<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(Mark One)
 [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934


      FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                       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 0-19793

                           METRETEK TECHNOLOGIES, INC.
                 (Name of small business issuer in its charter)


               DELAWARE                                   84-1169358
   (State or other jurisdiction of                     (I.R.S. Employer
    incorporation or organization)                    Identification No.)

                   1675 BROADWAY, SUITE 2150, DENVER, CO 80202
          (Address of principal executive offices, including Zip Code)

                                 (303) 592-5555
                (Issuer's telephone number, including area code)

         Securities registered under Section 12(b) of the Exchange Act:
                                      None

         Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock, par value $.01 per share
                         Common Stock Purchase Warrants
                                (Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes /X/    No / /

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will 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-KSB or any amendment to
this Form 10-KSB. / /

The issuer's revenues for its most recent fiscal year ended December 31, 1999
were $19,365,196.

As of March 15, 2000, the aggregate market value of the shares of the issuer's
Common Stock, the only class of voting or non-voting common equity of the
registrant, held by non-affiliates was $54,042,975, based upon $15.75, the last
sale price of the Common Stock on such date as reported on the Nasdaq National
Market.

As of March 15, 2000, 5,003,678 shares of Common Stock were outstanding.

Transitional Small Business Disclosure Format (check one):  Yes / /  No  /X/

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None
<PAGE>   2
                           METRETEK TECHNOLOGIES, INC.

                                   FORM 10-KSB
                      FOR THE YEAR ENDED DECEMBER 31, 1999

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                          Page
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<S>                                                                                        <C>
PART I       ITEM 1.      DESCRIPTION OF BUSINESS.........................................   2
             ITEM 2.      DESCRIPTION OF PROPERTY.........................................  31
             ITEM 3.      LEGAL PROCEEDINGS...............................................  32
             ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............  32
PART II      ITEM 5.      MARKET FOR COMMON EQUITY AND RELATED
                            STOCKHOLDER MATTERS...........................................  34
             ITEM 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                            FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................  36
             ITEM 7.      FINANCIAL STATEMENTS............................................  43
             ITEM 8.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                            ON ACCOUNTING AND FINANCIAL DISCLOSURE........................  43
PART III     ITEM 9.      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
                            CONTROL PERSONS; COMPLIANCE WITH SECTION
                            16(a) OF THE EXCHANGE ACT.....................................  44
             ITEM 10.     EXECUTIVE COMPENSATION..........................................  46
             ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                            AND MANAGEMENT................................................  50
             ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................  53
             ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K................................  54
SIGNATURES................................................................................  58
INDEX TO FINANCIAL STATEMENTS.............................................................  F-1
EXHIBIT INDEX.............................................................................  X-1
</TABLE>
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                   SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

         This Annual Report on Form 10-KSB contains "forward-looking statements"
within the meaning of and made under the safe harbor provisions of Section 27A
of the Securities Act of 1933 (the "Securities Act") and Section 21E of the
Securities Exchange Act of 1934 (the "Exchange Act"). From time to time, we may
publish or otherwise make available forward-looking statements of this nature.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, future events or performance, and underlying assumptions and
other statements, which are not historical facts. The words "may", "could",
"should", "will", "project", "intend", "continue", "believe", "anticipate",
"estimate", "expect", "plan", "intend" and similar expressions are intended to
identify forward-looking statements. Examples of forward-looking statements
include statements regarding, among other matters, our plans, intentions,
beliefs and expectations about the following:

         -        Our future prospects, including our revenues, income, margins,
                  profitability, cash flow, liquidity, financial condition and
                  results of operations;

         -        Our business plans and strategies;

         -        The risks and uncertainties related to our business;

         -        Our products and services, market position, market share,
                  business, growth strategies and strategic relationships;

         -        Industry trends, competitive conditions and market conditions,
                  segments and trends;

         -        Our capital requirements and capital resources;

         -        The sufficiency of funds from operations and available
                  borrowings to meet our future working capital and capital
                  expenditure needs;

         -        The development of a market for the products and services of
                  our Internet-based energy information business;

         -        Our ability to successfully develop and operate an
                  Internet-based business, to successfully design, create and
                  sell our products and services over the Internet and to
                  successfully meet our Internet strategy objectives; and

         -        Our ability to finance our Internet-based business.

         These forward-looking statements are based on the current plans,
intentions, beliefs and expectations of management as well as assumptions made
by and information currently available to management. You are cautioned not to
place undue reliance on these forward-looking statements. Forward-looking
statements are not guarantees of future performance or events. Forward-looking
statements are subject to substantial risks and uncertainties. Any or all of
these forward-looking statements could turn out to be wrong. Forward-looking
statements will be affected by inaccurate assumptions we might make or by known
or unknown risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by the forward-looking statements.
These risks and uncertainties include, but are not limited to, the factors
described under "Additional Factors That May Affect Our Business and Future
Results" in Item 1 below, as well as other risks and uncertainties discussed
elsewhere in this Report, in documents incorporated by reference in this Report
and in our other reports and filings with the Securities and Exchange Commission
("SEC"). We undertake no duty or obligation to update or revise any
forward-looking statements for any reason, whether as a result of new
information, future events or otherwise.
<PAGE>   4
                                     PART I


ITEM 1.  DESCRIPTION OF BUSINESS

BACKGROUND

         Metretek Technologies, Inc. and its subsidiaries ("Metretek" or "we")
is a diversified provider of energy measurement products, services and systems
to the energy industry. Metretek was incorporated in Delaware on April 5, 1991.
In June 1999, Metretek changed its name from "Marcum Natural Gas Services, Inc."
to Metretek Technologies, Inc. Metretek currently conducts its operations
through three subsidiaries:

         -        PowerSpring, Inc. ("PowerSpring"), based in Denver, Colorado,
                  which operates Metretek's Internet-based business to business
                  energy services hub.

         -        Metretek, Incorporated ("Metretek Florida"), based in
                  Melbourne, Florida, which designs, manufactures and sells
                  electronic devices and systems, commonly referred to as
                  automatic meter reading systems ("AMRs"), that automatically
                  monitor, record and transmit data from natural gas custody
                  transfer meters, electronic flow correctors and computers, and
                  other energy measurement products and services.

         -        Southern Flow Companies, Inc. ("Southern Flow"), based in
                  Lafayette, Louisiana, which provides a wide variety of natural
                  gas measurement services principally to producers and
                  operators of natural gas production facilities.

         Until 1997, we had also operated in the compressed natural gas ("CNG")
industry through Marcum Denver, Inc. (formerly named Marcum Fuel Systems, Inc.)
("Marcum Denver"). Marcum Denver was our wholly-owned subsidiary which engaged
in the design, manufacture and sale of CNG refueling station equipment. In June
1997, Marcum Denver discontinued its operations by selling substantially all of
its assets, because growth in the CNG industry was not meeting management's
expectations.

         During 1998, we decided to discontinue the operations of Marcum Gas
Transmission, Inc. ("MGT"). We formed MGT as a wholly-owned subsidiary to
acquire or finance the acquisition of natural gas assets through private
programs, and then to manage and maintain a small ownership interest in those
programs. Our decision to discontinue MGT's operations was based on the
declining prospects of the markets for these types of programs and in order to
enable us to focus on operations with better potential. In December 1997, MGT
sold one-third of its interests in two of the three programs it then managed,
and in March 1998, MGT liquidated the third program. We do not intend to form or
manage any new programs, although MGT will continue to manage the remaining two
programs that operate natural gas related assets until we sell MGT's interest in
those programs or liquidate the programs.

BUSINESS STRATEGY

         Our business strategy is to position ourself as an integrated provider
of data management products and services which enhance the flow of information
to the energy industry. To date, our products and services have been aimed
primarily at the natural gas industry. The natural gas industry is characterized
by relatively abundant domestic reserves, increasing demand, volatile prices and
regulatory changes such as those resulting from the deregulation of the
interstate pipeline industry. We intend to provide our products and services to
other segments of the energy industry. The energy industry generally is
undergoing fundamental regulatory and structural changes and trends. Our
strategy is to acquire, develop and operate businesses that are positioned to
take advantage of these trends.


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         In implementing our business strategy, we have made several important
acquisitions:

         -        In 1993, we acquired substantially all of the assets of the
                  Southern Flow Companies division of Weatherford International
                  Incorporated ("Weatherford").

         -        In 1994, we acquired Metretek Florida.

         -        In 1998, we acquired the electronic corrector business from
                  American Meter Company ("American Meter").

         -        In March 2000, we acquired Mercator Energy Incorporated
                  ("Mercator").

While we regularly engage in discussions relating to potential acquisitions and
dispositions, we have no present agreements or commitments with respect to any
material acquisition or disposition.

         We have recently focused a major part of our business strategy upon the
development of our Internet-based business, PowerSpring. In furtherance of this
Internet-based business strategy, we have entered into a strategic relationship
with Scient Corporation ("Scient"), a leading eBusiness systems and strategy
advisor, and we have acquired Mercator. The goal of PowerSpring is to provide
comprehensive energy consumption data and a broad array of additional
information designed to facilitate the purchase and management of natural gas by
commercial users of natural gas. PowerSpring also intends to provide commercial
electricity users with a mechanism to manage their energy needs and reduce their
electricity costs. Our initial focus is the development of a website to provide
a single source of information and services for commercial energy users.

RECENT DEVELOPMENTS


         On February 4, 2000, we completed a $14,000,000 private placement (the
"Units Private Placement") of 7,000 units ("Units"), including 1,450 Units we
issued on December 9, 1999. Each Unit consisted of 200 shares of Common Stock, 1
share of Series B Preferred Stock and warrants ("Unit Warrants") to purchase 100
shares of Common Stock. For a description of the material terms of these
securities, see "Item 5. Market for Common Equity and Related Stockholder
Matters - Recent Sales of Unregistered Securities." In the Units Private
Placement, we issued 1,400,000 shares of Common Stock, 7,000 shares of Series B
Preferred Stock and Unit Warrants to purchase 700,000 shares of Common Stock.
The Units Private Placement was approved and ratified by our stockholders at a
special meeting of stockholders held on February 3, 2000. The Units were issued
to institutional investors and other "accredited investors" (as defined under
Regulation D under the Securities Act).

         The primary purpose of the Units Private Placement was to raise capital
to enable us to develop the Internet-based business of PowerSpring. A portion of
the proceeds was also used to repay outstanding indebtedness, and the remaining
proceeds will be used for general corporate and working capital purposes,
including potentially providing the funds to finance an acquisition opportunity,
if one were to arise.

         On March 17, 2000, we acquired Mercator through a merger with a
wholly-owned subsidiary of PowerSpring. Mercator is a Denver-based natural gas
services and brokerage company that acts as an independent broker-agent for both
producers and users. This acquisition will provide PowerSpring with Mercator's
expertise in the area of energy procurement, which is an important element in
our Internet business strategy.

         In consideration for the acquisition of Mercator, we delivered to John
A. Harpole, the President and sole shareholder of Mercator prior to the
acquisition, $408,334 in cash, a $741,666 non-negotiable promissory note payable
by PowerSpring over two years and secured by a general security interest in the
assets of PowerSpring, and 2,500,000 shares of common stock of PowerSpring.
Subsequent to the acquisition of Mercator, we own 87.5% of the outstanding
shares of PowerSpring common stock, Mr. Harpole owns 12.5% of the outstanding
shares of PowerSpring common stock, and Mercator has become a wholly-owned
subsidiary of PowerSpring. We, PowerSpring and Mr. Harpole entered into a
stockholders agreement that addresses certain rights related to Mr. Harpole's
PowerSpring common stock, including a right of first refusal held by us for any
sale of PowerSpring

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common stock by Mr. Harpole, co-sale rights and similar rights upon PowerSpring
transactions, registration rights, and a right for Mr. Harpole to put his shares
of PowerSpring common stock back to PowerSpring at an appraised value for cash
payable over three years if PowerSpring has not completed an initial public
offering and has not sold its business within two years.

         PowerSpring also entered into a two-year employment agreement with Mr.
Harpole. Mr. Harpole will serve as the Executive Vice President, Chief Operating
Officer and a director of PowerSpring. Under the employment agreement, Mr.
Harpole received an option to purchase 60,000 shares of our Common Stock,
exercisable at $17.88 per share, and an option to purchase 200,000 shares of
PowerSpring common stock, exercisable at $.30 per share. Mr. Harpole agreed not
to compete with the business of PowerSpring for one year after the termination
of his employment.

         In September 1999, we had entered into a consulting and joint venture
agreement with Mercator, under which Mercator provided energy procurement
services to us on a consulting basis. In connection with the acquisition of
Mercator, the consulting and joint venture agreement, and a related stock option
agreement, were terminated.


POWERSPRING, INC.

         PowerSpring is our Internet-based business to business subsidiary. We
formed PowerSpring as a wholly-owned subsidiary incorporated in Delaware in
August 1999 under the name "Metretek Internet Services, Inc." In March, 2000, we
reorganized and expanded our Internet business by merging our wholly-owned
subsidiary TotalPlan, Inc. ("TotalPlan") into PowerSpring and by acquiring
Mercator. We currently conduct all our Internet-based business through
PowerSpring. As of the date of this Report, we own 87.5% of the capital stock of
PowerSpring, and PowerSpring owns all of the outstanding capital stock of
Mercator.

         Our Internet-based business objective is to be the leading Internet
provider of energy information products and services. We are developing our
Internet-based business to enable us to take our measurement information
products, services and data management technologies to a broader market of end
users of natural gas and electricity by creating a comprehensive market place on
the Internet for energy consumers and suppliers to take advantage of deregulated
energy markets. The initial focus of our Internet-based business strategy is to
develop and launch an Internet-based transactional website. After we implement
our Internet-based business strategy, we will continue to operate our Southern
Flow and Metretek Florida businesses. The technology requirements of our
Internet-based business will include automatic meter reading devices that will
be manufactured by Metretek Florida, and thus may enhance our revenues from our
Metretek Florida operations, depending on how we fix our revenue and pricing
models for our PowerSpring products and services.

         In September 1999, in furtherance of our Internet-based business
strategy, we entered into an agreement with Scient. Under the Scient agreement,
Scient is assisting and advising us in designing, developing and implementing a
viable Internet-based business strategy. Scient is a leading consultant and
advisor to businesses exploring their Internet business capabilities. We
estimate that our total costs associated with the services contemplated by the
Scient agreement will be between $6,000,000 and $8,000,000. Under the Scient
agreement, Scient is assisting us in:

         -        the conception of a viable Internet-based business strategy;

         -        the architecture of a functional and scalable transactional
                  based website;

         -        the design, engineering and development of the website;

         -        the development, selection and procurement of all applicable
                  operating software and hardware;

         -        the branding and marketing strategy for the Internet-based
                  business; and

         -        the operational structure, management and staffing of the
                  Internet-based business.


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         Background of our Internet-based business strategy. Historically, the
primary segment of Metretek Florida's business has been the sale of AMR
equipment and related software to its customers, primarily natural gas utilities
or combined natural gas/electric utilities. Typically, these customers would
purchase Metretek Florida's AMR equipment and software for installation on the
meters of their large, industrial natural gas customers.

         In 1985, the Federal Energy Regulatory Commission ("FERC") issued its
Order No. 436 that initiated deregulation of the interstate natural gas
transportation markets. This order was followed by other FERC orders, including
FERC Order No. 636, that substantially completed deregulation of the interstate
gas markets. As a result of the FERC rulings and various state level rulings and
legislation, most United States industrial and commercial natural gas customers
have, for some time, been legally able to choose a supplier of natural gas other
than their local natural gas utility. A customer that chooses to purchase
natural gas from a source other than its local utility is characterized by the
local utility as a "transportation" customer, or a customer engaged in
"deregulation purchases" of natural gas. A "transportation" customer
periodically contracts with one or more suppliers of natural gas to provide its
supply of natural gas and pays the local utility a transportation fee to
transport the natural gas from the "city gate" across the utilities distribution
system to the customer's facility. Often, the key benefit to the transportation
customer is a lower net cost of natural gas.

         A substantial percentage of industrial natural gas users in the United
States are "transportation" customers that are currently participating in the
benefits of a deregulated natural gas market, while only a very small percentage
of commercial gas users are transportation customers. We believe this largely
explains why the average natural gas prices paid by commercial customers are
higher than those paid by industrial customers, as discussed below. We also
believe that commercial natural gas customers have been precluded from
participating in the deregulated market primarily as a result of both economic
and expertise barriers to market entry. The primary goal of our eBusiness is to
remove these barriers to provide a large percentage of the commercial customer
market access to the deregulated natural gas market, as well as the commercial
electricity market.

         Deregulation of natural gas provides us with a market opportunity. A
1998 study published by the Energy Information Administration discloses that the
average natural gas burner tip cost paid by industrial users in 1997 was $3.14
per MMBTU, compared to the average cost paid by commercial natural gas customers
of $5.48 per MMBTU. Our Internet-based business strategy includes the concept of
introducing a product to the commercial natural gas market that will allow
commercial natural gas customers to substantially narrow the margin between
average commercial natural gas costs versus average industrial natural gas
costs.

         Our Internet-based business solution is to eliminate the primary
barriers to entry for commercial natural gas customers. While industrial natural
gas customers have been benefiting from deregulating natural gas markets,
commercial users of natural gas have not been. We believe commercial customers
of natural gas have been unable to benefit from deregulated markets largely as a
result of economic and expertise barriers.

         Our primary Internet-based business product is being designed to
provide a complete turn-key solution for the commercial natural gas customer and
to reduce or eliminate many of the market entry barriers. We anticipate that
this Internet-based business product will not require any up-front capital
investment by the customer, will be seamless in its application to the customer,
and will be perceived by the customer as having a small overall cost compared to
the potential savings in energy costs. We expect customers to realize a savings
in energy costs. In addition, customers will receive access to current and
historical value added consumption reports through a content and function
enriched website.

         Application of our Internet-based business strategy to the electricity
markets.The initial focus of PowerSpring will be the natural gas market, which
has been almost fully deregulated. However, the historical structure and
operating mechanics of the electricity markets are very similar to the natural
gas markets. Our AMR devices and software management programs are ideal for
application in the electricity markets. In addition, the domestic electricity
markets are about three times the size of the domestic natural gas markets.

         Deregulation of the electricity markets, while lagging behind the
deregulation of natural gas markets, but is progressing. We are aware of at
least 29 states that have either already deregulated their electricity markets,
have passed legislation to implement deregulation, or have active pilot
deregulation programs in place. We believe all of the remaining states are
currently considering some form of deregulation of electricity markets.


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         We believe that the opportunities to create savings for customers are
potentially larger in the electricity markets than in the natural gas markets.
We also expect that many of our natural gas customers will add their electricity
needs to our PowerSpring program as their electricity markets become
deregulated.

         Timing and funding of Internet-based business project. Based on our
current schedule, we anticipate launching an operable, transaction-based
Internet-based business website in June, 2000.

         We estimate that this initial development phase of PowerSpring will
require aggregate expenditures of between $6,000,000 and $8,000,000, consisting
of consulting fees and expenses payable to Scient and costs of acquiring the
requisite technology, including hardware and software, as well as research and
development costs. Through December 31, 1999, these costs were approximately
$1.5 million. We expect that after this initial development stage is completed
and our website is launched, the further development and growth of PowerSpring,
including staffing, organizational and start-up expenses, marketing costs and
additional capital expenditures, will require significant additional funds. To
develop and expand PowerSpring, we will need to raise significant additional
funds beyond the proceeds of the Units Private Placement, from the proceeds of
public or private equity financing, debt financing or from other sources.

         We intend to raise any needed additional capital to fund the
development and operations of PowerSpring primarily through financing at the
PowerSpring level. However, depending upon the availability of capital, market
conditions, our consolidated operations and the operations of PowerSpring, we
may also or instead raise additional capital at the Metretek level. For example,
depending on market conditions and other factors we deem appropriate, we may
call our outstanding publicly trading warrants ("Dividend Warrants") for
redemption. Due to the trading price of our Common Stock, as of the date of this
Report we have the right, upon 30 days notice, to call the Dividend Warrants for
redemption at a redemption price of $.01 per Dividend Warrant, and we will
continue to have this redemption right as long as the closing sale price of the
Common Stock as reported on the Nasdaq National Market equals or exceeds $6.50
per share. We expect that, subject to market conditions, most or all Dividend
Warrants will be exercised if we call them for redemption, resulting in gross
proceeds of up to $3.5 million to us.

         Our capital raising will be subject to the consent of our lender on our
credit facility, if our credit facility is then in effect. In addition,
depending on how it is structured, our capital raising could require the consent
of the holders of our Series B Preferred Stock. We cannot assure you that
additional funds will be available to us in the future or that, if available,
additional funds can be obtained on terms favorable to us, and on terms
acceptable to our lender, if its consent is required, and on terms acceptable to
the holders of our Series B Preferred Stock, if their consent is required. In
addition, we can not assure you that any capital which is available to us will
be sufficient to facilitate this successful operation of PowerSpring. Our
inability to raise sufficient additional funds, beyond the proceeds of the Units
Private Placement, to meet the capital requirements of PowerSpring could have a
material adverse effect on our business, financial condition and results of
operations.


METRETEK, INCORPORATED

         We acquired Metretek Florida in 1994. Metretek Florida was founded in
1977 in Melbourne, Florida as a developer, manufacturer and marketer of
automated systems for monitoring and recording energy consumption. Metretek
Florida's primary focus at present is in the natural gas metering industry.

         Products. Metretek Florida's manufactured products fall into three
categories: remote data collection products; electronic corrector products; and
application-specific products. Within these categories, Metretek Florida's
products are often customized to fit the needs of its customers.

         Remote data collection products, also referred to as AMRs, attach to
existing natural gas meters and correctors. These devices are designed to
automatically collect and transmit metering data according to a schedule preset
by the customer. The AMR is an electronic printed circuit board assembly
designed and programmed to interface with an energy meter at the point of energy
consumption. The electronic board is enclosed in an assembly that attaches to
the energy meter. The energy consumption data collected by the AMR is then sent
to a Metretek Florida proprietary database consisting of a software system
running on a centrally located personal computer or

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computer network maintained at the customer's central operations center for
further processing. Communications from the AMR to the database are generally
achieved through an existing voice grade telephone line, although cellular
telephone and radio are used when telephone lines are either not available or
are not cost-effective. Depending upon the particular features of the AMR, the
data collection may be time stamped with sufficient frequency to allow the
customer to perform critical aspects of gas flow management such as nomination,
delivery, balancing, meter indexing and billing.

         As a result of the strategic acquisition of assets from American Meter
in May 1998, Metretek Florida offers a complete line of natural gas volume
electronic corrector products. These corrector products include all or some of
the following functions:

         -        Pressure and temperature transducers to accomplish real time
                  correction of meter volumes for variations in ambient
                  temperature and pipeline pressure;

         -        Microprocessor and memory for calculation of final gas volumes
                  based upon AGA specified formulas, and for data storage;

         -        Full remote data collection capabilities;

         -        Users definable alarm detection and fault limits;

         -        User definable control features such as flow control, pipeline
                  pressure monitoring and shutdown, odorant injection;

         -        Automatic self-calibration features;

         -        Compatibility with numerous volumetric meters; and

         -        Capability of providing corrector features for multiple meters
                  simultaneously.

         In addition to the two primary product lines referred to above,
Metretek Florida also manufactures "application-specific" products designed for
certain market niches. These include cathodic protection monitors, used to
monitor rectifier and cathodic protection system failure, and gas pipeline
pressure monitors.

         Services. In addition to its manufactured product lines, Metretek
Florida also provides certain services to its customers. Metretek Florida offers
post-sale support services which help create and maintain customer satisfaction
and loyalty. Metretek Florida has recently commenced offering "energy data
collection and management services" under the trade name "TotalPlan(TM)" for
customers who are unable or unwilling to make the investment required to own a
Metretek Florida system. In this turn-key service, Metretek Florida provides and
installs the required remote data collection hardware, collects and formats the
remote data in Melbourne, Florida, and then sends the data electronically to the
customer for a per month or per communication fee. Management believes this
service will help Metretek Florida penetrate the commercial account AMR markets.

         In 1997, Metretek Florida commenced offering contract manufacturing of
electronic circuit boards by acquiring Sigma VI, Inc. ("Sigma VI"). Metretek
Florida expanded this business in June 1998 by acquiring the business and assets
of Quality Contract Manufacturing, Inc. ("QCMI"). Sigma VI and QCMI were two
small contract manufacturers of electronic circuit board and cable assemblies
located in Melbourne, Florida. Metretek Florida made these acquisitions to gain
control of the quality and timeliness of Metretek Florida's manufactured circuit
boards and subassemblies and to diversify and expand the business of Metretek
Florida. With the automated equipment and experienced personnel acquired,
Metretek Florida is able to offer contract manufacturing to local electronics
manufacturers who have high quality, short run, quick turnaround requirements.

         A critical element of Metretek Florida's product line is its data
collection and management capability. With the exception of the Sigma VI
products, virtually all of Metretek Florida's products are integrated with
Metretek Florida's database software package, the DC 2000 system. This system
provides substantial flexibility for

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the generation of reports in formats useful for Metretek's customers to perform
data management functions. As a result of the acquisition of the American Meter
electronic corrector product line, Metretek Florida and American Meter are
working towards the cross-functionality of certain of their products in an
effort to enhance data management by Metretek Florida's customers.

         Markets. Historically, Metretek Florida's AMR products have been
marketed principally to natural gas local distribution companies ("LDCs").
Typically, LDCs install these devices in conjunction with custody transfer
meters on their larger customers for the purpose of meeting deregulation
requirements. Sixty of the largest one hundred LDCs in North America currently
utilize Metretek Florida systems to monitor and record the natural gas
consumption of their industrial and commercial accounts. The timely and accurate
information provided by the Metretek Florida system is used by the operations,
engineering, natural gas supply, marketing, customer service and billing
departments of the LDC. In the future, Metretek Florida intends to focus its
marketing efforts directly toward the commercial and industrial users of natural
gas and electricity. Markets for the electronic corrector products are much
broader and include not only LDCs and their commercial and industrial customers,
but also natural gas transportation and distribution companies, natural gas
gatherers and processors, natural gas producers and operators, and natural gas
brokers.

         The U.S. market for remote data collection products for natural gas
meters consists of three classes of natural gas users:

         -        Industrial users, consisting of the largest 250,000 domestic
                  users of natural gas, such as steel mills, glass manufacturing
                  plants, and natural gas fired power generator plants;

         -        Commercial users, consisting of approximately 4,000,000
                  natural gas customers, such as multi-family apartment
                  complexes, restaurants, factories and other customers with
                  multiple locations within a relatively confined area; and

         -        Residential users, which are the smallest users and include
                  primarily residential single family houses.

         Historically, Metretek Florida has been the leading provider of AMRs to
the industrial natural gas market, which is becoming saturated. The primary
target for Metretek Florida's AMR products is the recently developing commercial
natural gas user market, Metretek Florida does not consider the residential
natural gas user sector of the market to be a viable target market for its
products, primarily due to the low margins inherent in that market.

         Marketing and Customer Service. Metretek Florida distributes its
products by a direct sales force in the United States, and uses contract
representatives and distributors to distribute its products outside the United
States. Metretek Florida also provides implementation services for its customers
designed to meet its customer's specific needs. Metretek Florida offers a
maintenance and support team in Melbourne, Florida that offers 24-hour,
toll-free hotline support, customer service representatives, consulting
services, equipment repair and preventative maintenance, software support and
maintenance, system troubleshooting and network management services. Metretek
Florida's marketing strategy includes utilizing its close contacts with the
utility industry through its sales representatives. Metretek Florida also
participates in trade shows, symposiums and conferences designed to expand
industry awareness of its products. Metretek Florida also utilizes direct
mailing of brochures and newsletters, and has a home page on the Internet.

         International. Outside of North America, Metretek Florida has sold AMR
systems to natural gas distribution utility companies in the United Kingdom, the
Netherlands, Pakistan, Australia, Argentina and Brazil. Over the past three
years, approximately 11% to 21% of Metretek Florida's annual sales have been to
customers outside the U.S. All of the eight major gas distribution utility
companies in Canada own and operate Metretek Florida systems. Metretek Europe
Limited, a wholly-owned subsidiary of Metretek Florida located in Camberley,
England, sells Metretek Florida products primarily in Western Europe.

         Acquisitions. Metretek Florida's business strategy includes the
acquisition of, and strategic alliances with, measurement equipment providers
and software application developers that can utilize or enhance Metretek
Florida's offering of products and services.


                                       8
<PAGE>   11
         On May 4, 1998, Metretek Florida acquired substantially all of the
assets and business of American Meter pertaining to electronic correctors and
non-radio-frequency meter reading devices in the natural gas and electric
utility industry. American Meter is ultimately controlled by Ruhrgas AG, a
German corporation. The assets acquired by Metretek Florida include certain
inventory, equipment, trademarks and technology of American Meter used in the
design, manufacture and sales of electronic measurement process control and
telemetry systems to utility companies in the natural gas and petroleum
industries. In connection with the acquisition, Metretek Florida assumed certain
transitional employee costs and product warranty obligations of American Meter.
The assets and business operations acquired have been relocated to Metretek
Florida's existing facility in Melbourne, Florida.

         In consideration for the purchase of the assets and business, we paid
and delivered to American Meter at the closing an aggregate purchase price
consisting of $1,300,000 in cash, 439,560 unregistered shares of Common Stock,
and a $1,200,000 convertible subordinated promissory note, $600,000 of the
principal of which was contingent upon Metretek Florida exceeding certain sales
targets, during an adjustment period, which targets were not met. Subsequent to
the closing, the purchase price was adjusted down by $85,000 to reflect a
decrease in American Meter's inventory between December 31, 1997 and May 4,
1998, partially offset by transitional costs assumed by Metretek Florida. After
the adjustment period, the final principal amount of the convertible note was
fixed at $600,000.

         American Meter has given notice that it desires to convert the note,
under its terms, into 105,495 shares of Common Stock at the rate of $5.6875 of
principal per share, plus 26,373 Dividend Warrants. The American Meter note bore
interest on the unpaid principal balance at a fixed rate equal to 7.5% per
annum, payable quarterly in arrears, and was due and payable May 4, 2002.
American Meter has the one-time demand right to cause the shares of Common Stock
issued to American Meter at the closing or issuable upon conversion of the
American Meter note to be registered under the Securities Act and applicable
state securities laws, and also has certain piggy-back registration rights to
include such shares in any registration statement filed by us, subject to
customary underwriter cutbacks.

         Metretek Florida also entered into a license agreement with American
Meter, providing for the license by American Meter to Metretek Florida of
certain operating software, and the development, manufacture and sale by
Metretek Florida to American Meter of certain electronic components and related
equipment pertaining to electronic temperature and pressure correction to be
imbedded within certain new rotary and turbine meters of American Meter. The
American Meter license agreement also grants to American Meter and its
affiliates the right to sell Metretek Florida products in the United States and
Canada at certain agreed-upon prices. American Meter has also entered into a
non-competition agreement with Metretek Florida, under which American Meter
agreed not to compete with Metretek Florida in the acquired business for five
years from the closing date. In 1998, in connection with this acquisition, Harry
I. Skilton, President of American Meter, became a member of our Board of
Directors.

SOUTHERN FLOW COMPANIES, INC.

         Southern Flow provides a variety of natural gas measurement services
principally to customers involved in natural gas production, gathering,
transportation and processing. We commenced our operations in this line of
business in 1991 by acquiring an existing business. This business was expanded
significantly in 1993 when we acquired substantially all of the assets of the
Southern Flow Companies division of Weatherford. Through its predecessors,
Southern Flow has provided measurement services to the natural gas industry
since 1953.

         Southern Flow provides a broad array of integrated natural gas
measurement services, including on-site field services, chart processing and
analysis, laboratory analysis, and data management and reporting. Southern
Flow's field services including the installation, testing, calibration, sales
and maintenance of measurement equipment and instruments. Southern Flow's chart
processing operations include analyzing, digitizing and auditing well charts and
providing custom reports as requested by the customer. Southern Flow also
provides laboratory analysis of natural gas and natural gas liquids chemical and
energy content. As part of its services to its customers, Southern Flow
maintains a proprietary database software system which calculates and summarizes
energy measurement data for its customers and allows for easy transfer and
integration of such data into customer's accounting systems. As an integral part
of these services, Southern Flow maintains a comprehensive inventory of natural
gas meters and metering parts, and derives approximately 25% of its annual
revenues from its "parts resale"

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<PAGE>   12
business. Southern Flow provides its services through 9 division offices located
throughout the Gulf of Mexico, Southwest, Mid-Continent and Rocky Mountain
regions.

         Natural gas measurement services are used by producers of natural gas
and pipeline companies to verify volumes of natural gas custody transfers. To
ensure that such data is accurate, on-site field services and data collection
must be coordinated with chart integration and data development and management
to produce timely and accurate reports.

         The market for independent natural gas measurement services is
fragmented, with no single company having the ability to exercise control. Many
natural gas producers and operators, and most natural gas pipeline and
transportation companies, internally perform some or all of their natural gas
measurement services. In addition to price, the primary consideration for
natural gas measurement customers is the quality of services and the ability to
maintain data integrity, because natural gas measurement has a direct effect on
the natural gas producer's revenue and royalty and working interest owner
obligations. We believe that we are able to effectively compete by:

         -        providing dependable integrated measurement services;

         -        maintaining local offices in proximity to our customer base;
                  and

         -        retaining experienced and competent personnel.

COMPETITION

         The markets for energy products, services, technology and information
are highly competitive and subject to rapidly changing technology, new and
emerging products, services and technologies, frequent product and service
performance improvements and evolving industry standards. In addition, we
anticipate facing intense competition in our new online business, especially as
the use of the Internet for energy products and services grows. The growth
potential and deregulatory environment of the energy market have attracted and
are anticipated to continue to attract many new start-ups as well as established
businesses from different industries. Competition may also increase as a result
of industry consolidation. Increased competition could result in price
reductions, reduced gross margins, loss of market share, inability to penetrate
new markets or to develop new markets, any of which could have a material and
adverse effect on our business.

         Our current and prospective competitors fall into the following
categories:

         -        large and well established distributors of energy measurement,
                  monitoring and information products and services, such as
                  Cellnet Data Systems, Inc., Itron Corp. and Whisper
                  Communications;

         -        large, well established and diversified companies like
                  Schlumberger, General Electric and Asea Brown Boveri that have
                  divisions or subsidiaries devoted to our markets;

         -        in-house services provided by utilities and major oil and gas
                  companies;

         -        large, well established and diversified oil and gas companies
                  like Enron Corp. and Duke Energy Corp.; and

         -        numerous prospective competitors that may offer energy
                  information.

         We believe that our ability to compete successfully will depend upon
many factors, many of which are outside of our control. These factors include:

         -        our responsiveness to customers needs;

         -        functionality of our and our competitors' products and
                  services;


                                       10
<PAGE>   13
         -        speed of implementation of new products and services and
                  enhancement to existing products and services;

         -        price of competitors' products and services;

         -        ease of use of products and services;

         -        performance and features of products and services;

         -        quality and reliability;

         -        reputation;

         -        quality of customer service and support;

         -        sales and marketing efforts;

         -        our ability to sustain our strategic relationships; and

         -        the timing and market acceptance of new products and services
                  and enhancements to existing products and services developed
                  by us and our competitors.

         We believe that we compete favorably with respect to the above factors,
although with respect to products and services that we do not believe price is a
principal competitive factor, we do not compete on the basis of price. In order
to be successful in the future, we must continue to respond promptly and
effectively to the challenges of technological change and its competitors'
innovations. We cannot guarantee that our products and services will continue to
compete favorably or that we will be successful in facing the increasing
competition for new products and enhancements introduced by its existing
competitors or new competition entering the market.

         Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical, marketing,
manufacturing and other resources than we do. This may enable our competitors to
respond more quickly to new or emerging technologies and changes in customer
requirements or preferences and to devote greater resources to the development,
promotion and sale of their products and services than we can. Our competitors
may be able to undertake more extensive marketing campaigns, adopt more
aggressive pricing policies and make more attractive offers to potential
employees, customers, strategic partners and suppliers and vendors than we can.
Our competitors may develop products and services that are equal or superior to
the products and services offered by us or that achieve greater market
acceptance than our products do. In addition, current and potential competitors
have established or may establish cooperative relationships among themselves or
with third parties to improve their ability to address the needs of our existing
and prospective customers. As a result, it is possible that new competitors may
emerge and rapidly acquire significant market share or impede our ability to
acquire market share in new markets. Increased competition is likely to result
in price reductions, reduced gross margins and loss of market share, and the
inability to develop new businesses, which could materially and adversely affect
our business. We cannot assure that we will have the financial resources,
technical expertise, portfolio of market or services or marketing and support
capabilities to successfully compete.

         The market for Metretek Florida's products and services is very
competitive. Although Metretek Florida's product offering is very specific to
the requirements for industrial and commercial meter reading/monitoring in
natural gas distribution utility companies, many suppliers of residential meter
reading systems also offer products for commercial and/or industrial
applications and can be formidable competitors for utility companies desiring to
implement residential meter reading and to have all automatic/remote meter
reading, including industrial and commercial, performed on a single system.
Also, major natural gas meter and instrument manufacturers offer systems to
remotely read and interrogate their own equipment, and utility companies that
use certain manufacturers' meters exclusively may also choose to buy their
communication and data collection products as well. We believe that several
large suppliers of equipment, services or technology to the utility industry
have developed or are currently developing products or services for the market
in which Metretek Florida is currently or is intending to compete. Most of
Metretek Florida's present and potential competitors have substantially greater
financial, marketing, technical and manufacturing resources, as well as greater
name recognition and experience, than Metretek Florida. Metretek Florida
competes with a large number of existing and potential competitors in these


                                       11
<PAGE>   14
markets, some of which do not compete in all of the same markets as Metretek
Florida. In addition, current and potential competitors may make strategic
acquisitions or establish cooperative relationships among themselves or with
third parties that increase their ability to address the needs of Metretek
Florida's prospective customers. Metretek Florida competes primarily on the
basis of product quality and reliability, applications expertise, and the
quality of its service and support.

         Numerous companies compete directly with Southern Flow in the natural
gas measurement services industry, including companies which provide the same
services as Southern Flow and those which provide additional or related field
services. Although a majority of natural gas measurement services is currently
performed internally by natural gas producers and pipeline companies, most of
Southern Flow's direct competition consists of small measurement companies
providing limited services and serving limited geographical areas. Southern Flow
offers a complete range of natural gas measurement services over a wide
geographical area which management believes offers Southern Flow advantages over
its competitors.

         PowerSpring will be competing in the Internet energy products, services
and information markets. These markets are evolving rapidly, are highly
competitive and are likely to be characterized by an increasing number of market
entrants and by industry consolidation. Because there are no substantial
barriers to entry, we expect that PowerSpring will face competition from both
existing competitors and new market entrants in the future. We believe that
participants in this market must grow rapidly and achieve a significant presence
to compete effectively. We believe that the primary competitive factors facing
PowerSpring are:

         -        a state-of-the-art infrastructure providing availability,
                  speed, scalability and security;

         -        site and Internet application hosting and management
                  expertise;

         -        fast and reliable Internet connectivity;

         -        a reputation for high-quality service and superior customer
                  service and support;

         -        numerous and diverse service offerings and timely addition of
                  value-added services;

         -        brand recognition;

         -        competitive pricing; and

         -        adequate capital to permit continued investment in
                  infrastructure, customer service and support and sales and
                  marketing.

         We expect our Internet competitors to come from three different areas:
energy service providers, online exchanges and measurement companies. We expect
our competitors will range from purely online energy offerings such as
Enermetrix to large off-line competitors such as Enron. Energy service providers
will be significant competitors of ours because they target the same commercial
and industrial market that we will target. Examples of competitive energy
service providers include Enron, Duke Energy, PG&E Energy Services, New
Energy/Power Direct, Energy.com and Utility.com. Companies that provide the
wholesale online exchanges, such Altra and Houston Street.com, enable customers
to trade energy in an on-line environment. Companies offering retail on-line
exchanges include Enermetrix.com.

REGULATION

         Regulation of Natural Gas. Our operations are affected in various
degrees by political developments and federal and state laws and regulations. In
particular, natural gas production, operations and economics are affected by
price controls, by environmental, tax and other laws relating to the natural gas
industry, by changes in such laws and by changing administrative regulations and
the interpretations and application of such laws, rules and regulations. Natural
gas industry legislation and agency regulation is periodically changed for a
variety of political, economic and other reasons. Natural gas sales have been
deregulated at the wholesale, or pipeline, level since

                                       12
<PAGE>   15
Federal Energy Regulatory Commission Order 636 was issued in 1992. Since that
time, individual states have been studying various methods for deregulating
natural gas sales at the retail level. Many state utility commissions are
currently conducting pilot programs that allow residential and small commercial
consumers to select a provider of their choice, other than the local
distribution company, to supply their natural gas. As natural gas sales are
deregulated, on a state by state basis, we believe that timely collection and
reporting of consumption data will be needed and desired by utility companies
and energy service providers, particularly for residential and commercial
customers who are purchasing natural gas on an aggregate basis. We believe that
PowerSpring and Metretek Florida will benefit from such a regulatory
environment.

         Regulation of Electricity. The electric utility industry is undergoing
fundamental structure changes due to deregulation. The traditional utility
structure, consisting of a vertically integrated system operating as a natural
monopoly with rates set in relation to cost, has historically presented
utilities with little incentive to improve service quality or operating
efficiency. Customer demands and regulatory mandates by federal and state
governments are opening the electric utility market to competition, forcing
electric utilities to transform themselves from regulated monopolies into
competitive enterprises. While regulatory initiatives vary from state to state,
many involve a shift from rate-of-return rate making, in which an electric
utility's rates are determined by its return on assets, to performance-based
rate making, in which an electric utility's rates and profitability are based
upon its cost, efficiency, and service quality. This deregulatory movement in
the electricity industry follows a similar deregulatory movement in the natural
gas utility industry. Today, commercial and industrial natural gas customers can
purchase natural gas directly from producers or brokers, while utilities are
required to provide transportation of such natural gas to customers' facilities.
We expect a similar result from electricity deregulation.

         Several major electric utilities have recently entered into merger
agreements and other consolidation transactions and bought and sold generation
assets. The restructuring has also focused on opening the electric power
production industry, in certain markets, to full competition in the next few
years and ultimately providing customers access to multiple suppliers. Federal
legislation, such as the National Energy Policy Act of 1992 (the "Energy Policy
Act"), has opened utility transmission lines to independent power producers in
an effort to increase competition in the wholesale electric power generation
market. Under the Energy Policy Act, individual states have the sole authority
to mandate the transport and delivery or "wheeling" of electric power to retail
customers. As a result, at least 18 states now have legislation or final
commission orders to mandate retail wheeling and nearly all of the other states
are in various stages of considering the implementation of retail wheeling and
unbundling, both at legislative and regulatory levels. Meanwhile, a number of
other states are also requiring utilities to "unbundle," or offer as separate
services, metering, billing and collection, and more states are formally
investigating such unbundling. Unbundling implies that a third party, such as a
new power market participant, would be free to own the electric meter that
measures usage and attaches to a commercial, industrial or residential
customer's premises. Traditionally, the owner of the meter has been the electric
utility which has also had a monopoly in providing metering, billing, and
collection services. In California, the state which has to date advanced the
furthest in the deregulation process, the California Public Utility Commission
mandated competitive retail wheeling and unbundling effective April 1, 1998 for
large commercial and industrial customers and January 1, 1999 for all remaining
customers. By mandating retail wheeling the California PUC allows the customer
to choose among energy service providers. The California PUC has also mandated
hourly metering capability for commercial and industrial customers choosing
direct access and which require more than 50 kW of power, which will be
decreased to 20kW in the year 2002.

         The changing regulatory environment means that new power market
participants will be entering into a market traditionally dominated by
established utilities. To date, more than 33 parties have registered with the
California PUC as Registered Energy Service Providers to provide electric
services in California. The established utilities are focused on retaining and
increasing their market share as a result of competition. Both new power market
participants and established utilities will be striving to optimize their
offerings and to distinguish themselves in the market. The same capabilities
will enable energy service providers to meet regulatory metering and forecasting
requirements, offer superior, competitively-priced services, collect customer
information and diversify by adding additional applications as available.

         We believe that competition will require recordation of electric power
consumption data more frequently than is presently customary through a much
wider use of daily, hourly and possibly even more frequent meter readings. In
fact, hourly meter reading has already been mandated for commercial and
industrial customers in

                                       13
<PAGE>   16
California. Other deregulating states which require hourly metering for
commercial and industrial customers include Michigan and Arizona. It is possible
that other states will follow. We believe that our AMR technology, or meter
reading technology similar to it, will be needed to do such hourly meter
reading.

         We believe that regulatory reform will result in new opportunities for
us to provide our products and services, such as AMR and other functions
typically performed by utilities, directly to end-user customers. In addition,
we believe there are a number of new business opportunities that will be able to
develop for capitalizing on the value of the information that can be derived
from our products and services.

         Regulation of Internet Activities. At present, there are few laws or
regulations directed specifically at Internet commerce. However, because of the
Internet's popularity and increasing use, laws and regulations directly
applicable to e-commerce or Internet communications are becoming more prevalent.
These laws and regulations may cover issues such as the collection and use of
data from web site visitors and related privacy issues, pricing, content,
copyrights, distribution and the quality of goods and services. The enactment of
any additional laws or regulations may impede the growth of the Internet and
Internet commerce which could decrease the revenue potential or increase the
costs of PowerSpring. Specific areas of legislative activity regulating Internet
commerce including the following:

         -        Taxes. Congress enacted a three-year moratorium, ending on
                  October 27, 2001, on the application of "discriminatory" or
                  "special" taxes by the states on Internet access or on
                  products and services delivered over the Internet. Congress
                  further declared that there will be no federal taxes on
                  e-commerce until the end of the moratorium. However, this
                  moratorium does not prevent states from taxing activities or
                  goods and services that the states would otherwise have the
                  power to tax. Furthermore, the moratorium does not apply to
                  certain state taxes that were in place before the moratorium
                  was enacted.

         -        Online Privacy. Both Congress and the Federal Trade Commission
                  are considering regulating the extent to which companies
                  should be able to use and disclose information they obtain
                  online from consumers. If any regulations are enacted, we may
                  find certain of our contemplated marketing activities
                  restricted. Also, the European Union has directed its member
                  nations to enact much more stringent privacy protection laws
                  than are generally found in the United States, and has
                  threatened to prohibit the export of certain personal data to
                  United States companies if similar measures are not adopted.
                  Such a prohibition could limit our growth in foreign markets.
                  The Department of Commerce is negotiating with the Federal
                  Trade Commission to provide exemptions from the European Union
                  regulations, but the outcome of these negotiations is
                  uncertain.

         -        Regulation of Commerce Facilities. To some extent, the rapid
                  growth of the Internet in the United States has been due to
                  the relative lack of government intervention in the
                  marketplace for Internet access. Lack of intervention may not
                  continue in the future. For example, several
                  telecommunications carriers are seeking to have
                  telecommunications over the Internet regulated by the Federal
                  Communications Commission in the same manner as other
                  telecommunications services. Additionally, local telephone
                  carriers have petitioned the Federal Communications Commission
                  to regulate Internet service providers in a manner similar to
                  long distance telephone carriers and to impose access fees on
                  these providers. Some Internet service providers are seeking
                  to have broadband Internet access over cable systems regulated
                  in much the same manner as telephone services, which could
                  slow the development of broadband Internet access services.
                  Because of these proceedings or others, new laws or
                  regulations could be enacted which could burden the companies
                  that provide the infrastructure on which the Internet is
                  based, thereby slowing the rapid expansion of the medium and
                  its availability to new users.

         Moreover, the applicability to the Internet of existing laws governing
such issues as intellectual property ownership and infringement, copyright,
patent, trademark, trade secret, obscenity, libel, employment and personal
privacy is uncertain and developing.

         Regulation of International Operations. Our international operations
are also subject to the political, economic and other uncertainties of doing
business abroad including, among others, risks of war, cancellation,


                                       14
<PAGE>   17
expropriation, renegotiation or modification of contracts, export and
transportation regulations and tariffs, taxation and royalty policies, foreign
exchange restrictions, international monetary fluctuations and other hazards
arising out of foreign government sovereignty over certain areas in which we
conduct, plan to conduct or in the future may conduct operations.

         Regulation of Environment. While various federal, state and local laws
and regulations covering the discharge of materials into the environment, or
otherwise relating to the protection of the environment, may affect our
operations as a result of their effect on natural gas development, exploration,
production, transportation and dispensing operations, our operations are not
currently subject to substantial environmental laws and regulations. We believe
we are in material compliance with those environmental laws and regulations to
which we are subject. It is not anticipated that we will be required in the near
future to expend amounts that are material in relation to our total capital
expenditures program by reason of environmental laws and regulations. However,
inasmuch as such laws and regulations are frequently changed, we are unable to
predict the ultimate effect on us and on the cost of compliance.

EMPLOYEES

         At February 29, 2000, we had 228 full-time employees. None of our
employees are covered by a collective bargaining agreement. We believe that our
relations with our employees are good.

RESEARCH AND DEVELOPMENT

         Our basic research and development activities have been historically
conducted by Metretek Florida. Metretek Florida conducts research and
development directed towards improvements in its product and service offering
which address anticipated customer needs and potential new markets. Current
research and development activities for existing customers and markets are aimed
at expanding Metretek Florida's wireless communication capability, cost
reduction of pulse collection devices, and a new software operating system.
Products and services currently under development for new markets include an
electric meter interface and a monitoring and recording system for liquid levels
in storage tanks (primarily for use in propane distribution systems).

         Recently, we commenced an extensive research and development program
for the business of PowerSpring. We incurred $961,383 and $2,225,758 for
research and development expenses during the years ended December 31, 1998 and
1999 respectively. We intend to continue to allocate resources to the research
and development of new Metretek Florida products and services in the future, but
our highest research and development priority currently is PowerSpring's
Internet-based business. Our future services will depend, in part, on our
services in these development projects which will require continual substantial
investments.

RAW MATERIALS

         Our subsidiaries purchase memory chips, electronic components, printed
circuit boards, fabricated sheet metal parts, machined components, aluminum,
metallic castings and various other raw materials for their products. While, in
the opinion of management, the loss of any one supplier of materials would not
have a material adverse impact on our business or operations, shortages in
certain components such as memory chips, supply problems from our suppliers or
our inability to develop alternative sources of supply quickly or
cost-effectively could materially impact our ability to manufacture our products
and therefore could adversely affect our business and operations. We attempt to
mitigate this risk by maintaining an inventory of such materials.

PROPRIETARY RIGHTS

         Our success and ability to compete are dependent in part upon our
proprietary rights and technology. We rely on a combination of patents,
copyrights, trademarks and trade secret laws to establish and protect our rights
in its products and proprietary technology. Although we maintain certain patents
related to our business, we do not believe that our competitive position is
dependent upon patent protection or that our operations are dependent upon any
individual patent. Nevertheless, we believe that the following factors are more
essential to protecting our technology leadership position:


                                       15
<PAGE>   18
         -        the technological and creative skills of our personnel;

         -        new products and service development;

         -        frequent product and service enhancements;

         -        name recognition;

         -        customer training and support; and

         -        reliable product support.

         We generally require our employees and consultants to enter into
nondisclosure and assignment of invention agreements to limit use of, access to
and distribution of proprietary technology. There can be no assurance that our
means of protecting our proprietary rights in the United States or abroad will
be adequate. In addition, the laws of some foreign countries may not protect our
proprietary rights as fully or in the same manner as do the laws in the United
States. Despite our efforts to protect our proprietary rights, it may be
possible for unauthorized third parties to copy, reverse engineer or otherwise
obtain, use or exploit aspects of our products, develop similar technology
independently or otherwise obtain and use information that we regard as
proprietary. Our actual and potential competitors may independently develop
technologies similar or superior to our technology or design around the
proprietary rights owned by us. Although we are not aware that our products
infringe on the proprietary rights of third parties, we cannot assure you that
others will not assert claims of infringement against us in the future or that,
if made, such claims will not be successful.


ADDITIONAL FACTORS THAT MAY AFFECT OUR BUSINESS AND FUTURE RESULTS

         Our business and future operating results may be affected by many
factors, risks and uncertainties, including those set forth below and those
contained else where in this report. In addition, the risks described below are
not the only risks facing us. There may be additional risks and uncertainties
that we do not currently consider material or that are not presently known to
us. If any of the following risks were to occur, our business, prospects,
assets, financial condition, results of operations and cash flows could be
materially and adversely affected. When we say that something could or will have
a material adverse effect on us or our business, we mean that it could or will
have one or more of these effects.

         WE HAVE A HISTORY OF LOSSES, AND WE MAY NEVER BECOME PROFITABLE

         We have incurred net losses on an annual basis during each year since
our incorporation. We incurred net losses of approximately $0.3 million and $3.7
million for the years ended December 31, 1998 and 1999. At December 31, 1999, we
had an accumulated deficit of approximately $25.2 million. Due to the design,
creation and implementation of PowerSpring, our Internet-based business, which
will require us to make significant expenditures, we expect operating losses to
continue for the foreseeable future. We also anticipate increased expenses as we
support, expand and improve PowerSpring and its infrastructure, invest in new
Internet applications, enhance our management expertise, expand our sales
efforts and pursue strategic Internet relationships. In addition, our
Internet-based business strategy is unproven. We may never generate sufficient
revenues to achieve profitability. Even if we do achieve profitability, we may
not be able to sustain or increase that profitability on a quarterly or annual
basis in the future.

         FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS MAY ADVERSELY AFFECT
         THE TRADING PRICE OF OUR COMMON STOCK

         Our quarterly revenues, expenses, margins and results of operations
have fluctuated significantly in the past and are expected to continue to
fluctuate significantly in the future due to a variety of factors, many of which
are outside of our control and any of which may cause the trading price of our
Common Stock to fluctuate. These factors include:


                                       16
<PAGE>   19
         -        the size, timing and terms of sales and orders;

         -        the amount and timing of expenditures on PowerSpring;

         -        our ability to implement our business plan and strategy with
                  respect to PowerSpring and the timing of its implementation;

         -        the timing, pricing and market acceptance of our new products
                  and services, especially those related to PowerSpring, and
                  those of our competitors;

         -        the pace of development of PowerSpring;

         -        the success of our brand building and marketing campaigns for
                  our PowerSpring products and services;

         -        the growth of the market for online energy products, services
                  and information;

         -        our ability to effectively manage our growth during the
                  anticipated rapid expansion of PowerSpring;

         -        changes in our pricing policies and those of our competitors;

         -        variations in the length of our product and service
                  implementation process;

         -        the mix of products and services sold;

         -        the mix of international and domestic revenues;

         -        the life cycles of our products and services;

         -        budgeting cycles of utilities;

         -        general economic and political conditions;

         -        economic conditions in the energy industry in general and the
                  natural gas and electricity industries in particular;

         -        the effects of governmental regulations and regulatory changes
                  in our current and new markets;

         -        prices charged by our suppliers;

         -        our ability to make successful acquisitions of technology or
                  businesses, and the costs related to such acquisitions;

         -        changes in our operating expenses; and

         -        the maintenance and development of business relationships with
                  strategic partners.

         Because many of our operating expenses, other than those related to
PowerSpring, are relatively fixed, a shortfall in anticipated revenue or delay
in recognizing revenue could cause our operating results to vary significantly
from quarter-to-quarter and could result in significant operating losses in any
particular quarter. The timing of large individual sales is also difficult for
us to predict. In addition, expenditures on PowerSpring will be significant and
will vary in the forseeable future. If our revenues fall below our expectations
in any particular quarter, our business could be materially adversely affected.
If our revenues fall below our expectations, we will not be able to reduce our
expenses rapidly in response to the short-fall and could suffer significant
operating losses.

         Due to all of these factors and the other risks discussed in this Item,
you should not rely on quarter-to-quarter comparisons of our results of
operations as an indication of our future performance. It is possible that in
some future periods our results of operations may be below the expectations of
public market analysts and investors. As a result, the trading price of our
Common Stock may fall.

         BECAUSE POWERSPRING, OUR INTERNET-BASED BUSINESS, HAS VIRTUALLY NO
         OPERATING HISTORY AND OUR INTERNET-BASED BUSINESS STRATEGY IS STILL
         BEING DEVELOPED AND IS UNPROVEN, LIMITED INFORMATION IS AVAILABLE UPON
         WHICH YOU CAN EVALUATE POWERSPRING


                                       17
<PAGE>   20
         Our business strategy and future success is highly dependent upon our
ability to develop PowerSpring. Our Internet-based business strategy is based on
an unproven business model, and our operating, sales and other strategies are
still being developed. Our Internet-based business strategy depends on the
willingness of commercial users of natural gas and electricity to purchase, at a
price profitable to us, a package consisting of energy data management equipment
and energy purchasing resources. It also depends on our ability to develop a
business that will generate significant revenues, profits and cash flow through
the offering of energy products, services and information over the Internet.
PowerSpring will not be launched until June 2000. Accordingly, we have virtually
no operating history to provide you upon which you can evaluate PowerSpring.

         As a company developing a new business in the new and rapidly evolving
markets for Internet products and services generally, and Internet energy
products, services and information specifically, we face numerous risks and
uncertainties which are described in this Item as well as other parts of this
Report. Some of these risks relate to our ability to:

         -        anticipate and adapt to the changing regulatory climate for
                  energy products and services;

         -        anticipate and adapt to the changing Internet market;

         -        attract customers to our new Internet-based business;

         -        collect energy research and other energy information adequate
                  to support a market for Internet services;

         -        implement our sales and marketing initiatives, both
                  domestically and internationally;

         -        attract, retain and motivate qualified personnel;

         -        respond to actions taken by our competitors;

         -        integrate acquired businesses, technologies, products and
                  services;

         -        generate revenues and sales of new products and services;

         -        implement an effective marketing strategy to promote awareness
                  of our new businesses; and

         -        develop and deploy successful versions of the software
                  necessary for our services.

         Our business and financial results in the future will depend heavily on
market acceptance and profitability of PowerSpring. If we are unsuccessful in
addressing these risks or in executing our business strategies, our business
would be materially and adversely affected.

         IF THE INTERNET IS NOT WIDELY ACCEPTED BY COMMERCIAL USERS OF ENERGY AS
         A MEDIUM FOR COMMERCE, OUR BUSINESS WOULD BE MATERIALLY AND ADVERSELY
         AFFECTED

         In the future, we expect to derive a significant amount of our
revenues, income and cash flow from PowerSpring, which is our Internet business
to business services hub subsidiary. We cannot assure you that Internet-based
commerce for energy products and services, especially by commercial users of
energy, will ever grow to account for substantial revenues, income and cash
flow, or when this growth might occur. Our business would suffer if the market
for Internet-based commerce for energy products and services fails to develop or
develops more slowly than expected. Our business would also suffer if we are
unable to adapt to new forms of, or new pricing models for, Internet-based
commerce for energy products and services.

         The viability and future growth of the Internet as a means of commerce
depends on several factors, including:

         -        the Internet's ability to handle increased activity;

         -        the Internet's ability to operate as a fast, reliable and
                  secure network;

         -        potential changes in governmental regulation of the Internet;

         -        the ability of the Internet infrastructure to support the
                  growing demands placed on it;


                                       18
<PAGE>   21
         -        Internet access costs;

         -        the performance and reliability of products and services
                  offered on the Internet as the number of users and amount of
                  traffic increases;

         -        the ability of businesses to adequately address security and
                  privacy concerns; and

         -        the nature and pace of technological changes relating to the
                  Internet.

         Moreover, critical issues concerning the commercial use of the
Internet, including data corruption, cost, ease of use, accessibility and
quality of service, remain unresolved and may negatively affect commerce on the
Internet. These issues will need to be addressed in order for the market for
on-line energy products and services to grow. It is difficult to predict when
Internet-based commerce for energy products and services will emerge and obtain
market acceptance and be profitable. This makes it difficult to project our
future revenues, results of operations and cash flows. We cannot assure you that
we will be successful in selling energy products and services over the Internet
or in capturing a significant share of the market for Internet-based energy
products and services.

         CONCERNS ABOUT SECURITY OF ELECTRONIC COMMERCE TRANSACTIONS AND
         CONFIDENTIALITY OF INFORMATION ON THE INTERNET MAY IMPEDE THE GROWTH OF
         POWERSPRING

         A significant barrier to electronic commerce has been the need for
security. Internet usage could decline if any well-publicized compromise of
security occurs. We may incur significant costs to protect against the threat of
security breaches or to alleviate problems caused by these breaches.
Unauthorized persons could attempt to penetrate our network security. If
successful, they could misappropriate proprietary information or cause
interruptions in our services. As a result, we may be required to expend capital
and resources to protect against or to alleviate these problems. Security
breaches could have a material and adverse effect on our business.

         OUR NEW INTERNET-BASED BUSINESS STRATEGY WILL BE DEPENDENT UPON THE
         DEVELOPMENT AND MAINTENANCE OF THE INTERNET INFRASTRUCTURE

         The success of our new Internet-based business strategy will depend
largely on the development and maintenance of the Internet infrastructure. This
includes maintenance of a reliable network backbone with the necessary speed,
data capacity and security, as well as timely development of complimentary
products such as high-speed modems, for providing reliable Internet access and
services. Because on-line commerce is new and evolving, we cannot predict
whether the Internet will prove to be a viable commercial marketplace in the
long term. The Internet has experienced, and is likely to continue to
experience, significant growth in the number of users and the amount of traffic.
If the Internet continues to experience increased numbers of users increased
frequency of use, or more complex requirement, the Internet infrastructure may
be unable to support the demands placed on it. In addition, the performance of
the Internet may be harmed by increased users or more complex requirements.

         The Internet has experienced a variety of outages and other delays as a
result of damages to portions of its infrastructure, and it could face outages
and delays in the future. These outages and delays could reduce the level of
Internet usage as well as the level of traffic in the processing of commerce on
our website. In addition, the Internet could lose its viability due to delays in
the development or adoption of new standards and protocols to handle increased
levels of activity or due to increased governmental regulation. The
infrastructure and complimentary products or services necessary to make the
Internet a viable commercial marketplace for the long-term may not be developed
successfully or in a timely manner. Even if these products or services are
developed, the Internet may not become a viable commercial marketplace for
services such as those that we intend to offer.

         WE MAY BE UNABLE TO SUCCESSFULLY MANAGE THE EXPECTED EXPANSION OF
         POWERSPRING

         Our anticipated future growth as a result of PowerSpring may place a
significant strain on our management, operating systems and resources. We cannot
successfully implement our Internet-based business strategy if we fail to manage
our growth. We expect that we will need to attract and retain competent
personnel and to continue to improve our financial managerial controls and
reporting systems and procedures. We will also need to continue to expand and
maintain close coordination among our technical, accounting, finance and sales
and marketing

                                       19
<PAGE>   22
organizations. In addition, our systems, procedures or controls may be
inadequate to support our operations, in which case management may be unable to
exploit opportunities for our products and services. Failure to manage our
growth effectively and successfully integrate any acquisition or strategic
relationships could materially and adversely affect our business.

         BECAUSE OUR FUTURE GROWTH, IN OUR TRADITIONAL BUSINESSES AND IN
         POWERSPRING, IS DEPENDENT IN LARGE PART UPON THE DEREGULATION OF THE
         ELECTRICITY INDUSTRY, DELAYS IN THE DEREGULATION OF THE ELECTRICITY
         MARKETS, OR IN THE ELECTRICITY INDUSTRY'S COMPETITIVE RESPONSE TO
         DEREGULATION, MAY MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS

         The electricity industry is currently undergoing fundamental structural
changes due to deregulation, similar to what the natural gas utility industry
has undergone. A key component of our business strategies, in both our
traditional businesses, especially Metretek Florida, and our new Internet-based
business, PowerSpring, is to take advantage of opportunities created by the
deregulation of the electricity industry as the result of the need for more and
more frequent electricity consumption information. A principal expected benefit
to us of electricity deregulation is the ability of commercial and industrial
electricity customers to purchase electricity directly from multiple suppliers,
rather than solely from the local utility. This will require these electricity
customers to obtain timely electricity consumption data. If the deregulatory
environment does not continue or slows down, or if the market is slow to respond
to the opportunities made available by the changes in the deregulation of the
electricity industry, then commercial electricity customers may not purchase our
products, may purchase less of our products or may not purchase our products
until later than we anticipate. Failure of electricity industry deregulation to
result in a significant increase in the purchases of our products and services
would materially and adversely affect our business.

         BECAUSE WE ARE DEPENDENT UPON THE UTILITY INDUSTRY FOR A SIGNIFICANT
         PORTION OF OUR REVENUE, CONTINUED REDUCTIONS OF PURCHASES OF OUR
         PRODUCTS AND SERVICES BY UTILITIES CAUSED BY REGULATORY REFORM MAY
         MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS

         We currently derive a significant portion of our revenue from sales of
our products and services to the utility industry, and particularly the natural
gas utility industry. We have experienced variability of operating results on
both an annual and quarterly basis due primarily to utility purchasing patterns,
and delays of purchasing decisions by utilities, as the result of mergers and
acquisitions in the utility industry or potential changes to the federal and
state regulatory framework within which the utility industry operates. The
utility industry is generally characterized by long budgeting, purchasing and
regulatory process cycles that can take up to several years to complete. Our
utility customers typically issue requests for quotes and proposals, establish
committees to evaluate the purchase proposals, review different technical
options with vendors, analyze performance and cost/benefit justifications and
perform a regulatory review, in addition to applying a normal budget approval
process within the utility. In addition, utilities may defer purchases of our
products and services if the utilities reduce capital expenditures as the result
of mergers and acquisitions, pending or unfavorable regulatory decisions, poor
revenues due to weather conditions, rising interest rates or general economic
downturns, among other factors. The natural gas utility industry has been
virtually the sole customer for our automatic meter reading systems. However,
over the last few years, the uncertainty in the utility industry that has
resulted from the regulatory uncertainty in the current era of deregulation, has
caused utilities to defer even further purchases of our products and services.
The continuation of this uncertain regulatory climate will materially and
adversely affect our revenues from sales of meter reading devices.

         The domestic utility industry is currently the focus of regulatory
reform initiatives in virtually every state. These initiatives have resulted in
significant uncertainty for industry participants and raise concerns regarding
assets that would not be considered for recovery through rate payer charges.
This regulatory climate has caused most utilities to delay purchasing decisions
that involve significant capital commitments. As a result of these purchasing
decision delays, utilities have reduced their purchases of our products and
services. While we expect some states will act on these regulatory reform
initiatives in the near future, we cannot assure you that the current regulatory
uncertainty will be resolved in the short term. In addition, new regulatory
initiatives could have a material and adverse effect on our business. Moreover,
in part as a result of the competitive pressures in the utility industry arising
from the regulatory reform process, many utilities are pursuing merger and
acquisition strategies. We have experienced considerable delays in purchase
decisions by utilities that have become parties to merger or acquisition
transactions. Typically, capital expenditure purchase decisions are put on hold
indefinitely when merger

                                       20
<PAGE>   23
negotiations begin. If this pattern of merger and acquisition activity among
utilities continues, our business may be materially and adversely affected.

         In addition, if any of the utilities that account for a significant
portion of our revenues decide to significantly reduce their purchases of our
products and services, our business may be materially and adversely affected.

         WE WILL REQUIRE A SUBSTANTIAL AMOUNT OF ADDITIONAL CAPITAL TO FINANCE
         OUR BUSINESS, ESPECIALLY POWERSPRING, BUT WE MAY NOT BE ABLE TO OBTAIN
         A SUFFICIENT AMOUNT OF FUNDS TO DO SO

         We will require substantial additional funds to design, create,
develop, implement, market and operate PowerSpring, our new Internet-based
business. If we cannot raise sufficient funds on a timely basis, we will not be
able to complete the development, implementation and successful operations of
PowerSpring, and our business will be materially and adversely affected.

         We estimate that the initial development phase to launch PowerSpring
will require estimated expenditures of between $6,000,000 and $8,000,000,
consisting of consulting fees and expenses payable to Scient and costs of
acquiring the requisite technology, including hardware and software, as well as
research and development costs. We expect that after this initial development
stage is completed and its web site is launched, the further development and
growth of PowerSpring, including staffing, organizational and start-up expenses,
marketing costs and additional capital expenditures, will require significant
additional funds. In order to so develop and expand PowerSpring, we will need to
raise the significant additional funds, beyond the proceeds of the Units Private
Placement, from the proceeds of public or private equity financing, debt
financing or from other sources. We intend to raise any needed additional
capital to fund the development and operations of PowerSpring primarily through
financing at the PowerSpring level. However, depending upon the availability of
capital, market conditions, our consolidation operations and the operations of
PowerSpring, we may also or instead raise additional capital at the Metretek
Technologies level. For example, depending on market conditions and other
factors we deem appropriate, we may call the outstanding Dividend Warrants for
redemption.

         Virtually any such capital raising will be subject to the consent of
our lender on our credit facility, if the credit facility is then in effect. In
addition, depending on how it is structured, this capital raising could require
the consent of the holders of our Series B Preferred Stock. We cannot assure you
that any additional funds will be available to us in the future or that, if
available, funds can be obtained on terms favorable to us, and on terms
acceptable to our lender, if its consent is required, and on terms acceptable to
the holders of the Series B Preferred Stock, if their consent is required. In
addition, we cannot assure you that available capital will be sufficient for the
successful operation of PowerSpring. Our inability to raise sufficient
additional funds, beyond the proceeds of the Units Private Placement, to meet
the capital requirements of PowerSpring could have a material adverse effect on
our business, financial condition and results of operations.

         In addition to our need to raise capital to fund PowerSpring, we will
need to raise additional capital in the future to either repay or refinance any
indebtedness we incur in the future to finance our operations, the growth of our
current business or acquisition opportunities. The Series B Preferred Stock
bears a cumulative dividend at the rate of 8% per year and, if not earlier
converted into Common Stock, is subject to mandatory redemption on December 9,
2004 at a redemption price equal to the liquidation preference, currently
$7,000,000. In addition, unanticipated events, over which we may have no
control, could also increase our operating costs or decrease our ability to
generate revenues from product and service sales. We will also require
additional capital in the future to make any significant acquisitions of
businesses or technologies. We have a $5 million revolving line of credit with
our current lender which expires in March 2001. Our ability to borrow funds
under this credit facility is limited to our loan availability based upon our
assets, primarily our accounts receivable and inventory, and is limited to $3
million by the terms of the Series B Preferred Stock. As of December 31, 1999,
we had a total loan availability of approximately $3.6 million, and of that we
had borrowed approximately $0.3 million. The amount of our loan availability, as
well as the amount we borrow, will change in the future depending on our asset
base and our capital requirements. Any amount outstanding under our credit
facility in March 2001 will need to either be repaid by us, refinanced by a new
lender or investor, or extended by our current lender. We cannot estimate the
amount that we will have borrowed under the credit facility when it expires, and
we cannot assure you that we will be able to repay, refinance or extend that
indebtedness at that time.


                                       21
<PAGE>   24
         To finance PowerSpring and the growth of our other businesses, and to
repay or refinance any indebtedness we might incur, we will need to raise a
substantial amount of additional capital from the public or private sales of
equity securities, debt financing, sales of assets, calling the Dividend
Warrants for redemption, or from other sources. Additional financing may not be
available to us when we need it or, if available, it may not be on terms
satisfactory to us, or we may not be able to obtain the required consents to
complete the financing. Obtaining additional financing will depend on many
factors, including market conditions, our operating performance and investor
sentiment. Terms of debt financing could restrict our ability to operate our
business, or to expand our operations. In addition, if we raise capital by
issuing capital stock or securities convertible into capital stock, our
stockholders could suffer a significant dilution of their percentage ownership
interests, and the new capital stock or other new securities could have rights,
preferences or privileges senior to those of our current stockholders. If we are
unable to raise sufficient additional financing on terms satisfactory to us,
then our business will be materially and adversely affected.

         RESTRICTIONS IMPOSED ON US AS A RESULT OF THE TERMS OF OUR CURRENT
         INDEBTEDNESS AND OUR SERIES B PREFERRED STOCK COULD LIMIT HOW WE
         CONDUCT OUR BUSINESS AND OUR ABILITY TO RAISE ADDITIONAL CAPITAL

         The terms of our current credit facility and of our Series B Preferred
Stock contain financial and operating covenants that limit the discretion of our
management. These covenants place significant restrictions on our ability to:

         -        incur additional indebtedness;

         -        create liens or other encumbrances;

         -        issue or redeem securities;

         -        make dividend payments and investments;

         -        amend our charter documents;

         -        sell or otherwise dispose of our assets;

         -        liquidate or dissolve;

         -        merge or consolidate with other companies; or

         -        reorganize, recapitalize or engage in a similar business
                  transaction.

         Any future financing arrangements will likely contain similar or more
restrictive covenants. As a result of these restrictions, we may be:

         -        limited in how we conduct our business;

         -        unable to raise additional debt or equity financing to operate
                  during general economic or business downturns; and

         -        unable to compete effectively or to take advantage of new
                  business opportunities.

         DIVIDENDS ON THE SERIES B PREFERRED STOCK WILL INCREASE OUR FUTURE NET
         LOSS AVAILABLE TO COMMON SHAREHOLDERS AND OUR NET LOSS PER COMMON SHARE

         After issuing the Series B Preferred Stock, we will recognize the 8%
coupon rate and certain "deemed distributions" as dividends on the Series B
Preferred Stock. The proceeds from the sale of the Units were allocated to the
Common Stock, the Unit Warrants and the Series B Preferred Stock based on the
relative fair value of each. This allocation process resulted in the Series B
Preferred Stock that we sold on February 4, 2000 being initially recorded at a
discount from its $1,000 per share liquidation value. This discount will be
recorded as a distribution over the term of the Series B Preferred Stock.
Another discount resulted from the increase in the fair market value of a share
of our Common Stock from the date we offered to sell 5,550 Units to February 4,
2000, the date we actually issued the Units. This increase caused the conversion
feature of the Series B Preferred Stock to be "in the money" on February 4,
2000. The discount related to the "in the money" conversion feature will be
recorded as a distribution

                                       22
<PAGE>   25
between the February 4, 2000 and June 9, 2000, after which date the Series B
Preferred Stock can first be converted into our Common Stock. The Series B
Preferred Stock dividends will increase our future net loss available to common
shareholders and net loss per common share, which could adversely affect the
trading price of our Common Stock.

         RAPID TECHNOLOGICAL CHANGES MAY PREVENT US FROM REMAINING CURRENT WITH
         OUR TECHNOLOGICAL RESOURCES AND MAINTAINING COMPETITIVE PRODUCT AND
         SERVICE OFFERINGS

         The markets in which our businesses currently operate and PowerSpring
will operate are characterized by rapid technological change, frequent new and
enhanced product and service introductions, evolving industry standards and
changes in customer needs. Significant technological changes could render our
existing products, services and technology, including our planned PowerSpring
products and services, obsolete. The Internet market's growth and intense
competition exacerbate these conditions. Our future success will depend, in
part, on our ability to:

         -        effectively use and develop leading technologies;

         -        continue to develop our technical expertise;

         -        enhance our current products and services;

         -        develop new products and services that meet changing customer
                  needs; and

         -        respond to emerging industry standards and technological
                  changes in a cost-effective manner.

         If we are unable to successfully respond to these developments or do
not respond to them in a cost-effective manner, then our business will be
materially and adversely affected. We cannot assure you that we will be
successful in responding to changing technology or market needs. In addition,
products, services and technologies developed by others may render our products,
services and technologies uncompetitive or obsolete.

         Even if we do successfully respond to technological advances and
emerging industry standards, the integration of new technology may require
substantial time and expense, and we cannot assure you that we will succeed in
adapting our products, services and technology in a timely and cost-effective
manner. We may experience financial or technical difficulties that could prevent
us from introducing new or enhanced products or services. Furthermore, these new
or enhanced products and services may contain problems that are discovered after
they are introduced. We may need to significantly modify the design of these
products and services to correct problems. Rapidly changing Internet technology
and operating systems may impede market acceptance of our PowerSpring products
and services. Our business could be materially and adversely affected if we
experience difficulties in introducing new or enhanced services and products or
if these products and services are not received favorably by our customers.

         Development and enhancement of our products and services will require
significant additional expenses and could strain our management, financial and
operational resources. The lack of market acceptance of our products or services
or our inability to generate sufficient revenues from this development or
enhancements to offset their costs could have a material adverse effect on our
business. We have experienced delays in releasing new products and product
enhancements and may experience similar delays in the future. These delays or
problems in the installation of implementation of our new products and services
and enhancements may cause customers to forego purchases of our products and
services to purchase those of our competitors.

         CHANGES IN OUR PRODUCT MIX COULD MATERIALLY AND ADVERSELY AFFECT OUR
         BUSINESS

         The margins on our revenues from some of our product and service
offerings is higher than the margins on our other product and service offerings.
For example, revenues from some of Metretek Florida's AMR devices have
significantly higher margins than Metretek Florida's contract manufacturing
revenues. In addition, we do not know what the prices and costs, and therefore
we cannot estimate the margins, of our future PowerSpring products and services
will be. These new products and services may have lower margins than our current
products and

                                       23
<PAGE>   26
services. If in the future we derive a proportionately greater percentage of our
revenues from lower margin products and services, then our overall margins on
our total revenues will decrease and, accordingly, will result in lower net
income, or higher net losses, and less cash flow on the same amount of revenues.

         OUR MANAGEMENT OF PRIVATE ENERGY PROGRAMS PRESENTS RISKS TO US

         MGT is our subsidiary that manages and holds a small ownership interest
in two private energy programs that own natural gas assets. The operations of
MGT have been discontinued and MGT does not intend to form any new private
programs. MGT is pursuing the sale of the existing energy programs but will
continue managing the two business trusts that operate these energy programs
only until those programs are sold or liquidated or until MGT's interests and
management obligations in those programs are sold. These private programs were
financed by private placements of equity interest raising capital to acquire the
assets and business operated by the programs. Our management of these energy
programs presents risks to us, including:

         -        material and adverse changes in the business, results of
                  operations and financial conditions of the programs due to
                  events, conditions and factors outside the control of MGT,
                  such as general and local conditions affecting the energy
                  market generally and the revenues of the programs
                  specifically;

         -        lawsuits by investors in these programs who become
                  dissatisfied with the result of these programs;

         -        changes in the regulatory environment relating to these
                  programs;

         -        reliance upon significant suppliers and customers by these
                  programs;

         -        hazards of energy facilities; and

         -        changes in technology.

         If any of these risks materialize and we are unsuccessful in addressing
these risks, our business could be materially and adversely affected.

         OUR INTERNATIONAL OPERATIONS ARE SUBJECT TO MANY RISKS AND
         UNCERTAINTIES

         We market and sell some of our products and services in international
markets. Our revenues from sales into international markets were approximately
8% and 5% of our consolidated revenues in fiscal years 1998 and 1999. One
component of our strategy for future growth involves the expansion of our
products and services into new international markets and the expansion of our
marketing efforts in our current international markets. This expansion will
require significant management attention and financial resources to establish
additional offices, hire additional personnel, localize and market products and
services in foreign markets and to develop relationships with international
service providers. However, we have only limited experience in developing
localized versions of our products and services and in developing relationships
with international service providers. We cannot assure you that we will be
successful in expanding our international operations, or that revenues from
international operations will be sufficient to offset these additional costs. If
revenues from international operations are not adequate to offset the additional
expense from expanding these international operations, our business could be
materially and adversely affected.

         In addition to the uncertainty regarding our ability to generate
sufficient revenues from foreign operations and to expand our international
presence, there are risks inherent in doing business on an international level,
including:

         -        adverse changes in applicable laws and regulatory
                  requirements;

         -        import and export restrictions;

         -        export controls relating to technology;

         -        tariffs and other trade barriers;

         -        less favorable intellectual property laws;

         -        difficulties in staffing and managing foreign operations;


                                       24
<PAGE>   27
         -        political instability;

         -        fluctuations in currency exchange rates;

         -        potential adverse tax consequences;

         -        cultural and language difficulties;

         -        the impact of adverse economic and market conditions in
                  foreign countries;

         -        the potential exchange and repatriation of foreign earnings;

         -        localization and translation of products and services;

         -        difficulties in collecting accounts receivable and longer
                  collection periods; and

         -        the impact of local economic conditions and practices.

         Our success in expanding our international operations will depend in
large part of our ability to anticipate and effectively manage these and other
risks. We have limited experience in conducting our business outside the United
States and may encounter unforeseen difficulties in conducting operations in
foreign countries. In addition, while our current products are designed to meet
relevant regulatory requirements of foreign markets in which they are sold, any
inability to obtain any required foreign regulatory approval and any changes in
foreign regulatory requirements could have a material adverse effect on our
ability to conduct business in these markets. In addition, we may confront
significant challenges in developing and implementing localized versions of our
systems due to many factors including the different standards among utilities on
a country by country basis. We cannot assure you that we will be able to
successfully market, sell and deliver our products and services in these foreign
markets.

         OUR MARKETS ARE HIGHLY COMPETITIVE, AND THE COMPETITION WE FACE COULD
         MATERIALLY AND ADVERSELY AFFECT OUR ABILITY TO SELL OUR CURRENT
         PRODUCTS AND SERVICES, EXPAND OUR CURRENT BUSINESSES AND DEVELOP OUR
         NEW BUSINESSES

         The markets for energy products, services, technology and information
are highly competitive and subject to rapidly changing technology, new and
converging products, services and technologies, frequent product and service
performance improvements and evolving industry standards. In addition, we
anticipate facing intense competition in our Internet business, especially as
the use of the Internet for energy products and services grows. The growth
potential and deregulatory environment of the energy market have attracted and
are anticipated to continue to attract many new start-ups as well as established
businesses from different industries. Competition may also increase as a result
of industry consolidation. Increased competition could result in price
reductions, reduced gross margins, loss of market share, inability to penetrate
new markets or to develop new markets, any of which could have a material and
adverse effect on our business.

         Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical, marketing,
manufacturing and other resources than we do. This may enable our competitors to
respond more quickly to new or emerging technologies and changes in customer
requirements or preferences and to devote greater resources to the development,
promotion and sale of their products and services than we can. Our competitors
may be able to undertake more extensive marketing campaigns, adopt more
aggressive pricing policies and make more attractive offers to potential
employees, customers, strategic partners and suppliers and vendors than we can.
Our competitors may develop products and services that are equal or superior to
the products and services offered by us or that achieve greater market
acceptance than our products do. In addition, current and potential competitors
have established or may establish cooperative relationships among themselves or
with third parties to improve their ability to address the needs of our existing
and prospective customers. As a result, it is possible that new competitors may
emerge and rapidly acquire significant market share or impede our ability to
acquire market share in new markets. Increased competition is likely to result
in price reductions, reduced gross margins and loss of market share, and the
inability to develop new businesses, which could materially and adversely affect
our business. We cannot assure you that we will have the financial resources,
technical expertise, portfolio of market or services or marketing and support
capabilities to successfully compete.


                                       25
<PAGE>   28
         WE MAY BE UNABLE TO SUCCESSFULLY ACQUIRE OTHER COMPANIES, FORM
         STRATEGIC ALLIANCES OR SUCCESSFULLY INTEGRATE ANY ACQUISITION OR
         ALLIANCE

         In the past, we have grown by acquiring complimentary businesses,
technologies, services and products and entering into strategic alliances with
complimentary businesses. We evaluate potential acquisition opportunities from
time to time, including those that could be material in size and scope. As part
of our growth strategy, we intend to continue to evaluate potential
acquisitions, investment opportunities and strategic alliances on an on-going
basis as they present themselves to facilitate our ability to enhance our
existing products and services and introduce new products and services on a
timely basis. However, we do not know if we will be able to identify any future
opportunities that we believe will be beneficial for us. Even if we are able to
identify an appropriate acquisition opportunity, we may not be able to
successfully finance the acquisition. A failure to identify or finance future
acquisitions may impair our growth and adversely affect our business.

         Any future acquisition involves risks commonly encountered in business
relationships, including:

         -        difficulties in assimilating and integrating the operations,
                  technologies, products and services of the acquired
                  businesses;

         -        difficulties in retaining key personnel;

         -        diversion of management's time and resources away from our
                  normal daily operations;

         -        difficulties in successfully incorporating licensed or
                  acquired technology and rights into our product and service
                  offerings;

         -        difficulties in maintaining uniform standards, controls,
                  procedures and policies within the two organizations;

         -        changes in management resulting from an alliance or
                  acquisition could impair relationships with employees and
                  customers of the acquired company's risks of entering markets
                  in which we have no or limited direct prior experience;

         -        potential disruptions of our ongoing business;

         -        unexpected costs associated with the acquisition; and

         -        potential additional expenses associated with amortization of
                  acquired intangible assets, integration costs and
                  unanticipated liabilities or contingencies.

         We cannot assure you that any acquisition of new businesses or
technology will lead to the successful development of new or enhanced products
and services, or that any new or enhanced products and services, if developed,
will achieve market acceptance or prove to be profitable.

         For these reasons, future acquisitions could materially and adversely
affect our existing businesses. Moreover, we cannot predict the accounting
treatment of any acquisition, in part because we cannot be certain whether
current accounting regulations, conventions or interpretations will prevail in
the future.

         In addition, to finance any future acquisitions, it may be necessary
for us to incur additional indebtedness or raise additional funds to public or
private financings. This financing may not be available to us or may be
available on terms satisfactory to us or to those whose consents are required
for our financing. Available equity or debt financing available may materially
and adversely affect our business and operations and, in the case of equity
financings, may significantly dilute the percentage ownership interests of our
stockholders.

         We currently have no agreements, commitments or obligations with
respect to any material acquisition. We cannot assure you that we will make any
additional acquisitions or that any acquisitions, if made, will be successful,
will assist us in the accomplishment of our business strategy, or will generate
sufficient revenues to offset the associated costs and other adverse effects or
will otherwise result in us receiving the intended benefits of the acquisition.


                                       26
<PAGE>   29
         IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS OR IF
         WE FACE A CLAIM OF INTELLECTUAL PROPERTY INFRINGEMENT BY A THIRD PARTY,
         WE COULD LOSE IMPORTANT INTELLECTUAL PROPERTY RIGHTS OR BE LIABLE FOR
         SIGNIFICANT DAMAGES AND OUR BUSINESS COULD BE MATERIALLY AND ADVERSELY
         AFFECTED

         Our success and ability to compete depends, in substantial part, upon
our intellectual property rights and technology. We rely primarily on patent,
copyright, trademark and trade secret laws, along with confidentiality
procedures, contractual provisions and licensing arrangements, to establish and
protect our proprietary rights. Although we hold patents and trademarks in our
business, we believe that the success of our business depends more upon our
proprietary technology, information, processes and know-how than on patents or
trademarks. Much of our proprietary information and technology is not patented
and may not be patentable. Moreover, we have applied for registration of a
number of key trademarks and service marks and intend to introduce new
trademarks and service marks. We may not be successful in obtaining registration
for one or more of these marks.

         Despite our efforts to protect our intellectual property rights, our
actions may be inadequate to protect these rights or to prevent others from
claiming violations of their proprietary rights. It may be possible for
unauthorized third parties to copy, reverse engineer or otherwise obtain, use or
exploit aspects of our products and services, develop similar technology
independently, or otherwise obtain and use information that we regard as
proprietary. We cannot assure you that our competitors will not independently
develop technology similar or superior to our technology or design around our
proprietary rights. We generally require our employees, consultants and
strategic partners to enter into confidentiality and proprietary invention
agreements with us to limit use of, access to, and distribution of our
proprietary technology. Our intellectual property rights with respect to
PowerSpring may not be viable or of value in the future because of validity,
enforceability and scope or protection of proprietary rights in Internet-related
industries is uncertain and still evolving. In addition, the laws of some
foreign countries may not protect our proprietary rights as fully or in the same
manner as the laws of the United States.

         We may need to resort to litigation to enforce our intellectual
property rights, to protect our trade secrets, and to determine the validity and
scope of other companies' proprietary rights, or to defend against claims of
infringement or validity in the future. However, litigation could result in
significant costs or the diversion of management and financial resources. We
cannot assure you that any litigation will be successful or will prevail over
counterclaims against us. As a result, any litigation could materially and
adversely affect our business.

         Although we are not aware that any of our products, services or
technologies infringe on the proprietary rights of third parties, we cannot be
certain that our products, services and technologies do not or will not infringe
valid intellectual property rights held by third parties. In addition, we cannot
assure you that third parties will not claim that we have infringed their
intellectual property rights. We may be subject to legal proceedings and claims
from time to time relating to the intellectual property of third parties in the
ordinary course of our business. We may incur substantial expenses in defending
against these third party infringement claims, regardless of their merit.
Successful infringement claims against us could result in substantial monetary
liability or may materially disrupt the conduct of our business. In addition,
even if we prevail on these claims, this litigation could be time-consuming and
expensive to defend, and could result in the diversion of our time and
attention, which could materially and adversely affect our business.

         POTENTIAL PROBLEMS RESULTING FROM THE YEAR 2000 ISSUE COULD CAUSE US TO
         INCUR UNANTICIPATED EXPENSE, DIVERT MANAGEMENT'S TIME AND ATTENTION AND
         DECREASE USE OF INTERNET SERVICES, ALL OF WHICH COULD MATERIALLY AND
         ADVERSELY AFFECT OUR BUSINESS

         The "Year 2000 issue," which was anticipated to present potential risks
and uncertainties to virtually all businesses, is the result of computer
programs and systems that use two digits, rather than four digits, to define the
applicable year. As a result of the Year 2000 issue, these programs and systems
could have failed or malfunctioned because they could not distinguish between
twentieth century and twenty-first century dates. This, in turn, could have
resulted in a major system failure or miscalculations, including an inability to
process transactions, send invoices or engage in normal business activities. In
addition, Year 2000 problems could subject us to liability claims and adversely
affect PowerSpring because Internet industries are susceptible to Year 2000
problems due to their reliance on computer hardware and software. Our potential
areas of exposure to Year 2000 issues include products purchased from third
parties, computers, software, telephone systems and other equipment used
internally. These Year 2000 problems could materially and adversely affect our
business.


                                       27
<PAGE>   30
         To date, we have not experienced any known material adverse effects on
our current products and services or internal systems or of the products,
services or systems or our suppliers, customers and third parties with whom we
do significant business as a result of the Year 2000 issue. In addition, the
total cost of our Year 2000 compliance activities has not been material to our
results of operations. However, some Year 2000 problems could arise later in
2000 or not be currently detectable. We cannot assure you that the Year 2000
issue will not have a material adverse effect on our business.

         FROM TIME TO TIME, WE ARE SUBJECT TO LAWSUITS THAT, IF THEY ARE
         SUCCESSFULLY PROSECUTED AGAINST US, COULD MATERIALLY AND ADVERSELY
         AFFECT OUR BUSINESS

         We are defendants to a pending action filed in 1993 in Denver District
Court in which the plaintiff is seeking $420,000 in damages plus punitive
damages. We believe the allegations against us are without merit. We have
vigorously contested these allegations, and we have asserted counterclaims
against the plaintiff. In 1997, the Denver District Court entered a summary
judgment in favor of us, but the summary judgment was reversed in February 1999
by the Colorado Court of Appeals. This action is currently scheduled for trial
in the third quarter of 2000. We are also from time to time involved in routine
litigation incidental to our business, although currently there is no other
pending, or to our knowledge threatened, material legal proceedings. Although we
do not currently expect any legal proceedings to have a material and adverse
affect on us, we recognize that the outcome of litigation is inherently
uncertain. Therefore, we cannot assure you that present or future litigation
could not materially and adversely affect our business.

         WE FACE SOME RISKS THAT ARE INHERENT IN NATURAL GAS OPERATIONS

         Some of our operations are subject to the hazards and risks inherent of
the servicing and operation of natural gas assets, including encountering
unexpected pressures, explosions, fire, natural disasters, blowouts, cratering
and pipeline ruptures, which could result in personal injuries, loss of life,
environmental damage and other damage to our properties and the properties of
others. These operations involve numerous financial, business, regulatory,
environmental, operating and legal risks. Damages occurring as a result of these
risks may give rise to product liability claims against us. We have product
liability insurance generally providing up to $6 million coverage per occurrence
and $7 million annual aggregate coverage. Although we believe that our insurance
is adequate and customary for companies of our size that are engaged in
operations similar to ours, losses due to risks and uncertainties could occur
for uninsurable or uninsured risks or could exceed our insurance coverage.
Therefore, the occurrence of a significant adverse effect that is not fully
covered by insurance could have a material and adverse effect on our business.
In addition, we cannot assure you that we will be able to maintain adequate
insurance in the future at reasonable rates.

         WE COULD BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATION WHICH
         AFFECTS OUR ABILITY TO OFFER OUR PRODUCTS AND SERVICES WHICH AFFECTS
         DEMAND FOR OUR PRODUCTS AND SERVICES

         Our business operations are subject to varying degrees of federal,
state, local and foreign laws and regulations. The modification or adoption of
future laws and regulations could adversely affect our business and our ability
to continually modify or alter our methods of operations at reasonable costs. We
cannot assure that we will be able, for financial or other reasons, to comply
with all applicable laws and regulations. If we fail to comply with these laws
and regulations, we could become subject to substantial penalties which could
materially and adversely affect our business.

         OUR BUSINESS WILL SUFFER IF WE ARE UNABLE TO CONTINUE TO ATTRACT AND
         RETAIN KEY MANAGEMENT AND TECHNICAL PERSONNEL

         We believe our future success will depend in large part upon our
ability to attract and retain highly qualified technical, managerial, sales and
marketing, finance and operation personnel. In particular, we will need to hire
highly qualified personnel for PowerSpring, including a chief executive officer,
a chief financial officer and an information technology officer. Competition for
qualified personnel is intense, and we cannot assure you that we will be able to
attract and retain these key employment in the future. We do not maintain key
person life insurance policies for any key members of our management team. The
loss of the services of one or more of our key

                                       28
<PAGE>   31
personnel could have a material adverse effect on our business. We cannot assure
you that we will be able to retain our current key personnel or that we will be
able attract or retain other highly qualified personnel in the future. We have
from time to time in the past experienced, and we expect to continue to
experience in the future, difficulty in hiring and retaining highly skilled
employees with appropriate qualifications. A shortage in the number of trained
technical and marketing personnel could limit our ability to increase sales of
our existing products and services and launch new product and service offerings,
including in our PowerSpring business. We do not have long-term employment
agreements with any of our key personnel, other than with W. Phillip Marcum, our
President and Chief Executive Officer, A. Bradley Gabbard, our Executive Vice
President and Chief Financial Officer, and John A. Harpole, PowerSpring's
Executive Vice President and Chief Operating Officer.

         OUR BUSINESS COULD SUFFER IF WE CANNOT MAINTAIN AND EXPAND OUR CURRENT
         STRATEGIC ALLIANCES AND DEVELOP NEW ALLIANCES

         A key element of our business strategy is the formation of corporate
relationships such as strategic alliances with other companies to provide
products and services to existing and new markets and to develop new products
and services and enhancements to existing products and services. We believe that
our success in the future in penetrating new markets will depend in large part
on our ability to maintain these relationships and to cultivate additional or
alternative relationships. However, we cannot assure you that we will be able to
develop new corporate relationships, or that these relationships will be
successful in achieving their purposes. Our failure to continue our existing
corporate relationships and develop new relationships could materially and
adversely affect our business.

         AS A RESULT OF THEIR BENEFICIAL OWNERSHIP OF A LARGE PERCENTAGE OF OUR
         COMMON STOCK, OUR DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT
         STOCKHOLDERS COULD EXERT SIGNIFICANT INFLUENCE OVER MATTERS REQUIRING
         STOCKHOLDER VOTES

         As of March 15, 2000, our executive officers, directors and 5% or
greater stockholders beneficially owned, in the aggregate, approximately 54.7%
of our outstanding Common Stock, assuming they exercise or convert all stock
options, warrants and other rights exercisable within 60 days of that date. As a
result, these stockholders could, as a practical matter, be able to exercise
significant control over matters requiring approval by our stockholders,
including the election of directors and the approval of mergers, sales of
substantially all of our assets and other significant corporate transactions.
The interests of these stockholders may differ from the interests of other
stockholders. In addition, this concentration of stock ownership may have the
effect of delaying or preventing a change in control of us.

         VIRTUALLY ALL OF OUR SHARES ARE ELIGIBLE FOR FUTURE SALE BY OUR CURRENT
         STOCKHOLDERS, AND SIGNIFICANT SALES OF THESE SHARES COULD RESULT IN A
         DECLINE IN OUR STOCK PRICE

         If our stockholders sell a significant number of shares of our Common
Stock in the public market, including shares issuable upon the exercise of
outstanding options, warrants and other rights, or if there is a perception that
these sales could occur, then the market price of our Common Stock could fall.
These sales also might make it more difficult for us to sell equity securities
in the future at a time and price that we deem appropriate.

         On March 15, 2000, 5,003,678 shares of Common Stock were outstanding.
On the same date, options to purchase 472,397 shares of Common Stock were
outstanding, and shares acquired upon exercise of these stock options are
eligible for sale on the public market from time to time subject to vesting.
These stock options generally have exercise prices significantly below the last
reported sale price of the Common Stock as reported on the cover of this
prospectus. On the same date, 7,000 shares of Series B Preferred Stock
convertible into 1,179,762 shares of Common Stock, and warrants and other rights
to purchase 1,946,990 shares of Common Stock, were outstanding. Virtually all
shares underlying these warrants and other rights are covered by registration
rights. The possible sale of a significant number of these shares issuable upon
the exercise of options and warrants could cause the price of the Common Stock
to decline.

         PROVISIONS OF OUR SECOND RESTATED CERTIFICATE OF INCORPORATION, BY-LAWS
         AND STOCKHOLDER RIGHTS PLAN, AND OF DELAWARE LAW, CONTAIN ANTI-TAKEOVER
         MEASURES THAT COULD DISCOURAGE A THIRD-PARTY ACQUISITION OF OUR COMMON
         STOCK AT A PREMIUM TO THE MARKET PRICE


                                       29
<PAGE>   32
         Some provisions in our Second Restated Certificate of Incorporation
("Second Restated Certificate"), our Amended and Restated By-Laws ("By-Laws"),
and our stockholder rights plan, as well as some provisions of Delaware law,
could make it more difficult for a third party to acquire us or discourage a
third party from attempting to acquire us, even if doing so would be beneficial
to stockholders. These provisions could also limit the price that investors
might be willing to pay in the future for shares of our Common Stock. These
provisions include:

         -        a classified Board of Directors in which only approximately
                  1/3 of the total board members are elected at each annual
                  meeting;

         -        authority for our Board of Directors to issue Common Stock and
                  Preferred Stock, and to determine the price, voting and other
                  rights, preferences, privileges and restrictions of
                  undesignated shares of Preferred Stock, without any vote by or
                  approval of our stockholders (other than the consent of
                  holders of Series B Preferred Stock relating to any senior or
                  equal ranking securities);

         -        the existence of large amounts of authorized but unissued
                  shares of Common Stock and Preferred Stock;

         -        super-majority voting requirements to effect material
                  amendments to our Second Restated Certificate and By-Laws;

         -        limitations on the persons who may call special meetings of
                  stockholders;

         -        prohibiting stockholder action by written consent;

         -        our stockholders rights plan;

         -        a fair price provision that sets minimum price requirements
                  for potential acquirers;

         -        anti-greenmail provisions which limit our ability to
                  repurchase shares of Common Stock from significant
                  stockholders;

         -        restrictions under Delaware law on mergers and other business
                  combinations between us and any 15% stockholders; and

         -        advance notice requirements for director nominations and for
                  stockholder proposals.

         WE DO NOT INTEND TO PAY DIVIDENDS ON THE COMMON STOCK, AND OUR ABILITY
         TO PAY DIVIDENDS ON THE COMMON STOCK IS LIMITED

         We have never declared or paid any cash dividends on our Common Stock.
Therefore, a stockholder will not experience a return on its investment in our
Common Stock without selling its shares, because we currently intend on
retaining any future earnings to fund our growth and do not expect to pay
dividends in the foreseeable future on the Common Stock.

         Under Delaware law, we are not permitted to make a distribution to our
stockholders, including dividends on our capital stock, if, after giving effect
to the payment, we would not be able to pay our debts as they become due in the
usual course of business or if our total assets would be less than the sum of
our total liabilities plus the amount which would be needed if we were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of stockholders whose preferential rights are superior to those
receiving the distribution. Consequently, if we fail to meet these criteria, we
will be unable to pay dividends on the Series B Preferred Stock.

         Our ability to pay dividends on our Common Stock is restricted by our
current credit facility. If we fail to pay dividends on the Series B Preferred
Stock, we will be prohibited from paying dividends on the Common Stock until all
unpaid dividends on the Series B Preferred Stock have been paid in full. In the
future, our Board of Directors will determine whether we pay dividends on the
Series B Preferred Stock or on our Common Stock. We cannot assure you that we
will pay dividends on the Series B Preferred Stock or on our Common Stock.



                                       30
<PAGE>   33
         OUR STOCK PRICE IS SUBJECT TO EXTREME PRICE AND VOLUME FLUCTUATIONS

         The market price and volume of the Common Stock has in the past been,
and in the future is likely to continue to be, highly volatile. The stock market
in general has been experiencing extreme price and volume fluctuations for
years. The market prices of securities of technology companies and
Internet-related companies in particular have been especially volatile. We
cannot assure you that our Common Stock will continue to trade at recent price
and volume levels. The following factors could cause wide fluctuations in the
market price and trading volume of our Common Stock in the future:

         -        actual or anticipated variations in our results of operations;

         -        announcements of technological innovations;

         -        changes in, or the failure by us to meet, securities analysts'
                  estimates and expectations;

         -        introduction of new products and services by us or our
                  competitors;

         -        conditions or trends in the energy services and information
                  industries in general and in the Internet and other technology
                  industries in particular;

         -        announcements by us or our competitors of significant
                  technical innovations, contracts, acquisitions, strategic
                  relationships, joint ventures or capital commitments;

         -        announcements by us or our competition of the success or
                  status of our business;

         -        general market conditions;

         -        additions or departures of our key personnel;

         -        sales of our Common Stock by directors, executive officers and
                  significant stockholders; and

         -        the gain or loss of significant customer orders.

         Many of these factors are beyond our control. These factors may
decrease the market price of our Common Stock, regardless of our operating
performance.

         In addition, broad fluctuations in price and volume have been unrelated
or disproportionate to operating performance, both of the market in general and
of us in particular. Any significant fluctuations in the future might result in
a material decline in the market price of our Common Stock. In the past,
following periods of volatility in the market price of a company's securities,
securities class action litigation has often been brought against that company.
We may become involved in this type of litigation in the future. Litigation is
often expensive and diverts management's attention and resources, which could
have a material adverse effect on our business, even if we ultimately prevail in
the litigation.

         WE MAY ISSUE ADDITIONAL PREFERRED STOCK RANKING JUNIOR TO THE SERIES B
         PREFERRED STOCK, WHICH COULD DILUTE THE INTERESTS OF HOLDERS OF COMMON
         STOCK

         The terms of the Series B Preferred Stock do not limit the issuance of
additional series of Preferred Stock ranking junior to the Series B Preferred
Stock, but do require the approval of the holders of a majority of the
outstanding shares of Series B Preferred Stock to issue any stock senior to or
on a parity with the Series B Preferred Stock. The issuance of additional shares
of Preferred Stock ranking junior to the Series B Preferred Stock could dilute
the interest of holders of our Common Stock.

ITEM 2. DESCRIPTION OF PROPERTY

         We lease our principal executive offices located in downtown Denver,
Colorado. The leased space contains 3,443 square feet. The lease currently has a
monthly rental obligation of $4,906, including operating costs, expires July 31,
2001, and contains a market-rate renewable lease provision.

         Metretek Florida leases its principal business offices, located in
Melbourne, Florida, for its executive, manufacturing, engineering, warehouse and
marketing operations. This facility has 50,000 square feet and a current

                                       31
<PAGE>   34
monthly rental obligation of $29,856, including operating costs. The lease
expires July 30, 2005. Metretek Florida has sub-leased 2,380 square feet of its
space for $1,896 monthly rental.

         Southern Flow leases office facilities in the following locations:
Lafayette, Belle Chasse and Shreveport, Louisiana; Jackson, Mississippi; Houston
and Victoria, Texas; Tulsa, Oklahoma; and Aztec, New Mexico. These offices have
an aggregate of approximately 66,000 square feet, total monthly rental
obligations of approximately $31,000 and terms expiring at various times through
2001. In addition, Southern Flow owns and occupies land and a 8,600 square foot
office building in Dallas, Texas.

         PowerSpring leases its principal business office located in downtown
Denver, Colorado. The leased space contains 2,902 square feet. The lease
currently has a monthly rental obligation of $4,540 and expires January 31,
2004. PowerSpring intends to lease additional office space during 2000 to
accommodate its anticipated growth needs, although we cannot assure you that any
new leases will be on terms favorable to us.


ITEM 3. LEGAL PROCEEDINGS

         In 1993, a former employee filed a lawsuit in Denver District Court
against us and DVCO Fuel Systems, Inc. ("DVCO"), one of our former subsidiaries,
alleging that we conspired with third parties to defraud him and that we
intentionally interfered with contracts in which he had an interest. The former
employee is seeking damages in the amount of approximately $420,000 plus
punitive damages. We have denied the former employee's claims and have asserted
counterclaims against the former employee, alleging that (1) he breached an
agreement with us which included a legal release, (2) he made intentional and/or
negligent misrepresentations regarding his qualification and reputation in the
compressed natural gas industry, (3) he breached his fiduciary duty to us, and
(4) he disparaged us. On September 18, 1997, the Denver District Court granted
our motion for summary judgment in our favor as to all claims of the former
employee. On February 18, 1999, the Colorado Court of Appeals reversed the
summary judgment decision and remanded the lawsuit for trial as to the
conspiracy claim only. The Colorado Supreme Court has upheld the Colorado Court
of Appeals' ruling. As a result, the lawsuit is scheduled for trial in August
2000. We believe the allegations against us are without merit and intend to
vigorously defend the claims made against us in the lawsuit. Although the
ultimate outcome of litigation is inherently uncertain, in the opinion of
management, this lawsuit is not expected to have a material adverse effect on
our business, financial condition or results of operations.

         From time to time, we are involved in routine litigation incidental to
our business. However, other than as set forth above, no legal proceedings are
currently pending or have been overtly threatened against us that we expect,
based upon current information, to have a material adverse effect on our
business, financial condition or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         At a special meeting of stockholders held on February 3, 2000, in
connection with the Units Private Placement, the following proposals were
submitted to and approved by our stockholders:

         Proposal 1: To approve and ratify:

                  -        the issuance and sale in a private placement of (a)
                           up to 1,400,000 shares of Common Stock, (b) up to
                           7,000 shares of Series B Preferred Stock, and (c)
                           Unit Warrants to purchase up to 700,000 shares of
                           Common Stock;

                  -        the issuance of shares of Common Stock upon
                           conversion of the Series B Preferred Stock, in
                           accordance with the terms of the Series B Preferred
                           Stock; and

                  -        the issuance of shares of Common Stock upon exercise
                           of the Warrants, in accordance with the terms of the
                           Unit Warrants.
<TABLE>
<CAPTION>

         FOR                    AGAINST          ABSTAIN
         ---                    -------          -------
<S>                            <C>             <C>
        2,136,412                51,250          3,788
</TABLE>


                                       32
<PAGE>   35
         Proposal 2: To approve an amendment to Article Fourth of the Restated
                     Certificate of Incorporation, as amended to that date, to:

                  -        increase the authorized number of shares of our
                           Preferred Stock, par value $.01 per share, by
                           1,000,000 shares to an aggregate of 3,500,000 shares;

                  -        eliminate the then authorized Series A Preferred
                           Stock, of which no shares were outstanding;

                  -        amend the terms of the Series B Preferred stock to
                           provide the holders of Series B Preferred Stock with
                           majority Board representation upon the occurrence of
                           a redemption default; and

                  -        eliminate references to prior reverse stock splits.
<TABLE>
<CAPTION>

         FOR                    AGAINST                   ABSTAIN
         ---                    -------                   -------
<S>                             <C>                       <C>
         2,088,804              388,683                     3,963
</TABLE>


         Proposal 3: To approve an amendment to our 1998 Stock Incentive Plan
                     to:

                  -        increase the number of shares of Common Stock
                           authorized for issuance thereunder by 500,000 shares
                           to an aggregate of 750,000 shares; and

                  -        increase the limit on the maximum number of shares
                           with respect to which awards may be granted during
                           any calendar year to any individual participant from
                           25,000 shares to 100,000 shares.
<TABLE>
<CAPTION>

           FOR                  AGAINST                   ABSTAIN
           ---                  -------                   -------
<S>                             <C>                       <C>
          2,394,232              78,311                     8,907
</TABLE>


                                       33
<PAGE>   36
                                     PART II


ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS


         Our Common Stock is traded on the Nasdaq National Market under the
symbol "MTEK." Our Dividend Warrants, which were issued as a dividend to
stockholders on September 18, 1998, have been traded on the Nasdaq SmallCap
Market since such date under the symbol "MTEKW". The following table sets forth,
for the periods indicated, the range of the high and low closing sale prices, of
the Common Stock as reported on the Nasdaq National Market, adjusted to reflect
the 1-for-4 reverse split of the Common Stock effected on July 6, 1998, and of
the Dividend Warrants as reported on the Nasdaq SmallCap Market.
<TABLE>
<CAPTION>

                                                    COMMON STOCK                   DIVIDEND WARRANTS
                                            ---------------------------         ----------------------
                                               HIGH              LOW              HIGH            LOW
                                               ----              ---              ----            ---
<S>                                         <C>                <C>               <C>              <C>
YEAR ENDED DECEMBER 31, 1998:
First Quarter ...............                $5.50             $4.13
Second Quarter ..............                 5.25              3.12
Third Quarter ...............                 3.25              1.78             $0.44            $0.31
Fourth Quarter ..............                 2.56              1.41              0.75             0.20

YEAR ENDED DECEMBER 31, 1999:
First Quarter ...............                 2.31              1.56              0.63             0.31
Second Quarter ..............                 2.25              1.44              0.56             0.25
Third Quarter ...............                 7.56              2.16              3.81             0.41
Fourth Quarter ..............                 6.75              4.44              3.38             1.75
</TABLE>

HOLDERS

         As of March 15, 2000, there were 281 holders of record of the Common
Stock and 278 holders of record of the Dividend Warrants. Because many of the
shares of Common Stock are held by brokers and other institutions on behalf of
stockholders, we are unable to determine precisely the total number of
stockholders represented by these record holders but estimates, based upon
available information, that there are at least 3,000 beneficial owners of its
Common Stock.

DIVIDENDS

         We have never declared or paid cash dividends on our Common Stock, and
do not anticipate declaring or paying any cash dividends on the Common Stock in
the foreseeable future. We currently intend to retain all future earnings, if
any, for use in the operation of our business. In addition, the terms of our
credit facility prohibit the payment of dividends (other than on the Series B
Preferred Stock) without the consent of our lender, and the terms of our Series
B Preferred Stock contain certain restrictions on our ability to pay dividends
on our Common Stock. Future dividends, if any, will be determined by our Board
of Directors, based upon our earnings, financial condition, capital
requirements, charter restrictions, contractual restrictions and such other
factors as our Board of Directors deems relevant.

         Holders of Series B Preferred Stock are entitled to receive dividends
in cash at the rate of 8% per annum, which dividends may be paid or accrued,
plus any additional dividends declared by the Board of Directors, and are
entitled, under specified circumstances, to participate in dividends declared or
paid on the Common Stock.

RECENT SALES OF UNREGISTERED SECURITIES

         On February 4, 2000, we completed the Units Private Placement,
consisting of 7,000 Units (including 1,450 Units issued December 9, 1999) issued
to institutional investors and other "accredited investors" (as such term is
defined Rule 501 of Regulation D under the Securities Act) for total gross
proceeds of $14 million. Each Unit consisted of 200 shares of Common Stock, one
share of Series B Preferred Stock and Unit Warrants to purchase 100 shares of
Common Stock.

         Each share of Series B Preferred Stock will be convertible, in whole or
in part, at any time after June 9, 2000 at the option of the holder, into that
number of shares of Common Stock equal to the "conversion value" of

                                       34
<PAGE>   37
such share of Series B Preferred Stock, which is $1,000 per share, plus
accumulated and unpaid dividends on such share, divided by the then applicable
"conversion price" of the Series B Preferred Stock. The initial conversion price
of the Series B Preferred Stock is $5.9334 per share of Common Stock. Based upon
an initial conversion value of $1,000, each share of Series B Preferred Stock is
initially convertible into 168.5374 shares of Common Stock. The conversion price
is subject to adjustment upon the following events:

         -        If, on December 9, 2000, the "reset price", computed by
                  multiplying 110% by the sum of (1) the average closing bid
                  price of the Common Stock for the 30 trading days immediately
                  preceding this date, plus (2) the fair market value of any
                  securities, cash or assets (other than any dividend or
                  distribution paid exclusively in cash or in Common Stock)
                  distributed or made payable to the holders of Series B
                  Preferred Stock on an as-converted per share basis, is less
                  than the then applicable conversion price, then the conversion
                  price of the Series B Preferred Stock will be reduced to the
                  reset price, provided that the conversion price cannot be
                  reduced by more than 50%;

         -        Issuances, sales or exchanges of shares of Common Stock at a
                  price per share of Common Stock, or issuances of option,
                  warrants or rights to subscribe for shares of Common Stock or
                  securities convertible into exchangeable shares of Common
                  Stock, at a purchase price less than the greater of the
                  "market price" of the Common Stock or the conversion price of
                  the Series B Preferred Stock in effect immediately before such
                  issuance, sale or exchange, which specified exceptions for
                  employee stock option programs and outstanding warrants;

         -        Subdivision, combination, split-ups, reverse splits,
                  reclassifications or similar corporate transactions;

         -        Any dividend payable in shares of Common Stock; or

         -        Any merger, consolidation or sale of all or substantially all
                  of our properties and assets;

         Each Unit Warrant entitles the holder to purchase one share of Common
Stock at an initial exercise price of $6.7425 per share. The initial exercise
price of the Unit Warrants will be reset on December 9, 2000 to 125% of the
average closing bid price of the Common Stock for the 30 trading days
immediately preceding such date, if the computed average closing bid price is
less than the exercise price of the Unit Warrants then in effect. The exercise
price is subject to further adjustment under the anti-dilution provisions of the
Unit Warrants, which are substantially the same as the anti-dilution provisions
of the Series B Preferred Stock described above. The Unit Warrants can be
exercised at any time until December 9, 2004. Instead of paying the exercise
price in cash, holders of Units Warrants may exercise their Unit Warrants by
delivering to us shares of Common Stock with the fair market value equal to the
exercise price. Alternatively, holders of Units Warrants may make a "cashless"
exercise of the Unit Warrants and receive, upon exercise without making any
payment of cash, Common Stock or any other asset, a "net" number of shares of
Common Stock determined by formula based on the amount that the trading price of
the Common Stock exceeds the exercise price then in effect.

         In connection with the Units Private Placement, we engaged First Albany
Corporation ("First Albany") to serve as our exclusive placement agent. We paid
First Albany a fee equal to 2% of the gross proceeds, plus customary fees and
expenses, and issued to First Albany and its affiliates warrants to purchase
30,000 shares of Common Stock at an exercise price of $14.50 per share,
exercisable from date of grant for four years.

         On November 10, 1999, as a royalty payment to a licensor under a
license agreement, we issued 9,127 shares of Common Stock to the licensor.

         Each of the issuances of securities described above was made in
reliance upon an exemption from the registration requirements of the Securities
Act pursuant to Section 4(2) of the Securities Act as a transaction not
involving a public offering. We reasonably believe that each recipient of such
securities had such knowledge and experience in financial and business matters
to be capable of evaluating the risks and merits of the investment, and each
recipient represented its intention to acquire the securities for investment
purposes only and not with a view to or for the sale in connection with any
unregistered distribution thereof. All recipients had adequate access, through
contractual provisions and/or their relationships with us, to information about
us, our business and operations, and

                                       35
<PAGE>   38
the securities. In connection with those issuances of securities, appropriate
legends were affixed to the certificates issued in such transactions.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

INTRODUCTION

         The following discussion and analysis of our results of operations for
the years ended December 31, 1999 and 1998 and of our consolidated financial
condition as of December 31, 1999 should be read in conjunction with our
consolidated financial statements and related notes included elsewhere in this
Report.

         We recently formed two subsidiaries to develop and operate our
Internet-based energy information and services business, PowerSpring and
TotalPlan. TotalPlan was merged into PowerSpring in March 2000. Neither
PowerSpring nor TotalPlan had any revenues during the year ended December 31,
1999.

         This discussion contains forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act. We may
identify these statements by the use of words such as "may", "could", "should",
"will", "project", "continue", "estimate", "believe", "expect", "anticipate",
"intend", "plan" and similar expressions. These forward-looking statements
involve several risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of various factors, including those we discuss in "Item I. Description of
Business -- Additional Factors That Could Affect Our Business and Future
Results", and elsewhere in this Report. These forward-looking statements speak
only as of the date of this Report, and we caution you not to rely on these
statements without also considering the risks and uncertainties associated with
these statements and our business that are addressed in this Report.


RESULTS OF OPERATIONS

         The following table sets forth information related to our current
primary business segments and is intended to assist you in understanding our
results of operations for the periods presented.
<TABLE>
<CAPTION>

                                                        YEARS ENDED
                                                        DECEMBER 31,
                                                --------------------------
                                                  1999              1998
                                                -------           --------
                                               (dollar amounts in thousands)
<S>                                             <C>              <C>
REVENUES:
       Southern Flow ...................        $ 11,112         $ 11,106
       Metretek ........................           8,234            8,774
       PowerSpring .....................            --               --
       Other ...........................              19               42
                                                --------         --------
       Total ...........................        $ 19,365         $ 19,922
                                                ========         ========
GROSS PROFIT:
       Southern Flow ...................        $  2,656         $  2,448
       Metretek ........................           2,929            4,568
       PowerSpring .....................            --               --
                                                --------         --------
       Total ...........................        $  5,585         $  7,016
                                                ========         ========
</TABLE>


                                       36
<PAGE>   39
<TABLE>

<S>                                            <C>               <C>
SEGMENT PROFIT (LOSS):
       Southern Flow ...................        $    977         $    747
       Metretek ........................          (1,715)             434
       PowerSpring .....................          (1,506)            --
       Other ...........................          (1,432)          (1,486)
                                                --------         --------
       Loss from continuing operations .          (3,676)            (305)
       Loss from discontinued operations            --                (34)
                                                --------         --------
       Total ...........................        $ (3,676)        $   (339)
                                                ========         ========
</TABLE>


       We currently have three reportable business segments: automated energy
data management; natural gas measurement services; and Internet-based energy
information and services. The operations of our automated energy data management
segment are conducted by Metretek Florida. Metretek Florida's manufactured
products fall into three categories: remote data collection products; electronic
corrector products; and application-specific products. Metretek Florida also
provides energy data collection and management services and post-sale support
services for its manufactured products.

       The operations of our natural gas measurement services segment are
conducted by Southern Flow. Southern Flow's services include on-site field
services, chart processing and analysis, laboratory analysis, and data
management and reporting. These services are provided principally to customers
involved in natural gas production, gathering, transportation and processing.

       The operations of our Internet-based energy information and services
segment are conducted by PowerSpring. PowerSpring has incurred operating costs
to date and does not expect to commence revenue generating operations until the
second quarter of 2000.

       We evaluate the performance of our operating segments based on income
(loss) before taxes, nonrecurring items and interest income and expense. Other
profit (loss) amounts in the table above include corporate related items,
results of insignificant operations, and income and expense not allocated to its
operating segments.

       During 1998, we decided to discontinue our business segment engaged in
acquiring or financing the acquisition of natural gas assets through private
programs. The financial statements as of and for the year ended December 31,
1998 have been reclassified to exclude the operating results of this segment
from continuing operations and to account for this segment as discontinued
operations. The following discussion relates only to our continuing operations.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

         Revenues. Our consolidated revenues for the year ended December 31,
1999 decreased $556,914, or 3%, compared to the same period in 1998, due to a
decrease in revenues by Metretek Florida. Metretek Florida's revenues for the
year ended December 31, 1999 decreased $540,767, or 6%, compared to the same
period in 1998. A decrease in Metretek Florida's international sales by $726,782
was partially offset by an increase in Metretek Florida's domestic sales by
$186,015. International sales, which are subject to fluctuation because Metretek
Florida does not currently have a steady base of international customers,
decreased because Metretek Florida did not capture as many new international
projects during 1999 as compared to 1998. The increase in Metretek Florida's
domestic sales was primarily the result of the inclusion in its 1999 revenues of
sales of its electronic corrector product line, which it acquired from American
Meter in May 1998 but did not fully market until the mid-third quarter of 1998.
Domestic sales of Metretek Florida's traditional line of remote data collection
products and systems also increased slightly during 1999 due primarily to
increased demand for Year 2000 compliant systems, but this was more than offset
by a decrease in circuit board assembly sales resulting partially from reduced
industry demand and partially from a loss of circuit board assembly business by
Metretek Florida due to sales personnel changes. A comparison of Metretek
Florida's current domestic and international product mix is as follows:



                                       37
<PAGE>   40
<TABLE>
<CAPTION>
                                                            YEAR ENDED DECEMBER 31,
                                                         ------------------------------------
                                                          1999                  1998
                                                          ----                  ----
                                                         (dollar amounts in thousands)
<S>                                                      <C>       <C>        <C>        <C>
     Remote data collection
         products and systems                            $4,861     59%        $5,595     64%
     Electronic corrector products                        2,370     29%         1,706     19%
     Circuit board assembly sales                         1,003     12%         1,473     17%
                                                         ------                ------
     Total                                               $8,234                $8,774
                                                         ======                ======
</TABLE>

Southern Flow's revenues increased $6,526, or less than 1%, for the year ended
December 31, 1999, compared to the same period in 1998.

         Costs and Expenses. Costs of measurement sales and services include
materials, labor, personnel and related overhead costs incurred to manufacture
products and provide services. Cost of sales and services for the year ended
December 31, 1999 increased $895,946, or 7%, compared to the same period in
1998. Metretek Florida's cost of sales and services for the year ended December
31, 1999 increased $1,098,406, or 26%, compared to the same period in 1998. This
increase was due primarily to higher personnel and related overhead costs
associated with the integration and manufacturing of the electronic corrector
product line which was acquired by Metretek Florida in May 1998. As a result,
Metretek Florida's overall gross profit margin decreased from 52.1% to 35.6%
compared to the same period in 1998. Southern Flow's cost of sales and services
for the year ended December 31, 1999 decreased $202,460, or 2%, compared to the
same period in 1998. Southern Flow's gross profit margin for the year ended
December 31, 1999 increased slightly from 22.0% to 23.9% compared to the same
period in 1998, which is within the range of normal fluctuations.

         General and administrative expenses include personnel and related
overhead costs for support and administration functions. General and
administrative expenses for the year ended December 31, 1999 decreased $139,785
or 4%, compared to the same period in 1998, due principally to the effect of the
following factors: (1) a decrease in expenses of Metretek Florida of
approximately $51,000 attributable to overall cost savings at Metretek Florida
and Sigma VI resulting from combining certain administrative functions; (2)
decreases in general and corporate expenses of approximately $184,000 primarily
due to the elimination of compensation costs associated with our 1998 Employee
Stock Purchase Plan, which was terminated in July 1998; and (3) a decrease in
expenses of Southern Flow of approximately $32,000 primarily attributable to
reduced state and franchise taxes in 1999 compared to 1998. These decreases in
general and administrative expenses were partially offset by approximately
$127,000 of personnel and related overhead costs incurred by PowerSpring, for
which there were no comparable costs during the same period in 1998.

         Selling, marketing and service expenses consist of personnel and
related overhead costs, including commissions for the sale and marketing
activities, together with advertising and promotion costs. Selling, marketing
and service expenses for the year ended December 31, 1999 increased $532,396, or
35%, compared to the same period in 1998, approximately $349,000 of which
related to activities at Metretek Florida. The increase in Metretek Florida's
expenses was due principally to an increase in the number of sales and customer
service personnel in 1999 compared to the same period in 1998 primarily
associated with the integration of the electronic corrector product line. The
remaining increase in selling, marketing and service expense of approximately
$183,000 in 1989 was incurred by PowerSpring, for which there were no comparable
costs during the same period in 1998.

         Depreciation and amortization expenses include the depreciation and
amortization of real property, customer list, goodwill and capitalized software
development costs. Depreciation and amortization expenses for the year ended
December 31, 1999 increased $159,433, or 14%, compared to the same period in
1998. This increase was due to additional goodwill amortization costs related to
Metretek Florida's acquisitions in the second quarter of 1998 as well as
increased depreciation expenses at both Metretek Florida and Southern Flow.

                                       38
<PAGE>   41
         Research and development expenses include payments to third parties,
personnel and related overhead costs for product and service development,
enhancements, and upgrades. Research and development expenses for the year ended
December 31, 1999 increased $1,264,375, or 132%, compared to the same period in
1998. The increase is due primarily to PowerSpring development expenditures in
1999 of approximately $1,196,000, for which there were no comparable costs
during the same period in 1998.

         Interest, finance charges and other expenses include interest and
finance charges on our credit facility as well as other non-operating expenses.
Interest, finance charges and other expenses for the year ended December 31,
1999 increased $101,331, or 55%, compared to the same period in 1998. The
increase reflects interest expense on additional borrowings during much of 1999
compared to 1998 in order to fund Metretek Florida's growth and development of
the businesses acquired by Metretek Florida in 1998, borrowings to finance
increases in Metretek Florida's inventory and accounts receivable, borrowings to
finance the initial development efforts of PowerSpring, and the amortized
portion of capitalized finance charges incurred in 1998 to obtain our current
credit facility.

SEASONALITY AND CYCLICALITY

         Metretek Florida historically derives substantially all of its revenues
from sales of its products and services to the utility industry. Metretek
Florida has experienced variability of operating results on both an annual and a
quarterly basis due primarily to utility purchasing patterns and delays of
purchasing decisions as a result of mergers and acquisitions in the utility
industry and changes or potential changes to the federal and state regulatory
frameworks within which the utility industry operates. The utility industry,
both domestic and foreign, is generally characterized by long budgeting,
purchasing and regulatory process cycles that can take up to several years to
complete. Metretek Florida's utility customers typically issue requests for
quotes and proposals, establish committees to evaluate the purchase, review
different technical options with vendors, analyze performance and cost/benefit
justifications and perform a regulatory review, in addition to applying the
normal budget approval process within a utility. Purchases of Metretek Florida's
products are, to a substantial extent, deferrable in the event that utilities
reduce capital expenditures as a result of mergers and acquisitions, pending or
unfavorable regulatory decisions, poor revenues due to weather conditions,
rising interest rates or general economic downturns, among other factors.

         Based upon the discussion and analysis in this Item and in "Item 1.
Description of Business -- Additional Factors That Could Affect Our Business and
Future Results," we believe that our future revenues, expenses and results of
operations are likely to vary significantly from quarter to quarter. As a
result, quarterly comparisons of operating results are not necessarily
meaningful or indicative of future performance.

FINANCIAL CONDITION AND LIQUIDITY

         We require capital principally for (1) the financing of inventory and
accounts receivable, (2) research and development expenses, including the
development of PowerSpring, (3) capital expenditures for property and equipment
and software development, and (4) the funding of possible future acquisitions.

         Net cash used by operating activities was approximately $396,000 for
the year ended December 31, 1999, which was the net result of the following: (1)
approximately $2,281,000 of cash used to fund continuing operations, before
changes in assets and liabilities; (2) approximately $1,891,000 of cash provided
by changes in working capital and other asset and liability accounts; and (3)
approximately $6,000 of cash used by discontinued operations.

         We plan to continue and expand our research and development efforts to
enhance our existing products and services, and to develop new products,
especially in the business of PowerSpring. We anticipate that our research and
development costs in 2000 will be approximately $4,700,000 of which $1,200,000
will relate to Metretek's business and $3,500,000 is expected to be incurred in
connection with further developing PowerSpring. Research and development
expenses in the amount of $2,225,758 were incurred in the year ended December
31, 1999.


                                       39
<PAGE>   42
         We anticipate capital expenditures in 2000 of approximately $8,100,000,
primarily for computer software and hardware production and laboratory
equipment. Capital expenditures for the year ended December 31, 1999 totaled
$300,298.

         On April 14, 1998, we entered into a loan and security agreement (the
"Loan Agreement") with a commercial bank (the "Lender") providing for a combined
$5,000,000 credit facility consisting of loans (the "Loans") and letters of
credit subject to limitations described below. The Loan Agreement provides for
daily advances in the form of Loans to fund capital requirements, and daily
paydowns on outstanding balances of the Loans from collection of customer
accounts receivable. We make monthly interest payments computed at prime plus 1%
(9.5% at December 31, 1999) on outstanding balances of the Loans. The Loans
mature on March 14, 2001.

         The Loans are secured by our tangible and intangible assets, including
the equipment, inventory, receivables and cash deposits, and the pledge of the
shares of our subsidiaries. The Loan Agreement requires us to maintain a minimum
tangible net worth, a maximum debt to tangible net worth ratio, minimum annual
net income (or maximum annual net loss in 1999), a minimum debt service coverage
ratio, and contains other standard covenants related to our operations,
including prohibitions on the payment of dividends and the issuance or
repurchase of securities (with certain exceptions) without the Lender's consent.

         Borrowings on the Loans are limited to the sum of 80% of eligible
accounts receivable of Southern Flow and Metretek Florida and 50% of raw
materials and finished goods inventory (up to a combined maximum of
$1,500,000) of Southern Flow and Metretek Florida. At December 31, 1999, we had
a combined $3,587,864 Loan availability, of which $269,968 had been borrowed by
Southern Flow and Metretek Florida, leaving $3,317,896 in unused Loan
availability.

         On May 4, 1998, we acquired substantially all of the assets and
business of a subsidiary of American Meter Company pertaining to electronic
correctors and non-radio-frequency meter reading devices in the natural gas and
electric utility industry. In consideration for this purchase, we delivered to
American Meter an aggregate purchase price consisting of $1,300,000 in cash,
439,560 unregistered shares of Common Stock, and a $600,000 convertible
subordinated promissory note. In March 2000, American Meter converted the note
into 105,495 shares of Common Stock under the terms of the note. Until it was
converted, the note bore interest on the unpaid principal balance at a fixed
rate equal to 7.5% per annum, payable quarterly in arrears, and was due and
payable on May 4, 2002.

         On September 13, 1999, we entered into a strategic relationship with
Scient to assist us in designing and creating an Internet-based business to
enable us to take its measurement information products, services, and data
measurement technologies to the market of end-users of natural gas and
electricity. The Internet project is being developed and operated through
PowerSpring. In connection with the development of PowerSpring, we issued to
Scient a warrant to purchase 125,000 shares of Common Stock. The Scient Warrant
becomes exercisable in September 2000, at exercise prices split between $5.00
and $10.00 per share, and expires in September 2002. Scient has registration
rights with respect to the Common Stock issuable upon the exercise of the Scient
warrant.

         In order to fund the initial development of PowerSpring, we entered
into an amendment with the Lender (the "Loan Amendment") to the terms of the
Loan Agreement. The Loan Amendment amended certain covenants of the Loan
Agreement, including our minimum annual net income (or maximum annual net loss
in 1999), minimum tangible net worth and minimum debt service coverage ratio.
The Loan Amendment also permitted us to utilize up to $700,000 of the credit
facility to finance expenditures on the first phase of PowerSpring's
development. In connection with the Loan Amendment, we paid customary fees to
the Lender and issued a warrant to purchase 20,000 shares of Common Stock. The
Lender warrant is exercisable for three years at an exercise price of $5.00 per
share. The Lender has registration rights with respect to the Common Stock
issuable upon the exercise of the Lender warrant.


                                       40
<PAGE>   43
         We estimate that this initial development phase and launch of
PowerSpring will require aggregate expenditures of between $6,000,000 and
$8,000,000, consisting of consulting fees and expenses payable to Scient and
costs of acquiring the requisite technology, including hardware and software, as
well as research and development costs. Through December 31, 1999, these costs
were approximately $1.5 million.

         On February 4, 2000, we completed the $14,000,000 Units Private
Placement by issuing 7,000 Units, including 1,450 Units we issued on December 9,
1999. Each Unit consisted of 200 shares of Common Stock, 1 share of Series B
Preferred Stock and Unit Warrants to purchase 100 shares of Common Stock. For a
description of the material terms of these securities, see "Item 5. Market for
Common Equity and Related Stockholder Matters - Recent Sales of Unregistered
Securities." In the Units Private Placement, we issued 1,400,000 shares of
Common Stock, 7,000 shares of Series B Preferred Stock and Unit Warrants to
purchase 700,000 shares of Common Stock. The Units Private Placement was
approved and ratified by our stockholders at a special meeting of stockholders
held on February 3, 2000. The Units were issued to institutional investors and
other "accredited investors" (as defined under Regulation D under the Securities
Act). The primary purpose of the Units Private Placement was to raise capital to
enable us to develop the Internet-based business of PowerSpring. A portion of
the proceeds was also used to repay outstanding indebtedness, and the remaining
proceeds will be used for general corporate and working capital purposes,
including potentially providing the funds to finance an acquisition opportunity,
if one were to arise.

         On March 17, 2000, we acquired Mercator Energy Incorporated through a
merger of Mercator with a wholly-owned subsidiary of PowerSpring. Mercator is a
Denver-based natural gas services and brokerage company that acts as an
independent broker-agent for both producers and consumers of natural gas. In
consideration for the acquisition of Mercator, we delivered to John A. Harpole,
the President and sole shareholder of Mercator prior to the acquisition,
$408,334 in cash, a $741,666 non-negotiable promissory note payable by
PowerSpring over two years and secured by a general security interest in the
assets of PowerSpring, and 2,500,000 shares of common stock of PowerSpring.
Subsequent to the acquisition of Mercator, we own 87.5% of the outstanding
shares of PowerSpring common stock, Mr. Harpole owns 12.5% of the outstanding
shares of PowerSpring common stock, and Mercator has become a wholly-owned
subsidiary of PowerSpring. We, PowerSpring and Mr. Harpole entered into a
stockholders agreement that addresses certain rights related to Mr. Harpole's
PowerSpring common stock, including a right for Mr. Harpole to put his shares of
PowerSpring common stock back to PowerSpring at an appraised value for each
payable over three years if PowerSpring has not completed an initial public
offering or has not sold its business within two years. PowerSpring also entered
into a two-year employment agreement with Mr. Harpole, who will serve as the
Executive Vice President, Chief Operating Officer and a director of PowerSpring.
Under the employment agreement, Mr. Harpole received an option to purchase
60,000 shares of our Common Stock, exercisable at $17.88 per share, and an
option to purchase 200,000 shares of PowerSpring common stock, exercisable at
$.30 per share.

         On September 13, 1999, we entered into a consulting and joint venture
agreement with Mercator, under which Mercator provided its energy procurement
services to us on a consulting basis. In connection with our acquisition of
Mercator, we issued to Mercator a warrant to purchase 60,000 shares of Common
Stock. The Mercator warrant vests in three tranches from the date of issuance
through March 2001, with exercise prices ranging between $4.50 and $5.50 per
share, and expires in September 2002. Mercator has registration rights with
respect to the Common Stock issuable upon the exercise of the Mercator warrant.
In connection with our acquisition of Mercator, the consulting agreement, and a
related stock option agreement between TotalPlan and Mercator, were terminated,
and Mercator transferred the Mercator warrant to Mr. Harpole.

         Compensation expense for the fair value of the Scient, Mercator and
Lender warrants is being recognized in accordance with the provisions of
Statement of Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation," over the period in which the services are being performed or the
remaining term of the Loan Agreement. Compensation expense associated with the
warrants in the amount of $70,029 has been recognized in the consolidated
statement of operations during the year ended December 31, 1999.

         In September 1998, our Board of Directors adopted a stock repurchase
plan that authorized us to purchase up to approximately 7% of our outstanding
Common Stock in open market transactions, from time to time as management deemed
appropriate, based on the market price of the Common Stock. During 1998 and


                                       41
<PAGE>   44
1999, we repurchased 96,116 shares of its Common Stock at an average price of
$2.22 per share. The stock repurchase plan was discontinued on October 6, 1999.
All of the repurchased shares have been retired.

         Based on our current plans and assumptions, management believes that
our capital resources, including cash and cash equivalents, amounts available
under existing credit facilities and funds generated from continuing operations,
and additional proceeds from the disposition of the remaining assets of its
discontinued operations, will be sufficient to meet our currently anticipated
cash needs, including our working capital needs, capital commitments and debt
service requirements, including those pertaining to the launch of the business
of PowerSpring. However, we will also have a continuing need for additional
capital to accomplish our business strategy with respect to our existing
businesses. The continued development of the business of PowerSpring will also
require substantial capital after launch. In addition, unanticipated events,
over which we may have no control, could increase our operating costs or
decrease our ability to generate revenues from product and service sales. We
will also require additional capital in the future in order to make any
significant acquisition of businesses or technologies.

         We expect that after the initial development stage of PowerSpring is
completed and our website is launched, the further development and growth of
PowerSpring, including staff, organizational and start up expenses, marketing
costs and additional capital expenditures, will require significant additional
funds, beyond the proceeds of the Units Private Placement, from the proceeds of
public or private equity financing, debt financing or from other sources. We
intend to raise any needed additional capital to fund the development and
operations of PowerSpring primarily through financing at the PowerSpring level.
However, depending upon the availability of capital, market conditions, our
consolidated operations and the operations of PowerSpring, we may also or
instead raise additional capital at the Metretek level. For example, depending
on market conditions and other factors we deem appropriate, we may call our
Dividend Warrants for redemption. Due to the trading price of our Common Stock,
as of the date of this Report we have the right, upon 30 days notice, to call
the Dividend Warrants for redemption, and we will continue to have this
redemption right as long as the closing sale price of the Common Stock as
reported on the Nasdaq National Market equals or exceeds $6.50 per share. We
expect that, subject to market conditions, most or all Dividend Warrants will be
exercised after we call them for redemption, resulting in gross proceeds of up
to $3.5 million to us.

         Obtaining additional financing will depend on many factors, including
market conditions, our operating performance and investor sentiment. Terms of
debt financing could restrict our ability to operate our business, or to expand
our operations. In addition, if we raise additional capital by issuing capital
stock or securities convertible into capital stock, stockholders could suffer a
significant dilution of their percentage ownership interests, and the new
capital stock or other new securities could have rights, preferences or
privileges senior to those of our current stockholders.

         Our capital raising will be subject to the consent of the Lender, if
our credit facility is then in effect. In addition, depending on how it is
structured, our capital raising could require the consent of the holders of our
Series B Preferred Stock. We cannot assure you that sufficient additional funds
will be available to us on a timely basis or that, if available on a timely
basis, such funds can be obtained on terms satisfactory to us, to our lender and
to the holders of our Series B Preferred Stock, if their consents are required.
Our inability to obtain sufficient additional capital on a timely basis on terms
that are acceptable could have a material adverse effect on our business,
financial condition and results of operations.

RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board issued Financial
Accounting Standards Statement No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("FAS 133"). FAS 133 establishes methods of accounting
for derivative financial instruments and hedging activities related to those
instruments as well as other hedging activities. We will be required to adopt
FAS 133 for our fiscal year ending December 31, 2001. However, because we do not
utilize derivative financial instruments, we do not believe the impact of FAS
133 will be material to our financial position or results of operations.


                                       42
<PAGE>   45
         In December 1998, the AICPA issued Statement of Position 98-9,
"Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain
Transactions" ("SOP 98-9"). SOP 98-9 requires use of the "residual method" for
recognition of revenue when vendor-specific objective evidence exists for
undelivered elements but does not exist for delivered elements of a software
arrangement. We will be required to comply with the provisions of SOP 98-9 for
transactions entered into beginning January 1, 2000. The adoption of SOP 98-9 is
not expected to have a material effect on our financial position or results of
operations. However, SOP 98-9 may require more revenue to be deferred for
certain types of transactions.

YEAR 2000 COMPLIANCE

         The "Year 2000 issue," which presented potential risks and
uncertainties to virtually all businesses, was to have resulted from computer
programs that used two digits rather than four to define the applicable year.
Any computer programs that had time-sensitive software could have recognized a
date using "00" as the year 1900 rather than the year 2000. This situation could
have resulted in system failures or miscalculations causing disruptions to
operations, including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar or normal business activities.

         As of the date of this Report, we have not experienced any known
material adverse impacts on our current products and services, internal
information systems or other internal operating systems as a result of the Year
2000 issue, and we have not received notice of any material Year 2000 compliance
issues from our suppliers or customers. Based on the work done to date, costs
directly associated with our Year 2000 compliance efforts were approximately
$200,000. We do not expect that any future expenditures to address the Year 2000
issues will be material. However, it remains possible that Year 2000 issues
associated with our products or systems may still arise or that we could receive
notice of Year 2000 issues that have arisen with our products and services. We
plan to continue to monitor the Year 2000 issues closely. Therefore, we cannot
assure you that Year 2000 issues will not have a material adverse effect on our
results of operations or financial condition.

ITEM 7. FINANCIAL STATEMENTS

         The information required by this Item is set forth on pages F-1 through
F-24 of this Report.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND FINANCIAL
         DISCLOSURE

         None


                                       43
<PAGE>   46
                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT

DIRECTORS AND EXECUTIVE OFFICERS

         Our executive officers and directors, and their ages and positions, are
as follows:

<TABLE>
<CAPTION>
NAME                      AGE    POSITION(S)
----                      ---    -----------
<S>                       <C>    <C>
W. Phillip Marcum          56    President, Chief Executive Officer, Chairman of
                                   the Board and Director

A. Bradley Gabbard         45    Executive Vice President, Chief Financial
                                   Officer, Treasurer and Director

Ronald W. McKee            52    President of Metretek Florida and Director

Basil M. Briggs (1)        64    Director

Kevin P. Collins           49    Director

Robert Lloyd (2)           61    Director

Anthony D. Pell (1)(2)     61    Director

Harry I. Skilton (1)       61    Director

Albert F. Thomasson (2)    58    Director
</TABLE>
----------

(1)  Member of the Compensation Committee

(2)  Member of the Audit Committee

         W. PHILLIP MARCUM, a co-founder of Metretek, has served as our
President, Chief Executive Officer, Chairman of the Board and a director since
our incorporation in April 1991. He also serves as the Chairman and Chief
Executive Officer of each of our direct wholly-owned subsidiaries. Since March
1996, Mr. Marcum has been a director of Key Energy Services, Inc., East
Brunswick, New Jersey ("Key"), an oilfield service provider. He was a director
of WellTech, Inc. ("WellTech") from January 1994 until March 1996 when WellTech
was merged into Key. He also serves as a director of one privately-held
corporation, Test America, Inc., Asheville, North Carolina, a water analysis
company.

         A. BRADLEY GABBARD, a co-founder of Metretek, has served as a director
of Metretek since our incorporation in April 1991. He has served as our
Executive Vice President since July 1993, and as our Chief Financial Officer and
Treasurer from April 1991 through July 1993 and since August 1996. He also
served as our Vice President and Secretary of Metretek from April 1991 through
July 1993. Mr. Gabbard also serves as the Chief Financial Officer of each of our
direct wholly-owned subsidiaries. From October 1990 to February 1991, Mr.
Gabbard was employed by Boettcher & Company, serving as Vice President in its
research department. In 1987, Mr. Gabbard joined Great Horn, Inc., a privately
held New York based investment corporation, as its Vice President in charge of
western oil and gas investment activities. In 1988, Great Horn acquired a
controlling interest in Premier Resources, Ltd., Denver, Colorado, and appointed
Mr. Gabbard as the Executive Vice President and Chief Operating Officer, where
he served until the sale of Premier in 1990. From 1981 to 1987, Mr. Gabbard was
employed by Search Drilling Company, Wichita, Kansas, a privately held oil and
gas company, initially serving as its Vice President of Finance, and later as an
Executive Vice President. From 1976 to 1981, Mr. Gabbard was employed in the
Oklahoma City office of Ernst and Whinney, principally serving clients in the
oil and gas industry. Mr. Gabbard is a certified public accountant.

         RONALD W. MCKEE has served as a director of Metretek since August 1997
and has served as the President and Chief Operating Officer of Metretek Florida
since September 1995. Mr. McKee had previously served as the Vice President of
Marketing of Metretek Florida since he joined Metretek Florida in 1989. From
1970 to 1989, Mr. McKee held various sales and marketing management positions
with Rockwell International, Pittsburgh,


                                       44
<PAGE>   47
Pennsylvania, and became the general sales and marketing manager for Rockwell
International's plug valve business in 1987.

         BASIL M. BRIGGS has served as a director of Metretek since June 1991.
He has been a practicing attorney in Detroit, Michigan since 1961, practicing
law with Cox, Hodgman & Giarmarco, P.C., Troy, Michigan, since January 1997. He
was of counsel with Miro, Weiner & Kramer, P.C., Bloomfield Hills, Michigan,
from 1987 through 1996. Mr. Briggs was the President of Briggs & Williams, P.C.,
Attorneys at Law, from its formation in 1977 through 1986. Mr. Briggs was the
Secretary of Patrick Petroleum Company from 1984, and a director of Patrick
Petroleum Company from 1970 until Patrick Petroleum Company was acquired by
Goodrich Petroleum Company in August 1995. Since August 1995, he has been a
director of Goodrich Petroleum Company.

         KEVIN P. COLLINS has served as a director of Metretek since March 2000.
Mr. Collins has been a Managing Member of The Old Hill Company LLC, Westport,
Connecticut, which provides corporate financial and advisory services, since
1997. From 1992 to 1997, he served as a principal of JHP Enterprises, Ltd., and
from 1985 to 1992, as Senior Vice President of DG Investment Bank, Ltd., both of
which were engaged in providing corporate finance and advisory services. Mr.
Collins has served as a director of Key since March 1996; a director of The Penn
Traffic Company, Syracuse, New York, a food retailer, since June 1999; and a
director of London Fog Industries, Inc, Eldesburg, Maryland, an outerwear
designer and distributor, since 1999. Mr. Collins also serves as the director of
one privately-held company, Avanti Petroleum, Inc., a convenience chain store.

         ROBERT LLOYD has served as a director of Metretek since July 1993. He
currently manages his personal investments. From 1988 to 1989 he was an
Executive Director of Interallianz London Limited, the wholly owned corporate
finance subsidiary of Interallianz Bank Zurich A.G. Mr. Lloyd formerly held
several positions with Drexel Burnham Lambert Inc. and its affiliates, including
Managing Director and Senior Corporate Finance Officer in Europe.

         ANTHONY D. PELL has served as a director of Metretek since June 1994.
Mr. Pell is a director of Rochdale Investment Management, Inc., New York, New
York. He was the President and a co-owner of Pell, Rudman & Co., Boston,
Massachusetts, an investment advisory firm, from 1981 until 1993, when it was
acquired by United Asset Management Company, since which time he has served as a
consultant. Mr. Pell was a director of Metretek Florida from 1985 until Metretek
was acquired by us in March 1994. Mr. Pell was associated with the law firm of
Coudert Brothers from 1966 to 1968 and with the law firm of Cadwalder,
Wickersham and Taft from 1968 to 1972, specializing in estate and tax planning.
In 1972, Mr. Pell joined Boston Company Financial Strategies, Inc. as a Vice
President and was appointed a Senior Vice President in 1975.

         HARRY I. SKILTON has served as a director of Metretek since May 1998.
Since 1994, Mr. Skilton has been the President, Chief Executive Officer and a
director of American Meter Company, Horsham, Pennsylvania, a worldwide supplier
of meters and electronic instruments to the natural gas industry, and an officer
and director of various American Meter subsidiaries. American Meter is
ultimately controlled by Ruhrgas, a German corporation. From 1992 through 1994,
Mr. Skilton was a principal of D/R Consultants, which engaged in general
industry marketing and consulting. From 1990 through 1992, Mr. Skilton was the
President, Chief Operating Officer and a director of Lukens Inc., Coatsville,
Pennsylvania, a diversified steel company engaged in a manufacture of carbon and
alloy steels and related products. From 1986 through 1990, Mr. Skilton was the
Executive Vice President and Group President of the Air Distribution Group of
Phillips Industries, Inc., Dayton, Ohio, which produces building components, air
distribution, transportation materials handling systems. From 1965 through 1984,
Mr. Skilton served in various executive capacities with Illinois Tool Works,
Inc., General Instrument Corporation and Celanese Corporation.

         ALBERT F. THOMASSON has served as a director of Metretek since March
1994. Mr. Thomasson was a director of Metretek Florida from 1981 until it was
acquired by us in March 1994. For the past five years, Mr. Thomasson has been
President of AFT Corporation, which provides management consulting services to
selected businesses in the Birmingham, Alabama area; President of AFTCO
Properties, Inc. and Brookhaven Properties, III, Inc., which are engaged in
residential real estate development in the Birmingham area; President of
Thomasson, Coal & Coke, Inc., which is a manufacturer of alloy block for
foundries until it merged into AFT Corporation in 1996; Managing General Partner
of Opto Oil and Gas Company, which owns working interests in oil and gas fields;


                                       45
<PAGE>   48
and Chairman of the Board of Daily Access Concepts, Inc., Mobile, Alabama, which
provides fully automated recordkeeping and trading services for qualified
retirement plans.

         Our Board of Directors currently consists of nine members divided into
three classes, with members of each class holding office for staggered
three-year terms. The Class I Directors, whose terms expire at the 2001 Annual
Meeting of Stockholders, are Messrs. Marcum, Briggs, and Lloyd. The Class II
Directors, whose terms expire at the 2002 Annual Meeting of Stockholders, are
Messrs. Gabbard, McKee and Thomasson. The Class III Directors, whose terms
expire at the 2000 Annual Meeting of Stockholders, are Messrs. Collins, Pell and
Skilton. So long as at least 2,000 shares of Series B Preferred Stock remain
outstanding, the holders of Series B Preferred Stock, voting as a single class,
have the right to elect one member of the Board of Directors. In March 2000, Mr.
Collins was elected to the Board of Directors by the holders of the Series B
Preferred Stock. All other directors are elected by the holders of the Common
Stock. Each director serves in office until his successor is duly elected and
qualified. Any additional members added to the Board of Directors will be
distributed among the three classes so that, as nearly as possible, each class
will consist of an equal number of directors. Our officers are appointed by our
Board of Directors and serve at its discretion, subject to their employment
agreements, as described in "Item 10. Executive Compensation."

OTHER KEY EMPLOYEES

         Information concerning other key employees of Metretek is set forth
below:

         WOOD A. BREAZEALE, JR., 70, has served as the President, Chief
Operating Officer and a director of Southern Flow since May 1993. Mr. Breazeale
was the President and Chief Operating Officer of Southern Flow Companies, a
division of Homco International, Inc., and a Vice President of Homco
International, Inc., from 1979 until we purchased the assets of the Southern
Flow Companies division of Weatherford in April 1993. Mr. Breazeale founded
Southern Flow Companies in 1953.

         GARY J. ZUIDERVEEN, 41, has served as our Controller since May 1994 and
as our Secretary and Principal Accounting Officer since August 1996. From June
1992 until May 1994, Mr. Zuiderveen was the General Accounting Manager at the
University Corporation for Atmospheric Research in Boulder, Colorado. From 1983
until June 1992, Mr. Zuiderveen was employed in the Denver, Colorado office of
Deloitte & Touche LLP, providing accounting and auditing services to clients
primarily in the manufacturing and financial services industries and serving in
the firm's national office accounting research department.

         JOHN A. HARPOLE, 40, has served as the Executive Vice President, Chief
Operating Officer and a director of PowerSpring since March 2000. From May,1994
until March 2000, when PowerSpring acquired Mercator, Mr. Harpole was the
President, sole director and sole shareholder of Mercator. From 1991 until May
1994, Mr. Harpole was a Vice President of Alta Energy Corporation. From 1982 to
1991, Mr. Harpole held various positions with Ladd Petroleum Corporation, a
subsidiary of General Electric Corporation.


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Exchange Act ("Section 16(a)") requires our
directors and executive officers, and beneficial owners of more than 10% of our
outstanding Common Stock, to file initial reports of ownership on Form 3 and
reports of changes in ownership on Form 4 or Form 5 with the SEC, and to furnish
us with copies of all such reports that they file. Based solely upon our review
of the copies of such forms we have received, and written representations from
certain directors and executive officers that no Form 5s were required to be
filed, we believe that, during 1999, all reports required by Section 16(a) to be
filed by such persons were timely filed, except for one report regarding a stock
option exercise filed late by Mr. Briggs.

SECTION 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION

         The following table sets forth the total compensation that we paid or
accrued for services rendered to us in all capacities during the last three
fiscal years by our Chief Executive Officer and by our two other executive


                                       46
<PAGE>   49
officers (the "Named Executive Officers") whose total salary and bonus exceeded
$100,000 in the fiscal year ended December 31, 1999 ("fiscal 1999"):

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                LONG TERM
                                                              COMPENSATION
                                                              ------------
                                                                 AWARDS
                                                              ------------
                                     ANNUAL COMPENSATION(1)    SECURITIES
                                     ----------------------    UNDERLYING         ALL OTHER
NAME AND PRINCIPAL POSITION   YEAR    SALARY($)   BONUS($)    OPTIONS(#)(2)   COMPENSATION($)(3)
---------------------------   ----    ---------   --------    -------------   ------------------
<S>                           <C>     <C>         <C>         <C>             <C>
W. Phillip Marcum .........   1999     $210,000   $     0              0            $6,400
  President and Chief         1998      200,000         0        120,000(4)          6,436
  Executive Officer           1997      175,250    31,395         50,000             6,127

A. Bradley Gabbard ........   1999     $152,500   $     0         12,500(5)         $5,826
  Executive Vice              1998      145,000         0         44,500(4)          6,249
  President and Chief         1997      127,292    24,225         25,000             5,877
  Financial Officer

Ronald W. McKee ...........   1999     $121,010   $     0         12,500(5)         $4,318
  President of Metretek       1998      130,000         0         25,000(4)          4,102
                              1997      100,000    19,380         12,250             3,829
</TABLE>
----------

(1)      Excludes perquisites and other personal benefits, if any, which were
         less than the lesser of $50,000 or 10% of the total annual salary and
         bonus reported for each Named Executive Officer.

(2)      The number of securities underlying options has been adjusted to
         reflect the one-to-four reverse split of the Common Stock effected on
         July 6, 1998.

(3)      Includes amounts paid or accrued on behalf of the Named Executive
         Officers in 1999 for (i) matching contributions under our 401(k) plan
         of $5,000 for Mr. Marcum, $4,567 for Mr. Gabbard, and $3,630 for Mr.
         McKee; (ii) premiums for group term life insurance of $936 for Mr.
         Marcum, $795 for Mr. Gabbard, and $346 for Mr. McKee; and (iii)
         premiums for long-term disability insurance of $464 for Mr. Marcum,
         $464 for Mr. Gabbard, and $342 for Mr. McKee.

(4)      Includes options originally granted prior to 1998 (120,000 to Mr.
         Marcum, 44,500 to Mr. Gabbard and 12,500 to Mr. McKee) that were
         cancelled and regranted pursuant to a stock option repricing in 1998.

(5)      These options vest in three equal annual installments: one-third on
         date of grant, one-third on the first anniversary of the grant and
         one-third on second anniversary of the grant.


                                       47
<PAGE>   50
EMPLOYMENT AGREEMENTS, CHANGE IN CONTROL ARRANGEMENTS AND OTHER COMPENSATION
ARRANGEMENTS

         In December 1991, we entered into employment agreements, which have
been amended several times, with W. Phillip Marcum, our President, Chief
Executive Officer and Chairman of the Board, and A. Bradley Gabbard, our
Executive Vice President and Chief Financial Officer. These employment
agreements were most recently amended effective January 1, 2000 to provide for
an extension of the employment term until December 31, 2003 for Mr. Marcum and
until December 31, 2001 for Mr. Gabbard, with automatic additional one-year
renewal periods when the term expires, unless either party gives six months
prior written notice of termination. The base salaries under these employment
agreements, which are subject to annual upward adjustments at the discretion of
the Board of Directors, are currently set at $295,000 for Mr. Marcum and
$175,000 for Mr. Gabbard. In addition to the base annual compensation, the
employment agreements provide, among other things, for standard benefits
commensurate with the management levels involved. The employment agreements also
provide for us to establish an incentive compensation fund, to be administered
by our Compensation Committee, to provide for incentive compensation to be paid
to each officer or employee (including Messrs. Marcum and Gabbard) deemed by the
Compensation Committee to have made a substantial contribution to us in the
event of a change of control of Metretek or of the sale of substantially all of
our assets or similar transactions. The total amount of incentive compensation
from the fund available for distribution will be determined by a formula based
on the amount by which the fair market value per share of the Common Stock
exceeds $10.08, multiplied by a factor ranging from 10-20% depending upon the
ratio of the fair market value to $10.08. In the case of the sale of a
significant subsidiary or substantially all of the assets of a significant
subsidiary, a similar pro rata distribution is required. As amended, the
employment agreements with Messrs. Marcum and Gabbard provide that if the
employment period expires without being renewed, then the executive is entitled
to receive a lump-sum severance payment equal to 12 months, for Mr. Marcum, and
six months, for Mr. Gabbard, of his then base salary, and continued
participation in all our insurance plans for such additional period. The
employment agreements also contain certain restrictions on each executive's
ability to compete, use of confidential information and use of inventions and
other intellectual property.

         As amended, the employment agreements with Messrs. Marcum and Gabbard
also include "change in control" provisions designed to provide for continuity
of management in the event we undergo a change in control. The agreements
provide that if within three years after a change in control, the executive is
terminated by us for any reason other than for "cause", or if the executive
terminates his employment for "good reason" (as such terms are defined in the
employment agreements), then the executive is entitled to receive a lump-sum
severance payment equal to two times, for Mr. Marcum, and one times, for Mr.
Gabbard, the amount of his then base salary, together with certain other
payments and benefits, including continued participation in all our insurance
plans for a period of two years for Mr. Marcum and one year for Mr. Gabbard.
Under these employment agreements, a "change in control" will be deemed to have
occurred only if: (1) any person or group becomes the beneficial owner of 50% or
more of our Common Stock; (2) a majority of our present directors are replaced,
unless the election of any new director is approved by a two-thirds vote of the
current (or properly approved successor) directors; (3) we approve a merger,
consolidation, reorganization or combination, other than one in which our voting
securities outstanding immediately prior thereto continue to represent more than
50% of our total voting power or of the surviving corporation following such a
transaction and our directors continue to represent a majority of our directors
or of the surviving corporation following such transaction; or (4) we approve a
sale of all or substantially all of its assets.

STOCK OPTION GRANTS

         The following table sets forth certain information with respect to
stock options granted during fiscal 1999 to the Named Executive Officers. We did
not grant any stock appreciation rights, alone or in tandem with stock options,
in fiscal 1999.


                                       48
<PAGE>   51
                        OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                   INDIVIDUAL GRANTS
                        ---------------------------------------------------------------------------
                                                  % OF TOTAL
                                                    OPTIONS
                         NUMBER OF SECURITIES      GRANTED TO
                               UNDERLYING         EMPLOYEES IN     EXERCISE           EXPIRATION
NAME                    OPTIONS GRANTED (#)(1)   FISCAL YEAR (2)   PRICE ($)(3)        DATE (4)
----                    ----------------------   ---------------   ------------        --------
<S>                     <C>                      <C>               <C>            <C>
W. Phillip Marcum ...                0                  0%             N/A               N/A

A. Bradley Gabbard ..           12,500                8.9%            $4.63       September 7, 2009

Ronald W. McKee .....           12,500                8.9%            $4.63       September 7, 2009
</TABLE>
----------

(1)      The options in this table are incentive stock options granted under our
         1998 Stock Incentive Plan. All options have ten year terms from the
         date of initial grant and vest in three equal installments: one-third
         upon grant, one-third after 1 year and one-third after two years.

(2)      Based upon 141,000 options granted during 1999 to employees.

(3)      The exercise price of the option is the fair market value of the Common
         Stock on the date of grant, based upon the last sale price of the
         Common Stock on such date as reported on the Nasdaq National Market.

(4)      These options may terminate before their terms expire due to the
         termination of the optionee's employment or the optionee's disability
         or death.

STOCK OPTION EXERCISES AND VALUES

         The following table sets forth information with respect to stock
options held by the Named Executive Officers on December 31, 1999. The Named
Executive Officers did not exercise any stock options during 1999.

                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                               NUMBER OF SECURITIES            VALUE OF UNEXERCISED
                          UNDERLYING UNEXERCISED OPTIONS     IN-THE-MONEY OPTIONS AT
                               AT FISCAL YEAR-END(#)          FISCAL YEAR-END ($)(1)
                          ------------------------------   ---------------------------
NAME                      EXERCISABLE     UNEXERCISABLE    EXERCISABLE   UNEXERCISABLE
----                      -----------     -------------    -----------   -------------
<S>                       <C>             <C>              <C>           <C>
W. Phillip Marcum ...       120,000               0         $330,000      $     0

A. Bradley Gabbard ..        48,667           8,333          122,875        1,000

Ronald W. McKee .....        29,167           8,333           69,750        1,000
</TABLE>


                                       49
<PAGE>   52
----------

(1)      For purposes of this table, the value of unexercised in-the-money
         options is calculated based upon the difference between $4.75, the
         closing sale price of the Common Stock on December 31, 1999 as reported
         on the Nasdaq National Market, and the option exercise price.

DIRECTOR COMPENSATION

         Directors who are also our officers or employees do not receive any
additional compensation for serving on the Board of Directors. All directors are
reimbursed for out-of-pocket costs of attending meetings of the Board of
Directors and its committees. Directors who are not our officers or employees
("Non-Employee Directors") currently receive a fee of $1,000 for attendance at
each meeting of the Board of Directors. Non-Employee Directors also receive
stock options. Until June 1998, these options were granted under our Directors'
Stock Option Plan (the "Directors' Plan"). Since June 1998, these options have
been granted under our 1998 Stock Incentive Plan (the "1998 Plan"). Under the
formula for these stock option grants, each person who is first elected or
appointed to serve as a Non-Employee Director is automatically granted an option
to purchase 5,000 shares of Common Stock. On the date of the Annual Meeting of
Stockholders each year, each Non-Employee Director (who has been such for at
least six months) is automatically granted an option to purchase 2,500 shares of
Common Stock. All options vest and become exercisable immediately upon grant.
Additional non-formula options can be granted to Non-Employee Directors under
the 1998 Plan in the discretion of the Board of Directors.

         Each Non-Employee Director has the right to irrevocably elect on an
annual basis in advance to receive additional stock options under the 1998 Plan
("Meeting Options") in lieu of cash fees for attending meetings of the Board of
Directors. The Meeting Options are granted on the date of each Annual Meeting of
Stockholders and vest in 25% increments on the date of each of the subsequent
four regular quarterly meetings of the Board of Directors attended by such
Non-Employee Director. The number of shares of Common Stock exercisable upon the
exercise of Meeting Options are such that the value of the stock options granted
is equal to the amount of fees waived.

         All options granted to Non-Employee Directors are nonqualified stock
options exercisable at a price equal to the fair market value of the Common
Stock on the date of grant and have ten year terms, subject to earlier
termination in the event of the termination of the optionee's status as a
director or the optionee's death. Options typically remain exercisable for one
year after a Non-Employee Director dies and for that number of years after a
Non-Employee Director leaves the Board of Directors (for any reason other than
death or removal for cause) equal to the number of full or partial years that
the Non-Employee Director served as a director, but not beyond the ten year term
of the option. On October 6, 1998, the exercise price of all options then
outstanding to Non-Employee Directors under the Directors' Plan and under the
1998 Plan was reduced to $2.00 per share, the closing sale price of the Common
Stock as reported on the Nasdaq National Market on such date. As of December 31,
1999, options to purchase 92,500 shares of Common Stock were outstanding to
Non-Employee Directors under the Directors' Plan and options to purchase 34,209
shares of Common Stock were outstanding to Non-Employee Directors under the 1998
Plan, at exercise prices ranging from $1.75 to $2.00 per share.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth information regarding the beneficial
ownership of our Common Stock as of March 15, 2000 by:

         -        each person who is known by us to beneficially own 5% or more
                  of the outstanding shares of our Common Stock;

         -        each of our directors;

         -        each of the Named Executive Officers; and


                                       50
<PAGE>   53
         -        all of our directors and executive officers as a group.

         Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Unless otherwise indicated below, to our
knowledge, each stockholder named in the table below has sole voting and
investment power with respect to the shares of Common Stock beneficially owned,
subject to applicable community property laws. In computing the number of shares
beneficially owned by a person and the percentage of beneficial ownership of
that person, beneficial ownership includes any shares of Common Stock subject to
options, warrants and other rights that are currently exercisable or exercisable
within 60 days of March 15, 2000. Such shares, however, are not included for
purposes of computing the beneficial ownership of any other person. The
percentage of beneficial ownership is based upon 5,003,678 shares of Common
Stock outstanding on March 15, 2000.

<TABLE>
<CAPTION>
                                              NUMBER OF SHARES OF    PERCENT OF
                                                  COMMON STOCK      COMMON STOCK
NAME OF BENEFICIAL OWNER                       BENEFICIALLY OWNED    OUTSTANDING
------------------------                       ------------------    -----------
<S>                                           <C>                   <C>
DDJ Capital Management, LLC(1) ............         900,000             17.0
    141 Linden Street, Suite 4
    Wellesley, Massachusetts 02482

Special Situations Funds (2) ..............         692,900             13.3
    153 East 53rd Street
    New York, New York 10022

Kenneth B. Funsten (3) ....................         502,212              9.8
    121 Outrigger Mall
    Marina del Ray, California 90292

American Meter Company (4) ................         461,319              8.8
    300 Welsh Road
    Horsham, Pennsylvania 19044

Credit Suisse Asset Management, LLC (5) ...         300,000              5.9
    153 East 53rd Street, 57th Floor
    New York, New York, 10022

Famco Value Income Partners, L.P. (6) .....         275,300              5.5
    121 Outrigger Mall
    Marina del Ray, California 90292

W. Phillip Marcum (7) .....................         224,823              4.4

Albert F. Thomasson (8) ...................         135,384              2.7

Robert Lloyd (9) ..........................          61,915              1.2

A. Bradley Gabbard (10) ...................          55,106              1.1

Ronald W. McKee (11) ......................          41,358              0.8

Anthony D. Pell (12) ......................          37,762              0.8

Basil M. Briggs (13) ......................          23,633              0.5

Harry I. Skilton (14) .....................          15,338              0.3

Kevin P. Collins (15) .....................           7,250              0.1

All directors and executive officers
     as a group (9 persons)(16) ...........         602,569             11.3
</TABLE>
----------

(1)      Information based, in part, on Schedule 13D filed with the SEC on
         December 21, 1999, Amendment No. 1 to Schedule 13D filed with the SEC
         on January 19, 2000, and Amendment No. 2 to Schedule 13D filed with the
         SEC on February 14, 2000 by DDJ Capital Management, LLC ("DDJ"), B
         III-A Capital Partners, L.P. ("B III-A") and GP III-A, LLC ("GP
         III-A"). The shares are owned by B III-A, the DDJ Canadian High Yield
         Fund ("DDJ Canadian Fund") and an account established for an
         institutional investor (the


                                       51
<PAGE>   54
         "Account"). GP III-A is the general partner of, and DDJ is the
         investment manager for, B III-A. DDJ is also the investment manager to
         the Account and an investment advisor to the DDJ Canadian Fund.
         Includes 300,000 shares that may be acquired upon the exercise of
         currently exercisable warrants, but does not include 505,612 shares of
         Common Stock that may be acquired after June 9, 2000 upon conversion of
         3,000 shares of Series B Preferred Stock.

(2)      Information based upon Schedule 13D filed with the SEC on March 8, 2000
         by Special Situations Fund III, L.P., Special Situations Cayman Fund,
         L.P., Special Situations Private Equity Fund, L.P., Special Situations
         Technology Fund, L.P., MGP Advisors Limited Partnership, AWM
         Investments Company, Inc., MG Advisors, L.C., SST Advisors, L.L.C.,
         Austin W. Marxe and David M. Greenhouse. MGP Advisors Limited
         Partnership is the general partner of and the investment advisor to the
         Special Situations Fund III. AWM Investment Company is the general
         partner of MGP Advisors and the general partner of and investment
         adviser to the Special Situations Cayman Fund. MG Advisers is the
         general partner of the Special Situations Private Equity Fund. SST
         Advisors is the general partner of the Special Situations Technology
         Fund. Austin W. Marxe and David M. Greenhouse are the officers,
         directors and members or principal shareholders of MG Advisors, MGP
         Advisors, AWM Investment Company and SST Advisors. Includes 200,000
         shares that may be acquired upon the exercise of currently exercisable
         warrants, but does not include 337,075 shares of Common Stock that may
         be acquired after June 9, 2000 upon conversion of 2,000 shares of
         Series B Preferred Stock.

(3)      Information based upon Amendment No. 5 to Schedule 13D filed by Kenneth
         B. Funsten and by FamCo Value Income Partners, L.P. ("FamCo VIP") with
         the SEC on February 9, 2000, and Form 4 filed by Mr. Funsten with the
         SEC on February 10, 2000. Includes shares owned by FamCo VIP and by
         FamCo Offshore, Ltd. Funsten Asset Management Company and Mr. Funsten,
         who is the president and portfolio manager of Funsten Asset Management
         Company, are the general partners of FamCo VIP and FamCo Offshore. Mr.
         Funsten holds sole voting and investment power over the securities
         owned by Famco VIP and Famco Offshore. In this table, the shares
         beneficially owned by Mr. Funsten include the shares owned by FamCo
         VIP. See note (6) below. Includes 136,687 shares that may be acquired
         upon the exercise of currently exercisable warrants, but does not
         include 84,269 shares of Common Stock that may be acquired after June
         9, 2000 upon the conversion of 500 shares of Series B Preferred Stock.
         Also does not include 4,100 shares owned by an employee of Funsten
         Asset Management Company which cannot be sold or further added to
         without permission by Mr. Funsten by virtue of restrictions that are
         placed on securities transactions by employees of Funsten Asset
         Management Company, because Mr. Funsten has no investment or voting
         authority over the shares of such employee and Mr. Funsten expressly
         disclaims beneficial ownership of such shares.

(4)      Information based upon Amendment No. 1 to Schedule 13D filed by
         American Meter Company, as successor in interest to its former
         subsidiary Eagle Research Corporation, with the SEC on February 29,
         2000. Includes 105,495 shares, and warrants currently exercisable for
         26,374 shares, that may be acquired by American Meter upon the
         conversion of a convertible note, and 109,891 shares that may be
         American Meter upon the exercise of currently exercisable warrants.

(5)      Credit Suisse Asset Management, L.P. is the investment advisor for SEI
         Institutional Management Trust, Ameritech Pension Trust (A-K-A-VAIL),
         Warburg Pincus High Yield Fund, The Common Fund, CSAM Investment Trust
         - U.S. HYLD Series and SEI Global - High Yield Fixed Income Fund, which
         funds and trusts are the owners of the shares. Includes 100,000 shares
         that may be acquired upon the exercise of currently exercisable
         warrants, but does not include 168,537 shares of Common Stock that may
         be acquired after June 9, 2000 upon the conversion of 1,000 shares of
         Series B Preferred Stock.

(6)      Information based upon Amendment No. 5 to Schedule 13D filed by Famco
         VIP with the SEC on February 9, 2000. According to the information
         contained therein, includes 136,687 shares that may be acquired by
         Famco VIP upon the exercise of currently exercisable warrants. Kenneth
         B. Funsten and Funsten Asset Management Company are the general
         partners of Famco VIP. In this table, the shares owned by Famco VIP are
         also included in the shares beneficially owned by Mr. Funsten. See note
         (3) above. Includes 85,050 shares that may be acquired upon the
         exercise of currently exercisable warrants.


                                       52
<PAGE>   55
         Does not include 4,100 shares owned by an employee of Funsten Asset
         Management Company which cannot be sold or further added to without
         permission by Mr. Funsten by virtue of restrictions that are placed on
         securities transactions by employees of Funsten Asset Management
         Company, because Famco VIP has no investment or voting authority over
         the shares of such employee and Famco VIP expressly disclaims
         beneficial ownership of such shares.

(7)      Includes 18,965 shares that may be acquired by Mr. Marcum upon the
         exercise of currently exercisable warrants, and 120,000 shares that may
         be acquired by Mr. Marcum upon the exercise of currently exercisable
         stock options.

(8)      Includes 2,338 shares held of record by Mr. Thomasson's wife and 32,858
         shares held in family trusts. Also includes 22,213 shares that may be
         acquired by Mr. Thomasson upon the exercise of currently exercisable
         stock options and 33,199 shares that may be acquired by Mr. Thomasson
         or his wife or their family trusts upon the exercise of currently
         exercisable warrants.

(9)      Includes 18,165 shares that may be acquired by Mr. Lloyd upon the
         exercise of currently exercisable stock options and 5,000 shares that
         may be acquired by Mr. Lloyd upon the exercise of currently exercisable
         warrants.

(10)     Includes 439 shares that may be acquired by Mr. Gabbard upon the
         exercise of currently exercisable warrants, and 48,667 shares that may
         be acquired by Mr. Gabbard upon the exercise of currently exercisable
         stock options.

(11)     Includes 29,167 shares that may be acquired by Mr. McKee upon the
         exercise of currently exercisable stock options and 2,638 shares that
         may be acquired by Mr. McKee upon the exercise of currently exercisable
         warrants.

(12)     Includes 2,600 shares held by Mr. Pell's wife. Also includes 17,500
         shares that may be acquired by Mr. Pell upon the exercise of currently
         exercisable stock options and 4,052 shares that may be acquired by Mr.
         Pell or his wife upon the exercise of currently exercisable warrants.

(13)     Includes 18,826 shares owned by Mr. Briggs' wife. Also includes 4,714
         shares that may be acquired by Mr. Briggs' wife upon the exercise of
         currently exercisable stock options and 93 shares that may be acquired
         by Mr. Briggs' wife upon the exercise of currently exercisable
         warrants.

(14)     Includes 12,213 shares that may be acquired by Mr. Skilton upon the
         exercise of currently exercisable stock options and 625 shares that may
         be acquired by Mr. Skilton upon the exercise of currently exercisable
         warrants. Although Mr. Skilton is the President, Chief Executive
         Officer and a director of American Meter, no shares owned of record by
         American Meter have been attributed to Mr. Skilton's beneficial
         ownership.

(15)     Includes 5,000 shares that may be acquired by Mr. Collins upon the
         exercise of currently exercisable stock options.

(16)     See notes (7) through (15).

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In December 1997, MGT sold one-third of its preferred and performance
share interests and one-third of its interest in future management and
administrative fees in two business trusts to Odessa Exploration Incorporated
("Odessa"), a subsidiary of Key. Odessa paid MGT $700,000 for its interest, a
mutually agreed reduction from an initial purchase price amount of $1,000,000.
W. Phillip Marcum, our Chairman of the Board, President and Chief Executive
Officer, and Kevin P. Collins, are directors of both Metretek and Key, although
Mr. Collins was not a director of Metretek at the time of the transaction.


                                       53
<PAGE>   56
         On May 4, 1998, in connection with our acquisition, through Metretek
Florida, of certain assets of a subsidiary of American Meter, Metretek Florida
entered into a license agreement with American Meter, for the license by
American Meter and American Meter Software to Metretek of certain operating
software, and the development, manufacture and sale by Metretek Florida to
American Meter of certain electronic components and related equipment pertaining
to electronic temperature and pressure correction to be embedded within certain
new rotary and turbine meters of American Meter. The license agreement also
grants to American Meter and its affiliates the right to sell Metretek Florida
products in the United States and Canada at certain agreed-upon prices.
Subsequent to the acquisition, Metretek Florida and American Meter entered into
an international sales agreement, pursuant to which American Meter and its
affiliates have the non-exclusive right to sell Metretek Florida products
internationally. Harry I. Skilton, the President, Chief Executive Officer and a
director of American Meter, became a member of our Board of Directors in May
1998 in connection with this acquisition. During fiscal 1998 and 1999, we
recorded revenues of approximately $522,000 and $593,000 with respect to sales
to American Meter under the license agreement and the international sales
agreement. The terms of the license agreement and the international sales
agreement were the result of arms-length negotiations between the parties.

         Each material transaction between us and any related party is approved
by a majority of the members of our Board of Directors who are disinterested in
the transaction.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(A) EXHIBITS

         (2)      PLAN OF PURCHASE, SALE, REORGANIZATION, ARRANGEMENT,
                  LIQUIDATION OR SUCCESSION:

                  (2.1)    Asset Purchase Agreement, dated as of March 23, 1998,
                           by and among Eagle Research Corporation, American
                           Meter Company, Metretek, Incorporated and Marcum
                           Natural Gas Services, Inc. (Incorporated by reference
                           to Exhibit 2.4 to Metretek's Annual Report on Form
                           10-KSB for the year ended December 31, 1997.)

                  (2.2)    Agreement and Plan of Merger, dated as of March 16,
                           2000, by and between TotalPlan, Inc. and PowerSpring,
                           Inc.

                  (2.3)    Agreement and Plan of Merger, dated as of March 17,
                           2000, by and among PowerSpring, Inc., MERC
                           Acquisition Corp., Mercator Energy Incorporated and
                           John A. Harpole.

         (3)      ARTICLES OF INCORPORATION AND BY-LAWS:

                  (3.1)    Second Restated Certificate of Incorporation, as
                           amended, of Marcum Natural Gas Services, Inc.
                           (Incorporated by reference to Exhibit 4.1 to
                           Metretek's Registration Statement on Form S-3,
                           Registration No. 333-96369.)

                  (3.2)    Amended and Restated By-Laws of Metretek
                           Technologies, Inc. (Incorporated by reference to
                           Exhibit 3.3 to Metretek's Annual Report on Form
                           10-KSB for the year ended December 31, 1998.)

         (4)      INSTRUMENT DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
                  INDENTURES:

                  (4.1)    Specimen Common Stock Certificate. (Incorporated by
                           reference to Exhibit 4.1 to Metretek's Registration
                           Statement on Form S-18, Registration No. 33-44558.)

                  (4.2)    Form of Common Stock Purchase Warrant. (Incorporated
                           by reference to Exhibit 4.4 to Metretek's
                           Registration Statement on Form S-3, Registration No.
                           333-60925.)


                                       54
<PAGE>   57
                  (4.3)    Form of Warrant Agency Agreement between Marcum
                           Natural Gas Services, Inc. and American Securities
                           Transfer & Trust, Inc. (Incorporated by reference to
                           Exhibit 4.4 to Metretek's Registration Statement on
                           Form S-3, Registration No. 333-60925).

                  (4.4)    Form of Certificate representing warrants to purchase
                           shares of Common Stock of Marcum Natural Gas
                           Services, Inc. issued to former holders of warrants
                           of Metretek, Incorporated. (Incorporated by reference
                           to Exhibit 4.2 to Metretek's Registration Statement
                           on Form S-4, Registration No. 33-73874.)

                  (4.5)    Rights Agreement, dated as of December 2, 1991,
                           between Marcum Natural Gas Services, Inc. and
                           American Securities Transfer, Inc. (Incorporated by
                           reference to Exhibit 10.6 to Metretek's Registration
                           Statement on Form S-18, Registration No. 33-44558.)

                  (4.6)    Amendment No. 1 to Rights Agreement, dated as of
                           March 23, 1998, between Marcum Natural Gas Services,
                           Inc. and American Securities Transfer & Trust, Inc.
                           (Incorporated by reference to Exhibit 2 to Metretek's
                           Registration Statement on Form 8-A/A, Amendment No. 1
                           filed April 3, 1998.)

                  (4.7)    Amendment No. 2 to Rights Agreement, dated as of
                           December 9, 1999, between Metretek Technology, Inc.
                           and American Securities Transfer & Trust, Inc.
                           (Incorporated by reference to Exhibit 1 to Metretek's
                           Registration Statement on Form 8-A/A, Amendment No. 4
                           filed December 23, 1999.)

                  (4.8)    Form of Registration Rights Agreement among Marcum
                           Natural Gas Services, Inc. and the former warrant
                           holders of Metretek, Incorporated. (Incorporated by
                           reference to Exhibit 4.4 to Metretek's Registration
                           Statement on Form S-4, Registration No. 33-73874.)

                  (4.9)    Securities Purchase Agreement, dated as of December
                           9, 1999, by and among Metretek Technologies, Inc. and
                           certain purchases of securities of Metretek
                           Technologies, Inc. (collectively, the "Unit
                           Purchasers"). (Incorporated by reference to Exhibit
                           4.1 to Metretek's Current Report on Form 8-K filed
                           December 22, 1999).

                  (4.10)   Form of Common Stock Purchase Warrant issued by
                           Metretek Technology, Inc. to the Unit Purchasers.
                           (Incorporated by reference to Exhibit 4.3 to
                           Metretek's Current Report on Form 8-K filed December
                           22, 1999).

                  (4.11)   Registration Rights Agreement, dated December 9,
                           1999, by and among Metretek Technologies, Inc. and
                           the Unit Purchasers. (Incorporated by reference to
                           Exhibit 4.4 to Metretek's Current Report on Form 8-K
                           filed December 22, 1999).

         (10)     MATERIAL CONTRACTS:

                  (10.1)   Marcum Natural Gas Services, Inc. 1991 Stock Option
                           Plan, as amended and restated December 5, 1996.
                           (Incorporated by reference to Exhibit 10.2 to
                           Metretek's Annual Report on Form 10-KSB for the year
                           ended December 31, 1996.)*

                  (10.2)   Marcum Natural Gas Services, Inc. Directors' Stock
                           Option Plan, as amended and restated December 2,
                           1996. (Incorporated by reference to Exhibit 10.3 to
                           Metretek's Annual Report on Form 10-KSB for the year
                           ended December 31, 1996.)*

                  (10.3)   Employment Agreement, dated as of June 11, 1991, by
                           and between Marcum Natural Gas Services, Inc. and W.
                           Phillip Marcum. (Incorporated by reference to Exhibit
                           10.4 to Metretek's Registration Statement on Form
                           S-18, Registration No. 33-44558.)*


                                       55
<PAGE>   58
                  (10.4)   Amendment No. 1 to Employment Agreement, dated June
                           27, 1997, by and between Marcum Natural Gas Services,
                           Inc. and W. Phillip Marcum. (Incorporated by
                           reference to Exhibit 10.1 to Metretek's Quarterly
                           Report on Form 10-QSB for the quarterly period ended
                           September 30, 1997.)*

                  (10.5)   Amendment No. 2 to Employment Agreement, dated
                           December 3, 1998, by and between Marcum Natural Gas
                           Services, Inc. and W. Phillip Marcum. (Incorporated
                           by reference to Exhibit 10.5 to Metretek's Annual
                           Report on Form 10-KSB for the year ended December 31,
                           1998.)*

                  (10.6)   Amendment No. 3 to Employment Agreement, dated as of
                           January 1, 2000, by and between Metretek
                           Technologies, Inc. and W. Phillip Marcum.*

                  (10.7)   Employment Agreement, dated as of June 11, 1991, by
                           and between Marcum Natural Gas Services, Inc. and A.
                           Bradley Gabbard. (Incorporated by reference to
                           Exhibit 10.4 to Metretek's Registration Statement on
                           Form S-18, Registration No. 33-44558.)*

                  (10.8)   Amendment No. 1 to Employment Agreement, dated June
                           27, 1997, by and between Marcum Natural Gas Services,
                           Inc. and A. Bradley Gabbard. (Incorporated by
                           reference to Exhibit 10.2 to Metretek's Quarterly
                           Report on Form 10-QSB for the quarterly period ended
                           September 30, 1997.)*

                  (10.9)   Amendment No. 2 to Employment Agreement, dated
                           December 3, 1998, by and between Marcum Natural Gas
                           Services, Inc. and A. Bradley Gabbard. (Incorporated
                           by reference to Exhibit 10.8 to Metretek's Annual
                           Report on Form 10-KSB for the year ended December 31,
                           1998.)*

                  (10.10)  Amendment No. 3 to Employment Agreement, dated as of
                           January 1, 2000, by and between Metretek
                           Technologies, Inc. and A. Bradley Gabbard.*

                  (10.11)  Loan and Security Agreement, dated April 14, 1998, by
                           and between National Bank of Canada, Marcum Natural
                           Gas Services, Inc., Metretek, Incorporated and
                           Southern Flow Companies, Inc. (Incorporated by
                           reference to Exhibit 10.1 to Metretek's Quarterly
                           Report on Form 10-QSB for the quarterly period ended
                           March 31, 1998.)

                  (10.12)  Amendment No. 1 to Loan and Security Agreement, dated
                           as of November 10, 1998, by and among National Bank
                           of Canada, Marcum Natural Gas Services, Inc.,
                           Metretek, Incorporated and Southern Flow Companies,
                           Inc. (Incorporated by reference to Exhibit 10.12 to
                           Metretek's Annual Report on Form 10-KSB for the year
                           ended December 31, 1998).

                  (10.13)  Second Amendment to Loan and Security Agreement and
                           Loan Documents, dated as of September 13, 1999, by
                           and among National Bank of Canada, Metretek
                           Technologies, Inc., Metretek, Incorporated and
                           Southern Flow Companies, Inc. (Incorporated by
                           reference to Exhibit 10.1 to Metretek's Current
                           Report on Form 8-K filed September 14, 1999).

                  (10.14)  Third Amendment to Loan and Security Agreement and
                           Loan Documents, dated as of December 9, 1999, by and
                           among National Bank of Canada, Metretek Technologies,
                           Inc., Metretek, Incorporated and Southern Flow
                           Companies, Inc. (Incorporated by reference to Exhibit
                           10.1 to Metretek's Current Report on Form 8-K filed
                           December 22, 1999).

                  (10.15)  Marcum Natural Gas Services, Inc. 1998 Employee Stock
                           Purchase Plan. (Incorporated by reference to Exhibit
                           4.3 to Metretek's Registration Statement on Form S-8,
                           Registration No. 333-43547.)*


                                       56
<PAGE>   59
                  (10.16)  Metretek Technologies, Inc. 1998 Stock Incentive
                           Plan, amended and restated as of February 3, 2000
                           (Incorporated by reference to Exhibit 10.2 to
                           Metretek's Current Report on Form 8-K filed on
                           February 22, 2000).*

                  (10.17)  Employment Agreement, dated as of March 17, 2000,
                           between PowerSpring, Inc. and John A. Harpole.

                  (10.18)  Stockholders Agreement, dated as of March 17, 2000,
                           among Metretek Technologies, Inc., PowerSpring, Inc.
                           and John A. Harpole.

                  (10.19)  Promissory Note, dated March 17, 2000, made by
                           PowerSpring, Inc. to John A. Harpole.

                  (10.20)  Security Agreement, dated March 17, 2000, between
                           PowerSpring, Inc. and John A. Harpole.

                  (10.21)  Form of Indemnification Agreement between Metretek
                           Technologies, Inc. and each of its directors.

         (21)     SUBSIDIARIES OF THE SMALL BUSINESS ISSUER:

                  (21.1)   Subsidiaries of Metretek Technologies, Inc.

         (23)     CONSENT OF DELOITTE & TOUCHE LLP:

                  (23.1)   Deloitte & Touche LLP

         (24)     POWER OF ATTORNEY:

                  (24.1)   Power of Attorney of the executive officers and
                           directors of Metretek Technologies, Inc. (Included on
                           signature page.)

         (27)     FINANCIAL DATA SCHEDULE

                  (27.1)   Financial Data Schedule

----------

         *Management contract or compensation plan or arrangement required to be
filed as an exhibit to this form pursuant to Item 13(a) of Form 10-KSB.

(B)      REPORTS ON FORM 8-K

         During the quarter ended December 31, 1999, Metretek filed the
following report on Form 8-K:

<TABLE>
<CAPTION>
         Filing Date         Item No.   Description
         -----------         --------   -----------
<S>                          <C>        <C>
         December 22, 1999   5,7        Description of $14 million Units Private
                                        Placement of Common Stock, Series B
                                        Preferred Stock and warrants to purchase
                                        Common Stock
</TABLE>


                                       57
<PAGE>   60
                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                          METRETEK TECHNOLOGIES INC.


                                          By:   /s/ W. Phillip Marcum
                                              ---------------------------------
                                               W. Phillip Marcum, President and
                                               Chief Executive Officer
                                               Date: March 27, 2000

         In accordance with the Exchange Act, this Report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated:

<TABLE>
<CAPTION>
Signature                        Title                                          Date
---------                        -----                                          ----
<S>                              <C>                                            <C>
    /s/ W. Phillip Marcum        Chairman of the Board, President,              March 27, 2000
-----------------------------      Chief Executive Officer and Director
W. Phillip Marcum                  (Principal executive officer)

    /s/ A. Bradley Gabbard       Executive Vice President, Chief Financial      March 27, 2000
-----------------------------      Officer, Treasurer and Director (Principal
A. Bradley Gabbard                 financial officer)

    /s/ Gary J. Zuiderveen       Secretary, Controller and Principal            March 27, 2000
-----------------------------      Accounting Officer (Principal
Gary J. Zuiderveen                 accounting officer)

    /s/ Basil M. Briggs          Director                                       March 27, 2000
-----------------------------
Basil M. Briggs

    /s/ Robert Lloyd             Director                                       March 27, 2000
-----------------------------
Robert Lloyd

    /s/ Ronald W. McKee          Director                                       March 27, 2000
-----------------------------
Ronald W. McKee

    /s/ Harry I. Skilton         Director                                       March 27, 2000
-----------------------------
Harry I. Skilton
</TABLE>


                                       58
<PAGE>   61
                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                         PAGE
<S>                                                                      <C>
CONSOLIDATED FINANCIAL STATEMENTS OF
   METRETEK TECHNOLOGIES, INC. AND SUBSIDIARIES

Independent Auditors' Report                                              F-2

Consolidated Balance Sheets as of December 31, 1999 and 1998              F-3

Consolidated Statements of Operations for the Years Ended
   December 31, 1999 and 1998                                             F-5

Consolidated Statements of Stockholders' Equity for the Years
   Ended December 31, 1999 and 1998                                       F-6

Consolidated Statements of Cash Flows for the Years Ended
   December 31, 1999 and 1998                                             F-7

Notes to Consolidated Financial Statements                                F-8
</TABLE>


                                      F-1
<PAGE>   62
INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of
  Metretek Technologies, Inc.:

We have audited the accompanying consolidated balance sheets of Metretek
Technologies, Inc. and subsidiaries (the "Company") as of December 31, 1999 and
1998, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the years then ended. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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, such consolidated financial statements present fairly, in all
material respects, the financial position of Metretek Technologies, Inc. and
subsidiaries at December 31, 1999 and 1998, and the results of their operations
and their cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.





DELOITTE & TOUCHE LLP

Denver, Colorado
March 17, 2000


                                      F-2
<PAGE>   63
METRETEK TECHNOLOGIES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
------------------------------------------------------------------------------------------------------

                                                                                 DECEMBER 31,
                                                                         -----------------------------
ASSETS                                                                       1999             1998
<S>                                                                      <C>               <C>
CURRENT ASSETS:
  Cash and cash equivalents                                              $   361,658       $   639,448
  Trade receivables, less allowance for doubtful accounts
    of $125,573 and $117,469, respectively                                 3,802,818         5,006,914
  Other receivables                                                            2,818           152,084
  Inventories                                                              4,155,429         4,412,100
  Net assets of discontinued operations (Note 4)                             338,455           319,393
  Prepaid expenses and other current assets                                  435,734           275,782
                                                                         -----------       -----------
      Total current assets                                                 9,096,912        10,805,721
                                                                         -----------       -----------
PROPERTY, PLANT AND EQUIPMENT, AT COST
  Equipment                                                                2,453,492         2,282,406
  Vehicles                                                                    52,277            24,733
  Furniture and fixtures                                                     508,490           486,857
  Land, building and improvements                                            718,604           714,423
                                                                         -----------       -----------
      Total                                                                3,732,863         3,508,419
  Less accumulated depreciation                                            2,179,015         1,719,603
                                                                         -----------       -----------
      Property, plant and equipment, net                                   1,553,848         1,788,816
                                                                         -----------       -----------
OTHER ASSETS:
  Customer list (net of accumulated amortization of $2,955,939 and
    $2,510,694, respectively)                                              5,936,948         6,382,193
  Goodwill and other intangibles (net of accumulated amortization
    of $1,048,676 and $734,365, respectively)                              2,842,036         3,204,606
  Other assets                                                               180,690           204,947
                                                                         -----------       -----------
      Total other assets                                                   8,959,674         9,791,746
                                                                         -----------       -----------
TOTAL                                                                    $19,610,434       $22,386,283
                                                                         ===========       ===========
</TABLE>


See notes to consolidated financial statements.


                                      F-3
<PAGE>   64
METRETEK TECHNOLOGIES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
-----------------------------------------------------------------------------------------------------

                                                                               DECEMBER 31,
                                                                     --------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY                                     1999                1998
<S>                                                                  <C>                 <C>
CURRENT LIABILITIES:
  Accounts payable                                                   $  1,073,900        $    720,459
  Accrued and other liabilities                                           951,963           1,055,372
  Deposits and capital lease obligations                                    5,587               9,849
                                                                     ------------        ------------

      Total current liabilities                                         2,031,450           1,785,680
                                                                     ------------        ------------

LONG-TERM NOTES PAYABLE (Note 5)                                          869,968           3,161,702
                                                                     ------------        ------------

COMMITMENTS AND CONTINGENCIES (Note 6)

REDEEMABLE PREFERRED STOCK - SERIES B,
  $.01 PAR VALUE; AUTHORIZED, 1,000,000 SHARES;
  1,450 ISSUED AND OUTSTANDING; REDEMPTION
  VALUE $1,000 PER SHARE (Note 10)                                      1,450,000                  --
                                                                     ------------        ------------

STOCKHOLDERS' EQUITY (Note 8):
  Redeemable preferred stock - Series A, $.01 par value;
    authorized, 1,000,000 shares; none issued and outstanding
  Redeemable preferred stock - Series C, $.01 par value;
    authorized, 500,000 shares; none issued and outstanding
  Common stock, $.01 par value; authorized, 25,000,000 shares;
    issued and outstanding, 3,784,045 and 3,489,181 shares,
    respectively                                                           37,840              34,892
  Additional paid-in-capital                                           40,434,688          38,930,724
  Accumulated other comprehensive income (loss)                            (4,098)              6,657
  Accumulated deficit                                                 (25,209,414)        (21,533,372)
                                                                     ------------        ------------

      Total stockholders' equity                                       15,259,016          17,438,901
                                                                     ------------        ------------

TOTAL                                                                $ 19,610,434        $ 22,386,283
                                                                     ============        ============
</TABLE>


See notes to consolidated financial statements.


                                      F-4
<PAGE>   65
METRETEK TECHNOLOGIES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------------------------------------------

                                                              YEAR ENDED
                                                             DECEMBER 31,
                                                   --------------------------------
                                                       1999                1998
<S>                                                <C>                 <C>
REVENUES:
  Natural gas measurement sales and services       $ 19,345,771        $ 19,880,012
  Other                                                  19,425              42,098
                                                   ------------        ------------

      Total revenues                                 19,365,196          19,922,110
                                                   ------------        ------------

COSTS AND EXPENSES:
  Cost of measurement sales and services             13,760,360          12,864,414
  General and administrative                          3,442,126           3,581,911
  Selling, marketing and service                      2,057,355           1,524,959
  Depreciation and amortization                       1,268,835           1,109,402
  Research and development                            2,225,758             961,383
  Interest, finance charges and other                   286,804             185,473
                                                   ------------        ------------

      Total costs and expenses                       23,041,238          20,227,542
                                                   ------------        ------------

LOSS FROM CONTINUING OPERATIONS BEFORE TAXES         (3,676,042)           (305,432)

INCOME TAXES (Note 7)                                        --                  --
                                                   ------------        ------------

LOSS FROM CONTINUING OPERATIONS                      (3,676,042)           (305,432)

LOSS FROM DISCONTINUED OPERATIONS (Note 4)                   --             (33,884)
                                                   ------------        ------------

NET LOSS                                             (3,676,042)           (339,316)

PREFERRED STOCK DISTRIBUTION                             (7,310)                 --
                                                   ------------        ------------

NET LOSS APPLICABLE TO COMMON SHAREHOLDERS         $ (3,683,352)       $   (339,316)
                                                   ============        ============

NET LOSS PER BASIC AND DILUTED COMMON SHARE:
  Continuing operations                            $      (1.06)       $      (0.09)
  Discontinued operations                                   .00               (0.01)
                                                   ------------        ------------

NET LOSS PER BASIC AND DILUTED COMMON SHARE        $      (1.06)       $      (0.10)
                                                   ============        ============

WEIGHTED AVERAGE BASIC AND DILUTED COMMON
  SHARES OUTSTANDING                                  3,487,915           3,385,699
                                                   ============        ============
</TABLE>


See notes to consolidated financial statements.


                                      F - 5
<PAGE>   66
METRETEK TECHNOLOGIES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999 AND 1998
----------------------------------------------------------------------------------------------------------------------------------

                                                                                 ACCUMULATED
                                        COMMON STOCK              ADDITIONAL       OTHER
                                  ------------------------        PAID-IN       COMPREHENSIVE        ACCUMULATED
                                    SHARES        VALUE            CAPITAL       INCOME (LOSS)         DEFICIT          TOTAL
<S>                               <C>          <C>              <C>                 <C>             <C>              <C>
BALANCE,
  JANUARY 1, 1998                 3,077,822    $    30,778      $ 37,005,983        $ 6,657         $(21,194,056)    $ 15,849,362

Net loss and
  comprehensive loss                                                                                    (339,316)        (339,316)
Stock issued in acquisition         439,560          4,396         1,995,604                                            2,000,000
Stock issued under
  Employee Stock
  Purchase Plan                      47,244            472           176,785                                              177,257
Repurchases of common
  stock                             (75,445)          (754)         (247,648)                                            (248,402)
                                  ---------    -----------      ------------        --------        ------------     ------------

BALANCE,
  DECEMBER 31, 1998               3,489,181         34,892        38,930,724          6,657          (21,533,372)      17,438,901

Comprehensive loss:
  Foreign currency
    translation adjustments                                                         (10,755)                              (10,755)
  Net loss                                                                                            (3,676,042)      (3,676,042)
                                                                                                                     ------------
Total comprehensive loss                                                                                               (3,686,797)
Exercises of stock
  options and warrants               34,765            347            68,519                                               68,866
Warrant compensation                                                 203,228                                              203,228
Repurchases of
  common stock                      (39,028)          (390)          (85,146)                                             (85,536)
Stock issued for royalty
  payments                            9,127             91            49,909                                               50,000
Stock issued in private
  placement, net of offering
  costs                             290,000          2,900         1,274,764                                            1,277,664
Preferred stock distribution                                          (7,310)                                              (7,310)
                                  ---------    -----------      ------------        --------        ------------     ------------

BALANCE,
  DECEMBER 31, 1999               3,784,045    $    37,840      $ 40,434,688        $ (4,098)       $(25,209,414)    $ 15,259,016
                                  =========    ===========      ============        ========        ============     ============

</TABLE>


See notes to consolidated financial statements.


                                      F - 6
<PAGE>   67
METRETEK TECHNOLOGIES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------------------------------------------------------------

                                                                                       YEAR ENDED
                                                                                       DECEMBER 31,
                                                                              ----------------------------
                                                                                  1999            1998
<S>                                                                           <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                    $(3,676,042)     $  (339,316)
  Adjustments to reconcile net loss to net cash used by
    continuing operations:
    Loss from discontinued operations                                                               33,884
    Depreciation and amortization                                               1,268,835        1,109,402
    Stock based compensation expense                                               70,029           88,629
    Royalty payments made with restricted stock                                    50,000
    Loss on disposal of property, plant and equipment                               5,784            7,066
  Changes in other assets and liabilities, net of effect of acquisitions:
      Trade receivables                                                         1,204,096       (1,540,632)
      Inventories                                                                 256,671         (398,707)
      Other current assets                                                        172,615         (112,206)
      Other noncurrent assets                                                      10,541          (24,439)
      Accounts payable                                                            353,441          108,366
      Accrued and other liabilities                                              (106,513)        (388,401)
                                                                              -----------      -----------
      Net cash used by continuing operations                                     (390,543)      (1,456,354)
      Net cash used by discontinued operations                                     (5,541)          (3,375)
                                                                              -----------      -----------
      Net cash used by operating activities                                      (396,084)      (1,459,729)
                                                                              -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property, plant and equipment                                     (300,298)        (608,950)
  Acquisitions                                                                                  (1,579,624)
  Proceeds from sale of property, plant and equipment                               7,800           19,197
                                                                              -----------      -----------
      Net cash used in investing activities                                      (292,498)      (2,169,377)
                                                                              -----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from private placement                                           2,727,664
  Borrowings on notes payable to bank                                                            2,561,702
  Payments on notes payable to bank                                            (2,291,734)         (49,545)
  Exercise of stock options and warrants                                           68,866
  Employee stock purchase plan                                                                      88,629
  Repurchase of common stock                                                      (85,536)        (248,402)
  Preferred stock distribution                                                     (7,310)
  Payments on capital lease obligations                                            (1,158)         (22,384)
                                                                              -----------      -----------
      Net cash provided by financing activities                                   410,792        2,330,000
                                                                              -----------      -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                        (277,790)      (1,299,106)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                    639,448        1,938,554
                                                                              -----------      -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                      $   361,658      $   639,448
                                                                              ===========      ===========
</TABLE>


See notes to consolidated financial statements.


                                      F - 7
<PAGE>   68
METRETEK TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      ORGANIZATION AND NAME CHANGE - The accompanying consolidated financial
      statements include the accounts of Metretek Technologies, Inc. ("MTEK")
      (formerly known as Marcum Natural Gas Services, Inc.) and its
      subsidiaries, PowerSpring, Inc. ("PowerSpring"), TotalPlan, Inc.
      ("TotalPlan"), Southern Flow Companies, Inc. ("Southern Flow"), Metretek,
      Incorporated ("Metretek") (and its wholly-owned subsidiaries, Metretek
      Europe, Limited ("Metretek Europe"), and Sigma VI, Inc. ("Sigma VI")),
      Marcum Gas Transmission, Inc. ("MGT") (and its wholly-owned subsidiary
      Marcum Capital Resources, Inc. ("MCRI")), and Marcum Denver, Inc.
      (formerly Marcum Fuel Systems, Inc.), collectively referred to as the
      Company.

      MTEK was incorporated on April 5, 1991. The focus of its continuing
      business operations is in three areas relating to the natural gas
      industry: 1) the design, manufacture and distribution of automated energy
      consumption monitoring and recording systems, 2) natural gas measurement
      services, and 3) Internet based business to business energy information
      and services. Metretek designs, manufactures and sells automated systems
      to monitor and record natural gas consumption of commercial and industrial
      customers of natural gas utility companies. Southern Flow provides natural
      gas measurement services. PowerSpring provides Internet based business to
      business energy information and services. Each area of business operation
      is considered to be a reportable segment - see Note 9.

      In June 1999, the stockholders of the Company formally approved a change
      in name of the Company from Marcum Natural Gas Services, Inc. to Metretek
      Technologies, Inc.

      PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
      include the accounts of MTEK and its subsidiaries after elimination of
      intercompany accounts and transactions.

      REVERSE STOCK SPLIT - On July 6, 1998, the Company effected a 1-for-4
      reverse split of the Company's Common Stock. Accordingly, all historical
      amounts contained in the consolidated financial statements, including
      weighted average share and per share amounts in the consolidated
      statements of operations, as well as common stock and additional paid-in
      capital amounts in the consolidated balance sheets and consolidated
      statements of stockholders' equity, have been adjusted to reflect the
      reverse stock split on a retroactive basis. In addition, all historical
      common stock, common stock option, and common stock warrant amounts in the
      notes to the consolidated financial statements have been adjusted to
      reflect the reverse stock split on a retroactive basis.

      REVENUE RECOGNITION - Equipment and supply sales are recognized when
      delivered, and natural gas measurement revenues are recognized as services
      are provided.

                                      F - 8
<PAGE>   69
      STATEMENT OF CASH FLOWS - The Company considers all investments with a
      maturity of three months or less at time of purchase to be cash
      equivalents. Supplemental statement of cash flows information is as
      follows:

<TABLE>
<CAPTION>
                                                          1999         1998

<S>                                                     <C>          <C>
      Cash paid for interest                            $249,036     $106,691

      Cash paid for income taxes                        $ 24,596     $ 23,911

      Noncash financing and investing activities:
        Common stock and debt issued in acquisition     $            $2,600,000
</TABLE>


      INVENTORIES - Inventories are stated at the lower of first-in, first-out
      cost or market. Inventories at December 31, 1999 and 1998 are summarized
      as follows:

<TABLE>
<CAPTION>
                                                  1999            1998

<S>                                            <C>             <C>
      Raw materials and supplies               $1,274,424      $1,469,097
      Work in process                           1,878,522       1,868,144
      Finished goods and merchandise            1,002,483       1,074,859
                                               ----------      ----------

      Total                                    $4,155,429      $4,412,100
                                               ==========      ==========
</TABLE>

      PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is stated at
      cost and is generally depreciated on the straight-line basis over
      estimated useful lives ranging from 2 to 40 years. Property, plant and
      equipment includes items under capital lease with a net book value of $0
      and $1,481 at December 31, 1999 and 1998, respectively.

      INTANGIBLE ASSETS - Southern Flow customer lists are being amortized over
      20 years using the straight-line method. Goodwill and other intangibles
      are being amortized over periods ranging from 10 to 20 years. The Company
      capitalizes software development costs integral to its products once
      technological feasibility of the products and software has been
      determined. Software development costs are being amortized over five
      years, using the straight-line method. Unamortized software development
      costs at December 31, 1999 and 1998 are $283,618 and $420,165,
      respectively. Patents and license agreements are amortized on a
      straight-line basis over the lesser of their estimated economic lives or
      their legal term of existence, generally 10 to 17 years. When events and
      circumstances so indicate, the Company assesses the recoverability of
      goodwill and other intangible assets based on undiscounted cash flows. If
      an impairment is indicated, assets are written down to estimated fair
      value. No impairment losses have been recognized in either of the periods
      presented.


                                      F - 9
<PAGE>   70
      ACCRUED AND OTHER LIABILITIES - Accrued and other liabilities at December
      31, 1999 and 1998 are summarized as follows:

<TABLE>
<CAPTION>
                                                               1999           1998

<S>                                                          <C>          <C>
      Payroll, employee benefits and related liabilities     $490,723     $  562,468
      Deferred revenue                                        159,300        119,445
      Sales, property and other taxes payable                  85,878        124,998
      Insurance premiums and reserves                         103,202         79,200
      Interest payable                                          5,160         30,000
      Preferred stock distribution                              7,310
      Other                                                   100,390        139,261
                                                             --------     ----------

      Total                                                  $951,963     $1,055,372
                                                             ========     ==========
</TABLE>


      USE OF ESTIMATES - The preparation of the Company's consolidated financial
      statements in conformity with generally accepted accounting principles
      requires management to make estimates and assumptions that affect the
      amounts reported in these financial statements and accompanying notes.
      Actual results could differ from those estimates.

      FOREIGN CURRENCY - The assets and liabilities of Metretek Europe are
      translated at the rate of exchange at year end while sales and expenses
      are translated at the average rates in effect during the year. The net
      effect of translation adjustments are shown in the accompanying financial
      statements as a component of other comprehensive income. During 1998, the
      assets and liabilities and foreign currency sales and expenses were not
      significant. Accordingly, there were no translation adjustments in 1998.

      COMPREHENSIVE INCOME (LOSS) - The Company's other comprehensive income
      (loss) consists of foreign currency translation adjustments and is
      presented in the Consolidated Statement of Stockholders' Equity.

      INCOME (LOSS) PER SHARE - The Company's net loss from continuing
      operations, loss from discontinued operations and net loss, per share is
      based on the weighted average shares of common stock outstanding during
      the periods presented. The assumed conversion of stock options and
      warrants is excluded because their effect is antidilutive.

      STOCK BASED COMPENSATION - The Company utilizes the intrinsic value method
      to account for employee stock options as well as stock options issued to
      independent members of the board of directors. The Company utilizes the
      fair value method to account for employee stock based compensation under
      its 1998 Employee Stock Purchase Plan and for stock based compensation to
      non-employees.

      DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - In June 1998, the
      Financial Accounting Standards Board issued Statement of Financial
      Accounting Standard (SFAS) 133, "Accounting for Derivative Instruments and
      Hedging Activities," which, as amended by SFAS No. 137, is effective for
      all fiscal quarters of fiscal years beginning after June 15, 2000. SFAS
      133 requires that all derivatives be recognized at fair value in the
      statement of financial position, and that the corresponding gains or
      losses be reported either in the statement of operations or as a component
      of comprehensive income, depending on the type of hedging relationship
      that exists. The Company is currently evaluating the impact SFAS 133 will
      have on its financial statements, if any.


                                     F - 10
<PAGE>   71
      COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE - In
      March 1998, the Accounting Standards Executive Committee issued Statement
      of Position (SOP) No. 98-1, "Accounting for the Costs of Computer Software
      Developed or Obtained for Internal Use," which the Company adopted January
      1, 1999. The adoption of SOP No. 98-1 did not have a material effect on
      the financial position or results of operations of the Company.

      RECLASSIFICATION - Certain 1998 amounts have been reclassified to conform
      to current year presentation.

2.    NEW BUSINESS VENTURE

      On September 13, 1999, the Company entered into a strategic relationship
      with Scient Corporation ("Scient") to assist the Company in designing and
      creating an Internet-based business to enable the Company to take its
      measurement information products, services, and data measurement
      technologies to the market of end-users of natural gas and electricity
      (the "Internet Project"). The Internet Project is being developed and will
      be operated through PowerSpring. Simultaneously, the Company entered into
      a joint venture agreement with Mercator Energy Incorporated ("Mercator")
      whereby Mercator provided consulting services (the "Mercator Consulting
      Agreement") to TotalPlan. TotalPlan was organized to develop and market
      the Company's proprietary turnkey data collection and software management
      system that enables commercial users of natural gas and electricity to
      monitor and better manage their energy purchases and consumption, which is
      designed to capitalize on a continuing trend toward deregulation within
      the industry.

      In order to finance the initial phase of its Internet Project, the
      Company, together with Metretek and Southern Flow, entered into an
      amendment (the "Loan Amendment") to the terms of its $5,000,000 credit
      facility with its commercial lender. The Loan Amendment amends certain
      covenants of the loan agreement, including the Company's minimum annual
      net income (or maximum annual net loss in 1999), minimum tangible net
      worth and minimum debt service coverage ratio.

      The Company anticipates that the costs of launching the Internet Project,
      which involves several phases, will require estimated expenditures of
      between approximately $6,000,000 and $8,000,000. The Company has the right
      to terminate the Internet Project on 30 days notice, with maximum
      additional expenditures of $100,000.

      In connection with the Internet Project, the Company issued to Scient a
      warrant (the "Scient Warrant") to purchase 125,000 shares of common stock
      of the Company. The Scient Warrant becomes exercisable in September 2000,
      at exercise prices split between $5.00 and $10.00 per share, and expires
      in September 2002. Scient has registration rights with respect to the
      common stock issuable upon the exercise of the Scient Warrant.

      Pursuant to the Mercator Consulting Agreement, Mercator provided
      broker-agent natural gas consulting services to TotalPlan for a fee of
      $7,500 per month. The term of the Mercator Consulting Agreement was six
      months, renewable by mutual consent for six additional months. In
      connection with the Mercator Consulting Agreement, the Company issued to
      Mercator an option to purchase up to 25% of the capital stock of TotalPlan
      for a purchase price equal to 25% of TotalPlan's cumulative net loss,
      which was exercisable only during the term of the Consulting Agreement.
      The Company also issued to Mercator a warrant (the "Mercator Warrant") to
      purchase 60,000 shares of common stock of the Company. The Mercator
      Warrant vests in three tranches from the date of issuance through March
      2000, with exercise prices ranging between $4.50 and $5.50 per share, and
      expires in September 2002. Mercator has registration rights with respect
      to the common stock issuable upon the


                                     F - 11
<PAGE>   72
      exercise of the Mercator Warrant. As discussed further in Note 10, the
      Company subsequently acquired Mercator and merged the operations of
      Mercator and TotalPlan into PowerSpring.

      In connection with the Loan Amendment, the Company paid customary fees to
      the commercial lender and issued a warrant (the "Lender Warrant") to
      purchase 20,000 shares of common stock of the Company. The Lender Warrant
      is exercisable for three years at an exercise price of $5.00 per share.
      The commercial lender has registration rights with respect to the common
      stock issuable upon the exercise of the Lender Warrant.

      Compensation expense for the fair value of the Scient, Mercator and Lender
      Warrants is being recognized over the period in which the services are
      being performed or the remaining term of the Loan Agreement. Compensation
      expense associated with the warrants in the amount of $70,029 has been
      recognized in the consolidated statement of operations during the year
      ended December 31, 1999.

3.    ACQUISITIONS

      On May 4, 1998, the Company, through its wholly owned subsidiary,
      Metretek, purchased substantially all of the assets and business of
      American Meter Software Corporation (formerly known as Eagle Research
      Corporation) ("American Meter Software"), pertaining to electronic
      correctors and non-radio-frequency meter reading devices for the natural
      gas and electric utility industry. American Meter Software was a wholly
      owned subsidiary of American Meter Company ("American Meter"), which is
      ultimately controlled by Ruhrgas AG, a German corporation. American Meter
      Software subsequently merged into American Meter. The assets acquired by
      Metretek include certain inventory, equipment, trademarks and technology
      of American Meter Software and American Meter used in the design,
      manufacture and sales of electronic measurement process control and
      telemetry systems to utility companies in the natural gas and petroleum
      industries. In connection with the acquisition, Metretek assumed certain
      transitional employee costs and product warranty obligations of American
      Meter Software. The assets and business operations acquired have been
      relocated to Metretek's existing facility in Melbourne, Florida.

      In consideration for the purchase of the assets and business, the Company
      and Metretek paid and delivered to American Meter Software at the closing
      an aggregate purchase price consisting of $1,300,000 in cash, 439,560
      unregistered shares of Common Stock of the Company valued at their fair
      value of $2,000,000, and a $600,000 convertible subordinated promissory
      note (the "American Meter Note"). Subsequent to closing, the purchase
      price was adjusted down by $85,000 to reflect a decrease in American Meter
      Software's inventory between December 31, 1997 and May 4, 1998, partially
      offset by transitional costs assumed by Metretek.

      The American Meter Note was convertible at any time at the option of
      American Meter Software, into 105,495 shares of Common Stock of the
      Company at the rate of approximately $5.69 of principal per share, which
      conversion option was exercised by American Meter on March 16, 2000. Prior
      to its conversion, the American Meter Note bore interest on the unpaid
      principal balance at a fixed rate equal to 7.5% per annum and was due and
      payable May 4, 2002. The Company granted to American Meter Software the
      one-time option to cause the shares of Common Stock issued at the closing
      and issuable upon the conversion of the American Meter Note to be
      registered under the Securities Act of 1993, as amended, and applicable
      state securities laws, and has also granted American Meter Software
      certain piggy-back registration rights to include such shares in any
      registration statement filed by the Company, subject to customary
      underwriter cutbacks.


                                     F - 12
<PAGE>   73
      Metretek also entered into a license agreement ("License Agreement") with
      American Meter and American Meter Software, providing for the license by
      American Meter and American Meter Software to Metretek of certain
      operating software, and the development, manufacture and sale by Metretek
      to American Meter and American Meter Software of certain electronic
      components and related equipment pertaining to electronic temperature and
      pressure correction to be imbedded with certain new rotary and turbine
      meters of American Meter. The License Agreement also grants American Meter
      and its affiliates the right to sell Metretek products in the United
      States and Canada at certain agreed-upon prices. American Meter and
      American Meter Software also entered into a Non-Competition Agreement with
      the Company and Metretek, pursuant to which American Meter and American
      Meter Software have agreed not to compete with Metretek in the acquired
      business for five years from the closing date.

      The acquisition was accounted for as a purchase, and therefore the results
      of operations of the American Meter Software business acquired have been
      combined with those of the Company effective May 4, 1998.

      On June 15, 1998, Metretek, through its wholly owned subsidiary, Sigma VI,
      acquired substantially all of the assets of Quality Contract
      Manufacturing, Inc. ("QCMI") in exchange for $150,000 in cash. QCMI is a
      contract manufacturer of electronic circuit boards, sub-assemblies, and
      cable assemblies serving customers primarily in Melbourne, Florida and the
      immediately surrounding area. The acquisition was accounted for as a
      purchase and therefore the results of operations of QCMI have been
      combined with those of the Company effective June 15, 1998.

      The purchase prices of the foregoing acquisitions (including transaction
      costs) were allocated as follows:

<TABLE>
<CAPTION>
                                               AMERICAN METER
                                                  SOFTWARE          QCMI
<S>                                              <C>              <C>
      Inventories                                $1,265,000
      Property, plant and equipment                 228,000       $ 75,000
      Goodwill and other intangibles              2,532,000         80,000
                                                 ----------       --------

                                                 $4,025,000       $155,000
                                                 ==========       ========
</TABLE>


      The following summary unaudited pro forma results of operations for the
      years ended December 31, 1998 assumes that the American Meter Software and
      QCMI acquisitions occurred on January 1, 1998. These pro forma results
      have been prepared for comparative purposes and do not purport to be
      indicative of results of operations which actually would have resulted had
      the combinations been in effect on the date indicated, or which may result
      in the future.

<TABLE>
<CAPTION>
                                                                                      1998

<S>                                                                              <C>
      Total revenues                                                             $ 21,272,000
      Income (loss) from continuing operations                                   $   (234,000)
      Income (loss) per share from continuing operations - assuming dilution     $      (0.07)
</TABLE>

      As discussed in Note 10, on March 17, 2000, the Company acquired the
      assets of Mercator and merged the operations of Mercator and TotalPlan
      into PowerSpring.


                                     F - 13
<PAGE>   74
4.    DISCONTINUED OPERATIONS

      During 1998, the Company decided to discontinue the operations of MGT, a
      directly owned subsidiary of the Company that was formed to acquire or
      finance the acquisition of natural gas assets through privately financed
      programs, and then to manage and maintain a small ownership interest in
      those programs. This decision was based on the declining prospects of the
      markets and in order to enable the Company to focus on its other
      operations. In December 1997, MGT sold one-third of its interests in two
      of the three programs it then managed, and in March 1998, MGT liquidated
      the third program. MGT does not intend to form or manage any new programs,
      although it will continue to manage the remaining two programs that
      operate natural gas related assets until MGT's interest in these programs
      are sold.

      Net assets of the discontinued operations at December 31, 1999 and 1998
      consisted of the following:

<TABLE>
<CAPTION>
                                                                         1999            1998

<S>                                                                   <C>            <C>
      Current assets                                                  $  23,816      $  72,311
      Other assets, net                                                 321,949        275,484
      Accounts payable, accrued expenses and other disposal costs        (7,310)       (28,402)
                                                                      ---------      ---------

      Net assets of discontinued operations                           $ 338,455      $ 319,393
                                                                      =========      =========
</TABLE>

5.    DEBT

      The balance of notes payable at December 31, 1999 and 1998 consists of the
      following:

<TABLE>
<CAPTION>
                                                  1999             1998

<S>                                           <C>               <C>
      Term loans                              $  600,000        $  600,000
      Lines of credit                            269,968         2,561,702
                                              ----------        ----------
                                                 869,968         3,161,702
      Less current maturities                         --                --
                                              ----------        ----------

      Long-term notes payable                 $  869,968        $3,161,702
                                              ==========        ==========
</TABLE>


      On April 14, 1998, the Company and its wholly owned subsidiaries, Southern
      Flow and Metretek, entered into a loan and security agreement (the "Loan
      Agreement") with a commercial bank (the "Lender") providing for a combined
      $5,000,000 credit facility consisting of loans (the "Loans") and letters
      of credit to Southern Flow and Metretek, subject to limitations described
      below. The Loan Agreement provides for daily advances to Southern Flow and
      Metretek in the form of Loans to fund capital requirements, and daily
      paydowns on outstanding balances of the Loans from collection of customer
      accounts receivable. The Company makes monthly interest payments computed
      at prime plus 1% (9.5% at December 31, 1999) on outstanding balances of
      the Loans. The Loans mature on March 14, 2001. The Loans are secured by
      the tangible and intangible assets of the Company, Southern Flow, and
      Metretek, including equipment, inventories, receivables, and cash
      deposits, and the pledge of the shares of the Company's subsidiaries. The
      Loan Agreement requires the Company to maintain a minimum tangible net
      worth, a maximum debt to tangible net worth ratio, minimum annual net
      income (maximum loss), a minimum debt service coverage ratio, and contains
      other standard covenants related to operations of the Company, including
      prohibitions on the payment of dividends and the issuance or repurchase of
      securities (with certain exceptions) without the Lender's consent.
      Borrowings on the


                                     F - 14
<PAGE>   75
      Loans are limited to the sum of 80% of eligible accounts receivable of
      Southern Flow and Metretek and 50% of raw materials and finished goods
      inventories (up to a combined maximum of $1,500,000) of Southern Flow and
      Metretek.

      At December 31, 1999, the Company had a combined $3,587,864 Loan
      availability, of which $269,968 had been borrowed by Southern Flow and
      Metretek, leaving $3,317,896 in unused Loan availability. Proceeds from
      initial advances under the Loan Agreement were used to extinguish the
      Company's existing loans, lines of credit, and accrued interest with two
      commercial bank lenders in the aggregate amount of $468,993, including
      $279,021 of a term loan and accrued interest owed by the Company's
      discontinued MGT segment to a commercial bank lender.

      The balance of the term loan at December 31, 1999 and 1998 consists of the
      7.5% American Meter convertible note incurred in connection with the
      acquisition discussed in Note 3.

6.    COMMITMENTS AND CONTINGENCIES

      LEGAL PROCEEDINGS - In 1993, a former employee filed an action in Denver
      District Court against DVCO Fuel Systems, Inc. ("DVCO"), a former
      subsidiary of Marcum Denver, and the Company, alleging that the Company
      conspired with certain third parties to defraud him and that the Company
      intentionally interfered with certain contracts in which he had an
      interest. The former employee is seeking damages in the amount of
      approximately $420,000 and punitive damages. The Company has denied the
      former employee's claims and has asserted counterclaims against the former
      employee, alleging that (i) he breached an agreement with the Company
      which included a legal release, (ii) he made intentional and/or negligent
      misrepresentations regarding his qualification and reputation in the
      compressed natural gas industry, (iii) he breached his fiduciary duty to
      the Company, and (iv) he disparaged the Company. On September 18, 1997,
      the former employee's action was dismissed as a result of the Court's
      grant of the motion by the Company and DVCO for summary judgment against
      the former employee's claims. On February 18, 1999, the Colorado Court of
      Appeals reversed the summary judgment decision and remanded the case for
      trial as to the conspiracy claim only. The action is currently scheduled
      for trial in the third quarter of 2000. The Company believes the
      allegations against it and DVCO are without merit and intends to defend
      the action vigorously. Although the outcome of this litigation is not
      determinable with certainty, in the opinion of the Company's management,
      this litigation is not expected to have a material adverse effect on the
      business, financial condition or results of operations of the Company

      Other than as set forth above, there are no legal proceedings pending or,
      to the knowledge of the Company, threatened against the Company or any of
      its assets, other than litigation incidental and not material to its
      business.

      OPERATING LEASES - The Company leases business facilities and vehicles
      under operating lease agreements which specify minimum rentals.
      Substantially all leases have renewal provisions. Rental expense for the
      years ended December 31, 1999 and 1998 totaled $1,155,305 and $1,119,290,
      respectively.


                                     F - 15
<PAGE>   76
      Future minimum rental payments under noncancelable operating leases having
      an initial or remaining term of more than one year are as follows:

<TABLE>
<CAPTION>
        YEAR ENDING DECEMBER 31:
<S>                                                             <C>
       2000                                                     $  732,233
       2001                                                        627,259
       2002                                                        466,533
       2003                                                        450,876
       2004                                                        377,163
                                                                ----------

      Total                                                     $2,654,064
                                                                ==========
</TABLE>


      EMPLOYEE BENEFIT PLANS - The Company has a defined contribution savings
      and investment plan (the "401(k) Plan") under Section 401(k) of the
      Internal Revenue Code. All employees age 21 or older with at least one
      year of service are eligible to participate in the 401(k) Plan. The 401(k)
      Plan provides for discretionary contributions by employees of up to 15% of
      their eligible compensation. The Company may make discretionary matching
      contributions up to 50% of participant contributions, subject to a maximum
      of 6% of each participant's eligible compensation. The Company's 401(k)
      Plan expense for the years ended December 31, 1999 and 1998 was $148,934
      and $146,161, respectively.

      LICENSE AGREEMENT - Metretek has a commitment to pay in cash or restricted
      shares of common stock of the Company a 5% royalty on sales of certain
      royalty-bearing products of Metretek with a minimum annual royalty of
      $50,000 through the year 2002. In September 1998, the Company repurchased
      18,181 shares of its common stock that had been issued to the licensor in
      prior years in order to satisfy certain obligations of Metretek under the
      license agreement. Royalty expense of $50,000 has been recognized in both
      1999 and 1998 under the license agreement.

7.    INCOME TAXES

      No tax expense or benefit has been recognized during the years ended
      December 31, 1999 and 1998 because of net operating losses incurred and
      because a valuation allowance has been provided for 100% of the net
      deferred tax assets at December 31, 1999 and 1998.


                                     F - 16
<PAGE>   77
      The components of the Company's deferred tax assets and liabilities at
      December 31, 1999 and 1998 are shown below:

<TABLE>
<CAPTION>
                                                                   1999             1998
<S>                                                            <C>              <C>
      Assets:
        Net operating loss carryforwards                       $ 7,914,000      $ 7,074,000
        Tax credit carryforwards                                   128,000          151,000
        Allowance for bad debts                                     38,000           40,000
        Other                                                      129,000            9,000
                                                               -----------      -----------
                                                                 8,209,000        7,274,000
                                                               -----------      -----------
      Liabilities:
        Excess of income tax depreciation and amortization
          over financial statement amounts                         460,000          650,000
        Other                                                       47,000           34,000
                                                               -----------      -----------
                                                                   507,000          684,000
                                                               -----------      -----------

      Net deferred tax asset                                     7,702,000        6,590,000
      Valuation allowance                                       (7,702,000)      (6,590,000)
                                                               -----------      -----------

      Total                                                    $         0      $         0
                                                               ===========      ===========
</TABLE>

      At December 31, 1999, the Company had unused net operating losses to carry
      forward against future years' taxable income of approximately $23,276,000
      expiring in various amounts from 2000 to 2014. At December 31, 1999, the
      Company had unused investment tax credits, general business tax credits,
      and research and development tax credit carryforwards aggregating
      approximately $128,000 expiring in various amounts from 2000 to 2008.

      As a result of its acquisition of Metretek in 1994, the Company acquired a
      remaining net operating loss carryforwards for tax purposes of $3,428,000
      expiring between 2000 and 2002. As a result of the change in ownership
      upon acquisition, utilization of the carryforwards is limited to
      approximately $762,000 annually under Section 382 of the Internal Revenue
      Code.

      As a result of an acquisition in 1991, the Company acquired a remaining
      net operating loss carryforwards for tax purposes of approximately
      $873,000 ($231,000, net of current limitation). Such carryforwards expire
      in 2000 through 2005. As a result of the change in ownership upon
      acquisition, utilization of these net operating loss carryforwards is
      limited to approximately $33,000 annually. If the benefits related to the
      net operating loss carryforwards that were not recognized at the
      acquisition date are recognized in a subsequent period, they will first
      reduce to zero any goodwill related to the acquisition, then reduce to
      zero all other noncurrent intangible assets, and then reduce income tax
      expense.

8.    CAPITAL STOCK

      WARRANT DIVIDEND - On September 18, 1998, the Company distributed 886,442
      common stock Purchase Warrants (the "Warrants") as a dividend to
      stockholders of the Company on the basis of one Warrant for each four
      shares of common stock outstanding on September 10, 1998, the record date
      for the Warrant dividend. Each Warrant is exercisable, for a five-year
      period, for one share of common stock at an exercise price of $4.00. The
      Warrants are subject to redemption by the Company, at $.01 per Warrant,
      in the event the Common Stock trades at or above $6.50 per share for 20
      consecutive trading days. The registration statement and prospectus
      covering the common stock issuable upon exercise of the Warrants also
      covers the resale of up to 155,081 Warrants by a selling security holder.


                                     F - 17
<PAGE>   78
      No accounting recognition was given to warrant dividend. A total of 412
      Warrants have been exercised through December 31, 1999.

      STOCK COMPENSATION - In January 1998, the Company adopted a non-qualified,
      compensatory Employee Stock Purchase Plan (the "1998 Stock Purchase
      Plan"), which allowed eligible employees to purchase shares of the
      Company's Common Stock through payroll deductions. Under the 1998 Stock
      Purchase Plan, employees purchased shares at a price equal to 100% of the
      lower of the beginning or ending fair market value of the shares during
      each one-month offering period. The Company matched the employees'
      purchase on a share-for-share basis. The maximum payroll deduction was 15%
      of an employee's eligible compensation. The Company reserved and
      registered a total of 50,000 shares of Common Stock for offer and issuance
      under the 1998 Stock Purchase Plan. The Company issued 47,244 shares under
      the 1998 Stock Purchase Plan, which has been discontinued. Stock
      compensation expense in the amount of $88,629 was recognized during the
      year ended December 31, 1998 representing the market value of the shares
      of common stock matched by the Company under the 1998 Stock Purchase Plan.

      STOCK INCENTIVE PLAN - In March 1998, the Board of Directors of the
      Company adopted the Metretek Technologies, Inc. 1998 Stock Incentive Plan
      (the "1998 Stock Incentive Plan"), which was approved by the Company's
      stockholders at the Annual Meeting of Stockholders held on June 12, 1998.
      The 1998 Stock Incentive Plan authorizes the Board of Directors to grant
      non-qualified stock options, incentive stock options, stock appreciation
      rights, restricted stock, performance awards and other stock-based awards
      to officers, directors, employees, consultants and advisors of the Company
      and its subsidiaries for up to 250,000 shares of the Company's common
      stock. The 1998 Stock Incentive Plan replaced the Company's existing 1991
      Stock Option Plan and the Company's Directors' Stock Option Plan (the
      "Prior Plans"), and no new awards will be made under the Prior Plans,
      although options outstanding under the Company's Prior Plans were not
      affected by the adoption of the 1998 Stock Incentive Plan. On February 3,
      2000, the stockholders of the Company, at a special meeting, adopted a
      proposal by the Board of Directors to increase the number of shares
      available under the 1998 Stock Incentive Plan to a total of 750,000 shares
      of common stock of the Company.

      STOCK REPURCHASE PLAN - In September 1998, the Board of Directors of the
      Company adopted a stock repurchase plan (the "Stock Repurchase Plan")
      pursuant to which the Company was authorized to purchase up to
      approximately 7% of its outstanding common stock in open market
      transactions, from time to time as management deems appropriate, based on
      the market price of the Company's stock. The Stock Repurchase Plan was
      discontinued on September 20, 1999. Under the Stock Repurchase Plan during
      1998 and 1999, the Company repurchased 96,116 shares of its common stock
      at an average price of $2.22 per share. The repurchased shares have been
      retired.

      STOCK OPTIONS - In December 1991, the Company adopted the 1991 Stock
      Option Plan which was amended and restated on June 4, 1996 ("1991 SOP")
      and the Director's Stock Option Plan ("Director SOP"). Under the 1991 SOP,
      incentive stock options and nonqualified stock options may be granted to
      officers and employees for up to 350,000 shares of common stock. Under the
      1991 SOP, options granted must be at exercise prices not less than the
      fair market value of the Company's common stock on the date of grant. The
      1991 SOP options have a term of ten years with the vesting terms
      determined on the date of the grant. The Director SOP permits the granting
      of nonqualified stock options for up to 162,500 shares of common stock to
      nonemployee directors of the Company. Each Director SOP option is
      exercisable at a price not less than the fair market value of the
      Company's common stock on the date of grant. The Director SOP options have
      a term of ten years and are vested on the date of grant.


                                     F - 18
<PAGE>   79
      Options granted to certain officers and non-employee directors contain
      limited rights for receipt of cash for appreciation in stock value in the
      event of certain changes in control.

      Options to purchase shares of common stock are summarized as follows:

<TABLE>
<CAPTION>
                                 1998 STOCK        DIRECTORS STOCK          1991 STOCK
                              INCENTIVE PLAN         OPTION PLAN            OPTION PLAN         OTHER OPTIONS
                          --------------------- --------------------- ---------------------  -------------------
                                      WEIGHTED               WEIGHTED              WEIGHTED             WEIGHTED
                             NUMBER    AVERAGE     NUMBER    AVERAGE     NUMBER    AVERAGE     NUMBER   AVERAGE
                               OF      OPTION        OF      OPTION        OF       OPTION       OF      OPTION
                              SHARES    PRICE      SHARES     PRICE      SHARES     PRICE      SHARES    PRICE
<S>                        <C>        <C>        <C>        <C>        <C>         <C>       <C>       <C>
Outstanding at
  January 1, 1998              --                 105,000    $ 5.54      260,250   $ 5.30      38,758   $ 6.38
Granted                      53,606    $ 2.65     115,000      2.12      304,750     2.29       1,559     2.00
Forfeited                   (17,428)     3.52    (110,000)     5.50     (289,438)    5.28      (1,559)    6.36
Expired                                                                                       (37,200)    6.38
                            -------               -------               --------              -------

Outstanding at
  December 31, 1998          36,178      2.23     110,000      2.00      275,562     2.00       1,558     2.00

Granted                     168,732      3.76
Forfeited                    (2,000)     4.63                             (1,250)    2.00
Expired                                                                                        (1,468)    2.00
Exercised                   (10,951)     1.86     (17,500)     2.00       (5,812)    2.00         (90)    2.00
                            -------               -------               --------              -------

Outstanding at
  December 31, 1999         191,959    $ 3.57      92,500    $ 2.00     268,500    $ 2.00       --      $  --
                            =======               =======               =======               ======
Exercisable at
  December 31:
  1999                       88,929    $ 3.13      92,500    $ 2.00     251,985    $ 2.00       --      $  --
                            =======               =======               =======               ======

  1998                       36,178    $ 2.23     110,000    $ 2.00        --      $ --        1,558    $ 2.00
                            =======               =======               =======               ======
</TABLE>

      On October 6, 1998, the Board of Directors approved the repricing of all
      outstanding stock options held by officers, directors and employees of the
      Company to an exercise price of $2.00 per share, the last sale price of
      the common stock as reported on the Nasdaq National Market on such date.
      No repriced officer or employee options (whether or not vested) were
      exercisable prior to October 6, 1999. The other terms of the outstanding
      stock options generally remained unchanged. The repriced options are
      reflected as forfeitures and new grants during the year ended December 31,
      1998 in the summary above.


                                     F - 19
<PAGE>   80
      The weighted average grant date fair values of options granted (including
      repriced options in 1998), during the years ended December 31, 1999 and
      1998 were $1.60 and $.77 per option, respectively. During the year ended
      December 31, 1999, 141,000 of the grants were incentive stock options
      granted to employees and 27,732 of the grants were nonqualified stock
      options granted to nonemployee directors of the Company. During the year
      ended December 31, 1998, 325,059 of the grants (including repriced
      options) were incentive stock options granted to employees and 149,856 of
      the grants (including repriced options) were nonqualified stock options
      granted to nonemployee directors of the Company. The range of exercise
      price for options outstanding as of December 31, 1999 was $1.75 to $5.63.
      The weighted average remaining contractual life of all options outstanding
      at December 31, 1999 was approximately 6.9 years. If the fair value based
      method of accounting for stock options had been applied, the Company's net
      loss and net loss per share would have increased to the pro forma amounts
      indicated below:

<TABLE>
<CAPTION>
                                                                         YEAR ENDED DECEMBER 31,
                                                                       1999                 1998

<S>                                                               <C>                  <C>
      Net loss - as reported                                      $  (3,676,042)       $    (339,316)
      Net loss - pro forma                                        $  (3,959,885)       $    (563,789)
      Loss per basic and diluted Common Share - as reported       $       (1.06)       $       (0.10)
      Loss per basic and diluted Common Share - pro forma         $       (1.14)       $       (0.17)
</TABLE>


      The fair values of stock options were calculated using the Black-Scholes
      stock option valuation model with the following weighted average
      assumptions for grants in 1999 and 1998: stock price volatility at 43% and
      40%, respectively; risk-free rate of return of 5.6% and 5%, respectively;
      dividend rate of $0.00 per year; and an expected term of 4 years for
      options granted to employees and 10 years for options granted to
      directors.

      STOCKHOLDER RIGHTS PLAN - On December 12, 1991, the stockholders of the
      Company approved the Stockholder Rights Plan ("Plan"). The Plan calls for
      the issuance of one preferred share purchase right ("Right") for each
      share of Common Stock held by stockholders of record on December 2, 1991.
      Each Right represents the right to purchase four one-hundredths of a share
      of Series C Preferred Stock of the Company at an initial exercise price of
      $25 per share. The Rights are exercisable through December 1, 2001, unless
      earlier redeemed by the Company. In the event that any person or group
      (with certain exceptions) acquires 15% or more of the Company's
      outstanding Common Stock, the Rights provide for the holder to acquire
      Common Stock of the Company, or acquiring company, at a 50% discount. The
      rights are redeemable by the Company at $.04 per Right.

      STOCK WARRANTS - On March 13, 1998, the Company issued 50,000 stock
      purchase warrants to a consultant for financial advisory services. At
      December 31, 1999, 12,500 of the warrants were vested and exercisable at
      $4.43 per share. The remaining 37,500 stock purchase warrants expired in
      1999 without vesting.

      METRETEK STOCK WARRANTS - Metretek stock warrants were issued by Metretek
      in prior periods in connection with issues of common stock and debentures.
      Stock warrants were also issued by Metretek to certain stockholders as
      remuneration for loans provided to Metretek and to a venture capital
      company as remuneration for services rendered in connection with a new
      issue of special preference stock. At December 31, 1998, stock warrants
      outstanding allow the holders to purchase a total of 36,620 shares of
      Common Stock at prices ranging from $44.48 to $88.96 per share. The
      Metretek stock warrants are exercisable over periods expiring at various
      dates through 2004. No accounting recognition was given


                                     F - 20
<PAGE>   81
      to the Metretek stock warrants, all of which were granted prior to
      guidance set forth in Emerging Issues Task Force Issue No. 96-13,
      "Accounting for Derivative Financial Instruments Indexed to, and
      Potentially Settled in, a Company's Own Stock."

      The shares of the Company's Common Stock issuable upon the exercise of the
      Metretek Warrants cannot be resold unless such resale is registered under
      the Securities Act and under applicable state securities laws or is made
      pursuant to an available exemption therefrom. The holders of the Metretek
      Warrants have the right, under certain circumstances, to require the
      Company to register the shares of the Company's Common Stock issuable upon
      exercise of the Metretek Warrants under the Securities Act and applicable
      state securities laws.

9.    SEGMENT AND RELATED INFORMATION

      The Company's reportable segments are strategic business units that offer
      different products and services. They are managed separately because each
      business requires different technology and marketing strategies.

      The Company has three reportable business segments: automated energy data
      management; natural gas measurement services; and Internet-based energy
      information and services. The operations of the Company's automated energy
      data management segment are conducted by Metretek. Metretek's manufactured
      products fall into three categories: remote data collection products;
      electronic corrector products; and application-specific products. Metretek
      also provides energy data collection and management services and post-sale
      support services for its manufactured products. Historically, Metretek's
      products and services have been provided principally to natural gas local
      distribution companies ("LDCs"). Typically LDCs install Metretek products
      in conjunction with custody transfer meters on their larger customers for
      the purpose of meeting deregulation requirements.

      The operations of the Company's natural gas measurement services segment
      are conducted by Southern Flow. Southern Flow's services include on-site
      field services, chart processing and analysis, laboratory analysis, and
      data management and reporting. These services are provided principally to
      customers involved in natural gas production, gathering, transportation
      and processing.

      The operations of the Company's Internet-based energy information and
      services segment are conducted by PowerSpring. PowerSpring has incurred
      operating costs to date and does not expect to commence revenue generating
      operations until the second quarter of 2000.

      The accounting policies of the reportable segments are the same as those
      described in Note 1 of the Notes to Consolidated Financial Statements. The
      Company evaluates the performance of its operating segments based on
      income (loss) before income taxes, nonrecurring items and interest income
      and expense. Intersegment sales are not significant.


                                     F - 21
<PAGE>   82
      Summarized financial information concerning the Company's reportable
      segments is shown in the following table. The "Other" column includes
      corporate related items, results of insignificant operations and, as it
      relates to segment profit, income and expense not allocated to reportable
      segments.

<TABLE>
<CAPTION>
                                                                                 INTERNET-BASED
                                              AUTOMATED         NATURAL GAS         ENERGY
                                             ENERGY DATA        MEASUREMENT       INFORMATION
                                              MANAGEMENT          SERVICES        AND SERVICES         OTHER             TOTAL

      1999
      <S>                                    <C>                <C>              <C>                <C>               <C>
      Revenues                               $ 8,233,628        $ 11,112,143                       $     19,425       $ 19,365,196
      Segment profit (loss)                   (1,714,941)            976,561     $ (1,505,981)       (1,431,681)        (3,676,042)
      Total assets                             8,752,459          10,040,015           94,682           723,278         19,610,434
      Capital expenditures                       167,895              87,973                             44,430            300,298
      Depreciation and amortization              641,447             612,388                             15,000          1,268,835

      1998
      Revenues                               $ 8,774,395        $ 11,105,617     $                  $    42,098       $ 19,922,110
      Segment profit (loss)                      433,563             746,828                         (1,485,823)          (305,432)
      Total assets                            11,054,992          10,685,373                            645,918         22,386,283
      Capital expenditures                       416,025             189,739                              3,186            608,950
      Depreciation and amortization              497,922             601,911                              9,569          1,109,402
</TABLE>


      The following table presents revenues by geographic area based on the
      location of the use of the product or service:

<TABLE>
<CAPTION>
                                             1999                  1998

<S>                                      <C>                   <C>
      United States                      $18,455,954           $18,294,312
      United Kingdom                         366,211               904,581
      Canada                                 466,030               596,777
      Australia                               44,062                74,601
      Argentina                               31,227                42,296
      Other                                    1,712                 9,543
                                         -----------           -----------

      Total                              $19,365,196           $19,922,110
                                         ===========           ===========
</TABLE>


10.   SUBSEQUENT EVENTS

      On February 4, 2000, the Company completed a $14,000,000 private placement
      (the "Units Private Placement") of 7,000 ("Units"), including 1,450 Units
      the Company issued on December 9, 1999. Each Unit consisted of 200 shares
      of common stock, 1 share of Series B Preferred Stock and warrants ("Unit
      Warrants") to purchase 100 shares of common stock. In the Units Private
      Placement, the Company issued 1,400,000 shares of common stock, 7,000
      shares of Series B Preferred Stock and Unit Warrants to purchase 700,000
      shares of common stock. The Units Private Placement was approved and
      ratified by the stockholders of the Company at a special meeting held on
      February 3, 2000.

      Each share of Series B Preferred Stock is mandatorily redeemable on
      December 9, 2004 at a liquidation preference of $1,000 per share plus
      accrued and unpaid dividends, accrues dividends at 8% annually payable
      quarterly in arrears, and is convertible at any time after June 9, 2000 at
      the option of the holder into 168.5374 shares of common stock of the
      Company. In addition, the Company has the right to redeem the Series B
      Preferred Stock on or after December 9, 2000, if the Company's common
      stock is trading at 200% of the conversion price of the Series B Preferred
      Stock. The conversion rate of the


                                     F - 22
<PAGE>   83
      Series B Preferred Stock may be subject to downward adjustment on December
      9, 2000 if the average closing bid price of the Company's common stock for
      the 30 trading days immediately preceding that date is less than the
      conversion price then in effect, provided that the conversion price cannot
      be reduced by more than 50%. The Series B Preferred Stock is also subject
      to certain anti-dilution provisions.

      Each Unit Warrant entitles the holder to purchase one share of the
      Company's common stock at an initial exercise price of $6.7425 per share.
      The initial exercise price of the Unit Warrants may also be subject to
      downward adjustment on December 9, 2000 if the average closing bid price
      of the Company's common stock for the 30 trading days immediately
      preceding that date is less than the exercise price of the Unit Warrants
      then in effect.

      The proceeds from the sale of the Units, including the 1,450 Units issued
      on December 9, 1999, have been allocated to common stock, the Unit
      Warrants, and the Series B Preferred Stock based on the relative fair
      value of each on the date of issuance. This allocation process resulted in
      the Series B Preferred Stock issued on February 4, 2000 being initially
      recorded at a discount of $141 per share from its $1,000 per share
      liquidation value. This discount will be recorded as a distribution over
      the term of the Series B Preferred Stock. Another discount resulted from
      the increase in the fair market value of a share of the Company's common
      stock from the date the Company offered to sell 5,550 Units to February 4,
      2000, the date the Units were issued. This increase caused the conversion
      feature of the Series B Preferred Stock to be "in the money" on February
      4, 2000. The discount of $859 per share related to the "in the money"
      conversion feature will also be recorded as a distribution between
      February 4 and June 9, 2000, the date the Series B Preferred Stock can
      first be converted into common stock of the Company.

      The primary purpose of the Units Private Placement was to raise capital to
      enable the Company to develop the Internet-based business of PowerSpring.
      A portion of the proceeds was also used to repay outstanding indebtedness,
      and the remaining proceeds will be used for general corporate and working
      capital purposes, including potentially providing the funds to finance an
      acquisition opportunity, if one were to arise.

      On March 17, 2000, the Company acquired Mercator Energy Incorporated
      ("Mercator") through a merger with a wholly-owned subsidiary of
      PowerSpring. Mercator is a Denver-based natural gas services and brokerage
      company that acts as an independent broker-agent for both producers and
      users. This acquisition will provide PowerSpring with Mercator's expertise
      in the area of energy procurement, which is an important element in the
      Company's Internet business strategy.

      In consideration for the acquisition of Mercator, the Company delivered to
      the sole shareholder of Mercator prior to the acquisition, $408,334 in
      cash, a $741,666 non-negotiable promissory note payable by PowerSpring
      over two years and secured by a general security interest in the assets of
      PowerSpring, and 2,500,000 shares of common stock of PowerSpring.
      Subsequent to the acquisition of Mercator, the Company owns 87.5% of the
      outstanding shares of PowerSpring common stock, and Mercator has become a
      wholly-owned subsidiary of PowerSpring. PowerSpring and Metretek entered
      into a stockholder's agreement with the former owner of Mercator that
      addresses certain rights related to PowerSpring common stock, including a
      right for the former owner of Mercator to put his shares of PowerSpring
      common stock back to PowerSpring at an appraised value over three years if
      PowerSpring has not completed an initial public offering or has not sold
      its business within two years.

      PowerSpring also entered into a two-year employment agreement with the
      former owner of Mercator which included an option to purchase 60,000
      shares of common stock of the Company exercisable, at


                                     F - 23
<PAGE>   84
      $17.88 per share, and an option to purchase 200,000 shares of PowerSpring
      common stock, exercisable at $.30 per share.

      In September 1999, the Company had entered into a consulting and joint
      venture agreement with Mercator, under which Mercator provided energy
      procurement consulting services to the Company. In connection with the
      acquisition of Mercator, the consulting and joint venture agreement and a
      related stock option agreement were terminated.

                                    * * * * *


                                     F - 24
<PAGE>   85
                           METRETEK TECHNOLOGIES, INC.

                                   FORM 10-KSB

                      FOR THE YEAR ENDED DECEMBER 31, 1999

                                  EXHIBIT LIST
                                  ------------


(2)      PLAN OF PURCHASE, SALE, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
         SUCCESSION:

         (2.1)    Asset Purchase Agreement, dated as of March 23, 1998, by and
                  among Eagle Research Corporation, American Meter Company,
                  Metretek, Incorporated and Marcum Natural Gas Services, Inc.
                  (Incorporated by reference to Exhibit 2.4 to Metretek's Annual
                  Report on Form 10-KSB for the year ended December 31, 1997.)

         (2.2)    Agreement and Plan of Merger, dated as of March 16, 2000, by
                  and between TotalPlan, Inc. and PowerSpring, Inc.

         (2.3)    Agreement and Plan of Merger, dated as of March 17, 2000, by
                  and among PowerSpring, Inc., MERC Acquisition Corp., Mercator
                  Energy Incorporated and John A. Harpole.

(3)      ARTICLES OF INCORPORATION AND BY-LAWS:

         (3.1)    Second Restated Certificate of Incorporation, as amended, of
                  Marcum Natural Gas Services, Inc. (Incorporated by reference
                  to Exhibit 4.1 to Metretek's Registration Statement on Form
                  S-3, Registration No. 333-96369.)

         (3.2)    Amended and Restated By-Laws of Metretek Technologies, Inc.
                  (Incorporated by reference to Exhibit 3.3 to Metretek's Annual
                  Report on Form 10-KSB for the year ended December 31, 1998.)

(4)      INSTRUMENT DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
         INDENTURES:

         (4.1)    Specimen Common Stock Certificate. (Incorporated by reference
                  to Exhibit 4.1 to Metretek's Registration Statement on Form
                  S-18, Registration No. 33-44558.)

         (4.2)    Form of Common Stock Purchase Warrant. (Incorporated by
                  reference to Exhibit 4.4 to Metretek's Registration Statement
                  on Form S-3, Registration No. 333-60925.)

<PAGE>   86
         (4.3)    Form of Warrant Agency Agreement between Marcum Natural Gas
                  Services, Inc. and American Securities Transfer & Trust, Inc.
                  (Incorporated by reference to Exhibit 4.4 to Metretek's
                  Registration Statement on Form S-3, Registration No.
                  333-60925).

         (4.4)    Form of Certificate representing warrants to purchase shares
                  of Common Stock of Marcum Natural Gas Services, Inc. issued to
                  former holders of warrants of Metretek, Incorporated.
                  (Incorporated by reference to Exhibit 4.2 to Metretek's
                  Registration Statement on Form S-4, Registration No.
                  33-73874.)

         (4.5)    Rights Agreement, dated as of December 2, 1991, between Marcum
                  Natural Gas Services, Inc. and American Securities Transfer,
                  Inc. (Incorporated by reference to Exhibit 10.6 to Metretek's
                  Registration Statement on Form S-18, Registration No.
                  33-44558.)

         (4.6)    Amendment No. 1 to Rights Agreement, dated as of March 23,
                  1998, between Marcum Natural Gas Services, Inc. and American
                  Securities Transfer & Trust, Inc. (Incorporated by reference
                  to Exhibit 2 to Metretek's Registration Statement on Form
                  8-A/A, Amendment No. 1 filed April 3, 1998.)

         (4.7)    Amendment No. 2 to Rights Agreement, dated as of December 9,
                  1999, between Metretek Technology, Inc. and American
                  Securities Transfer & Trust, Inc. (Incorporated by reference
                  to Exhibit 1 to Metretek's Registration Statement on Form
                  8-A/A, Amendment No. 4 filed December 23, 1999.)

         (4.8)    Form of Registration Rights Agreement among Marcum Natural Gas
                  Services, Inc. and the former warrant holders of Metretek,
                  Incorporated. (Incorporated by reference to Exhibit 4.4 to
                  Metretek's Registration Statement on Form S-4, Registration
                  No. 33-73874.)

         (4.9)    Securities Purchase Agreement, dated as of December 9, 1999,
                  by and among Metretek Technologies, Inc. and certain purchases
                  of securities of Metretek Technologies, Inc. (collectively,
                  the "Unit Purchasers"). (Incorporated by reference to Exhibit
                  4.1 to Metretek's Current Report on Form 8-K filed December
                  22, 1999).

         (4.10)   Form of Common Stock Purchase Warrant issued by Metretek
                  Technology, Inc. to the Unit Purchasers. (Incorporated by
                  reference to Exhibit 4.3 to Metretek's Current Report on Form
                  8-K filed December 22, 1999).

         (4.11)   Registration Rights Agreement, dated December 9, 1999, by and
                  among Metretek Technologies, Inc. and the Unit Purchasers.
                  (Incorporated by reference to Exhibit 4.4 to Metretek's
                  Current Report on Form 8-K filed December 22, 1999).

<PAGE>   87
(10)    MATERIAL CONTRACTS:

         (10.1)   Marcum Natural Gas Services, Inc. 1991 Stock Option Plan, as
                  amended and restated December 5, 1996. (Incorporated by
                  reference to Exhibit 10.2 to Metretek's Annual Report on Form
                  10-KSB for the year ended December 31, 1996.)*

         (10.2)   Marcum Natural Gas Services, Inc. Directors' Stock Option
                  Plan, as amended and restated December 2, 1996. (Incorporated
                  by reference to Exhibit 10.3 to Metretek's Annual Report on
                  Form 10-KSB for the year ended December 31, 1996.)*

         (10.3)   Employment Agreement, dated as of June 11, 1991, by and
                  between Marcum Natural Gas Services, Inc. and W. Phillip
                  Marcum. (Incorporated by reference to Exhibit 10.4 to
                  Metretek's Registration Statement on Form S-18, Registration
                  No. 33-44558.)*

         (10.4)   Amendment No. 1 to Employment Agreement, dated June 27, 1997,
                  by and between Marcum Natural Gas Services, Inc. and W.
                  Phillip Marcum. (Incorporated by reference to Exhibit 10.1 to
                  Metretek's Quarterly Report on Form 10-QSB for the quarterly
                  period ended September 30, 1997.)*

         (10.5)   Amendment No. 2 to Employment Agreement, dated December 3,
                  1998, by and between Marcum Natural Gas Services, Inc. and W.
                  Phillip Marcum. (Incorporated by reference to Exhibit 10.5 to
                  Metretek's Annual Report on Form 10-KSB for the year ended
                  December 31, 1998.)*

         (10.6)   Amendment No. 3 to Employment Agreement, dated as of January
                  1, 2000, by and between Metretek Technologies, Inc. and W.
                  Phillip Marcum.*

         (10.7)   Employment Agreement, dated as of June 11, 1991, by and
                  between Marcum Natural Gas Services, Inc. and A. Bradley
                  Gabbard. (Incorporated by reference to Exhibit 10.4 to
                  Metretek's Registration Statement on Form S-18, Registration
                  No. 33-44558.)*

         (10.8)   Amendment No. 1 to Employment Agreement, dated June 27, 1997,
                  by and between Marcum Natural Gas Services, Inc. and A.
                  Bradley Gabbard. (Incorporated by reference to Exhibit 10.2 to
                  Metretek's Quarterly Report on Form 10-QSB for the quarterly
                  period ended September 30, 1997.)*

         (10.9)   Amendment No. 2 to Employment Agreement, dated December 3,
                  1998, by and between Marcum Natural Gas Services, Inc. and A.
                  Bradley Gabbard. (Incorporated by reference to Exhibit 10.8 to
                  Metretek's Annual Report on Form 10-KSB for the year ended
                  December 31, 1998.)*

<PAGE>   88
         (10.10)  Amendment No. 3 to Employment Agreement, dated as of January
                  1, 2000, by and between Metretek Technologies, Inc. and A.
                  Bradley Gabbard.*

         (10.11)  Loan and Security Agreement, dated April 14, 1998, by and
                  between National Bank of Canada, Marcum Natural Gas Services,
                  Inc., Metretek, Incorporated and Southern Flow Companies, Inc.
                  (Incorporated by reference to Exhibit 10.1 to Metretek's
                  Quarterly Report on Form 10-QSB for the quarterly period ended
                  March 31, 1998.)

         (10.12)  Amendment No. 1 to Loan and Security Agreement, dated as of
                  November 10, 1998, by and among National Bank of Canada,
                  Marcum Natural Gas Services, Inc., Metretek, Incorporated and
                  Southern Flow Companies, Inc. (Incorporated by reference to
                  Exhibit 10.12 to Metretek's Annual Report on Form 10-KSB for
                  the year ended December 31, 1998).

         (10.13)  Second Amendment to Loan and Security Agreement and Loan
                  Documents, dated as of September 13, 1999, by and among
                  National Bank of Canada, Metretek Technologies, Inc.,
                  Metretek, Incorporated and Southern Flow Companies, Inc.
                  (Incorporated by reference to Exhibit 10.1 to Metretek's
                  Current Report on Form 8-K filed September 14, 1999).

         (10.14)  Third Amendment to Loan and Security Agreement and Loan
                  Documents, dated as of December 9, 1999, by and among National
                  Bank of Canada, Metretek Technologies, Inc., Metretek,
                  Incorporated and Southern Flow Companies, Inc. (Incorporated
                  by reference to Exhibit 10.1 to Metretek's Current Report on
                  Form 8-K filed December 22, 1999).

         (10.15)  Marcum Natural Gas Services, Inc. 1998 Employee Stock Purchase
                  Plan. (Incorporated by reference to Exhibit 4.3 to Metretek's
                  Registration Statement on Form S-8, Registration No.
                  333-43547.)*

         (10.16)  Metretek Technologies, Inc. 1998 Stock Incentive Plan, amended
                  and restated as of February 3, 2000 (Incorporated by reference
                  to Exhibit 10.2 to Metretek's Current Report on Form 8-K filed
                  on February 22, 2000).*

         (10.17)  Employment Agreement, dated as of March 17, 2000, between
                  PowerSpring, Inc. and John A. Harpole.

         (10.18)  Stockholders Agreement, dated as of March 17, 2000, among
                  Metretek Technologies, Inc., PowerSpring, Inc. and John A.
                  Harpole.

         (10.19)  Promissory Note, dated March 17, 2000, made by PowerSpring,
                  Inc. to John A. Harpole.

         (10.20)  Security Agreement, dated March 17, 2000, between PowerSpring,
                  Inc. and John A. Harpole.

<PAGE>   89
         (10.21)  Form of Indemnification Agreement between Metretek
                  Technologies, Inc. and each of its directors.

(21)     SUBSIDIARIES OF THE SMALL BUSINESS ISSUER:

         (21.1)   Subsidiaries of Metretek Technologies, Inc.

(23)     CONSENTS OF EXPERTS AND COUNSEL:

         (23.1)   Deloitte & Touche LLP

(24)     POWER OF ATTORNEY:

         (24.1)   Power of Attorney of the executive officers and directors of
                  Metretek Technologies, Inc. (Included on signature page.)

(27)     FINANCIAL DATA SCHEDULE

         (27.1)   Financial Data Schedule

----------
         *Management contract or compensation plan or arrangement required to be
filed as an exhibit to this form pursuant to Item 13(a) of Form 10-KSB.