words
Exhibit 3.2
Page 14 of 17 Pages
<PAGE>
"CORPORATE SEAL." Said seal may be used by causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise.
SECTION 8. FISCAL YEAR. The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.
SECTION 9. CHECKS. All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers, agent or agents of the
corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 10. NOTICE. Whenever any notice is required by these Bylaws to be
given, personal notice is not meant unless expressly so stated, and any notice
so required shall be deemed to be sufficient if given by depositing the same in
the United States mail, postage prepaid, addressed to the person entitled
thereto at his address as it appears on the records of the corporation, and such
notice shall be deemed to have been given on the day of such mailing.
Stockholders not entitled to vote shall not be entitled to receive notice of any
meetings except as otherwise provided by Statute.
SECTION 11. WAIVER OF NOTICE. Whenever any notice whatever is required to
be given under the provisions of any law, or under the provisions of the
Certificate of Incorporation of the
Exhibit 3.2
Page 15 of 17 Pages
<PAGE>
corporation or these Bylaws, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE VI
INDEMNIFICATION OF OFFICERS, DIRECTORS,
---------------------------------------
EMPLOYEES AND AGENTS
--------------------
To the extent and in the manner permitted by the laws of the State of
Oklahoma, and specifically as is permitted under Section 1031 of the Oklahoma
General Corporation Act, the corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, other than an action by or in the right of the corporation, by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement.
ARTICLE VII
AMENDMENTS
----------
These Bylaws may be altered or repealed and Bylaws may be made at any
annual meeting of the stockholders or at any special meeting thereof if notice
of the proposed alteration or repeal or
Exhibit 3.2
Page 16 of 17 Pages
<PAGE>
Bylaw or Bylaws to be made be contained in the notice of such special meeting,
by the affirmative vote of a majority of the stock issued and outstanding and
entitled to vote thereat, or by the affirmative vote of a majority of the Board
of Directors, at any regular meeting of the Board of Directors, or at any
special meeting of the Board of Directors, if notice of the proposed alteration
or repeal, or Bylaw or Bylaws to be made, be contained in the notice of such
special meeting.
APPROVAL OF DIRECTORS
The foregoing Bylaws, after being read, section by section, were approved
by the directors of this corporation at a meeting held on June 3, 1997.
Exhibit 3.2
Page 17 of 17 Pages
FILED
Sep 9 1998
OKLAHOMA SECRETARY
OF STATE
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
TECHLITE APPLIED SCIENCES, INC.
--------------------------------------
TO THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA:
The undersigned corporation ("the Corporation"), an Oklahoma
corporation, for the purposes of adopting an Amended and Restated Certificate of
Incorporation pursuant to the Section 1080 of the Oklahoma General Corporation
Act ("the Act"), hereby certifies:
1. The name of the Corporation is "TechLite Applied
Sciences, Inc."
2. The name under which the Corporation was originally incorporated was
"TEK-LITE Corporation"
3. The Certificate of Incorporation of the Corporation was filed with
the Oklahoma Secretary of State on November 19, 1992.
4. The Amended Certificate of Incorporation of the Corporation,
changing the name of the Corporation and the name and address of its registered
office and agent was filed with the Oklahoma Secretary of State on December 23,
1996.
5. The amendments to the Certificate of Incorporation effected by this
Certificate are (1) to change the address of its registered office, and (2) to
change the number of shares of Common Stock and of Preferred Stock that are
authorized to be issued.
6. This Amended and Restated Certificate of Incorporation was duly
adopted in accordance with Act Section 1080, after being proposed by the
directors and adopted by the shareholders in the manner and by the vote
prescribed in Act Section 1077, and restates, integrates and further amends the
Certificate of Incorporation.
7. The Certificate of Incorporation of Techlite Applied Sciences, Inc.
is hereby restated as further amended by this Certificate, to read in full, as
follows:
Exhibit 3.3
Page 1 of 4 Pages
<PAGE>
CERTIFICATE OF INCORPORATION
OF
TECHLITE APPLIED SCIENCES, INC.
TO THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA:
1. Name.
----
The name of the corporation is:
TechLite Applied Sciences, Inc.
2. Registered Office.
-----------------
The address of its registered office in the State of Oklahoma, County of
Tulsa, is 6106 East 32nd Place, Suite 101, Tulsa, OK 74135; and the name of its
registered agent at that address is James D. Arvidson.
3. Purpose.
-------
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the Oklahoma General Corporation
Act.
4. Capital Stock.
-------------
The Corporation is authorized to issue two classes of stock, both of which
shall be voting. One class of stock shall be Common Stock, par value $0.001. The
second class of stock shall be Preferred Stock, par value $0.001. The Preferred
Stock, or any series thereof, shall have such designations, preferences and
relative, participating, optional or other special rights and qualifications,
limitations or restrictions thereof as shall be expressed in the resolution or
resolutions providing for the issue of such stock adopted by the board of
directors and may be made dependent upon facts ascertainable outside such
resolution or resolutions of the board of directors, provided that the manner in
which such facts shall operate upon such designations, preferences, rights and
qualifications, limitations or restrictions of such class or series of stock is
clearly and expressly set forth in the resolution or resolutions providing for
the issuance of such stock by the board of directors.
The total number of shares of stock of each class which the corporation
shall have authority to issue and the par value of each share of each class of
stock are as follows:
Exhibit 3.3
Page 2 of 4 Pages
<PAGE>
<TABLE>
<CAPTION>
Number of
Par Authorized
Class Value Shares Total
----- ----- ----------- -----
<S> <C> <C> <C>
Common $0.001 40,000,000 $40,000
Preferred $0.001 10,000,000 10,000
---------- -------
Totals: 50,000,000 $50,000
</TABLE>
5. Bylaws.
------
The Bylaws of the corporation may be adopted, amended, or repealed by the
Board of Directors without the assent or vote of the stockholders.
6. Directors.
---------
The number of directors of the Corporation shall be such as from time to
time shall be fixed by, or in the manner provided in, the Bylaws. Elections of
directors need not be by ballot unless the Bylaws so provide.
7. Indemnification.
---------------
The corporation shall, to the full extent permitted by Section 1031 of the
Oklahoma General Corporation Act, as amended from time to time, indemnify all
persons whom it may indemnify pursuant thereto.
8. Amendment.
---------
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate in the manner now or hereafter
prescribed by law, and all rights and powers conferred herein on stockholders,
directors and officers are subject to this reserved power.
9. Compromise or Arrangement by Corporation with Creditors or Shareholders.
-----------------------------------------------------------------------
Whenever a compromise or arrangement is proposed between the Corporation
and its creditors or any class of them or between the Corporation and its
shareholders or any class of them, any court of equitable jurisdiction within
the State of Oklahoma, on the application in a summary way of the Corporation or
of any creditor or shareholder thereof or on the application of any receiver or
receivers appointed for the Corporation under the provisions of Section 106 of
the Act or on the application of trustees in dissolution or of any receiver or
receivers appointed for the Corporation under the provisions of Section 100 of
the Act, may order a meeting of the creditors or class of creditors, or of the
shareholders or class of shareholders of the Corporation, as the case may be, to
be summoned in such manner as the court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors, or
of the shareholders or class of shareholders of the Corporation, as the case may
be, agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such
Exhibit 3.3
Page 3 of 4 Pages
<PAGE>
compromise or arrangement, the compromise or arrangement and the reorganization,
if sanctioned by the court to which the application has been made, shall be
binding on all the creditors or class of creditors, or on all the shareholders
or class of shareholders, of the Corporation, as the case may be, and also on
the Corporation.
IN WITNESS WHEREOF, this Corporation has caused this Certificate to be
signed by its President and attested by its Secretary this 21st day of October,
1997.
ATTEST: TECHLITE APPLIED SCIENCES, INC.
/s/ Carol Sage By /s/ John F. Bodkin
- --------------------- -------------------------
Carol Sage, Secretary John F. Bodkin, President
Exhibit 3.3
Page 4 of 4 Pages
BYLAWS
OF
TEK-LITE CORPORATION
(name changed to TechLite Applied Sciences, Inc. 12-23-96)
ARTICLE I
OFFICES
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SECTION 1. REGISTERED OFFICE. The registered office of the corporation
shall be established and maintained at 1142 East 64th Street, in Tulsa, Tulsa
County, Oklahoma.
SECTION 2. OTHER OFFICES. The corporation may have other offices, either
within or without the State of Oklahoma, at such place or places as the Board of
Directors may from time to time appoint or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders for the
election of directors and for such other business as may be stated in the notice
of the meeting, shall be held at such place, either within or without the State
of Oklahoma, and at such time and date as the Board of Directors, by resolution,
shall determine and as set forth in the notice of the meeting. In the event the
Board of Directors fails to so determine the time, date and place of meeting,
the annual meeting of stockholders shall
Exhibit 3.4
Page 1 of 17 Pages
<PAGE>
be held at the registered office of the corporation in Oklahoma on the first
Friday in May of each year at 10:00 A.M.
If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors and
they may transact such other corporate business as shall be stated in the notice
of the meeting.
SECTION 2. OTHER MEETINGS. Meetings of stockholders for any purpose other
than the election of directors may be held at such time and place, within or
without the State of Oklahoma, as shall be stated in the notice of the meeting.
SECTION 3. VOTING. Each stockholder entitled to vote in accordance with the
terms of the Certificate of Incorporation and in accordance with the provisions
of these Bylaws shall be entitled to one vote, in person or by proxy, for each
share of stock entitled to vote held by such stockholder, but no proxy shall be
voted after three years from its date unless such proxy provides for a longer
period. Upon the demand of any stockholder, the vote for directors and the vote
upon any question before the meeting, shall be by ballot. All elections for
directors shall be decided by plurality vote of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors; and all other questions shall be decided by the affirmative vote of
the majority of shares present in person or
Exhibit 3.4
Page 2 of 17 Pages
<PAGE>
represented by proxy at the meeting and entitled to vote on the subject matter,
except as otherwise provided by the Certificate of Incorporation or the laws of
the State of Oklahoma.
A complete list of the stockholders entitled to vote at the ensuing
election, arranged in alphabetical order, with the address of each, and the
number of shares held by each, shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
SECTION 4. QUORUM. Except as otherwise required by law, by the Certificate
of Incorporation or by these Bylaws, the presence, in person or by proxy, of
stockholders holding a majority of the stock of the corporation entitled to vote
shall constitute a quorum at all meetings of the stockholders. In case a quorum
shall not be present at any meeting, a majority in interest of the stockholders
entitled to vote thereat, present in person or by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting until the
Exhibit 3.4
Page 3 of 17 Pages
<PAGE>
requisite amount of stock entitled to vote shall be present. At any such
adjourned meeting at which the requisite amount of stock entitled to vote shall
be represented, any business may be transacted which might have been transacted
at the meeting as originally noticed; but only those stockholders entitled to
vote at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.
SECTION 5. SPECIAL MEETINGS. Special meetings of the stockholders for any
purpose or purposes may be called by the President or Secretary, or by
resolution of the directors.
SECTION 6. NOTICE OF MEETINGS. Written notice, stating the place, date and
time of the meeting, and the general nature of the business to be considered,
shall be given to each stockholder entitled to vote thereat at his address as it
appears on the records of the corporation, not less than ten (10) nor more than
sixty (60) days before the date of the meeting. No business other than that
stated in the notice shall be transacted at any meeting without the unanimous
consent of all the stockholders entitled to vote thereat.
SECTION 7. ACTION WITHOUT MEETING. Unless otherwise provided by the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any annual
or special meeting, may be taken without a meeting, without prior notice and
without a
Exhibit 3.4
Page 4 of 17 Pages
<PAGE>
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.
ARTICLE III
DIRECTORS
---------
SECTION 1. NUMBER AND TERM. The number of directors shall be one or more.
The directors shall be elected at the annual meeting of the stockholders and
each director shall be elected to serve until his or her successor shall be
elected and shall qualify. Directors need not be stockholders.
SECTION 2. RESIGNATIONS. Any director, member of a committee or other
office may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time specified therein, and if no time be specified, at
the time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES. If the office of any director, member of a committee
or other officer becomes vacant, the remaining directors in office, though less
than a quorum by a
Exhibit 3.4
Page 5 of 17 Pages
<PAGE>
majority vote, may appoint any qualified person to fill such vacancy, who shall
hold office for the unexpired term and until his successor shall be duly chosen.
SECTION 4. REMOVAL. Any director or directors may be removed either for or
without cause at any time by the affirmative vote of the holders of a majority
of all the shares of stock outstanding and entitled to vote, at a special
meeting of the stockholders called for the purpose and the vacancies thus
created may be filled, at the meeting held for the purpose of removal, by the
affirmative vote of a majority in interest of the stockholders entitled to vote.
SECTION 5. INCREASE OF NUMBER. The number of directors may be increased by
amendment of these Bylaws by the affirmative vote of a majority vote of a
majority in interest of the stockholders, at the annual meeting or at a special
meeting called for that purpose, and by like vote the additional directors may
be chosen at such meeting to hold office until the next annual election and
until their successors are elected and qualify.
SECTION 6. POWERS. The Board of Directors shall exercise all of the powers
of the corporation except such as are by law, or by the Certificate of
Incorporation of the corporation or by these Bylaws conferred upon or reserved
to the stockholders.
SECTION 7. COMMITTEES. The Board of Directors may, by resolution or
resolutions passed by a majority of the whole board,
Exhibit 3.4
Page 6 of 17 Pages
<PAGE>
designate one or more committees, each committee to consist of one or more of
the directors of the corporation. Any such committee, to the extent provided in
the resolution of the Board of Directors, or in these Bylaws, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to the
stockholders a dissolution of the corporation or a revocation of a dissolution,
or amending the Bylaws of the corporation; and, unless the resolution, these
Bylaws or the Certificate of Incorporation expressly so provide, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock.
SECTION 8. ANNUAL MEETINGS. The annual meeting of the Board may be held at
such time and place, either within or without the State of Oklahoma, as shall be
fixed by a vote of the shareholders at the annual meeting and no notice of such
meeting shall be necessary to the newly elected directors in order to legally
constitute such meeting.
Exhibit 3.4
Page 7 of 17 Pages
<PAGE>
SECTION 9. REGULAR MEETINGS. Regular meetings of the directors may be held
without notice at such places and times as shall be determined from time to time
by resolution of the directors.
SECTION 10. SPECIAL MEETINGS. Special meetings of the board may be called
by the President or by the Secretary on the written request of any two (2)
directors on at least two (2) days' notice to each director and shall be held at
such place or places as may be determined by the directors, or as shall be
stated in the call of the meeting.
SECTION 11. QUORUM. A majority of the directors shall constitute a quorum
for the transaction of business. If at any meeting of the board there shall be
less than a quorum present, a majority of those present may adjourn the meeting
from time to time until a quorum is obtained, and no further notice thereof need
be given other than by announcement at the meeting which shall be so adjourned.
SECTION 12. COMPENSATION. Directors shall not receive any stated salary for
their services as directors or as members of committees, but by resolution of
the board a fixed fee and expenses of attendance may be allowed for attendance
at each meeting. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer, agent
or otherwise, and receiving compensation therefor.
Exhibit 3.4
Page 8 of 17 Pages
<PAGE>
SECTION 13. ACTION WITHOUT MEETING. Any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee thereof, may
be taken without a meeting, if prior to such action a written consent thereto is
signed by all members of the board, or of such committee as the case may be, and
such written consent is filed with the minutes of proceedings of the board or
committee.
ARTICLE IV
OFFICERS
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SECTION 1. OFFICERS. The officers of the corporation shall be a President,
a Treasurer, and a Secretary, all of whom shall be elected by the Board of
Directors and who shall hold office until their successors are elected and
qualified. In addition, the Board of Directors may elect a Chairman, one (1) or
more Vice Presidents and such Assistant Secretaries and Assistant Treasurers as
they may deem proper. None of the officers of the corporation need be directors.
The officers shall be elected at the first meeting of the Board of Directors
after each annual meeting. More than two (2) offices may be held by the same
person.
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint
such other officers and agents as it may deem advisable, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.
Exhibit 3.4
Page 9 of 17 Pages
<PAGE>
SECTION 3. CHAIRMAN. The Chairman of the Board of Directors, if one be
elected, shall preside at all meetings of the Board of Directors and he shall
have and perform such other duties as from time to time may be assigned to him
by the Board of Directors.
SECTION 4. PRESIDENT. The President shall be the chief executive officer of
the corporation and shall have the general powers and duties of supervision and
management usually vested in the office of President of a corporation. He shall
preside at all meetings of the stockholders if present thereat, and in the
absence or non-election of the Chairman of the Board of Directors, at all
meetings of the Board of Directors, and shall have general supervision,
direction and control of the business of the corporation. Except as the Board of
Directors shall authorize the execution thereof in some other manner, he shall
execute bonds, mortgages and other contracts in behalf of the corporation, and
shall cause the seal to be affixed to any instrument requiring it and when so
affixed the seal shall be attested by the signature of the Secretary or an
Assistant Secretary.
SECTION 5. VICE PRESIDENT. Each Vice President shall have such powers and
shall perform such duties as shall be assigned to him by the directors.
SECTION 6. TREASURER. The Treasurer shall have the custody of the corporate
funds and securities and shall keep full
Exhibit 3.4
Page 10 of 17 Pages
<PAGE>
and accurate accounts of receipts and disbursements in books belonging to the
corporation. He shall deposit all monies and other valuables in the name and to
the credit of the corporation in such depositories as may be designated by the
Board of Directors.
SECTION 7. SECRETARY. The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors, and all other notices
required by law or by these Bylaws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the President, or by the directors, or stockholders, upon whose requisition
the meeting is called as provided in these Bylaws. He shall record all the
proceedings of the meetings of the corporation and of the directors in a book to
be kept for that purpose, and shall perform such other duties as may be assigned
to him by the directors or the President. He shall have custody of the seal of
the corporation and shall affix the same to all instruments requiring it, when
authorized by the directors or the President, and attest the same.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the directors.
Exhibit 3.4
Page 11 of 17 Pages
<PAGE>
SECTION 9. SALARIES. The salaries of all officers of the corporation shall
be fixed by the Board of Directors.
SECTION 10. REMOVAL. Any officer elected or appointed by the Board of
Directors may be removed from office, with or without cause, at any time by the
affirmative vote of a majority of the directors present at any meeting of the
Board at which a quorum is present.
ARTICLE V
MISCELLANEOUS
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SECTION 1. CERTIFICATES OF STOCK. Certificates of stock, signed by the
President or Vice President, and the Treasurer or an Assistant Treasurer, or
Secretary or an Assistant Secretary, shall be issued to each stockholder
certifying the number of shares owned by him in the corporation. Any of or all
the signatures may be facsimiles.
SECTION 2. LOST CERTIFICATES. A new certificate of stock may be issued in
the place of any certificate theretofore issued by the corporation, alleged to
have been lost or destroyed, and the directors may, in their discretion, require
the owner of the lost or destroyed certificate, or his legal representatives, to
give the corporation a bond, in such sum as they may direct, not exceeding
double the value of the stock, to indemnify the corporation against any claim
that may be made against it on
Exhibit 3.4
Page 12 of 17 Pages
<PAGE>
account of the alleged loss of any such certificate, or the issuance of any such
new certificate.
SECTION 3. TRANSFER OF SHARES. The shares of stock of the corporation shall
be transferable only upon its books by the holders thereof in person or by their
duly authorized attorneys or legal representatives, and upon such transfer the
old certificates shall be surrendered to the corporation by the delivery thereof
to the person in charge of the stock and transfer books and ledgers, or to such
other person as the directors may designate, by whom they shall be cancelled,
and new certificates shall thereupon be issued. A record shall be made of each
transfer and whenever a transfer shall be made for collateral security, and not
absolutely, it shall be so expressed in the entry of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporation
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other
Exhibit 3.4
Page 13 of 17 Pages
<PAGE>
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
SECTION 5. REGISTERED STOCKHOLDERS. The corporation shall be entitled to
treat the holder of record of any share or shares as the holder in fact thereof,
and, accordingly, shall not be bound to recognize any equitable or other claim
to or interest in such share on the part of any other person, whether or not it
shall have express or other notice thereof, except as may be otherwise expressly
provided by the laws of Oklahoma.
SECTION 6. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the directors from or as a reserve fund to
meet contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.
SECTION 7. SEAL. The corporate seal shall be circular in form and shall
contain the name of the corporation and the words
Exhibit 3.4
Page 14 of 17 Pages
<PAGE>
"CORPORATE SEAL." Said seal may be used by causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise.
SECTION 8. FISCAL YEAR. The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.
SECTION 9. CHECKS. All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers, agent or agents of the
corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 10. NOTICE. Whenever any notice is required by these Bylaws to be
given, personal notice is not meant unless expressly so stated, and any notice
so required shall be deemed to be sufficient if given by depositing the same in
the United States mail, postage prepaid, addressed to the person entitled
thereto at his address as it appears on the records of the corporation, and such
notice shall be deemed to have been given on the day of such mailing.
Stockholders not entitled to vote shall not be entitled to receive notice of any
meetings except as otherwise provided by Statute.
SECTION 11. WAIVER OF NOTICE. Whenever any notice whatever is required to
be given under the provisions of any law, or under the provisions of the
Certificate of Incorporation of the
Exhibit 3.4
Page 15 of 17 Pages
<PAGE>
corporation or these Bylaws, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE VI
INDEMNIFICATION OF OFFICERS, DIRECTORS,
---------------------------------------
EMPLOYEES AND AGENTS
--------------------
To the extent and in the manner permitted by the laws of the State of
Oklahoma, and specifically as is permitted under Section 1031 of the Oklahoma
General Corporation Act, the corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, other than an action by or in the right of the corporation, by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement.
ARTICLE VII
AMENDMENTS
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These Bylaws may be altered or repealed and Bylaws may be made at any
annual meeting of the stockholders or at any special meeting thereof if notice
of the proposed alteration or repeal or
Exhibit 3.4
Page 16 of 17 Pages
<PAGE>
Bylaw or Bylaws to be made be contained in the notice of such special meeting,
by the affirmative vote of a majority of the stock issued and outstanding and
entitled to vote thereat, or by the affirmative vote of a majority of the Board
of Directors, at any regular meeting of the Board of Directors, or at any
special meeting of the Board of Directors, if notice of the proposed alteration
or repeal, or Bylaw or Bylaws to be made, be contained in the notice of such
special meeting.
APPROVAL OF DIRECTORS
---------------------
The foregoing Bylaws, after being read, section by section, were approved
by the directors of this corporation at a meeting held on February 22, 1993.
Exhibit 3.4
Page 17 of 17 Pages
FULLER, TUBB, POMEROY, KIRSCHNER, BICKFORD, & STOKES
A Professional Corporation
100 North Broadway, Suite 3300
Oklahoma City, OK 73102-8805
Telephone 405-239-3300
Fax 405-235-3352
e-mail [email protected]
Thomas J. Kenan, Of Counsel
October 16, 1998
Albert L. Welsh, President
TechLite, Inc.
Suite 202
4334 Northwest Expressway
Oklahoma City, OK 73112
Re: TechLite, Inc.
Dear Mr. Welsh:
I have reviewed the Form SB-2 and Form S-4 Registration Statements of TechLite,
Inc. and am of the opinion that the securities being registered on the Form SB-2
have been legally issued, are fully paid, and are non-assessable and that the
securities being registered on the Form S-4, when issued, will have been legally
issued, fully paid and will be non-assessable.
Sincerely,
/s/ Thomas J. Kenan
Thomas J. Kenan
TK:sa
Exhibit 5
FULLER, TUBB, POMEROY,
KIRSCHNER, BICKFORD & STOKES
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
100 NORTH BROADWAY, SUITE 3300
OKLAHOMA CITY, OK 73102-8805
THOMAS J. KENAN TELEPHONE 405-239-3300
Of Counsel FACSIMILE 405-235-3352
E-MAIL [email protected]
November 18, 1998
Albert L. Welsh, President
TechLite, Inc.
Suite 202
4334 Northwest Expressway
Oklahoma City, OK 73112
Re: Spinoff and transaction merger by
and among TechLite, Inc., TechLite
Applied Sciences, Inc., and
SuperCorp Inc.
Dear Mr. Welsh:
In connection with the preparation and filing of a Form SB-2 Registration
Statement under the Securities Act of 1933 ("the Act") to be filed by TechLite,
Inc. ("the Company") for the purpose of registering 195,556 shares of its Common
Stock ("the Spinoff Shares"), which shares are presently owned by SuperCorp
Inc., an Oklahoma corporation, and in connection with the preparation and filing
of a Form S-4 Registration Statement under the Act, to be filed by the Company
for the purpose of registering 2,209,903 shares of its Common Stock ("the Merger
Shares"), to be available for a proposed merger with TechLite Applied Sciences,
Inc., an Oklahoma corporation ("TechLite Applied Sciences, Inc."), I have been
asked to express my opinion with respect to certain U.S. federal income tax
matters.
I have examined the Form SB-2 Registration Statement, the Form S-4
Registration Statement, corporate proceedings reflected in the minutes of the
Company as certified by the secretary of the Company, an agreement of merger
among the Company, TechLite Applied Sciences, Inc. and SuperCorp effective as of
October 16, 1998, and an escrow agreement entered into on October 16, 1998, by
the Company, SuperCorp, and Bank One Trust Company, NA, Oklahoma City, Oklahoma
("Bank One").
Exhibit 8
Page 1 of 4 Pages
<PAGE>
Albert L. Welsh, President 2 November 18, 1998
Based upon my examination of the above-described documents, relevant
sections of the Internal Revenue Code of 1986 as amended ("the Code"), and
applicable regulations thereunder, I am of the following opinion with respect to
the federal income tax consequences of the proposed spinoff and merger
transactions:
1. Income Tax Consequences of the Merger.
-------------------------------------
The proposed merger between the Company and TechLite Applied Sciences, Inc.
will qualify as a type "A" reorganization under Section 368(a)(1) of the Code;
provided, however, when consideration is given to the fact that the Company is
newly organized, the step-transaction doctrine could be applied and the Company
could be considered a continuation of TechLite Applied Sciences, Inc. with only
a change of name or place of incorporation, a type "F" reorganization. In either
case, there will be no recognition of taxable gain or loss to the shareholders
of TechLite Applied Sciences, Inc. or to the shareholders of the Company. The
TechLite Applied Sciences, Inc. shareholders will have a carryover tax basis and
a tacked holding period for the stock received by them in the Company. Further,
TechLite Applied Sciences, Inc. will not recognize any taxable gain or loss,
provided its liabilities are not in excess of the tax basis of its assets.
2. Income Tax Consequences of the Spinoff.
--------------------------------------
The analysis of the income tax effects of the Spinoff is somewhat
different. Section 316 of the Code provides that, for purposes of the income tax
provisions of the Code (except subchapter L, which concerns insurance
companies), a dividend is any corporate distribution to shareholders made in the
normal course of business out of earnings and profits. Section 301(c) of the
Code provides that a distribution by a corporation which has no current or
accumulated earnings or profits is not taxable as a dividend. Instead, the
amount of the distribution must first be used to reduce the adjusted basis of a
stockholder's stock and any remaining portion will be treated as capital gain in
the same manner as a sale or exchange of the stock. The distributing
corporation, SuperCorp, advises the undersigned that it has no current or
accumulated earnings or profits and expects to have none the fiscal year of the
distribution. Based upon this representation of SuperCorp, the amount of the
distribution to each SuperCorp shareholder must first be used to reduce the
adjusted basis of each shareholder's SuperCorp stock and, should the adjusted
basis be reduced to zero, any remaining portion of the value of the distribution
will be treated as capital gain in the same manner as a sale or exchange of the
stock.
3. Tax Basis of the Spinoff Shares.
-------------------------------
The tax basis of the stock in the Company to be received by the SuperCorp
shareholders in the spinoff distribution is the fair market value of the
Exhibit 8
Page 2 of 4 Pages
<PAGE>
Albert L. Welsh, President 3 November 18, 1998
property. Section 301(d) of the Code. Fair market value is determined as of the
date of the distribution. Section 301(b)(3). The principal question raised by
the escrow arrangement with Bank One is whether the date of the distribution
occurs when the stock certificates are delivered to Bank One or, alternatively,
later when Bank One delivers the stock certificates to the SuperCorp
shareholders. Regulation Section 1.301-1(b) provides that a distribution made by
a corporation to its shareholders is to be included in gross income of the
distributees when the cash or other property is "unqualifiedly made subject to
their demands." When the distribution is in property other than cash, this
regulation provides that the valuation of the property is to be made on the date
of distribution without regard to whether such date is the same as that on which
the distribution is includable in gross income. An example is given in the
regulation of a corporation's distributing a taxable dividend in property on
December 31 which is received by, or unqualifiedly made subject to the demand
of, its shareholders two days later on January 2. In this example, the amount to
be included in the gross income of the shareholders will be the fair market
value of the property on December 31, although such amount will not be
includable in the gross income of the shareholders until January 2 of the next
year.
An important fact concerning the escrow with Bank One is that the escrow is
required by a regulation of the Securities and Exchange Commission; otherwise,
the distribution would be made directly to the SuperCorp shareholders. The
distributees of the stock (the SuperCorp shareholders) have full voting rights
over the distributed stock, the right to receive dividends, and the right in
certain circumstances to transfer the stock. SuperCorp itself has no right to
recall the distribution. The distributees will have the same type of
constructive receipt of the stock as existed in Carnahan, 21 BTA 893 (1930)
(Acq.), and the principles set forth in Reed v. Commissioner, 723 F.2d 138 (1st
Cir. 1983) would apply in the same way and support the determination that the
date of distribution is the date the stock certificates are delivered to Bank
One pursuant to the escrow agreement.
Based on the above, it is my opinion that the value of the shares of the
Company will be valued at their fair market value when the certificates
representing the shares of the Company are received by the escrow agent, Bank
One. Because the delivery of these certificates to Bank One is to take place
before the shareholders of TechLite Applied Sciences, Inc. vote on the merger,
and because the outcome of the merger vote is uncertain, SuperCorp and its
shareholders may reasonably take the position that the value of the shares of
the Company at the time of the distribution is the book value of such shares on
the date of such delivery to
Exhibit 8
Page 3 of 4 Pages
<PAGE>
Albert L. Welsh, President 4 November 18, 1998
Bank One without giving effect to any increase in book value that might occur
should the merger be later approved and effected.
There is the possibility that the Internal Revenue Service would argue
under the step-transaction or substance-versus- form doctrines that the delivery
of the certificates to Bank One should be disregarded and the stock valued only
when and if the merger is approved. The concept that might be asserted by the
Service would be that the transfer of stock to Bank One has no independent
significance unless the merger is approved and, therefore, should be
disregarded. As stated in Minnesota Tea Co. v. Helvering, 302 U.S. 609 (1938), a
case in which the shareholders were obligated to pay over to creditors cash
received by the shareholders, "the preliminary distribution to the stockholders
was a meaningless and unnecessary step in the transmission of the fund to the
creditors." However, the distribution of shares of the Company by SuperCorp to
its shareholders involves a situation where such shareholders will receive
something of significance from SuperCorp even if the merger is not consummated,
because the management of the Company will continue to exert efforts to find a
business or property for acquisition by the Company. Accordingly, it is my
opinion that the step-transaction or substance-versus-form doctrines are not
applicable. These concepts are ordinarily applied only to determine the
characterization of an entire transaction, not to determine the time for
evaluation of property.
Following the spinoff, the stock distributed to the SuperCorp shareholders
will be subject to the income tax laws and regulations regarding the sale of
capital assets such as capital stock in corporations. The tax basis in the stock
will be determined as described above (in my opinion, $0.001 a share), and the
holding period will relate back to the date that applies to a shareholder's
shares of common stock of SuperCorp.
Sincerely,
/s/ Thomas J. Kenan
-------------------
Thomas J. Kenan
TJK:sa
Exhibit 8
Page 4 of 4 Pages
ESCROW AGREEMENT
----------------
This Escrow Agreement is entered into effective April 17, 1998, by and
among TechLite, Inc., an Oklahoma corporation ("TechLite"); SuperCorp Inc., an
Oklahoma corporation ("SuperCorp"); and Bank One Trust Company of, NA, Oklahoma
City ("Bank One").
In consideration of the representations, undertakings, and promises set
forth below, the parties agree as follows:
1. Representations by TechLite.
---------------------------
TechLite represents as follows:
1.1. TechLite is preparing for filing a Form SB-2 Registration
Statement ("the SB-2") with the Securities and Exchange Commission ("the
Commission"). A copy of the most recent draft of the SB-2 is delivered herewith
to Bank One, and TechLite undertakes to deliver to Bank One the final form of
the SB-2 as filed with the Commission and any amendments thereto.
1.2. TechLite and TechLite Applied Sciences, Inc., an Oklahoma
corporation, have entered into an agreement of merger ("the Agreement of
Merger"), which merger is described in the SB-2.
1.3. TechLite has three shareholders - SuperCorp, which is the
owner of record of 195,556 shares of TechLite's common stock ("the Spinoff
Shares"), and two individuals who, together, own 48,888 shares of TechLite's
common stock.
2. Representations by SuperCorp.
----------------------------
As soon as permitted by law or regulation or as soon as possible after the
Commission has declared effective the SB-2, SuperCorp shall vote its 195,556
Spinoff Shares to approve the proposed merger described in the Agreement of
Merger. Immediately thereafter, SuperCorp shall declare a dividend to its
shareholders of the 195,556 Spinoff Shares.
3. Representations of Bank One.
---------------------------
Bank One represents that it is an "insured depository institution," as that
term is defined in Section 3(c)(2) of the Federal Deposit Insurance Act.
4. Escrow of Spinoff Shares.
------------------------
The 195,556 Spinoff Shares shall be escrowed with Bank One pursuant to the
following terms and conditions:
4.1. After declaration by SuperCorp of the dividend to its
shareholders of the 195,556 Spinoff Shares, either SuperCorp or its
registrar-transfer agent shall deliver to Bank One stock certificates
representing the 195,556 Spinoff Shares, which certificates shall evidence
Exhibit 10
Page 1 of 6 Pages
<PAGE>
on their faces the identity of the owners of the shares represented by each
certificate.
4.2. Until such time as the escrowed certificates are released
from escrow in accordance with the terms of this Escrow Agreement, TechLite
shall declare no cash dividends on the shares represented by such certificates.
4.3. Bank One shall hold the escrowed certificates solely for
the benefit of the owners of the shares represented by such certificates, which
owners shall have all voting rights with respect to such shares as are provided
by Oklahoma law. However, no transfer or other disposition of the escrowed
securities or any interest related to such securities shall be permitted by
TechLite or recognized by Bank One other than by will or the law of descent and
distribution, or pursuant to a qualified domestic relations order as defined by
the Internal Revenue Code of 1986 as amended or to Title 1 of the Employee
Retirement Income Security Act.
5. Release of the Escrowed Securities.
----------------------------------
The certificates placed in escrow with Bank One shall be released from
escrow and delivered by Bank One to TechLite's stock registrar-transfer agent
for delivery by it to the owners of the certificates at such time as or after
Bank One has received a signed representation from TechLite, together with any
other evidence acceptable to Bank One, that the conditions and requirements set
forth either in paragraph 5.1 or 5.2 below have been met; provided, however,
that all certificates representing the ownership of nine or fewer shares of
TechLite Common Stock shall not immediately be delivered to TechLite's stock
registrar-transfer agent, but shall continue to be held in escrow until such
time as Bank One has received written instructions from SuperCorp with respect
to such delivery, it being contemplated that SuperCorp shall communicate with
the owners of the shares represented by such small-denomination certificates and
extend to each of such owners the election either to receive the stock
certificate or to have the shares represented by such certificate sold in a
broker's transaction with the shares desired to be sold by other
small-denomination owners and to receive the net proceeds of such sale.
5.1. Should the merger described in the Agreement of Merger be
approved by the shareholders of TechLite, and should the necessary merger
documents be filed with the Registrar of companies' documents in Oklahoma,
TechLite shall so represent this to Bank One and shall state the date the merger
became effective.
5.2. Should the proposed merger described in the Plan of
Merger not be approved and effected, TechLite proposes to search for an
alternative merger partner or for a suitable business or assets to be acquired.
At such time as TechLite should execute an agreement of merger or for the
acquisition of a business or assets that would constitute the
Exhibit 10
Page 2 of 6 Pages
<PAGE>
business of TechLite, TechLite shall file a post-effective amendment to the SB-2
disclosing the information specified by the SB-2 registration statement form and
Industry Guides, including financial statements of TechLite and the company to
be acquired, and the post-effective amendment must become effective at the
Commission. Then, the alternative merger or acquisition of a business or assets
must be approved and legally effected, at which time TechLite shall represent to
Bank One that this has occurred and that all requirements of the Commission for
the release from escrow of the certificates have been met.
6. Term of Escrow Agreement.
------------------------
This Escrow Agreement shall terminate 18 months after the effective date of
the initial SB-2, unless the certificates have been earlier released from escrow
according to the provisions set forth above. Should no such release from escrow
have occurred by the termination date, Bank One shall deliver, for cancellation,
all escrowed stock certificates to TechLite's stock registrar-transfer agent.
7. Depository Duty.
---------------
Bank One will be liable as a depository only and will not be responsible
for the sufficiency or accuracy of the form, execution or validity of any
certificate or document delivered to Bank One hereunder or any description of
the property or other thing contained therein or the identity, authority or
rights of the persons executing or delivering or purporting to execute or
deliver any such certificate or document. Bank One's duties hereunder are
limited to the safekeeping of the instruments or other documents received, and
the delivery of the same in accordance with this Agreement.
8. Standard of Care.
----------------
Bank One will not be liable for any act or omission done in good faith, or
for any claim, demand, loss or damage made or suffered by any party to this
Agreement, excepting such as may arise through or be caused by Bank One's
willful misconduct or gross negligence.
9. Reliance.
--------
Bank One is authorized to rely on any document believed by Bank One to be
authentic in making any delivery of certificates, funds or property hereunder.
10. Escrow Charges.
--------------
A $500 fee will be paid by TechLite to Bank One for services to be rendered
hereunder. Bank One, however, may employ attorneys for reasonable protection of
the escrow property and of itself, and TechLite will reimburse Bank One on
demand. All sums due Bank One under this Agreement will bear interest at the
rate of 10 percent per annum from the date due until Bank One is reimbursed in
full.
11. Liability of Bank One.
---------------------
In accepting any securities or documents delivered hereunder, it is agreed
and understood by the undersigned that Bank One will not be called on to
construe any contract or instrument deposited herewith and, in the event of a
dispute, will be required to act
Exhibit 10
Page 3 of 6 Pages
<PAGE>
in respect to the deposit herein made only on the consent in writing of the
undersigned. In the event of its failure to obtain such consent in writing, Bank
One reserves the right to hold all papers in connection with or concerning this
escrow until a mutual agreement in writing has been reached between all parties
and delivered to Bank One or until delivery is legally authorized and ordered by
final judgment or decree of a court of competent jurisdiction. If Bank One obeys
or complies with any judgment, order or decree of a court of competent
jurisdiction, Bank One will not be liable to any of the parties hereto nor to
any other person, firm or corporation by reason of such compliance,
notwithstanding any such judgement, order or decree be subsequently reversed,
modified, annulled, set aside or vacated.
12. Resignation or Removal of Bank One.
----------------------------------
12.1. Bank One may resign hereunder following the giving of 30
days prior written notice to TechLite. Similarly, Bank One may be removed and
replaced following the giving of 30 days prior written notice to Bank One by
TechLite. In either event, the duties of Bank One will terminate 30 days after
the date of such notice (or as of such earlier date as may be mutually
agreeable), and Bank One will then deliver all certificates then in its
possession to a successor escrow agent as will be appointed by TechLite, as
evidenced by a written notice filed with Bank One.
12.2. If TechLite shall have failed to appoint a successor
escrow agent prior to the expiration of 30 days following the date of the
notice, resignation or removal of Bank One, Bank One may petition any court of
competent jurisdiction for the appointment of a successor escrow agent, or other
appropriate relief, and any such resulting appointment will be binding upon
TechLite. The cost of such proceeding including attorneys fees will be
reimbursed by TechLite on demand.
12.3. Upon acknowledgement by any successor escrow agent of
the receipt of all certificates that had prior to such notice been in the
possession of Bank One, Bank One will be fully released and relieved of all
duties, responsibilities, and obligations under this agreement.
13. Notice.
------
Any request, direction, notice or other service required or permitted to be
made or given by any party hereto will be in writing and will be deemed
sufficiently given or served for all purposes if delivered in person or via
certified mail, return receipt requested, to the parties hereto at the addresses
set forth below or at such other address as any party will specify, from time to
time, by written notice given to the other party hereto:
Exhibit 10
Page 4 of 6 Pages
<PAGE>
(a) To TechLite and to
SuperCorp: Thomas J. Kenan
100 North Broadway, Suite 3300
Oklahoma City, OK 73102
(b) To Bank One: Bank One Trust Company, NA,
Oklahoma City
100 North Broadway
P. O. Box 25848
Oklahoma City, OK 73125
IN WITNESS WHEREOF, this Escrow Agreement is executed as of the date set
forth above.
TECHLITE, INC.
By: /s/ Albert L. Welsh
----------------------------
Albert L. Welsh, President
BANK ONE TRUST COMPANY, NA, OKLAHOMA CITY
By: /s/ M.E. Allen
----------------------------
M. E. Allen, Vice President
SUPERCORP INC.
By: /s/ Albert L. Welsh
----------------------------
Albert L. Welsh, President
Exhibit 10
Page 5 of 6 Pages
<PAGE>
RELEASE
-------
All moneys, documents and papers relative to this escrow deposit have been
delivered in accordance with the provisions of this Escrow Agreement this ______
day of _____________________, 19______, and Bank One herein is relieved from all
further liability or responsibility with reference hereto.
TECHLITE, INC.
By_________________________________
Albert L. Welsh, President
SUPERCORP INC.
By_________________________________
Albert L. Welsh, President
Exhibit 10
Page 6 of 6 Pages
TECHLITE, INC.
1998 STOCK OPTION PLAN
1. Purposes of the Plan.
--------------------
The purposes of this 1998 Stock Option Plan are to attract and retain the
best available personnel for positions of substantial responsibility, to provide
additional incentive to Employees and Consultants of the Company and its
Subsidiaries and to promote the success of the Company's business. Options
granted under this Plan may be incentive stock options (as defined under Section
422 of the Code) or nonqualified stock options, as determined by the Option
Committee at the time of grant of an option and subject to the applicable
provisions of Section 422 of the Code, as amended, and the regulations
promulgated thereunder.
2. Definitions.
-----------
As used herein, the following definitions shall apply:
2.1 "Option Committee" means the Board or any of its
committees, as applicable, that is administering the Plan pursuant to Section 4
of the Plan.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as
amended.
2.4 "Company" means TECHLITE, INC., an Oklahoma
corporation.
2.5 "Consultant" means any consultant or advisor to the
Company or any Parent or Subsidiary and any director of the Company whether
compensated for such services or not, but not including any Employee.
2.6 "Continuous Status as an Employee" means the absence of
any interruption or termination of the employment relationship by the Company or
any Subsidiary. Continuous Status as an Employee shall not be considered
interrupted in the case of: (i) any leave of absence approved by the Board,
including sick leave, military leave, or any other personal leave; provided,
however, that for purposes of Incentive Stock Options, such leave is for a
period of not more than 90 days, unless reemployment upon the expiration of such
leave is guaranteed by contract or statute, or unless provided otherwise
pursuant to Company policy adopted from time to time; or
Exhibit 10.1
Page 1 of 14 Pages
<PAGE>
(ii) in the case of transfers between locations of the Company or between the
Company, its Subsidiaries or its successors.
2.7 "Employee" means any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
2.8 "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
2.9 "Fair Market Value" means, as of any date, the value of
Stock determined as follows:
2.9.1 If the Stock is listed on any established
stock exchange or a national market system including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("Nasdaq") System, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported, as quoted on such system or exchange or the exchange with the greatest
volume of trading in Stock for the last market trading day prior to the time of
determination) as reported in the Wall Street Journal or such other source as
the Option Committee deems reliable;
2.9.2 If the Stock is quoted on Nasdaq SmallCap
(but not on the National Market System) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high and low asked prices for the Stock; or
2.9.3 In the absence of an established market for
the Stock, the Fair Market Value thereof shall be determined in good faith by
the Option Committee.
2.10 "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
2.11 "Nonqualified Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.
2.12 "Option" means a stock option granted pursuant to
the Plan.
2.13 "Optioned Stock" means the Stock subject to an
Option.
Exhibit 10.1
Page 2 of 14 Pages
<PAGE>
2.14 "Optionee" means an Employee or Consultant who
receives an Option.
2.15 "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
2.16 "Plan" means this 1998 Stock Option Plan.
2.17 "Share" means a share of the Stock, as adjusted in
accordance with Section 13 of the Plan.
2.18 "Stock" means the Common Stock, par value $.001 per
share, of the Company.
2.19 "Subsidiary" means a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan.
-------------------------
Subject to the provisions of Section 13 of the Plan, the maximum number of
shares of Stock which may be optioned and sold under the Plan is 500,000 shares.
The shares may be authorized, but unissued, or reacquired Stock. If an Option
should expire or become unexercisable for any reason without having been
exercised in full, the unpurchased Shares which were subject thereto shall,
unless the Plan shall have been terminated, become available for future grant
under the Plan.
4. Administration of the Plan.
--------------------------
4.1 Administration By Board or Committee.
-------------------------------------
The Plan shall be administered by (a) the Board or (b) a committee
designated by the Board to administer the Plan, which committee shall be
constituted in such a manner as to permit the Plan to comply with Rule 16b-3
promulgated under the Exchange Act or any successor thereto ("Rule 16b-3") with
respect to a plan intended to qualify thereunder as a discretionary plan. Once
appointed, such committee shall continue to serve in its designated capacity
until otherwise directed by the Board. From time to time the Board may increase
the size of the committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies, however caused, and remove all members of the committee and
thereafter directly administer the Plan, all to the extent permitted by Rule
16b-3 with respect to a plan intended to qualify thereunder as a discretionary
plan.
4.2 Limitation on Administration by Board.
---------------------------------------
Notwithstanding the foregoing, the Plan shall not be administered
Exhibit 10.1
Page 3 of 14 Pages
<PAGE>
by the Board if (a) the Company and its officers and directors are then subject
to the requirements of Section 16 of the Exchange Act and (b) the Board's
administration of the Plan would prevent the Plan from complying with Rule
16b-3.
4.3 Multiple Administrative Bodies.
--------------------------------
If permitted by Rule 16b-3, the Plan may be administered by different
bodies with respect to directors, non-director officers and Employees who are
neither directors nor officers.
4.4 Powers of the Option Committee.
------------------------------
Subject to the provisions of the Plan and in, the case of a committee, the
specific duties delegated by the Board to such committee, the Option Committee
shall have the authority, in its discretion:
4.4.1 to determine whether and to what extent
Options shall be granted hereunder;
4.4.2 to select the officers, Consultants and
Employees to whom Options may from time to time be granted
hereunder;
4.4.3 to determine the number of shares of Stock to
be covered by each such award granted hereunder;
4.4.4 to determine the Fair Market Value of the
Stock, in accordance with Section 2.9 of the Plan;
4.4.5 to approve forms of agreement for use under
the Plan;
4.4.6 to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder
(including, but not limited to, the per share exercise price for the Shares to
be issued pursuant to the exercise of an Option and any restriction or
limitation, or any vesting, acceleration or waiver of forfeiture restrictions
regarding any Option or other award and/or the shares of Stock relating thereto,
based in each case on such factors as the Option Committee shall determine, in
its sole discretion);
4.4.7 to determine whether and under what
circumstances an Option may be bought-out for cash under subsection
10.4;
4.4.8 to determine whether, to what extent and
under what circumstances Stock and other amounts payable with respect to an
award under this Plan shall be deferred either
Exhibit 10.1
Page 4 of 14 Pages
<PAGE>
automatically or at the election of the participant (including providing for and
determining the amount, if any, of any deemed earnings on any deferred amount
during any deferral period); and
4.4.9 to reduce the exercise price of any Option to
the then current Fair Market Value if the Fair Market Value of the Stock covered
by such Option shall have declined since the date the Option was granted.
4.5 Effect of Option Committee's Decision.
---------------------------------------
All decisions, determinations and interpretations of the Option Committee
shall be final and binding on all Optionees and any other holders of any
Options. Neither the Board, the Committee, nor any member thereof shall be
liable for any act, omission, interpretation, construction or determination made
in connection with the Plan in good faith, and the members of the Board and of
the Committee shall be entitled to indemnification and reimbursement by the
Company in respect of any claim, loss, damage or expense (including counsel
fees) arising therefrom to the full extent permitted by law.
5. Eligibility.
-----------
5.1 Nonqualified Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if he is otherwise
eligible, be granted an additional Option or Options.
5.2 Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonqualified Stock Option.
However, notwithstanding such designations to the extent that the aggregate Fair
Market Value of the Shares, with respect to which Options designated as
Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company or any Parent or
Subsidiary), exceeds $100,000, such excess Options shall be treated as
Nonqualified Stock Options. For this purpose, Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.
5.3 The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his right or the Company's right
to terminate his employment or consulting relationship at any time, with or
without cause,
Exhibit 10.1
Page 5 of 14 Pages
<PAGE>
unless otherwise agreed in writing by the Company and such Optionee.
6. Term of Plan.
------------
The Plan shall become effective upon its adoption by the Board of Directors
subject only to approval by the holders of a majority of the outstanding Shares
within 12 months after such date. Should the Plan not be approved by a vote of
shareholders as specified above, the Plan shall terminate 12 months after the
effective date, all options issued prior to that termination date shall continue
in effect but without the benefits that would accrue under the Code or the Act
from such shareholder approval. Otherwise, it shall continue in effect until ten
years from the effective date, unless extended by the Board or sooner terminated
under Section 15 of the Plan. No grants of Options will be made pursuant to the
Plan after termination of the Plan.
7. Term of Option.
--------------
The term of each Option shall be the term stated in the Option Agreement;
provided, however, that in the case of an Incentive Stock Option, the terms
shall be no more than 10 years from the date of grant thereof or such shorter
term as may be provided in the Option Agreement. However, in the case of an
Option granted to an Optionee who, at the time the Option is granted, owns Stock
representing more than 10% of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five years
from the date of grant thereof or such shorter term as may be provided in the
Option Agreement.
8. Option Exercise Price and Consideration.
---------------------------------------
8.1 The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Option Committee; provided, however, that as to an Incentive Option:
8.1.1 granted to an Employee who, at the time of
the grant of such Incentive Stock Option, owns stock representing more than 10%
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.
8.1.2 granted to any other Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
8.2 The consideration to be paid for the Shares to be issued
upon exercise of an Option may be paid by certified or
Exhibit 10.1
Page 6 of 14 Pages
<PAGE>
cashier's check. In the discretion of the Option Committee as set forth in the
Option Agreement or, except for Incentive Options, determined at the time of
exercise, payment may also be made by any or all of the following:
8.2.1 check,
8.2.2 promissory note,
8.2.3 other shares of the Company's capital stock
which (a) in the case of shares of the Company's capital stock acquired upon
exercise of an Option either have been owned by the Optionee for more than six
months on the date of surrender or were not acquired, directly or indirectly,
from the Company, and (b) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares to which said Option shall
be exercised,
8.2.4 authorization for the Company to retain from
the total number of Shares as to which the Option is exercised that number of
Shares having a Fair Market Value on the date of exercise equal to the exercise
price for the total number of Shares as to which the Option is exercised,
8.2.5 delivery of a properly executed exercise
notice together with irrevocable instructions to a broker to promptly deliver to
the Company the amount of sale or loan proceeds required to pay the exercise
price, or
8.2.6 such other consideration and method of
payment for the issuance of Shares to the extent permitted under
applicable laws.
9. Limitation on Exercise.
----------------------
The following limitations on exercise of Options shall apply to all
Incentive Options and, except to the extent waived by the Option Committee and
stated in the Option Agreement, to all other Options.
9.1 Termination of Employment.
-------------------------
In the event of termination of an Optionee's relationship as a Consultant
(unless such termination is for purposes of becoming an Employee of the Company)
or on termination of an Optionee's Continuous Status as an Employee with the
Company (as the case may be), such Optionee may, but only within 90 days (or, as
to Options other than Incentive Options, such longer period of time as is
determined by the Option Committee) after the date of such termination, but in
no event later than the expiration date of the term of such Option as set forth
in the Option Agreement, exercise his Option to the extent
Exhibit 10.1
Page 7 of 14 Pages
<PAGE>
that Optionee was entitled to exercise it at the date of such termination. To
the extent that Optionee was not entitled to exercise the Option at the date of
such termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
9.2 Disability of Optionee.
----------------------
Notwithstanding the provisions of Section 9.1 above, in the event of
termination of an Optionee's relationship as a Consultant or Continuous Status
as an Employee as a result of his total and permanent disability (as defined in
Section 22(e)(3) of the Code), Optionee may, but only within 12 months from the
date of such termination and in no event later than the expiration date of the
term of such Option as set forth in the Option Agreement, exercise the Option to
the extent otherwise entitled to exercise it at the date of such termination. To
the extent that Optionee was not entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
9.3 Death of Optionee.
-------------------
In the event of the death of an Optionee, the Option may be exercised, at
any time within 12 months following the date of death (but in no event later
than the expiration date of the term of such Option as set forth in the Option
Agreement), by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent the
Optionee was entitled to exercise the Option at the date of death. To the extent
that the Optionee was not entitled to exercise the Option at the date of
termination, or if the Optionee's estate (or such other person who acquired the
right to exercise the Option) does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
10. Exercise of Option.
------------------
10.1 Procedure for Exercise; Rights as a Stockholder.
-----------------------------------------------
An Option shall be deemed to be exercised, and the Optionee deemed to be a
stockholder of the Shares being purchased upon exercise, when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8.2 of the Plan. An
Option may not be exercised for a fraction of a Share.
Exhibit 10.1
Page 8 of 14 Pages
<PAGE>
10.2 Effect on Number of Shares.
--------------------------
Exercise of an Option in any manner shall result in a decrease in the
number of shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
10.3 Rule 16b-3.
----------
Options granted to persons subject to Section 16(b) of the Exchange Act
must comply with the Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to Plan transactions.
10.4 Buyout Provisions.
------------------
The Option Committee may at any time offer to buy out for a payment in cash
or Shares, an Option previously granted, based on such terms and conditions as
the Option Committee shall establish and communicate to the Optionee at the time
that such offer is made.
11. Non-Transferability of Options.
------------------------------
The Options may not be sold, pledged, assigned, hypothecated, transferred,
or disposed of in any manner other than by will or by the laws of descent or
distribution and may be exercised, during the lifetime of the Optionee, only by
the Optionee.
12. Stock Withholding to Satisfy Withholding Tax Obligations.
--------------------------------------------------------
12.1 At the discretion of the Option Committee, Optionees may
satisfy withholding tax obligations as provided in this paragraph. When an
Optionee incurs tax liability in connection with an Option, which tax liability
is subject to tax withholding under applicable tax laws, and the Optionee is
obligated to pay the Company an amount required to be withheld under applicable
tax laws, the Optionee may satisfy the withholding tax obligation by electing to
have the Company withhold from the Shares to be issued upon exercise of the
Option, that number of Shares having a Fair Market Value equal to the amount
required to be withheld. The Fair Market Value of the Shares to be withheld
shall be determined on the date that the amount of tax to be withheld is to be
determined (the "Tax Date").
12.2 All elections by an Optionee to have Shares withheld for
this purpose shall be made in writing in a form acceptable to the Option
Committee and shall be subject to the following restrictions:
12.2.1 the election must be made on or prior to the
applicable Tax Date;
Exhibit 10.1
Page 9 of 14 Pages
<PAGE>
12.2.2 once made, the election shall be irrevocable
as to the particular Shares of the Option as to which the election
is made;
12.2.3 all elections shall be subject to the
consent or disapproval of the Option Committee; and
12.2.4 if the Optionee is subject to Rule 16b-3,
the election must comply with the applicable provisions of Rule 16b-3 and shall
be subject to such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions.
12.3 In the event the election to have Shares withheld is made by an
Optionee, the Tax Date is deferred under Section 83 of the Code and no election
is filed under Section 83(b) of the Code, the Optionee shall receive the full
number of Shares with respect to which the Option is exercised but such Optionee
shall be unconditionally obligated to tender back to the Company the proper
number of Shares on the Tax Date.
13. Changes in the Company's Capital Structure.
------------------------------------------
The existence of outstanding Options shall not affect in any way the right
or power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bond, debentures, preferred or prior preference
stock ahead of or affecting the Stock or the rights thereof, or the dissolution
or liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise; subject to the following:
13.1 If the Company shall effect a subdivision or
consolidation of shares or other capital readjustment, the payment of a stock
dividend, or other increase or reduction of the number of shares of the Stock
outstanding, without receiving compensation therefor in money, services or
property, then (a) the number, class, and per share price of shares of Stock
subject to outstanding Options hereunder shall be appropriately adjusted in such
a manner as to entitle an Optionee to receive upon exercise of an Option, for
the same aggregate cash consideration, the same total number and class of shares
as he would have received had he exercised his Option; (b) the number and class
of shares of Stock then reserved for issuance under the Plan shall be adjusted
by substituting for the total number and class of shares of Stock then
Exhibit 10.1
Page 10 of 14 Pages
<PAGE>
reserved that number and class of shares of stock that would have been received
by the owner of an equal number of outstanding shares of each class of Stock as
the result of the event requiring the adjustment.
13.2 Unless otherwise expressly provided in an Option
Agreement, upon a Corporate Change (as defined below), notwithstanding any other
term of this Plan, any and all outstanding Options not fully vested and
exercisable shall vest in full and be immediately exercisable, and any other
restrictions on such Options including, without limitation, requirements
concerning the achievement of specific goals shall terminate. The foregoing
shall apply to Incentive Options, unless stated to the contrary in the Option
Agreement, even though the effect may be to convert part of the Option to a
Nonqualified Option.
13.3 As used in this Plan, a "Corporate Change" shall be
deemed to have occurred upon, and shall mean (a) the acquisition by any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) (a "Person"), of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 80% or more of either (i)
the then outstanding shares of Stock of the Company (the "Outstanding Company
Common Stock") or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
the following transactions shall not constitute a Corporate Change: (u) any
acquisition by virtue of the conversion of preferred stock of the Company
outstanding on the effective date hereof; (v) customary transactions with and
between underwriters and selling group members with respect to a bona fide
public offering of securities, (w) any acquisition directly from the Company
(excluding an acquisition by virtue of the exercise of a conversion privilege),
(x) any acquisition by the Company, (y) any acquisition by any employee benefit
plan(s) (or related trust(s)) sponsored or maintained by the Company or any
corporation controlled by the Company or (z) any acquisition by any entity
pursuant to a reorganization, merger or consolidation, if, immediately following
such reorganization, merger or consolidation the conditions described in clauses
(i), (ii) and (iii) of clause (b) of this paragraph are satisfied; or (b) the
approval by the stockholders of the Company of a reorganization, merger or
consolidation, in each case, unless immediately following such reorganization,
merger or consolidation (i) more than 60% of, respectively, the then outstanding
shares of common stock (or other equivalent securities) of the entity resulting
from such reorganization, merger or consolidation and the combined voting power
of the then outstanding
Exhibit 10.1
Page 11 of 14 Pages
<PAGE>
voting securities of such entity entitled to vote generally in the election of
directors (or other similar governing body) is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Company Common Stock and
Outstanding Company Voting Securities immediately prior to such reorganization,
merger or consolidation in substantially the same proportions as their
ownership, immediately prior to such reorganization, merger or consolidation of
the Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (ii) no Person (excluding the Company, any employee benefit
plan(s) (or related trust(s)) of the Company and/or its subsidiaries or such
entity resulting from such reorganization, merger or consolidation and any
Person beneficially owning, immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 80% or more of the Outstanding Company
Common Stock or Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 80% or more of, respectively, the
then outstanding shares of common stock (or other equivalent securities) of the
entity resulting from such reorganization, merger or consolidation or the
combined voting power of the then outstanding voting securities of such entity
entitled to vote generally in the election of directors (or other similar
governing body) and (iii) at least a majority of the members of the board of
directors (or other similar governing body) of the entity resulting from such
reorganization, merger or consolidation were members of the Incumbent Board (as
defined below) at the time of the execution of the initial agreement providing
for such reorganization, merger on consolidation. The "Incumbent Board" shall
mean individuals who as of the effective date hereof constitute the Company's
Board of Directors; provided, however, that any individual becoming a director
subsequent to such date whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either (i) an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act), or an
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Company's Board of Directors or (ii) a plan or agreement
to replace a majority of the members of the Board of Directors then comprising
the Incumbent Board.
13.4 The Company intends that this Section shall comply with
the requirements of Rule 16b-3 and any future rules promulgated in substitution
therefor under the Exchange Act during
Exhibit 10.1
Page 12 of 14 Pages
<PAGE>
the term of the Plan. Should any provision of this Section not be necessary to
comply with the requirements of Rule 16b-3 or should any additional provisions
be necessary for this Section to comply with the requirements of Rule 16b-3, the
Board of Directors may amend the Plan to add to or modify the provisions of the
Plan accordingly.
13.5 Except as hereinbefore expressly provided, the issue by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, for cash or property, or for labor or services
either upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number, class, or price of
shares of Stock then subject to outstanding Options.
14. Time of Granting Options.
------------------------
The date of grant of an Option shall, for all purposes, be the date on
which the Option Committee makes the determination granting such Option, or such
other date as is determined by the Option Committee. Notice of the determination
shall be given to each Employee or Consultant to whom an Option is so granted
within a reasonable time after the date of such grant.
15. Amendment and Termination of the Plan.
-------------------------------------
15.1 Amendment and Termination.
---------------------------
The Board may at any time amend, alter, suspend or discontinue the Plan,
but no amendment, alteration, suspension or discontinuation shall be made which
would impair the rights of any Optionee under any grant theretofore made,
without his or her consent. In addition, to the extent necessary and desirable
to comply with Rule 16b-3 under the Exchange Act or with Section 422 of the Code
(or any other applicable law or regulation, including the applicable
requirements of the NASD or an established stock exchange), the Company shall
obtain stockholder approval of any Plan amendment in such a manner and to such a
degree as required.
15.2 Effect of Amendment or Termination.
----------------------------------
Any such amendment or termination of the Plan shall not affect Options
already granted and such Options shall remain in full force and effect as if
this Plan had not been amended or terminated, unless mutually agreed otherwise
between the Optionee and the Board, which agreement must be in writing and
signed by the Optionee and the Company.
16. Conditions Upon Issuance of Shares.
----------------------------------
Exhibit 10.1
Page 13 of 14 Pages
<PAGE>
16.1 Shares shall not be issued pursuant to the exercise of an
Option unless the exercise of such Option and the issuance and delivery of such
Shares pursuant thereto shall comply with all relevant provisions of law,
including without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
16.2 As a condition to the exercise of an Option, the Company
may require the person exercising such Option to represent and warrant at the
time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required
by any of the aforementioned relevant provisions of law.
17. Reservation of Shares.
---------------------
The Company, during the term of this Plan, will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
18. Information to Optionees.
--------------------------
The Company shall provide to each Optionee, during the period for which
such Optionee has one or more Options outstanding, copies of all annual reports
and other information which are generally provided to all stockholders of the
Company. The Company shall not be required to provide such information to
persons whose duties in connection with the Company assure their access to
equivalent information.
19. Governing Law; Construction.
---------------------------
All rights and obligations under the Plan shall be governed by, and the
Plan shall be construed in accordance with, the laws of the State of Oklahoma
without regard to the principals of conflicts of laws. Titles and headings to
Sections herein are for purposes of reference only, and shall in no way limit,
define or otherwise affect the meaning or interpretation of any provisions of
the Plan.
ADOPTED by the Directors on ___________________, 1998.
APPROVED by the Shareholders on ____________________, 1998.
Exhibit 10.1
Page 14 of 14 Pages
FULLER, TUBB, POMEROY,
KIRSCHNER, BICKFORD & STOKES
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
100 NORTH BROADWAY, SUITE 3300
OKLAHOMA CITY, OK 73102-8805
THOMAS J. KENAN TELEPHONE 405-239-3300
Of Counsel FACSIMILE 405-235-3352
E-MAIL [email protected]
November 6, 1998
Ms. Suzanne Peterson
424 NW 21 Street
Oklahoma City, OK 73103
Dear Ms. Peterson:
Re: SuperCorp Inc. and TechLite Applied
Sciences, Inc. merger-spinoff
I earlier advised you of a proposed merger-spinoff transaction pursuant to
an agreement that SuperCorp has entered into with TechLite Applied Sciences,
Inc., an Oklahoma company that retrofits lighting fixtures to obtain reductions
in electricity consumption.
We shall soon be filing the necessary registration statements with the
Securities and Exchange Commission.
There is a requirement that I must address at this time. It concerns the
possibility - which is not the probability - that the shareholders of TechLite
Applied Sciences, Inc. should vote to disapprove the merger-spinoff proposal.
----------
I enclose several pages of the present draft of the registration statements
being prepared for filing with the Securities and Exchange Commission. You will
see a section entitled "Consequences Should the Merger Not Occur." Described in
this section is a rather complex arrangement which is required by Rule 419 of
the Securities and Exchange Commission. Such rule relates to companies known as
"blank check companies." While the company created by SuperCorp (referred to in
the enclosed draft as "the Company") is not a classic "blank check company" as
envisioned by the Securities and Exchange Commission, I do believe that the
Company, prior to the merger, falls under the requirements of Rule 419.
Accordingly, it will be necessary to comply with such rule, and the rule
requires that if the Company does not acquire a
Exhibit 10.2
Page 1 of 2 Pages
<PAGE>
Ms. Suzanne Peterson 2 November 6, 1998
business or assets that would constitute a business within eighteen months after
the registration statement becomes effective, the shares of stock of the Company
are not to be let loose into the public market. I believe that a satisfactory
way of complying with the rule is to have the holders of the majority of the
Company's common stock agree at this time that they will vote to dissolve the
Company (remember: the Company is not SuperCorp but a company created by
SuperCorp) if no merger or business acquisition occurs within eighteen months
after the effective date of the registration statement.
I believe that the enclosed materials explain this matter. A letter
identical to this letter is being sent to persons whose shareholdings of
SuperCorp aggregate more than 50 percent of its outstanding shares and who will
receive more than 50 percent of the shares of the Company whose shares are being
spun off.
I ask that you and each of such persons execute where indicated below a
copy of this letter and return it to me, indicating thereby that, should the
proposed merger between TechLite, Inc. and TechLite Applied Sciences, Inc. not
be effected, and should TechLite, Inc. not acquire a business or assets that
would constitute a business within eighteen months after the effective date of
the registration statement to be filed with the Securities and Exchange
Commission, you will vote to cause a dissolution of TechLite, Inc. or comply
with any similar alternative requirement that might be proposed by the
Securities and Exchange Commission to effect compliance with its Rule 419.
I appreciate your cooperation. Should you not agree to the matters set
forth herein, it is likely that the transaction with TechLite, Inc. will have to
be abandoned.
Sincerely,
Thomas J. Kenan
TJK:sa
Enclosures
The undersigned agrees to the matters set forth in the above letter.
- -----------------------------------
Suzanne Peterson
Exhibit 10.2
Page 2 of 2 Pages
FULLER, TUBB, POMEROY,
KIRSCHNER, BICKFORD & STOKES
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
100 NORTH BROADWAY, SUITE 3300
OKLAHOMA CITY, OK 73102-8805
THOMAS J. KENAN TELEPHONE 405-239-3300
Of Counsel FACSIMILE 405-235-3352
E-MAIL [email protected]
November 6, 1998
Albert L. Welsh, President
TechLite, Inc.
Suite 202
4334 Northwest Expressway
Oklahoma City, OK 73112
Re: TechLite, Inc.
Dear Mr. Welsh:
The undersigned is named in the Forms SB-2 and S-4 Registration Statements
of TechLite, Inc. (the "Company"), an Oklahoma corporation, which registration
statements are to be filed with the Securities and Exchange Commission in
connection with a proposed merger with TechLite Applied Sciences, Inc., an
Oklahoma corporation, and a distribution by SuperCorp Inc., an Oklahoma
corporation, of certain of the shares of common stock of the Company to the
shareholders of SuperCorp Inc. The capacity in which the undersigned is named in
such SB-2 and S-4 Registration Statements is that of counsel to the Company and
as a person who has given an opinion on the validity of the securities being
registered and upon other legal matters concerning the registration or offering
of the securities described therein.
The undersigned hereby consents to being named in such SB-2 and S-4
Registration Statements in the capacity therein described.
Sincerely,
/s/ Thomas J. Kenan
Thomas J. Kenan
Exhibit 23
Page 1 of 1 Page
CAUSON & WESTHOFF
Certified Public Accountants
1707 South Canton Avenue
Tulsa, OK 74112
918-747-4870
Fax 918-747-4996
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated June 29, 1998, with respect to
the financial statements of TechLite Applied Sciences, Inc. included in two
Registration Statements (Form SB-2 and Form S- 4) and related Prospectus of
TechLite, Inc. for the registration of 195,556 common shares (Form SB-2) and
2,209,903 common shares (Form S-4).
/s/ Causon & Westhoff
--------------------------
Causon & Westhoff
November 17, 1998
Exhibit 23.1
Page 1 of 1 Page
HOGAN & SLOVACEK
A Professional Corporation
Certified Public Accountants
Harvey Parkway
301 N.W. 63rd, Suite 290
Oklahoma City, OK 73116
Office (405) 848-2020 Fax (405) 848-7359
INDEPENDENT AUDITOR'S CONSENT
We consent to the use of our report dated November 6, 1998, with respect to
the financial statements of TechLite, Inc. included in two Registration
Statements (Form SB-2 and Form S-4) of TechLite, Inc.
/s/ Hogan & Slovacek
------------------------
HOGAN & SLOVACEK
Oklahoma City, Oklahoma
November ____, 1998
Exhibit 23.2
Page 1 of 1 Page
J. D. ARVIDSON
6106 E. 32nd Place, Suite 101
Tulsa, OK 74135
Albert L. Welsh, President
TechLite, Inc.
4334 N.W. Expressway, Suite 202
Oklahoma City, OK 73116
Dear Mr. Welsh:
The undersigned consents to serve as a director of TechLite, Inc. should the
proposed merger between it and TechLite Applied Sciences, Inc. be approved and
effected. Further, the undersigned consents to being named in Form SB-2 and Form
S-4 Registration Statements filed with the Securities and Exchange Commission as
a person who will so serve as a director.
Sincerely,
/s/ J.D. Arvidson
J. D. Arvidson
Dated: November 24, 1998
Exhibit 23.3
Page 1 of 1 Page
C. O. SAGE
6106 E. 32nd Place, Suite 101
Tulsa, OK 74135
Albert L. Welsh, President
TechLite, Inc.
4334 N.W. Expressway, Suite 202
Oklahoma City, OK 73116
Dear Mr. Welsh:
The undersigned consents to serve as a director of TechLite, Inc. should the
proposed merger between it and TechLite Applied Sciences, Inc. be approved and
effected. Further, the undersigned consents to being named in Form SB-2 and Form
S-4 Registration Statements filed with the Securities and Exchange Commission as
a person who will so serve as a director.
Sincerely,
/s/ C.O. Sage
C. O. Sage
Dated: November 24, 1998
Exhibit 23.5
Page 1 of 1 Page
GERALD E. "GARY" HAHN
BRIGADIER GENERAL USAF (Ret.)
6106 E. 32nd Place, Suite 101
Tulsa, OK 74135
Albert L. Welsh, President
TechLite, Inc.
4334 N.W. Expressway, Suite 202
Oklahoma City, OK 73116
Dear Mr. Welsh:
The undersigned consents to serve as a director of TechLite, Inc. should the
proposed merger between it and TechLite Applied Sciences, Inc. be approved and
effected. Further, the undersigned consents to being named in Form SB-2 and Form
S-4 Registration Statements filed with the Securities and Exchange Commission as
a person who will so serve as a director.
Sincerely,
/s/ Gerald E. Hahn
Gerald E.Hahn
Brigadier General USAF (Ret.)
Dated: November 25, 1998
Exhibit 23.6
Page 1 of 1 Page
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