-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IwUnsbCMERDFXyed5CTPgGGMlkn4RixJfo155botsD3Oz7lzDRFNzil2eHreXoxs F3Y3VKxRMfut8phd4vMHdQ== /in/edgar/work/0000948830-00-500053/0000948830-00-500053.txt : 20001116 0000948830-00-500053.hdr.sgml : 20001116 ACCESSION NUMBER: 0000948830-00-500053 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: METEOR INDUSTRIES INC CENTRAL INDEX KEY: 0000912875 STANDARD INDUSTRIAL CLASSIFICATION: [5531 ] IRS NUMBER: 841236619 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12401 FILM NUMBER: 769298 BUSINESS ADDRESS: STREET 1: 1401 BLAKE STREET STREET 2: SUITE 200 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3035721135 MAIL ADDRESS: STREET 1: 1401 BLAKE STREET STREET 2: SUITE 200 CITY: DENVER STATE: CO ZIP: 80202 10-Q 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the Quarterly Period ended September 30, 2000 Commission File Number: 0-27968 METEOR INDUSTRIES, INC. -------------------------------------------------- (Exact Name of Issuer as Specified in its Charter) COLORADO 84-1236619 - ------------------------------- --------------------------------------- (State or Other Jurisdiction of (I.R.S. Employer Identification Number) Incorporation or Organization) 1401 BLAKE STREET, SUITE 200, DENVER, COLORADO 80202 -------------------------------------------------------- (Address of Principal Executive Offices) (303)572-1135 ---------------------------------------------------- (Registrant=s Telephone Number, Including Area Code) Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [ X ] NO [ ] There were 3,548,056 shares of the Registrant=s $.001 par value common stock outstanding as of November 14, 2000. Item 1: FINANCIAL STATEMENTS METEOR INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS ASSETS (Dollars in Thousands) September 30, December 31, 2000 1999 (Unaudited) CURRENT ASSETS Cash $ 270 $ 288 Restricted cash 1,957 600 Accounts receivable-trade, net of allowance of $314 and $233, respectively 16,451 14,835 Accounts receivable, related party 1,078 678 Notes receivable, net of allowance of $114 and $114, respectively 516 290 Notes receivable, related party 1,307 1,153 Inventory 4,235 3,596 Deferred tax asset 335 335 Other current assets 612 535 Total current assets 26,761 22,310 Property, plant and equipment, net 16,783 17,905 Other assets Notes receivable, net 138 123 Notes receivable, related party 1,190 1,277 Investments in closely held businesses 1,495 1,581 Intangibles, net 1,274 1,409 Other assets 309 390 Total other assets 4,406 4,780 TOTAL ASSETS $ 47,950 $ 44,995 Continued on next page 3 METEOR INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (Continued) LIABILITIES AND SHAREHOLDERS' EQUITY (Dollars in Thousands) September 30, December 31, 2000 1999 (Unaudited) CURRENT LIABILITIES Accounts payable, trade $ 12,271 $ 8,323 Accounts payable, related party 96 14 Book overdraft 2,844 1,924 Current portion, long-term debt 2,928 1,438 Accrued expenses 1,360 755 Fuel taxes payable 793 909 Revolving credit facility 7,062 9,292 Total current liabilities 27,354 22,655 Long-term debt 8,350 5,865 Deferred tax liability 2,606 2,606 Minority interest in subsidiaries 250 5,412 Total liabilities 38,560 36,538 Commitments and contingencies SHAREHOLDERS' EQUITY Preferred stock, $1.00 par value; 365,000 shares authorized, issued and outstanding 365 0 Common stock, $.001 par value; authorized 10,000,000 shares, 3,548,056 and 3,524,169 shares issued and outstanding, respectively 4 4 Paid-in capital 5,577 4,458 Treasury stock, at cost, 132,098 and 132,098 shares held respectively (489) (489) Retained earnings 3,933 4,484 Total shareholders' equity 9,390 8,457 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 47,950 $ 44,995 The accompanying notes are an integral part of the financial statements. 3 METEOR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) (Dollars in Thousands except per share information) September 30, September 30, 2000 1999 Net sales $ 53,485 $ 44,659 Cost of sales 47,894 37,748 Gross profit 5,591 6,911 Selling, general and administrative expenses 4,526 5,826 Depreciation and amortization 585 521 Total expenses 5,111 6,347 Income from operations 480 564 Other income and (expenses) Interest income 91 39 Interest expense (361) (251) Gain on sale of assets 11 5 Other (818) 303 Total other income (expense) (1,077) 96 Income (loss) before income taxes and minority interest (597) 660 Income tax (benefit) expense (266) 243 Minority interest 123 123 Net income (loss) $ (454) $ 294 Earnings (loss) per share: Basic $ (.13) $ .09 Diluted $ (.13) $ .08 Weighted average common share and common share equivalents: Basic 3,533,370 3,445,027 Diluted 3,533,370 3,491,960 The accompanying notes are an integral part of the financial statements. 4 METEOR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) (Dollars in Thousands except per share information) September 30, September 30, 2000 1999 Net sales $144,108 $108,774 Cost of sales 127,438 90,520 Gross profit 16,670 18,254 Selling, general and administrative expenses 13,529 14,590 Depreciation and amortization 1,780 1,530 Total expenses 15,309 16,120 Income from operations 1,361 2,134 Other income and (expenses) Interest income 276 130 Interest expense (1,095) (859) Gain on sale of assets 6 6 Other (884) 447 Total other expense (1,697) (276) Income (loss) before income taxes and minority interest (336) 1,858 Income tax (benefit) expense (153) 684 Minority interest 368 368 Net income (loss) $ (551) $ 806 Earnings(loss)per share: Basic $ (.16) $ .24 Diluted $ (.16) $ .23 Weighted average common share and common share equivalents: Basic 3,527,509 3,430,805 Diluted 3,527,509 3,477,738 The accompanying notes are an integral part of the financial statements. 5 METEOR INDUSTRIES, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE YEAR TO DATE ENDED SEPTEMBER 30, 2000 (UNAUDITED) (Dollars in Thousands) Preferred Additional Stock Common Stock Paid-In Retained Treasury Shares Amount Shares Amount Capital Earnings Stock Total Balance December 31, 1999 0 $ 0 3,656,267 $4 $4,458 $4,484 $(489) $8,457 Stock issued for 401(K)/ bonus 23,887 81 81 Options issued for services 99 99 Issuance of pre- ferred stock, net 365,000 365 315 680 Acquisition of subsid- iary's pre- ferred stock 624 624 Net loss (551) (551) Balance September 30, 2000 365,000 $365 3,680,154 $4 $5,577 $3,933 $(489) $9,390 The accompanying notes are an integral part of the financial statement 6 METEOR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) (Dollars in Thousands) September 30, September 30, 2000 1999 Cash flows from operating activities: Net income (loss) $ (551) $ 806 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 1,780 1,530 Gain on disposal of property, plant & equipment (6) (6) Minority interest 368 368 Other 732 0 Change in assets and liabilities: Decrease (increase) in: Accounts receivable, net (2,400) (4,107) Inventories (639) (137) Other current assets (77) 171 Other assets 81 59 Increase (decrease) in: Accounts payable 4,030 3,653 Accrued liabilities 157 (149) Taxes payable (116) (426) Net cash provided by operating activities 3,359 1,762 Cash flows from investing activities: Cash proceeds from sale of property, plant and equipment 171 78 Purchases of property, plant and equipment (477) (2,364) Non-compete agreement 0 (80) Investment in closely held business 49 5 Notes receivable payments (issued), net 113 (379) Net cash used in investing activities (144) (2,740) Continued on next page 7 METEOR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) (Dollars in Thousands) (Continued) September 30, September 30, 2000 1999 Cash flows from financing activities: Borrowings (payments) on revolving credit facilities, net $ (2,230) $ 1,983 Increase in book overdraft 920 (179) Payments on long-term debt (1,274) (1,187) Borrowings on long-term debt 0 427 Proceeds from preferred stock issued 731 0 Costs on preferred stock issued (23) 0 Restricted cash (1,357) 66 Net cash (used in) provided by financing activities (3,233) 1,110 Net increase (decrease)in cash and equivalents (18) 132 Cash and equivalents, beginning of period 288 380 Cash and equivalents, end of period $ 270 $ 512 The accompanying notes are an integral part of the financial statements. 8 METEOR INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - ORGANIZATION ORGANIZATION - Meteor Industries, Inc. ("Meteor" or "Company") was incor-porated on December 22, 1992, as a Colorado based holding company. In January 2000, Meteor Marketing, Inc.("Meteor Marketing"), a Colorado corporation and a wholly owned subsidiary of the Company, merged downstream with and into Fleischli Oil Company, Inc. ("Fleischli"), a Wyoming corporation and a wholly owned subsidiary of Meteor Marketing. Fleischli became the surviving corporation and immediately changed its name to "Meteor Marketing, Inc." In addition, the significant wholly owned subsidiaries included in Meteor Marketing which are: Graves Oil & Butane Co., Inc. ("Graves"), and Tri-Valley Gas Co. ("Tri-Valley") merged their marketing and distribution operations with and into Meteor Marketing. The Company also owns Meteor Holdings LLC ("MHL") and Innovative Solutions and Technologies, Inc. ("IST"). NOTE 2 - BASIS OF PRESENTATION These financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, such interim statements reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position and the results of operations and cash flows for the interim periods presented. The results of operations for these interim periods are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the audited consolidated financial statements and footnotes for the year ended December 31, 1999, filed with the Company's Form 10-K. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. NEW ACCOUNTING PRONOUNCEMENT - In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("FAS") NO. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement establishes accounting and reporting standards requiring that every derivative instrument be recorded on the balance sheet as either an asset or liability measured at its fair value. FAS No. 133 also requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. In June 1999, the FASB issued FAS No. 137 which defers the effective date of FAS No. 133 to fiscal years beginning after June 15, 2000. The Company will adopt FAS No. 133 in the first quarter of fiscal 2001, but does not expect such adoption to materially affect its financial statement presentation. NOTE 3 - EARNINGS PER SHARE Basic earnings per common share are computed by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted earnings per share are calculated taking into account all potentially dilutive secur-ities. A reconciliation of the denominator used in the calculation of basic and diluted earnings per share is presented below. Antidilutive stock 9 options and warrants of 772,267 and 1,309,266 for the nine months ended September 30, 2000 and 1999 respectively, are omitted from the denominator. The numerator is unchanged. Three Months Nine Months Ended September 30, September 30, 2000 1999 2000 1999 Denominator: Average common shares outstanding 3,533,370 3,445,027 3,527,509 3,430,805 Average dilutive stock options and warrants -0- 46,933 -0- 46,933 Diluted shares 3,533,370 3,491,960 3,527,509 3,477,738 NOTE 4 - COMMITMENTS AND CONTINGENCIES The Company is subject to various federal, state and local environmental laws and regulations. Although Company environmental policies and practices are designed to ensure compliance with these laws and regulations, future developments and increasingly stringent regulations could require the Company to make additional unforeseen environmental expenditures. The Company accrues for environmental remedial actions, operation, maintenance and monitoring costs based on the net present value of the costs, net of probable recoveries, after a remediation plan has been developed. These costs are discounted using a risk free interest rate over the estimated period which the remediation, operation, maintenance and monitoring costs are to be expended. Environmental accruals are routinely reviewed on an interim basis as events and developments warrant. The Company is a co-signer on a note for its 50% owned equity investment in Coors Pyramid LLC. The principal long-term balance owing on the note at September 30, 2000, is $330,000. The Company has guaranteed a $1,350,000 note payable on the office building in which the Company's corporate offices are located. The principal long-term balance owing on the note at September 30, 2000 is $1,350,000. In August 2000 the Company entered into a restructuring agreement with the former shareholder of a subsidiary. Under the terms of the agreement, the Company acquired for retirement the preferred shares owned by the former shareholder in exchange for a note and the assumption of certain environmental liabilities. The note is being amortized over a four-year period with an interest rate of 8%. The note requires a $1,500,000 payment to be made from the receipt of funds received from the future sale or refinancing of certain assets. The note is dated September 15, 2000. The note is guaranteed by Graves and Meteor Marketing, Inc. and is secured with certain assets of Graves. The excess of the carrying value for the minority interest (the preferred shares) and the liabilities recorded in the transaction is included in the paid in capital section of the balance sheet. This income is not included in the income statement. In October 2000, the Company entered into a non-binding letter of intent to merge with Active IQ Technologies, Inc. ("Active IQ") a privately-held company providing Internet infrastructure software solutions for business-to-business 10 (B2B) ecommerce. The closing of the merger transaction will be contingent upon several conditions, including the negotiation and execution of a definitive merger agreement, and approval of the transaction by Meteor's and Active IQ's shareholders. The transaction, if consummated, will result in Active IQ shareholders owning approximately 50% of the merged companies. The Company is a party to certain litigation that has arisen in the normal course of its business and that of its subsidiaries. In the opinion of management, none of this litigation is likely to have a material effect on the Company's financial position or results of operation. The Company has terminated all negotiations to acquire Jardine Petroleum Company and Innovative Drug Delivery Systems, Inc. resulting in approximately $552,000 being charged to other expense during the third quarter of 2000. NOTE 5 - RELATED PARTY TRANSACTIONS The Company has both short-term and long-term notes receivable from Capco Energy, Inc. ("Capco"), an affiliate of the Company. The notes bear interest and are secured by all of the outstanding shares of a wholly owned subsidiary of Capco and by certain shares of the Company's stock held by Capco. The total notes receivable balance at September 30, 2000 and at December 31, 1999, is $2,765,000 and $2,430,000. NOTE 6 - BUSINESS SEGMENTS The Company operates in six business segments: gasoline, diesel, propane, grease and lubricants, convenience store items and other products (anti- freeze, chemicals, services, hardware, rental income and miscellaneous items). Senior management evaluates and makes operating decisions about each of these operating segments based on a number of factors. Two of the most significant factors used in evaluating the operating performance are: net sales and gross profit before depreciation and amortization as presented below: Three Months Nine months Ended September 30, Ended September 30, 2000 1999 2000 1999 Net sales Gasoline $ 14,026 $12,197 $ 38,819 $ 27,848 Diesel 31,433 23,639 81,435 54,937 Propane 864 722 4,000 3,116 Greases and lubes 5,058 3,742 14,233 12,631 Convenience store items 0 1,931 0 4,865 Other items 2,104 2,428 5,621 5,377 Total net sales $ 53,485 $44,659 $144,108 $108,774 Gross profit, before depreciation Gasoline $ 938 $ 1,210 $ 2,619 $ 3,489 Diesel 2,335 2,392 6,237 6,432 Propane 272 280 1,376 1,348 Greases and lubes 725 812 2,701 2,505 Convenience store items 0 514 0 1,236 Other items 1,321 1,703 3,737 3,244 Total gross profit $ 5,591 $ 6,911 $ 16,670 $ 18,254 11 Three Months Nine months Ended September 30, Ended September 30, 2000 1999 2000 1999 Reconciliation to net income: Selling, general and administrative $ 4,526 $ 5,826 $ 13,529 $ 14,590 Depreciation and amortization 585 521 1,780 1,530 Income from operations 480 564 1,361 2,134 Other income (expense) (1,077) 96 (1,697) (276) Income tax expense (266) 243 (153) 684 Minority interest 123 123 368 368 Net income (loss) $ (454) $ 294 $ (551) $ 806 In December 1999, Meteor sold its retail store operating subsidiary to allow the Company to focus on its core business of commercial, wholesale and cardlock petroleum distribution. The Company does not account for assets by business segment and, therefore, depreciation and amortization are not factors used in evaluating operating performance. NOTE 7 - PREFERRED STOCK During June 2000, the Company issued 365,000 shares of Series B Convertible Preferred Stock. The Company received $707,000, net of issuance costs of $23,000. In addition, the Company issued stock options to consultants that resulted in $27,000 of non-cash expenses. Each share is: (1) not entitled to dividends, (2) entitled to a liquidation preference of $2.00, (3) entitled to one vote, and (4) not redeemable. Holders of the Series B Convertible Preferred Stock have the right to convert all or a portion of their shares into units, each unit consisting of one share of Common Stock and one warrant to purchase Common Stock. The warrants to be issued as part of the units shall be exercisable until May 15, 2005, at an exercise price of $2.50 per share. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS This Report contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Act of 1995. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described in the forward-looking statements. The following discussion of the Company's financial condition and results of operations should be read in conjunction with the historical financial statements and notes thereto of Meteor, included elsewhere in this document. 12 INTRODUCTION The Company is engaged in the distribution and marketing of refined petroleum products including gasoline, diesel fuel, propane and lubricants. The Company's growth, since its inception in 1992, has been primarily through the acquisition of businesses in the petroleum marketing industry. RESULTS OF OPERATIONS COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999 The Company had sales of $53.5 million for the three months ended September 30, 2000, compared to $44.7 million for the three months ended September 30, 1999, an $8.8 million (20%) increase. The increase is primarily due to higher product prices during the current period partially offset by a decrease in sales volumes. Gross profit for the three months ended September 30, 2000 and 1999, was $5.6 million and $6.9 million, respectively, a decrease of $1.3 million (19%). The decrease is primarily due to the exchange of higher retail margins with wholesale margins resulting from the sale of Meteor Stores, Inc. and lower sales volumes. The Company experienced a net loss of $454,000 for the three months ended September 30, 2000, compared to net income of $294,000 in 1999. The loss was attributable to two one time items: (1) acquisition costs totaling $552,000 due to terminating acquisition attempts of two companies and (2) recording environmental expense of $268,000. Income from operations declined slightly for the three months ended September 30, 2000, as compared to 1999, resulting from a decline in gross profit primarily due to the exchange of higher retail margins with wholesale margins, partially offset by a reduction in SG&A expenses resulting from the sale of Meteor Stores, Inc. In addition, depreciation and amortization expense increased due to the acquisition of property, plant and equipment additions, partially offset by the sale of Meteor Stores, Inc. Gasoline Segment Gasoline volumes decreased to 12.8 million gallons for the three months ended September 30, 2000, compared to 15.4 million gallons in 1999, a decrease of 2.6 million gallons (17%). The volume decrease is primarily due to reduced demand as a result of the rapid increase in the cost of petroleum based products. Gasoline sales increased to $14.0 million for the three months ended September 30, 2000, compared to $12.2 million in 1999, an increase of $1.8 million (15%) primarily due to higher product prices during the current period partially offset by the decrease in sales volumes. Gross profit decreased to $.9 million for the three months ended September 30, 2000, from $1.2 million in 1999, a decrease of $.3 million (25%), primarily due to the exchange of higher retail margins with wholesale margins resulting from the sale of Meteor Stores, Inc. (retail c-store subsidiary) in December 1999. Gross profit per gallon of gasoline sold increased to $.07 for the three months ended September 30, 2000, from $.06 in 1999. Diesel Segment Diesel volumes decreased to 29.3 million gallons for the three months ended September 30, 2000, from 30.5 million in 1999, a decrease of 1.2 million 13 gallons (4%) due to one large mining customer accepting a bid from a diesel supplier although the Company retained the trucking service. Diesel sales increased to $31.4 million for the three months ended September 30, 2000, from $23.6 million in 1999, an increase of $7.8 million (33%) due to higher product prices during the current period partially offset by the decrease in sales volumes. Gross profit decreased to $2.3 million for the three months ended September 30, 2000, from $2.4 million in 1999, a decrease of $.1 million (4%). Gross profit per gallon of diesel sold remained constant at $.08 for the three months ended September 30, 2000 and 1999. Propane Segment Propane volumes decreased to 1.0 million gallons for the three months ended September 30, 2000, from 1.1 million gallons in 1999, a .1 million gallon decrease (9%) due to a decrease in wholesale volume caused by unseasonably warm weather in our marketing area. Propane sales increased to $.9 million for the three months ended September 30, 2000, from $.7 million in 1999, an increase of $.2 million (29%) due to higher product prices during the current period, partially offset by a decrease in sales volumes. Gross profit remained constant at $.3 million for the three months ended September 30, 2000 and 1999. Gross profit per gallon sold increased to $.28 for the three months ended September 30, 2000, from $.24 in 1999. Greases and Lubricants Segment Grease and lubricants sales increased to $5.1 million for the three months ended September 30, 2000, compared to $3.7 million in 1999, an increase of $1.4 million (40%) due to higher product prices during the current period. Gross profit decreased to $.7 million for the three months ended September 30, 2000, compared to $.8 million in 1999, a decrease of $.1 million (13%). Convenience Store Items Segment Sales of convenience store items decreased to -0- for the three months ended September 30, 2000, from $1.9 million in 1999, due to the sale of Meteor Stores, Inc. in December 1999. Other Items Segment Sales of other items, which consist of anti-freeze, chemicals, services, hardware, rental income and miscellaneous items, decreased to $2.1 million for the three months ended September 30, 2000, compared to $2.4 million in 1999, a decrease of $.3 million (13%). Gross profit decreased to $1.3 million for the three months ended September 30, 2000, compared to $1.7 million in 1999, a decrease of $.4 million (24%). Expenses Selling, general, and administrative ("SG&A") expenses were $4.5 million for the three months ended September 30, 2000, compared to $5.8 million for the three months ended September 30, 1999, a decrease of $1.3 million (22%). The decrease is primarily related to the reduction in SG&A expenses related to the sale of Meteor Stores, Inc. partially offset by the increase in the level of activity and costs incurred to build the infrastructure necessary for future growth of the Company. 14 Depreciation and amortization expense increased to $.6 million for the three months ended September 30, 2000, compared to $.5 million in 1999. Interest expense increased to $361,000 for the three months ended September 30, 2000, compared to $251,000 in 1999, an increase of $110,000 (44%). The increase is due to carrying higher levels of accounts receivable and inventory. Accounts receivable and inventory are significantly higher in 2000 vs 1999 due to the rapid increase in the costs of petroleum based products. The Company recognized other expense of $818,000 for the three months ended September 30, 2000, as compared to other income of $303,000 in 1999. The Company has terminated all negotiations to acquire Jardine Petroleum Company and Innovative Drug Delivery Systems, Inc. resulting in a one time expense of approximately $552,000. The Company also recorded environmental expense of $268,000. The Company recognized other income for the three months ended September 30, 1999, of $300,000 related to the sale of 150,000 shares in a Canadian corporation. Income Taxes The provision for income taxes for the three months ended September 30, 2000, resulted in a benefit of $266,000 as compared to tax expense of $243,000 for the same period ended September 30, 1999. The change was due to the net loss for the current period. COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2000 TO SEPTEMBER 30, 1999 The Company had sales of $144.1 million for the nine months ended September 30, 2000, compared to $108.8 million for the nine months ended September 30, 1999, a $35.3 million (32%) increase. The increase is primarily due to an increase in product sales volumes as a result of the Carroll Oil Company acquisition in April 1999, and higher product prices during the current period. Gross profit for the nine months ended September 30, 2000 and 1999, was $16.7 million and $18.3 million, respectively. The decrease is due to the exchange of higher retail margins with wholesale margins resulting from the sale of Meteor Stores, Inc. The Company experienced a net loss of $551,000 for the nine months ended September 30, 2000, compared to net income of $806,000 in 1999. The loss results from the Company ending negotiations to acquire Jardine Petroleum Company and Innovative Drug Delivery Systems, Inc. resulting in a one time expense of approximately $552,000. The Company also recorded environmental expense of $268,000. Income from operations declined for the nine months ended September 30, 2000, as compared to 1999, resulting from a decline in gross profit primarily due to the exchange of higher retail margins with wholesale margins, partially offset by a reduction in SG&A expenses resulting from the sale of Meteor Stores, Inc. In addition, depreciation and amortization expense increased due to the acquisition of equipment additions, partially offset by the sale of Meteor Stores, Inc. 15 Gasoline Segment Gasoline volumes increased to 37.8 million gallons for the nine months ended September 30, 2000, compared to 33.3 million gallons in 1999, an increase of 4.5 million gallons (14%). The volume increase is primarily due to the Carroll Oil Company acquisition. Gasoline sales increased to $38.8 million for the nine months ended September 30, 2000, compared to $27.8 million in 1999, an increase of $11 million (40%) due to higher product prices during the current period and increased sales volumes. Gross profit decreased to $2.6 million for the nine months ended September 30, 2000, from $3.5 million in 1999,a decrease of $.9 million gallons (26%) primarily due to the exchange of higher retail margins with wholesale margins resulting from the sale of Meteor Stores, Inc. (retail c-store subsidiary) in December 1999. Gross profit per gallon of gasoline sold decreased to $.07 for the nine months ended September 30, 2000, from $.08 in 1999 for the above stated reason. Diesel Segment Diesel volumes increased to 82.3 million gallons for the nine months ended September 30, 2000, from 82.1 million gallons in 1999, an increase of .2 million gallons due to acquiring new customers and the Carroll Oil Company acquisition. Diesel sales increased to $81.4 million for the nine months ended September 30, 2000, from $54.9 million in 1999, an increase of $26.4 million (48%) due to higher product prices during the current period and increased sales volumes. Gross profit decreased to $6.2 million for the nine months ended September 30, 2000, from $6.4 million in 1999, a decrease of $.2 million (3%). Gross profit per gallon of diesel sold remained constant at $.08 per gallon for the nine months ended September 30, 2000 and 1999. Propane Segment Propane volumes decreased to 4.8 million gallons for the nine months ended September 30, 2000, from 5.8 million gallons in 1999, a 1.0 million gallon decrease (17%) due to a decrease in wholesale volume caused by unseasonably warm weather in our marketing area. Propane sales increased to $4.0 million for the nine months ended September 30, 2000, from $3.1 million in 1999, an increase of $.9 million (29%) due to higher product prices during the current period, partially offset by a decrease in sales volumes. Gross profit increased to $1.4 million for the nine months ended September 30, 2000, comparted to $1.3 million in 1999, an increase of $.1 million (8%). Gross profit per gallon of propane sold increased to $.29 for the nine months ended September 30, 2000, compared to $.22 in 1999, due to higher residential margins. Greases and Lubricants Segment Grease and lubricants sales increased to $14.2 million for the nine months ended September 30, 2000, compared to $12.6 million in 1999, an increase of $1.6 million (13%) due to higher product prices during the current period. Gross profit increased to $2.7 million for the nine months ended September 30, 2000, compared to $2.5 million, an increase of $.2 million (8%). Convenience Store Items Segment Sales of convenience store items decreased to -0- for the nine months ended September 30, 2000, from $4.9 million in 1999, due to the sale of Meteor Stores, Inc. in December 1999. 16 Other Items Segment Sales of other items, which consist of anti-freeze, chemicals, services, hardware, rental income and miscellaneous items, increased to $5.6 million for the nine months ended September 30, 2000, compared to $5.4 million in 1999, an increase of $.2 million (4%). Gross profit increased to $3.7 million for the nine months ended September 30, 2000, compared to $3.2 million in 1999, an increase of $.5 million (16%) due to rental income and freight revenue. Expenses Selling, general and administrative ("SG&A") expenses were $13.5 million for the nine months ended September 30, 2000, compared to $14.6 million for the nine months ended September 30, 1999, a decrease of $1.1 million (8%). The decrease is due to a reduction in SG&A expenses resulting from the sale of Meteor Stores, Inc., partially offset by the acquisition of Carroll Oil Company and corresponding increase in the level of activity and costs incurred to build the infrastructure necessary for future growth of the Company. Depreciation and amortization for the nine months ended September 30, 2000, was $1.8 million compared to $1.5 million for the nine months ended September 30, 1999. The increase is attributable to the Carroll Oil Company acquisition and property, plant and equipment additions, partially offset by the sale of Meteor Stores, Inc. Interest expense increased to $1.1 million for the nine months ending September 30, 2000, compared to $.9 million in 1999, an increase of $.2 million (22%). The increase is due to carrying higher levels of accounts receivable and inventory. Accounts receivable and inventory are significantly higher in 2000 vs 1999 due to the rapid increase in the cost of petroleum based products. The Company recognized other expense of $884,000 for the nine months ended September 30, 2000, as compared to other income of $447,000 in 1999. The Company terminated all negotiations to acquire Jardine Petroleum Company and Innovative Drug Delivery Systems, Inc. resulting in a one time expense of approximately $552,000. The Company also recorded environmental expense of $268,000. The Company recognized other income for the nine months ended September 30, 1999, of $440,000 related to the sale of 250,000 shares in a Canadian corporation. Income Taxes The provision for income taxes for the nine months ended September 30, 2000, resulted in a benefit of $153,000 as compared to tax expense of $684,000 for the same period ended September 30, 1999. The change was due to the net loss in the current period. LIQUIDITY AND CAPITAL RESOURCES At September 30, 2000, the Company had a working capital deficit of $.6 million compared to a working capital deficit of $.3 million at December 31, 1999. 17 Net cash provided by operating activities totaled $3.4 million for the nine months ended September 30, 2000, compared to $1.8 million for the nine months ended September 30, 1999. This increase in cash provided by operating activities is principally related to changes in working capital items due to higher product prices. Net cash used in investing activities totaled $.1 million for the nine months ended September 30, 2000, compared to cash used of $2.7 million for the nine months ended September 30, 1999. The decrease in cash used in investing activities is principally related to a reduction in expenditures for property, plant and equipment and the sale of a parcel of land in Colorado. Net cash used in financing activities totaled $3.2 million for the nine months ended September 30, 2000, compared to cash provided by of $1.1 million for the nine months ended September 30, 1999. The increase in cash used in financing activities primarily related to a decrease in borrowing on the revolving line of credit facility offset by proceeds from the issuance of preferred stock. Effective November 1, 2000, the Company renegotiated its revolving bank credit facility with Wells Fargo Business Credit, Inc. for $12.5 million which expires December 31, 2002. The credit line is subject to the borrowing base, as defined. At September 30, 2000, the borrowing base was approximately $11.2 million. $7.1 million was borrowed against the facility and is recorded as a current liability. The Company has various loans with banks, suppliers and individuals which require principal payments of approximately $1.3 million in 2000. The Company is obligated to pay lease costs of approximately $.9 million in 2000 for land, building, facilities and equipment. In August 2000 the Company entered into a restructuring agreement with the former shareholder of a subsidiary. Under the terms of the agreement, the Company acquired for retirement the preferred shares owned by the former shareholder in exchange for a note and the assumption of certain environmental liabilities. The note is being amortized over a four-year period with an interest rate of 8%. The note requires a $1,500,000 payment to be made from the receipt of funds received from the future sale or refinancing of certain assets. The note is dated September 15, 2000. The note is guaranteed by Graves and Meteor Marketing, Inc. and is secured with certain assets of Graves. The excess of the carrying value for the minority interest (the preferred shares) and the liabilities recorded in the transaction is included in the paid in capital section of the balance sheet. This income is not included in the income statement. The Company is responsible for any contamination of land it owns or leases. However, the Company may have limitations on any potential contamination liabilities as well as claims for reimbursement from third parties. For the quarters ended September 30, 2000 and 1999, the Company expended $92,000 and $91,000, respectively, for site assessment and related cleanup costs. The Company has accrued $741,000 at September 30, 2000, for environmental remediation which management believes is adequate to cover known remediation requirements. 18 ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's exposure to interest rate changes is primarily related to its variable rate debt issued under its $12.5 million revolving credit facility, which bears interest at prime plus 0.5%. As of September 30, 2000, there was $7.1 million in borrowings outstanding. Because the interest rate on this facility is variable, based upon the bank's prime rate, the Company's interest expense and net income are affected by interest rate fluctuations. If interest rates were to increase or decrease by 100 basis points, the result, based upon the existing outstanding debt as of September 30, 2000, and using the average interest rate paid on borrowed funds during the third quarter of 2000, would be an annual increase or decrease of approximately $71,000 in interest expense and a corresponding decrease or increase of approximately $40,000 in the Company's net income after taxes. PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 2. Changes in Securities. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibit 27 Financial Data Schedule Filed herewith electronically (b) Reports on Form 8-K. None. 19 SIGNATURES In accordance with the requirements of the Exchange Act, the Issuer caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. METEOR INDUSTRIES, INC. By:/s/ Richard E. Kisser Richard E. Kisser, Chief Financial and Accounting Officer Dated: November 14, 2000 21 EXHIBIT INDEX EXHIBIT METHOD OF FILING - ------- ----------------------------- 27. FINANCIAL DATA SCHEDULE Filed herewith electronically EX-27 2 0002.txt
5 This schedule contains summary financial information extracted from the consolidated balance sheets and consolidated statements of operations found on pages 3, 4 and 5 of the Company's Form 10-Q for the year to date, and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-2000 SEP-30-2000 2,227 0 17,843 (314) 4,235 26,761 22,453 (5,670) 47,950 27,354 0 4 0 365 9,025 47,950 144,108 144,108 127,438 15,309 1,697 0 1,095 (336) (153) 0 0 0 0 (551) (.16) (.16)
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