Greenwave Technology Solutions, Inc. — 2023 Form 10-K
Business context and reporting period
Annual report for the fiscal year ended December 31, 2023, filed April 16, 2024. Greenwave operates metal recycling facilities and provides hauling services, primarily in Virginia and North Carolina; it also reports a Cleveland, Ohio facility. The company previously sold its social-media assets and now focuses on recycling and hauling.
Financial performance and liquidity
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | $35.67 million | $33.98 million |
| Gross profit / margin | $14.48 million / about 41% | $12.44 million / about 37% |
| Operating expenses | $34.00 million | $23.32 million |
| Operating loss | $19.51 million | $10.88 million |
| Net loss | $26.94 million | $35.04 million |
| Net loss attributable to common stockholders | $33.60 million; $2.57 per share | $63.86 million; $9.71 per share |
| Cash used in operating activities | $1.83 million | $2.61 million |
| Cash at year-end | $1.55 million | $0.82 million |
Hauling revenue increased to $10.16 million from $0.34 million, while metal revenue declined to $25.35 million from $33.39 million, which management attributed to lower commodity prices. Gross margin improved, but the operating loss widened, largely reflecting a $10.05 million loss on assets, higher depreciation and amortization, and expanded operating expenses. Other expense fell to $7.42 million from $24.16 million, including lower interest and debt-discount expense; the 2022 comparison also included derivative fair-value and warrant-related items.
At year-end, current assets were $2.69 million and current liabilities were $23.27 million, a working-capital deficit of $20.58 million. Total liabilities were $50.87 million against total assets of $46.41 million, leaving a $4.45 million stockholders’ deficit. The balance sheet included $17.22 million of related-party notes and $12.10 million carrying value of convertible notes; the convertible notes had $18 million principal outstanding. Interest expense and debt-discount amortization totaled $8.90 million. No income-tax provision was recorded.
Material changes and notable items
- Revenue rose 5.0%, but operating expenses grew 45.8%; the operating loss increased by $8.63 million.
- Property and equipment, net, rose to $23.50 million from $13.17 million, alongside expansion of the truck fleet and other equipment.
- A July 2023 purchase of shredders and processing equipment from an entity controlled by the CEO was financed with a $17.22 million, 7% related-party note due in 2043. The company recorded a $9.85 million loss on the asset transaction. The note is junior to senior secured debt and requires interest-only payments until that senior debt is paid.
- Common shares outstanding increased from 10.96 million at year-end 2022 to 16.96 million at year-end 2023. The filing also reports 40.8 million potentially dilutive securities excluded from loss-per-share calculations.
Outlook, risks, and contingencies
Management gave no quantified revenue, earnings, or cash-flow guidance. It expects to pursue growth, including a second automotive shredder at Carrollton, Virginia, described in the business section as expected to come online in the second quarter of 2024. Management said the business could generate positive operating cash flow, but warned that a sharp downturn in recycled-metal markets or delays to growth plans could require additional capital.
The auditor’s report highlights substantial doubt about the company’s ability to continue as a going concern. The filing cites recurring losses, $1.83 million of 2023 operating cash use, a $395.87 million accumulated deficit, and the working-capital deficit. Greenwave states it may need additional debt or equity financing and has no current arrangement to secure it. Senior secured debt terms include monthly principal payments and default provisions; the filing’s debt maturity disclosures warrant review.
Other material risks include customer concentration: two customers represented 58.08% and 5.61% of 2023 revenue. Payroll-tax liabilities, including penalties, were $4.09 million, and the company reported delinquent payroll-tax filings. Management concluded that disclosure controls and internal control over financial reporting were ineffective, citing inadequate segregation of duties and review procedures; remediation depends in part on financing or increased revenue. Environmental compliance, commodity-price volatility, supplier availability, lease dependence, and potential dilution are also identified risks.
Subsequent to year-end, Greenwave issued shares for debt conversions and warrant exercises. In March 2024, it issued 13.77 million shares for $2.81 million of warrant-exercise proceeds and granted 27.54 million inducement warrants. It also exchanged $10 million of the CEO-controlled DWM Properties note for Series D preferred stock convertible at $0.204 per share, subject to the senior secured debt being repaid first. These transactions may affect future dilution and debt structure.
Key facts investors should verify
- Reconcile the $18 million convertible-note principal, its reported 2024 and 2025 maturities, required monthly payments, and year-end carrying value.
- Review the related-party equipment purchase, the $9.85 million recorded loss, valuation support, and the terms and priority of the $17.22 million DWM note.
- Assess near-term liquidity, financing availability, senior secured debt obligations, and the effect of the 2024 conversions and warrant inducement on dilution.
- Evaluate dependence on the largest customer, metal prices, and the sustainability of hauling growth and reported gross margins.
- Confirm progress in remediating material weaknesses and the status of delinquent payroll-tax filings and related liabilities.
- Note that the filing reports net loss of $26.94 million but net loss available to common stockholders of $33.60 million, reflecting deemed dividends; distinguish these measures when comparing results.