-----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, LGzn3GbTA/psUZW2LbpRh8SA+HW5glBPVgwJbt1+FS5OlhH/5OkEt6cKzQ46G3LJ i3PYhPbqCLSQ8czIWdlX0A== 0000948830-99-000260.txt : 19990521 0000948830-99-000260.hdr.sgml : 19990521 ACCESSION NUMBER: 0000948830-99-000260 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990520 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: 99631227 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 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the Year ended March 31, 1999 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)572-1135 ---------------------------------------------------- (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 3,555,792 shares of the Registrant's $.001 par value common stock outstanding as of May 17, 1999. Item 1: FINANCIAL STATEMENTS METEOR INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS (Dollars in Thousands) March 31, December 31, 1999 1998 CURRENT ASSETS Cash $ 633 $ 380 Restricted cash 1,668 1,222 Accounts receivable-trade, net of allowance of $200 and $201, respectively 10,398 9,447 Accounts receivable, related party 70 182 Notes receivable, net 106 106 Inventory 3,946 3,974 Deferred tax asset 283 283 Other current assets 331 502 Total current assets 17,435 16,096 Property, plant and equipment, net 19,354 19,235 Other assets Notes receivable, net 152 181 Investments in closely held businesses 1,450 1,444 Intangibles, net 2,019 2,068 Other assets 320 366 Total other assets 3,941 4,059 TOTAL ASSETS $40,730 $39,390 Continued on next page 2 METEOR INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued) LIABILITIES AND SHAREHOLDERS' EQUITY (Dollars in Thousands) March 31, December 31, 1999 1998 CURRENT LIABILITIES Accounts payable, trade $ 7,602 $ 5,556 Accounts payable, related party 21 109 Book overdraft 1,370 1,453 Current portion, long-term debt 1,525 1,544 Accrued expenses 1,117 1,313 Taxes payable 849 837 Income taxes payable 470 527 Revolving credit facility 4,911 5,167 Total current liabilities 17,865 16,506 Long-term debt 5,967 6,390 Deferred tax liability 3,686 3,686 Minority interest in subsidiaries 5,075 4,952 Total liabilities 32,593 31,534 Commitments and contingencies SHAREHOLDERS' EQUITY Common stock, $.001 par value; authorized 10,000,000 shares, 3,555,792 and 3,555,792 shares issued and outstanding, respectively 4 4 Paid-in capital 4,116 4,116 Treasury stock, at cost, 132,098 and 132,098 shares held respectively (489) (489) Retained earnings 4,506 4,225 Total shareholders' equity 8,137 7,856 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $40,730 $39,390 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, 1999 AND 1998 (UNAUDITED) (Dollars in Thousands except per share information) March 31, March 31, 1999 1998 Net sales $27,150 $26,824 Cost of sales 21,707 22,085 Gross profit 5,443 4,739 Selling, general and administrative expenses 4,194 3,685 Depreciation and amortization 480 304 Total expenses 4,674 3,989 Income from operations 769 750 Other income and (expenses) Interest income 38 44 Interest expense (311) (188) Other 140 -- Gain on sale of assets 3 2 Total other income and (expenses) (130) (142) Income before income taxes and minority interest 639 608 Income tax expense 235 224 Minority interest 123 111 Net Income $ 281 $ 273 Earnings per share: Basic $ .08 $ .07 Diluted $ .08 $ .07 Weighted average common share and common share equivalents: Basic 3,423,694 4,130,228 Diluted 3,428,361 4,135,579 The accompanying notes are an integral part of the financial statements. 4 METEOR INDUSTRIES, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 1999 (UNAUDITED) (Dollars in Thousands)
Additional Common Stock Paid-In Retained Treasury Shares Amount Capital Earnings Stock Total Balance - December 31, 1998 3,555,792 $ 4 $4,116 $4,225 $ (489) $7,856 Net income -- -- -- 281 -- 281 Balance - March 31, 1999 3,555,792 $ 4 $4,116 $4,506 $ (489) $8,137
The accompanying notes are an integral part of the financial statements. 5 METEOR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (UNAUDITED) (Dollars in Thousands) 1999 1998 Cash flows from operating activities: Net income $ 281 $ 273 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 480 304 Gain on disposal of property, plant & equipment (3) (2) Deferred income taxes -- 108 Minority interest 123 111 Change in assets and liabilities: Decrease (increase) in: Accounts receivable, net (839) 2,285 Inventories 28 556 Other current assets 171 (118) Other assets 54 (73) Increase (decrease) in: Accounts payable 1,958 (360) Accrued liabilities (196) (213) Taxes payable (45) (421) Net cash provided by operating activities 2,012 2,450 Cash flows from investing activities: Cash proceeds from sale of property, plant and equipment 27 2 Purchases of property, plant and equipment (582) (181) Investment in closely held business (6) (21) Note receivable payments (loans) 29 (52) Net cash used in investing activities (532) (252) Continued on next page 6 METEOR INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (UNAUDITED) (Dollars in Thousands) (Continued) 1999 1998 Cash flows from financing activities: Payments on revolving credit facilities, net $ (256) $(1,844) Increase in book overdraft (83) (328) Payments on long-term debt (442) (174) Purchase of treasury stock -- (43) Restricted cash (446) 412 Net cash used by financing activities (1,227) (1,976) Net increase in cash and equivalents 253 223 Cash and equivalents, beginning of period 380 226 Cash and equivalents, end of period $ 633 $ 448 SUPPLEMENTAL DISCLOSURES Other operating cash flow information: Cash paid for taxes $ 259 $ 645 Cash paid for interest $ 290 $ 188 The accompanying notes are an integral part of the financial statements. 7 METEOR INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 -- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION - Meteor Industries, Inc. ("Meteor" or "Company") was incorporated on December 22, 1992, as a Colorado based holding company. In October 1995, Meteor formed Meteor Marketing, Inc. ("Meteor Marketing"), a Colorado corporation, as a wholly owned subsidiary to hold the stock of its petroleum marketing and distribution subsidiaries and to operate the companies. The significant subsidiaries included in Meteor Marketing are: Graves Oil & Butane Co., Inc. ("Graves"), Fleischli Oil Company, Inc. ("Fleischli"), and Tri-Valley Gas Co. ("Tri-Valley"). In addition, Meteor owns Meteor Stores, Inc. ("MSI"), Meteor Holdings LLC ("MHL") and Innovative Solutions and Technologies, Inc. ("IST"). PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the accounts of Meteor Industries, Inc., and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The equity method of accounting is used for the Company's 50% or less owned affiliates over which the Company has the ability to exercise significant influence. USE OF ESTIMATES - The preparation of the Company's consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in these financial statements. Actual results may differ from these estimates. CASH AND CASH EQUIVALENTS - Cash and cash equivalents consist of short-term, highly liquid investments readily convertible into cash with an original maturity of three months or less. Financial instruments which potentially subject the Company to concentration of credit risk consist principally of cash and temporary cash investments. At times, cash balances held at financial institutions were in excess of Federal Deposit Insurance Corporation insurance limits. The Company places its temporary cash investments with high-credit quality financial institutions. The Company believes no significant concentration of credit risk exists with respect to these cash investments. RESTRICTED CASH - The Company has revolving bank credit facilities which require the use of depository accounts from which collected funds are transferred to the lender. The lender then applies these collections to the revolving credit facilities. These accounts are controlled by the lender. FAIR VALUE OF FINANCIAL INSTRUMENTS - Accounts receivable, accounts payable and accrued expenses are stated at fair value due to their short-term nature. The carrying value of notes receivable approximates fair value. The carrying value of notes payable approximates fair value since the notes are either very recent or have variable interest rates. ACCOUNTS RECEIVABLE - The Company has a diversified customer base. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. Credit risk with respect to accounts receivable is primarily concentrated in the diesel, gasoline and greases and lubes segments. 8 INVENTORIES - Inventories are stated at the lower of cost or market. Inventories of petroleum products, greases and oils, and related products are stated at weighted average cost for MSI and the last in first out (LIFO) basis for Graves and Fleischli. Sundries inventories are valued by the retail method and stated on the first in, first out (FIFO) basis which is lower than market. PROPERTY AND EQUIPMENT - Property and equipment are stated at cost; major renewals and improvements are charged to the property and equipment accounts; while replacements, maintenance and repairs which do not improve or extend the lives of the respective assets, are expensed currently. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to operations. DEPRECIATION - Depreciation is recorded on the straight-line method at rates based on the estimated useful lives of the assets. The estimated useful lives are as follows: DESCRIPTION LIVES Buildings and improvements 5 to 40 years Equipment 5 to 20 years COST IN EXCESS OF NET ASSETS ACQUIRED AND OTHER INTANGIBLES - The Company periodically evaluates its costs in excess of net assets acquired (goodwill) and its other intangibles to determine whether any impairment of these assets has occurred. In making such determination with respect to goodwill, the Company evaluates the performance using cash flows, on an undiscounted basis, of the underlying businesses which gave rise to such amount. With respect to other intangibles, which include the cost of license agreements, covenants not to compete and organization costs, the Company bases its determination on the performance using cash flows, on an undiscounted basis, of the related products. Any impairments are recognized using discounted cash flows. The assets acquired in these transactions continue to contribute a significant portion to the Company's net revenues and earnings. Substantially all costs in excess of net assets (goodwill) of subsidiaries acquired are being amortized on the straight-line method over fifteen years. Other intangibles, include the costs of license agreements, covenants not to compete and organization costs and are amortized over five years using the straight-line method. REVENUE RECOGNITION - Revenue from product sales is recognized when the product is delivered. Revenue from services is recognized when the services are performed and billable. INCOME TAXES - Income taxes provide for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes. Deferred income taxes reflect the differences between the assets and liabilities recognized for financial reporting purposes and amounts recognized for tax purposes. ENVIRONMENTAL EXPENDITURES - The Company expenses environmental expenditures related to existing conditions resulting from past or current operations and from which no current or future benefit is discernible. Expenditures which 9 extend the life of the related property or mitigate or prevent future environmental contamination are capitalized. The Company determines its liability on a site by site basis and records a liability at the time when it is probable and can be reasonably estimated. The Company's estimated liability is reduced to reflect the anticipated participation of other potentially responsible parties in those instances where it is probable that such parties are legally responsible and financially capable of paying their respective shares of the relevant costs. EARNINGS PER SHARE - Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share are calculated taking into account all potentially dilutive 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 1,947,933 and 1,211,634 for the quarters ended March 31, 1999 and 1998 respectively, are omitted from the denominator. The numerator is unchanged. The shares available upon exchange of a subsidiary's preferred stock of 1,014,635 and 1,101,634 for the three months ended March 31, 1999, and 1998, respectively, are omitted as they are antidilutive. 1999 1998 ---- ---- Denominator: Average common shares outstanding 3,423,694 4,130,228 Average dilutive stock options and warrants 4,667 5,351 Diluted shares 3,428,361 4,135,579 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, 1998, filed with the Company's Form 10-K. NOTE 2 - CONTINGENCIES The Company has in escrow at March 31, 1999, 150,000 shares in a Canadian corporation related to the sale of a subsidiary in 1995. The shares are subject to reduction depending on various factors related to the sale of the subsidiary. The Company recognized other income for the three months ended March 31, 1999, of $140,000 related to cash from the sale of shares released from escrow. 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. 10 NOTE 3 - BUSINESS SEGMENTS The Company adopted Statement of Financial Accounting Standards ("SFAS") 131, "Disclosure About Segments of an Enterprise and Related Information," in 1998. The Company operates in six business segments: gasoline, diesel, propane, grease and lubes, convenience store items and other products (anti-freeze, chemicals, food grade oils, services, hardware 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: revenue and gross profit before depreciation as presented below: Three months ended March 31, 1999 1998 Net sales Gasoline $ 5,550 $ 6,071 Diesel 12,733 12,571 Propane 1,585 1,229 Greases and lubes 4,690 4,444 Convenience store items 1,303 1,237 Other items 1,289 1,272 Total net sales $ 27,150 $ 26,824 Gross profit, before depreciation Gasoline $ 778 $ 1,044 Diesel 1,803 1,240 Propane 710 338 Greases and lubes 982 966 Convenience store items 313 313 Other items 857 838 Total gross profit $ 5,443 $ 4,739 Reconciliation to net income: Selling, general and administrative $ 4,194 $ 3,685 Depreciation and amortization 480 304 Income from operations 769 750 Other income (expense) (130) (142) Income tax expense 235 224 Minority interest 123 111 Net income $ 281 $ 273 The Company does not account for assets by business segment and, therefore, depreciation and amortization are not factors used in evaluating operating performance. NOTE 4 - SUBSEQUENT EVENTS On May 1, 1999, the Company completed its acquisition of certain assets of privately held Carroll Oil Company for approximately $1.1 million in cash. The acquisition was financed through cash and short and long-term debt. 11 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. 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. The Company's strategy is to continue to pursue acquisitions in the fragmented petroleum marketing industry. RESULTS OF OPERATIONS The Company's sales for the three months ended March 31, 1999, of $27.2 million compared to $26.8 million for the three months ended March 31, 1998, an increase of $.4 million(1%). The increase is primarily attributable to the Company's acquisitions of Tri-Valley in May 1998 and R & R's assets in November 1998, and partially offset by lower product prices during the current period resulting in lower net sales. Gross profit for the three months ended March 31, 1999 and 1998 was $5.4 million and $4.7 million respectively, an increase of $.7 million (15%). The increase is primarily attributable to acquisitions and an increase in diesel and propane margins, offset by a decrease in retail margins. Retail margins are dictated by competition in a given area and the Company has no control over such margins. Gasoline Segment Gasoline volumes increased to 10.6 million gallons for the three months ended March 31, 1999 from 9.6 million gallons for the same period in 1998, primarily due to acquisitions. Gasoline sales decreased to $5.6 million in 1999 from $6.0 million in 1998, due to lower product prices. Gross profit decreased to $.8 million in 1999 from $1.0 million in 1998. Gross profit per gallon of gasoline sold decreased to $.07 in 1999 from $.10 in 1998, primarily due to depressed street prices in certain geographical locations. Diesel Segment Diesel volumes increased to 24.3 million gallons for the three months ended March 31, 1999 from 20.4 million in 1998. Diesel sales increased to $12.7 million in 1999 from $12.6 million in 1998, primarily due to acquisitions and the addition of new customers. Gross profits increased to $1.8 million in 1999 from $1.2 million in 1998. Gross profit per gallon of diesel sold increased to $.07 in 1999 from $.06 in 1998, primarily due to improved margins in the current period. 12 Propane Segment Propane volumes increased to 3.0 million gallons for the three months ended March 31, 1999 from 2.2 million gallons in 1998, primarily due to the acquisition of Tri-Valley. Propane sales increased to $1.6 million for the three months ended March 31, 1999, from 1.2 million in 1998. Gross profits increased to $.7 million for the three months ended March 31, 1999 from $.3 million in 1998. Gross profit per gallon of propane sold increased to $.23 for the three months ended March 31, 1999, compared to $.14 in 1998, primarily due to the addition of the Tri-Valley operations. Greases and Lubes Segment Grease and lube sales increased to $4.7 million for the three months ended March 31, 1999, compared to $4.4 million in 1998, primarily due to acquisitions and increased sales to mining companies. Gross profit was constant at $1.0 million for the three months ended March 31, 1999 and 1998. Convenience Store Items Segment Sales of convenience store items increased to $1.3 million for the three months ended March 31, 1999 from $1.2 million in 1998, primarily due to acquisitions. Gross profit was constant at $.3 million in 1999 and 1998. Other Items Segment Sales of other items, which consist of anti-freeze, chemicals, food grade oils and miscellaneous items, remained constant at $1.3 million for the three months ended March 31, 1999 and 1998. Gross profit was also constant in 1999 and 1998. Expenses Selling, general, and administrative expenses were $4.2 million for the three months ended March 31, 1999, compared to $3.7 million for the three months ended March 31, 1998, an increase of $.5 million (14%). The increase is primarily related to acquisitions. Depreciation and amortization for the three months ended March 31, 1999, was $.5 million compared to $.3 million for the three months ended March 31, 1998. The increase in depreciation and amortization is primarily due to acquisitions and additional property, plant and equipment purchases. Interest expense increased to $.3 million for the three months ended March 31, 1999, compared to $.2 million in 1998. This increase in interest expense is due to additional debt related to acquisitions. Income Taxes The provision for income taxes for the three months ended March 31, 1999, was $235,000 compared to $224,000 for the same period ended March, 1998. The increase is due to higher income. Net Income Net income for the three months ended March 31, 1999, was $281,000 compared to $273,000 for the three months ended March 31, 1998, due to the above described items. 13 LIQUIDITY AND CAPITAL RESOURCES The Company has a revolving credit facility for $7 million. The credit line is subject to the borrowing base of the Company's subsidiaries, as defined. At March 31, 1999, the borrowing base was approximately $5.4 million and $4.9 million was borrowed against the facility which is recorded as a current liability. The Company was in default during the year on timely filing of financial information with the lender. The lender waived the default. At March 31, 1999, the Company had a net working capital deficit of $.4 million, including cash and restrictive cash totaling $2.3 million. At December 31, 1998, cash and restrictive cash totaled $1.6 million. Net cash provided by operating activities totaled $2.0 million for the three months ended March 31, 1999, compared to $2.4 million for the three months ended March 31, 1998. This decrease in cash provided by operating activities is principally related to changes in working capital items. Net cash used by investing activities totaled $.5 million for the three months ended March 31, 1999, compared to cash used of $.3 million for the three months ended March 31, 1998. This increase in cash used by investing activities is principally related to the purchase of property, plant and equipment. Net cash used by financing activities totaled $1.2 million for the three months ended March 31, 1999, compared to cash used of $2.0 million for the three months ended March 31, 1998. This decrease in cash used by financing activities primarily related to less payments made on the revolving credit facility. The Company has various loans with banks, suppliers and individuals which require principal payments of $1.5 million in 1999. The Company is obligated to pay lease costs of approximately $1.1 million in 1999 for land, building, facilities and equipment. A subsidiary of the Company has preferred stock outstanding which requires no periodic payments but accrues an 8% dividend and must be redeemed for $3.5 million 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 plus accrued dividends. 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 three months ended March 31, 1999 and 1998, the Company expended $42,000 and $28,000, respectively, for site assessment and related cleanup costs. The Company has accrued $.2 million for environmental remediation which management believes is adequate to cover known remediation requirements. YEAR 2000 COMPLIANCE Meteor's company wide Year 2000 Project ("Project") is proceeding on schedule. The Project is addressing the issue of computer programs and embedded computer chips being unable to distinguish between the year 1900 and the year 2000. The Project covers information systems infrastructure (including hardware and software), operating systems and significant vendors and customers. 14 Meteor and its subsidiaries have no proprietary software. The Company has been evaluating its embedded technology and at the present time has no indication of significant problems. Meteor does not expect to incur any significant costs updating its systems to become Year 2000 compliant. In 1997, in order to improve access to business information through common, integrated computing systems across the company, Meteor began a company wide systems replacement project with systems that use programs primarily from EDS, Inc. ("EDS"). The vendor has informed the Company that the new systems are Year 2000 compliant. The new systems, which are expected to make approximately ninety-five percent of the company's business information systems Year 2000 compliant are scheduled to be fully implemented by the end of the second quarter in 1999. Implementation of the EDS programs is on schedule and approximately ninety-five percent complete. Remaining business software programs are expected to be made Year 2000 compliant through the Project. Meteor relies on third party suppliers for raw materials, water, utilities and other key services. Interruption of supplier operations due to Year 2000 issues could affect Company operations. The Company has initiated efforts to evaluate the status of suppliers' efforts and to determine alternatives and contingency plan requirements. While approaches to reducing risks of interruption due to supplier failures will vary by business and facility, options include identification of alternative suppliers and accumulation of inventory to assure sales capacity where feasible and warranted. Meteor is also dependent upon customers for sales and cash flow. Year 2000 interruptions in customers' operations could result in reduced sales, increased inventory or receivable levels and cash flow reductions. While these events are possible, Meteor's customer base is broad enough to minimize the effects of a single occurrence. Meteor is, however, taking steps to monitor the status of customers as a means for determining risks and alternatives. Due to the general uncertainty inherent in the Year 2000 problem, resulting in part from the uncertainty of the Year 2000 readiness of third-party suppliers and customers, the Company is unable to determine at this time whether the consequences of Year 2000 failures will have a material impact on the Company's results of operations, liquidity or financial condition. The Project is expected to significantly reduce the Company's level of uncertainty about the Year 2000 problem and, in particular, about the Year 2000 compliance and readiness of its significant suppliers and customers. Meteor believes that, with the implementation of new information systems and completion of the Project as scheduled the possibility if significant interruptions of normal operations should be reduced. The Company's Y2K readiness program is an ongoing process; the estimated completion dates and costs of the Y2K readiness program are subject to change. 15 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 From 8-K. None. 16 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, Chief Financial and Accounting Officer) Dated: May 20, 1999 17 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-31-1999 MAR-31-1999 2,301 0 10,668 (200) 3,946 17,435 23,046 (3,692) 40,730 17,865 0 4 0 0 8,133 40,730 27,150 27,150 21,707 21,707 130 0 311 639 235 281 0 0 0 281 .08 .08
-----END PRIVACY-ENHANCED MESSAGE-----