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 September 30, 1997
Commission 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
4th 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 23,182,707 Shares Outstanding
$0.001 par value as of November 11, 1997
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARIES
REPORT ON FORM 10-QSB
QUARTER ENDED SEPTEMBER 30, 1997
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS THREE
MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND
1996
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY AS OF SEPTEMBER 30, 1997
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
AS OF SEPTEMBER 30, 1997 AND 1996
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>
Sept. 30, 1997 Dec. 31, 1996
--------------------- --------------------
ASSETS (unaudited) (audited)
Current assets:
<S> <C> <C>
Cash in bank $ 11,054 $ 6,909
Escrow Accounts 11,002 7,518
Accounts receivable, officers 148,348 130,398
--------------------- --------------------
Total current assets 170,404 144,825
Rental properties, net of depreciation 4,913,006 5,054,875
Other assets:
Land option 0 2,515,000
Investments 2,967,893 152,893
Capitalized software 186,723 186,723
--------------------- --------------------
$ 8,238,026 $ 8,054,316
===================== ===================
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 150,807 $ 74,550
Tenant deposits 20,814 20,814
Property taxes payable 68,782 83,782
Accrued wages payable 29,750 49,800
Accrued payroll taxes 55,914 43,141
Accrued interest payable 39,139 24,139
Notes payable 5,000 5,000
Payable to Stockholders 89,040 150,000
Current portion of long-term debt 213,000 214,100
--------------------- --------------------
Total current liabilities 672,246 665,326
Convertible secured debenture 600,000 0
Payable to stockholders 0 140,790
Long-term debt 3,465,471 3,481,202
--------------------- --------------------
Total liabilities 4,737,717 4,287,318
STOCKHOLDERS' EQUITY
Common stock
$0.001 par value: 50,000,000 authorized; 22,315,173 shares
issued and outstanding (15,214,460 at 12/31/96) 22,315 15,214
Additional paid-in capital 6,574,918 5,595.049
Retained deficit (3,096,924) (1,843,265)
--------------------- --------------------
Total stockholders' equity 3,500,309 3,766,998
--------------------- --------------------
$ 8,238,026 $ 8,054,316
===================== ===================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Sept. 30,
1997 1996
(unaudited) (unaudited)
-------------- ---------------
Revenue:
<S> <C> <C>
Rental income $ 124,499 $ 142,257
Other income 7,027 11,748
-------------- ---------------
Net revenue 131,526 154,005
Expenses:
General and administrative 463,832 205,277
Depreciation 48,219 40,727
Property and other taxes 2,598 28,933
Interest 101,766 98,922
-------------- ---------------
616,415 373,859
-------------- ---------------
Loss from operations (484,889) (219,854)
Other income (expense) 0 0
Provision for income taxes 0 0
-------------- ---------------
Net loss $ (484,889) $ (219,854)
============== ===============
Net loss per share* $ (0.02) $ (0.01)
============== ===============
*Weighted average number of common
shares used to compute loss per share 20,643,240 16,048,835
</TABLE>
See accompanying notes to financial statements.
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine Months Ended Sept. 30,
1997 1996
(unaudited) (unaudited)
-------------- ---------------
Revenue:
<S> <C> <C>
Rental income $ 371,339 $ 351,654
AMR and other income 10,685 92,966
-------------- ---------------
Net revenue 382,024 444,620
Expenses:
General and administrative 1,488,387 545,161
Depreciation 144,657 122,181
Property and other taxes 18,922 46,054
Interest 273,717 251,349
-------------- ---------------
1,925,683 964,745
-------------- ---------------
Loss from operations (1,543,659) (520,125)
Other income/expense 290,000 0
Provision for income taxes 0 0
-------------- ---------------
Net loss $ (1,253,659) $ (520,125)
============== ===============
Net loss per share* $ (0.06) $ (0.03)
============== ===============
*Weighted average number of common
shares used to compute loss per share 20,643,249 16,048,835
</TABLE>
See accompanying notes to financial statements.
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional
Par Value $0.001 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 stock (restricted)
At $0.25 per share for cash 557,000 557 130,832 0
At $0.25 per share for services 165,200 165 41,135 0
Net loss for period 0 0 0 (230,314)
--------------- --------------- ---------------- -------------
Balances at 6/30/97 18,917,308 18,917 6,335,072 (2,612,035)
--------------- --------------- ---------------- -------------
Issuance of common stock (restricted)
At $0.06 per share for services 2,325,000 2,325 132,559 0
At $0.10 per share for cash 1,072,865 1,073 107,287 0
Net loss for period 0 0 0 (484,889)
--------------- --------------- ---------------- -------------
Balances at 9/30/97 22,315,173 $ 22,315 $ 6,574,918 $ (3,096,924)
=============== =============== ================ =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
9 Months Ended 9 Months Ended
Sept. 30, 1997 Sept. 30, 1996
(unaudited) (unaudited)
------------------ ---------------
OPERATING ACTIVITIES
<S> <C> <C>
Net loss $ (1,253,659) $ (520,125)
Adjustments to reconcile net loss to cash used
by operating activities:
Depreciation 144,657 122,182
Stock issued for services/debt 324,249 94,968
Changes in operating assets and liabilities:
Increase in escrow accounts (3,484) (3,217)
Increase in accounts receivable 0 (10,000)
Increase in prepaid expenses 0 (41,000)
Increase in capitalized software 0 (89,646)
Increase in accounts receivable, officer (17,950) (55,898)
Increase in accounts payable 76,257 50,893
Decrease in tenant deposits 0 (1,721)
Decrease in property taxes (15,000) 26,411
Decrease in wages payable (20,050) 49,800
Increase in payroll taxes 12,773 0
Increase in interest payable 15,000 0
Decrease in payable to stockholder (60,960) 0
Decrease in current portion long-term debt (1,100) (13,356)
------------------ ---------------
Net cash required by operating activities (799,267) (390,709)
------------------ ---------------
FINANCING ACTIVITIES
Proceeds from convertible secured debt 600,000 0
Retirement of payable to stockholder (140,790) (10,000)
Retirement of long term debt (15,731) 145,669
Repayment of loan 0 (45,000)
Proceeds from sale of stock 659,933 455,610
------------------ ---------------
Net cash provided by financing activities 1,103,412 546,279
------------------ ---------------
INVESTING ACTIVITIES
Sale of land option (2,515,000) 0
Acquisition of rental properties 0 (121,582)
Acquisition of investments 2,815,000 0
------------------ ---------------
Net cash used by investing activities (300,000) (121,582)
------------------ ---------------
Increase (decrease) in cash and cash equivalents 4,145 33,988
Cash and cash equivalents at beginning of period 6,909 8,523
------------------ ---------------
Cash and cash equivalents at end of period $ 11,054 $ 42,511
================== ===============
SUPPLEMENTAL INFORMATION
Cash paid for interest $ 101,766 $ 98,922
</TABLE>
See accompanying notes to financial statements.
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUARTER ENDED SEPTEMBER 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 quarter ended
September 30, 1997 are not necessarily indicative of the results that can be
expected for the year ended December 31, 1997.
NOTE 2: PRIVATE PLACEMENT; EQUITY FINANCING
The Company issued a Private Placement Memorandum pursuant to
Regulation D, Rule 505 during the first quarter (and revised on April 9, 1996
and on August 23, 1996) to sell an aggregate of 4,000,000 shares of restricted
common stock for a total of $1,000,000. During the three month period ended
September 30, 1997, a total of $108,360 was raised pursuant to the Private
Placement. The total amount raised pursuant to the Private Placement for the
nine month period ended September 30, 1997 was $317,999.
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
believes that the validity of the convertibility of the Debentures is open to
some question and the Company has been sued by the Holders of the Debentures to
force conversion. The Company is defending its position and is, at this time,
uncertain as to the outcome of these proceedings. (See Part II, Item 1, "Legal
Proceedings.)
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. 4,000,000
shares of the Company's restricted common stock has been placed in escrow to
cover such conversion.
<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 September 30, 1997 and 1996,
respectively.
The operations of the Company's meter reading operations are
consolidated in the Company's financial statements. The Company's AMR operations
have been devoted primarily to research and development. The Company has
contracted for the installation of test systems of its AirLink(TM) automated
meter reading system for three utilities in Oregon, Utah, and Connecticut. The
Company hopes that the success of these test systems will result in orders for
full buildout of AirLink systems.
The Company's other operations have been devoted to that 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"). Signature is a commercial leasing company. The
Company has not consolidated the operations of Signature as it was a minority
shareholder at September 30, 1997.
Results of Operations
Revenues
Rental income totaled $124,499 for the three month period ended
September 30, 1997, a decrease of $17,758 or 12.5% from the prior year period.
This decrease was due primarily to changes in the composition of the Company's
property portfolio and variable occupancy rates from the prior year period.
Rental income for the nine month period ended September 30, 1997 was $371,339
compared to $351,654 for the prior nine month period; an increase of $19,685, or
5.6%. The San Diego rental market remains essentially flat; but the Company has
been able to stabilize occupancy rates and, in certain cases, to increase rental
rates.
Other income for the three months ended September 30, 1997 was $7,027
compared to $11,748 in the prior year period, a decrease of 4,721, or 40.2%. The
decrease is due to the lack of revenues associated with new charges to utilities
for testing of AirLink systems. For the nine month period ended September 30,
1997, the Company had other income of $10,685 compared to $92,966 of other
income in the prior year nine month period. In the previous fiscal nine-month
period, $30,000 was attributed directly to test installations of the Company's
AirLink system. The Company has had no income from such activities in the fiscal
1997.
Expenses
General and administrative expenses for the three month period ended
September 30, 1997 were $463,832 as compared to $205,277 for the prior year
period, an increase of $258,555 or 126%. This increase is attributable to
increased costs related to the broadened management and operations of the
Company over the past year, particularly related to financing activities and
increased staff to support the Company's automated meter reading operations. For
the nine month period ended September 30, 1997, general and administrative
expenses were $1,488,387 as compared to $545,161 for the prior year, an increase
of $943,226.
Depreciation expense was $48,219 for the third quarter of fiscal 1997
as compared to $40,727 in the previous year period, an increase of $7,492 or
18.4%, which is attributable to changes in the Company's
<PAGE>
portfolio of properties. For the nine month period ended September 30, 1997,
depreciation was $144,657 as compared to $122,181 in the previous year's nine
month period.
Interest expense was $101,766 in the third quarter period of 1997, an
increase of $2,844 or 2.9% compared to the prior year third quarter period.
Interest expense for the nine month period ended September 30, 1997 was $273,717
compared to $251,349 for the prior year, an increase of $22,368, or 8.9%. The
decrease in interest expense during the nine month period ended September 30,
1997 is due primarily to changes in the Company's real estate portfolio and the
associated indebtedness.
Property and other taxes for the three month period ended September 30,
1997 were $2,598 compared to $28,933 in the previous year's second quarter, a
decrease of $26,335 or 91.1%. For the nine month period ended September 30,
1997, property taxes were $18,922 compared to taxes of $46,054 for the prior
year's nine month period, a decrease of $27,132 or 58.9%. 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.
Real Estate Operations
The Company's wholly-owned GAM Properties, Inc. subsidiary continued to
post losses during the three-month and six-month periods despite efforts to
improve the composition of its real estate portfolio.
On October 22, 1997, the Company signed a Letter of Intent with Golden
Age Homes, Inc. ("Golden Age") to sell Greenland's GAM Properties, Inc.
subsidiary to Golden Age for convertible preferred stock of Golden Age. The
terms of the transaction provide for the Company to receive Golden Age shares
that are equivalent to the net asset values of the Company's real estate
properties. The transaction is subject to the approval of the shareholders of
both companies, which is scheduled to take place in the fourth quarter of fiscal
1997.
Notwithstanding the above, management had been working on alternative
plans to exchange its equity in selected properties in order to improve the
Company's cash flow. Additional financing would be required in the future in
order to enable the Company to achieve better financial results from its real
estate operations.
Automated Meter Reading Operations
The Company has continued to fund the research and development efforts
of its automated meter reading operations. During the third quarter, the Company
participated as an exhibitor at the Automated Meter Reading Association
symposium in Chicago, Illinois to promote its AirLink system.
The Company has agreements to install test systems in Oregon with
Emerald Peoples Utility District; in Utah with Springville City Electric; and in
Connecticut with the Third Taxing District of Norwalk. The Company has begun
installation of tests in both Oregon and Connecticut and plans to begin the Utah
installation in the fourth quarter of fiscal 1997. During these tests, Company
personnel deploy a number of AirLink devices in the field to function in
everyday utility conditions. Modifications are made to maximize performance,
improve functionality, and make required changes. This process is expected to
continue for the balance of fiscal 1997 in an effort to reach optimum
functionality and performance for anticipated marketing and sales to prospective
customers worldwide.
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. The Company is currently in discussions with several dozen utility
companies in the United States and internationally related to installation of
test systems or full buildout.
The Company has also signed several agreements with other companies in
order to represent AirLink. 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.
<PAGE>
Liquidity and Capital Resources
The Company's total assets were $8,238,026 at September 30, 1997, an
increase of $183,710 (2.3%) from the year ended December 31, 1996. This increase
in assets is based on changes in the composition of the Company's real estate
portfolio.
At September 30, 1997, the Company's total liabilities were $4,737,717,
an increase of $450,399 (19.2%) over the year ended December 31, 1995. The
increase is attributable primarily to changes in accounts payable and the
addition of $600,000 in debt associated with the Company's Convertible Secured
Debentures. Stockholders' equity was $3,500,309 at September 30, 1997, a
decrease of $266,689 (7.1%) over the year ended December 31, 1995.
The Company had negative working capital of $501,842 at September 30,
1997. The Company has only recently begun marketing its automated meter reading
technology and products and there can be no assurance that revenues from such
efforts will be forthcoming in the immediate near future. Consequently, the
Company will require additional capital to offset ongoing losses from
operations. The Company is in the process of a private placement offering to
sell up to 4,000,000 shares of restricted common stock to raise $1,000,000,
which would help eliminate the pressures associated with this condition. The
Company has signed a Letter of Intent with Golden Age Homes, Inc. for the sale
of its GAM Properties subsidiary in order to enhance cash flow. Management
continues to explore additional financing opportunities.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
At this time, the Company is involved in one legal matter related to
its sale of convertible debentures pursuant to Regulation S last April. On the
advice of counsel, the Company did not convert any of the debentures when
requested by Holders of said debentures. The Holders have sued the Company in
Federal Court in Nevada to force conversion of the debentures into common stock
of the Company pursuant to the original terms. The Company is preparing an
answer to the lawsuit and plans to pursue all of its legal remedies, including
aggressive defense, countersuit, and out-of-court settlement with the Holders.
The Company has placed 4,000,000 shares of its restricted common stock in escrow
to cover the conversion privileges of the Holders.
The Company's officers and directors are aware of no other threatened
or pending litigation which would have a material, adverse effect on the
Company.
ITEM 2 - CHANGES IN SECURITIES
Not applicable.
ITEM 3 - DEFAULTS ON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTER TO VOTE OF SECURITY HOLDERS
On October 27, 1997, the Company issued a Proxy Statement to
shareholders to vote at a Special Meeting of Shareholders to be held on December
5, 1997. The purpose of this meeting is to vote two (2) matters: (1) the sale of
the Company's GAM Properties, Inc. subsidiary to Golden Age Homes, Inc.; and (2)
to amend the Company's Articles of Incorporation to effect the increase of its
authorized common stock to 100,000,000 shares.
ITEM 5 - OTHER INFORMATION
None.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - none.
Reports on Form 8-K - none.
<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
November 14, 1997 Signed
--------------------------------------------------
Eric Gaer
President and Chief Executive Officer
November 14, 1997 Signed
--------------------------------------------------
Gerry B. Berg
Chairman and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Greenland Corporation September 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 22,056
<SECURITIES> 0
<RECEIVABLES> 148,348
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 170,404
<PP&E> 5,364,206
<DEPRECIATION> 451,200
<TOTAL-ASSETS> 8,238,026
<CURRENT-LIABILITIES> 672,246
<BONDS> 4,065,471
0
0
<COMMON> 22,315
<OTHER-SE> 3,477,994
<TOTAL-LIABILITY-AND-EQUITY> 8,238,026
<SALES> 15,000
<TOTAL-REVENUES> 382,024
<CGS> 0
<TOTAL-COSTS> 1,507,309
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 273,717
<INCOME-PRETAX> (1,543,659)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,543,659)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,253,659)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
