From yesterday's 10K news release.....
May 14, 1998
GREENLAND CORP (GLCP)
Annual Report (SEC form 10KSB)
Management's Discussion and Analysis or Plan of Operation
The following discussion pertains to the Company's results of operations and financial condition as of the end of and for each of the years in the two year period ended December 31, 1997. Greenland's strategy revolves around the development and deployment of information gathering and communications systems for utility industry. The Company's AirLink product enables utilities to improve the value of their services to customers through cost savings, resource management, security, and management intelligence. The AirLink system is a sophisticated electronics hardware and software product. Product development and testing has required ongoing investment in engineering, research and development, market research, and early marketing activities. The Company has invested, and continues to invest, considerable time and effort in development of the concept, assembling a development team, analyzing the market (including field research), planning the business, creating prototype devices, and contracting for the installation of pilot systems at utilities in the U.S. and in selected international markets. Greenland's marketing strategy is based upon providing products that can easily be adapted to address a number of different utilities while simultaneously
providing for individual customer requirements. The Company uses a direct sales approach (as opposed to third-party distribution) in its effort to place its products in the market. Marketing support is provided through public relations and participation in selected industry conferences and trade shows. Initial sales strategy relies heavily on building relationships with utilities (especially electric
utilities for whom an AirLink solution is nearest to completion) and providing pilot systems under an experimental FCC license, which is currently held by the Company. Initial response has been positive
and the Company believes that this strategy will serve to reduce the time from initial contact to full deployment of systems. Pursuant to shareholder approval, in December of 1997, the Company sold its GAM Properties, Inc. real estate subsidiary to Golden Age Homes, Inc., a San Diego-based residential care company. The Company received stock in Golden Age Homes. (Also see Notes to Financial Statements.)
The Company owns a 49% interest in Signature Leasing, LLC, a Nevada Corporation ("Signature"). Signature is a commercial leasing company The Company does not consolidate the operations of Signature as it is a minority shareholder. (Also see Notes to Financial Statements.)
Results of Operations AMR Sales Revenues from pilot projects totaled $15,000 in fiscal 1997. In the previous year, pilot project revenues were $40,000. The Company continues to refine its AirLink technology; and pilot installations serve as a platform for ongoing testing and performance evaluation. Other Income Other income totaled $11,381 for the year ended December 31, 1997. This income consisted of interest earned on bank deposits and services provided by the Company outside of its AMR operations. In the previous fiscal year, the Company aggregated rental income from its GAM Properties, Inc. subsidiary, which was sold in December 1997. Other income was $65,015 for the
year ended December 31, 1996 Expenses In December 1997, the Company sold its GAM Properties, Inc. ("GAM") subsidiary. Income and expenses associated with GAM have been previously consolidated on the Company's financial statements. The financial statements for the fiscal year ended December 31, 1997 do not include such income and expenses. Accordingly, comparative references between fiscal 1997 and fiscal 1996 exclude GAM operations. General and administrative expenses for the year ended December 31, 1997 were $1,820,050 as compared to
$639,462 in fiscal 1996, an increase of $1,180,588, or 185%. This increase is attributable to increased costs related to management and operations of the Company. The cost of outside consultants accounted for $636,580 (53.9%) of general and administrative expenses. The Company had depreciation expense of $12,134 for fiscal 1997 on its property and equipment. There was no depreciation claimed in fiscal 1996. Interest expense was $38,257 for the year ended December 31,
1997, an increase of $34,326 over the previous fiscal year. Property and other taxes for the year ended December 31, 1997 were $44,708 compared to $9,001in the previous fiscal year; an increase of $35,708 or 397%. The increase is directly attributable to the Company's disposition of its real estate properties, which were sold in December 1997.
The Company had no bad debt as of December 31, 1997 as compared to $59,668 in fiscal 1996.
Pursuant to shareholder approval, the Company sold, in December 1997, its GAM subsidiary to Golden Age Homes, Inc. ("Golden Age"). The Company received 290,000 shares of Golden Age Class A Convertible Preferred stock valued at $1,450,000. As a result of this transaction, the Company had a gain on the sale of its properties of $531,388; and it had a loss from discontinued operations of $190,660. (See Notes to Consolidated Financial Statements.)
AirLink Operations The Company continues with the ongoing development and marketing of its AirLink automated meter reading system for utilities. The Company introduced AirLink, for the first time, in June 1996. During the course of fiscal 1996, the Company entered into agreements to install AirLink pilot systems in Oregon, Utah, and Connecticut. During 1997, the Company has installed various iterations of the technology in Connecticut and Oregon. As a result of these pilot tests, the technology has been improved and the Company expects to install these improved systems in the fiscal 1998.
In May 1997, the Company entered into an agreement with KIT Concerns ("KIT") of Rio de Janiero, Brazil, for representation of AirLink in Brazil. In December 1997, the agreement was extended to include a technical association with Centro de Pesquisas de Energia Electrica
("CEPEL"), for the adaptation and development of AirLink for Brazil and other South American markets. CEPEL is a large research and development center that serves the Brazilian federal utilities.
It employs a large staff (492) of research engineers and technicians specializing in a wide variety of disciplines related to energy generation and distribution, especially the electric sector.
In June 1997, the Company entered into an agreement with International Power and Environmental Company ("IPEC") to represent AirLink on a world-wide basis, for use in automating parking meters. IPEC is a diversified company organized to develop new business opportunities throughout the world, particularly in the utility, environmental, and technology sectors.
In July 1997, the Company entered into a Cooperative Marketing Agreement with StarCom USA, Inc. ("StarCom"), under which the Company will support StarCom in proposing an AirLink system for Puerto Rico.
During fiscal 1997, the Company submitted several proposals, which were requested by utilities in the United States and three countries in South America. Many of these proposals are still pending. While management believes that these proposals are competitive, there can be no assurance that the Company will be selected as a provider of these automated meter reading systems.
In April 1998, the Company entered into Memorandum of Understanding with Symmetry Device Research ("Symmetry") to provide AirLink to Symmetry clients. Symmetry is a licensed power marketer, broker and aggregator in the state of California and expects to be certified by the California Public Utilities Commission as a Meter Service Provider and Meter Data Management Agent. The company specializes in power quality and energy management issues.
Subsequent Events
Subsequent to December 31, 1997, the Company entered into a transaction, on April 6, 1998, with Quantix, a Nevada Corporation, to exchange its holdings of 1,100,000 shares of 5% Convertible Class B Preferred Stock of Natural Born Carvers, Inc. for a combination of real estate, trust deeds, and promissory note. The transaction is intended to convert non-liquid assets of the Company into those that can be used for the ongoing financing of the Company. Management believes that the exchange of illiquid assets for liquid assets of substantially equal value will enhance the ability of the Company to continue financing its operations.
Liquidity and Capital Resources
Due principally to the sale of its real estate interests, including GAM, the Company's total assets decreased by $3,644,998, or 45.2%, to $4,409,318 in the year ended December 31, 1997. The Company's total liabilities, however, decreased $3,474,308, or 81% during fiscal 1997 due, principally, to the sale of GAM. As a result of the settlement of the Company's litigation related to its Regulation S debenture. In
March and May of 1998, liabilities have been reduced by an additional $600,000. Stockholders' equity was $3,596,308 at December 31, 1996, an increase of $170,690, or 4.5%. The Company had negative working capital of $59,896 at December 31, 1997, compared to negative working
capital of $520,501 at the end of the previous fiscal year. The Company, through a private placement of its common stock, raised $772,098 during fiscal 1997, which was used for operations and general
corporate purposes. The Company, through the placement of a convertible debenture, raised an additional $600,000. The Company continues to pursue additional capitalization through private
placement, and other activities in order to raise funds for ongoing operations, including the sale of or financing of its assets. There can be no assurance, however, that the Company will be successful in
obtaining additional capital, or securing such capital on acceptable terms.
Item 7. Financial Statements and Supplementary Data
See index to financial statements included herein.
Item 8. Change in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
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