U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended AUGUST 31, 1995 Commission File Number 1-13776
---------------- -----------
GREENMAN TECHNOLOGIES, INC.
---------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 71-0724248
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7 Kimball Lane, Building A, Lynnfield, MA 01940
- ----------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (617) 224-2411
--------------
101 Industrial Park Drive, Malvern, AR 72104
--------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the issuer (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.
Yes X No
--- ---
Number of shares outstanding as of October 14, 1995
Common Stock, $.01 par value, 4,937,333 shares
GREENMAN TECHNOLOGIES, INC.
FORM 10-QSB
QUARTERLY REPORT
AUGUST 31, 1995
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
PART I - FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements (*)
Unaudited Condensed Balance Sheets as of May 31, 1995 and August 31, 1995 3
Unaudited Condensed Statements of Operations for the three months ended August 31, 1994 and 1995 4
Unaudited Condensed Statements of Cash Flows for the three months ended August 31, 1994 and 1995 5
Notes to Unaudited Condensed Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
* The financial information at May 31, 1995 has been taken from audited
financial statements at that date and should be read in conjunction therewith.
All other financial statements are unaudited.
</TABLE>
2
GREENMAN TECHNOLOGIES, INC.
UNAUDITED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
MAY 31, AUGUST 31,
1995 1995
ASSETS
<S> <C> <C>
Current assets:
Cash......................................................................................... $ 109,778 $ 89,197
Accounts receivable, trade, less allowance for doubtful accounts of $4,834 at May 31, 1995
and $6,486 at August 31, 1995............................................................... 385,504 251,038
Inventory.................................................................................... 131,554 99,274
Notes receivable............................................................................. 175,000 232,094
Other current assets......................................................................... 68,882 63,352
---------- -----------
Total current assets..................................................................... 870,718 734,955
---------- -----------
Property and equipment, net 1,088,078 1,053,514
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Other assets:
Deferred offering costs (Note 3)............................................................. 415,028 539,973
Deposits..................................................................................... 2,410 13,800
---------- -----------
417,438 553,773
---------- -----------
$2,376,234 $ 2,342,242
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable................................................................................ $ 233,000 $ 233,000
Notes payable, investors..................................................................... 840,000 840,000
Notes payable, bank, current portion......................................................... 4,995 5,495
Accounts payable............................................................................. 583,449 427,220
Accrued interest and late charges............................................................ 611,842 683,425
Accrued expenses, other...................................................................... 483,189 234,453
Obligations under capital leases, current.................................................... 193,576 197,336
---------- ----------
Total current liabilities................................................................ 2,950,051 2,620,929
Convertible notes payable, investors............................................................. 35,000 35,000
Notes payable, bank, non-current portion ........................................................ 5,522 3,811
Obligations under capital leases................................................................. 717,451 652,074
---------- ----------
Total liabilities................................................................................ 3,708,024 3,311,814
---------- ----------
Stockholders' equity (deficit) (Notes 2 and 3):
Preferred stock, $1.00 par value, 1,000,000 shares authorized:
Class A convertible, 500,000 shares authorized, issued and outstanding...................... 500,000 500,000
Class B, convertible 300,000 shares authorized, issued and outstanding....................... -- 600,000
Common stock, $.01 par value, 10,000,000 shares authorized; 2,343,333 shares issued
and outstanding.......................................................................... 23,433 23,433
Additional paid-in capital................................................................... 264,910 264,910
Accumulated deficit.......................................................................... (2,120,133) (2,357,915)
----------- ------------
Total stockholders' equity (deficit)..................................................... (1,331,790) (969,572)
----------- ------------
$ 2,376,234 $ 2,342,242
=========== ============
See accompanying notes to unaudited condensed financial statements.
</TABLE>
3
GREENMAN TECHNOLOGIES, INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31,
1994 1995
<S> <C> <C>
Net sales .................................................... $ 578,652 $ 660,211
Cost of sales................................................. 538,117 560,449
----------- -----------
Gross profit ................................................. 40,535 99,762
----------- -----------
Operating expenses:
Research and development ................................. 66,666 --
Selling, general and administrative ...................... 127,322 226,287
----------- -----------
Total operating expenses.............................. 193,988 226,287
----------- -----------
Operating loss................................................ (153,453) (126,525)
----------- -----------
Other income (expense):
Interest expense.......................................... (48,743) (118,908)
Other, net................................................ 2,839 7,651
----------- -----------
Other income (expense), net........................... (45,904) (111,257)
----------- -----------
Net loss...................................................... $ (199,357) $ (237,782)
=========== ===========
Net loss per share (Note 1)................................... $ (.05) $ (. 06)
=========== ===========
Shares used in calculation of net loss per share.............. 4,097,333 4,097,333
=========== ===========
See accompanying notes to the unaudited condensed financial statements.
</TABLE>
4
GREENMAN TECHNOLOGIES, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
THREE MONTHS
ENDED AUGUST 31,
-----------------
1994 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (199,357) $ (237,782)
Adjustments to reconcile net loss to net cash used for operating
activities:
Depreciation and amortization......................... 34,020 36,952
Issuance of common stock for services................. 12,545 --
Decrease (increase) in assets:
Accounts receivable................................ 47,297 134,466
Inventory.......................................... 34,658 32,280
Other current assets............................... (2,086) 5,530
(Decrease) increase in liabilities:
Accounts payable................................... (83,711) (156,229)
Accrued expenses................................... 73,259 (177,153)
----------- -----------
Net cash used for operating activities......... (83,375) (361,936)
----------- -----------
Cash flows from investing activities:
Increase in notes receivable.............................. -- (57,094)
Purchase of property and equipment........................ (18,454) (2,388)
Increase in deposits...................................... (5,150) (11,390)
----------- -----------
Net cash used for investing activities......... (23,604) (70,872)
----------- -----------
Cash flows from financing activities:
Deferred offering costs................................... (20,855) (124,945)
Proceeds from notes payable............................... 15,054 --
Repayment of notes payable................................ (994) (1,211)
Principal payments on obligations under capital leases.... (777) (61,617)
Net proceeds on sale of preferred stock................... -- 600,000
Payments received on stock subscriptions ................. 75,000 --
----------- -----------
Net cash provided by financing activities............... 67,428 412,227
----------- -----------
Net decrease in cash.......................................... (39,551) (20,581)
Cash at beginning of period................................... 67,687 109,778
----------- -----------
Cash at end of period......................................... $ 28,136 $ 89,197
=========== ===========
Supplemental cash flow information:
Interest paid............................................. $ 778 $ 12,000
See accompanying notes to the unaudited condensed financial statements.
</TABLE>
5
GREENMAN TECHNOLOGIES, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
AUGUST 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
GreenMan Technologies, Inc. ( the "Company") develops, manufactures and
markets custom molded plastic parts. The Company is also developing low-cost
sources of crumb rubber recovered from discarded automobile tires and the
consumer products to be manufactured from these recycled materials.
Basis of Presentation
The financial statements are unaudited and should be read in conjunction
with the financial statements and notes thereto for the fiscal year ended May
31, 1995 included in the Company's Form SB-2 Registration Statement dated
September 29, 1995. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles has been condensed or omitted pursuant to the Securities
and Exchange Commission ("SEC") rules and regulations, although the Company
believes the disclosures which have been made are adequate to make the
information presented not misleading.
The results of operations for the periods reported are not necessarily
indicative of those that may be expected for a full year. In the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
which are necessary for a fair statement of operating results for the interim
periods presented have been made.
Deferred Offering Costs
Deferred offering costs represent costs incurred in connection with raising
capital. Upon completion of the Company's initial public offering ("IPO"), the
amount of proceeds credited to additional paid-in capital is reduced by the
deferred offering costs.
Net Loss Per Share
Net loss per share is based on the weighted average number of common
shares outstanding during the period.
A staff accounting bulletin issued by the Securities and Exchange
Commission requires that common stock, options, warrants and other potentially
dilutive instruments issued within one year prior to the initial filing of a
registration statement for an initial public offering be treated as outstanding
for all periods prior to the effective date of the registration for purposes of
the net loss per share computation.
2. CAPITAL STOCK
Preferred Stock Offering
In August 1995, the Company concluded a private placement of 300,000
shares of non-voting Class B convertible preferred stock at $2.00 per share.
Each share is convertible into one share of common stock and one redeemable
common stock purchase warrant and has a liquidation preference of $2.00 per
share. The terms of the warrants are the same as the IPO warrants.
6
GREENMAN TECHNOLOGIES, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
AUGUST 31, 1995
3. SUBSEQUENT EVENTS
Initial Public Offering
In October 1995, the Company sold in its IPO, 1,265,000 shares of common
stock at $5.00 per share and 1,265,000 redeemable Class A common stock purchase
warrants at $.10 per warrant and received net proceeds of approximately
$5,260,000 after underwriting commissions and other issuance costs paid at the
closing.
Acquisition of Subsidiary
In October 1995, the Company acquired all of the outstanding common
stock of DuraWear Corporation ("DuraWear"). DuraWear manufactures, installs and
markets a diverse range of high quality ceramic, polymer composite, and alloy
steel materials engineered to resist severely abrasive and corrosive conditions
typically encountered in bulk material handling systems. The Company paid
$400,000 in cash from the proceeds of the IPO and issued 75,000 shares of the
Company's common stock, valued in the aggregate at $375,000 or $5.00 per share.
In connection with the acquisition, the Company also entered into a
three-year non-competition agreement with the former sole stockholder of
DuraWear, under which the Company issued 70,000 shares of the Company's common
stock valued in the aggregate at $350,000 or $5.00 per share.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following information should be read in conjunction with the
consolidated financial statements and the notes thereto included in Item 1 of
the Quarterly Report, and the financial statements and notes thereto and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the Company's Form SB-2 Registeration Statement declared
effective by the Securities and Exchange Commission on September 29, 1995.
OVERVIEW
GreenMan Technologies, Inc. (the "Company") was incorporated in 1992 to
primarily develop, manufacture, assemble and sell environmentally friendly
plastic parts and products. The Company's Molding operation provides injection
molding manufacturing services in the production of plastic and thermoplastic
rubber parts for such products as stereo components and speakers, water filters
and pumps and computer accessories. While products manufactured by the Molding
operation are recyclable, most of the raw materials used to date have consisted
primarily of virgin plastic and thermo-plastic materials.
The Company's Recycling operation (the "Recycling operation") was
established to develop low-cost sources of rubber and plastic based products for
which there is a significant market demand. The Company has targeted several
markets with products incorporating recovered crumb rubber including the
building industry with anti-fatigue floor mats, roofing products and timbers,
and the lawn and garden market with landscape timbers and fencing. Through an
agreement with Crumb Rubber Technologies, Inc., ("CRT"), the Company has
acquired the capability to produce high-quality, lower cost crumb rubber that
can be combined with recycled plastic waste and virgin plastic to produce the
Company's proprietary thermo-plastic rubber which will be used in the production
of the Company's proposed consumer products, sold as a merchant chemical to
other users of crumb rubber or sold in its raw state.
In October 1995, GreenMan Technologies, Inc. (the "Company") sold in its
initial public offering ("IPO"), 1,265,000 shares of common stock at $5.00 per
share and 1,265,000 redeemable Class A common stock purchase warrants ("the
Warrants") at $.10 per warrant and received net proceeds of approximately
$5,260,000 after underwriting commissions and other issuance costs paid at the
closing. Each Warrant expires on September 28, 2000 and entitles the holder,
commencing on September 29, 1996, or sooner with the underwriter's prior written
consent, to purchase one share of common stock at a price of $5.00 per share,
subject to adjustment. The Company also issued to the underwriter of its IPO,
warrants ("Underwriter Warrants") to purchase 110,000 shares of common stock and
110,000 Warrants, each Underwriter Warrant is exercisable at a price of $8.25
per share of common stock and $.165 per Warrant for a period of four years,
commencing September 29, 1996. The Warrants issuable upon exercise of the
Underwriter Warrants have an exercise price of $8.25 per share of common stock.
On October 10, 1995, the Company acquired all of the outstanding common
stock of DuraWear Corporation. DuraWear manufactures, installs and markets a
diverse range of high quality ceramic, polymer composite, and alloy steel
materials engineered to resist severely abrasive and corrosive conditions
typically encountered in bulk handling systems in such industries as paper and
pulp, mining, coal handling and grain storage and transportation.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED AUGUST 31, 1995 COMPARED TO THE THREE MONTHS ENDED
AUGUST 31, 1994
Net sales for the three months ended August 31,1995 were $660,211 as
compared to $578,652 for the three months ended August 31, 1994. The increase of
$81,559 or 14% is due to increased sales resulting from additional contract
molding and assembly business.
Gross profit for the three months ended August 31,1995 was $99,762 or
15% of net sales as compared to $40,535 or 7% of net sales for the three months
ended August 31, 1994. This improvement in gross profit was attributable to
higher pricing for both new and existing contracts and lower per unit
manufacturing costs associated with increasing volume as operations expanded
from two shifts to three.
The Company expended $66,666 during the three months ended August 31,
1994 on research and development related primarily to the Company's product
development agreement with an unaffiliated third party. The Company did not
expend any funds during the three months ended August 31,1995 as the preliminary
research under this agreement was concluded in 1994 and the Company decided not
to proceed on the project.
Selling, general and administrative expenses were $226,287 for the three
months ended August 31,1995, or 34% of sales as compared to $127,322, or 22% of
sales, for the same 1994 period. The increase of $98,965 was primarily
attributable to professional and travel expenses associated with the Company's
initial public offering, the acquisition of DuraWear and the building of the
infrastructure necessary to operate as a public company.
As a result of the foregoing, the operating loss for the three months
ended August 31,1995 decreased by $26,968 or 18%, to $126,525 or 19% of sales as
compared to an operating loss of $153,453, or 27% of sales for the comparable
1994 period.
Interest expense for the three months ended August 31, 1995 increased
$70,165 or 144% as compared to the three months ended August 31, 1994. This
increase was primarily due to an increase in the interest expense on notes
payable to Budra Management Corp., a principal stockholder of the Company, as a
result of the modification of the terms of the note and additional interest
associated with the Company's $300,000 second round of bridge financing which
was completed in October and November 1994.
The Company experienced a net loss of $237,782, or $.06 per share for
the quarter ended August 31, 1995 as compared to a net loss of $199,357, or $.05
per share for the quarter ended August 31, 1994.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has satisfied its capital requirements
through the sale of common and preferred stock to investors, loans from
unaffiliated lenders, the acquisition of machinery and equipment through capital
leases and notes payable, and the issuance of common stock in lieu of cash for
services rendered.
In August 1995, the Company concluded a private placement of 300,000
shares of non-voting Class B convertible preferred stock at $2.00 per share.
Each share is convertible into one share of common stock and one redeemable
common stock purchase warrant and has a liquidation preference of $2.00 per
share.
At August 31, 1995, the Company had cash of $89,197, a working capital
deficit of $1,885,974, net capital deficiency of $969,572 and accumulated losses
of $2,357,915.
On October 10, 1995, the Company raised approximately $5,260,000 from
it's IPO, after underwriting commissions and other issuance costs paid at the
closing. The proceeds of the IPO will be utilized to repay outstanding bridge
loans, and past due accounts payable, to acquire DuraWear, to construct a crumb
rubber recovery facility, to expand the injection molding operations, to retain
the underwriter as a financial consultant for a period of three years and for
general working capital needs.
Based on the Company's operating plans, management believes that the
available working capital together with revenues from operations and the
purchase of equipment through lease financing arrangements, will be sufficient
to meet the Company's cash requirements for at least 12 months following the
IPO. After 12 months, management believes the Company will require additional
financing to fund growth. No assurances can be given that such financing will be
available to the Company in the future on favorable terms, if at all. If the
Company is unable to obtain additional financing, the Company's ability to
expand to new locations and to conduct additional marketing and other operating
activities could be materially and adversely affected.
10
PART II - OTHER INFORMATION
AUGUST 31, 1995
Item 1. Legal Proceedings
In October 1994, GMT was sued in Robert H. Jones v. GreenMan
Technologies, Inc. in the 15th Judicial District Court in
Lafayette, Louisiana, by a former consultant who seeks, among
other things, unpaid consulting fees, as well as licensing
fees/royalties relating to the Company's alleged use of a
cryogenic process for recovering crumb rubber that Mr. Jones
alleges he developed. The Company has retained Louisiana counsel
and is defending this lawsuit vigorously. The Company believes
that the outcome will not have a material adverse effect on its
business.
Item 2. Changes in Securities
The Company filed on August 10, 1995 a Certificate of Designation
creating a non-voting Class B convertible preferred stock which
is convertible into one share of common stock and one redeemable
common stock purchase warrant and has a liquidation preference of
$2.00 per share.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 3 - Certificate of Stock Designation of
GreenMan Technologies, Inc. dated August
10, 1995, (filed as Exhibit 3.1.2 to the
Company's Registration Statement on Form
SB-2 (File No. 33-86138) and incorporated
herein by reference).
(b) Exhibit 11 - Statement regarding net loss per share.
(b) There were no reports on Form 8-K filed during the three months
ended August 31, 1995
11
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934 , the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
By: GreenMan Technologies, Inc.
/s/ Maurice E. Needham
----------------------
Maurice E. Needham
Chief Executive Officer and Chairman of
the Board
SIGNATURE TITLE(S) DATE
--------- -------- ----
Chief Executive Officer and May 13, 1996
/s/ Maurice E. Needham Chairman of the Board
- ---------------------- (principal executive officer)
Maurice E. Needham
Chief Financial Officer May 13, 1996
/s/ Joseph E. Levangie (principal financial officer and
- ---------------------- principal accounting officer)
Joseph E. Levangie
12
Exhibit 11
GREENMAN TECHNOLOGIES, INC.
STATEMENT REGARDING NET LOSS PER SHARE
AUGUST 31, 1995
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
AUGUST 31, 1994 AUGUST 31, 1995
<S> <C> <C>
Net loss...................................................... $ (199,357) $ (237,782)
=========== ===========
Shares used in calculation of loss per share:
Common shares outstanding (1)............................. 2,588,500 2,343,333
Common equivalent shares (2).............................. 1,754,000 1,754,000
----------- ---------
4,097,333 4,097,333
=========== =========
Net loss per share............................................ $(.05) $(.06)
====== ======
(1) Includes all common shares outstanding prior to the initial public offering
in accordance with the Staff Accounting Bulletin.
(2) Includes common equivalent shares outstanding as follows: (i) 500,000 shares
of Class A convertible preferred stock convertible into 500,000 shares of
common stock; (ii) 259,000 shares of common stock issued pursuant to
convertible debt at the closing of the initial public offering; (iii)
695,000 shares issuable pursuant to outstanding stock options and warrants;
and (iv) 300,000 shares of Class B convertible preferred stock convertible
into 300,000 shares of common stock. All of these shares were issued at or
have exercise prices per share which are less than the initial public
offering price per share. The treasury stock method was not used in
calculating common equivalent shares.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-END> AUG-31-1996
<CASH> 89,197
<SECURITIES> 0
<RECEIVABLES> 257,524
<ALLOWANCES> 6,486
<INVENTORY> 99,274
<CURRENT-ASSETS> 734,955
<PP&E> 1,386,812
<DEPRECIATION> 333,298
<TOTAL-ASSETS> 2,342,242
<CURRENT-LIABILITIES> 2,620,929
<BONDS> 690,885
0
1,100,000
<COMMON> 23,433
<OTHER-SE> 264,910
<TOTAL-LIABILITY-AND-EQUITY> 2,342,242
<SALES> 660,211
<TOTAL-REVENUES> 660,211
<CGS> 560,449
<TOTAL-COSTS> 226,287
<OTHER-EXPENSES> 111,257
<LOSS-PROVISION> 6,486
<INTEREST-EXPENSE> 118,908
<INCOME-PRETAX> (237,782)
<INCOME-TAX> 0
<INCOME-CONTINUING> (237,782)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (237,782)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
