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, 1999
Commission File No. 017833
GREENLAND
CORPORATION
Nevada 87-0439051
(State or other jurisdiction of (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
incorporation or organization)
1935 AVENIDA DEL ORO, SUITE "D"
OCEANSIDE, CA 92056
(ADDRESS AND ZIP CODE OF PRINCIPAL EXECUTIVE OFFICES
(760) 414-9941
(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 20,613,430 SHARES OUTSTANDING
$0.001 PAR VALUE AS OF MAY 22, 1999
1
<PAGE>
GREENLAND CORPORATION
REPORT ON FORM 10-QSB
QUARTER ENDED MARCH 31, 1999
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
O CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1999 AND
DECEMBER 31, 1998 O CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998 O CONDENSED CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AS OF MARCH 31, 1999 O
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AS OF MARCH 31, 1999
AND 1998 O 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 AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
(UNAUDITED) (AUDITED)
----------------- -----------------
ASSETS
CURRENT ASSETS
<S> <C> <C>
CASH IN BANKS $ 34,074 $ 3,332
INVENTORY 53,205 0
ACCOUNTS RECEIVABLE - TRADE 15,413 0
ACCOUNTS RECEIVABLE - OTHER 25,000 44,250
PREPAID EXPENSES - CURRENT PORTION 51,193 51,668
----------------- ------------------
TOTAL CURRENT ASSETS 178,885 99,250
EQUIPMENT, NET OF DEPRECIATION OF $21,736 ($18,453 IN 1998) 29,499 24,600
OTHER ASSETS
PREPAID EXPENSES 51,518 51,669
NOTES RECEIVABLE (NOTE 3) 1,900,000 1,900,000
INVESTMENTS (GAHI) (NOTE 3) 0 1,450,000
CAPITALIZED SOFTWARE COSTS 186,723 186,723
LICENSES - CHECK CENTRAL (NOTE 4) 2,625,000 2,625,000
----------------- ------------------
$ 4,971,625 $ 6,337,242
================= ==================
LIABILITIES AND EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 186,452 $ 172,672
ACCRUED EXPENSES 19,020 0
NOTES PAYABLE (NOTE 5) 53,000 150,000
NOTE PAYABLE - RELATED PARTIES (NOTE 5) 214,750 223,000
STOCK SUBSCRIPTION REFUNDS PAYABLE 0 11,000
----------------- ------------------
TOTAL CURRENT LIABILITIES 473,222 556,672
STOCKHOLDERS' EQUITY
COMMON STOCK $.001 PAR VALUE:
AUTHORIZED -100,000,000 SHARES
ISSUED AND OUTSTANDING 19,765,647 SHARES (12,708,331 IN 1998) 19,766 12,708
ADDITIONAL PAID-IN CAPITAL 13,800,931 12,652,183
DEFICIT ACCUMULATED DURING DEVELOPMENT STAGE (9,322,294) (6,884,321)
----------------- ------------------
TOTAL STOCKHOLDERS' EQUITY 4,498,403 5,780,570
----------------- ------------------
$ 4,971,625 $ 6,337,242
================= ==================
</TABLE>
3
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
7/17/86
THREE MONTHS ENDED (DATE OF
MARCH 31, INCEPTION) TO
1999 1998 3/31/99
------------- ------------- -------------
REVENUES
<S> <C> <C> <C>
CHECK CENTRAL REVENUE $ 598 $ 0 $ 598
AMR SALES 0 0 55,000
OTHER INCOME 36 10,620 76,040
------------- ------------- -------------
634 10,620 131,638
EXPENSES
GENERAL AND ADMINISTRATIVE 1,228,616 485,109 6,446,479
DEPRECIATION 3,283 1,518 21,736
INTEREST 18,984 8,450 83,574
PROPERTY TAXES AND OTHER TAXES 3,724 0 83,491
BAD DEBTS 19,250 0 78,918
------------- ------------- -------------
1,273,857 495,077 6,714,198
------------- ------------- -------------
LOSS FROM OPERATIONS (1,273,223) (484,457) (6,582,560)
OTHER INCOME (LOSS)
GAIN ON DISPOSITION OF SUBSIDIARY 0 0 531,388
LOSS ON SALE OF INVESTMENTS 0 0 (742,025)
LOSS ON SALE OF INVESTMENTS - UNREALIZED (NOTE 3) (1,164,750) 0 (1,164,750)
------------- ------------- -------------
NET LOSS FROM CONTINUING OPERATIONS (2,437,973) (484,457) (7,957,947)
LOSS FROM DISCONTINUED OPERATIONS (NOTE 1) 0 0 (1,364,347)
------------- ------------- -------------
NET LOSS BEFORE INCOME TAXES (2,437,973) (484,457) (9,322,294)
PROVISION FOR INCOME TAXES 0 0 0
------------- ------------- -------------
NET LOSS $ (2,437,973) $ (484,457) $ (9,322,294)
============= ============= =============
LOSS BEFORE DISCONTINUED OPERATIONS $ (.16) $ (.05)
LOSS FROM DISCONTINUED OPERATIONS .00 .00
------------- -------------
NET LOSS PER WEIGHTED AVERAGE SHARE $ (.16) $ (.05)
============= =============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES USED TO
COMPUTE NET INCOME (LOSS) PER WEIGHTED AVERAGE SHARE 15,515,958 9,903,970
============= =============
</TABLE>
4
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
PAR VALUE $0.001 PAID - IN RETAINED
SHARES AMOUNT CAPITAL DEFICIT
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
BALANCES AT 7/17/86 (DATE OF INCEPTION) 0 $ 0 $ 0 $ 0
ISSUANCE OF COMMON STOCK (RESTRICTED)
AT $.02 PER SHARE AT 7/17/86 100,000 100 1,900
NET LOSS FOR PERIOD (1,950)
-------------- -------------- -------------- --------------
BALANCES AT 12/31/86 100,000 100 1,900 (1,950)
NET LOSS FOR PERIOD (10)
-------------- -------------- -------------- --------------
BALANCES AT 12/31/87 100,000 100 1,900 (1,960)
NET LOSS FOR PERIOD (10)
-------------- -------------- -------------- --------------
BALANCES AT 12/31/88 100,000 100 1,900 (1,970)
NET LOSS FOR PERIOD (10)
-------------- -------------- -------------- --------------
BALANCES AT 12/31/89 100,000 100 1,900 (1,980)
NET LOSS FOR PERIOD (10)
-------------- -------------- -------------- --------------
BALANCES AT 12/31/90 100,000 100 1,900 (1,990)
NET LOSS FOR PERIOD (10)
-------------- -------------- -------------- --------------
BALANCES AT 12/31/91 100,000 100 1,900 (2,000)
NET LOSS FOR PERIOD 0
-------------- -------------- -------------- --------------
BALANCES AT 12/31/92 100,000 100 1,900 (2,000)
NET LOSS FOR PERIOD 0
-------------- -------------- -------------- --------------
BALANCES AT 12/31/93 100,000 100 1,900 (2,000)
ISSUANCE OF COMMON STOCK (RESTRICTED)
AT $.33 PER SHARE FOR CASH 120,000 120 39,880
TO ACQUIRE SUBSIDIARY AT $30.40 PER
SHARE AT 10/1/94 10,000 10 303,983 (257,612)
TO ACQUIRE ADDITIONAL RENTAL PROPERTIES
AT $29.20 PER SHARE AT 10/1/94 52,415 52 1,530,275
AT PAR 10/21/94 FOR SERVICES RENDERED 13,200 13 119
NET LOSS FOR PERIOD (110,338)
-------------- -------------- -------------- --------------
BALANCE AT 12/312/94 295,615 295 1,876,157 (369,950)
ISSUANCE OF COMMON STOCK (REGULATION
S) AT $1.00 PER SHARE FOR STOCK
SUBSCRIPTION 110,000 110 109,890
ISSUANCE OF COMMON STOCK (RESTRICTED)
AT $48.29 PER SHARE TO CANCEL DEBT 2,554 3 123,317
AT $.01 PER SHARE FOR SERVICES 20,940 21 188
AT $.85 PER SHARE FOR ASSETS 850,000 850 718,479
AT $20.00 PER SHARE FOR ASSETS 840 1 16,807
AT $50.00 PER SHARE TO CANCEL DEBT 2,000 2 99,998
AT $51.43 PER SHARE TO CANCEL DEBT 500 0 25,719
AT $60.34 PER SHARE TO LAND OPTION 40,851 41 2,464,959
CANCELLATION OF RESTRICTED COMMON
STOCK (4,275) (4) (124,825)
NET LOSS FOR PERIOD (587,153)
-------------- -------------- -------------- --------------
BALANCES AT 12/31/95 1,319,025 1,319 5,310,689 (957,103)
</TABLE>
5
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
PAR VALUE $0.001 PAID - IN RETAINED
SHARES AMOUNT CAPITAL DEFICIT
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
BALANCES AT 12/31/95 1,319,025 $ 1,319 $ 5,310,689 $ (957,103)
ISSUANCE OF COMMON STOCK (RESTRICTED)
CORRECTION TO ISSUE PRICE OF SHARES
PREVIOUSLY SOLD ON SUBSCRIPTION (14,195)
AT $.001 PER SHARE FOR ASSETS 127,036 127 (127)
AT $.001 PER SHARE FOR SERVICES 11,886 12 (12)
AT $5.00 PER SHARE FOR CASH 24,250 24 121,226
AT $2.50 PER SHARE FOR CASH 143,850 144 359,482
AT $20.00 PER SHARE FOR CASH 5,450 6 108,994
AT $10.00 PER SHARE FOR CASH 60 0 600
AT $50.00 PER SHARE FOR CASH 20 0 1,000
AT $30.00 PER SHARE FOR CASH 2,800 3 83,997
AT $8.17 PER SHARE FOR SERVICES 6,000 6 48,994
AT $10.68 PER SHARE FOR CASH 289 0 3,087
AT $7.56 PER SHARE FOR SERVICES 450 0 3,401
AT $3.10 PER SHARE FOR CASH 13,200 13 40,905
CANCELLATION OF RESTRICTED COMMON STOCK (132,870) (133) (459,299)
NET LOSS FOR YEAR (886,162)
-------------- -------------- -------------- --------------
BALANCES AT 12/31/96 1,521,446 1,521 5,608,742 (1,843,265)
ISSUANCE OF COMMON STOCK (RESTRICTED)
AT $2.50 PER SHARE FOR CASH 88,700 89 221,661
AT $2.60 PER SHARE FOR CASH 1,500 2 3,898
AT $2.83 PER SHARE FOR SERVICES 530 1 1,499
AT $2.50 PER SHARE FOR SERVICES 16,500 16 41,234
AT $2.60 PER SHARE FOR SERVICES 1,650 2 4,288
AT $1.50 PER SHARE FOR CASH 200,000 200 299,800
AT PAR $.001 TO SETTLE LAWSUIT 6,138 6 (6)
AT $2.50 TO SETTLE DEBT 20 0 50
AT $1.00 PER SHARE FOR CASH 294,400 294 294,106
AT $2.20 PER SHARE FOR SERVICES 30,000 30 65,970
AT $1.00 PER SHARE FOR SERVICES 26,810 27 26,783
AT $2.77 PER SHARE FOR SERVICES 1,084 1 3,002
S-8 SHARES AT
$2.60 PER SHARE FOR SERVICES 70,000 70 181,930
$2.00 PER SHARE FOR SERVICES 10,000 10 19,990
$1.00 PER SHARE FOR SERVICES 210,000 210 209,790
$.75 PER SHARE FOR SERVICES 231,000 231 173,019
DISPOSITION OF SUBSIDIARY (55,853)
NET LOSS FOR YEAR (1,663,040)
-------------- -------------- -------------- --------------
BALANCES AT 12/31/97 2,709,778 2,710 7,155,756 (3,562,158)
</TABLE>
6
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(CONTINUED)
(UNAUDITED)
<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 2,709,778 $ 2,710 $ 7,155,756 $ (3,562,158)
ISSUANCE OF COMMON STOCK
S-8 SHARES
$.13 PER SHARE FOR SERVICES 1,000,000 1,000 129,000
$.19 PER SHARE FOR SERVICES 674,000 674 127,386
$.20 PER SHARE FOR SERVICES 300,000 300 59,700
$.275 PER SHARE FOR SERVICES 200,000 200 54,800
$.30 PER SHARE FOR SERVICES 291,666 292 87,208
$.50 PER SHARE FOR SERVICES 246,500 246 123,004
$.60 PER SHARE FOR SERVICES 760,000 760 455,240
$.70 PER SHARE FOR SERVICES 167,500 167 117,083
$1.00 PER SHARE FOR SERVICES 20,000 20 19,980
$1.50 PER SHARE FOR SERVICES 96,053 96 143,988
REGULATION "S" SHARES
$.40 PER SHARE TO RETIRE DEBENTURE 500,000 500 199,500
$.50 PER SHARE TO RETIRE DEBENTURE 100,000 100 49,900
$1.00 PER SHARE TO RETIRE DEBENTURE 400,000 400 399,600
ISSUANCE OF RESTRICTED SHARES
$.07 PER SHARE FOR SERVICES 310,386 310 21,417
$.10 PER SHARE FOR SERVICES 20,000 20 180
$.14 PER SHARE FOR SERVICES 26,900 27 3,739
$.275 PER SHARE FOR SERVICES 115,000 115 31,510
$.295 PER SHARE FOR SERVICES 161,028 161 47,342
$.40 PER SHARE FOR SERVICES 145,000 145 57,855
$.45 PER SHARE FOR SERVICES 35,000 35 15,715
$.50 PER SHARE FOR CASH 22,200 22 11,078
$.50 PER SHARE FOR SERVICES 208,729 209 104,051
$.75 PER SHARE FOR SUBSIDIARY 3,500,000 3,500 2,621,500
$.75 PER SHARE FOR SERVICES 350,000 350 262,150
$.85 PER SHARE FOR SERVICES 3,000 3 2,547
$1.00 PER SHARE FOR CASH 341,300 341 340,959
$2.00 PER SHARE FOR SERVICES 2,500 3 4,997
$2.50 PER SHARE FOR SERVICES 2,000 2 4,998
NET LOSS FOR YEAR (3,322,163)
-------------- -------------- -------------- --------------
BALANCES AT 12/31/98 12,708,331 12,708 12,652,183 (6,884,321)
ISSUANCE OF COMMON STOCK
S-8 SHARES
$.08 PER SHARE FOR SERVICES 922,761 923 72,898
$.1875 PRE SHARE FOR SERVICES 1,352,919 1,353 252.319
$.21 PER SHARE FOR SERVICES 850,000 850 177,650
$.22 PER SHARE FOR SERVICES 761,110 761 166,683
RESTRICTED SHARES
$.13 PER SHARE FOR SERVICES 380,527 381 49,088
$.15 PER SHARE FOR CASH 1,449,999 1,450 215,650
$.15 PER SHARE FOR SERVICES 980,000 980 146,420
$.19 PER SHARE FOR SERVICES 360,000 360 68,040
NET LOSS FOR QUARTER (2,437,973)
-------------- -------------- -------------- --------------
BALANCE AT 3/31/99 19,765,647 $ 19,766 $ 13,800,931 $ (9,322,294)
============== ============== ============== ==============
</TABLE>
7
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
7/17/86
THREE MONTHS ENDED (DATE OF
MARCH 31, INCEPTION) TO
1999 1998 3/31/99
------------- ------------- -------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
NET LOSS $ (2,437,973) $ (484,457) $ (9,322,294)
ADJUSTMENTS TO RECONCILE NET LOSS
TO CASH PROVIDED (REQUIRED) BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 3,283 1,518 585,952
UNREALIZED DECREASE IN INVESTMENTS 1,164,750 0 1,437,719
BOOK VALUE OF DISPOSED ASSETS/LIABILITIES 0 0 700,374
STOCK ISSUED FOR SERVICES 938,306 589,692 3,690,753
CHANGES IN OPERATING ASSETS AND LIABILITIES:
INVENTORY (53,205) 0 (53,205)
ACCOUNTS RECEIVABLE 19,250 0 34,668
PREPAID EXPENSES 626 (300) (102,169)
ACCOUNTS PAYABLE 13,780 (27,795) 186,452
ACCRUED EXPENSES 19,020 (30,081) 30,020
PROPERTY TAXES PAYABLE 0 0 (112,522)
------------- ------------- -------------
NET CASH PROVIDED (REQUIRED)
BY OPERATING ACTIVITIES (332,163) 48,577 (2,924,252)
INVESTING ACTIVITIES
CAPITALIZATION OF SOFTWARE COSTS 0 0 (186,723)
PURCHASE OF STOCK 0 0 (55,000)
PURCHASE OF EQUIPMENT (8,182) (581) (26,321)
ORGANIZATION COST 0 0 (50)
------------- ------------- -------------
NET CASH REQUIRED
BY INVESTING ACTIVITIES (8,182) (581) (268,094)
FINANCING ACTIVITIES
CASH FROM SUBSIDIARY 0 0 23,415
PROCEEDS FROM SALE OF STOCK 277,500 114,750 2,267,236
COLLECTIONS OF STOCK SUBSCRIPTION 0 0 40,000
AMOUNTS BORROWED FROM (REPAID TO) STOCKHOLDERS 55,587 0 278,587
REPAYMENT OF LOANS 0 (200,000) (243,818)
PROCEEDS FROM NEW LOANS 38,000 43,000 861,000
------------- ------------- -------------
NET CASH PROVIDED(REQUIRED)
BY FINANCING ACTIVITIES 371,087 (42,250) 3,226,420
------------- ------------- -------------
INCREASE IN CASH
AND CASH EQUIVALENTS 30,742 5,746 34,074
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 3,332 6,528 0
------------- ------------- -------------
CASH AND CASH
EQUIVALENTS AT END OF YEAR $ 34,074 $ 12,274 $ 34,074
============= ============= =============
SUPPLEMENTAL INFORMATION
CASH PAID FOR INTEREST $ 124 $ 8,450 $ 973,794
ASSETS ACQUIRED BY ASSUMPTION OF DEBT AND ISSUANCE OF STOCK 0 0 13,558,790
CANCELLATION OF STOCK PREVIOUSLY ISSUED FOR
ASSETS DETERMINED TO BE WORTHLESS 0 0 459,432
INVESTMENT RECEIVED IN EXCHANGE FOR NON-CASH ASSETS 0 0 3,850,000
NET BOOK VALUE OF ASSETS EXCHANGED FOR INVESTMENT 0 0 (1,412,077)
LAND OPTION EXCHANGED FOR INVESTMENT 0 0 (2,515,000)
STOCK ISSUED TO CANCEL DEBT 0 0 907,039
------------- ------------- -------------
$ 124 $ 8,450 $ 15,821,978
============= ============= =============
</TABLE>
8
<PAGE>
GREENLAND CORPORATION
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
QUARTER ENDED MARCH 31, 1999
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, 1999 are not necessarily indicative of the results that can be expected for
the year ended December 31, 1999.
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 from July 17, 1986 (Date of inception) to March 31,
1999 have 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 in a public company. The cost was
$55,000. The stock is not currently trading; this asset has been fully
reserved.
2- A 49% interest in a limited liability company which was reported at
$134,143 under the equity method. The Company has been unsuccessful in
locating the principals of this LLC in the last three years; this
asset is fully reserved.
3- 1,100,000 convertible preferred shares in a public company. The basis
in the land option given in exchange for these shares was $2,515,000.
During 1998, the Company exchanged the shares for notes receivable
valued at $1,900,000. The investment has been reflected at a value of
$1,900,000 as of March 31, 1999. The shares are convertible in 1999 to
the number of common shares (at the then-current market price)
equivalent to $2,860,000.
4- 290,000 convertible preferred shares of GAHI, a public company. 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. The shares are convertible in 1999 to the number of
common shares (at the then-current market price) equivalent to
$1,450,000. Subsequent to March 31, 1999, the Company sold the shares
to an officer of the Company for $150,000 cash and assumption of
$135,250 of the Company's debt. The loss of $1,164,750 has been
reflected in these financial statements as an urealized loss on sale
of investments. (See Note 7)
NOTE 4: LICENSES
During 1998, the Company acquired 100% of Check Central, Inc. (a Nevada
corporation) by issuing 3,500,000 shares of its common stock. The sole of asset
of Check Central, Inc. was a license to use certain software in the development
of check cashing machines. The transaction was accounted for as a purchase and
recorded at the fair market value of the stock issued.
NOTE 5: NOTES PAYABLE
Notes payable at March 31, 1999 are summarized as follows:
Individuals $53,000 at 8% due December 31, 1999
Officers $214,750 at 8% due February 28, 2000
As additional inducement to the persons to loan money to the Company, certain
warrants have been promised, but not yet issued as follows:
200,000 shares at $.33 effective for 2 years from August 31, 1998
10,000 shares at $.50 effective for 2 years from August 23, 1998
10,000 shares at $.40 effective for 2 years from September 10, 1998
10,000 shares at $.19 effective for 2 years from September 23, 1998
15,000 shares at $.41 effective for 2 years from October 23, 1998
9
<PAGE>
GREENLAND CORPORATION
NOTES TO CONDENSED CONSOLIDATED STATEMENTS (CONTINUED)
QUARTER ENDED MARCH 31, 1999
NOTE 6: REVERSE STOCK SPLIT
The Company effected a 1:10 reverse stock split on July 2, 1998. All references
to stock prices, and numbers of shares in these financial statements have been
adjusted to reflect the reverse split as if it were effective on the earliest
date reported.
NOTE 7: SUBSEQUENT EVENTS
Subsequent to March 31, 1999, the Company entered into a transaction on April 5,
1999 with Telenetics Corporation whereby Telenetics acquired the advanced
communication technology known as automated meter reading ("AMR") in exchange
for shares of Convertible Preferred Stock of Telenetics with a face value of
$900,000.
Subsequent to March 31, 1999, the Company consummated the sale of 290,000
convertible preferred shares of Golden Age Homes, Inc.; an OTCBB non-reporting
public company (the "GAHI Shares")("GAHI") to Chairman of the Board and CEO,
Louis T. Montulli for total consideration of $280,000. This includes cash as
well as an assumption of a current outstanding Notes Payable of $125,000. This
transaction was completed April 23, 1999. The loss on this asset has been
reflected in the financial statements as if it had occurred during the quarter
ended March 31, 1999. The GAHI Shares are convertible in December of 1999 to the
number of common shares (at the then market price) equivalent to $1,450,000.
Prior to entering into this transaction with Mr. Montulli, the Company had
solicited offers from other parties to purchase the GAHI Shares including the
assumption of the note payable of $125,000. Management determined that Mr.
Montulli's offer was the most favorable to the Company. The sale of GAHI Shares
to Mr. Montulli is part of the Company's on-going reevaluation of its assets to
determine the most effective use and benefit to the Company in relation to the
Company's operational needs.
Subsequent to March 31, 1999, the Company commenced a private placement of its
securities pursuant to Regulation D Rule 506 of the Securities Act of 1933, as
amended, on May 4, 1999. If fully subscribed, the offering will provide
approximately $4,000,000 of equity funding to the Company, exclusive of proceeds
payable to the Company through the exercise of the warrants that are part of the
offering. The offering consists of Units priced at $5.00 comprised of a 12%
Debenture convertible into 10 Shares of Greenland Common Stock and 10 Class A
Warrants exercisable at $.50 into 10 Shares of Greenland Common Stock; 10 Class
B Warrants exercisable at $1.00 into 10 Shares of Greenland Common Stock and 10
Class C Warrants exercisable at $1.50 into 10 Shares of Greenland Common Stock.
As of May 22, 1999, the Company had received approximately $39,000 from the
proceeds of the offering, after payment of all expenses.
10
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction
The following discussion pertains to the Company's operations and financial
condition as of the end of the first quarter March 31, 1999.
In May of 1998,the Company purchased the exclusive rights to all of Check
Central Inc's., software and hardware designs for the expressed intent of
completing the development and marketing of a stand-alone Check Cashing ATM
unit. Check Central's technology was acquired through an exchange of all the
issued and outstanding stock of Check Central, Inc. for 35,000,000 (pre-reverse
split) restricted shares of the Company's common stock valued at $2,625,000.
In late 1998, after completion of further market and engineering studies, the
Company determined that a significant amount of additional capital and a
substantial commitment of labor resources would be required to complete research
and development of AMR. Since the Company was making rapid progress with the
Check Cashing ATM and believed that it was faster to market, took less resources
and offered a greater financial potential for the Company, a strategic decision
was made to pursue the development of the Company's Check Cashing ATM on a full
resource basis. Therefore, the Company entered into a transaction, on April 5,
1999, with Telenetics Corporation, whereby Telenetics acquired the advanced
communication technology known as automated meter reading ("AMR") in exchange
for shares of Convertible Preferred Stock of Telenetics with a face value of
$900,000 (See subsequent Events Schedule).
As a result of the sale of AMR, the Company is engaged exclusively in the
development of proprietary software and hardware that is capable of providing
consumers with automated payroll check cashing, ATM and money order services
delivered through a free standing kiosk, similar to an ATM machine (the "Check
Cashing ATM").
The Company has invested, and continues to invest, considerable time and effort
in development of Check Cashing ATMs, assembling a development team, analyzing
the market, planning the business, creating prototype and beta test units, and
locating reliable manufacturers for the Check Cashing ATMs. The Company's
strategy for marketing and sales of the Check Cashing ATMs has been directed at
locating an established large, national distributor of ATM machines. Established
distributors have the infrastructure in place to sell, service and maintain a
large volume of machines and are best equipped to penetrate the market quickly
and efficiently. This strategy allows the Company to concentrate its resources
on doing what it does best, develop reliable, efficient products. The Company
successfully implemented this strategy by consummating a Master Distributor
Agreement with SmartCash ATM, Ltd. a Dallas; Texas based national distributor on
March 30, 1999.
This agreement requires SmartCash ATM to purchase 385 units (a purchase order
for these units totaling $9.2 million was received upon execution of the
agreement) for 1999, 1,200 units for the year 2000 and 2,000 units for the year
2001 in order to maintain their exclusivity. In the event purchase orders are
received in years 2000 and 2001 for these units (based on current prices) these
orders could provide Check Central with revenue in excess of $76,800,000 for
these two years. Thus, although there can be no assurances regarding actual
revenue to be realized, the total contract could produce revenue in excess of
$86,000,000 for Check Central through 2001.
This sales strategy will effect two significant revenue streams for the Company.
The first source of revenue will result from the sales of Check Cashing ATMs.
Initially, the Master Distributor will purchase the Check Cashing ATMs at a
wholesale price that will initially result in gross margins of approximately
50%. The Company expects these margins to improve as Check Central begins to
order machines in larger quantities taking advantage of volume discounts and
economies of scale. The second revenue source will result in the continuity of
"Transaction Fees" (including check cashing, ATM and money order) generated from
each Check Cashing ATM. As of March 31, 1999 the Company had generated
approximately $600 in revenue from the two Check Cashing ATMs placed into the
field in the first quarter as beta test sites. Check Central will share in the
Transaction Fees along with the owners of the Check Cashing ATMs, based on
individually negotiated contracts, and with the Master Distributor. The fee
generation of Check Central will get larger with the placement of additional
Check Cashing ATMs and, as machines remain in operation in the market, more
Transaction Fees will be generated.
Results of Operations
Revenue - The Company reported net revenue of $598 for the first quarter ending
March 31, 1999. This is the first revenue the Company has generated from
operations of the Check Cashing ATM. The revenue is credited to the two beta
units that were placed in the field in late January and early March
respectively. The Company expects higher revenue from these "company owned"
machines in the future since their purpose during the beta phase was testing the
functionality of the machine and not to attempt maximize revenue generation.
11
<PAGE>
Operations - The Company continues to fund its operations for the development
and deployment of Check Cashing ATM. The two beta units and the one
demonstration unit were financed primarily from funds received from equity
private placements.
The Company spent a significant part of the first quarter continuing to build
the infrastructure necessary to support not only the research and development
effort but laying the ground work for the various support groups that will be
required for successful transition from a development stage company to a
complete manufacturing, marketing and service organization. The Company has
successfully blended both employee and consultant based infrastructure that is
comprised of mechanical and design engineers, software engineers, back-end
support personnel, with payroll check cashing experience, and financial support
personnel. This organization will be critical to the successful ramp-up of
production scheduled for late second quarter of 1999.
Check Central has a fully certified set of subcontractors, suppliers and
assemblers to build machines to meet the Company's requirements. To ensure its
ability to meet production schedules and gear for increased output (estimated
100 units monthly by late spring 2000), the Company has engaged in discussion
with major ATM machine manufacturers who have expressed an interest in becoming
turnkey manufacturing partners.
Expenses
General and Administrative expenses for the quarter ended March 31, 1999 were
$1,228,616 compared with $485,109 for 1998. The major reason for the increase in
G&A was due directly to costs related to the build up of the Check Central
division and product development costs. No resources were allocated to the
Airlink Technology. Due to lack of capital, the Company has paid the officers
and certain consultants compensation in the form of stock and as a result the
Company has issued shares of its common stock which is reflected as G&A expense.
Depreciation, interest, property taxes and other expenses increased from $9,968
for March 31, 1998 to $25,991 for the first quarter ending March 31, 1999. This
is attributed to increases in Notes Payable with corresponding annual interest
of 8%. A bad debt was recorded for an uncollectable employee loan made during
prior years. The write down was for the balance owing of $19,250.
Income (Loss) - During the first quarter ending March 31, 1999, the Company had
losses of $2,437,973 compared to losses of $484,457 for the previous year's
quarter ending March 31st. The substantial increase in loss is attributed
primarily to the unrealized loss on the sale of investment GAHI which occurred
subsequent to March 31, 1999. Other factors include an increase in product
development costs for Check Central, mostly engineering and other consultant
fees which were compensated with stock.
Liquidity and Capital Resources
The year ending December 31, 1998 assets totaled $6,337,242 versus $4,971,625
for the first quarter 1999. The difference is the loss on the sale of the GAHI
asset of $1,164,750. The Company's total liabilities decreased slightly for the
first quarter 1999 compared with the year ending December 31, 1998 due to the
fact that the company invested additional funds in inventory and products
related to the development of the Check Cashing ATM. These products were
purchased with vendor terms. Total liabilities were $473,222 for the quarter
ending March 31, 1999 compared with $556,672 for the year ending December 31,
1998 due to the GAHI transaction which eliminated debt obligations.
The Company's strategy has been and will continue to be to maximize the return
on assets for the Company and its shareholders. The Company reevaluates its
assets on an on-going basis to determine the most effective use and benefit to
the Company in relation to the Company's operations needs. Based on this review,
the Company will either sell or leverage the assets for liquidity to support the
Company's capital requirements.
Stockholder's equity was $4,498,403 at March 31, 1999, a decrease of $1,282,167
from December 31, 1998.
The Company has a working capital deficiency of $(294,337) at March 31, 1999 and
a retained deficit of $(9,322,294). The Company's needs for working capital is a
key issue for management and necessary for the Company to meet its goals and
objectives. The Company continues to pursue additional capitalization through
private placement and other activities in order to raise funds for ongoing
operations, including institutional lending, lines of credit, purchase order
financing and the sale of or financing of its assets. Management believes that
institutional lending will be available to the Company once the Company
establishes a track record of production and shipping stability. On May 4, 1999
the Company commenced a private placement of its securities pursuant to
Regulation D Rule 506 of the Securities Act of 1933, as amended. If fully
subscribed, the offering will provide approximately $4,000,000 of equity funding
to the Company, exclusive of proceeds payable to the Company through the
exercise of the warrants that are part of the offering. (See Subsequent Events
Schedule)
12
<PAGE>
Subsequent Events
Subsequent to March 31, 1999, the Company entered into a transaction, on April
5, 1999, with Telenetics Corporation (an OTCBB fully-reporting public company),
whereby Telenetics acquired the advanced communication technology known as
automated meter reading ("AMR") in exchange for shares of Convertible Preferred
Stock of Telenetics with a face value of $900,000. In late 1998, after
completion of further market and engineering studies, the Company determined
that a significant amount of additional capital and a substantial commitment of
labor resources would be required to complete research and development of AMR.
Since the Company was making rapid progress with the Check Cashing ATM and
believed that it was faster to market, took less resources and offered a greater
financial potential for the Company, a strategic decisions was made to pursue
the development of the Company's Check Cashing ATM on a full resource basis.
Subsequent to March 31, 1999, the Company consummated the sale of 290,000
convertible preferred shares of Golden Age Homes, Inc.; an OTCBB non-reporting
public company (the "GAHI Shares")("GAHI") to Chairman of the Board and CEO,
Louis T. Montulli for total consideration of $280,000. This includes cash as
well as an assumption of a current outstanding Notes Payable of $125,000. This
transaction was completed April 23, 1999. The loss on this asset has been
reflected in the financial statements as if it had occurred during the quarter
ended March 31, 1999. The GAHI Shares are convertible in December of 1999 to the
number of common shares (at the then market price) equivalent to $1,450,000.
Prior to entering into this transaction with Mr. Montulli, the Company had
solicited offers from other parties to purchase the GAHI Shares including the
assumption of the note payable of $125,000. Management determined that Mr.
Montulli's offer was the most favorable to the Company. The sale of GAHI Shares
to Mr. Montulli is part of the Company's on-going reevaluation of its assets to
determine the most effective use and benefit to the Company in relation to the
Company's operational needs.
Subsequent to March 31, 1999, the Company commenced a private placement of its
securities pursuant to Regulation D Rule 506 of the Securities Act of 1933, as
amended, on May 4, 1999. If fully subscribed, the offering will provide
approximately $4,000,000 of equity funding to the Company, exclusive of proceeds
payable to the Company through the exercise of the warrants that are part of the
offering. The offering consists of Units priced at $5.00 comprised of a 12%
Debenture convertible into 10 Shares of Greenland Common Stock and 10 Class A
Warrants exercisable at $.50 into 10 Shares of Greenland Common Stock; 10 Class
B Warrants exercisable at $1.00 into 10 Shares of Greenland Common Stock and 10
Class C Warrants exercisable at $1.50 into 10 Shares of Greenland Common Stock.
As of May 22, 1999, the Company had received approximately $39,000 from the
proceeds of the offering, after payment of all expenses.
Part II - OTHER Information
During the first quarter of 1999 the Company received $53,000 in bridge loans
from three individuals, not affiliated with the Company, secured by the assets
of the Company (the "Secured Loan"). The terms of the Secured Loan provide
repayment in one year and interest payable at annual rate of 8%. In addition,
the holders of the Secured Loan purchased Warrants to acquire an aggregate of
706,666 shares of Greenland Corporation Common Stock, with an exercise period of
two years and an exercise price of one half of the Warrants at $.10 and the
balance at $.13. The warrants contain anti-dilution provisions. The Company
intends to repay the Secured Loans as soon as practicable.
During the first quarter, officers and directors of the Company loaned the
Company a total of $214,750 as unsecured bridge loans (the "Affiliate
Loans")(Richard Wray $20,000; Gene Cross $5,000; George Godwin $5,000; Lee
Swanson $25,000; Louis T. Montulli $154,750 and Thomas Beener $5,000). Except
for $125,000 loaned by Louis Montulli which will be converted to a purchase of
restricted shares of Greenland Common Stock at a price of $.15 per share, the
terms of the Affiliate Loans provide for repayment in periods ranging up to one
year and at an annual interest rate of 8%. The Affiliate Loans also provide for
the purchase of an aggregate of 800,000 shares of Greenland Common Stock through
the exercise of Warrants with an exercise period of two years at a price of
$.15. The warrants to be issued in connection with the Affiliate Loans do not
contain anti-dilution provisions. To date the warrants in connection with the
Affiliate Loans have not been issued. The Company expects to issue said warrants
shortly.
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.
13
<PAGE>
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
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
Date: May 24, 1999 By:
Louis T. Montulli
CEO, Chairman of Board
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.
Date: May 24, 1999 By:
Lee R. Swanson
Chief Financial Officer, Director
Date: May 24, 1999 By:
Thomas J. Beener
Secretary, Director
Date: May 24, 1999 By:
Richard Wray
Director, COO
Date: May 24, 1999 By:
Louis T. Montulli
CEO, Chairman of Board
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from Greenland Corporation March 31, 1999
financial statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000852127
<NAME> Greenland Corporation
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
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