eps3413.htm
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
10-Q
(Mark
One)
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarterly period ended March 31,
2009
or
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the transition period from ____________ to ____________
Commission
File Number: 1-13776
GreenMan
Technologies, Inc.
(Exact
name of registrant as specified in its charter)
|
|
|
(State
or other jurisdiction of incorporation
or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
205
South Garfield, Carlisle, Iowa
|
|
50047
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
|
|
|
(781)
224-2411
|
(Registrant’s
telephone number, including area code)
|
205
South Garfield, Carlisle Iowa 50047
|
|
|
(Former
name, former address and former fiscal year, if changed since last
report)
|
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes
x No
q
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange
Act. (Check one):
|
q Large
Accelerated Filer
|
q Accelerated
Filer
|
|
q Non-accelerated
Filer
|
x Smaller
reporting company
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes q No x
As
of May 15, 2009, there were 30,880,435 shares of the registrant’s Common Stock
were outstanding.
GreenMan
Technologies, Inc.
TABLE
OF CONTENTS
|
|
Page
|
PART
I.
|
FINANCIAL
INFORMATION
|
|
|
|
|
Item
1.
|
Consolidated
Financial Statements (unaudited)
|
|
|
|
|
|
Consolidated
Balance Sheets at March 31, 2009 (unaudited) and September 30,
2008
|
3
|
|
|
|
|
Consolidated
Statements of Operations for the three and six months ended March 31, 2009
and 2008 (unaudited)
|
4
|
|
|
|
|
Consolidated
Statement of Changes in Stockholders’ Equity (deficit) for the six months
ended March 31, 2009 (unaudited)
|
5
|
|
|
|
|
Consolidated
Statements of Cash Flows for the six months ended March 31, 2009 and 2008
(unaudited)
|
6
|
|
|
|
|
Notes
to Condensed Consolidated Financial Statements
|
7-13
|
|
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
14-17
|
|
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
17
|
|
|
|
Item
4T.
|
Controls
and Procedures
|
17
|
|
|
|
PART
II.
|
OTHER
INFORMATION
|
|
|
|
|
Item
1.
|
Legal
Proceedings
|
17
|
|
|
|
Item
1A.
|
Risk
Factors
|
17
|
|
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
17
|
|
|
|
Item
3.
|
Defaults
Upon Senior Securities
|
18
|
|
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
18
|
|
|
|
Item
5.
|
Other
Information
|
18
|
|
|
|
Item
6.
|
Exhibits
|
18
|
|
|
|
|
Signatures
|
19
|
GreenMan
Technologies, Inc.
Consolidated
Balance Sheets
(Unaudited)
|
|
March
31,
2009
|
|
|
September 30,
2008
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
$ |
5,528,228 |
|
|
$ |
210,080 |
|
Marketable
investments
|
|
|
2,846,933 |
|
|
|
-- |
|
Accounts
receivable, trade, less allowance for doubtful accounts of $0 and $96,338
as of March 31, 2009 and September 30, 2008
|
|
|
109,882 |
|
|
|
1,135,015 |
|
Inventory
|
|
|
1,252,073 |
|
|
|
1,323,748 |
|
Other
current assets
|
|
|
1,175,601 |
|
|
|
291,371 |
|
Assets
related to discontinued operations
|
|
|
-- |
|
|
|
10,145,282 |
|
Total
current assets
|
|
|
10,912,717 |
|
|
|
13,105,496 |
|
Property,
plant and equipment, net
|
|
|
557,001 |
|
|
|
551,683 |
|
Other
assets:
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
2,289,939 |
|
|
|
2,289,939 |
|
Long
term contracts, net
|
|
|
464,625 |
|
|
|
554,250 |
|
Patents,
net
|
|
|
97,500 |
|
|
|
113,433 |
|
Other
|
|
|
413,868 |
|
|
|
425,908 |
|
Assets
related to discontinued operations
|
|
|
-- |
|
|
|
6,566,780 |
|
Total
other assets
|
|
|
3,265,932 |
|
|
|
9,950,310 |
|
|
|
$ |
14,735,650 |
|
|
$ |
23,607,489 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Notes
payable, current
|
|
$ |
210,274 |
|
|
$ |
506,678 |
|
Accounts
payable
|
|
|
295,838 |
|
|
|
782,494 |
|
Accrued
expenses, other
|
|
|
976,057 |
|
|
|
1,176,408 |
|
Obligations
due under lease settlement, current
|
|
|
68,518 |
|
|
|
68,518 |
|
Notes
payable, related parties, current
|
|
|
-- |
|
|
|
534,320 |
|
Liabilities
related to discontinued operations
|
|
|
100,000 |
|
|
|
16,140,322 |
|
Total
current liabilities
|
|
|
1,650,687 |
|
|
|
19,208,740 |
|
Notes
payable, non-current
|
|
|
477,648 |
|
|
|
482,881 |
|
Obligations
due under lease settlement, non-current
|
|
|
555,540 |
|
|
|
580,540 |
|
Liabilities
related to discontinued operations
|
|
|
-- |
|
|
|
3,397,258 |
|
Total
liabilities
|
|
|
2,683,875 |
|
|
|
23,669,419 |
|
|
|
|
|
|
|
|
|
|
Stockholders'
deficit:
|
|
|
|
|
|
|
|
|
Preferred
stock, $1.00 par value, 1,000,000 shares authorized, none
outstanding
|
|
|
-- |
|
|
|
-- |
|
Common
stock, $.01 par value, 60,000,000 shares authorized, 30,880,435 shares
issued and outstanding at March 31, 2009 and
September 30, 2008
|
|
|
308,804 |
|
|
|
308,804 |
|
Additional
paid-in capital
|
|
|
38,250,536 |
|
|
|
38,881,669 |
|
Accumulated
deficit
|
|
|
(26,481,367 |
) |
|
|
(39,252,403 |
) |
Accumulated
other comprehensive loss
|
|
|
(26,198 |
) |
|
|
-- |
|
Total
stockholders’ equity (deficit)
|
|
|
12,051,775 |
|
|
|
(61,930 |
) |
|
|
$ |
14,735,650 |
|
|
$ |
23,607,489 |
|
See
accompanying condensed notes to unaudited consolidated financial
statements.
GreenMan
Technologies, Inc.
Consolidated
Statements of Operations
(Unaudited)
|
|
Three
Months Ended
March
31,
|
|
|
Six
Months Ended
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Net
sales
|
|
$ |
97,510 |
|
|
$ |
607,872 |
|
|
$ |
759,515 |
|
|
$ |
1,207,486 |
|
Cost
of sales
|
|
|
208,955 |
|
|
|
382,071 |
|
|
|
702,115 |
|
|
|
869,511 |
|
Gross
profit
|
|
|
(111,445 |
) |
|
|
225,801 |
|
|
|
57,400 |
|
|
|
337,975 |
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative
|
|
|
724,516 |
|
|
|
830,589 |
|
|
|
1,902,118 |
|
|
|
1,568,501 |
|
Operating
(loss) from continuing operations
|
|
|
(835,961 |
) |
|
|
(604,788 |
) |
|
|
(1,844,718 |
) |
|
|
(1,230,526 |
) |
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
and financing costs
|
|
|
(13,346 |
) |
|
|
(26,025 |
) |
|
|
(72,401 |
) |
|
|
(71,456 |
|
Other,
net
|
|
|
32,722 |
|
|
|
(30,460 |
) |
|
|
23,461 |
|
|
|
(49,674 |
|
Other
(expense), net
|
|
|
19,376 |
|
|
|
(56,485 |
) |
|
|
(48,940 |
) |
|
|
(121,130 |
) |
Loss
from continuing operations before income taxes
|
|
|
(816,585 |
) |
|
|
(661,273 |
) |
|
|
(1,893,658 |
) |
|
|
(1,351,656 |
) |
Provision
(benefit) for income taxes
|
|
|
-- |
|
|
|
(62 |
) |
|
|
456 |
|
|
|
-- |
|
Loss
from continuing operations
|
|
|
(816,585 |
) |
|
|
(661,211 |
) |
|
|
(1,894,114 |
) |
|
|
(1,351,656 |
) |
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
on sale of discontinued operations, net of taxes,
|
|
|
-- |
|
|
|
|
|
|
|
14,347,445 |
|
|
|
|
|
(Loss)
income from discontinued operations, net of taxes
|
|
|
(100,000 |
) |
|
|
(218,480 |
) |
|
|
317,705 |
|
|
|
489,869 |
|
|
|
|
(100,000 |
) |
|
|
(218,480 |
) |
|
|
14,665,150 |
|
|
|
489,869 |
|
Net
income (loss)
|
|
$ |
(916,585 |
) |
|
$ |
(879,691 |
) |
|
$ |
12,771,036 |
|
|
$ |
(861,787 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
from continuing operations per share –basic
|
|
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.04 |
) |
Income
from discontinued operations per share –basic
|
|
|
-- |
|
|
|
-- |
|
|
|
0.47 |
|
|
|
0.01 |
|
Net
(loss) income per share –basic
|
|
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
|
$ |
0.41 |
|
|
$ |
(0.03 |
) |
Net
(loss) income per share –diluted
|
|
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
|
$ |
0.41 |
|
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding -basic
|
|
|
30,880,435
|
|
|
|
30,880,435
|
|
|
|
30,880,435
|
|
|
|
30,880,435
|
|
Weighted
average shares outstanding -diluted
|
|
|
30,880,435
|
|
|
|
30,880,435
|
|
|
|
30,880,435
|
|
|
|
30,880,435
|
|
See
accompanying condensed notes to unaudited consolidated financial
statements.
GreenMan
Technologies, Inc.
Consolidated
Statement of Changes in Stockholders’ Equity (Deficit)
Six
Months Ended March 31, 2009
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Common
Stock
|
|
|
Paid
In
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Loss
|
|
|
Total
|
|
Balance,
September 30, 2008
|
|
|
30,880,435 |
|
|
$ |
308,804 |
|
|
$ |
38,881,669 |
|
|
$ |
(39,252,403 |
) |
|
$ |
-- |
|
|
$ |
(61,930 |
) |
Repurchase
of warrants
|
|
|
-- |
|
|
|
-- |
|
|
|
(700,000 |
) |
|
|
-- |
|
|
|
-- |
|
|
|
(700,000 |
) |
Compensation
expense associated with stock options
|
|
|
-- |
|
|
|
-- |
|
|
|
61,731 |
|
|
|
-- |
|
|
|
-- |
|
|
|
61,731 |
|
Value
of warrants issued for services rendered
|
|
|
-- |
|
|
|
-- |
|
|
|
7,136 |
|
|
|
-- |
|
|
|
-- |
|
|
|
7,136 |
|
Unrealized
loss on marketable investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,198 |
) |
|
|
(26,198 |
) |
Net
income for six months ended March 31, 2009
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
12,771,036 |
|
|
|
-- |
|
|
|
12,771,036 |
|
Balance,
March 31, 2009
|
|
|
30,880,435 |
|
|
$ |
308,804 |
|
|
$ |
38,250,536 |
|
|
$ |
(26,481,367 |
) |
|
$ |
(26,198 |
) |
|
$ |
12,051,775 |
|
See
accompanying condensed notes to unaudited consolidated financial
statements.
GreenMan
Technologies, Inc.
Consolidated
Statements of Cash Flow
(Unaudited)
|
|
Six
Months Ended March 31,
|
|
|
|
2009
|
|
|
2008
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
Net
income (loss)
|
|
$ |
12,771,036 |
|
|
$ |
(861,787 |
) |
Adjustments
to reconcile net income (loss) to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
Gain
on sale of tire recycling operations
|
|
|
(19,847,445 |
) |
|
|
-- |
|
Net
settlement income from discontinued operations
|
|
|
(144,420 |
) |
|
|
-- |
|
Deferred
income tax application
|
|
|
5,300,000 |
|
|
|
-- |
|
Gain
on lease termination
|
|
|
(124,628 |
) |
|
|
-- |
|
Gain
on disposal of property, plant and equipment
|
|
|
-- |
|
|
|
(7,703 |
) |
Depreciation
|
|
|
224,368 |
|
|
|
701,884 |
|
Amortization
of deferred interest expense
|
|
|
359,927 |
|
|
|
259,852 |
|
Amortization
of customer relationships
|
|
|
890 |
|
|
|
3,475 |
|
Amortization
of stock option compensation expense
|
|
|
61,731 |
|
|
|
75,564 |
|
Amortization
of patents
|
|
|
15,933 |
|
|
|
10,834 |
|
Amortization
of long term contracts
|
|
|
89,625 |
|
|
|
89,625 |
|
Amortization
of deferred gain on sale leaseback transaction
|
|
|
(270,228 |
) |
|
|
(18,293 |
) |
Net
value of warrants issued
|
|
|
7,136 |
|
|
|
9,008 |
|
Decrease
(increase) in assets:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
851,281 |
|
|
|
1,085,205 |
|
Product
inventory
|
|
|
7,401 |
|
|
|
(1,194,726 |
) |
Other
current assets
|
|
|
(811,606 |
) |
|
|
(135,714 |
) |
Other
assets
|
|
|
102,739 |
|
|
|
(24,687 |
) |
Increase
(decrease) in liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
(421,985 |
) |
|
|
(164,883 |
) |
Accrued
expenses and other
|
|
|
(512,670 |
) |
|
|
(74,602 |
) |
Net
cash used in operating activities
|
|
|
(2,340,915 |
) |
|
|
(246,948 |
) |
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchase
of property and equipment
|
|
|
(99,527 |
) |
|
|
(933,649 |
) |
Purchase
of marketable investments
|
|
|
(2,873,131 |
) |
|
|
-- |
|
Purchase
of warrants
|
|
|
(700,000 |
) |
|
|
-- |
|
Cash
acquired upon purchase of business, net of transaction
costs
|
|
|
-- |
|
|
|
68,571 |
|
Proceeds
from the sale of tire recycling operations
|
|
|
27,546,652 |
|
|
|
2,000 |
|
Net
cash provided by (used in) investing activities
|
|
|
23,873,994 |
|
|
|
(863,078 |
) |
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Net
activity under line of credit
|
|
|
(3,300,221 |
) |
|
|
2,354,652 |
|
Proceeds
from notes payable
|
|
|
-- |
|
|
|
501,128 |
|
Repayment
of notes payable
|
|
|
(11,768,101 |
) |
|
|
(1,418,896 |
) |
Repayment
of notes payable, related party
|
|
|
(534,320 |
) |
|
|
-- |
|
Principal
payments on obligations under capital leases
|
|
|
(1,188,625 |
) |
|
|
(116,274 |
) |
Net
cash (used in) provided by financing activities
|
|
|
(16,791,267 |
) |
|
|
1,320,610 |
|
Net
increase in cash
|
|
|
4,741,812 |
|
|
|
215.584 |
|
Cash
and cash equivalents at beginning of period
|
|
|
786,416 |
|
|
|
376,764 |
|
Cash
and cash equivalents at end of period
|
|
$ |
5,528,228 |
|
|
$ |
587,348 |
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information:
|
|
|
|
|
|
|
|
|
Machinery
and equipment acquired under capital leases
|
|
$ |
-- |
|
|
$ |
413,954 |
|
Unrealized
loss on marketable investments
|
|
|
26,198 |
|
|
|
-- |
|
Shares
issued in acquisition
|
|
|
-- |
|
|
|
2,800,000 |
|
Interest
paid
|
|
|
470,013 |
|
|
|
688,654 |
|
Taxes
paid
|
|
|
12,865 |
|
|
|
79,939 |
|
See
accompanying condensed notes to unaudited consolidated financial
statements.
GreenMan
Technologies, Inc.
Condensed
Notes to Interim Consolidated Financial Statements
Quarter
Ended March 31, 2009 and 2008
(Unaudited)
GreenMan
Technologies, Inc. (together with its subsidiaries “we”, “us” or “our”) was
originally founded in 1992 and has operated as a Delaware corporation since
1995. Prior to November 17, 2008, GreenMan was comprised of two business
segments, the tire recycling operations and the molded recycled rubber products
operations. As described below, our business changed substantially in November
2008, when we sold substantially all of the assets of our tire recycling
operations.
The
tire recycling operations were located in Savage, Minnesota and Des Moines, Iowa
and collected, processed and marketed scrap tires in whole, shredded or granular
form.
On
October 1, 2007, we acquired Welch Products, Inc. (“Welch”), a company
headquartered in Carlisle, Iowa, which specializes in designing, developing, and
manufacturing of environmentally responsible products using recycled materials,
primarily recycled rubber (See Note 5). Welch’s patented products and processes
include playground safety tiles, roadside anti-vegetation products, construction
molds and highway guard-rail rubber spacer blocks. Through its prior acquisition
of Playtribe, Inc., Welch also provides innovative playground design, equipment
and installation. In March 2009, we changed the name of our Welch
Products Inc. subsidiary to Green Tech Products, Inc. (“Green Tech Products”)
which better reflects the nature of their new product-line extension strategy
beyond playground safety tiles and equipment. We are currently evaluating
additional recycled molded products that may be used in applications such as
highway anti-vegetation and field-turf encasement projects.
Recent
Developments
On
September 12, 2008 we executed an asset purchase agreement with Liberty Tire
Services of Ohio, LLC, a wholly-owned subsidiary of Liberty Tire Services, LLC,
the largest tire recycling company in the United States for sale of our tire
recycling business, subject to shareholder approval. On November 13, 2008 our
shareholders approved the sale and on November 17, 2008 we completed the
divestiture of substantially all of the assets of our GreenMan Technologies of
Minnesota, Inc. and GreenMan Technologies of Iowa, Inc. subsidiaries, which had
operated our tire recycling business, for approximately $27.7 million in
cash. (See Note 6)
The
consolidated financial statements include the accounts of GreenMan Technologies,
Inc. and our wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
In
September 2005, due to the magnitude of continued operating losses, our Board of
Directors approved plans to divest the operations of our GreenMan Technologies
of Georgia, Inc. subsidiary and dispose of its assets. Accordingly, we
classified all remaining liabilities associated with our Georgia entity and its
results of operations as discontinued operations for all periods presented in
the accompanying consolidated financial statements. In June 2008, GreenMan
Technologies of Georgia, Inc. filed for liquidation under Chapter 7 of the
federal bankruptcy laws in the Bankruptcy Court of the Middle District of
Georgia and a trustee was appointed (See Note 6). As a result of the bankruptcy
proceedings we relinquished control of our Georgia subsidiary to the Bankruptcy
Court and therefore we de-consolidated substantially all remaining
obligations from our financial statements as of September 30, 2008.
Because
we operated our tire recycling assets during only a portion of the fiscal
quarter covered by this report on Form 10Q we have included in this Quarterly
Report relevant information on this business segment but have classified their
respective assets, liabilities and results of operations as
discontinued operations for all periods presented in the accompanying
consolidated financial statements.
The
accompanying interim financial statements are unaudited and should be read in
conjunction with the financial statements and notes thereto for the year ended
September 30, 2008 included in our Annual Report on Form 10-KSB. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted pursuant to the
Securities and Exchange Commission rules and regulations, although we believe
the disclosures which have been made herein are adequate to ensure that the
information presented is not misleading. The results of operations
for the interim periods reported are not necessarily indicative of those that
may be reported for a full year. In our opinion, all adjustments
which are necessary for a fair statement of operating results for the interim
periods presented have been made.
GreenMan
Technologies, Inc.
Condensed
Notes to Interim Consolidated Financial Statements
Quarter
Ended March 31, 2009 and 2008
(Unaudited)
3.
|
Marketable
Investments
|
GreenMan
invests excess cash in marketable investments, including highly-liquid debt
instruments of the United States Government and its agencies and high-quality
corporate debt instruments. All highly-liquid investments with an
original maturity of more than three months at original purchase price are
considered investments available for sale.
GreenMan
evaluates its marketable investments periodically for possible
other-than-temporary impairment and reviews factors such as length of time to
maturity, the extent to which fair value has been below cost basis and the
Company’s intent and ability to hold the marketable security for a period of
time which may be sufficient for anticipated recovery in market
value. The Company records impairment charges equal to the amount
that the carrying value of the available-for-sale investments exceeds the
estimated fair market value of the securities as of the evaluation date, if
appropriate. The fair value for all investments is determined based
on quoted market prices as of the valuation date as available.
Effective October
1, 2008, GreenMan adopted SFAS No. 157, Fair Value Measurements, or
SFAS No. 157. In February 2008, the Financial Accounting Standards Board of FASB
issued FSAB Staff Position No. FAS 157-2, Effective Date of FASB Statement No.
157, which provides a one year deferral of the effective date of SFAS No.
157 for non-financial assets and non-financial liabilities, except those that
are recognized or disclosed in the financial statements at fair value at least
annually. Therefore, the Company adopted the provisions of SFAS No. 157 with
respect to its financial assets and liabilities only. SFAS No. 157 defines fair
value, establishes a framework for measuring fair value under generally accepted
accounting principal and enhances disclosures about fair value measurements.
Fair value is defined under SFAS No. 157 as the exchange price that would be
received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. Valuation
techniques used to measure fair value under SFAS No. 157 must maximize the use
of observable inputs and minimize the use of unobservable
inputs. The standard describes a fair value hierarchy based on three
levels of inputs, of which the first two are considered observable and the last
unobservable, that may be used to measure fair value which are the
following:
|
·
|
Level
1 – Quoted prices in active markets for identical assets or
liabilities
|
|
·
|
Level
2 – Inputs other than Level 1 that are observable, either directly or
indirectly, such as quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or other inputs that are
observable or can be corroborated by observable market data for
substantially the full term of the assets or
liabilities.
|
|
·
|
Level
3 – Unobservable inputs that are supported by little or no market activity
and that are significant to the fair value of the assets or
liabilities.
|
The
adoption of this statement with respect to the Company’s financial assets and
liabilities, did not impact our consolidated results of operations and financial
condition, but required additional disclosure for assets and liabilities
measured at fair value.
In
accordance with SFAS No. 157, the following table represents that fair value
hierarchy for the Company’s financial assets (cash equivalents and investments)
measured at fair value on a recurring basis as of March 31, 2009:
Description:
|
Level
1
|
Marketable
investments
|
$
2,846,933
|
During the three months ended March 31,
2009, we recorded an unrealized loss of $26,198 which is shown as a reduction to
stockholder’s equity until such time as we sell the underlying investments or
determine the unrealized loss to be an other-than-temporary loss at which time
we will record the loss in our statement of operations.
GreenMan
Technologies, Inc.
Condensed
Notes to Interim Consolidated Financial Statements
Quarter
Ended March 31, 2009 and 2008
(Unaudited)
Net
Income Per Share
Basic
earnings per share represents income available to common stockholders 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 potentially 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 us relate
to outstanding stock options and warrants (determined using the treasury stock
method). As the
Company incurred losses from continuing operations for the three and six months
ending March 31, 2009 and 2008, potential common shares included in a diluted
earnings per share computation would result in an anti-dilutive per-share
amount, therefore, no diluted earnings share is presented.
5.
|
Acquisition
of Subsidiary
|
On
October 1, 2007, we acquired Welch Products, Inc., a company headquartered in
Carlisle, Iowa, which specializes in designing, developing and manufacturing of
environmentally responsible products using recycled materials, primarily
recycled rubber. Welch’s patented products and processes include playground
safety tiles, roadside anti-vegetation products, construction molds and highway
guard-rail rubber spacer blocks. Through its prior acquisition of Playtribe,
Inc., Welch also provides innovative playground design, equipment and
installation. Welch had been one of our crumb rubber customers for
the past several years. The transaction was structured as a share exchange in
which 100 percent of Welch’s common stock was exchanged for 8 million shares of
our common stock, valued at $2,800,000 based on the value of the 8 million
shares issued in this transaction on the date of issuance.
The
acquisition has been accounted for as a purchase in accordance with SFAS No.
141, “Business Combinations”, and accordingly the results of Welch’s operations
since the date of acquisition are included in our consolidated financial
statements. The total purchase price of $2,890,000 including
approximately $90,000 of transaction costs has been allocated as
follows:
Total
identifiable assets acquired
|
$
2,571,000
|
Total
identifiable liabilities acquired
|
$
2,821,000
|
The
total consideration paid exceeded the fair value of the net assets acquired by
$3,140,000 resulting in the recognition of $2,289,000 of goodwill and $645,000
assigned to long term contracts (in addition to $90,000 assigned to an existing
contract and being amortized over a 5-year term) based on an analysis of the
discounted future net cash flows of the contracts. In addition, we
increased the value of land and buildings by $195,000 based on a recent
appraisal and increased the value assigned to patents by $11,000 based on an
analysis of discounted future cash flows associated with the
patents. The value assigned to the long-term contracts is being
amortized on a straight line basis over an estimated useful life ranging from 48
to 60 months and the value assigned to patents is being amortized on a straight
line basis over an estimated useful life of 60 months.
Included
in other current and long term assets are lease receivables which bear interest
at rates ranging from 1.99% to 5.5% per annum.
In
March 2009, we changed the name of our Welch Products Inc. subsidiary to Green
Tech Products, Inc. (See Note 1).
Amortization expense during the next
five years is anticipated to be:
Twelve months ending March
31:
|
|
Contracts
|
|
|
Patents
|
|
|
Total
|
|
2010
|
|
$ |
179,250 |
|
|
$ |
21,667 |
|
|
$ |
200,917 |
|
2011
|
|
|
179,250 |
|
|
|
21,667 |
|
|
|
200,917 |
|
2012
|
|
|
98,625 |
|
|
|
21,667 |
|
|
|
120,292 |
|
2013
|
|
|
7,500 |
|
|
|
21,667 |
|
|
|
29,167 |
|
2014
and thereafter
|
|
|
-- |
|
|
|
10,832 |
|
|
|
10,832 |
|
|
|
$ |
464,625 |
|
|
$ |
97,500 |
|
|
$ |
562,125 |
|
GreenMan
Technologies, Inc.
Condensed
Notes to Interim Consolidated Financial Statements
Quarter
Ended March 31, 2009 and 2008
(Unaudited)
5.
|
Acquisition
of Subsidiary – (Continued)
|
Management
annually reviews long-lived assets, goodwill and certain identifiable
intangibles to evaluate whether events or changes in circumstances indicate an
impairment of carrying value. Such reviews include an analysis of
current results and take into consideration the discounted value of projected
operating cash flows (earnings before interest, taxes, depreciation and
amortization). An impairment charge would be recognized when expected
future operating cash flows are lower than the carrying value of the
assets.
6.
|
Discontinued
Operations
|
Georgia
Operations
Due
to the magnitude of the continuing operating losses incurred by our GreenMan
Technologies of Georgia, Inc. subsidiary ($3.4 million) during fiscal 2005, our
Board of Directors determined it to be in the best interest of our company to
discontinue all Georgia operations and completed the divestiture of its
operating assets during fiscal 2006. Accordingly, we have classified
all remaining liabilities associated with our Georgia entity and its results of
operations as discontinued operations.
On
June 27, 2008, GreenMan Technologies of Georgia, Inc. filed for liquidation
under Chapter 7 of the federal bankruptcy laws in the Bankruptcy Court of the
Middle District of Georgia and a trustee was appointed. On September
30, 2008 we received approval of the Trustee’s Final Report of No Distribution
in relation to the Chapter 7 filing and the case is considered
closed. The Trustee's
Report of No Distribution certifies that the trustee has performed the duties
required of a trustee under 11 U.S.C. Section 704 and has concluded that there
are no assets to administer.
The
major classes of liabilities associated with Georgia discontinued operations
were:
|
|
March
31,
2009
|
|
|
September 30,
2008
|
|
Liabilities
related to discontinued operations:
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
-- |
|
|
$ |
116,664 |
|
Accrued
expenses, other
|
|
|
100,000 |
|
|
|
163,147 |
|
Total
liabilities related to discontinued operations
|
|
$ |
100,000 |
|
|
$ |
279,811 |
|
During
the six months ended March 31, 2009, we recognized net income from Georgia
discontinued operations of approximately $44,000 including income of
approximately $161,000 associated with the completion of a March 2008 settlement
agreement with a former Georgia vendor. During the three and six months ended
March 31, 2009 we recognized an expense of $100,000 associated with an
April 2009 settlement agreement with a former Georgia vendor (See Note
9).
Tire
Recycling Operations
On
September 12, 2008 we executed an Asset Purchase Agreement with Liberty Tire
Services of Ohio, LLC, a wholly-owned subsidiary of Liberty Tire Services, LLC,
the largest tire recycling company in the United States, for sale of our tire
recycling business, subject to shareholder approval. On November 13, 2008 our
shareholders approved the sale and on November 17, 2008 we completed the
divestiture of substantially all of the assets of our GreenMan Technologies of
Minnesota, Inc. and GreenMan Technologies of Iowa, Inc. subsidiaries, which had
operated our tire recycling business, for approximately $27.7 million in
cash. We recognized a gain on sale of approximately $14.35 million,
net of estimated taxes of approximately $5.5 million which is included in gain
on sale of discontinued operations.
We
used approximately $16.5 million of the proceeds of this sale to retire certain
transaction related obligations and other debt including approximately $12.8
million due our former primary secured lender, Laurus Master Fund, Ltd., and
approximately $645,000 of related party debt (including approximately $111,000
of accrued interest). In addition, $750,000 of the proceeds were placed in an
escrow account for twelve months to cover possible indemnification claims
by the purchaser as well as the pending finalization of several other
post-closing reconcilations.
GreenMan
Technologies, Inc.
Condensed
Notes to Interim Consolidated Financial Statements
Quarter
Ended March 31, 2009 and 2008
(Unaudited)
6.
|
Discontinued Operations –
(Continued)
|
The
major classes of assets and liabilities associated with discontinued tire
recycling operations were:
|
|
March
31,
2009
|
|
|
September 30,
2008
|
|
Assets
related to discontinued operations:
|
|
|
|
|
|
|
Cash
|
|
$ |
-- |
|
|
$ |
576,336 |
|
Accounts
receivable, net
|
|
|
-- |
|
|
|
3,019,978 |
|
Deferred
income tax asset
|
|
|
-- |
|
|
|
5,300,000 |
|
Other
current assets
|
|
|
-- |
|
|
|
1,248,968 |
|
Total
current assets related to discontinued operations
|
|
|
-- |
|
|
|
10,145,282 |
|
Property,
plant and equipment (net)
|
|
|
-- |
|
|
|
6,399,172 |
|
Other
|
|
|
-- |
|
|
|
167,608 |
|
Total
other assets related to discontinued operations
|
|
|
-- |
|
|
|
6,566,780 |
|
Total
assets related to discontinued operations
|
|
$ |
-- |
|
|
$ |
16,712,062 |
|
|
|
|
|
|
|
|
|
|
Liabilities
related to discontinued operations:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
-- |
|
|
$ |
1,649,530 |
|
Notes
payable, current
|
|
|
-- |
|
|
|
9,566,387 |
|
Notes
payable, line of credit
|
|
|
-- |
|
|
|
3,300,221 |
|
Accrued
expenses, other
|
|
|
-- |
|
|
|
962,005 |
|
Capital
leases, current
|
|
|
-- |
|
|
|
382,368 |
|
Total
current liabilities related to discontinued operations
|
|
|
-- |
|
|
|
15,860,511 |
|
Notes
payable, non-current
|
|
|
-- |
|
|
|
1,540,150 |
|
Capital
leases, non-current
|
|
|
-- |
|
|
|
1,623,325 |
|
Deferred
gain on sale leaseback transaction, non-current
|
|
|
-- |
|
|
|
233,783 |
|
Total
non-current liabilities related to discontinued operations
|
|
|
-- |
|
|
|
3,397,258 |
|
Total
liabilities related to discontinued operations
|
|
$ |
-- |
|
|
$ |
19,257,769 |
|
In
conjunction with the sale of our Minnesota tire recycling operations, we
terminated a long term land and building lease agreement and realized a gain on
termination of the lease of $124,627 which is included in income from
discontinued operations for the six months ended March 31, 2009. In addition,
included in income from discontinued operations for the six months ended March
31, 2009 is the remaining unamortized gain of $265,570 associated with a 2004
sale lease back transaction associated with this property. Previously, we had
been amortizing a gain of $437,337 as income ratably over the term of the
lease.
Net
sales and income (loss) from discontinued tire recycling operations were as
follows:
|
|
Three
Months Ended
|
|
|
Six
Months Ended
|
|
|
|
March
31,
|
|
|
March
31,
|
|
|
March
31,
|
|
|
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Net
sales from discontinued operations
|
|
$ |
-- |
|
|
$ |
3,549,175 |
|
|
$ |
-- |
|
|
$ |
8,777,968 |
|
Income
(loss) from discontinued operations
|
|
|
-- |
|
|
|
(218,480 |
) |
|
|
14,620,730 |
|
|
|
489,869 |
|
Raw
material inventory primarily consists of crumb rubber used in production of
molded rubber products and other manufacturing supplies by our molded recycled
rubber products operation. Finished goods primarily consist of molded products,
playground equipment and crumb rubber to be sold to third parties by our tire
recycling operations. All inventory is valued at the lower of cost or market on
the first-in first-out (FIFO) method. Inventory consists of the
following:
|
|
March
31,
2009
|
|
|
September 30,
2008
|
|
Raw
materials
|
|
$ |
85,736 |
|
|
$ |
118,530 |
|
Finished
goods
|
|
|
1,166,337 |
|
|
|
1,205,218 |
|
Total
inventory
|
|
$ |
1,252,073 |
|
|
$ |
1,323,748 |
|
GreenMan
Technologies, Inc.
Condensed
Notes To Consolidated Financial Statements
Quarter
Ended March 31, 2009 and 2008
(Unaudited)
8.
|
Property,
Plant and Equipment
|
Property,
plant and equipment consists of the following:
|
|
March
31,
2009
|
|
|
September 30,
2008
|
|
|
Estimated
Useful Lives
|
|
Land
|
|
$ |
175,000 |
|
|
$ |
175,000 |
|
|
--
|
|
Buildings
and improvements
|
|
|
285,000 |
|
|
|
285,000 |
|
|
15
years
|
|
Machinery
and equipment
|
|
|
1,357,590 |
|
|
|
1,344,377 |
|
|
5
- 7 years
|
|
Furniture
and fixtures
|
|
|
59,954 |
|
|
|
65,842 |
|
|
3
- 7 years
|
|
Motor
vehicles
|
|
|
31,169 |
|
|
|
5,760 |
|
|
3
- 5 years
|
|
|
|
|
1,908,713 |
|
|
|
1,875,979 |
|
|
|
|
Less
accumulated depreciation
|
|
|
(1,351,712 |
) |
|
|
(1,324,296 |
) |
|
|
|
Property,
plant and equipment, net
|
|
$ |
557,001 |
|
|
$ |
551,683 |
|
|
|
|
9.
|
Notes
Payable/Credit Facilities
|
June
2006 Laurus Credit Facility
In
June 2006, we entered into a $16 million amended and restated credit facility
with Laurus Master Fund, Ltd. The credit facility consisted of a $5 million
non-convertible secured revolving note and an $11 million secured
non-convertible term note. All amounts due Laurus under the revolving note
($3,414,754) and term note ($9.4 million plus accrued interest of $35,511) were
paid off on November 17, 2008 in conjunction with the sale of our tire recycling
business (see Note 6), and this credit facility has been
terminated.
As
previously disclosed substantially all of GreenMan Technologies of Georgia,
Inc.’s assets were sold as of March 1, 2006. Several vendors of this subsidiary
commenced legal action, primarily in the state courts of Georgia, in attempts to
collect past due amounts, plus accruing interest, attorneys’ fees, and costs,
all relating to various services rendered to these subsidiaries. Although
GreenMan Technologies, Inc. itself was not a party to any of these vendor
relationships, two of the plaintiffs, representing approximately $900,000 of
these claims named GreenMan Technologies, Inc. as a defendant along with
GreenMan Technologies of Georgia, Inc.
On
June 27, 2008, GreenMan Technologies of Georgia, Inc. filed for liquidation
under Chapter 7 of the federal bankruptcy laws in the Bankruptcy Court of the
Middle District of Georgia and a trustee was appointed. As a result of the
bankruptcy proceedings all pending litigation was stayed and GreenMan
Technologies of Georgia, Inc. was de-consolidated from our financial statements
as of September 30, 2008.
During
fiscal 2008, one vendor secured a summary judgment for approximately $890,000
against GreenMan Technologies, Inc. While GreenMan Technologies, Inc. believed
it had valid defenses to these claims, as well as against any similar or related
claims that may be made against us in the future, we did not receive proper
notice of the summary judgment against us and therefore were unable to timely
appeal the judgment. Management therefore determined it to be in the best
interests of GreenMan Technologies, Inc. to reach settlement on this judgment
rather than to attempt to appeal the judgment for lack of proper notice. On
March 28, 2008, GreenMan Technologies, Inc. agreed to a cash settlement of
$450,000 with $100,000 paid upon signing the settlement agreement and nine
additional monthly payments of $38,889 commencing on April 30, 2008 and ending
on December 31, 2008. In January, 2009, after receipt of the final payment, the
plaintiff marked the judgment satisfied with the appropriate courts, at which
time we recorded a gain on settlement of approximately $161,000 relating to
amounts accrued for but forgiven per the agreement and which are included in
income from discontinued operations for the six months ended March 31,
2009.
Management
determined it to be in the best interests of GreenMan Technologies, Inc. to
reach settlement on the only remaining Georgia legal action involving GreenMan
and on April 15, 2009 executed a settlement and general release agreement with
plaintiff in return for a payment of $100,000. The $100,000 settlement is
included in loss from discontinued operations for the three months ended March
31,2009.
GreenMan
Technologies, Inc.
Condensed
Notes to Interim Consolidated Financial Statements
Quarter
Ended March 31, 2009 and 2008
(Unaudited)
Stock
Options
We
maintain stock-based compensation plans, which are described more fully in Note
11 to the consolidated financial statements in our 2008 Annual Report filed on
Form 10-KSB for the fiscal year ended September 30, 2008. Effective October 1,
2006, we adopted the provisions of Statement of Financial Accounting Standards
No. 123R, “Share-Based Payment” (SFAS 123R) for our share-based compensation
plans. We adopted SFAS 123R using the modified prospective transition method.
Under this transition method, compensation cost recognized includes (a) the
compensation cost for all share-based awards granted prior to, but not yet
vested, as of October 1, 2006, based on the grant-date fair value estimated in
accordance with the original provisions of SFAS 123 and (b) the compensation
cost for all share-based awards granted subsequent to September 30, 2006, based
on the grant-date fair value estimated in accordance with the provisions of SFAS
123R. In addition, we continued to
use the “simplified method” as allowed under Staff issued SAB 110, for
determining expected terms on stock options for calculating expense as our stock
option exercise experience does not provide a reasonable basis for an estimated
expected option term. Amortization of stock compensation expense was
$32,565 and $61,731 for the three and six months ended March 31, 2009,
respectively and $47,373 and $75,564 for the three and six months ended March
31, 2008, respectively. The unamortized compensation expense at March 31, 2009
was $428,681 and will be amortized over a weighted average remaining amortizable
life of approximately 3.4 years.
There
were no options granted during the three months ended March 31, 2009. During the
six months ended March 31, 2009, we granted options to our directors and
management to purchase an aggregate of 600,000 shares of our common stock at an
exercise price of $.33 per share, which represented the closing price of our
stock on the date of each respective grant. The options were granted under the
2005 Stock Option Plan, have a ten-year term and vest equally over a five-year
period from date of grant. The fair value of the options at the date of grant in
aggregate was $136,000 which was determined on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions; dividend yield of 0%; risk-free interest rates of approximately
2.3%; expected volatility based on historical trading information of 87% and
expected term of 5 years.
On
March 24, 2009 the Company purchased and retired warrants to purchase 4,811,905
shares of common stock at an exercise price of $.01 per share held by its former
secured lender, Laurus Master Fund, Ltd for $700,000 in cash, or approximately
$0.145 per share.
As
a result of the gain to be realized in fiscal 2009 from the sale of the tire
recycling operations (see Note 6) and anticipated overall Company results for
fiscal 2009, we have recorded a provision for state and federal income of $5.5
million during the three months ended December 31, 2008 using an effective
overall tax rate of 30% (which takes into account certain state net operating
loss limitations). This amount is included in the gain on disposal of
discontinued operations during the six months ended March 31, 2009.
Historically
we have provided a valuation reserve equal to 100% of our potential deferred tax
benefit due to the uncertainty of our ability to realize the anticipated benefit
given our historical losses. As a result of the estimated gain to be realized in
fiscal 2009 from the sale of the tire recycling operations and anticipated
overall results for fiscal 2009, we expect to be able to realize the benefit of
a portion of our federal net operating loss carry-forwards. Using an
effective overall tax rate of 30% (which takes into account certain state net
operating loss limitations) we have recognized a change in the valuation
allowance of $5.3 million during the fiscal year ended September 30, 2008 based
on the estimated gain associated with the November 2008 sale of our tire
recycling operations. This deferred asset was utilized during the quarter ended
December 31, 2008.
13.
|
Related
Party Transactions
|
On
November 18, 2008 we entered into a four-month (extended in March 2009 on a
month-to-month basis) consulting agreement at a rate of $7,500 per month with a
company owned by one of our directors who also serves as the Chairman of our
audit committee. The Company is currently providing assistance in the
areas of due diligence support, “green” market opportunity identification and
evaluation, Board of Director candidate identification and evaluation and other
services as our Board may determine.
Item
2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
This
section contains forward-looking statements regarding future events and the
future results of GreenMan Technologies, Inc. within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements are based on current
expectations, estimates, forecasts, and projections and the beliefs and
assumptions of our management. Words such as “expect,” “anticipate,” “target,”
“goal,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,”
“likely,” “may,” “designed,” “would,” “future,” “can,” “could” and other similar
expressions that are predictions of or indicate future events and trends or
which do not relate to historical matters are intended to identify such
forward-looking statements. These statements are based on management’s current
expectations and beliefs and involve a number of risks, uncertainties and
assumptions that are difficult to predict. Consequently, our actual results may
differ materially from our predictions. We urge readers to review carefully the
risk factors described in our Annual Report on Form 10-KSB for the fiscal year
ended September 30, 2008 as well as in the other documents that we file with the
Securities and Exchange Commission. You can read these documents at
www.sec.gov.
The following information should be
read in conjunction with the unaudited consolidated financial statements and the
notes thereto included in Item 1 of this 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 our
Annual Report on Form 10-KSB filed for the fiscal year ended September 30,
2008.
Overview
In
September 2005, due to the magnitude of continued operating losses, our Board of
Directors approved plans to divest the operations of our GreenMan Technologies
of Georgia, Inc. subsidiary and dispose of its respective assets. Accordingly,
we have classified all remaining liabilities associated with our Georgia entity
and its results of operations as discontinued operations for all periods
presented in the accompanying consolidated financial statements. On June 27, 2008, our
Georgia subsidiary filed for liquidation under Chapter 7 of the federal
bankruptcy laws in the Bankruptcy Court of the Middle District of Georgia. As a
result of the bankruptcy proceedings we have relinquished control of our Georgia
subsidiary to the Bankruptcy Court and therefore have de-consolidated
substantially all remaining obligations from our financial statements as of
September 30, 2008.
As
described in Item 1, above, our business changed substantially in November 2008,
when we sold substantially all of the assets of our tire recycling operations.
Because we operated our tire recycling assets during only a portion of the
fiscal quarter covered by this Report on Form 10Q we have included in this
Quarterly Report relevant information on this business segment but have
classified their respective assets, liabilities and results of
operations as discontinued operations for all periods presented in the
accompanying consolidated financial statements.
Results
of Operations
Three
Months ended March 31, 2009 Compared to the Three Months ended March 31,
2008
Net sales from continuing operations
for the three months ended March 31, 2009 decreased $510,362 or 84% to $97,510
as compared to net sales of $607,872 for the six months ended March 31, 2008. The decrease is
primarily attributable to decreased playground tile and equipment sales in the
Midwestern and Western regions of the United States. A majority of our revenue
is derived from specific one time installations with minimal follow on revenue
from the installed project, thus making quarterly revenue comparison
particularly difficult. In
addition, our quarter ended March 31 is our seasonally slowest quarter due to
weather related factors which preclude the installation of playground tiles and
equipment during the colder winter months, especially in the Midwestern
region.
Due
to lower revenue and playground tile production during the three months
ended March 31,
2009 we incurred a
negative gross profit of $111,445 compared to a positive gross profit
of $225,801 or 37% of net sales for the three months ended March 31, 2008. Due
to anticipated seasonally slower tile sales and adequate existing product
inventory levels, management decided to produce a minimal amount of playground
tiles during the quarter ended March 31, 2009. As a result, we were unable to
fully absorb all manufacturing overhead costs resulting in a negative gross
profit during the three months ended March 31, 2009.
Selling,
general and administrative expenses for the three months ended March 31,
2009 decreased
$106,073 to $724,516 as compared to $830,589 for the three months ended March
31, 2008. The decrease was primarily attributable to reduced travel, marketing
and sales related costs.
Interest
and financing expense for the three months ended March 31, 2009 decreased $12,679 to
$13,346, compared to $26,025 during the three months ended March 31, 2008 due to decreased
borrowings.
As
a result of the foregoing, our loss from continuing operations after income
taxes increased $155,374 to $816,585 for the three months ended March 31, 2009
as compared to $661,211 for the three months ended March 31, 2008.
During
the quarter ended March 31, 2009, we recognized a loss from Georgia discontinued
operations of $100,000 associated with settlement agreement with a former
Georgia vendor. The loss from discontinued operations for the three months ended
March 31, 2008 relates to the net results of our tire recycling.
Our
net loss for the three months ended March 31, 2009 was $916,585 or $.03 per
basic share as compared to a net loss of $879,691 or $.03 per basic share for
the three months ended March 31, 2008.
Six
Months ended March 31, 2009 Compared to the Six Months ended March 31,
2008
Net sales from continuing operations
for the six months ended March 31, 2009 decreased $447,971 or 37% to $759,515 as
compared to net sales of $1,207,486 for the six months ended March 31, 2008. The decrease is
primarily attributable to decreased playground tile and equipment sales in the
Midwestern and Western parts of the United States of during our seasonally
slower second quarter. A majority of our revenue is derived from specific one
time installations with minimal follow on revenue from the installed project,
thus making quarterly revenue comparison particularly difficult. In addition, our quarter ended March 31
is our seasonally slowest quarter due to weather related factors which preclude
the installation of playground tiles and equipment during the colder winter
months, especially in the Midwestern region.
Due
to lower revenue and playground tile production during the three months
ended March 31,
2009 our gross
profit was $57,400 or 8% of net sales compared to a gross profit of $337,975 or
28% of net sales for the six months ended March 31, 2008. Due to anticipated
seasonally slower tile sales during the quarter ended March 31, 2009 and
adequate existing product inventory levels, management decided to produce a
minimal amount of playground tiles during the quarter ended March 31, 2009. As a
result, we were unable to fully absorb all manufacturing overhead costs which
negatively impacted our gross profit for the six months ended March 31,
2009.
Selling,
general and administrative expenses for the six months ended March 31, 2009 increased $333,617 to
$1,902,118 as compared to $1,568,501 for the six months ended March 31, 2008.
The increase was primarily attributable to an increase of $247,000 in
professional expenses relating to business development initiatives and the
November 2008 sale of our tire recycling operations and an increase of
approximately $164,000 in wage and performance based incentives. These increases
were partially offset by reduced travel, marketing and sales related
costs.
Interest
and financing expense for the six months ended March 31, 2009 increased slightly to
$72,401, compared to $71,456 during the six months ended March 31,
2008.
As
a result of the foregoing, our loss from continuing operations after income
taxes increased $542,458 to $1,894,114 for the six months ended March 31, 2009
as compared to $1,351,656 for the six months ended March 31, 2008.
During
the six months ended March 31, 2009 we recognized a gain on sale of discontinued
operations net of income taxes ($5.5 million), of $14,347,445 associated with
the sale of our tire recycling business in November 2008. The income
from discontinued operations for the six months ended March 31, 2009 relates
primarily to the net results of our tire recycling operations including
approximately $391,000 of one-time gains associated with the termination of a
long-term land and building lease agreement in Minnesota. In addition, during
the six months ended March 31, 2009, we recognized income from Georgia
discontinued operations of approximately $44,000 relating to the net effects of
two settlement agreements with two former Georgia vendors. The income from
discontinued operations for the six months ended March 31, 2008 relates to the
net results of our tire recycling operations.
Our
net income for the six months ended March 31,2009 was $12,771,036 or $.41 per
basic share as compared to a net loss of $861,787 or $.03 per basic share for
the six months ended March 31, 2008.
Liquidity
and Capital Resources
As
of March 31, 2009, we had $8,375,161 in cash and cash equivalents, marketable
investments and net working capital of $9,262,030 primarily due to the sale of
our tire recycling business in November 2008. We intend to invest a portion of
the net proceeds of this transaction to grow our Green Tech Products (formerly
Welch Products) business model nationwide and pursue additional recycling,
alternative fuel, alternative energy and other “green” business opportunities
through our recently announced subsidiary, GreenMan Renewable Fuel and
Alternative Energy, Inc. as described below.
Our
tire recycling business has historically been the source of substantially all of
our revenue and cash flow. Green Tech Products (formerly Welch Products) has not
yet reached sustained profitability. Since the date of acquisition, we have made
a significant investment in sales and marketing initiatives intended to promote
Green Tech Products (formerly Welch Products) patented products and establish
market presence. We understand our continued existence is dependent on our
ability to generate positive operating cash flow from existing operations and
achieve profitable status on a sustained basis.
In
September 2008 we announced the formation of a new subsidiary, GreenMan
Renewable Fuel and Alternative Energy, Inc. Our primary objective for
this subsidiary is to pursue licenses, joint-ventures and long-term contracts
focused on the commercialization of existing and late-stage development products
and processes in green-based technologies including renewable fuels and
alternative energy. There has been significant global investment made over the
past several years in the area of renewable fuels, alternative energy and
clean-tech technologies and management does not see this momentum slowing down.
Our initial efforts to date have focused on rubber-based opportunities such as
tire gasification and alternative energy generation, but we have recently begun
expanding our focus into several other non-rubber based sectors which we believe
have large commercial market potential. We anticipate devoting increasing
resources over the next fiscal year to exploring our heightened participation in
this fast growing global initiative. To date, GreenMan Renewable Fuel and
Alternative Energy has generated no revenues and has not incurred any operating
expenses.
We
believe we will be able to satisfy our cash requirements through at least fiscal
2010. If Green Tech Products (formerly Welch Products) is unable to achieve
sustained profitability during fiscal 2009 and we are unable to obtain
additional financing to supplement our cash position, our ability to maintain
our current level of operations could be materially and adversely
affected. There is no guarantee we will be able to achieve sustained
profitability of our Welch Products business or of new business opportunities.
Our credit facility with Laurus Master Fund, Ltd. was terminated in November
2008, and we have not yet established any new credit facility.
The
Consolidated Statements of Cash Flows reflect events for the six months ended
March 31, 2009 and 2008 as they affect our liquidity. During the six months
ended March 31, 2009, net cash used by operating activities was $2,340,915. Our
net income for the six months ended March 31, 2009 was $12,771,036, reflecting a
$19,847,445 gain on sale of our tire recycling operations and the application of
$5.3 million of non-cash income taxes. Our cash flow was positively impacted by
the following non-cash expenses and changes to our working capital: $690,744 of
depreciation and amortization which was offset by an $811,606 increase in other
current assets and a decrease of $934,655 in accounts payable and accrued
expenses. During the six months ended March 31, 2008, net cash provided by
operating activities was $420,391 reflecting net income of $17,904 and the
following non-cash expenses and changes to our working capital: $556,941 of
depreciation and amortization and a decrease in accounts receivable of $742,479.
These changes were offset by a $345,820 increase in product inventory which is
not unusual during this seasonally slower quarter and a net decrease in accounts
payable and accrued expenses of $299,413.
Net
cash provided by investing activities was $23,754,716 for the six months ended
March 31, 2009, reflecting net proceeds from the sale of our scrap tire
processing operations of approximately $27.5 million. During the six months
ended March 31, 2009, we purchased $3 million of marketable investments and used
$700,000 to purchase warrants from our former secured lender to purchase
approximately 4.8 million shares of our common stock. Net cash used
by investing activities was $573,401 for the six months ended March 31, 2008
reflecting the purchase of equipment offset by proceeds of $2,000 and $68,571 of
net cash acquired in the Green Tech Products (formerly Welch Products)
transaction.
Net
cash used by financing activities was $16,791,267 during the six months ended
March 31, 2009, reflecting the payoff of approximately $12.85 million associated
with our Laurus credit facility and approximately $ $3.4 million of other debt
and capital lease obligations associated with our discontinued scrap tire
operations and $534,320 of related party debt. Net cash provided by financing
activities was $198,053 during the six months ended March 31, 2009 reflecting
normal debt including the payoff of approximately $467,000 of Green Tech
Products (formerly Welch Products) debt in conjunction with the acquisition and
capital lease repayments and an increase in our working capital line of
$1,002,943.
Effects
of Inflation and Changing Prices
Generally,
we are exposed to the effects of inflation and changing prices. Given
the largest component of our scrap tire collection and disposal costs is
transportation, we had been adversely affected by the significant increases in
the cost of fuel. Having sold our scrap tire recycling business, we do not
believe that future increases in fuel costs are likely to adversely affect our
business. We have generally been unaffected by interest rate declines during the
quarter ended December 31, 2008, because our credit facility bore interest at a
minimum rate of 8.0%.
Environmental
Liability
There
are no known material environmental violations or assessments.
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
Not
required pursuant to Item 305(e) of Regulation S-K.
Item
4T. Controls and Procedures
Our
management, with the participation of our chief executive officer and chief
financial officer, evaluated the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934) as of March 31, 2009. In designing and evaluating our
disclosure controls and procedures, we recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving their objectives and management necessarily
applied its judgment in evaluating the cost-benefit relationship of possible
controls and procedures. Based on this evaluation, our chief executive officer
and chief financial officer concluded that as of March 31, 2009, our disclosure
controls and procedures were (1) designed to ensure that material information
relating to the company, including our consolidated subsidiaries, is made known
to our chief executive officer and chief financial officer by others within
those entities, particularly during the period in which this report was being
prepared and (2) effective, in that they provide reasonable assurance that
information required to be disclosed by us in the reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the SEC's rules and forms.
No
change in our internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal
quarter ended March 31, 2009 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings
We
are subject to routine claims from time to time in the ordinary course of our
business. We do not believe that the resolution of any of the claims
that are currently known to us will have a material adverse effect on our
company or on our financial statements
There
have not been any material changes from the risk factors previously disclosed
under Item 6 of our Annual Report on Form 10-KSB for the fiscal year ended
September 30, 2008.
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
None.
Item 3.
Defaults Upon
Senior Securities
None.
Item
4. Submission of Matters to a Vote of Security
Holders
None.
Item
5. Other
None.
Item
6. Exhibits
The
following exhibits are filed with this document:
Exhibit
No.
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|
Description
|
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10.2
*
|
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--
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Warrant and option purchase
agreement between GreenMan Technologies, Inc., a Delaware
corporation and PSource Structured Debt Ltd., dated March 24,
2009.
|
|
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31.1
*
|
|
--
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule
15d-14(a)
|
|
|
|
|
31.2
*
|
|
--
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule
15d-14(a)
|
|
|
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32.1
*
|
|
--
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Certification
of Chief Executive Officer under 18 U.S.C. Section 1350
|
|
|
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32.2
*
|
|
--
|
Certification
of Chief Financial Officer under 18 U.S.C. Section 1350
|
________________________
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
GreenMan
Technologies, Inc.
By: /s/ Lyle Jensen
Lyle
Jensen
President
& Chief Executive Officer
By: /s/ Charles E. Coppa
Charles
E. Coppa
Chief
Financial Officer
Dated: May
15, 2009