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 NOVEMBER 30, 1996 Commission File Number 1-13776
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GREENMAN TECHNOLOGIES, INC.
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(Exact name of small business issuer as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation or organization)
71-0724248
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(I.R.S. Employer Identification No.)
7 KIMBALL LANE, BUILDING A, LYNNFIELD, MA 01940
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (617) 224-2411
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(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 January 13, 1997
Common Stock, $.01 par value, 5,623,483 shares
GREENMAN TECHNOLOGIES, INC.
FORM 10-QSB
QUARTERLY REPORT
NOVEMBER 30, 1996
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TABLE OF CONTENTS
PAGE
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (*)
<S> <C>
Unaudited Condensed Consolidated Balance Sheets as of May 31, 1996 and November 30, 1996 3
Unaudited Condensed Consolidated Statements of Loss for the three and six months ended November 30, 1995 and 1996 4
Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended November 30, 1995 and 1996 5-6
Notes to Unaudited Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
* The financial information at May 31, 1996 has been taken from audited financial statements at that date and should be
read in conjunction therewith. All other financial statements are unaudited.
</TABLE>
GREENMAN TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
May 31, November 30,
1996 1996
ASSETS -------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents..................................................... $ 153,172 $ 123,639
Accounts receivable, trade, less allowance for doubtful accounts
of $31,751 and $23,772 as of May 31, 1996 and November 30,1996.............. 605,255 393,549
Inventory .................................................................... 525,279 323,088
Loan receivable, related party................................................ 500,000 --
Other current assets.......................................................... 242,607 77,518
--------- ---------
Total current assets 2,026,313 917,794
--------- ---------
Property and equipment,at cost:
Land....................................................................... 223,785 223,785
Buildings.................................................................. 910,400 910,400
Machinery and equipment.................................................... 2,026,131 2,241,667
Furniture and fixtures..................................................... 88,276 89,792
Motor vehicles............................................................. 33,932 64,822
Leasehold improvements..................................................... 895,958 927,609
--------- ---------
4,178,482 4,458,075
Less accumulated depreciation and amortization........................... (507,991) (689,822)
--------- ---------
3,670,491 3,768,253
--------- ---------
Other assets:
Equipment deposits............................................................ 1,883,400 1,903,400
Goodwill, net................................................................. 465,246 440,322
Non-competition agreement, net................................................ 272,222 213,889
Notes receivable (Note 3)..................................................... 150,000 250,000
Licensing Fee................................................................. 100,000 100,000
Other......................................................................... 71,311 67,692
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2,942,179 2,975,303
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$ 8,638,983 $7,661,350
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, related parties (Note 4)....................................... $ 1,378,253 $ 2,047,014
Notes payable, bank, current portion ......................................... 140,289 233,397
Accounts payable.............................................................. 718,770 604,408
Accrued expenses, other....................................................... 680,318 904,134
Obligations under capital leases, current..................................... 311,679 342,991
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Total current liabilities................................................... 3,229,309 4,131,944
--------- ---------
Notes payable, bank, non-current portion........................................ 475,008 341,816
Notes payable, related parties, non-current portion............................. 578,897 52,313
Obligations under capital leases................................................ 819,943 755,287
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Total liabilities........................................................... 5,103,157 5,281,360
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Stockholders' equity (Note 5):
Preferred stock, $1.00 par value, 1,000,000 shares authorized, no shares issued
and outstanding............................................................ -- --
Common stock, $.01 par value, 20,000,000 shares authorized; 5,076,083 shares
issued and outstanding at May 31, 1996 and 5,623,483 shares issued and
outstanding at November 30,1996............................................ 50,761 56,235
Additional paid-in capital.................................................... 7,183,519 8,179,550
Accumulated deficit........................................................... (3,698,454) ( 5,855,795)
---------- - ---------
Total stockholders' equity.............................................. 3,535,826 2,379,990
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$ 8,638,983 $ 7,661,350
============ ============
See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>
GREENMAN TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
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NOVEMBER 30, NOVEMBER 30,
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1995 1996 1995 1996
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<S> <C> <C> <C> <C>
Net sales..................................................... $ 892,314 $ 796,141 $ 1,552,525 $ 1,683,007
Cost of sales................................................. 637,960 728,508 1,198,409 1,454,547
----------- ---------- --------- ---------
Gross profit ................................................. 254,354 67,633 354,116 228,460
----------- ---------- --------- ---------
Operating expenses:
Research and development ................................ 10,550 50,321 20,314 117,406
Selling, general and administrative ...................... 480,366 807,551 696,889 2,037,697
----------- ---------- --------- ---------
Total operating expenses.............................. 490,916 857,872 717,203 2,155,103
----------- ---------- --------- ---------
Operating loss................................................ (236,562) (790,239) (363,087) (1,926,643)
----------- ---------- --------- ---------
Other income (expense):
Interest expense.......................................... (21,519) (84,307) (140,427) (179,605)
Other, net................................................ 13,489 (17,815) 21,140 (51,093)
----------- ---------- --------- ---------
Other income (expense), net........................... (8,030) (102,122) (119,287) (230,698)
----------- ---------- --------- ---------
Net loss...................................................... $ (244,592) $ (892,361) $ (482,374) $(2,157,341)
=========== =========== =========== ============
Net loss per share (Note 2)................................... $ (.05) $ (.16) $ (.11) $ (.41)
=========== =========== =========== =============
Shares used in calculation of net loss per share.............. 4,565,905 5,471,977 4,330,338 5,273,250
=========== =========== =========== =============
See accompanying notes to unaudited condensed consolidated financial statements.
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GREENMAN TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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<CAPTION>
SIX MONTHS ENDED
NOVEMBER 30,
--------------------------------
1995 1996
Cash flows from operating activities: ------------- --------------
<S> <C> <C>
Net loss.................................................. $ (482,374) $ (2,157,341)
Adjustments to reconcile net loss to net cash used for
operating activities:
Depreciation and amortization......................... 112,458 265,088
Common stock warrants and options issued for services
rendered ........................................... -- 285,203
Decrease (increase) in assets:
Accounts receivable................................ 886 211,706
Inventory.......................................... (47,011) 202,191
Other current assets............................... (38,348) 165,089
Deferred offering costs............................ (329,109) --
(Decrease) increase in liabilities:
Accounts payable................................... (86,218) (114,362)
Accrued expenses................................... (555,845) 223,816
--------------- ------------
Net cash used for operating activities......... (1,425,561) (918,610)
--------------- ------------
Cash flows from investing activities:
Increase in notes receivable.............................. (57,094) (100,000)
Repayment of loan receivable,related party................ -- 500,000
Purchase of property and equipment........................ (53,196) (155,093)
Equipment deposits........................................ (700,000) (20,000)
Acquisition of DuraWear, net of cash acquired............. (370,027) --
(Increase) decrease in other assets....................... (4,608) 3,619
--------------- ------------
Net cash used for investing activities......... (1,184,925) 228,526
--------------- ------------
Cash flows from financing activities:
Proceeds from notes payable,bank.......................... 33,932 46,550
Repayment of notes payable,bank........................... (1,086,905) (86,634)
Proceeds from notes payable, related parties.............. -- 650,000
Repayment of notes payable, related parties............... -- (507,823)
Principal payments on obligations under capital leases.... (109,793) (157,844)
Net proceeds on sale of preferred stock................... 600,000 --
Net proceeds from initial public offering................. 5,389,360 --
Net proceeds on exercise of common stock options.......... 7,250 337
Net proceeds on sale of common stock...................... -- 715,965
--------------- ------------
Net cash provided by financing activities............... 4,833,844 660,551
--------------- ------------
Net increase (decrease) in cash............................... 2,223,358 (29,533)
Cash and cash equivalents at beginning of period.............. 109,778 153,172
--------------- ------------
Cash and cash equivalents at end of period.................... $ 2,333,136 $ 123,639
============ ==========
Supplemental cash flow information:
Machinery and equipment acquired under capital leases..... $ -- $ 124,500
Common stock issued on conversion of accrued interest..... 500,000 --
Common stock issued on conversion of notes payable........ 35,000 --
Common stock issued for non-competition agreement......... 350,000 --
Common stock issued upon conversion of preferred stock.... 1,100,000 --
Interest paid............................................. 200,158 66,058
See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>
GREENMAN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(CONCLUDED)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
On October 10, 1995, Company purchased all of the capital stock of
DuraWear Corporation as follows:
Fair value of assets acquired $ 1,704,603
Fair value of liabilities assumed 1,428,081
------------
Fair value of net assets acquired 276,522
Common stock issued (375,000)
Cash paid (400,000)
------------
Excess of cost over fair value of net assets $ 498,478
============
See accompanying notes to consolidated financial statements.
GREENMAN TECHNOLOGIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996
1. BASIS OF PRESENTATION
The consolidated financial statements include the results of the Company
and its wholly-owned subsidiary, DuraWear Corporation which was acquired on
October 10, 1995. All significant intercompany accounts and transactions are
eliminated in consolidation.
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, 1996 included in the Company's Form 10-KSB. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have 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.
2. 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.
3. NOTE RECEIVABLE
In September 1996, the Company loaned $100,000 to an unaffiliated
company in the form of a six month secured loan, bearing interest at prime
(8.25% at November 30, 1996) with principal and interest due in March 1997. The
note is secured by an interest in manufacturing equipment utilized by the
unaffiliated company.
4. NOTES PAYABLE, RELATED PARTIES
During the period of September 1996 to November 1996 the Company
borrowed $450,000 in aggregate from two officers of the Company. These unsecured
notes payable bear interest at prime plus 1.5% (9.75% at November 30, 1996) per
annum with principal and interest due on the earlier of 120 days after the date
of issuance or the tenth business day following the consummation of a minimum
$3,000,000 of additional financing by the Company.
5. COMMON STOCK TRANSACTIONS
On September 26, 1996, the Company sold 545,000 shares of common stock
to three foreign investors at $1.51 per share. Net proceeds were $715,965 after
deducting commissions and expenses of $106,985.
6. COMMON STOCK OPTIONS AND WARRANTS
The Company accounts for the fair value of its common stock options and
warrants in accordance with FASB Statement No. 123, "Accounting for Stock-Based
Compensation".
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following information should be read in conjunction with the
unaudited condensed consolidated financial statements and the notes thereto
included in Item 1 of the Quarterly Report, and the audited consolidated
financial statements and notes thereto and Management's Discussion and Analysis
of Financial Condition and Results of Operations contained in the Company's Form
10-KSB filed for the fiscal year ended May 31, 1996.
OVERVIEW
GreenMan Technologies, Inc. (the "Company" or "GreenMan") was
incorporated under the laws of the State of Arkansas on September 16, 1992 and
reincorporated under the laws of the State of Delaware on June 27, 1995. The
Company was formed primarily to develop, manufacture and sell "environmentally
friendly" plastic and thermoplastic rubber parts and products that are
manufactured using recycled materials and/or are themselves partially or wholly
recyclable.
The Company's Molding operation (the "Molding operation"), located in
Malvern, Arkansas, provides injection molding manufacturing services to
customers' specifications in the production of plastic and thermoplastic rubber
parts for such products as stereo components and speakers, water filters and
pumps, plumbing components and automotive accessories. The facility also
conducts research and development on the Company's GreenMan Environmental
Materials ("GEM") Stock and tests the use of these materials in the manufacture
of a variety of possible products.
The Company's Molding operation is scheduled to commence the manufacture
of the Company's first consumer product, a GEM Stock trash container, in the
third quarter of fiscal 1997. Future proposed products, to be manufactured
utilizing injection molding, will also be produced at the Molding operation,
which management expects to result in a gradual transition from contract/custom
molding (manufacturing products for third parties) to captive molding
(manufacturing products under the GreenMan name) activities.
The Company's Recycling operation (the "Recycling operation"), located
in Jackson, Georgia, was established to develop low-cost sources of rubber and
plastic waste (made from recycled plastics and crumb rubber from tires) for use
in the production of the Company's GEM Stock and to develop markets for
end-products to be made using the GEM Stock.
The Company has targeted several markets with products incorporating
significant amounts of recovered crumb rubber and plastic waste, including the
automotive industry with automobile tires; the building industry with
anti-fatigue floor mats, roofing products and timbers; the lawn and garden
market with landscape timbers and fencing; the consumer products market with
trash containers, recycling totes and storage containers; and the transportation
industry with nose cones, barriers, railroad ties and railway crossing mats.
Through an agreement with Crumb Rubber Technologies, Inc., ("CRT"), the Company
gains the capability to produce crumb rubber that can be combined with recycled
plastic waste and virgin plastic to produce the Company's GEM Stock which will
be used in the production of the Company's proposed consumer and industrial
products, sold in its raw state or as a merchant chemical to other users of
crumb rubber or sold in its raw state. Through an agreement with BFI Tire
Recyclers of Georgia, Inc., a wholly owned subsidiary of Browning-Ferris
Industries ("BFI"), the Company has secured a multi-year supply of waste tires
to feed the Company's Jackson, Georgia crumb rubber processing operation.
In October 1995, the Company completed its initial public offering and
received net proceeds of approximately $5,390,000 after underwriting commissions
and other issuance costs paid at the closing.
On October 10, 1995, the Company acquired all of the outstanding common
stock of DuraWear Corporation ("DuraWear"). DuraWear which is located in
Birmingham, Alabama, 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 in such industries as paper and pulp, mining, coal
handling and grain storage and transportation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED NOVEMBER 30, 1996 COMPARED TO THE THREE MONTHS ENDED
NOVEMBER 30, 1995
Net sales for the three months ended November 30,1996 were $796,141 as
compared to $892,314 for the three months ended November 30, 1995. The decrease
of $96,173 or 11% is primarily due to a 66% reduction in contract molding and
assembly business. This reduction is attributable to customers utilizing
existing inventories of products during the quarter and the delay in the receipt
of new molds from new and existing customers. This decrease was offset by the
inclusion of DuraWear sales of $557,858 which represents a $325,358 increase
over the corresponding 1995 quarter as the acquisition of DuraWear occurred on
October 10, 1995. The effort to secure additional custom molding business from
new customers is ongoing and will continue until the Company concludes the
transition from custom to captive molding. The Company has taken steps to reduce
operating expenses in its molding operations during this transition period to
compensate for the reduction in contract molding business. The Company
anticipates the commencement of production of a GEM Stock trash container during
the second half of the fiscal year and continues to identify and evaluate
additional captive molding opportunities.
Gross profit for the three months ended November 30, 1996 was $67,633 or
8.5% of net sales as compared to $254,354 or 29% of net sales for the three
months ended November 30, 1995. This decrease is largely attributable to the
reduction in contract molding business as the Company transitions to a series of
Company - labeled "green" products, using its own design, molds and sales
distribution. Also having a negative impact on gross profit is the Company's
decision to upgrade its Jackson, Georgia crumb rubber production facility to
produce higher-grade product. As a result, the Company will redeploy its current
equipment in a yet-to-be announced joint venture. During this refacilitation,
the Company is required to sell lower value-added TDF ("Tire Derived Fuel") as a
way to fulfill its BFI obligation. The Company is obligated to "take or pay for"
605 tons of TDF chips starting in August 1996 from BFI pursuant to a December
1995 agreement. BFI has acknowledged the delay in production and has agreed to
reduce the Company's obligation by fifty percent for six months.
Research and development expenditures were $50,321 during the three
months ended November 30, 1996 as compared to $10,550 for the same 1995 period.
The significant increase is attributable to the Company's ongoing efforts to
identify new proprietary products and expand the applications of existing
product lines.
Selling, general and administrative expenses were $807,551 for the three
months ended November 30, 1996 compared to $480,366 representing a 68% or
$327,185 increase from the same 1995 period. The increase was partially
attributable to the inclusion of an entire quarter of DuraWear's operating
expenses which included $29,167 relating to amortization of the three-year
non-competition agreement and $12,462 relating to goodwill amortization. The
results for the quarter ended November 30, 1996 also reflect $131,649 of costs
associated with the Company's recycling operation which has not yet begun
generating significant revenue and is operating under limited conditions as both
equipment and processes continue to be evaluated and refined in order to
maximize the production capabilities of that facility. In addition, the
Company's expenses increased due to increased corporate development and
marketing activities and increased expenses related to the Company's becoming a
public company in October 1995.
As a result of the foregoing, the operating loss for the three months
ended November 30,1996 increased by $553,677 to $790,239 as compared to an
operating loss of $236,562 for the comparable 1995 period. Interest expense
increased by $62,788 to $84,307 for the three months ended November 30, 1996 due
to increased borrowings related to equipment and working capital financing.
The Company experienced a net loss of $892,361, or $.16 per share for
the three months ended November 30, 1996 as compared to a net loss of $244,592,
or $.05 per share for the three months ended November 30, 1995.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1996 COMPARED TO THE SIX MONTHS ENDED NOVEMBER
30, 1995
Net sales for the six months ended November 30, 1996 were $1,683,007 as
compared to $1,552,525 for the six months ended November 30, 1995. The increase
of $130,482 or 8% is due to the inclusion of DuraWear sales of $1,026,263 which
offsets a 50% decrease in contract molding and assembly business. The reduction
in contract molding and assembly business is attributable to customers utilizing
existing inventories of products and the delay in the receipt of new molds from
new and existing customers. The effort to secure additional custom molding
business from new customers is ongoing and will continue until the Company
concludes the transition from custom to captive molding. The Company has taken
steps to reduce operating expenses in its molding operations to compensate for
the reduction in contract molding business.
Gross profit for the six months ended November 30, 1996 was $228,460 or
14% of net sales as compared to $354,116 or 23% of net sales for the six months
ended November 30, 1995. This decrease is largely attributable to the reduction
in contract molding business as the Company transitions to a series of Company -
labeled "green" products, using its own design, molds and sales distribution.
Also having a negative impact on gross profit is the Company's decision to
upgrade its Jackson, Georgia crumb rubber production facility to produce
higher-grade product. As a result, the Company will redeploy its current
equipment in a yet-to-be announced joint venture. During this refacilitation,
the Company is required to sell lower value-added TDF ("Tire Derived Fuel") as a
way to fulfill its BFI obligation. The Company is obligated to "take or pay for"
605 tons of TDF chips starting in August 1996 from BFI pursuant to a December
1995 agreement. BFI has acknowledged the delay in production and has agreed to
reduce the Company's obligation by fifty percent for six months.
Research and development expenditures were $117,406 for the six months
ended November 30, 1996 as compared to $20,314 for the same 1995 period. The
significant increase is attributable to the Company's ongoing efforts to
identify new proprietary products and expand the applications of existing
product lines.
Selling, general and administrative expenses increased $1,340,808 to
$2,037,697 for the six months ended November 30, 1996 as compared to $696,889
for the same 1995 period. The increase was partially attributable to the
inclusion of a full six months of DuraWear's operating expenses totaling
$541,872 which resulted in a $345,837 increase in expenses for the six months
ended November 30, 1996. These expenses include $58,333 relating to amortization
of a three-year non-competition agreement and $24,924 relating to goodwill
amortization. In addition, the Company initiated a significant financial public
relations campaign during the first quarter which resulted in a one time charge
of approximately $200,000. This campaign consisted of newsprint articles,
television features and the mailing of over 100,000 financial information
packages to potential investors. The Company also recognized a $255,070 non-cash
expense in connection with the issuance of common stock warrants and options in
accordance with SFAS No. 123, "Accounting for Stock-Based Compensation". The
results for the six months ended November 30, 1996 also reflect $266,880 of
costs associated with the Company's recycling operation which has not yet begun
generating significant revenue and is operating under limited conditions as both
equipment and processes continue to be evaluated and refined in order to
maximize the production capabilities of that facility. In addition, the
Company's expenses increased due to increased corporate development and
marketing activities and increased expenses related to the Company's becoming a
public company in October 1995.
As a result of the foregoing, the operating loss for the six months
ended November 30, 1996 increased by $1,563,556 to $1,926,643 as compared to an
operating loss of $363,087 for the comparable 1995 period. Interest expense
increased by $39,178 to $179,605 for the six months ended November 30, 1996 due
to increased borrowings related to equipment and working capital financing.
Other expenses increased to $51,093 as a result of reduced interest income and a
$30,133 non-cash expense in connection with the issuance of common stock
warrants and options in accordance with SFAS No. 123, "Accounting for
Stock-Based Compensation".
The Company experienced a net loss of $2,157,341, or $.41 per share for
the six months ended November 30, 1996 as compared to a net loss of $482,374, or
$.11 per share for the six months ended November 30, 1995.
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
affiliated and unaffiliated lenders, the acquisition of machinery and equipment
through capital leases and notes payable, and the issuance of common stock and
common stock options and warrants in lieu of cash for services rendered.
During June 1996, the Company borrowed $200,000 from Palomar Medical
Technologies, Inc. ("Palomar"), a company in which two of the Company's
directors also hold positions as directors and/or officers of the company. The
note payable bears interest at 10% per annum with principal and interest due at
the earlier of the tenth business day following the consummation by the Company
of a minimum $3,000,000 of additional financing or on January 1, 1997.
On September 26, 1996, the Company sold 545,000 shares of common stock
to three foreign investors at $1.51 per share. Net proceeds were $715,965 after
deducting commissions and expenses of $106,985. Approximately $521,000 of the
proceeds were utilized to repay loans from Palomar.
During the period of September 1996 to November 1996 the Company
borrowed $450,000 in aggregate from two officers of the Company. These unsecured
notes payable bear interest at prime plus 1.5% (9.75% at November 30, 1996) per
annum with principal and interest due on the earlier of 120 days after the date
of issuance or the tenth business day following the consummation of a minimum
$3,000,000 of additional financing by the Company. In December 1996, the Company
borrowed an additional $100,000 from one of the officers under similar terms as
noted above.
At November 30, 1996, the Company had cash of $123,639, a working
capital deficit of $3,214,150, net capital of $2,379,990 and accumulated losses
of $5,855,795.
Based on the Company's operating plans, management believes that the
available working capital together with revenues from operations, the sale of
common stock and the purchase of equipment through lease financing arrangements,
will be sufficient to meet the Company's cash requirements through the third
quarter of fiscal 1997. The Company expects that additional financing will be
required after this time in order to fund continued growth. Management has
identified and is currently evaluating several immediate financing alternatives
and diligently working to determine the feasibility of each alternative. The
Company has commenced the offering of 7% convertible debentures in an effort to
raise up to $3,000,000 in gross proceeds. As of the date of this report no funds
have been received and no assurances can be given that such financing will be
concluded in the near future on favorable terms, if at all. If the Company is
unable to obtain additional financing, its ability to maintain its current level
of operations could be materially and adversely affected and the Company may be
required to adjust its operating plans accordingly.
FACTORS AFFECTING FUTURE RESULTS
The Company's revenue and operating results may fluctuate from quarter
to quarter and from year to year due to a combination of factors, including: (i)
production of crumb rubber in commercial quantities at a price that will be
competitive in the market; (ii) the Company's ability to secure additional
customers for its products thereby reducing its reliance on a few major
customers; (iii) market acceptance of the Company's proposed GEM Stock material
and GreenMan consumer products; (iv) ability to obtain raw materials from
suppliers on terms acceptable to the Company; and (v) general economic
conditions. The Company's plans and objectives are based on assumptions that the
Company will be successful in producing crumb rubber at a price that will be
competitive in the market, that the Company will be successful in receiving
additional financing to fund future growth and that there will be no material
adverse change in the Company's operations or business.
Assumptions relating to the foregoing involve judgments with respect to,
among other things, future economic, competitive and market conditions all of
which are difficult or impossible to predict accurately and many of which are
beyond the control of the Company. As a result of the foregoing, there can be no
assurance that the Company will be able to achieve or sustain profitability on a
quarterly or annual basis. In light of the significant uncertainties inherent in
the Company's business, forward looking statements made in this report should
not be regarded as representations by the Company or any other person that the
objectives and plans of the Company will be achieved.
PART II - OTHER INFORMATION
NOVEMBER 30, 1996
Item 1. Legal Proceedings
There has been no significant change in legal proceedings during
the quarter ended November 30, 1996.
Item 2. Changes in Securities
None
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 11 -- Statement regarding net loss per share.
(b) Exhibit 10.45 -- Promissory Note issued September 2,1996
by GreenMan Technologies, Inc. to Maurice E. Needham
(c) Exhibit 10.46 -- Promissory Note issued September 25, 1996
by GreenMan Technologies, Inc. to Maurice E. Needham
(d) Exhibit 10.47 -- Promissory Note issued October 25, 1996
by GreenMan Technologies, Inc. to Joseph E. Levangie
(e) Exhibit 10.48 -- Promissory Note issued November 27, 1996
by GreenMan Technologies, Inc. to Maurice E. Needham
(f) Exhibit 27 -- Financial Data Schedule
(b) There were no reports on Form 8-K filed during the quarter ended
November 30, 1996
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1934 , the
Registrant certifies that it 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
--------- -------- ----
/s/ Maurice E. Needham Chief Executive Officer and January 13, 1997
- ---------------------- Chairman of the Board
Maurice E. Needham (Principal Executive Officer)
/s/ Joseph E. Levangie Chief Financial Officer and Director January 13, 1997
- ---------------------- (Principal Financial Officer and
Joseph E. Levangie Principal Accounting Officer)
EXHIBIT 10.45
GREENMAN TECHNOLOGIES, INC.
NOTE DUE THE EARLIER OF
(i) ONE HUNDRED AND TWENTY (120) DAYS AFTER THE DATE OF ISSUANCE
OR (ii) THE TENTH BUSINESS DAY FOLLOWING THE
CLOSING OF A MINIMUM OF A $3,000,000 REGULATIONS OFFERING
OF SECURITIES OF GREENMAN TECHNOLOGIES, INC.
$100,000 SEPTEMBER 2, 1996
FOR VALUE RECEIVED, GreenMan Technologies, Inc. a Delaware corporation
(the "Company"), with its principal office at 7 Kimball Lane, Lynnfield, MA
01940, promises to pay to the order of Maurice E. Needham (the "Payee" or "the
holder of this Note"), or registered assigns, on the earlier of (i) one-hundred
and twenty (120) days after the date of issuance of this Note or (ii) the tenth
business day following the consummation by the Company of a minimum $3,000,000
regulation S offering of its securities as described in Section 4 hereof (the
"Maturity Date") the principal amount of ONE HUNDRED THOUSAND DOLLARS
($100,000), in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public or private
debts, together with interest at a rate equal to Prime plus 1.5% (as published
in the Wall Street Journal at the date of execution of this note) per annum
until the Note is paid in full.
1. Events of Default.
(a) Upon the occurrence of any of the following events (herein
called "Events of Default") which shall have occurred and be continuing:
(i) The Company shall default in payment of the principal and
interest of this Note after the Maturity Date; or
(ii) (1) The Company shall commence any proceeding or other
action relating to it in bankruptcy or seek reorganization, arrangement,
readjustment of its debts, receivership, dissolution, liquidation, winding-up,
composition or any other relief under the Bankruptcy Act, as amended, or under
any other insolvency, reorganization, liquidation, dissolution, arrangement,
composition, readjustment of debt or any other similar act or law; of any
jurisdiction domestic or foreign, know or hereafter existing; or (2) the Company
shall admit the material allegations of any petition or pleading in connection
with any such proceeding; or (3) the Company applies for, or consents or
acquiesces to, the appointment of a receiver, conservator, trustee or similar
officer for it or for all or substantial part of its property; or (4) the
Company makes a general assignment for the benefit of creditors; or
(iii) (1) Commencement of any proceeding or in the taking of
any other action against the Company in bankruptcy or seeking
reorganization,arrangement, readjustment of its debts, liquidation, dissolution,
arrangement, composition, readjustment of debt or any other similar act of law
of any jurisdiction, domestic or foreign, now or hereafter existing and the
continuance of any of such events for sixty (60) days undismissed,
unbonded or undischarged; or (2) the appointment of a receiver, conservator,
trustee or similar officer of the Company or for all or substantially all of its
property and the continuance of any such events for sixty (60) days undismissed,
unbonded or undischarged, or (3) the issuance of a warrant or attachment,
execution or similar process against substantially all of the property of the
Company and the continuance of such event for thirty (30) undismissed, unbonded
and undischarged; or
(iv) The Company shall default in the payment of any material
amount of its indebtedness and such default shall not be cured or waived within
thirty (30) days after the Company's receipt of written notice of same, then,
and in any such event the holder of this Note may, by written notice to the
Company, declare the entire unpaid principal amount of this Note outstanding
together with accrued interest thereon due and payable, and the same shall,
unless such default shall be cured within ten (10) business days after such
notice, forthwith become due and payable upon the expiration of such ten-day
period, without presentment, demand protest, or other notice of any kind, all of
which are expressly waived.
2. Non-Waiver and Other Remedies. No course of dealing or delay on the part of
the holder of this Note in exercising any right thereunder shall operate as a
waiver thereof or otherwise prejudice the right of the holder of this Note. No
remedy conferred hereby shall be exclusive of any other remedy referred to
herein or now or hereinafter available at law, in equity, by statute or
otherwise.
3. Principal Obligation: Covenants: Except as set forth in Section 1 hereof, no
provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, at the rates, and in the
currency herein prescribed.
3.1 Affirmative Covenants. The Company covenants and agrees that, while this
Note isoutstanding, it shall:
(a) Pay all material indebtedness and obligations of the
Company in accordance with their respective terms, as the same may be modified
or waived by the lenders or other obligees, and pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income and profits, or upon any properties belonging to it before the same shall
be in default; provided, however, that the Company shall not be required to pay
any such tax, assessment, charge or levy which is being contested in good faith
by proper proceedings;
(b) Do all things necessary to preserve its corporate
existence and continue to engage in business of the same general type as
conducted as of the date hereof;
(c) Promptly notify the holder of this Note of the occurrence
of any event of any default under this Note;
(d) Comply in all materials respects with all statutes, laws,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations and requirements (collectively,
"Requirements(s)") of all governmental bodies, departments, commissions, boards,
companies or associations insuring the premises, courts, authorities, officials,
or officers, which are applicable to the company or its properties, except
wherein the failure to comply would not have a material effect on the
2
Company or its property; provided that nothing contained herein shall prevent
the Company from contesting the validity or the application of any Requirements;
and
(e) Promptly provide the holder of this Note with such reports
as are provided to holders of Common Stock or Warrants as soon as such reports
become available.
3.2 Negative Covenants. The Company covenants and agrees that while this Note is
outstanding it will not directly or indirectly:
(a) Guaranty or otherwise in any way become or be responsible
for indebtedness or borrowed money or obligations of any other person (other
than a subsidiary of the Company), contingently or otherwise;
(b) Declare or pay cash dividends;
(c) Borrow money in an amount exceeding $5,000,000 outstanding
at any time; or
(d) Make or incur an obligation for capital expenditures
outstanding at any one time exceeding $5,000,000, other than in the ordinary
course of business.
4. Prepayment
4.1 Consolidation of Merger. The principal of any accrued interest on this Note
may be prepaid in full without premium in the event the Company consolidates or
merges with another corporation unless the other corporation controls, is under
common control with or is controlled by the Company immediately prior to the
consolidation or merger, in which event this Note shall remain outstanding as an
obligation of the consolidated or surviving corporation.
4.2 Voluntary Prepayment This Note may be called by the Company at any time in
whole or in part from time to time, without penalty at the principal amount plus
accrued but unpaid interest.
5. Holder as Deemed Owner The Company may deem and treat the registered holder
hereof as the absolute owner of this Note (whether or not this Note shall be
overdue and notwithstanding any notice of ownership of writing hereon made by
anyone other than the Company, for the purpose of receiving payment hereof or
thereof or on account hereof and for all other purposes) and the Company shall
not be affected by notice to the contrary.
6. Corporate Obligation. It is expressly understood that this Note is solely a
corporate obligation of the Company, and that any and all personal liability,
either at common law or in equity or by constitution or statute, of, and any and
all such rights and claims against, every promoter, subscriber, incorporator,
shareholder, officer or director, as such, are hereby expressly waived and
released by the holder hereof by the acceptance of this Note and as a part of
the consideration for the issue hereof.
7. Required Consent. The Company may not modify any of the terms of the Note
without the prior written consent of the holder hereof.
3
8. Lost Documents Upon receipt by the Company of evidence satisfactory to it of
the loss, theft, destruction or mutilation of this Note or any Note exchanged
for it, and (in the case of loss, theft or destruction) of indemnity
satisfactory to it, and upon reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of such Note,
if mutilated, the Company will make and deliver in lieu of such Note a new Note
of like tenor and unpaid principal amount and dated as of the original date of
the Note.
9. Miscellaneous.
(a) Parties in Interest. All covenants, agreements, and
undertakings in this Note by and on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective permitted successors and assigns
of the parties hereto whether so expressed or not.
(b) Notices. All notices, request, consents and demands shall
be made in writing and shall be mailed first class, certified mail, return
receipt requested, to the Company or to the holder of this Note at such
respective addresses as may be furnished in writing to the other party hereto.
(c) Construction. This Note shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, this Note has been executed and delivered on the
date specified above by the duly authorized representative of the Company.
GREENMAN TECHNOLOGIES, INC.
By: /s/ Joseph E. Levangie
----------------------
Joseph E. Levangie
Chief Financial Officer
4
EXHIBIT 10.46
GREENMAN TECHNOLOGIES, INC.
NOTE DUE THE EARLIER OF
(i) ONE HUNDRED AND TWENTY (120) DAYS AFTER THE DATE OF ISSUANCE
OR (ii) THE TENTH BUSINESS DAY FOLLOWING THE
CLOSING OF A MINIMUM OF A $3,000,000 REGULATIONS OFFERING
OF SECURITIES OF GREENMAN TECHNOLOGIES, INC.
$100,000 SEPTEMBER 25, 1996
FOR VALUE RECEIVED, GreenMan Technologies, Inc. a Delaware corporation
(the "Company"), with its principal office at 7 Kimball Lane, Lynnfield, MA
01940, promises to pay to the order of Maurice E. Needham (the "Payee" or "the
holder of this Note"), or registered assigns, on the earlier of (i) one-hundred
and twenty (120) days after the date of issuance of this Note or (ii) the tenth
business day following the consummation by the Company of a minimum $3,000,000
regulation S offering of its securities as described in Section 4 hereof (the
"Maturity Date") the principal amount of ONE HUNDRED THOUSAND DOLLARS
($100,000), in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public or private
debts, together with interest at a rate equal to Prime plus 1.5% (as published
in the Wall Street Journal at the date of execution of this note) per annum
until the Note is paid in full.
1. Events of Default.
(a) Upon the occurrence of any of the following events (herein
called "Events of Default") which shall have occurred and be continuing:
(i) The Company shall default in payment of the principal and
interest of this Note after the Maturity Date; or
(ii) (1) The Company shall commence any proceeding or other
action relating to it in bankruptcy or seek reorganization, arrangement,
readjustment of its debts, receivership, dissolution, liquidation, winding-up,
composition or any other relief under the Bankruptcy Act, as amended, or under
any other insolvency, reorganization, liquidation, dissolution, arrangement,
composition, readjustment of debt or any other similar act or law; of any
jurisdiction domestic or foreign, know or hereafter existing; or (2) the Company
shall admit the material allegations of any petition or pleading in connection
with any such proceeding; or (3) the Company applies for, or consents or
acquiesces to, the appointment of a receiver, conservator, trustee or similar
officer for it or for all or substantial part of its property; or (4) the
Company makes a general assignment for the benefit of creditors; or
(iii) (1) Commencement of any proceeding or in the taking of
any other action against the Company in bankruptcy or seeking
reorganization,arrangement, readjustment of its debts, liquidation, dissolution,
arrangement, composition, readjustment of debt or any other similar act of law
of any jurisdiction, domestic or foreign, now or hereafter existing and the
continuance of any of such events for sixty (60) days undismissed, unbonded or
undischarged; or (2) the appointment of a receiver, conservator, trustee or
similar officer of the Company or for all or substantially all of its property
and the continuance of any such events for sixty (60) days undismissed,
unbonded or undischarged, or (3) the issuance of a warrant or attachment,
execution or similar process against substantially all of the property of the
Company and the continuance of such event for thirty (30) undismissed, unbonded
and undischarged; or
(iv) The Company shall default in the payment of any material
amount of its indebtedness and such default shall not be cured or waived within
thirty (30) days after the Company's receipt of written notice of same, then,
and in any such event the holder of this Note may, by written notice to the
Company, declare the entire unpaid principal amount of this Note outstanding
together with accrued interest thereon due and payable, and the same shall,
unless such default shall be cured within ten (10) business days after such
notice, forthwith become due and payable upon the expiration of such ten-day
period, without presentment, demand protest, or other notice of any kind, all of
which are expressly waived.
2. Non-Waiver and Other Remedies. No course of dealing or delay on the part of
the holder of this Note in exercising any right thereunder shall operate as a
waiver thereof or otherwise prejudice the right of the holder of this Note. No
remedy conferred hereby shall be exclusive of any other remedy referred to
herein or now or hereinafter available at law, in equity, by statute or
otherwise.
3. Principal Obligation: Covenants: Except as set forth in Section 1 hereof, no
provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, at the rates, and in the
currency herein prescribed.
3.1 Affirmative Covenants. The Company covenants and agrees that, while this
Note is outstanding, it shall:
(a) Pay all material indebtedness and obligations of the
Company in accordance with their respective terms, as the same may be modified
or waived by the lenders or other obligees, and pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income and profits, or upon any properties belonging to it before the same shall
be in default; provided, however, that the Company shall not be required to pay
any such tax, assessment, charge or levy which is being contested in good faith
by proper proceedings;
(b) Do all things necessary to preserve its corporate
existence and continue to engage in business of the same general type as
conducted as of the date hereof;
(c) Promptly notify the holder of this Note of the occurrence
of any event of any default under this Note;
(d) Comply in all materials respects with all statutes, laws,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations and requirements (collectively,
"Requirements(s)") of all governmental bodies, departments, commissions, boards,
companies or associations insuring the premises, courts, authorities, officials,
or officers, which are applicable to the company or its properties, except
wherein the failure to comply would not have a material effect on the
2
Company or its property; provided that nothing contained herein shall prevent
the Company from contesting the validity or the application of any Requirements;
and
(e) Promptly provide the holder of this Note with such reports
as are provided to holders of Common Stock or Warrants as soon as such reports
become available.
3.2 Negative Covenants. The Company covenants and agrees that while this Note is
outstanding it will not directly or indirectly:
(a) Guaranty or otherwise in any way become or be responsible
for indebtedness or borrowed money or obligations of any other person (other
than a subsidiary of the Company), contingently or otherwise;
(b) Declare or pay cash dividends;
(c) Borrow money in an amount exceeding $5,000,000 outstanding
at any time; or
(d) Make or incur an obligation for capital expenditures
outstanding at any one time exceeding $5,000,000, other than in the ordinary
course of business.
4. Prepayment
4.1 Consolidation of Merger. The principal of any accrued interest on this Note
may be prepaid in full without premium in the event the Company consolidates or
merges with another corporation unless the other corporation controls, is under
common control with or is controlled by the Company immediately prior to the
consolidation or merger, in which event this Note shall remain outstanding as an
obligation of the consolidated or surviving corporation.
4.2 Voluntary Prepayment This Note may be called by the Company at any time in
whole or in part from time to time, without penalty at the principal amount plus
accrued but unpaid interest.
5. Holder as Deemed Owner The Company may deem and treat the registered holder
hereof as the absolute owner of this Note (whether or not this Note shall be
overdue and notwithstanding any notice of ownership of writing hereon made by
anyone other than the Company, for the purpose of receiving payment hereof or
thereof or on account hereof and for all other purposes) and the Company shall
not be affected by notice to the contrary.
6. Corporate Obligation. It is expressly understood that this Note is solely a
corporate obligation of the Company, and that any and all personal liability,
either at common law or in equity or by constitution or statute, of, and any and
all such rights and claims against, every promoter, subscriber, incorporator,
shareholder, officer or director, as such, are hereby expressly waived and
released by the holder hereof by the acceptance of this Note and as a part of
the consideration for the issue hereof.
7. Required Consent. The Company may not modify any of the terms of the Note
without the prior written consent of the holder hereof.
3
8. Lost Documents Upon receipt by the Company of evidence satisfactory to it of
the loss, theft, destruction or mutilation of this Note or any Note exchanged
for it, and (in the case of loss, theft or destruction) of indemnity
satisfactory to it, and upon reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of such Note,
if mutilated, the Company will make and deliver in lieu of such Note a new Note
of like tenor and unpaid principal amount and dated as of the original date of
the Note.
9. Miscellaneous.
(a) Parties in Interest. All covenants, agreements, and
undertakings in this Note by and on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective permitted successors and assigns
of the parties hereto whether so expressed or not.
(b) Notices. All notices, request, consents and demands shall
be made in writing and shall be mailed first class, certified mail, return
receipt requested, to the Company or to the holder of this Note at such
respective addresses as may be furnished in writing to the other party hereto.
(c) Construction. This Note shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, this Note has been executed and delivered on the
date specified above by the duly authorized representative of the Company.
GREENMAN TECHNOLOGIES, INC.
By: /s/ Joseph E. Levangie
-----------------------
Joseph E. Levangie
Chief Financial Officer
EXHIBIT 10.47
GREENMAN TECHNOLOGIES, INC.
NOTE DUE THE EARLIER OF
(i) ONE HUNDRED AND TWENTY (120) DAYS AFTER THE DATE OF ISSUANCE
OR (ii) THE TENTH BUSINESS DAY FOLLOWING THE
CLOSING OF A MINIMUM OF A $3,000,000 REGULATIONS OFFERING
OF SECURITIES OF GREENMAN TECHNOLOGIES, INC.
$150,000 OCTOBER 25, 1996
FOR VALUE RECEIVED, GreenMan Technologies, Inc. a Delaware corporation
(the "Company"), with its principal office at 7 Kimball Lane, Lynnfield, MA
01940, promises to pay to the order of Joseph E. Levangie (the "Payee" or "the
holder of this Note"), or registered assigns, on the earlier of (i) one-hundred
and twenty (120) days after the date of issuance of this Note or (ii) the tenth
business day following the consummation by the Company of a minimum $3,000,000
regulation S offering of its securities as described in Section 4 hereof (the
"Maturity Date") the principal amount of ONE HUNDRED AND FIFTY THOUSAND DOLLARS
($150,000), in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public or private
debts, together with interest at a rate equal to Prime plus 1.5% (as published
in the Wall Street Journal at the date of execution of this note) per annum
until the Note is paid in full.
1. Events of Default.
(a) Upon the occurrence of any of the following events (herein
called "Events of Default") which shall have occurred and be continuing:
(i) The Company shall default in payment of the principal and
interest of this Note after the Maturity Date; or
(ii) (1) The Company shall commence any proceeding or other
action relating to it in bankruptcy or seek reorganization, arrangement,
readjustment of its debts, receivership, dissolution, liquidation, winding-up,
composition or any other relief under the Bankruptcy Act, as amended, or under
any other insolvency, reorganization, liquidation, dissolution, arrangement,
composition, readjustment of debt or any other similar act or law; of any
jurisdiction domestic or foreign, know or hereafter existing; or (2) the Company
shall admit the material allegations of any petition or pleading in connection
with any such proceeding; or (3) the Company applies for, or consents or
acquiesces to, the appointment of a receiver, conservator, trustee or similar
officer for it or for all or substantial part of its property; or (4) the
Company makes a general assignment for the benefit of creditors; or
(iii) (1) Commencement of any proceeding or in the taking of
any other action against the Company in bankruptcy or seeking
reorganization,arrangement, readjustment of its debts, liquidation, dissolution,
arrangement, composition, readjustment of debt or any other similar act of law
of any jurisdiction, domestic or foreign, now or hereafter existing and the
continuance of any of such events for sixty (60) days undismissed,
unbonded or undischarged; or (2) the appointment of a receiver, conservator,
trustee or similar officer of the Company or for all or substantially all of its
property and the continuance of any such events for sixty (60) days undismissed,
unbonded or undischarged, or (3) the issuance of a warrant or attachment,
execution or similar process against substantially all of the property of the
Company and the continuance of such event for thirty (30) undismissed, unbonded
and undischarged; or
(iv) The Company shall default in the payment of any material
amount of its indebtedness and such default shall not be cured or waived within
thirty (30) days after the Company's receipt of written notice of same, then,
and in any such event the holder of this Note may, by written notice to the
Company, declare the entire unpaid principal amount of this Note outstanding
together with accrued interest thereon due and payable, and the same shall,
unless such default shall be cured within ten (10) business days after such
notice, forthwith become due and payable upon the expiration of such ten-day
period, without presentment, demand protest, or other notice of any kind, all of
which are expressly waived.
2. Non-Waiver and Other Remedies. No course of dealing or delay on the part of
the holder of this Note in exercising any right thereunder shall operate as a
waiver thereof or otherwise prejudice the right of the holder of this Note. No
remedy conferred hereby shall be exclusive of any other remedy referred to
herein or now or hereinafter available at law, in equity, by statute or
otherwise.
3. Principal Obligation: Covenants: Except as set forth in Section 1 hereof, no
provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, at the rates, and in the
currency herein prescribed.
3.1 Affirmative Covenants. The Company covenants and agrees that, while this
Note is outstanding, it shall:
(a) Pay all material indebtedness and obligations of the
Company in accordance with their respective terms, as the same may be modified
or waived by the lenders or other obligees, and pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income and profits, or upon any properties belonging to it before the same shall
be in default; provided, however, that the Company shall not be required to pay
any such tax, assessment, charge or levy which is being contested in good faith
by proper proceedings;
(b) Do all things necessary to preserve its corporate
existence and continue to engage in business of the same general type as
conducted as of the date hereof;
(c) Promptly notify the holder of this Note of the occurrence
of any event of any default under this Note;
(d) Comply in all materials respects with all statutes, laws,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations and requirements (collectively,
"Requirements(s)") of all governmental bodies, departments, commissions, boards,
companies or associations insuring the premises, courts, authorities, officials,
or officers, which are applicable to the company or its properties, except
wherein the failure to comply would not have a material effect on the
2
Company or its property; provided that nothing contained herein shall prevent
the Company from contesting the validity or the application of any Requirements;
and
(e) Promptly provide the holder of this Note with such reports
as are provided to holders of Common Stock or Warrants as soon as such reports
become available.
3.2 Negative Covenants. The Company covenants and agrees that while this Note is
outstanding it will not directly or indirectly:
(a) Guaranty or otherwise in any way become or be responsible
for indebtedness or borrowed money or obligations of any other person (other
than a subsidiary of the Company), contingently or otherwise;
(b) Declare or pay cash dividends;
(c) Borrow money in an amount exceeding $5,000,000 outstanding
at any time; or
(d) Make or incur an obligation for capital expenditures
outstanding at any one time exceeding $5,000,000, other than in the ordinary
course of business.
4. Prepayment
4.1 Consolidation of Merger. The principal of any accrued interest on this Note
may be prepaid in full without premium in the event the Company consolidates or
merges with another corporation unless the other corporation controls, is under
common control with or is controlled by the Company immediately prior to the
consolidation or merger, in which event this Note shall remain outstanding as an
obligation of the consolidated or surviving corporation.
4.2 Voluntary Prepayment This Note may be called by the Company at any time in
whole or in part from time to time, without penalty at the principal amount plus
accrued but unpaid interest.
5. Holder as Deemed Owner The Company may deem and treat the registered holder
hereof as the absolute owner of this Note (whether or not this Note shall be
overdue and notwithstanding any notice of ownership of writing hereon made by
anyone other than the Company, for the purpose of receiving payment hereof or
thereof or on account hereof and for all other purposes) and the Company shall
not be affected by notice to the contrary.
6. Corporate Obligation. It is expressly understood that this Note is solely a
corporate obligation of the Company, and that any and all personal liability,
either at common law or in equity or by constitution or statute, of, and any and
all such rights and claims against, every promoter, subscriber, incorporator,
shareholder, officer or director, as such, are hereby expressly waived and
released by the holder hereof by the acceptance of this Note and as a part of
the consideration for the issue hereof.
7. Required Consent. The Company may not modify any of the terms of the Note
without the prior written consent of the holder hereof.
3
8. Lost Documents Upon receipt by the Company of evidence satisfactory to it of
the loss, theft, destruction or mutilation of this Note or any Note exchanged
for it, and (in the case of loss, theft or destruction) of indemnity
satisfactory to it, and upon reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of such Note,
if mutilated, the Company will make and deliver in lieu of such Note a new Note
of like tenor and unpaid principal amount and dated as of the original date of
the Note.
9. Miscellaneous.
(a) Parties in Interest. All covenants, agreements, and
undertakings in this Note by and on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective permitted successors and assigns
of the parties hereto whether so expressed or not.
(b) Notices. All notices, request, consents and demands shall
be made in writing and shall be mailed first class, certified mail, return
receipt requested, to the Company or to the holder of this Note at such
respective addresses as may be furnished in writing to the other party hereto.
(c) Construction. This Note shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, this Note has been executed and delivered on the
date specified above by the duly authorized representative of the Company.
GREENMAN TECHNOLOGIES, INC.
By: /s/ Maurice E. Needham
-----------------------
Maurice E. Needham
Chief Executive Officer
4
EXHIBIT 10.48
GREENMAN TECHNOLOGIES, INC.
NOTE DUE THE EARLIER OF
(i) ONE HUNDRED AND TWENTY (120) DAYS AFTER THE DATE OF ISSUANCE
OR (ii) THE TENTH BUSINESS DAY FOLLOWING THE
CLOSING OF A MINIMUM OF A $3,000,000 REGULATIONS OFFERING
OF SECURITIES OF GREENMAN TECHNOLOGIES, INC.
$100,000 NOVEMBER 27, 1996
FOR VALUE RECEIVED, GreenMan Technologies, Inc. a Delaware corporation
(the "Company"), with its principal office at 7 Kimball Lane, Lynnfield, MA
01940, promises to pay to the order of Maurice E. Needham (the "Payee" or "the
holder of this Note"), or registered assigns, on the earlier of (i) one-hundred
and twenty (120) days after the date of issuance of this Note or (ii) the tenth
business day following the consummation by the Company of a minimum $3,000,000
regulation S offering of its securities as described in Section 4 hereof (the
"Maturity Date") the principal amount of ONE HUNDRED THOUSAND DOLLARS
($100,000), in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public or private
debts, together with interest at a rate equal to Prime plus 1.5% (as published
in the Wall Street Journal at the date of execution of this note) per annum
until the Note is paid in full.
1. Events of Default.
(a) Upon the occurrence of any of the following events (herein
called "Events of Default") which shall have occurred and be continuing:
(i) The Company shall default in payment of the principal and
interest of this Note after the Maturity Date; or
(ii) (1) The Company shall commence any proceeding or other
action relating to it in bankruptcy or seek reorganization, arrangement,
readjustment of its debts, receivership, dissolution, liquidation, winding-up,
composition or any other relief under the Bankruptcy Act, as amended, or under
any other insolvency, reorganization, liquidation, dissolution, arrangement,
composition, readjustment of debt or any other similar act or law; of any
jurisdiction domestic or foreign, know or hereafter existing; or (2) the Company
shall admit the material allegations of any petition or pleading in connection
with any such proceeding; or (3) the Company applies for, or consents or
acquiesces to, the appointment of a receiver, conservator, trustee or similar
officer for it or for all or substantial part of its property; or (4) the
Company makes a general assignment for the benefit of creditors; or
(iii) (1) Commencement of any proceeding or in the taking of
any other action against the Company in bankruptcy or seeking
reorganization,arrangement, readjustment of its debts, liquidation, dissolution,
arrangement, composition, readjustment of debt or any other similar act of law
of any jurisdiction, domestic or foreign, now or hereafter existing and the
continuance of any of such events for sixty (60) days undismissed,
unbonded or undischarged; or (2) the appointment of a receiver, conservator,
trustee or similar officer of the Company or for all or substantially all of its
property and the continuance of any such events for sixty (60) days undismissed,
unbonded or undischarged, or (3) the issuance of a warrant or attachment,
execution or similar process against substantially all of the property of the
Company and the continuance of such event for thirty (30) undismissed, unbonded
and undischarged; or
(iv) The Company shall default in the payment of any material
amount of its indebtedness and such default shall not be cured or waived within
thirty (30) days after the Company's receipt of written notice of same, then,
and in any such event the holder of this Note may, by written notice to the
Company, declare the entire unpaid principal amount of this Note outstanding
together with accrued interest thereon due and payable, and the same shall,
unless such default shall be cured within ten (10) business days after such
notice, forthwith become due and payable upon the expiration of such ten-day
period, without presentment, demand protest, or other notice of any kind, all of
which are expressly waived.
2. Non-Waiver and Other Remedies. No course of dealing or delay on the part of
the holder of this Note in exercising any right thereunder shall operate as a
waiver thereof or otherwise prejudice the right of the holder of this Note. No
remedy conferred hereby shall be exclusive of any other remedy referred to
herein or now or hereinafter available at law, in equity, by statute or
otherwise.
3. Principal Obligation: Covenants: Except as set forth in Section 1 hereof, no
provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, at the rates, and in the
currency herein prescribed.
3.1 Affirmative Covenants. The Company covenants and agrees that, while this
Note is outstanding, it shall: (a) Pay all material indebtedness and obligations
of the Company in accordance with their respective terms, as the same may be
modified or waived by the lenders or other obligees, and pay and discharge all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income and profits, or upon any properties belonging to it before the same
shall be in default; provided, however, that the Company shall not be required
to pay any such tax, assessment, charge or levy which is being contested in good
faith by proper proceedings;
(b) Do all things necessary to preserve its corporate
existence and continue to engage in business of the same general type as
conducted as of the date hereof;
(c) Promptly notify the holder of this Note of the occurrence
of any event of any default under this Note;
(d) Comply in all materials respects with all statutes, laws,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations and requirements (collectively,
"Requirements(s)") of all governmental bodies, departments, commissions, boards,
companies or associations insuring the premises, courts, authorities, officials,
or officers, which are applicable to the company or its properties, except
wherein the failure to comply would not have a material effect on the
2
Company or its property; provided that nothing contained herein shall prevent
the Company from contesting the validity or the application of any Requirements;
and
(e) Promptly provide the holder of this Note with such reports
as are provided to holders of Common Stock or Warrants as soon as such reports
become available.
3.2 Negative Covenants. The Company covenants and agrees that while this Note is
outstanding it will not directly or indirectly:
(a) Guaranty or otherwise in any way become or be responsible
for indebtedness or borrowed money or obligations of any other person (other
than a subsidiary of the Company), contingently or otherwise;
(b) Declare or pay cash dividends;
(c) Borrow money in an amount exceeding $5,000,000 outstanding
at any time; or
(d) Make or incur an obligation for capital expenditures
outstanding at any one time exceeding $5,000,000, other than in the ordinary
course of business.
4. Prepayment
4.1 Consolidation of Merger. The principal of any accrued interest on this Note
may be prepaid in full without premium in the event the Company consolidates or
merges with another corporation unless the other corporation controls, is under
common control with or is controlled by the Company immediately prior to the
consolidation or merger, in which event this Note shall remain outstanding as an
obligation of the consolidated or surviving corporation.
4.2 Voluntary Prepayment This Note may be called by the Company at any time in
whole or in part from time to time, without penalty at the principal amount plus
accrued but unpaid interest.
5. Holder as Deemed Owner The Company may deem and treat the registered holder
hereof as the absolute owner of this Note (whether or not this Note shall be
overdue and notwithstanding any notice of ownership of writing hereon made by
anyone other than the Company, for the purpose of receiving payment hereof or
thereof or on account hereof and for all other purposes) and the Company shall
not be affected by notice to the contrary.
6. Corporate Obligation. It is expressly understood that this Note is solely a
corporate obligation of the Company, and that any and all personal liability,
either at common law or in equity or by constitution or statute, of, and any and
all such rights and claims against, every promoter, subscriber, incorporator,
shareholder, officer or director, as such, are hereby expressly waived and
released by the holder hereof by the acceptance of this Note and as a part of
the consideration for the issue hereof.
7. Required Consent. The Company may not modify any of the terms of the Note
without the prior written consent of the holder hereof.
3
8. Lost Documents Upon receipt by the Company of evidence satisfactory to it of
the loss, theft, destruction or mutilation of this Note or any Note exchanged
for it, and (in the case of loss, theft or destruction) of indemnity
satisfactory to it, and upon reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of such Note,
if mutilated, the Company will make and deliver in lieu of such Note a new Note
of like tenor and unpaid principal amount and dated as of the original date of
the Note.
9. Miscellaneous.
(a) Parties in Interest. All covenants, agreements, and
undertakings in this Note by and on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective permitted successors and assigns
of the parties hereto whether so expressed or not.
(b) Notices. All notices, request, consents and demands shall
be made in writing and shall be mailed first class, certified mail, return
receipt requested, to the Company or to the holder of this Note at such
respective addresses as may be furnished in writing to the other party hereto.
(c) Construction. This Note shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, this Note has been executed and delivered on the
date specified above by the duly authorized representative of the Company.
GREENMAN TECHNOLOGIES, INC.
By: /s/ Joseph E. Levangie
-----------------------
Joseph E. Levangie
Chief Financial Officer
EXHIBIT 11
GREENMAN TECHNOLOGIES, INC.
STATEMENT REGARDING NET LOSS PER SHARE
NOVEMBER 30, 1996
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1995
------------------- -----------------
<S> <C> <C>
Net loss.......................................... $ (244,592) $ (482,374)
=========== ===========
Shares used in calculation of loss per share:
Weighted Common shares outstanding pre-IPO (1)(2) 1,395,795 2,753,945
Weighted Common shares outstanding post-IPO 3,170,110 1,576,393
--------- ---------
4,565,905 4,330,338
=========== ===========
Net loss per share................................ $ (.05) $ (.11)
=========== ===========
THREE MONTHS SIX MONTHS
ENDED ENDED
NOVEMBER 30, 1996 NOVEMBER 30, 1996
------------------- -----------------
Net loss.......................................... $ (892,361) $ (2,157,341)
=========== =============
Shares used in calculation of loss per share:
Weighted average common shares outstanding 5,471,977 5,273,250
=========== ===========
Net loss per share................................ $ (.16) $ (.41)
=========== ===========
</TABLE>
(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 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> <S> <C>
<ARTICLE> 5
<CAPTION>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> NOV-30-1996
<CASH> 123,639
<SECURITIES> 0
<RECEIVABLES> 417,321
<ALLOWANCES> 23,772
<INVENTORY> 343,088
<CURRENT-ASSETS> 917,794
<PP&E> 4,458,075
<DEPRECIATION> 689,822
<TOTAL-ASSETS> 7,661,350
<CURRENT-LIABILITIES> 4,131,944
<BONDS> 2,674,540
0
0
<COMMON> 56,235
<OTHER-SE> 8,179,550
<TOTAL-LIABILITY-AND-EQUITY> 7,661,350
<SALES> 796,141
<TOTAL-REVENUES> 796,141
<CGS> 728,508
<TOTAL-COSTS> 728,508
<OTHER-EXPENSES> 790,239
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84,307
<INCOME-PRETAX> (892,361)
<INCOME-TAX> 0
<INCOME-CONTINUING> (892,361)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (892,361)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)
</TABLE>
