SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Commission File No. 333-68071
AMENDMENT NO. 1 TO FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
TechLite, Inc.
(Name of small business issuer in its charter)
Oklahoma 23531 73-1522114
(state of (Primary Standard Industrial (IRS Employer
incorporation) Classification Code Number) I.D. Number)
4334 Northwest Expressway, Suite 202
Oklahoma City, OK 73116
405-840-1585
(Address and telephone number of registrant's principal
executive offices and principal place of business)
Albert L. Welsh, 4334 Northwest Expressway, Suite 202
Oklahoma City, Oklahoma 73116 telephone: 405-840-1585
(Name, address and telephone number of agent for service)
Copies to:
Thomas J. Kenan, Esq. J. D. Arvidson
100 North Broadway, Suite 3300 6106 East 32nd Place, Suite 101
Oklahoma City, OK 73102-8805 Tulsa, OK 74135
Approximate date of proposed sale to the public: As soon as practicable
after the Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(c) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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<CAPTION>
Calculation of Registration Fee
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Title of Proposed Proposed
each class maximum maximum
of securities Dollar amount offering aggregate Amount of
to be to be price offering registration
registered registered per unit price fee
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<S> <C> <C> <C> <C>
Common Stock $196 $0.001 $196 $0.06(1)
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===================================================================================================================================
</TABLE>
(1) The 195,556 shares being registered are owned by SuperCorp Inc.,
the controlling stockholder of the Registrant, and are to be
distributed by SuperCorp Inc. to its stockholders as a stock
dividend. The registration fee is based upon the book value of the
Registrant as of September 30, 1998. Reg. 230.457(a).
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said section 8(a)
may determine.
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Spinoff
PROSPECTUS
TECHLITE, INC.
195,556 Shares of Common Stock
To be Distributed to SuperCorp, Inc. Stockholders
The Offering: A "Spinoff" distribution SuperCprop organized us for the
to the Stockholders of SuperCorp, Inc. prupose of merging Techlite
Value: $0.001 a Share when spunoff and Applied Sciences, Inc. of
prior to any Merger with TechLite Tulsa, Oklahoma into us. Our
Applied Sciences, Inc. Should such merger with it depends upon a
Merger occur, the Shares would have Pro favorable vote by its
Forma earnings of $0.____ a share for stockholders. Such vote will
the first nine months of our fiscal year taken after the spinoff
that just ended. distribution of these 195,556
shares. The outcome of the
vote is uncertain.
-------------------
Our common stock does not trade on any national securities exchange, the Nasdaq
Stock Market, or any stock market. The Shares will be escrowed until we either
merge with TechLite Applied Sciences or acquire another company not now known to
us. We believe our common stock will then soon trade on the OTC Bulletin Board.
We will propose a trading symbol of ATCLT,@ but we do not know now what the
symbol will be.
-------------------
Should the proposed Merger with Neither the Securities and
TechLite Applied Sciences occur Exchange Commission nor any
and the stock start trading, persons state securities commission
purchasing the Shares in the trading has approved or disapproved
market will assume a High Degree of these securities or determined
Risk. You should purchase Shares if this Prospectus is truthful
in the trading market only if or complete. Any
you can afford a complete loss. See representaiton to the contrary
"Risk Factors" on page 4. is a criminal offense.
TechLite, Inc.
4334 Northwest Expressway, Suite 202
Oklahoma City, OK 73116
Telephone 405-840-1585
February ____, 1999
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TABLE OF CONTENTS
Page
Summary Information......................................................... 1
Risk Factors ................................................. 2
1. Accumulated Deficit....................................... 2
2. No Assurance the Proposed Merger Will be
Approved; Blank Check Company Status
Possible ........................................ 2
3. No Assurance of a Public Market and Likelihood
of a Volatile Market............................. 2
4. Penny Stock Regulations .................................. 2
5. We do not Qualify for Nasdaq ............................. 3
6. Possible Need for Additional Funding ..................... 3
7. Reliance on Key Personnel................................. 3
8. Management Control........................................ 3
9. Tax Consequences.......................................... 3
10. Dividends Not Likely...................................... 4
11. Possible Future Dilution ................................. 4
12. Restrictions on Net Operating Loss
Carryforwards.................................... 5
13. Dependence on Major Suppliers ............................ 6
SuperCorp - The Distributing Stockholder.................................... 6
SuperCorp May be Deemed to be an Underwriter....................... 7
SuperCorp's Exposure as a Control Person.................. 7
Earlier SuperCorp Spinoff-Merger Transactions .............................. 8
Terms of the Transaction.................................................... 10
Terms of the Merger................................................ 10
Reasons for the Merger and Spinoff................................. 11
Accounting Treatment of Proposed Merger............................ 11
Degree of Management Control of Vote on Merger..................... 12
Dissenters' Rights of Appraisal.................................... 12
Compliance with Governmental Regulations........................... 12
Agreement and Plan of Merger....................................... 12
Transactions with Insiders.................................................. 12
Services Rendered by Insiders...................................... 13
Plan of Distribution........................................................ 14
The Escrow Agreement............................................... 14
Should the Merger Occur................................... 14
Should the Merger Not Occur............................... 14
Expenses of the Spinoff and Merger ................................ 15
Description of Securities................................................... 16
Common Stock....................................................... 16
Voting Rights............................................. 16
Dividend Rights........................................... 16
Liquidation Rights........................................ 16
Preemptive Rights......................................... 16
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Registrar and Transfer Agent.............................. 16
Dissenters' Rights........................................ 16
Preferred Stock.................................................... 16
Federal Income Tax Consequences............................................. 17
The Merger......................................................... 17
The Spinoff........................................................ 17
Stockholders of SuperCorp.......................................... 17
Other Financial Considerations.............................................. 18
Pro Forma Information and Dilution................................. 18
Material Contacts Among the Companies.............................. 20
Penny Stock Regulations .................................................... 21
Information About the Company............................................... 22
Description of Business and Properties............................. 23
Course of Business Should the Merger Not Occur..................... 23
Legal Proceedings.................................................. 23
Market for the Company's Common Stock
and Related Stockholder Matters........................... 23
Rule 144 and Rule 145 Restrictions on Trading...................... 24
Dividends................................................. 25
Registration Statement ............................................ 25
Reports to Stockholders ........................................... 26
Stock Certificates ................................................ 26
Financial Statements............................................... 26
Information About TechLite Applied Sciences................................. 26
Overview ................................................. 26
Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 26
Results of Operations..................................... 27
Sales..................................................... 27
Interim Results ................................. 28
Gross Margin.............................................. 28
Interim Results ................................. 28
Selling, General and Administrative Expenses.............. 28
Interim Results ................................. 28
Net Income Before Taxes................................... 28
Interim Results ................................. 29
Balance Sheet Items....................................... 29
Interim Results ................................. 29
Liquidity and Capital Resources .......................... 30
Interim Results ................................. 30
Outlook................................................... 30
Description of TechLite Applied Sciences's Business......................... 31
The Light Fixture Retrofitting Industry ........................... 31
The Market ........................................................ 31
Environmental Considerations ...................................... 32
Saving Money ...................................................... 32
Other Benefits .................................................... 33
Current Trends .................................................... 34
Financing a Retrofit .............................................. 35
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Sales Methods ..................................................... 36
Production Costs................................................... 37
Competition ....................................................... 37
Government Approval of Principal Products ......................... 37
Government Regulations ............................................ 37
Properties......................................................... 38
Office Facilities.................................................. 38
Dependence on Major Customers and Suppliers........................ 38
Seasonality........................................................ 38
Research and Development........................................... 38
Environmental Controls............................................. 39
Year 2000 Computer Problem ........................................ 39
Number of Employees................................................ 39
Venue of Sales..................................................... 39
Patents, Copyrights and Intellectual Property...................... 39
Legal Proceedings.................................................. 40
Market for TechLite Applied Sciences's Capital Stock
and Related Stockholder Matters........................... 40
Financial Statements............................................... 40
Management Information...................................................... 40
Security Ownership of Certain Beneficial Owners and
Management................................................ 40
Directors, Executive Officers and Significant
Employees................................................. 43
TechLite Applied Sciences.......................................... 44
The Company........................................................ 44
Directors of TechLite Applied Sciences............................. 44
Senior Executives of TechLite Applied Sciences..................... 45
The Company........................................................ 45
Albert L. Welsh........................................... 45
Remuneration of Directors and Officers...................................... 46
The Company........................................................ 46
TechLite Applied Sciences.......................................... 46
Employment Contracts .............................................. 46
Stock Options...................................................... 46
Certain Relationships and Related Transactions.............................. 46
Company's Transactions with Promoters.............................. 46
TechLite Applied Sciences's Transactions with
Management ............................................... 47
Interests of Named Experts and Counsel...................................... 47
Indemnification............................................................. 47
Financial Statements Index.................................................. 48
Appendix A - Agreement of Merger............................................ A-1
iii
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SUMMARY INFORMATION
This is SuperCorp Inc.'s fourth "spinoff" distribution of stock in other
companies to you - a SuperCorp stockholder. Our company, TechLite, Inc., was
formed by SuperCorp for the purpose of merging into us another company, TechLite
Applied Sciences, Inc. of Tulsa, Oklahoma.
TechLite Applied Sciences retrofits lighting fixtures in buildings in such
a way as to significantly reduce electricity consumption. Our merger with it is
contingent upon the stockholders of TechLite Applied Sciences voting to approve
the merger at a special stockholders' meeting to be held on or about February
____, 1999.
We have no business or assets other than $245 in cash. We do have a
stockholder base of more than 600 stockholders, thanks to this Spinoff by
SuperCorp. We offer our stockholder base to the TechLite Applied Sciences
stockholders. We believe this will provide sufficient benefit to them that they
will approve the Merger. We have explained to them that these benefits are:
o The common stock of our combined company will soon trade in
the stock market.
o You and they 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 their company now
can.
Should the TechLite Applied Sciences stockholders approve the Merger, its
officers and directors will become the officers and directors of our combined
Company and run it.
SuperCorp is distributing pro rata to each of its stockholders one share of
common stock of our Company for each 34.81 shares of SuperCorp common stock
outstanding. This amounts to approximately 195,556 shares of Common Stock of our
Company. All stock certificates representing Spinoff Shares will be held in
escrow until either the Merger is approved or, if not approved, a different
merger or business acquisition is made by the Company.
We believe your receipt of Spinoff Shares in our Company will result in
your realizing negligible or no taxable income.
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:
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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
RISK FACTORS
You should carefully consider the following factors:
1. Accumulated Deficit.
--------------------
The company with which our Company proposes to merge, TechLite Applied
Sciences, has operated at a loss for most of its six years of existence. Its
accumulated deficit at the end of its 1998 fiscal year (January 31, 1998) was
$1,436,018. It operated at a profit (unaudited) of approximately $415,392 the
first nine months of the fiscal year that ended January 31, 1999. There is no
assurance that profitable operations can be maintained.
2. No Assurance the Proposed Merger Will be Approved; Blank Check Company
------------------------------------------------------------------------
Status Possible.
- ----------------
There is no assurance the proposed merger (the "Merger") between the
Company and TechLite Applied Sciences will occur. The stockholders of TechLite
Applied Sciences must approve it at a special meeting of the stockholders.
Should they not approve it, our Company will be what the Securities and Exchange
Commission calls a "blank check company" - a company without significant assets
or a business whose sole purpose is to acquire significant assets or a business
by merger or otherwise. Because of this, Commission regulations require that the
certificates representing the 195,556 Spinoff Shares be placed in escrow. They
will be delivered to the SuperCorp stockholders (1) only in the event the
proposed Merger is approved by the TechLite Applied Sciences stockholders or
(2), should such Merger not be approved, in the event the Company acquires
significant assets or a business within 18 months of the date of this
Prospectus. No assurance is given that such would occur within eighteen months
of the date of this Prospectus. If it should not occur, the Company will be
dissolved.
3. No Assurance of a Public Market and Likelihood of a Volatile Market.
-----------------------------------------------------------------------
There is presently no public market for the Common Stock of our Company. We
cannot assure you that a public market for such securities will develop after
the occurrence of the Merger or, if one develops, that it will be sustained. It
is likely that any market that develops for the Common 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.
Should it trade on the OTC Bulletin Board at less than $5 a share - and we
expect that this will be the case, 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. These
restrictions are intended by our government to inhibit aggressive trading in
penny stocks. This could limit your ability to resell your
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stock in the stock market. This could also inhibit the creation of market
interest in our stock and act as a depressant on its price in the stock market.
5. We do not Qualify for Nasdaq.
----------------------------
Our Common Stock, after the Merger, should qualify to be quoted and to
trade on an NASD inter-dealer system called "the Bulletin Board." It would be
more desirable if it could trade on the Nasdaq SmallCap Market, but our stock
will not initially qualify for this. We will not have $4 million in net tangible
assets, and we do not expect to merit a market price of $4 a share. As long as
we trade as a "penny stock" on the OTC Bulletin Board, this will tend to reduce
broker-dealer and investor interest in us. This could operate to inhibit the
ability of our stock to reach a $4-per-share trading price necessary for initial
quotation on Nasdaq even should our Company otherwise qualify for Nasdaq. Until
we qualify for Nasdaq, we will have a reduced ability to use our stock for
business acquisition purposes. See "Information About the Company - Market for
the Company's Common Stock and Related Stockholders Matters."
6. Possible Need for Additional Funding.
------------------------------------
Should the proposed Merger be approved, our post-Merger Company may need
additional funding to achieve its plan of operations for the next twelve months.
If additional funding is needed, we have not identified the source for this
funding. We give no assurance that the needed funds can be obtained. See
"Information About TechLite Applied Sciences - Management's Discussion and
Analysis of Financial Condition and Results of Operations - Cash Requirements."
7. Reliance on Key Personnel.
--------------------------
Should the Merger occur, the post-Merger Company will be reliant on the
continued services of several key personnel. The loss of any of them could
adversely affect future operations. These persons are J. D. Arvidson, chief
executive officer of Techlite Applied Sciences; John F. Bodkin, president and
chief financial officer; C. O. Sage, executive vice president and chief
operating officer; Carol E. Sage, corporate secretary; and Mark Galvin, vice
president for administration. See "Management Information Directors, Executive
Officers and Significant Employees."
8. Management Control.
------------------
Should the proposed Merger be approved, the Company's officers and
directors and their affiliates will own approximately 33.6 percent of the Common
Stock of the Company. This amount may enable them to determine the outcome of
any vote affecting the control of the Company.
9. Tax Consequences.
----------------
The Merger should be a tax-free reorganization for both companies. The
Spinoff will be a taxable event for SuperCorp's stockholders, who will receive
the Spinoff Shares. However, SuperCorp's stockholders will owe either no income
taxes or only nominal income taxes with regard to their receipt of the Spinoff
Shares.
We take this position because:
o the Spinoff occurs before TechLite Applied Sciences's
stockholders vote on the Merger,
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o the outcome of their vote is uncertain, and
o the value of each Spinoff Share at the time of the Spinoff
should be the price SuperCorp paid for each Share - $0.001.
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. It is possible the Internal Revenue Service would challenge the
$0.001-a-Spinoff Share valuation and prevail in valuing these Shares at, say,
the price of the Company's stock when it first starts trading on the OTC
Bulletin Board. In such event, the actual tax consequences could be different
than as represented here. See "Federal Income Tax Consequences - Stockholders of
SuperCorp."
10. Dividends Not Likely.
--------------------
Should the Merger be approved, we anticipate that any earnings generated
from operations of the emergent company will be used to finance its growth, and
cash dividends will not be paid to holders of the Common Stock.
11. 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 (the
"Shelf Shares"). Such issuances could be made without notice to the stockholders
and without stockholder 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 Shelf Shares, none of the Company's or
SuperCorp's officers, directors, promoters or their affiliates or associates
have had any preliminary contact or discussions with representatives of any
business or company concerning the possibility of such an asset acquisition or
merger transaction. Further, we have no present plans, proposals, arrangements
or understandings with any representative of any business or company in this
same regard. We registered these Shelf Shares to be available to the management
of the post-Merger Company in the event the Merger is approved.
Should the stockholders of TechLite Applied Sciences not approve the
Merger, only then will SuperCorp's and the Company's management commence a
search for a substitute business acquisition or merger transaction. It is
SuperCorp's practice to reward persons who bring to it spinoff-merger
transactions that it accepts. This reward is in the form of "founders' stock" in
the SuperCorp-created subsidiary that is to be the surviving corporation in the
spinoff-merger transaction. Albert L. Welsh and George W. Cole were each allowed
by SuperCorp to buy 24,444 shares of Common Stock of the Company at $0.001 a
share when the Company was formed. This was their reward for bringing the
TechLite Applied Sciences transaction to SuperCorp. Should the stockholders of
TechLite Applied Sciences not approve the Merger, SuperCorp will demand the
surrender to the Company of the 24,444 shares issued to each of these two
persons. These shares and possibly additional shares will then be available to
be sold at $0.001 a share to any other person whether or not affiliated with
SuperCorp - that brings a substitute spinoff-merger transaction to the Company.
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The officers and directors of SuperCorp have conflicts of interest in
allowing themselves, their affiliates or their associates to buy "founders'
stock" at cheap prices in SuperCorp-created subsidiaries created for specific
spinoff-merger transactions. When such a situation arises, the matter is settled
by negotiation between the interested person and the directors of SuperCorp. An
interested director does not vote on the matter. The possibility of competing
searches does not arise. If, say, two directors each brings in an acceptable
spinoff-merger candidate, SuperCorp will accept both candidates and register two
spinoff-merger transactions.
Should the stockholders of TechLite Applied Sciences not approve the
Merger, there is no present potential that the Company will acquire or merge
with a substitute business or company in which SuperCorp's or the Company's
management, promoters, affiliates or associates have an ownership interest,
directly or indirectly. However, existing corporate policy would not exclude
this. It would be handled by negotiation with SuperCorp directors. An interested
director would not vote on the matter.
Each of SuperCorp's directors and officers serves without pay or
compensation other than (1) the receipt of pro rata stock distributions when a
spinoff-merger transaction is effected and (2) the opportunity to buy "founders'
stock" at cheap prices when he brings an acceptable spinoff-merger candidate to
SuperCorp. The officers and directors of SuperCorp are Albert L. Welsh, John E.
Adams and Thomas J. Kenan, all of Oklahoma City, Oklahoma; T.E. King of Palos
Verdes Peninsula, California; and Ronald D. Wallace of Atlanta, Georgia. George
W. Cole of Oklahoma City is a former director of SuperCorp who most actively
seeks spinoff-merger candidate companies.
Should the stockholders of TechLite Applied Sciences not approve the Merger
and the Company would enter into a spinoff-merger agreement with a substitute
company, the Company would file amendments to its presently effective
registration statements. The amended statements would cover the new acquisition
or merger transaction. Prior to any merger or acquisition, the Company would
provide its stockholders (whose stock certificates would still be held in
escrow) with a prospectus-proxy statement or information statement containing
complete disclosure documentation including audited financial statements.
12. Restrictions on Net Operating Loss Carryforwards.
------------------------------------------------
As stated above in Risk Factor No. 1, TechLite Applied Sciences had a net
operating loss carryforward of $1,436,018 at January 31, 1998. This net
operating loss carryforward 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.
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13. Dependence on Major Suppliers.
-----------------------------
TechLite Applied Sciences depends upon two non-affiliated companies to
fabricate and supply the lighting-enhancement reflectors it prefers to use in
its light fixture retrofitting business. The business of the post-Merger Company
could be materially affected by anything that affects the ability of these other
companies to supply their reflectors. Alternate suppliers of reflectors exist,
but the quality of their products is inferior to that of the three companies
whose reflectors are preferred. We believe the future competitive condition of
the post-Merger Company could be reduced if it cannot obtain high-quality
reflectors.
SUPERCORP - THE DISTRIBUTING STOCKHOLDER
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" activities such as the one described herein. Such
spinoff-merger involve SuperCorp's distribution, by way of stock dividends or
otherwise, 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, TechLite
Applied Sciences.
SuperCorp's assets consist of approximately $50,000 in cash. Each of its
five directors, Albert L. Welsh, John E. Adams, Ronald D. Wallace, T.E. King and
Thomas J. Kenan, either directly or by attribution through ownership by family
members, owns 375,000 shares of common stock of SuperCorp, which amount is
approximately 5.5 percent of the number of 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
15(d) of the Securities Act of 1933 or Section 13 of the Securities Exchange Act
of 1934. Its common stock does not trade in the stock market. SuperCorp has
never sought a market maker for its stock.
SuperCorp organized the Company in May 1997 as a vehicle specifically for
the proposed Merger. The Company has no business history, $245 in assets, no
liabilities, and initially only three stockholders - SuperCorp, who will
"spinoff" its shares in the Company to its more than 600 stockholders before the
TechLite Applied Sciences's stockholders vote on the Merger; Albert L. Welsh,
the sole officer and director of the Company and a stockholder of SuperCorp; and
George W. Cole, whose spouse, Marjorie Cole, is a stockholder of SuperCorp. See
"Information About the Company." Should the Merger not be approved, see "Plan of
Distribution - The Escrow Arrangement - Consequences Should the Merger Not
Occur" below for an explanation of what disposition we will make of our Company.
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SuperCorp May be Deemed to be an Underwriter.
- --------------------------------------------
The 195,556 Spinoff Shares described herein are owned by SuperCorp and are
to be redistributed by SuperCorp. SuperCorp may be deemed to be an underwriter
by reason of its intent to distribute such Shares.
After the distribution by SuperCorp of the Spinoff Shares to its
stockholders, SuperCorp will no longer own any stock of the Company, except to
the extent that 657 Spinoff Shares, reserved for rounding-up purposes, would not
be allocated in the rounding-up process (see "Terms of the Merger").
Should SuperCorp be an underwriter of the Spinoff Shares, any person who
purchases the registered Shares within three years after the distribution could
assert a claim against SuperCorp under Section 11 of the Securities Act of 1933.
The purchase could be in the open market as long as the shares purchased can be
traced to the registered Shares SuperCorp distributes to its stockholders. Such
a claim, to be successful, must be based upon a showing that statements in the
registration statement were false or misleading with respect to a material fact
or that the registration statement omitted material information required to be
included therein.
Open market purchasers may have to prove reliance upon the alleged
misstatement or omission. Reliance may not necessarily require a showing that
the purchaser actually read the registration statement. It may be sufficient if
there is a showing that the misstatements or omissions in the registration
statement were a substantial factor in the purchase of the shares.
SuperCorp's Exposure as a Control Person.
----------------------------------------
SuperCorp organized the Company and, since its organization and until the
proposed Merger should become effective, has been and will be a "control person"
of the Company, as that term is defined in Section 15 of the Securities Act of
1933 ("the Act").
Section 15 of the Act imposes joint and several liability on persons who
control other persons substantively liable under other sections of the Act:
o Section 11, for misrepresentations in a registration
statement,
o Section 12(1) - for the unlawful sale of unregistered
securities, and
o Section 12(2) - for misrepresentations in the sale of
securities.
A controlling person can avoid liability by proving "he had no knowledge of
or reasonable grounds to believe in the existence of the facts by reason of
which the liability of the controlled person is alleged to exist."
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EARLIER SUPERCORP SPINOFF-MERGER TRANSACTIONS
This transaction with TechLite Applied Sciences, should the stockholders of
TechLite Applied Sciences 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
8
<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.
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 five 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 20. 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 "______." Lark, Dransfield and Summit are viable, operating companies.
Their common stock prices are
9
<PAGE>
quoted daily. All three file reports with the Commission pursuant to the
requirements of the Securities Exchange Act of 1934.
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 the
stockholders of TechLite Applied Sciences,
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 of TechLite
Applied Sciences must, by a majority vote of the shares
outstanding, approve the merger.
Terms of the Merger.
- -------------------
The terms of the proposed merger ("the Merger") are as follows:
1. TechLite Applied Sciences shall merge into our Company.
2. All 2,209,903 outstanding shares of common stock of TechLite Applied
Sciences shall be converted into 2,209,903 shares of Common Stock of our Company
("the Merger Shares") 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 the Company, into which TechLite Applied Sciences shall have
merged. TechLite Applied Sciences's management and directors shall become the
management and directors of our combined Company. See "Management Information."
5. Prior to the Merger, SuperCorp shall distribute to its stockholders
("the Spinoff"), on a basis proportionate to their stockholdings in SuperCorp,
the 195,556 Shares ("the Spinoff 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.
10
<PAGE>
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 of the post-Merger Company will be January 31, the
end of TechLite Applied Sciences's fiscal year.
7. Should the stockholders of TechLite Applied Sciences not approve the
Merger, none of TechLite Applied Sciences, the Company, or SuperCorp shall be
liable to any of the others. 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.
- ----------------------------------
It is obvious that the SuperCorp stockholders will benefit by receiving,
for no consideration, the 195,556 Spinoff Shares. But we also believe that the
TechLite Applied Sciences's stockholders will benefit from converting their
present stock to 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 post-Merger combined Company. We believe the
existence of such a public market will facilitate the raising of expansion funds
for the post-Merger Company. We give no assurance that such will occur. See
"Risk Factors - No Assurance of a Public Market."
Effectively, the stockholders of TechLite Applied Sciences will suffer a
ten percent dilution in their equity in TechLite Applied Sciences solely for the
perceived, but not assured, benefits of having a public market for their
securities.
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.
Degree of Management Control of Vote on Merger.
- ----------------------------------------------
The Merger must be approved by a vote of a majority of the outstanding
shares of Common Stock of each of our Company and TechLite Applied Sciences.
With respect to such companies, the percentage of outstanding shares entitled to
vote and held by officers, directors and their affiliates are as follows: the
Company - 90%; and TechLite Applied Sciences - 37.4%. TechLite Applied
Sciences's officers, directors and affiliates, even though they are recommending
approval of the Merger, have agreed to vote their shares to approve or
disapprove the proposed Merger in accordance with the majority vote of the other
stockholders.
11
<PAGE>
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 exercised,
and if the Merger is effected, 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."
Compliance with Governmental Regulations.
- ----------------------------------------
No federal or state regulatory requirements, other than securities laws and
regulations, must be complied with or federal or state approval obtained in
connection with the Spinoff and Merger, other than the filing of articles of
merger with the Secretary of State of Oklahoma after a favorable vote might be
obtained on the proposed merger.
Agreement and Plan of Merger.
- ----------------------------
The complete Agreement of Merger among the Company, TechLite Applied
Sciences, and SuperCorp is included in this Prospectus. See "Appendix A -
Agreement of Merger."
TRANSACTIONS WITH INSIDERS
The 195,556 Spinoff Shares will be distributed pro rata to all SuperCorp
stockholders of record on the date on the cover page of this Prospectus. An
additional 48,888 shares of Common Stock of the Company are already owned by two
persons, either directly or by attribution to their family members or family
controlled entities.
Both of these two persons, either directly or by attribution, are
stockholders of SuperCorp. Each will receive Spinoff Shares in the pro rata
Spinoff distribution. Further, each owns 10,000 shares of common stock of
TechLite Applied Sciences, which each purchased in 1997 in exchange for
financial consulting services. Both of these persons may be deemed to be
"promoters" or "insiders" of the Company who will receive benefits from the
transaction not received by other SuperCorp stockholders.
The identities of the insiders, their positions with the Company and with
SuperCorp, the securities of the Company and of TechLite Applied Sciences each
owns, and his pro rata receipt of Spinoff Shares are as follows:
12
<PAGE>
<TABLE>
<CAPTION>
Shares Now Owned
----------------
Position with Company TechLite Applied Spinoff
Insider or SuperCorp Company Sciences Shares
------- ------------ ------- -------- ------
<S> <C> <C> <C>
Albert L. Welsh President and Director of the 24,444 10,000 10,773
Company and President and a
Director of SuperCorp
George W. Cole None 24,444 10,000 11,081
</TABLE>
Services Rendered by Insiders.
- -----------------------------
Mr. Welsh and Mr. Cole may be deemed to be "insiders" or "promoters" in
connection with the purchase by each of 24,444 shares of Common Stock of our
Company for $25, or $0.001 a share. Each also performed services for our Company
and for SuperCorp Inc. See "Other Financial Considerations - Material Contacts
Among the Companies."
The table below compares the securities to be received by the insiders and
to be received by other SuperCorp stockholders:
<TABLE>
<CAPTION>
Two Company Insiders
-----------------------------------------------
Other
TechLite
Type of Other Applied
Company's Spinoff Merger SuperCorp Sciences
Security Held Now Shares Shares Shareholders Shareholders Total
------------ ----------- ---------- ---------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Common 48,888(1) 21,854(2) 20,000(2) 173,702(2) 2,189,903(3) 2,448,444
Stock
Percent 2.0% 0.9% 0.8% 7.1% 89.2% 100%
</TABLE>
(1) Restricted securities. Must be held one year before tradeable under SEC
Rule 144.
(2) Registered with the Commission and unrestricted for transfer in the
stock market.
(3) Registered with the Commission and unrestricted for transfer in
the stock market. However, 825,789 of these shares would be held
by affiliates of the post-Merger Company (officers and directors
and controlling shareholders) and would be subject to the
limitations on resale imposed by Rule 145 of the Commission. See
"Information About the Company - Rule 144 and Rule 145
Restrictions on Trading."
For details concerning the direct ownership and the attribution of
ownership of Company securities by the insiders, see "Management Information -
Security Ownership of Certain Beneficial Owners and
Management."
13
<PAGE>
PLAN OF DISTRIBUTION
The Escrow Arrangement.
- ----------------------
A vote to approve the Merger by the stockholders of our Company is assured.
After such vote but before any vote by the stockholders of TechLite Applied
Sciences, SuperCorp shall declare a dividend to its stockholders of the 195,556
shares of Common Stock of the Company held by it ("the Spinoff Shares").
Certificates representing the 195,556 Spinoff Shares shall be distributed by
SuperCorp to Bank One Trust Company, NA, Oklahoma City ("the Escrow Agent") to
be held in escrow pursuant to the provisions of Securities and Exchange
Commission Regulation 230.419. Later distribution by the Escrow Agent would be
as follows:
Should the Merger Occur.
-----------------------
Should TechLite Applied Sciences's stockholders approve the Merger), the
Company shall supplement this Prospectus to indicate the fact and date of the
Merger. When the Company's Common Stock is declared eligible for quotation on
the OTC Bulletin Board, the Company shall provide to the Escrow Agent the
Company's representation that the requirements of Securities and Exchange
Commission Regulation ss.230.419(e) have been met. The Escrow Agent shall then
mail the escrowed certificates representing the 195,556 Spinoff Shares to the
owners of such securities.
Should the Merger Not Occur.
---------------------------
There can be no assurance that the proposed Merger between our Company and
TechLite Applied Sciences will occur, because a favorable stockholder vote of
TechLite Applied Sciences's stockholders must be obtained. No assurance can be
given that such will be obtained.
Should the Merger not occur, (1) TechLite Applied Sciences will continue as
a separate corporation with its existing assets and business, (2) the Company
still will have no significant assets or business, and (3) there will be no
trading market for our stock, which will still be held in escrow by the Escrow
Agent. As long as this escrow continues, no transfer or other disposition of the
securities held in escrow shall be permitted other than:
o by will or the laws of descent and distribution, or
o pursuant to a qualified domestic relations order as defined by
the Internal Revenue Code of 1986, as amended, or Title 1 of
the Employee Retirement Income Security Act or the rules
thereunder.
The Company's and SuperCorp's management have no specific plans for an
alternative to a rejection of the proposed Merger. They would commence to seek
to acquire a business or assets that would constitute a business. Such
management or SuperCorp would pay the costs of such search. Upon execution of
any agreement for the acquisition of a business or assets that would constitute
a business, the Company would file with the Securities and Exchange Commission
(the "Commission") a post-effective amendment to its earlier filed registration
statement. This amendment would contain complete
14
<PAGE>
disclosure documentation about the alternative business or assets acquisition,
including financial statements of the Company and of the company to be acquired
as well as pro forma financial information. Should the acquisition be by way of
a merger, the Company's stockholders would be furnished this information in a
proxy statement or information statement before any vote would be taken on the
proposed merger. Should the acquisition not require a vote by the Company's
stockholders, the Company would still provide this information to its
stockholders before closing the acquisition.
Upon the effectiveness of the acquisition described in the amended
registration statement, the Escrow Agent would distribute the certificates held
in escrow together with the Prospectus contained in the amended Registration
Statement. No later than 90 days after the end of the first full fiscal year of
operations following consummation of an acquisition, as described above, the
Company shall furnish its stockholders audited financial statements for such
year as well as the Company's plan of operation for the next year and file such
information with the Commission on a Form 10-K or 10-KSB. See "Penny Stock
Regulations."
Should no alternative to the Merger be effected within eighteen months
after the date of this Prospectus, Rule 419 of the Securities and Exchange
Commission requires that the acquisition effort be abandoned. In such event, the
certificates held in escrow would not be delivered to the record owners thereof.
The holders of a majority of the Company's Common Stock will have voting rights
to cause a dissolution of the Company, and persons who will constitute such a
majority have indicated their intentions to so exercise these voting rights to
that effect at that time. Such persons are Albert L. Welsh, president and a
director of SuperCorp; Nita Kaye Adams, Renee Adams, Chris Adams, and Meridyne
Corp., all of whom are related to or affiliated with John E. Adams, a director
of SuperCorp; the Marilyn C. Kenan Trust, which is under the control of the
spouse of Thomas J. Kenan, a director of SuperCorp, and Mary M. Kenan and Joseph
N. Kenan, the adult daughter and son of Thomas J. Kenan; Patrick D. and Julia V.
Kenan; Ronald D. Wallace, a director of SuperCorp and the beneficial owner of
SuperCorp shares held by Sackville Advisors, Ltd., which is under his control;
T.E. King, a director of SuperCorp; George W. Cole; Marjorie Cole; George B.
Cole; Judith Rader, Gary E. Bryant, Mary N. Jackson; Suzanne Kerr; Marshall A.
Pierson; and Susanne Peterson, stockholders of SuperCorp. See "The Escrow
Arrangement."
Expenses of the Spinoff and Merger.
- ----------------------------------
The estimated expenses of the Spinoff and the Merger are $104,300. All of
these expenses are being borne by TechLite Applied Sciences, with whom the
Company proposes to merge. These estimated expenses are federal and state
registration fees - $100; filing expenses (EDGAR) - $8,000; stock transfer
agent's fee - $4,000; escrow agent's fee - $500; printing and engraving -
$10,000; legal fees - $49,000; auditor's fee - $6,000; mailing cost - $5,900;
finder's fee - $18,500; and Moody's OTC Industrial Manual publication fee -
$2,300.
15
<PAGE>
DESCRIPTION OF SECURITIES
Common Stock.
------------
Each of the Company and TechLite Applied Sciences is an Oklahoma
corporation. The Company is authorized to issue 40 million shares of Common
Stock, $0.001 par value, and has 244,444 shares of Common Stock issued and
outstanding. TechLite Applied Sciences is authorized to issue 40 million shares
of common stock, $0.001 par value, and has 2,209,903 shares of its Common Stock
issued and outstanding.
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 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
to purchase any stock, obligations or other securities of the corporation.
Registrar and transfer agent.
------------------------------
Bank One Trust Company, NA, Oklahoma City is the transfer
agent and registrar of the Common Stock of the Company. TechLite Applied
Sciences serves as its own registrar and transfer agent.
Dissenters' rights.
------------------
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.
---------------
The Company is authorized to issue 10 million shares of Preferred Stock,
$0.001 par value. The Preferred Stock may be issued from time to time by the
directors as shares of one or more series. The description of shares of each
series of Preferred Stock, including any preferences, conversion and other
rights, voting powers, and conditions of redemption must be set forth in
resolutions adopted by the directors.
There are no shares of Preferred Stock of the Company issued and
outstanding.
16
<PAGE>
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 the Company is newly organized, the "step transaction doctrine" might be
applied. If so, the 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).
The Spinoff.
-----------
The distribution by SuperCorp to its stockholders of the 195,556 Spinoff
Shares will be a taxable event to SuperCorp and to each of its stockholders
receiving any of the Spinoff Shares. Gain (but not loss) would be recognized by
SuperCorp under Section 311 of the Internal Revenue Code for any excess of the
fair market value of the Company's stock on the date of actual distribution over
the tax basis to SuperCorp of such stock.
Stockholders of SuperCorp.
-------------------------
As for SuperCorp's stockholders who receive Spinoff Shares of the Company,
the Spinoff shall occur prior to the vote by TechLite Applied Sciences's
stockholders to accept or reject the Merger. Because the result of the vote by
TechLite Applied Sciences's stockholders cannot be forecast, and because the
Merger cannot and shall not become effective until after a favorable vote is
obtained on the Merger, it is more likely than not that the fair market value of
the Spinoff Shares on the date of the Spinoff should not have increased over the
$0.001 price paid by SuperCorp for the 195,556 Spinoff Shares.
SuperCorp has no current or accumulated earnings. The distribution is being
made from its excess capital. Each stockholder of SuperCorp should reduce the
adjusted basis of his SuperCorp stock by the fair market value of the
distribution to him, and any remaining portion will be treated as capital gain
in the same manner as a sale or exchange of the stock. This fair market value is
assumed to be $0.001 per share. SuperCorp undertakes to advise its stockholders
in early 2000 should it deem the fair market value of the distributed Spinoff
Shares on the date of distribution to have been different than $0.001 per share
or should it have had net earnings in 1999 which would cause the distribution,
to the extent of such earnings, to be taxed as a dividend and as ordinary
income.
The above discussion as to U.S. income tax consequences is not based upon
an advance ruling by the Treasury Department but upon the opinion of Thomas J.
Kenan, esquire, in his capacity as tax counsel to the Company (which tax opinion
is an exhibit to the registration statement of which this Prospectus is a part).
See "Risk Factors - Tax Consequences."
17
<PAGE>
OTHER FINANCIAL CONSIDERATIONS
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
October 31, 1998
TechLite
TechLite Applied
Inc. Sciences Pro Forma Pro Forma
(Historical) (Historical) Adjustments Combined
------------ ------------ ----------- --------
ASSETS
<S> <C> <C> <C> <C>
Current assets $245 $ 640,682 $ - $ 640,927
Property and equipment - 682,759 - 682,759
Other assets - 62,071 - 62,071
---- ----------- ---------- -----------
TOTAL ASSETS $245 $ 1,385,512 $ - $ 1,385,757
==== =========== ========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities $ - $ 617,380 $ - $ 617,380
Long term liabilities - 624,505 - 624,505
----- ----------- ---------- -----------
Total liabilities - 1,241,885 - $ 1,241,885
----- ----------- ---------- -----------
Stockholders' equity:
Common stock 245 220,990 - 221,235
Additional paid-in capital - 943,263 - 943,263
Retained earnings (deficit) - (1,020,626) - (1,020,626)
----- ----------- ---------- -----------
Total stockholders' equity 245 143,627 - 143,872
---- ----------- ---------- ----------
TOTAL LIABILITIES AND $245 $ 1,385,512 $ - $ 1,385,757
==== =========== ========== ===========
STOCKHOLDERS' EQUITY
Pro forma book value per share $ (0.06)
===========
</TABLE>
NOTE: Pro forma book value per share is calculated by dividing Total
Stockholders' Equity - $143,872 - by the total number of shares that
would have been outstanding on October 31, 1998 (2,454,347), giving
effect to the proposed Merger.
18
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA STATEMENT OF INCOME
Fiscal Year Ended January 31, 1998
and
Nine-Month Period Ended October 31, 1998
Fiscal Year Ended January 31, 1998 Nine Months Ended October 31, 1998 (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 $ - $1,714,514 $ - $1,714,514 $ - $3,844,310 $ - $3,844,310
Cost of Sales - 1,516,927 - 1,516,927 - 2,712,768 - 2,712,768
---------- ---------- ------------ ---------- ---------- ---------- ------------ ----------
Gross profit - 197,587 - 197,587 - 1,131,542 - 1,131,542
Operating expenses - 930,763 - 930,763 - 718,342 - 718,342
---------- ---------- ------------ ---------- ---------- ---------- ------------ ----------
Income from operations - (733,176) - (733,176) - 413,200 - 413,200
Other income - 2,962 - 2,962 - 2,192 - 2,192
---------- ---------- ------------ ---------- ---------- ---------- ------------ -----------
Income (loss) before
taxes (730,214) - (730,214) 415,392 - 415,392
Provision for taxes - - - - - 0 - 0
---------- ---------- ------------ ------------ ---------- ---------- ------------ ----------
NET INCOME (LOSS) $ - $ (730,214) $ - $ (730,214) $ - $ 415,392 $ - $ 415,392
========== ========== ============ ========== ========== ========== ============ ==========
EARNINGS PER
SHARE
Net income (loss) $ (730,214) - $ (730,214) $ 415,392 - $ 415,392
Weighted-average
number of shares
outstanding 2,204,000 244,444 2,448,444 2,209,903 244,444 2,454,347
Earnings per share - (0.33) - (0.30) - $0.19 $0.17
</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 October 31, 1998 as if outstanding as of the
beginning of the period.
19
<PAGE>
The essential effect of the Merger is to dilute by ten percent the equity
of the stockholders of TechLite Applied Sciences. This reduction in equity is
transferred to the present stockholders of SuperCorp and two persons, both of
whom are "insiders" to the Company.
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 a trust, 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 Merger described in this Prospectus.
The SuperCorp directors also favorably considered the spinoff-merger
transaction. They created a subsidiary corporation, the Company, to be available
to merge with TechLite Applied Sciences. They caused SuperCorp to purchase
244,440 shares of Common Stock of the Company at $0.001 a share, to be
distributed to other SuperCorp stockholders as a dividend. They also authorized
the sale of 24,444 shares of common stock of the Company to each of Mr. Welsh
and Mr. Cole in recognition of their services to the SuperCorp stockholders in
persuading the directors of TechLite Applied Sciences to consider the Merger
described herein.
20
<PAGE>
Other than the proposed Spinoff and Merger described herein, there have
been no material contracts, arrangements, understandings, relationships,
negotiations or transactions among TechLite Applied Sciences, the Company, and
SuperCorp during the periods for which financial statements appear herein.
PENNY STOCK REGULATIONS
There is no way to predict a price range within which the Company's Common
Stock will trade. The Company expects trading to commence on the OTC Bulletin
Board at a price less than $5 a share. Accordingly, the Company's Common Stock,
initially at least, would be subject to the rules governing "penny stocks."
A "penny stock" is any stock that:
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." The Company is not
now a "substantial issuer" and cannot become one until it has
net tangible assets of at least $5 million, which it does not
now have.
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
approve the customer's account for transactions in penny stocks in accordance
with procedures set forth in the Commission's Penny Stock Suitability Rule. The
broker-dealer must obtain from the customer information concerning the person's
financial situation, investment experience and investment objectives. Then, the
broker-dealer must "reasonably determine" (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.
21
<PAGE>
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,
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.
22
<PAGE>
Description of Business and Properties.
- --------------------------------------
Should the TechLite Applied Sciences's stockholders 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 to the present stockholders of TechLite Applied Sciences. 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.
Legal Proceedings.
- -----------------
Neither the Company nor its property is a party to or the subject of
pending legal proceedings.
Market for the Company's Common Stock and Related Stockholder Matters.
- ---------------------------------------------------------------------
There is no present public trading market in the U.S. or elsewhere for the
Company's Common Stock. After the Spinoff and before any vote on the Merger by
the stockholders of TechLite Applied Sciences, all certificates representing the
195,556 Spinoff Shares shall be held in escrow by the Escrow Agent.
Should the Merger be approved (1) the Escrow Agent will release from escrow
the certificates representing the ownership of the escrowed Spinoff Shares.
These certificates would be delivered to the more than 600 SuperCorp
stockholders owning the securities represented by the certificates, and (2) the
stockholders of TechLite Applied Sciences will receive 2,209,903 Shares of
Common Stock of the Company in exchange for the 2,209,903 outstanding shares of
capital stock of TechLite Applied Sciences.
The Company's stock will not be eligible for quotation on the Nasdaq Small
Cap Market ("Nasdaq") (1) until it trades at a bid price of $4 a share or higher
and (2) unless our combined Company meets other Nasdaq requirements regarding
assets and stockholders' equity, which we will not meet even if the Merger is
approved. We give no assurance that the Common Stock will ever become eligible
for quotation on Nasdaq.
23
<PAGE>
Our stock is expected to be quoted on an NASD inter-dealer system called
"the Bulletin Board." While some Bulletin Board stocks are actively traded, they
do not draw the interest of most of the brokerage community that concentrates
its attention on Nasdaq-quoted stocks or exchange-listed stocks. The eligibility
requirements for listing our stock on exchanges are generally as high or higher
than the requirements for eligibility for quotation on Nasdaq.
Should the Merger be approved by TechLite Applied Sciences's stockholders,
we all face the prospect of an indefinite period during which the Shares will be
subject to trading severities imposed on Bulletin Board "penny stocks" (stocks
that trade at less than $5 per share) by regulations of the Securities and
Exchange Commission. These trading severities reduce broker-dealer and investor
interest in trading or owning "penny stocks." This could inhibit the ability of
our stock to reach a trading level of $4 per share or higher and thereby become
eligible for quotation on Nasdaq even if we meet Nasdaq's assets and
stockholders' equity requirements in the future. See "Risk Factor No. 4 - Penny
Stock Regulations" and "Penny Stock Regulations."
Rule 144 and Rule 145 Restrictions on Trading.
- ---------------------------------------------
Should the Merger be approved, 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.
Holders of the Shares who are deemed to be affiliates of TechLite Applied
Sciences at the time of the vote on the Merger, in order to sell their Shares,
must either register them for sale or comply with the resale provisions set
forth in paragraph (d) of the Commission's Rule 145, unless some other
exemption-from-registration provision is available. The resale 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
24
<PAGE>
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 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 the Merger be approved, 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. 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. The Company is an electronic filer, and the SEC maintains an
Internet Web site that
25
<PAGE>
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. The
Company also intends to furnish stockholders with annual reports containing
financial statements audited by independent public or certified accountants and
such other periodic reports as it may deem appropriate or as required by law.
Stock Certificates.
------------------
Certificates for the securities offered hereby will be ready for delivery
within one week after the date of this Prospectus (see "The Escrow
Arrangement").
Financial Statements.
- --------------------
See "Financial Statements - TechLite, Inc." for the independent auditor's
report dated November 6,1998, with respect to the Company's balance sheet as of
November 6, 1998, such balance sheet, and the notes to the balance sheet.
INFORMATION ABOUT TECHLITE APPLIED SCIENCES
Overview.
- --------
TechLite Applied Sciences, Inc. ("TechLite Applied Sciences"), was
incorporated in Oklahoma on November 9, 1992. Its fiscal year ends January 31.
TechLite Applied Sciences has been engaged since 1993 in the business of
retrofitting existing lighting fixtures in buildings used for commercial,
education, manufacturing, institutional and health care purposes. 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; Kearney, Nebraska; and
Brazilia and Rio de Janeiro, Brazil. TechLite Applied Sciences operated at a
loss from inception through the fiscal year that ended January 31, 1998.
Operations became profitable in the fiscal year that ended January 31, 1999.
Management's Discussion and Analysis of Financial Condition and Results of
---------------------------------------------------------------------------
Operations.
- ----------
The following discussion and analysis should be read in conjunction with
the financial statements and the accompanying notes thereto and is qualified in
its entirety by the foregoing and by more detailed financial information
appearing elsewhere. See "Financial Statements."
26
<PAGE>
Results of operations.
---------------------
The following table presents, as a percentage of sales, certain selected
financial data for each of the two years in the period ended January 31, 1998
and for the nine-month period ended October 31, 1998:
<TABLE>
<CAPTION>
Nine
Months
Ended
Year ended January 31 1997 1998 10-31-98
---------------------------------------------------------------- ---------
<S> <C> <C> <C>
Sales 100% 100% 100%
Cost of sales 86% 88% 71%
--- --- ---
Gross margin 14% 12% 29%
Selling, general and
administrative expenses 26% 54% 19%
Net income (loss) before taxes (12)% (43)% 11%
</TABLE>
Sales.
-----
Sales of $1,714,514 for fiscal year 1998 decreased by $86,139 from fiscal
1997's sales of $1,800,653, a decrease of five percent. Most operations in
fiscal year 1998 were affected by two events:
o In July 1997 TechLite Applied Sciences was the successful
bidder on a $3.95 million contract to retrofit most of the
buildings of the Tulsa, Oklahoma Independent School District
Number One. The contract was signed on October 6, 1997.
TechLite Applied Sciences quickly increased its staff to
enable it to perform its contractual obligations. Yet, the
school district, through more than three months of
bureaucratic delays, prevented TechLite Applied Sciences
from commencing work on the contract until January 27, 1998
- five days before the end of fiscal year 1998.
o From October 1997 through the end of that fiscal year
(1998), and even through October 1998, TechLite Applied
Sciences diverted significant personnel and some monetary
resources to the pursuit of perceived opportunities in
Brazil. The objects of the opportunities are retrofitting
contracts with the postal system in Brazil and with a large,
French-owned chain store company, Carrefour Comercio E
Industria LT ("Carrefour"). As of October 31, 1998,
TechLite Applied Sciences had retrofitted the lighting
fixtures in demonstration areas of the postal system's main
office and in one of Carrefour's stores (one that has 80
checkout counters), and has made specific proposals to each,
both for a single building retrofit and for a system-wide
retrofit. TechLite Applied Sciences still awaits a response
from each.
27
<PAGE>
Interim Results.
---------------
Sales for the nine months ended October 31, 1998 were
$3,844,310, an increase of $2,336,090, or 155%, over the $1,508,220 in sales for
the nine months ended October 31, 1997. The increase was due to work being
commenced on the Tulsa, Oklahoma public school contract.
Gross margin.
------------
Gross margin decreased from $247,221 in fiscal 1997 to $197,587 in fiscal
1998, a decrease of twenty percent. The decrease was due primarily to the 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 Houston contract was
performed from September 1996 through March 1997.
Interim Results.
---------------
Gross margin for the nine months ended October 31, 1998 was
$1,131,542, an increase of $963,121, or 572%, over the gross margin of $168,421
for the nine months ended October 31, 1997. The gross margin, as a percentage of
sales, increased from 11% for the 1997 nine-month period to 29% for the 1998
first nine-months period. The increase in gross margin is attributable to the
increase in sales. The increase in gross margin percentage is attributable to
the difference in margin, as a percentage of sales, between the Tulsa public
schools contract and the Houston public schools contract.
Selling, general and administrative expenses.
--------------------------------------------
Selling, general and administrative expenses increased from $467,391 in
fiscal 1997 to $930,763 in fiscal 1998, or 99%. This reflects the increase in
staff made in anticipation of commencing work on the Tulsa public schools
contract. See " - Sales," above.
Interim Results.
---------------
Selling, general and administrative expenses for the nine
months ended October 31, 1998 increased slightly to $718,342 from $687,214
during the same nine-month period the previous year, an increase of 4.5%. This
small increase, at a time when sales more than doubled, was due to a concerted
effort by TechLite Applied Sciences' management to reduce these expenses at all
levels.
Net income (loss) before taxes.
------------------------------
A net loss before taxes of $219,965 in fiscal 1997 increased to a net loss
of $730,214 in 1998, an increase of 232%. The increase in loss was due to
TechLite Applied Sciences' increasing its staff in fiscal 1998 for the Tulsa
public schools contract and holding this staff for several months before work
could be commenced only five days before the end of the fiscal year.
28
<PAGE>
Interim Results.
---------------
Net income before taxes for the nine months ended October 31,
1998 was $415,392, a significant reversal from a loss of $516,488 for the same
period ended October 31, 1997. This gain was due to a more than doubling of
sales (a reflection of work having commenced on the Tulsa public schools
contract), a greater gross margin obtained from the Tulsa public schools
contract than from the Houston public schools contract, and some reductions made
in general and administrative expenses.
Balance sheet items.
-------------------
Significant changes in several balance sheet items occurred from fiscal
1997 to fiscal 1998, in particular the following:
o a cash position of $150,272 at the end of fiscal year 1997
----
deteriorated to a bank overdraft of $10,191 at the end of
fiscal 1998,
o accounts receivable of $122,638 at the end of fiscal 1997
-------------------
increased 240% to $416,809 at the end of fiscal 1998,
o property and equipment of $91,630 at the end of fiscal 1997
----------------------
doubled to $184,477 at the end of fiscal 1998,
o payroll and sales tax payable of $74,444 at the end of fiscal
------------------------------
1997 leaped 185% to $212,521 at the end of fiscal 1998,
reflecting management's severe cash flow situation,
o notes payable and accrued interest of $394,853 at the end of
----------------------------------
fiscal 1997 were reduced by $235,258, or 60%, by the end of
fiscal 1998, and
o stockholders' equity received an infusion of $1,005,216 from
---------------------
the sale of stock during fiscal 1998, of which amount $688,767
represents stock sold for cash and $316,449 represents stock
sold for the cancellation of notes payable.
Interim Results.
----------------
There were several significant changes in balance sheet items
that occurred from October 31, 1997 to October 31, 1998, but it is more
revealing to compare October 31, 1998 balance sheet items with those of only
nine months earlier, at the fiscal year end of January 31, 1997:
o A bank overdrawn position of $10,191 at the end of fiscal
--------------
1998 improved to a cash position of $13,632 on October 31,
1998,
o accounts receivable of $416,809 on January 31, 1997 were
-------------------
collected, and receivables of $268,554 were recorded on
October 31, 1998,
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 $39,096 being on the books on October 31,
1998,
29
<PAGE>
o billings in excess of costs and estimated earnings on
---------------------------
uncompleted contracts totaling $330,074 at the end of fiscal
1998 had been eliminated by October 31, 1998,
o notes payable of $159,595 at the end of fiscal 1998 had
-------------
increased by 291% to $624,505 by October 31, 1998,
o the retained deficit had been reduced, by reason of nine
----------------
months' earnings of $415,392, from $1,436,018 to $1,020,626
at October 31, 1998, and
o a stockholders' deficit of $430,322 on January 31, 1998 had
---------------------
been converted to stockholders' equity of $143,627 at
October 31, 1998.
The above improvements in balance sheet items were due to the facts
that TechLite Applied Sciences increased its sales and gross margin, effected
reductions in costs, and made a profit of $415,392 for the nine months ended
October 31, 1998.
Liquidity and Capital Resources.
-------------------------------
TechLite Applied Sciences had positive cash flow from operations in fiscal
1997 of $182,053 but negative cash flow from operations of $786,400 in fiscal
1998. The principal component of this negative cash flow in fiscal 1998 was the
year's net loss of $730,214. This drain on liquidity and capital resources was
covered by the sale of $688,767 of common stock, by new borrowings of $128,427,
and by holding back payroll and sales tax payables of $212,521. A positive item
at fiscal 1998 year-end was contracts receivable of $416,809.
Interim Results.
---------------
TechLite Applied Sciences had a positive cash flow of $63,557
for the nine months ended October 31, 1998, as compared to a positive cash flow
of $753,608 for the same nine months the previous year. The principal components
of this significant change in liquidity were the $415,392 net income for the
nine months ended October 31, 1998 as compared with a loss of $516,488 for the
same nine months the previous year, and a decrease of $173,151 in contract
receivables for the most recent nine months.
Outlook.
-------
The statements contained in this Outlook are based on current expectations.
These statements are forward-looking, and actual results may vary materially.
TechLite Applied Sciences is rapidly increasing its sales and improving its
gross margin. It expects sales to have increased from $1.7 million in fiscal
1998 (which ended January 31, 1998) to approximately $5.0 million in the fiscal
year that ended January 31, 1999.
TechLite Applied Sciences's future results of operations and the other
forward-looking statements contained in this Outlook and Offering Circular, in
particular the statements regarding projected operations in the fiscal year
beginning February 1999, involve a number of risks and
30
<PAGE>
uncertainties. In addition to the factors discussed above, among the other
factors that could cause actual results to differ materially are the following:
the loss of any of several key personnel; unexpected costs in establishing
branch offices; the emergence of competition not now detected; and a general
economic turndown.
DESCRIPTION OF TECHLITE APPLIED SCIENCES' 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" 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 Green Lights program - provided the impetus for the development of
three significant energy-efficient products:
o energy-efficient fluorescent lamps,
o improved electronic ballasts, and
o highly efficient 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
31
<PAGE>
business plan projects that it will have sales aggregating $239 million, which
is less than 0.5 percent of the market in this area.
Environmental Considerations.
- ----------------------------
Generating electricity involves burning fossil fuels - coal, oil, or
natural gas - or running a nuclear reactor or a hydroelectric plant. The mining
and transportation of fossil fuels can result in various types of pollution.
Burning fossil fuels emits air pollutants from smokestacks, including carbon
dioxide, sulfur dioxide, and nitrogen oxides. Today the EPA is increasingly
focusing on pollution prevention. If the nation uses less electricity to deliver
an energy service - such as lighting - the power plants that produce the
electricity burn less fuel and thus generate less pollution.
Lighting accounts for 20 to 25 percent of all electricity sold in the U.S.
Lighting for industry, stores, offices and warehouses represents 80 to 90
percent of total lighting electricity use. Every kilowatt hour of lighting
electricity not used prevents emissions of 1.5 pounds of carbon dioxide, 5.8
grams of sulfur dioxide, and 2.5 grams of nitrogen oxides. If energy efficient
lighting were used where profitable, the nation's demand for electricity would
be cut by more than 10 percent. This would result in annual reductions of 2.2
million metric tons of carbon dioxide -the equivalent of taking 44 million cars
off the road; 1.3 million metric tons of sulfur dioxide; and 600,000 metric tons
of nitrogen oxides. These reductions represent twelve percent of U.S. utility
emissions.
Saving Money.
- ------------
The Green Lights upgrade program focuses on achieving energy savings under
circumstances that save money for the electricity user. Businesses which have
made the investment in retrofit lighting, because of the development of highly
efficient 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. Further, 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
32
<PAGE>
photometric results. TechLite 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.
- -------------------------------
33
<PAGE>
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 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
34
<PAGE>
to perform presentations. Its engineers identify and measure extensive lists of
data for a computerized design process.
In 1997, the competitive climate began to change with the emergence of
"energy service companies," called "ESCOs". 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. TechLite Applied Sciences has no strategic alliances with
any ESCOs at present. Such alliances could prove to be critical in getting
business in the future.
Financing a Retrofit.
- --------------------
A candidate for an electrical fixture retrofit may need funding. In today's
market, funding plans offer a repayment schedule derived from the energy savings
with the customer realizing a positive cash flow from the savings.
Significant advantages are provided by informal strategic alliances between
heating, ventilation and air-conditioning companies, such as Carrier
Corporation, and energy efficient lighting retrofit companies, such as TechLite
Applied Sciences. Typically, the largest consumption of power in large buildings
comes from the heating, ventilation and air conditioning units. The EPA has
mandated replacement of refrigerants containing chlorofluorocarbons (CFCs). This
is an expensive process. The replacement of this equipment may be essential for
many buildings, but the building owners might not save enough from the
efficiency of new systems to pay for them in the short term. Heating,
ventilation and air-conditioning industry leaders, such as Carrier, York, Trane,
Honeywell and Johnson Controls, have recently begun to include lighting
retrofits with their own replacement projects.
The reason for the joint ventures is economics. Typically, when a building
installs new heating, ventilation and air-conditioning equipment and
simultaneously retrofits its electric lighting, the lighting retrofit will
provide 30 to 40 percent of the total electricity savings while contributing
only ten to twelve percent of the total cost. A company such as Carrier is
interested in selling the large heating, ventilation and air-conditioning
equipment and, perhaps, financing the total project, but it needs the
participation of the electric light retrofitter to provide the necessary savings
to make the entire project feasible.
Often, the large heating, ventilation and air-conditioning company will
provide the financing for the entire project. Thus, the
35
<PAGE>
lighting retrofit company, with no out-of-pocket expense or risk, gets the
advantage of the larger company's financing resources which enable building
owners to upgrade their heating, ventilation and air conditioning systems and
upgrade their lighting to state-of-the-art systems. These large companies, such
as Carrier Corporation, will guarantee the building owner that the savings
generated will pay for the entire system, or they will make up the difference.
These proposals are highly advantageous to a small lighting retrofit company
such as TechLite Applied Sciences. In October 1995, Carrier Corporation's Tulsa
branch asked TechLite Applied Sciences to help with the lighting portion of a
complete heating, ventilation and air-conditioning replacement and lighting
retrofit project for Oral Roberts University in Tulsa. The entire project
investment for ORU was $5.9 million with an annual energy savings of $1 million
guaranteed by Carrier. TechLite Applied Sciences's portion of the project was
approximately twelve percent of the total investment, but it provided 30 percent
of the annual savings.
Sales Methods.
- -------------
TechLite Applied Sciences operates out of six offices. Each of the U.S.
offices has a demonstration machine that is used as a sales device. Within a
single portable unit, there is a television set with VCR for showing Green
Lights and TechLite Applied Sciences videos, a rotating watt meter, a light
level indicator, a laser pointer for demonstration of reflectivity, an audio
amplifier for demonstration of hum characteristics, and two two-by-four recessed
troffers mounted on a motorized mast so that fixtures can be raised to a normal
position at ceiling height. The demonstration machine vividly demonstrates the
improvement in lighting obtained from a retrofit as well as the substantial
reduction in electricity usage.
Sales procedures employed today typically commence with a walk-through by
an experienced sales engineer to determine if a building is a good prospect.
Then, a demonstration using the demonstration machine is scheduled. After the
demonstration, depending upon the size of the building, the types of fixtures
observed, the hours of usage and rates for electricity demonstrated by the
building's electricity bills, an estimate of available savings is made. The
potential customer is asked, based upon these savings, if it wishes to proceed
with a comprehensive feasibility and engineering study. If the answer is
positive, then TechLite Applied Sciences and the potential customer enter into a
memorandum of understanding 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
36
<PAGE>
over-lit areas and the under-lit areas and (2) which solution is most
cost-effective.
In October 1997 TechLite Applied Sciences commenced a sales effort in
Brazil that resulted in its retrofitting, for demonstration purposes, the
eighteenth floor of the central post office building in Brazilia and a portion
of a large discount store for a French commercial concern, Carrefour Comercio E
Industria LT ("Carrefour"). Following the demonstrations, TechLite Applied
Sciences made proposals in July 1998 to each of the Brazil postal system and
Carrefour to retrofit a single building for each and, in the case of Carrefour,
50 stores for Carrefour.
Production Costs.
- ----------------
The cost of materials - lamps, ballasts, reflectors and motion sensors -
should account for approximately 59 percent of a project's costs. Installation
and supervisory labor should account for an additional fifteen percent of a
project's costs. Selling, general and administrative expenses are currently
running at approximately sixteen percent of contract revenue. During the first
nine months of the fiscal year that ended January 31, 1999, TechLite Applied
Sciences had a pre-tax profit on sales of approximately 10.8 percent. TechLite
Applied Sciences estimates that selling, general and administrative expenses
will decrease to approximately ten percent of contract revenue as the volume
increases.
Competition.
- -----------
Numerous companies throughout the U.S. are engaged in the business of
retrofitting light fixtures. Many of these are small businesses that operate
only locally. 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.
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
37
<PAGE>
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 5,000 square feet of a 13,000
square-foot office building in Tulsa, Oklahoma. It leases 400 square feet in
Tecumseh, Oklahoma; 644 square feet of space in Kearney, Nebraska; 300 square
feet in Dallas, Texas; a 10,000 square-foot warehouse and 400 square feet of
office space in Brazilia, and 250 square feet of office space in Rio de Janeiro,
Brazil. It also leases 4,000 square feet of warehousing capacity in Tulsa,
Oklahoma. The space is deemed adequate for TechLite Applied Sciences's
foreseeable needs. As branches are opened in additional cities, facilities will
be leased for the branch operations.
Dependence on Major Customers and Suppliers.
- -------------------------------------------
TechLite Applied Sciences has been dependent, and expects to continue to be
dependent, upon single customers for ten percent or more of its consolidated
revenues. However, such customers would not be expected to be repeat customers
once the work for such customers is completed. It has had and anticipates
significant backlogs, but additional staff is taken on to meet all contract
needs.
It depends upon American Illuminetics, Inc. of Carlsbad, California; X-Tra
Light Manufacturing Co. of Houston, Texas; and, to some extent, Harris
Manufacturing, Inc. of Orange Park, Florida 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.
Seasonality.
- -----------
There is no seasonal aspect to TechLite Applied Sciences's business.
38
<PAGE>
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 December 31, 1998, TechLite Applied Sciences employed 35 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.
39
<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 TechLite Applied Sciences's common
stock. There are 52 holders of record of TechLite Applied Sciences's issued and
outstanding common stock. Should the Merger not be approved, no public trading
market is expected to develop. TechLite Applied Sciences has declared no
dividends on its common stock. There are no restrictions that would or are
likely to limit the ability of TechLite Applied Sciences to pay dividends on its
common stock, but TechLite Applied Sciences has no plans to pay dividends in the
foreseeable future and intends to use earnings for the expansion of its present
business.
There are no shares of Common Stock subject to outstanding options or
warrants to purchase, or securities convertible into, common stock of TechLite
Applied Sciences.
Should the proposed Merger be approved, all of the 2,209,903 shares of
Common Stock of the Company that would be distributed to the 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, 1997 and 1998, and statements of income, cash flows, and changes in
stockholders' equity for the period ended January 31, 1997 and 1998, which have
been prepared in accordance with generally accepted accounting principles in the
United States, and for its unaudited interim financial statements containing
balance sheets at July 31, 1997 and 1998, and statements of income and cash
flows for the nine months ended October 31, 1997 and 1998, which have been
prepared in accordance with generally accepted accounting practices in the
United States.
MANAGEMENT INFORMATION
Security Ownership of Certain Beneficial Owners and Management.
- --------------------------------------------------------------
The following table shows information as of December 31, 1998 with respect to
each beneficial owner of more than 5% of each class of voting stock of the
Company and TechLite Applied Sciences, and to each of the officers and directors
of the Company and of TechLite Applied Sciences individually and as a group, and
as of the same date with respect to the same persons as adjusted to give effect
to the Spinoff
40
<PAGE>
and to the proposed Merger between the Company and TechLite Applied Sciences
(2,454,347 shares):
<TABLE>
<CAPTION>
Common Stock Beneficially Owned
----------------------------------
Before Company Common
Spinoff-Merger After Merger
--------------- ---------------
No. of % of No. of % of
The Company Shares Class Shares Class
- ----------- ------ ----- ------ -----
<S> <C> <C> <C> <C>
SuperCorp Inc.
100 North Broadway, Suite 3300
Oklahoma City, OK 73102 195,556 80 0 0(1)
Thomas J. Kenan
212 Northwest 18th
Oklahoma City, OK 73103 195,556(2) 80 95,773(3) 3.9
Ronald D. Wallace
One Buckhead Plaza, 19th Floor
3060 Peachtree Street, NW
Atlanta, GA 30305 195,556(2) 80 10,773 0.4
John E. Adams
1205 Tedford
Oklahoma City, OK 73116 195,556(2) 80 10,773 0.4
T.E. King
49 Strawberry Lane, Suite 200
Palos Verdes Peninsula, CA 90274 195,556(2) 80 10,773 0.4
Albert L. Welsh
3832 Northwest 69th
Oklahoma City, OK 73116 220,000(4) 90 45,217(5) 1.8
George W. Cole
3535 Northwest 58th, Suite 770
Oklahoma City, OK 73112 24,444 10 45,525(6) 1.9
Officers and Directors as a Group (1 person
before Merger, 0 persons after Merger) 220,000 90 0 0
</TABLE>
- -------------------------
(1) After allocating one share of Common Stock of the Company for each
34.81 shares of common stock of SuperCorp, SuperCorp will have 659
shares available for rounding up fractional shares.
(2) These shares are attributed to this person through his position as a
director of SuperCorp. SuperCorp owns 195,556 shares of Common Stock of
the 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
41
<PAGE>
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 the Company in the Merger. This trust would also receive
10,773 shares of Common Stock of the Company in the Spinoff. Mr. Kenan
provides legal services to the Company and to SuperCorp.
(4) 195,556 of these shares are attributed to this person through his
position as a director of SuperCorp. See footnote (2) above.
24,444 of these shares are owned directly by him and were
received for his services as a "promoter" of the Company. See
"Transactions With Insiders."
(5) 10,773 of these shares would be received in the Spinoff, 24,444
shares are directly owned by him and were received for his
services as a "promoter" of the Company (see "Transactions with
Insiders"), and 10,000 shares would be received in the Merger in
exchange for 10,000 shares of TechLite Applied Sciences now owned
by this person by way of direct purchase from TechLite Applied
Sciences.
(6) 11,081 of these shares would be received in the Spinoff. 24,444
shares are directly owned by him and were received for his
services as a "promoter" of the Company (see "Transactions with
Insiders"). 10,000 shares would be received in the Merger in
exchange for 10,000 shares of TechLite Applied Sciences now owned
by this person by way of direct purchase from TechLite Applied
Sciences. The 11,081 Spinoff Shares are attributed to Mr. Cole
through the holdings of 385,700 shares of Common Stock of
SuperCorp held by his spouse, Marjorie J. Cole - 375,000 shares,
the Cole Family Limited Partnership - 1,500 shares, Mr. Cole -
1,600 shares, Marjorie J. Cole and George W. Cole -1,600 shares,
George W. Cole and a son, George B. Cole - 1,500 shares,
George W. Cole and a daughter, Margaret A. Cole - 1,500 shares,
Marjorie J. Cole and a son, George B. Cole - 1,500 shares, and
Marjorie J. Cole and a daughter, Margaret A. Cole - 1,500 shares.
Mr. Cole disclaims any beneficial ownership in shares of capital
stock of the Company owned by his spouse.
42
<PAGE>
<TABLE>
<CAPTION>
Common Stock Beneficially Owned
-----------------------------------
Before Company Common
Spinoff-Merger After Merger
--------------- --------------
No. of % of No. of % of
TechLite Applied Sciences Shares Class Shares Class
- ------------------------- ------ ----- ------ -----
<S> <C> <C> <C> <C>
J. D. Arvidson 528,400 23.9 528,400 21.5
9316 N. 147th E. Ave.
Owasso, OK 74136
John F. Bodkin 0(1) 0 0 0
25668 Lo Lane
Twin Peaks, CA 92391
C. O. Sage 222,292(2) 10.1 222,292(2) 9.1
7902 S. 70th E. Pl.
Tulsa, OK 74133
Gen. Gerald Hahn 1,000 0 1,000 0
3744 S. Niagara Way
Denver, CO 80237-1248
Carol E. Sage 222,292(2) 10.1 222,292(2) 9.1
7902 W. 70th E. Pl.
Tulsa, OK 74133
Mark D. Galvin 74,097 3.4 74,097 3.0
5412 Harvard
Bartlesville, OK 74006
Rex D. Frates 388,056(3) 17.6 388,056 15.8
2626 East 28th Street
Tulsa, OK 74114
Officers and Directors 825,789 37.4 825,789 33.6
as a group (6 persons)
</TABLE>
- -------------------------
(1) The Company has adopted a stock option plan and proposes to grant
options to this officer in an as yet undetermined amount or exercise
price.
(2) These shares are held in joint tenancy with right of survivorship by C.
O. Sage and Carol E. Sage, husband and wife, who own 222,292 shares in
the aggregate.
(3) Of these shares, 240,000 are held of record in three trusts, the
beneficiaries of which are descendants of Mr. Frates.
Directors, Executive Officers and Significant Employees.
- -------------------------------------------------------
Set forth below are the names, and terms of office of each of the directors,
executive officers and significant employees of both the Company and TechLite
Applied Sciences and a description of the business experience of each.
43
<PAGE>
<TABLE>
<CAPTION>
TechLite Applied Sciences:
Office Held Term of
Person Office Since Office
------ ------ ----- ------
<S> <C> <C>
J. D. Arvidson, 60 Chief Executive Officer and 1992 1999
Director
John F. Bodkin, 60 President, Chief Financial Officer 1997 1999
and Director
C. O. Sage, 65 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
The Company.
Office Held Term of
Person Office Since Office
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.
John F. Bodkin.
--------------
Mr. Bodkin has more than 36 years' experience in corporate management and
marketing. Prior to joining the Company in February 1997, he was self-employed
as a business consultant from 1992 to 1994, and from July 1994 until the present
he has served as the Chief Executive Officer of Logistech, Inc., a software
development company specializing in import and export software, maquiladora
manufacturing, and international trade. Mr. Bodkin presently serves full time
with TechLite Applied Sciences. His duties with Logistech, Inc. do not involve a
substantial amount of his time.
C. O. Sage.
----------
Mr. Sage has more than 25 years' experience in various agriculture-related
businesses, one being the building and management of a 35,000-head cattle
feeding business. He served for almost ten years as Assistant to the State
Treasurer of Oklahoma in charge of the operations of the State Treasurer's
office. Mr. Sage
44
<PAGE>
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.
Mark G. Galvin.
--------------
Mr. Galvin received a Master of Business Administration degree from
Oklahoma State University in 1994. Prior to joining the Company in May 1993 and
while still a student, he designed and developed custom software. He is the
co-developer of the Company's software which automated the presentation
materials of the Company and its lighting survey functions. He served as the
project manager for the Oral Roberts University and Edmond, Oklahoma public
schools lighting projects, which were completed ahead of schedule and below
budget. He presently serves as the project manager of the Company's Tulsa,
Oklahoma Public Schools project.
Lee Arehart.
-----------
Prior to joining the Company in 1993, Mr. Arehart was the owner of
businesses involved in retail management, recreational facility management, and
franchise operations.
The Company.
-----------
Albert L. Welsh.
---------------
Mr. Welsh received a bachelor of arts degree in 1953 from the University of
Oklahoma and a master of business administration degree in 1958 from Stanford
University. From 1958 until 1963 he was a financial analyst for Ford Motor
Company in Dearborn, Michigan. From 1967 until 1970 he was a partner and
principal of Parker Bishop & Welsh, an NASD-member broker-dealer and
underwriter. From 1970 to 1974 he was a private investor. From 1974 through 1985
he was a real estate developer. From 1986 to 1989 he was a registered investment
adviser. From 1989 to 1991 he was an investor in SuperCorp Inc. From 1991 until
the present he has been the Oklahoma City, Oklahoma branch manager of Birchtree
Financial Services, Inc., a Kansas City, Missouri-based broker-dealer firm with
approximately 75 offices. In 1997 he also began to serve as president of
SuperCorp Inc.
45
<PAGE>
Remuneration of Directors and Officers.
- --------------------------------------
The Company.
-----------
Mr. Welsh, the sole officer and director of the company, has received and
is receiving no compensation for his services for the Company. No compensation
is proposed to be paid to any officer or director of the Company prior to the
proposed Merger with TechLite Applied Sciences.
TechLite Applied Sciences.
-------------------------
The directors of TechLite Applied Sciences receive no compensation for
their services as directors. The officers of TechLite Applied Sciences received
from it an aggregate of $229,537 of compensation in the last fiscal year for
their services in all capacities. Should the Merger be effected, they shall
become the officers of the post-merger Company.
Mr. Arvidson, the chief executive officer of TechLite Applied Sciences,
receives a salary of $6,667 a month. Mr. Bodkin, the president, receives a
salary of $6,000 a month.
Employment Contracts.
--------------------
TechLite Applied Sciences has no employment contracts with any employees.
Stock Options.
-------------
The Company has adopted a stock option plan ("the Plan") which shall
survive the Merger, the major provisions of which Plan are as follows:
The directors of the Company have adopted a "1998 Stock Option Plan"
pursuant to which options granted under the plan may be incentive stock options
as defined under Section 422 of the Internal Revenue Code or non-qualified stock
options, as determined by the Option Committee of the board of directors at the
time of grant of an option and subject to the applicable provisions of Section
422 of the Internal Revenue Code and regulations promulgated thereunder. The
Plan enables the Option Committee of the board of directors to grant up to
250,000 stock options to employees and consultants from time to time. As of the
date of this Offering Circular, the Option Committee has granted no options.
Certain Relationships and Related Transactions.
- ----------------------------------------------
Company's Transactions with Insiders and Promoters.
--------------------------------------------------
The following persons may be deemed to be "insiders" and "promoters" of the
Company: Albert L. Welsh and George W. Cole. Each of such persons or his spouse
has purchased 24,444 shares of Common Stock of the Company at $0.001 a share,
which shares are in addition to what will be received on a pro rata basis with
other SuperCorp
46
<PAGE>
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 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 5.8% of the issued and outstanding 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.
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
47
<PAGE>
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 is empowered
to, and may, purchase and maintain liability insurance on behalf of any person
who is or was a director, officer, employee or agent of the corporation. As a
result of such corporation law, TechLite Applied Sciences or, should the
proposed merger become effective, the Company may, at some future time, be
legally obligated to pay judgments (including amounts paid in settlement) and
expenses in regard to civil or criminal suits or proceedings brought against one
or more of its officers, directors, employees or agents, as such, with respect
to matters involving the proposed Merger or, should the Merger be effected,
matters that occurred prior to the Merger with respect to TechLite Applied
Sciences.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable.
FINANCIAL STATEMENTS INDEX
The financial statements of the Company and of TechLite Applied Sciences
appear as follows:
TechLite, Inc.
Independent Auditors' Report...................................... F-1
Balance Sheet November 6, 1998.................................... F-2
Notes to Balance Sheet November 6, 1998........................... F-3
TechLite Applied Sciences, Inc.
Report of Independent Auditors.................................... F-5
Balance Sheets as of October 31, 1998 (unaudited) and
January 31, 1998 and 1997................................ F-6
Statements of Income for the nine months ended
October 31, 1998 and 1997 (unaudited) and the
years ended January 31, 1998 and January 31, 1997........ F-7
Statements of Cash Flows for the nine months ended
October 31, 1998 and 1997 (unaudited) and
the years ended January 31, 1998 and
January 31, 1997......................................... F-8
Statements of Changes in Stockholders' Equity
for the period ended January 31, 1996 to
January 31, 1998......................................... F-9
Notes to Financial Statements.....................................F-10
48
<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 November 6,
1998. This balance sheet is the responsibility of the Company's management. Our
responsibility is to express an opinion on this balance sheet based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in
all material respects, the financial position of TechLite, Inc. as of November
6, 1998, in conformity with generally accepted accounting principles.
/S/ HOGAN & SLOVACEK
Oklahoma City, Oklahoma
November 6, 1998
F-1
<PAGE>
TECHLITE, INC.
-------------
(A Development Stage Company)
BALANCE SHEET
-------------
NOVEMBER 6, 1998
----------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash - on deposit in trust account $ 245
=====
STOCKHOLDER'S EQUITY
Preferred Stock - Authorized 10,000,000 shares,
$0.001 par value - none issued
Common Stock - 40,000,000 shares authorized,
$0.001 par value, 244,444 shares issued 245
-----
$ 245
=====
</TABLE>
The accompanying notes are an integral part
of this balance sheet.
F-2
<PAGE>
TECHLITE, INC.
-------------
(A Development Stage Company)
NOTES TO BALANCE SHEET
----------------------
NOVEMBER 6, 1998
----------------
(1) ORGANIZATION
TechLite, Inc. (the Company) was organized in accordance with the General
Corporation Act of the State of Oklahoma on June 3, 1997, for the purpose of
merging (the "Merger") with TechLite Applied Sciences, Inc. (TechLite Applied
Sciences), an Oklahoma corporation. The Company has no business operations or
significant capital and has no intention of engaging in any active business
until it merges with TechLite Applied Sciences. Should the Merger not occur, the
Company would seek other business opportunities, and if none were found, could
be dissolved within 18 months by a vote of the majority of its common
stockholders. The Company is a development-stage company organized for the
merger described below.
The sole officer and director of the Company is a 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
F-3
<PAGE>
the Company prior to the Merger will be those of TechLite Applied Sciences. Upon
completion of the proposed Merger, TechLite Applied Sciences will own 2,209,903
shares of Common Stock of the Company or 90% of its voting shares. The fiscal
year of the Company will be December 31.
F-4
<PAGE>
Independent Accountants' Report
-------------------------------
Board of Directors
TechLite Applied Sciences, Inc.
Tulsa, Oklahoma
We have audited the accompanying balance sheets of TECHLITE APPLIED SCIENCES,
INC. as of January 31, 1998 and 1997, and the related statements of income,
statements of changes in stockholders' equity, and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of TECHLITE APPLIED SCIENCES, INC.
as of January 31, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
/s/ Causon & Westhoff
---------------------
CAUSON & WESTHOFF
Tulsa, Oklahoma
June 29, 1998
F-5
<PAGE>
<TABLE>
<CAPTION>
TECHLITE APPLIED SCIENCES, INC.
BALANCE SHEETS
At October 31 At January 31
---------------------------------------------------
1998 1998 1997
-------------- -------------- -------------
(Unaudited)
ASSETS
<S> <C> <C> <C>
Cash 13,632 150,272
Accounts receivable 268,554 416,809 122,638
Inventory 33,565 46,378 22,305
Costs and estimated earnings in excess
of billings on uncompleted contracts 223,807
Property & equipment, net 682,759 184,477 91,630
New business development costs 101,124
Other assets, net 62,071 10,943 31,800
-------------- -------------- -------------
Total Assets 1,385,512 658,607 418,645
============== ============== =============
LIABILITIES
Bank overdraft 10,191
Accounts payable 537,132 312,048 289,660
Accrued wages 31,303 31,445 49,231
Taxes payable 39,096 212,521 74,444
Billings in excess of costs and estimated
earnings on uncompleted contracts 330,074 315,781
Notes payable 624,505 159,595 394,853
Other liabilities 9,849 33,055
-------------- -------------- -------------
Total Liabilities 1,241,885 1,088,929 1,123,969
-------------- -------------- -------------
EQUITY
Common stock 220,990 220,400 480
Paid-in-capital 943,263 785,296
Retained earnings(deficit) (1,020,626) (1,436,018) (705,804)
-------------- -------------- -------------
Total Equity 143,627 (430,322) (705,324)
-------------- -------------- -------------
Total Liabilities & Equity 1,385,512 658,607 418,645
============== ============== =============
</TABLE>
See Notes to Financial Statements
F-6
<PAGE>
<TABLE>
<CAPTION>
TECHLITE APPLIED SCIENCES, INC.
STATEMENTS OF INCOME
Nine Months Ended
October 31 Years Ended January 31
------------------------------- -------------------------------
1998 1997 1998 1997
------------- -------------- -------------- -------------
(Unaudited)
<S> <C> <C> <C> <C>
Contract revenue earned 3,844,310 1,508,220 1,714,514 1,800,653
Cost of revenue earned 2,712,768 1,339,799 1,516,927 1,553,432
------------- -------------- -------------- -------------
Gross profit 1,131,542 168,421 197,587 247,221
General & administrative expenses 718,342 687,214 930,763 467,391
------------- -------------- -------------- -------------
Income from operations 413,200 (518,793) (733,176) (220,170)
Other income 2,192 2,305 2,962 205
------------- -------------- -------------- -------------
Income(Loss) before taxes 415,392 (516,488) (730,214) (219,965)
------------- -------------- -------------- -------------
Provision for income taxes 0 0 0 0
------------- -------------- -------------- -------------
Net Income(Loss) 415,392 (516,488) (730,214) (219,965)
============= ============== ============== =============
Net Income(Loss) per common share 0.19 (0.33)
============= ==============
</TABLE>
See Notes to Financial Statements
F-7
<PAGE>
<TABLE>
<CAPTION>
TECHLITE APPLIED SCIENCES, INC.
STATEMENTS OF CASH FLOWS
Nine Months Ended
October 31 Years Ended January 31
------------------------------- -------------------------------
1998 1997 1998 1997
------------- -------------- -------------- -------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C> <C>
Net income 415,392 (516,488) (730,214) (219,965)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 47,996 27,850 40,983 10,064
Decrease (increase) in contract receivables 148,255 (24,896) (294,171) (122,638)
Decrease (increase) in inventory 12,813 (21,637) (24,073) (22,305)
Decrease (increase) in other assets (152,252) 11,813 20,857 (29,022)
Net increase (decrease) in billings related to
costs and estimated earnings on
uncompleted contracts (553,881) (115,781) 14,293 315,781
Increase (decrease) in accounts payable 214,893 (143,150) 32,579 260,093
Increase (decrease) in other accrued liabilities (196,773) 28,681 153,346 (9,955)
------------- -------------- -------------- -------------
Net cash provided by operating activities (63,557) (753,608) (786,400) 182,053
------------- -------------- -------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment (546,278) (110,136) (133,830) (61,826)
------------- -------------- -------------- -------------
Net cash used in investing activities (546,278) (110,136) (133,830) (61,826)
------------- -------------- -------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principle payments on notes payable (37,090) (37,033) (47,236) (60,563)
New borrowings 502,000 93,236 128,427 88,261
Sale of stock 158,557 663,767 688,767
------------- -------------- -------------- -------------
Net cash used in financing activities 623,467 719,970 769,958 27,698
------------- -------------- -------------- -------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 13,632 (143,774) (150,272) 147,925
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 0 150,272 150,272 2,347
------------- -------------- -------------- -------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD 13,632 6,498 0 150,272
============= ============== ============== =============
</TABLE>
See Notes to Financial Statements
F-8
<PAGE>
<TABLE>
<CAPTION>
TECHLITE APPLIED SCIENCES, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Additional
Common Paid-in Retained
Stock Capital Earnings Total
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 31, 1996 480 (485,839) (485,359)
NET INCOME(LOSS) (219,965) (219,965)
--------------------------------------------------------------------
BALANCE, JANUARY 31, 1997 480 (705,804) (705,324)
NET INCOME(LOSS) (730,214) (730,214)
SALE OF STOCK 93,822 594,945 688,767
DEBT/EQUITY CONVERSION 126,098 190,351 316,449
--------------------------------------------------------------------
BALANCE, JANUARY 31, 1998 220,400 785,296 (1,436,018) (430,322)
(Unaudited)
NET INCOME(LOSS) 415,392 415,392
SALE OF STOCK 590 157,967 158,557
--------------------------------------------------------------------
BALANCE, OCTOBER 31, 1998 220,990 943,263 (1,020,626) 143,627
====================================================================
</TABLE>
See Notes to Financial Statements
F-9
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Nature of Operations
- --------------------
The Company is organized as an Oklahoma corporation located in Tulsa,
Oklahoma. The Company is an energy efficient lighting specialist primarily
engaged in performing retrofits of lighting systems in commercial, educational
and health care facilities. The work is performed primarily under fixed-price
contracts. The length of the contracts vary, typically between 1 and 18 months.
Revenue Recognition
- -------------------
Revenues from fixed-price construction contracts are recognized on the
percentage-of-completion method, measured by the percentage of costs incurred to
date to estimated total costs for each contract. This method is used because the
Company considers expended costs to be the best available measure of progress on
these contracts. Because of the inherent uncertainties in estimating costs, it
is at least reasonably possible that the estimates used will change within the
near term.
Cost Recognition
- ----------------
Contract costs include all direct material, labor, and equipment costs and
those indirect costs related to contract performance such as indirect labor,
supplies, and tool costs. Provisions for estimated losses on uncompleted
contracts are made in the period in which such losses are determined. Changes in
job performance, job conditions, estimated profitability, including those
arising from contract penalty provisions, and final contract settlements may
result in revisions to costs and income and are recognized in the period in
which the revenues are determined.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally
accepted accounting principles require management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
F-10
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Depreciation
- ------------
Furniture and equipment are depreciated using the straight-line method over
the estimated useful life of each asset, which is generally from five to seven
years.
Income Taxes
- ------------
Provisions for income taxes are based on taxes payable or refundable for
the current year and deferred taxes on temporary differences between the amount
of taxable income and pretax financial income and between the tax bases of
assets and liabilities and their reported amounts in the financial statements.
Deferred tax assets and liabilities are included in the financial statements at
currently enacted income tax rates applicable to the period in which the
deferred tax assets and liabilities are expected to be realized or settled as
prescribed in FASB Statement No. 109, Accounting for Income Taxes. A valuation
allowance is established to reduce deferred tax assets if it is more likely than
not that a deferred tax asset will not be realized, as explained in Note 6. As
changes in tax laws or rates are enacted, deferred tax assets and liabilities
are adjusted through the provision for income taxes.
NOTE 2: CONTRACT RECEIVABLES
<TABLE>
<CAPTION>
Contract receivables consist of:
1998 1997
Billed ---- ----
<S> <C> <C>
Completed contracts $ 106,596 $ 19,638
Contracts in progress 310,213 103,000
--------- --------
$ 416,809 $ 122,638
========= =========
</TABLE>
Subsequent to January 31, 1998, approximately $404,000 was collected on the
outstanding receivable balance.
F-11
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 3: COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
<TABLE>
<CAPTION>
Costs, estimated earnings, and billings on uncompleted contracts are summarized
as follows:
1998 1997
---- ----
<S> <C> <C>
Costs incurred on uncompleted contracts $ 163,551 $ 1,027,003
Estimated earnings 40,888 62,568
---------- -----------
204,439 1,089,571
Billings to date 534,513 1,405,352
---------- -----------
$ (330,074) $ (315,781)
=========== ==========
Included in the accompanying balance sheet
under the following captions:
Billings in excess of costs and estimated
earnings on uncompleted contracts $ 330,074 $ 315,781
========== ==========
</TABLE>
NOTE 4: PAYROLL AND SALES TAXES PAYABLE
The Company owed the Internal Revenue Service and the Oklahoma Tax
Commission a combined total of $212,521 and $74,444 at January 31, 1998 and
1997, respectfully. The balances include current year and prior years amounts
related to payroll taxes, sales taxes, penalties and interest. Subsequent to
January 31, 1998, the Company reached a settlement agreement with the Oklahoma
Tax Commission and settled the outstanding debt in full. Additionally, the
Company has entered into a payment arrangement with the Internal Revenue
Service. The Company has made payments to the Internal Revenue Service since
January 31, 1998 in response to the payment arrangement and the outstanding debt
has been paid in full.
F-12
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
<TABLE>
<CAPTION>
NOTE 5: NOTES PAYABLE
1998 1997
---- ----
<S> <C> <C>
Unsecured notes payable, due on demand, at 10% $ 100,563 $ 75,961
Notes payable to banks, collateralized by equipment, due
in monthly installments plus interest through
March 2000, at 10% to 12% 49,607 18,545
Shareholder notes receivable, various loans made in
association with stock purchases, at 10% 225,179
---------- ---------
$ 150,170 $ 319,685
========== =========
Aggregate annual maturities of long-term debt at January 31, 1998, are:
1999 $ 123,669
2000 24,885
2001 1,616
---------
$ 150,170
=========
</TABLE>
NOTE 6: INCOME TAXES AND DEFERRED INCOME TAXES
Based on the Company's reoccurring net operating losses it appears it is
more likely than not that the deferred tax asset created by the net operating
losses may not be realized. Therefore, a 100% allowance has been applied to the
net deferred tax asset.
There is no provision for income taxes included in these financial
statements. The net operating losses will be carried forward.
<TABLE>
<CAPTION>
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:
1998 1997
---- ----
<S> <C> <C>
Computed at the statutory rate of 34% $ (248,272) $ (74,788)
Increase (decrease) in tax resulting from:
Net operating loss carryforward 248,272 74,788
---------- ---------
$ 0 $ 0
========== =========
</TABLE>
F-13
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 7: DEBT TO EQUITY CONVERSION
During 1993, the Company borrowed funds in conjunction with a private stock
offering. The simultaneous stock purchases and borrowings were evidenced by a
document entitled Stock Sale and Stockholder's Agreement, which gave preemptive
shareholder rights to each person who subscribed for stock and loaned money to
the Company. The Board of Directors of the Company recognized that the
preemptive shareholder rights inhibited any significant expansion of the Company
and prevented it from raising funds from the public through the stock market.
All stockholders recorded at January 31, 1997 were requested to exchange (1)
their promissory notes of the Company and (2) their preemptive shareholder
rights for additional shares of common stock in the Company. $316,449 of
outstanding debt and accrued interest was converted to equity as a result of
this transaction.
NOTE 8: BACKLOG
The following schedule summarizes changes in backlog on contracts during
the years ended January 31, 1998 and 1997. Backlog represents the amount of
revenue the Company expects to realize from work to be performed on uncompleted
contracts in progress at year end and from contractual agreements on which work
has not yet begun.
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Backlog, beginning of year $ 823,540 $ 0
New contracts during the year 1,485,954 2,624,193
Contract adjustments 0 0
---------- ----------
2,309,494 2,624,193
Less contract revenues earned during the year 1,714,514 1,800,653
---------- ----------
Backlog, end of year $ 594,980 $ 823,540
========== ==========
</TABLE>
The Company entered into additional contracts with estimated revenues of
$3,315,000 between February 1, 1998 and June 29, 1998.
F-14
<PAGE>
TECHLITE APPLIED SCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998 AND 1997
NOTE 9: PROPERTY AND EQUIPMENT (UNAUDITED)
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 was $84,028 and $43,045 at January 31, 1998 and 1997,
respectfully. Accumulated depreciation was $132,024 at October 31, 1998.
NOTE 10: OTHER ASSETS (UNAUDITED)
At October 31, 1998, the Company recorded $62,071 as other assets. Other
assets consist of organizational costs, purchased licenses, and other
miscellaneous amortizable capital expenditures.
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
A-1
<PAGE>
Corporation from and after the Effective Date, who shall hold office subject to
the provisions of the Articles of Incorporation and Bylaws of the Surviving
Corporation, until their successors are duly elected and qualified.
4. Officers.
--------
The officers of TechLite Applied Sciences on the Effective Date shall
become the officers of the Surviving Corporation from and after the Effective
Date, subject to such powers with respect to the designation of officers as the
directors of the Surviving Corporation may have under its Articles of
Incorporation and Bylaws.
5. Manner of Conversion.
--------------------
The manner of converting the shares of capital stock of the Constituent
Corporations into shares of the Surviving Corporation shall be as follows:
5.1. The shares of capital stock of TechLite Applied Sciences
which shall be issued and outstanding on the Effective Date shall, on the
Effective Date, be cancelled and exchanged for 2,209,903 shares of Common Stock
("the Merger Shares") of the Company.
5.2. There shall be 195,556 shares of Common Stock, $0.001 par
value, of the Company issued and outstanding prior to the Effective Date ("the
Spinoff Shares") and held of record by SuperCorp, which shares shall, on the
Effective Date, continue to be outstanding and which shall have been distributed
by the record holder thereof, SuperCorp, to its 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>
Common None 40,000,000 $0.001
Preferred To be designated 10,000,000 $0.001
by the directors
</TABLE>
A-2
<PAGE>
6.3 As of the Effective Date but immediately before giving
effect to the Merger, the Company has outstanding capital as follows: 244,444
shares of Common Stock, $0.001 par value. No other shares, options, warrants or
any rights to acquire the Company's capital stock will be issued and outstanding
as of the Effective Date but immediately before giving effect to the Merger. The
shares of Common Stock to be issued in connection with the Merger, when issued,
delivered and sold, will be duly and validly issued and outstanding, fully paid
and non-assessable, will not have been issued in violation of or subject to any
preemptive or similar rights and will be free from any lien, charge, encumbrance
or other security interest or third party right or interest.
6.4 The Company has no liabilities or obligations, whether
absolute, contingent or otherwise.
6.5 As of the Effective Date, the financial statements of the
Company shall not vary in any particular from the Company's financial statements
that appear in the registration statement described in paragraph 7 below.
6.6 As of the Effective Date, the Merger and the Agreement
will have been duly authorized and approved by the Company's directors and
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.
A-3
<PAGE>
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 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>
Post-Effective Amendment and Prospectus Stickers Concerning Proposed
---------------------------------------------------------------------------
Merger.
- ------
Should the proposed merger described herein be approved by the requisite
stockholder vote and become effective, the Company will file a supplement to the
Prospectus, and insert a box on the front cover of all copies of the Prospectus,
in which box will be the effective date of the merger.
UNTIL _____________________, 1999 (90 DAYS AFTER THE EFFECTIVE DATE OF
THE MERGER), ALL U.S. 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 $46,050 incurred in connection with the proposed
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
Escrow agent's fee 500
Filing expenses (EDGAR) 4,000
Stock transfer agent's fee 4,000
Printing and engraving 9,000
Postage 5,400
Legal 29,000
Accounting and auditors 4,000
Moody's OTC Industrial Manual
publication fee 2,300
--------
Total Expenses $ 58,250
</TABLE>
Indemnification of Directors and Officers.
- -----------------------------------------
There is set forth in the Prospectus under "Terms of the Transaction
- -Indemnification for Securities Act Liabilities" a description of the laws of
the State of Oklahoma with respect to the indemnification of officers,
directors, and agents of corporations incorporated in the State of Oklahoma.
Both the Company and TechLite Applied Sciences, Inc. have articles of
incorporation and bylaws provisions that insure or indemnify, to the full extent
allowed by the laws of the State of Oklahoma, directors, officers, employees,
agents or persons serving in similar capacities in other enterprises at the
request either of the Company or TechLite Applied Sciences, Inc., as the case
may be.
To the extent of the indemnification rights provided by the State of
Oklahoma statutes and provided by the Company's and TechLite Applied Sciences,
Inc.'s articles of incorporation and bylaws, and to the extent of TechLite
Applied Sciences, Inc.'s and the Company's abilities to meet such
indemnification obligations, the officers, directors and agents of TechLite
Applied Sciences, Inc. or the Company would be beneficially affected.
Recent Sales of Unregistered Securities.
- ---------------------------------------
On May 29, 1997, the Registrant issued 195,556 shares of its Common Stock
to its corporate parent, SuperCorp, Inc., an Oklahoma
II-1
<PAGE>
corporation, for a cash consideration of $196, or $0.001 a share, and on May 29,
1997, issued 24,444 shares of its Common Stock to Albert L. Welsh and 24,444
shares of its Common Stock to George W. Cole for a cash consideration of $49, or
$0.001 a share.
Services Rendered by Insiders.
- -----------------------------
Mr. Welsh and Mr. Cole may be deemed to be "insiders" or "promoters" in
connection with the purchase by each of 24,444 shares of Common Stock of the
Registrant for $24.50, or $0.001 a share. Each also performed services for the
Registrant and SuperCorp Inc.
Mr. Welsh's and Mr. Cole's services consisted of introducing TechLite
Applied Sciences to SuperCorp in early 1997 and in advising TechLite Applied
Sciences of the advantages to it of entering into the Agreement of Merger with
the Company (see "Appendix A - Agreement of Merger").
There was no underwriter, and none of the above-described securities were
offered to any persons other than the present holders of these securities.
The securities were not registered under the Securities Act of 1933 in
reliance upon the exemption from registration provided by Section 4(2) of the
Securities Act and by Regulation D, Rule 506.
Exhibits and Financial Statement Schedules.
- ------------------------------------------
Separately bound but filed as part of this Registration Statement are the
following exhibits:
Exhibit Item
------- ----
2 - Agreement of Merger of October 16, 1998,
between TechLite, Inc. and TechLite Applied
Sciences, Inc.*
3.1 - Articles of Incorporation of TechLite, Inc.*
3.2 - Bylaws of TechLite, Inc.*
3.3 - Amended Articles of Incorporation of
TechLite Applied Sciences, Inc.*
3.4 - Bylaws of TechLite Applied Sciences, Inc.*
5 - Opinion of Thomas J. Kenan, Esq., as to the
legality of the securities covered by the
Registration Statement.*
8 - Opinion of Thomas J. Kenan, Esq., as to tax
matters and tax consequences.*
II-2
<PAGE>
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.
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.
23.8 - Consent of Hogan & Slovacek, independent
auditors of TechLite, Inc.
27 - Financial Data Schedule.*
* Previously filed with Form SB-2; incorporated herein.
II-3
<PAGE>
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.
3. File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
4. File a post-effective amendment to the registration
statement to include any financial statements required by Regulation 210.3-19
under the Securities Act of 1933 at the start of a delayed offering or
throughout a continuous offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 ("the Act") may be permitted to directors, officers and controlling
persons of TechLite, Inc. pursuant to the foregoing provisions, or otherwise,
TechLite, Inc. has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by TechLite,
Inc. of expenses incurred or paid by a director, officer or controlling person
of TechLite, Inc. in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, TechLite, Inc. will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
TechLite, Inc. hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject to and included in the
Registration Statement when it became effective.
II-4
<PAGE>
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: February 9, 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: February 9, 1999 /s/ Albert L. Welsh
---------------------------------
Albert L. Welsh, president, sole
director, principal financial
officer, and authorized
representative of the Registrant
II-5
JOHN F. BODKIN
6106 E. 32nd Place, Suite 101
Tulsa, OK 74135
Albert L. Welsh, President
TechLite, Inc.
4334 N.W. Expressway, Suite 202
Oklahoma City, OK 73116
Dear Mr. Welsh:
The undersigned consents to serve as a director of TechLite, Inc. should the
proposed merger between it and TechLite Applied Sciences, Inc. be approved and
effected. Further, the undersigned consents to being named in Form SB-2 and Form
S-4 Registration Statements filed with the Securities and Exchange Commission as
a person who will so serve as a director.
Sincerely,
/s/ John F. Bodkin
------------------
John F. Bodkin
Dated: January 13, 1999
Exhibit 23.4
Page 1 of 1 Page
CAUSON & WESTHOFF
Certified Public Accountants
1707 South Canton Avenue
Tulsa, OK 74112
918-747-4870
Fax 918-747-4996
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated June 29, 1998, with respect to
the financial statements of TechLite Applied Sciences, Inc. included in two
Registration Statements (Amendment No. 1 to Form SB-2 and Amendment No. 1 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
February 9, 1999
Exhibit 23.7
HOGAN & SLOVACEK
A Professional Corporation
Certified Public Accountants
Harvey Parkway
301 N.W. 63rd, Suite 290
Oklahoma City, OK 73116
Office (405) 848-2020 Fax (405) 848-7359
INDEPENDENT AUDITOR'S CONSENT
We consent to the use of our report dated November 6, 1998, with respect to
the financial statements of TechLite, Inc. included in two Registration
Statements (Amendment No. 1 to Form SB-2 and Amendment No. 1 to Form S-4) of
TechLite, Inc.
/s/ Hogan & Slovacek
--------------------
HOGAN & SLOVACEK
Oklahoma City, Oklahoma
February 8, 1999
Exhibit 23.8
