** **

**UNITED STATES**

**Securitiesand Exchange Commission**

**Washington,DC 20549**

 

**FORM 10-QSB**

 
| ý |   | **Quarterly Report Pursuant to Section 13 or 15(d) of the  Securities Exchange Act of 1934** |
|--------|--------|----------------------------------------------------------------------------------------------|

 

 

# **Forthe quarterly period ended September 30, 2001**

# **CommissionFile No. 017833**

**GreenlanD**

**corporation**

(Exact Name of Small BusinessIssuer as

Specified in its Charter)

 

| **Nevada**                                                      |   | **87-0439051**                           |
|-----------------------------------------------------------------|--------|------------------------------------------|
| (State or other  jurisdiction of incorporation or organization) |   | (I.R.S. Employer  Identification Number) |

 

** 2111 Palomar Airport Road, Suite 200**

**Carlsbad, CA 92009**

(Address ofprincipal executive offices)

 

** (760)****804-2770**

** **(Issuer’stelephone number)

 

 

Indicate by checkmark whether the issuer (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.

 

**ý YES    ****o NO**

 

**APPLICABLE ONLY TO CORPORATE ISSUER**

 

State the numberof shares outstanding of each of the issuer’s classes of common equity, as ofthe latest practicable date.

 
| **Class  A Common Stock  $0.001 par value** |   | **159,374,426 Shares Outstanding  As of November 14, 2001** |
|---------------------------------------------|--------|-------------------------------------------------------------|

** **

**Transitional Small Business Disclosure Format**

** **

**(Check One)**

**Yes****o   No****ý**

 

** **

**Greenland Corporation**

**Report on Form 10-QSB**

**Quarter Ended September 30, 2001**

 

**Table of Contents**

 

 
| **Part  I.** | Financial Information                                                                                                                               |   |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|         |                                                                                                                                                |   |
| **Item  1.** | Financial Statements (unaudited)                                                                                                                    |   |
|         |                                                                                                                                                |   |
|         | Condensed  consolidated balance sheets as of September 30, 2001 and December 31, 2000                                                               |   |
|         |                                                                                                                                                |   |
|         | Condensed  consolidated statements of operations and other comprehensive income for the  three and nine months ended September 30, 2001 and 2000    |   |
|         |                                                                                                                                                |   |
|         | Condensed  consolidated statements of stockholders’ equity for the nine months ended  September 30, 2001, and the year ended December 31, 2000 |   |
|         |                                                                                                                                                |   |
|         | Condensed  consolidated statements of cash flows for the nine months ended September 30,  2001 and 2000                                             |   |
|         |                                                                                                                                                |   |
|         | Notes  to condensed consolidated financial statements                                                                                               |   |
|         |                                                                                                                                                |   |
|         |                                                                                                                                                |   |
| **Item 2.**  | Management’s  discussion and analysis of financial condition and results of operations                                                         |   |
|         |                                                                                                                                                |   |
| **Part II.** | Other Information                                                                                                                                   |   |
|         |                                                                                                                                                |   |
|         |                                                                                                                                                |   |
|         | Signatures                                                                                                                                          |   |

 

 

 

 

 

 

 

**GREENLANDCORPORATION AND SUBSIDIARY**

**CondensedConsolidated Balance Sheets**

**(Unaudited)**

 

**ASSETS**
| ***Thousands of  dollars, except share amounts***                                                                                                             |       | **September  30,  2001** |         | **December  31, 2000** |       |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|--------------|-----------------------------|------------|
| ** **

                                                                                                                                             |       | ** **               | ** **   |
| Current Assets:                                                                                                                                               |       |                     |         |                        |       |
| Cash                                                                                                                                                          |       | $                        | 32           |                        | $          | 75 |   |
| Accounts  receivable (less allowance for uncollectible accountsof $127 thousand in 2001  and $27 thousand in 2000)                                            |       | 39                       |         | 23                          |       |
| Inventories                                                                                                                                                   |       | 285                      |         | 319                         |       |
| Prepaid officers  compensation                                                                                                                                |       | 31                       |         | -0-                         |       |
| Other current  assets                                                                                                                                         |       | 32                       |         | 17                          |       |
|                                                                                                                                                          |       |                     |         |                        |       |
| Total current  assets                                                                                                                                         |       | 419                      |         | 434                         |       |
|                                                                                                                                                          |       |                     |         |                        |       |
| Property and  equipment, net                                                                                                                                  |       | 588                      |         | 886                         |       |
| Long term notes  receivable (less allowance for uncollectible account of $1.9 million in 2001  and 2000)                                                      |       | -0-                      |         | -0-                         |       |
| Investments                                                                                                                                                   |       | 600                      |         | 247                         |       |
| Intangibles, net                                                                                                                                              |       | 2,679                    |         | 3,009                       |       |
| Other assets                                                                                                                                                  |       | 34                       |         | 30                          |       |
|                                                                                                                                                          |       |                     |         |                        |       |
| Total assets                                                                                                                                                  |       | $                        | 4,320        |                        | $          | 4,606 |   |
|                                                                                                                                                          |       |                     | ** **   |                        | ** ** |
| **LIABILITIES AND  STOCKHOLDERS’ EQUITY**                                                                                                                | ** ** |
| Current  Liabilities:                                                                                                                                         |       |                     |         |                        |       |
| Notes payable                                                                                                                                                 |       | $                        | 453          |                        | $          | 463 |   |
| Trade accounts payable                                                                                                                                        |       | 682                      |         | 662                         |       |
| Accrued expenses                                                                                                                                              |       | 679                      |         | 279                         |       |
| Current portion  of capital leases                                                                                                                            |       | 135                      |         | 119                         |       |
| Notes payable to  related parties                                                                                                                             |       | 177                      |         | 50                          |       |
|                                                                                                                                                          |       |                     |         |                        |       |
| Total current  liabilities                                                                                                                                    |       | 2,126                    |         | 1,573                       |       |
|                                                                                                                                                          |       |                     |         |                        |       |
| Long term  liabilities:                                                                                                                                       |       |                     |         |                        |       |
| Long term  portion of capital leases                                                                                                                          |       | 199                      |         | 300                         |       |
|                                                                                                                                                          |       |                     |         |                        |       |
| Total  Liabilities                                                                                                                                            |       | 2,325                    |         | 1,873                       |       |
|                                                                                                                                                          |       |                     |         |                        |       |
| Stockholders’  Equity:                                                                                                                                   |       |                     |         |                        |       |
| Convertible Preferred  Stock, $.01 par value, and 5,000,000 shares authorized, 60 shares issued and  outstanding                                              |       |                     |         |                        |       |
| Common stock,  $.001 par value; and 500,000,000 shares authorized (180,000,000 in 2000),  148,008,744 in 2001 and (69,962,830 in 2000) issued and outstanding |       | 148                      |    | 70                          |       |
| Additional  paid-in capital                                                                                                                                   |       | 28,603                   |         | 24,399                      |       |
| Subscribed  shares and (receivable)                                                                                                                           |       | (1,167                   | )            | (133                        | )          |
| Accumulated  other comprehensive income                                                                                                                       |       | -0-                      |         | (315                        | )          |
| Retained deficit                                                                                                                                              |       | (25,589                  | )            | (21,288                     | )          |
|                                                                                                                                                          |       |                     |         |                        |       |
| Total  stockholders’ equity                                                                                                                              |       | 1,995                    |         | 2,733                       |       |
|                                                                                                                                                          |       |                     |         |                        |       |
| Total  liabilities and stockholders’ equity                                                                                                              |       | $                        | 4,320        |                        | $          | 4,606 |   |
|                                                                                                                                                          |       |                     | * *     |                        | * *   |

*Seeaccompanying notes to condensed consolidated financial statements*

 

**GREENLANDCORPORATION AND SUBSIDIARY**

**CondensedConsolidated Statements of Operations and Other Comprehensive Income**

**(Unaudited)**

 

 
| ***Thousands except per share amounts***                             |   | **Three month  ended**** September** **30,** |   | **Nine months  ended**** September** **30,** |   |
|----------------------------------------------------------------------|--------|--------------------------------------------------------|--------|--------------------------------------------------------|--------|
|                                                                 |   | **2001**                                               |   | **2000**                                               |   | **2001** |   | **2000** |   |
| Net  sales                                                           |   | $                                                      | -0-    |                                                   | $      | 86 |   | $ | 189 |   | $ | 561 |   |
| Cost  of goods sold                                                  |   | 133                                                    |   | 747                                                    |   | 650 |   | 2,558 |   |
|                                                                 |   |                                                   |   |                                                   |   |   |   |   |   |
| Gross  profit (loss)                                                 |   | (133                                                   | )      | (661                                                   | )      | (461 | ) | (1,997 | ) |
|                                                                 |   |                                                   |   |                                                   |   |   |   |   |   |
| General  and administrative expenses                                 |   | 685                                                    |   | 667                                                    |   | 2,781 |   | 2,706 |   |
| Research  and development costs                                      |   | 2                                                      |   | 190                                                    |   | 87 |   | 551 |   |
| Repurchase  of distributor agreement                                 |   | -0-                                                    |   | -0-                                                    |   | -0- |   | 320 |   |
|                                                                 |   |                                                   |   |                                                   |   |   |   |   |   |
| Total  operating costs                                               |   | 687                                                    |   | 857                                                    |   | 2,868 |   | 3,577 |   |
|                                                                 |   |                                                   |   |                                                   |   |   |   |   |   |
| Operating  loss                                                      |   | (820                                                   | )      | (1,518                                                 | )      | (3,329 | ) | (5,574 | ) |
|                                                                 |   |                                                   |   |                                                   |   |   |   |   |   |
| Other  income (expenses):                                            |   |                                                   |   |                                                   |   |   |   |   |   |
| Loss  on sale of assets                                              |   | (35                                                    | )      | -0-                                                    |   | (519 | ) | (43 | ) |
| Termination  of lease cost                                           |   | -0-                                                    |   | -0-                                                    |   | (212 | ) | -0- |   |
| Warrant  costs – equity investor                                |   | -0-                                                    |   | -0-                                                    |   | (138 | ) | -0- |   |
| Interest  expense                                                    |   | (31                                                    | )      | (16                                                    | )      | (85 | ) | (49 | ) |
| Other  income (expense)                                              |   | -0-                                                    |   | 12                                                     |   | (16 | ) | 16 |   |
| Total  other income (expense)                                        |   | (66                                                    | )      | (4                                                     | )      | (970 | ) | (76 | ) |
|                                                                 |   |                                                   |   |                                                   |   |   |   |   |   |
| Loss  before income taxes                                            |   | (886                                                   | )      | (1,522                                                 | )      | (4,299 | ) | (5,650 | ) |
|                                                                 |   |                                                   |   |                                                   |   |   |   |   |   |
| Income  tax expense                                                  |   | -0-                                                    |   | -0-                                                    |   | 2 |   | 3 |   |
|                                                                 |   |                                                   |   |                                                   |   |   |   |   |   |
| Net  loss                                                            |   | (886                                                   | )      | (1,522                                                 | )      | (4,301 | ) | (5,653 | ) |
|                                                                 |   |                                                   |   |                                                   |   |   |   |   |   |
| Other  comprehensive income, net of tax:                             |   |                                                   |   |                                                   |   |   |   |   |   |
| Unrealized  loss on investments                                      |   | -0-                                                    |   | -0-                                                    |   | (67 | ) | -0- |   |
| Plus:  reclassification adjustment for losses included in net income |   | -0-                                                    |   | -0-                                                    |   | 382 |   | -0- |   |
| Other  comprehensive income                                          |   | -0-                                                    |   | -0-                                                    |   | 315 |   | -0- |   |
|                                                                 |   |                                                   |   |                                                   |   |   |   |   |   |
| Comprehensive  loss                                                  |   | $                                                      | (886   | )                                                      | $      | (1,522 | ) | $ | (3,986 | ) | $ | (5,653 | ) |
|                                                                 |   |                                                   |   |                                                   |   |   |   |   |   |
| Net  loss per share:                                                 |   |                                                   |   |                                                   |   |   |   |   |   |
|                                                                 |   |                                                   |   |                                                   |   |   |   |   |   |
| Basic  loss per share                                                |   | (0.01                                                  | )      | (0.03                                                  | )      | (0.04 | ) | (0.11 | ) |
| Diluted  loss per share                                              |   | (0.01                                                  | )      | (0.03                                                  | )      | (0.04 | ) | (0.11 | ) |
|                                                                 |   |                                                   |   |                                                   |   |   |   |   |   |
| Weighted  average shares outstanding                                 |   |                                                   |   |                                                   |   |   |   |   |   |
| Basic                                                                |   | 134,907                                                |   | 60,551                                                 |   | 101,638 |   | 52,651 |   |
| Diluted                                                              |   | 134,907                                                |   | 60,551                                                 |   | 101,638 |   | 52,651 |   |

** **

*Seeaccompanying notes to condensed consolidated financial statements*

 

**GREENLANDCORPORATION AND SUBSIDIARY**

**CondensedConsolidated Statements of Stockholders’ Equity**

**(Unaudited)**

 

 
| ***Thousands of shares/dollars***                                  |   |             |   |                |   |       |   |       |   | **Additional**

**Paid-in Capital** |   |
|--------------------------------------------------------------------|--------|------------------|--------|---------------------|--------|------------|--------|------------|--------|-------------------------------------|--------|
|                                                               |   | **Common Stock** |   | **Preferred Stock** |   | ** ** |
|                                                               |   | **Shares**       |   | **Amount**          |   | **Shares** |   | **Amount** |   | ** **                          |
| Balance at December 31, 1999                                       |   | 35,298           |   | 35                  |   |       |   |       |   | 16,882                              |   |
|                                                               |   |             |   |                |   |       |   |       |   |                                |   |
| Shares issued to retire debt and  to purchase assets               |   | 2,245            |   | 2                   |   |       |   |       |   | 1,055                               |   |
| Sale of common stock                                               |   | 11,508           |   | 12                  |   |       |   |       |   | 2,146                               |   |
| Shares issued for services                                         |   | 14,746           |   | 15                  |   |       |   |       |   | 2,614                               |   |
| Subscribed shares issued                                           |   | 930              |   | 1                   |   |       |   |       |   | 174                                 |   |
| Warrants to purchase shares                                        |   |             |   |                |   |       |   |       |   | 265                                 |   |
| Exercised warrants and options                                     |   | 5,236            |   | 5                   |   |       |   |       |   | 653                                 |   |
| Options issued for services                                        |   |             |   |                |   |       |   |       |   | 610                                 |   |
| Unrealized loss on investments                                     |   |             |   |                |   |       |   |       |   |                                |   |
| Net loss                                                           |   |             |   |                |   |       |   |       |   |                                |   |
|                                                               |   |             |   |                |   |       |   |       |   |                                |   |
| Balance at December 31, 2000                                       |   | 69,963           |   | $                   | 70     |       | 0      |       | $      | 0                                   |   | $ | 24,399 |   |
|                                                               |   |             |   |                |   |       |   |       |   |                                |   |
|                                                               |   |             |   |                |   |       |   |       |   |                                |   |
|                                                               |   |             |   |                |   |       |   |       |   |                                |   |
| Shares issued to retire debt and  to purchase assets               |   | 2,869            |   | 3                   |   |       |   |       |   | 725                                 |   |
| Shares issued and held in escrow                                   |   | 27,467           |   | 27                  |   |       |   |       |   | 439                                 |   |
| Shares issued for services                                         |   | 24,971           |   | 25                  |   |       |   |       |   | 1,288                               |   |
| Shares issued for note receivable                                  |   | 6,339            |   | 6                   |   |       |   |       |   | 244                                 |   |
| Exercised warrants and options                                     |   | 16,399           |   | 17                  |   |       |   |       |   | 1,175                               |   |
| Warrants issued to equity investor                                 |   |             |   |                |   |       |   |       |   | 138                                 |   |
| Options issued for services                                        |   |             |   |                |   |       |   |       |   | 195                                 |   |
| Unrealized loss on investments, net of reclassification adjustment |   |             |   |                |   |       |   |       |   |                                |   |
| Net loss                                                           |   |             |   |                |   |       |   |       |   |                                |   |
|                                                               |   |             |   |                |   |       |   |       |   |                                |   |
| Balance at September 30, 2001                                      |   | 148,008          |   | $                   | 148    |       | 0      |       | $      | 0                                   |   | $ | 28,603 |   |

 

 

*Seeaccompanying notes to condensed consolidated financial statements*

 

**GREENLANDCORPORATION AND SUBSIDIARY**

**Condensed Consolidated Statements of Stockholders’ Equity**

**(Unaudited)**

 

 
|                                                               |   | **Subscribed****Shares Unissued & Receivable** |   | **Accumulated Other Comprehensive Income** | ** ** | **Retained Deficit** | ** ** | **Total** | **    ** |
|--------------------------------------------------------------------|--------|----------------------------------------------------|--------|--------------------------------------------|------------|----------------------|------------|-----------|--------------------|
| ***Thousands of shares/dollars***                                  |
|                                                               |
|                                                               |
| Balance at December 31, 1999                                       |   | 175                                                |   | -0-                                        |       | (13,707              | )          | 3,385     |               |
|                                                               |   |                                               |   |                                       |       |                 |       |      |               |
| Shares issued to retire debt and  to purchase assets               |   |                                               |   |                                       |       |                 |       | 1,057     |               |
| Sale of common stock                                               |   |                                               |   |                                       |       |                 |       | 2,158     |               |
| Shares issued for services                                         |   |                                               |   |                                       |       |                 |       | 2,629     |               |
| Subscribed shares issued                                           |   | (175                                               | )      |                                       |       |                 |       | -0-       |               |
| Warrants to purchase shares                                        |   |                                               |   |                                       |       |                 |       | 265       |               |
| Exercised warrants and options                                     |   | (133                                               | )      |                                       |       |                 |       | 525       |               |
| Options issued for services                                        |   |                                               |   |                                       |       |                 |       | 610       |               |
| Unrealized loss on investments                                     |   |                                               |   | (315                                       | )          |                 |       | (315      | )                  |
| Net loss                                                           |   |                                               |   |                                       |       | (7,581               | )          | (7,581    | )                  |
|                                                               |   |                                               |   |                                       |       |                 |       |      |               |
| Balance at December 31, 2000                                       |   | $                                                  | (133   | )                                          | $          | (315                 | )          | $         | (21,288            | ) | $ | 2,733 |   |
|                                                               |   |                                               |   |                                       |       |                 |       |      |               |
|                                                               |   |                                               |   |                                       |       |                 |       |      |               |
|                                                               |   |                                               |   |                                       |       |                 |       |      |               |
| Shares issued to retire debt and  to purchase assets               |   |                                               |   |                                       |       |                 |       | 728       |               |
| Shares issued and held in escrow                                   |   | (466                                               | )      |                                       |       |                 |       | -0-       |               |
| Shares issued for services                                         |   |                                               |   |                                       |       |                 |       | 1,313     |               |
| Shares issued for note receivable                                  |   | (250                                               | )      |                                       |       |                 |       | -0-       |               |
| Exercised warrants and options                                     |   | (318                                               | )      |                                       |       |                 |       | 874       |               |
| Warrants issued to equity investor                                 |   |                                               |   |                                       |       |                 |       | 138       |               |
| Options issued for services                                        |   |                                               |   |                                       |       |                 |       | 195       |               |
| Unrealized loss on investments, net of reclassification adjustment |   |                                               |   | 315                                        |       |                 |       | 315       |               |
| Net loss                                                           |   |                                               |   |                                       |       | (4,301               | )          | (4,301    | )                  |
|                                                               |   |                                               |   |                                       |       |                 |       |      |               |
| Balance at September 30, 2001                                      |   | $                                                  | (1,167 | )                                          | $          | -0-                  |       | $         | (25,589            | ) | $ | 1,995 |   |

* *

*See accompanying notes to condensed consolidated financialstatements*

 

**GREENLANDCORPORATION AND SUBSIDIARY**

**CondensedConsolidated Statements of Cash Flows**

**(Unaudited)**

 
| ***Thousands of  dollars***                                                  |   | **Nine  Months Ended**  |          |
|------------------------------------------------------------------------------|--------|-------------------------|---------------|
|                                                                         |   | **September  30, 2001** |          | **September  30, 2000** |   |
| Cash flows from  operating activities:                                       |   |                    |          |   |   |
| Net loss                                                                     |   | $                       | (4,301        | ) | $ | (5,653 | ) |
| Adjustments to  reconcile net loss to net cash used in operating activities: |   |                    |     |   |     |
| Depreciation and  amortization                                               |   | 587                     |          | 471 |   |
| Allowance for  uncollectible accounts                                        |   | 100                     |          | 29 |   |
| Repurchase of  distributor agreement                                         |   | -0-                     |          | 320 |   |
| Options and  warrants issued for services                                    |   | 195                     |          | 535 |   |
| Warrant costs –  equity investor                                        |   | 138                     |          | -0- |   |
| Loss on sale of  assets                                                      |   | 519                     |          | 43 |   |
| Stock issued for  services                                                   |   | 1,313                   |          | 2,283 |   |
|                                                                         |   |                    |          |   |   |
| (Increase)  decrease in Accounts receivable                                  |   | (116                    | )             | (30 | ) |
| (Increase) decrease in Inventories                                           |   | 34                      |          | 20 |   |
| (Increase)  decrease in Other                                                |   | (50                     | )             | (211 | ) |
| Increase  (decrease) in Trade accounts payable                               |   | 20                      |          | 209 |   |
| Increase  (decrease) in Accrued expenses                                     |   | 400                     |          | (144 | ) |
|                                                                         |   |                    |          |   |   |
| Net cash used in  operating activities                                       |   | (1,161                  | )             | (2,128 | ) |
|                                                                         |   |                    |          |   |   |
| Cash flows from  investing activities:                                       |   |                    |          |   |   |
| Purchase of  software and equipment                                          |   | (60                     | )             | (347 | ) |
| Proceeds from  sale of investments                                           |   | 164                     |          | -0- |   |
| Investment in  notes receivable                                              |   | -0-                     |          | (200 | ) |
|                                                                         |   |                    |          |   |   |
| Net cash provided  by (used in) investing activities                         |   | 104                     |          | (547 | ) |
|                                                                         |   |                    |          |   |   |
| Cash flows from  financing activities:                                       |   |                    |          |   |   |
| Proceeds from  sale of stock                                                 |   | -0-                     |          | 2,171 |   |
| Proceeds from  notes payable to related parties                              |   | 235                     |          | -0- |   |
| Proceeds from  the exercise of warrants and options                          |   | 874                     |          | -0- |   |
| Principal  payments on capital leases                                        |   | (85                     | )             | (17 | ) |
| Principal  payment on line of credit                                         |   | (10                     | )             | -0- |   |
| Proceeds from  sale of stock warrants                                        |   | -0-                     |          | 489 |   |
|                                                                         |   |                    |          |   |   |
| Net cash  provided by financing activities                                   |   | 1,014                   |          | 2,643 |   |
|                                                                         |   |                    |          |   |   |
| Decrease in cash                                                             |   | (43                     | )             | (32 | ) |
|                                                                         |   |                    |          |   |   |
| Cash at  beginning of period                                                 |   | 75                      |          | 236 |   |
|                                                                         |   |                    |          |   |   |
| Cash at end of  period                                                       |   | $                       | 32            |   | $ | 204 |   |
| Supplemental  information:                                                   |   |                    |          |   |   |
| Cash paid for  interest                                                      |   | $                       | 31            |   | $ | 36 |   |
| Cash paid for  income taxes                                                  |   | $                       | -0-           |   | $ | 3 |   |

*** ***

*Seeaccompanying notes to condensed consolidated financial statements*****

 

 

Supplemental disclosureof non-cash investing and financing activities:

      For the nine months ended September 30,2001:

The Company issued shares in exchange for a note receivable in theamount of $250 thousand.

The Company acquired assets in the amount of  $20 thousand by issuing stock.

The Company repaid notes payable to related parties of $108 thousandthrough the issuance of stock.

The Company paid for services in the amount of $1.3 million by issuingshares of its common stock.

The Company issued options and warrants to employees and directors topurchase 34 million shares with a weighted average strike price of $.003 andrecorded a $195 thousand expense.

The Company issued 5.4 million warrants to an equity investor andrecorded a $138 thousand other expense.

The Company issued 60 shares of convertible preferred stock for 100,000shares of Zzyzx Peripherals, Inc. in the amount of $600,000.

 

      For the nine months ended September 30,2000:

The Company acquiredassets in the amount of $430 thousand by issuing stock.

The Company repaid debtand other accrued expenses of $206 thousand through the issuance of stock in2000.

The Company repaid notes payable to related parties through theissuance of stock in the amount of $220 thousand.

The Company acquired a receivable from its employees in the amountof  $88 thousand for the repayment ofthe employee portion of withholding from compensation paid in the form ofCompany stock.

The Company acquired equipmentand furniture in the amount of $144 thousand by incurring capital leases.

TheCompany issued options to purchase 4.1 million shares with weighted averagestrike price of $.15 for services in the amount of $535 thousand.

 

*Seeaccompanying notes to condensed consolidated financial statements*

 

**GREENLANDCORPORATION AND SUBSIDIARY**

**Notes toCondensed Consolidated Financial Statements**

**(Unaudited)**

 

**Note1.                   BASIS OF PRESENTATION**

General

Theaccompanying unaudited condensed consolidated financial statements have beenprepared in accordance with the instructions to Form 10-QSB. Therefore, they donot include all information and footnotes necessary for a complete presentationof financial position, results of operations, cash flows, and stockholders'equity in conformity with generally accepted accounting principles. Thecondensed consolidated balance sheet at December 31, 2000 was derived from theaudited balance sheet at that date which is not presented herein. Except asdisclosed herein, there has been no material change in the informationdisclosed in the notes to the financial statements included in the Company'sannual report on Form 10-KSB for the year ended December 31, 2000. In theopinion of Management, all adjustments considered necessary for a fairpresentation of the results of operations and financial position have beenincluded, and all such adjustments are of a normal recurring nature. Operatingresults for the nine months ended September 30, 2001 are not necessarilyindicative of the results that can be expected for the year ended December 31,2001.

 

Future Accounting Requirements

 

In June 2001, the Financial AccountingStandards Board ("FASB") issued Statement of Financial AccountingStandard ("SFAS") No. 141, "Business Combinations", whichis effective for all business combinations initiated after June 30, 2001.  SFAS No. 141 eliminates the use of thepooling-of-interests method in a business combination.  The Company does not expect the adoption ofSFAS No. 141 to have a material impact on its consolidated financial positionor results of operations.

In June 2001, the Financial Accounting Standards Board("FASB") issued Statement of Financial Accounting Standard("SFAS") No 142, "Goodwill and Other Intangible Assets",which is effective for the Company's year ending December 31, 2002.  Under SFAS No. 142, goodwill is notamortized and is tested for impairment on an annual basis and between annualtests in certain circumstances.  TheCompany currently amortizes goodwill over twelve years and expects the adoptionof SFAS No. 142 to eliminate the annual amortization of approximately $173,000per year through December 31, 2010.  TheCompany has not completed its analysis of the impairment test provisions of SFASNo. 142 and the effect on the consolidated financial position and results ofoperations of the impairment provisions is not known.

 

 

**Note2.                   GOING CONCERNUNCERTAINTY**

As shown in the accompanying condensed consolidated financialstatements, the Company has suffered recurring losses from operations, has anet working capital deficiency of approximately $1.7 million and a retaineddeficit of $25.6 million as of September 30, 2001. These factors, among others,raise substantial doubt about the Company’s ability to continue as a goingconcern. The Company’s need for working capital is a key issue for managementand necessary for the Company to meet its goals and objectives. The Companycontinues to meet its obligations and pursue additional capitalizationopportunities. There is no assurance, however, that the Company will besuccessful in meeting its goals and objectives in the future.

 During 2000 and 1999, the Company fullysubscribed its private placement offering realizing $3.4 million in netproceeds. In addition, the Company realized $378 thousand from the exercise ofClass A Warrants.  There are stilloutstanding Class B Warrants exercisable at $1.00 and Class C Warrantsexercisable at $1.50 (collectively, the “Warrants”).  By letter dated June 18, 2001 the Company notified the holders ofthe Warrants issued pursuant to the private placement that they could exerciseall 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 GreenlandCorporation) (the “Warrant Purchase Offer”). The holders had thirty days to exercise said warrants.   For the nine months ended September 30,2001 the Company received $874 thousand through the exercise of options andwarrants.

 

On March 28, 2001, the Company announced that it had entered anagreement with a NASD approved Underwriter, referred to in Companycommunications as an “institutional private equity investor,” under which theUnderwriter agreed to purchase shares of the Company’s common stock over thenext three years. Generally, under the terms of the agreement, the Underwriterhas agreed to purchase such amounts of common stock as the Company elects tosell the Underwriter.  The purchaseprice 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 theamount of common shares that the Underwriter is obligated to purchase duringany 61-day period to 9.9% of the total common shares outstanding and is subjectto an overall cap of $35 million over the three-year term of the agreement. TheUnderwriter’s obligation to purchase shares terminates upon the occurrence ofvarious events as specified in the agreement. The actual amount of common stockthat the Underwriter may purchase is dependant on, among other things, (1) themarket price of the Company’s stock and (2) whether a termination event occurs.The agreement must be registered and declared effective by the Securities andExchange Commission. In consideration for executing the agreement, the Underwriterwill receive warrants to purchase 5,390,000 shares of Common stock. The Companyhas recorded a $138 thousand expense for issuance of the warrants.  There can be no assurance that the Companywill sell any stock to the Underwriter under the terms of the agreement.

 

As discussed in Note 16, the Company is in a dispute regarding theownership of software technology paid for by Greenland Corporation, which SerenSystems, Inc. has refused to deliver and/or make available to the Company. As aresult, Greenland Corporation has been unable to fulfill its obligations withrespect to certain purchase orders and/or contracts.  The Company filed a Demand for Arbitration with the AmericanArbitration Association against Seren Systems, Inc. with respect to the abovementioneddispute. The Company remains confident that Greenland Corporation will obtainthe substantive determination necessary to obtain the return of its property.However, the Company is actively seeking a settlement that would be beneficialto the Company’s ability to continue its business operations.

 

**Note 3.                   INVENTORIES**

Inventories at September 30, 2001 were as follows:

 

| Raw materials                   | $      | 308    |   |
|---------------------------------|--------|--------|--------|
| Work-in-progress                | -0-    |   |
| Finished goods                  | 20     |   |
|                            | 328    |   |
| Less allowance for obsolescence | (43    | )      |
|                            |   |   |
|                            | $      | 285    |   |

 

 

Inventories are stated at lower of cost, first-in first-out basis ormarket.  Provision for potentiallyobsolete or slow moving inventory is made based on management’s analysis ofinventory levels.

 

**Note 4.                   ACCOUNTS RECEIVABLE**

 

The Company entered into anagreement with CardPlus International, Inc., the nation’s only certifiedminority electronic payments processor. Pursuant to the agreement CardPlus purchased six interactive checkcashing Maxcash TM Automated Banking Machine kiosks.  These terminals are to be processed from CardPlus’ DenverColorado electronic transaction and data processing center.  This transaction is the first purchase underthe Company’s ongoing strategy to aggressively pursue sales of the Maxcash ABMto customers that have their own processing capabilities.

##### **Note 5.                   PROPERTY AND EQUIPMENT**

Net property and equipment at September 30, 2001 was as follows:

 

| Computers and  equipment                       |   | $      | 145    |   |
|------------------------------------------------|--------|--------|--------|--------|
| Furniture & equipment under capital leases |   | 537    |   |
| Demonstration  equipment                       |   | 127    |   |
| Furniture and fixtures                         |   | 66     |   |
| Leasehold  improvements                        |   | -0-    |   |
|                                           |   | 875    |   |
|                                           |   |   |   |
| Accumulated  depreciation                      |   | 287    |   |
|                                           |   |   |   |
|                                           |   | $      | 588    |   |

 

Depreciation expense, including amortization of capital lease assets,for the three months and nine months ended September 30, 2001 was $53 and $207thousand (including $65 thousand on furniture and equipment under capitalleases).

##### ** **

##### **Note 6.                   LONG TERM NOTES RECEIVABLE**

During 1999, the Company exchanged 1.1 million convertible preferredshares in a public company for notes receivable valued at $1.9 million withinterest at 9%.  The Company hassubstantial doubt about the collectibility of the notes and established a 100%allowance at December 31, 1999.  TheCompany does not recognize interest income on impaired notes.

##### ** **

##### **Note 7.                   INVESTMENTS**

On September 28, 2001 theCompany purchased 100,000 shares of common stock, representing five percent ofthe issued and outstanding shares of common stock, of   ZZYZX Peripherals, Inc (the “ZZYZX Shares”). The Company acquiredthe ZZYZX Shares for 60 shares of Class A Convertible Preferred shares of theCompany (the “Company Shares”).   Theinvestment is carried at a cost of $600,000 determined by fair value of theClass A Convertible Preferred Stock issued and exchanged.  Investment is adjusted for decline in fair valuethat is other than temporary.   Mr. GeneCross is a Director and Shareholder of Greenland and a Director and shareholderof ZZYZX. Of the ZZYZX Shares purchased by Greenland, Mr. Cross owned 20,000shares. Mr. Frank Kavanaugh, a Director and shareholder of ZZYZX, controls DKCapital and Bet Trust and is a shareholder of Greenland Corporation. Of theZZYZX Shares purchased by Greenland, DK Capital and Bet Trust together owned40,000 shares.

At April 16, 2001 the Company sold all of its investments in commonstock of Telenetics Corporation.  Thecommon stock was carried at fair value. Unrealized holding gains and losses areexcluded from earnings and reported in other comprehensive income. During thenine months ended September 30, 2001, the Company realized $397 thousand oflosses and $164 thousand of proceeds from sales of shares in the investment.Cost is determined based on specific identification.

 

##### **Note 8.                   INTANGIBLE ASSETS**

Intangible assets at September 30, 2001 consisted of the following:

 

| Capitalized software costs                                       |   | $      | 1,014  |   |
|------------------------------------------------------------------|--------|--------|--------|--------|
| Licenses                                                         |   | 675    |   |
| Excess of  purchase price over fair value of net assets acquired |   | 2,079  |   |
|                                                             |   | 3,768  |   |
|                                                             |   |   |   |
| Less accumulated  amortization                                   |   | 1,089  |   |
|                                                             |   |   |   |
|                                                             |   | $      | 2,679  |   |

 

During 1998, as part ofthe purchase of the net assets of Check Central, Inc., the Company acquiredlicenses to use certain software in the development of check cashingmachines.  The Company is amortizingthese licenses over 5 years.  The excessof the purchase price over the fair value of the identifiable net assetsacquired was capitalized and is being amortized over 12 years.

The Company amortizescapitalized software costs over 5 years. At September 30, 2001 and December 31, 2000, net intangible assets ofthe Company include $588 thousand of software developed by Seren Systems, Inc.(see Note 16).

TheCompany reviews its intangibles for impairment whenever events andcircumstances indicate that the carrying amount of an asset may not berecoverable.  Management evaluatesassets for impairment by comparing undiscounted future cash flows to thecarrying amount of the assets.  Ifimpairment exists, the amount of impairment is measured as the amount by whichthe carrying amount of the asset exceed it’s fair value.  Management evaluated its intangible assetfor impairment and no impairment loss was recognized in the three month andnine month ended September 30, 2001. Due to industry conditions, it is at least reasonably possible that theimpairment estimate will change in the near term.

 

##### **Note 9.                   NOTES PAYABLE TO RELATEDPARTIES**

Notes payable to related parties at September 30, 2001 were as follows:

 
| Note payable to a stockholder and officer of the  Company.  Interest at 8%.  Principal due February 2002.                                   |   | $      | 2   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----|
|                                                                                                                                                  |   |   |
| Note payable to a stockholder and officer of the Company.  Interest at 8%.  Principal due September 2002.                                   |   | 62     |
|                                                                                                                                                  |   |   |
| Notes payable to a stockholder and employee of the  Company.  Interest at 8%.  Principal due at various dates through  September, 28, 2002. |   | 113    |
|                                                                                                                                                  |   |   |
|                                                                                                                                                  |   | $      | 177 |

 

In July 2001, Thomas A. Hyde, Jr, CEO andChairman of Greenland Corporation agreed to loan the Company $100,000. Theterms of the loan provide for repayment within one year at 8% interest andwarrant to purchase 1,333,333 shares of Greenland Corporation common stock at$.03 per share.

 

The Company repaid notes payable during theperiod ended September 30, 2001 to related parties of $108 thousand through theissuance of stock.

** **

**Note 10.         NOTES PAYABLE**

Notes payable at September 30, 2001 were as follows:

 
| Note payable to a company, with interest at 8%.  Due through the payment of commissions  earned through March 9, 2001.                                                                                                                                                                                                                                       |   | $      | 320 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----|
|                                                                                                                                                                                                                                                                                                                                                              |   |   |
| Revolving Line-of-credit agreement with a commercial  bank which allows for advances up to a maximum of $150 thousand.  The line expires on July 17, 2003.  Interest at the bank’s reference rate plus 2.0% but not less than 8.5%.The  line will be secured by company assets and personally guaranteed by a  director and stockholder of the Company. |   | 133    |
|                                                                                                                                                                                                                                                                                                                                                              |   |   |
|                                                                                                                                                                                                                                                                                                                                                              |   | $      | 453 |

**Note 11.         STOCKHOLDERS’ EQUITY**

The Company issued commonstock in exchange for a note receivable in the amount of $250 thousand.

The Company issued 27million shares held in escrow for deferred compensation.

The Company acquiredassets in the amount of  $20 thousand byissuing stock.

The Company repaid notespayable to related parties of $108 thousand through the issuance of stock.

The Company paid forservices in the amount of $1.3 million by issuing 25 million shares of itscommon stock.

The Company issuedoptions and warrants to employees and directors to purchase 34 million shareswith a weighted average strike price of $.003 and recorded a $195 thousandcompensation expense.

The Company issued 5.4million warrants to an equity investor and recorded $138 thousand as otherexpense.

The Company issued 60shares of convertible preferred stock for 100,000 shares of Zzyzx Peripherals,Inc. in the amount of $600,000.

 

##### **Note 12.              CONVERTIBLEPREFERRED STOCK**

The Company Class APreferred stocks are convertible into $600,000 worth of shares of GreenlandCorporation common stock. The Company Shares are convertible during a two yearperiod at a conversion price that is equal to 80% of the closing bid price ofthe Company’s common stock during a specified trading period and there is alimitation as to the amount that can be converted during any 90 day period.

 

##### **Note 13.                 SEGMENTS AND MAJOR CUSTOMERS**

**TheCompany has two reportable segments consisting of (1) the sale and distributionof automatic check cashing machines and (2) customer service and fee incomeearned through check cashing transaction processing.  The accounting policies of the segments are the same as thosedescribed in the summary of significant accounting policies.  The Company evaluates performance based onsales, gross profit margins and operating profit before income taxes.**

The following is information for the Company’s reportable segments forthe nine months ended September 30, 2001:

 
|                            |   | **Sales  Segment** |   | **Processing  Segment** |   | **Unallocated** |   | **Total** | ** ** |
|---------------------------------|--------|--------------------|--------|-------------------------|--------|-----------------|--------|-----------|------------|
|                            |   |               |   |                    |   |            |   |      |       |
| Revenue                         |   | $                  | 173    |                    | $      | 16              |   | $         | -0-        |   | $ | 189 |   |
| Gross margin                    |   | (2                 | )      | (459                    | )      | -0-             |   | (461      | )          |
| Depreciation and  amortization  |   | 10                 |   | 308                     |   | 269             |   | 587       |       |
| Interest expense                |   |               |   |                    |   | 85              |   | 85        |       |
| Other, net                      |   |               |   |                    |   | (3,753          | )      | (3,753    | )          |
| Loss from  continuing           |   |               |   |                    |   |            |   |      |       |
| operations  before income taxes |   | (2                 | )      | (459                    | )      | (3,838          | )      | (4,299    | )          |
|                            |   |               |   |                    |   |            |   |      |       |
| Identifiable  assets            |   | $                  | 285    |                    | $      | 2,679           |   | $         | 1,356      |   | $ | 4,320 |   |
| Capital expenditures            |   | -0-                |   | -0-                     |   | 60              |   | 60        |       |

 

**The abovenegative gross margins include fixed overhead costs for expenses such assupervision, labor, amortization and depreciation, communications, andfacilities, as well as the direct costs to manufacture and service theautomated banking machines.**

**Note14.                 OPERATING LEASE**

**TheCompany moved its executive offices to new corporate headquarters in Carlsbad,California.  The Company leases its officefacilities under an operating lease expiring August 14, 2003 with monthlypayments of $6 thousand due at the beginning of the month.  Rent will increase semi annually at a fixedrate of approximately 4%.**

Future minimum lease payments for twelve months ended September 30under the lease are as follows:

 

| 2002                         |   | $      | 76  |
|------------------------------|--------|--------|-----|
| 2003                         |   | 72     |
|                         |   |   |
| Total minimum lease payments |   | $      | 148 |

** **

**Note15.                 REPURCHASE OFDISTRIBUTOR AGREEMENT**

**In March2000, the Company repurchased the exclusive distribution rights to the MasterDistribution Agreement with SmartCash ATM, Ltd. (SmartCash). In consideration,the Company agreed to loan SmartCash $200 thousand collateralized by 333thousand shares of Greenland Corporation common stock, release certainrestrictions on Company common stock held by SmartCash, issue warrants topurchase 500 thousand shares of Company common stock, and continue to paycommissions on sales of machines sold by certain sales representatives untilthe earlier of March 2002, or said commissions equal $320 thousand. DuringDecember 2000, the Company fully reserved against the $200 thousand notereceivable given the probability of collection from SmartCash, and the decreasein the value of the Company’s collateral. In addition, the Company issuedSmartCash a note payable for $320 thousand that will be repaid through thepayment of the commissions noted above. During March 2000 the Company recordeda $320 thousand expense on this transaction.**

** **

**Note16.                 LEGAL PROCEEDINGS**

On October 12, 2000, theCompany filed a Demand for Arbitration with the American ArbitrationAssociation against Seren Systems, Inc. The Complaint sought preliminary reliefin a dispute regarding the ownership of software technology paid for by theCompany, which Seren Systems, Inc. has refused to deliver and/or make availableto the Company. As a result, the Company has been unable to fulfill itsobligations with respect to certain purchase orders and/or contracts, withrespect to the above mentioned dispute. The November 26, 1998 ConsultingAgreement by and between the Company and Seren Systems, Inc. stipulates thatany controversy between the parties shall be settled by binding arbitration. Ahearing date originally scheduled for September 17, 2001 was postponed bymutual agreement of both Seren and the Company. The Company has been andpresently is, engaged in settlement discussions with Seren and no new hearingdate has been scheduled. In addition to the return of its property, the Companyseeks actual damages in the amount of approximately $1.5 million, including thereturn of payments made to Seren as a subcontractor for Greenland on theACS/7-Eleven V.com project; Seren Systems has counterclaimed for damages in theamount of $700,000.

On March 23, 2001 ArthurKazarian, Trustee for the General Wood Investment Trust (the “Landlord”) fileda Complaint in San Diego County naming Greenland Corporation as adefendant.  The Complaint allegesUnlawful Detainer.   On or about May 1,2001 the Company paid $45,000 to the Landlord and entered into a judgment to payan additional $15,000 of legal fees. The Company has entered into a settlement agreement to pay legal fees of$12,000. The Company has paid the settlement amount in full.

On May 23, 2001 the Companyfiled a Complaint in San Diego County naming Michael Armani as the defendant.The Complaint alleges breach of contract by Michael Armani in connection withtwo separate stock purchase agreements. The Company seeks damages in the amount of $474,595.  On August 7, 2001 the Company filed arequest for Entry of Default against Mr. Armani in the amount of $474,595 andthe court granted entry of default. Subsequently Mr. Armani filed a motion to set aside the entry of defaultand on October 26, 2001 the court granted said motion and the entry of defaultwas set aside.  The court granted Mr.Armani 10 days to file a responsive to the Company’s Compliant. The Company isnot yet in receipt of said filing.

On May 23, 2001 Arthur Kazarian, Trustee for theGeneral Wood Investment Trust (the “Landlord”) filed a Complaint in San DiegoCounty naming Greenland Corporation as a defendant.  The Complaint alleges breach of contract pursuant to the terms ofthe lease agreement between the Company and the Landlord for the real propertylocated at 1935 Avenida Del Oro, Oceanside, California and previously occupiedby the Company.  The Complaint seeksdamages in the amount of approximately $500,000.  Although the Company remains liable for the payments remainingfor the term of the lease, the Landlord has a duty to mitigate said damages.  The Company recorded a lease terminationliability of $212 thousand during the quarter ended March 31, 2001.  The Company has retained outside counsel forrepresentation in this matter and settlement discussions are presently beingconducted.

On July 5, 2001 Max Farrowfiled a Complaint in San Diego County naming Greenland Corporation, Thomas J.Beener,  Intelli-Group, Inc.,  Intelli-Group LLC and Intelli-Corp, Inc. asdefendants.  The Complaint allegesbreach of contract in connection with Mr. Farrow’s resignation as an officerand director of the Company in January 2001. The Company believes that the Company and Mr. Beener have valid defenseto the allegations of Mr. Farrow. Although there can be no assurances, theCompany believes that it will successfully defend this legal action and thatthe outcome will not have a material adverse impact on the Company.

The Company's officers anddirectors are aware of no other threatened or pending litigation, which wouldhave a material, adverse effect on the Company. From time to time the Companyis a defendant (actual or threatened) in certain lawsuits encountered in theordinary course of its business, the resolution of which, in the opinion ofmanagement, should not have a material adverse effect on the Company'sfinancial position results of operations, or cash flows.

The Company, along withSeren Systems (“Seren”), its then current and primary software developer andsupplier for its own ABM terminals, was in the process of completingdevelopment of the check cashing service interface to the Mosaic Software hostsystem being implemented to support a large network of V.com terminals. InSeptember 2000, Seren unilaterally halted testing and effectively shut-down anyfurther check cashing development for the V.com project. The partiesparticipating in this project may have been financially damaged, related to thedelay in performance by the Company and Seren. None of the parties have broughtsuit 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.

The Company's officers anddirectors are aware of no other threatened or pending litigation, which wouldhave a material, adverse effect on the Company. From time to time the Companyis a defendant (actual or threatened) in certain lawsuits encountered in theordinary course of its business, the resolution of which, in the opinion ofmanagement, should not have a material adverse effect on the Company'sfinancial position results of operations, or cash flows.

** **

**NOTE17.              SUBSEQUENT EVENTS**

**Subsequentto September 30, 2001, the Company issued 11,365,682 shares of common stock forservices and for shareholders who exercised their warrants.**

** **
| **ITEM 2 -** |   | **MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** |
|--------------|--------|--------------------------------------------------------------------------------------------|

 

 

This Quarterly Report contains forward-looking statements thatinvolve risk and uncertainties. Forward-looking statements include, withoutlimitation, 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 orphrases of similar meaning. Forward-looking statements involve risks anduncertainties which may cause actual results to differ materially from theforward-looking statements.  Such risksand uncertainties include, but are not limited to, risks associated withcompleting product development; commercial use of check-cashing machines;product repairs; consumer acceptance; need for additional financing;manufacturing risks; dependence on suppliers; dependence on distributors; rapidtechnological changes; dependence on key personnel; compliance with state laws;risks of technical problems or product defects; dependence on proprietarytechnology and other factors detailed in the Company's reports filed with theSecurities and Exchange Commission.

 

 

**INTRODUCTION**

 

The following discussionpertains to the Company's operations and financial condition as of September30, 2001, and should be read in conjunction with the Company’s financialstatements and notes thereto, and other financial information includedelsewhere in this report.

The Company is engaged inthe development of proprietary software that is capable of providing supportand delivery of a range of on-line financial services to consumers, including:check cashing, ATM, wire transfers, bill pay, money orders, and phone carddispensing services. The Company has developed, manufactured and deliveredlimited numbers of freestanding kiosks under its trademarked brand name MAXcashABM. The Company acquired its base technology in May 1998, when Check Centralwas incorporated into Greenland Corporation as a wholly-owned subsidiary.

The Company’s initialstrategy had been oriented around two revenue streams:(1) the sale of itsMAXcash ABM machines; and (2) generation of fees in connection with the variousbanking services provided on each of the machines in operation.  Fees range from $0.35 per transaction to 6%of the value of the transaction. However, without sufficient numbers ofmachines in the field, this revenue stream did not produce material results.

The Company's strategy formarketing and sales of the MAXCash ABM, during fiscal 2000, was directed atlocating distributors of ATM machines and entering on its distributionagreements. This strategy enabled the Company to concentrate its resources onproduct development and support. The Company has signed a number of suchagreements (37 to date). However, significant unit sales have not materializedto date due primarily to the uncertainty caused by its dispute with SerenSystems.*(Also see “Legal Matters.”)*

Management determined thatits efforts to develop, produce, and successfully market and support itsMAXcash ABM system may be beyond the scope of its currently availableresources. On April 2, 2001, the Company announced that it was temporarilysuspending its Check Central subsidiary check cashing operations until suchtime as the integration of the Company’s Check Central software with theMAXcash operating system was complete, in order to minimize its check cashingrisk, reduce operating losses, and to conserve capital.

The Company has invested,and continues to invest substantial resources in the ongoing development of itsback-office, risk management, and transaction support software systems. TheCompany hopes to expand its scope from manufacturing, distribution, and supportof its proprietary MAXcash ABM to also providing support for the ABM-liketerminals of other manufacturers. Furthermore, the Company believes that it canbe successful in providing back-office software and on-line transaction supportto other hardware vendors and retailers through a network and software systemof its own design.

The Company's long-term goalis to participate in the multi-billion dollar check cashing market by offeringan open-architecture POS/check cashing transaction processing platform, eitherfor self-service or clerk-assisted transactions. In addition to Greenland’s supportfor its MAXcash ABM kiosk, the Company plans to broaden its market focus andreposition itself as a leading provider of back-office transactions softwareand support services to the check cashing, retail, and POS transactionindustries – including check approval and guarantee services, merchant POSservices, ATM transaction processing, money order and prepaid phone carddispensing, wire transfer, bill pay and other products and services.

In order to accomplish itsobjectives, the Company has entered into several strategic partnerships for thecontinued development and sales of hardware systems (ABM-like machines), POStransaction software (the back-office), all to reside on third-party-suppliedhost platforms. This strategy is expected to reduce Greenland’s ongoingbusiness risk.

As resources permit,management hopes to further the development of its proprietary back-office riskmanagement operations to support fully automated POS check cashing approval andguarantee services. The proposed processing architecture will be reengineeredas an open platform systems environment in order to provide support formultiple existing ATM and POS vendors. The Company hopes to leverage the directsale forces of other large-scale, national hardware manufacturers to sell itssystem.

On May 8, 2001 the Companyannounced that it signed a software license and support agreement withFlorida-based Mosaic Software for use of its PostilionÔ systemsplatform to provide transaction routing and switching software for theCompany’s interactive check cashing MAXcash ABM kiosks, as well as fortraditional ATM, advanced ATM and point-of-sale (POS) terminals manufactured byother companies.  The software providesa scalable foundation for the Company’s new strategy of providing services toand through multiple hardware platforms. By supporting virtually all major ATM hardware vendors, such as NCR,Diebold, Tidel, IBM, and Verifone (Hewlett Packard), the Company will have theopportunity to work with third-party sales channels to generate transactionprocessing revenues.  The agreementexpired on or about August 1, 2001.  Theparties have negotiated an extension through December 31, 2001on termsmaterially similar to the terms of the previous agreement.  If fully implemented, management projectstotal cost of the services provided pursuant to the term of the agreement to beapproximately $1.3 million.

The Mosaic system is a fullyintegrated Microsoft WindowsÔ NT-based applications suitethat facilitates transaction management and network communication betweenfree-standing financial services machines such as the Company’s MAXcash ABM,the Postilion host, and the Company’s Check Central back-office risk managementsystem and call center.

****On June5, 2001 the Company entered into an exclusive software development and supportagreement with Trilicom Data Solutions to provide device-level software for theCompany’s interactive check cashing Maxcash ABM, as well as to provide systemsintegration services for independent check cashers, grocers, and otherGreenland customers.  This will allowthe Company to continue sales and support of its Maxcash ABM terminals whilethe Company  rebuilds it’s host andback-office transaction support infrastructure with Mosaic Software. Theagreement provides for payment through a combination of  company stock and equity funding as itbecomes available.****

****On June26, 2001, the Company entered into an exclusive manufacturing and assemblyagreement with California Chassis, Inc., to build Greenland’s interactive checkcashing Maxcash ABM.****

****OnSeptember 28, 2001, the Company invested $600,000 in ZZYZX Peripherals, Inc. toestablish a strategic relationship designed to support the data storage needsof self-service check cashing for the Company and its customers.  Data storage is an integral part of thecheck cashing systems and related technology requirements (see Note 7).****

 

****Results of Operations****

****Revenue****

The Company reported total  revenues of $0 and $189 thousand from itstwo segments  for the three and ninemonths ended September 30, 2001, respectively. This represents an $86 thousand decrease, or 100%, from the three monthsended September 30, 2000, and a $372 thousand, or 66%, decrease from the ninemonths ended September 30, 2000.   **** The Company’s salesoperations for its principal product, the Maxcash ABM, was temporarilysuspended primarily due to a legal dispute with its software provider and theassociated financial risks to the Company represented by the dispute.****

The Company earned revenuesfrom the sale and rental of ABM’s and related products of $173 thousand and$236 thousand for the nine months ended September 30, 2001, and 2000,respectively.  The Company sold sevenABM’s in 2001, and ten ABMs in 2000.

 

****Cost ofGoods Sold****

 

The Company incurred totalcosts of revenues of $133 thousand and $650 thousand from its two segments forthe three and nine months ended September 30, 2001, respectively.   The costs incurred in the sales segmentwere $175 thousand and $743 thousand for the nine months ended September 30,2001, and 2000, respectively. This $568 thousand, or 76%, decrease is primarilyattributable to a decrease in direct material and overhead costs as a result ofdecreased machine production. Manufacturing costs include fixed overheadexpenses for items such as supervision, testing, and facilities, as well as thedirect cost of the machines sold.  Thegross margin on machine sales for the nine months ended September 30, 2001, and2000, was $(2) thousand and $(507) thousand. Management had anticipated greater improvements in the gross margin onmachine sales as a result of sales volume increasing to a level sufficient toabsorb overhead costs. Such increases did not materialize.

Costs associated with transaction processing, included in cost ofsales, were $475 thousand and $1.8 million for the nine months ended September30, 2001 and 2000, respectively, resulting in gross margins on transactionrevenue of $(459) thousand and $(1.5) million, respectively.  Processing costs included fixed overheadexpenses such as the amortization of software development costs, depreciation,labor, and communications.  Managementanticipates improvements in the gross margin as an increased number of machinesare placed in the field, and the Company benefits from the associated economiesof scale.

 

****OperatingExpenses****

Operatingexpenses for the three and nine months ended September 30, 2001 were $687thousand and $2.9 million, respectively, compared to $857 thousand and $3.6million, respectively, for the corresponding periods in 2000.

 

Researchand Development Costs for the three and nine months ended September 30, 2001 of$2 thousand and $87 thousand, respectively, decreased 99% and 84%,respectively, from the comparative periods in 2000, which reflect the Company’stemporary discontuation of it support for the Maxcash ABM product.

 

**In March 2000, the Companyrepurchased the exclusive distribution rights to the Master DistributionAgreement with SmartCash ATM, Ltd. (SmartCash). In consideration, the Companyagreed to loan SmartCash $200 thousand collateralized by 333 thousand shares ofGreenland Corporation common stock, release certain restrictions on Companycommon stock held by SmartCash, issue warrants to purchase 500 thousand sharesof Company common stock, and continue to pay commissions on sales of machinessold by certain sales representatives until the earlier of March 2002, or saidcommissions equal $320 thousand. During December 2000, the Company fullyreserved against the $200 thousand note receivable given the probability of collectionfrom SmartCash, and the decrease in the value of the Company’s collateral. Inaddition, the Company issued SmartCash a note payable for $320 thousand thatwill be repaid through the payment of the commissions noted above. During March2000 the Company recorded a $320 thousand expense on this transaction.**

 

****OtherExpense****

Net other expense of $66thousand and  $970 thousand for thethree month and nine months ended September 30, 2001 increased $62 thousand and$894 thousand from the corresponding period in 2000. Expenses incurred in 2001included a $519 thousand loss on the sale of assets, a $212 thousand expenseaccrued for future lease payments potentially due under the Company’sterminated office space operating lease, and a $138 thousand expense accruedfor warrant costs due under the equity funding agreement.

 

****Net Loss****

Duringthe three and nine months ended September 30, 2001, the Company incurred netlosses from continuing operations of $886 thousand and $4.3 million,respectively, which represents a 42% and 24% decrease in losses from continuing operations, respectively, fromthe comparative periods in 2000.  Losseswere reduced due primarily to reduced cost of good sold associated with temporary discontuation of its Maxcash ABMsales and support efforts.

 

Future Accounting Requirements

 

In June 2001, the Financial AccountingStandards Board ("FASB") issued Statement of Financial AccountingStandard ("SFAS") No 141, "Business Combinations", which iseffective for all business combinations initiated after June 30, 2001.  SFAS No. 141 eliminates the use of thepooling-of-interests method in a business combination.  The Company does not expect the adoption ofSFAS No. 141 to have a material impact on its consolidated financial positionor results of operations.

 

In June 2001, the Financial Accounting Standards Board("FASB") issued Statement of Financial Accounting Standard("SFAS") No 142, "Goodwill and Other Intangible Assets",which is effective for the Company's year ending December 31, 2002.  Under SFAS No. 142, goodwill is notamortized and is tested for impairment on an annual basis and between annualtests in certain circumstances.  TheCompany currently amortizes goodwill over twelve years and expects the adoptionof SFAS No. 142 to eliminate the annual amortization of approximately $173,000per year through December 31, 2010.  TheCompany has not completed its analysis of the impairment test provisions ofSFAS No. 142 and the effect on the consolidated financial position and resultsof operations of the impairment provisions is not known.

 

**Liquidity and Capital Resources**

Historically, the Company hasfinanced its operations through cash generated from the sale of equitysecurities and debt financing. To date, the Company has not been able to supportits operations from revenues through sales of products or services.

At September 30, 2001, theCompany’s had a working capital deficit of approximately $1.7 million comparedwith a working capital deficit of $1.1 million at December 31, 2000.  This increase of $568 thousand, or 50%,resulted primarily from a increase in accrued expenses of $400 thousand.Stockholders’ equity decreased for the nine months ended September 30, 2001from December 31, 2000 by $738 thousand, or 27%, due primarily to the  $4.3 million net loss, which was offset byincreased paid-in-capital of $4.2 million.

The Company's officers and directors are aware of no other threatened orpending litigation, not otherwise discussed in Item 1, Legal Matters, whichwould have a material, adverse effect on the Company. From time to time theCompany is a defendant (actual or threatened) in certain lawsuits encounteredin the ordinary course of its business, the resolution of which, in the opinionof management, should not have amaterial adverse effect on the Company's financial position results ofoperations, or cash flows.

The Company’s auditors haveexpressed their uncertainty as to the Company’s ability to continue as a goingconcern. They cite recurring losses from operations, the Company’s workingcapital deficiency, and limited cash resources.

In order to address thisuncertainty, the Company has taken steps to raise additional funds to financeits operations, including the potential for making strategic acquisitions,which could better position the Company for growth.

On March 28, 2001, theCompany announced that it had entered an agreement with a NASD approvedUnderwriter, referred to in Company communications as an “institutional privateequity investor,” under which the Underwriter agreed to purchase shares of theCompany’s common stock over the next three years. Generally, under the terms ofthe agreement, the Underwriter has agreed to purchase such amounts of commonstock 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. Theagreement limits the amount of common shares that the Underwriter is obligatedto purchase during any 61-day period to 9.9% of the total common sharesoutstanding and is subject to an overall cap of $35 million over the three-yearterm of the agreement. The Underwriter’s obligation to purchase sharesterminates upon the occurrence of various events as specified in the agreement.The actual amount of common stock that the Underwriter may purchase isdependant on, among other things, (1) the market price of the Company’s stockand (2) whether a termination event occurs. The agreement must be registeredand declared effective by the Securities and Exchange Commission. Inconsideration for executing the agreement, the Underwriter will receivewarrants to purchase 5,390,000 shares of Common stock. The company has recordeda $138 thousand expense for issuance of the warrants.  There can be no assurance that the Company will any sell stock tothe Underwriter under the terms of the agreement.

During 2000and 1999, the Company fully subscribed its private placement offering realizing$3.4 million in net proceeds.  Inaddition, the Company realized $378 thousand from the exercise of Class AWarrants.  There are still outstandingClass  B Warrants exercisable at $1.00and Class C Warrants exercisable at $1.50 (collectively, the “Warrants”)..  By letter dated June 18, 2001 the Companynotified the holders all the warrants issued pursuant to the private placementthat they could exercise all or any portion of their warrants at an exerciseprice of $.033 per warrant (each warrant can be exercised into one share ofcommon stock of Greenland Corporation) (the “Warrant Purchase Offer”). Theholders had thirty days to exercise said warrants. For the nine months endedSeptember 30, 2001 the Company received $874 thousand through the exercise ofoptions and warrants.

 

On April 2, 2001, theCompany announced that it was temporarily suspending its check cashingoperations in order to minimize its check cashing risk, reduce operatinglosses, and to conserve capital.

**Part II****- OTHERINFORMATION**

 

**ITEM 1- LEGAL PROCEEDINGS**

 

On October 12, 2000, theCompany filed a Demand for Arbitration with the American ArbitrationAssociation against Seren Systems, Inc. The Complaint sought preliminary reliefin a dispute regarding the ownership of software technology paid for by theCompany, which Seren Systems, Inc. has refused to deliver and/or make availableto the Company. As a result, the Company has been unable to fulfill itsobligations with respect to certain purchase orders and/or contracts. withrespect to the above mentioned dispute. The November 26, 1998 Consulting Agreementby and between the Company and Seren Systems, Inc. stipulates that anycontroversy between the parties shall be settled by binding arbitration. Ahearing date originally scheduled for September 17, 2001 was postponed bymutual agreement of both Seren and the Company. The Company has been andpresently is, engaged in settlement discussions with Seren and no new hearingdate has been scheduled. In addition to the return of its property, the Companyseeks actual damages in the amount of approximately $1.5 million, including thereturn of payments made to Seren as a subcontractor for Greenland on theACS/7-Eleven V.com project; Seren Systems has counterclaimed for damages in theamount of $700,000.

On March 23, 2001 ArthurKazarian, Trustee for the General Wood Investment Trust (the “Landlord”) fileda Complaint in San Diego County naming Greenland Corporation as adefendant.  The Complaint allegesUnlawful Detainer.   On or about May 1,2001 the Company paid $45,000 to the Landlord and entered into a judgment topay an additional $15,000 of legal fees. The Company has entered into a settlement agreement to pay legal fees of$12,000. The Company has paid the settlement amount in full.

On May 23, 2001 the Companyfiled a Complaint in San Diego County naming Michael Armani as the defendant.The Complaint alleges breach of contract by Michael Armani in connection withtwo separate stock purchase agreements. The Company seeks damages in the amount of $474,595.  On August 7, 2001 the Company filed arequest for Entry of Default against Mr. Armani in the amount of $474,595 andthe court granted entry of default. Subsequently Mr. Armani filed a motion to set aside the entry of defaultand on October 26, 2001 the court granted said motion and the entry of defaultwas set aside.  The court granted Mr.Armani 10 days to file a responsive to the Company’s Compliant. The Company isnot yest in receipt of said filing.

On May 23, 2001 ArthurKazarian, Trustee for the General Wood Investment Trust (the “Landlord”) fileda Complaint in San Diego County naming Greenland Corporation as adefendant.  The Complaint alleges breachof contract pursuant to the terms of the lease agreement between the Companyand 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 ofapproximately $500,000.  Although theCompany 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 $212thousand during the quarter ended March 31, 2001.  The Company has retained outside counsel for representation inthis matter and settlement discussions are presently being conducted.

On July 5, 2001 Max Farrowfiled a Complaint in San Diego County naming Greenland Corporation, Thomas J.Beener,  Intelli-Group, Inc.,  Intelli-Group LLC and Intelli-Corp, Inc. asdefendants.  The Complaint allegesbreach of contract in connection with Mr. Farrow’s resignation as an officerand director of the Company in January 2001. The Company believes that the Company and Mr. Beener have valid defenseto the allegations of Mr. Farrow. Although there can be no assurances, theCompany believes that it will successfully defend this legal action and thatthe outcome will not have a material adverse impact on the Company.

The Company's officers anddirectors are aware of no other threatened or pending litigation, which wouldhave a material, adverse effect on the Company. From time to time the Companyis a defendant (actual or threatened) in certain lawsuits encountered in theordinary course of its business, the resolution of which, in the opinion ofmanagement, should not have a material adverse effect on the Company'sfinancial position results of operations, or cash flows.

**ITEM 2 - CHANGES IN SECURITIES**

 

The Company issued 6.3million shares in exchange for a note receivable in the amount of $250thousand.

The Company issued 27million shares held in escrow for deferred compensation.

The Company acquiredassets in the amount of $20 thousand by issuing 1.0 million shares.

The Company repaid notespayable to related parties of $108 thousand by issuing 1.8 million shares ofits common stock.

The Company paid forservices in the amount of $1.3 million by issuing 25 million shares of itscommon stock.

The Company issuedoptions and warrants to employees and directors to purchase 34 million shareswith a weighted average strike price of $.003 and recorded a $195 thousandcompensation expense.

The Company issued 5.4million warrants to an equity investor and recorded a $138 thousand otherexpense.

The Company issued 60shares of convertible preferred stock for 100,000 shares of Zzyzx Peripherals,Inc. in the amount of $600,000.

 

**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)           Reportson Form 8-K – None

 

**SIGNATURES**

 

 

In accordance with therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

 
|                          |   |                               |
|-------------------------------|--------|------------------------------------|
|                          |   |                               |
| Date:  November 14, 2001 |   | By: /s/ T.A. Hyde, Jr.             |
|                          |   | T.A. Hyde, Jr.                     |
|                          |   | CEO, Chairman of Board             |
|                          |   |                               |
|                          |   |                               |
|                          |   |                               |
| Date: November 14,  2001      |   | By: /s/ Gene Cross                 |
|                          |   | Gene Cross                         |
|                          |   | Chief Financial  Officer, Director |
|                          |   |                               |
|                          |   |                               |
|                          |   |                               |
| Date: November 14,  2001      |   | By: /s/ Thomas J.  Beener          |
|                          |   | Thomas J. Beener                   |
|                          |   | Secretary, Director                |
|                          |   |                               |