<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 ---------------

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

                                 ---------------


For the Year Ended December 31, 1997                 Commission File No. 1-12462


                                 TRI-LITE, INC.
             (Exact name of registrant as specified in its charter)


             Pennsylvania                                        23-2515309
(State of incorporation or organization)                   (IRS Employer ID No.)


<TABLE>
<S>                                               <C>                  
          2701 Junipero Street                                 14901 Broadway Avenue
     Signal Hills, California  90806                           Cleveland, Ohio 44137
(Address of principal executive offices)          (Former address of principal executive offices)
</TABLE>


                                 (562) 426-8622
              (Registrant's telephone number, including area code)


          Securities registered pursuant to Section 12 (b) of the Act:


                                                           Name of each exchange
    Title of each class                                     on which registered
Common stock, no par value                                     Not Applicable

        Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 13, or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and has been subject to such filing
requirements for the past 90 days.

                                 YES /_/ NO /x/

        APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDING
                        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 /_/ NO /x/

        Aggregate market value of Common Shares held by non-affiliates on
                         January 31, 1999: Undetermined
       Number of Common Shares Outstanding on January 31, 1999: 4,060,000


<PAGE>


                                     Part I

Item 1.  Business

(a) General development of business

         Tri-Lite, Inc., was incorporated in 1988 under the laws of the
Commonwealth of Pennsylvania. As used in this report, the terms "Company",
"Tri-Lite" and "Registrant" refer to Tri-Lite, Inc. and subsidiaries.

         The Company completed an initial public offering of its common stock in
October, 1993. The Company's shares were listed on the American Stock Exchange
under the symbol "NRG" until February 26, 1996 when they were delisted. The
Company's shares are anticipated to trade in the immediate future, on the
over-the-counter market.

         Effective June 30, 1995, certain of the Company's wholly owned
subsidiaries were merged into Tri-Lite, Inc. Subsequent to these mergers the
Company operated through a parent company with operating divisions and three
wholly owned subsidiaries. The operating divisions did business under the names
Allite, Trio Lighting and NL Corporation. The wholly owned subsidiaries were
Prolite Lighting and Sign Maintenance Co., Inc.(Prolite), Self Powered Lighting,
Inc.(SPL), and NL Corporation De Mexico S.A. de C.V.

         During 1995, the Company operated under two separate industry segments.
The Company's lighting fixture business segment involved the designing,
sourcing, manufacturing and marketing of recessed lighting, track lighting,
emergency lighting and decorative lighting for use in new construction and
remodeling of retail, commercial, industrial and residential buildings. The
Company's other segment included electrical energy management which involves
auditing, retrofitting, maintaining and managing lighting in order to reduce
energy consumption used for lighting of commercial and industrial buildings.

         During the 4th quarter of 1995 the Company's Board of Directors decided
to discontinue the operations of it's electrical energy management segment. It
was determined that due to increased competition, decreasing liquidity and
continued difficulty in obtaining performance bonds it was not likely to achieve
profitabilty. Accordingly, the Company began winding down the segment's
operations.

         Subsequent to December 31, 1995, the Company, its operating divisions
and its wholly owned subsidiaries experienced material changes in the mode of
conducting their respective businesses. The following chronology of events will
provide the basis for explaining the present status of the Company and its
remaining operating subsidiaries (Self Powered Lighting, Inc. and Aim Energy,
Inc.).

         On October 26, 1995, the Company filed a complaint in the United States
District Court for the Northern District of Ohio, Eastern Division, against
Helionetics, Inc., seeking monetary damages, injunctive relief and declaratory
relief. In January 1996, Helionetics, Inc., filed an answer to this complaint
and filed a counterclaim against Tri-Lite, Inc., Lawrence A. Terkel and Star
Bank N.A. In conjunction with the Company's plan of reorganization, described
below, the lawsuit between the parties has been settled.

         On November 20, 1995, the Company received formal notice from it's
primary lender, Star Bank N.A., that certain defaults had occurred under the
Financing Agreement dated July 13, 1995. Also on February 15, 1996, Star Bank
N.A. notified the Company of it's demand for payment in full of the Company's
credit facility. The demand required payment by February 20,


                                       2

<PAGE>

1996. On February 23, 1996, the Court of Common Pleas, Cuyahoga County, Ohio
granted a motion by Star Bank N.A. for an Emergency Order Appointing a Receiver
to be charged with administration of properties during the special receivership
period.

         On February 26, 1996, Tri-Lite, Inc., ( the "Debtor") filed a voluntary
petition under Chapter 11 of the United States Bankruptcy Code ( Case No. SA
96-12049 JR ), U.S. Bankruptcy Court, Central District of California and on
March 22, 1996 Self Powered Lighting, Inc. (SPL) also filed a voluntary petition
under Chapter 11 of the United States Bankruptcy Code (Case No. SA 96-13178 JR),
Central Distirct of California. On January 16, 1997, the Court confirmed the
Company's plan of reorganization. See attached Exhibit I for the Third Amended
Disclosure Statement For Third Amended Joint Chapter 11 Plan of Reorganization.
In May, 1997 the Court confirmed the plan of reorganization of SPL. See attached
Exhibit for the SPL's First Amended Chapter 11 Plan. The Company's approved plan
of reorganization was based upon Helionetics, Inc. and Ms. Susan Barnes acting
as its co-proponents. In April 1997, Helionetics also filed a voluntary petition
under Chapter 11 of the Bankruptcy Code (Case No. SA 97-14645 JR) with the U.S.
Bankruptcy Court, Central District of California. As a result, the funding of
the Company's reorganization plan was combined with that of Helionetics
bankruptcy plan, which included the provisions and methodology to fund the
Company's plan. In addition, due to Helionetics creditors under its plan, the
pay-out to the Company's creditors was negatively affected. The confirmation
hearing for the Chapter 11 Liquidating Plan of Helionetics, Inc. held on
November 24, 1998 was approved by the U.S. Bankruptcy Court on December 23,
1998. Provisions of the Combined Plans included the following:

         o The Company will issue 87.5% (5% of which will be issued to the
Helionetics Committee of Unsecured Creditors (Helionetics Committee) pursuant to
a settlement agreement reached between the Helionetics Committee, the Company,
Susan Barnes and an affiliate) of the Company's "new" common stock to Ms. Susan
Barnes, as its co-proponent of the Company's plan of reorganization, and in
exchange for her agreement to forgo any claims on her approximately $4.3 million
secured claim against Helionetics, Inc. The shares are exempt from registration
requirements under the 33 Act pursuant to the exemption provided by Section 1145
of the Bankruptcy Code.

         o The Company's unsecured creditors will receive up to 47% of their
allowed claims in cash as a result of the combined plan with Helionetics. The
approved reorganization plan of the Company called for a 70% pay-out to the
unsecured creditors. The payout is subject to the final determination of the
Helionetics own plan of reorganization . The plan required an initial payment to
the unsecured creditors of approximately 30% of the approved pay-out. However,
only approximately $426,700 initial payment was made in May 1997. Ms. Barnes
provided the funds for this initial payment.

         o Helionetics contributed to the Company its interest (87.5%) in Aim
Energy, Inc.

         o The Company will issue on a pro rata basis to its existing
shareholders (Class 6 claimant) 12.5% of its "new" common stock in exchange for
their existing "old common shares" outstanding which totalled 6,039,333 shares.
The new shares to be issued are exempt from registration pursuant to exemption
provided by Section 1145 of the Bankruptcy Code.

         o Under the approved plan of reorganization of Self Powered Lighting,
Inc., all creditors of SPL will receive 100% of their allowed claims within 60
months from its effective date and the Company will retain its 100% interest in
SPL.

         o Helionetics will cancel and release its claim against the Company for
$1,800,000 note receivable secured by all assets of the Company.


                                       3

<PAGE>

         o The Company will issue two secured promissory notes; a $800,000
senior note in favor of the Helionetics Committee and a $500,000 junior note in
favor of Ms. Susan Barnes. Both notes carries an interest rate of 10.5%. The
senior note matures on December 8, 2003. No payment is due on the junior note
until the senior note is fully paid. Both notes are subordinated to any new
financing that might be required by the Company.

         Subsequent to February 23, 1996, Prolite Lighting and Sign Maintenance
Co. Inc., (Prolite) continued under the control and supervision of the Receiver.
On December 16, 1996, Tri-Lite made payment in full of all remaining balances
owed to Star Bank N.A. As a result, on January 1997, the Prolite Receivership
was terminated.

         As a result of the Company's Chapter 11 filing and in conjunction with
the development of a plan of reorganization, the Company decided to discontinue
the operations of the NL Corporation division located in Cleveland, Ohio and its
remaining recessed lighting business.

         The Company, as a result of the approved plan of reorganization, is now
comprised of the wholly owned subsidiary Self-Powered Ligthing, Inc.; the 87
1/2% owned Aim Energy, Inc. (see description of business) and the 100% owned
subsidiary, Prolite Lighting and Sign Maintenance Co., Inc. (an inactive
corporation).

         At December 31, 1997, as a result of the confirmed plan of
reorganization, 87.5% of the Company's common stock was owned jointly by its
co-proponents, Helionetics and Susan Barnes. The ownership interest was
subsequently reduced by 5% pursuant to a settlement agreement between the
parties.

(b) Financial information about industry segments:

         Prior to the approval of the Company's plan of reorganization, the
Company's business was in two business segments: (i) manufacturing and sale of
electrical lighting fixture including emergency exit signs, and (ii) energy
management. Financial information by industry segment for the Company is
presented in the financial statements accompanying this report. Currently as a
result of the approved plan of reorganization, the Company's business is now in
two business segments: (I) emergency lighting fixtures, and (ii) energy
conservation and safety equipment.


(c)  Narrative description of business

         Emergency Lighting Fixtures

         1.   Products

         Through its wholly-owned subsidiary, Self Powered Lighting, Inc., the
Company is engaged in the manufacture and distribution of specialized emergency
and exit lighting fixtures. SPL offers two types of exit signs:

          (1)  low energy electrical

          (2)  no energy (self luminous) - represents approximately 75% of total
               sales

Generally, SPL sells through a sales representative network. In-house sales
orders are handled by SPL's own internal marketing staff.


         2. Manufacturing and Suppliers


                                       4

<PAGE>

         At December 31, 1997, the Company's manufacturing facility for SPL
products is located in West Nyack, New York. SPL's primary raw material vendor
is located in England. The 1996 Chapter 11 filing of the Company and SPL had the
effect of causing difficulty in maintaining its credit terms with all vendors.
However, in 1996, after a period of sourcing raw materials on a cash basis, SPL
has been able to re-establish credit terms with it's primary vendor and a
majority of its domestic vendors. Most finished products are supplied by a
foreign manufacturer located in the Republic of China and paid, generally, on a
letter of credit basis.


         3. Working Capital Items

         SPL maintained sufficient raw materials to sustain its manufacturing
operations. Finished goods are generally purchased to support existing backlog.
However, its ability to respond quickly to customer orders are somewhat hampered
by its limited working capital. This sometimes resulted in lost revenues. SPL
has in place a receivable factoring line of credit in the amount of $500,000
which it believes is sufficient at the present time but could require additional
funding if its plan of operations increase. The Company is also in the planning
stage of tapping the equity market to raise additional capital to settle
favorably its chapter 11 obligations.

         4. Customers

         During 1997, 1996 and 1995, SPL had no sales to a single customer which
totalled more than 10% of their total sales respectively. During 1998, SPL
obtained a "sole-source" agreement with Catalina Lighting (a NYSE company) to
supply its entire emergency and exit lighting requirements under the
Westinghouse brand name for resale to major home improvement chains. This
business is expected to increase over the next 2-5 years.


         5. Seasonality and Backlog

         SPL has no substantial seasonal factors that affect it's emergency
lighting fixture business. SPL's backlog at December 31, 1997, 1996, and 1995
totaled approximately $550,000, $1,100,000 and $443,000, respectively which is
anticipated to be shipped over the next 12 months. The backlog at December 1996
is unusually high due to supply problem related to Tritium, a key material used
in the manufacture of exit signs. The supply problem was resolved subsequently.

         6. Competition

         SPL is one of two manufacturers that supply emergency signs to the
airline industry. SPL is also one of four companies that manufacture and
distribute self luminous exit signs.

         7. Research and Development

         SPL has not expended and does not require significant funds for
development of new products.

         8. Patents, Trademarks and Licenses

         SPL has patents in place on certain of its products.

         9. Environmental Matters


                                       5

<PAGE>

         SPL uses Tritium, a regulated raw material, in the manufacture of its
self luminous products. Tritium is a low energy isotope of hydrogen that emits a
soft beta ray. Tritium is naturally present in the atmosphere as a result of
cosmic ray bombardment of oxygen and nitrogen in the upper atmosphere as well as
outer space. Tritium Oxide is the regulated element in Tritium gas and would
have to be ingested for hours to be considered mildly dangerous. Tritium used in
exit signs is 96% pure and contains less than 1% Tritium Oxide. There have been
no reported incidents (harmful to either man or the environment) due to acute
exposure to Tritium. The Company employs a radiation safety officer who oversees
the Company's use of Tritium and sees to it that the Company complies with the
appropriate regulations. No additional capital expenditure is required by the
Company to comply with regulations.

         10. Employees

         At December 31, 1997, 1996 and 1995, SPL employed 25, 22 and 29
employees, respectively at locations in Elmsford, NY and in West Nyack, NY.


         Energy Conservation and Safety Equipment Business - During 1997 the
Company operated its energy conservation and safety equipment business through
its 87 1/2% owned subsidiary, Aim Energy, Inc.

         1. Products and services

         The "Active Injection Mode Harmonic Conditioner" (the AIM Filter) is an
electronic device which mitigates or cancels harmonic current distortion, also
called Total Harmonic Distortion (THD). Harmonics waste energy, increase
electrical bills, overheat wires and equipment, create interference, cause
computers and computer controlled equipment to malfunction and interferes with
telecommunications. Harmonics can require expensive rewiring to avoid
overheating of wires and possible fires. Harmonics are an increasingly serious
hazard due to the greater use of devices to improve energy efficiency and the
rapid expansion in the use of computers and computer related equipment.

Harmonics. Alternating current (AC) is now universally used to deliver power in
electric power systems. AC power is known as "alternating" because the flow of
current is continuously reversing; positive current in any one wire becomes
negative current and vice versa. This happens 60 times per second in the United
States, Canada and Mexico and hence is called "60 cycle" power. Ideally, this
alternation occurs smoothly and continuously, e.g., from positive 110 volts to
negative 110 volts. If pictured on a graph (or oscilloscope), the alternation of
current forms a smooth "sine wave" and thus the current is known as
"sinusoidal". The flow of current is not smooth and continuous when there is
harmonic distortion of current. Harmonic distortion of current causes voltage
harmonics, i.e., increases or decreases in voltage from that which would conform
to a smooth sine wave.

Equipment such as computers, electronic ballasts (used by fluorescent lights),
welding equipment, battery chargers, motor speed control devices such as
variable speed drives ("VSDs"), and uninterruptible power supplies ("UPSs") all
use utility current to run an electronic power converter. The power converter
changes the normal AC power supplied by the utility into direct current ("DC")
(and in some cases back to the AC power) used by the machines. Power converters
draw current in pulses, and the effect of each pulse is to generate harmonic
distortion in the current carried by the wire. When harmonics from different
sources are in synchronization, the effect is amplified.

Problems Caused by Harmonics. Current harmonics waste energy, requiring
increased generation capacity and fuel use. Harmonics can cause computer shut
downs, tripped circuit


                                       6

<PAGE>

breakers, overloading of electric equipment, failure of electronic parts,
premature failure of insulation on electrical wires ("conductors"), reduction in
capacity of the large conductors and the useful output of power generators and
serious reduction in the operating life of electrical motors.

Computers and computer controlled equipment must have essentially sinusoidal or
"clean" voltage to operate. Voltage harmonics can cause a computer to "crash",
resulting in lost data and reduced productivity. In addition telecommunications
equipment is now generally controlled by computers sensitive to harmonics,
telecommunications equipment can also suffer interference from harmonics,
degrading the quality of the signal. Medical equipment, such as computer
controlled monitors, CAT scanners, magnetic resonance imagers (MRI), and x-ray
equipment can also malfunction because of harmonics.

Building wiring and transformers can suffer overheating and premature aging in
the presence of harmonics. A problem found in large office buildings is a build
up of current on the neutral conductor of three phase systems. While these
conductors ideally would have no current flow at all, harmonics may cause them
to carry a current substantially in excess of the current on any other
conductor. This current can overheat the wire, requiring rewiring to prevent
electrical fires. As a result, building owners may expend substantial sums to
rewire or require tenants to limit or reduce the harmonics they create in order
to protect the building wiring and the integrity of other tenants' power supply.
Harmonics also cause transformers serving a building or a particular portion of
the building to overheat, and heavier duty, more expensive harmonic resistant
transformers ("x-rated transformers") are now required where harmonics are
anticipated.

Uninterruptible power supplies ("UPSs") are used to protect computers and
important equipment from power failure. Each UPS contributes harmonics because
of its AC/DC power converter, while at the same time supplying power to
equipment sensitive to harmonics. Thus, the UPS may require harmonic filtering
to limit the harmonics it creates in the building and protective circuits to
protect it against harmonics from other sources. In addition, harmonic filtering
may be necessary for successful synchronization of the UPS power supply and the
line power supply which is required for redundancy. A similar problem exists
with respect to standby emergency generators, which may be unable to operate in
a building with large harmonics due to an inability of the small generators to
generate sufficient current and/or an inability to synchronize with other power
sources (utility power or UPS power).

Harmonics also cause problems for utilities. Harmonics travel through the power
line to utility equipment, such as switches, transformers and the nearest
generators, potentially damaging such utility equipment. The utility must limit
harmonics on the line to serve their customers and protect their own equipment.
In addition, harmonics require larger conductors and generation capacity to
supply the power needed to do a given amount of useful work.

As an additional benefit, the AIM Filters also provide substantial power factor
correction. "Power factor" is the ratio of the watts of electricity consumed to
volt-amps on the circuit, expressed as a ratio. Thus, if a traditional
electricity meter indicates 80 watts consumed, but the utility is supplying 1
amp of power at 100 volts, or 100 volt-amps, the power factor would be .8.
Several United States utility companies have begun implementing surcharges for
large customers with low power factors to recover the cost of supplying the
larger volt-amps required by the customer. These surcharges are a material part
of electric bills for large customers with low power factors. The AIM Filter
increases the power factor, thus reducing the surcharge (in some cases the power
factor is corrected to a level where the user actually qualifies for a reduced
KWH rate charge); this may provide an additional cost justification for
installation of such filters. However, it should be noted that in many if not
most installations, the traditional alternative approach of adding power factor
correction capacitors and equipment may be


                                       7

<PAGE>

adequate, and the AIM Filter must compete with these approaches as a means of
power factor correction.

The problems of harmonics are receiving growing attention worldwide. The
Institute for Electrical and Electronics Engineers, a principal standard setting
body for the industry, has promulgated its latest standard, IEEE 519-1992
Recommended Practice and Requirements for Harmonic Control in Electric Power
Systems, replacing a 1981 version. The new standard sets a limit on harmonics to
a maximum of 5% on total harmonic distortion of current ("TCD"), i.e., harmonic
variations in current, and 5% total harmonic distortion of voltage ("TVD").
While IEEE 519-1992 is a professional standard for electrical engineers, and
thus does not have the force of law, it is deemed to set the standard of care
for the profession and thus result in potential liability if a professional
authorizes a deviation therefrom and that deviation causes a loss. Compliance
with this or other similar standards may become required by law on a
state-by-state and country-by-country basis for new installations. In addition,
the standard may be adopted by utilities. For example, SaskPower, a Canadian
utility, requires compliance with this standard at the time of any change in the
utility connection.

Methods to Solve the Harmonics Problem. Several methods other than active
injection mode harmonic conditioners (such as the AIM Filters) are currently
used to mitigate the problem of harmonics. These include: passive filters,
zig-zag and phase shift transformers, and complex, higher order multiphase
rectifiers (e.g., 12 pulse, 18 pulse, 24 pulse, etc.). There are serious
limitations to the competing products and approaches.

Passive filters are the traditional approach. They must be designed for the
specific harmonic problem, often at significant engineering cost, and are thus
inflexible. In a dynamic environment, such as that caused by installation of new
VSD, UPS and computer equipment, harmonic distortion changes, and passive
filters will likely fail to mitigate harmonics and may even create resonance
problems due to interference of the filters with each other or other equipment.
This causes significant operational limitations. Thus, when used to address
harmonics in a building or other electrical environment, passive filters are
costly to design, time consuming to implement, and likely to require expensive
changes over time. Passive filters may be designed to mitigate the harmonics
caused by a particular device more easily, and this is the most common approach
to preventing harmonic problems. However, this fails to address harmonics from
other sources and there can be interference which defeats the filtering.

Zig-zag transformers and phase shift transformers are also used to reduce
harmonics. The installation of phase shift transformers in existing
installations may require extensive and expensive rewiring to balance loads, and
both types of transformers add additional power dissipation to the system.

Improved AC-DC converters using higher-order multiphase rectification can be
used to reduce the distortion generated by specific pieces of equipment. These
prevent only the particular pieces of equipment from causing a problem-they do
not protect the rectifier or the system itself from harmonics from other
sources.

Management believes the AIM Filters are superior to these alternative methods
because they can mitigate harmonics in existing installations without
necessitating extensive engineering studies or changes in the equipment. The AIM
Filters can adapt to changing harmonic conditions, and they are comparatively
simple and inexpensive to use. The AIM Filters are connected in parallel with
the existing AC power supply, meaning that failure of an AIM Filter will not
interrupt the power supply.


                                       8

<PAGE>

The Company is currently marketing AIM Filters for three types of applications:
(1) three phase, three wire balanced loads; (2) three phase, four wire
unbalanced loads; and (3) single phase loads.

AIM Filters for three phase, three wire loads are suitable for use with products
such as VSDs, including both AC and DC motor speed controls, and are compatible
with other balanced loads, such as UPSs, fluorescent lighting ballasts,
mainframe computers and ultraviolet lighting. The AIM Filters in this category
handle voltages of 208, 240, 400, 480, 600 volts and provide currents of up to
25, 50 or 100 amps. Over 200 of the three phase, three wire AIM Filters have
been installed to date, including models in each of the five listed voltage
configurations.

AIM Filters do not address all power quality problems, The filters will not stop
large voltage surges caused, for instance, by lightning strikes; a separate
surge protector (together with a UPS or backup generator to maintain power) is
needed for this. The AIM Filters cannot correct voltage sags caused by the
utility system (as opposed to those caused by the harmonics), for which a UPS
would be necessary. The capabilities of the AIM Filters complement those of a
UPS or a back-up generator, eliminate problems caused by that equipment and
other equipment causing or sensitive to harmonics, and may be necessary in order
to use such equipment effectively.

         2. Marketing

         The first models of the AIM Filters are designed for use in the
commercial, industrial, and public utility sectors to install in water/sewage
treatment and other large facilities using VSD controlled motors; and office
building and institutions with significant use of VSDs, computers, UPSs, or
energy saving illumination. The AIM Filters can be used either in existing
installations with harmonic problems or in connection with installation of new
devices which are likely to cause harmonic problems, or can be sold together
with (or incorporated into) specific products which are likely to cause
harmonics.

One of the first focuses of AIM marketing has been to sell AIM Filters to those
organizations installing VSDs and UPSs in either existing facilities or new
facilities. The initial models of the AIM Filters are suitable to control the
harmonics caused by many types of VSDs and UPSs, and subsequent models will be
suitable for all but the largest VSDs and UPSs.

Installation of VSDs in existing buildings reduces electric consumption by 30%
to 50% of the electricity used by motors in elevators, fans, and HVAC. The
Company estimates that the expense of adding a VSD can be recovered quickly,
making the change highly cost-effective. The harmonics caused by VSD
installation may be unacceptable without harmonic filtering, and approaches to
harmonic filtering other than the AIM Filter have serious drawbacks. Thus, the
Company will market AIM Filters as a simple and cost effective way of using
VSDs, allowing recovery of the VSD cost savings. Even with the cost of the AIM
Filters, the Company believes that the cost of the VSD and filter can generally
be recovered in less than three years.

AIM has entered into representation agreements with independent companies which
sell and service VSDs and UPSs. These agreements generally are (but not always)
exclusive within a territory. The distributor buys and sells in his own name and
for his own account. He acts as an independent trader in regards to both the
Company and the customers without thereby being authorized to act in the name of
or on behalf of the Company or otherwise to bind the Company. AIM may contract
with one or more stocking distributors who may purchase the filters for resale.
In each case, the local representative will have local servicing
responsibilities for the products. In addition, AIM will retain the right to
sell directly to "national accounts" in territories serviced by a distributor,
but will pay the representative a reduced fee to supply local service. In areas
in which there are no distributors, AIM will market the filters directly. AIM
presently has eighteen


                                       9

<PAGE>

(18) sales representatives covering the United States, Canada, Japan, Australia
and Europe. Plans are underway to add representatives.

AIM has also entered into a license and joint marketing venture with Shindengen
Corporation, a Japanese power supply company, in early 1998 for the purpose of
exploiting the Japanese and other Asian markets. The agreement calls for
delivery of fifty (50) AIM Filters.

         3. Backlog

         AIM has backlog of unfilled orders at December 31, 1997 of
approximately $100,000. Backlog in 1996 and 1995 is nominal due to the absence
of sales activities in those years.

         4. Working Capital Items

         AIM maintain a very limited parts inventory on hand due to its limited
resources. Parts are purchased from suppliers on a COD basis. This arrangement
was a result of the bankruptcy filing of Helionetics, Inc., its previous parent
company. Virtually no finished goods are maintained and products are built when
orders are received from customers. AIM finances its customers orders by
requiring a partial payment (generally 25%) from customers. These advances are
deducted later on from shipments to the customers. AIM offers discounts for
early payments of its receivables thereby improving its liquidity.

         5. Patents and Licenses

         AIM has two patents relating to the AIM Filters. While the Company
believes that the technology included in the patents significantly reduces the
cost of production and improves the performance of active harmonic filters as
compared to competitors' products, the patents will not prevent the development
of other active harmonic filters or other methods of dealing with or preventing
harmonics, and it is possible that competing products or approaches may have a
competitive advantage.

         6. Research and Development

         The Company is continuing refinement of the technology for smaller
applications and plans to incur additional engineering to reduce the cost of the
existing AIM Filters. The Company estimate the cost to complete this engineering
is approximately $250,000.

         7. Employees

         AIM currently has 6 employees. It employs a consultant for its
engineering and other technical requirements. AIM plans on hiring additional
engineering staff in 1999.

         Discontinued Operations

         As a result of the Chapter 11 filing in February 1996, the Company
discontinued and liquidated all of its operations, except for SPL.

         The principal products and services of the discontinued operations were
as follows:

         (a) lighting fixtures, which involves designing, sourcing,
manufacturing and marketing of recessed lighting, track lighting and decorative
lighting and (b) electrical energy management, which involves auditing,
retrofitting, maintaining and managing lighting in order to reduce energy
consumption used for lighting of industrial and commercial buildings. The
electrical management business operated through Prolite Lighting and Sign
Maintenance Co.,


                                       10

<PAGE>

Inc. and its subsidiary. The remaining subsidiaries (Allite, Inc., Trio
California, Inc., Trio Lighting, Inc., and NL Corporation) comprised the
lighting fixture division.

Revenues for 1996 and 1995 of these discontinued operations were $5,509,800 and
$19,337,000 respectively.



Item 2. Properties

At December 31. 1997, the Company leased the following properties:

         (a)  Corporate offices and warehouse of SPL California operations - a
              single industrial building with approximately 15,400 square ft.
              and annual rent of $74,064. The lease expiration is December 1,
              2002.

         (b)  Manufacturing plant and offices of SPL in New York - a 14,000 sq.
              ft. single industrial building with annual rental of $63,000 for
              the first year ending May 1995; $70,000 for the second, third and
              fourth year; $73,060 for the fifth, sixth and seventh year and
              $76,300 for the eight, ninth and tenth year, which will expire May
              2005.


Item 3. Legal Proceedings

Other than ordinary routine litigation incidental to the business, the Company
and it's subsidiaries are involved in the following material legal proceedings:

         In October 1995, the Company filed a complaint in the U.S. District
Court for the Northern District of Ohio against Helionetics, Inc. (Helionetics),
its majority shareholder, for $2 million in compensatory damages and $2 million
in punitive damages for the alleged repudiation and revocation of Helionetics
guaranty of the Company's credit facility with its senior lender, along with
other cause of actions. Helionetics disputed all of the Company's claims.
Helionetics as a response, filed a counter-complaint against Star Bank in the US
District Court, Northern District of Ohio (Case No. 1:95CV2289) which case was
transferred to the US Bankruptcy Court, Central District of California in May
1996 (Case No. SA 96-1523JR). The complaint against Star Bank was dismissed as
part of the bankruptcy proceedings and the Company's complaint against
Helionetics were no longer being pursued by the Company.


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

         Each security holder of record on February 26, 1996, received the
Company's Third Amended Disclosure Statement For Third Amended Joint Chapter 11
Plan of Reorganization and a ballot to vote their approval or disapproval of
such Plan.



                                     PART II


                                       11

<PAGE>

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

         (a) In conjunction with the Company's plan of reorganization, the
Company's equity will be recapitalized. The reorganized company will issue new
Tri-Lite Common Stock to satisfy the requirements of Section 6.6 of the plan.
The plan calls for issuance of 12.5% of the Company's new common stock of
4,000,000 shares, or 500,000 shares, to the existing shareholders. As of January
31, 1999, the Company has 6,039,333 shares outstanding of the old common stock.
A description of these requirements is set forth in the attached Chapter 11
Disclosure Statement at Exhibit I. As of January 1999, there is no established
public trading market for the Company's stock. The Company is actively pursuing
viable alternatives to establish a market for the Company's common shares.

         (b) At January 31, 1999 there were approximately 3,450 holders of the
Company's common stock.


         (c) The Company presently intends to retain future earnings, if any, to
provide funds for use in the operation and expansion of its businesses.
Accordingly, the Company does not anticipate paying cash dividends on its
common stock in the foreseeable future.


                                       12

<PAGE>


Item 6. Selected Financial Data

The following tables summarize certain selected financial data for the periods
presented for the Company on a consolidated basis. The data for the years ended
December 31, 1997, 1996 and 1995 should be read in conjunction with the more
detailed audited consolidated financial statements for such years presented
elsewhere herein.

<TABLE>
<CAPTION>
Income Statement Data
---------------------
                                                           December 31
                            -------------------------------------------------------------------------
                                1997           1996            1995            1994           1993

<S>                         <C>            <C>            <C>             <C>             <C>        
Revenues                    $ 5,084,800    $ 8,047,000    $ 22,947,500    $ 19,865,000    $ 4,568,000

Income(Loss) from
  Continuing operations     $  (974,900)   $(4,212,700)   $(11,640,100)   $ (2,441,000)   $(1,129,000)
  Discontinued operations             -   $          -    $ (1,447,700)   $ (1,610,000)   $   871,000
   Extraordinary item           576,300              -               -               -              -

Income(Loss) Per Share      $     (0.10)   $     (0.70)   $      (2.17)   $      (1.06)   $      0.12

Cash Dividends Per Share            N/A            N/A             N/A             N/A            N/A


Balance Sheet Data
------------------

Total Assets                $ 1,363,200    $ 2,375,900    $  6,166,900    $ 19,507,000    $ 9,513,000

Long Term Obligations:

  Due to Parent             $         -    $ 1,866,500    $  1,980,000    $  6,175,000    $ 2,597,000

  Other Long Term Debt      $ 1,866,000    $         -    $  3,365,100    $    106,000    $    48,000

Liabilities Subject
    to Compromise           $ 5,721,600    $ 6,148,300               -               -              -
</TABLE>


                                       13

<PAGE>


Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

         The Company's overall financial condition during 1997 and 1996 has
changed significantly as a result of the Company's filing for protection under
Chapter 11 of the Bankruptcy Code in February 1996 resulting from the decision
by Star Bank to roll up and terminate the Company's line of credit.

         Liquidity and Capital Resources

         For essentially all of 1996, the Company operated as a debtor in
possession and was liquidating its Prolite subsidiary under the direction of a
court appointed receiver. Proceeds from the Prolite liquidation were used to pay
down the Star Bank loan. Additionally, almost all activities were directed to
the reduction of the Star Bank loan balance which was completed in early
December 1996. A receivable financing facility was obtained with a financial
institution in December 1996 which essentially funded the remaining operations
of the Company, namely SPL and the Allite operations for the year of 1997. The
receivable financing, however, had very onerous provisions in terms of interest
rate and other factoring cost. AIM Energy, Inc., contributed to Tri-Lite
pursuant to the Chapter 11 reorganization plan, operated from its own limited
resources. Its liquidity for the year of 1997 was provided, in part, from
occasional loans from Ms. Susan Barnes. In addition, advances were required from
most of its customer orders which enabled AIM to purchase required parts. These
sources of liquidity, while helpful, naturally hampered the efficient operation
of AIM.

         Working capital was a deficit in 1997, 1996, and 1995 of $1,231,800,
$1,433,600 and $343,800, respectively. The deficit was a direct result of
decreased receivables and inventories of $876,000, $3,411,000 and $7,923,000,
respectively for 1997, 1996 and 1995 which was caused by the Chapter 11
proceedings. Payables and accrued expenses decreased by $638,000, $3,213,000 and
$818,000 in 1995, 1996 and 1997. In 1997, pre-petition trade accounts payables,
pre-petition did not change significantly due to the Chapter 11 proceedings
which stayed all pre-petition liabilities. A significant accrued liability
relates to the bankruptcy proceedings which is primarily administrative cost.

         The funding for the Company's plan of reorganization which was approved
on January 16, 1997 was partly provided by Ms. Susan Barnes contribution of
$426,737. This amount was used to fund the first payment to the unsecured
creditors. The remaining balance due to unsecured creditors will be funded from
the proceeds of the sale of Helionetics holding of shares of Laser Photonics,
Inc. pursuant to the collateral pledge agreement between the Company and
Helionetics. A senior secured promissory note of $800,000 was issued by the
Company in favor of the Committee of the Unsecured Creditors of Helionetics in
addition to a subordinated junior promissory note of $500,000 in favor of Ms.
Susan Barnes. The final distribution to unsecured creditors was dependent upon
final resolution of the Helionetics Chapter 11 proceedings.

         No substantial capital expenditures were made in 1996 and 1997; and
there were no substantial capital expenditures anticipated in 1998.

         Subsequent Event

         In June 1998, SPL replaced its receivable financing facility with a
financial institution and entered into a financing agreement with another
institution on more favorable terms. The new financing agreement requires SPL to
pay the prime rate of interest, as defined, plus 6% on advances equal to 80% of
its eligible account receivables.


                                       14

<PAGE>

         In March 1998, AIM entered into a license agreement with Shindengen
Electric Manufacturing Company, Ltd. (Shindengen) whereby it received $300,000
for granting to Shindengen the right and license to design, manufacture and sell
the AIM products in Japan and Asia. The agreement calls for payment to AIM of a
4% royalty for sales of AIM products by Shindengen and an initial order of 50
AIM units.

         The Company expects to receive by the end of March 1999 or early in
April a UL (Underwriter Laboratories) approval on its AIM products. The Company
currently hold a CE Mark on its AIM products that enable it to sell in Europe.

         The Company's liquidity needs continued to be provided by its own
internal operations, however, the Company needed additional working capital to
fund its increasing backlog and the engineering cost required to reduce its AIM
filters cost.

         Results of Operations -

         1997 vs 1996
         ------------

         Revenues for the year ended December 31, 1997 were $5,085,800, a 
decline of 37% from the 1996 revenues of $8,047,000. The decrease in 1997
revenues was primarily a reflection of the Chapter 11 proceedings.

         The loss from continuing operations for 1997 and 1996 amounted to
$974,900 and $4,212,700, respectively. During 1997 the operations of the Company
were comprised mostly of SPL and three quarters of the year for AIM. The 1997
combined gross margin of approximately 33% was unfavorably affected by the
margin contribution of the discontinued lighting fixtures division. Excluding
the effect of such discontinued division, gross margin was approximately 44%
compared to 32% in 1996.

         Selling, general and administrative expenses, as a percent of sales
were 47% and 48% for 1997 and 1996, respectively. The unusually high percentage
of expenses in 1996 was the result of the Chapter 11 bankruptcy filing. 1996
expenses included Chapter 11 administrative cost of approximately $1 million,
accrual for employment contracts allowed as unsecured claims ($983,000), and
write off of receivable from NL de Mexico ($529,000).

         Interest expense of $302,000 in 1996 was the result of the Star Bank
loan which was fully paid off in December 1996.

         Included in 1997 income was the gain on Chapter 11 proceedings of
$576,300 as a result of the gain recognized on the initial payment to the
unsecured creditors.

         The profitability in 1997, while improved, continued to be impacted by
the Chapter 11 proceedings specifically in the areas of Chapter 11
administrative cost and the higher cost charged by the receivable financing
facility. The Company anticipate an improved profitability in 1998. The
improvement will be attributed to: lower interest (factoring) cost as a result
of a new receivable financing facility obtained in June 1998; consolidation of
AIM's full year of operations in 1998 which will reflect the favorable effect in
results of operations of the Shindengen agreement; the effect of cost savings
implemented at SPL and reduced Chapter 11 administrative cost.

         1996 vs 1995
         ------------

         Revenues for 1996 and 1995 were $8,047,000 and $22,947,500,
respectively or a decrease of $14,900,500 or 65%. The decline in 1996 like in
1997 was the direct result of the 


                                       15

<PAGE>

Chapter 11 proceedings which essentially reorganized the Company's operations by
the discontinuance of the electrical lighting fixtures business segment except
for SPL's operations.
[B
         The loss of $4,212,700 in 1996 compared with a loss of $11,640,100 for
1995. In 1995 the loss on discontinued operations of $1,447,700 relate to
Prolite, the energy management segment of the Company. The loss in 1995 included
the effect of the Chapter 11 filing in 1996. It included various asset valuation
provisions: inventories and receivables reserves of $1.8 million; $600,000 fixed
assets valuation allowance; $3.4 million write off of goodwill; and $200,000
miscellaneous general accruals. The decline in profitability in 1995 commenced
in the second quarter of 1995 and continued on until the fourth quarter. Up
until the second quarter of 1995, the Company experienced liquidity problems. In
July 1995, a new line of credit was obtained from Star Bank primarily as a
result of Mr. Lawrence Terkel's efforts. Mr. Terkel was President and operating
officer of the Company at the time. Mr. Terkel had been serving as President and
Chief Executive Officer of NL Corporation, the Company's wholly-owned subsidiary
in Cleveland, Ohio. A significant condition of the new loan was a required
change to the Company's Board of Directors and management team. Additionally,
the bank and Mr. Terkel required Helionetics to guaranty the line of credit.
Business conditions within the Company, already difficult, deteriorated
dramatically coincident with the installation of the new board of directors and
new management team led by Mr. Lawrence Terkel. The loan covenants which the
Company had agreed to in July 1995 at the time of the new management takeover,
were in default by October 1995 and culminated with the first notice by Star
Bank in January 1996 to the Helionetics board of directors of such default. The
Star Bank notice gave the Helionetics board fourteen (14) days to correct the
default in the approximate $5 million loan. Shortly thereafter, Mr. Terkel and
the entire board of directors of the Company, at the Helionetics' board request,
tendered their resignations. The Company was then in default of its Star Bank
loan and was incurring significant losses from operations. In February 1996,
Chapter 11 proceedings were instituted to protect the Company's assets from Star
Bank's foreclosure proceedings. Operations in 1996 were severely curtailed as a
result of the Chapter 11 filing and reflect the winding down of the lighting
products business other than that of SPL. The manufacturing operations in Mexico
were essentially shut down and Prolite was liquidated in 1996 by a court
appointed receiver.

         Interest expense in 1996 and 1995 was approximately $302,000 and
$600,500, respectively. The decrease was the result of pay-downs in the Star
Bank loan as a result of the bankruptcy.

         Impact of Recently Issued Accounting Standards

         The FASB has issued Statement of Financial Accounting Standards 130
"Reporting Comprehensive Income" and Statement of Financial Accounting Standards
131 "Disclosures About Segments of an Enterprise and Related Information".
Statement 130 establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is defined
as all changes in equity except those resulting from investments by owners and
distributions to owners. Among other disclosures, Statement 130 requires that
all items that are required to be recognized under current account standards as
components of comprehensive income be reported in a financial statement that
displays with the same prominence as other financial statements. Statement 131
supersedes Statement of Financial Accounting Standards 14 "Financial Reporting
For Segments of a Business Enterprise". Statement 131 establishes standards on
how public companies report financial information about operating segments in
interim financial statements that are issued to the public. It also establishes
standards for disclosures regarding products and services, geographic areas and
major customers. Statement 131 defines operating segments as components of a
company about which separate financial in formation is available that is
evaluated regularly by the chief operating decision makers in evaluating how to
allocate resources and in assessing performance.


                                       16

<PAGE>

         Statements 130 and 131 are effective for financial statement periods
beginning after December 15, 1997 and require comparative information for
earlier years to be restated. Because of the recent issuance of these standards,
management has been unable to fully evaluate the impact, if any, the standards
may have on the future financial statement disclosures. Results of operations
and financial position, however, will be unaffected by implementation of these
standards.

         Also, in June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 (SFAS No. 133), "Accounting
for Derivative Instruments and Hedging Activities". This statement is effective
for fiscal years beginning after June 15, 1999. Earlier application is
encouraged; however, the Company does not anticipate adopting SFAS No. 133 until
the fiscal year beginning January 1, 2000. SFAS No. 133 requires that an entity
recognize all derivatives as assets or liabilities in the statement of financial
position and measure those instruments at fair value. The Company does not
believe the adoption of SFAS No. 133 will have a material impact on assets,
liabilities or equity. The Company has not yet determined the impact of SFAS No.
133 on the income statement or the impact on comprehensive income.

         SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement benefits" and SFAS No. 134, "Accounting for Mortgage-Backed
Securities Retained after the Securitization of Mortgage Loans Held for Sale by
a Mortgage banking Enterprise" were issued in 1998 and are not expected to
impact the Company regarding future financial statement disclosures, results of
operations and financial position.

         Year 2000 Problem

         The Company has reviewed its operations as it relates to the Year 2000
issues. The effect on the Company's operations of the Year 2000 issues are
minimal. SPL products do not utilize parts or processes that the Year 2000
issues need to address. AIM's products are analog based and therefore have no
Year 2000 issues. An estimated capital expenditures of approximately
$25,000-$30,000 however, will be required to update the Company's computer
hardware, network and management systems to make it Year 2000 compliant.
Implementation of these changes is anticipated to occur in the second quarter of
1999.

         For vendors and suppliers, the Company believes, while assurance cannot
be made, that its sources of materials and parts will not be affected by the
Year 2000 problems. Important suppliers of the Company's manufacturing needs and
customers are either major or fairly large corporations which we believe would
be in compliance of the Year 2000.

Item 7 (a). Quantitative and Qualitative Disclosures About Market Risk.

         The Company does not have any market risk sensitive instruments at
December 31, 1997.

Item 8. Financial Statements and Supplementary Data

         The financial statements prepared in accordance with Regulation S-X are
set forth beginning on page F-1 hereof.

Item 9. Changes in and Disagreements With Accountants on Accounting and
        Financial Disclosure


                                       17

<PAGE>

         Reference is made to the information set forth in the Current Report
(Form 8-K) dated December 28, 1995 and the Current Report (Form 8-K) dated May
3, 1996. Such Reports are incorporated by reference.


                                       18

<PAGE>

                                    PART III


Item 10. Directors and Executive Officers of the Registrant

         The names and ages of the directors and executive officers of the
Company as of January 31, 1999 are as follows:

          Name              Age @ 12/98         Position
          ----              -----------         --------


    E. Maxwell Malone          61         Director, President and
                                          Chief Executive Officer

    Jack Katz                  39         Director, President & CEO, 
                                          Self-Powered Lighting, Inc.

    Ernest Dageford            64         Director, President & CEO,
                                          Aim Energy, Inc.

    Adrian Cayetano            54         Director and Principal Accounting
                                            Officer

    Fred de Boom               62         Director


         The directors shall serve until the next annual meeting of shareholders
or until their successors are elected. Background information on the Company's
current Directors and Officers is as follows:

         E. Maxwell Malone - is currently President and Chief Executive Officer
of the Company since October 1997. He is currently the President and Director of
Helionetics, Inc. since 1990. Helionetics, Inc. filed for protection under
Chapter 11 of the U.S. Bankruptcy Code in April 1997; and its Liquidating Plan
approved in December 1998. Mr. Malone was a founder and, from its inception in
August 1987, through June 1989, Chairman of the Board, President and Chief
Executive Officer of Bristol Research, a manufacturer of primary processing
boards for personal computers. Mr. Malone served as President of Pick Systems
Corporation and Pencor International Corp., two computer software firms. Mr.
Malone was a co-founder of Microdata Corporation, a manufacturer of computer
systems acquired by McDonnell Douglas Corporation in 1978. Prior to that, Mr.
Malone was also a senior programmer for Lockheed Missiles & Space corporation
and Control Data Corporation as well as an instructor of Applied Statistics at
Southern Illinois University.

         Jack Katz has served as President of Self-Powered Lighting since 1996.
He served as a director of the Company since April 1997. Mr. Katz has been in
the lighting business for over ten years and had served as Regional Vice
President of Catalina Lighting, Inc., a NYSE company, from November 1995 till
September 1996. He was President of Allite, Inc., a subsidiary of the Company,
from January 1993 to November 1995.

         Ernest Dageford - Mr. Dageford served as President and Chief Executive
Officer of Aim Energy, Inc. since 1992. He has been a Vice President of Energy
Resource Group of JWP in New York from 1986 to 1992. From 1976 to 1986, Mr.
Dageford was an owner and President of Climatron, Inc., a developer and
manufacturer of computerized controls to monitor and control industrial
commercial buildings. Climatron subsequently was sold to JWP of New York. Prior
to 1976, Mr. Dageford served in various project engineering capacity with
several electronics


                                       19

<PAGE>

companies in the areas of power quality. Mr. Dageford' educational background is
in Physics and Electronics and did graduate work in Plasma Physics.

         Adrian Cayetano - Mr. Cayetano was a consultant of the Company since
November 1997 and served as Director and Principal Accounting Officer beginning
in December 1998. He served as Controller of Helionetics, Inc. from May 1990 to
August 1996. Helionetics, Inc. filed for protection under Chapter 11 of the U.S.
Bankruptcy Code in April 1997 and obtained approval of its Liquidating Plan in
December 1998. Mr. Cayetano is a Certified Public Accountant in California and a
member of the California Society of Certified Public Accountants. He worked as
an auditor with Pricewaterhouse International in Manila, Philippines for five
years until 1972. Mr. Cayetano holds a degree in Business Administration with a
major in Accounting and had one year graduate studies work in business.

         Fred de Boom - Mr. De Boom was elected as a director in January 1999.
He is currently a principal of Sonfad Associates, an investment banking services
company specializing in corporate finance services for middle market companies.
Mr. De Boom had over 30 years experience with 3 leading commercial banks as a
commercial lending specialist. He has a degree in business from Michigan State
University and holds an MBA from the University of Southern California.



Item 11. Executive Compensation

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                               Long Term Compensation
                                          Annual Compensation                            Awards                   Payouts
(a)             (b)              (c)               (d)          (e)               (f)              (g)        (h)           (i)
                                                              Other
Name                                                          Annual           Restricted       Securities              All Other
and                                                          Compen-              Stock         Underlying    LTIP       Compen-
Principal                                                     sation             Awards          Options/   Payouts       sation
Position       Year           Salary($)         Bonus($)        ($)                ($)            SARs(#)     ($)           ($)
-----------------------------------------------------------------------------------------------------------------------------------
<S>            <C>            <C>                 <C>         <C>               <C>                <C>        <C>         <C>
E. Maxwell 
  Malone
  CEO          1997           24,000(6)

A. Alvin 
  Katz
  CEO          1996          120,000                           6,000(5)
               1995          120,000(1)                        6,000(5)                                                   75,000(2)

Lawrence A. 
  Terkel
  CEO          1995           94,408(3)

Jack Katz
  President, 
  Self Powered 
  Lighting
               1997           96,000                           6,000(5)
               1996           88,000                           6,000(5)

Ernest 
  Dageford
  President, 
  Aim Energy, 
  Inc.
               1997         125,000(6)
</TABLE>

(1)  Served as CEO from 1/1/95 to 7/15/95 and from 2/15/96 to July 1997.

(2)  Represents payment on one year non-compete agreement.


                                       20

<PAGE>

(3)  Served as CEO from 7/15/95 to 2/15/96.

(4)  The Company also reimburses all reasonable, ordinary and necessary business
     expenses.

(5)  Represent car allowance paid.

(6)  Represent current earnings and do not represent actual payments in 1997.



Item 12. Security Ownership of Certain Beneficial Owners and Management

         The following table sets forth information regarding beneficial
ownership as of January 31, 1999, of the Company's common stock, by any person
who is known to the Company to be the beneficial owner of more than five percent
of the Company's voting securities and by each director and by officers and
directors of the Company as a group.

Name and address of                      Amount and nature             Percent
beneficial owner                      of beneficial ownership          of class
--------------------------------------------------------------------------------

Susan E. Barnes
6026 W. 6th Street
Los Angeles, California 90024             2,802,000 shares            67.0%

Jack Katz *
2701 Junipero Street
Signal Hill, California 90806               300,000 shares             7.2%

E. Maxwell Malone                           100,000 shares             2.4%
Ernest Dageford                             200,000 shares             4.8%
Adrian Cayetano                              75,000 shares             1.8%
All current directors and officers
  as a group(4)                             675,000 shares            16.1%


*    This address also applies to all persons listed.


Item 13. Certain Relationships and Related Transactions

(a) Transactions with management and others:


         As of December 31, 1997, the Company owed Helionetics, Inc., it's
former principal shareholder, $1,866,500 on a note payable including interest at
10%. Helionetics cancelled and released its claim against the note as part of
the Company's plan of reorganization.

         During 1995, the Company leased certain real property located in
Cleveland, Ohio, from Lawrence A. Terkel, the Company's President and Chief
Executive Officer from July 15, 1995 to February 15, 1996. The properties were
owned by Mr. Terkel, his brother and father. The lease was rejected in
bankruptcy and the amount of $149,453 was included in the allowed claims of
unsecured creditors.

         As of December 31, 1995, 1996 and 1997, the Company owed Richard B.
Barnett, Senior VP - Marketing from July 15, 1995 to February 28, 1996, $195,000
on a note payable. This note and accrued interest has been settled in
conjunction with the Company's plan of reorganization for $180,000. See the
Company's Chapter 11 Disclosure Statement at Exhibit I.

         During 1995, the Company sublet certain office and warehouse space
located in Irvine, California, from Helionetics, Inc., its principal
shareholder. The Company vacated the Irvine


                                       21

<PAGE>

property in August, 1995, when it relocated to an office/warehouse facility in
Santa Ana, California, which it leased from an unrelated party. During 1995,
total accrual relating to the lease of the Irvine property amounted to $120,000.
The Company made no payments on the lease.

         Ms. Susan Barnes, as co-proponent of the Company's plan of
reorganization, will receive 82.5% of the newly issued common stock of the
Company. In addition, pursuant to the settlement agreement between the Committee
of the Unsecured Creditors of Helionetics and Ms. Barnes, the Company will issue
a junior subordinated secured promissory note of $500,000 with interest of 10.5%
in favor of Ms. Barnes. Regardless of any payment terms set forth in the junior
note, in no event shall the junior note to Ms. Barnes oblige the Company to pay
until such time as all principal, interest and others sums payable to the Senior
Note of $800,000 have been fully satisfied.

         Ms. Barnes had loaned the Company in 1996 and 1997 a total of
approximately $218,400 and at December 31, 1997 had an outstanding loan to the
Company of $142,668.


                                       22

<PAGE>

                                     PART IV


Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) Financial Statements and Financial Statement Schedules.

         (1) The following financial statements of Tri-Lite, Inc. and
Subsidiaries are included in Item 8:

               Consolidated Balance Sheets--December 31, 1997 and 1996

               Consolidated Statements of Operations--For the Years Ended
               December 31, 1997, 1996 and 1995

               Consolidated Statement of Stockholder's Equity(Deficit)--For the
               period from January 1, 1995 through December 31, 1997

               Consolidated Statements of Cash Flows--For the Years Ended
               December 31, 1997, 1996 and 1995

               Notes to Consolidated Financial Statements

         (2) Financial Statement Schedule

               Schedule II - Valuation and qualifying accounts

         (3) See Exhibit Index

(b) Reports on Form 8-K--The Company filed Reports on Form 8-K dated December
28, 1995, February 14, 1996 and February 18, 1997 and are hereby incorporated by
reference.

(c) Exhibits--The response to this portion of Item 14 is submitted as a separate
section of this report.


                                       23

<PAGE>

                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its  
behalf by the undersigned, thereunto duly authorized.


TRI-LITE, INC.

By: \s\ E. Maxwell Malone                                 Date: March 9, 1999
    ---------------------
      E. Maxwell Malone
      President and Chief Executive Officer

By: \s\ Adrian Cayetano                                   Date: March 9, 1999
    ---------------------
      Adrian Cayetano
      Principal Accounting Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.



By: \s\ E. Maxwell Malone                                Date: March 9, 1999
    ---------------------
     E. Maxwell Malone, President, Chief Executive
      Officer, Principal Executive Officer

By: \s\ Adrian O. Cayetano                               Date: March 9, 1999
    ----------------------
     Adrian O. Cayetano, Director, Principal
     Accounting Officer

By: \s\ Jack Katz                                        Date: March 9, 1999
    ---------------------
     Jack Katz, Director

By: \s\ Ernest Dageford                                  Date: March 9, 1999
    ---------------------
     Ernest Dageford, Director

By: \s\ Fred de Boom                                     Date: March 9, 1999
    ---------------------
     Fred de Boom, Director


                                       24

<PAGE>

                        TRI-LITE, INC. AND SUBSIDIARIES

                       Consolidated Financial Statements
                              For the Years Ended
                        December 31, 1997, 1996 and 1995



<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                            PAGE
                                                                            ----

Independent Auditor's Report ............................................... F-2

Consolidated Balance Sheets - December 31, 1997 and 1996 ................... F-3

Consolidated Statements of Operations - For the Years Ended
      December 31, 1997, 1996 and 1995 ..................................... F-4

Consolidated Statement of Stockholders' Equity (Deficit) - 
      For the Period from January 1, 1995 through 
       December 31, 1997 ................................................... F-5

Consolidated Statements of Cash Flows - For the Years Ended
      December 31, 1997, 1996 and 1995 ..................................... F-6

Notes to Consolidated Financial Statements ................................. F-8


                                      F-1

<PAGE>

                          INDEPENDENT AUDITOR'S REPORT


Board of Directors
Tri-Lite, Inc. and Subsidiaries
Signal Hill, California

We have audited the consolidated balance sheets of Tri-Lite, Inc. and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for
each of the years in the three year period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial condition of Tri-Lite, Inc. and
subsidiaries as of December 31, 1997 and 1996 and the results of their
operations and their cash flows for each of the years in the three year period
ended December 31, 1997, in conformity with generally accepted accounting
principles.

Our audit referred to above includes audits of the financial statement schedule
listed under Item 14(a)(2) of Form 10-K. In our opinion, the financial statement
schedule presents fairly, in all material respects, in relation to the financial
statements taken as a whole, the information required to be stated therein.

/s/ HEIN + ASSOCIATES LLP

Certified Public Accountants

Orange, California
February 15, 1999


                                       F-2

<PAGE>


                         TRI-LITE, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                          DECEMBER 31,
                                                                                                   ----------------------------
                                                                                                        1997           1996
                                                                                                   ------------    ------------
                                                                      ASSETS

<S>                                                                                                <C>             <C>
CURRENT ASSETS:
      Cash and cash equivalents                                                                    $     83,970    $    140,126
      Accounts receivable - trade, less allowance
           for doubtful accounts of $47,059 and
           $327,244 in 1997 and 1996, respectively                                                      529,428       1,073,734
      Inventories, net                                                                                  317,771         649,844
      Prepaid expenses and other                                                                         34,412          55,088
      Note receivable - Officer                                                                          20,000          20,000
                                                                                                   ------------    ------------
                     Total current assets                                                               985,581       1,938,792
                                                                                                   ------------    ------------

PROPERTY AND EQUIPMENT:

      Machinery and equipment                                                                         1,178,885       1,542,703
      Leasehold improvements                                                                            344,724         344,724
                                                                                                   ------------    ------------
                                                                                                      1,523,609       1,887,427
      Less accumulated depreciation and amortization
                                                                                                     (1,277,565)     (1,604,598)
                                                                                                   ------------    ------------
                     Net property and equipment                                                         246,044         282,829

OTHER ASSETS                                                                                            131,604         154,265
                                                                                                   ------------    ------------

TOTAL ASSETS                                                                                       $  1,363,229    $  2,375,886
                                                                                                   ============    ============

                   LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
      Accounts payable                                                                             $  1,769,502    $  2,407,523
      Notes payable and long-term debt - current portion                                                305,242         729,607
      Note payable - related party                                                                      142,668         235,348
                                                                                                   ------------    ------------
                     Total current liabilities                                                        2,217,412       3,372,478

LONG-TERM LIABILITIES:
      Liabilities Subject to Compromise                                                               5,721,602       6,148,340
      Notes payable and long-term debt - less current portion                                           565,962             -
      Note payable to Helionetics, Inc.                                                                     -         1,866,540
      Note payable to Helionetics Inc., Official Committee of
           Unsecured Creditors                                                                          800,000             -
      Note payable, related party                                                                       500,000             -
                                                                                                   ------------    ------------

                    Total liabilities                                                                 9,804,976      11,387,358
                                                                                                   ------------    ------------

COMMITMENTS AND CONTINGENCIES (Note 10)                                                                     -               -

STOCKHOLDERS' EQUITY (DEFICIT):

      Common stock, no par value; 10,000,000 shares authorized,
           4,000,000 and 6,039,333 shares issued and
           outstanding at December 31, 1997 and 1996, respectively
                                                                                                     11,813,346      11,813,346
      Contributed capital                                                                               968,335             -
      Accumulated deficit                                                                           (21,223,428)    (20,824,818)
                                                                                                   ------------    ------------

                     Total stockholders' equity (deficit)                                            (8,441,747)     (9,011,472)
                                                                                                   ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                               $  1,363,229    $  2,375,886
                                                                                                   ============    ============
</TABLE>

           See accompanying notes to consolidated financial statements


                                       F-3

<PAGE>



                        TRI-LITE, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                        FOR THE YEARS ENDED DECEMBER 31,
                                                  --------------------------------------------
                                                      1997            1996           1995
                                                  ------------    ------------    ------------
<S>                                               <C>             <C>             <C>         
REVENUES                                          $  5,084,837    $  8,047,095    $ 22,947,527
COST OF REVENUES                                     3,429,895       5,444,776      16,740,119
                                                  ------------    ------------    ------------
      Gross profit                                   1,654,942       2,602,319       6,207,408

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
                                                     2,412,791       3,835,635      12,741,021
                                                  ------------    ------------    ------------

LOSS FROM OPERATIONS                                  (757,849)     (1,233,316)     (6,533,613)

OTHER (INCOME) EXPENSES:
      Interest expense                                  37,199         302,002         600,564
      Other                                            (14,237)        307,345         (23,386)
                                                  ------------    ------------    ------------

LOSS FROM CONTINUING OPERATIONS BEFORE
      REORGANIZATION ITEMS, PROVISION FOR
      INCOME TAXES, DISCONTINUED OPERATIONS AND
      EXTRAORDINARY ITEM
                                                      (780,811)     (1,842,663)     (7,110,791)

      Reorganization items (Note 4)                    194,063       2,370,025       4,529,365
                                                  ------------    ------------    ------------

LOSS FROM CONTINUING OPERATIONS BEFORE
      PROVISION FOR INCOME TAXES, DISCONTINUED
      OPERATIONS AND EXTRAORDINARY ITEM
                                                      (974,874)     (4,212,688)    (11,640,156)

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

LOSS FROM CONTINUING OPERATIONS BEFORE
      DISCONTINUED OPERATIONS AND
      EXTRAORDINARY ITEM
                                                      (974,874)     (4,212,688)    (11,640,156)

DISCONTINUED OPERATIONS:
      Loss from discontinued business segment
          net of income taxes of $ -0-, $ -0- and
          $ -0- for 1997, 1996 and 1995,
          respectively                                     -               -        (1,447,704)
                                                  ------------    ------------    ------------

LOSS BEFORE EXTRAORDINARY ITEM                        (974,874)     (4,212,688)    (13,087,860)
      Extraordinary item - gain from debt
           reduction associated with Chapter
           11 proceedings, net of income
           taxes of $ -0-                              576,264             -               -
                                                  ------------    ------------    ------------

NET INCOME (LOSS)                                 $   (398,610)   $ (4,212,688)   $(13,087,860)
                                                  ============    ============    ============

BASIC AND DILUTED EARNINGS PER SHARE:
      (Loss) from continuing operations           $       (.24)   $       (.70)   $      (1.93)
      Discontinued operations                              -               -             (0.24)
      Extraordinary item                                   .14             -               -
                                                  ------------    ------------    ------------
           Net income (loss)                      $       (.10)   $       (.70)   $      (2.17)
                                                  ============    ============    ============

WEIGHTED AVERAGE SHARES OUTSTANDING                  4,000,000       6,039,333       6,016,182
                                                  ============    ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-4

<PAGE>


                        TRI-LITE, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
         FOR THE PERIOD FROM JANUARY 1, 1995 THROUGH DECEMBER 31, 1997

<TABLE>
<CAPTION>
                                                                                                                          TOTAL
                                                                COMMON STOCK                                           STOCKHOLDERS'
                                                       ----------------------------     CONTRIBUTED     ACCUMULATED       EQUITY
                                                          SHARES          AMOUNT          CAPITAL         DEFICIT       (DEFICIT)
                                                       ------------    ------------    ------------    ------------    ------------

<S>                                                       <C>          <C>             <C>             <C>             <C>
BALANCES, December 31, 1994, as previously
      reported                                            4,349,333    $  8,514,723    $     65,291    $ (3,524,270)   $  5,055,744
      Prior period adjustment (Note 5)                          -        (1,286,328)        (65,291)            -        (1,351,619)
                                                       ------------    ------------    ------------    ------------    ------------

BALANCES, January 1, 1995, as adjusted                    4,349,333       7,228,395             -        (3,524,270)      3,704,125
      Common stock issued for services                       80,000          60,000             -               -            60,000
      Debt converted to common stock                      1,458,317       4,374,951             -               -         4,374,951
      Common stock issued for
            inventory purchase                              151,683         150,000             -               -           150,000
      Net loss                                                  -               -               -       (13,087,860)    (13,087,860)
                                                       ------------    ------------    ------------    ------------    ------------

BALANCES, December 31, 1995                               6,039,333      11,813,346             -       (16,612,130)     (4,798,784)

      Net loss                                                  -               -               -        (4,212,688)     (4,212,688)
                                                       ------------    ------------    ------------    ------------    ------------

BALANCES, December 31, 1996                               6,039,333      11,813,346             -       (20,824,818)     (9,011,472)

      Elimination of old stockholders
         interests                                       (6,039,333)            -               -               -               -
      Issuance of new shares                              4,000,000             -               -               -               -
      Capital Contribution                                      -               -           426,739             -           426,739
      Net debt forgiveness between related
         parties                                                -               -           541,596             -           541,596 
      Net (loss)                                                -               -               -          (398,610)       (398,610)
                                                       ------------    ------------    ------------    ------------    ------------

BALANCES, December 31, 1997                               4,000,000    $ 11,813,346    $    968,335    $(21,223,428)   $ (8,441,747)
                                                       ============    ============    ============    ============    ============
</TABLE>

           See accompanying notes to consolidated financial statements

                                       F-5

<PAGE>


                        TRI-LITE, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                        FOR THE YEARS ENDED DECEMBER 31,
                                                                             ------------------------------------------------------
                                                                                 1997                 1996                 1995
                                                                             ------------         ------------         ------------

<S>                                                                          <C>                  <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss from continuing operations                                    $   (974,874)        $ (4,212,688)        $(11,640,156)
      Adjustments to reconcile net loss to net cash
           provided by (used in) operating activities:
           Depreciation and amortization                                           56,689              237,447              330,261
           Loss due to impairment of long lived assets
                                                                                   37,400              319,264              209,145
           Services and inventory paid through the
                issuance of common stock                                              -                    -                210,000
           Bad debt expense                                                        26,329               40,301                3,337
           Inventory reserve                                                     (315,940)          (1,072,237)           1,425,501
           Write-off of goodwill                                                      -                    -              3,529,284
           Gain on Reorganization                                               1,117,860                  -                    -
           Changes in operating assets and liabilities,
                net of effects of business acquisitions:
                Accounts receivable                                               824,491            1,467,344              955,841
                Inventories                                                       648,013            3,277,704            3,232,391
                Prepaid expenses and other                                         43,357              (71,079)             346,016
                Accounts payable and accrued expenses                          (1,162,532)           2,650,893            1,102,166
                Liabilities subject to compromise                                (426,739)                 -                    -
                                                                             ------------         ------------         ------------
      Net cash provided by (used in) operating
           activities from continuing operations                                 (125,946)           2,636,949             (296,214)
                                                                             ------------         ------------         ------------

      Net (loss) from discontinued operations                                         -                    -             (1,447,704)
           Loss on disposal of assets                                                 -                    -                159,186
           Bad debt expense                                                           -                    -                682,918
           Changes in operating assets                                                -                    -                445,294
                                                                             ------------         ------------         ------------
           Net cash (used in) operating
                activities from discontinued operations                               -                    -               (160,306)
                                                                             ------------         ------------         ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Cash loaned to related party                                                    -                    -                (20,000)
      Purchases of property and equipment                                         (19,904)                 -                    -
                                                                             ------------         ------------         ------------
                Net cash (used in) investing activities                           (19,904)                 -                (20,000)
                                                                             ------------         ------------         ------------
</TABLE>

                                   (continued)

                                       F-6

<PAGE>


                        TRI-LITE, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (continued)

<TABLE>
<CAPTION>
                                                                                       FOR THE YEARS ENDED DECEMBER 31,
                                                                           --------------------------------------------------------
                                                                               1997                  1996                   1995
                                                                           ------------          ------------          ------------

<S>                                                                        <C>                   <C>                   <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
      Borrowings on line of credit                                         $        -            $        -            $ 13,353,265
      Payments on line of credit                                               (424,365)           (3,074,554)          (13,283,624)
      Proceeds from the issuance of notes payable                                   -                 729,607                   -
      Principal payments on notes payable                                           -                (230,660)              (88,624)
      Payments on note payable to related party                                     -                  37,051               (28,703)
      Net borrowings from related party                                          87,320                   -                     -
      Net proceeds from capital contribution                                    426,739                   -                     -
                                                                           ------------          ------------          ------------
      Net cash provided by (used in) financing
          activities
                                                                                 89,694            (2,538,556)              (47,686)
                                                                           ------------          ------------          ------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                         (56,156)               98,393              (524,206)

CASH AND CASH EQUIVALENTS, at beginning of year                                 140,126                41,733               565,939
                                                                           ------------          ------------          ------------

CASH AND CASH EQUIVALENTS, at end of year                                  $     83,970          $    140,126          $     41,733
                                                                           ============          ============          ============

SUPPLEMENTAL CASH FLOW INFORMATION:
      Cash payments for:
                Interest                                                   $     15,256          $    302,002          $    540,539
                                                                           ============          ============          ============
                Taxes                                                      $        -            $        -            $        -
                                                                           ============          ============          ============

NON-CASH INVESTING AND FINANCING ACTIVITIES:
      Conversion of note payable to Helionetics:                           $ (1,800,000)         $        -            $  4,374,950
                                                                           ============          ============          ============
      Issuance of notes payable to:
           Helionetics, Inc. Official Committee
                of unsecured creditors                                     $    800,000          $        -            $        -
           Ms. Susan Barnes                                                     500,000                   -                     -
                                                                           ------------          ------------          ------------
                                                                           $  1,300,000          $        -            $        -
                                                                           ============          ============          ============
      Conversion of SPL accounts payable to
           note payable                                                    $    565,962          $        -            $        -
                                                                           ============          ============          ============
</TABLE>


                                       F-7

<PAGE>

                         TRI-LITE, INC AND SUBSIDIARIES.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.          ORGANIZATION AND BUSINESS:

            General - Tri-Lite, Inc. and its subsidiaries (the "Company")
            manufacture and distribute emergency electrical lighting fixtures
            for commercial and residential use and energy conservation and
            safety equipment for retail and commercial facilities. As of
            December 31, 1997, Tri-Lite, Inc. (Tri-Lite) has two wholly owned
            subsidiaries, Self Powered Lighting, Inc. (SPL), and Prolite
            Lighting and Sign Maintenance Co., Inc. (Prolite), and an 87.5%
            owned subsidiary, AIM Energy, Inc.

            On February 15, 1996, the Company's primary lender, Star Bank
            demanded payment in full of the Company's credit facility by
            February 20, 1996 as a result of certain loan provision defaults
            which had not been cured. On February 23, 1996, the Court of Common
            Pleas, Cuyahoga County, Ohio granted Star Bank an emergency order
            appointing a receiver to collect and remit to Star Bank all
            collections on accounts receivable of the Company. In response, on
            February 26, 1996, Tri-Lite filed a voluntary petition under Chapter
            11 of the United States Bankruptcy Code with the U.S. Bankruptcy
            Court, Central District of California. At the time of the Bankruptcy
            Filing, Helionetics, Inc. owned approximately 49 percent of
            Tri-Lite. Additionally, as of that date, Susan Barnes was the
            Beneficial owner or controlled 37.6 percent of Helionetics, Inc. Due
            to the above described actions of Star Bank, SPL filed its own
            voluntary petition under Chapter 11 of the United States Bankruptcy
            Code with the U.S. Bankruptcy Court, Central District of California
            on March 22, 1996.

            Under Chapter 11, certain claims against a Company in existence
            prior to the filing of the petition for relief under the federal
            bankruptcy laws are stayed while the Company continues business
            operations as a Debtor-in-possession. These claims are reflected in
            the December 31, 1997 and 1996, Balance Sheet as "Liabilities
            Subject to Compromise." Claims against the Company's assets which
            are secured against the Companies assets ("secured claims") are also
            stayed, although the holders of such claims have the right to move
            the court for relief from the stay. Secured claims are secured
            primarily by liens on the Company's property and equipment.

            On January 16, 1997, the Bankruptcy Court approved the Tri-Lite Plan
            of Reorganization with Helionetics, Inc. and Susan Barnes as
            co-proponents of the plan. In April 1997, Helionetics, Inc filed a
            voluntary petition under Chapter 11 of the United States Bankruptcy
            Code with the U.S. Bankruptcy Court, Central District of California.
            As a result, the funding of the Company's reorganization plan was
            combined with that of Helionetics, Inc. The Helionetics Bankruptcy
            Plan, which included the provisions and methodology to fund the
            Tri-Lite plan, were approved by the US Bankruptcy Court on December
            23, 1998. Provisions of the Combined Plan include the following:

            o    Under the plan, the Company will issue 4,000,000 "new shares",
                 replacing all pre-petition common shares, with 82.5% of its
                 "new" Tri-Lite common stock going to Ms. Susan Barnes in
                 exchange for her agreement to forgo any claims on her
                 approximately $4.3 million secured claim against Helionetics,
                 Inc.

            o    The shareholders of record immediately prior to the bankruptcy
                 filing of the Company will receive 12.5% of the "new" Tri-Lite
                 common stock.

            o    The Helionetics, Inc. Official Committee of Unsecured Creditors
                 ("Helionetics Committee") will receive 5% of the "new" Tri-Lite
                 common stock.


                                      F-8

<PAGE>

                         TRI-LITE, INC AND SUBSIDIARIES.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

            o    Helionetics, or Ms. Susan Barnes at her sole option, will pay
                 the unsecured creditors of Tri-lite, Inc, up to 47% of their
                 allowed claims in cash. The actual disbursement is subject to
                 the finalized Helionetics Bankruptcy Plan.

            o    Helionetics, Inc. will forgive its $1,800,000 note receivable
                 and related accrued interest due from the Company.

            o    Tri-Lite will issue two interest bearing notes payable to
                 Helionetics, Inc. Official Committee of Unsecured Creditors
                 ($800,000) and to Susan Barnes ($500,000). The effect of these
                 note issuances, net of the debt forgiven as described
                 immediately above, has been reflected as a credit to
                 contributed capital in the accompanying Statement of
                 Stockholders' Equity (Deficit), since such transaction occurred
                 between related parties.

            o    Helionetics, Inc. will contribute to the Company its ownership
                 in AIM Energy, Inc. This transaction has been recorded as a
                 reorganization of entities under common control. The Company
                 received no asset s or liabilities in its acquisition of AIM.
                 Additionally, AIM had insignificant operations prior to its
                 acquisition.

            In March 1997, the court approved the SPL of Reorganization. Under
            the provisions of the Plan, all creditors will receive 100% of their
            allowed claims, with interest, within 60 months of the effective
            date and Tri-Lite will retain its interest in SPL.


2.          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

            Principles of Consolidation - The consolidated financial statements
            include the accounts of the Company and its wholly-owned and
            partially-owned subsidiaries. All material intercompany accounts and
            transactions have been eliminated.

            Accounts Receivable and Concentration of Credit Risk - Credit Risk
            represents the accounting loss that would be recognized at the
            reporting date if counterparties failed completely to perform as
            contracted. Concentrations of credit risk (whether on or off the
            balance sheet) that arise from financial instruments, exist for
            groups of customers or groups of counterparties when they have
            similar economic characteristics that would cause their ability to
            meet contractual obligations to be similarly effected by changes in
            economic or other conditions described below.

            The Company sells predominately to retail companies and to
            commercial and industrial companies. Approximately 60% of the
            Company's SPL subsidiary's revenues are derived from the Airline
            industry in the United States. The Company performs periodic credit
            evaluations of its customers and does not require collateral. The
            Company maintains allowances for potential credit losses and such
            losses have been within management's expectations.


                                      F-9

<PAGE>

                         TRI-LITE, INC AND SUBSIDIARIES.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

            Inventories - Inventories are valued at the lower of cost (first-in,
            first-out) or market. At December 31, 1997 and 1996, inventories
            consist of the following:

<TABLE>
<CAPTION>
                                                                1997                1996
                                                            -----------         -----------
                <S>                                         <C>                 <C>        
                Raw materials and component parts           $   354,879         $   374,623
                Work-in-process                                  18,867             647,136
                                                            -----------         -----------
                                                                373,746           1,021,759
                Allowance for obsolescence                      (55,975)           (371,915)
                                                            -----------         -----------
                                                            $   317,771         $   649,844
                                                            ===========         ===========
</TABLE>


            Property and Equipment - Property and equipment are stated at cost.
            Depreciation and amortization is computed over the estimated useful
            lives of the assets or the remaining terms of the leases using the
            straight-line method.

            Useful lives for property and equipment are as follows:

                Machinery and equipment   3 to 12 years
                Leasehold improvements    5 years or life of lease, whichever
                                             is less

            Goodwill - Goodwill represents the excess of purchase price over
            fair value of net assets acquired. Because of the magnitude of the
            Company's losses and its petition for relief under Chapter 11 (See
            Note 1), goodwill of $3,529,284 was written-off as of December 31,
            1995 and was included in selling, general and administrative
            expenses in the accompanying Statement of Operations.

            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 differences are expected to
            reverse.

            Revenue Recognition - Revenue for product sales is recognized upon
            shipment. The Company records a provision for the effect of
            anticipated returned products at the time units are shipped.

            Revenues for management services are recognized when the services
            are provided.

            Revenues on contracts performed by the Company's discontinued
            segment were recorded using the percentage of completion method of
            accounting. At the time a loss on the contract became known, the
            entire amount of the estimated loss on the contract was recognized.

            Product Development Expenditures - Product development expenditures
            are charged to operations as incurred.


                                      F-10

<PAGE>

                         TRI-LITE, INC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

            Warranties - The Company recognizes the full estimated cost of
            warranty expense at the time of shipment.

            Earnings Per Share - The Company follows Statement of Financial
            Accounting Standards No. 128 when calculating earnings per share.
            Basic earnings per share excludes dilution and is calculated by
            dividing income available to common stockholders by the weighted
            average number of common shares outstanding for the period. Diluted
            earnings per share reflects the potential dilution that could occur
            if securities or other contracts to issue common stock were
            exercised or converted into common stock or resulted in the issuance
            of common stock that then shared in the earnings of the entity.
            Common stock equivalents for the years ended December 31, 1997, 1996
            and 1995 were anti-dilutive and excluded in the earnings per share
            computation.

            Statement of Cash Flows - For purposes of the statement of cash
            flows, the Company considers all highly liquid debt instruments
            purchased with an original maturity of three months or less to be
            cash equivalents.

            Accounting Estimates - The preparation of financial statements in
            conformity with generally accepted accounting principles requires
            management to make estimates and assumptions that affect the amounts
            reported in the financial statements and the accompanying notes. The
            actual results could differ from those estimates.

            The Company's financial statements are based upon a number of
            significant estimates, including the allowance for doubtful
            accounts, technological obsolescence of inventories, the estimated
            useful lives selected for property and equipment, realizability of
            deferred tax assets and goodwill, allowance for sales returns, and
            warranty reserve. Due to the uncertainties inherent in the
            estimation process, it is at least reasonably possible that these
            estimates will be further revised in the near term and such
            revisions could be material.

            Impairment of Long-Lived Assets - In the event that facts and
            circumstances indicate that the cost of assets or other assets may
            be impaired, an evaluation of recoverability would be performed. If
            an evaluation is required, the estimated future undiscounted cash
            flows associated with the asset would be compared to the asset's
            carrying amount to determine if a write-down to market value or
            discounted cash flow value is required.

            As a result of its net losses and petition for relief under Chapter
            11, the Company consolidated its manufacturing and warehouse
            operations and eliminated unprofitable products. Certain leasehold
            improvements and machinery and equipment were abandoned or disposed
            of. These assets were written down to their net realizable value
            upon disposal. Write downs of $91,812 and $600,000 are included in
            reorganization items in the accompanying Statements of Operations as
            of December 31, 1996 and 1995, respectively.

            Stock-Based Compensation - In October 1995, the Financial Accounting
            Standards Board issued a new statement titled "Accounting for
            Stock-Based Compensation" (FAS123) which the Company adopted January
            1, 1996. FAS123 encourages, but does not require, companies to
            recognize compensation expense for grants of stock, stock options
            and other equity instruments to employees based on fair value.


                                      F-11

<PAGE>

                         TRI-LITE, INC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

            Companies that do not adopt the fair value accounting rules must
            disclose the impact of adopting the new method in the notes to the
            financial statements. Transactions in equity instruments with
            non-employees for goods or services must be accounted for on the
            fair value method. The Company has elected not to adopt the fair
            value accounting prescribed by FAS123 for employees, but is subject
            to the disclosure requirements prescribed by FAS123.

            Fair Value of Financial Instruments - The estimated fair values for
            financial instruments under SFAS No. 107, Disclosures about Fair
            Value of Financial Instruments, are determined at discrete points in
            time based on relevant market information. These estimates involve
            uncertainties and cannot be determined with precision. The estimated
            fair values of the Company's financial instruments, which includes
            all cash, accounts receivable, accounts payable, and long-term debt,
            approximates the carrying value in the consolidated financial
            statements at December 31, 1997 and 1996.

            Impact of Recently Issued Accounting Standards - The FASB has issued
            Statement of Financial Accounting Standards 130 "Reporting
            Comprehensive Income" and Statement of Financial Accounting
            Standards 131 "Disclosures About Segments of an Enterprise and
            Related Information." Statement 130 establishes standards for
            reporting and display of comprehensive income, its components and
            accumulated balances. Comprehensive income is defined as all changes
            in equity except those resulting from investments by owners and
            distributions to owners. Among other disclosures, Statement 130
            requires that all items that are required to be recognized under
            current account standards as components of comprehensive income be
            reported in a financial statement that displays with the same
            prominence as other financial statements. Statement 131 supersedes
            Statement of Financial Accounting Standards 14 "Financial Reporting
            for Segments of a Business Enterprise". Statement 131 establishes
            standards on how public companies report financial information about
            operating segments in interim financial statements that are issued
            to the public. It also establishes standards for disclosures
            regarding products and services, geographic areas and major
            customers. Statement 131 defines operating segments as components of
            a company about which separate financial information is available
            that is evaluated regularly by the chief operating decision makers
            in evaluating how to allocate resources and in assessing
            performance.

            Statements 130 and 131 are effective for financial statement periods
            beginning after December 15, 1997 and require comparative
            information for earlier years to be restated. Because of the recent
            issuance of these standards, management has been unable to fully
            evaluate the impact, if any, the standards may have on the future
            financial statement disclosures. Results of operations and financial
            position, however, will be unaffected by implementation of these
            standards.

            Also, in June 1998, the Financial Accounting Standards Board issued
            Statement of Financial Accounting Standards No. 133 (SFAS No. 133),
            "Accounting for Derivative Instruments and Hedging Activities". This
            statement is effective for fiscal years beginning after June 15,
            1999. Earlier application is encouraged; however, the Company does
            not anticipate adopting SFAS No. 133 until the fiscal year beginning
            January 1, 2000. SFAS No. 133 requires than an entity recognize all
            derivatives as assets or liabilities in the statement of financial
            position and measure those instruments at fair value. The Company
            does not believe the adoption of SFAS No. 133 will have a material
            impact on assets, liabilities or equity. The Company has not yet
            determined the impact of SFAS No. 133 on the income statement or the
            impact on comprehensive income.


                                      F-12

<PAGE>

                         TRI-LITE, INC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

            SFAS No. 132, "Employers' Disclosures about Pensions and Other
            Postretirement Benefits" and SFAS No. 134, "Accounting for
            Mortgage-Backed Securities Retained after the Securitization of
            Mortgage Loans Held for Sale by a Mortgage banking Enterprise" were
            issued in 1998 and are not expected to impact the Company regarding
            future financial statement disclosures, results of operations and
            financial position.

3.          BASIS OF PRESENTATION:

            AICPA Statement of Position No. 90-7, "Financial Reporting by
            Entities in Reorganization Under the Bankruptcy Code" ("SOP No.
            90-7") allows certain companies to adopt a "fresh-start" method of
            accounting if the reorganization value ("approximate fair value") of
            the assets of the Company immediately before confirmation of the
            Plan was less than the total of all post-petition liabilities and
            allowed pre-petition claims, and holders of the existing voting
            shares immediately before the confirmation of the Plan would receive
            less than 50% of the voting shares of the emerging company.
            Management believes that since pre-confirmation stockholders (or
            their affiliates or control persons) received in excess of 50% of
            the "new" Tri-Lite Common Shares after emerging from bankruptcy,
            fresh start accounting is not applicable.

            The financial statements have been prepared on a going concern
            basis, which contemplates, among other things, the realization of
            assets and the satisfaction of liabilities in the normal course of
            business. However, there is doubt about the Company's ability to
            continue as a going concern because of the magnitude of its losses
            of its stockholders' deficit of $8,441,747 and its working capital
            deficit of $1,231,831 as of December 31, 1997. The Company's
            continued existence is dependent upon its ability to raise
            substantial capital, to increase sales and to significantly improve
            operations.

            Management has taken several actions in response to these
            conditions. Management believes that operations and product
            offerings have been consolidated sufficiently to generate operating
            profits and cash flows. Management has also negotiated new credit
            facilities which will improve the Company's ability to finance
            working capital requirements. Management believes that these actions
            will allow the Company to continue as a going concern.

            The financial statements do not include any adjustments relating to
            the recoverability and classification of recorded asset amounts or
            the amount and classification of liabilities or any other adjustment
            that might be necessary should the Company be unable to continue as
            a going concern.


                                      F-13

<PAGE>

                         TRI-LITE, INC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.          REORGANIZATION ITEMS:

            The effects of transactions and adjustments related to
            reorganization activities were as follows:

<TABLE>
<CAPTION>
                                                           FOR THE YEARS ENDED DECEMBER 31,
                                                         ------------------------------------
                                                             1997        1996         1995
                                                         ----------   ----------   ----------
            <S>                                          <C>          <C>          <C>
            Impairment recognized on long-lived
               assets
                                                         $      -     $1,305,874   $4,191,430
            Professional fees                               194,063    1,064,151      337,935
                                                         ----------   ----------   ----------
                      Total reorganization items         $  194,063   $2,370,025   $4,529,365
                                                         ==========   ==========   ==========
</TABLE>


5.          ACQUISITIONS:

            Effective January 1, 1994, the Company acquired from Helionetics all
            of the outstanding shares of Self Powered Lighting, Inc. (SPL), in
            exchange for 550,000 shares of the Company's common stock valued at
            approximately $448,000 which was the historical cost of the net
            assets of SPL at December 31, 1993. Upon the Company's filing of an
            application with the American Stock Exchange for the listing of the
            550,000 shares, the American Stock Exchange did not grant the
            Company approval to issue such shares to Helionetics. On August 3,
            1994, the Company entered into an agreement with Helionetics to
            issue a $1,800,000 note payable in exchange for the 550,000 shares
            of the Company's common stock issued to acquire SPL.

            The accompanying Consolidated Statement of Stockholders' Equity
            (Deficit) includes a prior period adjustment to various December 31,
            1994 Stockholders' Equity accounts to properly record the above
            transaction in accordance with Accounting Principal Board Opinion
            Number 16. Due to the transaction occurring between entities under
            common control the transaction has been recorded by charging the
            excess of the purchase price over the historical net book value to
            Stockholders' Equity

6.          DISCONTINUED OPERATIONS:

            Having experienced significant losses in its electrical energy
            management segment, the Company's Board of Directors decided on
            December 31, 1995 to discontinue the operations by winding down open
            customer contracts and liquidating its assets.


                                      F-14

<PAGE>

                         TRI-LITE, INC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


            For the year ended December 31, 1995 a net loss before income tax
            benefit of $1,447,704 was generated from the discontinued segment,
            as follows:

                     Revenue                            $10,261,073
                                                        -----------
                     Expenses:
                          Cost of sales                   9,030,335
                          Selling, general and
                             administrative               2,595,463
                          Interest expense                   82,979
                                                        -----------
                     Total Expenses                      11,708,777
                                                        -----------
                     Loss before provision for
                        income taxes                    $(1,447,704)
                                                        =========== 

            As the result of the Chapter 11 filing in February 1996, the Company
            discontinued and liquidated all of it's lighting fixtures operations
            that involved designing, sourcing, manufacturing and marketing
            recessed lighting track lighting, and decorative lighting.

            As of December 31, 1996, all related assets and liabilities of the
            lighting fixture businesses were written off and included in the
            results from continuing operations for the period then ended. Losses
            for the years ended December 31, 1996 and 1995 related to these
            activities were as follows:

<TABLE>
<CAPTION>
                                                                    FOR THE YEAR ENDED
                                                                       DECEMBER 31,
                                                              -----------------------------
                                                                  1996              1995
                                                              ------------     ------------
            <S>                                               <C>              <C>         
            Revenue                                           $  5,685,434     $ 23,201,172
                                                              ------------     ------------
            Expenses:
                 Cost of sales                                   4,133,137       18,423,682
                 Selling, general and administrative             5,415,885       14,688,464
                 Interest and other expense                        606,311        1,177,472
                                                              ------------     ------------
            Total Expenses                                      10,155,333       34,289,618
                                                              ------------     ------------
            Loss before provision for income                  $ (4,469,899)    $(11,088,446)
                                                              ============     ============
</TABLE>


7.          NOTES PAYABLE TO RELATED PARTIES:

            Note payable to Helionetics, Inc. of $1,800,000 as of December 31,
            1996 bears interest at 10% per annum, payable monthly. The note is
            secured by the net assets of SPL and is subordinate to the Company's
            bank debt.

            Interest expense related to this note for the year ended December
            31, 1995 amounted to approximately $180,000. Interest expense
            accruals during 1997 and 1996 were stayed due to the various
            bankruptcy proceedings.


                                      F-15

<PAGE>

                         TRI-LITE, INC AND SUBSIDIARIES.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

            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, whereby
            82.5% of Company's then issued and outstanding common shares would
            be issued to Ms. Susan Barnes, and 5% is to be issued to the
            Helionetics Committee. The Agreement also called for Helionetics to
            cancel and release it's $1,800,000 promissory note secured by all
            the assets of the Company. In addition, the Company will issue a
            senior secured promissory note in the amount of $800,000 in favor of
            the Helionetics Committee and a secured junior subordinated
            promissory note in the amount of $500,000 in favor of Ms. Susan
            Barnes. Both notes will bear interest at 10.5% and are subordinated
            to any new financing that the Company may require. Additionally, Ms.
            Barnes loaned the Company in 1996 and 1997 a total of approximately
            $218,400 and at December 31, 1997 such loan had an outstanding
            balance of $142,668. The loan bears interest at the prime rate plus
            2% and is due on demand.

8.          NOTES PAYABLE AND LONG-TERM DEBT:

            Notes payable and long-term debt at December 31, 1997 and 1996
            consisted of the following:

<TABLE>
<CAPTION>
                                                                     1997            1996
                                                                  ---------       ---------
            <S>                                                   <C>             <C>
            Accounts Payable to Self-Powered
            Lighting creditors, due in installments
            through August 2002, bearing interest
            at the bank's prime rate plus 2%                      $ 565,962       $     -
            
            Advances from Altres Financial for
            accounts receivable factored at a
            discount rate of 1.5% plus related
            service fees                                            305,242         729,607
                                                                  ---------       ---------
            Subtotal                                                871,204         729,607
            
            Less: Current Portion                                  (305,242)       (729,607)
                                                                  ---------       ---------
            
            Total notes payable and long-term
                 debt, less current portion                       $ 565,962       $     -
                                                                  =========       =========
</TABLE>

            In December 1996, the Company entered into an agreement to factor up
            to $1,000,000 in accounts receivable, $200,000 minimum per month, at
            a discount of 20%. The company is entitled to a rebate of the
            commissions less 1.25% of the amount factored plus 0.35% for every
            ten days past 30 days an account is outstanding, a daily funds
            charges equal to prime plus 1% dividend by 360 and a monthly
            collateral fee of 0.25%. The factor may also maintain a reserve of
            5% of the outstanding balance on accounts factored. As of December
            31, 1997 and 1996, the face amount of receivables factored was
            $354,214 and $825,827, respectively.


                                      F-16

<PAGE>

                         TRI-LITE, INC AND SUBSIDIARIES.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9.          LIABILITIES SUBJECT TO COMPROMISE:

            Liabilities subject to compromise as of December 31, 1997 and 1996
            consists of the following:

<TABLE>
<CAPTION>
                                                                          1997                        1996
                                                                 -----------------------     --------------------

                     <S>                                         <C>                         <C>                 
                     Trade payables and accrued expenses         $         3,520,776         $          3,947,513
                     Taxes                                                   291,775                      291,775
                     Commissions                                             257,765                      257,765
                     Other expenses                                          338,025                      338,026
                     Note payable                                            180,000                      180,000
                     Claims under rejected executory                       1,133,261                    1,133,261
                                                                 -------------------         --------------------
                     Total                                       $         5,721,602         $          6,148,340
                                                                 ===================         ====================
</TABLE>

            The note payable at December 31, 1997 and 1996 bears interest at a
            bank's prime rate plus 2% and is due in monthly installments of
            $2,000, plus interest, through November 1999. Interest expense
            related to this note for the year ended December 31, 1995 amounted
            to approximately $20,000.

10.         COMMITMENTS AND CONTINGENCIES:

            Leases - The Company leases its facilities and certain equipment
            under noncancellable leases expiring at various dates through 2005.

            Future annual minimum rental commitments in the aggregate under
            these noncancellable leases are as follows:

              FOR THE YEAR ENDING DECEMBER 31,
              --------------------------------
                                 1998                               $139,440
                                 1999                                156,049
                                 2000                                162,370
                                 2001                                169,300
                                 2002                                163,170
                              Thereafter                             184,392
                                                                    --------
                                                                    $974,721
                                                                    ========

            Total rental expense related to all operating leases amounted to
            $235,827, $408,480 and $467,852 in 1997, 1996 and 1995,
            respectively.

            During 1995, the Company leased certain real property located in
            Cleveland, Ohio, from Lawrence A. Terkel, the Company's President
            and Chief Executive Officer from July 15, 1995 to February 15, 1996.
            The properties were owned by Mr. Terkel, his brother and father. The
            lease was rejected in bankruptcy and the amount of $149,453 was
            included in the allowed claims of unsecured creditors.

            During 1995, the Company sublet certain office and warehouse space
            located in Irvine, California, from Helionetics, Inc., it's
            principal shareholder. The Company vacated the Irvine property in
            August, 1995, when it relocated to an office/warehouse facility in
            Santa Ana, California, which it leased from an


                                      F-17

<PAGE>

                         TRI-LITE, INC AND SUBSIDIARIES.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

            unrelated party. During 1995, total rent expense accrued relating to
            the lease of the Irvine property amounted to $120,000.

            Litigation - In the ordinary course of business, there are various
            claims and lawsuits brought by or against the Company. In the
            opinion of management, the ultimate outcome of these matters will
            not materially affect the Company's operations or financial
            position.

            Helionetics is a defendant in class actions seeking unspecified
            damages allegedly resulting from the purported violation of federal
            securities laws. In the opinion of Company management, the ultimate
            outcome of these actions will not have any impact on the Company's
            consolidated financial statements.

            Employment Contracts - The Company had entered into employment
            agreements with several officers of the Company. These agreements
            were voided by the Bankruptcy Court. The Company has accrued the
            amounts allowed by the Bankruptcy Court under these agreements as of
            December 31, 1996.

11.         INCOME TAXES:

            The Company's total income tax expense was $ -0- for each of the
            years December 31, 1997, 1996 and 1995

            Income tax expense (benefit) for the years ended December 31, 1997,
            1996, and 1995 differed from the amount computed by applying the
            U.S. Federal income tax rate of 34% for each period as follows:

<TABLE>
<CAPTION>
                                           1997                           1996                            1995
                              ---------------------------     ---------------------------     ----------------------------

<S>                           <C>             <C>             <C>             <C>             <C>             <C>        
Computed "expected" tax
expense (benefit)             $    48,615              34%    $(1,585,683)            (34%)   $(4,616,257)            (34%)

Nondeductible expenses                -                 0%            -                 0%      1,284,060               9%

Change in the beginning-of-
the-year balance of the
valuation allowance for
deferred tax assets               (48,615)            (34%)     1,585,683              34%      3,332,197              25%
State taxes, net of federal
   tax benefit                        -                 0%            -                 0%            -                 0%
                              -----------     -----------     -----------     -----------     -----------     -----------
                              $       -                 0%    $       -                 0%    $       -                 0%
                              ===========     ===========     ===========     ===========     ===========     ===========
</TABLE>


                                      F-18

<PAGE>

                        TRI-LITE, INC AND SUBSIDIARIES.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

            The tax effects of temporary differences that give rise to
            significant portions of the deferred taxes at December 31, 1997 and
            1996 are presented below:

<TABLE>
<CAPTION>
                                                                        1997           1996
                                                                    -----------    -----------

           <S>                                                      <C>            <C>
           Current deferred tax assets (liabilities):
                Accounts receivable due to allowance for doubtful
                     accounts                                       $    18,889    $   131,349
                Inventories due to allowance for obsolescence            22,467        149,279
                Compensated absences, principally due to accrual
                     for financial reporting purposes                    49,361         43,068
                Accrued expenses, principally due to accrual for
                     financial reporting purposes                       810,952        688,609
                Write-down of assets for book not tax                   128,874        128,874
                Other                                                     4,027         74,434
                                                                    -----------    -----------
                                                                      1,034,570      1,215,613
                Less valuation allowance                             (1,034,570)    (1,215,613)
                                                                    -----------    -----------
                Net current deferred tax assets                     $       -      $       -
                                                                    ===========    ===========
           Long-term deferred tax assets (liabilities):
                Asset acquisition basis adjustment                     (130,848)      (130,848)
                Depreciation and amortization                           (27,268)       101,735
                Net operating loss carryforwards                      6,951,789      6,533,019
                Less valuation allowance                             (6,793,673)    (6,503,906)
                                                                    -----------    -----------
                Net long-term deferred tax assets                   $       -      $       -
                                                                    ===========    ===========
</TABLE>


            As of December 31, 1997, the Company had net operating loss carry
            forwards for federal and state purposes of approximately $19,362,000
            and $2,760,000, respectively, which expire in 2012 and 2002. The
            benefit of the net operating losses to offset future taxable income
            is subject to reduction or limitation of use as a result of
            consolidated return filing regulations and additional limitations
            relating to a greater than 50% change in ownership. The change in
            the valuation allowance for the year ended December 31, 1997 and
            1996 was $108,724 and $65,656, respectively.


                                      F-19

<PAGE>

                         TRI-LITE, INC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12.         STOCKHOLDERS' EQUITY:

            Stock Option Plan - On October 26, 1993, the Company's Board of
            Directors and stockholders approved the issuance of options to
            purchase 300,000 shares of the Company's common stock. The 1993
            Stock Option Plan (the Plan) is intended to qualify under Section
            422 of the Internal Revenue Code. The options fully vest at the time
            of issuance, are exercisable up to ten years from the date of grant
            and are nontransferable. In the event an option is granted to a 10%
            shareholder, such option must be granted at 110% of the fair market
            value and expire five years from the date of grant. On the date of
            adoption, the Board of Directors granted 300,000 shares at their
            fair market value of $4.625 per share. Through December 31, 1995, no
            options had been exercised. As a result of the Company's Chapter 11
            Bankruptcy filing, all options were cancelled.

13.         SEGMENT INFORMATION:

            During the year ended December 31, 1995, the Company operated in two
            industry segments, as follows:

                     1.    The lighting fixture business segment
                     2.    The electrical energy management segment

            During the fourth quarter of 1995, the Company's Board of Directors
            decided to discontinue the operations of the electrical energy
            management segment. Accordingly, the operations of that segment have
            been shown in the accompanying Statement of Operations as
            discontinued operations.

            During the year ended December 31, 1996 the Company operated only in
            one industry segment, the lighting fixture business segment.

            During the year ended December 31, 1997 the Company operated again
            in two industry segments, as follows:

                     1.    The lighting fixture business segment
                     2.    The energy conservation and safety equipment business
                           segment

            Identifiable assets by industry are those assets that are used in
            the Company's operations in each industry. Corporate assets are,
            principally, cash and cash equivalents.


                                      F-20

<PAGE>

                         TRI-LITE, INC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

            Information concerning the Company's operations and related
            information in its two different industry segments for the year
            ended December 31, 1997 is as follows:

                                                                         
<TABLE>
<CAPTION>
                                                                      ENERGY 
                                                                 CONSERVATION AND         ADJUSTMENTS
                                            LIGHTING FIXTURE     SAFETY EQUIPMENT            AND
                                            BUSINESS SEGMENT     BUSINESS SEGMENT        ELIMINATIONS       CONSOLIDATED
                                            ----------------     ---------------      ----------------    ----------------

           <S>                              <C>                  <C>                  <C>                 <C>
           NET SALES TO UNAFFILIATED
             CUSTOMERS                      $     4,743,521      $       341,316      $         -         $      5,084,837

           INTERSEGMENT SALES                        -                        -                 -                    -
                                            ---------------      ---------------      ----------------    ----------------
           TOTAL REVENUES                   $     4,734,521      $       341,316      $         -         $      5,084,837
                                            ===============      ===============      ================    ================

           OPERATING PROFIT (LOSS)          $      (906,273)     $       (45,639)     $         -         $       (951,912)
                                            ===============      ===============      ================

           GENERAL CORPORATE (EXPENSES)                                                                            (37,199)

           OTHER INCOME (EXPENSE), net                                                                              14,237
                                                                                                          ----------------
           LOSS BEFORE INCOME TAXES                                                                       $        974,874
                                                                                                          ================
           IDENTIFIABLE ASSETS AT
             DECEMBER 31, 1997              $     1,218,920      $        60,339      $         -         $      1,279,259
                                            ===============      ===============      ================
           CORPORATE ASSETS                                                                                         83,970
                                                                                                          ----------------
                                                                                                                     
           TOTAL ASSETS AT DECEMBER 31,
             1997                                                                                         $      1,363,229
                                                                                                          ================
           DEPRECIATION AND AMORTIZATION    $        56,689      $         -          $         -         $         56,689
                                            ===============      ===============      ================    ================

           CAPITAL EXPENDITURES             $        19,904      $         -          $         -         $         19,904
                                            ===============      ===============      ================    ================
</TABLE>


            Total revenue by segment includes both sales to unaffiliated
            customers, as reported in the Company's consolidated statement of
            operations, and intersegment sales where applicable which are
            accounted for at prices approximating market for such products.
            Operating profit is total revenue less operating expenses, none of
            the following items has been added or deducted: general corporate
            expenses; dividend, interest, and miscellaneous income; interest
            expense; income taxes; and extraordinary item.


                                      F-21

<PAGE>

<TABLE>
                                                  TRI-LITE, INC AND SUBSIDIARIES

<CAPTION>
                                        SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                 Column A                             Column B             Column C                     Column D         Column E
                                                                 -------------------------------
                                                     BALANCE AT   CHARGED TO          CHARGED TO
                                                    BEGINNING OF  COSTS AND             OTHER                          BALANCE AT
                DESCRIPTION                            PERIOD     EXPENSES            ACCOUNTS         DEDUCTIONS     END OF PERIOD
---------------------------------------------       ----------   ----------           ----------      ------------    --------------

<S>                                                 <C>          <C>                  <C>             <C>              <C>
YEAR ENDED DECEMBER 31, 1997:
      Allowance for doubtful accounts - trade       $  327,244   $   26,329           $     -         $  306,514(1)    $   47,059
      Reserve for inventory obsolescence               371,915          -                   -            315,940(2)        55,975

YEAR ENDED DECEMBER 31, 1996:
      Allowance for doubtful accounts - trade          286,943       31,305                 -             (8,996)(1)      327,244
      Reserve for inventory obsolescence             1,444,152      115,585                 -          1,187,822 (2)      371,915
                                                                                                                 
YEAR ENDED DECEMBER 31, 1995:
      Allowance for doubtful accounts - trade          283,607      737,660                 -            734,324          286,943
      Reserve for inventory obsolescence               216,033    1,228,119                 -                -          1,444,152
</TABLE>

----------

(1)  Use of allowance in write-off of scheduled bad debts
(2)  Use of allowance in write-off of obsolete inventories


<PAGE>

                         TRI-LITE, INC. AND SUBSIDIARIES

                                    FORM 10-K

                                  EXHIBIT INDEX

Exhibit
Number             Description of Document
-------            -----------------------

   I               Third Amended Disclosure Statement for Third Amended Joint
                   Chapter 11 Plan of Reorganization

  II               Third Amended Joint Chapter 11 Plan of Reorganization
                   as Modified

 III               Fourth Amended Disclosure Statement describing Helionetics,
                   Inc. Third Amended Chapter 11 Liquidation Plan

  IV               Settlement Agreement between the Helionetics Official
                   Committee of Creditors Holding Unsecured Claims, Helionetics,
                   Tri-Lite, Inc., KB Equities, Bernard Katz, Susan Barnes

   V               First Amended Chapter 11 Plan of Self Powered
                   Lighting, Inc.