SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997Commission File No. 017833
GREENLAND
CORPORATION
Nevada 87-0439051
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
7084 Miramar Road
Fourth Floor
San Diego, CA 92121
(Address and zip code of principal executive offices
(619) 566-9604
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X YES o NO
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class A Common Stock 20,286,291 Shares Outstanding
$0.001 par value as of August 11, 1997
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARIES
REPORT ON FORM 10-QSB
QUARTER ENDED JUNE 30, 1997
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30,
1997 AND DECEMBER 31, 1996
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY AS OF JUNE 30, 1997
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AS
OF JUNE 30, 1997
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
PART II. OTHER INFORMATION
SIGNATURES
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1997 Dec. 31, 1996
----------------- ---------------------
ASSETS (unaudited) (audited)
Current assets:
<S> <C> <C>
Cash in bank $ 157,165 $ 6,909
Escrow accounts 10,663 7,518
Accounts receivable, officers 148,048 130,398
----------------- ---------------------
Total current assets 315,876 144,825
Rental properties, net of depreciation 4,961,226 5,054,875
Other assets:
Land option 2,515,000
Investments 2,967,893 152,893
Capitalized software 186,723 186,723
----------------- ---------------------
Total assets $ 8,431,718 $ 8,054,316
============== ====================
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 109,119 $ 74,550
Tenant deposits 25,731 20,814
Property taxes payable 83,782 83,782
Accrued wages payable 29,750 49,800
Payroll taxes payable 20,787 43,141
Accrued interest payable 39,139 24,139
Notes payable 5,000 5,000
Payable to stockholders 95,040 150,000
Current portion of long-term debt 213,150 214,100
--------------- ---------------------
Total current liabilities 621,498 665,326
Convertible Secured Debenture 600,000
Payable to stockholders 140,790
Long-term debt 3,468,266 3,481,202
-------------- ---------------------
Total liabilities 4,689,764 4,287,318
STOCKHOLDERS' EQUITY
Common stock
$0.001 par value: 50,000,000 authorized; 18,917,308 shares
issued and outstanding (15,214,460 at 12/31/96) 18,917 15,214
Additional paid-in capital 6,335,072 5,595,049
Retained deficit (2,612,035) (1,843,265)
-------------- ---------------------
Total stockholders' equity 3,741,954 3,766,998
-------------- ---------------------
$ 8,431,718 $ 8,054,316
============== =====================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
Three Months Ended June 30,
1997 1996
(unaudited) (unaudited)
---------------- ---------------
Revenue:
<S> <C> <C>
Rental income $ 114,293 $ 104,236
Other income 1,078 21,030
---------------- ---------------
Net revenue 115,371 125,266
Expenses:
General and administrative 144,290 339,784
Engineering 102,844 -
Consulting fees 141,000 -
Salaries 77,206 -
Marketing 7,059 -
Rent 9,772
Depreciation 48,219 40,727
Property and other taxes 4,826 13,863
Interest 100,469 78,554
---------------- ---------------
635,685 314,876
---------------- ---------------
Income (loss) from operations (520,314) (189,610)
Other income (expense) 290,000 -
Provision for income taxes - -
---------------- ---------------
Net income (loss) $ (230,314) $ (189,610)
============= ===============
Net income (loss) per share* $ (0.01) $ (0.01)
================ ===============
*Weighted average number of common
shares used to compute income (loss)
per share 18,556,208 15,339,167
</TABLE>
See accompanying notes to financial statements.
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
Six Months Ended June 30,
1997 1996
(unaudited) (unaudited)
---------------- ---------------
Revenue:
<S> <C> <C>
Rental income $ 231,841 $ 209,397
Other income 18,657 81,218
---------------- ---------------
Net revenue 250,498 290,615
Expenses:
General and administrative 214,947 339,784
Engineering 190,739 -
Consulting fees 352,405 -
Salaries 144,761 -
Marketing 60,561 -
Rent 61,142 -
Depreciation 96,438 81,455
Property and other taxes 16,324 17,120
Interest 171,951 152,427
---------------- ---------------
1,309,268 590,786
---------------- ---------------
Income (loss) from operations (1,058,770) (300,171)
Other income (expense) 290,000 -
Provision for income taxes - -
---------------- ---------------
Net income (loss) $ (768,770) $ (300,171)
============= =============
Net income (loss) per share* $ (0.04)$ (0.01)
=============== ==============
*Weighted average number of common
shares used to compute income (loss)
per share 18,556,208 15,339,167
</TABLE>
See accompanying notes to financial statements.
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
Common Stock
Par Value $0.001 Additional
-------------------------------- Paid-In Retained
Shares Amount Capital Deficit
---------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Balances at 3/31/97 18,195,108 $ 18,195 $ 6,163,105 $ (2,381,721)
Issuance of common (restricted) -
at $0.25 per share for cash 557,000 557 130,832 -
at $0.25 per share for services 165,200 165 41,135
Net loss for period - - - (230,314)
---------------- --------------- --------------- --------------
Balances at 6/30/97 18,917,308 18,917 6,335,072 (2,612,035)
</TABLE>
See accompanying notes to financial statements.
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
6 Months Ended
1997
(unaudited)
--------------------
OPERATING ACTIVITIES
<S> <C>
Net loss $ (768,770)
Adjustments to reconcile net loss to cash used
by operating activities:
Depreciation 96,438
Changes in operating assets and liabilities:
Increase in escrow accounts (3,145)
Increase in accounts receivable, officer (17,650)
.Increase in accounts payable 34,569
Increase in deposits 4,917
Decrease in wages payable (20,050)
Decrease in payroll taxes 22,234
Increase in Accrued Interest 15,000
Decrease in payable to stockholders (54,960)
Decrease in current portion long-term debt (950)
---------------
Net cash required by operating activities (736,955)
FINANCING ACTIVITIES
Proceeds from Convertible Secured Debenture 600,000
Amounts paid to stockholder (140,790)
Retirement of long-term debt (12,936)
Proceeds from sale of stock 743,726
---------------
Net cash provided by financing activities 1,190,000
--------------
INVESTING ACTIVITIES
Sale of land option (2,515,000)
Acquisition of Investments 2,817,789
Net cash used by investing activities (302,789)
-----------------
Increase (decrease) in cash and cash equivalents 150,256
Cash and cash equivalents at beginning of period 6,909
----------------
Cash and cash equivalents at end of period $ 157,165
==============
SUPPLEMENTAL INFORMATION
Cash paid for interest
</TABLE>
See accompanying notes to financial statements.
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUARTER ENDED JUNE 30, 1997
PART I - FINANCIAL INFORMATION
BASIS OF PRESENTATION
General
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB. Therefore, they do not include
all information and footnotes necessary for a complete presentation of financial
position, results of operations, cash flows, and stockholders' equity in
conformity with generally accepted accounting principles. Except as disclosed
herein, there has been no material change in the information disclosed in the
notes to the financial statements included in the Company's annual report on
Form 10-KSB for the year ended December 31, 1996. In the opinion of Management,
all adjustments considered necessary for a fair presentation of the results of
operations and financial position have been included and all such adjustments
are of a normal recurring nature. Operating results for the quarters ended June
30, 1997 are not necessarily indicative of the results that can be expected for
the year ended December 31, 1997.
NOTE 2: PRIVATE PLACEMENT
The Company issued a Private Placement Memorandum pursuant to
Regulation D, Rule 505 revised on March 31, 1997) to sell an aggregate of
4,000,000 shares of restricted common stock for a total of $1,000,000; and has
since revised the Memorandum on July 21, 1997 to sell an aggregate of 10,000,000
shares for a total of $1,000,000. During the three month period ended June 30,
1997, a total of $131,389 was raised (557,000 shares) pursuant to the Private
Placement. During the prior three-month period ended March 31, 1997, a total of
$78,250 was raised (313,000 shares).
NOTE 3: CONVERTIBLE SECURED DEBENTURES
On April 9, 1997, the Company sold $600,000 in aggregate principal
amount of 10% Convertible Debentures due April 30, 1999 under Regulation S.
Sales commissions of 15% were paid. The Company placed 4,000,000 shares of
restricted stock in escrow as security. Under the original terms of their
issuance, the Series B Convertible Debentures are convertible into common stock
at the lower of $.186 per share or 62% of the closing bid price of the common
stock averaged over the five days prior to conversion. The issuance and sale of
the Series B Convertible Debentures was intended to comply with Regulation S of
the Securities Act.
Based in part on the advice of outside legal counsel, the Company now
believes that the validity of the convertibility of the Debentures is open to
some question.
The Company has booked the Debentures as long-term debt. Should
conversion occur, there would be a corresponding entry in stockholders' equity,
which would involve significant dilution of current shareholders.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction
The following discussion pertains to the Company's results of
operations and financial condition as of June 30, 1997 and 1996, respectively.
The operations of the Company's meter reading operations and GAM
Properties, Inc. real estate subsidiary are consolidated in the Company's
financial statements.
The Company's AMR operations have been, devoted to research and
development and development of prototype installations of its AirLink(TM)
automated meter reading system. Operations have been devoted primarily to
engineering and administration.
The Company has also pursued marketing and sales of its product line,
and is involved in preparing to install three pilot installations of AirLink in
Oregon, Utah, and Connecticut. These pilot installations are anticipated
sometime in the third quarter of this year. The Company has filed for three
patents with the U.S.
Patent Office.
The Company is currently bidding on sales and installation of AirLink
with a number of utilities in the U.S. and internationally. Sales of AirLink are
highly dependent on the successful installation of its contracted pilot systems.
While management is optimistic that its sales opportunities will bear positive
results over time, it is likely that the sales cycle will be lengthy.
The Company's other operations have been devoted to those of its
wholly-owned GAM Properties, Inc. subsidiary. GAM owns and manages a number of
residential and commercial income properties in California.
The Company owns a 49% interest in Signature Leasing, LLC, a Nevada
Corporation ("Signature"). The Company has not consolidated the operations of
Signature as it was a minority shareholder at June 30, 1997.
Results of Operations
Revenues
Rental income totaled $114,293 for the three month period ended June
30, 1997, an increase of $10,057 or 9.6% from the prior year period. This
increase was due primarily to changes in the composition of the Company's
property portfolio and to variable occupancy rates from the prior year period.
Rental income for the six month period ended June 30, 1997 was $231,841 compared
to $209,397 for the prior six month period; an increase of $22,444 or 10.7%. The
San Diego rental market remains essentially flat; but the Company has been able
to stabilize occupancy rates.
Other income for the three months ended June 30, 1997 was $1,078. The
Company has $21,030 from other income in the prior year, $20,000 of which was
for payments from utilities for contracted pilot installation of its automated
meter reading products. For the six month period ended June 30, 1997, the
Company had other income of $18,657 compared to $81,218 in the prior year six
month period.
Expenses
Operating expenses for the three month period ended June 30, 1997
totaled $635,685 as compared to $314,876 for the prior year period, an increase
of $320,809 or 101.9%. This increase is attributable to increased costs related
to the broadened management and operations of the Company over the past year,
<PAGE>
particularly related to increased costs in support the Company's automated meter
reading operations. Additionally, the Company's paid approximately $50,000 in
legal and accounting expense in the second quarter. For the six month period
ended June 30, 1997, operating expenses were $1,309,268 as compared to $590,786
for the prior year, an increase of $718,482 or 121.6%.
Additional operating expenses for the three month period ended June 30,
1997 included engineering expenses of $102,844, which are directly attributable
to the Company's automated meter reading operations.
For the six month period, engineering expenses were $190,739.
Consulting fees, including fees paid were $141,000 for the second
quarter; and $352,405 for the six month period ended June 30, 1997. These fees
consist primarily of those paid for services related to the Company's financing
activities.
Salaries for the three month period ended June 30, 1997, which include
those for management and support staff, were $77,206; salaries were $144,761 for
the six month period.
Marketing expenses for the three month period ended June 30, 1997 were
$7,059 and $60,561 for the six month period.
Rent paid for the three month period ended June 30, 1997 was $9,772 and
$61,142 for the six month period.
Depreciation expense was $48,219 for the second quarter of fiscal 1997
as compared to $40,727 in the previous year period, a decrease of $7,492 or
18.4%, which is attributable to changes in the Company's portfolio of
properties. For the six month period ended June 30, 1997, depreciation was
$96,438 as compared to $81,455, an 18.4% decrease.
Interest expense was $100,469 in the second quarter period of 1997, an
increase of $21,915 or 27.9% compared to the prior year second quarter period.
Interest expense for the six month period ended June 30, 1997 was $171,951
compared to $152,427 for the prior year, an increase of $19,524, or 12.8%. The
increases in interest expense are principally due to changes in the Company's
real estate portfolio and the associated indebtedness.
Property and other taxes for the three month period ended June 30, 1997
were $4,826 compared to $13,863 in the previous year's second quarter, a
decrease of $9,037 or 65.2%. For the six month period ended June 30, 1997, taxes
were $16,324 compared to taxes of $17,120 for the prior year's six month period,
a decrease of $796 or 4.6%. The decreases are attributable to the changes in the
composition of the Company's of real estate properties upon which value property
taxes are assessed.
Automated Meter Reading Operations
The Company has continued to fund the development efforts of its
automated meter reading operations. During the second quarter, the Company
continued its efforts to deploy its pilot systems in Oregon, Utah, and
Connecticut. Installation of the pilot systems is anticipated in the third
quarter.
The Company has made several formal and informal presentations to
utilities in the U.S. and internationally, and hopes to accelerate its marketing
activities following successful deployment of pilot systems.
In April, the Company announced today that it has filed a patent
application with the U.S. Patent Office related to its AirLink automated meter
reading technology. The application is the third patent application filed by the
Company in support of its AirLink technology. The new application is related to
the methodology used in AirLink meter reading units for revolving element
utility meters.
<PAGE>
In May, the Company entered into an agreement with KIT Concerns of
Brazil to distribute, on an exclusive basis, Greenland's AirLink automated meter
reading ("AMR") system in Brazil. KIT, located in Rio de Janeiro, is a
diversified company organized to develop new business opportunities in Brazil,
particularly in the telecommunications and technology sectors.
In June, Greenland entered into an agreement with International Power
and Environmental Company ("IPEC") to represent the Company's AirLink system on
a world-wide basis, for use in automating parking meters. IPEC, located in San
Diego, California with offices in Los Angeles and Baja California is a
diversified company organized to develop new business opportunities throughout
the world, particularly in the utility, environmental, and technology sectors.
In July, the Company entered into an agreement with StarCom U.S.A.
whereby StarCom and Greenland will cooperate in presenting an integrated
communications system for Puerto Rico encompassing up to 1.3 million utility
meters.
The Company continues to modify and improve its technology, and will
use its field testing to continue this process in order to provide competitive
advantage.
Real Estate Operations
The Company's wholly-owned GAM Properties, Inc. subsidiary continued to
work on adjusting the composition of its real estate portfolio during the second
quarter of fiscal 1997 with the objective of maximizing its revenues and assets.
The Company continues to reduce its debt on its properties and maintains its
traditionally high occupancy rates in its rental properties.
In May, 1997 the Company sold its option on its Tucson acreage to Eyre
Trading Group, Ltd., which has subsequently changed its name to Natural Born
Carvers, Inc., a specialty clothing company whose shares are publicly traded
over-the-counter (symbol: CARV). Under the terms of the sale, Greenland received
1,100,000 shares of 5% Convertible Class B Preferred Stock at $5.00 par value
per share. The shares are convertible in two years. The Company has booked these
securities as an investment on its balance sheet at approximately $2.8 million.
The Company expects to continue to look for asset enhancement through
property, exchanges, acquisitions, and/or sales.
Liquidity and Capital Resources
The Company's total assets were $8,431,718 at June 30, 1997, an
increase of $377,402, or 4.7%, over to the year ended December 31, 1996. This
increase in assets is based primarily on the sale of the Company's Tucson
property for securities in a publicly traded specialty clothing company.
At June 30, 1997, the Company's total liabilities were $4,689,764, an
increase of $402,446 (9.4%) over the year ended December 31, 1996. The increase
is attributable primarily to the Company's Convertible Secured Debentures.
Stockholders' equity was $3,741,954 at June 30, 1997, a decrease of $25,044
(6.6%) over the year ended December 31, 1996.
The Company had negative working capital of $305,622 at June 30, 1997.
The Company's working capital has improved by $163,307 since the period ended
March 31, 1997 and by $214,879 since the year ended December 31, 1996. The
Company is in the process of a private placement offering to sell up to
10,000,000 shares of restricted common stock to raise $1,000,000, which would
eliminate the pressures associated with this condition. The Company is also
investigating other corporate financing activities in order meet its ongoing
requirements for working capital to grow its business.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company is not involved in any litigation that would have a
material adverse effect on the Company. However, there is the possibility of
litigation related to the sale of the Convertible Secured Debentures pursuant to
Regulation S. (See Note 3 to the Consolidated Financial Statements.)
ITEM 2 - CHANGES IN SECURITIES
Not applicable.
ITEM 3 - DEFAULTS ON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTER TO VOTE OF SECURITY HOLDERS
None.
ITEM 5 - OTHER INFORMATION
None.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - none.
(b) Reports on Form 8-K
Form 8-K filed April 18, 1997, related to the sales of equity
securities pursuant to Regulation S.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GREENLAND CORPORATION
August 12, 1997
/S/
-----------------------------------------------------
Eric W. Gaer
Chairman, President and Chief Executive Officer
August 12, 1997
/S/
----------------------------------------------------
Gerry B. Berg
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Greenland Corporation June 30, 1997 financial statements and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000852127
<NAME> Greenland Corporation
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 167,828
<SECURITIES> 0
<RECEIVABLES> 148,048
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 315,876
<PP&E> 5,364,206
<DEPRECIATION> 402,980
<TOTAL-ASSETS> 8,431,718
<CURRENT-LIABILITIES> 621,498
<BONDS> 4,689,764
0
0
<COMMON> 18,917
<OTHER-SE> 3,723,037
<TOTAL-LIABILITY-AND-EQUITY> 8,431,718
<SALES> 15,000
<TOTAL-REVENUES> 250,498
<CGS> 0
<TOTAL-COSTS> 535,216
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 171,951
<INCOME-PRETAX> (768,770)
<INCOME-TAX> 0
<INCOME-CONTINUING> (768,770)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (768,770)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
