American Power Group Corporation announced results for the third quarter ending June 30, 2016. Net sales decreased $32,000 or 6 percent to $524,000.
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CEO Lyle Jensen said: "While our overall third quarter was relatively flat, we are very pleased that vehicular dual fuel revenue continues to become a larger portion of our overall revenue.
"Domestic vehicular dual fuel revenue grew 383 percent over the prior year and our international dual fuel vehicular revenue grew 34 percent over the prior year quarter due to conversion activity in Mexico where aggressive actions are being taken to accelerate technologies that can improve their air quality.
On a year-to-date basis, domestic vehicular dual fuel revenue is up over 470 percent or close to $750,000 bolstered by our recent announcement of WW Transport surpassing the 100+ vehicular unit conversion milestone.
"Our domestic stationary oil/gas conversion revenue was down on a quarterly and year-to-date basis but we have seen a healthy increase of eighty drill rigs coming back on line at the mid-point of the fourth quarter which is encouraging as compared to the historical lows of the third quarter."
Net sales decreased $32,000 or 6 percent to $524,000 as compared to net sales of $556,000 for the three months ended June 30, 2015.
Due to increased oil reserves and a decrease in the growth rate of demand throughout certain parts of the world, the price of oil in the U.S. has dropped to below the $50 per barrel range which has resulted in a steady decrease in diesel prices during the three months ended June 30, 2016.
While natural gas prices at the pump have remained stable, the price spread between lower diesel prices and natural gas have tightened.
Because company's dual fuel technology displaces higher cost diesel fuel with lower cost and cleaner burning natural gas, the recent decrease in oil/diesel pricing has impacted the timing of dealer restocking orders and the implementation schedules of existing and prospective customers in the near term due to the current tighter price spread between diesel and natural gas.
North American stationary revenues for the three months ended June 30, 2016 were approximately $57,000 which was $328,00 or 85 percent lower as compared to revenue of $385,000 for the three months ended June 30, 2015. The decrease was primarily due to the decline in active drilling rigs in the oil and gas industry.
Domestic vehicular revenues for the three months ended June 30, 2016 increased $264,000 or 383 percent to $333,000 as compared to revenues of $69,000 for the three months ended June 30, 2015. The increase was attributable to an increase in follow-on fleet sales for the quarter.
International vehicular revenues for the three months ended June 30, 2016 increased $32,000 or 32 percent to $134,000 as compared to revenues of $102,000 for the three months ended June 30, 2015 which almost entirely related to one large order to company's Dominican Republic distributor. Revenue from the Trident NGL Services division was $0 for the three months ended June 30, 2016.
There were no sales for the three months ended June 30, 2015 as we entered this business segment during the September 2015 quarter.
During the three months ended June 30, 2016 company's gross loss was $182,000 or 35 percent of net sales as compared to a gross loss of $130,000 or 24 percent of net sales for the three months ended June 30, 2015.
The decrease in gross profit was primarily due to an increase in fixed overhead costs including capitalized software amortization and approximately $105,000 relating to company's Trident NGL Services division which had no revenue during the quarter.
Selling, general and administrative expenses for the three months ended June 30, 2016 increased $132,000 or 12 percent to $1,192,000 as compared to $1,060,00 for the three months ended June 30, 2015. The increase is due to the added expenses associated with company's Trident NGL services division.
During the three months ended June 30, 2016 the revaluation of company's warrant liability to fair value resulted in non-cash revaluation income of $6,000 as compared to $154,000 during the three months ended March 31, 2015.
During the three months ended June 30, 2016, interest and financing expense increased $140,000 or 169 percent to $224,000 as compared to $83,000 for the three months ended June 30, 2015, due to increased borrowings and interest rates for company's Trident NGL Services division. During the three months ended June 30, 2016, we recorded other income of $90,000 associated with a reduction in the net present value of company's lease settlement obligation.
Company's net loss for the three months ended June 30, 2016 increased $144,000 or 9 percent to a net loss of $1,453,000 or $(0.02) per basic share as compared to a net loss of $1,597,000 or $(0.03) per basic share for the three months ended June 30, 2015. The calculation of net loss per share available to Common shareholders for the three months ended June 30, 2016 reflects the inclusion of Convertible Preferred Stock quarterly dividends of $339,000 and the Series D beneficial conversion feature of $294,000.
The calculation of net income per share available for Common shareholders for the three months ended June 30, 2015 reflects the inclusion of quarterly Convertible Preferred Stock dividends of $291,000. ■