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 March 31, 1998
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
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 [ ] 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 42,186,787 Shares Outstanding
$0.001 par value as of May 15, 1998
<PAGE>
GREENLAND CORPORATION
REPORT ON FORM 10-QSB
QUARTER ENDED MARCH 31, 1998
TABLE OF CONTENTS
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets as of March 31,
1998 and December 31, 1997
Condensed consolidated statements of operations
Three months ended March 31, 1998 and 1997
Condensed consolidated statements of changes in
stockholders' equity as of March 31, 1998
Condensed consolidated statements of cash flows as of
March 31, 1998 and 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
2
<PAGE>
GREENLAND CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
QUARTER ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
MAR. 31, 1998 DEC. 31, 1997
----------------- -----------------
ASSETS (UNAUDITED) (AUDITED)
CURRENT ASSETS:
<S> <C> <C>
CASH IN BANK $ 12,274 $ 6,528
ACCOUNTS RECEIVABLE, OFFICERS 146,586 146,586
PREPAID EXPENSES 300 -
----------------- -----------------
TOTAL CURRENT ASSETS 159,160 153,114
EQUIPMENT, NET OF DEPRECIATION 29,401 30,338
OTHER ASSETS
INVESTMENTS 4,039,143 4,039,143
CAPITALIZED SOFTWARE 186,723 186,723
----------------- -----------------
TOTAL ASSETS $ 4,414,427 $ 4,409,318
================= =================
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $ 95,707 $ 123,502
ACCRUED WAGES PAYABLE - 29,750
PAYROLL TAXES PAYABLE 59,427 59,758
NOTES PAYABLE 38,000 -
----------------- -----------------
TOTAL CURRENT LIABILITIES 193,134 213,010
12% CONVERTIBLE DEBENTURES 5,000 -
10% CONVERTIBLE SECURED DEBENTURES 400,000 600,000
----------------- -----------------
TOTAL LIABILITIES 598,134 813,010
STOCKHOLDERS' EQUITY
COMMON STOCK
$0.001 PAR VALUE: 100,000,000 AUTHORIZED; 34,387,787 SHARES
ISSUED AND OUTSTANDING AT 3/31/98 34,388 27,097
ADDITIONAL PAID-IN CAPITAL 7,828,520 7,131,369
RETAINED DEFICIT (4,046,615) (3,562,158)
----------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 3,816,293 3,596,308
----------------- -----------------
$ 4,414,427 $ 4,409,318
================= =================
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
GREENLAND CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
QUARTER ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
THREE MONTHS ENDED MAR. 31,
1998 1997
(UNAUDITED) (UNAUDITED)
---------------- --------------
REVENUES:
<S> <C> <C>
AMR INCOME $ 10,000 $ 15,000
RENTAL INCOME - 117,548
OTHER INCOME 620 2,579
---------------- --------------
NET REVENUE 10,620 135,127
EXPENSES:
GENERAL AND ADMINISTRATIVE EXPENSE 119,322 71,837
CONSULTING FEES 242,835 211,405
SALARIES 44,957 103,555
MARKETING AND SALES 7,760 53,502
ENGINEERING 56,410 50,715
RENT 13,825 51,370
DEPRECIATION 1,518 48,219
PROPERTY TAXES - 11,498
INTEREST 8,450 71,482
---------------- --------------
495,077 673,583
---------------- --------------
INCOME (LOSS) FROM OPERATIONS (484,457) (538,456)
OTHER INCOME (EXPENSE) - -
PROVISION FOR INCOME TAXES - -
---------------- --------------
NET INCOME (LOSS) $ (484,457) $ (538,456)
================ ==============
NET INCOME (LOSS) PER SHARE $ (0.02) $ (0.03)
================ ==============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES USED TO COMPUTE INCOME (LOSS)
PER SHARE 29,462,787 16,847,291
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
GREENLAND CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
QUARTER ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
PAR VALUE $0.001 PAID-IN RETAINED
SHARES AMOUNT CAPITAL DEFICIT
--------------- --------------- ---------------- -----------------
<S> <C> <C> <C> <C>
BALANCES AT 12/31/97 27,097,787 $ 27,097 $ 7,131,369 $ (3,562,158)
ISSUANCE OF COMMON
AT $0.05 PER SHARE FOR CASH 2,250,000 2,250 112,500
AT $0.10 PER SHARE FOR SERVICES 25,000 25 5,000
AT $0.05 PER SHARE FOR SERVICES 4,815,000 4,815 569,851
AT PAR FOR SERVICES 200,000 200 9,800
NET LOSS FOR PERIOD - - - (484,457)
--------------- --------------- ---------------- -----------------
BALANCES AT 3/31/98 34,387,787 $ 34,388 $ 7,828,520 $ (4,046,615)
=============== =============== ================ =================
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
GREENLAND CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
QUARTER ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
3 MONTHS ENDED
MARCH 31,
1998 1997
(UNAUDITED) (UNAUDITED)
------------- -------------
OPERATING ACTIVITIES
<S> <C> <C>
NET INCOME (LOSS) $ (484,457) $ (538,456)
ADJUSTMENTS TO RECONCILE NET LOSS TO CASH USED
BY OPERATING ACTIVITIES:
STOCK ISSUED FOR SERVICES 589,692 191,690
DEPRECIATION 1,518 48,219
CHANGES IN OPERATING ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE - (18,050)
ESCROW ACCOUNTS - (1,670)
PREPAID EXPENSES (300) -
ACCOUNTS PAYABLE (27,795) 16,129
PAYROLL TAXES PAYABLE (331) (31,696)
ACCRUED WAGES PAYABLE (29,750) -
------------- -------------
NET CASH USED (REQUIRED) BY OPERATING ACTIVITIES 48,577 (333,834)
INVESTING ACTIVITIES
PURCHASE OF EQUIPMENT (581) -
------------- -------------
NET CASH PROVIDED BY INVESTING ACTIVITIES (581) -
FINANCING ACTIVITIES
PROCEEDS FROM SALE OF STOCK 114,750 379,347
COLLECTION OF STOCK SUBSCRIPTION - -
NOTES PAYABLE 43,000
AMOUNTS REPAID TO STOCKHOLDER - (20,000)
REPAYMENT OF LOANS (200,000) (8,644)
------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES (42,250) 350,703
------------- -------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,746 16,869
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,528 6,909
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 12,274 $ 23,778
============= =============
SUPPLEMENTAL INFORMATION
CASH PAID FOR INTEREST $ 8,450 $ 71,482
------------- -------------
============= =============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
GREENLAND CORPORATION
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
QUARTER ENDED MARCH 31, 1998
NOTE 1: 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, 1997. 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 March
31, 1998 are not necessarily indicative of the results that can be expected for
the year ended December 31, 1998.
NOTE 2: DISCONTINUED OPERATIONS
In December, 1997 the Company disposed of its wholly-owned subsidiary
Gam Properties, Inc. (which was in the real estate rental business). The
financial statements for the period ended March 31, 1997 have not been restated
to reflect the loss from Gam's operations as resulting from discontinued
operations.
NOTE 3: INVESTMENTS
Investments consist of the following items:
1- 25,000 shares of common stock of PSA, Inc. (OTCBB-PSAZ). The
cost was $55,000, and the current market value at May 21, 1998 was
$56,250.
2-A 49% interest in a limited liability company which is reported
at $134,143 under the equity method.
3- 1,100,000 convertible preferred shares of Natural Born Carvers,
Inc. (OTCBB-CARV). The cost was $2,515,000. Subsequent to December
31, 1997, the Company has exchanged the shares for land and notes
receivable valued at $2,400,000. The investment has been reflected
at a value of $2,400,000 as of December 31, 1997. The shares are
convertible in 1998 to the number of common shares (at the
then-current market price) equivalent to $2,860,000.
4-290,000 convertible preferred shares of Golden Age Homes, Inc.
(OTCBB-GAHI). The net book value of the Company's subsidiary which
was exchanged for these shares was $1,412,077. The negotiated
price at December 31, 1997 was $1,630,000, which is the value
reflected on these financial statements. The shares are
convertible in 1999 to the number of common shares (at the
then-current market price) equivalent to $1,450,000.
In the first quarter, the Company entered into a transaction, with
Quantix, a Nevada Corporation, to exchange its holdings of 1,100,000 shares of
5% Convertible Class B Preferred Stock of Natural Born Carvers, Inc. for a
combination of real estate, trust deeds, and promissory note. The transaction is
intended to convert non-liquid assets of the Company into those that can be used
for the ongoing financing of the Company. Management believes that the exchange
of illiquid assets for liquid assets of substantially equal value will enhance
the ability of the Company to continue financing its operations.
7
<PAGE>
NOTE 4: 10% 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 believed that the validity of the convertibility of the Debentures was
open to some question. The Company was sued by the Holders of the Debentures to
force conversion. During and subsequent to the first quarter, the Company
settled with the Holders of the Debentures and issued 9,000,000 shares of its
common stock to retire the Debentures.
NOTE 5: 12% CONVERTIBLE SECURED DEBENTURES
During the first quarter of fiscal 1998, the Company issued an offering
consisting of $250,000 of 12% Convertible Debentures due April 1, 2000. The
Company promises to pay the registered holder(s) of debentures the principal sum
of his investment on April 1, 2000 and to pay interest on the principal sum
outstanding from time to time in arrears on the maturity date of the debentures
at the rate of twelve percent (12%) per annum, accruing from the date of initial
issuance. The debentures are convertible into shares of the Company's common
stock at the greater of $0.10 per share or ninety percent (90%) of the bid price
of the Company's common stock as quoted on the OTC Electronic Bulletin Board at
the date of conversion. For each $10,000 of debentures, purchasers will receive
50,000 one-year warrants, expiring March 1, 1999, to purchase shares of the
Company's common stock at $0.25 per share. During the first quarter ended March
31, 1998, the Company sold a principal amount of Debentures of $5,000.
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 March 31, 1997 and 1997, respectively.
In December 1997, the Company sold its GAM Properties, Inc. ("GAM")
subsidiary. Income and expenses associated with GAM have been previously
consolidated on the Company's financial statements. The financial statements for
the period ended March 31, 1998 do not include such income and expenses.
The Company continues with the ongoing development and marketing of its
AirLink automated meter reading system for utilities. The Company introduced
AirLink, for the first time, in June 1996. During the course of fiscal 1996, the
Company entered into agreements to install AirLink pilot systems in Oregon,
Utah, and Connecticut. During 1997, the Company installed various iterations of
the technology in Connecticut and Oregon. As a result of these pilot tests, the
technology has been improved, and the Company expects to install these improved
systems in the fiscal 1998.
Results of Operations
During the first quarter of fiscal 1998 ended March 31, 1998, the
Company had losses of $484,457, compared to losses of $538,456 in the year
earlier period. The decrease of $53,999 is due primarily to the Company's sale
of its GAM Properties, Inc. subsidiary in December 1997, operations which had
been contributing to the Company's losses in previous periods.
Income
Income from the Company's automated meter reading technology
("AirLink(TM)") was $10,000 during the first quarter, compared to $15,000 for
the year-earlier period. The Company continues to refine its AirLink technology;
and pilot installations serve as a platform for ongoing testing and performance
evaluation.
8
<PAGE>
Other income (including interest income) was $620 for the first quarter
compared to $2,579 in the first quarter of last year. The decrease is due
principally to the disposition of the Company's GAM operations.
Expenses
General and administrative expenses for the period ended March 31, 1998
totaled $ 485,109, compared to $440,299, an increase of $44,810 (10.2%). The
increase in general and administrative expenses were due primarily to increases
in expenses associated with ongoing capitalization of the Company, and ongoing
operations associated with product development.
Depreciation expense during the first quarter ended March 31, 1998 was
$1,518, compared to $48,219 for the first quarter of fiscal 1997. This decrease
is due to the sale of the Company's GAM operations in fiscal 1997.
Interest expense decreased by $63,032 to $8,450 (13.4%) in the first
quarter period of 1998 over the first quarter period of fiscal 1997 due to the
sale of the Company's GAM operations in fiscal 1997.
Operations
The Company has continue to fund the development efforts related to its
automated meter reading operations. Sales of the Company's AirLink automated
meter reading system have been limited to pilot installations for utilities in
Connecticut, Utah, and Oregon. Marketing and sales efforts on behalf of AirLink
have been accelerated, and the Company has responded to several requests for
proposal from utilities in the U.S. and internationally.
The Company has submitted several proposals, which were requested by
utilities in the United States and three countries in South America. Many of
these proposals are still pending. While management believes that these
proposals are competitive, there can be no assurance that the Company will be
selected as a provider of these automated meter reading systems.
Subsequent to the period ended March 31, 1998, the Company entered into
Memorandum of Understanding with Symmetry Device Research ("Symmetry") to
provide AirLink to Symmetry clients. Symmetry is a licensed power marketer,
broker and aggregator in the state of California and expects to be certified by
the California Public Utilities Commission as a Meter Service Provider and Meter
Data Management Agent. The company specializes in power quality and energy
management issues.
Liquidity and Capital Resources
The Company's total assets were $4,414,427 at March 31, 1998, an
increase of $5,109 compared to the year ended December 31, 1997. This increase
in assets is based primarily on increases in cash. The Company's total
liabilities at March 31, 1998 were $598,134 compared to $813,010 at December 31,
1997; a decrease of $214,876 or 26.4%. This decrease is due primarily to the
conversion of $200,000 principal amount of 10% Convertible Debentures converted
in the first quarter period. Subsequent to March 31, 1998, the Company converted
the balance of $400,000 principal of these Debentures. (Also see Notes to
Consolidated Financial Statements.)
The Company had negative working capital of $33,974 at March 31, 1998.
The Company has extended a private placement offering to raise, over time, up to
$7,500,000. The Company continues to investigate several alternatives to acquire
additional capital, including borrowings on some of its assets. The Company is
actively pursuing financing related to anticipated needs related to project
financing of its automated meter reading operations.
PART II - OTHER INFORMATION
Subsequent to the end of the period, in May 1998, the Company signed a
Letter of Intent with Check Central, Inc. to acquire all of the outstanding
shares of Check Central, Inc. in exchange for 34,400,000 shares of Greenland
Corporation restricted common stock. Subject to execution of a definitive
agreement, Check Central, Inc. will become a wholly-owned subsidiary of the
Company.
Check Central, Inc. has developed a proprietary system consisting of a
sophisticated back-end computer network connected, via ISDN telephone lines, to
free-standing kiosks that resemble standard bank ATM machines. Check Central
terminals will cash payroll checks, provide ATM services, and issue money orders
to users of the system.
9
<PAGE>
ITEM 1 - LEGAL PROCEEDINGS
The Company is not involved in any litigation that would have a
material adverse effect on the Company; and the officers and directors are aware
of no threatened or pending litigation which would have a material, adverse
effect on the Company.
ITEM 2 - CHANGES IN SECURITIES
None.
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 January 22, 1998 related to the sale of the
Company's GAM Properties, Inc. subsidiary to Golden Age Homes,
Inc.; and to report the sales of equity securities pursuant to
Regulation S to R.O.I., Inc.
10
<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
May 22, 1998 /s/ Eric W. Gaer
------------------------------------------------------
Eric W. Gaer
President, Chief Executive Officer, and acting Chief
Financial Officer
May 22, 1998 /s/ Michael H. deDomenico
------------------------------------------------------
Michael H. deDomenico
Secretary
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Greenland Corporation March 31, 1998 financial statements and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000852127
<NAME> Greenland Corporation
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 12,274
<SECURITIES> 0
<RECEIVABLES> 146,586
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 159,160
<PP&E> 43,053
<DEPRECIATION> (13,652)
<TOTAL-ASSETS> 4,414,427
<CURRENT-LIABILITIES> 193,134
<BONDS> 405,000
0
0
<COMMON> 34,388
<OTHER-SE> 3,781,905
<TOTAL-LIABILITY-AND-EQUITY> 4,414,427
<SALES> 10,000
<TOTAL-REVENUES> 10,620
<CGS> 0
<TOTAL-COSTS> 495,077
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,450
<INCOME-PRETAX> (484,457)
<INCOME-TAX> 0
<INCOME-CONTINUING> (484,457)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (484,457)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
