<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 June 30, 1999 Commission file number 1-12462
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TRI-LITE, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2515309
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(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
11779 Cardinal Circle, Garden Grove, CA 92843
---------------------------------------------
(Address of principal executive offices)
(714) 537-3456
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(Registrant's telephone number, including area code)
2701 Junipero Street, Signal Hill, CA 90806
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(Former name, former address and former fiscal year,
if changed since last report)
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
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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
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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 June 30, 1999
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION PAGE #
Item 1. Condensed Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements 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 9
Item 6. Exhibits and Reports on Form 8-K 9
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
TRI-LITE, INC.
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998*
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(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 86,300 $ 22,600
Accounts receivable, net 767,000 561,600
Inventories 797,000 587,300
Other current assets 91,400 41,700
------------------ -----------------
Total current assets 1,741,700 1,213,200
------------------ -----------------
Property and Equipment
Machinery and equipment 1,230,800 1,210,100
Leasehold improvement 338,200 338,200
------------------ -----------------
1,569,000 1,548,300
Less: accumulated depreciation and
amortization (1,387,400) (1,360,900)
------------------ -----------------
Net property and equipment 181,600 187,400
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Other Assets 18,200 148,500
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Total Assets $ 1,941,500 $ 1,549,100
================== =================
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
- ---------------------------------------
Current Liabilities
Accounts payable and accrued expenses $ 1,658,800 $ 1,536,600
Current portion of notes payable 554,000 343,200
Current portion of note payable - related party 56,800 96,000
------------------ -----------------
Total current liabilities 2,269,600 1,975,800
Long Term Liabilities
Liabilities Subject to Compromise 2,455,500 5,721,600
Notes payable and long term debt-less current portion 362,100 566,000
Note payable to Helionetics Inc., Official
Committee of Unsecured Creditors 798,000 800,000
Note payable - related party less current portion 500,000 500,000
Deferred income 133,300 158,300
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Total liabilities 6,518,500 9,721,700
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Commitments and Contingencies
Stockholders' (Deficit):
Common Stock-no par value; 25,000,000
shares authorized, 4,928,948 shares
issued and outstanding at June 30, 1999 and
December 31, 1998 11,973,000 11,973,000
Contributed capital 2,529,400 1,127,300
Accumulated deficit (19,079,400) (21,272,900)
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Total Stockholders' (deficit) (4,577,000) (8,172,600)
------------------ -----------------
Total Liabilities and Stockholders' (Deficit) $ 1,941,500 $ 1,549,100
================== =================
</TABLE>
*Condensed from audited Consolidated Financial Statements
The accompanying notes are an integral part of these Condensed
Consolidated Financial Statements
3
<PAGE>
TRI-LITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------- ------------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES $ 1,307,400 $ 1,306,300 $ 2,708,300 $ 2,501,200
----------------- ----------------- ---------------- ----------------
COST AND EXPENSES
Cost of Sales 470,900 655,100 1,168,100 1,109,600
Selling, general and administrative 529,900 503,700 1,068,700 1,072,800
Interest and factoring cost 60,900 41,600 103,800 80,400
----------------- ----------------- ---------------- ----------------
Total costs and expenses 1,061,700 1,200,400 2,340,600 2,262,800
----------------- ----------------- ---------------- ----------------
OTHER INCOME (EXPENSES)
Other (2,700) - 600 -
----------------- ----------------- ---------------- ----------------
INCOME BEFORE PROVISION FOR INCOME TAX AND
EXTRAORDINARY ITEM
243,000 105,900 368,300 238,400
Provision for income tax 41,000 - 54,800 -
----------------- ----------------- ---------------- ----------------
INCOME Before Extraordinary Item 202,000 105,900 315,500 238,400
EXTRAORDINARY ITEM - Gain from debt
reduction associated with Chapter 11
proceedings, net of income taxes of $0
1,880,000 - 1,880,000 -
----------------- ----------------- ---------------- ----------------
NET INCOME $ 2,082,000 $ 105,900 $ 2,193,500 $ 238,400
================= ================= ================ ================
EARNINGS PER COMMON SHARE BEFORE
EXTRAORDINARY ITEM
Basic $0.04 $0.03 $0.06 $0.06
===== ===== ===== =====
Diluted $0.04 $0.03 $0.06 $0.06
===== ===== ===== =====
EARNINGS PER COMMON SHARE
Basic $0.42 $0.03 $0.45 $0.06
===== ===== ===== =====
Diluted $0.42 $0.03 $0.45 $0.06
===== ===== ===== =====
</TABLE>
The accompanying notes are an integral part of these Condensed
Consolidated Financial Statements
4
<PAGE>
TRI-LITE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1999 1998
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 2,193,500 $ 238,400
Non-Cash gain from Chapter 11 proceedings (1,880,000) -
Adjustment to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 26,500 6,500
Deferred revenue (25,000) -
Net change in operating assets and liabilities (1,690,600) (300,700)
------------------ ------------------
Net cash provided by (used in) operating activities (1,375,600) (55,800)
------------------ ------------------
Cash flow from investing activities:
Purchase of property and equipment (34,200) (11,100)
Other assets 71,100 42,300
------------------ ------------------
Net cash provided by investing activities 36,900 31,200
------------------ ------------------
Cash flow from financing activities:
Net borrowings (payments) under line of credit 24,100 -
Payments on notes payable (2,000) -
Payments on note payable-related, net (21,800) 44,400
Capital contribution from Chapter 11 proceedings 1,402,400 -
------------------ ------------------
Net cash provided by financing activities 1,402,400 44,400
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Net change in cash and cash equivalents 63,700 19,800
Cash and cash equivalents, at beginning of period 22,600 84,000
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Cash and cash equivalents, at end of period $ 86,300 $ 103,800
================== ==================
Supplemental Cash Flow Information:
Cash payments for:
Interest $ 103,800 $ 50,400
================== ==================
</TABLE>
The accompanying notes are an integral part of these Condensed
Consolidated Financial Statements
5
<PAGE>
TRI-LITE AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Summary of Significant Accounting Policies
------------------------------------------
The unaudited condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission and are unaudited. 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 and six months ended June 30, 1999 and 1998 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. Common stock equivalents had no dilutive
impact for the period. Shares used in the computation are as follows:
<TABLE>
<CAPTION>
June 30,
1999 1998
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<S> <C> <C>
Weighted average shares 4,928,948 4,000,000
(2) Notes Payable
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<CAPTION>
Notes payable at June 30, 1999 and December 31, 1998 consisted of the
following:
June 30, December 31,
1999 1998
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<S> <C> <C>
Advances from FC Commercial for an accounts
receivable purchasing facility at prime rate plus
6% $ 341,500 $ 317,300
Installment contract payable at 9.15% interest at
$2,873 per month 8,600 25,900
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% 566,000 566,000
---------------- -----------------
916,100 909,200
Less: Current portion (554,000) (343,200)
---------------- -----------------
$ 362,100 $ 566,000
================ =================
</TABLE>
6
<PAGE>
(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. The 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 June 30, 1999 and December 31, 1998 such loan had
an outstanding balance of $56,000 and $96,000, 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 June 30, 1999 is comprised of $49,800
state income tax and $5,000 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.
7
<PAGE>
TRI-LITE, INC. AND SUBSIDIARIES
Item 2. Management Discussion and Analysis of Financial Condition and results
---------------------------------------------------------------------
of operations
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The discussion in this Item should be read in conjunction with the
Condensed Financial Statements and the Notes thereto included in Item 1 of
this report on Form 10-Q. The discussion in this Item contains forward-looking
statements relating to future events or financial results, such as statements
indicating that "we believe", "we expect", "we anticipate", or "we intend"
that certain events may occur or certain trends may continue. Other
forward-looking statements include statements about the future development of
products or technologies, Year 2000 compliance, facilities needs, our
liquidity and capital needs and other statements about future matters. All
these forward-looking statements involve risks and uncertainties. You should
not rely too heavily on these statements, although they reflect the good faith
judgement of our management, they involve future events that might not occur.
We can only base such statements on facts and factors that we currently know.
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 , could not support the increase in its customer backlog and
thereby is risking the possibility of losing some customer orders. Moreover,
AIM Energy, Inc. 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 aforementioned cash flow problem was mitigated to some degree by
receiving $125,000 increase in the Company's credit line shortly after June
30, 1999. No assurances can be given that the Company can secure any
additional financing that it may require.
Working capital at June 30, 1999 was a deficit of $527,900, as the
result of $226,384 in installment payments due in the first quarter 2000 to
SPL creditors. Including this installment, the working capital deficit at June
30, 1999 decreased by $234,700 compared with a deficit of $762,600 in December
31, 1998. Receivables and inventories, a significant component of working
capital, increased by approximately $415,100, while payables and accrued
expenses increased by approximately $128,200.
Year 2000 Issues - As described more fully in the Company's Form
10-K, the Company does not have major year 2000 problems due to the nature of
its products. It has invested 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 month periods ended June 30, 1999 and 1998 were
$1,307,400 and $1,306,300. Revenues for the six month periods were $2,708,300
and $2,501,200, respectively. Revenues increased by approximately $1,100 and
$207,100 respectively, while sales for the three months were comparable to the
prior year. SPL reported revenues of $2,300,700 in 1999 compared with $1,867,400
in 1998 for an increase of $433,300. AIM Energy's revenues for the three and
six month periods ended 1999 and 1998 were $407,600 and $604,600, respectively,
as a result of more competition in their industry.
Cost of sales for the period ended June 30, 1999 and 1998 were 43.4%
and 44.3%, respectively, while cost of sales for the three months ended June 30,
1999 was 14% lower than the comparable period of 1998. This was primarily the
result of increased aircraft sales in the second quarter of fiscal 1999.
Selling, general and administrative expenses were $529,900 and
$1,068,700 as compared with $503,700 and $1,072,800 in the same period in
1998. These costs remained constant while sales continued to increase in
fiscal 1999.
Inflation and Seasonality
The Company does not believe that its operations are impacted by
inflation or seasonality.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company does not have any market risk sensitive instruments at
June 30, 1999.
8
<PAGE>
TRI-LITE, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 4. Legal Proceedings - None
Item 5. Other Information
Subsequent to the end of the second quarter, the Company began
shipping specially designed exit signs, which have been approved for use in
the five boroughs of New York City by the NYC regulatory agencies.
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. Messrs. Katz and Dageford continued to be the
President of their respective Company's. The resignations are 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 of Directors. 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.
Exhibit 27.1 Financial Data Schedule
9
<PAGE>
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: August 13, 1999 /s/ E. MAXWELL MALONE
---------------------
E. MAXWELL MALONE
President and Chief Executive Officer
Date: August 13, 1999 /s/ DARYOOSH KAVEH
------------------
DARYOOSH KAVEH
Chief Accounting Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 6/30/99
BALANCE SHEET AND THE STATEMENT OF OPERATIONS FOR THE SIX MONTHS THEN ENDED AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 86
<SECURITIES> 0
<RECEIVABLES> 767
<ALLOWANCES> 0
<INVENTORY> 797
<CURRENT-ASSETS> 1,742
<PP&E> 1,569
<DEPRECIATION> 1,387
<TOTAL-ASSETS> 1,941
<CURRENT-LIABILITIES> 2,270
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,941
<SALES> 2,708
<TOTAL-REVENUES> 2,708
<CGS> 1,168
<TOTAL-COSTS> 2,341
<OTHER-EXPENSES> 1
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 104
<INCOME-PRETAX> 368
<INCOME-TAX> 55
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 1,880
<NET-INCOME> 2,193
<EPS-BASIC> .45
<EPS-DILUTED> .45
</TABLE>
