UNITED STATES
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 the Quarter Ended June 30, 2006
Commission File Number: 1-13776
GREENMAN TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 71-0724248
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
12498 Wyoming Avenue South
Savage, Minnesota 55378
------------------------------------------------------------
(Address of principal executive offices, including zip code)
(800) 957-9575
------------------------------------------------
(Issuer's telephone number, including area code)
Check whether the issuer (1) 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.
|X| YES |_| NO
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act.):
|_| YES |X| NO
There were 20,360,252 shares outstanding of the issuer's Common Stock, $0.01 par
value, at August 1, 2006.
1
GreenMan Technologies, Inc.
Form 10-QSB
Quarterly Report
June 30, 2006
Table of Contents
PART I - FINANCIAL INFORMATION Page
----
Item 1. Financial Statements (*)
Unaudited Consolidated Balance Sheets as of
June 30, 2006 and September 30, 2005 3
Unaudited Consolidated Statements of Operations for the
three and nine months ended June 30, 2006 and 2005 4
Unaudited Consolidated Statement of Changes in Stockholders'
Deficit for the nine months ended June 30, 2006 5
Unaudited Consolidated Statements of Cash Flows for the
nine months ended June 30, 2006 and 2005 6
Notes to Interim Unaudited Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis or Plan of Operation 19
Item 3. Controls and Procedures 28
PART II - OTHER INFORMATION
Item 2. Changes in Securities 29
Item 6. Exhibits and Reports on Form 8-K 29
Signatures 31
* The financial information at September 30, 2005 has been taken from
audited financial statements at that date and should be read in
conjunction therewith. All other financial statements are unaudited.
2
GREENMAN TECHNOLOGIES, INC.
Consolidated Balance Sheets
June 30, September 30,
2006 2005
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents ............................................................ $ 615,747 $ 256,492
Accounts receivable, trade, less allowance for doubtful accounts
of $190,766 and $219,354 as of June 30, 2006 and September 30, 2005 ............... 2,488,970 2,968,766
Product inventory .................................................................... 683,166 173,043
Other current assets ................................................................. 604,337 642,813
Assets related to discontinued operations ............................................ 15,034 2,037,613
------------ ------------
Total current assets ........................................................... 4,407,254 6,078,727
------------ ------------
Property, plant and equipment, net ..................................................... 5,991,364 6,342,252
------------ ------------
Other assets:
Deferred loan costs .................................................................. -- 430,158
Customer relationship intangibles, net ............................................... 195,356 206,455
Other ................................................................................ 50,264 62,360
------------ ------------
Total other assets ............................................................. 245,620 698,973
------------ ------------
$ 10,644,238 $ 13,119,952
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable, current ............................................................... $ 574,587 $ 836,381
Notes payable, line of credit ........................................................ -- 619,950
Convertible notes payable, current ................................................... -- 1,305,361
Notes payable, related parties, current .............................................. 30,000 --
Convertible notes payable, line of credit ............................................ -- 3,585,281
Accounts payable ..................................................................... 2,720,349 2,458,772
Accrued expenses, other .............................................................. 1,371,660 1,089,479
Obligations under capital leases, current ............................................ 125,399 169,367
Liabilities related to discontinued operations ....................................... 3,815,081 4,682,022
------------ ------------
Total current liabilities ...................................................... 8,637,076 14,746,613
Notes payable, related parties, non-current portion .................................. 734,320 699,320
Notes payable, non-current portion ................................................... 10,745,935 2,237,044
Convertible notes payable, non-current portion ....................................... -- 1,802,896
Obligations under capital leases, non-current portion ................................ 1,289,935 1,369,192
Deferred gain on sale leaseback transaction .......................................... 352,300 379,633
Liabilities related to discontinued operations ....................................... 566,175 571,425
------------ ------------
Total liabilities .............................................................. 22,325,741 21,806,123
------------ ------------
Stockholders' deficit:
Preferred stock, $1.00 par value, 1,000,000 shares authorized,
none outstanding .................................................................. -- --
Common stock, $.01 par value, 40,000,000 shares authorized,
20,360,252 and 19,225,352 shares issued and outstanding at
June 30, 2006 and September 30, 2005 .............................................. 203,603 192,253
Additional paid-in capital ........................................................... 35,515,127 34,853,599
Accumulated deficit .................................................................. (47,400,233) (43,732,023)
------------ ------------
Total stockholders'deficit ..................................................... (11,681,503) (8,686,171)
------------ ------------
$ 10,644,238 $ 13,119,952
============ ============
See accompanying notes to consolidated financial statements.
3
GREENMAN TECHNOLOGIES, INC.
Consolidated Statements of Operations
Three Months Ended Nine Months Ended
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
------------ ------------ ------------ ------------
Net sales ...................................................... $ 5,463,204 $ 5,777,153 $ 14,486,290 $ 15,659,770
Cost of sales .................................................. 4,047,250 4,794,644 11,244,152 13,480,202
------------ ------------ ------------ ------------
Gross profit ................................................... 1,415,954 982,509 3,242,138 2,179,568
------------ ------------ ------------ ------------
Operating expenses:
Selling, general and administrative ........................ 1,382,601 817,683 3,417,137 2,558,715
Impairment loss ............................................ -- 57,183 35,901 57,183
------------ ------------ ------------ ------------
1,382,601 874,866 3,453,038 2,615,898
------------ ------------ ------------ ------------
Operating income (loss) from continuing operations ............. 33,353 107,643 (210,900) (436,330)
------------ ------------ ------------ ------------
Other income and financing (expense):
Interest and financing expense ............................. (1,261,597) (256,035) (1,878,141) (699,834)
Non-cash interest and financing fees ....................... (310,688) (549,981) (1,273,014) (920,619)
Other, net ................................................. 372,507 92,711 267,380 (7,399)
------------ ------------ ------------ ------------
Other (expense), net ................................... (1,199,778) (713,305) (2,883,775) (1,627,852)
------------ ------------ ------------ ------------
Loss from continuing operations before income taxes ............ (1,166,425) (605,662) (3,094,675) (2,064,182)
Provision for income taxes ..................................... -- -- -- 270,000
------------ ------------ ------------ ------------
Loss from continuing operations ................................ (1,166,425) (605,662) (3,094,675) (2,334,182)
Discontinued operations:
Gain on disposal of discontinued operations .............. -- -- 9,475 --
Income (loss) from discontinued operations ................. 185,039 (1,200,991) (583,010) (3,165,119)
------------ ------------ ------------ ------------
185,039 (1,200,991) (573,535) (3,165,119)
------------ ------------ ------------ ------------
Net loss ...................................................... $ (981,386) $ (1,806.653) $ (3,668,210) $ (5,499,301)
============ ============ ============ ============
Loss from continuing operations per share - basic .............. $ (0.06) $ (0.03) $ (0.16) $ (0.12)
Loss from discontinued operations per share - basic ............ 0.01 (0.06) (0.03) (0.17)
------------ ------------ ------------ ------------
Net loss per share - basic ..................................... $ (0.05) $ (0.09) $ (0.19) $ (0.29)
============ ============ ============ ============
Weighted average shares outstanding - basic and diluted ........ 19,992,216 19,223,429 19,480,973 19,176,314
============ ============ ============ ============
See accompanying notes to unaudited consolidated financial statements.
4
GREENMAN TECHNOLOGIES, INC.
Unaudited Consolidated Statement of Changes in Stockholders' Deficit
Nine Months Ended June 30, 2006
Additional
Common Stock Paid In Accumulated
Shares Amount Capital Deficit Total
---------- -------- ----------- ------------ ------------
Balance, September 30, 2005 .............................. 19,225,352 $192,253 $34,853,599 $(43,732,023) $ (8,686,171)
Sale of common stock ..................................... 500,000 5,000 135,000 -- 140,000
Common stock issued upon conversion of notes
payable and interest .................................. 315,330 3,154 88,522 -- 91,676
Common stock issued for fees and expenses due ............ 186,240 1,863 65,183 -- 67,046
Common stock issued for services rendered ................ 133,330 1,333 28,667 -- 30,000
Net value of warrants issued in conjunction with
debt restructuring .................................... -- -- 344,156 -- 344,156
Net loss for the nine months ended June 30, 2006 ......... -- -- -- (3,668,210) (3,668,210)
---------- -------- ----------- ------------ ------------
Balance, June 30, 2006 ................................... 20,360,252 $203,603 $35,515,127 $(47,400,233) $(11,681,503)
========== ======== =========== ============ ============
See accompanying notes to unaudited consolidated financial statements.
5
GREENMAN TECHNOLOGIES, INC.
Unaudited Consolidated Statements of Cash Flow
Nine Months Ended June 30,
2006 2005
------------ -----------
Cash flows from operating activities:
Net loss .................................................................................. $ (3,668,210) $(5,499,301)
Adjustments to reconcile net loss to net cash provided by operating activities:
Increase in valuation allowance on deferred tax asset ..................................... -- 270,000
Loss (gain) on disposal of property, plant and equipment .................................. 169,315 (4,896)
Gain recognized on debt restructuring ..................................................... (353,476) --
Impairment loss ........................................................................... 35,901 57,183
Depreciation .............................................................................. 1,167,505 1,796,042
Amortization of non-cash financing costs .................................................. 1,272,874 892,435
Amortization of customer relationships .................................................... 11,099 18,326
Gain on sale leaseback .................................................................... (27,333) (27,333)
Decrease (increase) in assets:
Accounts receivable ................................................................... 1,471,376 287,028
Product inventory ..................................................................... (510,123) 140,926
Other current assets .................................................................. 270,117 128,037
Other assets .......................................................................... 12,096 162,195
Increase (decrease) in liabilities:
Accounts payable ...................................................................... 381,226 1,563,500
Accrued expenses and other ............................................................ (325,610) 3,933
------------ -----------
Net cash provided by (used for) operating activities ............................... (93,243) (211,925)
Cash flows from investing activities:
Purchase of property and equipment ........................................................ (1,120,286) (1,640,874)
Proceeds from the sale of property and equipment .......................................... 116,000 608,102
Proceeds from equipment held for sale ..................................................... 444,332 --
------------ -----------
Net cash provided by (used for) investing activities ............................... (559,954) (1,032,772)
Cash flows from financing activities:
(Increase) in deferred financing costs .................................................... -- (23,452)
Net (payments) advances under line of credit .............................................. (619,950) 199,950
Proceeds from notes payable ............................................................... 11,692,554 145,420
Proceeds from notes payable, related party ................................................ 155,000
Repayment of notes payable ................................................................ (3,628,870) (1,097,540)
Repayment of convertible notes payable .................................................... (3,108,257) (125,000)
Net (payments) advances on convertible notes payable, line of credit ...................... (3,585,281) 2,575,970
Principal payments on obligations under capital leases .................................... (140,770) (414,336)
Sale of common stock ...................................................................... 140,000 --
------------ -----------
Net cash (used for) provided by financing activities ............................... 904,426 1,261,012
------------ -----------
Net increase in cash and cash equivalents ................................................... 251,229 16,315
Cash and cash equivalents at beginning of period including $108,724 and $247,
respectively, of cash related to discontinued operations .................................. 365,216 509,787
------------ -----------
Cash and cash equivalents at end of period, including $698 and $608,
respectively, of cash related to discontinued operations .................................. $ 616,445 $ 526,102
============ ===========
Supplemental cash flow information:
Property, plant and equipment acquired under capital leases ............................... $ 17,546 $ 277,372
Equipment acquired through transfer of deposits ........................................... -- 247,874
Shares issued to acquire exclusive purchase option ........................................ -- 200,000
Accounts receivable offset in connection with sale of discontinued operations ............. 152,000 --
Accounts payable offset with proceeds on sale of discontinued operations .................. 247,000 --
Shares issued upon conversion of notes payable and interest ............................... 91,676 19,750
Shares issued in lieu of cash for fees, expenses and services rendered .................... 97,046 --
Net value of warrants issued .............................................................. 344,156 --
Interest paid ............................................................................. 1,030,656 984,161
Taxes paid ................................................................................ -- 4,227
See accompanying notes to unaudited interim consolidated financial statements
6
GREENMAN TECHNOLOGIES, INC.
Notes to Interim Consolidated Financial Statements
Quarters Ended June 30, 2006 and 2005
(Unaudited)
1. Business
GreenMan Technologies, Inc. (together with its subsidiaries "we", "us" or
"our") was originally founded in 1992 and has been operated as a Delaware
corporation since 1995. Today, we comprise three operating locations that
collect, process and market scrap tires in whole, shredded or granular form. We
are headquartered in Savage, Minnesota and currently operate tire processing
operations in Iowa and Minnesota. Earlier in fiscal 2006 we sold substantially
all of our operations in Georgia and Tennessee (see Note 4) and on July 17,
2006, we sold our our California subsidiary (see Note 14).
2. Basis of Presentation
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.
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, 2005 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 are adequate to make the information
presented 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. Certain
reclassifications have been made to the 2005 interim consolidated financial
statements to conform to the current period presentation.
In September 2005, due to the magnitude of continued operating losses, our
Board of Directors approved separate plans to divest the operations of our
Georgia and Tennessee subsidiaries and dispose of their respective assets.
Accordingly, we have classified their respective results of operations as
discontinued operations for all periods presented in the accompanying
consolidated financial statements.
Nature of Operations, Risks, and Uncertainties
As of June 30, 2006, we had $616,445 in cash and cash equivalents and a
working capital deficiency of $4,229,822 of which $3,800,047 or 90% of the total
is associated with our discontinued Georgia subsidiary. We understand our
continued existence is dependent on our ability to generate positive operating
cash flow and achieve profitable status on a sustained basis. We believe our
efforts to achieve these goals will be positively impacted by the June 30, 2006
restructuring of our Laurus Credit facility (see Note 7) as well as our ongoing
efforts to divest and/or close historically unprofitable operations (see Notes 4
and 14). However, we believe the June 15th delisting of our stock by the
American Stock Exchange could substantially limit our stock's future liquidity
and impair our ability to raise capital (see Note 12). The financial statements
do not include any adjustments that might result from the outcome of these
uncertainties.
We have invested substantial amounts of capital during the past several
years in new equipment to increase processing capacity at our Iowa and Minnesota
locations, as well as consolidating our Wisconsin location into our Minnesota
operations during fiscal 2005 to substantially reduce operating costs and
maximize our return on assets. Our future operating plan focuses on maximizing
the performance of these two operations through our continuing efforts to
increase overall quality of revenue (revenue per passenger tire equivalent)
while remaining diligent with our ongoing cost reduction initiatives. During
fiscal 2005, we completed an evaluation of our corporate-wide inbound collection
infrastructure and determined that we would no longer provide certain levels of
service and products at existing rates in certain markets and therefore
implemented price increases where warranted and terminated service in situations
where price increases were not an alternative. As a result, we experienced a 4%
increase in overall tipping fees (fees we are paid to collect and dispose of a
scrap tire) during fiscal 2005 and an increase of 3% on a year to date basis
during fiscal 2006 as compared to the same period during fiscal 2005. While
these initiatives reduced our overall inbound tire volume growth rate during
fiscal 2005 and thus far during fiscal 2006, we believe they have and will
continue to improve our performance through lower labor, parts and maintenance
costs. In addition, we continue to identify, and are currently selling product
into several new, higher-value markets as evidenced by an 18% increase in end
product revenue during fiscal 2005 and a 1% increase on a year to date basis in
fiscal 2006. We continue to experience strong demand for our end products.
7
GREENMAN TECHNOLOGIES, INC.
Notes to Interim Consolidated Financial Statements
Quarters Ended June 30, 2006 and 2005
(Unaudited)
3. Net Loss 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) and convertible debt. Basic and diluted net loss per share are the same
for the three and nine months ended June 30, 2006 and 2005, since the effect of
the inclusion of all outstanding options, warrants and convertible debt would be
anti-dilutive.
4. Discontinued Operations
Due to the magnitude of the continuing operating losses incurred by our
Georgia ($3.4 million) and Tennessee ($1.8 million) subsidiaries during fiscal
2005, our Board of Directors determined it to be in the best interest of our
company to discontinue all Southeastern operations and dispose of their
respective operating assets. A majority of the Tennessee operating losses were
due to rapid market share growth within the state necessitating us to transport
an increasing number of Tennessee scrap tires to our Georgia facility for
processing at significant transportation and processing loss. A majority of the
Georgia operating losses were due to (1) the negative impact of processing a
significant number of Tennessee sourced tires; (2) a change in the
specifications of our primary end market customers requiring a smaller product
resulting in reduced processing capacity and significantly higher operating
costs and (3) equipment reliability issues resulting from aging equipment
processing an increasing number of scrap tires.
On September 6, 2005 we entered into an agreement under which all
Tennessee scrap tire collection contracts and certain other contracts with
suppliers of waste tires and contracts to supply whole tires to certain cement
kilns in the southeastern region of the United States were assigned to a company
owned by a former employee. We received no cash consideration for these
assignments and recorded a $1,334,849 loss (including a non-cash loss of
$918,450 associated with goodwill written off) on disposal of the operations at
September 30, 2005. The aggregate net losses including the loss on disposal
associated with the discontinued operations of our Tennessee subsidiary included
in the results for the three and nine months ended June 30, 2005 were
approximately $440,000 and $1,202,000, respectively. During the quarter ended
June 30, 2006 we reached agreement with our former Tennessee landlord regarding
past due amounts and have recognized approximately $56,000 of income from
discontinued Tennessee operations for the three and nine months ended June 30,
2006.
On September 27, 2005, we adopted a plan to dispose of all Georgia
operations and during the quarter ended December 31, 2005, we substantially
curtailed operations at our Georgia subsidiary. As a result, we wrote down all
Georgia operating assets to their estimated fair market value at September 30,
2005 and recorded a loss on disposal of $4,631,102 (including a non-cash loss of
$1,253,748 associated with goodwill written off) net of a gain on settlement of
our Georgia facility lease of $586,137 (see Note 5). We completed the
divestiture of all Georgia operating assets as of March 1, 2006. During the
quarter ended June 30, 2006 we reached agreement with several vendors regarding
remaining past due amounts and reduced certain plant closure accruals resulting
in approximately $129,000 of income from discontinued Georgia operations. The
aggregate net losses including the loss on disposal associated with the
discontinued operations of our Georgia subsidiary included in the results for
the three and nine months ended June 30, 2005 were approximately $785,000 and
$1,963,000.
On February 17, 2006, we entered into an Asset Purchase Agreement with
Tires Into Recycled Energy and Supplies, Inc. ("TIRES"), a leading crumb rubber
processor in the United States. Under the agreement, we sold and assigned to
TIRES certain assets, including (a) certain truck tire processing equipment
located at our Georgia facility; (b) certain rights and interests in our
contracts with suppliers of scrap truck tires; and (c) certain intangible
assets. TIRES agreed to assume all of our rights and obligations under these
contracts. In addition, TIRES entered into a sublease agreement with us with
respect to part of the premises located in Georgia. As additional consideration,
TIRES agreed to terminate several material supply and equipment lease agreements
as well as terminating a December 2005 letter of intent between GreenMan and
TIRES containing an exclusive option to acquire certain operating assets of
TIRES (see Note 6).
8
GREENMAN TECHNOLOGIES, INC.
Notes to Interim Consolidated Financial Statements
Quarters Ended June 30, 2006 and 2005
(Unaudited)
4. Discontinued Operations - (Continued)
On March 1, 2006, we entered into an Asset Purchase Agreement with MTR of
Georgia, Inc. ("MTR"), a company co-owned by a former employee. Under the
agreement, we sold and assigned to MTR certain assets, including (a) certain
passenger tire processing equipment located at our Georgia facility; (b) certain
rights and interests in our contracts with suppliers of scrap passenger tires;
and (c) certain intangible assets. MTR agreed to assume all of our rights and
obligations under these contracts. In addition, MTR entered into a sublease
agreement with us with respect to part of the premises located in Georgia (see
Note 5). We received $250,000 from MTR for these assets. As additional
consideration, MTR has agreed to assume financial responsibility for disposing
of all scrap tires and scrap tire processing residual at the Georgia facility as
of the closing of this sale.
We agreed with TIRES and MTR not to compete in the business of providing
whole tire waste disposal services or selling crumb rubber material (except to
our existing customers) within certain Southeastern states for a period of three
years.
The major classes of assets and liabilities associated with discontinued
operations were:
June 30, September 30,
2006 2005
---------- ----------
Assets related to discontinued operations:
Cash ..................................................... $ 698 $ 108,724
Accounts receivable, net ................................. 9,690 1,153,269
Equipment held for resale ................................ -- 539,332
Other current assets ..................................... 4,646 236,288
---------- ----------
Total assets related to discontinued operations ........ $ 15,034 $2,037,613
========== ==========
June 30, September 30,
2006 2005
---------- ----------
Liabilities related to discontinued operations:
Accounts payable ......................................... $2,927,199 $3,066,596
Notes payable, current ................................... 402,848 435,926
Accrued expenses, other .................................. 158,239 707,706
Capital leases, current .................................. 326,795 326,794
Lease payable, current ................................... -- 145,000
---------- ----------
Total current .......................................... 3,815,081 4,682,022
Notes payable, non-current ............................... 11,175 16,425
Lease payable, non-current ............................... 555,000 555,000
---------- ----------
Total non-current ...................................... 566,175 571,425
---------- ----------
Total liabilities related to discontinued operations ... $4,381,256 $5,253,447
========== ==========
Net sales and (loss) from discontinued operations were as follows:
Three Months Ended Nine Months Ended
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
----------- ----------- ----------- -----------
Net sales from discontinued operations ....... $ -- $ 3,000,268 $ 343,718 $ 8,808,558
Income (loss) from discontinued operations ... 185,039 (1,200,991) (573,535) (3,165,119)
9
GREENMAN TECHNOLOGIES, INC.
Notes to Interim Consolidated Financial Statements
Quarters Ended June 30, 2006 and 2005
(Unaudited)
5. Property, Plant and Equipment
Property, plant and equipment consists of the following:
June 30, September 30, Estimated
2006 2005 Useful Lives
------------ ------------- ------------
Buildings and improvements .......... $ 1,731,279 $ 1,749,907 10-20 years
Machinery and equipment ............. 7,037,404 7,401,613 5-10 years
Furniture and fixtures .............. 175,938 199,934 3-5 years
Motor vehicles ...................... 3,377,261 3,598,098 3-10 years
Construction in process ............. 850,973 42,638
------------ ------------
13,172,855 12,992,190
Less accumulated deprecation and
amortization ...................... (7,181,491) (6,649,938)
------------ ------------
Property, plant and equipment, net .. $ 5,991,364 $ 6,342,252
============ ============
On February 28, 2006, we amended our Georgia lease agreement whereby we
obtained the right to terminate the original lease, which had a remaining term
of approximately fifteen years, by providing the landlord with six months
notice. In the event of such termination, we will be obligated to continue to
pay rent until the earlier to occur of (1) the sale by the landlord of the
premises; (2) the date on which a new tenant takes over; or (3) three years from
the date on which we vacate the property. As a result of the amendment and our
decision to dispose of our Georgia operations, we wrote off the unamortized
balance of $1,427,053 associated with the leased land and buildings and
improvements as a cost of disposal of discontinued operations at September 30,
2005. This loss was partially offset by a $586,137 gain on settlement of the
remaining capital lease obligations due and is included in the loss on disposal
of discontinued operations at September 30, 2005. (see Note 4)
During the quarter ended March 31, 2006, due to continued operating losses
management evaluated the carrying value of certain California equipment and
determined that, the carrying value exceeded its estimated fair value based on
replacement cost of similar equipment. Therefore, we recorded an impairment loss
amounting to $35,901 during the quarter ended March 31, 2006. In addition, we
determined that certain equipment was no longer necessary and/or operable and as
a result recorded a $73,300 loss on disposal of these assets during the three
months ended March 31, 2006.
During the third quarter of fiscal 2006, we initiated a $900,000 equipment
upgrade to our Des Moines, Iowa processing facility whereby we are installing
new fine grind crumb rubber processing equipment. This new equipment is expected
to increase overall production capacity by over 8 million pounds per year to
over 20 million pounds of crumb rubber capacity. Approximately $450,000 of the
initiative was funded by a loan from the Iowa Department of Natural Resources
with the balance of the project funded internally. We anticipate the initiative
to be complete and operational during the fourth quarter of fiscal 2006.
During June 2005, our Wisconsin subsidiary sold all of its land and
buildings for approximately $483,000, realizing a gain of $123,608. We used
approximately $284,000 of the proceeds to repay an existing obligation on the
property and simultaneous with the sale, entered into an agreement to lease the
property back for a period of 90 days. We consolidated all remaining Wisconsin
operations into our Minnesota facility during the quarter ending September 30,
2005.
In addition during the quarter ended June 30, 2005, our Wisconsin
subsidiary reached an agreement with the lessor of certain transportation
equipment to buy-out the remaining term of the lease. The lessor agreed to
accept approximately $190,000 in full settlement of our capital lease obligation
with a carrying value of approximately $156,000, resulting in a loss of
approximately $34,000 in connection with this transaction during the quarter. In
addition, management determined that the carrying value of the purchased
transportation equipment was impaired. Accordingly, we recorded an impairment
loss amounting to $57,183 during the quarter ended June 30, 2005 based on the
estimated fair value based on replacement cost of similar equipment and reduced
the remaining estimated useful life to 24 months.
10
GREENMAN TECHNOLOGIES, INC.
Notes to Interim Consolidated Financial Statements
Quarters Ended June 30, 2006 and 2005
(Unaudited)
6. Acquisition Deposit
In August 2004, we executed a non-binding letter of intent and escrow
agreement with TIRES. Pursuant to the escrow agreement, we made a "good faith"
payment amounting to $350,000, which was to be applied toward the purchase price
upon completion of the transaction. On December 8, 2004, we executed a new
letter of intent which superseded the August letter of intent in which we (1)
leased, with an option to buy, certain pieces of tire processing equipment owned
by TIRES (the "Equipment Leases"), (2) entered a material supply agreement (the
"MSA") and (3) were granted an exclusive purchase option to acquire additional
operating assets of TIRES. The operating leases were executed in January 2005
but became effective in February and March 2005 and provide for aggregate
monthly payments of $25,300 over terms ranging from 48 to 60 months.
We also agreed to allow TIRES to retain $101,378 of the "good faith"
payment to upgrade its existing crumb rubber production capacity and have used
the remaining $248,622 to prepare and move the leased equipment for our use.
Accordingly, during the quarter ended March 31, 2005, the $101,378 was expensed
when it was released from escrow and approximately $243,597 had been capitalized
and was being amortized over the lease terms which ranged from 48 to 60 months.
The remaining balance of $205,306 was written off as a cost of disposal of
discontinued operations at September 30, 2005.
The exclusive purchase option to acquire additional operating assets of
TIRES was exercisable if predetermined financial performance criteria were met
by TIRES during the subsequent fifteen to twenty-four month period after
December 8, 2004. The ultimate purchase price was to be determined based on
those results. In return for the exclusive purchase option, we issued 127,389
shares of our common stock (valued at $200,000) to TIRES. Had we exercised our
exclusive purchase option and closed a transaction, the value of the shares
would have been applied against the purchase price of the assets. If the
exclusive purchase option expired or we decided not to exercise the option,
TIRES would retain a sufficient number of our shares to equal $200,000 (as of
the date that the purchase option expires) and return the balance of such shares
to us. If at the time the purchase option expired, the value of the shares were
less than $200,000, we would have been required to issue a sufficient number of
additional shares to equal $200,000. If at the time the purchase option expired,
TIRES had not achieved the predetermined financial performance criteria, TIRES
would have had to return to us a sufficient number of our shares to equal
$200,000 at the time.
In February 2006 in conjunction with the discontinuance of our Georgia
operations (see Note 4), we agreed to sell and assign to TIRES (a) certain truck
tire processing equipment located at our Georgia facility; (b) certain rights
and interests in our contracts with suppliers of scrap truck tires; (c) certain
intangible assets; and (d) allowed TIRES to retain the 127,389 shares of our
common stock and in return received $155,000 in cash proceeds; agreed to
terminate the MSA, Equipment Leases and several other agreements previously
executed between the parties in addition to terminating a December 2004 letter
of intent and exclusive option. Accordingly, at September 30, 2005, included in
loss on disposal of discontinued operations is the $200,000 assigned to the
shares of common stock retained by TIRES.
7. Notes Payable/Credit Facilities
Republic Services of Georgia
On May 6, 2002 we issued Republic Services of Georgia, LP ("RSLP") a
$743,750 10% promissory note due in March 2007. On July 31, 2005, RSLP agreed to
defer all interest and principal payments due, including nine existing past-due
payments totaling $76,042 through June 2006 at which time all past due interest
and principal payments under the May 6, 2002 promissory note was to be
incorporated into an a new 10% promissory note, payable in 48 monthly
installments commencing July 2006.
On June 30, 2006 we reached an agreement with RSLP whereby in return for a
payment of $250,000 and the issuance of a $150,000 unsecured promissory note,
RSLP agreed to forgo all remaining amounts due under the revised May 6, 2002
promissory note totalling $766,355 at June 30, 2006. The settlement was
characterized as a troubled debt restructuring and as a result, we realized a
gain on restructuring of $353,476 during the quarter ended June 30, 2006 ($0.02
per basic share for the three and nine months ended June 30, 2006). The note
bears interest at 10% and is payable in 11 monthly installments of $5,000 with
the remaining balance due June 30, 2007.
11
GREENMAN TECHNOLOGIES, INC.
Notes to Interim Consolidated Financial Statements
Quarters Ended June 30, 2006 and 2005
(Unaudited)
7. Notes Payable/Credit Facilities - (Continued)
First American Credit Facility
On February 13, 2003, our Iowa subsidiary amended its existing term debt
with First American under the terms of a five-year, $1,760,857 secured term
note. The note was payable in sixty monthly installments of $33,425 and secured
with all Iowa assets. The term note bore interest at 7.5% and the line of credit
bore interest at the prime rate plus 1%.
On February 10, 2005, First American renewed our working capital line
until February 10, 2006 (subsequently extended to June 15, 2006) and increased
our maximum availability under the line of credit to $800,000. On June 30, 2006,
we used $1,218,746 of the proceeds from the Laurus debt restructuring described
below to pay off all amounts due First American.
June 2004 Laurus Credit Facility
On June 30, 2004, we entered into a $9 million credit facility with Laurus
Master Fund, Ltd. ("Laurus"), consisting of a $5 million convertible, revolving
working capital line of credit and a $4 million convertible term note. At
closing, we borrowed $2 million under the line of credit and $4 million under
the term loan. We used the proceeds to repay certain existing debt obligations,
financing costs relating to this transaction, and general working capital. On
March 22, 2005, the credit facility was amended to (1) permit us to maintain
overradvances of up to $2,000,000 under the line of credit through December 31,
2005 (subsequently extended to May 31, 2006); (2) defer certain principal
payments on the term note as described below; and (3) reduce the conversion
price on the minimum borrowing note and term note as described below.
The line of credit had a three-year term and requires us to maintain a
minimum borrowing of $1,000,000. Advances generally bore interest at the prime
rate plus 1.0% and were convertible into shares of our common stock at the
option of Laurus. Except for downward adjustments provided in the credit
facility terms described below, the interest rate shall not be below 5%. Amounts
advanced under the line were limited to 90% of accounts receivable and 50% of
finished goods inventory as defined, subject to certain limitations. We were
permitted to maintain overadvances of up to $2,000,000 under the line of credit
until June 30, 2006.
Subject to certain limitations, Laurus had the option to convert the first
$1,000,000 of borrowings under the line of credit into our common stock at a
revised price of $0.79 (85% of the average closing price of our common stock for
the five days immediately preceding March 22, 2005). Each subsequent $1,000,000
of borrowings would be convertible at the higher of $.93 or a 10% premium over
the 22-day trailing average closing price computed on each $1,000,000 increment.
As a result of the reduction in conversion price pursuant to the terms of the
March 22, 2005 amendment, we recorded a beneficial conversion feature of
$598,717. The discount was recorded as additional paid-in-capital and was
amortized to interest as of December 31, 2005.
The term note also had a three-year term and bore interest at the greater
of prime rate plus 1.0% or 5.0%, payable monthly. Monthly principal payments of
$125,000 over the term of the loan commenced on November 1, 2004; however, the
terms of the March 22, 2005 amendment deferred the principal payments otherwise
due from December 1, 2004 through June 30, 2005, until the maturity date of the
term note, at which time the deferred payments and all other outstanding amounts
are due. In addition, Laurus agreed to defer principal payments otherwise due
from November 1, 2005 through June 1, 2006, which will be payable in full at
maturity.
Laurus had the option to convert some or all of the note's principal and
interest payments into common stock at a revised fixed conversion price of $.79
on the first $1,000,000 of borrowings, and $.93 on the remaining amounts.
Subject to certain limitations, regular payments of principal and interest were
automatically payable in common stock if the 5-day average closing price of the
common stock immediately preceding a payment date is greater than or equal to
110% of such fixed conversion price. As a result of the change in conversion
price pursuant to the terms of the March 22, 2005 amendment, we recorded an
additional beneficial conversion feature of $1,485,594 on the term note. The
additional discount amount was recorded as paid-in-capital with the portion
attributed to the first $1,000,000 of borrowings, $567,429 which was amortized
to interest expense as of December 31, 2005 with the remaining balance of
$918,165 was to be amortized over the remaining term of the note or ratably upon
any partial conversion.
12
GREENMAN TECHNOLOGIES, INC.
Notes to Interim Consolidated Financial Statements
Quarters Ended June 30, 2006 and 2005
(Unaudited)
7. Notes Payable/Credit Facility - (Continued)
On July 20, 2005, we issued an additional $1 million convertible term note
to Laurus. The note matured on June 30, 2007 and bore interest at the prime rate
plus 1.75%, payable monthly commencing August 1, 2005. Monthly principal
payments of $58,823.53 over the term of the loan were to commence on February 1,
2006. Laurus subsequently agreed to defer the principal payments otherwise due
from February 1, 2006 through May 1, 2006, until the maturity date of the term
note, at which time the deferred payments and all other outstanding amounts are
due. Laurus had the option to convert some or all of the principal and interest
payments into common stock at a price of $.33 (the average closing price of our
common stock on the American Stock Exchange for the 3-day period ending July 18,
2005).
In connection with this term note, we issued Laurus an option to purchase
up to an aggregate of 2,413,571 shares of our common stock at an exercise price
equal to $0.01 per share. This option, valued at $401,738, was immediately
exercisable, has a term of ten years, allows for cashless exercise at the option
of Laurus, and does not contain any "put" provisions. Net proceeds received from
issuance of the term note amounted to $955,000 and were allocated to the term
note and the warrant based on their relative fair values. The note contained a
beneficial conversion feature of $393,939 at issuance based on the intrinsic
value of the shares into which the note is convertible, and a debt issue
discount amounting to $446,738. The beneficial conversion amount was recorded as
paid in capital and was to be amortized to interest expense along with the debt
conversion discount over the two year term of the note or ratably upon any
partial conversion. The terms of the note were substantially similar to our June
2004 credit facility, including similar negative and restrictive covenants, as
well as reporting requirements and default provisions.
The conversion price applicable to each of the notes and the exercise
price of each of the warrants was previously subject to downward adjustment on a
"full ratchet" basis, if with certain exceptions, we issued shares of our common
stock (or common stock equivalents) at a price per share less than the
applicable conversion or exercise price. These rights have never been enforced
and on April 8, 2006, Laurus agreed to retroactively eliminate their rights to
enforce these provisions
June 2006 Laurus Credit Facility
On June 30, 2006, we entered into a $16 million amended and restated
credit facility with Laurus (the "New Credit Facility"). The New Credit Facility
consists of (1) a $5 million non-convertible secured revolving note (the
"Revolving Note"); and (2) an $11 million secured non-convertible term note (the
"Term Note"). Unlike the terms of our prior credit facility with Laurus, the New
Credit Facility is not convertible into shares of our common stock.
The Revolving Note has a three-year term from the closing, bears interest
on any outstanding amounts at the prime rate plus 2% (10.25% at June 30, 2006),
with a minimum rate of 8%. Amounts advanced under the line are limited to 90% of
accounts receivable and 50% of finished goods inventory, as defined up to a
maximum of $5 million, subject to certain limitations. There are no amounts
outstanding under the Revolving Note at June 30, 2006.
The Term Loan has a maturity date of June 30, 2009 and bears interest at
the prime rate plus 2% (10.25% at June 30, 2006), with a minimum rate of 8%.
Interest on the Term Loan is payable monthly commencing August 1, 2006.
Principal will be amortized over the term of the loan, commencing on July 2,
2007, with minimum monthly payments of principal as follows: (i) for the period
commencing on July 2, 2007 through June 2008, minimum principal payments of
$150,000; (ii) for the period from July 2008 through June 2009, minimum
principal payments of $400,000; and (iii) the balance of the principal will be
payable on the maturity date. In addition, we have agreed to make an excess cash
flow repayment as follows: no later than ninety-five days following the end of
each fiscal year beginning with the fiscal year ending on September 30, 2007, we
have agreed to make a payment equal to 50% of (a) the aggregate net operating
cash flow generated for such fiscal year less (b) aggregate capital expenditures
made in such fiscal year (up to a maximum of 25% of the net operating cash flow
calculated in accordance with clause (a). The Term Loan maybe prepaid at any
time without penalty. We used approximately $8,503,000 of the Term Note proceeds
to repay our outstanding indebtedness under our existing credit facility with
13
GREENMAN TECHNOLOGIES, INC.
Notes to Interim Consolidated Financial Statements
Quarters Ended June 30, 2006 and 2005
(Unaudited)
7. Notes Payable/Credit Facility - (Continued)
Laurus, approximately $1,219,000 to repay in full the indebtedness due First
American Bank; $250,000 to RSLP as part of a settlement agreement (as described
above) and paid approximately $888,000 of costs and fees associated with this
transaction which were expensed at June 30, 2006.
In connection with the New Credit Facility, we issued Laurus a warrant to
purchase up to an aggregate of 3,586,429 shares of our common stock at an
exercise price equal to $0.01 per share. This warrant, valued at $1,116,927, is
immediately exercisable, has a term of ten years, allows for cashless exercise
at the option of Laurus, and does not contain any "put" provisions. Previously
issued warrants to purchase an aggregate of 1,380,000 shares of our common stock
were canceled as part of this transaction. The fair value of these terminated
warrants was determined to be $31,774 and will offset the value of the new
warrant issued. In addition, the fair value associated with the forgone
convertibility feature of all previous convertible amounts was determined to be
$740,998 and will offset the value of the new warrant used. As a result of the
foregoing, the net value assigned to the new warrant of $344,155 was recorded as
paid in capital and will be amortized to interest expense. The terms of the Term
Note are substantially similar to our June 2004 credit facility, including
similar negative and restrictive covenants, as well as reporting requirements
and default provisions.
Laurus Funds has agreed that it shall not, on any trading day, be
permitted to sell any common stock acquired upon exercise of this warrant in
excess of 10% of the aggregate numbers of shares of the common stock traded on
such trading day. We have agreed to register for resale under the Securities Act
of 1933 the shares of common stock issuable to Laurus Funds upon exercise of the
aforementioned warrant.
Pursuant to Statement of Financial Accounting Standards No. 15 "Accounting
by Debtors and Creditors for Troubled Debt Restructuring" ("SFAS 15") the New
Credit Facility will be accounted for as a troubled debt restructuring. It was
determined that, because the effective interest rate of the New Credit Facility
was lower than that of the previous credit facility therefore indicating a
concession was granted by Laurus, we are viewed as a passive beneficiary of the
restructuring, and no new transaction has occurred. Under SFAS 15, a
modification of terms "is neither an event that results in a new asset or
liability for accounting purposes nor an event that requires a new measurement
of an existing asset or liability." Thus, from a debtor's standpoint, SFAS 15
calls for a modification of the terms of a loan to be accounted for
prospectively. As a result, $258,900 of deferred financing fees and $972,836 of
debt discount and beneficial conversion features associated with the previous
credit facility were netted against the new Term Debt related to the portion of
the new debt that refinanced the original Laurus debt to provide a net carrying
amount of $7,170,512. The carrying amount of the loan will be amortized over the
term of the loan at a constant effective interest rate of $20.0% applied to the
future cash payments specified by the new loan.
8. Notes Payable - Related Party
In November 2000, we borrowed $200,000 from a director. This unsecured
note payable bears interest at 12% per annum with interest due monthly and the
principal due originally in November 2001. Subsequently, the director agreed to
extend the maturity date of the note several times and in June 2004 and again in
June 2006, agreed to extend the maturity of this note until the earlier of when
all amounts due under the restructured Laurus credit facility (see Note 7) have
been repaid or June 30, 2009.
During the period of June to August 2003, two immediate family members of
an officer loaned us a total of $400,000 under the terms of two-year, unsecured
promissory notes which bear interest at 12% per annum with interest due
quarterly and the principal due upon maturity. In March 2004, these same
individuals loaned us an additional $200,000 in aggregate, under similar terms
with the principal due upon maturity March 2006. These individuals each agreed
to invest the entire $100,000 principal balance of their June 2003 notes
($200,000 in aggregate) into our April 2004 private placement of investment
units and each received 113,636 units in these transactions. At June 30, 2006,
the remaining balance due on these advances amounted to $400,000. In addition,
the two individuals agreed to extend the maturity of the remaining balance of
these notes until the earlier of when all amounts due under the restructured
Laurus credit facility have been repaid or June 30, 2009. (see Note 7)
14
GREENMAN TECHNOLOGIES, INC.
Notes to Interim Consolidated Financial Statements
Quarters Ended June 30, 2006 and 2005
(Unaudited)
8. Notes Payable -Related Party - (Continued)
In September 2003, a former officer loaned us $400,000 under the terms of
a September 30, 2003 unsecured promissory note which bears interest at 12% per
annum with interest due quarterly and the principal due March 31, 2004
(subsequently extended to September 30, 2004). In 2004, the officer applied
approximately $114,000 of the balance due him and accrued interest of
approximately $21,000 to exercise options to purchase 185,000 shares of common
stock. In addition, he has agreed to extend the maturity of the remaining
balance of this note until the earlier of when all amounts due under the
restructured Laurus credit facility have been repaid or June 30, 2009. At June
30, 2006, the remaining balance due on this note amounted to $99,320.
During the period of January to June 2006, a director loaned us $155,000
under the terms of three unsecured promissory notes which bear interest at 10%
per annum with interest and principal due during periods ranging form June 30,
2006 through September 30, 2006. On April 12, 2006, the director agreed in lieu
of being repaid in cash at maturity to convert $76,450 (including interest of
$1,450) into 273,035 shares of unregistered common stock at a price of $.28
which was the closing price of our stock on the date of conversion. In addition,
on June 5, 2006 the director agreed to convert $15,226 (including interest of
$226) into 42,295 shares of unregistered common stock at a price of $.36 which
was the closing price of our stock on the date of conversion. As of June 30,
2006, the remaining balance due on this note amounted to $65,000 and the
director has agreed to extend $35,000 until the earlier of when all amounts due
under the restructured Laurus credit facility have been repaid or June 30, 2009
Interest expense on notes payable to related parties amounted to $22,656
and $66,066 for the three and nine months ended June 30, 2006 and $20,980 and
$62,940 for the three and nine months ended June 30, 2005. Accrued interest
payable amounted to $156,450 at June 30, 2006.
9. Litigation
As of June 30, 2006, approximately 14 vendors of our GreenMan Technologies
of Georgia, Inc. and GreenMan Technologies of Tennessee, Inc. subsidiaries had
commenced legal action, primarily in the state courts of Georgia, in attempts to
collect approximately $1.6 million of past due amounts, plus accruing interest,
attorneys' fees, and costs, all relating to various services rendered to these
subsidiaries. The largest individual claim is for approximately $650,000. As of
June 30, 2006, one vendor had secured judgments in their favor for an aggregate
of approximately $225,000. As previously noted, all of GreenMan Technologies of
Tennessee, Inc.'s assets were sold in September 2005 and substantially all of
GreenMan Technologies of Georgia, Inc.'s assets were sold as of March 1, 2006.
All proceeds from these sales were retained by our secured lender and these
subsidiaries have no substantial assets. We are therefore currently evaluating
the alternatives available to these subsidiaries.
Although GreenMan Technologies, Inc. was not a party to any of these
vendor relationships, three of the plaintiffs have named GreenMan Technologies,
Inc. as a defendant along with our subsidiaries. We believe that GreenMan
Technologies, Inc has valid defenses to these claims, as well as against any
similar or related claims that maybe made against us in the future, and we
intend to defend against any such claims vigorously.
In addition to the foregoing, 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.
10. Commitments and Contingencies
Management Changes
On April 12, 2006, our Board of Directors named Lyle E. Jensen as
President and Chief Executive Officer succeeding Robert H. Davis, who resigned
those positions, and resigned as a member of our Board of Directors, on the same
day. Mr. Jensen has been a member of our Board of Directors since May 2002, and
previously served as the Chair of the Board's Audit Committee and as member of
the Board's Compensation Committee. Mr. Jensen remains a member of the Board of
Directors, but no longer serve on these committees. Nicholas DeBenedictis, an
outside Director has joined the Compensation Committee and will serve as our
Audit Committee Chair.
15
GREENMAN TECHNOLOGIES, INC.
Notes to Interim Consolidated Financial Statements
Quarters Ended June 30, 2006 and 2005
(Unaudited)
10. Commitments and Contingencies - (Continued)
We entered into a five-year employment agreement with Mr. Jensen pursuant
to which Mr. Jensen receives a base salary of $195,000 per year. The agreement
automatically renews for one additional year upon each anniversary, unless
notice of non-renewal is given by either party. The agreement may be terminated
without cause on thirty days' notice but provides for payment of twelve months'
salary and certain benefits as a severance payment for termination without
cause. The agreement also provides for incentive compensation based on the
attainment of certain financial and non-financial goals. Mr. Jensen will receive
a relocation allowance of up to $25,000 and a car allowance of $600 per month.
Mr. Jensen has been granted a qualified option under the 2005 Stock Option Plan
to purchase 500,000 shares of the our common stock, par value $.01 per share,
with an exercise price of $.28 per share which was the closing price of our
stock on the date of grant. In addition, upon signing of his employment
agreement, Mr. Jensen agreed to purchase 500,000 unregistered shares of our
common stock at $.28 per share which was the closing bid price of the common
stock on the date the agreement was executed. In conjunction with Mr. Davis's
resignation, we agreed to the payment of salary and certain benefits for a
subsequent twelve month period which aggregate approximately $300,000 pursuant
to certain contractual obligations.
In addition, based on the intended sale or closure of our California
subsidiary, notice of termination was provided to our California vice president
on June 30 and we agreed to the payment of salary and certain benefits for a
subsequent twelve month period which aggregate approximately $97,000 pursuant to
certain contractual obligations. (see Note 14).
11. Stock Options
We maintain stock-based compensation plans, which are described more fully
in Note 11 to the consolidated financial statements in our 2005 Annual Report
filed on Form 10-KSB for the fiscal year ended September 30, 2005. As permitted
by SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), we
previously had elected to continue with the accounting methodology prescribed by
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees ("APB 25")." Beginning on October 1, 2006, the Company will adopt SFAS
No. 123(R) "Share-based Payment" and apply the required fair value methodology
to all stock option and equity award plans.
The following table provides the pro forma disclosures of net loss and
earnings per share as if the fair value recognition provisions of SFAS 123, had
been applied:
Three Months Ended Nine Months Ended
June 30, 2006 June 30, 2005 June 30, 2006 June 30, 2005
------------- ------------- ------------- -------------
Net loss as reported ..................................... $ (981,386) $(1,806,653) $(3,668,210) $(5,499,301)
Add: Compensation recognized under APB 25 ................ -- -- -- --
Less: Compensation recognized under FAS 123 .............. (10,622) (9,121) (26,061) (44,156)
----------- ----------- ----------- -----------
Pro forma net loss ....................................... $ (992,008) $(1,815,774) $(3,694,271) $(5,543,457)
=========== =========== =========== ===========
Net loss per share:
Basic and diluted - as reported ...................... $ (0.06) $ (0.09) $ (0.19) $ (0.29)
=========== =========== =========== ===========
Basic and diluted - pro forma ........................ $ (0.06) $ (0.09) $ (0.19) $ (0.29)
=========== =========== =========== ===========
12. Stockholders' Equity
Common Stock Transactions
On April 12, 2006, Mr. Jensen purchased 500,000 shares of our unregistered
common stock (see Note 10),
During the quarter ended June 30, 2006, a director agreed to convert
$91,676 of principal and interest due him under certain unsecured promissory
notes payable into 315,330 shares of our unregistered common stock. (see Note
8).
In June 2006, several directors and officers agreed to accept 186,240
shares of unregistered common stock (valued at $67,046) in lieu of cash for
certain director's fees and expenses due the individuals. In addition, we issued
133,330 shares of unregistered stock (valued at $30,000) to a third party for
consulting services rendered during fiscal 2006.
16
GREENMAN TECHNOLOGIES, INC.
Notes to Interim Consolidated Financial Statements
Quarters Ended June 30, 2006 and 2005
(Unaudited)
12. Stockholders' Equity - (Continued)
Stock Options and Warrants
During the quarter ended June 30, 2006, we granted options to several
officers and employees to purchase an aggregate of 929,000 shares of the our
common stock at exercise prices ranging from $.28 to $.36 per share which
represented the closing price of our stock on the date of each respective grant.
(see Note 10). 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.
On June 30, 2006, we issued Laurus a warrant to purchase up to 3,586,429
shares of our common stock at an exercise price of $.01 per share and terminated
warrants previously issued to Laurus to purchase up to 990,000 shares of our
common stock at prices ranging from $1.63 to $2.29 and up to 390,000 shares of
our common stock at prices ranging from $1.56 to $2.18. (See Note 7).
American Stock Exchange Notices
As previously disclosed, on January 5, 2006 we were notified by the
American Stock Exchange indicating we were not in compliance with the Exchange's
requirements for continued listing as set forth in Sections 134 and 1101 of the
Exchange's Company Guide (the "Company Guide") with respect to our failure to
file our Annual Report on Form 10-KSB for the year ended September 30, 2005 with
the Securities and Exchange Commission. In order to maintain our listing on the
Exchange, we were required to, and did, submit a plan by January 19, 2006
advising the Exchange of action we have taken, or will take, that would bring
our company into compliance with Sections 134 and 1101 of the Company Guide by
no later than March 20, 2006. On February 2, 2006, we were notified that the
Exchange had accepted our compliance plan and had granted us an extension of
time through March 20, 2006 to regain compliance with the continued listing
standards. We filed our Annual Report on April 20, 2006.
On February 14, 2006, we were notified by the Exchange that we are not in
compliance with the Exchange's requirements for continued listing set forth in
Section 1003(a)(i) of the Company Guide because we did not meet the $2,000,000
shareholders' equity requirement and because we reported losses from continuing
operations and/or net losses in two out of our three most recent fiscal years.
In order to maintain our listing on the Exchange, we were required to, and did,
submit a plan by March 14, 2006 advising the Exchange of action we have taken,
or will take, that would bring us into compliance no later than February 14,
2007.
On February 17, 2006 we were notified by the Exchange indicating we were
not in compliance with the Exchange's requirements for continued listing as set
forth in Sections 134 and 1101 of the Company Guide with respect to our failure
to file our Quarterly Report on Form 10-QSB for the quarter ended December 31,
2005 with the Securities and Exchange Commission. In order to maintain our
listing on the Exchange, we were required to, and did, submit a plan by March 3,
2006 advising the Exchange of action we have taken, or will take, that would
bring our company into compliance with Sections 134 and 1101 of the Company
Guide by no later than April 6, 2006. We filed our Quarterly Report on May 10,
2006.
On April 25, 2006 we were notified by the Exchange indicating its
intention to initiate proceedings to delist our common stock. The notice
indicated we failed to comply with Sections 134, 610, 1003 and 1101 of the
Company Guide as noted in the Exchange's February 14th and February 17th notices
described above. In addition, the April 25th notice indicated that based on a
subsequent review of our Form 10-KSB for the fiscal year ended September 30,
2005, we are not in compliance with the Exchange's requirements for continued
listing set forth in Section 1003(a)(ii) of the Company Guide, which requires a
company to maintain stockholders' equity in excess of $4,000,000 if it has
sustained losses from continuing operations and/or net losses in three out of
its four most recent fiscal years. In addition, the Exchange's notice also
indicated we are not in compliance with Section 610(b) of the Company Guide,
requiring a company that has received an audit opinion containing a going
concern qualification to make a public announcement through the news media
disclosing the receipt of such qualified opinion.
17
GREENMAN TECHNOLOGIES, INC.
Notes to Interim Consolidated Financial Statements
Quarters Ended June 30, 2006 and 2005
(Unaudited)
12. Stockholders' Equity - (Continued)
We appealed the Exchange's determination to initiate delisting proceedings
and appeared before a committee of the Exchange on June 6, 2006. On June 7,
2006, we received notice from the Exchange indicating their decision to delist
our common stock was affirmed and on June 15, 2006 our common stock ceased
trading on the Exchange and was delisted from the Exchange on July 6, 2006.
During the period of June 15 through June 20, 2006 we were traded on the Pink
Sheet until June 21, 2006 when we began trading on the
Over-The-Counter-Bulletin-Board ("OTCBB") under the symbol "GMTI".
13. Income Taxes
Based on continued operating losses, we determined the near-term
realizability of our deferred tax asset to be uncertain and accordingly
increased the valuation allowance by $270,000 during the nine months ended June
30, 2005.
14. Subsequent Events
Sale of California Subsidiary
Due to the magnitude of continued operating losses incurred by our
California subsidiary ($3.2 million since inception) subsequent to June 30,
2006, our Board of Directors determined it to be in the best interest of our
company to divest our California operations. A majority of the California
operating losses were due to significantly higher operating costs and equipment
reliability issues resulting from aging equipment processing an increasing
number of scrap tires. The aggregate net losses associated with our California
subsidiary included in the results for the three and nine months ended June 30,
2006 were approximately $220,000 and $952,000, respectively and $59,000 and
$551,000 for the three and nine months ended June 30, 2005.
On July 17, 2006 we entered into a Stock Purchase Agreement with a third
party whereby we agreed to sell our wholly-owned subsidiary, GreenMan
Technologies of California, Inc. for $1,000. GreenMan Technologies of
California, was formed in 2002 to acquire all of the outstanding common stock of
Unlimited Tire Technologies, Inc. an Azusa, California scrap tire recycling
company of which the third party was the majority owner. We do not anticipate
realizing a material gain or loss on this transaction.
Item 2. Management's Discussion and Analysis or Plan of Operations
The following information should be read in conjunction with the unaudited
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 our Form 10-KSB filed for the year ended
September 30, 2005.
Results of Operations
Three Months ended June 30, 2006 Compared to the Three Months ended June 30,
2005
Net sales from continuing operations for the three months ended June 30,
2006 decreased $313,949 or 5% to $5,463,204 as compared to last year's net sales
from continuing operations of $5,777,153. Our continuing operations processed
approximately 3.9 million passenger tire equivalents during the three months
ended June 30, 2006, compared to approximately 4.1 million passenger tire
equivalents during the same period last year. The decrease was attributable to
lower inbound volume and revenue in California and the completion of an Iowa
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scrap tire cleanup project during fiscal 2005 which accounted for approximately
$110,000 of revenue and 115,000 passenger tire equivalents during the three
months ended June 30, 2005. This decrease was partially offset by a 1% increase
in the fee we are paid to collect and dispose of a scrap tire ("tipping fee") (a
3 percent increase when the prior year Iowa scrap tire cleanup revenue is
removed) during the three months ended June 30, 2006 and consistent end-product
revenue during this period. During fiscal 2005, we completed an evaluation of
our corporate-wide inbound collection infrastructure and determined that we
would no longer provide certain levels of service and products at existing rates
in certain markets and therefore implemented price increases where warranted and
terminated service in situations where price increases were not an alternative.
While these initiatives reduced our overall inbound tire volume and may
negatively impact our overall gross tipping fee revenue, we believe these
efforts will continue to improve our performance through lower labor, parts and
maintenance costs.
Gross profit for the three months ended June 30, 2006 was $1,415,954 or
26% of net sales, compared to $982,509 or 17% of net sales for three months
ended June 30, 2005. Our cost of sales decreased $747,394 or 16% primarily due
to decreased collection and processing costs associated with lower inbound
volume and our ongoing efforts to reduce operating costs where available.
Selling, general and administrative expenses for the three months ended
June 30, 2006 increased $564,918 to $1,382,601 or 25% of net sales, compared to
$817,683 or 14% of net sales for the three months ended June 30, 2005. The
increase was primarily attributable to the inclusion of approximately $397,000
of one-time severance costs related to our former President and Chief Executive
Officer and sale of our California subsidiary on July 17, 2006 in addition to
increased professional expenses.
During June 2005 our Wisconsin subsidiary reached an agreement with the
lessor of certain transportation equipment to buy-out the remaining term of the
lease. Management determined that the carrying value of the purchased
transportation equipment was impaired and recorded an impairment loss amounting
to $57,183 during the quarter ended June 30, 2005.
As a result of the foregoing, we had an operating profit of $33,353
(including $397,000 of one-time severance costs) for the three months ended June
30, 2006 as compared to an operating profit of $107,643 for the three months
ended June 30, 2005.
Cash interest and financing expense for the three months ended June 30,
2006 increased $1,005,562 to $1,261,597, compared to $256,035 during the three
months ended June 30, 2005 as a result of increased rates and borrowings and the
inclusion of approximately $888,000 of non-recurring fees and expenses
associated with the June 30, 2006 Laurus restructuring (see Note 7). Financing
fees and non-cash interest decreased $239,293 as a result of lower Laurus
related amortization expense for the three months ended June 30, 2006 as
compared to $549,981 for the same period last year. During the three months
ended June 30, 2006 we recognized approximately $353,476 of gain on debt
restructuring associated with the June 30, 2006 restructuring of the RSLP
promissory note (see Note 7).
As a result of the foregoing, our net loss from continuing operations for
the three months ended June 30, 2006 increased $560,763 to $1,166,425 (including
approximately $932,000 of one-time charges/gains noted above) or $0.06 per basic
share, compared to a net loss of $605,662 or $.03 per basic share for the three
months ended June 30, 2005. During the quarter ended June 30, 2006 we reached
agreement with several vendors regarding remaining past due amounts and reduced
certain plant closure accruals for both Georgia and Tennessee resulting in
approximately $185,000 of ($.01 per basic share) income from discontinued
operations as compared to a loss from discontinued operations of $1,200,991
($.06 per basic share) for the same period last year.
Our net loss for the three months ended June 30, 2006 decreased $825,267
or 46% to $981,386 or $.05 per basic share (including approximately $932,000 of
one-time charges/gains noted above) as compared to a net loss of $1,806,653 or
$.09 per basic share for the three months ended June 30, 2005.
Nine Months ended June 30, 2006 Compared to the Nine Months ended June 30, 2005
Net sales from continuing operations for the nine months ended June 30,
2006 decreased $1,173,480 or 7% to $14,486,290 as compared to last year's net
sales from continuing operations of $15,659,770. Our continuing operations
processed approximately 11 million passenger tire equivalents during the nine
months ended June 30, 2006, compared to approximately 12.5 million passenger
tire equivalents during the same period last year. The decrease was primarily
attributable to the completion of an Iowa scrap tire cleanup project during
fiscal 2005 which accounted for approximately $1,188,000 of revenue and 1.25
million passenger tire equivalents during the nine months ended June 30, 2005
and lower inbound volume and revenue in California.
19
The negative impact on overall revenue resulting from lower inbound tire
volumes was partially offset by a 3% increase (a 10% increase when the prior
year Iowa scrap tire cleanup revenue is removed) in the fee we are paid to
collect and dispose of a scrap tire and a 1 percent increase in end product
revenue during the nine months ended June 30, 2006. During fiscal 2005, we
completed an evaluation of our corporate-wide inbound collection infrastructure
and determined that we would no longer provide certain levels of service and
products at existing rates in certain markets and therefore implemented price
increases where warranted and terminated service in situations where price
increases were not an alternative. While these initiatives reduced our overall
inbound tire volume growth rate and may negatively impact our overall gross
tipping fee revenue, we believe these efforts will continue to improve our
performance through lower labor, parts and maintenance costs.
Gross profit for the nine months ended June 30, 2006 was $3,242,138 or 22%
of net sales, compared to $2,179,568 or 14% of net sales for nine months ended
June 30, 2005. Our cost of sales decreased $2,236,050 or 17% primarily due to
decreased collection and processing costs associated with lower inbound volume
and our ongoing efforts to reduce operating costs where available.
Selling, general and administrative expenses for the nine months ended
June 30, 2006 increased $858,442 to $3,417,137 or 24% of net sales, compared to
$2,558,715 or 16% of net sales for the nine months ended June 30, 2005. The
increase was primarily attributable to the inclusion of approximately $397,000
of one-time severance costs related to our former President and Chief Executive
Officer and sale of our California subsidiary on July 17, 2006 in addition to
increased professional expenses.
Due to continued operating losses management evaluated the carrying value
of certain California equipment and determined that, the carrying value exceeded
its estimated fair value based on replacement cost of similar equipment.
Therefore, we recorded an impairment loss amounting to $35,901 during the nine
months ended June 30, 2006. In addition, during June 2005 management determined
that the carrying value of certain Wisconsin transportation equipment was
impaired and recorded an impairment loss amounting to $57,183 during the nine
months ended June 30, 2005.
As a result of the foregoing, our operating loss decreased $225,430 to
$210,900 (including $397,000 of one-time severance costs) for the nine months
ended June 30, 2006 as compared to an operating loss of $436,330 for the nine
months ended June 30, 2005.
Cash interest and financing expense for the nine months ended June 30,
2006 increased $1,178,307 to $1,878,141, compared to $699,834 during the nine
months ended June 30, 2005 as a result of increased rates and borrowings and the
inclusion of approximately $888,000 of non-recurring fees and expenses
associated with the June 30, 2006 Laurus refinancing (see Note 7). Financing
fees and non-cash interest and increased $352,395 to $1,273,014 for the nine
months ended June 30, 2006 and compared to $920,619 for the same period last
year. The increase was primarily attributable to increased Laurus related
amortization expense. During the nine months ended June 30, 2006 we recognized
approximately $353,476 of gain on debt restructuring associated with the June
30, 2006 restructuring of the RSLP promissory note (see Note 7). In addition, we
determined that certain California equipment was no longer necessary and/or
operable and as a result recorded a $73,300 loss on disposal of these assets
during the nine months ended June 30, 2006. Included in other expenses for the
nine months ended June 30, 2005, is $101,378 relating to a portion of an
acquisition deposit which was written off.
Based on the magnitude of our fiscal 2005 losses, we determined the
near-term realizability of a $270,000 non-cash deferred tax asset to be
uncertain and therefore have provided a valuation allowance on the entire amount
during the nine months ended June 30, 2005.
As a result of the foregoing, our net loss from continuing operations for
the nine months ended June 30, 2006 increased $760,493 to $3,094,675 (including
approximately $932,000 of one-time charges/gains noted above) or $.16 per basic
share, compared to a net loss of $2,334,182 or $.12 per basic share for the nine
months ended June 30, 2005. The $573,535 net loss ($.03 per basic share) from
discontinued operations for the nine months ended June 30, 2006 relates
primarily to the costs of exit activities associated with our Georgia
operations. The $3,165,119 net loss ($.17 per basic share) from discontinued
operations for the nine months ended June 30, 2005 includes approximately
$1,963,000 associated with our Georgia operations and approximately $1,202,000
associated with our Tennessee operations.
Our net loss for the nine months ended June 30, 2006 decreased $1,831,091
or 33% to $3,668,210 (including approximately $932,000 of one-time charges/gains
noted above) or $.19 per basic share as compared to a net loss of $5,499,301 or
$.29 per basic share for the nine months ended June 30, 2005.
Liquidity and Capital Resources
As of June 30, 2006, we had $616,445 in cash and cash equivalents and a
working capital deficiency of $4,229,822 of which $3,800,047 or 90% of the total
is associated with our discontinued Georgia subsidiary. We understand our
20
continued existence is dependent on our ability to generate positive operating
cash flow and achieve profitable status on a sustained basis. We believe our
efforts to achieve these goals will be positively impacted by the June 30, 2006
restructuring of our Laurus Credit facility (see Note 7) as well as our ongoing
efforts to divest and/or close historically unprofitable operations (see Notes 4
and 14). However, we believe the June 15th delisting of our stock by the
American Stock Exchange could substantially limit our stock's future liquidity
and impair our ability to raise capital. (see Note 12).
The Consolidated Statements of Cash Flows reflect events in fiscal 2006
and 2005 as they affect our liquidity. During the nine months ended June 30,
2006, net cash used by operating activities was $93,243. While our net loss was
$3,668,210 our overall cash flow was positively impacted by the following
non-cash expenses and changes to our working capital: $2,440,379 of depreciation
and amortization, $205,216 of non-cash impairment loss and net loss on disposal
of fixed assets and a decrease in accounts receivable of $1,471,376 which offset
a $510,123 increase in inventory which is not unusual in anticipation of our
seasonally stronger quarter. During the nine months ended June 30, 2005, net
cash used by operating activities was $211,925 which reflects a net loss of
$5,499,301 which was partially offset by depreciation and amortization of
$2,706,803, a $270,000 non-cash deferred tax asset write-off, a $287,028
decrease in accounts receivable and a $1,563,500 increase to accounts payable.
Net cash used for by investing activities was $559,954 for the nine months
ended June 30, 2006 reflecting the purchase of $1,120,286 of equipment and the
receipt of $444,332 from the sale of assets. The net cash used by investing
activities for the nine months ended June 30, 2005 was $1,032,772 reflecting the
purchase of equipment of $1,640,874 to increase capacity and efficiencies at
several of our operating locations. This offset by proceeds received from the
sale of our Wisconsin property.
Net cash provided by financing activities was $904,426 during the nine
months ended June 30, 2006 reflecting the positive impact of the Laurus
restructuring and other notes payable and the sale of our common stock. Net cash
provided by financing activities was $1,261,012 during the nine months ended
June 30, 2005 and was positively impacted by availability under our new Laurus
credit facility as well as increased availability under our First American
credit facility. This increase was offset by repayment of notes payable of
$1,222,540 and capital leases of $414,336.
The financial statements have been prepared assuming we will continue as a
going concern. We have incurred substantial losses from operations, and have a
significant working capital deficiency at June 30, 2006. These factors raise
substantial doubt about our ability to continue as a going concern.
In order to reduce our operating costs, address our liquidity needs and
return to profitable status, we have implemented and/or are in the processing of
implementing the following actions:
Divestiture of Unprofitable Operations
Due to the magnitude of the continuing operating losses incurred by our
Georgia ($3.4 million) and Tennessee ($1.8 million) subsidiaries during fiscal
2005, our Board of Directors determined it to be in the best interest of our
company to discontinue all Southeastern operations and dispose of their
respective operating assets. A majority of the Tennessee operating losses were
due to rapid market share growth within the state necessitating us to transport
an increasing number of Tennessee scrap tires to our Georgia facility for
processing at significant transportation and processing loss. A majority of the
Georgia operating losses were due to (1) the negative impact of processing a
significant number of Tennessee sourced tires; (2) a change in the
specifications of our primary end market customers requiring a smaller product
resulting in reduced processing capacity and significantly higher operating
costs and (3) equipment reliability issues resulting from aging equipment
processing an increasing number of scrap tires.
On September 6, 2005 we entered into an agreement under which all
Tennessee scrap tire collection contracts and certain other contracts with
suppliers of waste tires and contracts to supply whole tires to certain cement
kilns in the southeastern region of the United States were assigned to a company
owned by a former employee. We received no cash consideration for these
assignments and recorded a $1,334,849 loss (including a non-cash loss of
$918,450 associated with goodwill written off) on disposal of the operations at
September 30, 2005. The aggregate net losses including the loss on disposal
associated with the discontinued operations of our Tennessee subsidiary included
in the results for the three and nine months ended June 30, 2005 were
approximately $440,000 and $1,202,000, respectively. During the quarter ended
June 30, 2006 we reached agreement with our former Tennessee landlord regarding
past due amounts and have recognized approximately $56,000 of income from
discontinued Tennessee operations for the three and nine months ended June 30,
2006.
21
On September 27, 2005, we adopted a plan to dispose of all Georgia
operations and during the quarter ended December 31, 2005, we substantially
curtailed operations at our Georgia subsidiary. As a result, we wrote down all
Georgia operating assets to their estimated fair market value at September 30,
2005 and recorded a loss on disposal of $4,631,102 (including a non-cash loss of
$1,253,748 associated with goodwill written off) net of a gain on settlement of
our Georgia facility lease of $586,137 (see Note 5). We completed the
divestiture of all Georgia operating assets as of March 1, 2006. During the
quarter ended June 30, 2006 we reached agreement with several vendors regarding
remaining past due amounts and reduced certain plant closure accruals resulting
in approximately $129,000 of income from discontinued Georgia operations. The
aggregate net losses including the loss on disposal associated with the
discontinued operations of our Georgia subsidiary included in the results for
the three and nine months ended June 30, 2005 were approximately $785,000 and
$1,963,000.
On February 17, 2006, we entered into an Asset Purchase Agreement with
Tires Into Recycled Energy and Supplies, Inc. ("TIRES"), a leading crumb rubber
processor in the United States. Under the agreement, we sold and assigned to
TIRES certain assets, including (a) certain truck tire processing equipment
located at our Georgia facility; (b) certain rights and interests in our
contracts with suppliers of scrap truck tires; and (c) certain intangible
assets. TIRES agreed to assume all of our rights and obligations under these
contracts. In addition, TIRES entered into a sublease agreement with us with
respect to part of the premises located in Georgia. As additional consideration,
TIRES agreed to terminate several material supply and equipment lease agreements
as well as terminating a December 2005 letter of intent between GreenMan and
TIRES containing an exclusive option to acquire certain operating assets of
TIRES (see Note 6).
On March 1, 2006, we entered into an Asset Purchase Agreement with MTR of
Georgia, Inc. ("MTR") a company co-owned by a former employee. Under the
agreement, we sold and assigned to MTR certain assets, including (a) certain
passenger tire processing equipment located at our Georgia facility; (b) certain
rights and interests in our contracts with suppliers of scrap passenger tires;
and (c) certain intangible assets. MTR agreed to assume all of our rights and
obligations under these contracts. In addition, MTR entered into a sublease
agreement with us with respect to part of the premises located in Georgia (see
Note 5). We received $250,000 from MTR for these assets. As additional
consideration, MTR has agreed to assume financial responsibility for disposing
of all scrap tires and scrap tire processing residual at the Georgia facility as
of the close of this sale.
We agreed with TIRES and MTR not to compete in the business of providing
whole tire waste disposal services or selling crumb rubber material (except to
our existing customers) within certain Southeastern states for a period of three
years.
Due to the magnitude of continued operating losses incurred by our
California subsidiary ($3.2 million since inception), our Board of Directors
determined it to be in the best interest of our company to divest our California
operations. A majority of the California operating losses were due to rapid
market share growth within the state, significantly higher operating costs and
equipment reliability issues resulting from aging equipment processing an
increasing number of scrap tires. The aggregate net losses associated with our
California subsidiary included in the results for the three and nine months
ended June 30, 2006 were approximately $220,000 and $952,000, respectively and
$59,000 and $551,000 for the three and nine months ended June 30, 2005.
On July 17, 2006 we entered into a Stock Purchase Agreement with a third
party whereby we agreed to sell our wholly-owned subsidiary, GreenMan
Technologies of California, Inc. for $1,000. GreenMan Technologies of
California, was formed in 2002 to acquire all of the outstanding common stock of
Unlimited Tire Technologies, Inc. an Azusa, California scrap tire recycling
company of which the third party was the majority owner. We do not anticipate
realizing a material gain or loss on this transaction.
Credit Facility Refinancing
On June 30, 2006, we entered into a $16 million amended and restated
credit facility with Laurus (the "New Credit Facility"). The New Credit Facility
consists of (1) a $5 million non-convertible secured revolving note (the
"Revolving Note"); and (2) an $11 million secured non-convertible term note (the
"Term Note").
22
Additional Steps to Increase Liquidity
Over the last several years, we have funded portions of our operating cash
flow from sales of equity securities, loans from officers and related parties,
increased borrowings and extending payments to our vendors.
In December 2003, we issued a 10% convertible note due December 2004 in
the aggregate principal amount of $375,000 to an investor. The note was
convertible at the option of the holder at any time prior to maturity into
investment units at a price equal to $1.07 per unit with each unit consisting of
one share of common stock and a warrant to purchase 1.5 shares of common stock
at an exercise price of $1.07 per share, exercisable nine months after issuance
for a period of five years from date of issuance. The note was converted on June
24, 2004 into 369,331 shares of common stock and we issued warrants to purchase
553,997 shares of our common stock. When originally issued, this note reflected
a beneficial conversion feature amounting to $154,226 and, upon conversion, the
remaining unamortized beneficial conversion discount of approximately $77,000
was charged to interest expense.
In April 2004, we commenced a private offering of investment units to
accredited investors, each unit consisting of one share of our common stock and
a warrant to purchase 0.5 shares of our common stock. As of June 30, 2004, when
the offering terminated, we had sold 1,594,211 units (1,594,211 shares of our
common stock and warrants to purchase 797,105 additional shares of our common
stock at prices ranging from $1.56 to $2.06 per share) to investors, including
our directors and existing shareholders, for gross proceeds of $1,547,800. We
used the net proceeds of this offering to commence re-establishing our Georgia
waste wire processing capacity and for general working capital purposes.
From June 2003 through March 2004, several of our officers and members of
their families loaned us an aggregate of $1,345,000. These advances bear
interest at 12% and mature at various times through March 2006. In April 2004,
several of these individuals agreed to invest approximately $550,000 of the
amounts due them under the terms of their loans into the private placement
described above. In April 2004, one of our officers applied approximately
$187,000 of amounts due him to pay off notes receivable due our company and in
June 2004 applied approximately $114,000 of amounts due him, plus $21,000 of
accrued interest to exercise options to purchase 185,000 shares of our common
stock. In addition, during the period of January to June 2006, a director loaned
us $155,000 under the terms of three unsecured promissory notes which bear
interest at 10% per annum with interest with principal due during periods
ranging form June 30, 2006 through September 30, 2006. On April 12, 2006, the
director agreed in lieu of being repaid in cash at maturity to convert $76,450
(including interest of $1,450) into 273,035 shares of unregistered common stock
at a price of $.28 which was the closing price of our stock on the date of
conversion. In addition, on June 5, 2006 the director agreed to convert $15,226
(including interest of $226) into 42,295 shares of unregistered common stock at
a price of $.36 which was the closing price of our stock on the date of
conversion. At June 30,2006 , the remaining balance on these advances amounted
to $764,320
Operating Performance Enhancements
Historically, our tire shredding operations were able to recover and sell
approximately 60% of a processed tire with the balance disposed of as waste wire
residual (cross-contaminated rubber and steel) at an annual cost exceeding
$1,000,000 in prior years. During the past several years we have purchased
secondary equipment for our Iowa and Minnesota facilities to further process the
waste wire residual into saleable components of rubber and steel that not only
provide new sources of revenue but also significantly reduced our residual
disposal costs.
During the third quarter of fiscal 2006, we initiated a $900,000 equipment
upgrade to our Des Moines, Iowa processing facility whereby we are installing
new fine grind crumb rubber processing equipment. This new equipment is expected
to increase overall production capacity by over 8 million pounds per year to
over 20 million pounds of crumb rubber capacity. Approximately $450,000 of the
initiative was funded by a loan from the Iowa Department of Natural Resources
with the balance of the project funded internally. We anticipate the initiative
to be complete and operational during the fourth quarter of fiscal 2006.
Effects of Inflation and Changing Prices
Generally, we are exposed to the effects of inflation and changing prices.
Primarily because the largest component of our collection and disposal costs is
transportation, we have been adversely affected by the significant increases in
the cost of fuel. Additionally, because we rely on floating-rate debt for
certain financing arrangements, rising interest rates have had a negative effect
on our performance.
Based on our fiscal 2006 operating plan our available working capital and
our revenues from operations, we believe that borrowings from affiliated and
unaffiliated lenders including additional funding from Laurus will be necessary
to satisfy our cash requirements for the foreseeable future. If we are unable to
obtain additional financing, our ability to maintain our current level of
operations could be materially and adversely affected and we may be required to
adjust our operating plans accordingly or to discontinue our operations
altogether.
23
Off-Balance Sheet Arrangements
We lease various facilities and equipment under cancelable and
non-cancelable short and long term operating leases which are described in
Footnote 10 to the Audited Consolidated Financial Statements contained in our
annual report on Form 10-KSB.
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.
Factors That May Affect Future Results
Risks Related to our Business
We have lost money in the past fifteen consecutive quarters and may need
additional working capital if we do not return to sustained profitability, which
if not received, may force us to curtail operations.
We have incurred substantial losses from operations over the past 15
quarters. As of June 30, 2006, we had $616,445 in cash and cash equivalents and
a working capital deficiency of $4,229,822 of which $3,800,047 or 90% of the
total is associated with our discontinued Georgia subsidiary. We understand our
continued existence is dependent on our ability to generate positive operating
cash flow and achieve profitable status on a sustained basis. We believe our
efforts to achieve these goals will be positively impacted by the June 30, 2006
restructuring of our Laurus Credit facility (see Note 7) as well as our ongoing
efforts to divest and/or close historically unprofitable operations (see Notes 4
and 14). However, we believe the June 15th delisting of our stock by the
American Stock Exchange could substantially limit our stock's future liquidity
and impair our ability to raise capital. (see Note 12).
We have invested substantial amounts of capital during the past several
years in new equipment to increase processing capacity at our Iowa and Minnesota
locations, as well as consolidating our Wisconsin location into our Minnesota
operations during fiscal 2005 to substantially reduce operating costs and
maximize our return on assets. Our future operating plan focuses on maximizing
the performance of these two operations through our continuing efforts to
increase overall quality of revenue (revenue per passenger tire equivalent)
while remaining diligent with our ongoing cost reduction initiatives. During
fiscal 2005, we completed an evaluation of our corporate-wide inbound collection
infrastructure and determined that we would no longer provide certain levels of
service and products at existing rates in certain markets and therefore
implemented price increases where warranted and terminated service in situations
where price increases were not an alternative. As a result, we experienced a 4%
increase in overall tipping fees (fees we are paid to collect and dispose of a
scrap tire) during fiscal 2005 and an increase of 3% on a year to date basis
during fiscal 2006 as compared to the same period during fiscal 2005. While
these initiatives reduced our overall inbound tire volume growth rate during
fiscal 2005 and thus far during fiscal 2006, we believe they have and will
continue to improve our performance through lower labor, parts and maintenance
costs. In addition, we continue to identify, and are currently selling product
into several new, higher-value markets as evidenced by an 18% increase in end
product revenue during fiscal 2005 and a 1% increase on a year to date basis in
fiscal 2006. We continue to experience strong demand for our end products.
The delisting of our common stock by the American Stock Exchange could
substantially limit our stock's liquidity and impair our ability to raise
capital.
On April 25, 2006, we received a notice from the American Stock Exchange
(the "Exchange") stating that the Exchange intends to initiate proceedings to
delist the Registrant's common stock. The notice indicated that we failed to
comply with Sections 134, 610, 1003(f)(iii) and 1101 of the Exchange's Company
Guide. We appealed the Exchange's determination to initiate delisting
proceedings and appeared before a committee of the Exchange on June 6, 2006. On
June 7, 2006, we received notice from the Exchange indicating their decision to
delist our common stock was affirmed and on June 15, 2006 our common stock
ceased trading on the Exchange and was delisted from the Exchange on July
6,2006. During the period of June 15 through June 20, 2006 we were traded on the
Pink Sheet until June 21, 2006 when we began trading on the
Over-The-Counter-Bulletin-Board under the symbol "GMTI". We believe the
delisting could substantially limit our stock's liquidity and impair our ability
to raise capital.
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We have substantial indebtedness to Laurus Master Fund secured by substantially
all of our assets. If an event of default occurs under the secured notes issued
to Laurus, Laurus may foreclose on our assets and we may be forced to curtail or
cease our operations or sell some or all of our assets to repay the notes.
On June 30, 2006, we entered into a $16 million amended and restated
credit facility with Laurus (the "New Credit Facility"). The New Credit Facility
consists of a $5 million non-convertible secured revolving note and an $11
million secured non-convertible term note (the "Term Note"). Unlike the terms of
the June 2004 credit facility with Laurus, the New Credit Facility is not
convertible into shares of our common stock.
Subject to certain grace periods, the notes and agreements provide for the
following events of default (among others):
o failure to pay interest and principal when due;
o an uncured breach by us of any material covenant, term or condition
in any of the notes or related agreements;
o a breach by us of any material representation or warranty made in
any of the notes or in any related agreement;
o any money judgment or similar final process is filed against us for
more than $50,000 that remains unvacated, unbonded or unstayed for a
period of 30 business days;
o any form of bankruptcy or insolvency proceeding is instituted by or
against us;
o suspension of our common stock from our principal trading market for
five consecutive days or five days during any ten consecutive days;
and
o the occurrence of a change in control of our ownership.
In the event of a future default under our agreements with Laurus, Laurus
may enforce its rights as a secured party and we may lose all or a portion of
our assets, be forced to materially reduce our business activities or cease
operations.
We will require additional funding to grow our business, which funding may not
be available to us on favorable terms or at all. If we do not obtain funding
when we need it, our business will be adversely affected. In addition, if we
have to sell securities in order to obtain financing, the rights of our current
holders may be adversely affected.
We will have to seek additional outside funding sources to satisfy our
future financing demands if our operations do not produce the level of revenue
we require to maintain and grow our business. We cannot assure you that outside
funding will be available to us at the time that we need it and in the amount
necessary to satisfy our needs, or, that if such funds are available, they will
be available on terms that are favorable to us. If we are unable to secure
financing when we need it, our business will be adversely affected and we may
need to discontinue some or all of our operations. If we have to issue
additional shares of common stock or securities convertible into common stock in
order to secure additional funding, our current stockholders will experience
dilution of their ownership of our shares. In the event that we issue securities
or instruments other than common stock, we may be required to issue such
instruments with greater rights than those currently possessed by holders of our
common stock.
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Improvement in our business depends on our ability to increase demand for our
products and services.
Adverse events or economic or other conditions affecting markets for our
products and services, potential delays in product development, product and
service flaws, changes in technology, changes in the regulatory environment and
the availability of competitive products and services are among a number of
factors that could limit demand for our products and services.
Our business is subject to extensive and rigorous government regulation; failure
to comply with applicable regulatory requirements could substantially harm our
business.
Our tire recycling activities are subject to extensive and rigorous
government regulation designed to protect the environment. The establishment and
operation of plants for tire recycling are subject to obtaining numerous permits
and compliance with environmental and other government regulations. The process
of obtaining required regulatory approvals can be lengthy and expensive. The
Environmental Protection Agency and comparable state and local regulatory
agencies actively enforce environmental regulations and conduct periodic
inspections to determine compliance with government regulations. Failure to
comply with applicable regulatory requirements can result in, among other
things, fines, suspensions of approvals, seizure or recall of products,
operating restrictions, and criminal prosecutions. Furthermore, changes in
existing regulations or adoption of new regulations could impose costly new
procedures for compliance, or prevent us from obtaining, or affect the timing
of, regulatory approvals.
The market in which we operate is highly competitive, fragmented and
decentralized and our competitors may have greater technical and financial
resources.
The market for our services is highly competitive, fragmented and
decentralized. Many of our competitors are small regional or local businesses.
Some of our larger competitors may have greater financial and technical
resources than we do. As a result, they may be able to adapt more quickly to new
or emerging technologies and changes in customer requirements, or to devote
greater resources to the promotion and sale of their services. Competition could
increase if new companies enter the markets in which we operate or our existing
competitors expand their service lines. These factors may limit or prevent any
further development of our business.
Our success depends on the retention of our senior management and other key
personnel.
Our success depends largely on the skills, experience and performance of
our senior management. The loss of any key member of senior management could
have a material adverse effect on our business, financial condition and results
of operations.
Seasonal factors may affect our quarterly operating results.
Seasonality may cause our total revenues to fluctuate. We typically
process fewer tires during the winter and experience a more pronounced volume
reduction in severe weather conditions. In addition, a majority of our crumb
rubber is used for playground and athletic surfaces, running tracks and
landscaping/groundcover applications which are typically installed during the
warmer portions of the year. Similar seasonal or other patterns may develop in
our business.
Inflation and changing prices may hurt our business.
Generally, we are exposed to the effects of inflation and changing prices.
Primarily because the largest component of our collection and disposal costs is
transportation, we have been adversely affected by significant increases in the
cost of fuel. Additionally, because we rely on floating-rate debt for certain
financing arrangements, rising interest rates have had a negative effect on our
financial performance.
If we acquire other companies or businesses, we will be subject to risks that
could hurt our business.
A significant part of our business strategy entails future acquisitions,
or significant investments in, businesses that offer complementary products and
services. Promising acquisitions are difficult to identify and complete for a
number of reasons. Any acquisitions completed by our company may be made at a
premium over the fair value of the net assets of the acquired companies, and
competition may cause us to pay more for an acquired business than its long-term
fair market value. There can be no assurance that we will be able to complete
future acquisitions on terms favorable to us or at all. In addition, we may not
26
be able to integrate future acquired businesses, at all or without significant
distraction of management from our ongoing business. In order to finance
acquisitions, it may be necessary for us to issue shares of our capital stock to
the sellers of the acquired businesses and/or to seek additional funds through
public or private financings. Any equity or debt financing, if available at all,
may be on terms which are not favorable to us and, in the case of an equity
financing or the use of our stock to pay for an acquisition, may result in
dilution to our existing stockholders.
As we grow, we are subject to growth related risks.
We are subject to growth-related risks, including capacity constraints and
pressure on our internal systems and personnel. In order to manage current
operations and any future growth effectively, we will need to continue to
implement and improve our operational, financial and management information
systems and to hire, train, motivate, manage and retain employees. We may be
unable to manage such growth effectively. Our management, personnel or systems
may be inadequate to support our operations, and we may be unable to achieve the
increased levels of revenue commensurate with the increased levels of operating
expenses associated with this growth. Any such failure could have a material
adverse impact on our business, operations and prospects. In addition, the cost
of opening new facilities and the hiring of new personnel for those facilities
could significantly decrease our profitability, if the new facilities do not
generate sufficient additional revenue.
Risks Related to the Securities Market
Our stock price may be volatile, which could result in substantial losses for
our shareholders.
Our common stock is thinly traded and an active public market for our
stock may not develop. Consequently, the market price of our common stock may be
highly volatile. Additionally, the market price of our common stock could
fluctuate significantly in response to the following factors, some of which are
beyond our control:
o we are now traded on the Over The Counter Bulletin Board;
o changes in market valuations of similar companies;
o announcements by us or by our competitors of new or enhanced
products, technologies or services or significant contracts,
acquisitions, strategic relationships, joint ventures or capital
commitments;
o regulatory developments;
o additions or departures of senior management and other key
personnel;
o deviations in our results of operations from the estimates of
securities analysts; and
o future issuances of our common stock or other securities.
We have options, warrants and convertible promissory notes currently
outstanding. Exercise of these options and warrants, and conversions of these
promissory notes will cause dilution to existing and new shareholders. Future
sales of common stock by Laurus and our existing stockholders could result in a
decline in the market price of our stock.
As of June 30, 2006, we have options and warrants to purchase
approximately 11,752,000 shares of common stock outstanding. The exercise of our
options and warrants will cause additional shares of common stock to be issued,
resulting in dilution to investors and our existing stockholders. As of June 30,
2006, approximately 13 million shares of our common stock were eligible for sale
in the public market. This represents approximately 68 percent of our
outstanding shares of common stock. After the effective date of the additional
registration statement we are required to file with respect to the Laurus credit
facility approximately 19 shares of our common stock will be eligible for resale
in the public market. Sales of a significant number of shares of our common
stock in the public market could result in a decline in the market price of our
common stock, particularly in light of the illiquidity and low trading volume in
our common stock.
Our directors, executive officers and principal stockholders own a significant
percentage of our shares, which will limit your ability to influence corporate
matters.
Our directors, executive officers and other principal stockholders owned
approximately 30 percent of our outstanding common stock as of June 30, 2006.
Accordingly, these stockholders could have a significant influence over the
outcome of any corporate transaction or other matter submitted to our
stockholders for approval, including mergers, consolidations and the sale of all
or substantially all of our assets and also could prevent or cause a change in
control. The interests of these stockholders may differ from the interests of
our other stockholders. In addition, limited number of shares held in public
float effect the liquidity of our common stock. Third parties may be discouraged
from making a tender offer or bid to acquire us because of this concentration of
ownership.
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We have never paid dividends on our capital stock, and we do not anticipate
paying any cash dividends in the foreseeable future.
We have paid no cash dividends on our capital stock to date and we
currently intend to retain our future earnings, if any, to fund the development
and growth of our businesses. In addition, our agreements with Laurus prohibit
the payment of cash dividends. As a result, capital appreciation, if any, of our
common stock will be shareholders' sole source of gain for the foreseeable
future.
Anti-takeover provisions in our charter documents and Delaware law could
discourage potential acquisition proposals and could prevent, deter or delay a
change in control of our company.
Certain provisions of our Restated Certificate of Incorporation and
By-Laws could have the effect, either alone or in combination with each other,
of preventing, deterring or delaying a change in control of our company, even if
a change in control would be beneficial to our stockholders. Delaware law may
also discourage, delay or prevent someone from acquiring or merging with us.
Environmental Liability
There are no known material environmental violations or assessments.
Item 3 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 June 30, 2006. 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 June 30, 2006, 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 June 30, 2006 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On April 12, 2006, we issued 500,000 shares of common stock, valued at
$140,000 to one of our officers. See Note 10, "Commitments and
Contingencies" of Notes to Unaudited Condensed Consolidated Financial
Statements included in this report. The issuance of these shares was
exempt from registration under the Securities Act of 1933 pursuant to
Section 4(2) of the Securities Act.
During the quarter ended, we issued 315,330 shares of our unregistered
common stock to one of our directors upon partial conversion of $90,000 of
principal and $1,676 of accrued interest on two promissory notes. See Note
8, "Notes Payable - Related Party" of Notes to Unaudited Condensed
Consolidated Financial Statements included in this report. The issuance of
these shares is exempt from registration under the Securities Act pursuant
to Section 4(2) of the Securities Act.
On June 5, 2006, we issued 186,240 shares of our unregistered common stock
valued at $67,046 to several directors and officers in lieu of cash for
past due fees and expenses due them. See Note 12, "Stockholder's Equity"
of Notes to Unaudited Condensed Consolidated Financial Statements included
in this report. The issuance of these shares is exempt from registration
under the Securities Act pursuant to Section 4(2) of the Securities Act.
On June 16, 2006, we issued 133,330 shares of our unregistered common
stock valued at $30,000 to a third party for consulting services rendered
during fiscal 2006. See Note 12, "Stockholder's Equity" of Notes to
Unaudited Condensed Consolidated Financial Statements included in this
report. The issuance of these shares is exempt from registration under the
Securities Act pursuant to Section 4(2) of the Securities Act.
On June 30, 2006, we issued Laurus a warrant to purchase up to 3,586,429
shares of our common stock at an exercise price of $.01 per share. See
Note 7, "Notes Payable/Credit Facilities," of Notes to Unaudited Condensed
Consolidated Financial Statements included in this report. The issuance of
this warrant is exempt from registration pursuant to Section 4(2) of the
Securities Act.
Item 6. Exhibits
4.1 Common Stock Purchase Warrant, dated June 30, 2006, issued
to Laurus Master Fund, Ltd.
4.2 Letter of Common Stock Purchase Warrant cancellation,
dated June 30, 2006, by and among GreenMan Technologies,
Inc. and Laurus Master Fund, Ltd.
4.3 Registration Rights Agreement dated June 30, 2006, made by
GreenMan Technologies, Inc. to Laurus Master Fund, Ltd.
4.4 Reaffirmation and Ratifiction Agreement dated June 30,
2006, made by GreenMan Technologies, Inc. to Laurus Master
Fund, Ltd.
4.5 Stock Pledge Agreement, dated June 30, 2006, by and among
GreenMan Technologies, Inc. and Laurus Master Fund, Ltd.
4.6 Escrow Agreement dated June 30, 2006, among GreenMan
Technologies, Inc., Laurus Master Fund, Ltd., and Loeb &
Loeb LLP, as Escrow Agent
10.1 Subordination Agreement, dated March 15, 2006 by and among
Nicholas and Nancy DeBenedictis in favor of Laurus Master
Fund, Ltd.
10.2 Amended and Restated Security Purchase Agreement, dated
June 30, 2006, by and among GreenMan Technologies, Inc.
and certain of its subsidiaries, in favor of Laurus Master
Fund, Ltd.
10.3 Secured Non-Convertible Term Note, dated June 30, 2006,
made by GreenMan Technologies, Inc. to Laurus Master Fund,
Ltd.
10.4 Secured Non-Convertible Revolving Note, dated June 30,
2006, made by GreenMan Technologies, Inc. to Laurus Master
Fund, Ltd.
10.5 $30,000 Unsecured Promissory Note issued by GreenMan
Technologies, Inc. to Nicholas and Nancy DeBenedictis
dated May 6, 2006
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10.6 Mutual General Release by and between GreenMan
Technologies, Inc.,etal and Republic Services, Inc. dated
June 30,2006.
10.7 $150,000 Promissory Note by GreenMan Technologies, Inc. to
Republic Services of Georgia, LP dated June 30, 2006.
10.8* Employment Agreement dated April 12, 2006, between
Greenman Technologies,Inc. and Lyle Jensen
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)
32.1 Certification of Chief Executive Officer under 18 U.S.C
Section 1350
32.2 Certification of Chief Financial Officer under 18 U.S.C
Section 1350
(a) Reports on Form 8-K
1. Form 8-K dated April 10, 2006 (filed April 11, 2006), covering Items
2.02 and 9.01
2. Form 8-K dated April 12, 2006 (filed April 17, 2006), covering Items
5.02 and 9.01
3. Form 8-K dated April 27, 2006 (filed April 27, 2006), covering Items
3.01 and 9.01
4. Form 8-K dated June 7, 2006 (filed June 13, 2006), covering Items
3.01 and 9.01
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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/ Lyle Jensen
---------------
Lyle Jensen
Chief Executive Officer
By: GreenMan Technologies, Inc.
/s/ Charles E. Coppa
--------------------
Chief Financial Officer, Treasurer,
Secretary
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