<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1999 Commission file number 1-12462
TRI-LITE, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2515309
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
2701 Junipero Street, Signal Hill, California 90806
(Address of principal executive offices)
(562) 426-8622
(Registrant's telephone number, including area code)
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 12 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 ___X___ No______
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by section 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes__X___ No______
Indicate the number of shares outstanding at each of the issuer's
classes of common stock; as of the latest practicable date: 4,928,948 shares of
common stock as of March 31, 1999
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INDEX
PART I. FINANCIAL INFORMATION PAGE #
Item 1. Financial Statements
Statement of Operations 3
Balance Sheets 4
Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About
Market Risk. 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities and Use of Proceeds - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - none 9
Item 6. Exhibits and Reports on Form 8-K 9
2
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TRI-LITE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
March 31,
---------------------------
1999 1998
---------- ----------
REVENUES $1,400,854 $1,194,900
---------- ----------
COST AND EXPENSES
Cost of Sales 697,241 454,500
Selling, general and administrative 538,790 569,100
Chapter 11 administrative cost -- --
Interest and factoring cost 42,874 38,800
---------- ----------
1,278,905 1,062,400
---------- ----------
OTHER INCOME (EXPENSES)
Interest income -- --
Other 3,313 --
---------- ----------
3,313 --
---------- ----------
INCOME BEFORE PROVISION FOR INCOME TAX 125,262 132,500
Provision for income tax 13,750 --
---------- ----------
NET INCOME $ 111,512 $ 132,500
========== ==========
EARNINGS PER COMMON SHARE (Note 1):
Primary $ 0.03 $ 0.03
---------- ----------
Fully Diluted $ 0.03 $ 0.03
---------- ----------
The accompanying notes are an integral part of these statements
3
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TRI-LITE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
1999 December 31,
(Unaudited) 1998
------------ ------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 79,819 $ 22,594
Accounts receivable, net 657,118 561,579
Inventories 606,152 587,300
Other current assets 47,423 41,746
------------ ------------
Total current assets 1,390,512 1,213,219
------------ ------------
Property and Equipment
Machinery and equipment 1,214,796 1,210,127
Leasehold improvement 338,152 338,152
------------ ------------
1,552,948 1,548,279
Less: accumulated depreciation and
amortization (1,372,542) (1,360,882)
------------ ------------
Net property and equipment 180,406 187,397
Other Assets 130,086 148,477
------------ ------------
Total Assets $ 1,701,004 $ 1,549,093
============ ============
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current Liabilities
Accounts payable and accrued expenses $ 1,604,338 $ 1,536,574
Notes payable and long-term debt-current (Note 2) 553,957 343,226
Note payable - related party (Note 3) 97,741 95,991
------------ ------------
Total current liabilities 2,256,036 1,975,791
Long Term Liabilities
Liabilities Subject to Compromise 5,721,602 5,721,602
Notes payable and long term debt-less current (Note 2) 339,578 565,962
Note payable to Helionetics Inc., Official
Committee of Unsecured Creditors (Note 3) 799,038 800,000
Note payable - related party (Note 3) 500,000 500,000
------------ ------------
Total liabilities 9,616,254 9,563,355
------------ ------------
Deferred Income 145,833 158,333
------------ ------------
Commitments and Contingencies
Stockholders' Equity (Deficit):
Common Stock-no par value; 25,000,000 shares authorized,
4,928,948 shares issued and outstanding at
March 31, 1999 and December 31, 1998 11,973,048 11,973,048
Contributed capital 1,127,290 1,127,290
Accumulated deficit (21,161,421) (21,272,933)
------------ ------------
Total Stockholders' equity (deficit) (8,061,083) (8,172,595)
------------ ------------
Total Liabilities and Stockholders' Equity
(Deficit) $ 1,701,004 $ 1,549,093
============ ============
</TABLE>
The accompanying notes are an integral part of these statements
4
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TRI-LITE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 111,512 $ 132,500
Adjustment to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 11,660 9,700
Interest 29,826 --
Deferred revenue (12,500)
Net change in operating assets and liabilities (67,952) (17,600)
--------- ---------
Net cash provided by (used in) operations 72,546 124,600
--------- ---------
Cash flow from investing activities:
Purchase of property and equipment (4,670) (9,900)
Other assets 18,391 43,200
Other 6,815 --
--------- ---------
Net cash provided by (used in) investing 20,536 33,300
activities
--------- ---------
Cash flow from financing activities:
Net borrowings (payments) to line of credit, net (7,034) --
Payments on notes payable (30,573) --
Payments on note payable-related, net 1,750 (15,300)
Other (18,400)
--------- ---------
Net cash provided by (used in) financing (35,857) (33,700)
activities
--------- ---------
Net change in cash and cash equivalents 57,225 124,200
Cash and cash equivalents, at beginning of period 22,594 84,000
========= =========
Cash and cash equivalents, at end of period $ 79,819 $ 208,200
========= =========
Supplemental Cash Flow Information:
Cash payments for:
Interest $ 13,048 $ 23,800
Taxes $ -- $ --
</TABLE>
The accompanying notes are an integral part of these statements
5
<PAGE>
TRI-LITE AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Summary of Significant Accounting Policies
The unaudited consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
and are unaudited except for the balance sheet as of December 31, 1998. Certain
information and footnote disclosures normally included in the financial
statements have been condensed or omitted pursuant to such rules and
regulations. It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's latest annual report on Form 10-K. In the opinion of management the
accompanying financial statements contain all adjustments necessary to present
fairly the Company's financial position and the results of operations for the
periods presented. The results of operations for the three months ended March
31, 1999 are not necessarily indicative of the results to be expected for the
full year.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of the Company and its subsidiaries. Upon consolidation all material
intercompany transactions and accounts have been eliminated.
Inventories
Inventories are valued at the lower of cost (first-in, first-out
method) or market.
Earnings per share
The Company follows Statement of Financial Accounting Standards No. 128
when calculating earnings per share and is calculated by dividing income
available to common stockholders by the weighted average number of common shares
outstanding for the period.. There were no common stock equivalents for the
period. Weighted average shares are as follows:
March 31,
-------------------------
1999 199
--------- ---------
4,928,948 4,000,000
(2) Notes Payable
Notes payable at March 31, 1999 and December 31, 1998 consisted of the
following:
March 31, December 31,
1999 1998
--------- ---------
Advances from FC Commercial for an accounts
receivable purchasing facility at prime rate
plus 6% $ 310,334 $ 317,368
Installment contract payable at 9.15% interest
at $2,873 per month 17,239 25,858
Payable to Self Powered Lighting creditors,
due in installments of $226,384 in January 2000;
$113,192 in 2001; $113,192 in 2002; $133,194 in
2003, bearing interest at the bank prime rate
plus 2% 565,962 565,962
--------- ---------
$ 893,535 $ 909,188
Less: Current portion (553,957) (343,226)
========= =========
$ 339,578 $ 565,962
========= =========
6
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(3) Note Payable-related parties
Pursuant to the Helionetics bankruptcy proceedings, the Helionetics,
Inc. Official Committee of Unsecured Creditors (Helionetics Committee) entered
into a settlement agreement with the Company, Ms. Susan Barnes and her
affiliates, and Bernard B. Katz and in connection therewith the Company issued a
senior secured promissory note in the amount of $800,000 in favor of the
Helionetics Committee and secured junior subordinated promissory note in the
amount of $500,000 in favor of Ms. Susan Barnes. Both notes bear interest at
10.5% and 10% respectively and are subordinated to any new financing that the
Company may require. The senior note is payable in installments of $7,318 per
month for a period of five years, with a final balloon payment in December 2003.
No payment can be made on the junior note until the senior note is paid in full.
Ms Barnes loaned the Company in 1997 and 1998 a total of approximately $248,400.
At March 31, 1999 and December 31, 1998 such loan had an outstanding balance of
$97,741 and $95,991, respectively. The loan bears interest at the prime rate
plus 2% and is due on demand.
(4) Income Taxes
The Company accounts for income taxes under the liability method, which
requires recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the difference between the financial
statements and tax basis of assets and liabilities using enacted tax rates in
effect for the year in which the difference are expected to reverse.
The income tax expense for March 31, 1999 is comprised of $12,500 state
income tax and $1,250 of foreign tax. No provision for federal income tax was
provided for the period as a result of the Company's net operating loss
carryforwards.
(5) Plan of Reorganization
On January 16, 1997, the Bankruptcy Court approved the Tri-Lite Plan of
Reorganization with Helionetics, Inc. (Helionetics) and Susan Barnes as
co-proponents. In April 1997, Helionetics filed a voluntary petition under
Chapter 11 of the Bankruptcy Code. As a result, the funding of the Company's
reorganization plan was combined with that of Helionetics. The Helionetics
Liquidating Plan, which included the provisions and methodology to fund the
Tri-Lite plan, were approved by the Bankruptcy Code on December 23, 1998.
Following were significant provisions of the plan:
o The Company issued 4,000,000 "new" shares replacing pre-petition
common shares, with 82,5% of its "new" shares going to Susan Barnes in
exchange for her agreement to forgo any claims on her approximately
$4.3 million secured claim against Helionetics. 12.5% "new" shares, or
500,000, were issued to the "old" shareholders and 5% , or 200,000
shares were issued to the Helionetics Committee of Unsecured Creditors
(Helionetics Committee).
o The unsecured creditors of the Company will receive up to 47% of their
allowed claims in cash. The actual disbursement is subject to the
finalized Helionetics Bankruptcy Plan.
o Helionetics forgave its $1,800,000 note receivable and related accrued
interest due from the Company.
o The Company issued two secured interest bearing promissory note to the
Helionetics Committee ($800,000) and to Susan Barnes ($500,000).
o Helionetics tendered its holdings of AIM Energy, Inc. to the Company.
7
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TRI-LITE, INC. AND SUBSIDIARIES
Item 2. Management Discussion and Analysis of Financial Condition and results of
operations
Liquidity and Capital Resources
As discussed in the Form 10-K for the year ended December 31, 1998, the
Company continued to rely on its internal cash flow to fund its operations. This
source of liquidity while sufficient for its current operating plan , may not be
sufficient to support the increase in its customer backlog and thereby risk the
possibility of losing some customer orders. Moreover, AIM will require $250,000
in its effort to reduce the cost of its AIM products to further compete in the
marketplace and increase its market share. The Company will attempt to tap the
equity market for this additional working capital needs.
Working capital at March 31, 1999 were a deficit of $865,524, which
deficit included $226,384 of installments due in the first quarter of 2000 to
SPL creditors. Excluding this installments, the working capital deficit at March
31, 1999 decreased by $123,360 from December 31, 1998. Working capital deficit
at December 31, 1998 totaled $762,500. Receivable and inventories, a significant
component of working capital, increased by approximately $114,000 at March 31,
1999. Trade payable and accrued expenses declined by approximately $68,000 from
the 1998 year-end.
No significant capital expenditures are planned in the remainder of
1999.
The balance of the liabilities subject to compromise totaling
$5,721,602, which represented the liabilities stayed as a result of the
Company's Chapter 11 proceedings, is expected to be recognized partly as a gain
and as a contribution to capital by Helionetics. This recognition is expected to
be realized in 1999.
Year 2000 Issues - As described more fully in the Company's Form 10-K,
the Company does not have a major year 2000 problems due to the nature of its
products. It would require approximately $30,000 to update its hardware and
management system software to comply with the year 2000 issues.
Results of Operations
Revenues for the three months ended March 31, 1999 and 1998 were
$1,400,800 and $1,194,900, respectively. Excluding the effect of the sale to
Shindengen Corporation (Shindengen) of $270,000, revenues increased by
approximately $425,000. SPL reported revenues of $1,139,000 in 1999 of the same
period compared with $856,000 in 1998 or an increase of $283,000. AIM Energy's
revenues for the quarter ended 1999 and 1998 were $260,900 and $339,100.
Excluding the sale to Shindengen AIM reported an increase in revenue in 1999 of
approximately $121,700 over the same period in 1998.
Cost of sales for March 31, 1999 and 1998 were 49.7% and 38%,
respectively. Excluding the effect of the sale to Shindengen, cost of sales was
45.6% in 1998.
Selling, general and administrative expenses were $538,790 for the
three months ended March 31, 1999 compared with $569,100 in the same period in
1998, or a decrease of $30,310.
The interest expense, primarily, relate to the two secured promissory
note of $800,000 and $500,000; and also interest accrued from the SPL payable to
creditors.
Income tax provision relate to estimated state income tax and foreign
tax applicable to the Shindengen deferred revenue.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company does not have any market risk sensitive instrument at March
31, 1999.
8
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TRI-LITE, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 5. Other Information
Jack Katz resigned as a director of the Company effective May 10, 1999.
Mr. Katz is the CEO of Self Powered Lighting, Inc., a wholly owned subsidiary of
the Company. On May 6, 1999, Mr. Ernest Dageford resigned as a director of the
Company. Mr. Katz and Dageford continued to be the President of their respective
Company's. The resignation is consistent with the Company's desire to have
"outsiders" as members of the board of directors.
On April 23, 1999, the board of directors granted a 50,000 stock option
to Mr. Fred de Boom, a member of the board. The option is exercisable at $0.09
per share and vest 25,000 one year from April 23, 1999 and 25,000 two years from
April 23, 1999.
Item 6. Exhibits and Reports on Form 8-K
No Form 8-K has been filed since the last Form 10-K.
9
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRI-LITE, INC.
Date: May 13, 1999 /s/ E. MAXWELL MALONE
---------------------
E. MAXWELL MALONE
President and Chief Executive Officer
Date: May 13, 1999 /s/ ADRIAN CAYETANO
-------------------
ADRIAN CAYETANO
Chief Accounting Officer
10
