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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 Quarterly Period ended June 30, 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 August 16, 1999.
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METEOR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars in Thousands)
June 30, December 31,
1999 1998
(Unaudited)
CURRENT ASSETS
Cash $ 293 $ 380
Restricted cash 3,452 1,222
Accounts receivable-trade, net of allowance
of $203 and $201, respectively 11,846 9,447
Accounts receivable, related party 38 182
Notes receivable, net 107 106
Inventory 3,821 3,974
Deferred tax asset 283 283
Other current assets 332 502
Total current assets 20,172 16,096
Property, plant and equipment, net 20,077 19,235
Other assets
Notes receivable, net 226 181
Investments in closely held businesses 1,492 1,444
Intangibles, net 2,444 2,068
Other assets 289 366
Total other assets 4,451 4,059
TOTAL ASSETS $ 44,700 $ 39,390
Continued on next page
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METEOR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
(Dollars in Thousands)
June 30, December 31,
1999 1998
(Unaudited)
CURRENT LIABILITIES
Accounts payable, trade $ 8,940 $ 5,556
Accounts payable, related party 21 109
Book overdraft 2,188 1,453
Current portion, long-term debt 1,602 1,544
Accrued expenses 817 1,313
Taxes payable 698 837
Income taxes payable 134 527
Revolving credit facility 6,699 5,167
Total current liabilities 21,099 16,506
Long-term debt 6,306 6,390
Deferred tax liability 3,686 3,686
Minority interest in subsidiaries 5,241 4,952
Total liabilities 36,332 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 4,737 4,225
Total shareholders' equity 8,368 7,856
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 44,700 $ 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 JUNE 30, 1999 AND 1998
(UNAUDITED)
(Dollars in Thousands except per share information)
June 30, June 30,
1999 1998
Net sales $ 36,965 $ 29,575
Cost of sales 31,066 24,828
Gross profit 5,899 4,747
Selling, general and administrative
expenses 4,570 3,660
Depreciation and amortization 529 344
Total expenses 5,099 4,004
Income from operations 800 743
Other income and (expenses)
Interest income 54 40
Interest expense (297) (144)
Other 4 --
Gain on sale of assets (2) --
Total other income and (expenses) (241) (104)
Income before income taxes and
minority interest 559 639
Income tax expense 206 235
Minority interest 122 111
Net Income $ 231 $ 293
Earnings per share:
Basic $ .07 $ .07
Diluted $ .07 $ .07
Weighted average common share
and common share equivalents:
Basic 3,423,694 4,098,895
Diluted 3,433,754 4,241,010
The accompanying notes are an integral part of the financial statements.
4
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METEOR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
(Dollars in Thousands except per share information)
June 30, June 30,
1999 1998
Net sales $ 64,115 $ 56,400
Cost of sales 52,773 46,913
Gross profit 11,342 9,487
Selling, general and administrative
expenses 8,764 7,345
Depreciation and amortization 1,009 648
Total expenses 9,773 7,993
Income from operations 1,569 1,494
Other income and (expenses)
Interest income 92 83
Interest expense (608) (332)
Gain on sale of assets 1 2
Other 144 --
Total other income and (expenses) (371) (247)
Income before income taxes and
minority interest 1,198 1,247
Income tax expense 441 459
Minority interest 245 222
Net Income $ 512 $ 566
Earnings per share:
Basic $ .15 $ .14
Diluted $ .15 $ .13
Weighted average common share
and common share equivalents:
Basic 3,423,694 4,103,311
Diluted 3,433,754 4,245,427
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 SIX MONTHS ENDED JUNE 30, 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 512 512
Balance - June
30, 1999 3,555,792 $ 4 $4,116 $4,737 $(489) $8,368
The accompanying notes are an integral part of the financial statement
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METEOR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
(Dollars in Thousands)
June 30, June 30,
1999 1998
Cash flows from operating activities:
Net income $ 512 $ 566
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,009 648
Gain on disposal of property,
plant & equipment (1) (2)
Deferred income taxes -- 1
Minority interest 245 222
Change in assets and liabilities:
Decrease (increase) in:
Accounts receivable, net (2,255) 2,424
Inventories 153 300
Other current assets 170 (54)
Other assets (77) (95)
Increase (decrease) in:
Accounts payable 3,296 62
Accrued liabilities (496) (123)
Taxes payable (532) (96)
Net cash provided by operating
activities 2,024 3,853
Cash flows from investing activities:
Cash proceeds from sale of property,
plant and equipment 73 2
Purchases of property, plant and equipment (1,802) (483)
Non-compete agreement (80) --
Investment in closely held business (4) (21)
Note receivable payments (loans) (46) (291)
Purchase of Tri-Valley, net of cash acquired -- (2,834)
Net cash used in investing activities (1,859) (3,627)
Continued on next page
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METEOR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
(Dollars in Thousands)
(Continued)
June 30, June 30,
1999 1998
Cash flows from financing activities:
Borrowings (payments) on revolving credit
facilities, net $ 1,532 $ (1,930)
Increase in book overdraft 735 317
Payments on long-term debt (870) --
Borrowings on long-term debt 581 3,305
Purchase of treasury stock -- (2,160)
Restricted cash (2,230) 621
Net cash (used) provided by financing activities (252) 153
Net increase (decrease)in cash and equivalents (87) 379
Cash and equivalents, beginning of
period 380 225
Cash and equivalents, end of period $ 293 $ 604
The accompanying notes are an integral part of the financial statements.
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METEOR INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 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").
NOTE 2 - BASIS OF PRESENTATION
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 3 - 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 1,611,266 and 958,500 for the six months ended June 30, 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 1,141,514 for the six months ended June 30, 1999 and
1998, respectively, are omitted as they are antidilutive.
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Three Months Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
Denominator:
Average common shares
outstanding 3,423,694 4,098,895 3,423,694 4,103,311
Average dilutive stock
options and warrants 10,060 142,115 10,060 142,116
--------- --------- --------- ---------
Diluted shares 3,433,754 4,241,010 3,433,754 4,245,427
NOTE 4 - CONTINGENCIES
The Company has in escrow at June 30, 1999, 150,000 shares in a Canadian
corporation related to the sale of a subsidiary in 1995. The shares are
released from escrow depending on various factors related to the sale of the
subsidiary. The Company recognized other income for the six months ended June
30, 1999, of $140,000 related to the sale of shares released from escrow
during the period.
The Company is subject to various federal, state and local environmental laws
and regulations. Although Company environmental policies and practices are
designed to ensure compliance with these laws and regulations, future
developments and increasing stringent regulations could require the Company to
make additional unforeseen environmental expenditures.
Environmental accruals are routinely reviewed on an interim basis as events
and developments warrant.
The Company is a co-signer on a note for its 50% owned equity investment in
Coors Pyramid LLC. The amount payable on the note at June 30, 1999, is
$401,336.
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.
NOTE 5 - 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:
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Three months Six months
Ended June 30, Ended June 30,
1999 1998 1999 1998
Net sales
Gasoline $10,100 $ 6,646 $15,651 $12,717
Diesel 18,565 14,882 31,298 27,453
Propane 808 630 2,394 1,859
Greases and lubes 5,091 4,826 9,780 9,271
Convenience store items 1,631 1,499 2,933 2,736
Other items 770 1,092 2,059 2,364
Total net sales $36,965 $29,575 $64,115 $56,400
Gross profit, before
depreciation
Gasoline $ 1,502 $ 1,062 $ 2,280 $ 2,106
Diesel 2,236 1,581 4,039 2,821
Propane 358 176 1,068 514
Greases and lubes 1,000 999 1,982 1,965
Convenience store items 409 376 722 690
Other items 394 553 1,251 1,391
Total gross profit $ 5,899 $ 4,747 $11,342 $ 9,487
Reconciliation to net income:
Selling, general and
administrative $ 4,570 $ 3,660 $ 8,764 $ 7,345
Depreciation and
amortization 529 344 1,009 648
Income from operations 800 743 1,569 1,494
Other income (expense) (241) (104) (371) (247)
Income tax expense 206 235 441 459
Minority interest 122 111 245 222
Net income $ 231 $ 293 $ 512 $ 566
The Company does not account for assets by business segment and, therefore,
depreciation and amortization are not factors used in evaluating operating
performance.
NOTE 6 - ACQUISITION
On April 30, 1999, the Company completed its acquisition of certain assets of
privately held Carroll Oil Company for approximately $1.1 million in cash. In
addition, the Company entered into a non-compete agreement with the owner of
Carroll Oil Company that resulted in $475,000 of intangibles. The acquisition
was financed through cash and short and long-term debt.
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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
COMPARISON OF THE THREE MONTHS ENDED JUNE 30,1999 TO JUNE 30, 1998
The Company's sales for the three months ended June 30,1999, were $37.0
million compared to $29.6 million for the comparable period ending June 30,
1998. The increase in revenue of $7.4 million (25%) is primarily attributable
to the Company's acquisitions of Tri-Valley in May 1998, R & R's operations in
November 1998 and Carroll Oil's operations in May 1999.
Gross profit for the three months ended June 30, 1999 and 1998 was $5.9
million and $4.7 million respectively, an increase of $1.2 million (25.5%).
The increase is primarily attributable to acquisitions and an increase in
diesel and propane margins.
Gasoline Segment
Gasoline volumes increased to 12.8 million gallons for the three months ended
June 30, 1999 from 10.8 million gallons for the same period in 1998, primarily
due to acquisitions. Gasoline sales increased to $10.1 million in 1999 from
$6.6 million in 1998, due to higher sales volumes and selling prices. Gross
profit increased to $1.5 million 1999 from $1.1 million 1998. Gross profit
per gallon of gasoline sold increased to $.12 in 1999 from $.10 in 1998.
Diesel segment
Diesel volumes increased to 27.0 million gallons for the three months ended
June 30, 1999 from 23.6 million in 1998. Diesel sales increased to $18.6
million in 1999 from $14.9 million in 1998, primarily due to acquisitions and
the addition of new customers. Gross profits increased to $2.2 million in
1999 from $1.6 million in 1998. Gross profit per gallon of diesel sold
increased to $.08 in 1999 from $.07 in 1998.
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Propane Segment
Propane volumes increased to 1.7 million gallons for the three months ended
June 30, 1999, from 1.3 million gallons in 1998, primarily due to the
acquisition of Tri-Valley. Propane sales increased to $.8 million for the
three months ended June 30,1999, from $.6 million in 1998. Gross profits
increased to $.4 million for the three months ended June 30, 1999, from $.2
million in 1998. Gross profit per gallon of propane sold increased to $.24
per gallon for the three months ended June 30, 1999, compared to $.15 per
gallon in 1998, primarily due to the addition of the Tri-Valley operations.
Greases and Lubes Segment
Grease and lube sales increased to $5.1 million for the three months ended
June 30, 1999, compared to $4.8 million in 1998, primarily due to acquisitions
and increased sales to mining companies. Gross profit remained constant at
$1.0 million for the three months ended June 30, 1999 and 1998.
Convenience Store Items Segment
Sales of convenience store items increased to $1.6 million for the three
months ended June 30, 1999, compared to $1.5 million in 1998, primarily due to
operating additional locations. Gross profit remained constant at $.4 million
for the three months ended June 30, 1999 and 1998.
Other Items Segment
Sales of other items, which consist of anti-freeze, chemicals, food grade oils
and miscellaneous items, decreased to $.8 million for the three months ended
June 30, 1999, compared to $1.1 million in 1998. Gross profit decreased to
$.4 million from $.6 million in 1998.
Expenses
Selling, general, and administrative expenses were $4.6 million for the three
months ended June 30, 1999, compared to $3.7 million for the three months
ended June 30, 1998, an increase of $.9 million (24%). The increase is
primarily related to acquisitions.
Depreciation and amortization for the three months ended June 30, 1999, was
$.5 million compared to $.3 million for the three months ended June 30, 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 June 30,
1999, compared to $.1 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 June 30, 1999, was
$206,000 compared to $235,000 for the same period ended June 30, 1998. The
decrease is due to lower income.
Net Income
Net income for the three months ended June 30, 1999, was $231,000 compared to
$293,000 for the three months ended June 30, 1998, due to the above described
items.
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COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 1999 TO JUNE 30, 1998
The Company's sales for the six months ended June 30, 1999, were $64.1 million
compared to $56.4 million for the six months ended June 30, 1998, an increase
of $7.7 million(13.7%). The increase is primarily attributable to the
Company's acquisitions of Tri-Valley in May 1998, R & R's operations in
November 1998 and Carroll Oil's operations in May 1999.
Gross profit for the six months ended June 30, 1999 and 1998 was $11.3 million
and $9.5 million respectively, an increase of $1.8 million (19%). The
increase is primarily attributable to acquisitions and an increase in diesel
and propane margins.
Gasoline Segment
Gasoline volumes increased to 23.4 million gallons for the six months ended
June 30, 1999 from 20.5 million gallons for the same period in 1998, primarily
due to acquisitions. Gasoline sales increased to $15.7 million in 1999 from
$12.7 million in 1998, due to higher sales volumes. Gross profit increased to
$2.3 million in 1999 from $2.1 million in 1998. Gross profit per gallon of
gasoline sold remained constant at $.10 in 1999 as compared to the same period
in 1998.
Diesel Segment
Diesel volumes increased to 51.4 million gallons for the six months ended June
30, 1999 from 44.1 million in 1998. Diesel sales increased to $31.3 million
in 1999 from $27.5 million in 1998, primarily due to acquisitions and the
addition of new customers. Gross profits increased to $4.0 million in 1999
from $2.8 million in 1998. Gross profit per gallon of diesel sold increased to
$.08 in 1999 from $.06 in 1998.
Propane Segment
Propane volumes increased to 4.6 million gallons for the six months ended June
30, 1999 from 3.6 million gallons in 1998, primarily due to the acquisition of
Tri-Valley. Propane sales increased to $2.4 million for the six months ended
June 30, 1999, from 1.9 million in 1998. Gross profits increased to $1.1
million for the six months ended June 30, 1999 from $.5 million in 1998.
Gross profit per gallon of propane sold increased to $.24 for the six months
ended June 30, 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 $9.8 million for the six months ended June
30, 1999, compared to $9.3 million in 1998, primarily due to acquisitions and
increased sales to mining companies. Gross profit was constant at $2.0
million for the six months ended June 30, 1999 and 1998.
Convenience Store Items Segment
Sales of convenience store items increased to $2.9 million for the six months
ended June 30, 1999 from $2.7 million in 1998, primarily due to operating
additional locations. Gross profit was constant at $.7 million in 1999 and
1998.
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Other Items Segment
Sales of other items, which consist of anti-freeze, chemicals, food grade oils
and miscellaneous items, decreased to $2.0 million for the six months ended
June 30, 1999 from 2.4 million for the same period in 1998. Gross profit
decreased to $1.3 million from $1.4 million in 1998.
Expenses
Selling, general, and administrative expenses were $8.8 million for the six
months ended June 30, 1999, compared to $7.3 million for the six months ended
June 30, 1998, an increase of $1.5 million (20.5%). The increase is primarily
related to acquisitions.
Depreciation and amortization for the six months ended June 30, 1999, was $1.0
million compared to $.6 million for the six months ended June 30, 1998. The
increase in depreciation and amortization is primarily due to acquisitions and
additional property, plant and equipment purchases.
Interest expense increased to $.6 million for the six months ended June 30,
1999, compared to $.3 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 six months ended June 30, 1999, was
$441,000 compared to $459,000 for the same period ended June 30, 1998. The
decrease is due to lower income.
Net Income
Net income for the six months ended June 30, 1999, was $512,000 compared to
$566,000 for the six months ended June 30, 1998, due to the above described
items.
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
June 30, 1999, the borrowing base was approximately $14.6 million and $6.7
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 June 30, 1999, the Company had a net working capital deficit of $.9
million, including cash and restricted cash totaling $3.1 million. At
December 31, 1998, cash and restricted cash totaled $1.6 million.
Net cash provided by operating activities totaled $2.0 million for the six
months ended June 30, 1999, compared to $3.9 million for the six months ended
June 30, 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 $1.9 million for the six months
ended June 30, 1999, compared to cash used of $3.6 million for the six months
ended June 30, 1998. This decrease in cash used by investing activities is
principally related to the purchase of Tri-Valley in 1998 offset by higher
purchases of property, plant and equipment in 1999.
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Net cash used by financing activities totaled $.3 million for the six months
ended June 30, 1999, compared to cash provided of $.2 million for the six
months ended June 30, 1998. The decrease is due to borrowings and repayments
on debt facilities in both years, the purchasing of treasury stock in 1998,
offset by restricted cash increases in 1999 as a result of timing differences.
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
six months ended June 30, 1999 and 1998, the Company expended $91,000 and
$54,000, respectively, for site assessment and related cleanup costs. The
Company has accrued $143,000 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.
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 fully
implemented. 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,
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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 it's significant suppliers and customers. Meteor believes
that, with the implementation of new information systems and completion of the
Project as scheduled, the possibility of 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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 27 Financial Data Schedule Filed herewith
electronically
(b) Reports on Form 8-K.
None.
17
<PAGE>
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/ Richard E. Kisser
Richard E. Kisser, Chief Financial
and Accounting Officer)
Dated: August 16, 1999
18
<PAGE>
<PAGE>
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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 3,745
<SECURITIES> 0
<RECEIVABLES> 12,049
<ALLOWANCES> (203)
<INVENTORY> 3,821
<CURRENT-ASSETS> 20,172
<PP&E> 24,216
<DEPRECIATION> (4,139)
<TOTAL-ASSETS> 44,700
<CURRENT-LIABILITIES> 21,098
<BONDS> 0
<COMMON> 4
0
0
<OTHER-SE> 8,364
<TOTAL-LIABILITY-AND-EQUITY> 44,700
<SALES> 64,115
<TOTAL-REVENUES> 64,115
<CGS> 52,773
<TOTAL-COSTS> 52,773
<OTHER-EXPENSES> 371
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 608
<INCOME-PRETAX> 1,198
<INCOME-TAX> 441
<INCOME-CONTINUING> 512
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 512
<EPS-BASIC> .15
<EPS-DILUTED> .15
</TABLE>
