www.greenman.biz www.welchproducts.com www.nssi-usa.com www.playtribe.comIn September 2005, due to the magnitude of continued operating losses, our Board of Directors approved plans to divest the operations of our Georgia subsidiary and dispose of their respective assets. Accordingly, we have classified all remaining liabilities associated with our Georgia entity and their results of operations as discontinued operations for all periods presented in the accompanying consolidated financial statements. On October 1, 2007, we acquired Welch Products, Inc. in exchange for 8,000,000 newly issued shares of our commons stock. The results described below include the operations of Welch since October 1, 2007. Three Months ended December 31, 2007 Compared to the Three Months ended December 31, 2006 Net sales from continuing operations for the three months ended December 31, 2007 increased $1,001,000 or 20 percent to $5,888,000 as compared to the first quarter of last year's net sales from continuing operations of $4,887,000. The increase in primarily attributable to the inclusion of approximately $600,000 of revenue associated with Welch, our newly acquired subsidiary. The remaining increase was attributable to a 17 percent increase in overall product revenue associated with the tire recycling operations. We processed approximately 3.6 million passenger tire equivalents during the quarter ended December 31, 2007 which was consistent with the same period last year. Gross profit for the three months ended December 31, 2007 was $1,802,000 or 31 percent of net sales, compared to $1,483,000 or 30 percent of net sales for the three months ended December 31, 2006. The results for the three months ended December 31, 2007 included Welch which had a gross profit of $112,000 or 19 percent of its net sales. Selling, general and administrative expenses for the three months ended December 31, 2007 increased $305,000 to $1,273,000 or 22 percent of net sales, compared to $968,000 or 20 percent of net sales for the three months ended December 31, 2006. The increase was primarily attributable to the inclusion of $401,000 associated with Welch which was offset by reduced wages and performance based incentives and professional expenses. As a result of the foregoing, we had operating income from continuing operations of $529,000 during the three months ended December 31, 2007 as compared to operating income of $515,000 for the three months ended December 31, 2006. Interest and financing expense for the three months ended December 31, 2007 decreased $25,000 to $498,000, compared to $523,000 during the three months ended December 31, 2006. The decrease was primarily due to reduced interest rates and borrowings. We recorded a provision for state income tax expense of approximately $52,000 during the three months ended December 31, 2007. As a result of the foregoing, we had net income after income taxes from continuing operations for the three months ended December 31, 2007 of $18,000 or $.00 per basic share, compared to a net loss of $19,000 or $.00 per basic share for the three months ended December 31, 2006. Our net income for the three months ended December 31, 2007 was $18,000 or $.00 per basic share as compared to a net loss of $9,000 or $.00 per basic share for the three months ended December 31, 2006. "Safe Harbor" Statement: Under the Private Securities Litigation Reform Act With the exception of the historical information contained in this news release, the matters described herein contain "forward-looking" statements that involve risk and uncertainties that may individually or collectively impact the matters herein described, including but not limited to the possibility that we may not be able to secure the financing necessary to return to sustained profitability, our ability to successfully integrate the recent Welch Products acquisition and realize the anticipated benefits, the possibility that we may not realize the benefits of product acceptance, economic, competitive, governmental, seasonal, management, technological and/or other factors outside the control of the Company, which are detailed from time to time in the Company's SEC reports, including the Annual report on Form 10-KSB for the fiscal period ended September 30, 2007. The Company disclaims any intent or obligation to update these "forward-looking" statements.
Condensed Consolidated Statements of Operations
Three Months Ended
December 31,
2007 2006
----------- -----------
Net sales $ 5,888,000 $ 4,887,000
Cost of sales 4,086,000 3,404,000
----------- -----------
Gross profit 1,802,000 1,483,000
Selling, general and administrative 1,273,000 968,000
----------- -----------
Operating income (loss) from continuing
operations 529,000 515,000
----------- -----------
Other income (expense)
Interest and financing expense (498,000) (523,000)
Other (expenses) income, net 39,000 (11,000)
----------- -----------
(459,000) (534,000)
Income (loss) from continuing operations before
income taxes 70,000 (19,000)
Provision for income taxes 52,000 --
----------- -----------
Income (loss) from continuing operations 18,000 (19,000)
Discontinued operations
Gain (loss) from discontinued operations -- 10,000
----------- -----------
-- --
----------- -----------
Net income (loss) $ 18,000 $ (9,000)
=========== ===========
Income (loss) from continuing operations per
share - basic $ -- $ --
Income (loss) from discontinued operations per
share - basic -- --
----------- -----------
Net income (loss) per share - basic $ -- $ --
=========== ===========
Net income per share - diluted $ -- $ --
=========== ===========
Weighted average shares outstanding - basic 30,880,000 21,467,000
=========== ===========
Weighted average shares outstanding - diluted 35,788,000 21,467,000
=========== ===========
Condensed Consolidated Balance Sheet Data
December 31, September 30,
2007 2007
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Assets
Current assets $ 5,016,000 $ 3,760,000
Property, plant and equipment (net) 6,296,000 5,219,000
Goodwill 2,290,000 --
Other assets 1,621,000 312,000
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$ 15,223,000 $ 9,291,000
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Liabilities and Stockholders' (Deficit)
Current liabilities $ 7,409,000 $ 4,262,000
Notes payable, non-current 10,677,000 10,807,000
Capital lease obligations, non-current 1,391,000 1,273,000
Deferred gain on sale leaseback 261,000 270,000
Obligations due under lease settlement 580,000 580,000
Liabilities related to discontinued
operations 2,975,000 3,019,000
Stockholders' equity (8,070,000) (10,920,000)
------------- -------------
$ 15,223,000 $ 9,291,000
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Contact Information: Contacts: Chuck Coppa, CFO Lyle Jensen, CEO GreenMan Technologies 800-957-9575