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 March 31, 2000 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 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 (781) 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 May 1, 2000
Common Stock, $.01 par value, 11,990,716 shares
<PAGE>
GreenMan Technologies, Inc.
Form 10-QSB
Quarterly Report
March 31, 2000
Table of Contents
PART I - FINANCIAL INFORMATION Page
----
Item 1. Financial Statements (*)
Unaudited Condensed Consolidated Balance Sheets as of
September 30, 1999 and March 31, 2000 3
Unaudited Condensed Consolidated Statements of Loss
for the three and six months ended March 31, 1999 and 2000 4
Unaudited Condensed Consolidated Statement of Changes
in Stockholders' Equity for the six months ended March 31, 2000 5
Unaudited Condensed Consolidated Statements of Cash Flows
for the six months ended March 31, 1999 and 2000 6
Notes to Unaudited Condensed Consolidated Financial
Statements 7-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
* The financial information at September 30, 1999 has been taken from
audited financial statements at that date and should be read in
conjunction therewith. All other financial statements are unaudited.
<PAGE>
GreenMan Technologies, Inc.
Unaudited Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, March 31,
1999 2000
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................................................. $ 2,233 $ 12,239
Accounts receivable, trade, less allowance for doubtful accounts of $166,582 and
$50,871 as of September 30, 1999 and March 31, 2000 ................................ 2,189,487 2,050,707
Equipment held for sale ............................................................... 635,000 477,500
Other current assets .................................................................. 704,918 704,160
------------ ------------
Total current assets ............................................................ 3,531,638 3,244,606
------------ ------------
Property, plant and equipment, net ...................................................... 7,584,321 6,899,337
------------ ------------
Other assets:
Deferred loan costs ................................................................... 143,091 89,421
Goodwill, net ......................................................................... 1,796,717 1,523,971
Real estate held for investment, net .................................................. 707,908 699,053
Other ................................................................................. 296,044 229,283
------------ ------------
2,943,760 2,541,728
------------ ------------
$ 14,059,719 $ 12,685,671
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Convertible notes payable, current .................................................... $ 300,000 $ 490,000
Notes payable, current ................................................................ 2,573,064 4,332,196
Accounts payable ...................................................................... 2,431,411 2,295,009
Other current liabilities ............................................................. 1,846,896 1,415,845
Obligations under capital leases, current ............................................. 140,725 150,024
------------ ------------
Total current liabilities ....................................................... 7,292,096 8,683,074
Notes payable, non-current portion .................................................... 3,805,744 1,769,928
Obligations under capital leases, non-current portion ................................. 585,590 508,178
------------ ------------
Total liabilities ............................................................... 11,683,430 10,961,180
------------ ------------
Stockholders' equity:
Preferred stock, $1.00 par value, 1,000,000 shares authorized: Class B
convertible, liquidation value $10.00 per share, 320,000 shares issued and
outstanding at September 30, 1999 and March 31, 2000 ............................... 3,200,000 3,200,000
Common stock, $.01 par value, 20,000,000 shares authorized; 11,762,599 and
11,990,716 shares issued and outstanding at September 30, 1999 and March 31, 2000 117,626 119,907
Additional paid-in capital ............................................................ 23,127,529 23,189,254
Accumulated deficit ................................................................... (24,013,866) (24,729,670)
Notes receivable, common stock ...................................................... (55,000) (55,000)
------------ ------------
Total stockholders' equity ...................................................... 2,376,289 1,724,491
------------ ------------
$ 14,059,719 $ 12,685,671
============ ============
</TABLE>
See accompanying notes to unaudited condensed consolidated
financial statements.
<PAGE>
GreenMan Technologies, Inc.
Unaudited Condensed Consolidated Statements of Loss
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31, March 31, March 31,
1999 2000 1999 2000
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Net sales .............................................. $ 3,804,660 $ 4,279,816 $ 8,185,611 $ 8,839,069
Cost of sales .......................................... 2,974,649 3,690,181 6,052,047 7,206,707
------------ ------------ ----------- ------------
Gross profit ........................................... 830,011 589,635 2,133,564 1,632,362
------------ ------------ ----------- ------------
Operating expenses:
Research and development ........................... 16,250 10,000 30,625 23,464
Selling, general and administrative ................ 946,127 997,563 1,918,260 1,878,837
Impairment losses .................................. -- 326,235 -- 326,235
------------ ------------ ----------- ------------
Total operating expenses ....................... 962,377 1,333,798 1,948,885 2,228,536
------------ ------------ ----------- ------------
Operating (loss) profit ................................ (132,366) (744,163) 184,679 (596,174)
------------ ------------ ----------- ------------
Other income (expense):
Interest and financing costs ....................... (160,959) (239,200) (584,975) (464,650)
Casualty loss ...................................... (955,000) -- (955,000) --
Forgiveness of indebtedness ........................ -- 238,333 -- 238,333
Other, net ......................................... 18,534 88,278 15,076 106,687
------------ ------------ ----------- ------------
Other (expense), net ........................... (1,097,425) 87,411 (1,524,899) (119,630)
------------ ------------ ----------- ------------
Loss from continuing operations ........................ (1,229,791) (656,752) (1,340,220) (715,804)
------------ ------------ ----------- ------------
Discontinued operations:
Loss from discontinued operations .................. (70,901) -- (181,285) --
Loss on disposal of discontinued operations ........ (920,000) -- (920,000) --
------------ ------------ ----------- ------------
(990,901) -- (1,101,285) --
------------ ------------ ----------- ------------
Net loss ............................................... $ (2,220,692) $ (656,752) $(2,441,505) $ (715,804)
============ ============ =========== ============
Loss from continuing operations per share - basic ...... $ (0.11) $ (0.05) $ (0.14) $ (0.06)
Loss from discontinued operations per share - basic .... (0.01) (0.00) (0.02) (0.00)
Loss on disposal of discontinued operations- basic ..... (0.08) (0.00) (0.09) (0.00)
------------ ------------ ----------- ------------
Net loss per share - basic ............................. $ (0.20) $ (0.05) $ (0.25) $ (0.06)
============ ============ =========== ============
Weighted average shares outstanding .................... 11,171,235 11,990,716 9,788,142 11,904,032
============ ============ =========== ============
</TABLE>
See accompanying notes to unaudited condensed consolidated
financial statements.
<PAGE>
GreenMan Technologies, Inc.
Consolidated Statement of Changes in Stockholders' Equity
Six Months Ended March 31, 2000
<TABLE>
<CAPTION>
Notes
Preferred Stock Common Stock Additional Receivable
-------------------- --------------------- Paid-in Accumulated Common
Shares Amount Shares Amount Capital Deficit Stock Total
------- ---------- ---------- -------- ----------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1999 ... 320,000 $3,200,000 11,762,599 $117,626 $23,127,529 $(24,013,866) $(55,000) $ 2,376,289
Sale of common stock .......... -- -- 228,117 2,281 51,225 -- -- 53,506
Fair value of warrants
issued in convertible
debt offering ............... -- -- -- -- 10,500 -- -- 10,500
Net loss for the six
months ended
March 31, 2000 .............. -- -- -- -- -- (715,804) -- (715,804)
------- ---------- ---------- -------- ----------- ------------ -------- -----------
Balance, March 31, 2000 ....... 320,000 $3,200,000 11,990,716 $119,907 $23,189,254 $(24,729,670) $(55,000) $ 1,724,491
======= ========== ========== ======== =========== ============ ======== ===========
</TABLE>
See accompanying notes to unaudited condensed consolidated
financial statements.
<PAGE>
GreenMan Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flow
<TABLE>
<CAPTION>
Six Months Ended
March 31, March 31,
1999 2000
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<S> <C> <C>
Cash flows from operating activities:
Net loss ......................................................................... $(2,441,505) $(715,804)
Adjustments to reconcile net loss to net cash provided by (used for) operating
activities:
Amortization of deferred financing costs ......................................... 306,304 --
Depreciation and amortization .................................................... 923,836 813,568
Impairment loss .................................................................. -- 326,235
Loss on disposal of discontinued operations ...................................... 920,000 --
Forgiveness of indebtedness ...................................................... -- (238,333)
(Increase) decrease in assets:
Accounts receivable .......................................................... (560,879) 138,780
Inventory .................................................................... 87,211 --
Insurance claim receivable ................................................... 370,284 --
Other current assets ......................................................... (80,648) 758
Increase (decrease) in liabilities:
Accounts payable ............................................................. 59,126 (136,402)
Other current liabilities .................................................... 484,088 (192,718)
----------- ---------
Net cash provided by (used for) operating activities ...................... 67,817 (3,916)
----------- ---------
Cash flows from investing activities:
Purchase of property and equipment ............................................... (972,203) (138,506)
Proceeds on disposal of property and equipment ................................... -- 213,808
(Increase) decrease in other assets .............................................. (55,525) 66,761
----------- ---------
Net cash provided (used) by investing activities ............................ (1,027,728) 142,063
----------- ---------
Cash flows from financing activities:
Net advances under line of credit ................................................ 519,584 136,919
Repayment of notes payable ....................................................... (492,016) (750,031)
Proceeds from notes payable ...................................................... 642,839 333,617
Net proceeds from convertible notes payable ...................................... -- 370,000
Repayment of convertible notes payable ........................................... -- (185,000)
Repayment of notes payable related parties ....................................... (4,956) --
Principal payments on obligations under capital leases ........................... (9,123) (87,152)
Net proceeds on the sale of common stock ......................................... 500,000 53,506
Repurchase of common stock ....................................................... (2,000) --
----------- ---------
Net cash provided by (used for) financing activities ........................... 1,154,328 (128,141)
----------- ---------
Net increase in cash ................................................................. 194,417 10,006
Cash and cash equivalents at beginning of period ..................................... 161,215 2,233
----------- ---------
Cash and cash equivalents at end of period ........................................... $ 355,632 $ 12,239
=========== =========
Supplemental cash flow information:
Machinery and equipment acquired under capital leases .............................. $ -- $ 19,038
Common stock issued upon conversion of notes payable and accrued interest .......... 912,666 --
Interest paid ...................................................................... 266,235 423,966
</TABLE>
See accompanying notes to unaudited condensed consolidated
financial statements.
<PAGE>
GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
March 31, 2000
1. Business
GreenMan Technologies, Inc. is engaged in the business of collecting,
shredding and marketing scrap tires. The tire recycling operations are located
in Jackson, Georgia and Savage, Minnesota.
In February 2000, management decided to consolidate the operations of
GreenMan of South Carolina into GreenMan of Georgia in order to maximize the
processing capacity of the Georgia facility and eliminate continued South
Carolina operating losses. The consolidation was concluded in March 2000 and
GreenMan continues to provide collection services to its South Carolina customer
base.
In March 1999, GreenMan discontinued operations at its wholly-owned
subsidiary, DuraWear Corporation and in June 1999 sold substantially all of
DuraWear's assets and liabilities to a third party. DuraWear manufactured,
installed and marketed a diverse range of abrasive resistant ceramic and polymer
products.
On September 4, 1998, GreenMan acquired all of the scrap tire collection
and processing assets of United Waste Service, Inc., a wholly owned subsidiary
of Republic Services, Inc. The two recycling operations were located in Georgia
and South Carolina. The Georgia operations were combined with GreenMan
Technologies of Georgia during the year ended September 30, 1999. The South
Carolina operation has been incorporated as GreenMan Technologies of South
Carolina, Inc. which was subsequently consolidated into the operations of
GreenMan Technologies of Georgia, Inc.
In August 1998, GreenMan's Louisiana crumb rubber processing facility was
severely damaged by a fire which necessitated the closure of the operation in
December 1998.
2. Basis of Presentation
The consolidated financial statements include the results of operations of
GreenMan Technologies of Minnesota, GreenMan Technologies of Georgia, GreenMan
Technologies of Louisiana and GreenMan Technologies of South Carolina. All
significant intercompany accounts and transactions are eliminated in
consolidation. The consolidated financial statements have been restated to
reflect the operating results of DuraWear as discontinued operations for all
periods presented.
The financial statements are unaudited and should be read in conjunction
with the financial statements and notes thereto for the year ended September 30,
1999 included in GreenMan'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 rules and regulations,
although management 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.
3. Net Loss Per Share
Basic earnings per share represents income available to common stock
divided by the weighted average number of common shares outstanding during the
period. Diluted earnings per share reflects additional common shares that would
have been outstanding if potential dilutive common shares had been issued, as
well as any adjustment to income that would result from the assumed conversion.
Potential common shares that may be issued by GreenMan relate to outstanding
stock options and warrants (determined using the treasury stock method),
preferred stock and convertible debt. The assumed conversion of outstanding
dilutive stock options, warrants and preferred stock would increase the shares
outstanding but would not require an adjustment to income as a result of the
conversion. For all periods presented, options, warrants, preferred stock and
convertible debt were anti-dilutive and excluded from the net loss per share
computation.
<PAGE>
GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
March 31, 2000
4. Discontinued Operations
In March 1999, GreenMan decided to discontinue operations at its DuraWear
subsidiary in order to eliminate continued operating losses and focus efforts on
the core business of tire recycling. GreenMan recorded a loss on disposal of
DuraWear of $920,000 and wrote down DuraWear's net assets to their estimated
fair market value at March 31, 1999. On June 14, 1999, a third party paid
$16,451 for substantially all assets and liabilities of DuraWear, excluding the
land and buildings which were retained by GreenMan subject to the existing
mortgage. The land and buildings have been reclassified to real estate held for
investment.
During the year ended September 30, 1999 DuraWear had revenues totaling
$407,947 and reported a loss from discontinued operations of $1,156,285. For the
three and six months ended March 31, 1999, DuraWear's revenues were $211,128 and
$407,947, respectively. The consolidated financial statements have been restated
to reflect the net operating results of DuraWear as a separate line item for all
periods presented. At March 31, 2000, DuraWear's assets totaled $699,053 and
represented 5.5% of consolidated assets.
5. Need for Additional Capital
GreenMan has incurred losses since its inception aggregating $24,729,670,
had a working capital deficiency of $5,438,468 at March 31, 2000 and is in
default of certain debt obligations. In addition, the commencement of
involuntary bankruptcy proceedings or the inability to maintain compliance with
the terms of long-term debt obligations may result in additional defaults, the
acceleration of debt repayment terms and a further deterioration in GreenMan's
financial position. These conditions raise substantial doubt about GreenMan's
ability to continue as a going concern. GreenMan's continued existence is
dependent on its ability to achieve profitable status and raise additional
financing. Management plans to resolve the doubt by evaluating existing
financing alternatives, negotiating with existing secured creditors, attempting
to refinance existing long term debt and achieving profitability. Management
does not believe that adjustments or reclassifications of recorded assets and
liabilities are necessary at this time.
6. Property, Plant and Equipment
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
September 30, March 31, Estimated
1999 2000 Useful Lives
---------------- ---------------- ---------------
<S> <C> <C> <C>
Land ..................................... $ 655,377 $ 668,877
Buildings ................................ 1,667,702 1,673,446 10-20 years
Machinery and equipment .................. 3,967,537 3,798,505 5-10 years
Furniture and fixtures ................... 88,023 83,298 3-5 years
Motor vehicles ........................... 3,028,711 3,037,282 3-10 years
------------- -----------
9,407,350 9,261,407
Less accumulated depreciation
and amortization (1,823,029) (2,362,070)
------------- -----------
Property, plant and equipment, net $ 7,584,321 $ 6,899,337
============= ===========
</TABLE>
<PAGE>
GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
March 31, 2000
7. Investment in Joint Venture
In August 1997, GreenMan formed a joint venture with Crumb Rubber
Technologies, Inc. to collect and process tires in the State of New York and to
market the crumb rubber derived from the tires. As a result of the joint
venture's inability to generate significant revenues since inception, GreenMan's
minority ownership position in the joint venture and management's belief that it
is unlikely to generate any significant revenue from the joint venture,
management wrote-off its investment in the joint venture at September 30, 1998.
Pursuant to the terms of the joint venture agreement, Crumb Rubber
Technologies agreed to return $300,000 of equipment deposits to GreenMan by
March 1998. As of September 30, 1998 they had repaid $115,000, however due to
Crumb Rubber Technologies inability to maintain the agreed upon payment schedule
and the uncollateralized nature of the deposits management wrote off the balance
of $185,000. During the year ended September 30, 1999, GreenMan recovered
$35,000 from Crumb Rubber Technologies and recorded it as other income.
In December 1999, GreenMan agreed to sell its minority interest in a joint
venture to Crumb Rubber Technologies and forgive all remaining amounts due from
them in return for $60,000 to be paid by January 31, 2000 and the return of
previously issued warrants to purchase shares of GreenMan's common stock.
GreenMan received representations from Crumb Rubber Technologies that there were
no obligations due by GreenMan as a result of its minority ownership in the
joint venture. GreenMan received $20,000 from Crumb Rubber Technologies during
the quarter ended December 31, 1999 and the remaining $40,000 during the quarter
ended March 31, 2000. These amounts have been recorded as other income.
8. Convertible Notes Payable
June 1998 Convertible Note
In June 1998, GreenMan issued a $300,000 10% convertible note payable in
settlement of all amounts owed under certain leases. The note is payable in 36
monthly payments of $9,680 and is convertible into common stock at the holder's
option at $1.38 per share. GreenMan had not made any payments on the convertible
note payable as of September 30, 1999, is currently in default and has
classified the note as a current liability. In October 1999, a payment plan was
established with the creditor whereby GreenMan agreed to make monthly payments
until the balance was paid off. In March 2000, GreenMan granted the note holder
a secured interest in certain equipment owned by GreenMan and currently held for
resale. As of May 1, 2000, GreenMan had paid $195,000 towards the outstanding
obligation.
Private Offering of Convertible Notes Payable and Warrants
In October 1999, GreenMan commenced a private offering of 10% convertible
notes payable and warrants in an effort to raise up to $500,000 in gross
proceeds. As of March 31, 2000, the Company had issued $375,000 of convertible
notes to an investor (who became a director of GreenMan in March 2000) and
issued immediately exercisable five year warrants to purchase 125,000 shares of
common stock at exercise prices ranging from $.31 to $.50 per share. GreenMan
also recorded deferred financing costs of $10,500 in connection with the
issuance of the warrants and paid $5,000 in fees to a placement agent. The
convertible notes payable are due twelve months after issuance and are payable
in cash or unregistered common stock at a conversion price of $1.00 per share.
The investor has been granted piggy-back registration rights to register the
common stock.
The deferred charges are being amortized over the life of the notes
payable. Amortization and interest expense for the three and six months ended
March 31, 2000 was $10,500 and $16,700, respectively.
<PAGE>
GreenMan Technologies, Inc.
Notes To Unaudited Condensed Consolidated Financial Statements
March 31, 2000
9. Common Stock Transactions
In October 1998, GreenMan commenced a private offering of common stock in
an effort to raise up to $500,000 in gross proceeds (the offering was
subsequently increased to $1,000,000 in March 1999). During the six months ended
March 31, 2000, GreenMan sold 228,117 shares of common stock for gross proceeds
of $53,506. As of March 31, 2000, 1,766,730 shares of unregistered common stock
have been sold to investors including officers and directors for approximately
$608,506 of gross proceeds. In January 1999, GreenMan advanced $55,000 to two
officers under 8.5% secured loan agreements with both principal and interest due
January 2002. The proceeds were used to participate in the private placement and
the loans are secured by 191,637 shares of common stock owned by the officers.
The investors have been granted piggy-back registration rights to register the
common stock and have agreed not to sell or transfer the shares for a period of
at least twelve months after issuance.
10. Market for Common Stock
On July 7, 1999, GreenMan was notified that as a result of noncompliance
with the $1.00 minimum bid requirement and the violation of marketplace rules
regarding shareholder approval, GreenMan's securities would no longer be listed
on Nasdaq's Small Cap Market effective July 7, 1999. Effective July 8, 1999, the
common stock and warrants began trading on the Over the Counter Bulletin Board
and continue to trade on the Boston Stock Exchange. GreenMan filed an appeal
with Nasdaq Small Cap Market requesting a review of the decision and a
reinstatement of its securities on the Nasdaq Small Cap Market. In February
2000, GreenMan was notified by the Hearing Review Council that the decision to
delist GreenMan's securities would not be reversed.
Management anticipates that the absence of listing on Nasdaq's Small Cap
Market for the common stock may have a material adverse effect on the market
for, and potentially the market price of the common stock.
11. Segment Information
GreenMan operates in one business segment, the collecting, shredding and
marketing of scrap tires to be used as feedstock for tire derived fuel, civil
engineering projects and/or for further processing into crumb rubber. In March
1999, GreenMan decided to discontinue operations at its industrial materials
subsidiary in order to eliminate continued operating losses and focus efforts on
the core business of tire recycling.
<PAGE>
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 GreenMan's Form
10-KSB filed for the year ended September 30, 1999.
Results of Operations
Three Months ended March 31, 2000 Compared to the Three Months ended March
31, 1999
Net sales for the three months ended March 31, 2000 were $4,279,816 as
compared to $3,804,660 for the three months ended March 31, 1999. GreenMan
collected 4.3 million passenger tire equivalents during the quarter ended March
31, 2000 as compared to 4.2 million passenger tire equivalents for the quarter
ended March 31, 1999. The slight increase in passenger tire equivalents was
attributable to increased abatement work at GreenMan's Minnesota operations
which were offset by reduced volume at GreenMan's southeastern U.S. operations
as result of the consolidation of the Lawrenceville location in 1999, the
completion of Georgia abatement projects and lower volume in South Carolina due
to increased competition. The 12% increase in total revenues was attributable to
an increase in the overall quality of revenue (revenue per passenger tire
equivalent) during the quarter.
Gross profit for the three months ended March 31, 2000 was $589,635 or 14
% of net sales as compared to $830,011or 22% of net sales for the three months
ended March 31, 1999. The decrease was primarily attributable to decreased
volumes in Georgia and operating inefficiencies experienced in South Carolina.
During a majority of the quarter, South Carolina resources were focused on
cleanup/transfer and closure activities. Management has identified approximately
$178,000 of non-reoccurring operating costs associated with these consolidation
activities. In addition, approximately $62,000 of charges associated with the
transfer and installation of the South Carolina shredder to GreenMan's Minnesota
operations and approximately $61,000 of repairs to the Minnesota shredder that
was replaced were identified as non-reoccuring.
As a result of the consolidation of the South Carolina operations into the
Georgia operations during the quarter, management determined that certain
equipment was no longer necessary and initiated an effort to sell the excess
equipment. The net book value of the identified assets exceeded the estimated
market value and accordingly, GreenMan recorded a non-cash impairment loss of
$154,235. In addition, management determined that based on reduced revenues,
tire volumes and estimated future cash flows associated with South Carolina
operations, the net book value of the goodwill associated with GreenMan of South
Carolina exceeded the estimated market value and accordingly, a non-cash
impairment loss of $172,000 was recorded at March 31, 2000.
Operating expenses, exclusive of the impairment loss were $1,007,563 for
the three months ended March 31, 2000, or 24% of net sales as compared to
$962,377 or 25% of net sales, for the three months ended March 31, 1999.
GreenMan recorded $238,333 of forgiveness of indebtedness during the
quarter ended March 31, 2000 as a result of renegotiating certain outstanding
obligations in an effort to strengthen GreenMan's financial position. GreenMan
recorded a $955,000 casualty loss during the quarter ended March 31, 1999
associated with the litigation that ensued from GreenMan Technologies of
Louisiana's fire.
The Company experienced a net loss of $656,752 (including $326,235 of
non-cash impairment losses) or $.05 per share for the three months ended March
31, 2000 as compared to a net loss of $2,220,692, or $0.20 per share for the
three months ended March 31, 1999. The net loss for the three months ended March
31, 1999 includes a $990,901 loss from discontinued operations associated with
the March 1999 decision to close DuraWear.
<PAGE>
Six Months ended March 31, 2000 Compared to the Six Months ended March 31, 1999
Net sales for the six months ended March 31, 2000 were $8,839,069 as
compared to $8,185,611 for the six months ended March 31, 1999. GreenMan
collected approximately 9 million passenger tire equivalents during the six
months ended March 31, 2000 and March 31, 1999. The increased abatement work at
our Minnesota operations and the increased overall quality of revenue (revenue
per passenger tire equivalent) offset the decreased volume experienced at our
southeastern U.S. operations.
Gross profit for the six months ended March 31, 2000 was $1,632,362 or 18%
of net sales as compared to $2,133,564 or 26% of net sales for the six months
ended March 31, 1999. The decrease was primarily attributable to decreased
volumes in GreenMan's southeastern U.S. operations and operating inefficiencies
experienced in South Carolina as resources were focused on cleanup/transfer and
closure activities during a majority of the recent quarter. Management has
identified approximately $1780,000 of non-reoccurring costs incurred as a result
of the consolidation in addition to approximately $123,000 of charges associated
with the repair/transfer and installation of the South Carolina shredder into
GreenMan's Minnesota operations.
Operating expenses, exclusive of the impairment losses were $1,902,301 for
the six months ended March 31, 2000, or 22% of sales as compared to $1,948,885,
or 24% of sales, for the six months ended March 31, 1999. As a result of the
consolidation of the southeastern U.S. operations, GreenMan recorded an
impairment loss of $326,235 during the quarter ended March 31, 2000.
Interest and financing costs for the six months ended March 31, 2000
decreased by $120,325 to $464,650 due to the elimination of financing cost
amortization associated with the issuance of convertible debentures in 1997 and
1998.
GreenMan recorded $238,333 of forgiveness of indebtedness during the
quarter ended March 31, 2000 as a result of renegotiating certain outstanding
obligations in an effort to strengthen GreenMan's financial position. During the
quarter ended March 31, 1999, GreenMan recorded a $955,000 casualty loss
associated with the litigation that ensued from GreenMan Technologies of
Louisiana's fire.
The Company experienced a net loss of $715,804 (including $326,235 of
non-cash impairment losses) or $.06 per share for the six months ended March 31,
2000 as compared to a net loss of $2,441,505, or $0.25 per share for the six
months ended March 31, 1999. The net loss for the six months ended March 31,
1999 includes a $1,101,285 loss from discontinued operations associated with
DuraWear.
<PAGE>
Liquidity and Capital Resources
Since its inception, GreenMan has satisfied its capital requirements
through the sale of common and preferred stock and debt securities 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 options and warrants in lieu of cash for services rendered.
GreenMan has incurred losses since its inception aggregating $24,729,670,
has a working capital deficiency of $5,438,468 at March 31, 2000 and is in
default of certain debt obligations. In addition, the commencement of
involuntary bankruptcy proceedings or the inability to maintain compliance with
the terms of long-term debt obligations may result in additional defaults, the
acceleration of debt repayment terms, and a further deterioration in GreenMan's
financial position. These conditions raise substantial doubt about GreenMan's
ability to continue as a going concern. GreenMan's continued existence is
dependent on its ability to achieve profitable status and raise additional
financing. Management plans to resolve the doubt by:
o Focusing corporate resources on growing GreenMan's core business of tire
collection and processing;
o Reducing operating and overhead costs where appropriate;
o Negotiating with existing secured and unsecured creditors to refinance or
reach settlement of existing long term debt;
o Continuing to identify and evaluate financing alternatives.
During the past two and one half years, GreenMan has divested/closed and
or consolidated under performing operations which have contributed over $14.5
million of GreenMan's cumulative losses. Additionally, GreenMan eliminated the
use of non-conventional financing methods (discounted convertible debentures)
which contributed an additional $4.0 million in cumulative losses. GreenMan has
also reduced its corporate overhead by over $350,000 on an annualized basis.
In February 2000, management decided to consolidate the operations of
GreenMan of South Carolina into GreenMan of Georgia in order to maximize the
processing capacity of the Georgia facility and eliminate continued South
Carolina operating losses which aggregated approximately $1.54 million through
March 31, 2000.
GreenMan recorded $238,311 of forgiveness of indebtedness during the
quarter ended March 31, 2000 as a result of renegotiating certain outstanding
obligations in an effort to strengthen GreenMan's financial position.
During the six months ended March 31,2000 GreenMan sold $213,808 of idle
equipment and is currently marketing an additional $477,500 of idle equipment in
order to raise additional capital.
GreenMan has also identified equipment which management believes will
recycle the tire processing residual currently disposed of at a cost exceeding
$1,000,000 per year, into saleable components of rubber and steel. Management is
evaluating financing alternatives for purchase of this equipment but there can
be no assurance at this time that such financing will be concluded in the near
future on favorable terms, if at all.
Approximately $3.7 million of current liabilities is associated with
GreenMan's credit facility with Finova Capital Corporation which is classified
as current as it is due in February 2001. GreenMan is currently evaluating
several financing alternatives, including discussions with Finova regarding a
renewal of the credit facility. No assurances can be given that such refinancing
will be concluded in the near future on favorable terms, if at all
On July 7, 1999, GreenMan was notified that as a result of noncompliance
with the $1.00 minimum bid requirement and the violation of marketplace rules
regarding shareholder approval, GreenMan's securities would no longer be listed
on Nasdaq's Small Cap Market effective July 7, 1999. Effective July 8, 1999, the
common stock and warrants began trading on the Over the Counter Bulletin Board
and continue to trade on the Boston Stock Exchange. GreenMan filed an appeal
with Nasdaq Small Cap Market requesting a review of the decision and a
reinstatement of its securities on the Nasdaq Small Cap Market. In February
2000, GreenMan was notified by the Hearing Review Council that the decision to
delist GreenMan's securities would not be reversed. Management anticipates that
the absence of listing on Nasdaq's Small Cap Market for the common stock may
have a material adverse effect on the market for, and potentially the market
price, of the common stock.
<PAGE>
Management is currently evaluating several immediate financing
alternatives which would enhance GreenMan's financial position and is diligently
working to determine the feasibility of each alternative. No assurances can be
given that such financing will be concluded in the near future on favorable
terms, if at all. If GreenMan is unable to obtain additional financing, its
ability to continue as a going concern could be materially and adversely
affected.
Private Offering of Convertible Notes Payable and Warrants
In October 1999, GreenMan commenced a private offering of 10% convertible
notes payable and warrants in an effort to raise up to $500,000 in gross
proceeds. As of March 31, 2000, the Company had issued $375,000 of convertible
notes to an investor (who became a director of GreenMan in March 2000) and
issued immediately exercisable five year warrants to purchase 125,000 shares of
common stock at exercise prices ranging from $.31 to $.50 per share. GreenMan
also recorded deferred financing costs of $10,500 in connection with the
issuance of the warrants and paid $5,000 in fees to a placement agent. The
convertible notes payable are due twelve months after issuance and are payable
in cash or unregistered common stock at a conversion price of $1.00 per share.
The investors have been granted piggy-back registration rights to register the
common stock.
Management believes that placement of these securities is exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended.
Private Offering of Common Stock and Warrants
In October 1998, GreenMan commenced a private offering of common stock in
an effort to raise up to $500,000 in gross proceeds (the offering was
subsequently increased to $1,000,000 in March 1999). During the six months ended
March 31, 2000, GreenMan sold 228,117 shares of common stock for gross proceeds
of $53,506. As of March 31, 2000, 1,766,730 shares of unregistered common stock
have been sold to investors including officers and directors for approximately
$608,506 of gross proceeds. In January 1999, GreenMan advanced $55,000 to two
officers under 8.5% secured loan agreements with both principal and interest due
January 2002. The proceeds were used to participate in the private placement and
the loans are secured by 191,637 shares of common stock owned by the officers.
The investors have been granted piggy-back registration rights to register the
common stock and have agreed not to sell or transfer the shares for a period of
at least twelve months after issuance.
Management believes that placement of these securities is exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended.
Acquisition of United Waste Service's Tire Related Assets
On September 4, 1998, GreenMan acquired all of the scrap tire collection
and processing assets of United Waste Service, Inc., a wholly owned subsidiary
of Republic Services, Inc. GreenMan paid $4,050,000 for the acquired assets in
the form of $850,000 in cash and $3,200,000 of preferred stock. The preferred
stock is convertible into GreenMan's common stock beginning in February 2001
based upon the higher of the trailing 15 day average closing bid prices prior to
the conversion date or the average of the closing bid prices during the period
from September 3, 1998 to February 3, 2001. Simultaneous with the acquisition,
GreenMan entered into an equipment financing agreement with Heller Financial
Inc. which provided the $850,000 for the transaction. The acquired assets are
located in Lawrenceville, Georgia (subsequently combined with GreenMan
Technologies of Georgia) and Batesburg, South Carolina (incorporated as GreenMan
Technologies of South Carolina).
Cautionary Statement
Information contained or incorporated by reference in this document
contains "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, which statements can be identified by
the use of forward-looking terminology such as "may," "will," "would," "can,"
"could," "intend," "plan," "expect," "anticipate," "estimate" or "continue" or
the negative thereof or other variations thereon or comparable terminology. The
following matters constitute cautionary statements identifying important factors
with respect to such forward-looking statements, including certain risks and
uncertainties, that could cause actual results to differ materially from those
in such forward-looking statements.
<PAGE>
Factors Affecting Future Results
There are several factors which may effect the future operating results of
GreenMan, including:
o the ability to obtain additional financing at acceptable terms to
eliminate the current working capital deficit, cure existing defaults and
fund continued internal growth;
o the ability to realize the anticipated consolidation benefits associated
with the consolidation of GreenMan's South Carolina operations into the
Georgia operations without the loss of significant South Carolina
customers;
o the ability to renegotiate the conversion price of the Class B convertible
preferred stock if, in February 2001, the conversion price were to result
in a change in control;
o the delisting of GreenMan's securities from the Nasdaq Small Cap Stock
Market and the effect on the market for, and potentially the market price
of, GreenMan's common stock;
o the ability to realize the remaining $950,000 due under the property
insurance policy in conjunction with the Louisiana fire; and
o general economic conditions.
GreenMan's plans and objectives are based on assumptions that it will be
successful in receiving additional financing to fund future growth and that
there will be no material adverse change in GreenMan's operations or business.
There can be no assurance that GreenMan will obtain such financing on acceptable
terms.
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 GreenMan. As a result, there can be no assurance that
GreenMan will be able to achieve or sustain profitability on a quarterly or
annual basis. In light of the significant uncertainties inherent in GreenMan's
business, forward-looking statements made in this report should not be regarded
as a representation by GreenMan or any other person that the objectives and
plans of GreenMan will be achieved.
Environmental Liability
There are no known material environmental violations or assessments.
Year 2000 Date Conversion
GreenMan has experienced no significant business interruptions as a result
of year 2000 problems.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There have been no significant changes in legal proceedings
during the quarter ended March 31, 2000.
Item 2. Changes in Securities .
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The Company conducted a Special Meeting in lieu of an Annual
Meeting of Stockholders on March 29, 2000. The matters
considered at the meeting were election of six members of the
Board of Directors and a proposal to ratify the selection of
the firm of Wolf & Company, P.C. as independent auditors for
the fiscal year ending September 30, 2000.
The results of each vote was as follows:
<TABLE>
<CAPTION>
For * Against Abstain*
---------- --------- ----------
<S> <C> <C> <C>
Vote 1 - Election of six (6) members of the Board
of Directors.......................................... 9,534,752 -- 66,912
Vote 2 - Proposal to ratify the selection of Wolf &
Company, P.C. as independent auditors for the
fiscal year ending September 30, 2000................. 9,657,635 66,628 10,803
</TABLE>
* Information reported for Vote 1 reflects the voting results for four
directors. Shareholders abstained from voting an additional 133,402 shares for
two directors who were successfully elected to the Board of Directors. On March
31, 2000, Mr. James O'Connor resigned as a director of GreenMan.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11 -- Statement regarding net loss per share.
Exhibit 27 -- Financial Data Schedule.
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the quarter ended March 31,
2000.
<PAGE>
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/ Robert H. Davis
----------------
Robert H. Davis
Chief Executive Officer
By: GreenMan Technologies, Inc.
/s/ Charles E. Coppa
----------------
Chief Financial Officer
Exhibit 11
GreenMan Technologies, Inc.
Statement Regarding Net Loss per Share
March 31, 2000
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31, March 31, March 31,
1999 2000 1999 2000
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Loss from continuing operations ....... $ (1,229,791) (656,752) $(1,340,220) (715,804)
Loss from discontinued operations ..... (990,901) -- (1,101,285) --
------------ ---------- ----------- ----------
Net loss .............................. $ (2,220,692) (656,752) $(2,441,505) (715,804)
============ ========== =========== ==========
Net loss per share:
Continuing operations ................. $ (0.11) (0.05) (0.14) (0.06)
Discontinued operations ............... (0.09) -- (0.11) --
Net loss .............................. (0.20) (0.05) (0.25) (0.06)
============ ========== =========== ==========
Weighted average shares outstanding ... 11,171,235 11,990,716 9,788,142 11,904,032
============ ========== =========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 12,239
<SECURITIES> 0
<RECEIVABLES> 2,101,578
<ALLOWANCES> 50,871
<INVENTORY> 0
<CURRENT-ASSETS> 3,244,606
<PP&E> 9,261,407
<DEPRECIATION> 2,362,070
<TOTAL-ASSETS> 12,685,671
<CURRENT-LIABILITIES> 8,683,074
<BONDS> 1,769,928
0
3,200,000
<COMMON> 119,907
<OTHER-SE> (1,595,416)
<TOTAL-LIABILITY-AND-EQUITY> 12,685,671
<SALES> 8,839,069
<TOTAL-REVENUES> 8,839,069
<CGS> 7,206,707
<TOTAL-COSTS> 2,228,536
<OTHER-EXPENSES> (345,020)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 464,650
<INCOME-PRETAX> (715,804)
<INCOME-TAX> 0
<INCOME-CONTINUING> (715,804)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (715,804)
<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
