SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002
COMMISSION FILE NUMBER: 017833
GREENLAND CORPORATION
(Exact Name of Registrant as specified in its charter)
NEVADA 87-0439051
(State of other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)
2111 PALOMAR AIRPORT ROAD, SUITE 200
CARLSBAD, CA 92009
(Address and zip code of principal executive offices)
(760) 804-2770
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES NO
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
CLASS A COMMON STOCK $0.001 PAR VALUE
270,420,378 SHARES OUTSTANDING AS OF APRIL 30, 2002
DOCUMENTS INCORPORATED BY REFERENCE
Traditional Small Business Disclosure Format (check one): YES NO
GREENLAND CORPORATION
REPORT ON FORM 10-QSB
QUARTER ENDED MARCH 31, 2002
TABLE OF CONTENTS
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Consolidated balance sheets as of March 31, 2002
Consolidated statements of operations for the three months ended March 31, 2002
and 2001
Consolidated statements of cash flows for the three months ended March 31, 2002
and 2001
Notes to consolidated financial statements
Item 2. Management's discussion and analysis of financial condition and
results of operations
Part II. Other Information
Signatures
GREENLAND CORPORATION
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
MARCH 31, 2002
(in thousands, except share amounts)
ASSETS
- ----------------------------------------------------------------------------------------
CURRENT ASSETS:
Cash & cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5
Accounts receivable, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258
Accounts receivable-officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
-------------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 424
PROPERTY AND EQUIPMENT, NET. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496
OTHER ASSETS
Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450
Intangibles, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 902
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-------------------
$ 2,301
===================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 685
Accrued expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,011
Note payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438
Note payable-related party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Current maturities of obligations under capital lease . . . . . . . . . . . . . . . 144
-------------------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,443
Long term debt
Obligations under capital lease less current maturities. . . . . . . . . . . . . . . . . 126
COMMITMENTS
STOCKHOLDERS' EQUITY
Convertible Preferred Class A stock, $.001 par value;
authorized shares 10,000, 60 shares issued and
outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -
Common stock, $.001 par value; authorized shares
500,000,000, 241,152,994 shares issued and outstanding . . . . . . . . . . . . . 234
Additional paid in capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,661
Subscribed shares and receivables . . . . . . . . . . . . . . . . . . . . . . . . . (1,213)
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28,950)
-------------------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . (268)
-------------------
$ 2,301
===================
The accompanying notes are an integral part of these consolidated financial statements.
GREENLAND CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTH ENDED MARCH 31, 2002 AND 2001
(in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2002 2001
--------------------- ----------------
Net Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ 89
Cost of Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 436
--------------------- ----------------
Gross loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (101) (347)
Operating Expenses:
General & administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . 714 1,035
Research & development costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . - 67
--------------------- ----------------
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (714) 1,102
Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (815) (1,449)
Non-operating income (expense):
Loss on sale of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (114)
Impairment of goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,565) -
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (37) (16)
Loss on termination of lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . - (212)
Warrant costs - equity investor . . . . . . . . . . . . . . . . . . . . . . . . . . - (138)
Other income (expense). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (16)
--------------------- ----------------
Total non-operating expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,602) (496)
Loss before income tax and extraordinary item. . . . . . . . . . . . . . . . . . . . . . (2,417) (1,945)
Provision for income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2
--------------------- ----------------
Net Loss before extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,417) (1,947)
Extraordinary item - loss on settlement of debts . . . . . . . . . . . . . . . . . . . . (11) -
--------------------- ----------------
Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,428) (1,947)
Other comprehensive income, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . - 33
--------------------- ----------------
Comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,428) $ (1,914)
===================== ================
Basic and diluted weighted average number of
common stock outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212,937 70,604
===================== ================
Basic and diluted net loss per share . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.011) $ (0.03)
===================== ================
The accompanying notes are an integral part of these consolidated financial statements.
GREENLAND CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE YEARS ENDED MARCH 31, 2002 AND 2001
(in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2002 2001
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(2,428) $(1,947)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . . 126 199
Allowance for doubtful accounts. . . . . . . . . . . . . . . . . . . . . . . . . - 100
Warrant cost - equity investor . . . . . . . . . . . . . . . . . . . . . . . . . - 138
Options issued for services . . . . . . . . . . . . . . . . . . . . . . . . . . . - 92
Realized loss on the sale & disposal of investments . . . . . . . . . . . . . . . - 114
Impairment of goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,565 -
Net loss on settlement of debt. . . . . . . . . . . . . . . . . . . . . . . . . . 11 -
Stock issued for services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 433 1,093
Stock issued for salaries & reimbursement . . . . . . . . . . . . . . . . . . . . 45 -
(Increase) / decrease in current assets:
Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 (93)
Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 26
Prepaid Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 -
Other asset. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 (87)
Increase / (decrease) in current liabilities:
Account payable and accrued expense. . . . . . . . . . . . . . . . . . . . . . 129 105
-------- --------
Total Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,341 1,687
-------- --------
Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . (87) (260)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments . . . . . . . . . . . . . . . . . . . . . . . . . . - 65
-------- --------
Net cash provided by in investing activities. . . . . . . . . . . . . . . . . . . . . - 65
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the exercise of warrants & options . . . . . . . . . . . . . . . . . . . 42 68
Principal payments on capital leases . . . . . . . . . . . . . . . . . . . . . . . . . (33) (12)
Proceeds from note payable-related party . . . . . . . . . . . . . . . . . . . . . . . 76 74
-------- --------
Net cash provided by financing activities. . . . . . . . . . . . . . . . . . . . . . . 85 130
NET DECREASE IN CASH & CASH EQUIVALENT . . . . . . . . . . . . . . . . . . . . . . . . . (2) (65)
CASH & CASH EQUIVALENT, BEGINNING BALANCE. . . . . . . . . . . . . . . . . . . . . . . . 7 75
-------- --------
CASH & CASH EQUIVALENT, ENDING BALANCE . . . . . . . . . . . . . . . . . . . . . . . . . $ 5 $ 10
======== ========
SUPPLEMENTAL INFORMATION:
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14 $ 12
======== ========
Cash paid for income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ -
======== ========
The accompanying notes are an integral part of these consolidated financial statements.
GREENLAND CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated interim financial statements
have been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission for the presentation of interim financial
information, but do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. The
audited consolidated financial statements for the two years ended December 31,
2001 was filed on April 18, 2002 with the Securities and Exchange Commission and
is hereby referenced. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for the
three months period ended March 31, 2002 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2002.
NOTE 2. GOING CONCERN UNCERTAINTY
As shown in the accompanying consolidated financial statements, the Company has
suffered recurring losses from operations, has a net working capital deficiency
of approximately $2.0 million and an accumulated deficit of $28.9 million as of
March 31, 2002. These factors, among others, raise substantial doubt about the
Company's ability to continue as a going concern. The Company's need for working
capital is a key issue for management and necessary for the Company to meet its
goals and objectives. The Company continues to meet its obligations and pursue
additional capitalization opportunities. There is no assurance, however, that
the Company will be successful in meeting its goals and objectives in the
future.
In view of the matters described in the preceding paragraph, recoverability of a
major portion of the recorded asset amounts shown in the accompanying balance
sheet is dependent upon continued operations of the Company, which in turn is
dependent upon the Company's ability to raise additional capital, obtain
financing and to succeed in its future operations. The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and classification of liabilities that might
be necessary should the Company be unable to continue as a going concern.
During 1999 and 2000, the Company fully subscribed its private placement
offering realizing $3.4 million in net proceeds. In addition, the Company
realized $378 thousand from the exercise of Class A Warrants. There are still
outstanding Class B Warrants exercisable at $1.00 and Class C Warrants
exercisable at $1.50 (collectively, the "Warrants"). By letter dated June 18,
2001 the Company notified the holders of the Warrants issued pursuant to the
private placement that they could exercise all or any portion of their warrants
at an exercise price of $.033 per warrant (each warrant can be exercised into
one share of common stock of Greenland Corporation) (the "Warrant Purchase
Offer"). The holders had thirty days to exercise said warrants.
On March 28, 2001, the Company announced that it had entered an agreement with a
NASD approved Underwriter, referred to in Company communications as an
"institutional private equity investor," under which the Underwriter agreed to
purchase shares of the Company's common stock over the next three years.
Generally, under the terms of the agreement, the Underwriter has agreed to
purchase such amounts of common stock as the Company elects to sell the
Underwriter. The purchase price for the shares is generally the lesser of (1)
the market price less $0.075 per share or (2) 93% of the market price. The
agreement limits the amount of common shares that the Underwriter is obligated
to purchase during any 61-day period to 9.9% of the total common shares
outstanding and is subject to an overall cap of $35 million over the three-year
term of the agreement. The Underwriter's obligation to purchase shares
terminates upon the occurrence of various events as specified in the agreement.
The actual amount of common stock that the Underwriter may purchase is dependant
on, among other things, (1) the market price of the Company's stock and (2)
whether a termination event occurs. The agreement must be registered and
declared effective by the Securities and Exchange Commission. In consideration
for executing the agreement, the Underwriter will receive warrants to purchase
5,390,000 shares of Common stock. There can be no assurance that the Company
will sell any stock to the Underwriter under the terms of the agreement.
NOTE 3. RECENT PRONOUNCEMENTS
On July 20, 2001, the FASB issued SFAS No. 141, "Business Combinations," and
SFAS No. 142, "Goodwill and Other Intangible Assets." These statements make
significant changes to the accounting for business combinations, goodwill, and
intangible assets.
SFAS No. 141 establishes new standards for accounting and reporting requirements
for business combinations and will require that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001.
Use of the pooling-of-interests method will be prohibited. This statement is
effective for business combinations completed after June 30, 2001.
SFAS No. 142 establishes new standards for goodwill acquired in a business
combination and eliminates amortization of goodwill and instead sets forth
methods to periodically evaluate goodwill for impairment. Intangible assets with
a determinable useful life will continue to be amortized over that period. This
statement became effective January 1, 2002.
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset
Retirement Obligations". SFAS 143 addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. This Statement is effective for financial
statements issued for fiscal years beginning after June 15, 2002.
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
was issued in August 2001. SFAS No. 144 is effective for fiscal years beginning
after December 15, 2001, and addresses financial accounting and reporting for
the impairment or disposal of long-lived assets. This statement supersedes SFAS
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," and the accounting and reporting provisions of APB
Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions," for the disposal of a segment of a business.
The adoption of above pronouncements, did materially impact the Company's
financial position or results of operations (NOTE 8).
NOTE 4. INVENTORIES
Inventories at March 31, 2002 were as follows:
(In thousands)
Raw materials . . . . . . . . . $ 293
Work-in-progress. . . . . . . . -0-
Finished goods. . . . . . . . . -0-
---------------
293
Less allowance for obsolescence (147)
---------------
$ 146
===============
Inventories are stated at lower of cost, first-in first-out basis or market.
Provision for potentially obsolete or slow moving inventory is made based on
management's analysis of inventory levels.
NOTE 5. ACCOUNTS RECEIVABLE
The Company entered into an agreement with CardPlus International, Inc., the
nations only certified minority electronic payments processor. Pursuant to the
agreement, CardPlus purchased six MAXcash ABM's and licensed the Company's
intellectual property to establish an electronic transaction and data processing
center. This transaction was the first purchase under the Company's ongoing
strategy to aggressively pursue sales of the MAXcash ABM to customers that have
their own processing capabilities. In addition, this transaction was the first
in the Company's strategy to license its intellectual property. On March 31,
2002, the accounts receivable balance per the balance sheet comprised of the
receivable from CardPlus International, Inc.
NOTE 6. PROPERTY AND EQUIPMENT
Net property and equipment at March 31, 2002 was as follows:
(In thousands)
Computers and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 145
Furniture & equipment under capital leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537
Demonstration equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Furniture and fixtures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Leasehold improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -0-
----------
875
Accumulated depreciation & amortization (Including accumulated amortization of $159,696 on leased assets) (379)
----------
$ 496
==========
Depreciation expense, including amortization of capital lease assets for the
three months ended March 31, 2002 and 2001 was $43 thousand and $74 thousand,
respectively.
NOTE 7. INVESTMENT & ACQUISITION
On September 28, 2001 the Company purchased 100,000 shares of common stock,
representing five percent of the issued and outstanding shares of common stock,
of ZZYZX Peripherals, Inc (the "ZZYZX Shares"). The Company acquired the ZZYZX
Shares for 60 shares of Class A Convertible Preferred shares of the Company (the
"Company Shares"). The investment is carried at a cost of $600,000 determined
by fair value of the Class A Convertible Preferred Stock issued and exchanged.
Investment is adjusted for decline in fair value that is other than temporary.
The Company's investments in marketable equity securities are being held for an
indefinite period and, in accordance with the Financial Accounting Standards
Board's Statement 115 (FASB 115), are classified as available for sale. Mr. Gene
Cross is a Director and Shareholder of Greenland and a Director and shareholder
of ZZYZX. Of the ZZYZX Shares purchased by Greenland, Mr. Cross owned 20,000
shares. Mr. Frank Kavanaugh, a Director and shareholder of ZZYZX, controls DK
Capital and Bet Trust and is a shareholder of Greenland Corporation. Of the
ZZYZX Shares purchased by Greenland, DK Capital and Bet Trust together owned
40,000 shares.
The Company determined the fair value of the investment at $450,000 based upon
market value of the investment. The Company charged to earnings $150,000 in
2001, as other than temporary impairment of the investment.
On January 31, 2002, the Company entered into a stock purchase agreement
("Agreement") to purchase all of the issued and outstanding shares of W3M, Inc.,
a California corporation doing business as Paradigm Cabling Systems (the "PCS");
and ASHFORD CAPITAL LLC, a California Limited Liability Company, REGENTS CAPITAL
WEST, MICHAEL CUMMINGS, MONDO MARSHALL, GREG WILBER, SANDRA STEWART and JOHN M.
PITKIN ("Sellers"), the shareholders of the Company. Under the agreement, the
Company acquired PCS for $2,916,667, payable pursuant to the terms of a Stock
Purchase Agreement dated January 31, 2002, a Secured
Promissory Note dated February 1, 2002, and a Pledge Agreement, dated February
1, 2002. The promissory note bears an interest rate of 7% per annum, is payable
in installments of $1,000,000 by June 30, 2003 and $1,916,667 by June 30, 2004.
The promissory note is secured by pledge of PCS's stock. The Company
contemplated commencing a private placement equity offering on or about June 30,
2002. The acquisition costs of approximately $1.9 million will be allocated to
the assets acquired and the liabilities assumed based upon estimates of their
respective fair values. Subsequent to the consummation of the transaction
the parties amended the Agreement to reflect that the originally scheduled
Closing Date and consolidation of operations will be modified and rescinded and
will not take place until such time as the two years of audited financial
statements of Paradigm are completed.
NOTE 8. INTANGIBLE ASSETS
Intangible assets at March 31, 2002 consisted of the following:
(In thousands)
Capitalized software costs . . . . $ 1,013
Licenses . . . . . . . . . . . . . 675
Excess of purchase price over fair
value of net assets acquired . . . -
---------------
1,688
Less accumulated amortization. . . (786)
---------------
$ 902
===============
During 1998, as part of the purchase of the net assets of Check Central, Inc.,
the Company acquired licenses to use certain software in the development of
check cashing machines. The Company is amortizing these licenses over 5 years.
The excess of the purchase price over the fair value of the identifiable net
assets acquired was capitalized and is being amortized over 12 years.
The Company reviews its intangibles for impairment whenever events and
circumstances indicate that the carrying amount of an asset may not be
recoverable. Management evaluates assets for impairment by comparing
undiscounted future cash flows to the carrying amount of the assets. If
impairment exists, the amount of impairment is measured as the amount by which
the carrying amount of the asset exceed it's fair value. Management evaluated
its intangible asset for impairment and wrote off the balance of goodwill in the
amount of $1.6 million as a loss in this quarter as required by SFAS 142 and is
stated in NOTE 2 above.
NOTE 9. ACCRUED EXPENSES
Accrued expenses at March 31, 2002 are as follows:
(in thousands)
Accrued monthly expenses . . . . . . $ 414
Accrued payroll liabilities. . . . . 490
Accrued interest . . . . . . . . . . 72
Accrued warranty expense . . . . . . 5
Customer deposits. . . . . . . . . . 3
Customer prepaid communication costs 27
---------------
$ 1,011
===============
NOTE 10. NOTES PAYABLE TO RELATED PARTIES
Notes payable to related parties at March 31, 2002 were as follows:
(in thousands)
Note payable to a stockholder and officer of the Company.
Unsecured, and interest at 8%. Principal due February 2002. . . . . . . . . . . . . $ 2
Note payable to a stockholder and employee of the Company.
Unsecured, and interest at 8%. Principal due March 2003. . . . . . . . . . . . . . 76
Notes payable to a stockholder and officer of the Company.
Interest at 8%. Principal due at various dates through October 2002.
- --------------------------------------------------------------------------
$ 165
===============
NOTE 11. NOTES PAYABLE
Notes payable at March 31, 2002 were as follows:
(in thousands)
Note payable to an unrelated party, with interest at 10%.
Due through the payment of commissions earned through March 9, 2001.
Revolving Line-of-credit agreement with a commercial bank, which allows for advances up to a maximum of $150 thousand.
The line ex
438
====================================================
NOTE 12. STOCKHOLDERS' EQUITY
CONVERTIBLE PREFERRED STOCK
The Company is authorized to issue 10,000 shares of Class A convertible
preferred stock with a face value of ten thousand Dollars ($10,000) and a par
value of $.001 per share. The company issued 60 Class A preferred stock
convertible into $10,000 worth of shares of Greenland Corporation common stock
for acquisition of investment (NOTE 7).
The Company is authorized to issue 10,000 shares of Class B convertible
preferred stock with a face value of ten thousand Dollars ($10,000), with a par
value to be determined at the discretion of the Board of directors. The Company
has not issued any Class B convertible preferred stock through March 31, 2002.
COMMON STOCK ISSUED IN EXCHANGE FOR SERVICES
The Company issued 41.7 million and 6.0 million shares of its common stock for
services for the three months ended March 31, 2002 and 2001, respectively. The
Company has recognized expenses for such services in the amount of $433 thousand
and $1.1 million in 2002 and 2001, respectively.
The Company issued 4.1 million shares of common stock for salaries totaling $45
thousand.
NOTE 13. SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
The Company prepares its statements of cash flows using the indirect method as
defined under the Financial Accounting Standard No. 95.
The cash flow statements do not include following non-cash investing and
financing activities:
The Company paid for services in the amount of $433 thousand and $1.1 million
for the three months ended March 31, 2002 and 2001, respectively, by issuing its
common stock.
The Company repaid notes payable to related parties of $88 thousand for the
three months ended March 31, 2001 by issuance of stock.
The Company paid for salary in the amount of $45 thousands for the three months
ended March 31, 2002 by issuing common stock.
The Company issued non-qualified options to employees and directors to purchase
5.9 million shares and recorded $92 thousand expense for the three months ended
March 31, 2001.
NOTE 14. SEGMENTS AND MAJOR CUSTOMERS
The Company has two reportable segments consisting of (1) the sale and
distribution of automatic check cashing machines and (2) customer service and
fee income earned through check cashing transaction processing. The accounting
policies of the segments are the same as those described in the summary of
significant accounting policies. The Company evaluates performance based on
sales, gross profit margins and operating profit before income taxes.
The following is information for the Company's reportable segments for the three
month ended March 31, 2002 (in thousands):
Sales Segment Processing Segment Unallocated Total
-------------- -------------------- ------------- --------
Revenue. . . . . . . . . . . . . . . . $ -0- $ -0- $ -0- $ -0-
Gross margin . . . . . . . . . . . . . -0- (101) -0- (101)
Depreciation and amortization. . . . . -0- 101 714 815
Interest expense . . . . . . . . . . . -0- -0- 37 37
Other, net . . . . . . . . . . . . . . -0- -0- (2,279) (2,279)
Loss from continuing operations before
income taxes. . . . . . . . . . . . -0- (101) (2,316) (2,417)
Identifiable assets. . . . . . . . . . 146 902 1,253 2,301
Capital expenditures . . . . . . . . . -0- -0- -0- -0-
NOTE 14. SEGMENTS AND MAJOR CUSTOMERS (Continued)
The following is information for the Company's reportable segments for the three
month ended March 31, 2001(in thousands):
Sales Segment Processing Segment Unallocated Total
--------------- -------------------- ------------- --------
Revenue . . . . . . . . . . . . $ 72 $ 17 $ -0- $ 89
Gross margin. . . . . . . . . . (90) (257) -0- (347)
Depreciation and amortization . 4 100 95 199
Interest expense. . . . . . . . -0- -0- 16 16
Other, net. . . . . . . . . . . -0- -0- (1,584) (1,584)
Loss from continuing operations
before income taxes. . . . . (90) (257) (1,598) (1,945)
Identifiable assets . . . . . . -0- 1,267 2,983 4,250
Capital expenditures. . . . . . -0- -0- -0- -0-
The above negative gross margins include fixed overhead costs for expenses such
as supervision, labor, amortization and depreciation, communications, and
facilities, as well as the direct costs to manufacture and service the automated
banking machines.
NOTE 15. LEGAL PROCEEDINGS
The Company, along with Seren Systems ("Seren"), its then current and primary
software developer and supplier for its own ABM terminals, was in the process of
completing development of the check cashing service interface to the Mosaic
Software host system being implemented to support a large network of V.com
terminals. In September 2000, Seren unilaterally halted testing and effectively
shutdown any further check cashing development for the V.com project. The
parties participating in this project may have been financially damaged, related
to the delay in performance by the Company and Seren. Although the Company and
Seren resolved the dispute between each other and entered into settlement
agreement, none of the parties have brought suit against the Company and/or
Seren at this time. There is no assurance, however, that such suit(s) will not
be brought in the future.
On May 23, 2001 the Company filed a Complaint in San Diego County naming Michael
Armani as the defendant. The Complaint alleges breach of contract by Michael
Armani in connection with two separate stock purchase agreements. The Company
seeks damages in the amount of $474,595. On August 7, 2001 the Company filed a
request for Entry of Default against Mr. Armani in the amount of $474,595 and
the court granted entry of default. Subsequently Mr. Armani filed a motion to
set aside the entry of default and on October 26, 2001 the court granted said
motion and the entry of default was set aside. The court granted Mr. Armani 10
days to file a responsive to the Company's Compliant. Although no responsive
pleading was filed, the parties agreed to submit the dispute to mediation (See
Subsequent Events).
On May 23, 2001 Arthur Kazarian, Trustee for the General Wood Investment Trust
(the "Landlord") filed a Complaint in San Diego County naming Greenland
Corporation as a defendant. The Complaint alleges breach of contract pursuant
to the terms of the lease agreement between the Company and the Landlord for the
real property located at 1935 Avenida Del Oro, Oceanside, California and
previously occupied by the Company. The Complaint seeks damages in the amount
of approximately $500,000. Although the Company remains liable for the payments
remaining for the term of the lease, the Landlord has a duty to mitigate said
damages. The Company recorded a lease termination liability of $275 thousand
during the year ended December 31, 2001. The Company has retained outside
counsel for representation in this matter and settlement discussions are
presently being conducted (See Subsequent Events)
NOTE 15. LEGAL PROCEEDINGS (Continued)
The Company entered into an agreement with Intellicorp, Inc. ("Intellicorp")
whereby Intellicorp agreed to invest $3,000,000 in exchange for board seats and
stock. After making the initial payment of $500,000, Intellicorp defaulted on
the balance. The Company is seeking a recovery of the unpaid $2,500,000. The
case is in discovery stage. The defendant's ability to pay is unknown. The
Company had issued 46,153,848 shares of common stock for the investment. The
shares were returned back to the Company and are pending cancellation. These
shares have been excluded from the issued and outstanding shares in the
financial statements.
On July 5, 2001 Max Farrow, a formal officer of the Company, filed a Complaint
in San Diego County naming Greenland Corporation, Thomas J. Beener,
Intelli-Group, Inc., Intelli-Group LLC and Intelli-Corp, Inc. as defendants.
The Complaint alleges breach of contract in connection with Mr. Farrow's
resignation as an officer and director of the Company in January 2001. The
Company believes that the Company and Mr. Beener have valid defense to the
allegations of Mr. Farrow. Although there can be no assurances, the Company
believes that it will successfully defend this legal action and that the outcome
will not have a material adverse impact on the Company (See note 16).
Fund Recovery, a temporary staffing services filed a complaint against Greenland
Corporation alleging breach of contract. Trial is set for June 2002. A summary
judgment motion is pending. The Company recorded the liability amount of $14
thousand in the consolidated financial statements.
The case of Magnum Financial against Greenland Corporation for non-payment for
services was settled in 2001 with a judgment against the Company of $12
thousand. The Company recorded the liability in the consolidated financial
statements.
The case of San Diego Wholesale Credit against Greenland Corporation was settled
for a total of $5 thousand in 2001. The Company recorded the liability in the
consolidated financial statements.
John Ellis has filed a demand for arbitration in San Diego County against the
Company seeking damages of approximately $70,000 for an alleged breach of
contract action. The Company believes it has valid defenses to the allegations.
The Company is presently engaged in the discovery process.
The Company's officers and directors are aware of no other threatened or pending
litigation, which would have a material, adverse effect on the Company. From
time to time the Company is a defendant (actual or threatened) in certain
lawsuits encountered in the ordinary course of its business, the resolution of
which, in the opinion of management, should not have a material adverse effect
on the Company's financial position results of operations, or cash flows.
NOTE 16. SUBSEQUENT EVENTS
Subsequent to March 31, 2002, the Company issued 39,500,000 shares of common
stock for services.
Subsequent to March 31, 2002, the Company and Mr. Armani participated in
mediation and as a result entered into a settlement agreement whereby the Mr.
Armani agreed to make certain cash payments to the Company and the parties
entered into mutual release of all claims. Mr. Armani defaulted in his
obligation to make the first cash payment and consequently, the Company obtained
a judgment against Mr. Armani for $100,000. The Company is commencing efforts to
collect on the judgment.
Subsequent to March 31, 2002, the Company and Mr. Thomas Beener , entered into a
settlement agreement with Max Farrow whereby Mr. Farrow agreed to release Mr.
Beener from all claims, obligations etc., in exchange for the issuance of 8
million restricted shares of Greenland Corporation common stock.
Subsequent to March 31, 2002, the Company entered into a settlement agreement
with Arthur Kazarian, Trustee for the General Wood Investment Trust (the
"Landlord") where by the Company agreed to pay the sum of $220,000 to the
Landlord in installments payments of $20,000 in May 2002, $50,000 in October
2002 and the remaining balance in December 2002. In the event Greenland defaults
in any or all scheduled payments, the Landlord is entitled to a stipulated
judgment of $275,000.
Subsequent to March 31, 2002 Mr. Thomas A. Hyde, Jr., resigned as Chief
Executive Officer and Chairman of the Board of the Company. The Company issued
certain shares of its common stock as compensation for the balance of Mr. Hyde's
employment contract.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This Quarterly Report contains forward-looking statements that involve risk and
uncertainties. Forward-looking statements include, without limitation, any
statement that may predict, indicate or imply future results, performance or
achievements and may contain the words "believe," "expect," "anticipate,"
"estimate," "project," "will be," "will continue" or words or phrases of similar
meaning. Forward-looking statements involve risks and uncertainties which may
cause actual results to differ materially from the forward-looking statements.
Such risks and uncertainties include, but are not limited to, risks associated
with completing product development; commercial use of check-cashing machines;
product repairs; consumer acceptance; need for additional financing;
manufacturing risks; dependence on suppliers; dependence on distributors; rapid
technological changes; dependence on key personnel; compliance with state laws;
risks of technical problems or product defects; dependence on proprietary
technology and other factors detailed in the Company's reports filed with the
Securities and Exchange Commission.
INTRODUCTION
The following discussion pertains to the Company's operations and financial
condition as of March 31, 2002, and should be read in conjunction with the
Company's financial statements and notes thereto, and other financial
information included elsewhere in this report.
The Company has developed proprietary software that is capable of providing
support for delivery to consumers of a range of on-line financial services
including check cashing, ATM, money orders and phone card dispensing services.
The Company has developed, manufactured and has delivered limited numbers of
freestanding kiosks, under the trademarked brand name MAXcash ABM. The unit is
similar in appearance to an ATM machine. The Company acquired its base
technology in May 1998, when Check Central was incorporated into Greenland
Corporation as a wholly-owned subsidiary.
The Company has invested, and continues to invest capital, time and effort in
the development and evolution of its back-office, risk management and
transaction support software systems. Management, as a result of the Seren
litigation and the default by Intellicorp, determined that its original plan to
develop, produce, and successfully market and support its MAXcash ABM system was
beyond the scope of its available resources. However, management also believes
that it has created a convenient and cost effective system for check cash
transaction processing and the reporting of activity and earnings generated from
its check cashing ABMs through secure networks. Accordingly, the Company hopes
to expand its scope from distribution, and support of its proprietary MAXcash
ABM to also providing support for the ABM-like terminals of other manufacturers.
Furthermore, the Company believes that it can be successful in providing
back-office and on-line transaction support to other hardware vendors and
retailers through a network and software system of its own design, the Check
Central Solutions.
The Company's strategy for marketing and sales of the MAXcash ABM, during fiscal
2001, was directed at locating distributors of ATM machines and entering into
distribution agreements. Although the Company signed a number of such
agreements, significant unit sales did not materialize, however, primarily due
to the Seren dispute. The Company will continue to seek distributors for the
MAXcash ABM and feels confident that with the resolution of the Seren
litigation, the willingness of distributors to handle the MAXcash ABM will
increase.
The Company's strategy has been oriented around two revenue streams. The first
was the sale of the MAXcash ABM. The second revenue stream was to be generated
from the fees earned in connection with the various banking services provided on
each of the machines in operation. However, without sufficient numbers of
machines in the field, this revenue stream did not produce material results in
fiscal 2001.
Management's goal is to build a solid foundation that will provide operating
revenue and opportunity for profitability. This goal will be achieved through a
business strategy of continued sales of the MAXcash ABM, licensing of
intellectual property, acquisitions of check cashing stores and acquisitions of
complimentary companies.
During the first quarter of 2002, the Company took the first step in acquiring
companies that are complimentary to the Greenland's operations, with the
acquisition of W3M, Inc., the parent of Paradigm Cabling Systems - ("Paradigm")
market niche specialist in data communications and network project management.
With revenues of over $5.1 million in fiscal year just completed, Paradigm
provides a variety of engineering and "last mile" installation services to
corporate and government customers throughout Southern California.
In addition, Paradigm serves as a foundation for growing revenues and
earnings to Greenland and represents an internal profit center that is a major
step towards building a solid infrastructure for Greenland's transaction
processing and software business. With Paradigm's expertise in-house, Greenland
will have the ability to obtain favorable network pricing, installation and
management services for its MAXcash ABM and Check central Solutions customers.
In January 31, 2002, the Company entered into the stock purchase agreement
("Agreement") to purchase all of the issued and outstanding shares of Paradigm
for a purchase price of $2,916,667, payable pursuant to the terms of the
Agreement dated January 31, 2002, a Secured Promissory Note dated February 1,
2002, and a Pledge Agreement, dated February 1, 2002. The promissory note bears
an interest rate of 7% per annum, is payable in installments of $1,000,000 by
June 30, 2003 and $1,916,667 by June 30, 2004. The promissory note is secured by
pledge of Paradigm's stock. The Company contemplated commencing a private
placement equity offering on or about June 30, 2002.
Subsequent to the consummation of the transaction and in preparation of the
consolidation of financial reporting of the Company and Paradigm's operations it
was determined that the required two years of audited financial statements would
consume more time and expense than originally anticipated. Therefore, although
the Agreement is executed and fully binding, on April 30, 2002 the parties
amended the Agreement to reflect that the originally scheduled Closing Date and
consolidation of operations will be modified and rescinded and will not take
place until such time as the two years of audited financial statements of
Paradigm are completed. Management expects such consolidation will take place
for the Form 10-QSB for the second quarter of 2002.
Paradigm continues to operate in a positive direction and the Company
will periodically report on its progress. Michael Cummings serves as President
and Thomas Beener serves as Chairman of the Board.
Management is exploring the purchase of check cashing stores, purchase of
certain complimentary companies, expansion of its licensing program and
developing an in-house processing center.
Although the Company is optimistic about achieving its goals and although it has
consummated certain transactions there is no assurance that management will
achieve its goals.
RESULTS OF OPERATIONS
REVENUE
The Company reported total revenues of $0 from its two segments for the
three month ended March 31, 2002 compared to revenues of $89 thousand for the
three month ended March 31, 2001, which represents a $89 thousand decrease.
The Company's sales operations for its principal product, the Maxcash ABM, was
temporarily suspended primarily due to a legal dispute with its software
provider and the associated financial risks to the Company represented by the
dispute.
COST OF SALES
The Company incurred total costs of revenues of $101 thousand and $436
thousand from its two segments for the three month ended March 31, 2002 and
2001, respectively. The costs incurred in the sale segment were $0 and $162
thousand for the three months ended March 31, 2002 and 2001. This decrease is
primarily attributable to a decrease in direct material and overhead costs.
Management had anticipated greater improvements in the gross margin on machine
sales. Such increases did not materialize.
Costs associated with transaction processing, included in cost of sales, were
$101 thousand and $274 thousand for the three month ended March 31, 2002 and
2001, respectively, resulting in gross margins on transaction revenue of $(101)
thousand and $(257) thousand, respectively. Processing costs included fixed
overhead expenses such as the amortization of software development costs and
depreciation. The decrease was due primarily to the temporary shut down of the
processing of the machines. In addition, the company's effort to revitalize
sales has not produce any to date.
OPERATING EXPENSES
General and administrative expenses for the three months ended March 31,
2002 and 2001 were $714 thousand and $1.0 million, respectively. The 31%
decrease was due primarily to the temporary shut down of the manufacturing of
the machines.
Research and Development Costs for the three months ended March 31, 2002
and 2001, respectively of $0 and $67 thousand, respectively, this decreased
reflects the Company's temporary discontinuation of it support for the Maxcash
ABM product.
NON-OPERATING EXPENSES
Non-operating expense of $1.6 million for the three months ended March 31,
2002 increased 1.1 million from 2001. Expenses incurred in 2002 included $1.5
million on impairment of goodwill.
NET LOSS
The net loss for the three months ended March 31, 2002 was $2.4 million
compared to $1.9 million for comparative period in 2001, an increase of $481
thousand, or 25%. Losses increased due primarily to the impairment of goodwill.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has financed its operations through cash
generated from the sale of equity securities and debt financing. To date, the
Company has not been able to support its operations from revenues through sales
of products or services.
At March 31, 2002, the Company's had a working capital deficit of $2.0
million compared with a working capital deficit of $1.8 million at December 31,
2001. This increase of $248 thousand, or 14% resulted from an increase in note
payable to related party of $76 thousand, as well as an increase in accrued
expense $132 thousand. Stockholders' equity decreased for the three months ended
March 31, 2002 from the previous fiscal year by $1.9 million, due primarily to
the $2.4 million comprehensive loss, which was offset by increased
paid-in-capital of $525 thousand.
The Company's officers and directors are aware of no other threatened or
pending litigation, not otherwise discussed in Item 3, Legal Matters, which
would have a material, adverse effect on the Company. From time to time the
Company is a defendant (actual or threatened) in certain lawsuits encountered in
the ordinary course of its business, the resolution of which, in the opinion of
management, should not have a material adverse effect on the Company's financial
position results of operations, or cash flows.
The Company's auditors have expressed their uncertainty as to the Company's
ability to continue as a going concern. They cite recurring losses from
operations, the Company's working capital deficiency, and limited cash
resources.
In order to address this uncertainty, the Company has taken steps to raise
additional funds to finance its operations, including the potential for making
strategic acquisitions, which could better position the Company for growth.
On April 2, 2001, the Company announced that it was temporarily suspending
its check cashing operations in order to minimize its check cashing risk, reduce
operating losses, and to conserve capital.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL MATTERS
The Company, along with Seren Systems ("Seren"), its then current and
primary software developer and supplier for its own ABM terminals, was in the
process of completing development of the check cashing service interface to the
Mosaic Software host system being implemented to support a large network of
V.com terminals. In September 2000, Seren unilaterally halted testing and
effectively shutdown any further check cashing development for the V.com
project. The parties participating in this project may have been financially
damaged, related to the delay in performance by the Company and Seren. Although
the Company and Seren resolved the dispute between each other and entered into
settlement agreement, none of the parties have brought suit against the Company
and/or Seren at this time. There is no assurance, however, that such suit(s)
will not be brought in the future.
On May 23, 2001 the Company filed a Complaint in San Diego County naming Michael
Armani as the defendant. The Complaint alleges breach of contract by Michael
Armani in connection with two separate stock purchase agreements. The Company
seeks damages in the amount of $474,595. On August 7, 2001 the Company filed a
request for Entry of Default against Mr. Armani in the amount of $474,595 and
the court granted entry of default. Subsequently Mr. Armani filed a motion to
set aside the entry of default and on October 26, 2001 the court granted said
motion and the entry of default was set aside. The court granted Mr. Armani 10
days to file a responsive to the Company's Compliant. On April 12, 2002
pursuant to mediation, Greenland and Mr. Armani entered into a settlement
agreement whereby Mr. Armani agreed to make certain payments to Greenland and
each party dismissed all claims against the other. Mr. Armani breached the
terms of the settlement agreement by failing to make the first cash payment and
as a result the Company has obtained a judgment of $100,000 against Mr. Armani.
(See "Subsequent Events")
On May 23, 2001 Arthur Kazarian, Trustee for the General Wood Investment Trust
(the "Landlord") filed a Complaint in San Diego County naming Greenland
Corporation as a defendant. The Complaint alleges breach of contract pursuant
to the terms of the lease agreement between the Company and the Landlord for the
real property located at 1935 Avenida Del Oro, Oceanside, California and
previously occupied by the Company. The Complaint seeks damages in the amount
of approximately $500,000. Although the Company remains liable for the payments
remaining for the term of the lease, the Landlord has a duty to mitigate said
damages. The Company recorded a lease termination liability of $275 thousand
during the year ended December 31, 2001. The Company entered into a settlement
agreement with Landlord where by the Company agreed to pay the sum of $220,000
to the Landlord in installments payments of $20,000 in May 2002, $50,000 in
October 2002 and one payment in December 2002 (See "Subsequent Events")
The Company entered into an agreement with Intellicorp, Inc.
("Intellicorp") whereby Intellicorp agreed to invest $3,000,000 in exchange for
board seats and stock. After making the initial payment of $500,000, Intellicorp
defaulted on the balance. The Company is seeking a recovery of the unpaid
$2,500,000. The case is in discovery stage. The defendant's ability to pay is
unknown. The Company had issued 46,153,848 shares of common stock for the
investment. The shares were returned back to the Company and are pending
cancellation. These shares have been excluded from the issued and outstanding
shares in the financial statements.
On July 5, 2001 Max Farrow, a formal officer of the Company, filed a
Complaint in San Diego County naming Greenland Corporation, Thomas J. Beener,
Intelli-Group, Inc., Intelli-Group LLC and Intelli-Corp, Inc. as defendants.
The Complaint alleges breach of contract in connection with Mr. Farrow's
resignation as an officer and director of the Company in January 2001. The
Company, on behalf of Thomas Beener, entered into a settlement agreement with
Max Farrow whereby Mr. Farrow and Mr. Beener agreed to release the other from
all claims, obligations etc., in exchange for the issuance of 8 million
restricted shares of Greenland Corporation common stock (See "Subsequent
Events")
John Ellis has filed a demand for arbitration in San Diego County against
the Company seeking damages of approximately $70,000 for an alleged breach of
contract action. The Company believes it has valid defenses to the allegations.
The Company is presently engaged in the discovery process.
The Company's officers and directors are aware of no other threatened or
pending litigation, which would have a material, adverse effect on the Company.
From time to time the Company is a defendant (actual or threatened) in certain
lawsuits encountered in the ordinary course of its business, the resolution of
which, in the opinion of management, should not have a material adverse effect
on the Company's financial position results of operations, or cash flows.
ITEM 2 - CHANGES IN SECURITIES
The Company paid for services in the amount of $433 thousand by issuing 41.7
million shares of its common stock.
The Company paid for salary in the amount of $45 thousands by issuing common
stock.
The Company repaid notes payable to related parties of $88 thousand for the
three months ended March 31, 2001 by issuance of stock.
The Company issued non-qualified options to employees and directors to purchase
5.9 million shares and recorded $92 thousand expense for the three months ended
March 31, 2001.
ITEM 3 - DEFAULTS ON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTER TO VOTE OF SECURITY HOLDERS
None.
ITEM 5 - OTHER INFORMATION
None.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits 1 - None
(b) Reports on Form 8-K
On March 26, 2002, the Company filed Form 8-K to report the change of its
certifying accountant to Kabani & Company, Inc. and to report stock purchase
agreement with Paradigm Cabling Systems
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 20, 2002 . . . . . . . . By: /s/ Thomas J. Beener
------------------------
Thomas J. Beener
- -----------------------------------
CEO, President
Date: May 20, 2002. . . . . . . . . By: /s/ Gene Cross
Gene Cross
- -----------------------------------
Chief Financial Officer, Director
Chairman of Board Director