Greenwave Technology Solutions(GWAV) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The financial statements for the period ended September 30, 2022, show total assets of $40.2 million, positive stockholders' equity of $22.5 million, and revenues of $28.0 million, despite a net loss of $27.9 million Condensed Consolidated Balance Sheets As of September 30, 2022, the balance sheet shows total assets of $40.2 million, total liabilities of $17.7 million, and a shift from a $23.3 million stockholders' deficit to $22.5 million positive equity due to liability elimination Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | Sep 30, 2022 ($) | Dec 31, 2021 ($) | | :--- | :--- | :--- | | Total Assets | 40,225,869 | 38,177,570 | | Cash | 1,568,104 | 2,958,293 | | Property and equipment, net | 7,809,702 | 2,905,037 | | Goodwill | 2,499,753 | 2,499,753 | | Total Liabilities | 17,733,172 | 61,525,632 | | Derivative liabilities | 0 | 44,024,242 | | Convertible notes payable, net | 0 | 6,459,469 | | Total stockholders' equity (deficit) | 22,492,697 | (23,348,062) | Condensed Consolidated Statements of Operations For the nine months ended September 30, 2022, revenues surged to $28.0 million, but the company reported a net loss of $27.9 million, with a net loss available to common stockholders of $56.7 million, driven by high operating expenses and interest Statement of Operations - Nine Months Ended Sep 30 (Unaudited) | Metric | 2022 ($) | 2021 (Restated) ($) | | :--- | :--- | :--- | | Revenues | 27,972,612 | 1,660 | | Gross Profit | 10,814,905 | 1,363 | | Loss From Operations | (4,455,612) | (1,196,292) | | Net Loss | (27,888,158) | 10,864,149 | | Net Loss Available to Common Stockholders | (56,704,196) | (23,934,774) | | Basic and Diluted Net Loss Per Share | (9.43) | (5.11) | Statement of Operations - Three Months Ended Sep 30 (Unaudited) | Metric | 2022 ($) | 2021 (Restated) ($) | | :--- | :--- | :--- | | Revenues | 7,347,223 | 54 | | Gross Profit | 2,484,889 | 54 | | Loss From Operations | (3,294,162) | (395,258) | | Net Loss | (8,577,535) | (523,741) | | Net Loss Available to Common Stockholders | (37,393,573) | (523,741) | | Basic and Diluted Net Loss Per Share | (4.30) | (0.11) | Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2022, net cash used in operations was $2.1 million, investing activities used $3.7 million, while financing provided $4.4 million, resulting in a $1.4 million cash decrease Cash Flow Summary - Nine Months Ended Sep 30 (Unaudited) | Cash Flow Activity | 2022 ($) | 2021 (Restated) ($) | | :--- | :--- | :--- | | Net cash used in operating activities | (2,067,257) | (390,269) | | Net cash used in investing activities | (3,684,307) | 0 | | Net cash provided by financing activities | 4,362,042 | 389,866 | | Net decrease in cash | (1,389,522) | (403) | | Cash, beginning of period | 2,958,293 | 1,485 | | Cash, end of period | 1,568,771 | 1,082 | Notes to Condensed Consolidated Financial Statements The notes detail the company's business shift to metal recycling, a going concern risk, significant balance sheet improvement from debt conversion, related-party transactions, and high revenue concentration - The company changed its name from MassRoots, Inc. and shifted its business from social media to metal recycling by acquiring Empire Services, Inc., which operates 11 facilities in Virginia and North Carolina, effective October 1, 2021[26] - As of September 30, 2022, the company had a working capital deficit of $10.6 million and an accumulated deficit of $356.6 million, raising substantial doubt about its ability to continue as a going concern, though management believes current cash and anticipated cash from operations are sufficient for the next year[30][33] - On July 22, 2022, senior secured convertible notes with a principal amount of $37.7 million, plus accrued interest, were converted into 6,896,901 shares of common stock, significantly improving the company's balance sheet[131] - For the nine months ended September 30, 2022, three customers accounted for approximately 55.91%, 15.25%, and 12.97% of total revenue, indicating a high concentration of revenue[182] - The company leases 12 scrap yard facilities from an entity controlled by its CEO, with rent paid to this entity totaling $1,854,814 for the nine months ended September 30, 2022[185][186] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's transition to scrap metal, operational priorities including capacity expansion, and financial results showing a revenue increase to $28.0 million but also a net loss, with a focus on future cash flow generation - The company is installing a second automotive shredder and a downstream system, which are expected to double processing capacity and increase profit margins[198] - A key corporate priority is to open a facility with rail or deep-water port access to efficiently transport products and expand the number of potential buyers[197] Results of Operations - Nine Months Ended Sep 30 | Metric | 2022 ($) | 2021 ($) | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | 27,972,612 | 1,660 | 27,970,952 | 1,684,997% | | Gross Profit | 10,814,905 | 1,363 | 10,813,542 | 793,363% | | Loss from Operations | (4,455,612) | (1,196,292) | (3,259,320) | 272% | | Net Loss Available to Common Stockholders | (56,704,196) | (23,934,728) | (32,769,422) | 137% | - The increase in operating expenses for the nine months ended Sep 30, 2022, was primarily due to the Empire acquisition, including a $4.7 million increase in payroll, $2.8 million in hauling/maintenance, and $2.6 million in rent[223] - Management believes the company could generate positive cash flows from operations and will not need to raise additional capital in the foreseeable future, but acknowledges this could change with market downturns or growth delays[233] Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company," the company is not required to provide quantitative and qualitative disclosures about market risk - The company is not required to provide quantitative and qualitative disclosures about market risks because it qualifies as a "smaller reporting company"[238] Controls and Procedures Management assessed and concluded that the company's internal controls over financial reporting were effective as of September 30, 2022, enhanced by additional accounting personnel - Management determined that the company's internal controls over financial reporting were effective as of September 30, 2022[242] - During the most recent fiscal quarter, the company hired additional accounting personnel to enhance segregation of duties and financial reporting review procedures[243] PART II. OTHER INFORMATION Legal Proceedings The company refers to Note 9 for details on legal proceedings, including an arbitration award resolution and a completed environmental remediation consent order - Information regarding legal proceedings is disclosed in Note 9 – Commitments and Contingencies, with no material developments since December 31, 2021, except as described therein[245] Risk Factors As a "smaller reporting company," the company is not required to provide risk factors in this report and refers to its Annual Report on Form 10-K - The company is not required to provide risk factors in this report as it is a "smaller reporting company"[246] Unregistered Sales of Equity Securities and Use of Proceeds During the nine months ended September 30, 2022, the company issued 475,000 common shares from the conversion of 117 Series Z Preferred Stock shares - The company issued 475,000 shares of common stock upon the conversion of 117 shares of Series Z Preferred Stock during the period[247] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[248] Other Information The company reported no other information for this item - None[250]