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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.
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(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
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(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
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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
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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
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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.
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METEOR INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-In Retained Treasury
Shares Amount Capital Earnings Stock Total
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
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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
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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
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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
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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
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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.
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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
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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.
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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.
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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.
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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
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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.
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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
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EXHIBIT INDEX
EXHIBIT METHOD OF FILING
- ------- -----------------------------
27. FINANCIAL DATA SCHEDULE Filed herewith electronically
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,301
<SECURITIES> 0
<RECEIVABLES> 10,668
<ALLOWANCES> (200)
<INVENTORY> 3,946
<CURRENT-ASSETS> 17,435
<PP&E> 23,046
<DEPRECIATION> (3,692)
<TOTAL-ASSETS> 40,730
<CURRENT-LIABILITIES> 17,865
<BONDS> 0
<COMMON> 4
0
0
<OTHER-SE> 8,133
<TOTAL-LIABILITY-AND-EQUITY> 40,730
<SALES> 27,150
<TOTAL-REVENUES> 27,150
<CGS> 21,707
<TOTAL-COSTS> 21,707
<OTHER-EXPENSES> 130
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 311
<INCOME-PRETAX> 639
<INCOME-TAX> 235
<INCOME-CONTINUING> 281
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 281
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
