-----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, GR26zAKVR+9Z4IJ/tLYfvd2gtuXrWGK91TlrFZchQ1rcVwfcZ+nXq1zlGInaBpjk YVIzspPp1IIrX3FdWdlLFg== 0000948830-98-000110.txt : 19980518 0000948830-98-000110.hdr.sgml : 19980518 ACCESSION NUMBER: 0000948830-98-000110 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NASD 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: SEC FILE NUMBER: 001-12401 FILM NUMBER: 98624548 BUSINESS ADDRESS: STREET 1: 216 16TH ST STE 730 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3035721137 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, 1998 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 4,130,228 shares of the Registrant's $.001 par value common stock outstanding as of March 31, 1998. METEOR INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS ASSETS March 31 December 31 1998 1997 CURRENT ASSETS Cash and cash equivalents $ 448,284 $ 225,694 Restricted cash 738,681 1,150,266 Accounts receivable-trade, net of allowance of $372,040 and $455,067, respectively 7,488,939 9,745,318 Accounts receivable, related party 63,610 91,919 Notes receivable, related party 125,668 106,031 Inventory 3,262,646 3,818,332 Deferred tax asset 348,056 404,970 Other current assets 401,414 283,604 Total current assets 12,877,298 15,826,134 Property, plant and equipment, net 13,831,939 13,939,783 Other assets Notes receivable, net 211,564 179,110 Investments in closely held businesses 1,415,923 1,395,045 Other assets 658,043 601,279 Total other assets 2,285,530 2,175,434 TOTAL ASSETS $28,994,767 $31,941,351 Continued on next page -2- METEOR INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (Continued) LIABILITIES AND SHAREHOLDERS' EQUITY March 31 December 31 1998 1997 CURRENT LIABILITIES Accounts payable, trade $ 5,301,184 $ 5,655,272 Accounts payable, related party 20,539 26,407 Bank overdraft -- 327,734 Current portion, long-term debt 740,552 592,195 Accrued expenses 613,578 826,875 Taxes payable 1,251,342 1,672,586 Revolving credit facility 1,990,430 3,833,572 Total current liabilities 9,917,625 12,934,641 Long-term debt 2,589,860 2,912,183 Deferred tax liability 2,339,388 2,288,349 Minority interest in subsidiaries 4,626,028 4,515,010 Total liabilities 19,472,901 22,650,183 Commitments and contingencies SHAREHOLDERS' EQUITY Common stock, $.001 par value; authorized 10,000,000 shares, 4,130,228 and 4,130,228 shares issued and outstanding, respectively 4,130 4,130 Paid-in capital 6,319,071 6,319,071 Treasury stock, at cost, 29,500 and 18,500 shares held, respectively (131,208) (88,694) Retained earnings 3,329,873 3,056,661 Total shareholders' equity 9,521,866 9,291,168 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $28,994,767 $31,941,351 The accompanying notes are an integral part of the financial statements. -3- METEOR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 1998 1997 Net sales $ 26,824,447 $ 13,852,540 Cost of sales 22,084,988 11,628,471 Gross profit 4,739,459 2,224,069 Selling, general and administrative expenses 3,684,564 1,972,452 Depreciation and amortization 304,277 219,515 Total expenses 3,988,841 2,191,967 Income from operations 750,618 32,102 Other income and (expenses) Interest income 44,019 101,441 Interest expense (188,245) (115,153) Gain on sale of assets 1,500 17,500 Other Income -- 480,807 Total other income and (expenses) (142,726) 484,595 Income before income taxes and minority interest 607,892 516,697 Income tax expense 223,704 201,512 Income before minority interest 384,188 315,185 Minority interest 110,976 100,430 Net income $ 273,212 $ 214,755 Other comprehensive income, net of tax $ -- $ -- Earnings per common share and equivalent: Basic Net income $ .07 $ .06 Diluted Net income $ .07 $ .06 Weighted average common share and common share equivalents: Basic 4,130,228 3,353,561 Diluted 4,135,579 3,506,840 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 31,1998 AND 1997 1998 1997 Cash flows from operating activities Net income $ 273,212 $ 214,755 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 304,277 219,515 Gain/loss on disposal of property & equipment (1,500) (17,500) Deferred income taxes 107,947 (31,277) Minority interest 110,976 100,430 (Increase)/decrease in accounts receivable 2,284,729 71,177 (Increase)/decrease in inventories 555,686 (30,753) (Increase)/decrease in other current assets (117,810) 37,359 (Increase)/decrease in other assets (72,586) 46,170 Increase/(decrease) in accounts payable (359,960) (320,762) Increase/(decrease)in accrued liabilities (213,297) 62,074 Increase/(decrease) in taxes payable (421,243) 169,803 Net cash provided by operating activities 2,450,431 520,991 Cash flows from investing activities Cash proceeds from sale of property 1,500 34,893 Purchases of property and equipment (180,605) (126,181) Investment in closely held business (20,872) (5,258) Note receivable (loan) payments (52,091) 519,121 Net cash provided (used) by investing activities (252,068) 422,575 Cash flows from financing activities Borrowings on revolving credit facilities 26,209,411 14,523,606 Payments on revolving credit facilities (28,052,555) (14,852,004) (Decrease) in bank overdraft (327,734) (170,308) Payments on long-term debt (173,966) (103,176) Proceeds from common stock issued -- 520,000 Purchase of treasury stock (42,514) -- Restricted cash 411,585 (321,081) Net cash (used) by financing activities (1,975,773) (402,963) Net increase in cash and equivalents 222,590 540,603 Cash and equivalents, beginning of period 225,694 151,992 Cash and equivalents, end of period $ 448,284 $ 692,595 Non-cash investing and financing activities Cash paid for interest $ 187,720 $ 68,075 Cash paid for taxes $ 644,948 $ 31,709 The accompanying notes are an integral part of the financial statements. -5- METEOR INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998 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 in its own account and through limited liability companies. 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 its own account and through limited liability companies. 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. Fleischli Oil Company, Inc. ("Fleischli"), which was acquired effective August 1, 1997, is a wholesale distributor of petroleum products primarily in Wyoming, Colorado, Utah and Nebraska. 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., its wholly owned subsidiary Bloomfield Pyramid L.L.C., Hillger, including its 75% owned subsidiary Hatch Pyramid LLC and its wholly owned subsidiary Socorro Pyramid L.L.C., Fleischli, and IST and Meteor's 73% owned subsidiary, Meteor Holdings LLC. All significant intercompany transactions and balances have been eliminated in consolidation. EARNINGS PER SHARE - Basic earnings per common share is computed by dividing the net income by the weighted average number of common shares outstanding. Diluted earnings per common share is computed by taking into account the dilutive effect of common stock options and warrants and convertible securities. A reconciliation of the denominator used in the calculation of basic and diluted earnings per share is presented below. Antidilutive stock options and warrants of 1,101,634 and -0- for the three months ended March 31, 1998, and 1997, respectively, are omitted from the denominator. The numerator is unchanged. The shares available upon exchange of a subsidiary's preferred stock of 1,510,540 and 820,911 for the three months ended March 31, 1998, and 1997, respectively, are omitted as they are antidilutive. 1998 1997 Denominator: Average common shares outstanding 4,130,228 3,353,561 Average dilutive stock options and warrants 5,351 153,279 Diluted shares 4,135,579 3,506,840 -6- INTERIM FINANCIAL INFORMATION - 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, 1997, filed with the Company's Form 10-K. NOTE 2 - NEW ACCOUNTING PRONOUNCEMENTS The Company adopted SFAS No. 130, "Reporting Comprehensive Income," in the first quarter of 1998. The Company has no other comprehensive income. The Company is required to adopt SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," in the fourth quarter of 1998. SFAS No. 131 will supersede the business segment disclosure requirements currently in effect under SFAS No. 14. SFAS No. 131, among other things, establishes standards regarding the information a company is required to disclose about its operating segments and provides guidance regarding what constitutes a reportable operating segment. The Company currently believes the segment disclosures pursuant to SFAS No. 131 will not be materially different from the current disclosures pursuant to SFAS No. 14. -7- 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 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 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. The Company's strategy is to continue to pursue acquisitions in the fragmented petroleum marketing industry. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities totaled $2,450,000 for the three months ended March 31, 1998 compared to $521,000 for the three months ended March 31, 1997. The increase in cash provided in 1998 is primarily related to the improved collection of accounts receivable and the Fleischli acquisition. As of March 31, 1998, the Company had working capital of $2,960,000 compared to working capital of $2,891,000 at December 31, 1997. The increase in the working capital is due primarily to improved collection of accounts receivable offset by payments on the credit facilities. Net cash used by investing activities totaled $252,000 for the three months ended March 31, 1998, compared to cash proceeds of $423,000 for the three months ended March 31, 1997. The Company collected loans to related parties of $519,000 in 1997. 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. Net cash used by financing activities totaled $1,976,000 for the three months ended March 31, 1998 compared to a use of $403,000 for the three months ended March 31, 1997. The increase in 1998 is primarily related to payments on debts. The Company has three revolving bank credit facilities with Norwest Business Credit, Inc. - one for $3,000,000, one for $1,500,000 and one for $5,000,000. The credit lines are subject to the borrowing base of the Company's subsidiaries, as defined and on March 31, 1998, $336,000, $-0- and $1,654,000 were borrowed against the facilities which are recorded as current liabilities. The Company has been in default on timely filing of information with the lender. The Company was also in default of the net book value requirements for one of the subsidiaries. The lender waived these defaults. The Company has various loans with banks which require payments of $741,000 in 1998. The Company owns 50% of a limited liability company which in June, 1996, acquired a convenience store for $610,000 using financing from Phillips 66. The balance of the loan at March 31, 1998 was $457,000. 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 LLC. -8- 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. In order to pay its obligations, the interest on such obligations and other expenses, the Company must generate cash flows from operations which exceed that which has been achieved in the past. In addition, the Company will probably be required to raise capital or refinance its existing debt in order to pay such long term obligations as they become due. The Company is obligated to pay lease costs of approximately $893,000 in 1998 for land, building, facilities, and equipment. 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 states the Company operates in have recognized the potential cleanup costs resulting from regulations, and have included the establishment of corrective action funds. The purpose of the funds are to provide monetary assistance in both assessing site damage and correcting the damage. 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 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. 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. The Company has accrued for environmental remediation which management believes is required to cover known remediation problems. Meteor and its subsidiaries have checked with the manufacturers of their various software packages and have been told that new versions addressing the year 2000 will be available between mid-year through end of 1998. At this time the Company has no reason to believe that there will be any problems with its various software packages. The Company adopted SFAS No. 130, "Reporting Comprehensive Income," in the first quarter of 1998. The Company has no other comprehensive income. The Company is required to adopt SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," in the fourth quarter of 1998. SFAS No. 131 will supersede the business segment disclosure requirements currently in effect under SFAS No. 14. SFAS No. 131, among other things, establishes standards regarding the information a company is required to disclose about its operating -9- segments and provides guidance regarding what constitutes a reportable operating segment. The Company currently believes the segment disclosures pursuant to SFAS No. 131 will not be materially different from the current disclosures pursuant to SFAS No. 14. RESULTS OF OPERATIONS COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1998 TO MARCH 31, 1997 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, 1998, were $26,824,000 compared to $13,853,000 for the comparable period ending March 31, 1997. The increase in revenue of $12,971,000 is primarily related to the Fleischli acquisition offset by lower prices for the Company's products. The Company's cost of sales for the three months ended March 31, 1998, were $22,085,000 (82.0% of sales) compared to $11,628,000 (83.9% of sales) for the comparable period ended March 31, 1997. The increase of $10,457,000 in cost of sales is primarily due to the Fleischli acquisition offset by a lower price for the Company's purchases. The Company's gross profit for the three months ended March 31, 1998, was $4,739,000 compared to $2,224,000 for the comparable period ended March 31, 1997. The increase of $2,515,000 is primarily related to the Fleischli acquisition and an increase in fuel margins due primarily to lower prices on products sold at set per gallon prices over cost. Fuel 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 $3,685,000 for the three months ended March 31, 1998, compared to $1,973,000 for the comparable period ended March 31, 1997. Even though the Company has cut expenses at the subsidiary levels, total expenses have increased due to the Fleischli acquisition and an increase in corporate overhead related to acquisition activity. The Company's depreciation and amortization for the three months ended March 31, 1998, was $304,000 compared to $220,000 for the comparable period ended March 31, 1997. The increase is primarily due to the Fleischli acquisition. The Company's other income (expense) for the three months ended March 31, 1998 was $(143,000) compared to $485,000 for the comparable period ended March 31, 1997. The decrease is related to a settlement of litigation for $480,000, net of expenses in 1997 and an increase in interest expense in 1998 due to the Fleischli acquisition. The Company's provision for income taxes for the three months ended March 31, 1998, was $224,000 compared to $202,000 for the comparable period ended March 31, 1997. This increase is due to more taxable income. The Company's net income for the three months ended March 31, 1998, was $273,000 compared to $215,000 in the prior period. The change in net income is due to the above described items. -10- 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. -11- 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(Chief Financial and Accounting Officer) Dated: May 15, 1998 -12- 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-31-1998 MAR-31-1998 1,186,965 0 7,678,217 0 3,262,646 12,877,298 15,910,745 2,086,804 28,994,767 9,917,625 0 4,130 0 0 9,517,736 28,994,767 26,824,447 26,824,447 22,084,988 3,988,841 0 0 188,245 607,892 223,704 273,212 0 0 0 273,212 .07 .07
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