Greenwave Technology facing financial questions

Chesapeake, Virginia-based Greenwave Technology Solutions Inc., which spent the first three years of this decade raising funds and buying and opening scrap metal recycling facilities, has informed the United States Securities and Exchange Commissions (SEC) and its investors there is “substantial doubt" about the company’s “ability to continue as a going concern for one year from the issuance of the unaudited condensed consolidated financial statements” summarizing the first half of this year."

As of June 30, the company had cash of $374,951 and a working capital deficit (current liabilities in excess of current assets) of $22,364,325. In an industry whose veterans routinely point to debt as an unwelcome condition, the accumulated Greenwave deficit as of June 30 was $368,559,752.

One ray of hope is the startup of a auto shredding and downstream system in Kelford, North Carolina, which the company says is on track to generate several hundred thousand dollars of additional high margin revenue per month.

In an early-August news release, Greenwave claims the new system is on track to generate in excess of $1,000,000 per month in revenue with 80 percent-plus margins by the end of the 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 says. "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.”

The deficit figures published by the company indicate it may choose to raise capital, with Greenwave adding it believes it can do so through nonequity based instruments such as nonconvertible notes, lines of credit and cash advances.

“If the company raises additional funds by issuing equity securities, its stockholders would experience dilution," the company 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.”

In this year’s second quarter, Greenwave indicates in its SEC filing it garnered revenue of about $9.4 million but suffered a net loss of more than $2.2 million. The company’s stock was trading at $1.03 per share as of Aug. 15.

Greenwave Technology board chair and CEO Danny Meeks has been in the waste hauling and recycling sector since he was 18 years old, having started and sold companies including Meeks Disposal Corp. and Select Recycling Waste Services Inc. In 2004, he founded Empire Services Inc. in the scrap sector, which was renamed Greenwave Technology Solutions as it went public.

Meeks formerly served as a Portsmouth, Virginia, city council member and unsuccessfully ran for mayor of that city in 2020.