UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
COMMISSION FILE NUMBER: 001-15035
ABLE ENERGY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 22-3520840
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
198 Green Pond Road
Rockaway, NJ 07866
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (973) 625-1012
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, PAR VALUE $.001 PER SHARE
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(Title of class)
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes[X] No[ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]
The aggregate market value of the common stock held by non-affiliates of the
registrant was approximately $2,788,660 on December 31, 2004, based on the last
reported sales price of the registrant's common stock on the NASDAQ Small Cap
Market on such date. All executive officers, directors and 10% or more
beneficial owners of the registrant's common stock have been deemed, solely for
the purpose of the foregoing calculation, "affiliates" of the registrant.
As of September 24, 2005, there were 2,514,463 shares of the registrant's common
stock, $.001 par value, issued and outstanding.
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). [ ] Yes [X] No
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). [ ] Yes [X] No
2
ABLE ENERGY, INC.
TABLE OF CONTENTS
Explanatory Note..............................................................4
PART II.
Item 5. Market for Registrant's Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities.......4
Item 6. Selected Financial Data.............................................5
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operation............................................6
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.........13
Item 8. Financial Statements and Supplementary Data........................13
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure...........................................13
Item 9A. Controls and Procedures............................................13
Item 9B. Other Informaton...................................................15
Financial Statements and Supplementary Data.................................F-1
Signatures...................................................................16
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
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EXPLANATORY NOTE
Able Energy, Inc. ("the Company") is filing this Amendment No. 1 to its Annual
Report on Form 10-K for the year ended June 30, 2005 (the "Report"), which was
previously filed on September 28, 2005, solely to amend the Part II information.
In addition to the restatement of the basic financial statements, as discussed
in detail at footnote 2 of the Notes to the Consolidated Financial Statements,
the Company has updated certain disclosures in the financial statement footnotes
and management's discussion and analysis. This Report should be read in
conjunction with the Company's Annual Report on Form 10-K for the year ended
June 30, 2006, which is being filed concurrently with this Report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.
(a) Market Price and Dividend Information
The Company's Common Stock is traded on the Nasdaq SmallCap Market under the
symbol "ABLE". The following table sets forth the high and low bid prices of the
Common Stock on a quarterly basis, as reported by Nasdaq:
FISCAL YEAR ENDED JUNE 30, 2005 HIGH LOW
First Quarter $ 2.62 $ 1.60
Second Quarter 6.03 2.14
Third Quarter 15.30 2.51
Fourth Quarter 22.94 7.90
FISCAL YEAR ENDED JUNE 30, 2004 HIGH LOW
First Quarter $ 3.85 $ 2.75
Second Quarter 4.17 2.55
Third Quarter 3.37 2.30
Fourth Quarter 2.62 1.60
(b) As of September 23, 2005, the Company's common stock was held
beneficially by approximately 2,594 persons.
(c) Dividends
We have never paid a cash dividend on our common stock. It is the
current policy of our Board of Directors to retain any earnings to
finance the operations and expansion of our business. The payment of
dividends in the future will depend upon our earnings, financial
condition and capital needs and on other factors deemed pertinent by the
Board of Directors.
(d) Recent Sales of Unregistered Securities
None.
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ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data should be read in conjunction with the
Consolidated Financial Statements, including the related notes, and "Item 7 -
Management's Discussion and Analysis of Financial Condition and Results of
Operation".
FOR THE YEAR ENDED JUNE 30,
2005 2004 2003 2002 2001
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(RESTATED) (RESTATED) (RESTATED) (RESTATED) (RESTATED)
RESULTS OF OPERATIONS DATA - ---------- ---------- ---------- ---------- ----------
CONTINUING OPERATIONS
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Sales $ 61,947,349 $ 42,847,123 $ 43,365,028 $ 24,751,562 $ 18,189,597
Gross Profit 5,914,764 5,579,654 6,459,633 4,174,341 53,081,399
Operating Income (Loss) (1,212,432) (2,049,001) 241,951 (1,990,889) (717,763)
Net Income (Loss) from Continuing
Operations (2,180,091) (2,777,358) (33,190) (2,085,895) (725,223)
Net Income (Loss) from Continuing
Operations per Share - Basic (1.04) (1.38) (0.02) (1.04) (0.36)
Depreciation and Amortization 1,225,196 1,194,958 1,112.098 1,066,022 1,183,144
Interest Expense 449,776 576,578 435,992 281,994 449,776
Weighted Average Number of Shares
Outstanding - Basic 2,094,629 2,013,250 2,012,708 2,001,332 2,140,813
BALANCE SHEET DATA
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Cash $ 1,754,318 $ 1,309,848 $ 400,033 $ 258,560 $ 999,018
Current Assets 6,057,809 5,531,423 5,504,366 3,086,136 4,040,586
Current Liabilities 6,715,631 5,500,095 5,652,767 5,659,157 5,169,197
Total Assets 12,371,937 12,229,537 12,531,652 10,439,013 11,756,530
Long-Term Liabilities 4,041,578 3,633,516 3,616,460 1,657,071 1,828,401
Total Stockholders' Equity 1,614,728 3,095,926 3,262,425 3,122,785 4,758,932
Notes
1. The results of operations data for the years ended June 30,
2003, June 30, 2002 and June 30, 2001 have been adjusted to
reflect the discontinued operations of Able Propane, LLC (see
financial statement Note 19).
2. Due to the Company changing its fiscal year during 2001, the
results of operations for the year ended June 30, 2001 in the
above table are for the period January 1, 2001 to June 30, 2001.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
The following discussion should be read in conjunction with our Consolidated
Financial Statements, and Notes thereto, contained elsewhere in this report.
OVERVIEW
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Able Energy Inc. ("Able") was incorporated in Delaware in 1997. Able Oil, a
wholly owned subsidiary of Able, was established in 1989 and sells both
residential and commercial heating oil and complete HVAC service to its heating
oil customers. Able Energy NY, a wholly owned subsidiary of Able, sells
residential and commercial heating oil, propane diesel fuel, and kerosene to
customers around the Warrensburg NY area. Able Melbourne, a wholly owned
subsidiary of Able, was established in 1996 and sells various grades of diesel
fuel around Cape Canaveral FL. PriceEnergy Inc., a majority owned subsidiary of
Able, was established in 1999 and has developed an internet platform that has
extended the Company's ability to sell and deliver liquid fuels and related
energy products.
Management's Discussion and Analysis of Financial Condition and Results of
Operation contains forward-looking statements, which are based upon current
expectations and involve a number of risks and uncertainties. In order for us to
utilize the "safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995, investors are hereby cautioned that these statements may be
affected by the important factors, among others, set forth below, and
consequently, actual operations and results may differ materially from those
expressed in these forward-looking statements. The important factors include:
o Commodity Supply
o Commodity Pricing
o Customers Converting to Natural Gas
o Alternative Energy Sources
o Winter Temperature Variations (Degree Days)
o Customers Moving Out of The Area
o Legislative Changes
o The Availability (Or Lack of) Acquisition Candidates
o The Success of Our Risk Management Activities
o The Effects of Competition
o Changes in Environmental Law
o General Economic, Market, or Business Conditions
We undertake no obligation to update or revise any such forward-looking
statements.
BUSINESS STRATEGY
Our business plan calls for maximization of sales throughout our existing
heating oil market areas by means of aggressive market penetration to recapture
lost business as well as to attract new customers who have moved into our market
area during the past two years. In addition, our external strategy is to acquire
related heating oil businesses, which strengthen and expand our current service
area along with moving into planned new areas. In this way, we can realize new
residential and commercial business and take advantage of expected population
growth in new market regions.
We also are in the process of becoming more vertically integrated through
acquisition. In addition to acquiring businesses in the core #2 heating oil
portion of our business, we are also developing relationships with potential
acquisitions in the area of diesel fuel distribution, truck stop facilities,
convenience store/gasoline fueling stations, and crude oil refineries.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our significant accounting policies are described in Note 1 of the consolidated
financial statements included in this Annual Report on Form 10-K/A for the
fiscal year ended June 30, 2005. The consolidated financial statements are
prepared in accordance with accounting principles generally accepted in the
United States of America, which
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requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
We consider the following policies to be the most critical in understanding the
judgments involved in preparing the financial statements and the uncertainties
that could impact our results of operations, financial condition and cash flows.
REVENUE RECOGNITION
Sales of fuel and heating equipment are recognized at the time of delivery to
the customer, and sales of equipment are recognized at the time of installation.
Revenue from repairs and maintenance service is recognized upon completion of
the service. Payments received from customers for heating equipment service
contracts are deferred and amortized into income over the term of the respective
service contracts, on a straight-line basis, which generally do not exceed one
year.
DEPRECIATION, AMORTIZATION AND IMPAIRMENT OF LONG-LIVED ASSETS
We calculate our depreciation and amortization by using the straight-line method
based on estimated useful lives and salvage values of our assets. When assets
are put into service, we make estimates with respect to useful lives that we
believe are reasonable. However, subsequent events could cause us to change our
estimates, thus impacting the future calculation of depreciation and
amortization. Any gain or loss from the sale or other disposition of assets is
reflected in the year of such sale or other disposal.
Additionally, we assess our long-lived assets for possible impairment whenever
events or changes in circumstances indicate that the carrying value of the
assets may not be recoverable. Such indicators include changes in our business
plans, a change in the extent or manner in which a long-lived asset is being
used or in its physical condition, or a current expectation that, more likely
than not, a long-lived asset will be sold or otherwise disposed of significantly
before the end of its previously estimated useful life. If the carrying value of
an asset exceeds the future undiscounted cash flows expected from the asset, an
impairment charge would be recorded for the excess of the carrying value of the
asset over its fair value. Determination as to whether and how much an asset is
impaired would necessarily involve numerous management estimates. Any impairment
reviews and calculations would be based on assumptions that are consistent with
our business plans and long-term investment decisions.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
We routinely review our receivable balances to identify past due amounts and
analyze the reasons such amounts have not been collected. In many instances,
such uncollected amounts involve billing delays and discrepancies or disputes as
to the appropriate price or volumes of oil delivered, received or exchanged. We
also attempt to monitor changes in the creditworthiness of our customers as a
result of developments related to each customer, the industry as a whole and the
general economy. Based on these analyses, we have established an allowance for
doubtful accounts and consider the reserve adequate, however, there is no
assurance that actual amounts will not vary significantly from estimated
amounts.
REVENUE AND EXPENSE ACCRUALS
We routinely make accruals for both revenues and expenses due to the timing of
compiling billing information, receiving third party information and reconciling
our records with those of third parties. We reflect estimates for these items
based on our internal records and information from third parties. We believe our
estimates for these items are reasonable, but there is no assurance that actual
amounts will not vary significantly from estimated amounts.
INCOME TAXES
As part of the process of preparing consolidated financial statements, the
Company is required to estimate income taxes in each of the jurisdictions in
which it operates. Significant judgment is required in determining the income
tax expense provision. The Company recognizes deferred tax assets and
liabilities based on differences between the financial reporting and tax bases
of assets and liabilities using the enacted tax rates and laws that are expected
to be in effect when the differences are expected to be recovered. The Company
assesses the likelihood of our deferred tax assets being recovered from future
taxable income. The Company then provides a valuation allowance for deferred tax
assets for which the Company does not consider realization of such assets to be
more likely than not. The
7
Company considers future taxable income and ongoing prudent and feasible tax
planning strategies in assessing the valuation allowance. Any decrease in the
valuation allowance could have a material impact on net income in the period in
which such determination is made.
RECENT ACCOUNTING PRONOUNCEMENTS
Refer to Note 1 in the accompanying consolidated financial statements.
RESULTS OF OPERATIONS
The following expense items negatively affected net loss for the year ended June
30, 2005:
o One time non-recurring expenses for deferred loss due to the
2003 Newton Accident $318,000
o Accelerated amortization and prepayment penalty for early payoff
of UPS loan $206,000
o Stock based compensation $117,000
o Directors' fees $183,000
o Professional fees for legal & related expenses due to the 2003
Newton Accident & supplemental government filings. $311,000
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TOTAL $1,135,000
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FISCAL 2005 COMPARED TO FISCAL 2004
Revenue for fiscal 2005 increased approximately $19.1 million or 44.6% over
fiscal 2004. This increase can be attributed primarily to the pass-through of
fuel oil costs to customers offset by somewhat lower gallons sales during the
period as a result of a slight decline in heating degree days from last season
and the initial impact of marketing changes in the way the Company sells to its
discount customers. The Company did not have the use of its facility in Newton,
New Jersey, due to the March 2003 accident.
Gross profit margins for fiscal 2005 decreased to 9.5% from 13.0% for fiscal
2004. The decrease in margin was the result of the dramatically rising product
costs during the period. Retail pricing was adjusted as necessary to cover most
of the increases while continuing to maintain the Company's competitive position
in the marketplace. Gross profit margin was also affected by a strong increase
in sales of our PriceEnergy subsidiary in Able's present market area.
Selling, general and administrative expenses for fiscal 2005 decreased by
approximately $532,000 or 8.3 % compared to fiscal 2004. The Company attributes
this decrease primarily to a reduction in advertising and marketing of
approximately $315,000 related to more effective advertising campaigns and a
reduction in bad debt expense of approximately $151,000 related to increased
collection efforts during the period.
Depreciation and amortization expense remained relatively flat for fiscal 2005
as compared to fiscal 2004.
Other income (expenses) increased to a net expense of $964,000 in fiscal 2005
from $689,000 in fiscal 2004. The increase is primarily related to a write-off
of costs related to insurance claims of approximately $318,000 and directors
fees of $183,000. These costs were offset by an increase in interest income of
approximately $65,000 and reduction in interest expense of approximately
$127,000 related to debt pay-offs and refinancing.
Operating loss for fiscal 2005 was $1.2 million compared to $2.0 million for
fiscal 2004. The net improvement in our operating loss for the year was directly
related to the volatile market pricing and a decrease in selling, general and
administrative expenses.
Our effective tax rate for fiscal 2005 is negligible. The difference in the
Company's effective tax rate from the federal statutory rate is primarily due to
a 100% valuation allowance provided for all deferred tax assets. Current period
income tax expense of $3,488 represents minimum state tax liabilities.
Net loss for fiscal 2005 was $2.1 million compared to $0.2 million for fiscal
2004. During fiscal 2004 the Company
8
recognized an after-tax gain on sale of the operating assets of Able Propane in
the amount of $2.6 million, which reduced its net loss from continuing
operations of $2.8 million. Excluding discontinued operatons, the net loss from
continuing operarions for fiscal 2004 to fiscal 2005 decreased by approximately
$561,000. This decrease in the net loss is primarily due to gross profit
increase and selling, general and administrative expense decreases offset by
increases in other expenses.
FISCAL 2004 COMPARED TO FISCAL 2003
The Company reported revenues of $42,847,123 for fiscal 2004, which was a small
decrease of $517,905 from the prior year's revenues of $43,365,028 for the same
period. This decrease can be attributed primarily to somewhat lower gallons
sales during the period as a result of a decline in heating degree days from the
previous season and the initial impact of marketing changes in the way the
Company sells to its discount customers. The Company did not have the use of its
facility in Newton, New Jersey, due to the explosion in March 2003, which
negatively affected service levels to some of the customers in the Sussex
County, New Jersey, delivery area.
Gross profit margin, as a percentage of revenues, for fiscal 2004, decreased by
1.87% from $6,459,633 in fiscal 2003 to $5,579,654 in fiscal 2004. The decrease
in margin was the result of the dramatically rising product costs during the
months of October, November and December. Retail pricing was adjusted
appropriately to cover most of the increases while continuing to maintain the
Company's competitive position in the marketplace.
Selling, General, and Administrative expenses, as a percent of sales, increased
by 3.24% from 11.76% in the year ended June 30, 2003 to 15.00% during the year
ending June 30, 2004. The Company attributes this increase to higher insurance
rates due to an unsettled insurance market, payroll costs, advertising and
outside consulting and legal fees.
Operating loss for fiscal 2004 was $(2,049,001) as compared to the Company's
income of $241,951 for fiscal 2003. This operating loss for the year was
directly related to the volatile market pricing and increased costs related to
the explosion and fire in Newton, New Jersey on March 14, 2003, and increased
operating costs (such as insurance).
Net loss from continuing operations for fiscal 2004 was $(2,777,358) as compared
to a loss of $(33,190) in fiscal 2003. The fiscal 2004 loss was directly related
to an increase in operating costs, warmer temperature for the season, and a
lower gross margin.
OPERATIONAL EFFICIENCIES
Volume in gallons is the true gauge by which increases or decreases can be
measured on a year-to-year basis as the volatility in the cost of the commodity
can present an inexact picture of real growth. Total gallons for fiscal 2005
compared to fiscal 2004 were down by 2.9%. This is primarily the result of
slightly lower heating degree-days in the 2004/05 season versus the 2003/04
season. Heating degree-days are the industry measurement used to relate each
day's temperatures during the heating season to the demand for fuel used for
heat. Other reasons for the year-to-year gallons decline were the fact that the
March 2003 explosion, which affected our Newton fuel depot, has left this
facility still in an "out of service" condition. We are currently working
diligently to get this location back in service, or acquire a substitute
(acquisition) facility, before the beginning of the upcoming heating season. The
ability to use this, or some other location in the area, will greatly improve
our service level to the Sussex County delivery area. We are also enhancing our
communications to our `will call' customers by offering Able Oil Express. We
believe that by focusing our efforts on each specific segment of customer, we
can build overall gallons sales. Gallons increases could also be realized
through the successful completion of several acquisitions that are anticipated
for completion in future periods. These acquisitions, if completed, could
significantly add to our Company's overall sales volume as measured in gallons
as well as dollars of revenue.
The Company believes that it will continue to increase the utilization of
existing personnel and equipment, thus continuing to reduce expenses as a
percent of sales, and increasing profitability, within its current business
configuration. The redefining of the Company's organizational chart and
associated position descriptions (by assigning duties to best suit the
organization's growth) will further enhance this increased utilization.
Moreover, the Company has completed the process of implementing a new Versyss
(now ADDS North) operating system to further streamline operations and
information processing.
The Company understands the importance of controlling expenses at every level
and as such, has enlisted the
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support of an outside consultant to assist in the integration of a new
comprehensive operating budget that will interface with the new ADDS North
computer operating system. The Company believes that these changes will enable
management, through enhanced reporting capabilities, to quickly respond to
changing trends in sales and expenses. The combination of the new operating
system and the detailed budget program and reporting now provides all levels of
management with real time results not previously available.
The Company's margin strategy will be strengthened as it plans to shift some of
the sales volume to other area dealers within the PriceEnergy subsidiary to
handle highly discounted non-service related home heating oil sales. This change
will permit Able Oil Co. to focus and grow its higher margin automatic delivery
customer base using its moniker of "Full Service at Discount Prices", while the
PriceEnergy entity will cater to those customers looking for the lowest possible
retail price either on-line or over the phone. The Company believes that this
further segmentation of its customer base will be successful in increasing
overall profitability while enhancing customer appeal. The Company has
identified several discreet customer segments that prefer varying levels of
service from the Company. By better aligning the Company's product offerings to
match the desires of these customer segments, the Company believes that it will
be able to capture a larger market share.
The Company implemented a service billing methodology known as "Flat Rate
Pricing," an approach similar to that used in the automobile repair industry.
This system provides the Company's sales and service personnel a "package
approach" to selling service, and provides the customer with an easy to
understand invoice. This policy is consistent with the Company's customer
segmentation strategy, permitting different retail prices for different customer
segments, based upon their choice of service level desired. This system will
interface with the Company's automated dispatch communications program that was
introduced last year. Since the flat rate pricing has now been fully rolled out,
the Company's service segment is now operating as a profit center instead of a
support vehicle to the fuel delivery side of the business.
WARRENSBURG, NEW YORK OPERATIONAL ENHANCEMENTS
The Company is in the process of completing operational changes to its
Warrensburg, New York business, which will permit the consolidation of all daily
operations on to one modern facility located in the newly developed Warrensburg
Industrial Park. The Company's previous operations on its Lake George property
have been moved to the new site and the Lake George location has been sold. The
proceeds from the sale of this location have provided funding for the new
operations at the industrial park. When completed this fall, the new fuel depot
and sales office will house the local sales and administrative support personnel
as well as operations and fuel storage for #2 heating oil, kerosene, propane
gas, and diesel fuel. A new modular office and tank farm has been completed on
the new property and the Company has terminated its leased office space on Mail
Street in Warrensburg. By having all operations combined in the new location we
will have the ability to grow the business more effectively as well as handle a
greater volume of all products.
RECENTLY IMPLEMENTED TECHNOLOGICAL PROCEDURES
The Company has introduced additional customer service technology to its
Rockaway call and administrative center during the past year. Management has
completed improvements to its existing telephone hardware and in-house call
management. The Company's call center environment now provides the ability to
respond to changing call patterns, both higher and lower, without the expense of
clerical over-staffing to meet unrealized needs. New software gives customers
the option of placing an order via a voice activated technology. This enables
customers who simply wish to refill their fuel tank, the opportunity to quickly
place an order 24 hours a day without the help of a live customer service
representative. This system has been a contributing factor in our reduction of
clerical SG&A expense for the past fiscal year.
The Company is now beginning full implementation of the recently announced
automated dispatch technology, which provides management with the ability to
communicate with service technicians instantaneously. This system is also now
performing billing functions at the customer's location as well as documenting
payment data instantaneously. Additionally, management is now aware of the
status of every on-duty worker and is able to obtain real time reporting for
stand-by, en route, and service work time. This system has enabled the Company
to maximize scheduling opportunities and eliminate service technician down time.
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PRICEENERGY OPERATING SUBSIDIARY
The Company's operating subsidiary, PriceEnergy, with its modern
order-processing platform, has been in full operation for over four years now.
This revolutionary proprietary technology is fully automated and allows for the
removal of the inefficiencies associated with traditional heating oil companies
in this industry. PriceEnergy has generated over 7.1 million gallons in business
this year, which were delivered by the growing PriceEnergy dealer network. This
is an increase of over 61% vs. the prior year. In December of 2002, PriceEnergy
began sales of home heating oil in the initial BJ's Wholesale Club. Gallons sold
through this venue have been steadily increasing. The Company is excited about
these types of opportunities with "Channel Partners" such as BJ's and is looking
to expand the Channel Partner concept. The Company is currently in the process
of upgrading the PriceEnergy operating platform to enable it to handle even
greater volumes of business as well as provide new services to its customers
including an on-line or "I-Catalog" selling energy related items for home and
business.
EXPLOSION AND FIRE
On March 14, 2003, Able Energy experienced an explosion and fire at its Newton,
New Jersey facility which resulted in the destruction of an office building on
the site, as well as damage to 18 Company vehicles and neighboring properties.
While there were no serious injuries, the Newton facility has been in an out of
service condition since the incident.
The Company is currently not processing deliveries from the Newton, New Jersey,
facility as the Newton Board of Adjustment originally denied the Company's
application to repair and rebuild the facility on the grounds that the zoning
laws covering the Newton, New Jersey, property had been changed following the
accident. The Company appealed the Board's decision in August of 2004, and was
granted immediate permission to make some building repairs and restore power to
the underground cathodic protection system. The Company has effectuated these
repairs and will continue to move the legal process forward in order to regain
use of the facility. It is anticipated that the Company will have use of either
its Newton facility or an alternative location in the area soon. This would
enable the Company to realize savings in delivery mileage and driver time as a
result of being able to handle this area's business needs locally.
LIQUIDITY AND CAPITAL RESOURCES
To date, our principal sources of working capital have been the proceeds from
public and private placements of securities and notes payable. Since our
inception, sales of securities, including the proceeds from the exercise of
outstanding options and warrants, have generated approximately $6.5 million,
less applicable expenses.
We had a working capital deficit of approximately $(660,000) at June 30, 2005
compared to working capital of approximately $30,000 at June 30, 2004 and ratios
of current assets to current liabilities of 0.9:1 as of June 30, 2005 and 1.1 as
of June 30, 2004. The working capital decrease of approximately $690,000 was
primarily due to a net loss of approximately $2.2 million and capital
expenditures of approximately $1.2 million. This decrease was partially offset
by proceeds from the sale of common stock through the exercise of outstanding
options and warrants of approximately $0.5 million, net proceeds from note
payable, long term debt and lines of credit of approximately $0.9 million,
depreciation and amortization included in net loss of approximately $1.2 million
and non-cash compensation included in net loss of approximately $0.2 million.
In May 2005 we entered into a $1,750,000 line of credit agreement with
Entrepreneurs Growth Capital, LLC. The line is collateralized by accounts
receivable and inventories. Outstanding balances under the loan bear interest at
an annual rate equal to the Citibank's Prime rate plus 4%. As of June 30, 2005
approximately $1 million was outstanding and $750,000 was available under this
credit line.
On July 12, 2005, the Company consummated a financing with a group of lenders.
Pursuant to the terms of the Securities Purchase Agreement, the Company sold
variable rate convertible debentures in the amount of $2.5 million. The
debentures shall be repaid within two years from the date of issuance with
interest payable at a rate per annum equal to Libor, plus 4%, which on July 12,
2005 was 3.57% plus 4%, or 7.57%. The interest is payable quarterly on the first
of January, April, July, and October. The debentures may be converted at the
option of the purchasers into shares of the Company's Common Stock at a
conversion price of $6.50 per share. The amount of shares to be issued at such
conversion will be 384,618. In addition, the purchasers shall have the right to
receive
11
five-year warrants to purchase 192,308 shares of Common Stock at $7.15 per
share. The market value of the Company's Common Stock on July 12, 2005 was
$17.90 per share. The debenture conversion price of $6.50 is 36.31% of the
market value. Closing expenses related to this transaction totaled $315,000,
including a $250,000 broker fee and $65,000 in various legal expenses.
On July 27, 2005, the Company made a loan of $1,730,000 to All American Plazas,
Inc. which is the largest shareholder of the Company. The funds were disbursed
from the financing proceeds of $2.5 million described above. Under the note, the
loan bears interest at 3.50% per annum and is secured by the 1,000,000 shares of
Able Energy, Inc. Common Stock owned by All American Plazas, Inc.
We anticipate that funds generated from operations, together with cash and
investments, and availability under our credit line will be sufficient to fund
our current level of growth and our existing commitments at least through fiscal
2006. However, to the extent the expansion of our operations requires
significant additional resources, we may be required to seek additional
financing. No assurance can be given that such financing would be available on
terms that would be acceptable to us.
CONTRACTUAL OBLIGATIONS
The following schedule summarizes our contractual obligations as of June 30,
2005 in the periods indicated.
Payments Due by Period
----------------------------------------------------------------------
Contractual
Obligations Total Less than 1 year 1-3 years 3-5 years 5 years
---------------------------------- ---------- ---------------- ---------- ---------- ----------
Long-Term Debt $4,339,187 $1,086,849 $ 244,263 $ 151,110 $2,856,965
Capital Lease Obligations 976,398 266,831 669,344 40,223 -
Operating Leases 98,830 98,830 - - -
Unconditional Purchase Obligations 2,284,909 2,284,909 - - -
---------- ---------------- ---------- ---------- ----------
Total Contractual Obligations $7,699,324 $3,737,419 $ 913,607 $ 191,333 $2,856,965
========== ================ ========== ========== ==========
Excluded from the table above is estimated interest payments on long term debt
and capital lease obligations of approximately $378,035, $765,819, $367,974 and
$2,031,618 for the periods less than 1 year, 1-3 years, 3-5 years, and more than
5 years, respectively.
ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS
--------------------------------------------------------------------------------
SEASONALITY
The Company's operations are subject to seasonal fluctuations, with a majority
of the Company's business occurring in the late fall and winter months.
Approximately 70% of the Company's revenues are earned and received from October
through March; most of such revenues are derived from the sale of home heating
products, primarily #2 home heating fuel oil. However, the seasonality of the
Company's business is offset, in part, by an increase in revenues from the sale
of HVAC products and services, diesel and gasoline fuels during the spring and
summer months due to the increased use of automobiles and construction
apparatus.
From May through September, Able Oil can experience considerable reduction of
retail heating oil sales. Similarly, Able Energy's New York propane operations
can experience up to an 80% decrease in heating related propane sales during the
months of April to September, which is offset somewhat by increased sales of
propane gas used for pool heating, heating of domestic hot water in homes and
fuel for outdoor cooking equipment.
Over 90% of Able Melbourne's revenues are derived from the sale of diesel fuel
for construction vehicles, and commercial and recreational sea-going vessels
during Florida's fishing season, which begins in April and ends in November.
Only a small percentage of Able Melbourne's revenues are derived from the sale
of home heating fuel. Most of these sales occur from December through March,
Florida's cooler months.
12
FUTURE OPERATING RESULTS. Future operating results, which reflect management's
current expectations may be impacted by a number of factors that could cause
actual results to differ materially from those stated herein. These factors
include worldwide economic and political conditions, terrorist activities,
industry specific factors, and governmental agencies.
FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS MAY CAUSE VOLATILITY IN THE
PRICE OF OUR COMMON STOCK. Given the nature of the markets in which we
participate, we cannot reliably predict future revenue and profitability. As
demand for our services has increased in recent periods, our quarterly revenue
and operating results have become highly dependent on the timing of contracts
signed and programs implemented during the year, which are difficult to
forecast.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company does not issue or invest in financial instruments or derivatives for
trading or speculative purposes. All of the operations of the Company are
conducted in the United States, and, as such, are not subject to material
foreign currency exchange rate risk. At June 30, 2005, the Company had
approximately $4.3 million of outstanding long-term debt. Although the Company's
assets included approximately $1.7 million in cash and cash equivalents market
rate risk associated with changing interest rates in the United States is not
material. See also Note 4 of the Notes to Consolidated Financial Statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Attached.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
The Company maintains disclosure controls and procedures that are designed to
help ensure that information required to be disclosed in the Company's reports
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and that such information is accumulated and
communicated to management, to allow timely decisions regarding required
disclosure.
In preparing the Company's disclosure controls and procedures, management cannot
reasonably expect that all errors and all fraud will be discovered prior to the
period in which the Exchange Act or other applicable law requires disclosure.
Any system of controls, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control
systems are met. Further, the design of a control system must reflect the fact
that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Extraordinary costs and expenses may have an
impact on disclosure controls and procedures because of potential allocation of
Company resources to address such extraordinary items. Because of the inherent
limitations in a cost-effective control system, no evaluation of internal
control over financial reporting can provide absolute assurance that
misstatements due to error or fraud will not occur or that all control issues
and instances of fraud, if any, within our Company have been detected.
The design of any system of controls is based in part on certain assumptions
about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future
conditions. Projections of any evaluation of controls effectiveness to future
periods are subject to risks. Over time, controls may become inadequate because
of changes in conditions or deterioration in the degree of compliance with
policies or procedures.
LACK OF SEGREGATION OF DUTIES
The Company is aware that there is a lack of segregation of duties at
the Company due to the small number of employees dealing with general
administrative and financial matters. However, at this time management
13
has decided that considering the abilities of the employees now involved and the
control procedures in place, the risks associated with such lack of segregation
are low and the potential benefits of adding employees to clearly segregate
duties do not justify the substantial expenses associated with such increases.
Management will periodically reevaluate this situation.
In connection with the preparation of this Annual Report on Form 10-K/A, the
Company previously announced that it had made errors in applying accounting
principles generally accepted in the United States of America to certain
transaction types. On December 26, 2006, the Company announced, in consultation
with the Audit Committee of the Company's Board of Directors, that the Company
would restate its financial statements for the fiscal year ended June 30, 2005.
The restatement corrected errors relating to (1) the amortization of a customer
list; (2) the deferral of revenue recognition associated with certain twelve
month service contracts; (3) the classification of certain property and
equipment; (4) reconciliation of a sub-ledger discrepancy; (5) the accrual of
audit fees; (6) the treatment of deferred tax assets and liabilities; and (7)
the issuance and cancellation of common stock in regard to non-performance by a
consultant under its consulting agreement with the Company. The nature of the
errors being corrected is explained more completely in Note 2 in the Notes to
Consolidated Financial Statements.
Accordingly, the Company's management has amended its Management Report Of
Internal Control Over Financial Reporting to identify such errors as evidence of
a material weakness that existed at June 30, 2005, as outlined below.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of the Company is responsible for establishing and
maintaining adequate internal control over financial reporting. Internal control
over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated
under the Exchange Act as a process designed by, or under the supervision of,
the Company's principal executive and principal financial officers and is
effected by the Company's board of directors, management and other personnel, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles and includes those policies and
procedures that:
o pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions
of the assets of the Company;
o provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and
that receipts and expenditures of the Company are being made
only in accordance with authorizations of management and, if
necessary, directors of the Company;
o and provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the
Company's assets that could have a material effect on the
financial statements.
An internal control material weakness is a significant deficiency, or
aggregation of deficiencies, that does not reduce to a relatively low level the
risk that material misstatements in financial statements will be prevented or
detected on a timely basis by the Company. An internal control significant
deficiency, or aggregation of deficiencies, is one that could result in a
misstatement of the financial statements that is more than inconsequential.
As previously disclosed in the Company's Report on Form 8-K filed on
December 26, 2006, management assessed the effectiveness of the Company's
internal control over financial reporting as of June 30, 2005, and concluded the
Company's internal control over financial reporting was not effective based upon
the following material weaknesses:
(1) Insufficient expertise to properly apply accounting principles generally
accepted in the United States of America.
(2) Inadequate segregation of duties, including insufficient supervision and
review of accounting staff work.
14
REMEDIATION STEPS TO ADDRESS MATERIAL WEAKNESSES
In an effort to remediate the identified material weaknesses, management
has implemented since June 30, 2005, or is in the process of implementing, the
following remediation steps to enhance internal control over financial
reporting.
o On August 15, 2005, the Company hired a full-time Chief
Financial Officer with extensive experience in public company
compliance and financial statement preparation. On June 15, 2006
as disclosed in the Company's Report on Form 8-K filed June 21,
2006, the Company's Chief Financial Officer, for personal
reasons, left the Company. Christopher Westad, the Company's
President, was appointed Acting Chief Financial Officer and an
independent firm, which included professionals with previous
public company Chief Financial Officer experience, was engaged
to provide support services to the Acting Chief Financial
Officer and management of the Company in connection with the
filing of this Annual Report on Form 10-K/A. On September 28,
2006, as disclosed in the Company's Current Report on Form 8-K
filed on September 29, 2006, Mr. Westad stepped down temporarily
as acting Chief Financial Officer in connection with his service
as acting Chief Executive Officer. The Board designated Jeffrey
Feld, the Company's Controller, as the acting Chief Financial
Officer. The Company intends to identify a full-time Chief
Financial Officer with the adequate expertise in SEC rules and
accounting principles generally accepted in the United States of
America.
o The Company intends to draft and adopt Disclosure Controls and
Procedures Guidelines, which will be used in order to ensure
that disclosable events are surfaced in a consistent and timely
manner.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
On June 15, 2006 as disclosed in the Company's Report on Form 8-K filed
June 21, 2006, Steven Vella, the Company's Chief Financial Officer, left the
Company for personal reasons. Christopher Westad, the Company's President, was
appointed Acting Chief Financial Officer and an independent firm, which included
professionals with previous public company Chief Financial Officer experience,
was engaged to provide support services to the Acting Chief Financial Officer
and management of the Company in connection with the filing of this Annual
Report on Form 10-K/A. On September 28, 2006, as disclosed in the Company's
Current Report on Form 8-K filed on September 29, 2006, Mr. Westad stepped down
temporarily as acting Chief Financial Officer in connection with his service as
acting Chief Executive Officer. The Board designated Jeffrey Feld, the Company's
Controller, as the acting Chief Financial Officer. Except as set forth in this
paragraph and except for the additional material weakness described above and
changes in connection with the remediation subsequent to June 30, 2005 of the
material weaknesses described above, there were no changes in the Company's
internal control over financial reporting that occurred during the year ended
June 30, 2005, or subsequently, that have materially affected, or are reasonably
likely to materially affect, its internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
15
ABLE ENERGY, INC. AND SUBSIDIARIES
FOR THE YEARS ENDED
JUNE 30, 2005, 2004 AND 2003
PAGE
----
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-1
CONSOLIDATED BALANCE SHEETS F-2
CONSOLIDATED STATEMENTS OF OPERATIONS F-4
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-8
To The Board of Directors
Able Energy, Inc.
Rockaway, New Jersey 07866
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
We have audited the accompanying consolidated balance sheets of Able Energy,
Inc. and Subsidiaries as of June 30, 2005 and 2004 and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended June 30, 2005. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the Standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Able Energy, Inc.
and Subsidiaries as of June 30, 2005 and 2004, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 2005, in conformity with accounting principles generally accepted in
the United States of America.
Simontacchi & Company, LLP
Rockaway, New Jersey
September 14, 2004, except for the restatement discussed in Note 2 to the
consolidated financial statements, as to which the date is April 4, 2007.
F-1
ABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30,
Assets: 2005 2004
(RESTATED) (RESTATED)
------------ ------------
Current Assets:
Cash $ 1,754,318 $ 1,309,848
Accounts Receivable (Less Allowance for Doubtful
Accounts of $238,049 (2005) and $192,222 (2004) 2,822,270 2,436,554
Inventory 726,987 559,325
Notes Receivable - Current Portion 57,826 51,851
Other Receivable - Non-Compete - Current Portion 225,000 225,000
Miscellaneous Receivables 38,596 127,422
Prepaid Expenses 432,812 318,980
Deferred Costs - Insurance Claims - 424,547
Prepaid Expense - Income Taxes - 2,063
Other Receivable - 75,833
------------ ------------
Total Current Assets 6,057,809 5,531,423
------------ ------------
Property and Equipment:
Land 479,346 479,346
Buildings 1,242,433 1,124,600
Trucks 3,594,218 3,217,443
Fuel Tanks 824,738 674,765
Machinery and Equipment 999,315 911,177
Building Improvements 494,037 483,152
Cylinders 295,476 183,773
Office Furniture and Equipment 205,319 200,640
------------ ------------
Sub Total Property & Equipment 8,134,882 7,274,896
Less: Accumulated Depreciation and Amortization 3,853,035 3,164,946
------------ ------------
Net Property and Equipment 4,281,847 4,109,950
------------ ------------
Other Assets:
Deposits 54,918 137,015
Other Receivable - Non-Compete - Less Current Portion 450,000 675,000
Notes Receivable - Less Current Portion 649,435 675,295
Website Development Costs, Less Accumulated Amortization of
$ 2,127,601 (2005) and $ 1,654,761 (2004) 262,988 676,033
Customer List, Less Accumulated Amortization of $353,156 for 2005, 311,104 for 2004 257,694 299,746
Covenant Not to Compete, Less Accumulated Amortization of
$100,000 (2005) and $96,667 (2004) 3,333
Development Costs - Franchising 9,191 18,382
Deferred Closing Costs - Financing 348,055 103,360
------------ ------------
Total Other Assets 2,032,281 2,588,164
------------ ------------
Total Assets $ 12,371,937 $ 12,229,537
============ ============
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-2
ABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30,
Liabilities and Stockholders' Equity
2005 2004
(RESTATED) (RESTATED)
------------ ------------
Current Liabilities:
Accounts Payable $ 1,863,841 $ 1,703,005
Note Payable - Line of Credit 1,015,468 699,236
Note Payable - Other 432,660 -
Current Portion of Long-Term Debt 338,212 371,838
Accrued Expenses 152,760 318,154
Accrued Taxes 112,064 31,582
Employee Income Tax Withheld 146,624 -
Deferred Income 196,618 181,475
Customer Pre-Purchase Payments 2,226,655 1,495,906
Customer Credit Balances 230,729 698,899
------------ ------------
Total Current Liabilities 6,715,631 5,500,095
Deferred Income 79,679 79,679
Long Term Debt: Less Current Portion 3,961,899 3,553,837
------------ ------------
Total Liabilities 10,757,209 9,133,611
------------ ------------
Stockholders' Equity:
Preferred Stock:
Authorized 10,000,000 Shares; Par Value $.001 per Share;
Issued and Outstanding Shares - None
Common Stock:
Authorized 10,000,000 Shares; Par Value $.001 per Share; Issued
and Outstanding Shares 2,314,463 (2005) and 2,013,250 (2004) 2,314 2,013
Paid in Surplus 6,409,816 5,711,224
Retained Earnings (Deficit) (4,797,402) (2,617,311)
------------ ------------
Total Stockholders' Equity 1,614,728 3,095,926
------------ ------------
Total Liabilities and Stockholders' Equity $ 12,371,937 $ 12,229,537
============ ============
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-3
ABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30,
2005 2004 2003
(RESTATED) (RESTATED) (RESTATED)
------------ ------------ ------------
Net Sales $ 61,947,349 $ 42,847,123 $ 43,365,028
Cost of Sales 56,032,585 37,267,469 36,905,395
------------ ------------ ------------
Gross Profit 5,914,764 5,579,654 6,459,633
------------ ------------ ------------
Expenses:
Selling, General and Administrative Expenses 5,902,000 6,433,697 5,105,584
Depreciation and Amortization Expense 1,225,196 1,194,958 1,112,098
------------ ------------ ------------
Total Operating Expenses 7,127,196 7,628,655 6,217,682
------------ ------------ ------------
Income (Loss) From Operations (1,212,432) (2,049,001) 241,951
------------ ------------ ------------
Other Income (Expenses):
Interest and Other Income 214,742 149,803 112,543
Interest Expense (449,776) (576,578) (435,992)
Directors' Fees (183,197) - (24,000)
Loss on Sale of Assets (19,249) - -
Gain on Insurance Recovery - - 215,140
Other Expense (Note 20) (318,236) - -
Legal Fees Relating to Accident (Note 10) (208,455) (261,862) (90,050)
------------ ------------ ------------
Total Other Income (Expense) (964,171) (688,637) (222,359)
------------ ------------ ------------
Income from Continuing Operations
Before Provision for Income Taxes (2,176,603) (2,737,638) 19,592
Provision for Income Taxes 3,488 39,720 52,782
------------ ------------ ------------
Net Income (Loss) From Continuing Operations (2,180,091) (2,777,358) (33,190)
------------ ------------ ------------
Discontinued Operations:
Income (Loss) from Discontinued Operations - (57,630) 148,830
Gain on Sale of Subsidiary Operating Assets - 2,668,490 -
------------ ------------ ------------
Income (Loss) from Discontinued Operations - 2,610,860 148,830
------------ ------------ ------------
Net Income (Loss) $ (2,180,091) $ (166,498) $ 115,640
------------ ------------ ------------
Basic Earnings (Loss) per Common Share
Income (Loss) from Continuing Operations $ (1.04) $ (1.38) $ (0.02)
============ ============ ============
Income (Loss) from Discontinued Operations $ - $ 1.30 $ 0.07
============ ============ ============
Diluted Earnings (Loss) per Common Share $ (1.04) $ (1.38) $ (0.02)
============ ============ ============
Income (Loss) from Continuing Operations $ - $ 1.30 $ 0.07
============ ============ ============
Income (Loss) from Discontinued Operations
Weighted Average Number of Common Shares Outstanding - Basic 2,094,629 2,013,250 2,012,708
============ ============ ============
Weighted Average Number of Common Shares Outstanding- Diluted 2,094,629 2,013,250 2,051,700
============ ============ ============
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-4
ABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30,
COMMON STOCK ADDITIONAL TOTAL
---------------------------- PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT SURPLUS EARNINGS EQUITY
----------- ----------- ----------- ----------- -----------
(RESTATED) (RESTATED) (RESTATED) (RESTATED) (RESTATED)
----------- ----------- ----------- ----------- -----------
Balance - June 30, 2002 2,007,250 $ 2,007 $ 5,687,230 $(2,566,452) $ 3,122,785
Issuance of Common Stock for
Payment of Directors' 6,000 6 23,994 - 24,000
Net Income - - - 115,640 115,640
----------- ----------- ----------- ----------- -----------
Balance - June 30, 2003 2,013,250 2,013 5,711,224 (2,450,812) 3,262,425
Net Loss (166,499) (166,499)
----------- ----------- ----------- ----------- -----------
Balance - June 30, 2004 2,013,250 2,013 5,711,224 (2,617,311) 3,095,926
Common Stock Issued in Connection
with Option and warrant Exercises 291,213 291 478,392 - 478,683
Options Granted to Employees -
Below Market Price - - 117,000 - 117,000
Restricted Stock Granted to Board
Members 10,000 10 103,200 - 103,210
Net Loss - - - (2,180,091) (2,180,091)
----------- ----------- ----------- ----------- -----------
Balance - June 30, 2005 2,341,463 $ 2,314 $ 6,409,816 $(4,797,402) $ 1,614,728
=========== =========== =========== =========== ===========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-5
ABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30,
2005 2004 2003
----------- ----------- -----------
(Restated) (RESTATED) (RESTATED) (RESTATED)
---------- ----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES OF CONTINUING OPERATIONS
-------------------------------------------------------------
Net Income (Loss) $(2,180,091) $ (166,498) $ 115,640
(Loss) Income from Discontinued Operations - (57,630) 148,830
Gain on Sale of Subsidiary - 2,668,490 -
----------- ----------- -----------
Income (Loss) - Continuing Operations (2,180,091) (2,777,358) (33,190)
Adjustments to Reconcile Net Income (Loss)to Net Cash
Used by Operating Activities:
Depreciation and Amortization 1,225,196 1,194,958 1,112,098
Loss (Gain) on Disposal of Equipment 35,722 - (215,272)
Stock Based Compensation - Directors 103,200 - 24,000
Stock Based Compensation - Employees 117,000 -
(Increase) Decrease in:
Accounts Receivable (385,716) 225,254 (728,282)
Inventory (167,662) 230,097 (383,998)
Prepaid Expenses (113,832) 77,002 (167,143)
Prepaid Income Taxes 2,063 - 670
Deposits 82,097 28,526 (87,000)
Deferred Income Tax - Asset - 118,868 (8,074)
Deferred Costs - Insurance Claims 424,547 279,128 (614,816)
Increase (Decrease) in:
Accounts Payable 160,836 282,094 261,570
Accrued Expenses (84,912) (484,246) 19,355
Employee Income Tax Withheld 146,624
Customer Advance Payments 730,749 559,226 56,569
Customer Credit Balance (468,170) 282,255 (131,692)
Deferred Income Taxes - (70,310) 15,598
Escrow Deposits - (5,000) (23,472)
Deferred Income 15,143 37,537 44,460
----------- ----------- -----------
Net Cash Used by Operating Activities - Continuing
Operations (357,206) (21,969) (858,619)
----------- ----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
-----------------------------------
Purchase of Property and Equipment (1,139,969) (1,216,540) (1,102,589)
Web Site Development Costs (59,795) (56,219) (74,064)
Increase in Deposits - - (7,971)
Insurance Claim Receivable - 349,526 -
Disposition of Equipment 4,876 73,860 118,258
Cash Received on Sale of Equipment and Inventory - Subsidiary 225,000 - -
Payment on Notes Receivable - Sale of Equipment 19,855 8,224 13,359
Cash Received on Sale of Property 229,814 - -
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-6
ABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED JUNE 30,
2005 2004 2003
AS RESTATED AS RESTATED AS RESTATED
----------- ----------- -----------
Note Receivable - Montgomery - - 655
Receivable - Officer 75,833 (75,833) -
Miscellaneous Receivables 103,826 (56,919) 43,402
----------- ----------- -----------
Net Cash Used by Investing Activities - Continuing Operations (540,560) (973,901) (1,008,950)
----------- ----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES
-----------------------------------
Note Payable - Bank $ (699,236) $ 700,000 $ -
(Decrease) Increase in Notes Payable - Bank - (1,270,764) (200,000)
Note Payable - Other 432,660 (1,585,000) 1,085,000
Note Payable - Officer - (321,630) 311,320
Note Payable - Line of Credit 1,015,468 - -
Decrease in Long-Term Debt (3,236,437) (3,377,095) (766,479)
Increase in Long-Term Debt 3,610,874 5,117,315 844,869
Increase in Deferred Financing Cost on Notes Payable (244,695) - -
Sale of Common Stock 463,602 - -
----------- ----------- -----------
Net Cash (Used) Provided By Financing Activities -
Continuing Operations 1,342,236 (737,174) 1,274,710
----------- ----------- -----------
Discontinued Operations:
Net Cash (Used) Provided by Discontinued Operations - 1,055,720 734,332
Proceeds from Sale of Equipment and Inventory 3,000,000 -
Cost of Sale - (1,412,861) -
----------- ----------- -----------
Net Cash Provided by Discontinued Operations - 2,642,859 734,332
----------- ----------- -----------
Net Increase in Cash 444,470 909,815 141,473
Cash - Beginning of Year 1,309,848 400,033 258,560
----------- ----------- -----------
Cash - End of Year $ 1,754,318 $ 1,309,848 $ 400,033
=========== =========== ===========
The Company had Interest Cash Expenditures of: $ 432,849 $ 665,032 $ 416,049
The Company had Tax Cash Expenditures of: $ 17,249 $ 59,638 $ 34,567
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-7
ABLE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Able Energy, Inc. ("Able") was incorporated in Delaware in 1997 and together
with its operating subsidiaries ("Able Energy" or the "Company"), provides
liquid fuel and services to residential and commercial customers.
Able Oil Company, incorporated in New Jersey in 1990, a wholly owned subsidiary
of Able, sells heating oil and other liquid fuels and provides heating,
ventilation and air conditioning services to residential and commercial
customers in the New Jersey and Pennsylvania markets. Able Energy New York,
Inc., incorporated in New York in 1989, a wholly owned subsidiary of Able, sells
residential and commercial heating oil, propane, diesel fuel, and kerosene to
customers located within the Warrensburg, New York area. Able Oil Melbourne,
Inc., incorporated in Florida in 1995, a wholly owned subsidiary of Able,
primarily sells diesel fuel to customers located within the vicinity of Cape
Canaveral, Florida. Able Energy Terminal LLC, incorporated in New Jersey in
1999, a wholly owned subsidiary of Able, provides fuel storage and distribution
services, primarily to Able Oil. PriceEnergy.com, Inc., a majority owned (67.9%)
subsidiary of Able, was incorporated in Delaware in 1999 and, through an
internet platform, facilitates the sale of fuel oil through a network of
suppliers in New England and the mid-Atlantic states. PriceEnergy.com
Franchising L.L.C., incorporated in New Jersey in 2001, a wholly owned
subsidiary of Able, aims to extend the PriceEnergy.com brand by providing
franchising services to owner-operators in new markets.
The Company's operations are subject to seasonal fluctuations with a majority of
the Company's business occurring in the late fall and winter months.
Approximately 70% of the Company's revenues are earned and received from October
through March, and the overwhelming majority of such revenues are derived from
the sale of home heating fuel. However, the seasonality of the Company's
business is offset, in part, by the increase in revenues from the sale of diesel
and gasoline fuels during the spring and summer months due to the increased use
of automobiles and construction apparatus.
RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
Effective with this filing, the Company is correcting certain errors in its
previously issued financial statements. Amounts stated herein as of June 30,
2005 and 2004 and for the fiscal years ended June 30, 2005, 2004 and 2003
represent the restated financial information rather than the financial
information originally included in Form 10-K for the year ended June 30, 2005
which was filed on September 28, 2005 (See Note 2).
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Able Energy, Inc.
and its subsidiaries. All material inter-company balances and transactions were
eliminated in consolidation.
MAJORITY OWNERSHIP
The Company is the majority owner, owning 67.9% of the issued shares of a
subsidiary, PriceEnergy.Com, Inc. in which their capital investment is $25,000.
The subsidiary has established an E-Commerce Operating System for the sale of
products through a network of suppliers originally on the East Coast of the
United States. The business became active in October 2000 (See Notes 8 and 13).
MINORITY INTEREST
The minority interest in PriceEnergy.Com, Inc. is a deficit and, in accordance
with Accounting Research Bulletin No. 51, subsidiary losses should not be
charged against the minority interest to the extent of reducing it to a negative
amount. As such, the losses have been charged against the Company, the majority
owner.
INVENTORIES
Inventories, consisting principally of heating oil, diesel fuel, kerosene,
propane and heating equipment, related parts and supplies, and are valued at the
lower of cost (first in, first out method) or market.
F-8
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is provided by using the straight-line method based upon the
estimated useful lives of the assets as follows:
Trucks, Machinery & Equipment and Furniture & Fixtures 5 years
Fuel Tanks 10 years
Cylinders - Propane 20 years
Building Improvements 20 years
Buildings 30-40 years
Depreciation expense for the years ended June 30, 2005, 2004 and 2003 amounted
to $697,780, $769,742 and $745,015, respectively. The cost and related
accumulated depreciation of assets sold or otherwise disposed of during the
period are removed from the accounts. Any gain or loss is reflected in the year
of disposal.
At June 30, 2005 and 2004 the equipment under the capital leases had net book
values of approximately $ 768,248 and $ 622,924, respectively.
Expenditures for maintenance and repairs are charged to expense as incurred,
whereas expenditures for renewals and betterments are capitalized.
GOODWILL AND INTANGIBLE ASSETS
Intangibles include customer lists, a covenant not to compete, website
development costs and development costs- franchising. The covenant not to
compete and development costs - franchising are being amortized over 5 year
periods. Amortization expense related to the covenant not to compete and
development costs - franchising for the years ended June 30, 2005, 2004 and 2003
amounted to $12,524, $29,191 and $29,191, respectively.
Costs of $2,390,589 incurred in the developmental stage for computer hardware
and software have been capitalized in accordance with Emerging Issues Task Force
("EITF ") 00-2, "Accounting for Website Development Costs". The costs are being
amortized on a straight-line basis over the estimated useful life, 5 years.
Operations commenced in October 2000. Amortization for the years ended June 30,
2005, 2004 and 2003 amounted to $472,840, $461,823 and $445,842, respectively.
Customer Lists totaling approximately $611,000 related to various acquisitions
are being amortized over a 10-15 year estimated lives. In addition, Statement of
Financial Accounting Standards No.142 (SFAS 142) requires goodwill and other
intangible assets to be periodically tested for impairment, and adjusted when
impaired. As of June 30, 2005 and 2004, the Company has net unamortized customer
lists of $257,694 and $299,746, respectively. Based upon an assessment of the
customer lists, there has been no impairment, beyond the net unamortized
balances (see Note 2).
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Although these estimates are based on
management's knowledge of current events and actions it may undertake in the
future, they may ultimately differ from actual results.
INCOME TAXES
The subsidiaries are filing a consolidated tax return with Able Energy, Inc.
Effective January 1, 1997, the Company has elected to provide for income taxes
based on the provisions of Financial Accounting Standards Board ("FASB")
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes", which requires recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in
the financial statements and tax returns in different years. Under this method,
deferred income tax assets and liabilities are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
F-9
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CONCENTRATIONS OF CREDIT RISK
The Company performs on-going credit evaluations of its customers' financial
conditions and requires no collateral from its customers.
Financial instruments, which potentially subject the Company to concentrations
of credit risk consist of checking and savings accounts with several financial
institutions in excess of insured limits. The excess above insured limits is
approximately $1,300,000 at June 30, 2005. The Company does not anticipate
non-performance by the financial institutions.
ADVERTISING EXPENSE
Advertising costs are expensed at the time the advertisement appears in various
publications and other media. The expense was $338,995, $651,302 and $416,712
for the years ended June 30, 2005, 2004 and 2003, respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Carrying amounts of certain of the Company's financial instruments, including
cash and cash equivalents, accounts receivable, notes receivable, accounts
payable accrued compensation, notes payable, and other accrued liabilities,
approximate fair value because of their short maturities.
REVENUE RECOGNITION
Sales of fuel and heating equipment are recognized at the time of delivery to
the customer, and sales of equipment are recognized at the time of installation.
Revenue from repairs and maintenance service is recognized upon completion of
the service. Payments received from customers for heating equipment service
contracts are deferred and amortized into income over the term of the respective
service contracts, on a straight-line basis, which generally do not exceed one
year.
COMPUTATION OF NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed using the weighted-average number
of common shares outstanding during the period. Diluted net income per share is
computed using the weighted-average number of common and dilutive potential
common shares outstanding during the period. Diluted net loss per share is
computed using the weighted-average number of common shares and excludes
dilutive potential common shares outstanding, as their effect is antidilutive.
Dilutive potential common shares primarily consist of stock options and
warrants. These options and warrants could be dilutive in the future. The
numerator for the calculation of both basic and diluted earnings per share is
the earnings or loss available for common stockholders.
STOCK BASED COMPENSATION
The Company accounts for its stock options issued to employees and outside
directors pursuant to Accounting Principles Board Opinion ("APB") No. 25,
"Accounting for Stock Issued to Employees" and has adopted the disclosure
requirements of SFAS No. 123, "Accounting for Stock-Based Compensation", and
SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure - an Amendment of FASB Statement No. 123". The $103,200 and $24,000
value of stock granted to directors was charged as directors' fees, during the
fiscal years ended June 30, 2005 and 2003, respectively. The $117,000 grant date
intrinsic value of options granted to employees was charged as compensation
expense during the fiscal year ended June 30, 2005.
The following table illustrates the effect on net income and earnings per share
if the Company had applied the fair value recognition provisions of SFAS No. 123
to stock-based employee compensation.
F-10
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STOCK BASED COMPENSATION, CONTINUED
FOR THE YEARS ENDED JUNE 30,
--------------------------------------------------
2005 2004 2003
---------------- ----------- -----------
(RESTATED) (RESTATED) (RESTATED)
---------------- ----------- -----------
Net Income (Loss) From Continuing Operations, as
reported $ (2,180,091) $(2,777,358) $ (33,190)
Deduct: Total stock-based
employee compensation
expense determined under
fair value based method for all
awards, net of related tax
effects 858,324 102,224 128,950
---------------- ----------- -----------
Pro forma net loss from continuing operations $ (3,038,415) $(2,879,582) $ (162,140)
================ =========== ===========
Weighted average common
shares outstanding - basic 2,094,629 2,013,250 2,012,708
================ =========== ===========
Weighted average common
shares outstanding - diluted 2,094,629 2,013,250 2,051,700
================ =========== ===========
(Loss) earnings per share:
Basic from continuing operations, as reported $ (1.04) $ (1.38) $ (0.02)
================ =========== ===========
Basic from continuing operations, pro forma $ (1.45) $ (1.43) $ (0.08)
================ =========== ===========
Diluted from continuing operations, as reported $ (1.04) $ (1.38) $ (0.02)
================ =========== ===========
Diluted from continuing operations, pro forma $ (1.45) $ (1.43) $ (0.08)
================ =========== ===========
Potentially dilutive options and warrants to purchase 238,000, 349,000 and
389,000 shares of the common stock were outstanding as of June 30, 2005, 2004
and 2003, respectively, but were not included in the computation of diluted loss
per share because the effect of their inclusion would have been anti-dilutive.
The estimated weighted average fair values of the options at the date of grant
using the Black-Scholes option-pricing model as promulgated by SFAS No. 123 and
the related assumptions used to develop the estimates are as follows:
FOR THE YEARS ENDED JUNE 30,
---------------------------------
2005 2004 2003
-------- -------- --------
Weighted average fair value of
options granted during the year $4.82 $2.04 $1.99
Risk-free interest rate 4.0% 4.0% 4.0%
Expected volatility 185.9% 120.1% 113.7%
Dividend yield - - -
Expected life 5 years 5 years 5 years
See Note 14 for further discussion of the Company's stock options.
The Company accounts for stock issued to non-employees in accordance with the
provisions of SFAS 123 and the Emerging Issues Task Force ("EITF") Issue No.
96-18, "Accounting for Equity Instruments that are Issued to other than
Employees for Acquiring, or in Conjunction with Selling Goods or Services."
Under SFAS 123, the cost is measured at the fair value of the consideration
received or the fair value of the equity instruments issued, whichever is more
reliably measured. There were no grants to non-employees during the fiscal years
ended June 30, 2005, 2004 and 2003.
F-11
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets to be held and used are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of such
assets may not be recoverable. Measurement of an impairment loss for long-lived
assets that management expects to hold and use is based on the fair value of the
asset. Long-lived assets to be disposed of are reported at the lower of carrying
amount or fair value less costs to sell.
RECENT ACCOUNTING PRONOUNCEMENTS
SHARE-BASED PAYMENT
In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment," which
is a revision of SFAS No. 123, "Accounting for Stock-Based Compensation". SFAS
123(R) requires that the compensation cost relating to share-based payment
transactions be recognized in financial statements. The compensation cost will
be measured based on the fair value of the equity or liability instruments
issued. The Statement is effective as of the beginning of the first interim or
annual period beginning after June 15, 2005. The Company will adopt SFAS No.
123(R) on July 1, 2005 using the modified prospective method. The Company has
disclosed the pro forma impact of adopting SFAS No. 123(R) on net income and
earnings per share for the year ended June 30, 2005, 2004 and 2003 in Note 1,
which includes all share-based payment transactions to date. The Company does
not yet know the impact that any future share-based payment transactions will
have on our financial position or results of operations.
INVENTORY COSTS
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs." SFAS 151
amends ARB No. 43, "Inventory Pricing", to clarify the accounting for certain
costs as period expense. The Statement is effective for fiscal years beginning
after June 15, 2005; however, early adoption of this Statement is permitted.
There was no impact from the adoption of this statement.
NOTE 2 RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
SUMMARY
On December 26, 2006, the Company filed a report on Form 8-K with the Securities
and Exchange Commission disclosing that the Company would restate previously
issued financial statements for the years ended June 30, 2005, 2004 and 2003.
During the audit of Able Energy, Inc.'s June 30, 2006 financial statements by
the Company's new independent registered public accounting firm, the Company, in
consultation with the Audit Committee, determined that the previously issued
financial statements contained certain errors with respect to the application of
U.S generally accepted accounting principles("GAAP").
These restated financial statements and the related notes correct errors
relating to (1) the amortization of customer lists; (2) the deferral of revenue
recognition associated with certain twelve month service contracts; (3) the
classification of certain property and equipment; (4) reconciliation of a
sub-ledger discrepancy; (5) the accrual of audit fees; (6)the treatment of
deferred tax assets and liabilities; and (7) the issuance and cancellation of
common stock in regard to non-performance by a consultant under its consulting
agreement with the Company.
CUSTOMER LIST AMORTIZATION
The Company was amortizing customer lists aggregating approximately $611,000
(purchased in various asset acquisitions) over estimated useful lives of 10-15
years until July 2001, when the net book value was $422,728. The Company has
reassessed its position and has determined that the customer lists should have
continued to be amortized, in accordance with SFAS No. 142, "Goodwill and Other
Intangible Assets", which states that intangible assets must be amortized over
their estimated useful life, unless that useful life is determined to be
indefinite. Accordingly, the Company has recognized additional amortization
expense of $38,878 during the fiscal year ended June 30, 2002 and an additional
$42,052 during each of the fiscal years ended June 30, 2005, 2004 and 2003.
SERVICE CONTRACT REVENUE DEFERRAL
In the ordinary course of business, the Company offers a twelve month service
contract related to residential customers' heating equipment. The Company's
policy, which is consistent with GAAP, is to defer the revenue associated with
these contracts, recognizing the revenue over the life of the respective
contracts. However, the Company's policy was not applied correctly. The Company
has estimated and recorded the deferrals required at the various reporting
dates, which has had the impact of reducing revenue by $17,476, $35,205, $44,460
and $99,478 for the fiscal years ended June 30, 2005, 2004, 2003 and 2002,
respectively.
F-12
NOTE 2 RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (CONTINUED)
PROPERTY AND EQUIPMENT RECLASSIFICATION
Certain building structures were constructed and were inadvertently classified
as Building Improvements. The correcting adjustments have no impact on net
income. The cost basis that was reclassified from Building Improvements to
Buildings was $172,055 and $124,332 during the fiscal years ended June 30, 2005
and 2004, respectively.
RECONCILIATION OF SUB-LEDGER DISCREPANCY
In July 2004, the Company implemented a new industry-specific back office
system, which included an accounts receivable sub-ledger. At the time of the
conversion, a discrepancy developed between the accounts receivable on the
general ledger and the accounts receivable on the sub-ledger, which discrepancy
was never reconciled. The Company has now determined that certain accounts
receivable balances on the general ledger were unsubstantiated. Accordingly, the
Company recorded a $54,630 charge associated with the write-down of these
balances during the fiscal year ended June 30, 2005, which was the year that the
new back-office system was implemented.
AUDIT FEE ACCRUAL
As of June 30, 2005, the Company recorded an accrual for audit fees that it
estimated would be incurred subsequent to that date, with respect to the audit
of the Company's June 30, 2005 financial statements. The Company subsequently
determined that the accrual for the audit services which had not yet been
performed was not in accordance with GAAP. Accordingly, the Company reversed
$31,337 of Accrued Expenses as of June 30, 2005, with a corresponding reduction
of Selling, General and Administrative Expenses.
TREATMENT OF DEFERRED TAX ASSETS AND LIABILITIES
Given the Company's recent operating results, the Company has subsequently
determined that it is more likely than not that the net deferred tax assets will
not be realized. Pursuant to FAS 109, a 100% valuation allowance has now been
provided against the net deferred tax assets. Accordingly, the balance sheet no
longer reflects $109,867 and $100,014 of deferred tax assets plus $104,517 and
$91,176 of deferred tax liabilities, as of June 30, 2005 and 2004, respectively.
In addition, the Company has reassessed the gross value of its deferred tax
assets and has updated the related footnote disclosure, See Note 7.
CANCELLATION OF COMMON STOCK DUE TO NON-PERFORMANCE BY A CONSULTANT
In March 2005, the Company issued common stock to a consultant pursuant to the
terms of a consulting agreement. Subsequently, the Company determined that the
consultant did not perform in accordance with the consulting agreement and the
Company has filed suit demanding that the shares be returned. The Company's
position is that the share issuance has been cancelled "ab initio", as if the
shares were never issued. Accordingly, the impact of the share issuance during
the fiscal year ended June 30, 2005 has been reversed, including $58,442 of
Prepaid Expenses, a $143 reduction of Common Stock, a $71,286 reduction of Paid
in Surplus, and a $12,987 reduction of Selling, General and Administrative
Expenses. In addition, the outstanding common stock as of June 30, 2005 was
reduced by 142,857 shares.
IMPACT
Amounts reflected herein for the fiscal years ended June 30, 2005, 2004 and 2003
represent the restated financial information rather than the financial
information included in the Form 10-K for the year ended June 30, 2005, which
was filed with the SEC on September 28, 2005. The following summarizes the
effect of the adjustments discussed above on the previously reported net loss
and net loss per share:
F-13
NOTE 2 RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (CONTINUED)
Years ended June 30,
------------------------------------------------------------------------------------
2005 2004 2003
------------------------- ------------------------- --------------------------
income income income
Net (loss) Net (loss) Net (loss)
income per income per income per
(loss) share (loss) share (loss) share
----------- ----------- ----------- ----------- ----------- -----------
As reported $(2,110,257) $ (0.99) $(2,700,102) $ (1.34) $ 53,322 $ 0.03
Customer list amortization (42,052) (0.02) (42,052) (0.02) (42,052) (0.02)
Service contract deferral (17,476) (0.01) (35,204) (0.02) (44,460) (0.03)
Sub-ledger difference (54,630) (0.03) - - - -
Audit fee accrual 31,337 0.01 - - - -
Stock cancellation 12,987 - - - - -
----------- ----------- ----------- ----------- ----------- -----------
As restated $(2,180,091) $ (1.04) $(2,777,358) $ (1.38) $ (33,190) $ (0.02)
=========== =========== =========== =========== =========== ===========
The impact on the Consolidated Statements of Operations, Balance Sheets and
Statements of Cash Flows, as a result of the adjustments discussed above, is
illustrated on a condensed basis below.
Adjustments to the Statement of Operations
------------------------------------------
Years ended June 30,
------------------------------------------------------------------------------------
2005 2004 2003
-------------------------- ----------------------------- ---------------------------
Amounts Amounts Amounts
previously As previously As previously As
STATEMENTS OF OPERATIONS: reported restated reported restated reported restated
-------------------------- ----------------------------- ---------------------------
Net Sales $ 61,964,825 $ 61,947,349 $ 42,882,327 $ 42,847,123 $ 43,409,488 $ 43,365,028
Gross Profit 5,986,870 5,914,764 5,614,858 5,579,654 6,504,093 6,459,633
Income (Loss) From Operations (1,142,598) (1,212,432) (1,971,745) (2,049,001) 328,463 241,951
Total Other Income (Expense) (964,171) (964,171) (688,637) (688,637) (222,359) (222,359)
Net Income (Loss) From Continuing Ops (2,110,257) (2,180,091) (2,700,102) (2,777,358) 53,322 (33,190)
Net Income (Loss) $ (2,110,257) $ (2,180,091) $ (89,242) $ (166,498) $ 202,152 $ 115,640
Basic and Diluted Earnings (Loss) per Share:
Income (Loss) from Continuing Ops $ (0.99) $ (1.04) $ (1.34) $ (1.38) $ 0.03 $ (0.02)
Income (Loss) from Discontinued Ops $ - $ - $ 1.30 $ 1.30 $ 0.07 $ 0.07
Wtd Avg Common Shares - Basic 2,140,813 2,094,629 2,013,250 2,013,250 2,012,708 2,012,708
Wtd Avg Common Shares - Diluted 2,140,813 2,094,629 2,013,250 2,013,250 2,051,700 2,051,700
------------------------------------------------------------------------------------------------------------------------------------
F-14
NOTE 2 RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (CONTINUED)
Adjustments to the Balance Sheets
---------------------------------
As of June 30,
-----------------------------------------------------
2005 2005 2004 2004
----------- ----------- ----------- -----------
As As
previously As previously As
BALANCE SHEETS: reported restated reported restated
----------- ----------- ----------- -----------
Total Current Assets $ 6,230,307 $ 6,057,809 $ 5,577,508 $ 5,531,423
Total Assets $12,754,560 $12,371,937 $12,443,695 $12,229,537
Total Current Liabilities $ 6,550,350 $ 6,715,631 $ 5,320,953 $ 5,500,095
Total Liabilities $10,696,445 $10,757,209 $ 9,045,644 $ 9,133,611
Total Stockholders' Equity $ 2,058,115 $ 1,614,728 $ 3,398,051 $ 3,095,926
Total Liabilities and Stockholders' Equity $12,754,560 $12,371,937 $12,443,695 $12,229,537
Adjustments to the Statements of Cash Flows
-------------------------------------------
For the Years Ended June 30,
-------------------------------------------------------------------------------------
2005 2005 2004 2004 2003 2003
----------- ----------- ----------- ----------- ----------- -----------
As As As
previously As previously As previously As
STATEMENTS OF CASH FLOWS: reported restated reported restated reported restated
----------- ----------- ----------- ----------- ----------- -----------
Net Cash (Used in) Provided by Operating
Activities of Continuing Operations $ (357,206) $ (357,206) $ (21,969) $ (21,969) $ (858,619) $ (858,619)
Net Cash Used in Investing
Activities of Continuing Operations $ (540,560) $ (540,560) $ (973,901) $ (973,901) $(1,008,950) $(1,008,950)
Net Cash (Used in) Provided by Financing
Activities of Continuing Operations $ 1,342,236 $ 1,342,236 $ (737,174) $ (737,174) $ 1,274,710 $ 1,274,710
Net Cash Provided by
Discontinued Operations $ - $ - $ 2,642,859 $ 2,642,859 $ 734,332 $ 734,332
NOTE 3 NOTES RECEIVABLE
A. The Company has a Receivable from Able Montgomery, Inc. and Andrew W. Schmidt
related to the sale of Able Montgomery, Inc. to Schmidt, and a truck financed by
Able Energy, Inc. No payments of principal or interest had been received for
more than one year. A new note was drawn dated June 15, 2000 for $170,000,
including the prior balance, plus accrued interest. The Note bears interest at
9.5% per annum and payments commenced October 1, 2000. The payments will be
monthly in varying amount each year with a final payment of $55,981.07 due
September 1, 2010. No payments were received in the year ended December 31,
2000. In February 2001, two (2) payments were received in the amount $2,691.66,
interest only. In September 2001, $15,124.97 was received covering payments from
December 2000 through October 2001, representing interest of $14,804.13 and
principal of $320.84. Payments were received in November and December 2002,
representing payments for December 2001 and January 2002, for a total of
$3,333.34; interest of $2,678.88, and principal of $654.46. No payments have
been received in more than 30 months.
F-15
NOTE 3 NOTES RECEIVABLE (CONTINUED)
The note is secured by a pledge and security agreement and stock purchase
agreement (Stock of Able Montgomery, Inc.), dated December 31, 1998, and the
assets of Andrew W. Schmidt with the note dated June 15, 2000. The income on the
sale of the company in December 1998 and the accrued interest on the drawing of
the new note are shown as deferred income in the amount of $79,679 to be
realized on collection of the notes.
The Company is in negotiations with Andrew Schmidt. Andrew Schmidt and the
Company have reached an agreement whereby the liability will be paid by an
additional $.04 per gallon charge on oil purchased from the Company. The Company
believes the value of the collateral will cover the amount due if foreclosure is
required.
Maturities of the Note Receivable are as follows:
For the Years Principal
Ending June 30, Amount
--------------------- -------------
2006 $ 44,118
2007 13,753
2008 15,118
2009 16,619
2010 18,268
Thereafter 60,825
-------------
Total $168,701
=============
B. Able Oil Company has three (3) Notes Receivable for the sale of oil delivery
trucks to independent drivers who also deliver oil for the Company. Two notes
bear interest at the rate of 12% per annum and one Note at 9% annum. One note
began December 1998, one began February 1999 and one began January 2004. The
notes are payable eight (8) months per year September through April, the oil
delivery season.
Maturities of these Notes Receivable are as follows:
For the Years Ending Principal
June 30, Amount
--------------------- -------------
2006 $ 13,708
2007 11,990
2008 6,147
2009 6,715
-------------
Total $ 38,560
=============
NOTE 4 INVENTORIES
The components of the inventories are as follows:
Items June 30, 2005 June 30, 2004
----------------------------- ------------------- ----------------
Heating Oil $ 335,245 $ 232,364
Diesel Fuel 34,409 19,998
Kerosene 3,025 4,906
Propane 28,020 13,461
Parts, Supplies and Equipment 326,290 288,596
------------------- ----------------
Total $ 726,987 $ 559,325
=================== ================
F-16
NOTE 5 NOTES PAYABLE BANK
A. On September 22, 2003, the Company closed a new loan facility with UPS
Capital Business Credit. The facility is a $4,300,000 term loan, payable
over fifteen (15) years with interest at the prime rate, plus 1.75%, and
a line of credit of $700,000 with interest at prime plus 1.00%. The
payments on the term loan, due the first of each month, include
principal, interest of $35,900.04, and real estate tax escrow of
$2,576.63, totaling $38,476.67. Real estate tax escrow of $7,745.03 was
paid at closing. September 30, 2003 was the first payment and included
nine (9) days of interest plus principal totaling $20,382.02. Any
payment received more than five (5) days after the due date is subject
to a late charge of 5% of such payment. Upon the occurrence of an event
of default, the loan shall bear interest at five percentage points (5%)
above the rate otherwise in effect under the loan.
On March 3, 2004, the Company repaid $1,100,000 of the term loan
principal balance. The monthly payments of principal and interest were
reduced to $26,672, commencing with the payment due April 1, 2004, which
was paid by the Company in March 2004. All other terms of the loan will
remain the same.
1. The collateral will be as follows for the term loan:
A. A first mortgage on properties located at 344 Route 46,
Rockaway, NJ and 38 Diller Avenue, Newton, NJ
B. A first security interest in equipment and fleet
vehicles
C. A first security interest in the customer list
TERMS AND COLLATERAL RELATED TO THE REVOLVING LINE OF CREDIT
Interest is payable monthly on the first day of each month, in arrears.
This loan shall be paid down annually for a minimum of thirty (30) days
at the borrower's discretion, but prior to renewal. The maturity is
annually renewing from the closing date. This part of the loan is
secured by a first priority lien on accounts receivable and inventory.
The Revolving Line of Credit will have availability up to 75% on
accounts receivable less than 90 days outstanding, plus 50% on
inventory. The outstanding balance at June 30, 2004 was $700,000.
The loan facility is guaranteed by Able Energy, Inc.
The Agreement contains certain financial covenants as enumerated in the
Agreement
The balance of the term loan at June 30, 2004 was $3,064,523
Included in current portion of long-term debt 144,422
----------
Included in long-term debt - less current portion $2,920,101
==========
The Term Loan and the Line of Credit were paid in full on May 13, 2005
with new financing secured by the Company (see Note 5 B and C)
B. On May 13, 2005, the Company entered into a term loan with Northfield
Savings Bank for $3,250,000. Principal and interest shall be due and
payable the first of each month, commencing on July 1, 2005, in the
amount of $21,439. The initial interest rate is 6.25% per annum on the
unpaid principal balance for the first five (5) years, to be
redetermined every fifth anniversary date (reset date) at 300 basis
points over the five (5) year treasury rate, but not lower than the
initial rate; at that time the monthly payment will be redetermined. At
the maturity date of June 1, 2030, all amounts owed are due and payable.
If payment is not received within ten (10) days after its due date, a
late charge of 5% of such delinquent payment will be applied.
Prepayments may be paid in whole or part, together with accrued interest
on the prepaid amount.
Security for the Note is a Mortgage and Security Agreement on real
property in the Borough of Rockaway, County of Morris, New Jersey and an
assignment of leases and rents, the property is at 344 Route 46. The
property is owned by Able Energy Terminal, LLC, a wholly owned
subsidiary. The Company granted to the bank a continuing security
interest in all property of the borrower, now and hereafter in
possession of the bank, as security for payment of this note and any
other liabilities to the bank. The interest rate on default is 4% per
annum above the interest rate then in effect.
F-17
NOTE 5 NOTES PAYABLE BANK (CONTINUED)
COVENANTS
The financial statements and Compliance Certificate, as per the
Agreement, will be signed by the borrower's chief financial officer. As
of June 30, 2005, the Company is in compliance with the Agreement
covenants.
The Company paid the term loan due of $3,019,298.52, which included a
prepayment penalty of $70,864 (included in interest expense on the
statement of operations), to UPS Capital with proceeds from this loan
and also closing costs and legal fees. The net amount to the Company was
$94,993.67.
C. On May 13, 2005, the Company and subsidiaries entered into a loan and
security agreement with Entrepreneur Growth Capital, LLC, as lender. The
loan will be a Line-Of-Credit of $1,750,000, secured by (1) accounts
receivable, 60 days or less in age from invoice date with a maximum
accounts receivable credit line of $1,250,000 and (2) inventory, owned
by borrower in storage tanks in Rockaway, New Jersey facility and goods
held for sale or lease or to be furnished under a contract of service
and all present and future raw materials, work in process and finished
goods, with a maximum inventories credit line of $500,000. Loans and
advances are permitted up to 85% of the net amount of eligible accounts
receivable and 30% of the net amount of eligible inventory, not to
exceed the maximum Line-of-Credit amount of $1,750,000. The balance due
by June 30, 2005 is $1,015,468.
INTEREST AND FEES
Interest payable on loans and advances, related to both accounts
receivable and inventory advances are charged at Citibank's Prime rate,
plus 4% per annum, but the rate shall never be more than 24% or maximum
permitted by law. All interest and fees charged or chargeable to
borrower shall be deemed as an additional advance.
Any advance interest shall be charged at 18% per annum, the default rate
of interest shall be 24% per annum. The Company shall pay the lender an
annual facility fee in an amount equal to two percent (2%) of the
Line-of-Credit, $35,000. The facility fee is payable upon execution of
this agreement and upon each annual anniversary date of this agreement
until such time this agreement has been terminated in accordance with
its terms. Borrower shall pay lender a minimum interest charge in an
amount equal to the difference between (a) $11,000 per month, and (b)
the actual amount of interest charged to the borrower on the obligation
that month. Borrower shall pay lender a monthly collateral management
fee equal to one quarter of one percent (0.25%) of the Line-of- Credit,
or $4,375.
COLLATERAL
All of borrower's (a) accounts receivable, now existing and hereafter
created (b) present and future deposit accounts (c) present and future
books records, computer programs, etc. (d) presently owned or hereafter
acquired inventory (e) present and future general intangibles, including
customer lists, trademarks, etc. (f) rights, title and interest in any
and all assets, personal property owned by third parties.
EVENTS OF DEFAULT AS PER SECTION 8 OF THE AGREEMENT
This agreement shall continue in full force and effect for a term ending
on the last business day of the month two (2) years from the date hereof
("the Renewal Date") and shall automatically renew from year-to-year
thereafter until terminated pursuant to the terms here of. The lender
may terminate this agreement on the Renewal Date or on the anniversary
of the Renewal Date in any year by giving the borrower at least thirty
(30) days prior written notice, by registered or certified mail, return
receipt requested. Borrower may terminate upon the same dates by giving
ninety (90) day notice to lender.
F-18
NOTE 6 NOTES PAYABLE
The Company has a mortgage note payable to Able Income Fund, LLC with an
original balance of $500,000. The note is dated February 22, 2005 and is
due May 22, 2005. The note has an interest rate of 14% per annum and is
payable with interest only at $5,833.33 per month with the balance and
any accrued interest due at May 22, 2005. The note is secured by a
mortgage on property in Warrensburg Industrial Park, Warrensburg, New
York, owned by Able Energy New York, Inc., a wholly owned subsidiary of
the Company. The due date of the loan has been extended to August 22,
2005. All other terms and conditions remain unchanged. One of the owners
of Able Income Fund, LLC is the prior Chief Executive Officer (CEO) of
Able Energy, Inc. The balance due at June 30, 2005 is $432,660.
Mortgage note payable dated, August 27, 1999, related to the purchase of
B & B Fuels facility and equipment. The total Note is $145,000. The Note
is payable in the monthly amount of principal and interest of $1,721.18
with and interest rate of 7.5% per annum. The initial payment was made
on September 27, 1999, and continues monthly until August 27, 2009,
which is the final payment. The Note is secured by a mortgage made by
Able Energy New York, Inc. on property at 2 and 4 Green Terrace and 4
Horicon Avenue, Town of Warrensburg, Warren County, New York. The
balance due on this Note at June 30, 2005 and June 30, 2004 was $73,713
and $88,242, respectively.
INTEREST RATE AT OUTSTANDING OUTSTANDING
JUNE 30, 2005 DEBT AT DEBT AT
AND 2004 MATURITIES 6/30/2005 6/30/2004
---------------- ---------- ---------------- ----------------
Notes Payable Collateralized
By Trucks and Vans 2.90 - 12.506% 10/20/05-8/10/06 $ 20,920 $ 26,904
Capitalize Leases Payable
Collateralized by Trucks and Vans
Purchased 4.075 - 9.498% 1/7/05-4/5/10 932,102 708,570
Notes Payable Collateralized by Office
and Computer Equipment 4.699 - 16.196% 9/1/04-5/27/08 23,376 37,435
---------------- ----------------
$ 976,398 $ 772,909
================ ================
The above notes are all collateralized by the equipment and/or furniture
purchased. The capitalized leases payable are lease/purchase agreements with a
small purchase price at the end of the lease. The above notes are represented by
Notes Payable to Payees.
Maturities on the Notes Payable subsequent to June 30, 2005 are as follows:
For the Years Ending Principal
June 30, Amount
--------------------- -------------
2006 $ 338,212
2007 334,759
2008 309,158
2009 263,909
2010 120,924
Thereafter 2,933,149
-------------
Total $4,300,111
=============
F-19
NOTE 7 INCOME TAXES
Effective January 1, 1997 the Company adopted Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes.
The differences between the statutory Federal Income Tax and Income Taxes is
accounted for as follows:
2005
------------------------------------------------------------
AMOUNT PERCENT
------ -------
Statutory Federal Income Tax $ 2,442 15.0%
State Income Tax 1,046 7.6
------- -------
Income Taxes $ 3,488 22.6%
======= =======
Income Taxes consist of:
Current -
Deferred $ 3,488
-------
TOTAL $ 3,488
=======
The State of New Jersey has suspended the use of carry forward losses for the
years 2002 and 2003. As such, state income taxes of $45,091 have been shown as a
deferred asset and as income taxes payable. New Jersey carry forward is treated
separately by the Company. Able Oil Company has a New Jersey Operating Loss of
$501,010 which can not be utilized in the year ended June 30, 2003, the State
Income Tax on income in excess of the NOL $45,258 is shown as state income tax.
Under current New Jersey law, the carry forward will be available up to 50% of
NOL after 2003, the Company's fiscal year ending June 30, 2005.
The effective tax rate differed from the statutory U.S. Federal Income Tax Rate
as follows:
Fiscal Year Ended June 30,
------------------------------------
2005 2004 2003
--------- --------- ---------
U.S Federal Statutory Note 15.0 15.0 34.0
2004 2003
---- ----
AMOUNT PERCENT AMOUNT PERCENT
--------- ------- ---------- -------
Statutory Federal Income Tax $ 27,804 15.0% $ 204,432 34.0%
Federal Income Tax Reduction due to
Carry forward loss State Income Tax (199,165)
State Income Tax (Note X) 11,916 7.6 45,258 5.9
State Income Tax Reduction due to
Carry forward loss 45,091
State Income Tax - (Note X) - - (42,834) -
--------- ------- ---------- -------
Income Taxes $ 39,720 22.6% $ 52,782 39.9%
========= ======= ========== =======
Income Taxes consist of:
Current $ - $ 45,258
Deferred 39,720 7,524
--------- ----------
TOTAL $ 39,720 $ 52,782
========= ==========
F-20
NOTE 7 INCOME TAXES (CONTINUED)
Temporary differences between the tax bases of assets and liabilities and their
financial reporting amounts that give rise to a significant portion of the
deferred tax liability and deferred tax asset and their approximate tax effects
are as follows at:
JUNE 30,
2005 2004
----------- -----------
Net operating loss carry forwards $ 2,702,847 $ 1,216,470
Allowance for doubtful accounts 95,077 76,773
----------- -----------
Deferred tax assets - gross 2,797,924 1,293,243
Depreciation and amortization (505,317) (600,000)
----------- -----------
Deferred tax assets - net 2,292,607 693,243
Less: Valuation allowance (2,292,607) (693,243)
----------- -----------
Total $ - $ -
=========== ===========
Increase in valuation allowance $ 1,599,363 $ 91,102
=========== ===========
The Company has federal net operating loss ("NOL") carry forwards of
approximately $6,592,000 and $2,862,000 as of June 30, 2005 and 2004,
respectively. The federal net operating loss carryforwards expire between June
30, 2020 and 2025. Able Energy, Inc, Able Oil Company and PriceEnergy.Com, Inc.
have aggregate New Jersey net operating loss carry forwards of approximately
$7,585,000 and $4,056,000 as of June 30, 2005 and 2004, respectively. The New
Jersey net operating loss carryforwards expire between June 30, 2010 and 2013.
The Company's ability to use its federal NOL carryforwards may be subject to an
annual limitation in future years pursuant to Section 382 of the Internal
Revenue Code.
These carry forward losses are available to offset future taxable income, if
any. The Company's utilization of this carry forward against future taxable
income is subject to the Company having profitable operations or a profitable
sale of Company assets, which creates taxable income. Due to the uncertainty
surrounding the realization of the benefits associated with the carry forward
losses and the other temporary differences, the Company has provided a valuation
allowance for the entire amount of the net deferred tax assets as of June 30,
2005 and 2004
NOTE 8 NOTE RECEIVABLE - SUBSIDIARY
The Company has a Note Receivable from PriceEnergy.Com, Inc. for advances made
in the development of the business, including hardware and software costs. All
of PriceEnergy.Com, Inc.'s assets are pledged as collateral to Able Energy, Inc.
The amount of the note is $1,350,000 dated November 1, 2000 with interest at 8%
per annum payable quarterly. Principal payments to begin two years after the
date of the Note, November 1, 2002. Through June 30, 2005, no principal has been
paid. Interest, in the amount of $54,000 has been accrued for the six months
ended December 31, 2002. No interest has been accrued since December 31, 2002 as
the note is non-performing. Unpaid accrued interest due through June 30, 2005 is
$234,000. The Note, accrued interest and interest expense have been eliminated
in the consolidated financial statements (See Notes 1 and 13).
F-21
NOTE 8 NOTE RECEIVABLE - SUBSIDIARY (CONTINUED)
Able Oil Company has a Note Receivable originally dated September 30, 2002 in
the amount of $1,510,372.73 from PriceEnergy.Com, Inc. The Note has been updated
for transactions through June 30, 2005, resulting in a balance of $3,544,389
with interest at 8% per annum, to be paid quarterly. Principal payments to begin
one year after date of Note, October 1, 2003, and continue monthly thereafter.
The Note is the result of the transference of the unpaid accounts receivable
which resulted from the sale of heating oil through PriceEnergy.Com, Inc. Able
Oil Company has a second position as collateral in all of the assets of
PriceEnergy.Com, Inc. to Able Energy, Inc. No interest has been recorded since
December 31, 2002. Any payments will go to pay principal. The note receivable
accrued interest and interest income have been eliminated in consolidation
against the amounts on PriceEnergy.Com, Inc.
NOTE 9 PROFIT SHARING PLAN
Effective January 1, 1997, Able Oil Company established a Qualified Profit
Sharing Plan under Internal Revenue Code Section 401(k). The Company matches 25%
of qualified employee contributions. The expense was $ 27,472, $26,579 and
$24,213 for the years ended June 30, 2005, 2004 and 2003, respectively.
NOTE 10 COMMITMENTS AND CONTINGENCIES
CONTRACTUAL OBLIGATIONS
Able Oil Company is under contract to purchase #2 oil as follows:
GALLONS OPEN OPEN DOLLAR
COMMITMENT COMMITMENT AT
COMPANY PERIOD TOTAL GALLONS AT 6/30/05 6/30/05
---------------- --------------- --------------- ------------- -----------
Petrocom 10/1/05-3/31/06 252,000 252,000 $ 413,910
Conectiv Energy 11/1/05-2/28/06 168,000 168,000 257,754
Petrocom 10/1/05-4/30/06 294,000 294,000 430,962
Center Oil 10/1/05-4/30/06 588,000 588,000 930,829
Gulf Oil 11/1/05-2/28/06 168,000 168,000 251,454
--------------- ------------- -----------
Total 1,470,000 1,470,000 $ 2,284,909
=============== ============= ===========
In addition, the Company has employment agreements with two officers with
aggregate salary obligations of $283,200 in each of the next two fiscal years
ending June 30, 2007 and 2006.
ENVIRONMENTAL MATTERS
The Company is subject to laws and regulations relating to the protection of the
environment. While it is not possible to quantify with certainty the potential
impact of actions regarding environmental matters, in the opinion of management,
compliance with the present environmental protection laws will not have a
material adverse effect on the financial condition, competitive position, or
capital expenditures of the Company.
In accordance with the agreement on the purchase of the property on Route 46,
Rockaway, New Jersey by Able Energy Terminal, LLC, the purchaser shall commence
after the closing, which was August 31, 1999, the investigation and remediation
of the property and any hazardous substances emanating from the property in
order to obtain a No Further Action letter from the New Jersey Department of
Environmental Protection (NJDEP). The purchaser will also pursue recovery of all
costs and damages related thereto in the lawsuit by the seller against a former
tenant on the purchased property. The purchaser will assume all responsibility
and direction for the lawsuit, subject to the sharing of any recoveries from the
lawsuit in equal shares with the seller.
The seller by reduction of its mortgage will pay costs related to the above up
to $250,000. A settlement has been achieved by the Company with regard to the
lawsuit. The settlement provides for a lump sum payment of $397,500 from the
defendants to the Company. In return, the defendants received a release from the
seller, an Estate, and a release and indemnification from the Company. The
defendants provided a release to Able Energy and the Estate. Pursuant to the
original agreement, the Estate receives 50% of the settlement amount, net of
attorney fees.
F-22
NOTE 10 COMMITMENTS AND CONTINGENCIES (CONTINUED)
ENVIRONMENTAL MATTERS (CONTINUED)
This has been amended by an agreement dated November 5, 2001. The entire
settlement, net of attorney fees, was collected and placed in an attorney's
escrow account for payment of all investigation and remediation costs. Able
Energy Terminal, LLC has incurred costs of $102,956 to June 30, 2005, which are
included in Prepaid Expenses and must be presented to the attorney for
reimbursement. The New Jersey Department of Environmental Protection (NJDEP) has
issued an approval for treated water run-off. The ruling is for a 180-day
period, which can be renewed for an additional 180 days, per management, during
which a valid permit must be obtained. When approval is received and contract
invoice wording is sufficient for the attorney, reimbursement can be made upon
approval of the attorney and the Estate.
The costs of the cleanup pursuant to the Agreement of Sale must be shared
equally by the seller and purchaser, up to the seller's cap of $250,000.
Seller's contribution to the cleanup is in the form of a reduction to Able's
note payable to the seller of $650,000 and not by direct payments. The note has
been paid in full. As such, any payment by the Estate must be direct payments.
Payments will begin when and if costs exceed $397,500. In the opinion of
management, the Company will not sustain costs in this matter, which will have a
material adverse effect on its financial condition.
EXPLOSION AND FIRE
Following an explosion and fire that occurred at the Able Energy Facility in
Newton, NJ on March 14, 2003, and through the subsequent clean up efforts, Able
Energy has cooperated fully with all local, state and federal agencies in their
investigations into the cause of this accident.
All violation charges with the New Jersey Department of Community Affairs and
OSHA have been settled and paid.
The Sussex County, New Jersey, Prosecutor's Office is conducting an
investigation as a result of the March 14, 2003 explosion and fire. At a hearing
on July 27, 2005, the President and former CFO pleaded guilty and received
community service. The Company will face a fine of up to $30,000 when sentenced
September 21, 2005.
A lawsuit (known as HICKS VS. ABLE ENERGY, INC.) has been filed against the
Company by property owners who allegedly suffered property damages as a result
of the March 14, 2003 explosion and fire. The Company's insurance carrier is
defending as related to compensatory damages. Legal counsel is defending on the
punitive damage claim. On June 13, 2005, the Court granted a motion certifying a
plaintiff class action which is defined as "All Persons and Entities that on and
after March 14, 2003, residing within a 1,000 yard radius of Able Oil Company's
fuel depot facility and were damaged as a result of the March 14, 2003
explosion". The claim is limited to economic loss and claims for personal injury
have been specifically excluded from the Class Certification. The insurer has
settled approximately 200 claims against the Company. The Company believes that
the Class Action Claims for compensatory damages is within the available limits
of its insurance.
After the March 14, 2003 fire and explosion, the town of Newton changed its
zoning requirements and made fuel oil and propane distribution prohibited uses.
The Company is appealing a denial of a request for building permits to
reconstruct damaged and destroyed buildings and sought a Non-Conforming Use
Certificate to permit fuel oil distribution use only. On August 20, 2004, the
Superior Court of New Jersey ruled that the Company may continue to use the site
as a non-conforming use, but stayed its decision subject to Newton's appellate
rights. The decision was upheld in May 2005 by the court upon the appeal of the
Town of Newton. The Company is planning to use the property in the manner
approved by the decision.
Two lawsuits have been filed by homeowners in Newton, New Jersey who allegedly
suffered property damages as a result of the March 14, 2003 explosion and fire.
The Company's insurance carrier is defending as related to the property damage
claims. As to Punitive Damages, one case is being defended by an outside
attorney and one by the insurance carrier. It appears that compensatory damage
claims are within the available limits of insurance.
OTHER MATTERS
The Company in the normal course of business has been involved in lawsuits.
Current suits are being defended by the insurance carrier and should be covered
by insurance and legal counsel is defending on punitive damage claims as noted
above.
F-23
NOTE 11 OPERATING LEASES
The Company leased 9,800 square feet in the Rockaway Business Center on Green
Pond Road in Rockaway, New Jersey. The facility will be used as a call center
and will combine the administrative operations in New Jersey in one facility.
The lease has a term of five (5) years and three (3) months from August 1, 2000
through October 31, 2005.
The rent for the first year is $7,145.83 per month and the second through fifth
year is $7,431.67 per month, plus 20.5% of the building's annual operational
costs and it's portion of utilities. The current monthly rent, including Common
Area Charges, is $9,799.04 per month.
The lease does not contain any option for renewal. The Company and the landlord
have agreed to extend the lease for a period of six months to April 30, 2006
based upon the existing terms. The total rent expense was $117,588 for the year
ended June 30, 2005. The estimated future rents are as follows:
July 2005-April 2006 $ 98,830
=========
The following summarizes the month-to-month operating leases for the
other subsidiaries:
Able Oil Melbourne $500 per month
Total rent expense, $6,000
Able Energy New York $500 per month
Total rent expense, $6,000
NOTE 12 FRANCHISING
The Company sells franchises permitting the operation of a franchised business
specializing in residential and commercial sales of fuel oil, diesel fuel,
gasoline, propane and related services. The Company will provide training,
advertising and use of Able credit for the purchase of product, among other
things, as specified in the Agreement. The franchisee has an option to sell the
business back to the Company after two (2) years of operations for a price
calculated per the Agreement.
The Company signed its first franchise agreement in September 2000. On June 29,
2001, PriceEnergy.Com Franchising, LLC, a subsidiary, signed its first franchise
agreement. The franchisee will operate a B-franchised business, using the
proprietary marks and a license from PriceEnergy.Com, Inc. and will establish
the presence of the franchisee's company on the PriceEnergy Internet Website.
The franchisee will have the exclusive territory of Fairfield County,
Connecticut as designated in the agreement. No other franchise agreements have
been signed.
F-24
NOTE 13 RELATED PARTY TRANSACTIONS
The following officers of this Company own stock in the subsidiary,
PriceEnergy.Com, Inc., which they incorporated in November 1999.
Former Chief Executive Officer 22.6%
President 4.0%
Chief Operating Officer 5.5%
No capital contributions have been made by these officers (See Notes 1 and 8).
The Company has entered into a consulting agreement with its former Chief
Executive Officer ("CEO") on February 16, 2005 (see note 21). The agreement is
for two years and provides for annual fees of $60,000 to be paid in monthly
installments. In addition the former CEO received options to purchase 100,000
shares of the Company's common stock at $4.00 per share. The options were
exercised on July 7, 2005, at which time the closing price was $16.89. The
former CEO was paid $20,769 related to this agreement during the year ended June
30, 2005.
During the year ended June 30, 2005 the Company paid $20,000 in legal fees to a
firm in which one of the members of the Board of Directors is a partner.
All American Plazas, Inc., currently owns approximately 38% of the Company's
outstanding shares. In addition, a director and General Counsel of the Company
and one of the Company's vice presidents have related interests in All American
Plazas, Inc.
The Company entered into a Stock Purchase Agreement on June 16, 2005 ("Purchase
Agreement") with all of the shareholders (the "Sellers") of All American Plazas,
Inc. ("All American") in connection with our acquisition of All American. The
transaction is expected to be consummated in October 2005, upon receipt of the
required approval by our stockholders.
At the closing, The Company will deliver to the Sellers 11,666,667 shares of our
restricted common stock, par value $.001 per share, at $3.00 per share for an
aggregate purchase price of $35,000,000. In addition, at the closing, we will
deliver to certain of the Sellers a number of shares of our restricted common
stock equal to the number of shares of our common stock owned by All American as
of the closing date.
All American recently consummated a financing that, if the acquisition of All
American is consummated, will impact the Company. Pursuant to the terms of the
Securities Purchase Agreement dated June 1, 2005 (the "Agreement") among All
American and certain purchasers, the purchasers loaned All American an aggregate
of $5,000,000, evidenced by Secured Debentures also dated June 1, 2005 (the
"Debentures").
If the Company consummates the acquisition of All American, upon such
consummation, The Company will assume the obligations of All American under the
Agreement, the Debentures and the AIR Agreement through the execution of a
Securities Assumption, Amendment and Issuance Agreement, Registration Rights
Agreement, Common Stock Purchase Warrant Agreement and Variable Rate Secured
Convertible Debenture Agreement, each between the Purchasers and us (the "Able
Energy Transaction Documents").
In connection with two loans entered into by the Company in May 2005 (see Note
5), fees in the amount of $167,500 were paid to Unison Capital Corporation, a
company in which a vice president of Able Energy has a related interest. This
individual also has a related party interest to All American Plazas, Inc., the
Company's largest shareholder.
Subsequent to the payments being made and based on discussions with Unison
Capital Corporation it was determined the $167,500 was an inappropriate payment
to a related party and Unison Capital Corporation has agreed to reimburse this
amount to the Company over a twelve month period beginning in October 2005. The
charge had been appropriately classified as deferred finance charges in the
balance sheet and therefore will have no effect on the Company's statement of
operations.
F-25
NOTE 14 STOCK OPTIONS AND WARRANTS
The Able Energy, Inc. 1999 Employee Stock Option Plan, as amended, permits stock
option awards up to 700,000 shares of the Company's common stock to be granted
to directors, employees and consultants of the Company. There are 270,750
options remaining available for issuance under this plan at June 30, 2005.
The Able Energy, Inc. 2000 Employee Stock Purchase Plan, which was approved by
the stockholders on June 23, 2000, permits employees to purchase up to 350,000
shares of the Company's common stock. There are 350,000 shares remaining
available for issuance under this plan at June 30, 2005.
The Able Energy, Inc. 2000 Stock Bonus Plan, which was approved by the
stockholders on June 23, 2000, permits restricted stock awards up to 350,000
shares of the Company's common stock to be granted to directors, employees and
consultants of the Company. There are 338,000 shares remaining available for
issuance under this plan at June 30, 2005.
The Able Energy, Inc. 2005 Incentive Stock Plan, which was approved by the
stockholders on May 25, 2005, permits stock option, common stock and restricted
commons stock awards up to 1,000,000 shares of the Company's common stock to be
granted to directors, employees and consultants of the Company. There are
1,000,000 shares remaining available for issuance under this plan at June 30,
2005.
There was compensation expense of approximately $117,000 recorded from stock
options under APB 25 for the year ended June 30, 2005. On May 5, 2005, the
Company granted 50,000 vested options each to two employees at an exercise price
15% below market vesting immediately.
A summary of the Company's stock option activity, and related information for
the years ended June 30, follows:
Weighted-Average Number of Weighted-Average
Options Exercise Price Exercisable Exercise Price
--------- -------------- ----------- --------------
Outstanding June 30, 2002 235,840 $ 3.15 230,340 $ 3.11
Granted 50,000 3.16
---------
Outstanding June 30, 2003 285,840 3.15 283,090 2.48
Granted 50,000 2.55
Expirations (47,840) 3.25
---------
Outstanding June 30, 2004 288,000 3.03 288,000 3.03
Granted 200,000 5.34
Exercised (194,000) 2.52
Expirations (56,000) 5.00
---------
Outstanding June 30, 2005 238,000 4.92 238,000 4.92
=========
Weighted-average fair value of options granted during the years ended June 30,
2005 and 2004, are as follows:
2005 2004
-------------- ---------------
Where exercise price
equals stock price - -
Where exercise price
exceeds stock price $ 2.05 $ 2.04
Where stock price
exceeds exercise price $ 7.60 -
============== ===============
F-26
NOTE 14 STOCK OPTIONS AND WARRANTS (CONTINUED)
Following is a summary of the status of stock options outstanding at June 30,
2005:
Outstanding and Exercisable Options
---------------------------------------------------------
Weighted-Average
Exercise Price Range Number Outstanding Remaining Weighted-Average
at 6/30/05 Contractual Life Exercise Price
-------------------- ------------------ ------------------- ----------------
$ 2.25 - $ 3.16 38,000 2.9 $ 2.73
$ 4.00 - $ 6.68 200,000 4.8 5.34
------------------ ------------------- ----------------
238,000 4.5 $4.92
==================
A summary of the Company's stock warrant activity, and related information for
the years ended June 30, follows:
Weighted-Average Number of Weighted-Average
Warrants Exercise Price Exercisable Exercise Price
------------- ------------- ------------- -------------
Outstanding June 30, 2002 150,000 $ 4.67 150,000 $ 4.67
Grants 170,000 5.00
-------------
Outstanding June 30, 2003 320,000 4.85 320,000 4.85
Expirations (40,000) 4.00
-------------
Outstanding June 30, 2004 280,000 4.97 280,000 4.97
Exercised (91,213) 5.25
Expirations (188,787) 4.83
-------------
Outstanding June 30, 2005 - - - -
=============
NOTE 15 COMPENSATED ABSENCES
There has been no liability accrued for compensated absences; as in accordance
with Company policy, all compensated absences, accrued vacation and sick payment
must be used by December 31st. At June 30, 2005, any amount for accrual of the
above is not material and has not been computed.
NOTE 16 NON-CASH EXPENSES
The following transactions during the year ended June 30, 20005 resulted in no
cash being received or expended:
Stock Based Compensation - Directors $ 103,200
Stock Based Compensation - Employees 117,000
F-27
NOTE 17 PRODUCT INFORMATION
The Company sells several types of products and provides services. Following are
revenues by product groups and services:
CONTINUING OPERATIONS FISCAL YEAR ENDED JUNE 30,
------------------------------------------------
2005 2004 2003
------------ ------------- -------------
Home Heating Oil #2 $33,979,796 $23,674,243 $24,253,490
Commercial Oil #2 4,742,098 2,949,654 1,878,937
Gasoline, Diesel Fuel, Kerosene,
Propane & Lubricants 20,060,543 13,122,536 13,775,172
Equipment Sales & Services 1,364,796 1,122,240 1,231,297
Installation Repairs & Services 1,800,116 1,978,450 2,226,132
------------ ------------- -------------
Net Sales $61,947,349 $42,847,123 $43,365,028
============ ============= =============
NOTE 18 SALE OF SUBSIDIARY
On March 1, 2004, the Company sold the operations of its subsidiary, Able
Propane, LLC. The sale consisted of inventory and equipment (the operating
assets of the subsidiary). The total price of the sale was $4,400,000, of which
$3,000,000 was received in cash and was used as a reduction of long-term debt in
the amount of $1,284,737. There was also payment of $135,000 of Officer Loans
and $325,000 of Legal Fees. The Company had a cash increase of $1,255,268.
The Company received a Note receivable for $500,000, principal balance of this
Note payable in full on the fourth anniversary of the closing, March 1, 2008.
The Note bears interest at 6% per annum ($30,000 per year), payable quarterly
within 45 days of the closing of each fiscal quarter.
The Company also has signed a non-competition agreement and will receive a total
payment of $900,000, payable in $225,000 installments due one, two, three and
four years from the date of closing. $225,000 was received in March 2005.
NOTE 19 DISCONTINUED OPERATIONS
On March 1, 2004, the Company sold the operating assets of its subsidiary, Able
Propane, LLC (see Note18), and discontinued the sale of propane fuel in the
State of New Jersey.
Following the sale, the results of Able Propane, LLC were reported in the
Company's Consolidated Statements of Income and Cash Flows, separately, as
discontinued operations. In accordance with Generally Accepted Accounting
Principals (GAAP), the Consolidated Statement of Financial Position has not been
restated. Able Propane, LLC represented the primary vehicle by which the Company
engaged in the sale of propane fuel.
Summarized financial information for discontinued operations for the year ended
June 30 are as follows:
2004 2003
---------- ----------
Total Revenues $1,817,902 $2,888,174
---------- ----------
Income (Loss) from Discontinued
Operations - Net of Tax (57,630) 148,830
Gain on Sale of Subsidiary - Net of Tax 2,668,490 -
---------- ----------
Total Income From Discontinued
Operations $2,610,860 $148,830
---------- ----------
Total Assets $ - 0 - $2,940,622
Total Liabilities - 0 - 2,603,736
---------- ----------
Net Assets of Discontinued Operations $ - 0 - $ 336,886
========== ==========
Able Propane, LLC is treated as a Partnership for tax purposes and pays no
income tax. As such, there is no provision for income taxes. Able Propane, LLC
had no assets or liabilities at June 30, 2004. The assets and liabilities after
the sale and collection of accounts receivable and payment of accounts payable,
which were transferred to the Company, were immaterial to the total assets and
liabilities of the Company.
F-28
NOTE 20 OTHER EXPENSES
On March 14, 2003, a fire and explosion occurred at the Company's facility in
Newton, New Jersey (see note 10). The Company submitted expenses for
reimbursement to their insurance carrier. The Company was reimbursed
approximately $1,041,000. Un-reimbursed expenses of $318,236 have been expensed
in the year ended June 30, 2005 and are classified as other expense on the
accompanying consolidated statement of operations.
NOTE 21 OTHER
In December 2004, the major shareholder and Company Chief Executive Officer
(CEO) signed a contract and received a deposit representing the sale of his 50%
plus interest in the Company. In the period ended March 31, 2005, this
individual has resigned as an Officer (CEO) and from the Board of Directors,
where he was Chairman of the Board.
NOTE 22 ALLOWANCE FOR DOUBTFUL ACCOUNTS
The following represents a summary of allowance for doubtful accounts for the
years ended June 30, 2005, 2004 and 2003:
For the Year Beginning Ending
Ended June 30, Balance Additions Deductions Balance
---------------- ----------- --------- ---------- --------
2003 $242,358 $164,752 $127,207 $279,913
2004 $279,913 $109,372 $197,063 $192,222
2005 $192,222 $163,663 $117,836 $238,049
NOTE 23 SUBSEQUENT EVENTS
On July 12, 2005, the Company consummated a financing with a group of lenders.
Pursuant to the terms of the Securities Purchase Agreement, the Company sold
variable rate convertible debentures in the amount of $2.5 million. The
debentures shall be repaid within two years from the date of issuance with
interest payable at a rate per annum equal to Libor, plus 4%, which on July 12,
2005 was 3.57% plus 4%, or 7.57%. The interest is payable quarterly on the first
of January, April, July, and October. The debentures may be converted at the
option of the purchasers into shares of the Company's Common Stock at a
conversion price of $6.50 per share. The amount of shares to be issued at such
conversion will be 384,618. In addition, the purchasers shall have the right to
receive five-year warrants to purchase 192,308 shares of Common Stock at $7.15
per share. The market value of the Company's Common Stock on July 12, 2005 was
$17.90 per share. The debenture conversion price of $6.50 is 36.31% of the
market value. Closing expenses related to this transaction totaled $305,000
included a $250,000 broker fee and $65,000 in various legal expenses.
On July 27, 2005, the Company made a loan of $1,730,000 to All American Plazas,
Inc., which is the largest shareholder of the Company. The funds were disbursed
from the $2.5 million raised from the sale of variable rate convertible
debentures discussed above. Under the note, the loan bears interest at 3.50% per
annum and is secured by the 1,000,000 shares of Able Energy, Inc. Common Stock
owned by All American Plazas, Inc. The interest rate of the Company on it's $2.5
million loan is 7.57% as noted above.
F-29
NOTE 24 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED
AND RESTATED)
2005 QUARTER
------------ FIRST SECOND THIRD FOURTH
(RESTATED) (RESTATED) (RESTATED) (RESTATED)
---------- ---------- ---------- ----------
Continuing Operations:
Revenues $ 8,217,476 $ 18,983,729 $ 23,664,402 $ 11,081,742
Gross Profit 552,988 1,785,862 2,741,169 834,745
Net Income (Loss) (942,411) 38,999 557,826 (1,834,505)
Net Income (Loss) Per Share:
Basic (0.47) 0.02 0.27 (0.79)
Diluted (0.47) 0.02 0.27 (0.79)
Weighted Average Shares Outstanding:
Basic 2,013,250 2,013,250 2,030,281 2,314,463
Diluted 2,013,250 2,038,786 2,052,481 2,314,463
2004 QUARTER
------------ FIRST SECOND THIRD FOURTH
(RESTATED) (RESTATED) (RESTATED) (RESTATED)
---------- ---------- ---------- ----------
Continuing Operations:
Revenues $ 6,495,839 $ 11,751,387 $ 16,636,243 $ 7,963,654
Gross Profit 877,775 1,385,071 2,829,091 487,717
Net Income (Loss) (1,359,230) (421,066) 437,499 (1,434,562)
Discontinued Operations:
Revenues 345,572 1,012,734 1,863,030 -
Net Income (Loss) (171,374) (190,450) 344,319 (40,125)
Gain on Sale of Subsidiary Operating Assets - - 2,866,490 -
Income (Loss) from Discontinued Operations (171,374) (190,450) 3,210,809 (40,125)
Net Income (Loss) Per Share:
Basic
Continuing Operations (0.68) (0.21) 0.22 (0.71)
Discontinued Operations (0.09) (0.09) 1.59 (0.02)
Diluted
Continuing Operations (0.68) (0.21) 0.22 (0.71)
Discontinued Operations (0.09) (0.09) 1.57 (0.02)
Weighted Average Shares Outstanding:
Basic 2,013,250 2,013,250 2,013,250 2,013,250
Diluted 2,013,250 2,013,250 2,040,588 2,013,250
2003 QUARTER
------------ FIRST SECOND THIRD FOURTH
(RESTATED) (RESTATED) (RESTATED) (RESTATED)
---------- ---------- ---------- ----------
Continuing Operations:
Revenues $ 5,896,411 $ 11,719,725 $ 18,196,202 $ 7,552,690
Gross Profit 1,026,664 1,904,433 3,073,377 455,159
Net Income (Loss) (763,837) 702,645 1,097,193 (1,069,193)
Discontinued Operations:
Revenues 325,813 722,872 1,283,263 556,206
Net Income (Loss) 12,380 200,135 (37,656) (26,029)
Net Income (Loss) Per Share (a)
Basic
Continuing Operations (0.38) 0.35 0.55 (0.53)
Discontinued Operations (0.01) 0.10 (0.02) (0.01)
Diluted
Continuing Operations (0.38) 0.34 0.53 (0.53)
Discontinued Operations (0.01) 0.10 (0.02) (0.01)
Weighted Average Shares Outstanding
Basic 2,003,831 2,006,855 2,009,814 2,012,708
Diluted 2,003,831 2,057,512 2,052,751 2,012,708
F-30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Able Energy, Inc.
Dated: April 11, 2007 By: /s/ Christopher P. Westad
-----------------------------------------
Christopher P. Westad
Acting Chief Executive Officer and President
(Principal Executive Officer)
Dated: April 11, 2007 By: /s/ Jeffrey Feld
------------------------------------
Jeffrey Feld
Acting Chief Financial Officer
(Principal Financial and Accounting Officer)
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Christopher P. Westad Acting Chief Executive Officer, April 11, 2007
----------------------------- President and Director
Christopher P. Westad (Principal Executive Officer)
/s/ Jeffrey Feld Acting Chief Financial Officer April 11, 2007
----------------------------- (Principal Financial Officer
Jeffrey Feld and Principal Accounting Officer)
/s/ Mark Barbera Director April 11, 2007
-----------------------------
Mark Barbera
/s/ Stephen Chalk Director April 11, 2007
-----------------------------
Stephen Chalk
/s/ Solange Charas Director April 11, 2007
-----------------------------
Solange Charas
/s/ Gregory D. Frost Director April 11, 2007
-----------------------------
Gregory D. Frost
/s/ Edward C. Miller, Jr. Director April 11, 2007
-----------------------------
Edward C. Miller, Jr.
/s/ Patrick O'Neill Director April 11, 2007
-----------------------------
Patrick O'Neill
/s/ Alan E. Richards Director April 11, 2007
-----------------------------
Alan E. Richards
17