GreenMan Technologies Inc. Reports 'Transition Period' Financial Results: Revenue Rises 63 Percent; Company Realizes First-Ever Operating Profit

Business Wire, Jan 14, 1999

"I believe we have turned this company around, and I am very much looking forward to reporting our first-quarter fiscal 1999 results early next month." Robert H. Davis, President/CEO

LYNNFIELD, Mass.--(BUSINESS WIRE)--Jan. 14, 1999--GreenMan Technologies Inc. (NASDAQ:GMTI, GMTW) (BSE:GMY, GMYW) today reported financial results for the four-month "transition period" ended Sept. 30, 1998.

For the four months ended Sept. 30, 1998, GreenMan reported net sales of $5,034,809, compared with net sales of $3,081,945 for the same period in 1997. The increase of $1,952,864, or 63 percent, was primarily attributable to increased revenues from the Company's tire-recycling operations, which were acquired in June 1997 and realized more than 30 percent internal growth in tires processed during the four-month period in 1998 compared with the same period in 1997.

Operating expenses for the four months ended Sept. 30, 1998, were $1,544,913, or 31 percent of consolidated revenues, compared with $1,154,835, or 37 percent of consolidated revenues, for the comparable period in 1997. As a result of revenue growth and improved operating expense management, the Company experienced its first-ever operating profit of $96,842 for the four-month period ended Sept. 30, 1998, compared with an operating loss of $142,517 for the four-month period ended Sept. 30, 1997.

"We changed our year-end from May 31st to September 30th in order to better synchronize the timing of GreenMan's financial reporting with calendar quarters. We now look forward to reporting our first-quarter fiscal 1999 financial results -- for the period October through December 1998 -- early next month," said Robert H. Davis, president and chief executive officer of GreenMan.

"Regarding our results for the four months ended Sept. 30, 1998, we are extremely gratified by the performance of all GreenMan's tire-recycling operations, particularly the internal growth of more than 30 percent, and the backlog of business now in place," Davis added. "Our attention is now fixed on building the leading scrap tire-recycler in the industry, with a special focus on enhanced and sustainable profitability."

The Company reported a net loss of $2,326,086, or a net loss of $0.37 per share, for the four months ended September 30, 1998, compared with a net loss of $1,184,900, or a net loss of $0.67 per share, for the comparable period in 1997. The net loss in 1998 included $735,000 relating to the Company's write-off of its investment in two joint ventures and uncollectible equipment deposits, and a net $950,000 casualty loss associated with the August 21, 1998, fire at the Company's Louisiana crumb rubber facility. Under the terms of the Company's $3,000,000 property insurance policy, the Company anticipates initially receiving approximately $2,050,000. The remaining $950,000 may be paid if the Company can demonstrate, to the insurance company's satisfaction, that the Company's expenditure of $3,000,000 (replacement policy limit) on alternative equipment satisfies the replacement requirements of the insurance policy. The Company will recognize the remaining $950,000 of insurance proceeds when it has received approval from the insurance company and has reported the damaged property. Interest and financing costs for the four-month period ended Sept. 30, 1998, decreased by $392,892, to $651,316, due to decreased amortization of financing costs associated with the issuance of convertible debentures.

Chuck Coppa, GreenMan's chief financial officer, added, "The September 30, 1998, transition period results reflect our commitment to eliminate underperforming assets and to focus GreenMan on near-term profitable operations and acquisitions. Our efforts at September 30, 1998, have positioned GreenMan to enter fiscal 1999 focused on our future, and not on our past. We will aggressively pursue realization of the remaining $950,000 of insurance proceeds in fiscal 1999."

Already the second-largest U.S. scrap tire-recycler, GreenMan Technologies intends to become the leading company in this industry.

The Company's "Consolidated Statements of Loss" and "Consolidated Balance Sheet" follow.

"Safe Harbor" Statement Under the Private Security Litigation Reform Act

With the exception of the historical information contained in this 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 product acceptance, economic, competitive, governmental, results of litigation, 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 report on Form 10-KSB for the transition period ended September 30, 1998. The Company disclaims any intent or obligation to update these forward-looking statements. -0-

Consolidated Statements of Loss

                              Year Ended          Four Months Ended
                                May 31               September 30

                            1997       1998        1997       1998
                                                (unaudited)

Net sales               $2,084,220 $11,011,519  $3,081,945 $5,034,809

Cost of sales            1,439,249   7,494,762   2,069,627  3,393,054
Gross profit               644,971   3,516,757   1,012,318  1,641,756
Operating expenses:
  Research and
   development             319,726     675,252      97,176    150,132
  Selling, general and
   administrative        3,721,223   4,524,488   1,057,659  1,394,781
  Impairment loss        1,000,000          --          --         --
     Total operating
      expenses           5,040,949   5,199,740   1,154,835  1,544,913

Operating (loss) profit (4,395,978) (1,682,983)   (142,517)    96,842
Other income (expense):
  Interest and
   financing costs      (2,015,971) (2,886,366) (1,044,208)  (651,316)
  Other, net                (5,436)      5,317       1,825   (821,613)
  Casualty loss                 --          --          -- (1,450,000)
  Forgiveness of
   indebtedness                 --          --          --    500,000
    Other (expense),
     net                (2,021,407) (2,881,049) (1,042,383)(2,422,929)
Loss from continuing
 operations             (6,417,385) (4,564,032) (1,184,900)(2,326,086)
Discontinued operations:
  Loss from discontinued
   operations             (589,094)   (660,954)   (244,115)        --
  Loss on disposal of
   discontinued
   operations                   --  (1,100,000)         --         --
                          (589,094) (1,760,954)   (244,115)        --

Net loss              $(7,006,479)$(6,324,986)$(1,429,015)$(2,326,086)
Loss from continuing
 operations per share
 - basic                   $(5.72)     $(1.76)     $(0.67)     $(0.37)
Loss from discontinued
 operations per share
 - basic                    (0.52)      (0.26)      (0.14)         --
Loss on disposal of
 discontinued operations
 - basic                       --       (0.42)         --          --

Net loss per share
 - basic                   $(6.24)     $(2.44)     $(0.81)     $(0.37)

Weighted average
 shares outstanding     1,122,788   2,596,776   1,774,631   6,247,793


(a) All share and per share data presented have been adjusted to give
retroactive effect to a reverse split of the Company's Common Stock
pursuant to which each five shares of Common Stock then outstanding
were converted into one share. The reverse split became effective on
March 23, 1998.



Consolidated Balance Sheet Data

            Assets                      May 31, 1998    Sept. 30, 1998

Total Current Assets                     $ 2,376,724       $ 4,937,280
Property, Plant and Equipment (net)        9,874,079         9,126,573
Deferred Financing Costs                     441,465           306,304
Other Assets                               1,815,274         3,036,602
Total Assets                             $14,507,542       $17,406,759

   Liabilities and Stockholders' (Deficit) Equity

Total Current Liabilities                $ 4,524,639       $ 6,172,731
Convertible Notes payable                  1,359,567           839,740
Non-Current Portion of Notes Payable       3,062,283         3,546,207
Non-Current Portion of Capital Lease
 Obligations                               2,424,825         1,568,364
Stockholders' Equity                       3,136,228         5,279,717
Total Liabilities and Stockholders'
 Equity                                  $14,507,542       $17,406,759