-----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, Q4oLpZV9ly2gxr2i+X3rAAkCOVW0+AMxJPRtBlAiHRoNahLrUogFUzy8BlTtoVg2 uRUOgQYstaelggKjzR9srw== 0000948830-98-000229.txt : 19980818 0000948830-98-000229.hdr.sgml : 19980818 ACCESSION NUMBER: 0000948830-98-000229 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980817 SROS: AMEX 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: 98692605 BUSINESS ADDRESS: STREET 1: 216 16TH ST STE 730 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3035721135 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 June 30, 1998 Commission File Number: 1-12401 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 June 30, 1998, of which 592,800 were held in Treasury. METEOR INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS ASSETS June 30 December 31 1998 1997 ----------- ----------- CURRENT ASSETS Cash and cash equivalents $ 604,291 $ 225,694 Restricted cash 529,725 1,150,266 Accounts receivable-trade, net of allowance of $345,294 and $455,067, respectively 7,837,061 9,745,318 Accounts receivable, related party 63,609 91,919 Notes receivable 213,060 106,031 Inventory 3,849,663 3,818,332 Deferred tax asset 394,793 404,970 Other current assets 381,687 283,604 ----------- ----------- Total current assets 13,873,889 15,826,134 Property, plant and equipment, net 17,385,640 13,939,783 Other assets Notes receivable, net 363,533 179,110 Investments in closely held businesses 1,415,926 1,395,045 Other assets 2,239,316 601,279 ----------- ----------- Total other assets 4,018,775 2,175,434 TOTAL ASSETS $35,278,304 $31,941,351 Continued on next page 2 METEOR INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (Continued) LIABILITIES AND SHAREHOLDERS' EQUITY June 30 December 31 1998 1997 ----------- ----------- CURRENT LIABILITIES Accounts payable, trade $ 6,157,953 $ 5,655,272 Accounts payable, related party 18,566 26,407 Bank overdraft 644,638 327,734 Current portion, long-term debt 1,513,554 592,195 Accrued expenses 710,669 826,875 Taxes payable 1,610,425 1,672,586 Revolving credit facility 1,903,743 3,833,572 ----------- ----------- Total current liabilities 12,559,548 12,934,641 Long-term debt 6,375,183 2,912,183 Deferred tax liability 3,911,995 2,288,349 Minority interest in subsidiaries 4,734,976 4,515,010 ----------- ----------- Total liabilities 27,581,702 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, 592,800 and 18,500 shares held, respectively (2,249,175) (88,694) Retained earnings 3,622,576 3,056,661 ----------- ----------- Total shareholders' equity 7,696,602 9,291,168 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $35,278,304 $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 JUNE 30, 1998 AND 1997 1998 1997 ------------ ------------ Net sales $ 29,575,250 $ 14,307,724 Cost of sales 24,828,118 11,977,551 ------------ ------------ Gross profit 4,747,132 2,330,173 Selling, general and administrative expenses 3,660,220 2,028,835 Depreciation and amortization 344,129 219,516 ------------ ------------ Total expenses 4,004,349 2,248,351 Income from operations 742,783 81,822 Other income and (expenses) Interest income 39,666 129,291 Interest expense (144,216) (87,474) Gain on sale of assets 500 27,850 Other Income -- 16,483 ------------ ------------ Total other income and (expenses) (104,050) 86,150 Income before income taxes and minority interest 638,733 167,972 Income tax expense 235,054 65,509 Income before minority interest 403,679 102,463 Minority interest 110,976 100,430 Net income $ 292,703 $ 2,033 Other comprehensive income, net of tax $ -- $ -- Earnings per common share and equivalent: Basic Net income $ .07 $ -- Diluted Net income $ .07 $ -- Weighted average common share and common share equivalents: Basic 4,098,895 3,670,228 Diluted 4,241,010 3,767,320 The accompanying notes are an integral part of the financial statements. 4 METEOR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997 1998 1997 ------------ ------------ Net sales $ 56,399,697 $ 28,160,264 Cost of sales 46,913,106 23,606,022 ------------ ------------ Gross profit 9,486,591 4,554,242 Selling, general and administrative expenses 7,344,784 4,001,287 Depreciation and amortization 648,406 439,031 ------------ ------------ Total expenses 7,993,190 4,440,318 Income from operations 1,493,401 113,924 Other income and (expenses) Interest income 83,685 230,732 Interest expense (332,461) (202,627) Gain on sale of assets 2,000 497,290 Other Income -- 45,350 ------------ ------------ Total other income and (expenses) (246,776) 570,745 Income before income taxes and minority interest 1,246,625 684,669 Income tax expense 458,758 267,021 Income before minority interest 787,867 417,648 Minority interest 221,952 200,860 Net income $ 565,915 $ 216,788 Other comprehensive income, net of tax $ -- $ -- Earnings per common share and equivalent: Basic Net income $ .14 $ .06 Diluted Net income $ .13 $ .06 Weighted average common share and common share equivalents: Basic 4,103,311 3,511,895 Diluted 4,245,427 3,608,986 The accompanying notes are an integral part of the financial statements. 5 METEOR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30,1998 AND 1997 1998 1997 ---------- ---------- Cash flows from operating activities Net income $ 565,915 $ 216,788 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 648,406 439,031 (Gain)/loss on disposal of property & equipment (2,000) (45,350) Deferred income taxes 1,082 (33,912) Minority interest 221,952 200,860 Changes in working capital, net of acquired business (Increase)/decrease in accounts receivable 2,423,518 (182,268) (Increase)/decrease in inventories 299,730 34,688 (Increase)/decrease in other current assets (53,349) 19,113 (Increase)/decrease in other assets (94,860) 162,582 Increase/(decrease) in accounts payable 61,793 (556,425) Increase/(decrease)in accrued liabilities (122,839) (1,301) Increase/(decrease) in taxes payable (96,483) 287,881 ---------- ---------- Net cash provided by operating activities 3,852,865 541,687 Cash flows from investing activities Cash proceeds from sale of property 2,000 119,023 Purchases of property and equipment (482,326) (301,470) Investment in closely held business (20,875) 18,360 Note receivable (loan) payments (291,452) 291,593 Purchase of Tri-Valley, net of cash acquired (2,834,265) -- ---------- ---------- Net cash provided (used) by investing activities (3,626,918) 127,506 Cash flows from financing activities Payments on revolving credit facilities (1,929,829) (2,154,093) Increase (decrease) in bank overdraft 316,905 (170,308) Payments on long-term debt -- (325,346) Borrowings on long-term debt 3,305,523 -- Purchase of treasury stock (2,160,490) -- Restricted cash 620,541 278,352 Sale of stock -- 3,692,246 ---------- ---------- Net cash provided by financing activities 152,650 1,320,851 Net increase in cash and equivalents 378,597 1,990,044 Cash and equivalents, beginning of period 225,694 151,992 Cash and equivalents, end of period $ 604,291 $ 2,142,036 The accompanying notes are an integral part of the financial statements. 6 METEOR INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 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. Tri-Valley Gas Co. ("Tri-Valley"), which was acquired on May 29, 1998, is a wholesale and retail distributor of petroleum products in Colorado. 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 its 100% owned subsidiary Tri-Valley, 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 958,800 and 810,000 for the six months ended June 30, 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 1,141,514 and 694,748 for the six months ended June 30, 1998, and 1997, respectively, are omitted as they are antidilutive. 7 Three Months Six Months Ended June 30, Ended June 30, 1998 1997 1998 1997 --------- --------- --------- --------- Denominator: Average common shares outstanding 4,098,895 3,670,228 4,103,311 3,511,895 Average dilutive stock options and warrants 142,115 97,092 142,116 97,091 Diluted shares 4,241,010 3,767,320 4,245,427 3,608,986 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. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement, effective for all fiscal quarters of fiscal years beginning after June 15, 1999, establishes accounting and reporting standard for derivative instruments and for hedging activities. It requires that the Company recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. At this time, the Company cannot determine the effects, if any, adopting this statement will have on its financial condition, liquidity or results of operations. NOTE 3 - ACQUISITIONS On May 29, 1998 the Company closed on the acquisition of Tri-Valley Gas Co. The acquisition was recorded using purchase accounting rules. The purchase price was $3,000,000 for 100% of the outstanding stock of Tri-Valley. 8 NOTE 4 - RELATED PARTY TRANSACTION In June 1998 the Company acquired 533,000 shares of its common stock from its major shareholder for $2,000,000. $1,250,000 was paid in cash on signing the agreement, $250,000 was paid in cash in August and a note for $500,000 was executed which calls for 18 equal monthly payments with interest at 10% beginning on October 1, 1998. 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 state-ments 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 $3,852,865 for the six months ended June 30, 1998 compared to $541,687 for the six months ended June 30, 1997. The increase in cash provided in 1998 is primarily related to the improved collection of accounts receivable and additional cash flow generated by the operation of Fleischli and Tri-Valley. As of June 30, 1998, the Company had working capital of $1,314,341 compared to working capital of $2,891,493 at December 31, 1997. The decrease in the working capital is due primarily to increases in current portion of long term debt and accounts payable. Net cash used by investing activities totaled $3,626,918 for the six months ended June 30, 1998, compared to cash provisions of $127,506 for the six months ended June 30, 1997. The increase in cash used is primarily due to the investment of $2,834,265, net of cash acquired, in Tri-Valley and $482,326 in equipment purchases in 1998. Net cash provided by financing activities totaled $152,650 for the six months ended June 30, 1998 compared to a provision of $1,320,851 for the six months ended June 30, 1997. The decrease in 1998 is primarily related to the purchase of 574,300 shares of treasury stock for $2,160,490. The Company renegotiated three revolving bank credit facilities with Norwest Business Credit, Inc. into one new credit facility with Norwest Bank Colorado, N.A. for $7,000,000. The credit lines are subject to the borrowing base of the Company's subsidiaries, as defined, and on June 30, $1,929,829 was borrowed against the facility which is recorded as a current liability. The Company has been in default on timely filing of information with the lender. The lender waived these defaults. The Company has various loans with banks which require payments of $741,000 in 1998. 9 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 June 30, 1998 was $446,449. 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. The Company is currently negotiating an equipment lease line with Norwest Equipment Finance, Inc. for $1,300,000 to lease equipment for expansion and upgrades. 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 will probably raise capital or refinance its existing debt in order to pay its long term obligations as they become due. The Company is obligated to pay lease costs which are included in selling, general and administrative expenses 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. 10 Meteor and its subsidiaries have no proprietary software and have checked with the manufacturers of their various software packages and have been informed that new versions addressing the year 2000 problem 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 significant problems with its various software packages. The Company is beginning to evaluate its embedded technology and at the present time has no indication of significant problems. The Company does not expect any significant costs related to the year 2000 problem. 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. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement, effective for all fiscal quarters of fiscal years beginning after June 15, 1999, establishes accounting and reporting standard for derivative instruments and for hedging activities. It requires that the Company recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. At this time, the Company cannot determine the effects, if any, adopting this statement will have on its financial condition, liquidity or results of operations. RESULTS OF OPERATIONS COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 1998 TO JUNE 30, 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 June 30, 1998, were $29,575,250 compared to $14,307,724 for the comparable period ending June 30, 1997. The increase in revenue of $15,267,526 is primarily related to the Fleischli and Tri-Valley acquisitions offset by lower prices for the Company's products. The Company's cost of sales for the three months ended June 30, 1998, were $24,828,118 (83.9% of sales) compared to $11,977,551 (83.7% of sales) for the comparable period ended June 30, 1997. The increase of $12,850,567 in cost of sales is primarily due to the Fleischli and Tri-Valley acquisitions offset by a lower price for the Company's purchases. The Company's gross profit for the three months ended June 30, 1998, was $4,747,132 compared to $2,330,173 for the comparable period ended June 30, 1997. The increase of $2,416,959 is primarily related to the Fleischli and Tri-Valley acquisitions 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. 11 The Company's selling, general and administrative expenses were $3,660,220 for the three months ended June 30, 1998, compared to $2,028,835 for the comparable period ended June 30, 1997. Even though the Company has cut expenses at the subsidiary levels, total expenses have increased due to the Fleischli and Tri-Valley acquisitions. The Company's depreciation and amortization for the three months ended June 30, 1998, was $344,129 compared to $219,516 for the comparable period ended June 30, 1997. The increase is primarily due to the Fleischli and Tri-Valley acquisitions. The Company's other income (expense) for the three months ended June 30, 1998 was $(104,050) compared to $86,150 for the comparable period ended June 30, 1997. The decrease is related to an increase in interest expense in 1998 due to the Fleischli and Tri-Valley acquisitions. The Company's provision for income taxes for the three months ended June 30, 1998, was $235,054 compared to $65,509 for the comparable period ended June 30, 1997. This increase is due to more taxable income. The Company's net income for the three months ended June 30, 1998, was $292,703 compared to $2,033 in the prior period. The change in net income is due to the above described items. COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 1998 TO JUNE 30, 1997 The Company's sales for the six months ended June 30, 1998, were $56,399,697 compared to $28,160,264 for the comparable period ending June 30, 1997. The increase in revenue of $28,239,433 is primarily related to the Fleischli and Tri-Valley acquisitions offset by lower prices for the Company's products. The Company's cost of sales for the six months ended June 30, 1998, were $46,913,106 (83.2% of sales) compared to $23,606,022 (83.8% of sales) for the comparable period ended June 30, 1997. The increase of $23,307,084 in cost of sales is primarily due to the Fleischli and Tri-Valley acquisitions offset by a lower price for the Company's purchases. The Company's gross profit for the six months ended June 30, 1998, was $9,486,591 compared to $4,554,242 for the comparable period ended June 30, 1997. The increase of $4,932,349 is primarily related to the Fleischli and Tri-Valley acquisitions 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 $7,344,784 for the six months ended June 30, 1998, compared to $4,001,287 for the comparable period ended June 30, 1997. Even though the Company has cut expenses at the subsidiary levels, total expenses have increased due to the Fleischli and Tri-Valley acquisitions. The Company's depreciation and amortization for the six months ended June 30, 1998, was $648,406 compared to $439,031 for the comparable period ended June 30, 1997. The increase is primarily due to the Fleischli and Tri-Valley acquisitions. 12 The Company's other income (expense) for the six months ended June 30, 1998 was $(246,776) compared to $570,745 for the comparable period ended June 30, 1997. The decrease is primarily 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 and Tri-Valley acquisitions. The Company's provision for income taxes for the six months ended June 30, 1998, was $458,758 compared to $267,021 for the comparable period ended June 30, 1997. This increase is due to more taxable income. The Company's net income for the six months ended June 30, 1998, was $565,915 compared to $216,788 in the prior period. The change in net income is due to the above described items. 13 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 May 29,1998, Acquisition Filed previously Form 8-K. of Tri-Valley Gas Co. electronically 14 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: August 14, 1998 15 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. 6-MOS DEC-31-1997 JUN-30-1998 1,134,016 0 8,459,024 (345,294) 3,849,663 13,873,889 19,791,125 (2,405,485) 35,278,304 12,559,548 0 4,130 0 0 7,692,472 35,278,304 56,399,697 56,399,697 46,913,106 7,993,190 0 0 332,461 1,024,673 458,758 565,915 0 0 0 565,915 .14 .13
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