“Substantial Doubt” Reported
Greenwave Technology Solutions Inc., a Virginia-based company active in scrap metal recycling, has recently informed investors and the United States Securities and Exchange Commissions (SEC) that they face “substantial doubt” as to whether the firm can remain a going concern for the next year.
This announcement followed three years of raising funds and purchasing or establishing facilities, culminating in an “unaudited condensed consolidated financial statement” which was submitted mid-year.
On June 30th, Greenwave’s finances displayed a cash balance of $374,951. However, its current liabilities exceeding its current assets caused a working capital deficit of $22,364,325, and an overall accumulated deficit of $368,559,752. According to industry veterans, this amount of debt is an “unwelcomed condition.”
A Bright Spot
However, there is still cause for optimism as its new auto shredding and downstream system has been launched in Kelford, North Carolina. According to the company, this initiative is anticipated to result in an extra several hundred thousand dollars of high margin revenue each month.
In an August statement with the press, Greenwave disclosed that the new system is estimated to generate over one million dollars each month and will reach an 80 percent margin or higher by the end of this year.
“The company believes it is generating positive cash flows from operating activities and may not need to raise any additional capital to continue operations,” Greenwave explained. “Further, the company closed a $15 million private placement on July 31, 2023, retiring all outstanding merchant cash advances and reducing the company’s equipment debt.”
Possible Capital Increase
The financial reports released by Greenwave show that a capital increase may be imminent. The firm asserts that this could be done through non-equity based financing options including nonconvertible notes, lines of credit and cash advances.
“If the company raises additional funds by issuing equity securities, its stockholders would experience dilution,” the firm adds. “Additional debt financing, if available, may involve covenants restricting its operations or its ability to incur additional debt. Any additional debt financing or additional equity that the company raises may contain terms that are not favorable to it or its stockholders and require significant debt service payments, which diverts resources from other activities. The Company’s ability to raise additional capital will be impacted by market conditions and the price of the Company’s common stock.”
Greenwave CEO’s Early Entry into the Industry
This past quarter, Greenwave reported to the SEC that its total income was close to $9.4 million, yet still experienced a net loss of more than $2.2 million. On August 15th of this year, the company’s stocks were trading at $1.03 per share.
Danny Meeks, Greenwave Technology’s board chair and CEO, has been an influential figure in the world of waste hauling and recycling since just 18 years old. After founding Meeks Disposal Corp. and Select Recycling Waste Services Inc., he established Empire Services Inc. which was later rebranded as Greenwave Technology Solutions upon its entry onto the stock exchange.
Meeks also held a seat on the Portsmouth, Virginia City Council. He then ran for mayor of Portsmouth in 2020, but did not win the election.
