U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
TechLite, Inc.
(Exact name of registrant as specified in its charter)
Oklahoma 333-68071 73-1522114
- -------------- ----------------------- --------------
(state of (Commission File Number) (IRS Employer
incorporation) I.D. Number)
6106 East 32nd Place, Suite 101
Tulsa, OK 74135
918-664-1441
-------------------------------------------------------
(Address and telephone number of registrant's principal
executive offices and principal place of business)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ___ No X (The registrant became
subject to filing requirements on September 13, 1999.)
As of October 31, 1999, there were 2,454,347 shares of the Registrant's
Common Stock, par value $0.001 per share, outstanding.
Transitional Small Business Disclosure Format (check one): Yes ___ No X
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
2
<PAGE>
TECHLITE, INC.
BALANCE SHEETS
As of the nine months ended
October 31, 1999 and the twelve months ended January 31, 1999
<TABLE>
<CAPTION>
October 31, 1999 January 31, 1999
(Unaudited) (Audited)
------------------- -------------------
<S> <C> <C>
ASSETS
Cash 319 19,162
Accounts receivable 1,458,463 831,822
Inventory 33,512 41,185
Property & equipment
Equipment 212,172 162,058
Furniture and fixtures 32,108 24,045
Building and land 400,000 400,000
Leasehold improvements 56,227 52,252
Autos and trucks 213,360 191,790
------------------- -------------------
913,867 830,145
Less accumulated depreciation 223,829 148,665
------------------- -------------------
690,038 681,480
------------------- -------------------
Other assets, net 6,746 7,240
------------------- -------------------
Total Assets 2,189,078 1,580,889
=================== ===================
LIABILITIES
Accounts payable 843,621 380,543
Accrued wages 8,998 29,132
Taxes payable 205,949 97,110
Billings in excess of costs and estimated
earnings on uncompleted contracts 66,545 96,337
Notes payable 1,997,153 1,341,011
Other liabilities 84,233 58,665
------------------- -------------------
Total Liabilities 3,206,499 2,002,798
------------------- -------------------
EQUITY
Common stock, $.001 par value 2,210 2,210
Paid-in-capital 1,378,048 1,378,048
Retained earnings(deficit) (2,397,679) (1,802,167)
------------------- -------------------
Total Equity (1,017,421) (421,909)
------------------- -------------------
Total Liabilities & Equity 2,189,078 1,580,889
=================== ===================
</TABLE>
See Notes to Financial Statements
3
<PAGE>
TECHLITE, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 31 October 31
------------------ ------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Contract revenue earned 783,838 1,255,268 2,560,402 3,844,310
Cost of revenue earned 625,542 868,779 1,920,454 2,712,768
-------------- -------------- -------------- --------------
Gross profit 158,296 386,489 639,948 1,131,542
General & administrative expenses 225,015 305,287 1,257,174 718,342
-------------- -------------- -------------- --------------
Income(Loss) from operations (66,719) 81,202 (617,226) 413,200
Other income 5,543 0 21,714 2,192
-------------- -------------- -------------- --------------
Income(Loss) before taxes (61,176) 81,202 (595,512) 415,392
Provision for income taxes 0 0 0 0
-------------- -------------- -------------- --------------
Net Income(Loss) (61,176) 81,202 (595,512) 415,392
============== ============== ============== ==============
Net Income(Loss) per common share (0.03) 0.04 (0.27) 0.19
============== ============== ============== ==============
</TABLE>
See Notes to Financial Statements
4
<PAGE>
TECHLITE, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
October 31, 1999 October 31, 1998
(Unaudited) (Unaudited)
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) (595,512) 415,392
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 78,796 47,996
Decrease (increase) in contract receivables (626,641) 148,255
Decrease (increase) in inventory 7,673 12,813
Decrease (increase) in other assets/receivables (3,138) (152,252)
Net increase (decrease) in billings related to
costs and estimated earnings on
uncompleted contracts (29,792) (553,881)
Increase (decrease) in accounts payable 463,078 214,893
Increase (decrease) in other accrued liabilities 114,273 (196,773)
---------------- ----------------
Net cash provided by operating activities (591,263) (63,557)
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment (83,722) (546,278)
---------------- ----------------
Net cash used in investing activities (83,722) (546,278)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principle payments on notes payable (985,780) (37,090)
New borrowings 1,641,922 502,000
Sale of stock 0 158,557
---------------- ----------------
Net cash used in financing activities 656,142 623,467
---------------- ----------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (18,843) 13,632
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 19,162 0
---------------- ----------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD 319 13,632
================ ================
</TABLE>
See Notes to Financial Statements
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: 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
healthcare 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.
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.
6
<PAGE>
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 3. As changes in
tax laws or rates are enacted, deferred tax assets and liabilities are adjusted
through the provision for income taxes.
NOTE 2: PROPERTY AND EQUIPMENT
Property and equipment consist of buildings, vehicles, equipment, furniture and
leasehold improvements. The vehicles and equipment are depreciated over five
years, furniture is depreciated over seven years, leasehold improvements are
depreciated over ten years and buildings are depreciated over 25 years.
NOTE 3: INCOME TAXES AND DEFERRED INCOME TAXES
Based on the Company's significant net operating losses it appears it is more
likely than not that the deferred tax asset created by the net operating losses
may not be realized. Therefore, a 100% allowance has been applied to the net
deferred tax asset.
There is no provision for income taxes included in these financial statements.
The net operating losses will be carried forward.
7
<PAGE>
Item 2. 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 "Item 1. Financial Statements."
Results of Operations - Third Quarter of Fiscal Year 2000 Compared to Third
---------------------------------------------------------------------------
Quarter of Fiscal Year 1999
---------------------------
Our revenues of $783,838 for the quarter ended October 31, 1999 (Q3 2000)
fell by $471,430 or 38.5 percent from revenues of $1,255,268 for the quarter
ended October 31, 1998 (Q3 1999). We have devoted a considerable amount of time,
effort and resources to marketing efforts this quarter as well as this entire
fiscal year. Our considerable efforts are now beginning to produce.
Approximately $4 million in new contracts have now been approved. In Q4 2000, we
believe additional projects will also be approved before year-end. Our efforts
have resulted in some degree of neglect by our sales department of other,
smaller opportunities. other, smaller opportunities.
Our gross margin for Q3 2000 was $158,296, or 20.1 percent, compared with
gross margin of $386,489, or 30.8 percent, for Q3 1999. This reduction of gross
margin is attributable to the smaller margin inherent in the contracts we worked
on this last quarter, such contracts being public bid contracts that generally
involve smaller margins and less revenue than negotiated contracts.
General and administrative expenses for Q3 2000 were $225,015, or 28.7
percent of revenues, compared with general and administrative expenses of
$305,287, or 24.3 percent of revenues, for Q3 1999. This increase was a
consequence of our devotion of major efforts to marketing.
We had a net loss of $61,176 for Q3 2000 compared to net income of $81,202
for Q3 1999.
Results of Operations - First Three Quarters of Fiscal Year 2000 Compared
---------------------------------------------------------------------------
to First Three Quarters of Fiscal Year 1999
-------------------------------------------
Our revenues for the nine months ended October 31, 1999 were $2,560,402, a
decrease of $1,283,908, or 33.4 percent, from revenues of $3,844,310 for the
comparable period of 1999. This nine-month drop in revenues is attributable to
the same causes for the decline of sales in Q3 2000, as set forth above.
Our gross margin for the nine months ended October 31, 1999 was $639,948,
or 25 percent, compared with gross margin of $1,131,542, or 29.4 percent for the
same period in 1998. This reduction in margin is due to
the smaller margin inherent in public bid contracts, which was a major source of
the work we performed during the first nine months of the present fiscal year.
General and administrative expenses for the nine months ended October 31,
1999 were $1,257,174, or 49.1 percent of revenues, compared
8
<PAGE>
with general and administrative expenses for the same period in 1998 of
$718,342, or only 18.7 percent of revenues. This considerable increase in
general and administrative expenses - $538,832 - during a period of $1,283,908
less revenue is attributed to our having devoted considerable time, effort and
resources to marketing efforts, particularly in Florida and Brazil.
We sustained a loss of $595,512 during the first nine months of fiscal year
2000 compared with net income of $415,392 for the first nine months of fiscal
year 1999.
Outlook
-------
This outlook section contains a number of forward-looking statements, all
of which are based on current expectations. Actual results may vary
considerably.
We anticipate obtaining contracts, as a result of our sole source marketing
efforts, for approximately $10 million in revenue in the next six to nine
months. The sole source approach has increased sale cycle time from inception to
signature. We anticipate $10 to $14 million in revenue from our effort. We
continue our market development efforts in Brazil, and our efforts are
proceeding favorably.
Our most difficult problem today is a nuisance lawsuit filed by a person
that assisted us in our negotiations in 1997 with the Tulsa, Oklahoma public
school system. He claims a commission greater than what we believe he is due. An
agreement has been reached to resolve the matter by having the project audited
to determine the actual amount owed, if any.
Management's Statement on Y2K
-----------------------------
TechLite's information technology system is Y2K compliant based on
communications with our hardware and software providers and in-house testing. We
have no non-information technology systems affecting business operations. We
have no multiple computer systems.
Third parties with whom we have material relationships have confirmed that
they expect no business interruptions. We expect no cost directly relating to
fixing Y2K issues, such as modifying software and hiring Y2K solution providers.
We estimate no material lost revenues due to Y2K issues, and we are establishing
a contingency plan.
TechLite's future results of operations and the other forward-looking
statements contained herein involve a number of risks and uncertainties. Among
the factors that could cause actual results to differ materially are the
following: inability of the Company to obtain needed additional capital, loss of
personnel - particularly chief executive officer Jim Arvidson - as a result of
accident or for health reasons, and interruptions in the supply of inventory
from manufacturers of the inventory.
9
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Item
------- ----
27 - Financial Data Schedule*
*Previously filed and incorporated herein.
(b) Reports on Form 8-K
A Form 8-K, Current Report, dated November 8, 1999, reporting events
beginning October 21, 1999, was filed November 12, 1999.
Items reported:
Item 2: Acquisition or Disposition of Assets - reporting a merger with
TechLite Applied Sciences, Inc. that became effective on October 21, 1999;
Item 4: Change in Registrant's Certifying Accountant - reporting a
change in the registrant's certifying accountant on October 22, 1999; and
Item 7. Financial Statements and Exhibits - including (a) July 31,
1999 financial statements of the business acquired and (b) pro forma
financial information reflecting the registrant's merger on October 21,
1999, with TechLite Applied Sciences, Inc.
SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
Date: February 28, 2000 TechLite, Inc.
By /s/ J.D. Arvidson
-------------------------------
J.D. Arvidson, Chief Executive
Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-START> FEB-01-1999
<PERIOD-END> OCT-31-1999
<CASH> 319
<SECURITIES> 0
<RECEIVABLES> 1,458,463
<ALLOWANCES> 0
<INVENTORY> 33,512
<CURRENT-ASSETS> 1,492,294
<PP&E> 913,867
<DEPRECIATION> 223,829
<TOTAL-ASSETS> 2,189,078
<CURRENT-LIABILITIES> 2,179,828
<BONDS> 0
0
0
<COMMON> 2,210
<OTHER-SE> (1,019,631)
<TOTAL-LIABILITY-AND-EQUITY> 2,189,078
<SALES> 783,838
<TOTAL-REVENUES> 789,381
<CGS> 625,542
<TOTAL-COSTS> 625,542
<OTHER-EXPENSES> 225,015
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44,595
<INCOME-PRETAX> (61,176)
<INCOME-TAX> 0
<INCOME-CONTINUING> (61,176)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (61,176)
<EPS-BASIC> (0.030)
<EPS-DILUTED> (0.030)
</TABLE>
