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, 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
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 [ ] 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 11,346,548 Shares Outstanding
$0.001 par value as of September 30, 1998
1
<PAGE>
GREENLAND CORPORATION
(A DEVELOPMENT STAGE COMPANY)
REPORT ON FORM 10-QSB
QUARTER ENDED SEPTEMBER 30, 1998
TABLE OF CONTENTS
Part I. Financial Information
Item 1. Financial Statements
Consolidated balance sheet as of September 30, 1998
Consolidated statements of operations
Three months ended September 30, 1998 and
1997 Nine months ended September 30, 1998
and 1997 7/17/86 (date of inception) to
September 30, 1998
Consolidated statements of cash flows
Three months ended September 30, 1998 and 1997
Nine months ended September 30, 1998 and 1997
7/17/86 (date of inception) to September 30, 1998
Item 2. Management's discussion and analysis of financial condition and results
of operations
Part II. Other Information
Signatures
2
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
September 30,
1998
-----------------
ASSETS
Current Assets
<S> <C>
Cash in banks $ 37,256
Accounts receivable - officers 147,585
-----------------
TOTAL CURRENT ASSETS 184,841
Equipment, net of depreciation of $16,688 26,366
Other Assets
Notes Receivable 1,900,000
Investments 1,639,143
Software and licenses 2,625,000
Capitalized software costs 186,723
-----------------
$ 6,562,073
=================
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 171,494
Accrued liabilities 11,000
Notes payable 175,000
-----------------
TOTAL CURRENT LIABILITIES 357,494
Convertible secured debentures 5,000
Contingent liabilities 0
-----------------
TOTAL LIABILITIES 362,494
STOCKHOLDERS' EQUITY
Common Stock $.001 par value:
Authorized -100,000,000 shares
Issued and outstanding 11,346,548 shares 11,346
Additional paid-in capital 12,483,852
Deficit accumulated during development stage (6,295,619)
------------------
TOTAL STOCKHOLDERS' EQUITY 6,199,579
-----------------
$ 6,562,073
=================
</TABLE>
3
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
7/17/86
Three Months Ended Nine Months Ended (Date of
September 30, September 30, inception) to
1998 1997 1998 1997 9/30/98
------------- -------------- ------------- ------------- ------------------
REVENUES
<S> <C> <C> <C> <C> <C>
AMR Sales $ 0 $ 0 $ 10,000 $ 0 $ 65,000
Other income 48 (7,972) 5,539 10,685 65,860
------------- -------------- ------------- ------------- ------------------
48 (7,972) 15,539 10,685 130,860
EXPENSES
General and administrative 593,942 463,832 2,010,851 1,488,387 4,572,619
Depreciation 1,518 1,518 4,554 4,554 16,688
Interest 8,482 0 17,011 0 59,252
Property taxes and other taxes 5,730 2,598 35,945 18,922 89,654
Research and development 119,089 0 242,758 0 242,758
Bad debts 0 0 0 0 59,668
------------- -------------- ------------- ------------- ------------------
728,761 467,948 2,311,119 1,511,863 5,040,639
------------- -------------- ------------- ------------- ------------------
LOSS FROM OPERATIONS (728,713) (475,920) (2,295,580) (1,501,178) (4,909,779)
OTHER INCOME (LOSS)
Gain on disposition of subsidiary 0 0 0 0 531,388
Gain (Loss) on sale of properties 0 0 (437,881) 290,000 (552,881)
------------- -------------- ------------- ------------- ------------------
NET LOSS FROM
CONTINUING OPERATIONS (728,713) (475,920) (2,733,461) (1,211,178) (4,931,272)
Loss from discontinued operations (Note 1) 0 (8,969) 0 (42,481) (1,364,347)
------------- -------------- ------------- ------------- ------------------
NET LOSS BEFORE
INCOME TAXES (728,713) (484,889) (2,733,461) (1,253,659) (6,295,619)
PROVISION FOR INCOME TAXES 0 0 0 0 0
------------- -------------- ------------- ------------- ------------------
NET LOSS $ (728,713) $ (484,889) $ (2,733,461) $ (1,253,659) $ (6,295,619)
============= ============== ============= ============= ==================
NET LOSS PER WEIGHTED
AVERAGE SHARE $ (.11) $ (.23) $ (.43) $ (.61)
============== ============== ============== ==============
Weighted average number of common shares
used to compute net income (loss) per
weighted average share 6,431,739 2,064,324 6,431,739 2,064,324
============= ============== ============= =============
</TABLE>
4
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
7/17/86
Nine months ended (Date of
September 30, inception) to
OPERATING ACTIVITIES 1998 1997 9/30/98
------------- ------------- -------------
<S> <C> <C> <C>
Net loss $ (2,733,461) $ (1,253,659) $ (6,295,619)
Adjustments to reconcile net loss to cash provided (required)
by operating activities:
Depreciation and amortization 4,554 144,657 580,904
Unrealized decrease in investments 0 0 83,826
Book value of disposed assets/liabilities 388,000 0 588,374
Stock issued for services 1,659,332 324,249 2,482,754
Changes in operating assets and liabilities:
Accounts receivable - officer (1,000) (17,950) (87,918)
Escrow accounts 0 (3,484) 0
Other assets 0 542
Accounts payable 47,992 76,257 171,494
Accrued expenses (78,508) 7,723 11,000
Notes payable 175,000 0 175,000
Payable to stockholders 0 (60,960) 0
Current portion of long-term debt 0 (1,100) 0
Property taxes payable 0 (15,000) (112,522)
------------- ------------- -------------
NET CASH REQUIRED BY OPERATING ACTIVITIES (538,091) (799,267) (2,402,165)
INVESTING ACTIVITIES
Acquisition of investments 0 (300,000) 0
Capitalization of software costs 0 0 (186,723)
Purchase of stock 0 0 (55,000)
Purchase of equipment (581) 0 (18,139)
Sale of property 112,000 0 112,000
Organization cost 0 0 (50)
------------- ------------- -------------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 111,419 (300,000) (147,912)
FINANCING ACTIVITIES
Cash from subsidiary 0 0 23,415
Proceeds from sale of stock 452,400 659,933 2,089,736
Collections of stock subscription 0 0 40,000
Amounts borrowed from (repaid to) stockholders 0 (140,790) 0
Repayment of loans 0 (15,731) (243,818)
Proceeds from new loans 5,000 600,000 678,000
------------- ------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 457,400 1,103,412 2,587,333
------------- ------------- -------------
INCREASE IN CASH AND CASH EQUIVALENTS 30,728 4,145 37,256
Cash and cash equivalents at beginning of period 6,528 6,909 0
------------- ------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 37,256 $ 11,054 $ 37,256
============= ============= =============
SUPPLEMENTAL INFORMATION
Cash paid for interest $ 8,482 $ $ 959,803
Subsidiary acquired by issuance of stock 2,625,000 2,625,000
Assets acquired by assumption of debt and issuance of stock 10,933,790
Cancellation of stock previously issued for assets determined
to be worthless (Note 4) 459,432
Investment received in exchange for non-cash assets 2,515,000 6,365,000
Net book value of assets exchanged for investment (1,412,077)
Land option exchanged for investment (2,515,000) (2,515,000)
Stock issued to cancel debt 616,400 865,439
------------- ------------- -------------
$ 3,249,882 $ 0 $ 18,281,387
============= ============= =============
</TABLE>
5
<PAGE>
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, 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
September 30, 1998 are not necessarily indicative of the results that can be
expected for the year ended December 31, 1998.
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, 1998 and 1997,
respectively.
The operations of the Company's meter reading operations and
newly-acquired Check Central, Inc. subsidiary are consolidated in the Company's
financial statements.
The Company's AMR operations have been devoted to research 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 pursued limited marketing and sales of its
product line.
During the third quarter, the Company has devoted the majority of its
resources to the development of its Check Central check cashing machine and, as
a result, the development of AMR has been slowed.
The Company, in May 1998, acquired Check Central, Inc., developers of
proprietary technology to provide automated check cashing, money orders, and ATM
services from free-standing automated teller machines in retail locations.
The acquisition of Check Central was an all-stock transaction.
Greenland purchased all of the outstanding shares of Check Central for 3.5
million shares of Greenland restricted common stock (after the reverse split of
the Company's common stock) , representing, at the time, approximately 45% of
the total issued and outstanding shares.
The Company expects that some of its Check Central machines will be
Company-owned for which it will pay a space rental fee and a split of
transaction fees with retailers. At this time, the Company has released no
forecast related to the future financial performance of Check Central
operations. However, the Company estimates that the check-cashing market segment
is approximately $1.5 billion annually. The Company anticipates rollout of
initial units later in the current fiscal year.
Results of Operations Revenues
The Company had no income from sales of AirLink systems during the
quarter ended September 30, 1998. There was no income from AMR operations during
the corresponding quarter of fiscal 1997. For the nine month period ended
September 30, 1998, the Company had AMR revenues of $10,000 associated with its
pilot operations. There were no corresponding revenues in the year- earlier
period. To date, the Company has had AMR revenues of $65,000, all associated
with contracted pilot installations of AirLink.
Other income for the three months ended September 30, 1998 was $48. The
Company had $(7,972) from other income in the prior year. For the nine month
period ended September 30, 1998, the Company had other income of $5,539 compared
to $10,685 in the prior year nine month period.
Expenses
General and administrative expenses for the three month period ended
September 30, 1998 totaled $593,942 as compared to $463,832 for the prior year
period, an increase of $130,110 or 28.1%. For the nine month period ended
September 30, 1998, general and administrative expenses were $2,010,851 as
compared to $1,488,387 for the prior year, an increase of $522,464 or 35.1%.
Since inception (July 17, 1986), the Company has paid $4,572,619 of general and
administrative expenses.
6
<PAGE>
Research and development expenses for the three month period ended
September 30, 1998 were $119,089, compared to $0 in the year-earlier three month
period. For the nine month period ended September 30, 1998, research and
development expenses were $242,758 as compared to $0 for the period ended
September 30, 1997. The Company has paid a total of $242,758 in research and
development expenses since its inception.
Depreciation expense was $1,518 for the third quarter of fiscal 1998;
the identical amount as in the year-earlier three-month period. These expenses
are directly related to Company equipment. For the nine month periods ended
September 30, 1998, and 1997, depreciation was $4,554.
Interest expense was $9,482 in the third quarter period of 1998; there
were no such expenses in the first quarter of fiscal 1997. Interest expenses
were $17,011 for the nine month period ended September 30, 1998 compared to no
such expenses in the year-earlier nine-month period. The increases in interest
expense are principally due to the Company's debt. Since inception, the Company
has paid $59,252 in interest.
Taxes for the three month period ended September 30, 1998 were $5,730
compared to $2,598 in the previous year's third quarter, an increase of $3,132.
For the nine month period ended September 30, 1998, taxes were $35,945 compared
to taxes of $18,922 for the prior year's nine month period, an increase of
$17,023. These increases are principally related to payroll taxes.
Check Central Operations
Check Central, Inc., acquired by Greenland in the second quarter, is
operated as a wholly-owned subsidiary. Check Central has developed technology to
enable automated banking and check cashing.
The fundamental Check Central product is an automated teller machine
that is installed in a retail environment such as a convenience store, liquor
store, laundromat, supermarket, etc. It provides an automated platform to
provide several financial services. The basic services include:
payroll/government check cashing, money orders, and ATM functions. Additional
services may include, in the future: bill paying services (including utility
bills), wire transfers, on-line purchases, payday loans, electronic tax filing,
etc.
The core of the system is Check Central's proprietary server
technology. This is an on-line check approval system that makes all the check
cashing decisions and electronically dispenses the cash for each check
transaction. This service, along with the user-friendly design of the retail
machine, enables automated transaction services possible, including advanced
security features to minimize theft and fraud. This server technology, Check
Central Management Software ("CCMS"), has been extensively tested in the retail
market. This technology eliminates all responsibility at the store level by
providing proprietary software with sophisticated risk management algorithms,
digital communication to each branch location, connectivity to major databases,
and a back-office staff with experienced check cashing personnel. The system
makes all check cashing decisions in a real-time environment.
Initially, the Company will own and operate a limited number of
machines, paying for retail space and providing some profit-sharing revenues to
retailers. Alternatively, the Company will sell Check Central machines to
retailers and provide service and support in exchange for a percentage of fee
revenues.
At present, Check Central production units are in development. Management
anticipates release of these units in the fourth quarter of fiscal 1998.
Automated Meter Reading Operations
The Company has determined that the AirLink system is not now market-ready;
and the Company estimates that getting it market-ready will require an
additional year of development and substantial resources. Going forward, the
Company does not presently have the capital necessary to launch Check Central,
and simultaneously continue to develop AirLink. Therefore, the Company has
slowed the development of AirLink while it fully evaluates all of its
alternatives, which could include raising additional capital specifically for
AirLink, joint venturing with another company for its completion, or the
possible sale of the technology. The Company will consider all alternatives and
options carefully, and make a decision that is in the best interest of its
stockholders. Liquidity and Capital Resources
The Company's total assets were $6,562,073 at September 30, 1998, an
increase of $2,152,755, or 48.8%, over the year ended December 31, 1997. This
increase in assets is based primarily on the acquisition of Check Central.
At September 30, 1998, the Company's total liabilities were $362,494, a
decrease of $450,516 (55.4%) over the year ended December 31, 1997. The decrease
is attributable primarily to the conversion of the Company's 10% Convertible
Secured Debentures.
Stockholders' equity was $6,199,579 at September 30, 1998, an increase
of $2,603,271 (72.4%) over the year ended December 31, 1997.
7
<PAGE>
The Company had working capital deficit of $(172,653) at September 30,
1998. The Company's working capital has decreased by $112,757 since the year
ended December 31, 1997. Management is currently evaluating its options to raise
additional capital through equity or debt financing in order meet its ongoing
requirements for working capital to grow the business.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None.
ITEM 2 - CHANGES IN SECURITIES
The Company effected a 1 for 10 reverse split of its Common Stock in
July, 1998.
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 September 2, 1998, related to the exchange of shares of
Greenland Common Stock for all of the outstanding shares of Check
Central, Inc.
8
<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 24, 1998
-------------------------------
Lee R. Swanson
President, Chief Executive Officer, and Acting
Chief Financing Officer
November 24, 1998
-------------------------------
Thomas Beener
Secretary
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from Greenland Corporation September 30, 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 37,256
<SECURITIES> 1,639,143
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 184,841
<PP&E> 43,054
<DEPRECIATION> (16,688)
<TOTAL-ASSETS> 6,562,073
<CURRENT-LIABILITIES> 357,494
<BONDS> 5,000
0
0
<COMMON> 11,346
<OTHER-SE> 6,188,233
<TOTAL-LIABILITY-AND-EQUITY> 6,562,073
<SALES> 15,539
<TOTAL-REVENUES> 15,539
<CGS> 0
<TOTAL-COSTS> 2,311,119
<OTHER-EXPENSES> 437,881
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,011
<INCOME-PRETAX> (2,733,461)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,733,461)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,733,461)
<EPS-PRIMARY> (.43)
<EPS-DILUTED> (.43)
</TABLE>
