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 operations and financial condition as of the end of the year December 31, 1998.
In May of 1998, the Company purchased the exclusive rights to all of Check Central Inc., software and hardware designs for the expressed intent of completing the development and marketing of a Check Cashing ATM. Check Central's technology was acquired through an exchange of all the issued and outstanding stock of Check Central, Inc. for 35,000,000 (pre-reverse split) restricted shares of the Company's common stock valued at $2,625,000.
In late 1998, after completion of further market and engineering studies, the Company determined that a significant amount of additional capital and a substantial commitment of labor resources would be required to complete research and development of AMR. Since the Company was making rapid progress with the Check Cashing ATM and believed that it was faster to market, took less resources and offered a greater financial potential for the Company, a strategic decision was made to pursue the development of the Company's Check Cashing ATM on a full resource basis. Therefore, the Company entered into a transaction, on April 5, 1999, with Telenetics Corporation, whereby Telenetics acquired the advanced communication technology known as automated meter reading ("AMR") in exchange for shares of Convertible Preferred Stock of Telenetics with a face value of $900,000.
As a result of the sale of AMR, the Company is engaged exclusively in the development of proprietary software and hardware that is capable of providing consumers with automated payroll check cashing, ATM and money order services delivered through a free standing kiosk, similar to an ATM machine (the "Check Cashing ATM").
The Company has invested, and continues to invest, considerable time and effort in development of the Check Cashing ATM, assembling a development team, analyzing the market, planning the business, creating prototype and beta test units, and locating reliable manufacturers for the Check Cashing ATM.
The Company's strategy for marketing and sales of the Check Cashing ATM has been directed at locating an established large, national distributor of ATM machines. Established distributors have the infrastructure in place to sell, service and maintain a large volume of machines and are best equipped to penetrate the market quickly and efficiently. This strategy allows the Company to concentrate its resources on doing what it does best, develop reliable, efficient products. The Company successfully implemented this strategy by consummating a Master Distributor Agreement with SmartCash ATM, Ltd. a Dallas, Texas based national distributor (see Subsequent Events Schedule).
This sales strategy will effect two significant revenue streams for the Company. The first source of revenue will result from the sales of Check Cashing ATMs. Initially, the Master Distributor will purchase the machines at a wholesale price that will initially result in gross margins of approximately 50%. The Company expects these margins to improve as Check Central begins to order machines in larger quantities taking advantage of volume discounts and economies of sale. The second revenue source will result in the continuity of transaction fees generated from each Check Cashing ATM. Check Central will share in the transaction fees along with the owners of the Check Cashing ATM. The fee generation of Check Central will get larger with the placement of additional machines and as machines mature in the market, more transaction fees will be generated.
Results of Operations
Revenue - The Company reported no revenue in 1998. With the acquisition of Check Central in mid 1998, the company focused its efforts and available capital to further develop the Check Central technology. To validate the market and test mechanical and systems reliability, management produced its first demo check cashing model by the third quarter of 1998 followed by two beta test units in late 1998. After the initial "debugging" period, Check Central placed its first two working machines in Southern California in January and February of 1999.
With the successful completion of beta testing and consummation of the agreement with SmartCash ATM (see Subsequent Events Schedule), Check Central is expected to begin shipping the first production models to market by late second quarter of 1999.
Operations - The Company continues to fund its operations for the development and deployment of Check Cashing ATM. The two beta units and the one demonstration unit were financed primarily from funds received from equity private placements.
The Company spent a significant part of the year building the infrastructure necessary to support not only the research and development effort but laying the ground work for the various support groups that will be required for successful transition from a development stage company to a complete manufacturing, marketing and service organization. The Company has successfully blended both employee and consultant based infrastructure that is comprised of mechanical and design engineers, software engineers, back-end support personnel, with payroll check cashing experience, and financial support personnel. This organization will be critical to the successful ramp-up of production schedule for late second quarter of 1999.
Check Central has a fully certified set of subcontractors, suppliers and assemblers to build machines to meet the Company's requirements. To ensure its ability to meet production schedules and gear for increased output (estimated 100 units monthly by late spring 2000), the Company has engaged in discussion with major ATM machine manufacturers who have expressed an interest in becoming turnkey manufacturing partners.
Expenses - General and Administrative expenses for the year ended December 31, 1998 were $2,656,095 compared with $1,820,050 for 1997. The major reason for the increase in G&A was due directly to the Check Central acquisition and extensive product development costs. In addition to this increase for Check Central, limited resources were allocated to Airlink Systems. Depreciation, interest, property taxes and other expenses decreased from $95,099 in 1997 to $54,726 in 1998. Due to lack of capital, the Company has paid the officers and certain consultants their compensation in the form of stock and as a result the Company has issued shares of its common stock which is reflected as G&A expense.
Income (Loss) - During the year ending December 31, 1998, the Company had losses of $3,322,163 compared to losses of $1,663,040 for the calendar year ending 1997. The increase in losses were due to the loss on the sale of the Lake Elsinore property of $627,025 and increases in product development costs for Check Central.
Liquidity and Capital Resources
Assets increased substantially in 1998 due to the acquisition of Check Central of $2,625,000. The year ending December 31, 1997 assets totaled $4,410,000 versus $6,337,242 for year ending 1998. The Company's total liabilities decreased for 1998 through efforts of management to pay down existing obligations and bring vendors current. Total liabilities were $556,672 for the year ending December 31, 1998 compared with $812,000 for year ending December 31, 1997.
The Company's strategy has been and will continue to be to maximize the return of assets for the Company and its shareholders. The Company reevaluates its assets on an on-going basis to determine the most effective use and benefit to the Company in relation to the Company's operations needs. Based on this review, the Company will either sell or leverage the asset for liquidity to support the Company's capital requirements. As a result of this process, the Company will continue to evaluate its assets, including a promissory note from Quantix Corporation and the convertible preferred shares of GAHI.
Stockholder's equity was $5,780 at December 31, 1998, and increase of $2,184,262.
The Company has a working capital deficiency of $(457,422) at December 31, 1998 and a retained deficit of $(6,884,321). The Company's needs for working capital is a key issue for management and necessary for the Company to meet its goals and objectives. The Company continues to pursue additional capitalization through private placement and other activities in order to raise funds for ongoing operations, including institutional lending, lines of credit, purchase order financing and the sale of or financing of its assets.
Management believes that institutional lending will be available to the Company once the Company establishes a track record of production and shipping stability.
Subsequent Events
Subsequent to December 31, 1998, the Company entered into a transaction, on April 5, 1999, with Telenetics Corporation, whereby Telenetics acquired the advanced communication technology known as automated meter reading ("AMR") in exchange for shares of Convertible Preferred Stock of Telenetics with a face value of $900,000. In late 1998, after completion of further market and engineering studies, the Company determined that a significant amount of additional capital and a substantial commitment of labor resources would be required to complete research and development of AMR. Since the Company was making rapid progress with the Check Cashing ATM and believed that it was faster to market, took less resources and offered a greater financial potential for the Company, a strategic decisions was made to pursue the development of the Company's Check Cashing ATM on a full resource basis.
Subsequent to December 31, 1998, the Company entered into a transaction on March 30, 1999, with SmartCash ATM, Ltd. ("SmartCash") whereby the Company entered into a Master Distributor Agreement with SmartCash
ATM, an affiliate of ATM International (collectively, "SmartCash ATM") located in Dallas, Texas. Under the terms of the Master Distributor Agreement, SmartCash ATM is required to order 385 Check Cashing ATMs in 1999, 1,200 Check Cashing ATMs in 2000 and 2,000 Check Cashing ATMs in 2001 in order to remain the exclusive distributor for Check Central. The Company believes this relationship will enable Check Central to achieve rapid market penetration by utilizing the services of an existing operation with marketing and sales personnel in place. The Company will also pursue direct corporate sales on a limited basis and will pay SmartCash ATM a commission on said sales.
Subsequent to December 31, 1998, the Board of Directors of Greenland has approved the commencement of a private placement offering. The Company anticipates commencing the offering shortly.
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
Item 9.
Directors, Executive Officers, Promoters and Control Persons, Compliance with Section 16(a) of the Exchange Act
The information required by this item relating to the Company's directors and nominees and disclosure relating to compliance with Section 16(a) of the Securities Exchange Act of 1934 is included under the captions "Election of Directors" and "Compliance with Section 16(a) of the Securities Exchange Act of 1934" in the Registrant's Proxy Statement for the 1999 Annual Meeting of Shareholders and is incorporated herein by reference.
Item 10.
Executive Compensation
The information required by item 10 of Form 10-KSB is incorporated by reference to the information contained in the section captioned "Executive Compensation" in the Proxy Statement to be filed with the Commission on or before April 30, 1999.
Item 11.
Security Ownership of Certain Beneficial Owners and Management
The information required by item 11 of Form 10-KSB is incorporated by reference to the information contained in the section captioned "Security Ownership of Certain Beneficial Owners and Management" in the Proxy Statement to be filed with the Commission on or before April 30, 1999.
Item 12.
Certain Relationships and Related Transactions
The information required by item 12 of Form 10-KSB is incorporated by reference to the information contained in the section captioned "Certain Relationships and related Transactions" in the Proxy Statement to be filed with the Commission on or before April 30, 1999.
Item 13. Exhibits and Reports on Form 8-K
(A) List of documents filed as part of this report.
(1) Financial Statements
Reference is made to the index to Financial Statements under
Item 7 in Part II hereof, where these documents are listed.
(2) Financial Statement Schedules
None
(3) Exhibits
None |
