-----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, WXoWWuXlRnG91eVIRA78/e1xStF/6pcyUmrmDB8ZqJYbofBt6DkgsmIxegp4/90U VKlFnTQotzwzzjEQddzeGg== 0000948830-97-000132.txt : 19970520 0000948830-97-000132.hdr.sgml : 19970520 ACCESSION NUMBER: 0000948830-97-000132 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: METEOR INDUSTRIES INC CENTRAL INDEX KEY: 0000912875 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO & HOME SUPPLY STORES [5531] IRS NUMBER: 841236619 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12401 FILM NUMBER: 97609432 BUSINESS ADDRESS: STREET 1: 216 16TH ST STE 730 CITY: DENVER STATE: CO ZIP: 80202 MAIL ADDRESS: STREET 1: 216 16TH ST STREET 2: STE 730 CITY: DENVER STATE: CO ZIP: 80202 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 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) 216 SIXTEENTH STREET, SUITE 730 DENVER, COLORADO 80202 ---------------------------------------- (Address of Principal Executive Offices) (303) 572-1137 ------------------------------- (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 Issuer 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 3,440,228 shares of the Registrant's $.001 par value common stock outstanding as of March 31, 1997. METEOR INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS ASSETS March 31 December 31 1997 1996 (Audited) CURRENT ASSETS Cash and cash equivalents $ 692,595 $ 151,992 Restricted cash 1,249,436 928,355 Accounts receivable-trade, net of allowance 5,033,584 5,134,276 Accounts receivable, related party 138,664 109,149 Notes receivable, related party 766,700 736,045 Inventory 1,252,482 1,221,729 Other current assets 172,033 206,401 Total current assets 9,305,494 8,487,947 Property, plant and equipment, net 8,180,489 8,277,368 Other assets Notes receivable, related party 1,048,654 1,598,430 Investments in closely held businesses 1,290,665 1,285,407 Other assets 724,561 784,579 Total other assets 3,063,880 3,668,416 TOTAL ASSETS $20,549,863 $20,433,731 Continued on next page -2- METEOR INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (Continued) LIABILITIES AND SHAREHOLDERS' EQUITY March 31 December 31 1997 1996 (Audited) CURRENT LIABILITIES Accounts payable, trade $ 3,191,495 $ 3,512,257 Bank overdraft -- 170,308 Current portion, long-term debt 2,104,604 2,176,357 Accrued expenses 275,014 212,940 Taxes payable 899,837 730,034 Revolving credit facility 1,812,629 2,141,027 Total current liabilities 8,283,579 8,942,923 Long-term debt 414,351 445,774 Deferred tax liability 1,744,954 1,773,240 Minority interest in subsidiaries 4,252,333 4,151,903 Total liabilities 14,695,217 15,313,840 Commitments and contingencies SHAREHOLDERS' EQUITY Common stock, $.001 par value; authorized 10,000,000 shares, 3,440,228 and 3,310,228 shares issued and outstanding, respectively 3,440 3,310 Paid-in capital 3,180,843 2,660,973 Retained earnings 2,670,363 2,455,608 Total shareholders' equity 5,854,646 5,119,891 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $20,549,863 $20,433,731 The accompanying notes are an integral part of the financial statements. -3- METEOR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996 1997 1996 Net sales $13,852,540 $ 13,385,539 Cost of sales 11,628,471 10,829,923 Gross profit 2,224,069 2,555,616 Selling, general and administrative expenses 1,972,452 1,961,050 Depreciation and amortization 219,515 221,089 Total expenses 2,191,967 2,182,139 Income from operations 32,102 373,477 Other income and (expenses) Interest income 101,441 54,701 Interest expense (115,153) (127,700) Gain on sale of assets 17,500 31,105 Other Income 480,807 -- Total other income and (expenses) 484,595 (41,894) Income before income taxes and minority interest 516,697 331,583 Income tax expense 201,512 62,979 Income before minority interest 315,185 268,604 Minority interest 100,430 95,316 Net income $ 214,755 $ 173,288 Net income per common share $ .06 $ .06 The accompanying notes are an integral part of the financial statements. -4- METEOR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31,1997 AND 1996 1997 1996 Cash flows from operating activities Net income $ 214,755 $ 173,288 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 219,515 221,089 Gain/loss on disposal of property & equipment (17,500) (31,105) Deferred income taxes (31,277) (182,723) Minority interest 100,430 95,316 Changes in assets and liabilities, net of effects from reverse acquisitions (Increase)/decrease in accounts receivable 71,177 (130,557) (Increase)/decrease in inventories (30,753) (78,566) (Increase)/decrease in other current assets 37,359 (48,545) Increase/(decrease) in accounts payable (320,762) 759,486 Increase/(decrease)in accrued liabilities 62,074 46,916 Increase/(decrease) in taxes payable 169,803 107,067 (Increase)/decrease in other assets 46,170 (75,302) Net cash provided by operating activities 520,991 856,364 Cash flows from investing activities Cash proceeds from sale of property 34,893 31,105 Purchases of property and equipment (126,181) (125,809) Investment in closely held business (5,258) -- Note receivable payments 519,121 48,970 Net cash provided (used) by investing activities 422,575 (45,734) Cash flows from financing activities Borrowings from financing activities 14,523,606 12,431,661 Payments on revolving credit facilities (14,852,004) (13,188,226) Increase (decrease) in bank overdraft (170,308) (71,657) Borrowings on long-term debt (103,176) -- Payments on long-term debt -- (56,511) Proceeds from common stock issued 520,000 -- Restricted cash (321,081) 110,069 Net cash provided (used)by financing activities (402,963) (774,664) Net increase (decrease) in cash and equivalents 540,603 35,966 Cash and equivalents, beginning of period 151,992 95,150 Cash and equivalents, end of period $ 692,595 $ 131,116 The accompanying notes are an integral part of the financial statements. -5- METEOR INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Meteor Industries, Inc.("Meteor" or "Company") was incorporated on December 22, 1992, as a Colorado based holding company. Graves Oil & Butane Co., Inc. ("Graves"), which was acquired effective September 1, 1993, is a wholesale and retail distributor of petroleum products primarily in northern New Mexico, Colorado, Arizona and Utah. Graves also operates retail gasoline and convenience stores in northern New Mexico and Colorado. El Boracho, Inc., which was acquired September 1, 1993, holds a liquor license for use by an Albuquerque, New Mexico convenience store. Hillger Oil Company ("Hillger"), which was acquired effective April 1, 1995, is a wholesale and retail distributor of petroleum products primarily in southern New Mexico and Arizona. In addition, Hillger operates and owns through a subsidiary, Hatch Pyramid LLC, retail gasoline and convenience stores in southern New Mexico. Capco Resources, Inc. ("CRI"), is a holding Company involved in the development of a power project in Pakistan. The acquisition of CRI was accounted for as a reverse acquisition with CRI treated as the acquirer. In 1996 the Company transferred its ownership of CRI to Meteor Holdings LLC ("MHL"). Innovative Solutions and Technologies, Inc. ("IST") is involved in providing environmental consulting. Capco Analytical Services, Inc. ("CAS") is involved in providing laboratory analysis. PRINCIPLES OF CONSOLIDATION AND ORGANIZATION - The consolidated financial statements include the accounts of Meteor Industries, Inc., and its wholly owned subsidiaries, Graves, including its wholly owned subsidiary, El Boracho, Inc., Hillger including its 75% owned subsidiary Hatch Pyramid LLC, CAS and IST and Meteor's 73% owned subsidiary, Meteor Holdings LLC. All significant intercompany transactions and balances have been eliminated in consolidation. 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, 1996, filed with the Company's Form 10-K. Earnings per common and common equivalent share are computed by dividing the net income by the weighted average number of common shares. The number of shares used in the earnings per share computation for the three months ended March 31, 1997, is 3,353,561; and for the three month period March 31, 1996, is 3,024,903. NOTE 2 -- NEW ACCOUNTING PRONOUNCEMENTS In February, 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS No. 128"). The standard requires presentation of earnings per share on a "basic" (only actual shares outstanding) and "fully diluted" (actual shares outstanding plus the effect of other dilutive securities) basis. At this time, the Company does not expect the adoption of SFAS No. 128 to have a material impact on the Company's earnings per share. -6- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR METEOR INDUSTRIES, INC. This Report contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform 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. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities totaled $521,000 for the three months ended March 31, 1997 compared to $856,000 for the period ended December 31, 1996. The decrease in cash provided is primarily related to the timing of payments of accounts payable. As of March 31, 1997, the Company had a working capital of $1,022,000 compared to a working capital deficit of $455,000 at December 31, 1996. The increase in the working capital is due primarily to sale of stock and partial collection of a note receivable from related party. Net cash provided by investing activities totaled $423,000 for the three months ended March 31, 1997, compared to cash used of $46,000 for the period ended March 31, 1996. The increase is primarily a result of the partial collection of a loan to related party. This was partially offset by purchases of property and equipment. Because of the Company's continued expansion and development efforts, the Company's liquidity requirements have increased and are expected to continue to increase as a result of the need to reduce the Company's existing debt related to prior acquisitions. During the quarter the Company raised $520,000 in a private placement of stock. Net cash used by financing activities totaled $403,000 for the three months ended March 31, 1997, compared to a use of $775,000 for the period ended March 31, 1996. The decrease in cash used is primarily related to the sale of stock. The Company has two revolving bank credit facilities with Norwest Business Credit, Inc. - one for $3,000,000 and one for $1,500,000. The credit lines are subject to the borrowing base of the Company's subsidiaries, as defined, and on March 31, 1997, $1,565,000 and $250,000 were borrowed against the facilities which are recorded as current liabilities. The Company has been in default on the timely filing of information with the lender. The Company was also in default of the net worth requirements for one of the subsidiaries, which default has been corrected. The lender waived these defaults. The Company is and will continue to be in default in timely filing of information and one of the Company's subsidiaries is in violation of its debt service coverage requirements. The Company has not requested waivers of these violations. However, it is expected that the lender will continue to waive these violations as they have in the past. The Company has a term loan with a New Mexico bank which is due in January, 1998 and a term loan with Norwest Business Credit, Inc. which is due in June, 1998. The balances at March 31, 1997, were $160,000 and $156,000, respectively. The loans are collateralized by real estate and buildings and equipment and require approximately $29,000 per month in payments. At March 31, 1997, the Company owned 50% of a limited liability company which in June 1996 acquired a convenience store for $610,000 using financing from Phillips -7- Performance Fund Inc. The balance of the loan at March 31, 1997 was $496,000. The Company is a co-signer on this loan which has a term of 10 years. The Company records its investment using the equity method, which reflects only the Company's share of the net worth of the limited liability company. The Company owns 75% of a limited liability company which in December 1996 acquired a convenience store for $415,000 using seller financing of $315,000. The loan has quarterly payments of $14,000 and a term of 7 years. A subsidiary of the Company has preferred stock outstanding which requires no periodic payments but accrues an 8% dividend and must be redeemed for $3,543,000 plus accrued dividends at the holder's request any time after September 15, 2000 unless earlier converted into common stock pursuant to its terms. This preferred stock is treated as a minority interest on the balance sheet and recorded at its discounted value. The Company owes the founder of one of its subsidiaries $1,759,000 payable in semi-annual installments of $200,000 which includes principal and interest calculated at 2 percentage points in excess of Citibank's prime rate. All previously unpaid principal and interest is due October 1, 1997. It is anticipated that $670,000 will be offset by payments on notes receivable from the founder also due October 1, 1997. The Company plans to pay this debt by drawing down its $3,000,000 line of credit or possibly selling or refinancing one of its convenience stores. The Company is obligated to pay lease costs of approximately $66,000 monthly for land, building, facilities, and equipment. In order to pay its obligations, the interest on such obligations and other expenses, the Company must generate cash flow from operations which exceeds that which has been achieved in the past. In addition, even if historical cash flow is exceeded throughout the terms of its obligations, the Company will probably be required to raise capital or refinance its existing debt in order to pay its obligations as they become due. The Company has filed a registration statement pursuant to which it expects to sell 600,000 shares of stock during the second quarter of 1997. The Company utilizes underground tanks at various locations to store petroleum products and is therefore subject to various federal and state statutes concerning environmental protection, as well as the New Mexico Ground Water Protection Act. The various federal and state statutes are designed to identify environmental damage, identify hazardous material and/or operations, regulate operations engaged in hazardous activities, and establish procedures for remedial action as necessary. The state of New Mexico has recognized the potential cleanup costs resulting from regulations, and the New Mexico Ground Water Protection Act has included the establishment of a corrective action fund. The purpose of the fund is to provide monetary assistance in both assessing site damage and correcting the damage where such costs are in excess of $10,000. Assistance is not available to repair or replace underground tanks or equipment. The law specifies requirements which must have been met for an applicant to be eligible, including a provision that payments will be made in accordance with regulations (which have not yet been issued), and states that payment from the corrective action fund are limited to amounts in that fund. The Company is responsible for any contamination of land it owns or leases; however, the Company's responsibilities may be limited as a result of possible claims for reimbursement from third parties. -8- The Company maintains detailed inventory records and performs tank and line tightness tests on a regular basis on all underground storage tanks. Management has assessed the environmental contingencies and does not anticipate any potential liabilities that will have a material adverse effect on the consolidated financial position, results of operation, or liquidity of the Company. RESULTS OF OPERATIONS COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1997 TO MARCH 31, 1996 The Company is primarily engaged in the business of marketing and distributing refined petroleum and related products employing wholesale, convenience store operations and environmental services. The Company's sales for the three months ended March 31, 1997, were $13,853,000 compared to $13,386,000 for the comparable period ending March 31, 1996. The increase in revenue of $467,000 is primarily related to increases in propane sales and sales at the convenience stores. Sales are expected to be similar to the previous year assuming no significant acquisitions are made. The Company's cost of sales for the three months ended March 31, 1997, were $11,628,000 (83.9% of sales) compared to $10,830,000 (80.1% of sales) for the comparable period ended March 31, 1996. The increase of $798,000 in cost of sales is primarily due to an increase in fuel costs which the Company was not able to pass on to its customers due to competition. The Company's gross profit for the three months ended March 31, 1997, was $2,224,000 compared to $2,556,000 for the comparable period ended March 31, 1996. The decrease of $332,000 is primarily related to a decrease in gasoline margins. Gasoline margins are dictated by competition in a given area and the Company has limited control over such margins. The Company's selling, general and administrative expenses were $1,973,000 for the three months ended March 31, 1997, compared to $1,961,000 for the comparable period ended March 31, 1996. Even though the Company has cut expenses at the subsidiary levels, total expenses have increased due to an increase in corporate overhead related to acquisition activity and capital raising activities. The Company's depreciation for the three months ended March 31, 1997, was $220,000 compared to $221,000 for the comparable period ended March 31, 1996. The Company's other income for the three months ended March 31, 1997 was $485,000 compared to $0 for the comparable period ended March 31, 1996. The increase is related to a settlement of litigation for $480,000, net of expenses. The Company's provision for income taxes for the three months ended March 31, 1997, was $202,000 compared to $63,000 for the comparable period ended March 31, 1996. This increase is due to more income and the utilization of a loss carryforward in 1996. The Company's net income for the three months ended March 31, 1997, was $215,000 compared to $173,000 in the prior period. The change in net income is due to the above described items. It should be noted that if the Company had not had other income from the settlement of litigation of approximately $480,000, the Company would have recorded a net loss of approximately $78,000 for the three months ended March 31, 1997. -9- PART II - OTHER INFORMATION Item 1. Legal Proceedings. In March 1997, the Company agreed to an out of court settlement with one of its former insurers whereby such insurer has agreed to pay the Company an amount which, after deducting the Company's costs and attorney's fees, will result in the Company receiving approximately $480,000. The Company expects to receive such payment during May 1997. Item 2. Changes in Securities. During the quarter ended March 31, 1997, the Company issued securities in a transaction which was not registered under the Securities Act of 1933, as amended (the "Act"), as follows: On January 2, 1997, the Company granted options under its Stock Option Plan to four employees to purchase an aggregate of 20,000 shares of Common Stock at $5.07 per share. These options vest over five years and expire on January 2, 2002. On February 14, 1997, the Company granted an option under its Stock Option Plan to Dennis R. Staal, Secretary and Treasurer of the Company, to purchase 25,000 shares of Common Stock at $3.50. Also on February 14, 1997, the Company granted an option under its Stock Option Plan to the president of one of the Company's subsidiaries, to purchase 5,000 shares of Common Stock at $3.50 per share. These options vest over three years on an annual basis and expire five years from the date of grant. On February 14, 1997, the Company granted options to three consultants to purchase an aggregate of 130,000 shares of the Company's Common Stock. These options are exercisable at $3.50 per share and expire on February 13, 1998. In February and March of 1997, the Company sold shares and warrants to purchase the Company's Common Stock to 16 accredited investors in a private offering. A total of 130,000 shares of Common Stock and 130,000 warrants were sold in this offering for an aggregate of $520,000 in cash. The Company paid no commissions in connection with this offering. Each warrant allows the holder to purchase one share of Common Stock at $5.00 per share from March 28, 1998 until March 27, 1999. With respect to these sales, the Company relied on Section 4(2) of the Act, and Rule 506 of Regulation D promulgated thereunder. Each investor was given a copy of a Private Placement Memorandum containing information concerning the Company, a Form D was filed with the SEC and the Company complied with the other applicable requirements of Rule 506. Each investor signed a subscription agreement in which he represented that he was purchasing the shares for investment only and not for the purpose of resale or distribution. The appropriate restrictive legends were placed on the certificates and stop transfer instructions were issued to the transfer agent. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. None. -10- Item 6. Exhibits and Reports on Form 8-K. (a) Exhibit 27 Financial Data Schedule Filed herewith electronically (b) Reports on From 8-K. None. 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/ Dennis R. Staal Dennis R. Staal, Treasurer(duly author- ized officer and Chief Financial and Accounting Officer) Dated: May 15, 1997 -11- EXHIBIT INDEX EXHIBIT METHOD OF FILING - ------- ----------------------------- 27. FINANCIAL DATA SCHEDULE Filed herewith electronically EX-27 2
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. 3-MOS DEC-31-1996 MAR-31-1997 1,942,031 0 5,938,948 0 1,252,482 171,033 14,048,061 (5,867,572) 20,549,863 8,283,579 0 3,440 0 0 5,851,206 20,549,863 13,852,540 13,852,540 11,628,471 2,191,967 0 0 115,153 516,697 201,512 214,755 0 0 0 214,755 .06 .06
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