U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED JANUARY 31, 2000

                                       or

                 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                          COMMISSION FILE NO. 333-48675

                                 TECHLITE, INC.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)


       Oklahoma                                                73-1522114
------------------------                              --------------------------
(state of incorporation)                              (IRS Employer I.D. Number)


                         6106 East 32nd Place, Suite 101
                                Tulsa, OK 74135
                      -------------------------------------
                      (Address principal executive offices)

                     Issuer's telephone number: 918-664-1441

         Securities registered under Section 12(b) of the Exchange Act:

                           Title of each class: None.

                Name of each exchange on which registered: None.

         Securities registered under Section 12(g) of the Exchange Act:

                         Common Stock, $0.001 par value
                         ------------------------------
                                (Title of class)

        Check  whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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[ ] No[X]

        Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not  contained in  this form, and no disclosure will be
contained,  to the  best  of  registrant's  knowledge,  in definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

<PAGE>


State issuer's revenues for its most recent fiscal year:  $2,625,750.

        State the  aggregate  market value of the voting and  non-voting  common
equity held by  non-affiliates  computed by  reference to the price at which the
common  equity  was sold,  or the  average  bid and asked  price of such  common
equity, as of a specified date within the past 60 days:  $1,646,771  computed by
reference  to the  $1.06  average  of the bid and asked  price of the  Company's
Common Stock on May 15, 2000.

        State the number of shares  outstanding of each of the issuer's  classes
of common equity, as of the latest practicable date:  2,454,347 shares of Common
Stock, $0.001 par value.

DOCUMENTS INCORPORATED BY REFERENCE

        If the  following  documents  are  incorporated  by  reference,  briefly
describe them and identify the part of the Form 10-KSB  (e.g.,  Part I, Part II,
etc.) into which the document is incorporated: (1) any annual report to security
holders;  (3) any proxy or information  statement;  and (3) any prospectus filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").
The list  documents  should be clearly  described  for  identification  purposes
(e.g.,  annual  report to security  holders for fiscal year ended  December  24,
1990). None.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

                                        2

<PAGE>


                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

Item 1. Description of Business ...........................................   5

        Business Development ..............................................   5
        Description of TechLite's Business ................................   5
        The Light Fixture Retrofitting Industry ...........................   5
        The Market ........................................................   6
        Environmental Considerations ......................................   6
        Saving Money ......................................................   6
        Other Benefits ....................................................   7
        Current Trends ....................................................   8
        Sales Methods .....................................................   9
        Production Costs ..................................................  10
        Competition .......................................................  10
        Government Approval of Principal Products .........................  10
        Government Regulations ............................................  10
        Dependence on Major Customers and Suppliers .......................  11
        Seasonality .......................................................  11
        Research and Development ..........................................  11
        Environmental Controls ............................................  11
        Year 2000 Computer Problem ........................................  11
        Number of Employees ...............................................  11
        Venue of Sales ....................................................  11
        Patents, Copyrights and Intellectual Property .....................  12

Item 2. Properties ........................................................  12

        Facilities ........................................................  12

Item 3. Legal Proceedings .................................................  12

Item 4. Submission of Matters to a Vote of Security Holders ...............  12

Item 5. Market for Common Equity and Related Stockholder Matters ..........  13

Item 6. Management's Discussion and Analysis ..............................  13

        Results of Operations .............................................  13
        Sales .............................................................  14
        Gross Margin ......................................................  14
        Selling, General and Administrative Expenses ......................  14
        Net Income (Loss) Before Taxes ....................................  14
        Balance Sheet Items ...............................................  14
        Liquidity and Capital Resources ...................................  15

Item 7. Financial Statements ..............................................  15

                                        3
<PAGE>

Item 8. Changes in and Disagreements with Accountants on Accounting
        and Financial Disclosure ..........................................  16

Item 9. Directors, Executive Officers, Promoters and Control Persons;
        Compliance with Section 16(a) of the Exchange Act .................  16

Item 10.  Executive Compensation ..........................................  17

Item 11.  Security Ownership of Certain Beneficial Owners and Management ..  18

Item 12.  Certain Relationships and Related Transactions ..................  19

        Parents of the Company ............................................  19

Item 13.  Exhibits and Reports on Form 8-K ................................  19

        Signatures ........................................................  21

                                        4
<PAGE>



ITEM    1.     DESCRIPTION OF BUSINESS.

        BUSINESS DEVELOPMENT

        TechLite, Inc.  was  incorporated  in  Oklahoma on June 3, 1997, for the
purpose of merging with TechLite Applied Sciences, Inc. of Tulsa, Oklahoma.   On
October 21, 1999  we  merged  with  TechLite Applied  Sciences.  The  historical
financial statements of TechLite are  those of  TechLite Applied Sciences, Inc.,
which was incorporated in Oklahoma on November 9, 1992.

        TechLite,  through its  predecessor in interest,  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.

        We have our  headquarters  in Tulsa,  Oklahoma,  and  branch  offices in
Dallas,  Texas. Our fiscal year ends January 31. We have operated at a loss from
inception through the fiscal year that ended January 31, 2000.

                       DESCRIPTION OF TECHLITE'S BUSINESS

The Light Fixture Retrofitting Industry.
---------------------------------------

        In 1992 the Congress  enacted the National  Energy  Policy Act. This law
mandated  that many  inefficient  lighting  products,  such as the commonly used
40-watt,  T-12 fluorescent lamp, be eliminated and replaced with new technology.
Also affected by this legislation are electric motors, other lamps,  luminaries,
distribution transformers and electromagnetic fields research.

        Also, in 1992 the Environmental  Protection Agency (the "EPA") initiated
its  "Green   Lights"   or  "Energy   Star"   program.   This  is  a   voluntary
pollution-reduction  program that assists  electricity  users by providing  them
with the most current information about  energy-efficient  lighting technologies
and how upgrades or retrofitting can be financed.

        These two  government  initiatives  - the National  Energy Policy Act of
1992  and  the  EPA's  Energy  Star  program  -  provided  the  impetus  for the
development of three significant energy-efficient products:

        o       energy-efficient fluorescent lamps,

        o       improved electronic ballasts, and

        o       highly efficient reflectors.

        The  retrofitting  of existing  fixtures  with these three  improvements
makes possible (1) up to a 60 percent or greater  reduction in power consumption
while (2)  maintaining or even improving  current light levels.  The business of
TechLite is selling and installing these and related

                                        5
<PAGE>


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. We estimate that more than 1
billion of these  retrofittable  units are in the  central  U.S.  States,  where
TechLite 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's  five-year business plan projects that it will have sales aggregating
$239 million, which is less than 0.5 percent of the market in this area.

Environmental Considerations.
----------------------------

        Generating  electricity  involves  burning fossil fuels - coal,  oil, or
natural gas - or running a nuclear reactor or a hydroelectric  plant. The mining
and  transportation  of fossil fuels can result in various  types of  pollution.
Burning fossil fuels emits air pollutants  from  smokestacks,  including  carbon
dioxide,  sulfur  dioxide,  and nitrogen  oxides.  Today the EPA is increasingly
focusing on pollution prevention. If the nation uses less electricity to deliver
an energy  service  - such as  lighting  - the power  plants  that  produce  the
electricity burn less fuel and thus generate less pollution.

        Lighting  accounts for 20 to 25 percent of all  electricity  sold in the
U.S. Lighting for industry,  stores,  offices and warehouses represents 80 to 90
percent of total  lighting  electricity  use.  Every  kilowatt  hour of lighting
electricity  not used prevents  emissions of 1.5 pounds of carbon  dioxide,  5.8
grams of sulfur dioxide,  and 2.5 grams of nitrogen oxides.  If energy efficient
lighting were used where  profitable,  the nation's demand for electricity would
be cut by more than 10 percent.  This would result in annual  reductions  of 2.2
million metric tons of carbon dioxide -the  equivalent of taking 44 million cars
off the road; 1.3 million metric tons of sulfur dioxide; and 600,000 metric tons
of nitrogen oxides. These reductions represent twelve percent of U.S.
utility emissions.

Saving Money.
------------

        The EPA's  Energy  Star  upgrade  program  focuses on  achieving  energy
savings under circumstances that save money for the electricity user. Businesses
that have made the investment in retrofit  lighting - because of the development
of   highly   efficient   reflectors,    improved   electronic   ballasts,   and
energy-efficient  fluorescent  lamps - have cut their electric bills by up to 60
percent  or more  and have  experienced  an  average  return  on their  retrofit
investment of 35 percent or more.

        The new electronic ballast is ten to fifteen percent more efficient than
the standard  magnetic  ballast now in widespread use. Newly  developed  compact
fluorescent lamps convert most of their electricity

                                        6
<PAGE>


into  light - not  heat.  They are  four  times  more  efficient  than  standard
incandescent  lights.  They can last nine to fifteen times longer.  New lighting
systems that include the smaller diameter "T-8"  fluorescent  lamps that replace
the old 40-watt T-12 "cool white" fluorescent lamps can increase lumens per watt
to over 100, as opposed to the current standard of 60. By substituting these new
systems, offices improve their lighting quality while reducing energy costs.

        Occupancy sensors keep lights on when motion is detected and turn lights
off when  motion is not  detected.  They ensure that lights are in use only when
needed.

        Of a special  importance  is the  development  of  lighting  enhancement
reflectors for  fluorescent  light fixtures.  Utilizing a mirror-like  permanent
specular  coating  on a metal  substrate  and  ray-tracing  software,  reflector
manufacturers  can bend the  mirrored  strips into  intricate  shapes to achieve
desired photometric  results.  TechLite makes use of these lighting  enhancement
reflectors.  This requires a fixture-by-  fixture  retrofitting by TechLite but,
together with the other energy- efficient  improvements  noted above, it enables
TechLite 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.

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

                                        7
<PAGE>


many needed,  air-conditioning  costs in a building may be reduced by 20 percent
              ------------------------------------------------------------------
and replacement parts by 50 percent.
-----------------------------------

        The development of mini-fluorescent  compact lamps allows replacement of
many sizes of incandescent lamps. Power reductions may be as high as 80 percent.
With lower prices and minimal  installation  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, 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  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'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 utilizes sophisticated

                                        8
<PAGE>


lighting  demonstration units 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.  Financing for the package is generally  provided
by the ESCOs.  TechLite has no strategic alliances with any ESCOs at present but
is seeking them. Such alliances  could prove to be critical in getting  business
in the future.

Sales Methods.
-------------

        TechLite's  corporate  office  makes  available  to each sales  office a
demonstration  machine that is used as a sales device.  Within a single portable
unit,  there is a television  set with VCR for showing  Energy Star and TechLite
videos,  a rotating  watt meter,  a light level  indicator,  a laser pointer for
demonstration  of  reflectivity,  an audio  amplifier for  demonstration  of hum
characteristics,  and two two-by-four  recessed  troffers mounted on a motorized
mast so that fixtures can be raised to a normal position at ceiling height.  The
demonstration  machine vividly demonstrates the improvement in lighting obtained
from a retrofit as well as the substantial reduction in electricity usage.

        Sales procedures  employed today typically commence with a walk- through
by an experienced  sales engineer to determine if a building is a good prospect.
Then, a demonstration  using the demonstration  machine is scheduled.  After the
demonstration,  depending  upon the size of the building,  the types of fixtures
observed,  the hours of usage and the rates for electricity  demonstrated by the
building's  electricity  bills,  an estimate of available  savings is made.  The
potential customer is asked,  based upon these savings,  if it wishes to proceed
with a comprehensive feasibility and engineering study.

        If the answer is  positive,  then  TechLite 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 reimburses  TechLite 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

                                        9
<PAGE>


over-lit areas and the under-lit areas and (2) which solution is most
cost-effective.

        In October 1997 we  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,  we made proposals in July 1998 to
each of the Brazil postal system and Carrefour to retrofit a single building for
each and, in the case of Carrefour, 50 stores for Carrefour.  Each of the Brazil
postal  system  and  Carrefour  later  advised  us that  no  contract  would  be
considered  at  that  time,  due to the  unstable  Brazilian  currency  and  its
devaluation.

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.  Our selling, general and administrative expenses are geared to
sales of $25 million a year - a level we have yet to achieve.  We estimate  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.   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
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's competitors and
the emerging "energy supply companies" -"ESCOs".

Government Approval of Principal Products.
-----------------------------------------

        No government approval is required in the U.S. for TechLite's  products.
It buys from others the fluorescent lamps,  ballasts, and reflectors it installs
in its retrofitting business.

Government Regulations.
----------------------

        TechLite, as an electrical contractor, is subject to regulation as such.
State,  county or city statutes and  ordinances  usually  require that it have a
qualified and licensed  electrician  present and supervising  each retrofit job.
Further, all installations of electrical fixtures are

                                       10
<PAGE>


subject  to  compliance  with  electrical  codes  in  force  in  virtually   all
jurisdictions in the U.S.

Dependence on Major Customers and Suppliers.
-------------------------------------------

        TechLite 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 for
the lighting-enhancement reflectors TechLite prefers to use in the  retrofitting
of light fixtures.  TechLite believes that all foreseeable demand for reflectors
can be met.  Other suppliers of  reflectors are  available.  For lamps, TechLite
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's business.

Research and Development.
------------------------

        TechLite conducts no research and development.

Environmental Controls.
----------------------

        TechLite 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 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 presently uses off-the-shelf and
easily  replaceable  software  programs and has determined  that all software is
year 2000 compliant.

Number of Employees.
-------------------

        On January 31, 2000,  TechLite employed 30 persons full time, no persons
part time, and had four persons under  contract as sales  associates who receive
commissions on new business they bring to the company.


                                       11
<PAGE>


Venue of Sales.
--------------

        None of TechLite's  sales are  attributable  to exports.  It is making a
concerted  effort,  however,  to obtain  business in Brazil.  Should it obtain a
significant  contract  to  retrofit  the  lighting  fixtures in one or more post
office  buildings  in  Brazil,  TechLite  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 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's  costs in advance of its payment of these
costs.

Patents, Copyrights and Intellectual Property.
---------------------------------------------

        TechLite has no patents,  copyrights or  intellectual  property but does
have common law copyright protection for an energy audit software program.

ITEM    2.     PROPERTIES

        TechLite owns a 13,000  square-foot office building located at 6106 East
32nd Place, Tulsa, Oklahoma 74135.

        FACILITIES

        TechLite  occupies   approximately  5,500  square  feet  of  its  13,000
square-foot office building in Tulsa, Oklahoma. It leases, on short-term leases,
warehouse space and additional office space as follows:
<TABLE>
<CAPTION>

         Use of
         Leased                                    Square          Monthly
        Premises        City          Feet          Rent            Term
        ---------     ---------       -----        ------         ----------

<S>     <C>           <C>             <C>          <C>            <C>
        Warehouse     Tulsa, OK       4,200        $1,275         06-09-2000
</TABLE>

The above space is deemed adequate for TechLite's foreseeable needs. As branches
are opened in additional cities,  facilities will be leased on short-term leases
for the branch operations.

ITEM    3.     LEGAL PROCEEDINGS

        On September 9, 1999,  TechLite was sued in the District  Court of Tulsa
County,  Oklahoma, Power Savers, Inc. v. TechLite Applied Sciences, Inc., Docket
No.  CJ-994303,  in a dispute  involving the correct  amount of net profit to be
paid to an agent of TechLite  with regard to a contract  between  TechLite and a
Tulsa County school  district.  TechLite has already paid the agent an amount in
excess of  $200,000  and  believes it is not  further  liable to the  plaintiff.
Nevertheless, TechLite has placed $125,000 into escrow for settlement purposes.

ITEM    4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None

                                       12
<PAGE>


ITEM    5.     MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

TechLite's Common Stock presently trades on the OTC Bulletin Board,  having been
added to the OTC  Bulletin  Board in April 2000.  The high and low bid and asked
prices,  as reported by the OTC Bulletin Board, are as follows for the few weeks
in the second quarter of 2000 that the stock has traded.  The quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions.

                                    High                  Low
                                    ----                  ---
        2000:
               2nd Qtr.             1.25                  0.75

Holders.  Based on information provided by our transfer agent,  the  Company had
-------
638 shareholders of record of its common stock on May 15, 2000.

Dividends.  TechLite has paid no cash dividends  since its inception,  and it is
---------
unlikely that any cash dividend will be paid in the  foreseeable  future.  There
are no restrictions that would or are likely to limit the ability of the company
to pay  dividends on its Common  Stock,  but it has no plans to pay dividends in
the  foreseeable  future and intends to use  earnings  for the  expansion of its
business.  The  declaration in the future of any cash or stock dividends will be
at the discretion of the Board depending upon the earnings, capital requirements
and financial  position of the company,  general  economic  conditions and other
pertinent  factors.  There are no dividend  restrictions held by any creditor or
other agreement to which the company is a party.

        Recent Sales of Unregistered Securities. Subsequent to the effectiveness
        ---------------------------------------
of the merger on October 21, 1999  between  the  company  and  TechLite  Applied
Sciences,  Inc., the company sold 336,633 shares of Common Stock to investors in
an offering exempt from registration pursuant to the provisions of Regulation D,
Rule 506. No underwriter or broker-dealer was used. The shares were all sold for
services  rendered during the period November 1999 through January 2000. Each of
the purchasers was  personally  known to the company and its directors  prior to
the offer made by the Company to sell such securities.

ITEM    6.     MANAGEMENT'S DISCUSSION AND ANALYSIS

        The following discussion and analysis should be read in conjunction
with the financial statements and the accompanying notes thereto. It is
qualified in its entirety by the foregoing and by more detailed financial
information appearing elsewhere.  See "Item 7 - Financial Statements."

        Results of operations.
        ---------------------

        The following table presents, as a percentage of sales, certain selected
financial  data for each of the two years in the period  ended  January 31, 2000
and January 31, 1999:

                                       13
<PAGE>

<TABLE>
<CAPTION>

        Year ended January 31                             2000          1999
        --------------------------------------------------------------------

<S>                                                       <C>           <C>
        Sales                                             100%          100%
        Cost of sales                                      83%           71%
                                                          ---           ---
        Gross margin                                       17%           29%

        Selling, general and
               administrative expenses                     79%           32%

        Net income (loss) before taxes                    (59)%          (2)%
</TABLE>

        Sales.
        -----

        Sales of  $2,625,750  for  fiscal  year  2000  (FY  2000)  decreased  by
$2,021,108,  or 43 percent from sales of  $4,646,858  for fiscal year 1999.  The
decrease   was  due  to  the   concentration   by  TechLite  of  its  sales  and
administrative  personnel  during FY 2000 to entering the Florida market through
the  acquisition  of a  Florida  company  already  established  in the  lighting
maintenance and retrofit  business,  primarily with school districts in Florida.
The effort was not successful,  although  TechLite is continuing its efforts and
believes it will be successful in this respect during FY 2001.

        Gross margin.
        ------------

        Gross margin  decreased  to $455,058,  or 17 percent of sales in FY 2000
from  $1,358,654,  or 29 percent of sales,  in fiscal 1999. The decrease was due
primarily to increased costs in contract management and oversight.

        Selling, general and administrative expenses.
        --------------------------------------------

        Selling,  general and administrative  expenses increased from $1,472,865
in fiscal 1999 to  $2,065,936 in FY 2000, an increase of $593,071 or 40 percent.
This  increase is  attributable  to our expenses of developing a presence in the
Florida market.

        Net income (loss) before taxes.
        ------------------------------

        A net loss before  taxes of $105,444 in fiscal 1999  increased  to a net
loss of $1,543,791 in FY 2000. This increase in loss was attributable  primarily
to our  unproductive  efforts  in  Florida - efforts  that  diverted  both sales
personnel  and  administrative  personnel  from  other  opportunities,   thereby
reducing income and increasing costs.

        Balance sheet items.
        -------------------

        Significant  changes in several balance sheet items occurred from fiscal
1999 to fiscal 2000, in particular the following:

        o      A cash position of $19,162 at the end of fiscal 1999 increased to
                 ----
               a cash position of $126,189 at the end of fiscal year 2000,

        o      contracts  receivable  of  $831,822  at  the  end  of fiscal 1999
               ---------------------
               decreased to $264,534 at the end of fiscal year 2000,

                                       14
<PAGE>


        o      inventory of $41,185 at the end of fiscal year 1999 increased  to
               ---------
               $189,949 at the end of fiscal year 2000,

        o      payroll  and  sales tax payable  of  $97,110 at the end of fiscal
               -------------------------------
               1999 increased to $314,450 at the end of fiscal year 2000,

        o      the backlog of business decreased from $1,686,995 at  January 31,
                   -------------------
               1999 to $403,267 at January 31, 2000,

        o      notes payable  of  $1,341,011 at the end of fiscal 1999 increased
               -------------
               by 72% to $2,312,725 at the end of fiscal 2000, and

        o      the  retained deficit  increased  from $1,802,167  at the  end of
                    ----------------
               fiscal 1999 to $3,345,958 at the end of fiscal year 2000.

        Liquidity and Capital Resources.
        -------------------------------

        TechLite had negative  cash flow from  operations  of $756,335 in fiscal
2000.  The principal  components of this negative cash flow were a net loss from
operations of  $1,543,791,  a decrease of $494,216 in contract  receivables,  an
increase in inventory of $148,764,  an increase in accounts payable of $309,040,
an increase of  $253,304  in accrued  liabilities  and a decrease of $116,696 in
billings related to costs and estimated earnings on uncompleted contracts.  This
drain on  liquidity  and  capital  resources  was covered by net  borrowings  of
$946,566.

ITEM 7.        FINANCIAL STATEMENTS

                                       15
<PAGE>






                         Independent Accountants' Report


Board of Directors
TechLite, Inc.
Tulsa, Oklahoma


We have audited the accompanying balance sheets of TECHLITE,  INC. as of January
31, 2000 and 1999, 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.

The  financial  statements  as of January 31, 1999,  and for the year then ended
have been restated to reflect the pooling of interest between TECHLITE, INC. and
TECHLITE  APPLIED  SCIENCES,  INC.  as  described  in  Note 1 to  the  financial
statements.  We did not audit the  January  31,  1999  financial  statements  of
TECHLITE, INC., which reflected total assets of $245 as of January 31, 1999, and
no revenue or expense for the year then ended.  Those statements were audited by
other auditors  whose report has been furnished to us, and our opinion,  insofar
as it relates to the amounts included for TECHLITE, INC. as of January 31, 1999,
and for the year  then  ended,  is  based  solely  on the  report  of the  other
auditors.

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,  INC. as of January
31, 2000 and 1999,  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
Tulsa, Oklahoma
April 25, 2000

                                      F-1
<PAGE>


                                 TECHLITE, INC.


                                 BALANCE SHEETS

                            JANUARY 31, 2000 AND 1999


                                     ASSETS
                                     ------

<TABLE>
<CAPTION>
                                                         2000            1999
                                                         -----           ----

<S>                                                  <C>              <C>
CASH                                                 $ 126,189        $  19,407

ACCOUNTS RECEIVABLE
     Contract receivables                              264,534          821,229
     Other receivables                                  73,072           10,593

INVENTORY, At Cost                                     189,949           41,185

PROPERTY AND EQUIPMENT, At Cost
     Equipment                                         196,314          162,058
     Furniture and fixtures                             32,490           24,045
     Building and land                                 400,000          400,000
     Leasehold improvements                             68,020           52,252
     Autos and trucks                                  216,770          191,790
                                                     ---------        ---------
                                                       913,594          830,145
     Less accumulated depreciation                     250,251          148,665
                                                     ---------        ---------
                                                       663,343          681,480
                                                     ---------        ---------

OTHER ASSETS                                           345,862            7,240
                                                     ---------        ---------



               Total Assets                         $1,662,949       $1,581,134
                                                     =========        =========
</TABLE>

See Notes to Financial Statements
                                      F-2

<PAGE>



                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

<TABLE>
<CAPTION>
                                                         2000            1999
                                                        -----            ----
LIABILITIES
<S>                                                 <C>              <C>
     Accounts payable                               $  689,583       $  380,543
     Accrued wages                                      35,831           29,132
     Payroll and sales tax payable                     314,450           97,110
     Billings in excess of costs and estimated
          earnings on uncompleted contracts            213,033           96,337
     Notes payable and accrued interest              2,312,725        1,341,011
     Other liabilities                                  62,782           58,665
                                                     ---------        ---------
               Total Liabilities                     3,628,404        2,002,798
                                                     ---------        ---------





STOCKHOLDERS' EQUITY
     Preferred stock, $.001 par value;
           10,000,000 authorized shares;
           none issued
     Common stock, $ .001 par value;
           40,000,000 authorized shares;
           2,454,347 issued and
           outstanding in 2000 and 1999                  2,455            2,455
     Additional paid-in capital                      1,378,048        1,378,048
     Retained earnings(deficit)                     (3,345,958)      (1,802,167)
                                                     ---------        ---------
               Total Stockholders' Equity           (1,965,455)        (421,664)
                                                     ---------        ---------


               Total Liabilities & Stockholders'
                 Equity                             $1,662,949       $1,581,134
                                                     =========        =========

</TABLE>

See Notes to Financial Statements

                                      F-3
<PAGE>

                                 TECHLITE, INC.

                              STATEMENTS OF INCOME

                      YEARS ENDED JANUARY 31, 2000 AND 1999

<TABLE>
<CAPTION>

                                                        2000            1999
                                                        ----            ----

<S>                                                <C>              <C>
CONTRACT REVENUES EARNED                           $ 2,625,750      $ 4,646,858

COST OF REVENUES EARNED                              2,170,692        3,288,204
                                                     ---------        ---------

GROSS PROFIT                                           455,058        1,358,654

GENERAL AND ADMINISTRATIVE
     EXPENSES                                        2,065,936        1,472,865
                                                     ---------        ---------

INCOME(LOSS) FROM OPERATIONS                        (1,610,878         (114,211)

OTHER INCOME                                            67,087            8,767

INCOME(LOSS) BEFORE TAXES                           (1,543,791)        (105,444)
                                                     ---------       ----------

PROVISION FOR INCOME TAXES
                                                             0                0
                                                     ---------       ----------

NET INCOME(LOSS)                                   $(1,543,791)     $  (105,444)
                                                     =========       ==========


NET INCOME(LOSS) PER SHARE                         $      (.63)     $      (.04)
                                                     =========       ==========
</TABLE>


See Notes to Financial Statements

                                       F-4

<PAGE>


                                 TECHLITE, INC.

                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                      YEARS ENDED JANUARY 31, 2000 AND 1999

<TABLE>
<CAPTION>

                                           Additional
                                Common      Paid-in      Retained
                                Stock       Capital      Earnings       Total

<S>                             <C>       <C>          <C>            <C>
BALANCE, JANUARY 31, 1998       $2,449    $1,264,197   $(1,696,723)   $(430,077)


NET INCOME(LOSS)                                          (105,444)    (105,444)

SALE OF STOCK
                                     6       113,851                    113,857
                                 -----     ---------     ---------    ---------

BALANCE, JANUARY 31, 1999        2,455     1,378,048    (1,802,167)    (421,664)

NET INCOME(LOSS)                                        (1,543,791)  (1,543,791)

SALE OF STOCK
                                 -----     ---------     ---------    ---------
BALANCE, JANUARY 31, 2000       $2,455    $1,378,048   $(3,345,958) $(1,965,455)
                                 =====     =========     =========    =========
</TABLE>

See Notes to Financial Statements

                                      F-5
<PAGE>


                                 TECHLITE, INC.

                            STATEMENTS OF CASH FLOWS

                      YEARS ENDED JANUARY 31, 2000 AND 1999


CASH FLOWS FROM OPERATING ACTIVITIES:
<TABLE>
<CAPTION>
                                                          2000           1999
                                                          -----          ----

<S>                                                  <C>             <C>
     Net income (loss)                               $ (1,543,791)   $ (105,444)
     Adjustments to reconcile net income to net
       cash provided by operating activities:
     Depreciation and amortization                        105,218        68,269
     Decrease (increase) in contract receivables          494,216      (404,420)
     Decrease (increase) in inventory                    (148,764)        5,193
     Decrease (increase) in other                        (342,254)      (10,522)
       assets/receivables
     Net increase (decrease) in billings related
       to costs and estimated earnings on
       uncompleted contracts                              116,696      (233,737)
     Increase (decrease) in accounts payable              309,040        58,304
     Increase (decrease) in other accrued                 253,304       (92,114)
       liabilities
                                                        ---------     ---------
         Net cash used in operating
           activities                                    (756,335)     (714,471)
                                                        ---------     ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Acquisition of equipment                             (83,449)     (561,640)
                                                        ---------     ---------
         Net cash used in investing
           activities                                     (83,449)     (561,640)
                                                        ---------     ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Principle payments on notes payable               (3,752,634)     (394,815)
     New borrowings                                     4,699,200     1,576,231
     Sale of stock                                                      113,857
                                                        ---------     ---------
         Net cash provided by
           financing activities                           946,566     1,295,273
                                                        ---------     ---------

NET INCREASE IN CASH AND
CASH EQUIVALENTS                                          106,782        19,162

CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR                                          19,407           245
                                                        ---------     ---------

CASH AND CASH EQUIVALENTS AT
END OF YEAR                                            $  126,189    $   19,407
                                                        =========     =========
</TABLE>

See Notes to Financial Statements
                                      F-6
<PAGE>


                                 TECHLITE, INC.

                          NOTES TO FINANCIAL STATEMENTS

                            JANUARY 31, 2000 AND 1999


NOTE 1:     MERGER ACTIVITY

        TechLite,  Inc.  (the  Company)  was  organized in  accordance  with the
General  Corporation  Act of the  State of  Oklahoma  on June 3,  1997,  for the
purpose of merging with TechLite Applied Sciences,  Inc. (Applied Sciences),  an
Oklahoma  corporation.  The Company had no business  operations  or  significant
capital and had no intention of engaging in any active  business until it merged
with Applied Sciences.
        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, but Applied Sciences will elect all directors
and officers of the merged  entity.  The Company  effected the merger on October
21, 1999 with Applied  Sciences  pursuant to approving votes of the shareholders
of both corporations.  The merger was a tax-free reorganization accounted for as
a pooling of interests.


NOTE 2:     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 healthcare  facilities.  The work is performed  primarily under  fixed-price
contracts which were obtained either through  negotiations or a bidding process.
The length of the contracts varies,  typically  between 1 and 18 months.  Due to
the nature of the construction  industry,  once work is completed on a contract,
new contracts must be identified and obtained. The ultimate success in obtaining
new contracts from year to year is subject to the inherent  uncertainties of the
bidding and negotiation process associated with the construction industry.

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.

                                      F-7
<PAGE>

                                 TECHLITE, INC.

                          NOTES TO FINANCIAL STATEMENTS

                            JANUARY 31, 2000 AND 1999


NOTE 2: NATURE  OF  OPERATIONS  AND  SUMMARY OF  SIGNIFICANT ACCOUNTING POLICIES
        (Continued)

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.

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 7. As
changes in tax laws or rates are enacted,  deferred  tax assets and  liabilities
are adjusted through the provision for income taxes.

                                      F-8
<PAGE>

                                 TECHLITE, INC.

                          NOTES TO FINANCIAL STATEMENTS

                            JANUARY 31, 2000 AND 1999


NOTE 3:     CONTRACT RECEIVABLES

Contract receivables consist of:
<TABLE>
<CAPTION>

                                                         2000            1999
                                                         ----            ----
   Billed
<S>                                                   <C>             <C>
        Completed contracts                           $       0       $ 135,516
        Contracts in progress                           264,534         685,713
                                                        -------         -------

                                                      $ 264,534       $ 821,229
                                                        =======         =======
</TABLE>



NOTE 4:     COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

Costs,  estimated earnings, and billings on uncompleted contracts are summarized
as follows:
<TABLE>
<CAPTION>

                                                         2000           1999
                                                         ----           ----

<S>                                                  <C>             <C>
   Costs incurred on uncompleted contracts           $1,314,259      $3,066,461
   Estimated earnings                                   405,623       1,237,926
                                                      ---------       ---------
                                                      1,719,882       4,304,387
   Billings to date                                   1,932,915       4,400,724
                                                      ---------       ---------

                                                     $ (213,033)     $  (96,337)
                                                      =========       =========


   Included in the accompanying balance sheet
       under the following captions:
         Billings in excess of costs and estimated
           earnings on uncompleted contracts         $  213,033      $   96,337
                                                      =========       =========
</TABLE>

                                      F-9
<PAGE>
                                 TECHLITE, INC.

                          NOTES TO FINANCIAL STATEMENTS

                            JANUARY 31, 2000 AND 1999


NOTE 5:     NOTES PAYABLE
<TABLE>
<CAPTION>

                                                         2000           1999
                                                         ----           ----

<S>                                                  <C>             <C>
   Unsecured notes payable, due on demand, at 10%    $   67,072      $   76,262
   Notes payable to banks, collateralized by
   equipment,       due in monthly installments plus
   interest through
        September 2002, at 8.25% to 12%                  92,360         121,682
   Unsecured line of credit, at 14.5%                    38,778          49,500
   Line of credit, secured by factored accounts
        receivable, accounts receivable,
        contracts receivable, inventory and
        fixed assets, due                               986,403         673,463
   June and December 2000, at 12%
   Note payable, collateralized by 750,692 shares
   of Company stock owned by two officers
   and additional real estate owned
   by one officer, due May 2000, at 9%                 250,830
   Note payable, collateralized by contracts
   receivable and accounts receivable,
     due May 2000, at 9.5%                              50,135
   Note payable, collateralized by 8300 shares
   of Emerson Electric stock owned by
   a Company shareholder, due August 2000,
   at 8%                                               395,100
   Notes payable, building and land, due in
   monthly installments plus interest
   through October 2013, at 9%                         384,509          397,713
                                                     ---------        ---------
                                                     2,265,187        1,318,620
   Accrued interest                                     47,538           22,391
                                                     ---------        ---------

                                                    $2,312,725       $1,341,011
                                                     =========        =========
</TABLE>

Aggregate annual maturities of debt at January 31, 2000, are:
<TABLE>

<S>            <C>                                  <C>
               2001                                 $1,843,834
               2002                                     46,175
               2003                                     38,570
               2004                                     19,099
               2005                                     20,918
               Thereafter                              296,591
                                                     ---------

                                                    $2,265,187
                                                     =========
</TABLE>
                                      F-10
<PAGE>
                                 TECHLITE, INC.

                          NOTES TO FINANCIAL STATEMENTS

                            JANUARY 31, 2000 AND 1999


NOTE 6:     PROPERTY AND EQUIPMENT

        Property  and  equipment  consist  of  buildings,  vehicles,  equipment,
furniture and leasehold improvements. The vehicles and equipment are depreciated
over  five  years,   furniture  is  depreciated  over  seven  years,   leasehold
improvements  are depreciated  over ten years and buildings are depreciated over
25 years. Accumulated depreciation is summarized as follows:
<TABLE>
<CAPTION>

                                                         2000            1999
                                                         ----            ----

<S>                                                   <C>             <C>
   Buildings                                          $  26,667       $   6,667
   Vehicles                                             104,484          64,199
   Equipment                                             92,549          61,756
   Furniture                                             13,749           9,641
   Leasehold improvements                                12,802           6,402
                                                       --------        --------

                                                      $ 250,251       $ 148,665
                                                       ========        ========

</TABLE>


NOTE 7:     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.

   A reconciliation  of the income tax expense (refund) at the statutory rate to
income tax expense at the Company's effective tax rate is shown below:
<TABLE>
<CAPTION>

                                                         2000            1999
                                                         ----            ----

<S>                                                   <C>             <C>
   Computed at the statutory rate of 34%              $(524,889)      $ (35,851)
   Increase in tax resulting from:
        Net operating loss carryforward                 524,889          35,851
                                                        -------         -------

                                                      $       0       $       0
                                                        =======         =======
</TABLE>
                                      F-11
<PAGE>
                                 TECHLITE, INC.

                          NOTES TO FINANCIAL STATEMENTS

                            JANUARY 31, 2000 AND 1999


NOTE 8:     OTHER ASSETS

        At January 31, 2000 and 1999, the Company recorded  $345,862 and $7,240,
respectively,  as other  assets.  Other assets  include  costs  associated  with
internally  developed  software  which is  amortized  over 4 years,  $3,608  and
$7,240, at January 31, 2000 and 1999, respectively.  Additionally,  other assets
at January 31, 2000 also include $90,688 as receivable from a vendor,  $1,566 of
prepaid  expenses and $250,000 as a purchase  option  contract.  See Note 12 for
subsequent information related to the purchase option contract.


NOTE 9:     BACKLOG

      The following  schedule  summarizes changes in backlog on contracts during
the years  ended  January 31, 2000 and 1999.  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>
                                                        2000            1999
                                                        ----            ----

<S>                                                  <C>             <C>
   Backlog, beginning of year                        $1,686,995      $  594,980
   New contracts during the year                      1,342,022       2,638,292
   Contract adjustments                                               3,100,581
                                                      ---------       ---------
                                                      3,029,017       6,333,853
   Less contract revenues earned during the year      2,625,750       4,646,858
                                                      ---------       ---------

   Backlog, end of year                              $  403,267      $1,686,995
                                                      =========       =========
</TABLE>

The  Company  entered  into  additional  contracts  with  estimated  revenues of
approximately $222,000 between February 1, 2000 and April 25, 2000.


NOTE  10:   ADDITIONAL SHARES OF COMMON STOCK

        As of January 31, 2000,  the company  agreed to issue 336,633 new shares
of common stock to various  individuals for services  rendered during the fiscal
year ended January 31, 2000. The value of the services  rendered was $16,831.65.
As of April 25, 2000, the new shares of common stock were still unissued.

                                      F-12
<PAGE>
                                 TECHLITE, INC.

                          NOTES TO FINANCIAL STATEMENTS

                            JANUARY 31, 2000 AND 1999


NOTE 11:     SIGNIFICANT ESTIMATES AND CONCENTRATIONS

        Generally accepted  accounting  principles require disclosure of certain
significant estimates and current  vulnerability due to certain  concentrations.
Those matters include the following:

        Estimates of revenue on uncompleted construction contracts are explained
in Note 2, under Revenue Recognition and are described in detail in Note 4.

        The Company had one significant retrofit contract,  Tulsa Public Schools
for the years ended January 31, 2000 and 1999.  The  percentage of total revenue
derived from Tulsa Public  Schools was  approximately  57% and 84% for the years
ended January 31, 2000 and 1999, respectively. The Tulsa Public Schools contract
was completed April 2000.


NOTE 12:     SUBSEQUENT EVENTS

        At January 31, 2000,  the Company's  financial  statements  reflected an
other  asset of  $250,000  as  discussed  in Note 8. This asset  represents  the
purchase of an option contract for the  acquisition of A&K Service  Corporation,
Inc. The option was valid at January 31,  2000.  However,  in February  2000 the
option  expired  without  being  exercised and the $250,000 was forfeited by the
Company.  This amount will be  reflected as general and  administrative  expense
associated with acquisition activities during February 2000.

                                      F-13
<PAGE>

ITEM 8.        CHANGES IN AND  DISAGREEMENTS WITH  ACCOUNTANTS ON ACCOUNTING AND
               FINANCIAL DISCLOSURE

        On October  22, 1999 the  Company's  principal  independent  accountant,
Hogan & Slovacek  of  Oklahoma  City,  Oklahoma,  resigned.  Its  reports on the
Company's  financial  statements  from  inception  onward  contained  no adverse
opinions or  disclaimers  or opinions and were not  modified as to  uncertainty,
audit scope or accounting  principles.  There were no disagreements with Hogan &
Slovacek,  whether or not resolved,  on any matter of  accounting  principles or
practices,  financial  statement  disclosure,  or auditing  scope or  procedure,
which, if not resolved to Hogan & Slovacek's satisfaction,  would have caused it
to make reference to the subject matter of the  disagreements in connection with
its reports.

        On October  22,  1999 the  Company  engaged  new  principal  independent
accountants,  Causon & Westhoff,  Certified Public Accountants,  P.C., of Tulsa,
Oklahoma, to audit the Company's financial statements.

        The change in the Company's  certifying  accountants  was made solely in
connection  with the change of the  Company's  principal  place of business from
Oklahoma City, Oklahoma to Tulsa, Oklahoma. The engagement of the new accounting
firm was made by the officers of the Company  without the prior  approval of the
board of directors or any committee of the board of directors, but a majority of
the directors  advised the officers that the engagement would be approved at the
next board meeting, and it was so approved.

ITEM 9.        DIRECTORS,  EXECUTIVE OFFICERS,  PROMOTERS  AND CONTROL  PERSONS;
               COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

        Set  forth  below  are the  names,  and  terms of  office of each of the
directors,  executive  officers and  significant  employees of the Company and a
description of the business experience of each.

<TABLE>
<CAPTION>

                                                            Office Held  Term of
    Person                           Office                    Since      Office
    ------                           ------                 -----------  -------

<S>                      <C>                                    <C>        <C>
J. D. Arvidson, 61       Chief Executive Officer, President     1992       2000
                         and Director

C. O. Sage, 67           Executive Vice President, Chief        1992       2000
                         Operating Officer, and Director

General Gerald Hahn,
  USAF (Ret.), 62        Chairman of the Board of               1997       2000
                         Directors

Carol E. Sage, 63        Secretary                              1994       2000

Mark D. Galvin, 46       Vice President                         1993       2000

Lee Arehart, 65          Sales Director, Tulsa Office           1997       2000

</TABLE>


        J. D. "Jim" Arvidson.   Mr. Arvidson  has  33  years  of  experience  in
        --------------------
construction contracting and management.  He was engaged for 23 years in

                                       16
<PAGE>

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
was the  principal  founder  of  TechLite  Applied  Sciences  and was its  chief
executive  officer  since its founding in 1992 until it merged with  TechLite in
1999.

        C. O.  Sage.  Mr.  Sage has more than 25 years'  experience  in  various
        -----------
agriculture-related  businesses,  one being the  building  and  management  of a
35,000-head cattle feeding business. He served for almost ten years as Assistant
to the State  Treasurer  of  Oklahoma in charge of the  operations  of the State
Treasurer's  office.  Mr.  Sage  was one of the  founders  of  TechLite  Applied
Sciences and was employed by it in his present  capacity since it was founded in
1992 until it merged with TechLite in 1999.

        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.

        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 D. Galvin. Mr. Galvin received a Master of Business  Administration
        --------------
degree from Oklahoma  State  University in 1994. He is the  co-developer  of the
company's  software which automated the  presentation  materials of its lighting
survey  functions.  He  served  as the  project  manager  for the  Oral  Roberts
University and Edmond,  Oklahoma public schools  lighting  projects,  which were
completed ahead of schedule and below budget.

        Lee Arehart.  Prior to joining  TechLite  Applied  Sciences in 1993, Mr.
        -----------
Arehart was the owner of businesses involved in retail management,  recreational
facility management, and franchise operations.

ITEM 10.       EXECUTIVE COMPENSATION

        The directors of TechLite  receive no compensation for their services as
directors. The officers of TechLite received from it an aggregate of $324,370 of
compensation in the last fiscal year for their services in all capacities.

        Mr. Arvidson,  the chief executive officer of TechLite,  receives a draw
of $7,917 a month  against  commission  income  equal to 23 percent of the gross
profits from retrofitting contracts sold by Mr. Arvidson.

                                       17
<PAGE>


        Employment Contracts.
        --------------------

        TechLite has no employment contracts with any employees.

        Stock Options.
        -------------

        TechLite has adopted a stock option plan, the major  provisions of which
Plan are as follows:

        Options granted under the plan may be "employee incentive stock options"
as defined under Section 422 of the Internal Revenue Code or non-qualified stock
options,  as determined by the option committee of the board of directors at the
time of grant of an option.  The plan enables the option  committee of the board
of directors to grant up to 500,000 stock  options to employees and  consultants
from time to time. The option committee has granted no options.

ITEM 11.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The following table shows information as of May 15, 2000 with respect to
each  beneficial  owner of more  than 5% of each  class of  voting  stock of the
Company and to each of the  officers and  directors of the Company  individually
and as a group:

<TABLE>
<CAPTION>

TechLite                                    No. of Shares             % of Class
--------                                    -------------             ----------

<S>                                             <C>                        <C>
J.D. Arvidson                                   578,400                    23.6
9316 North 147th East Avenue
Owasso, OK 74136

C.O. Sage                                       247,292(1)                 10.1
7902 South 70th East Place
Tulsa, OK 74133

Gen. Gerald Hahn                                  1,000                      (2)
3744 South Niagara Way
Denver, CO 80237-1248

Carol E. Sage                                   247,292(1)                 10.1
7902 West 70th East Place
Tulsa, OK 74133

Mark D. Galvin                                   74,097                     3.0
5412 Harvard
Bartlesville, OK 74006

Rex D. Frates                                   148,056                     6.0
2626 East 28th Street
Tulsa, OK 74114

Officers and Directors as a                     900,789                    36.7
group (5 persons)
-------------------------
</TABLE>

                                       18
<PAGE>


(1)     These  shares are held in joint  tenancy with right of  survivorship  by
        C.O. Sage and Carol E. Sage, husband and wife, who own 222,292 shares in
        the aggregate.

(2)     Less than one percent.

ITEM 12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        Subsequent to the merger on October 21, 1999 between TechLite,  Inc. and
TechLite Applied Sciences, Inc., J.D. Arvidson,  president and a director of the
company, and C.O. Sage, executive vice president,  chief operating officer and a
director of the  company,  jointly  guaranteed  the  repayment of a bank loan of
$250,000  made to the company.  Mr.  Arvidson  pledged,  to the repayment of the
loan,  528,000  shares of common  stock of the  company,  and C.O.  Sage pledged
222,292  shares of  common  stock of the  company.  As  consideration  for their
guarantees,  the company granted 50,000 shares of common stock to J.D.  Arvidson
and 25,000 shares of common stock to C.O. Sage.

        During fiscal year 2000 Mr. Sage also loaned $99,529 to the company.

ITEM 13.       EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits

        The following exhibits are filed, by incorporation by reference, as part
of this Form 10-KSB:

        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.*

        10.1          -      1998 stock Option Plan adopted by TechLite, Inc.*

        27            -      Financial Data Schedule.

        *      Previously filed with Form S-4, Commission File No. 333-
               68137; 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;

                                       19
<PAGE>

                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.

                                       20
<PAGE>

                                   SIGNATURES


        In accordance  with Section  15(d) of the Exchange  Act, the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                            TECHLITE, INC.



Date:  May 16, 2000                         By /s/ J.D. Arvidson
                                              ----------------------------------
                                              J.D. Arvidson, Chief Executive
                                                Officer

        In accordance  with the Exchange Act, this report has been signed by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.



Date:  May 16, 2000                         By /s/ C.O. Sage
                                              ----------------------------------
                                              C.O. Sage, Chief Operating Officer
                                                and Director



Date:  May 16, 2000                         By /s/ J.D. Arvidson
                                              ----------------------------------
                                              J.D. Arvidson, Chief Executive
                                                Officer and Director



Date:  May 16, 2000                         By /s/ Gerald Hahn
                                              ----------------------------------
                                              Gerald Hahn, Director



Date:  May 16, 2000                         By /s/ Mark D. Galvin
                                              ----------------------------------
                                              Mark D. Galvin, Vice President




Date:  May 16, 2000                         By /s/ Carol E. Sage
                                              ----------------------------------
                                              Carol E. Sage, Secretary


                                       21
<PAGE>



                                 TechLite, Inc.

                  EXHIBIT INDEX (FORM 10-KSB JANUARY 31, 2000)


        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.*

        10.1          -      1998 Stock Option Plan adopted by TechLite,
                             Inc.*

        27            -      Financial Data Schedule.


        *    Previously  filed  with  Form S-4,  Commission File No.  333-68137;
             incorporated herein.