SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Commission File No. 333-68137
AMENDMENT NO. 2 TO FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
TechLite, Inc.
(Exact name of registrant as specified 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)
Albert L. Welsh
4334 Northwest Expressway, Suite 202
405-840-1585
--------------------------------------------------------------
(Name, address and telephone number of agent for service)
Copies to:
Thomas J. Kenan, Esq. J. D. Arvidson
Suite 3300 Suite 101
100 North Broadway 6106 East 32nd Place
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 the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
<PAGE>
<TABLE>
<CAPTION>
Calculation of Registration Fee
============================================================================================================
Title of Proposed Proposed
each class maximum maximum
of securities Amount offering aggregate Amount of
to be to be price offering registration
registered registered per unit price fee
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 2,209,903 $0.001 $2,210 $0.21(1)
- ------------------------------------------------------------------------------------------------------------
Common Stock 1,500,000 $0.001 $1,500 $0.14(2)
-----
(for the shelf) $0.35
============================================================================================================
</TABLE>
(1) These 2,209,903 shares are to be offered in exchange for all the issued and
outstanding shares of capital stock of TechLite Applied Sciences, Inc. in a
proposed merger. TechLite Applied Sciences, Inc. has an accumulated capital
deficit. The registration fee is based upon one- third of the par value
(2,209,903 shares times $0.001 par value divided by one-third) of the
securities to be received in the merger transaction. Regulation
230.457(f)(2).
(2) These 1,500,000 shares are being registered pursuant to the provisions of
Regulation 230.415(a)(viii) and are to be available to be issued in
connection with business combinations. The registration fee is based upon
the maximum offering price of all the securities listed in the above table.
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-PROXY STATEMENT
TECHLITE, INC.
2,209,903 Shares of Common Stock 1,500,000 Shares of Common Stock
We offer these shares of common stock We are reserving these shares
only to the stockholders of TechLite of common stock for other,
Applied Sciences, Inc. We propose that future, possible acquisitions or
your company merge into our company. other types of business
combinations. We have none in
mind at this time.
-------------------
Our common stock does not trade on any national securities exchange, the Nasdaq
Stock Market, or any stock market. Should you approve the merger of your company
into our company, we believe our common stock will then soon trade on the OTC
Bulletin Board. We will propose a trading symbol of "TCLT," but we do not know
now what the symbol will be.
--------------------
Your approval of the merger with our Neither the Securities and
company is equivalent to a purchase of Exchange Commission nor any
our securities. This involves a high state securities commission has
degree of risk. See "Risk Factors," approved or disapproved these
beginning on page 2. securities or determined if this
prospectus-proxy statement is
truthful or complete. Any
representation to the contrary
is a criminal offense.
TechLite, Inc.
4334 Northwest Expressway, Suite 202
Oklahoma City, OK 73116
Telephone 405-840-1585
June ____, 1999
<PAGE>
This Prospectus-Proxy Statement incorporates important business and
financial information about the Company (TechLite, Inc.) and TechLite Applied
Sciences that is not included in or delivered with this document. This
information is available without charge to stockholders upon written or oral
request made to:
The Company TechLite Applied Sciences
Albert L. Welsh, President J.D. Arvidson, Chief Executive
TechLite, Inc. Officer
Suite 202 TechLite Applied Sciences, Inc.
4334 Northwest Expressway Suite 101
Oklahoma City, OK 73116 6106 East 32nd Place
Telephone: 405-840-1585 Tulsa, OK 74135
Telephone: 918-664-1441
To obtain timely delivery of requested information, you must request the
information no later than ___________________, 1999, which is five business days
before the date of the special stockholders' meeting called to consider the
merger proposal described herein.
TABLE OF CONTENTS
Page
Summary of Proposed Transaction............................................ 1
Risk Factors ....................................... 2
1. Dilution ....................................... 2
2. Impact of Your Operations at a Loss...................... 2
3. No Assurance of a Public Market and Likelihood
of a Limited Volatile Market............................. 2
4. Penny Stock Regulations ................................. 2
5. Need for Additional Funding ............................. 2
6. Continued Reliance on Key Personnel...................... 2
7. Management Control....................................... 3
8. Tax Consequences......................................... 3
9. Dividends Not Likely..................................... 3
10. Possible Future Dilution ................................ 3
11. Restrictions on Net Operating Loss Carryforwards ........ 3
12. Dependence on Major Suppliers ........................... 3
The Three Companies ....................................... 4
TechLite, Inc. .......................... 4
TechLite Applied Sciences, Inc.................................... 4
SuperCorp Inc. ....................................... 4
Terms of the Transaction................................................... 5
Terms of the Merger............................................... 5
Reasons for the Merger and Spinoff................................ 6
Accounting Treatment of Proposed Merger........................... 6
Dissenters' Rights of Appraisal................................... 6
i
<PAGE>
Differences Between Rights of Stockholders of the Company
and of TechLite Applied Sciences......................... 7
Expenses of the Spinoff and Merger ............................... 7
Shelf Shares ..................................................... 7
Description of Securities......................................... 7
Common Stock............................................. 7
Voting Rights................................... 7
Dividend Rights................................. 7
Liquidation Rights.............................. 7
Preemptive Rights............................... 8
Registrar and Transfer Agent.................... 8
Dissenters' Rights.............................. 8
Preferred Stock.......................................... 8
Federal Income Tax Consequences................................... 8
The Merger............................................... 8
Stockholders of TechLite Applied Sciences....... 8
Pro Forma Financial Information and Dilution...................... 9
Material Contacts Among the Companies............................. 11
Earlier SuperCorp Spinoff-Merger Transactions ............................. 12
Penny Stock Regulations ................................................... 14
Information About the Company.............................................. 15
Description of Business and Properties ........................... 15
Course of Business Should the Merger Not Occur.................... 16
Legal Proceedings................................................. 16
Market for the Company's Common Stock and Related
Stockholder Matters...................................... 16
Rule 144 and Rule 145 Restrictions on Trading..................... 17
Dividends ....................................... 18
Registration Statement ........................................... 18
Reports to Stockholders .......................................... 18
Stock Certificates ............................................... 18
Financial Statements.............................................. 19
Information About TechLite Applied Sciences................................ 19
Overview ......................................................... 19
Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 19
Results of Operations.................................... 19
Sales ....................................... 20
Interim Results ................................ 20
Gross Margin............................................. 20
Interim Results ................................ 20
Selling, General and Administrative Expenses............. 20
Interim Results ................................ 20
Net Income Before Taxes.................................. 21
Interim Results ................................ 21
Balance Sheet Items...................................... 21
Interim Results ................................ 22
Liquidity and Capital Resources ......................... 22
Interim Results ................................ 22
Outlook ....................................... 22
Description of TechLite Applied Sciences' Business ............... 23
ii
<PAGE>
The Light Fixture Retrofitting Industry .......................... 23
The Market ....................................................... 23
Environmental Considerations ..................................... 24
Saving Money ..................................................... 24
Other Benefits ................................................... 26
Current Trends ................................................... 26
Sales Methods .................................................... 27
Production Costs ................................................. 28
Competition ...................................................... 28
Government Approval of Principal Products ........................ 29
Government Regulations ........................................... 29
Properties ....................................................... 29
Office Facilities ................................................ 29
Dependence on Major Customers and Suppliers ...................... 29
Seasonality ...................................................... 30
Research and Development ......................................... 30
Environmental Controls ........................................... 30
Year 2000 Computer Problem ....................................... 30
Number of Employees .............................................. 30
Venue of Sales ................................................... 30
Patents, Copyrights and Intellectual Property .................... 30
Legal Proceedings ................................................ 31
Market for TechLite Applied Sciences' Capital Stock and
Related Stockholder Matters ............................. 31
Financial Statements.............................................. 31
Voting and Management Information.......................................... 32
Date, Time and Place Information ................................. 32
The Company.............................................. 32
TechLite Applied Sciences................................ 32
Voting Procedure......................................... 32
Revocability of Proxy............................................. 32
Dissenters' Rights of Appraisal................................... 32
Persons Making the Solicitation................................... 33
Voting Securities and Principal Holders Thereof................... 33
Security Ownership of Certain Beneficial Owners and
Management............................................... 34
Directors, Executive Officers and Significant Employees........... 36
TechLite Applied Sciences................................ 36
Our Company.............................................. 37
Remuneration of Directors and Officers............................ 38
Our Company.............................................. 38
TechLite Applied Sciences................................ 38
Employment Contracts .................................... 39
Stock Options............................................ 39
Certain Relationships and Related Transactions.................... 39
Company's Transactions with Insiders and Promoters....... 39
TechLite Applied Sciences' Transactions with
Management ..................................... 39
Interests of Named Experts and Counsel .................................... 39
Indemnification ........................................................... 40
Financial Statements Index ................................................ 41
iii
<PAGE>
Appendix A - Agreement of Merger........................................... A-1
iv
<PAGE>
SUMMARY OF PROPOSED TRANSACTION
We organized our company, TechLite, Inc., for the specific purpose of
merging with your company, TechLite Applied Sciences, Inc. The merger will occur
only if the holders of a majority of the capital stock of your company approve
it. A vote to approve or reject the merger will be taken soon at a special
stockholders' meeting of your company.
We have no business or substantial assets. Your company does. Yet, we do
have something to offer you. By the time you vote on this proposed merger with
us, we will have increased the number of our stockholders from only three in one
state to more than 600 in 35 states. We offer you this increased stockholder
base. We believe this will benefit you and us as follows:
o The common stock of our combined company will soon trade in the stock
market.
o You can sell your shares of stock in the stock market, if you wish,
or buy more.
o Our combined company can try to buy other companies with our
tradeable stock rather than with money.
o Our combined, public company should be better able to raise new
capital through the sale of stock than your company now can.
Your company, TechLite Applied Sciences, retrofits lighting fixtures in
buildings in such a way as to significantly reduce electricity consumption. We
will not change this business. Should you approve the merger, your officers and
directors will run our combined company.
Should you approve the merger, each of you will receive one share of our
common stock for each share of common stock you now own of TechLite Applied
Sciences. This amounts to 2,209,903 shares of our stock. Your shares would
represent 90 percent of the outstanding stock after the merger. In effect, we
propose that you give us ten percent of the equity of your company for the
possibility, but not the certainty, that we will together get the benefits
outlined above.
Our address and telephone number is on the cover page of this Prospectus.
The addresses and telephone numbers of SuperCorp and TechLite Applied Sciences
are as follows:
SuperCorp Inc. TechLite Applied Sciences, Inc.
Suite 202 Suite 101
4334 Northwest Expressway 6106 East 32nd Place
Oklahoma City, OK 73116 Tulsa, OK 74135
Telephone: 405-840-1585 Telephone: 918-664-1441
In our opinion, there are no adverse federal income tax consequences to you
should you vote to approve the merger with us.
1
<PAGE>
RISK FACTORS
You, the stockholders of TechLite Applied Sciences, soon will be asked to
vote on the proposed merger. You are making an investment decision that involves
a high degree of risk. You should carefully consider the following risk factors
as well as the terms of the merger in determining whether to approve the merger:
1. Dilution.
--------
Your approval of the merger will cause you to suffer a ten percent dilution
in your percentage ownership and book value of your company. This dilution will
be solely for obtaining the possibility, but not the certainty, of obtaining the
benefits outlined above in "Summary of Proposed Transaction."
2. Impact of your Operations at a Loss.
-----------------------------------
TechLite Applied Sciences has operated at a loss for all but one of its six
years of existence. Its accumulated deficit at the end of its 1999 fiscal year
(January 31, 1999) was $1,347,066. It operated at a loss (unaudited) of
approximately $128,846 the first three months of its fiscal year that will end
January 31, 2000. There is no assurance that profitable operations can be
obtained or maintained. Should you approve the merger and our combined company
continues to operate at a loss, the perceived benefits of the stock market may
also be largely lost.
3. No Assurance of a Public Market and Likelihood of a Limited, Volatile
------------------------------------------------------------------------
Market.
- ------
If you approve the merger, you will exchange your present stock for shares
of stock in our company. However, there is presently no public market for the
stock of our company. We cannot assure you that a public market will develop
after the occurrence of the merger. It is likely that any market that develops
for the stock will be volatile and that trading in the stock will be limited.
4. Penny Stock Regulations.
-----------------------
We do anticipate that our stock will be listed on the OTC Bulletin Board.
We anticipate it will initially trade at less than $5 a share. The stock will be
a so-called "penny stock." This designation subjects broker-dealer firms to
certain restrictions and a strict regimen if they recommend the stock to their
customers. This inhibits aggressive trading in penny stocks. This could limit
your ability to resell your stock and act as a depressant on its price in the
stock market.
5. Need for Additional Funding.
---------------------------
Your company needs additional funding to achieve its plan of operations for
the next twelve months. Your approval of the merger will not, by itself, bring
any new funds into our combined company. Our assets consist of only $245 in
cash. We have not identified any source for additional funding. We give no
assurance that any needed funds can be obtained.
6. Continued Reliance on Key Personnel.
-----------------------------------
Should you approve the merger, the post-merger company will still be
reliant on the continued services of your key personnel. The loss of any of them
could adversely affect future operations. We bring no personnel to our combined
company. We believe your key personnel are J. D. Arvidson, chief executive
officer of Techlite Applied Sciences; C. O. Sage, executive vice president and
chief operating officer; Carol E. Sage, corporate
2
<PAGE>
secretary; and Mark Galvin, vice president for administration. See "Management
Information - Directors, Executive Officers and Significant Employees."
7. Management Control.
------------------
Should you approve the merger, your present officers and directors and
their affiliates will own approximately 33.6 percent of the common stock of our
combined company. This may enable them to determine the outcome of any vote
affecting the control of the company.
8. Tax Consequences.
----------------
The merger should be a tax-free reorganization for both companies and for
you. These anticipated favorable tax consequences are not supported by an
advance ruling by the Treasury Department. They are based upon the opinion of
our tax counsel. See "Federal Income Tax Consequences - The Merger -
Stockholders of TechLite Applied Sciences."
9. Dividends Not Likely.
--------------------
Should you approve the merger, we anticipate that any earnings generated
from operations of our combined company will be used, for the foreseeable
future, to finance its growth, and cash dividends will not be paid to holders of
the common stock.
10. Possible Future Dilution.
------------------------
In addition to the 2,209,903 shares registered for the proposed merger, we
have registered 1,500,000 shares to be available for issuance by the post-merger
company in possible, future, business combinations or asset acquisitions. Such
issuances could be made without notice to you and without your approval. Such
issuances would dilute the percentage ownership, and could dilute the net
tangible book value per share, of stockholders of our combined company.
With regard to such 1,500,000 shares, we have no present plans, proposals,
arrangements or understandings with any representative of any business or
company.
11. Restrictions on Net Operating Loss Carryforwards.
------------------------------------------------
Your company had a net operating loss carryforward of $1,347,066 at January
31, 1999. This may be used to offset otherwise taxable income for several years
in the future. However, under present tax laws 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 merger with us will
effect a 10 percent change in such ownership. While this percentage change will
not of itself trigger such a restriction, it must be taken into account during
the next three years for these income tax purposes.
12. Dependence on Major Suppliers.
-----------------------------
Your company depends upon American Illuminetics, Inc. of Carlsbad,
California, and X-Tra Light Manufacturing Co. of Houston, Texas, to fabricate
and supply the lighting-enhancement reflectors it prefers to use in its light
fixture retrofitting business. Its business could be materially affected by
anything that affects the ability of these other two companies to supply these
reflectors. Such reflectors provide clean "breaks" and sharp angles at the
designed creases. Alternate suppliers of reflectors
3
<PAGE>
exist, but their reflectors merely bend the reflectors at the designed creases,
a design feature that compromises reflection capability. The future competitive
condition of the post-merger company could be reduced if it cannot obtain the
high-quality reflectors it prefers.
THE THREE COMPANIES
The merger we propose will affect three companies and their stockholders:
TechLite, Inc.
--------------
Our company was incorporated in Oklahoma on June 3, 1997, for the purpose
of merging with your company. We have no business operations or significant
capital. We have no present intention of engaging in any active business until
and unless we merge with your company.
TechLite Applied Sciences, Inc.
-------------------------------
Your company was incorporated in Oklahoma on November 9, 1992. It 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.
The business office of the TechLite Applied Sciences is located at 6106
East 32nd Place, Suite 101, Tulsa, Oklahoma 74135. Its telephone number is
918-664-1441.
SuperCorp Inc.
-------------
A third company, SuperCorp Inc. ("SuperCorp"), was organized in Oklahoma on
October 21, 1988. SuperCorp has more than 600 stockholders in 35 states.
SuperCorp acquired almost all of these stockholders 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. The
SuperCorp shares were distributed to the creditors and stockholders of
Naturizer, Inc. SuperCorp's purpose is to engage in "spinoff-merger" activities
such as the one described herein. Such spinoff-mergers involve SuperCorp's
distribution to its stockholders of registered shares of stock of subsidiary
corporations SuperCorp organizes to merge with viable companies. This is the
"spinoff" part of a spinoff-merger transaction orchestrated by SuperCorp. The
"merger" part requires an approving vote of the stockholders of the viable
company - here, your company.
SuperCorp's assets consist of approximately $50,000 in cash. Each of its
five directors, Albert L. Welsh, John E. Adams, T.E. King, Thomas J. Kenan, and
Ronald D. Wallace, either directly or by attribution through ownership by family
members, owns 452,006 shares of common stock of SuperCorp, which amount is less
than seven percent of the number of its outstanding shares. See "Management
Information - Security Ownership of Certain Beneficial Owners and Management."
SuperCorp is not subject to the reporting requirements imposed by Section
12 or Section 15(d) of the Securities Exchange Act of 1934. Its common stock
does not trade in the stock market. SuperCorp has never sought a market maker
for its stock.
4
<PAGE>
SuperCorp organized TechLite, Inc. in May 1997 as a vehicle for the
proposed merger with your company. Our company has no business history, $245 in
assets, no liabilities, and only three stockholders - SuperCorp, who will
"spinoff" its shares in the company to its more than 600 stockholders before you
vote on the merger; George W. Cole, a stockholder of SuperCorp; and Albert L.
Welsh, a stockholder of SuperCorp and the president and a director of both
TechLite and SuperCorp. Should you not approve the merger, see "Information
About the Company - Course of Business Should the Merger Not Occur" below if you
care to know what disposition we will make of our company.
SuperCorp's address is 4334 Northwest Expressway, Suite 202, Oklahoma City,
OK 73116. Its telephone number is 405-840-1585.
TERMS OF THE TRANSACTION
Our company, SuperCorp, and TechLite Applied Sciences have entered into an
agreement of merger between our company and TechLite Applied Sciences. A copy of
the agreement appears as "Appendix A - Agreement of merger." For the merger to
occur, each of the following must occur:
o Registration statements must be filed with and become effective at the
Securities and Exchange Commission and appropriate state securities
regulatory agencies. This has occurred. The registration statements
cover the following:
o the 2,209,903 merger shares - the shares we offer to you and the
other stockholders of your company,
o the 195,556 spinoff shares - the shares SuperCorp will distribute
to its more than 600 stockholders, and
o the 1,500,000 shelf shares - the shares that will be available to
our combined company for other, future, possible business
combinations or acquisitions that would involve other companies;
and
o The stockholders of each of our company and your company must, by a
majority vote of the shares outstanding, approve the merger.
Terms of the Merger.
- -------------------
The terms of the proposed merger are as follows:
1. TechLite Applied Sciences shall merge into our company.
2. All 2,209,903 outstanding shares of capital stock of your company shall
be converted into 2,209,903 shares of common stock of our company on a
share-for-share basis.
3. There shall be no fractional shares.
4. The present business of TechLite Applied Sciences shall be conducted
after the merger by our company, into which TechLite Applied
5
<PAGE>
Sciences shall have merged. TechLite Applied Sciences' management and directors
shall become the management and directors of our combined company. See
"Management Information."
5. Prior to the merger, SuperCorp shall distribute in a "spinoff" to its
stockholders, on a basis proportionate to their stockholdings in SuperCorp, the
195,556 shares of common stock of the company now held by SuperCorp. Each
SuperCorp stockholder shall receive one share of the company for each 34.81
shares of SuperCorp held of record on the date on the cover of this
Prospectus-Proxy Statement.
6. The historical financial statements of the post-merger company shall be
those of TechLite Applied Sciences. See "Financial Statements - TechLite Applied
Sciences." The fiscal year-end of the post-merger company will be January 31,
the end of your company's fiscal year.
7. Should you not approve the merger, this will not make TechLite Applied
Sciences liable to our company or to SuperCorp. However, in any event TechLite
Applied Sciences must pay all three parties' expenses relating to the
registration of the shares described herein.
Reasons for the Merger and Spinoff.
- ----------------------------------
We believe you will benefit from exchanging your stock for stock of our
company in the merger. We have registered with the Securities and Exchange
Commission the stock involved in the spinoff and the stock involved in the
merger. SuperCorp's distribution of the spinoff shares to its stockholders
should provide the basis for the creation of a public market for the common
stock of our combined company. We believe that the existence of such a public
market will facilitate the raising of expansion funds for our combined company.
We give no assurance that such will occur.
SuperCorp, which presently controls our company, believes that the
SuperCorp stockholders will benefit by receiving, for no consideration, the
195,556 spinoff shares.
Accounting Treatment of Proposed Merger.
- ---------------------------------------
Because our company is only a corporate shell and not an operating entity,
the proposed merger will be accounted for as if TechLite Applied Sciences
recapitalized.
Dissenters' Rights of Appraisal.
- -------------------------------
Stockholders of TechLite Applied Sciences who vote against the merger have
the right to dissent and to exercise certain rights of appraisal. If your
approve the merger, these rights would cause TechLite Applied Sciences to pay to
these dissenters the appraised value of their shareholdings. See "Voting and
Management Information - Dissenters' Rights of Appraisal."
6
<PAGE>
Differences Between Rights of Stockholders of the Company and of TechLite
- --------------------------------------------------------------------------------
Applied Sciences.
- ----------------
There are no material differences between the rights of holders of the
common stock of our company and of TechLite Applied Sciences. See "Terms of the
Transaction - Description of Securities."
Expenses of the Spinoff and Merger.
- ----------------------------------
The estimated expenses of the spinoff and the merger are $104,300. These
expenses are being borne entirely by your company, even if you vote to
disapprove the merger. These expenses are federal and state registration fees -
$100; printing and engraving - $10,000; legal fees - $49,000; auditor's fee -
$6,000; filing expenses (EDGAR) - $8,000; finder's fee - $18,500; stock transfer
agent's fee - $4,000; escrow agent's fee - $500; Moody's OTC Industrial Manual
publication fee - $2,300; and mailing cost - $5,900.
Shelf Shares.
- ------------
We have also registered 1,500,000 shares of common stock of our company
that shall not be distributed at this time. They shall be available to our
combined company to enter into one or more merger or acquisition transactions
during the next two years. Should you not approve the merger, the shelf shares
will be available for such purposes for only eighteen months. There are no
current plans, arrangements or understandings for mergers, acquisitions or
business combinations for which the shelf shares would be used.
The offering price of the shelf shares will be determined in the
future, if use is made of such shelf shares.
Description of Securities.
- -------------------------
Common Stock.
-------------
Each of our company and TechLite Applied Sciences is an Oklahoma
corporation. Our company is authorized to issue 40 million shares of common
stock. It has 244,444 shares of common stock now issued and outstanding.
TechLite Applied Sciences is authorized to issue 40 million shares of common
stock. It has 2,209,903 shares of its common stock now issued and outstanding.
There are no differences in the common stock of our two companies.
Voting rights.
-------------
Stockholders have one vote a share on all matters submitted to a
vote of the stockholders. Shares of common stock do not have cumulative voting
rights. This 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.
---------------
Stockholders receive dividends when and if declared by the board
of directors out of funds of the corporation legally available therefor.
Liquidation rights.
-------------------
Upon any liquidation, dissolution or winding up, stockholders
receive pro rata all of the assets of the corporation available for distribution
to stockholders, subject to the
7
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prior satisfaction of the liquidation rights of the holders of outstanding
shares of preferred stock.
Preemptive rights.
-----------------
Stockholders do not have preemptive rights to subscribe for or
purchase any stock, obligations or other securities of the corporation.
Registrar and transfer agent.
----------------------------
Securities Transfer Corporation, Dallas, Texas, is the transfer
agent and registrar of the common stock of our company. TechLite Applied
Sciences serves as its own registrar and transfer agent.
Dissenters' rights.
------------------
A stockholder has "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 corporation's certificate of
incorporation.
Preferred Stock.
----------------
Each of our company and TechLite Applied Sciences is authorized to issue 10
million shares of preferred stock. 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, and conditions of redemption must be set forth
in resolutions adopted by the directors.
There are no outstanding shares of preferred stock either of our company or
of TechLite Applied Sciences.
Federal Income Tax Consequences.
- -------------------------------
The Merger.
----------
The merger should qualify as a type "A" tax free reorganization for both
corporations under Section 368(a)(1) of the Internal Revenue Code. However,
because our company is newly organized, the "step transaction doctrine" might be
applied. If so, our company might be considered a continuation of TechLite
Applied Sciences with only a change of name or place of incorporation, a type
"F" tax free reorganization under Section 368(a)(1).
Stockholders of TechLite Applied Sciences.
-----------------------------------------
Whether the merger be characterized as a type "A" or "F" reorganization,
there should be no recognition of taxable gain or loss to the stockholders of
TechLite Applied Sciences by reason of the merger. Each stockholder of TechLite
Applied Sciences would have a carryover tax basis and a tacked holding period
for our company's securities received in the merger.
TechLite Applied Sciences itself would not recognize any taxable gain or
loss, because its liabilities are not in excess of the tax basis of its assets.
The distribution by SuperCorp to its stockholders of the 195,556 spinoff
shares will not adversely affect the non-recognition of gain or loss to TechLite
Applied Sciences or its stockholders in the merger.
8
<PAGE>
The above discussion is not based upon an advance ruling by the Treasury
Department but upon an opinion of Thomas J. Kenan, esquire, in his capacity as
tax counsel to the company (which tax opinion is one of the exhibits to the
registration statement of which this Prospectus- Proxy Statement is a part). See
"Risk Factors - Tax Consequences."
Pro Forma Financial Information and Dilution.
- --------------------------------------------
The following sets forth certain pro forma financial information giving
effect to the merger:
<TABLE>
<CAPTION>
PRO FORMA STATEMENT OF FINANCIAL CONDITION
April 30, 1999
TechLite
TechLite Applied
Inc. Sciences Pro Forma Pro Forma
(Historical) (Historical) Adjustments Combined
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets $245 $ 983,143 $ - $ 983,388
Property and equipment - 691,337 - 691,337
Other assets - 16,221 - 16,221
---- ----------- ---------- -----------
TOTAL ASSETS $245 $ 1,690,701 $ - $ 1,690,946
==== =========== ========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities $ - $ 828,432 $ - $ 828,432
Long term liabilities - 1,413,024 - 1,413,024
----- ----------- ---------- -----------
Total liabilities - 2,241,456 - $ 2,241,456
----- ----------- ---------- -----------
stockholders' equity:
Common stock 245 220,990 - 221,235
Additional paid-in capital - 898,563 - 898,563
Retained earnings (deficit) - (1,670,308) - (1,670,308)
----- ----------- ---------- -----------
Total stockholders' equity 245 (550,755) - (550,510)
---- ----------- ---------- ----------
TOTAL LIABILITIES AND $245 $ 1,690,701 $ - $ 1,690,946
==== =========== ========== ===========
STOCKHOLDERS' EQUITY
Pro forma book value per share $ (0.22)
==========
</TABLE>
NOTE: Pro forma book value per share is calculated by dividing Total
stockholders' Equity - $(550,510) - by the total number of shares that
would have been outstanding on April 30, 1999 (2,454,347), giving
effect to the proposed merger.
9
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA STATEMENT OF INCOME
Fiscal Year Ended January 31, 1999
and
Three-Month Period Ended April 30, 1999
Fiscal Year Ended January 31, 1999 Three Months Ended April 30, 1999 (Unaudited)
--------------------------------------------------------------------------------------------------------------
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 $ - $4,646,858 $ - $4,646,858 $ - $1,242,217 $ - $1,242,217
Cost of Sales - 3,288,204 - 3,288,204 - 898,008 - 898,008
---------- ---------- ------------ ---------- ----------- ---------- ------------ ----------
Gross profit - 1,358,654 - 1,358,654 - 344,209 - 344,209
Operating expenses - 1,278,469 194,396 1,472,865 - 481,964 - 481,964
---------- ---------- ------------ ---------- ----------- ---------- ------------ ----------
Income from operations - 80,185 - (114,211) - (137,755) - (137,755)
Other income - 8,767 - 8,767 - 8,909 - 8,909
---------- ---------- ------------ ---------- ----------- ---------- ------------ -----------
Income (loss) before
taxes 88,952 - (105,444) (128,846) - (128,846)
Provision for taxes - - - - - 0 - 0
---------- ---------- ------------ ------------ ----------- ---------- ------------ ----------
NET INCOME (LOSS) $ - $ 88,952 $ - $ 88,952 $ - $ (128,846) $ - $ (128,846)
========== ========== ============ ========== =========== ========== ============ ==========
EARNINGS PER
SHARE
Net income (loss) $ 88,952 - $ (105,444) $ (128,846) - $ (128,846)
Weighted-average
number of shares
outstanding 2,209,903 244,444 2,454,347 2,209,903 244,444 2,454,347
Earnings per share - $0.04 - $(0.04) - $(0.06) $(0.05)
</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 April 30, 1999 as if outstanding as of the
beginning of the period.
(3) The $194,396 adjustment in operating expenses for the fiscal year ended
January 31, 1999 represents new business development costs incurred that fiscal
year. These costs would have been amortized over five years following completion
of the development, but a change in generally accepted accounting principles
that became effective during the first quarter of calendar 1999 required that
they be expensed during the first quarter of the fiscal year ending January 31,
2000.
10
<PAGE>
Material Contacts Among the Companies.
- -------------------------------------
Thomas J. Kenan of Oklahoma City, Oklahoma, is a director and general
counsel of SuperCorp. In 1995 he was introduced to J.D. Arvidson, president of
TechLite Applied Sciences, by Rex Frates of Tulsa, Oklahoma. Mr. Frates is 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 stockholder of SuperCorp, to contact Mr. Arvidson. Mr. Kenan told
them that Mr. Arvidson's 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. 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 (1) 85,000 shares of his TechLite
Applied Sciences stock to the Marilyn C. Kenan Trust, whose trustee and primary
beneficiary is Mr. Kenan's spouse, Marilyn C. Kenan, and (2) 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
stockholders the spinoff-merger transaction described in this Prospectus.
The SuperCorp directors also favorably considered the spinoff- merger
transaction. They created a subsidiary corporation, our company, to be available
to merge with TechLite Applied Sciences. They caused SuperCorp to purchase
244,440 shares of common stock of our company, at $0.001 a share, to be
distributed to the SuperCorp stockholders as a stock dividend. They also
authorized the sale at $0.001 a share of 24,444 shares of common stock of the
company to each of Mr. Welsh and Mr. Cole in recognition of their services to
the SuperCorp stockholders in persuading the directors of TechLite Applied
Sciences to consider the merger described herein.
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, our company, and
SuperCorp during the periods for which financial statements appear herein.
11
<PAGE>
EARLIER SUPERCORP SPINOFF-MERGER TRANSACTIONS
This transaction with TechLite Applied Sciences, should you approve it,
will be the fourth such "spinoff-merger" transaction effected by SuperCorp with
subsidiaries it creates for such purposes.
The Lark Technologies, Inc. spinoff-merger.
------------------------------------------
SuperCorp's first spinoff-merger transaction concerned Lark Technologies,
Inc. ("Lark"), a SuperCorp-created subsidiary. Lark merged with a Houston, Texas
company engaged in DNA sequencing whose major stockholders are affiliates of the
Baylor School of Medicine.
The Lark spinoff occurred on September 6, 1995. The Lark merger occurred on
September 14, 1995. None of SuperCorp's or Lark's officers, directors,
affiliates or persons or entities engaged in management-type activities with
SuperCorp or Lark had any involvement in this spinoff- merger. None of these
persons received any cash, stock or other thing of value with respect to this
transaction other than his pro rata receipt of Lark stock that was spunoff to
the SuperCorp stockholders. Subsequent to the Lark spinoff-merger, Lark raised
$1 million in a rights offering to its stockholder base.
The Dransfield China Paper Corporation transaction.
--------------------------------------------------
The second spinoff-merger transaction concerned Dransfield China Paper
Corporation ("Dransfield"), a SuperCorp-created subsidiary. Dransfield merged
with a Hong Kong company engaged in distributing hygienic paper products in Hong
Kong and in building integrated paper mills in China. Dransfield's major
stockholder is a Hong Kong stock Exchange-listed company.
The Dransfield spinoff occurred on February 13, 1996. The Dransfield merger
occurred on February 26, 1997. One of SuperCorp's officers and directors, T.E.
King, received $45,000 from the Hong Kong company, 11,642 shares of common stock
of Dransfield and 250,000 warrants to purchase shares of common stock of
Dransfield at $5.50 a share as compensation for his services in bringing
together the Hong Kong company and SuperCorp. Thomas J. Kenan, an officer and a
director of SuperCorp, received 20,000 warrants and the other officers and
directors of SuperCorp each received 40,000 warrants to purchase shares of
common stock of Dransfield at $5.50 a share as compensation for their past
efforts in screening prospective spinoff-merger transactions. All of these
warrants expired without being exercised. Each of these officers and directors
also received his pro rata distribution of Dransfield shares spunoff by
SuperCorp to its stockholders. Subsequent to the Dransfield spinoff-merger,
Dransfield raised $750,000 in a private placement to investors in the U.S. and
Hong Kong.
The Summit Technologies, Inc. transaction.
-----------------------------------------
The third spinoff-merger transaction concerned Summit Environmental
Corporation, Inc. ("Summit"), a SuperCorp-created subsidiary. Summit merged with
a Longview, Texas company engaged in marketing a new fire
12
<PAGE>
suppressant product and other products manufactured by other companies.
The Summit spinoff occurred on November 10, 1998. The Summit merger
occurred on December 2, 1998.
None of SuperCorp's officers, directors, affiliates or persons or entities
engaged in management-type activities with SuperCorp or Summit had any
involvement in this spinoff-merger other than Thomas J. Kenan, a director and
general counsel of SuperCorp. The Longview, Texas company allowed Mr. Kenan to
purchase 28,333 shares of its common stock at $0.30 a share in a non-public
offering it conducted at this price before the registration statements for the
spinoff-merger transaction were filed with the Securities and Exchange
Commission.
George W. Cole, a former SuperCorp director and a person to whom Securities
and Exchange Commission rules may attribute the beneficial ownership of more
shares of common stock of SuperCorp than any other SuperCorp stockholder,
received compensation for finding and negotiating the spinoff-merger transaction
with Summit.
Mr. Cole received $18,500 from the Longview, Texas company for a finder's
fee and for consulting services. He exchanged $14,250 of such fee for 23,750
shares of the Longview, Texas company at $0.60 a share prior to the
spinoff-merger. Further, SuperCorp allowed him to purchase 125,000 shares of
common stock of Summit at $0.001 a share when SuperCorp organized Summit.
After each of the above three spinoff-merger transactions was consummated,
SuperCorp director Thomas J. Kenan became involved with each company as an
attorney. He has represented each company from time to time as a securities
lawyer. He received cash fees for such services at his customary billing rates.
He also was invited by Dransfield to serve as a non-management director of
Dransfield and of its Hong Kong stock Exchange-listed parent, Dransfield
Holdings Limited. He receives no compensation for such director's services but
was granted an option to purchase 25,000 shares of Dransfield at $2.60 a share.
The option has not been exercised. He was invited by Summit to serve as a
non-management director. He receives no compensation for such services.
Albert L. Welsh, the president and a director of SuperCorp and the sole
officer and director of our company, TechLite, Inc., and George W. Cole, whose
family owns more than six percent of the outstanding shares of common stock of
SuperCorp, are named elsewhere in this Prospectus- Proxy Statement as persons
who have been involved in transactions among our company, SuperCorp and TechLite
Applied Sciences. See "Material Contacts Among the Companies," page 12. Neither
of such persons has been involved in post-merger transactions with any of Lark,
Dransfield or Summit other than as a stockbroker with regard to the trading of
stock in the open market.
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 "SEVT." Lark, Dransfield and Summit are viable, operating companies.
Their common stock prices are quoted
13
<PAGE>
daily. All three file reports with the Commission pursuant to the requirements
of the Securities Exchange Act of 1934.
PENNY STOCK REGULATIONS
There is no way to predict a price range within which our common stock will
trade. We expect trading to commence on the OTC Bulletin Board at a price less
than $5 a share. Accordingly, our common stock, initially at least, would be
subject to the rules governing "penny stocks."
A "penny stock" is any stock that:
o sells for less than $5 a share.
o is not listed on an exchange or authorized for quotation on The
Nasdaq stock Market, and
o is not a stock of a "substantial issuer." Our 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.
There are statutes and regulations of the Securities and Exchange
Commission (the "Commission") that impose a strict regimen on brokers that
recommend penny stocks.
The Penny Stock Suitability Rule
--------------------------------
Before a broker-dealer can recommend and sell a penny stock to a new
customer who is not an institutional accredited investor, 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" (1) that transactions in penny stocks
are suitable for the person and (2) 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 delays a proposed transaction. It causes 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 to the following:
o transactions not recommended by the broker-dealer,
14
<PAGE>
o sales to institutional accredited investors,
o sales to "established customers" of the broker-dealer persons who
either 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, and
o 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." This document includes 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. It 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
Our company was incorporated under the laws of the State of Oklahoma on
June 3, 1997. It has no business or significant assets. It 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 you approve the merger, our company shall be the surviving company,
but our 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
15
<PAGE>
to you. TechLite Applied Sciences's present management shall become the
management of the company. See "Management Information - Directors, Executive
Officers, and Significant Employees."
TechLite Applied Sciences's present management advises us that it shall
continue the business of TechLite Applied Sciences as the business of the
company after the merger (see "Information about TechLite Applied Sciences -
Description of Business and Properties").
Our 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 you not approve the merger, we will be a "blank check" company
without any property or business. We will seek to acquire, in one or more
transactions in exchange for part or all of the "shelf shares" of the company,
businesses or assets that would constitute businesses. Should we not make such
an acquisition within 18 months, a Commission rule requires that our acquisition
effort be abandoned. In such event, the spinoff certificates, all of which are
held in escrow, would not be delivered to the record owners thereof. The holders
of the majority of our 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. Such a
dissolution would have insignificant consequences for the persons receiving the
spinoff shares. The company would have no assets to distribute to its
stockholders upon such a dissolution. Each stockholder would have a capital loss
equal to $0.001 a share for each share of the company received in the spinoff.
Legal Proceedings.
- -----------------
Neither our 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.
- ---------------------------------------------------------------------
There is no present public trading market in the U.S. or elsewhere for our
common stock. After the spinoff and before you vote on the merger, all
certificates representing the 195,556 spinoff shares shall be held in escrow by
an escrow agent.
Should you approve the merger, the escrow agent will release from escrow
the certificates representing the spinoff shares. These certificates would be
delivered to the more than 600 SuperCorp stockholders owning the securities
represented by the certificates. You will receive 2,209,903 shares of common
stock of our company in exchange for your 2,209,903 outstanding shares of
capital stock of TechLite Applied Sciences.
16
<PAGE>
Rule 144 and Rule 145 Restrictions on Trading.
- ---------------------------------------------
Should you approve the merger, all 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, there will be certain restrictions on the transfer for value of
some of the shares.
Securities and Exchange Commission rules define as "affiliates" a
corporation's executive officers, directors and other persons who, by any
manner, exercise control over the corporation's direction and policies. The
affiliates of your company at the time of the vote on the merger, in order to
sell their shares received in the merger, must either register them for sale or
comply with the resale provisions set forth in paragraph (d) of the Commission's
Rule 145, unless some other exemption-from-registration provision is available.
The resale provisions of paragraph (d) of Rule 145 refer to certain provisions
of the Commission's Rule 144 and require, for sales of the shares by such
affiliates, 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,
o the company must have filed all reports with the
Commission required by such rule during the twelve
months preceding such sale (or such shorter period
that the company was required to file such reports),
o transfers for value by such affiliates can occur only
either (1) through broker transactions not involving
the solicitation of buyers or (2) 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 resale provisions of Rule 145 shall continue for such affiliates
for one year after the merger. Then, only the company's reporting requirement
shall continue. When 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 that the
company file reports with the Commission will no longer be required for such a
former affiliate to sell any of the shares acquired in the merger.
We believe that none of the 195,556 registered spinoff shares will be
subject to any restrictions on trading or transfers for value. We
17
<PAGE>
also believe that none of the 2,209,903 shares of the company to be distributed
in the merger to TechLite Applied Sciences stockholders other than 825,789
shares to TechLite Applied Sciences' officers, directors and affiliates - 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
1,579,670 shares in the "public float," i.e., subject to no securities law
restrictions on their being traded or transferred for value. We estimate that
approximately 675 persons will own these shares of record. The offering of them
for sale could have a materially adverse effect on the market price of the
company's stock. Further, the affiliates of TechLite Applied Sciences will hold
an additional 825,789 shares and will be able to sell these shares pursuant to
Rule 144 and Rule 145 of the Securities Act.
No equity of the company is subject to outstanding options or warrants to
purchase, or securities convertible into, equity of the company.
Dividends.
---------
We have had no operations or earnings and have declared no dividends on our
capital stock. Should you approve the merger, 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").
Registration Statement.
----------------------
The company has filed with the Securities and Exchange Commission ("SEC")
in Washington, D.C., a Registration Statement under the Securities Act of 1933,
with respect to the common stock offered by this Prospectus-Proxy Statement. The
public may read and copy any materials we file with the SEC at the Public
Reference Room of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. Our company is an electronic filer, and the
SEC maintains an Internet Web site that contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the SEC. The address of such site is http://www.sec.gov.
Reports to Stockholders.
-----------------------
The company will file reports with the Securities and Exchange Commission.
These reports are annual 10-KSB, quarterly 10-QSB and periodic 8-K reports. We
will furnish stockholders with annual reports containing financial statements
audited by independent public or certified accountants and such other periodic
reports as we may deem appropriate or as required by law.
Stock Certificates.
------------------
Certificates for the securities offered hereby will be ready for delivery
within one week after you approve the merger.
18
<PAGE>
Financial Statements.
- --------------------
See "Financial Statements - TechLite, Inc." for the independent auditor's
report dated June ____, 1999, with respect to our company's balance sheet as of
April 30, 1999, such balance sheet, and the notes to the balance sheet.
INFORMATION ABOUT TECHLITE APPLIED SCIENCES
Overview.
- --------
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. It installs
highly efficient reflectors, improved electronic ballasts, and energy-efficient
fluorescent lamps that make possible a 60 percent or greater reduction in
electricity consumption. It does this while maintaining or improving existing
light levels.
TechLite Applied Sciences has its headquarters in Tulsa, Oklahoma, and
branch offices in Dallas, Texas; Tecumseh, Oklahoma; and Brazilia and Rio de
Janeiro, Brazil. Its fiscal year ends January 31. TechLite Applied Sciences
operated at a loss from inception through the fiscal year that ended January 31,
1998. Operations became profitable in the fiscal year that ended January 31,
1999, but have not been profitable for the three-month period that ended April
30, 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, 1999
and for the three-month period ended April 30, 1999:
<TABLE>
<CAPTION>
Three Months
Ended
Year ended January 31 1998 1999 04-30-99
-------------------------------------------------- ------------
<S> <C> <C> <C>
Sales 100% 100% 100%
Cost of sales 88% 71% 72%
--- --- ---
Gross margin 12% 29% 28%
Selling, general and
administrative expenses 54% 28% 39%
Net income (loss) before taxes (43)% 2% (11)%
</TABLE>
19
<PAGE>
Sales.
-----
Sales of $4,646,858 for fiscal year 1999 increased by 271 percent over
fiscal 1998's sales of $1,714,514. The increase was due to work being commenced
on a $3.95 million contract to retrofit most of the buildings of the Tulsa,
Oklahoma Independent School District Number One.
Interim Results.
---------------
Sales for the three months ended April 30, 1999 were $1,242,217, a
decrease of $58,204, or 4.5%, from the $1,300,421 in sales for the three months
ended April 30, 1998.
Gross margin.
------------
Gross margin increased from $197,587 in fiscal 1998 to $1,358,654 in fiscal
1999, an increase of 688%. The increase was due primarily to the low gross
margin realized on work performed in fiscal 1998 on buildings owned by the
Houston Independent School District. Another company had earlier received the
contract to perform this work but had been dismissed due to 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 increase in gross
margin percentage is attributable to the difference in margin, as a percentage
of sales, between the Tulsa public schools contract performed in fiscal 1999 and
the Houston public schools contract performed in fiscal 1998.
Interim Results.
---------------
Gross margin for the three months ended April 30, 1999 was $344,209
or 27.7%, an increase over gross margin of 24.3% for the same three-month period
the previous fiscal year. This improvement was achieved on lower sales of
$58,204.
Selling, general and administrative expenses.
--------------------------------------------
Selling, general and administrative expenses increased from $930,763 in
fiscal 1998 to $1,278,469 in fiscal 1999, or 37%. This small increase, at a time
when sales almost tripled, was due to a concerted effort by TechLite Applied
Sciences' management to reduce these expenses at all levels.
Interim Results.
---------------
Selling, general and administrative expenses increased dramatically
from $194,367 during the three months ended April 30, 1998 to $481,964 during
the same period ended April 30, 1999, an increase of $287,597 - or 148 percent -
on fairly comparable sales. The increase was attributable to substantial new
business development costs that were incurred in Florida and in Brazil. These
costs are now being expensed as they are incurred in accordance with recent
changes in generally accepted accounting principles.
20
<PAGE>
Net income (loss) before taxes.
------------------------------
A net loss before taxes of $730,214 in fiscal 1998 was reversed to net
income before taxes of $88,952 in fiscal 1999. This gain was due to an almost
tripling 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.
Interim Results.
----------------
Net income (loss) before taxes recorded a loss of $137,755 during
the first three months of the present fiscal year as compared with net income of
$121,692 during the same period the previous year. The loss was due to
substantial new business development costs that were incurred in Florida and in
Brazil during this quarter. These costs are now being expensed as they are
incurred in accordance with recent changes in generally accepted accounting
principles.
Balance sheet items.
-------------------
Significant changes in several balance sheet items occurred from fiscal
1998 to fiscal 1999, in particular the following:
o A bank overdrawn position of $10,191 at the end of fiscal 1998
--------------
improved to a cash position of $19,162 at the end of fiscal 1999,
----
o contracts receivable of $416,809 on January 31, 1998 increased
--------------------
to $821,229 at the end of fiscal 1999,
o payroll and sales tax payable of $212,521 at the end of fiscal
-----------------------------
1998 had been paid in full by October 31, 1998 with only
current taxes of $97,110 being on the books at the end of
fiscal 1999,
o the backlog of business increased from $594,980 at January 31,
-------------------
1998 to $2,221,777 at January 31, 1999,
o billings in excess of costs and estimated earnings on uncompleted
---------------------------
contracts totaling $330,074 at the end of fiscal 1998 had been
reduced to $96,337 at the end of fiscal 1999,
o notes payable of $159,595 at the end of fiscal 1998 had increased
-------------
by 840% to $1,341,011 at the end of fiscal 1999,
o the retained deficit had been reduced, by reason of earnings
----------------
of $88,952, from $1,436,018 to $1,347,066 at the end of fiscal
1999, and
o a stockholders' deficit of $430,322 on January 31, 1998 had been
---------------------
reduced to a stockholders' deficit of $227,513 at the end of
fiscal 1999.
The above improvements in balance sheet items were due to the facts that
TechLite Applied Sciences increased its sales and gross margin,
21
<PAGE>
effected reductions in costs, and made a profit of $88,952 for the fiscal year
ended January 31, 1999. The increase in notes payable is primarily attributable
to two things: a $750,000 line of credit necessary to cover the costs of the
increase in sales volume, and a note payable of approximately $400,000
associated with the acquisition of the home office building.
Interim Results.
---------------
The balance sheet item "Other Assets" included $194,396 on January
31, 1999 attributed to new business development costs incurred in Brazil. Due to
a change in accounting rules, these costs can no longer be amortized and were
written off as expense during the first quarter of the present fiscal year.
This write-off of an amortizable asset also affected the
stockholders' retained deficit in the same amount.
Liquidity and Capital Resources.
-------------------------------
TechLite Applied Sciences had negative cash flow from operations of
$714,471 in fiscal 1999. The principal components of this negative cash flow
were an increase of $404,420 in contract receivables, an increase of $204,918 in
other assets, and a decrease of $233,737 in billings related to costs and
estimated earnings on uncompleted contracts. It increased its property, land and
equipment by $561,640 in fiscal 1999. This drain on liquidity and capital
resources was covered by the sale of $113,857 of common stock and by new
borrowings of $1,576,231. A positive item at fiscal 1999 year-end was contracts
receivable of $821,229, almost double that of $416,809 of fiscal 1998 year-end.
Interim Results.
---------------
TechLite Applied Sciences made $683,463 in principal payments on
notes receivable during the quarter that ended April 30, 1999 but had $755,476
in new borrowings, a net increase of $72,013 in long-term debt. Its loss from
operations of $137,755 during this fiscal quarter was financed from the new
borrowings and from increases in accounts payable and other accrued liabilities.
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 expects sales to increase from $4.6 million in
fiscal 1999 (which ended January 31, 1999) to approximately $8.0 million in the
fiscal year to end January 31, 2000. It expects its earnings to increase from
$88,952 in fiscal 1999 to approximately $896,000 in the present fiscal year to
end January 31, 2000.
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 1999, 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
22
<PAGE>
costs in establishing branch offices; the emergence of competition not now
detected; and a general economic turndown.
DESCRIPTION OF TECHLITE APPLIED SCIENCES' BUSINESS
The Light Fixture Retrofitting Industry.
- ---------------------------------------
In 1992 the Congress enacted the National Energy Policy Act. This law
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" or "Energy Star" program. This is 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.
These two government initiatives - the National Energy Policy Act of 1992
and the EPA's Energy Star 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 reflectors.
The retrofitting of existing fixtures with these three improvements makes
possible (1) up to a 60 percent or greater reduction in power consumption while
(2) maintaining or even improving current light levels. The business of TechLite
Applied Sciences is selling and installing these and related products. This
involves designing or adapting the 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 an energy-efficient lighting retrofit. Of that number, only
approximately 50 million, or less than two percent, have been converted. We
estimate 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.
23
<PAGE>
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 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 EPA's Energy Star upgrade program focuses on achieving energy savings
under circumstances that save money for the electricity user. Businesses that
have made the investment in retrofit lighting - because of the development of
highly efficient 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.
The new electronic ballast is ten to fifteen percent more efficient than
the standard magnetic ballast now in widespread use. Newly developed compact
fluorescent lamps convert most of their electricity into light - not heat. They
are four times more efficient than standard incandescent lights. They 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 improve their
lighting quality while reducing energy costs.
Occupancy sensors keep lights on when motion is detected and turn lights
off when motion is not detected. They ensure 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
24
<PAGE>
Applied Sciences makes use of these lighting enhancement reflectors. This
requires a fixture-by-fixture retrofitting by TechLite Applied Sciences but,
together with the other energy-efficient improvements noted above, it 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. It usually pays the highest commercial rates, because of the
relatively small space occupied. Retrofitting the lights of this business can be
most cost-effective. It can generate 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 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 $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.
With lower prices and minimal installation
25
<PAGE>
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.
- --------------
Many electric light retrofit companies 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.
TechLite Applied Sciences uses the latest ballasts. They 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.
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 continue to improve
their products. Single lamp reflectors for two-foot by four- foot fixtures have
added even more low-end versatility. 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
retrofits 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. Its engineers identify and measure
extensive lists of data for a computerized design process.
26
<PAGE>
In 1997, the competitive climate began to change with the emergence of
"energy service companies," called "ESCOs". Several states took steps toward the
deregulation of the electricity supply companies - the electrical utility
companies. One response of the utility companies has often been their creation
of ESCO subsidiaries. These 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. Financing for the package is
generally provided by the ESCOs. TechLite Applied Sciences has no strategic
alliances with any ESCOs at present but is seeking them. Such alliances could
prove to be critical in getting business in the future.
Sales Methods.
- -------------
TechLite Applied Sciences operates out of six offices. It makes available
to each U.S. office a demonstration machine that is used as a sales device.
Within a single portable unit, there is a television set with VCR for showing
Energy Star 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 building, the types of fixtures
observed, the hours of usage and the 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 that 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 (1) the best
retrofit solution for the over-lit areas and the under-lit areas and (2) which
solution is most cost-effective.
27
<PAGE>
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. Each of the Brazil postal system and Carrefour later
advised TechLite Applied Sciences that no contract would be considered at that
time, due to the unstable Brazilian currency and its devaluation. However the
postal system and Carrefour recently advised TechLite Applied Sciences that at
such time as the Brazilian currency exchange rate gets to 1.6 reals to the U.S.
dollar, each will enter into a contract with TechLite Applied Sciences - the
Brazil postal system for four of its largest post office buildings
(approximately a $6 million contract) and Carrefour for all 58 of its stores
(approximately a $20 million contract). The exchange rate on June 16, 1999 was
1.766 Brazilian reals to the U.S. dollar.
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 twenty-eight percent of contract revenue. During the
fiscal year that ended January 31, 1999, TechLite Applied Sciences had a pre-tax
profit on sales of $4.6 million of approximately two percent. Its selling,
general and administrative expenses are geared to sales of $25 million a year -
a level it has yet to achieve. 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. Even so, 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 obtains its retrofit contracts in most instances when
it can demonstrate what it offers in contrast to what a competitor offers.
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.
28
<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 a 13,000 square-foot office building located
at 6106 East 32nd Place, Tulsa, Oklahoma 74135.
Office Facilities.
- -----------------
TechLite Applied Sciences occupies approximately 5,500 square feet of its
13,000 square-foot office building in Tulsa, Oklahoma. It leases, on short-term
leases, warehouse space and additional office space as follows:
<TABLE>
<CAPTION>
Use of
Leased Square Monthly
Premises City Feet Rent Term
-------- --------------------- ------- ------- --------------
<S> <C> <C> <C> <C>
Office Tecumseh, OK 400 $ 175 Month-to-Month
Warehouse Tulsa, OK 4,200 $1,275 06-09-2000
Office Dallas, TX 300 $ 80 12-31-1999
Office &
Warehouse Brazilia, Brazil 10,400 $ 400 12-31-1999
Office &
Warehouse Rio de Janeiro, Brazil 250 $ 100 12-31-1999
</TABLE>
The above space is deemed adequate for TechLite Applied Sciences's foreseeable
needs. As branches are opened in additional cities, facilities will be leased on
short-term leases 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 depends upon American Illuminetics, Inc. of Carlsbad, California and
X-Tra Light Manufacturing Co. of Houston, Texas 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 always of as high a quality as that of the present suppliers, in
the view of TechLite Applied Sciences. For lamps, TechLite Applied Sciences
depends upon Phillips Lighting Co. of Somerset, New Jersey; Osram Sylvania, Inc.
of Danvers, Massachusetts; and GE Lighting of Cleveland, Ohio. For ballasts, it
depends upon Advance Transformer Co. of Rosemont, Illinois; Magnetek Lighting
Products Group of Nashville, Tennessee; and Motorola Lighting, Inc. of Buffalo
Grove, Illinois.
29
<PAGE>
Seasonality.
- -----------
There is no seasonal aspect to TechLite Applied Sciences's business.
Research and Development.
- ------------------------
TechLite Applied Sciences conducts no research and development.
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 April 30, 1999, TechLite Applied Sciences employed 48 persons full time,
two persons part time, and had eight 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 but does have common law copyright protection for an energy audit
software program.
30
<PAGE>
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 your TechLite Applied Sciences's
common stock. There are 52 holders of record of TechLite Applied Sciences's
issued and outstanding common stock. Should you not approve the merger, no
public trading market is expected to develop for your stock. 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
advises us that it 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 you approve the proposed merger, all 2,209,903 shares of common
stock of our company that would be distributed to the stockholders 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, 1998 and 1999, and statements of income, cash flows, and changes in
stockholders' equity for the period ended January 31, 1998 and 1999, 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 April 30, 1998 and 1999, and statements of income and cash
flows for the three months ended April 30, 1998 and 1999, which have been
prepared in accordance with generally accepted accounting practices in the
United States.
31
<PAGE>
VOTING AND MANAGEMENT INFORMATION
TechLite Applied Sciences' management will solicit your proxy with respect
to the proposed merger described herein.
Date, Time and Place Information.
- --------------------------------
Our Company.
-----------
Our company's stockholders must also vote on the proposed merger. An
approving vote is assured and shall be taken by written, unanimous consent
within one day after the date of this Prospectus-Proxy Statement.
TechLite Applied Sciences.
-------------------------
Stockholders of your Company will vote on the proposed merger at a special
meeting of the stockholders of TechLite Applied Sciences to be held on 11:00
A.M., __________, ___________________, 1999, at TechLite Applied Sciences'
offices at 6106 East 32nd Place, Suite 101, Tulsa, Oklahoma 74135. TechLite
Applied Sciences' officers, directors and their affiliates are entitled to vote
37.4% of the outstanding shares entitled to vote. Nevertheless, your management
has agreed to vote their shares to approve or disapprove the merger in
accordance with the majority vote of the other voting stockholders. Accordingly,
we are unable to provide assurance that the merger will be approved.
Voting Procedure.
----------------
Voting by TechLite Applied Sciences' stockholders may be by written ballot
at the meeting or by written proxy. stockholders of record as of the date of
this Prospectus-Proxy Statement shall be entitled to vote. Provided a quorum is
present in person or by proxy (as determined by the aggregate voting rights of
the common stock, considered as a whole), abstentions by stockholders present in
person at the meeting shall be counted as a vote for rejecting the merger. None
of the shares are held of record by brokers.
Revocability of Proxy.
- ---------------------
A person giving a proxy has the power to revoke it. A revocation of a proxy
earlier given can be accomplished either (1) by written notification by the
giver of the proxy of an intent to revoke it, or (2) by attendance at the
special stockholders' meeting called to vote on the proposed merger and either
oral or written instruction to the person counting ballots on the merger vote of
an intention to revoke the earlier given proxy.
Dissenters' Rights of Appraisal.
- -------------------------------
Stockholders of TechLite Applied Sciences who do not vote for or consent in
writing to the proposed merger, and who continuously hold their shares through
the effective date of the merger (should it be effected), are entitled to
exercise dissenters' rights of appraisal. Generally, any stockholder of TechLite
Applied Sciences is entitled to dissent from consummation of the plan of merger
and to obtain payment of the fair value of his shares should the merger be
consummated. The notice of the special meeting of stockholders of TechLite
Applied Sciences, at which the vote shall be taken whether to approve the
proposed merger, must state that all stockholders are entitled to assert
32
<PAGE>
dissenters' rights. The notice must be accompanied by a copy of the relevant
portions of Oklahoma corporation law describing dissenters' rights, the
procedure for exercise of dissenters' rights, and the procedure for judicial
appraisal of the value of the shares of common stock of TechLite Applied
Sciences should a dissenter and TechLite Applied Sciences not agree on the value
of such shares.
All stockholders of TechLite Applied Sciences who desire to consider
whether their dissenters' rights should be exercised should carefully read the
relevant portions of Section 1155 of the Oklahoma General Corporation Act that
will accompany the notice of the special meeting of stockholders. You should
especially be alert to the requirement that if you wish to assert your
dissenters' rights, you must deliver to the corporation, before the vote is
taken, written notice of your intent to demand payment for your shares if the
merger is approved. You must not vote your shares in favor of, or consent in
writing to, the merger, although you will not lose your dissenter's rights by
failing to vote. Other procedures are required and will be described in detail
in the copy of Oklahoma corporation law that describe dissenters' rights. A mere
vote against the merger does not satisfy the requirement of delivering written
notice before the meeting of your intent to demand payment for your shares if
the proposed merger is effectuated.
Persons Making the Solicitation.
- -------------------------------
Members of management of TechLite Applied Sciences will solicit proxies for
that entity (see "Voting and Management Information - Date, Time and Place
Information - TechLite Applied Sciences).
They will solicit proxies by the mails, by telephone, or by personal
solicitation. TechLite Applied Sciences will bear the cost of the solicitation.
Management will vote signed but otherwise unmarked proxies to approve the
merger. Management will vote its shares in accordance with the majority vote of
non-management stockholders.
Voting Securities and Principal Holders Thereof.
- -----------------------------------------------
The merger must be approved by an affirmative vote of the holders of a
majority of the outstanding shares of common stock of our company and of your
company.
There are presently outstanding 244,444 shares of common stock of our
company, 195,556 of which are held of record by SuperCorp and 48,888 of which
are held by persons affiliated or associated with two insiders or promoters of
our company. A vote approving the proposed merger by our company is assured.
There are presently outstanding 2,209,903 shares of common stock of
TechLite Applied Sciences held of record by 52 stockholders. Each share is
entitled to one vote on the proposed merger.
33
<PAGE>
The record date for determining the right to vote on the proposed merger is
the date on the cover of this Prospectus-Proxy Statement for our company and for
TechLite Applied Sciences.
Security Ownership of Certain Beneficial Owners and Management.
- --------------------------------------------------------------
The following table shows information as of June 15, 1999 with respect to
each beneficial owner of more than 5% of each class of voting stock of our
company and of TechLite Applied Sciences, and to each of the officers and
directors of our 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 our company and
TechLite Applied Sciences (2,454,347 shares):
<TABLE>
<CAPTION>
Common Stock Beneficially Owned
-------------------------------
Before After
Spinoff-Merger Spinoff-Merger
-------------- --------------
No. of % of No. of % of
Our Company shares Class shares Class
- ----------- --------- ----- --------- -----
<S> <C> <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 97,985(3) 4.0
Ronald D. Wallace
One Buckhead Plaza, 19th Floor
3060 Peachtree Street, NW
Atlanta, GA 30305 195,556(2) 80 12,985 0.5
John E. Adams
1205 Tedford
Oklahoma City, OK 73116 195,556(2) 80 12,985 0.5
T.E. King
49 Strawberry Lane, Suite 200
Palos Verdes Peninsula, CA 90274 195,556(2) 80 12,985 0.5
Albert L. Welsh
3832 Northwest 69th
Oklahoma City, OK 73116 220,000(4) 90 47,429(5) 1.9
George W. Cole
3535 Northwest 58th, Suite 770
Oklahoma City, OK 73112 24,444 10 47,737(6) 1.9
Officers and Directors as a Group (1 person
before merger, 0 persons after merger) 220,000 90 0 0
</TABLE>
- -------------------------
34
<PAGE>
(1) After allocating one share of common stock of our 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. SuperCorp owns 195,556 shares of common stock of
our company. This person shares with the other directors of SuperCorp
the voting and investment power over SuperCorp's stock in the company.
(3) These shares would be owned by the Marilyn C. Kenan Trust. This
trust is under the control of Marilyn C. Kenan, its sole trustee
and sole beneficiary for her life. Mrs. Kenan is the spouse of
Thomas J. Kenan, an officer and director of SuperCorp. Mr. Kenan
disclaims any beneficial interest in shares of capital stock of the
company owned by this trust, which is a testamentary trust
established in the 1980s by the estates of her deceased parents.
The Marilyn C. Kenan Trust owns 85,000 shares of common stock of
TechLite Applied Sciences and would exchange these shares for
85,000 shares of common stock of our company in the merger. This
trust would also receive 12,985 shares of common stock of our
company in the spinoff. Mr. Kenan provides legal services to our
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 our company. See "Transactions
With Insiders."
(5) 12,985 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 our 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) 13,293 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 our company (see "Transactions with Insiders").
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
13,293 spinoff shares are attributed to Mr. Cole through the
holdings of 462,706 shares of common stock of SuperCorp held by his
spouse, Marjorie J. Cole - 452,006 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.
35
<PAGE>
<TABLE>
<CAPTION>
Common Stock Beneficially Owned
-------------------------------
TechLite Applied
Sciences' Common Our Company Common
Before 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
C. O. Sage 222,292(1) 10.1 222,292(1) 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(1) 10.1 222,292(1) 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 148,056 6.7 148,056 6.0
2626 East 28th Street
Tulsa, OK 74114
Officers and Directors 825,789 37.4 825,789 33.6
as a group (5 persons)
</TABLE>
- -------------------------
(1) 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.
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 our company and your
company and a description of the business experience of each.
<TABLE>
<CAPTION>
TechLite Applied Sciences:
-------------------------
Office Held Term of
Person Office Since Office
------ ------ ----- ------
<S> <C> <C> <C>
J. D. Arvidson, 60 Chief Executive Officer, President 1992 1999
and Director
36
<PAGE>
C. O. Sage, 66 Executive Vice President, Chief 1992 1999
Operating Officer, and Director
General Gerald Hahn, USAF (Ret.), 61 Chairman of the Board of 1997 1999
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>
Our Company.
-----------
Office Held Term of
Person Office Since Office
------ ------ ----- ------
<S> <C> <C> <C>
Albert L. Welsh, 67 President, Secretary and Director 1997 9-98
</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.
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 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.
37
<PAGE>
Mark G. Galvin.
--------------
Mr. Galvin received a Master of Business Administration degree from
Oklahoma State University in 1994. Prior to joining TechLite Applied Sciences in
May 1993 and while still a student, he designed and developed custom software.
He is the co-developer of TechLite Applied Sciences' software which automated
the presentation materials of TechLite Applied Sciences 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.
Lee Arehart.
-----------
Prior to joining TechLite Applied Sciences in 1993, Mr. Arehart was the
owner of businesses involved in retail management, recreational facility
management, and franchise operations.
Our 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.
Remuneration of Directors and Officers.
- --------------------------------------
Our Company.
-----------
Mr. Welsh, the sole officer and director of our 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 $374,000 of compensation in the last fiscal year for
their services in all capacities. Should the merger be effected, they shall
become the officers of the post-merger company.
Mr. Arvidson, the chief executive officer of TechLite Applied Sciences,
receives a draw of $7,917 a month against commission income equal to 23 percent
of the gross profits from retrofitting contracts sold by Mr. Arvidson.
38
<PAGE>
Employment Contracts.
--------------------
TechLite Applied Sciences has no employment contracts with any employees.
Stock Options.
-------------
Our company has adopted a stock option plan which shall survive the merger,
the major provisions of which Plan are as follows:
Options granted under the plan may be "employee 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. The plan enables the option committee of the board
of directors to grant up to 500,000 stock options to employees and consultants
from time to time. The option committee has granted no options.
Certain Relationships and Related Transactions.
- ----------------------------------------------
Our Company's Transactions with Insiders and Promoters.
------------------------------------------------------
The following persons may be deemed to be "insiders" and "promoters" of our
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 stockholders 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 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-Proxy Statement as having given an
opinion on legal matters concerning the registration or offering of the
securities described herein. Mr. Kenan's spouse, Marilyn C. Kenan, is the
trustee and sole beneficiary of the Marilyn C. Kenan Trust, a testamentary trust
that presently owns 85,000 shares of common stock of TechLite Applied Sciences.
It also is the beneficial owner of 375,000 shares of common stock of SuperCorp.
By reason of these ownerships, the trust shall become the beneficial owner of
95,773 shares of the company by way of the merger and SuperCorp's distribution
of the 195,556 spinoff shares to its stockholders. Mr. Kenan disclaims any
beneficial ownership in the securities beneficially owned by his spouse's trust.
39
<PAGE>
INDEMNIFICATION
Under Oklahoma corporation law, a corporation is authorized to indemnify
officers, directors, employees and agents who are parties 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 reasonable expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement 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.
With respect to any criminal action or proceeding, these same
indemnification authorizations apply if these persons had no reasonable cause to
believe their conduct was unlawful.
In the case of any action by the corporation against such persons, the
corporation is authorized to provide similar indemnification, but if any such
persons should 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 stockholders or disinterested directors.
In such regard, an Oklahoma corporation may purchase and maintain liability
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation.
As a result of such corporation law, 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
40
<PAGE>
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 April 30, 1999..................................... F-2
Notes to Balance Sheet April 30, 1999............................ F-3
TechLite Applied Sciences, Inc.
Report of Independent Auditors................................... F-5
Balance Sheets as of April 30, 1999 (unaudited) and
January 31, 1999 and 1998............................... F-6
Statements of Income for the three months ended
April 30, 1999 and 1998 (unaudited) and the
years ended January 31, 1999 and January 31, 1998....... F-7
Statements of Cash Flows for the three months ended
April 30, 1999 and 1998 (unaudited) and
the years ended January 31, 1999 and
January 31, 1998........................................ F-8
Statements of Changes in stockholders' Equity
for the period ended January 31, 1996 to
January 31, 1999........................................ F-9
Notes to Financial Statements.................................... F-10
41
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Director and Stockholders
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 April 30,
1999. This balance sheet is the responsibility of the company's management. Our
responsibility is to express an opinion on this balance sheet based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and 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 April 30,
1999, in conformity with generally accepted accounting principles.
/S/ HOGAN & SLOVACEK
Oklahoma City, Oklahoma
June 23, 1999
F-1
<PAGE>
TECHLITE, INC.
--------------
(A Development Stage Company)
BALANCE SHEET
-------------
APRIL 30, 1999
--------------
<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
----------------------
APRIL 30, 1999
--------------
(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 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 stockholder, 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 stockholders upon the effectiveness of the registration
statements to be filed with the Securities and Exchange Commission and a
favorable vote of SuperCorp Inc.'s stockholders 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 stockholders
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 stockholders 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 proposed merger, TechLite
Applied Sciences will own
F-3
<PAGE>
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>
Causon & Westhoff
15 West 6th, Suite 2310
Tulsa, OK 74119
Telephone 918-382-7000
Fax 918-382-7005
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, 1999 and 1998, 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, 1999 and 1998, 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
April 27, 1999
F-5
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
At April 30 At January 31
------------- -------------------------------
1999 1999 1998
------------- ------------- --------------
(Unaudited)
ASSETS
<S> <C> <C> <C>
Cash 54,508 19,162 -
Accounts receivable 890,704 821,229 416,809
Inventory 37,931 41,185 46,378
Costs and estimated earnings in excess
of billings on uncompleted contracts - - -
Property & equipment, net 691,337 681,480 184,477
Other assets, net 16,221 212,229 10,943
------------- ------------- --------------
Total Assets 1,690,701 1,775,285 658,607
============= ============= ==============
LIABILITIES
Bank overdraft - - 10,191
Accounts payable 541,364 380,543 312,048
Accrued wages 12,308 29,132 31,445
Taxes payable 143,361 97,110 212,521
Billings in excess of costs and estimated
earnings on uncompleted contracts 47,532 96,337 330,074
Notes payable 1,413,024 1,341,011 159,595
Other liabilities 83,867 58,665 33,055
------------- ------------- --------------
Total Liabilities 2,241,456 2,002,798 1,088,929
------------- ------------- --------------
EQUITY
Common stock 220,990 220,990 220,400
Paid-in-capital 898,563 898,563 785,296
Retained earnings(deficit) (1,670,308) (1,347,066) (1,436,018)
------------- ------------- --------------
Total Equity (550,755) (227,513) (430,322)
------------- ------------- --------------
Total Liabilities & Equity 1,690,701 1,775,285 658,607
============= ============= ==============
</TABLE>
See Notes to Financial Statements
F-6
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
April 30 Years Ended January 31
------------------------------- -------------------------------
1999 1998 1999 1998
-------------- ------------- ------------- --------------
(Unaudited)
<S> <C> <C> <C> <C>
Contract revenue earned 1,242,217 1,300,421 4,646,858 1,714,514
Cost of revenue earned 898,008 984,362 3,288,204 1,516,927
-------------- ------------- ------------- --------------
Gross profit 344,209 316,059 1,358,654 197,587
General & administrative expenses 481,964 194,367 1,278,469 930,763
-------------- ------------- ------------- --------------
Income(Loss) from operations (137,755) 121,692 80,185 (733,176)
Other income 8,909 - 8,767 2,962
-------------- ------------- ------------- --------------
Income(Loss) before taxes (128,846) 121,692 88,952 (730,214)
Provision for income taxes 0 0 0 0
-------------- ------------- ------------- --------------
Income(Loss) before cumulative effect of a
change in accounting principle (128,846) 121,692 88,952 (730,214)
-------------- ------------- ------------- --------------
Cumulative effect on prior years of
accounting change (194,396) - - -
-------------- ------------- ------------- --------------
Net Income(Loss) (323,242) 121,692 88,952 (730,214)
============== ============= ============= ==============
Net Income(Loss) per common share (0.15) 0.06 0.04 (0.33)
============== ============= ============= ==============
Pro forma amounts assuming new business
development costs are expensed retroactively
Net Income(Loss) (128,846) 92,752 (105,444) (730,214)
Net Income(Loss) per share (0.06) 0.04 (0.05) (0.33)
</TABLE>
See Notes to Financial Statements
F-7
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
April 30 Years Ended January 31
------------------------------- -------------------------------
1999 1998 1999 1998
-------------- ------------- ------------- --------------
(Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (323,242) 121,692 88,952 (730,214)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 27,741 9,888 68,269 44,678
Decrease (increase) in contract receivables (69,475) 232,297 (404,420) (294,171)
Decrease (increase) in inventory 3,254 505 5,193 (24,073)
Decrease (increase) in other assets 192,376 (29,086) (204,918) 17,202
Net increase (decrease) in billings related to
costs and estimated earnings on
uncompleted contracts (48,805) (179,165) (233,737) 14,293
Increase (decrease) in accounts payable 160,821 80,129 58,304 32,579
Increase (decrease) in other accrued liabilities 54,629 (197,676) (92,114) 153,346
-------------- ------------- ------------- --------------
Net cash provided by operating activities (2,701) 38,584 (714,471) (786,360)
-------------- ------------- ------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment (33,966) (5,948) (561,640) (133,870)
-------------- ------------- ------------- --------------
Net cash used in investing activities (33,966) (5,948) (561,640) (133,870)
-------------- ------------- ------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principle payments on notes payable (683,463) (10,862) (394,815) (47,236)
New borrowings 755,476 0 1,576,231 128,427
Sale of stock 0 0 113,857 688,767
-------------- ------------- ------------- --------------
Net cash used in financing activities 72,013 (10,862) 1,295,273 769,958
-------------- ------------- ------------- --------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 35,346 21,774 19,162 (150,272)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 19,162 0 0 150,272
-------------- ------------- ------------- --------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD 54,508 21,774 19,162 0
============== ============= ============= ==============
</TABLE>
See Notes to Financial Statements
F-8
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional
Common Paid-in Retained
Stock Capital Earnings Total
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
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)
NET INCOME(LOSS) - - 88,952 88,952
SALE OF STOCK 590 113,267 - 113,857
--------------------------------------------------------------------
BALANCE, JANUARY 31, 1999 220,990 898,563 (1,347,066) (227,513)
(Unaudited)
NET INCOME(LOSS) - - (323,242) (323,242)
SALE OF STOCK - - - -
--------------------------------------------------------------------
BALANCE, APRIL 30, 1999 220,990 898,563 (1,670,308) (550,755)
====================================================================
</TABLE>
See Notes to Financial Statements
F-9
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1999 AND 1998
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, 1999 AND 1998
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
Contract receivables consist of:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Billed
Completed contracts $ 135,516 $ 106,596
Contracts in progress 685,713 310,213
------------ -----------
$ 821,229 $ 416,809
=========== ===========
</TABLE>
Subsequent to January 31, 1999, approximately $800,000 was collected on the
outstanding receivable balance.
F-11
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1999 AND 1998
NOTE 3: COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
Costs, estimated earnings, and billings on uncompleted contracts are summarized
as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Costs incurred on uncompleted contracts $ 3,066,461 $ 163,551
Estimated earnings 1,237,926 40,888
------------- -------------
4,304,387 204,439
Billings to date 4,400,724 534,513
------------- -------------
$ (96,337) $ (330,074)
============= =============
Included in the accompanying balance sheet under
the following captions:
Billings in excess of costs and estimated
earnings on uncompleted contracts $ 96,337 $ 330,074
============= =============
</TABLE>
NOTE 4: PROPERTY AND EQUIPMENT
Property and equipment consist of buildings, vehicles, equipment, furniture
and leasehold improvements. The vehicles and equipment are depreciated over five
years, furniture is depreciated over seven years, leasehold improvements are
depreciated over ten years and buildings are depreciated over 25 years.
Accumulated depreciation is summarized as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Buildings $ 6,667 $
Vehicles 64,199 36,030
Equipment 61,756 39,392
Furniture 9,641 6,759
Leasehold improvements 6,402 1,847
------------- -------------
$ 148,665 $ 84,028
============= =============
</TABLE>
F-12
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1999 AND 1998
NOTE 5: NOTES PAYABLE
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Unsecured notes payable, due on demand, at 10% $ 76,262 $ 100,563
Notes payable to banks, collateralized by
equipment, due in monthly installments plus
interest through March 2000, at 10% to 12% 121,682 49,607
Unsecured line of credit, at 13.75% 49,500
Line of credit, secured by factored accounts
receivable, at 12% 673,463
Notes payable, building and land due in monthly
installments plus interest through 2014, at 9% 397,713
------------- ------------
$ 1,318,620 $ 150,170
============= ============
</TABLE>
<TABLE>
<CAPTION>
Aggregate annual maturities of long-term debt at January 31, 1999, are:
<S> <C>
2000 $ 933,776
2001 14,945
2002 15,923
2003 17,439
2004 19,099
Thereafter 317,438
--------------
$ 1,318,620
</TABLE>
NOTE 6: INCOME TAXES AND DEFERRED INCOME TAXES
Based on the Company's significant 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.
F-13
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1999 AND 1998
NOTE 6: INCOME TAXES AND DEFERRED INCOME TAXES (Continued)
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>
1999 1998
---- ----
<S> <C> <C> <C>
Computed at the statutory rate of 34% $ 30,244 $ (248,272)
Increase (decrease) in tax resulting from:
Net operating loss carryforward (30,244) 248,272
-------------
$ 0 $ 0
============= ===========
</TABLE>
NOTE 7: OTHER ASSETS
At January 31, 1999 and 1998, the Company recorded $212,229 and $10,943,
respectfully, as other assets. Other assets consist of new business development
costs, other miscellaneous amortizable capital expenditures and other
miscellaneous assets.
Other miscellaneous amortizable capital expenditures include costs
associated with internally developed assets which are amortized over 4 years.
The recorded net asset value was $7,240 and $10,943 and January 31, 1999 and
1998, respectfully.
The new business development costs of $194,396 were incurred during the
fiscal year ended January 31, 1999 in association with the developing the
Company's presence in Brazil. These costs would have been amortized over 5 years
following the completion of the development. However, SOP 98-5, Reporting on the
Costs of Start-Up Activities, requires development costs to be expensed as
incurred. The effective date of SOP 98-5 will require that $194,396 be expensed
during the first quarter of the fiscal year ending January 31, 2000. The initial
application of SOP 98-5 will be reported as a cumulative effect of a change in
accounting principle for the fiscal year ended January 31, 2000.
F-14
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1999 AND 1998
NOTE 8: 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 9: BACKLOG
The following schedule summarizes changes in backlog on contracts during
the years ended January 31, 1999 and 1998. 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>
1999 1998
---- ----
<S> <C> <C>
Backlog, beginning of year $ 594,980 $ 823,540
New contracts during the year 3,173,074 1,485,954
Contract adjustments 3,100,581 0
------------- ------------
6,868,635 2,309,494
Less contract revenues earned during the year 4,646,858 1,714,514
------------- ------------
Backlog, end of year $ 2,221,777 $ 594,980
============= ============
</TABLE>
The Company entered into additional contracts with estimated revenues of
approximately $201,000 between February 1, 1999 and April 27, 1999.
F-15
<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 stockholders, for such
stockholders' 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 stockholder 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 stockholders
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 stockholders ("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> <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
A-2
<PAGE>
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
stockholders.
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 stockholders 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 stockholders 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
A-3
<PAGE>
may be terminated by the board of directors of TechLite Applied Sciences
notwithstanding approval of this Agreement by the stockholders 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>
UNTIL _____________________, 1999 (90 DAYS AFTER THE EFFECTIVE DATE OF THE
MERGER), ALL DEALERS EFFECTING TRANSACTIONS IN THESE SECURITIES MAY BE REQUIRED
TO DELIVER A PROSPECTUS.
<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 set forth below as
well as additional expenses of $58,250 incurred in connection with the merger
described herein 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 $ 50
Filing expenses (EDGAR) 4,000
Printing and engraving 1,000
Postage 500
Legal 20,000
Finder's fee 18,500
Accounting and auditors 2,000
--------
Total Expenses $ 46,050
</TABLE>
Indemnification of Directors and Officers.
- -----------------------------------------
There is set forth in the Prospectus-Proxy Statement 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.
Exhibits and Financial Statement Schedules.
- ------------------------------------------
Separately bound but filed as part of this Registration Statement are the
following exhibits:
II-1
<PAGE>
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.*
10.2 - Representative agreement among certain
stockholders 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.
(Superseded by Exhibit 23.7.)
23.2 - Consent of Hogan & Slovacek, independent
auditors of TechLite, Inc. (Superseded by
Exhibit 23.8.)
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.**
II-2
<PAGE>
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.*
23.7 - Consent of Causon & Westhoff, independent
auditors of TechLite Applied Sciences, Inc.
(Superseded by Exhibit 23.9.)
23.8 - Consent of Hogan & Slovacek, independent
auditors of TechLite, Inc. (Superseded by
Exhibit 23.10)
23.9 - Consent of Causon & Westhoff, independent
auditors of TechLite Applied Sciences, Inc.
23.10 - Consent of Hogan & Slovacek, independent
auditors of TechLite, Inc.
27 - Financial Data Schedule.*
* Previously filed with Form S-4; incorporated herein.
** Previously filed with Amendment No. 1 to Form S-4;
incorporated herein.
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 securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
II-3
<PAGE>
3. File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 ("the Act") may be permitted to directors, officers and controlling
persons of 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: June 24, 1999 TechLite, Inc.
By/s/Albert L. Welsh
--------------------------
Albert L. Welsh, president
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Date: June 24, 1999 /s/ Albert L. Welsh
--------------------------------
Albert L. Welsh, president, sole
director, principal financial
officer, and authorized
representative of the Registrant
II-4
CAUSON & WESTHOFF
Certified Public Accountants
15 West 6th, Suite 2310
Tulsa, OK 74119
918-382-7000
Fax 918-382-7005
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated April 27, 1999, with respect to
the financial statements of TechLite Applied Sciences, Inc. included in two
Registration Statements (Amendment No. 2 to Form SB-2 and Amendment No. 2 to
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
June 24, 1999
Exhibit 23.9
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 June 23, 1999, with respect to
the financial statements of TechLite, Inc. included in two Registration
Statements (Amendment No. 2 to Form SB-2 and Amendment No. 2 to Form S-4) of
TechLite, Inc.
/s/ Hogan & Slovacek
-----------------------
HOGAN & SLOVACEK
Oklahoma City, Oklahoma
June 24, 1999
Exhibit 23.10
