UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
DEEP
GREEN WASTE & RECYCLING, INC.
(Exact
name of registrant as specified in its charter)
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Wyoming
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7349
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30-1035174
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(State
or other Jurisdiction of
incorporation
or organization)
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(Primary
Standard Industrial
Classification
Code Number)
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(I.R.S.
Employer
Identification
Number)
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13110
NE 177th Place, Suite 293, Woodinville, WA 98072
(833)
304-7336
(Address,
including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Registered
Agent Solutions, Inc.
125
S. King St.
P.O.
Box 2922
Jackson,
WY 83001
(800)
246-2677
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
Please
send copies of all communications to:
McMurdo
Law Group, LLC
Matthew
McMurdo, Esq.
1185
Avenue of the Americas, 3rd Floor
New
York, New York 10036
(917)
318-2865
As
soon as practicable after the effective date of this Registration Statement.
(Approximate
date of commencement of proposed sale to the public)
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933 check the following box: [X]
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933,
please check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration
statement for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box
and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same
offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box
and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same
offering. [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
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Large
accelerated filer
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[ ]
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Accelerated
filer
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[ ]
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Non-accelerated
filer
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[ ]
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Smaller
reporting company
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[X]
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
[ ]
EXPLANATORY
NOTE
Prior
to the effectiveness of this Form S-1, we, “The Company”, are not subject to the periodic reporting requirements of
the Exchange Act. We intend, with the filing of this Form S-1, and ultimate effectiveness of this Form S-1, to become SEC Reporting
in which case we will be subject to comply with the periodic reporting requirements of the Exchange Act for so long as we are
subject to those requirements.
Calculation
of Registration Fee
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Title
of Each Class of
Securities
To Be Registered
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Amount
to
be
Registered
(4)(5)(6)
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Proposed
Maximum
Offering
Price
Per
Share (1)
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Proposed
Maximum
Aggregate
Offering
Price
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Amount
of
Registration
Fee (2)
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Common
stock, par value $.001 per share
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27,206,637
shares
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$
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0.04
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$
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1,088,265
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$
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141.25
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(1)
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The
Offering price has been estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(c)
of the Securities Act and is based upon a $0.04 per share price on the OTC Market on March 13, 2020, the most
recent day that the Registrant’s shares traded on the OTC Markets.
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(2)
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Calculated
pursuant to Rule 457(a) based on an estimate of the proposed maximum aggregate offering price
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(3)
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Pursuant
to Rule 416 under the Securities Act, the securities being registered hereunder include such indeterminate number of additional
shares of common stock as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions.
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(4)
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This
Registration Statement covers the resale by our selling shareholders of up to 6,000,000
shares of common stock issuable upon conversion of a convertible note.
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(5)
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This
Registration Statement covers the resale by our selling shareholders of up to 20,403,706 shares of common stock previously
issued to such selling shareholders.
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(6)
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This
Registration Statement covers the resale by our selling shareholders of up to 802,931 shares of common stock issuable upon
the exercise of multiple warrants with exercise prices ranging from $0.04 to $0.20.
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The
registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it
is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
PRELIMINARY
PROSPECTUS - SUBJECT TO COMPLETION Dated March 18, 2020
DEEP
GREEN WASTE & RECYCLING, INC.
27,206,637
Shares
of
Common
Stock
This
prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the “SEC”).
This prospectus relates to the offering of up to 27,206,637 shares of our common stock, par value $0.0001 per share
(“Common Stock”) by selling shareholders. This registration statement covers the resale by our selling shareholders
of up to 20,403,706 shares of common stock previously issued to such selling shareholders, 802,931 shares of
common stock issuable upon the exercise of multiple warrants and 6,000,000 shares of common stock issuable
upon conversion of a convertible note. The information in this prospectus is not complete and may be changed. The selling shareholders
may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective.
This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where
the offer or sale is not permitted.
Our
Common Stock is subject to quotation on OTC Markets “PINK” under the symbol “DGWR.” On March 13, 2020,
the last reported sales price for our Common Stock was $0.04 per share. We urge prospective purchasers of our Common Stock
to obtain current information about the market prices of our Common Stock. The shares of our Common Stock may be offered and sold
by the Selling Shareholders at a fixed price of $0.04 per share until our Common Stock is quoted on the OTC Bulletin Board, OTCQX
or OTCQB, and thereafter at prevailing market prices or privately negotiated prices or in
transactions that are not in the public market. Notwithstanding our belief that upon the effective date of this registration statement
our Common Stock will qualify for quotation on the OTCQB and we intend to pursue application for admission to the OTCQB, we cannot
assure you that our Common Stock will, in fact, be quoted on the OTCQB tier. We will not receive proceeds from the sale
of shares from the selling shareholders.
There
are no underwriting commissions involved in this offering. We have agreed to pay all the costs and expenses of this offering.
Selling shareholders will pay no offering expenses. As of the date of this prospectus, our common stock is quoted under the symbol
“DGWR.” On March 13, 2020, the last reported sale price of our common stock on the OTC Markets “PINK”
was $0.04 per share.
This
offering is highly speculative and these securities involve a high degree of risk and should be considered only by persons who
can afford the loss of their entire investment. Additionally, our auditor has expressed substantial doubt as to our Company’s
ability to continue as a going concern. See “Risk Factors” beginning on page, infra.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is March 18, 2020.
Our
Common Stock is quoted on the OTC Markets Pink under the symbol “DGWR.”
Our
common stock involves a high degree of risk. You should read the “RISK FACTORS” section beginning on page 11 before
you decide to purchase any of our Common Stock.
The
Company has minimal revenues to date and there can be no assurance that the Company will be successful in furthering its operations
and/or revenues. Persons should not invest unless they can afford to lose their entire investment. Investing in our securities
involves a high degree of risk. You should purchase these securities only if you can afford a complete loss of your investment.
See “Risk Factors” beginning on page 11 of this prospectus.
Neither
the SEC nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy
of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is March 18, 2020.
TABLE
OF CONTENTS
You
should rely only on the information contained in this prospectus and any free writing prospectus prepared by us or on our behalf.
We have not authorized anyone to provide you with different or additional information. If anyone provides you with different or
additional information, you should not rely on it. The information in this prospectus is accurate only as of the date on the front
of this prospectus. Our business, financial condition, results of operations and prospects may have changed since the date of
this prospectus. This prospectus is not an offer or solicitation relating to the securities in any jurisdiction in which such
an offer or solicitation relating to the securities is not authorized. You should not consider this prospectus to be an offer
or solicitation relating to the securities if the person making the offer or solicitation is not qualified to do so, or if it
is unlawful for you to receive such an offer or solicitation.
PROSPECTUS
SUMMARY
This
summary highlights certain information appearing elsewhere in this prospectus. This summary is not complete and does not contain
all of the information you should consider prior to investing. After you read this summary, you should read and consider carefully
the more detailed information and financial statements and related notes that we include in this prospectus, especially the sections
entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations.” If you invest in our securities, you are assuming a high degree of risk.
Unless we have indicated otherwise or
the context otherwise requires, references in the prospectus to “Deep Green Waste,” “Deep Green’”
the “Company,” “we,” “us” and “our” or similar terms are to Deep Green Waste
& Recycling, Inc.
DESCRIPTION
OF BUSINESS
Overview
Deep
Green Waste & Recycling, Inc. (f/k/a Critic Clothing, Inc.) (“Deep Green”, the “Company”, “we”,
“us”, or “our”) was organized as a Nevada Corporation on August 24, 1995 under the name of Evader,
Inc. On May 25, 2012, the Company filed its Foreign Profit Corporation Articles of Domestication to change the domicile of
the Company from Nevada to Wyoming. On November 4, 2015, the Company filed an Amendment to its Articles of Incorporation to change
the name of the Company to Critical Clothing, Inc. and on August 28, 2017 an Amendment was filed to change the Company name to
Deep Green Waste & Recycling, Inc.
Deep
Green was a full-service waste & recycling company that managed services to and logistics for large commercial
properties throughout the continental U.S. The Company served retail malls and shopping centers, multi-family apartment
and townhome communities, hospitals, hotels, correctional institutions, office parks and more. Our unique value proposition was
in the design and execution of end-to-end waste management programs for our clients. Our programs not only saved
money on direct waste disposal, lower administrative costs and equipment costs, but they also provided income from
direct recycling rebates. We had a presence in over 30 states across all regions of the United States and served
approximately 300 commercial customers.
On
August 10, 2017, our majority shareholder and our board of directors approved an amendment to our Articles of Incorporation for
the purpose of approving a reverse split of one to one thousand in which each shareholder will be issued one common share in exchange
for every one thousand common shares of their currently issued common stock. Prior to approval of the reverse split, we had a
total of 99,997,102,862 issued and outstanding shares of common stock, par value $0.0001. On September 27, 2017, the effective
date of the reverse split, we had a total of 99,997,102 issued and 90,697,102 outstanding shares of common stock, par value $0.0001.
Please see NOTE G - CAPITAL STOCK for further information.
On
August 24, 2017, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations
(the “Agreement”) with St. James Capital Management, LLC. Under the terms of the Agreement, the Company transferred
and assigned all of the assets of the Company related to its extreme sports apparel design and manufacturing business in exchange
for the assumption of certain liabilities and cancellation of 3,000,000,000 shares of common stock of the Company.
On
August 24, 2017, the Company entered into a Merger Agreement (the “Merger Agreement”) with Deep Green Acquisition,
LLC, a Georgia limited liability company and wholly owned subsidiary of the Company (“Merger Sub”) and Deep Green
Waste and Recycling, LLC, a privately held Georgia limited liability company (“Deep Green Waste”). In connection with
the closing of this merger transaction, Merger Sub merged with and into Deep Green Waste (the “Merger”) on August
24, 2017, with the filing of Articles of Merger with the Georgia Secretary of State.
On
October 1, 2017, the Company acquired Compaction and Recycling Equipment, Inc. (“CARE”), a Portland, Oregon
based company that sells and services waste and recycling equipment. The Company purchased 100% of the common stock for $902,700,
of which $586,890 was paid in cash at closing and a promissory note was executed in the amount of $315,810. The note pays simple
interest at the rate of 7% per annum on the outstanding balance due, amortized over forty-eight months and payable in quarterly
installments, with the first payment being due on the first day of the first month following 90 days after closing.
On
October 1, 2017, the Company acquired Columbia Financial Services, Inc. (“CFSI”), a Portland, Oregon based
company that finances the purchases of waste and recycling equipment. Deep Green purchased 100% of the common stock for $597,300,
of which $418,110 was paid in cash at closing and a promissory note was executed in the amount of $179,190. The note pays simple
interest at the rate of 7% per annum on the outstanding balance due, amortized over forty-eight months and payable in quarterly
installments, with the first payment being due on the first day of the first month following 90 days after closing.
On August 7, 2018,
the Company entered into an Agreement of Conveyance, Transfer and Assignment of Subsidiaries and Assumption of Obligations with
Mirabile Corporate Holdings, Inc. (the “Agreement”). Under the terms of the Agreement, the Company transferred all
capital stock of its two wholly owned subsidiaries, Compaction and Recycling Equipment, Inc. and Columbia Financial Services,
Inc., to Mirabile Corporate Holdings, Inc. in exchange for the assumption and cancellation of certain liabilities. Please see
NOTE C – DISCONTINUED OPERATIONS for further information.
Going
forward, the company plans to re-launch its waste and recycling services business. The Company plans to:
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●
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Provide
sustainable waste management services that minimizes costs based on volume and content of waste streams, and methods of disposal,
including landfills, transfer stations and recycling centers; and
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Offer
innovative recycling services that significantly reduce the disposal of plastics, electronic wastes, food wastes, and hazardous
wastes; and
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Establish
partnerships with innovative universities and companies, and acquire profitable waste and recycling services companies, that
can help the Company achieve these objectives; and
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●
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Attract
investment funds who will actively work with the Company to achieve these goals and help the Company grow into a leading waste
and recycling services supplier in North America.
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Licenses:
None.
Patents/Trademarks:
We
currently hold no patents or trademarks.
Research
& Development
We
had no expenses in Research and Development costs during the years ended December 31, 2019 and 2018.
Compliance
Expenses
Our
company incurs annual expenses to comply with state corporate governance and business licensing requirements. We estimate these
costs to be under $2,000 per year for the establishment of foreign corporations in other states that we plan to operate.
Labor
and Other Supplies
We
currently have three part time employees. We contract all labor for public company governance services, website development, accounting,
legal and daily activities outside of management.
Principal
Products or Services and Markets
The
principal markets for the Company’s future and recycling services will comprise property management companies, construction
and demolition companies, restaurants and retail stores, industrial and manufacturing businesses, and healthcare.
Seasonality
The
waste and recycling industry experiences little seasonal variance, and the Company does not anticipate significant seasonality
in its business.
Leases
The
Company anticipates its most significant lease obligations will be classified as fixed assets that will be used in the normal
course of its business. Some lease obligations may include renewal or purchase options, escalation clauses, restrictions,
penalties or other obligations that we will consider in determining minimum lease payments. The leases will be classified as either
operating leases or capital leases, as appropriate.
Governmental
Regulation
Our
operations are subject to certain foreign, federal, state and local regulatory requirements relating to environmental, waste management,
and health and safety matters. We believe we operate in substantial compliance with all applicable requirements. However, material
costs and liabilities may arise from these requirements or from new, modified or more stringent requirements. Material cost may
rise due to additional manufacturing cost of raw or made parts with the application of new regulations. Our liabilities may also
increase due to additional regulations imposed by foreign, federal, state and local regulatory requirements relating to environmental,
waste management, and health and safety matters. In addition, our past, current and future operations and those of businesses
we acquire, may give rise to claims of exposure by employees or the public or to other claims or liabilities relating to environmental,
waste management or health and safety concerns.
Our
markets can be positively or negatively impacted by the effects of governmental and regulatory matters. We are affected not only
by energy policy, laws, regulations and incentives of governments in the markets into which we sell, but also by rules, regulations
and costs imposed by utilities. Utility companies or governmental entities could place barriers on the installation of our product
or the interconnection of the product with the electric grid. Further, utility companies may charge additional fees to customers
who install on-site power generation, thereby reducing the electricity they take from the utility, or for having the capacity
to use power from the grid for back-up or standby purposes. These types of restrictions, fees or charges could hamper the ability
to install or effectively use our products or increase the cost to our potential customers for using our systems in the future.
This could make our systems less desirable, thereby adversely affecting our revenue and profitability potential. In addition,
utility rate reductions can make our products less competitive which would have a material adverse effect on our future operations.
These costs, incentives and rules are not always the same as those faced by technologies with which we compete. Additionally,
reduced emissions and higher fuel efficiency could help our future customers combat the effects of global warming. Accordingly,
we may benefit from increased government regulations that impose tighter emission and fuel efficiency standards.
Environmental
Regulation
Upon
the completion of a waste and recycling service business, the Company will become subject to federal, state or provincial and
local environmental, health, safety and transportation laws and regulations. These laws and regulations are administered by the
EPA, Environment Canada, and various other federal, state, provincial and local environmental, zoning, transportation, land use,
health and safety agencies in the U.S. and Canada. Many of these agencies will examine our subsidiary operations to monitor compliance
with these laws and regulations and have the power to enforce compliance, obtain injunctions or impose civil or criminal penalties
in case of violations. Because the primary mission of our business is to collect, manage and recycle waste in an environmentally
sound manner, a significant portion of our capital expenditures will be related, either directly or indirectly, to supporting
the Company’s subsidiary operations as they relate to compliance with federal, state, provincial and local rules.
Competition
We
expect to encounter intense competition with large national waste management companies, counties and municipalities that maintain
their own waste collection and disposal operations and regional and local companies of varying sizes and financial resources.
The industry also includes companies that specialize in certain discrete areas of waste management, operators of alternative disposal
facilities, companies that seek to use parts of the waste stream as feedstock for renewable energy and other by-products, and
waste brokers that rely upon haulers in local markets to address customer needs. In recent years, the industry has seen some consolidation,
though the industry remains intensely competitive. Operating costs, disposal costs and collection fees vary widely throughout
the areas in which we operate. The prices that we charge are determined locally, and typically vary by volume and weight, type
of waste collected, treatment requirements, risk of handling or disposal, frequency of collections, distance to final disposal
sites, the availability of airspace within the geographic region, labor costs and amount and type of equipment furnished to the
customer.
Competitors
include: Waste Management (WM), Rubicon Global, Republic Services, Stericycle, Waste Connections, Casella Waste Systems, Bioenergy
DevCo, PegEx, Recycle Track Systems and Liquid Environmental Solutions.
Employees
As
of the date of this Report, we have one full-time employee that serves in the roles of President/Chief Executive Officer/Corporate
Secretary, and two part time employees that serve in the roles of Chief Operating Officer and Interim Chief Financial Officer.
We plan to expand our management team within the next 12 months
to include certain officers for any acquisitions and any new subsidiaries or operational activities management deems necessary.
We consider our relations with our employees and consultants to be in good standing. Please see DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS, AND CONTROL PERSONS for additional information.
Report
to Shareholders
The
public may read and copy these reports, statements, or other information we file at the SEC’s public reference room at 100
F Street, NE., Washington, DC 20549 on official business days during the hours of 10 a.m. to 3 p.m. State that the public may
obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains
an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically
with the Commission at (http://www.sec.gov).
Going
Concern
The
Company had minimal revenues and has incurred losses of $7,043,784 for the period August 24, 1995 (inception) through
the twelve months ended December 31, 2019 and negative working capital of $4,021,949 at December 31, 2019. These factors
raise substantial doubt about the Company’s ability to continue as a going concern.
There
can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that
funds will be available from external sources such as debt or equity financings or other potential sources. The lack of additional
capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force
the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business.
Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that
they will not have a significant dilutive effect on the Company’s existing stockholders.
The
Company intends to overcome the circumstances that impact its ability to remain a going concern through a combination of the commencement
of revenues, with interim cash flow deficiencies being addressed through additional equity and debt financing. The Company anticipates
raising additional funds through public or private financing, strategic relationships or other arrangements in the near future
to support its business operations; however, the Company may not have commitments from third parties for a sufficient amount of
additional capital. The Company cannot be certain that any such financing will be available on acceptable terms, or at all, and
its failure to raise capital when needed could limit its ability to continue its operations. The Company’s ability to obtain
additional funding will determine its ability to continue as a going concern. Failure to secure additional financing in a timely
manner and on favorable terms would have a material adverse effect on the Company’s financial performance, results of operations
and stock price and require it to curtail or cease operations, sell off its assets, seek protection from its creditors through
bankruptcy proceedings, or otherwise. Furthermore, additional equity financing may be dilutive to the holders of the Company’s
common stock, and debt financing, if available, may involve restrictive covenants, and strategic relationships, if necessary,
to raise additional funds, and may require that the Company relinquish valuable rights. Please see NOTE J - GOING
CONCERN UNCERTAINITY for further information.
Company
Information
We
are a Wyoming for-profit corporation. Our corporate address is 13110 NE 177th Place, Suite 293, Woodinville, WA 98072,
our telephone number is (833) 304-7336 and our website address is www.deepgreenwaste.com. The information on our website is not
a part of this prospectus. The Company’s stock is quoted under the symbol “DGWR” on the OTC Markets “PINK.”
The Company’s transfer agent is Transfer Online whose address is 512 SE Salmon St., Portland, OR 97214 and phone number
is (503) 227-2950.
Smaller
Reporting Company
We
also qualify as a “smaller reporting company” under Rule 12b-2 of the Exchange Act, which is defined as a company
with a public equity float of less than $75 million. To the extent that we remain a smaller reporting company at such time as
we are no longer an emerging growth company, we will still have reduced disclosure requirements for our public filings some of
which are similar to those of an emerging growth company, including having to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act and the reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements.
THE
OFFERING
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Securities
offered
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Up
to 27,206,637 shares of our Common Stock
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Offering
Amount
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$1,088,265
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Terms
of the Offering
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The
Selling Shareholders will determine when and how they will sell the Common Stock offered in this Prospectus. The
shares of our Common Stock may be offered and sold by Selling Shareholders at a fixed price of $0.04 per share until our Common
Stock is quoted on the OTCQB tier of the OTC Markets, and thereafter at prevailing market prices or privately negotiated prices
or in transactions that are not in the public market. Notwithstanding our belief that upon the effective date of this registration
statement our Common Stock will satisfy the admission requirements for the OTCQB and our intention to make application for
quotation on the OTCQB Market, we cannot assure you that our Common Stock will be quoted on the OTCQB tier.
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Common
Stock Issued and Outstanding Before This Offering
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105,891,540
(1)
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Common
Stock Issued and Outstanding After This Offering
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112,694,471
(2)(3)(4)(5)(6)
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Risk
Factors
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See
“Risk Factors” beginning on page 11 and the other information set forth in this prospectus for a discussion
of factors you should consider before deciding to invest in our securities.
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Market
for Common Stock
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Our
Common Stock is subject to quotation on the OTC Pink Market under the symbol “DGWR.”
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Dividends
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We
have not declared or paid any cash dividends on our common stock since our inception, and we do not anticipate paying any
such dividends for the foreseeable future.
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(1)
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The
number of shares of our common stock outstanding before this Offering is 105,891,540 as of March 13, 2020.
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(2)
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On
March 12, 2020, the Company issued to Armada Investment Fund, LLC (“ARMADA”) a Convertible Promissory Note (the “Note”)
in the amount of Twenty-Three Thousand and NO/100 Dollars ($23,000). On March 6, 2020, ARMADA entered into an Assignment Agreement
(the “Agreement”) with Sylios Corp (“Assignor”). Under the terms of the Agreement, the Assignor sells,
assigns, conveys and transfers its interest into the Securities Purchase Agreement, Convertible Promissory Note (principal amount
of $23,000), Stock Purchase Warrant Agreement (262,500 shares of common stock) and Registration Rights Agreement entered into
by the Assignor and Company all dated January 13, 2020. This Registration Statement covers the resale by ARMADA of up to 6,000,000
shares of common stock issuable upon conversion of the Note.
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(3)
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In
addition, ARMADA was issued a warrant to purchase 262,500 shares of the Company’s
common stock. The shares to be issued under the warrant are included in the offering
and are included in the calculation of beneficial ownership. In the event that ARMADA
were to fully exercise their warrant, the total number of shares outstanding would increase
to 112,694,471. Please see NOTE G - CAPITAL STOCK for further information.
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(4)
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We
will receive proceeds from the issuance of 262,500 shares of our common stock underlying
the warrant issued to ARMADA pursuant to the Securities Purchase Agreement dated January
13, 2020 and the Assignment Agreement dated March 12, 2020. The warrants have an exercise
price of $0.04 and are exercisable for a period of five years.
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(5)
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This
Registration Statement covers the resale by our selling shareholders of up to 20,403,706
shares of common stock previously issued to such selling shareholders.
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|
|
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(6)
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This
Registration Statement covers the resale of 540,431 shares of our common stock underlying
the warrants previously issued to multiple warrant holders, not inclusive of ARMADA.
The warrants have exercise prices ranging from $0.20 to $0.175. The shares to be issued
under the warrants are included in the offering and are included in the calculation of
beneficial ownership. We will receive proceeds from the issuance of the 540,431 shares
underlying the warrants. In the event that the multiple warrant holders were to fully
exercise their warrants, the total number of shares outstanding would increase to 112,694,471.
Please see SELLING SHAREHOLDERS for further information.
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SUMMARY
FINANCIAL DATA
The
following summary of our financial data should be read in conjunction with, and is qualified in its entirety by reference to,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated
financial statements, appearing elsewhere in this prospectus.
Statements
of Operations Data
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|
|
For
the
year-ended
December
31, 2019
|
|
|
For
the
year-ended
December 31, 2018
|
|
|
Revenue
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|
$
|
-
|
|
|
$
|
6,375,693
|
|
|
Loss
from operations
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|
$
|
(41,403
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)
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|
$
|
(1,302,084
|
)
|
|
Net
income (loss)
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|
$
|
(92,376
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)
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|
$
|
(2,549,458
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)
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Balance
Sheet Data
|
|
|
As
of
December
31, 2019
|
|
|
As
of
December
31, 2018
|
|
|
Cash
|
|
$
|
735
|
|
|
$
|
1,694
|
|
|
Total
assets
|
|
$
|
29,199
|
|
|
$
|
52,501
|
|
|
Total
liabilities
|
|
$
|
4,149,109
|
|
|
$
|
4,080,035
|
|
|
Total
stockholders’ (deficiency)
|
|
$
|
(4,119,910
|
)
|
|
$
|
(4,027,534
|
)
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RISK
FACTORS
You
should carefully consider the risks described below and other information in this prospectus, including the financial statements
and related notes that appear at the end of this prospectus, before deciding to invest in our securities. These risks should be
considered in conjunction with any other information included herein, including in conjunction with forward-looking statements
made herein. If any of the following risks actually occur, they could materially adversely affect our business, financial condition,
operating results or prospects. Additional risks and uncertainties that we do not presently know or that we currently deem immaterial
may also impair our business, financial condition, operating results and prospects.
Risks
Relating to Our Financial Condition
Our
independent registered accounting firm has expressed concerns about our ability to continue as a going concern.
The
report of our independent registered accounting firm expresses concern about our ability to continue as a going concern based
on the absence of significant revenues, our significant losses from operations and our need for additional financing to fund all
of our operations. It is not possible at this time for us to predict with assurance the potential success of our business. The
revenue and income potential of our proposed business and operations are unknown. If we cannot continue as a viable entity, we
may be unable to continue our operations and you may lose some or all of your investment in our common stock.
We
have limited operational history in an emerging industry, making it difficult to accurately predict and forecast business operation.
As
we have approximately ten years of corporate operational history and have yet to generate substantial revenue, it is extremely
difficult to make accurate predictions and forecasts on our finances. This is compounded by the fact that we operate in both the
technology, retail and cannabis industries, which are three rapidly transforming industries. There is no guarantee that our products
or services will remain attractive to potential and current users as these industries undergo rapid change or that potential customers
will utilize our services.
As
a growing company, we have yet to achieve a profit and may not achieve a profit in the near future, if at all.
We
have not yet produced a net profit and may not in the near future, if at all. While we expect our revenue to grow, we have not
achieved profitability and cannot be certain that we will be able to sustain our current growth rate or realize sufficient revenue
to achieve profitability. Our ability to continue as a going concern may be dependent upon raising capital from financing transactions,
increasing revenue throughout the year and keeping operating expenses below our revenue levels in order to achieve positive cash
flows, none of which can be assured.
We
may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at
all.
We
intend to continue to make investments to support our business growth and may require additional funds to respond to business
challenges, including the need to develop new features and products or enhance our existing products, improve our operating infrastructure
or acquire complementary businesses and technologies. Accordingly, we may need to engage in continued equity or debt financings
to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our
existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences
and privileges superior to those of our common stock. Any debt financing we secure in the future could involve restrictive covenants
relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us
to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain
additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms
satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges
could be impaired, and our business may be harmed.
We
expect our quarterly financial results to fluctuate.
We
expect our revenue and operating results to vary significantly from quarter to quarter due to a number of factors, including changes
in:
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General
economic conditions, both domestically and in foreign markets;
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The
performance of the two spin-offs of which we hold an equity investment;
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Production
from the oil and natural gas wells in which we maintain ownership;
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Our
ability to identify future acquisition targets;
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●
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Our
ability to raise capital to implement our business plan; and
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●
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General
acceptance and growth of the cannabis and blockchain technology industries.
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As
a result of the variability of these and other factors, our operating results in future quarters may be below the expectations
of our stockholders.
General
Business Risks
Conflicts
of interest may arise from other business activities of our directors and officers.
We
are highly dependent on the services of key executives, the loss of whom could materially harm our business and our strategic
direction. If we lose key management or significant personnel, cannot recruit qualified employees, directors, officers, or other
personnel or experience increases in our compensation costs, our business may materially suffer.
We
are highly dependent on our management team, specifically Lloyd Spencer, the Company’s President and Chief Executive Officer.
If we lose key employees, our business may suffer. Furthermore, our future success will also depend in part on the continued service
of our management personnel and our ability to identify, hire, and retain additional key personnel. We do not carry “key-man”
life insurance on the lives of any of our executives, employees or advisors. We experience intense competition for qualified personnel
and may be unable to attract and retain the personnel necessary for the development of our business. Because of this competition,
our compensation costs may increase significantly.
We
will need to raise additional capital to continue operations over the coming year.
We
anticipate the need to raise approximately $500,000 in capital to fund our operations through December 31, 2020. We expect to
use these cash proceeds, primarily for future acquisitions, expansion of our business plan and to remain in full legal and accounting
compliance with the SEC. We cannot guarantee that we will be able to raise these required funds or generate sufficient revenue
to remain operational.
We
may be unable to manage growth, which may impact our potential profitability.
Successful
implementation of our business strategy requires us to manage our growth. Growth could place an increasing strain on our management
and financial resources. To manage growth effectively, we will need to:
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●
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Establish
definitive business strategies, goals and objectives;
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●
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Maintain
a system of management controls; and
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●
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Attract
and retain qualified personnel, as well as, develop, train and manage management-level and other employees.
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If
we fail to manage our growth effectively, our business, financial condition or operating results could be materially harmed, and
our stock price may decline.
Our
lack of adequate D&O insurance may also make it difficult for us to retain and attract talented and skilled directors and
officers.
We
may in the future be subject to additional litigation, including potential class action and stockholder derivative actions. Risks
associated with legal liability are difficult to assess and quantify, and their existence and magnitude can remain unknown for
significant periods of time. To date, we have not obtained directors and officers liability (“D&O”) insurance.
While neither Florida law nor our Articles of Incorporation or bylaws require us to indemnify or advance expenses to our officers
and directors involved in such a legal action, we have entered into an indemnification agreement with our President and intend
to enter into similar agreements with other officers and directors in the future. Without adequate D&O insurance, the amounts
we would pay to indemnify our officers and directors should they be subject to legal action based on their service to the Company
could have a material adverse effect on our financial condition, results of operations and liquidity. Furthermore, our lack of
adequate D&O insurance may make it difficult for us to retain and attract talented and skilled directors and officers, which
could adversely affect our business.
If
we are unable to maintain effective internal control over our financial reporting, the reputational effects could materially adversely
affect our business.
Under
the provisions of Section 404(a) of the Sarbanes-Oxley Act of 2002, as amended by the Dodd Frank Wall Street Reform and Consumer
Protection Act of 2010, the SEC adopted rules requiring public companies to perform an evaluation of Internal Control over Financial
Reporting (Internal Controls) and to report on our evaluation in our Annual Report on Form 10-K. Our Internal Controls constitute
a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements in accordance with GAAP. In the event we discover material weakness in our internal controls and our remediation of
such reported material weakness is ineffective, or if in the future we are unable to maintain effective Internal Controls, additional
resulting material restatements could occur, regulatory actions could be taken, and a resulting loss of investor confidence in
the reliability of our financial statements could occur.
The
Company’s bank accounts will not be fully insured
The
Company’s regular bank accounts and the escrow account for this Offering each have federal insurance that is limited to
a certain amount of coverage. It is anticipated that the account balances in each account may exceed those limits at times. In
the event that any of Company’s banks should fail, the Company may not be able to recover all amounts deposited in these
bank accounts.
The
Company’s business plan is speculative
The
Company’s present business and planned business are speculative and subject to numerous risks and uncertainties. There is
no assurance that the Company will generate significant revenues or profits.
The
Company will likely incur debt
The
Company has incurred high level of debt and expects to incur future debt in order to fund operations. Complying with obligations
under such indebtedness may have a material adverse effect on the Company and on your investment. There is high risk of default,
if the Company is not able to raise additional capital and there is no assurance that the Company will be able to do so.
The
Company’s expenses could increase without a corresponding increase in revenues
The
Company’s operating and other expenses could increase without a corresponding increase in revenues, which could have a material
adverse effect on the Company’s consolidated financial results and on your investment. Factors which could increase operating
and other expenses include, but are not limited to (1) increases in the rate of inflation, (2) increases in taxes and other statutory
charges, (3) changes in laws, regulations or government policies which increase the costs of compliance with such laws, regulations
or policies, (4) significant increases in insurance premiums, and (5) increases in borrowing costs.
The
Company will be reliant on key suppliers
The
Company intends to enter into agreements with key suppliers and will be reliant on positive and continuing relationships with
such suppliers. Termination of those agreements, variations in their terms or the failure of a key supplier to comply with its
obligations under these agreements (including if a key supplier were to become insolvent) could have a material adverse effect
on the Company’s consolidated financial results and on your investment.
Increased
costs could affect the company
An
increase in the cost of raw materials or energy could affect the Company’s profitability. Commodity and other price changes
may result in unexpected increases in the cost of raw materials, glass bottles and other packaging materials used by the Company.
The Company may also be adversely affected by shortages of raw materials or packaging materials. In addition, energy cost increases
could result in higher transportation, freight and other operating costs. The Company may not be able to increase its prices to
offset these increased costs without suffering reduced volume, sales and operating profit, and this could have an adverse effect
on your investment.
Inability
to maintain and enhance product image
It
is important that the Company maintains and enhances the image of its existing and new products. The image and reputation of the
Company’s products and services may be impacted for various reasons including litigation, complaints from regulatory bodies
resulting from quality failure, illness or other health concerns. Such concerns, even when unsubstantiated, could be harmful to
the Company’s image and the reputation of its products. From time to time, the Company may receive complaints from customers
regarding products purchased from the Company. The Company may in the future receive correspondence from customers requesting
reimbursement. Certain dissatisfied customers may threaten legal action against the Company if no reimbursement is made. The Company
may become subject to product liability lawsuits from customers alleging injury because of a purported defect in products or sold
by the Company, claiming substantial damages and demanding payments from the Company. The Company is in the chain of title when
it manufactures, supplies or distributes products, and therefore is subject to the risk of being held legally responsible for
them. These claims may not be covered by the Company’s insurance policies. Any resulting litigation could be costly for
the Company, divert management attention, and could result in increased costs of doing business, or otherwise have a material
adverse effect on the Company’s business, results of operations, and financial condition. Any negative publicity generated
as a result of customer complaints about the Company’s products could damage the Company’s reputation and diminish
the value of the Company’s brand, which could have a material adverse effect on the Company’s business, results of
operations, and financial condition, as well as your investment. Deterioration in the Company’s brand equity (brand image,
reputation and product quality) may have a material adverse effect on its consolidated financial results as well as your investment.
If
we are unable to protect effectively our intellectual property, we may not be able to operate our business, which would impair
our ability to compete
Our
success will depend on our ability to obtain and maintain meaningful intellectual property protection for any such intellectual
property. The names and/or logos of Company brands (whether owned by the Company or licensed to us) may be challenged by holders
of trademarks who file opposition notices, or otherwise contest trademark applications by the Company for its brands. Similarly,
domains owned and used by the Company may be challenged by others who contest the ability of the Company to use the domain name
or URL. Such challenges could have a material adverse effect on the Company’s consolidated financial results as well as
your investment.
Computer,
website or information system breakdown could affect the Company’s business
Computer,
website and/or information system breakdowns as well as cyber security attacks could impair the Company’s ability to service
its customers leading to reduced revenue from sales and/or reputational damage, which could have a material adverse effect on
the Company’s consolidated financial results as well as your investment.
Changes
in the economy could have a detrimental impact on the Company
Changes
in the general economic climate could have a detrimental impact on consumer expenditure and therefore on the Company’s revenue.
It is possible that recessionary pressures and other economic factors (such as declining incomes, future potential rising interest
rates, higher unemployment and tax increases) may adversely affect customers’ confidence and willingness to spend. Any of
such events or occurrences could have a material adverse effect on the Company’s consolidated financial results and on your
investment.
The
amount of capital the company is attempting to raise in this offering is not enough to sustain the Company’s current business
plan
In
order to achieve the Company’s near and long-term goals, the Company will need to procure funds in addition to the amount
raised in the Offering. There is no guarantee the Company will be able to raise such funds on acceptable terms or at all. If we
are not able to raise sufficient capital in the future, we will not be able to execute our business plan, our continued operations
will be in jeopardy and we may be forced to cease operations and sell or otherwise transfer all or substantially all of our remaining
assets, which could cause you to lose all or a portion of your investment.
Additional
financing may be necessary for the implementation of our growth strategy
The
Company may require additional debt and/or equity financing to pursue our growth and business strategies. These include but are
not limited to enhancing our operating infrastructure and otherwise responding to competitive pressures. Given our limited
operating history and existing losses, there can be no assurance that additional financing will be available, or, if available,
that the terms will be acceptable to us.
The
Company’s business model is evolving
The
Company’s business model is unproven and is likely to continue to evolve. Accordingly, the Company’s initial business
model may not be successful and may need to be changed. The Company’s ability to generate significant revenues will depend,
in large part, on the Company’s ability to successfully market the Company’s products to potential users who may not
be convinced of the need for the Company’s products and services or who may be reluctant to rely upon third parties to develop
and provide these products. The Company intends to continue to develop the Company’s business model as the Company’s
market continues to evolve.
The
Company needs to increase brand awareness
Due
to a variety of factors, the Company’s opportunity to achieve and maintain a significant market share may be limited. Developing
and maintaining awareness of the Company’s brand name, among other factors, is critical. Further, the importance of brand
recognition will increase as competition in the Company’s market increases. Successfully promoting and positioning the Company’s
brand, products and services will depend largely on the effectiveness of the Company’s marketing efforts. Therefore, the
Company may need to increase the Company’s financial commitment to creating and maintaining brand awareness. If the Company
fails to successfully promote the Company’s brand name or if the Company incurs significant expenses promoting and maintaining
the Company’s brand name, it would have a material adverse effect on the Company’s consolidated results of operations.
The
Company faces competition in the Company’s markets from a number of large and small companies, some of which have greater
financial, research and development, production and other resources than does the company
In
many cases, the Company’s competitors have longer operating histories, established ties to the market and consumers, greater
brand awareness, and greater financial, technical and marketing resources. The Company’s ability to compete depends, in
part, upon a number of factors outside the Company’s control, including the ability of the Company’s competitors to
develop alternatives that are superior. If the Company fails to successfully compete in its markets, or if the Company incurs
significant expenses in order to compete, it would have a material adverse effect on the Company’s consolidated results
of operations.
A
data security breach could expose the Company to liability and protracted and costly litigation, and could adversely affect the
Company’s reputation and operating revenues
To
the extent that the Company’s activities involve the storage and transmission of confidential information, the Company and/or
third-party processors will receive, transmit and store confidential customer and other information. Encryption software and the
other technologies used to provide security for storage, processing and transmission of confidential customer and other information
may not be effective to protect against data security breaches by third parties. The risk of unauthorized circumvention of such
security measures has been heightened by advances in computer capabilities and the increasing sophistication of hackers. Improper
access to the Company’s or these third parties’ systems or databases could result in the theft, publication, deletion
or modification of confidential customer and other information. A data security breach of the systems on which sensitive account
information is stored could lead to fraudulent activity involving the Company’s products and services, reputational damage,
and claims or regulatory actions against us. If the Company issued in connection with any data security breach, the Company could
be involved in protracted and costly litigation. If unsuccessful in defending that litigation, the Company might be forced to
pay damages and/or change the Company’s business practices or pricing structure, any of which could have a material adverse
effect on the Company’s operating revenues and profitability. The Company would also likely have to pay fines, penalties
and/or other assessments imposed as a result of any data security breach.
The
Company depends on third-party providers for a reliable internet infrastructure and the failure of these third parties, or the
internet in general, for any reason would significantly impair the Company’s ability to conduct its business
The
Company will outsource some or all of its online presence and data management to third parties who host the actual servers and
provide power and security in multiple data centers in each geographic location. These third-party facilities require uninterrupted
access to the Internet. If the operation of the servers is interrupted for any reason, including natural disaster, financial insolvency
of a third-party provider, or malicious electronic intrusion into the data center, its business would be significantly damaged.
As has occurred with many Internet-based businesses, the Company may be subject to ‘denial-of-service’ attacks in
which unknown individuals bombard its computer servers with requests for data, thereby degrading the servers’ performance.
The Company cannot be certain it will be successful in quickly identifying and neutralizing these attacks. If either a third-party
facility failed, or the Company’s ability to access the Internet was interfered with because of the failure of Internet
equipment in general or if the Company becomes subject to malicious attacks of computer intruders, its business and operating
results will be materially adversely affected.
We
expect to incur substantial expenses to meet our reporting obligations as a public company. In addition, failure to maintain adequate
financial and management processes and controls could lead to errors in our financial reporting and could harm our ability to
manage our expenses.
We
estimate that it will cost approximately $50,000 annually to maintain the proper management and financial controls for our filings
required as a public reporting company. In addition, if we do not maintain adequate financial and management personnel, processes
and controls, we may not be able to accurately report our financial performance on a timely basis, which could cause a decline
in our stock price and adversely affect our ability to raise capital.
We
have a limited operating history and if we are not successful in continuing to grow our business, then we may have to scale back
or even cease ongoing business operations.
We
are in the “developmental” stage of business and have yet to commence any substantive commercial operations. We have
limited history of revenues from operations. We have yet to generate positive earnings and there can be no assurance that we will
ever operate profitably. We have a limited operating history and must be considered in the developmental stage. Success is significantly
dependent on a successful drilling, completion and production program. Operations will be subject to all the risks inherent in
the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history.
We may be unable to locate recoverable reserves or operate on a profitable basis. We are in the developmental stage and potential
investors should be aware of the difficulties normally encountered by enterprises in this stage. If the business plan is not successful,
and we are not able to operate profitably, investors may lose some or all of their investment in the Company.
Risk
to Our Common Stock and Offering
If
we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board which would limit the
ability of broker-dealers to sell our securities in the secondary market.
Companies
trading on the Over the Counter Bulletin Board must be reporting issuers under Section 12 of the Securities Exchange Act of 1934,
as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC
Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability
of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market. In
addition, we may be unable to get relisted on the OTC Bulletin Board, which may have an adverse material effect on the Company.
We
do not expect to pay dividends in the future; any return on investment may be limited to the value of our common stock.
We
do not currently anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common stock will
depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors
may consider relevant. Our current intention is to apply net earnings, if any, in the foreseeable future to increasing our capital
base and development and marketing efforts. There can be no assurance that the Company will ever have sufficient earnings to declare
and pay dividends to the holders of our common stock, and in any event, a decision to declare and pay dividends is at the sole
discretion of our board of directors. If we do not pay dividends, our common stock may be less valuable because a return on your
investment will only occur if its stock price appreciates.
Authorization
of preferred stock.
Our
Certificate of Incorporation authorizes the issuance of up to 2,000,000 shares of preferred stock with designations, rights and
preferences determined from time to time by its Board of Directors. Accordingly, our Board of Directors is empowered, without
stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely
affect the voting power or other rights of the holders of the common stock. In the event of issuance, the preferred stock could
be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company.
As of December 31, 2019, we have authorized and issued 2,000,000 and 0 shares, respectively, of Preferred stock. Please see
NOTE G - CAPITAL STOCK for further information.
The
Company arbitrarily determined the offering price and terms of the Shares offered through this Prospectus.
The
price of the Shares has been arbitrarily determined and bears no relationship to the assets or book value of the Company, or other
customary investment criteria. No independent counsel or appraiser has been retained to value the Shares, and no assurance can
be made that the offering price is in fact reflective of the underlying value of the Shares offered hereunder. Each prospective
investor is therefore urged to consult with his or her own legal counsel and tax advisors as to the offering price and terms of
the Shares offered hereunder.
The
Shares are an illiquid investment and transferability of the Shares is subject to significant restriction.
There
are substantial restrictions on the transfer of the Shares. Therefore, the purchase of the Shares must be considered a long-term
investment acceptable only for prospective investors who are willing and can afford to accept and bear the substantial risk of
the investment for an indefinite period of time. There is not a public market for the resale of the Shares. A prospective investor,
therefore, may not be able to liquidate its investment, even in the event of an emergency, and Shares may not be acceptable as
collateral for a loan.
The
market price for our common stock may be particularly volatile given our status as a relatively unknown company, with a limited
operating history and lack of profits which could lead to wide fluctuations in our share price. You may be unable to sell your
common stock at or above your purchase price, which may result in substantial losses to you.
Our
stock price may be particularly volatile when compared to the shares of larger, more established companies that trade on a national
securities exchange and have large public floats. The volatility in our share price will be attributable to a number of factors.
First, our common stock will be compared to the shares of such larger, more established companies, sporadically and thinly traded.
As a consequence of this limited liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately
influence the price of those shares in either direction. The price for our shares could decline precipitously in the event that
a large number of shares of our common stock are sold on the market without commensurate demand. Second, we are a speculative
or “risky” investment due to our limited operating history and lack of profits to date, and uncertainty of future
market acceptance for our potential products. As a consequence of this enhanced risk, more risk-adverse investors may, under the
fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their
shares on the market more quickly and at greater discounts than would be the case with the stock of a larger, more established
company that trades on a national securities exchange and has a large public float. Many of these factors are beyond our control
and may decrease the market price of our common stock, regardless of our operating performance. We cannot make any predictions
or projections as to what the prevailing market price for our common stock will be at any time. Moreover, the OTC Bulletin Board
is not a liquid market in contrast to the major stock exchanges. We cannot assure you as to the liquidity or the future market
prices of our common stock if a market does develop. If an active market for our common stock does not develop, the fair market
value of our common stock could be materially adversely affected.
Existing
stockholders will experience significant dilution from our sale of shares under potential Securities Purchase Agreements.
The
sale of shares pursuant to any Securities Purchase Agreements executed by the Company in the future will have a dilutive impact
on our stockholders. As a result, the market price of our common stock could decline significantly, as we sell shares pursuant
to the Securities Purchase Agreement. In addition, for any particular advance, we will need to issue a greater number of shares
of common stock under the Securities Purchase Agreement as our stock price declines. If our stock price is lower, then our existing
stockholders would experience greater dilution.
The
Company May Issue Shares of Preferred Stock with Greater Rights than Common Stock.
The
Company’s charter authorizes the Board of Directors to issue one or more series of preferred stock and set the terms of
the preferred stock without seeking any further approval from holders of the Company’s common stock. Any preferred stock
that is issued may rank ahead of the Company’s common stock in terms of dividends, priority and liquidation premiums and
may have greater voting rights than the Company’s common stock.
Being
a Public Company Significantly Increases the Company’s Administrative Costs.
The
Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and listing requirements subsequently adopted
by the NYSE Amex in response to Sarbanes-Oxley, have required changes in corporate governance practices, internal control policies
and audit committee practices of public companies. Although the Company is a relatively small public company, these rules, regulations,
and requirements for the most part apply to the same extent as they apply to all major publicly traded companies. As a result,
they have significantly increased the Company’s legal, financial, compliance and administrative costs, and have made certain
other activities more time consuming and costly, as well as requiring substantial time and attention of our senior management.
The Company expects its continued compliance with these and future rules and regulations to continue to require significant resources.
These rules and regulations also may make it more difficult and more expensive for the Company to obtain director and officer
liability insurance in the future and could make it more difficult for it to attract and retain qualified members for the Company’s
Board of Directors, particularly to serve on its audit committee.
Our
shares are subject to the U.S. “Penny Stock” Rules and investors who purchase our shares may have difficulty re-selling
their shares as the liquidity of the market for our shares may be adversely affected by the impact of the “Penny Stock”
Rules.
Our
stock is subject to U.S. “Penny Stock” rules, which may make the stock more difficult to trade on the open market.
Our common shares are not currently traded on the OTC Bulletin Board, but it is the Company’s plan that the common shares
be quoted on the OTC Bulletin Board. A “penny stock” is generally defined by regulations of the U.S. Securities and
Exchange Commission (“SEC”) as an equity security with a market price of less than US$5.00 per share. However, an
equity security with a market price under US $5.00 will not be considered a penny stock if it fits within any of the following
exceptions:
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(i)
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the
equity security is listed on NASDAQ or a national securities exchange;
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(ii)
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the
issuer of the equity security has been in continuous operation for less than three years, and either has (a) net tangible
assets of at least US $5,000,000, or (b) average annual revenue of at least US $6,000,000; or
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(iii)
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the
issuer of the equity security has been in continuous operation for more than three years and has net tangible assets of at
least US $2,000,000.
|
Our
common stock does not currently fit into any of the above exceptions.
If
an investor buys or sells a penny stock, SEC regulations require that the investor receive, prior to the transaction, a disclosure
explaining the penny stock market and associated risks. Furthermore, trading in our common stock will be subject to Rule 15g-9
of the Exchange Act, which relates to non-NASDAQ and non-exchange listed securities. Under this rule, broker/dealers who recommend
our securities to persons other than established customers and accredited investors must make a special written suitability determination
for the purchaser and receive the purchaser’s written agreement to a transaction prior to sale. Securities are exempt from
this rule if their market price is at least $5.00 per share. Since our common stock is currently deemed penny stock regulations,
it may tend to reduce market liquidity of our common stock, because they limit the broker/dealers’ ability to trade, and
a purchaser’s ability to sell, the stock in the secondary market.
The
low price of our common stock has a negative effect on the amount and percentage of transaction costs paid by individual shareholders.
The low price of our common stock also limits our ability to raise additional capital by issuing additional shares. There are
several reasons for these effects. First, the internal policies of certain institutional investors prohibit the purchase of low-priced
stocks. Second, many brokerage houses do not permit low-priced stocks to be used as collateral for margin accounts or to be purchased
on margin. Third, some brokerage house policies and practices tend to discourage individual brokers from dealing in low-priced
stocks. Finally, broker’s commissions on low-priced stocks usually represent a higher percentage of the stock price than
commissions on higher priced stocks. As a result, the Company’s shareholders may pay transaction costs that are a higher
percentage of their total share value than if our share price were substantially higher.
Because
we can issue additional shares of common stock, purchasers of our common stock may incur immediate dilution and experience further
dilution.
We
are authorized to issue up to 250,000,000 shares of common stock, of which 105,051,540 shares of common stock are issued
and outstanding as of December 31, 2019. Our Board of Directors has the authority to cause us to issue additional shares of common
stock and to determine the rights, preferences and privileges of such shares, without consent of any of our stockholders. Consequently,
the stockholders may experience more dilution in their ownership of our stock in the future.
A
reverse stock split may decrease the liquidity of the shares of our common stock.
The
liquidity of the shares of our common stock may be affected adversely by a reverse stock split given the reduced number of shares
that will be outstanding following a reverse stock split, especially if the market price of our common stock does not increase
as a result of the reverse stock split.
Following
a reverse stock split, the resulting market price of our common stock may not attract new investors, including institutional investors,
and may not satisfy the investing requirements of those investors. Consequently, the trading liquidity of our common stock may
not improve.
Although
we believe that a higher market price of our common stock may help generate greater or broader investor interest, we cannot assure
you that a reverse stock split will result in a share price that will attract new investors.
You
may be diluted by conversions of the Company’s Series B Preferred Stock, convertible notes and exercises of outstanding
options and warrants.
As
of the date of this filing, we had (i) outstanding options/warrants to purchase an aggregate of 6,552,931 shares
of our common stock with exercise prices ranging from $0.04 to $0.20 per share, (ii) an outstanding third-party
note with principal amount of $23,000, which is convertible for up to 6,000,000 shares of our common stock, and
(iii) twenty five thousand shares of our Series B Convertible Preferred Stock convertible into an undetermined number of shares
of our common stock. Please see NOTE G - CAPITAL STOCK for further information.
The
exercise of such options and warrants, conversion of the third-party notes and conversion of our Series B Convertible Preferred
Stock will result in further dilution of your investment. In addition, you may experience additional dilution if we issue common
stock in the future. As a result of this dilution, you may receive significantly less in net tangible book value than the full
purchase price you paid for the shares in the event of liquidation.
Issuances
of shares of common stock or securities convertible into or exercisable for shares of common stock following this offering, as
well as the exercise of options and warrants outstanding, will dilute your ownership interests and may adversely affect the future
market price of our common stock.
The
issuance of additional shares of our common stock or securities convertible into or exchangeable for our common stock could be
dilutive to stockholders if they do not invest in future offerings. We may seek additional capital through a combination of private
and public offerings in the future.
The
Company’s shares of common stock are quoted on the OTC Pink Sheet market, which limits the liquidity and price of the Company’s
common stock.
The
Company’s shares of Common Stock are traded on the OTC Pink Sheet market under the symbol “DGWR.” Quotation
of the Company’s securities on the OTC Pink Sheet market limits the liquidity and price of the Company’s Common Stock
more than if the Company’s shares of Common Stock were listed on The Nasdaq Stock Market or a national exchange. There is
currently no active trading market in the Company’s Common Stock. There can be no assurance that there will be an active
trading market for the Company’s Common Stock following a business combination. In the event that an active trading market
commences, there can be no assurance as to the market price of the Company’s shares of Common Stock, whether any trading
market will provide liquidity to investors, or whether any trading market will be sustained. Furthermore, because our shares of
Common Stock are traded on the OTC Pink Sheet market, the shares of our Common Stock may only be offered and sold by Selling
Shareholders at a fixed price of $0.044 per share until our Common Stock is quoted on the OTCQB tier of the OTC Markets, and thereafter
at prevailing market prices or privately negotiated prices or in transactions that are not in the public market. We cannot assure
you that our Common Stock will be quoted on the OTCQB tier notwithstanding our belief that we will satisfy the eligibility standards
for admission to, and our intention to make application for quotation on the OTCQB.
FINRA
sales practice requirements may limit a stockholder’s ability to buy and sell our stock.
The
Financial Industry Regulatory Authority, Inc. (“FINRA”) has adopted rules requiring that, in recommending an investment
to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior
to recommending speculative or low-priced securities to their non-institutional customers, broker-dealers must make reasonable
efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information.
Under interpretations of these rules, FINRA has indicated its belief that there is a high probability that speculative or low-priced
securities will not be suitable for at least some customers. If these FINRA requirements are applicable to us or our securities,
they may make it more difficult for broker-dealers to recommend that at least some of their customers buy our common stock, which
may limit the ability of our stockholders to buy and sell our common stock and could have an adverse effect on the market for
and price of our common stock.
We
are classified as a “smaller reporting company” and we cannot be certain if the reduced disclosure requirements applicable
to smaller reporting companies will make our common stock less attractive to investors.
We
are a “smaller reporting company.” Specifically, “smaller reporting companies” are able to provide simplified
executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act
requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control
over financial reporting; and have certain other decreased disclosure obligations in their SEC filings.
Because
directors and officers currently and for the foreseeable future will continue to control Green Deep Waste, it is not likely
that you will be able to elect directors or have any say in the policies of the Company
Our
shareholders are not entitled to cumulative voting rights. Consequently, the election of directors and all other matters requiring
shareholder approval will be decided by majority vote. The directors, officers and affiliates of Deep Green Waste beneficially
own approximately 30% of our outstanding common stock either through direct ownership or through another class of capital stock
that may be convertible into shares of our common stock. Due to such significant ownership position held by our insiders, new
investors may not be able to effect a change in our business or management, and therefore, shareholders would have no recourse
as a result of decisions made by management. Our Interim Chief Financial Officer and Director owns all (25,000)
issued and outstanding shares of the Company’s Series B Preferred Stock, which has voting rights equal to 20,000
votes for each shares of Series B held. As of the date of this filing, our Interim Chief Financial Officer would
have voting rights equal to 562,906,600 shares (500,000,000 voting shares through the Series B Preferred
Stock and 62,906,800 shares of common stock held) or 93.07% of the shares available to vote for a matter brought
before shareholders.
Since
we intend to retain any earnings for development of our business for the foreseeable future, you will likely not receive any dividends
for the foreseeable future.
We
have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future
earnings to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common
stock in the foreseeable future.
NOTE
ABOUT FORWARD-LOOKING STATEMENTS
Statements
under “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” “Description of Business” and elsewhere in this prospectus may be “forward-looking
statements.” Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs,
expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions.
These statements include, among other things, statements regarding:
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the
growth of our business and revenues and our expectations about the factors that influence our success;
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●
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our
plans to continue to invest in systems, facilities, and infrastructure, increase our hiring and grow our business;
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●
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our
plans for the build out, expansion and funding of
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our
ability to identify and acquire working interests and royalties in
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our
ability to identify and acquire
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our
ability to identify acquisitions, joint ventures and other business combinations;
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●
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our
ability to attain funding for the development of
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●
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our
ability to attain funding and the sufficiency of our sources of funding;
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our
expectation that our cost of revenues, development expenses, sales and marketing expenses, and general and administrative
expenses will increase;
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fluctuations
in our capital expenditures; and
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our
plans for potential business partners and any acquisition plans;
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as
well as other statements regarding our future operations, financial condition and prospects, and business strategies. These statements
are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management.
These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult
to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted
in the forward-looking statements due to numerous factors, including those described above and those risks discussed from time
to time in this registration statement, of which this prospectus is a part, including the risks described under “Risk Factors.”
Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update
any forward-looking statement to reflect events or circumstances that occur in the future.
If
one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual
results may vary materially from what we may have projected. Any forward-looking statements you read in this prospectus reflect
our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating
to our operations, results of operations, financial condition, growth strategy and liquidity. You should specifically consider
the factors identified in this prospectus that could cause actual results to differ before making an investment decision. In addition,
as discussed in “Risk Factors,” our shares may be considered a “penny stock” and, as a result, the safe
harbors provided for forward-looking statements made by a public company that files reports under the federal securities laws
may not be available to us.
TAX
CONSIDERATIONS
We
are not providing any tax advice as to the acquisition, holding or disposition of the securities offered herein. In making an
investment decision, investors are strongly encouraged to consult their own tax advisor to determine the U.S. Federal, state and
any applicable foreign tax consequences relating to their investment in our securities.
USE
OF PROCEEDS
This
prospectus relates to shares of our common stock that may be offered and sold from time to time by the selling stockholders. We
will not receive any proceeds from the sale of shares of common stock in this offering, except from the issuance of 262,500 shares
of our common stock underlying the warrant issued to Armada Investment Fund, LLC, 37,868 shares of our common stock underlying
the warrants issued to Virginia Haubert, 395,459 shares of our common stock underlying the warrants issued to David Smith and
the David Smith Trust, 25,000 shares of our common stock underlying the warrant issued to Torey Gault, 14,473 shares of our common
stock underlying the warrant issued to Jonja Maner, 44,473 shares of our common stock underlying the warrant issued to Mary Williams,
11,579 shares of our common stock underlying the warrant issued to Josh Beckham and 11,579 shares of our common stock underlying
the warrant issued to Chris Montag.
DETERMINATION
OF OFFERING PRICE
The
pricing of the Shares has been arbitrarily determined and established by the Company. No independent accountant or appraiser has
been retained to protect the interest of the investors. No assurance can be made that the offering price is in fact reflective
of the underlying value of the Shares. Each prospective investor is urged to consult with his or her counsel and/or accountant
as to offering price and the terms and conditions of the Shares. Factors to be considered in determining the price include the
amount of capital expected to be required, the market for securities of entities in a new business venture, projected rates of
return expected by prospective investors of speculative investments, the Company’s prospects for success and prices of similar
entities.
DILUTION
Not
applicable. We are not offering any shares in this registration statement. All shares are being registered on behalf of our selling
shareholders.
SELLING
SHAREHOLDERS
This
prospectus covers the resale from time to time by the selling shareholders and future shareholders identified in the table below
of up to 27,206,637 shares of our common stock, which were issued in various transactions exempt from registration under
the Securities Act, as follows:
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20,403,706
of the shares registered hereby for resale are common stock previously issued to such selling shareholders.
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6,000,000
of the shares registered hereby are issuable upon conversion
of the Convertible Note, which we sold to Armada Investment Fund, LLC on March 12, 2020. Please see NOTE
L – SUBSEQUENT EVENTS for additional information.; and
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●
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262,500
of the shares registered hereby are issuable upon the exercise of the warrant issued
to Armada Investment Fund, LLC on March 12, 2020. Please see NOTE L – SUBSEQUENT EVENTS
for additional information.; and
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37,868
of the shares registered hereby are issuable upon the exercise of the warrants issued to Virginia Haubert on November 30,
2017; and
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395,459
of the shares registered hereby are issuable upon the exercise of the warrants issued to David Smith and the David Smith Trust
on November 30, 2017; and
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25,000
of the shares registered hereby are issuable upon the exercise of the warrant issued to Torey Gault on October 30, 2017
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14,473
of the shares registered hereby are issuable upon the exercise of the warrant issued to Jonja Maner on July 27, 2017
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14,473
of the shares registered hereby are issuable upon the exercise of the warrant issued to Mary Williams on November 30, 2017
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30,000
of the shares registered hereby are issuable upon the exercise of the warrant issued to Mary Williams on February 19, 2018
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11,579
of the shares registered hereby are issuable upon the exercise of the warrant issued to Josh Beckham on November 30, 2017
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11,579
of the shares registered hereby are issuable upon the exercise of the warrant issued to Chris Montag on November 30, 2017
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The
selling shareholders named below are selling the securities. The table assumes that all of the securities will be sold in this
offering. However, any or all of the securities listed below may be retained by any of the selling shareholders, and therefore,
no accurate forecast can be made as to the number of securities that will be held by the selling shareholders upon termination
of this offering. The shares of our Common Stock may be offered and sold by the Selling Shareholders at a fixed price of $0.04
per share until our Common Stock is quoted on the OTC Bulletin Board, OTCQX or OTCQB, and thereafter at prevailing market prices
or privately negotiated prices or in transactions that are not in the public market. Notwithstanding our belief that upon the
effective date of this registration statement our Common Stock will qualify for quotation on the OTCQB and we intend to pursue
application for admission to the OTCQB, we cannot assure you that our Common Stock will, in fact, be quoted on the OTCQB tier.
We will not receive proceeds from the sale of shares from the selling shareholders, but we will however receive proceeds from
the issuance of 262,500 shares of our common stock underlying the warrants. We believe that the selling shareholders
listed in the table have sole voting and investment powers with respect to the securities indicated. Each selling shareholder
who is also an affiliate of a broker dealer as noted below has represented that: (1) the selling shareholder purchased in the
ordinary course of business; and (2) at the time of purchase of the securities being registered for resale, the selling shareholder
had no agreements or understandings, directly or indirectly, with any person to distribute the securities.
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Stockholder
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Beneficial
Ownership Before Offering
(ii)
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Percentage
of
Common Stock
Owned
Before
Offering
(ii)
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Shares
of Common Stock Included
in Prospectus
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Beneficial
Ownership After the Offering
(iii)
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Percentage
of
Common Stock
Owned
After the Offering
(iii)
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Armada
Investment Fund, LLC (iv)
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6,262,500
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5.29
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%
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6,262,500
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0
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0.00
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%
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Lloyd
Spencer (v)
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840,000
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*
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%
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840,000
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0
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0.00
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%
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Billy
R. Edmonds (vi)
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62,906,800
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53.11
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%
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4,500,000
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58,406,800
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49.31
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%
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David
A. Bradford (vii)
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12,005,400
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10.14
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%
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4,500,000
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7,505,400
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6.34
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%
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Virginia
Haubert (viii)
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3,417,897
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2.89
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%
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3,417,897
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0
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0.00
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%
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David
Smith (ix)
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7,351,393
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6.21
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%
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3,500,000
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|
|
|
3,851,393
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3.25
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%
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Kathryn
Wilburn (x)
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2,124,150
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1.79
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%
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2,124,150
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|
|
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0
|
|
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0.00
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%
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|
William
T. Lawson (xi)
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1,272,450
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|
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1.07
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%
|
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|
1,272,450
|
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0
|
|
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|
0.00
|
%
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Torey
Gault (xii)
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|
186,500
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|
|
|
*
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%
|
|
|
186,500
|
|
|
|
0
|
|
|
|
0.00
|
%
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|
Jonja
Maner (xiii)
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|
159,205
|
|
|
|
*
|
%
|
|
|
159,205
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|
|
|
0
|
|
|
|
0.00
|
%
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|
Mary
Williams (xiv)
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|
189,205
|
|
|
|
*
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%
|
|
|
189,205
|
|
|
|
0
|
|
|
|
0.00
|
%
|
|
Josh
Beckham (xv)
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|
|
127,365
|
|
|
|
*
|
%
|
|
|
127,365
|
|
|
|
0
|
|
|
|
0.00
|
%
|
|
Chris
Montag (xvi)
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|
|
127,365
|
|
|
|
*
|
%
|
|
|
127,365
|
|
|
|
0
|
|
|
|
0.00
|
%
|
|
TOTAL
|
|
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96,970,230
|
|
|
|
81.87
|
%
|
|
|
27,206,637
|
|
|
|
69,763,593
|
|
|
|
58.90
|
%
|
*
Less than 1%
(i)
These columns represent the aggregate maximum number and percentage of shares that the selling stockholders can own at one time
(and therefore, offer for resale at any one time).
(ii)
The number and percentage of shares beneficially owned is determined in accordance with Rule 13d-3 of the Securities Exchange
Act of 1934, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rule,
beneficial ownership includes any shares as to which the selling stockholders has sole or shared voting power or investment power
and also any shares, which the selling stockholders has the right to acquire within 60 days. The percentage of shares owned by
each selling stockholder is based on 118,444,471 shares that is comprised of 105,891,540 shares of common stock
issued and outstanding, plus 6,000,000 shares to be issued upon the conversion of the convertible note issued to Armada Investment Fund, LLC
and 6,552,931 shares of common stock issuable upon the exercise of all outstanding warrants as of March 13, 2020.
(iii)
Assumes that all securities registered will be sold.
(iv) On March
12, 2020, the Company issued to Armada Investment Fund, LLC (“ARMADA”) a Convertible Promissory Note (the
“Note”) in the amount of Twenty-Three Thousand and NO/100 Dollars ($23,000). On March 6, 2020, ARMADA entered
into an Assignment Agreement (the “Agreement”) with Sylios Corp (“Assignor”). Under the terms of the
Agreement, the Assignor sells, assigns, conveys and transfers its interest into the Securities Purchase Agreement,
Convertible Promissory Note (principal amount of $23,000), Stock Purchase Warrant Agreement (262,500 shares of common stock)
and Registration Rights Agreement entered into by the Assignor and Company all dated January 13, 2020. This Registration
Statement covers the resale by ARMADA of up to 6,000,000 shares of common stock issuable upon conversion of the Note and
262,500 shares issuable as per the warrant. The address for ARMADA is 7703 Springfield Lake Dr., Lake Worth, FL 33467 and its
principal is Gabriel Berkowitz. Please see NOTE L – SUBSEQUENT EVENTS for additional information.
(v)
Includes 840,000 shares of common stock issued to Mr. Spencer as per the terms of the Employment Agreement entered into between
the Company and Mr. Spencer dated December 4, 2019. Mr. Spencer’s address is 13110 NE 177th Place, Suite 293,
Woodinville, WA 98072.
(vi)
Includes 62,906,800 shares of common stock issued to Mr. Edmonds in exchange for membership units held by Mr. Edmonds, issued
by Deep Green Waste & Recycling, LLC, in the Merger Agreement by and between Deep Green Waste & Recycling, LLC, Critic
Clothing, Inc. and Deep Green Acquisition, LLC dated August 24, 2017. The address for Mr. Edmonds is 13110 NE 177th
Place, Suite 293, Woodinville, WA 98072.
(vii)
Includes 12,005,400 shares of common stock issued to Mr. Bradford in exchange for membership units held by Mr. Bradford, issued
by Deep Green Waste & Recycling, LLC, in the Merger Agreement by and between Deep Green Waste & Recycling, LLC, Critic
Clothing, Inc. and Deep Green Acquisition, LLC dated August 24, 2017. The address for Mr. Bradford is 13110 NE 177th
Place, Suite 293, Woodinville, WA 98072.
(viii)
Includes 3,001,350 shares of common stock issued to Ms. Haubert in exchange for membership units held by Ms. Haubert, issued by
Deep Green Waste & Recycling, LLC, in the Merger Agreement by and between Deep Green Waste & Recycling, LLC, Critic Clothing,
Inc. and Deep Green Acquisition, LLC dated August 24, 2017, 378,679 shares of common stock issued as per the terms of the Debt
Conversion Agreement dated November 30, 2017 and 37,868 shares of common stock issuable upon exercise of the warrants issued to
Ms. Haubert on November 30, 2017. The address for Ms. Haubert is 107 Blind Way, Miffilitown, PA 17059.
(ix)
Includes 3,001,350 shares of common stock issued to Mr. Smith in exchange for membership units held by Mr. Smith, issued by Deep
Green Waste & Recycling, LLC, in the Merger Agreement by and between Deep Green Waste & Recycling, LLC, Critic Clothing,
Inc. and Deep Green Acquisition, LLC dated August 24, 2017, 2,436,067 shares of common stock issued as per the terms of the Debt
Conversion Agreement dated November 30, 2017, 1,518,517 shares of common stock held in the name of the David Smith Trust issued
as per the terms of the Debt Conversion Agreement dated November 30, 2017, 151,852 shares of common stock issuable upon exercise
of the warrant issued to Mr. Smith on November 30, 2017 and 243,607 shares of common stock issuable upon exercise of the warrant
issued to the Smith Trust on November 30, 2017. Of the shares controlled by Mr. Smith, 3,104,541 shares of previously issued common
stock and 395,459 shares of common stock issuable upon exercise of the warrants issued to David Smith and the Smith Trust on November
30, 2017 are being included within this registration statement for a total of 3,500,000 shares. Mr. Smith is the Trustee of the
David Smith Trust. The address for Mr. Smith is 550 Brayford Way, Suwanee, GA 30024.
(x)
Includes 2,124,150 shares of common stock issued to Ms. Wilburn in exchange for membership units held by Ms. Wilburn, issued
by Deep Green Waste & Recycling, LLC, in the Merger Agreement by and between Deep Green Waste & Recycling, LLC, Critic
Clothing, Inc. and Deep Green Acquisition, LLC dated August 24, 2017. The address for Ms. Wilburn is 1410 Little Raven Street,
Denver, CO 80202.
(xi)
Includes 1,272,450 shares of common stock issued to Mr. Lawson in exchange for membership units held by Mr. Lawson, issued by
Deep Green Waste & Recycling, LLC, in the Merger Agreement by and between Deep Green Waste & Recycling, LLC, Critic Clothing,
Inc. and Deep Green Acquisition, LLC dated August 24, 2017. The address for Mr. Lawson is 1503 Fallen Leaf, Marietta, GA 30064.
(xii)
Includes 25,000 shares of common stock issuable upon exercise of the warrant issued to Ms. Gault as per the terms of the Convertible
Note issued on October 30, 2017 and 161,500 shares of common stock issued to Mr. Gault in exchange for membership units held by
Ms. Gault, issued by Deep Green Waste & Recycling, LLC, in the Merger Agreement by and between Deep Green Waste & Recycling,
LLC, Critic Clothing, Inc. and Deep Green Acquisition, LLC dated August 24, 2017. The address for Mr. Gault is 12862 Riverside
Dr, East, Windsor, ON n8n1a8.
(xiii)
Includes 14,473 shares of common stock issuable upon exercise of the warrant issued to Ms. Maner on November 30, 2017 and 144,732
shares of common stock as per the terms of the Debt Conversion Agreement dated July 27, 2017. The address for Ms. Maner is 470
Vernon North Dr., Atlanta, GA 30338.
(xiv)
Includes 14,473 shares of common stock issuable upon exercise of the warrant issued to Ms. Williams dated November 30, 2017, 144,732
shares of common stock issued as per the terms of the Debt Conversion Agreement dated July 27, 2017 and 30,000 shares of common
stock issuable upon exercise of the warrant issued to Ms. Williams as per the terms of the Convertible Note dated February 19,
2018. The address for Ms. Williams is 1888 Colt Dr., Atlanta, GA 30341.
(xv)
Includes 11,579 shares of common stock issuable upon exercise of a warrant issued to Mr. Beckham on November 30, 2017 and 115,786
shares of common stock issued to Mr. Beckham as per the terms of the Debt Conversion Agreement dated July 27, 2017. The address
for Mr. Beckham is P.O. Box 342, Snellville, GA 30039.
(xvi)
Includes 11,579 shares of common stock issuable upon exercise of a warrant issued to Mr. Montag on November 30, 2017 and 115,786
shares of common stock issued to Mr. Montag as per the terms of the Debt Conversion Agreement dated July 27, 2017. The address
for Mr. Montag is 3709 Ashwood Dr., Smyrna, GA 30080.
(xvii)
Those shareholders shown with an asterisk (*) after their name
in the “Stockholder” column are registered broker-dealers or affiliates of broker-dealers.
PLAN
OF DISTRIBUTION
The
Selling Shareholders and any of its pledgees, donees, assignees and other successors-in-interest may, from time to time sell any
or all of their shares of Common Stock on any market or trading facility on which the shares are traded or in private transactions. On
March 9, 2020, the last reported sales price for our Common Stock was $0.04 per
share. Because our Common Stock is subject to quotation on OTC Pink Market, our Common Stock may only be offered and sold by the
Selling Shareholders at a fixed price of $0.04 per share until our Common Stock is quoted on the OTCQB tier of the OTC Markets,
and thereafter at prevailing market prices or privately negotiated prices or in transactions that are not in the public market.
Notwithstanding our belief that upon the effective date of this registration statement our Common Stock will satisfy the eligibility
standards and requirements for quotation on the OTCQB and our express intention to pursue our application for quotation of our
Common Stock on the OTCQB, we cannot assure you that our Common Stock will, in fact, be quoted on the OTCQB tier. We urge prospective
purchasers of our Common Stock to obtain current information about the market prices of our Common Stock.
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ordinary
brokerage transactions and transactions in which the broker-dealer solicits the purchaser;
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block
trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block
as principal
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facilitate
the transaction;
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purchases
by a broker-dealer as principal and resale by the broker-dealer for its account;
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an
exchange distribution in accordance with the rules of the applicable exchange;
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privately-negotiated
transactions;
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broker-dealers
may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;
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through
the writing of options on the shares;
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a
combination of any such methods of sale; and
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any
other method permitted pursuant to applicable law.
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The
selling stockholders may also sell shares under Rule 144 of the Securities Act, if available, rather than under this prospectus.
The selling stockholders shall have the sole and absolute discretion not to accept any purchase offer or make any sale of shares
if it deems the purchase price to be unsatisfactory at any particular time.
The
selling stockholders or their respective pledgees, donees, transferees or other successors in interest, may also sell the shares
directly to market makers acting as principals and/or broker-dealers acting as agents for themselves or their customers. Such
broker-dealers may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or
the purchasers of shares for whom such broker-dealers may act as agents or to whom they sell as principal or both, which compensation
as to a particular broker-dealer might be in excess of customary commissions. Market makers and block purchasers purchasing the
shares will do so for their own account and at their own risk. It is possible that a selling stockholder will attempt to sell
shares of common stock in block transactions to market makers or other purchasers at a price per share which may be below the
then existing market price. We cannot assure that all or any of the shares offered in this prospectus will be issued to, or sold
by, the selling stockholders. The selling stockholders and any brokers, dealers or agents, upon effecting the sale of any of the
shares offered in this prospectus, may be deemed to be “underwriters” as that term is defined under the Securities
Exchange Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the rules and regulations of such acts.
In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased
by them may be deemed to be underwriting commissions or discounts under the Securities Act.
We
are required to pay all fees and expenses incident to the registration of the shares, including fees and disbursements of counsel
to the selling stockholders, but excluding brokerage commissions or underwriter discounts.
The
selling stockholders, alternatively, may sell all or any part of the shares offered in this prospectus through an underwriter.
The selling stockholders have not entered into any agreement with a prospective underwriter and there is no assurance that any
such agreement will be entered into.
The
selling stockholders may pledge their shares to their brokers under the margin provisions of customer agreements. If a selling
stockholder defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares. The selling stockholders
and any other persons participating in the sale or distribution of the shares will be subject to applicable provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations under such Act, including, without limitation, Regulation
M. These provisions may restrict certain activities of and limit the timing of purchases and sales of any of the shares by, the
selling stockholders or any other such person. In the event that any of the selling stockholders are deemed an affiliated purchaser
or distribution participant within the meaning of Regulation M, then the selling stockholders will not be permitted to engage
in short sales of common stock. Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited
from simultaneously engaging in market making and certain other activities with respect to such securities for a specified period
of time prior to the commencement of such distributions, subject to specified exceptions or exemptions. In addition, if a short
sale is deemed to be a stabilizing activity, then the selling stockholders will not be permitted to engage in a short sale of
our common stock. All of these limitations may affect the marketability of the shares.
If
a selling stockholder notifies us that it has a material arrangement with a broker-dealer for the resale of the common stock,
then we would be required to amend the registration statement of which this prospectus is a part and file a prospectus supplement
to describe the agreements between the selling stockholder and the broker-dealer.
DESCRIPTION
OF SECURITIES
Description
of Registrant’s Securities to be Registered.
We
are registering on this Registration Statement only our common stock, the terms of which are described below. However, because
our preferred stock will remain outstanding following the effectiveness of this Registration Statement, we also describe below
the terms of our preferred stock to the extent such terms qualify the rights of our common stock.
Our
authorized capital consists of 250,000,000 shares of common stock, par value $.0001 per share (the “Common Stock”)
and 2,000,000 are shares of preferred stock, par value $.0001 per share (the “Preferred Stock”). At
December 31, 2019 and December 31, 2018, the Company had 105,051,540 and 105,051,540 shares of Common Stock issued
and outstanding, respectively, and 0 and 0 shares of Preferred Stock issued and outstanding, respectively.
Common
Stock
Holders
of the Company’s common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders
of common stock do not have cumulative voting rights. Therefore, holders of a majority of the shares of common stock voting for
the election of directors can elect all of the directors. Holders of the Company’s common stock representing a majority
of the voting power of the Company’s capital stock issued, outstanding and entitled to vote, represented in person or by
proxy, are necessary to constitute a quorum at any meeting of stockholders. A vote by the holders of a majority of the Company’s
outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment
to the Company’s articles of incorporation.
Holders
of the Company’s common stock are entitled to share in all dividends that the board of directors, in its discretion, declares
from legally available funds. In the event of a liquidation, dissolution or winding up, each outstanding share entitles its holder
to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if
any, having preference over the common stock. The Company’s common stock has no pre-emptive rights, no conversion rights
and there are no redemption provisions applicable to the Company’s common stock.
On
August 10, 2017, our majority shareholder and our board of directors
approved an amendment to our Articles of Incorporation for the purpose of approving a reverse split of one to one thousand in
which each shareholder will be issued one common share in exchange for every one thousand common shares of their currently issued
common stock. Prior to approval of the reverse split, we had a total of 99,997,102,862 issued and outstanding shares of
common stock, par value $0.0001. On September 27, 2017, the effective date of the reverse split, we had a total of 99,997,102
issued and 90,697,102 outstanding shares of common stock, par value $0.0001. Please see NOTE G - CAPITAL STOCK
for further information.
At
December 31, 2019 and December 31,2018, there are 105,051,540 and 105,051,540 shares of common stock issued and outstanding.
Preferred
Stock
Our
Articles of Incorporation authorizes the issuance of up to 2,000,000 shares of preferred stock with designations, rights and preferences
determined from time to time by its Board of Directors. Accordingly, our Board of Directors is empowered, without stockholder
approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect
the voting power or other rights of the holders of the common stock. In the event of issuance, the preferred stock could be utilized,
under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company.
On
July 18, 2010, the Board of Directors unanimously approved the designation of a series of preferred stock to be known as “Series
A Convertible Preferred Stock” (hereinafter “Series A”) with a stated par value is $0.0001.The designations,
powers, preferences and rights, and the qualifications, limitations or restrictions hereof, in respect of the Series A shall be
as hereinafter described.
The
holders of the Series A, shall not be entitled to receive dividends, nor shall dividends be paid on common stock or any other
Series of Preferred Stock while Series A shares are outstanding. The holders of Series A shall be entitled to vote on all matters
submitted to a vote of the Shareholders of the Company. The holders of the Series A shall be entitled to one thousand (1,000)
votes per one share of Series A held. Upon the availability of a sufficient number of authorized but unissued and unreserved shares
of common stock, the holders of any Series A Preferred Stock shall be entitled to convert such shares in to fully paid and non-assessable
shares of common stock at the rate of 1000 shares of common stock for each share of Series A. In the event of any liquidation,
dissolution or winding up of the Corporation, either voluntarily or involuntarily, after setting apart or paying in full the preferential
amounts due the Holders of senior capital stock, if any, the Holders of Series A and parity capital stock, if any, shall be entitled
to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the Holders
of junior capital stock, including Common Stock, an amount equal to $0.125 per share. The number of authorized shares constituting
the Series A is Five Hundred Thousand (500,000) shares.
At
December 31, 2019 and December 31,2018, there are 0 and 0 Series A shares issued and outstanding. If the holder of our
Series A were to elect to convert their shares into shares of our common stock, this would result in additional
dilution to shareholders.
On
January 22, 2020, the Board of Directors unanimously approved the designation of a series of preferred stock to be known as “Series
B Convertible Preferred Stock” (hereinafter “Series B”) with a stated par value is $0.0001. The designations,
powers, preferences and rights, and the qualifications, limitations or restrictions hereof, in respect of the Series B shall be
as hereinafter described.
The
holders of the Series B, shall not be entitled to receive dividends, nor shall dividends be paid on common stock or any other
Series of Preferred Stock while Series B shares are outstanding. The holders of Series B shall be entitled to vote on all matters
submitted to a vote of the Shareholders of the Company. The holders of the Series B shall be entitled to twenty thousand (20,000)
votes per one share of Series B held. Upon the availability of a sufficient number of authorized but unissued and unreserved shares
of common stock, the holders of any Series B Preferred Stock shall be entitled to convert such shares in to fully paid and non-assessable
shares of common stock at the following conversion feature: the Conversion Price for each share of Series B Preferred Stock in
effect on any Conversion Date shall be (i) eighty five percent (85%) of the average closing bid price of the Common Stock over
the twenty (20) trading days immediately preceding the date of conversion, (ii) but no less than Par Value of the Common Stock.
For purposes of determining the closing bid price on any day, reference shall be to the closing bid price for a share of Common
Stock on such date on the NASD OTC Bulletin Board, as reported on Bloomberg, L.P. Any conversion shall be for a minimum Stated
Value of $500.00 of Series B shares.
If
the Corporation shall commence a voluntary case under the U.S. Federal bankruptcy laws or any other applicable bankruptcy, insolvency
or similar law, or consent to the entry of an order for relief in an involuntary case under any law or to the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Corporation or of any substantial
part of its property, or make an assignment for the benefit of its creditors, or admit in writing its inability to pay its debts
generally as they become due, or if a decree or order for relief in respect of the Corporation shall be entered by a court having
jurisdiction in the premises in an involuntary case under the U.S. Federal bankruptcy laws or any other applicable bankruptcy,
insolvency or similar law resulting in the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
other similar official) of the Corporation or of any substantial part of its property, or ordering the winding up or liquidation
of its affairs, and any such decree or order shall be unstayed and in effect for a period of sixty (60) consecutive days and,
on account of any such event, the Corporation shall liquidate, dissolve or wind up, or if the Corporation shall otherwise liquidate,
dissolve or wind up, including, but not limited to, the sale or transfer of all or substantially all of the Corporation’s
assets in one transaction or in a series of related transactions (a “Liquidation Event”), no distribution shall be
made to the holders of any shares of capital stock of the Corporation (other than Senior Securities and Pari Passu Securities)
upon liquidation, dissolution or winding up unless prior thereto the Holders of shares of Series B Preferred Stock shall have
received the Liquidation Preference (as defined below) with respect to each share. If, upon the occurrence of a Liquidation Event,
the assets and funds available for distribution among the Holders of the Series B Preferred Stock and Holders of Pari Passu Securities
shall be insufficient to permit the payment to such holders of the preferential amounts payable thereon, then the entire assets
and funds of the Corporation legally available for distribution to the Series B Preferred Stock and the Pari Passu Securities
shall be distributed ratably among such shares in proportion to the ratio that the Liquidation Preference payable on each such
share bears to the aggregate Liquidation Preference payable on all such shares.
At
December 31, 2019 and December 31,2018, there are 0 and 0 Series B shares issued and outstanding. If the holder of our Series
B were to elect to convert their shares into shares of our common stock, this would result in additional dilution to shareholders.
Please see NOTE G - CAPITAL STOCK for further
information.
Options
and Warrants
As
of the date of this filing, the Company has issued warrants/options
to the persons and upon the terms below:
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Name
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Date
of Issuance
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Shares
upon
Issuance of
warrants or
options (v)
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Exercise
Price (vi)
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Expiration
Date
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Armada
Investment Fund, LLC (i)
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3/12/2020
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262,500
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$
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0.04
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1/13/2025
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Anna
& Michele Castoro (ii)
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10/30/2017
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25,000
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0.175
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10/30/2020
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John
Figliolini (iii)
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10/30/2017
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25,000
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0.175
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10/30/2020
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Tirante
Financial, Ltd (iv)
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10/30/2017
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425,000
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0.175
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10/30/2020
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Torey
Gault (v)
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10/30/2017
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25,000
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0.175
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10/30/2020
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White
Crest Assets, LLC (vi)
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10/20/2017
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200,000
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0.175
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10/20/2020
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Saint
James Capital Management, LLC (vii)
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06/25/2017
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5,000,000
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0.20
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06/25/2020
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Transglobal
Finance, Inc. (viii)
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11/20/2017
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25,000
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0.175
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11/20/2020
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Mary
Williams (ix)
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2/19/2018
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30,000
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0.175
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2/19/2021
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C.
Alvin Roberds, Jr. (x)
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3/16/2018
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25,000
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0.175
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3/16/2021
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Ellen
Bailey (xi)
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3/16/2018
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25,000
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0.175
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3/16/2021
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Chris
Montag (xii)
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11/30/2017
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11,579
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0.20
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11/30/2020
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Jonja
Maner (xiii)
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11/30/2017
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14,473
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0.20
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11/30/2020
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Josh
Beckham (xiv)
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11/30/2017
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11,579
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0.20
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11/30/2020
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Virginia
Haubert (xv)
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11/30/2017
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20,500
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0.20
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11/30/2020
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Virginia
Haubert (xvi)
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11/30/2017
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17,368
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0.20
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|
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11/30/2020
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David
Smith (xvii)
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11/30/2017
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151,852
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0.20
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11/30/2020
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Smith
Trust (xviii)
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11/30/2017
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243,607
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0.20
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11/30/2020
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(i)
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On
March 12, 2020, the Company issued to Armada Investment Fund, LLC (“ARMADA”)
a Convertible Promissory Note (the “Note”) in the amount of Twenty-Three
Thousand and NO/100 Dollars ($23,000). On March 6, 2020, ARMADA entered into an Assignment
Agreement (the “Agreement”) with Sylios Corp (“Assignor”). Under
the terms of the Agreement, the Assignor sells, assigns, conveys and transfers its interest
into the Securities Purchase Agreement, Convertible Promissory Note (principal amount
of $23,000), Stock Purchase Warrant Agreement (262,500 shares of common stock) and Registration
Rights Agreement (RRA”) entered into by the Assignor and Company all dated January
13, 2020. The Note is convertible, in whole or in part, at any time and from time to
time before maturity (January 13, 2021) at the option of the holder at the Variable Conversion
Price, shall equal the lesser of (i) 60% multiplied by the lowest Trading Price during
the previous twenty (20) Trading Days before the Issue Date of this Note (representing
a discount rate of 40%) or (ii) 60% multiplied by the Market Price (as defined herein)
(representing a discount rate of 40%). “Market Price” means the lowest Trading
Price (as defined below) for the Common Stock during the twenty (20) Trading Day period
ending on the latest complete Trading Day prior to the Conversion Date. The Note has
a term of one (1) year and bears interest at 8% annually. Among other things, the RRA
provides for the Company to file a Registration Statement with the SEC covering the resale
of shares underlying the Note and the warrant and to have declared effective such Registration
Statement. In the event that the Company doesn’t meet the registration requirements
provided for in the RRA, the Company is obligated to pay ARMADA certain payments for
such failures.
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(ii)
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On
October 30, 2017, the Company executed a Convertible Note (the “Convertible Note”) payable to Anna & Michele
Castoro, (“CASTORO”) in the principal amount of $50,000. The Convertible Note was funded on October 30, 2017.
The Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (May 30, 2020)
at the option of the holder at the fixed conversion price of $0.20. The Convertible Note has a term of thirty (30) months
and bears interest at 12% annually. As part of the transaction, CASTORO was also issued a warrant granting the holder the
right to purchase 25,000 shares of the Company’s common stock at an exercise price of $0.175 for a term of 3-years.
Please see NOTE C – DISCONTINUED OPERATIONS for further information.
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(iii)
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On
October 30, 2017, the Company executed a Convertible Note (the “Convertible Note”) payable to John Figliolini,
(“FIGLIOLINI”) in the principal amount of $50,000. The Convertible Note was funded on October 30, 2017. The Convertible
Note is convertible, in whole or in part, at any time and from time to time before maturity (May 30, 2020) at the option of
the holder at the fixed conversion price of $0.20. The Convertible Note has a term of thirty (30) months and bears interest
at 12% annually. As part of the transaction, FIGLIOLINI was also issued a warrant granting the holder the right to purchase
25,000 shares of the Company’s common stock at an exercise price of $0.175 for a term of 3-years. Please see NOTE C – DISCONTINUED OPERATIONS for further information.
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(iv)
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On
October 30, 2017, the Company executed a Convertible Note (the “Convertible Note”) payable to Tirante Finance,
Ltd, (“TIRANTE”) in the principal amount of $850,000. The Convertible Note was funded on October 30, 2017. The
Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (May 30, 2020) at
the option of the holder at the fixed conversion price of $0.20. The Convertible Note has a term of thirty (30) months and
bears interest at 12% annually. As part of the transaction, TIRANTE was also issued a warrant granting the holder the right
to purchase 425,000 shares of the Company’s common stock at an exercise price of $0.175 for a term of 3-years. Please
see NOTE C – DISCONTINUED OPERATIONS for further information.
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(v)
|
On
October 30, 2017, the Company executed a Convertible Note (the “Convertible Note”) payable to Torey Gault, (“GAULT”)
in the principal amount of $50,000. The Convertible Note was funded on October 30, 2017. The Convertible Note is convertible,
in whole or in part, at any time and from time to time before maturity (May 30, 2020) at the option of the holder at the fixed
conversion price of $0.20. The Convertible Note has a term of thirty (30) months and bears interest at 12% annually. As part
of the transaction, GAULT was also issued a warrant granting the holder the right to purchase 25,000 shares of the Company’s
common stock at an exercise price of $0.175 for a term of 3-years. Please see NOTE C – DISCONTINUED OPERATIONS
for further information.
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|
|
|
|
|
|
(vi)
|
On
October 20, 2017, the Company executed a Convertible Note (the “Convertible Note”) payable to White Crest Assets,
LLC, (“CREST”) in the principal amount of $400,000. The Convertible Note was funded on October 20, 2017. The Convertible
Note is convertible, in whole or in part, at any time and from time to time before maturity (May 20, 2020) at the option of
the holder at the fixed conversion price of $0.20. The Convertible Note has a term of thirty (30) months and bears interest
at 12% annually. As part of the transaction, CREST was also issued a warrant granting the holder the right to purchase 200,000
shares of the Company’s common stock at an exercise price of $0.175 for a term of 3-years. Please see NOTE C – DISCONTINUED OPERATIONS for further information.
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(vii)
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On
June 25, 2017, the Company entered into a conversion agreement with Saint James Capital Management, LLC (“St. James”),
whereby St. James agreed to convert 2,000,000 shares of the Company’s Series A Preferred stock into a warrant to purchase
5,000,000 shares of the Company’s common stock at $0.30 per share for a term of three years. The warrant strike price
was reduced to $.20 by the Company’s Board of Directors on August 23, 2017.
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(viii)
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On
November 20, 2017, the Company executed a Convertible Note (the “Convertible Note”) payable to Transglobal Finance,
Inc., (“TRANSGLOBAL”) in the principal amount of $70,000. The Convertible Note was funded on November 20, 2017.
The Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (November 20,
2019) at the option of the holder at the fixed conversion price of $0.20. The Convertible Note has a term of twenty-four (24)
months and bears interest at 12% annually. As part of the transaction, TRANSGLOBAL was also issued a warrant granting the
holder the right to purchase 25,000 shares of the Company’s common stock at an exercise price of $0.175 for a term of
3-years. Please see NOTE C – DISCONTINUED OPERATIONS for further information.
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(ix)
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On
February 19, 2018, the Company executed a Convertible Note (the “Convertible Note”) payable to Mary Williams,
(“WILLIAMS”) in the principal amount of $60,000. The Convertible Note was funded on February 19, 2018. The Convertible
Note is convertible, in whole or in part, at any time and from time to time before maturity (February 19, 2020) at the option
of the holder at the fixed conversion price of $0.20. The Convertible Note has a term of twenty-four (24) months and bears
interest at 12% annually. As part of the transaction, WILLIAMS was also issued a warrant granting the holder the right to
purchase 30,000 shares of the Company’s common stock at an exercise price of $0.175 for a term of 3-years. Please see
NOTE C – DISCONTINUED OPERATIONS for further information.
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(x)
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On
March 15, 2018, the Company executed a Convertible Note (the “Convertible Note”) payable to C Alvin Roberds, Jr.,
(“ROBERDS”) in the principal amount of $50,000. The Convertible Note was funded on March 15, 2018. The Convertible
Note is convertible, in whole or in part, at any time and from time to time before maturity (March 15, 2020) at the option
of the holder at the fixed conversion price of $0.20. The Convertible Note has a term of twenty-four (24) months and bears
interest at 12% annually. As part of the transaction, ROBERDS was also issued a warrant granting the holder the right to purchase
25,000 shares of the Company’s common stock at an exercise price of $0.175 for a term of 3-years. Please see NOTE C – DISCONTINUED OPERATIONS for further information.
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(xi)
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On
March 16, 2018, the Company executed a Convertible Note (the “Convertible Note”) payable to Ellen Bailey, (“BAILEY”)
in the principal amount of $50,000. The Convertible Note was funded on March 16, 2018. The Convertible Note is convertible,
in whole or in part, at any time and from time to time before maturity (March 16, 2020) at the option of the holder at the
fixed conversion price of $0.20. The Convertible Note has a term of twenty-four (24) months and bears interest at 12% annually.
As part of the transaction, BAILEY was also issued a warrant granting the holder the right to purchase 25,000 shares of the
Company’s common stock at an exercise price of $0.175 for a term of 3-years. Please see NOTE C – DISCONTINUED OPERATIONS for further information.
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(xii)
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On
November 30, 2017, the Company entered into a Debt Conversion Agreement with Chris or Lindsay Montag. Under the terms of the
Agreement, the Company issued the Chris Montag 115,786 shares of common stock and a warrant to purchase 11,579 shares of the
Company’s common stock at an exercise price of $0.18 for a term of three years in satisfaction of an outstanding loan
in the amount of $20,841.
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(xiii)
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On
November 30, 2017, the Company entered into a Debt Conversion Agreement with Jonja Maner Montag. Under the terms of the Agreement,
the Company issued the Ms. Maner 144,732 shares of common stock and a warrant to purchase 14,473 shares of the Company’s
common stock at an exercise price of $0.18 for a term of three years in satisfaction of an outstanding loan in the amount
of $26,052.
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(xiv)
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On
November 30, 2017, the Company entered into a Debt Conversion Agreement with Mr. Beckham. Under the terms of the Agreement,
the Company issued Mr. Beckham 115,786 shares of common stock and a warrant to purchase 11,579 shares of the Company’s
common stock at an exercise price of $0.18 for a term of three years in satisfaction of an outstanding loan in the amount
of $20,841.
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(xv)
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On
November 30, 2017, the Company entered into a Debt Conversion Agreement with Ms. Haubert. Under the terms of the Agreement,
the Company issued Ms. Haubert 205,000 shares of common stock and a warrant to purchase 20,500 shares of the Company’s
common stock at an exercise price of $0.18 for a term of three years in satisfaction of an outstanding loan in the amount
of $36,900.
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(xvi)
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On
November 30, 2017, the Company entered into a Debt Conversion Agreement with Ms. Haubert. Under the terms of the Agreement,
the Company issued Ms. Haubert 173,679 shares of common stock and a warrant to purchase 17,368 shares of the Company’s
common stock at an exercise price of $0.18 for a term of three years in satisfaction of an outstanding loan in the amount
of $31,262.
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(xvii)
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On
November 30, 2017, the Company entered into a Debt Conversion Agreement with David Smith. Under the terms of the Agreement,
the Company issued to the David Smith Trust 1,518,517 shares of common stock and a warrant to purchase 151,852 shares of the
Company’s common stock at an exercise price of $0.18 for a term of three years in satisfaction of an outstanding loan
in the amount of $273,333.
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(xviii)
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On
November 30, 2017, the Company entered into a Debt Conversion Agreement with David Smith. Under the terms of the Agreement,
the Company issued to Mr. Smith 2,436,067 shares of common stock and a warrant to purchase 243,607 shares of the Company’s
common stock at an exercise price of $0.18 for a term of three years in satisfaction of an outstanding loan in the amount
of $438,942.
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To
date, no warrants or options have been issued under shareholder approved plans and no shareholder approved plans currently exist.
Please see NOTE G - CAPITAL STOCK and NOTE L - SUBSEQUENT EVENTS for further information.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Transfer Online, 512 SE Salmon St., Portland, OR 97214, Tel: (503) 227-2950
Fax: (503) 227-6874.
INTERESTS
OF NAMED EXPERTS AND COUNSEL
The
validity of the shares of common stock offered hereby will be passed upon for the Registrant by McMurdo Law Group, LLC, Matthew
McMurdo, Esq., 1185 Avenue of the Americas, 3rd Floor, New York, New York 10036. The financial statements for the
years ended December 31, 2019 and 2018 for Deep Green Waste & Recycling, Inc. included in this prospectus and elsewhere in
the registration statement have been audited by Michael T. Studer CPA P.C., 111 West Sunrise Highway, 2nd Floor,
East Freeport, New York 11520, as indicated in its report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in auditing and accounting in giving said reports.
DIVIDEND
POLICY
We
have never paid any cash dividends on our common stock and anticipate that, for the foreseeable future, no cash dividends will
be paid on our common stock.
DESCRIPTION
OF BUSINESS
Organization
Deep
Green Waste & Recycling, Inc. (f/k/a Critic Clothing, Inc.) (“Deep Green”, the “Company”, “we”,
“us”, or “our”) was organized as a Nevada Corporation on August 24, 1995 under the name of Evader, Inc.
On May 25, 2012, the Company filed its Foreign Profit Corporation Articles of Domestication to change the domicile of the Company
from Nevada to Wyoming. On November 4, 2015, the Company filed an Amendment to its Articles of Incorporation to change the name
of the Company to Critical Clothing, Inc. and on August 28, 2017 an Amendment was filed to change the Company name to Deep Green
Waste & Recycling, Inc.
Deep
Green was a full-service waste & recycling company that managed services to and logistics for large commercial properties
throughout the continental U.S. The Company served retail malls and shopping centers, multi-family apartment and townhome communities,
hospitals, hotels, correctional institutions, office parks and more. Our unique value proposition was in the design and execution
of end-to-end waste management programs for our clients. Our programs not only saved money on direct waste disposal, lower administrative
costs and equipment costs, but they also provided income from direct recycling rebates. We had a presence in over 30 states across
all regions of the United States and served approximately 300 commercial customers.
On
August 10, 2017, our majority shareholder and our board of directors approved an amendment to our Articles of Incorporation for
the purpose of approving a reverse split of one to one thousand in which each shareholder will be issued one common share in exchange
for every one thousand common shares of their currently issued common stock. Prior to approval of the reverse split, we had a
total of 99,997,102,862 issued and outstanding shares of common stock, par value $0.0001. On September 27, 2017, the effective
date of the reverse split, we had a total of 99,997,102 issued and 90,697,102 outstanding shares of common stock, par value $0.0001.
Please see NOTE G - CAPITAL STOCK for further information.
On
August 24, 2017, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations
(the “Agreement”) with St. James Capital Management, LLC. Under the terms of the Agreement, the Company transferred
and assigned all of the assets of the Company related to its extreme sports apparel design and manufacturing business in exchange
for the assumption of certain liabilities and cancellation of 3,000,000,000 shares of common stock of the Company.
On
August 24, 2017, the Company entered into a Merger Agreement (the “Merger Agreement”) with Deep Green Acquisition,
LLC, a Georgia limited liability company and wholly owned subsidiary of the Company (“Merger Sub”) and Deep Green
Waste and Recycling, LLC, a privately held Georgia limited liability company (“Deep Green Waste”). In connection with
the closing of this merger transaction, Merger Sub merged with and into Deep Green Waste (the “Merger”) on August
24, 2017, with the filing of Articles of Merger with the Georgia Secretary of State.
On
October 1, 2017, the Company acquired Compaction and Recycling Equipment Inc (CARE), a Portland, Oregon based company that sells
and services waste and recycling equipment. The Company purchased 100% of the common stock for $902,700, of which $586,890 was
paid in cash at closing and a promissory note was executed in the amount of $315,810. The note pays simple interest at the rate
of 7% per annum on the outstanding balance due, amortized over forty-eight months and payable in quarterly installments, with
the first payment being due on the first day of the first month following 90 days after closing.
On
October 1, 2017, the Company acquired Columbia Financial Services Inc (CFSI), a Portland, Oregon based company that finances the
purchases of waste and recycling equipment. Deep Green purchased 100% of the common stock for $597,300, of which $418,110 was
paid in cash at closing and a promissory note was executed in the amount of $179,190. The note pays simple interest at the rate
of 7% per annum on the outstanding balance due, amortized over forty-eight months and payable in quarterly installments, with
the first payment being due on the first day of the first month following 90 days after closing.
On
August 7, 2018, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Subsidiaries and Assumption of
Obligations (the “Agreement”) with Mirabile Corporate Holdings, Inc. Under the terms of the Agreement, the Company
transferred all capital stock of its two wholly owned subsidiaries, Compaction and Recycling Equipment, Inc. and Columbia Financial
Services, Inc., to Mirabile Corporate Holdings, Inc. in exchange for the assumption and cancellation of certain liabilities. Please
see NOTE C – DISCONTINUED OPERATIONS for additional information.
Going
forward, the company plans to re-launch its waste and recycling services business. The Company plans to:
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Provide
sustainable waste management services that minimizes costs based on volume and content of waste streams, and methods of disposal,
including landfills, transfer stations and recycling centers
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Offer
innovative recycling services that significantly reduce the disposal of plastics, electronic wastes, food wastes, and hazardous
wastes
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Establish
partnerships with innovative universities and companies, and acquire profitable waste and recycling services companies, that
can help the Company achieve these objectives
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Attract
investment funds who will actively work with the Company to achieve these goals and help the Company grow into a leading waste
and recycling services supplier in North America.
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Our
principal executive office is located at 13110 NE 177th Place, Suite 293, Woodinville, WA 98072, our telephone number
is (833) 304-7336 and our corporate website is located at www.deepgreenwaste.com.
For
the year ended December 31, 2019, we raised an aggregate of $- from the sale of our securities. For the year ended
December 31, 2019, we had net loss of $92,376 as compared to a net loss of $2,549,458 for the year ended December 31,
2018.
Our
independent registered public accounting firm has issued an audit opinion for our Company, which includes an explanatory paragraph
expressing substantial doubt as to our ability to continue as a going concern.
Background:
Deep Green Waste Recycling, Inc.
On
December 16, 2019, the Company entered into a Consulting Agreement (the “Agreement”) with Sylios Corp (the “Consultant”).
Under the terms of the Agreement, the Consultant is to assist the Company in the preparation of its Registration Statement on
Form S-1, introduce the Company to a PCAOB audit firm and introduce potential funding sources. The term of the Agreement is for
six months and the Consultant is to be paid compensation of $7,500. The Company made its first payment of $5,000 on January 13,
2020.
On
December 4, 2019, the Company entered into an agreement with Lloyd Spencer as President and Chief Executive Officer. In connection
with his appointment, the Company and Mr. Spencer entered into a written employment agreement (the “Employment Agreement”)
for an initial three-year term, which provides for the following compensation terms for Mr. Spencer. Pursuant to the Employment
Agreement, Mr. Spencer will receive a base salary of $10,000 per month starting when the corporation receives its first round
of equity or debt financing. Mr. Spencer shall receive 500,000 restricted shares of the Company’s common stock on or before
January 31, 2020 as a sign-on bonus. In addition, the Company shall issue to Mr. Spencer restricted shares in the form of stock
grants equivalent to 6,120,000 shares of the Corporation’s Common Stock over a 3-year period. Stock Grant shares shall vest
170,000 shares each month after the Stock Grant date, December 4, 2019, over a three year period, except that all unvested Stock
Grant shares shall vest immediately if the Corporation terminates Executive’s employment without Just Cause, or Executive
resigns for Good Reason. The number of shares vested shall be adjusted in the event of subsequent stock splits.
On
December 3, 2019, David Bradford submitted his resignation as President, Chief Executive Officer Secretary a member of the Board
of Directors of the Company, effectively immediately. Mr. Bradford retained his role as Chief operating Officer of the Company.
On
August 7, 2018, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Subsidiaries and Assumption of
Obligations (the “Agreement”) with Mirabile Corporate Holdings, Inc. Under the terms of the Agreement, the Company
transferred all capital stock of its two wholly owned subsidiaries, Compaction and Recycling Equipment, Inc. and Columbia Financial
Services, Inc., to Mirabile Corporate Holdings, Inc. in exchange for the assumption and cancellation of certain liabilities. Please
see NOTE C – DISCONTINUED OPERATIONS for additional information.
On
June 11, 2018, Josh Beckham submitted his resignation as Chief Financial Officer of the Company, effectively immediately. Mr.
Beckham did not resign as a result of any disagreement with the Company on any matter relating to the Company’s operations,
policies or practices.
On
October 1, 2017, the Company acquired Compaction and Recycling Equipment Inc (CARE), a Portland, Oregon based company that sells
and services waste and recycling equipment. The Company purchased 100% of the common stock for $902,700, of which $586,890 was
paid in cash at closing and a promissory note was executed in the amount of $315,810. The note pays simple interest at the rate
of 7% per annum on the outstanding balance due, amortized over forty-eight months and payable in quarterly installments, with
the first payment being due on the first day of the first month following 90 days after closing.
On
October 1, 2017, the Company acquired Columbia Financial Services Inc (CFSI), a Portland, Oregon based company that finances the
purchases of waste and recycling equipment. Deep Green purchased 100% of the common stock for $597,300, of which $418,110 was
paid in cash at closing and a promissory note was executed in the amount of $179,190. The note pays simple interest at the rate
of 7% per annum on the outstanding balance due, amortized over forty-eight months and payable in quarterly installments, with
the first payment being due on the first day of the first month following 90 days after closing.
On
October 1, 2017, the Company entered into an Independent Contractor Agreement (the “Agreement”) with Gordon Borse
(the “Contractor”). Under the terms of the Agreement, the Company was to pay the Contractor a fee of $5,000 per month
for a term of four years. The Contractor was to provide services as a sales and business development consultant. The Company elected
to terminate the Agreement on July 12, 2018.
On
August 28, 2017, the Company filed an Amendment to its Articles of Incorporation to change the name of the Company to Deep Green
Waste & Recycling, Inc.
On
August 24, 2017, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations
(the “Agreement”) with St. James Capital Management, LLC. Under the terms of the Agreement, the Company transferred
and assigned all of the assets of the Company related to its extreme sports apparel design and manufacturing business in exchange
for the assumption of certain liabilities and cancellation of 3,000,000,000 shares of common stock of the Company.
On
August 24, 2017, the Company entered into a Merger Agreement (the “Merger Agreement”) with Deep Green Acquisition,
LLC, a Georgia limited liability company and wholly owned subsidiary of the Company (“Merger Sub”) and Deep Green
Waste and Recycling, LLC, a privately held Georgia limited liability company (“Deep Green Waste”). In connection with
the closing of this merger transaction, Merger Sub merged with and into Deep Green Waste (the “Merger”) on August
24, 2017, with the filing of Articles of Merger with the Georgia Secretary of State.
On
August 10, 2017, our majority shareholder and our board of directors approved an amendment to our Articles of Incorporation for
the purpose of approving a reverse split of one to one thousand in which each shareholder will be issued one common share in exchange
for every one thousand common shares of their currently issued common stock. Prior to approval of the reverse split, we had a
total of 99,997,102,862 issued and outstanding shares of common stock, par value $0.0001. On September 27, 2017, the effective
date of the reverse split, we had a total of 99,997,102 issued and 90,697,102 outstanding shares of common stock, par value $0.0001.
Please see NOTE G - CAPITAL STOCK for further information.
On
July 20, 2017, the Company filed an Amendment to its Articles of Incorporation to change the capital structure of the Company.
The Company increased the number of shares of authorized common stock from 5,000,000,000 to 110,000,000,000.
On
July 20, 2017, the Company filed an Amendment to its Articles of Incorporation to add Articles 13. Article 13 states: Whenever
shareholders are required or permitted to take any action by vote, such action may be taken without a meeting on written consent,
setting forth the action so taken, signed by the holders of outstanding shares having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present
and voted.
On June 26, 2017, the Company entered into a conversion agreement
with Saint James Capital Management LLC and agreed to convert 2,000,000 shares of the Company’s Series A Preferred Stock
held by Saint James into a warrant to purchase 5,000,000 shares of the Company’s common stock at an exercise price of $0.30
per share and a term of three years. On August 23, 2017, the Company’s Board of Directors approved a reduction of the warrant
exercise price from $0.30 to $0.20 per share.
On
August 13, 2015, the Company filed an Amendment to its Articles of Incorporation to amend the designation of the Company’s
Series A Preferred Stock (Series A”) so that the holders of the Series A may at their election convert each share of Series
A into 1,000 shares of the Company’s common stock.
On
November 4, 2015, the Company filed an Amendment to its Articles of Incorporation to change the name of the Company to Critical
Clothing, Inc.
On
December 8, 2014, the Company filed an Amendment to its Articles of Incorporation to change the capital structure of the Company.
The Company increased the number of shares of authorized common stock from 1,800,000,000 to 5,000,000,000.
On
August 14, 2014, the Company filed an Amendment to its Articles of Incorporation to change the capital structure of the Company.
The Company decreased the number of shares of authorized common stock from 5,000,000,000 to 1,800,000,000 and also increased the
number of authorized shares of preferred stock from 1,000,000 to 2,000,000.
On
July 24, 2014, the Company filed an Amendment to its Articles of Incorporation to change the capital structure of the Company.
The Company increased the number of shares of authorized common stock from 868.751.727 to 5,000,000,000 and also authorized 1,000,000
shares as preferred stock.
On
May 25, 2012, the Company filed its Foreign Profit Corporation Articles of Domestication to change the domicile of the Company
from Nevada to Wyoming.
On
July 19, 2010, the Company filed a Certificate of Designation for a Convertible Preferred Series A Stock. Please see NOTE
G- CAPITAL STOCK for further information.
On
August 24, 1995, the Company filed its Articles of Incorporation with the State of Nevada under the name of Evader, Inc.
Fundraising
and Previous Offerings
During
the twelve months ended December 31, 2019 and 2018, the Company raised $0 and $285,000, respectively, through the issuance
of Convertible Promissory Notes, Secured Notes or through Securities Purchase Agreements.
Employees
and Consultants
As
of the date of this Report, we have one full-time employee that serves in the roles of President/Chief Executive Officer/Corporate
Secretary, two part time employees that serve in the roles of Chief Operating Officer and Interim Chief Financial Officer and
one independent consultant. The Company anticipates that it
will need to retain the services of additional management and key personnel in the near future to further its business plan.
Amount
Spent on Research and Website Development
Deep
Green Waste will invest a significant portion of its operating budget in the research and development of its newly formed or acquired
subsidiaries. We expect to spend approximately $100,000 during the fiscal year ended December 31, 2020 on further development-related
payroll, websites and expenses. We spent $0 on research and development-related salaries for the year ended December 31, 2019.
Insurance
In
2020, Deep Green Waste will begin offering health, dental and vision insurance to its employees at an estimated monthly
cost of $4,000. Deep Green Waste also carries general liability insurance. We do not currently hold any other forms of
insurance, including directors’ and officers’ insurance. Because we do not have any insurance, if we are made a party
of a legal action, we may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered against
us that could cause us to cease operations.
Trademarks
The
success of our business depends on our continued ability to use our existing trade name in order to increase our brand awareness.
In that regard, we believe that our trade name is valuable asset that is critical to our success. As of the date of this prospectus,
we have not submitted a trademark application for our name, Deep Green Waste & Recycling or that of any of our subsidiaries.
In the event the Company does file an application, there is no guarantee that the U.S. Patent and Trademark Office will grant
us a trademark. The unauthorized use or other misappropriation of our trade name could diminish the value of our business concept
and may cause a decline in our revenue.
Competitors,
Methods of Completion, Competitive Business Conditions
We
are in direct competition with numerous companies whose business plans are centered around the waste sector. Several of
our competitors are large, well-known energy companies, but no single entity dominates the industry. Many of our competitors possess
greater financial and personnel resources, sometimes enabling them to identify and acquire more economically desirable contracts.
We are more of a regional operator, and have the traditional competitive strengths of one, including recently established
contacts and in-depth knowledge of the local geography.
We
believe our operational subsidiary faces significant direct competition in the waste sector. There are several direct
competitors such as Waste Connections, Clean energy Technologies, Cass Information Systems and advanced environmental Recycling
Tech.
Legal
Proceedings
From
time to time we may be a defendant and plaintiff in various legal proceedings arising in the normal course of our business. We
are currently not a party to any material pending legal proceedings or government actions, including any bankruptcy, receivership,
or similar proceedings. In addition, management is not aware of any known litigation or liabilities involving the operators of
our properties that could affect our operations. Should any liabilities be incurred in the future, they will be accrued based
on management’s best estimate of the potential loss. As such, there is no adverse effect on our consolidated financial position,
results of operations or cash flow at this time. Furthermore, Management of the Company does not believe that there are any proceedings
to which any director, officer, or affiliate of the Company, any owner of record of the beneficially or more than five percent
of the common stock of the Company, or any associate of any such director, officer, affiliate of the Company, or security holder
is a party adverse to the Company or has a material interest adverse to the Company.
On
June 20, 2018, Central Ohio Contractors, Inc. (“Plaintiff”) filed a complaint against Deep Green Waste & Recycling,
LLC (“Defendant”) with the Common Pleas Court of Franklin County, Ohio, alleging that the Defendant failed to pay
Plaintiff for services rendered from January through March 2018 in the amount of $32,580.73. On August 1, 2018, the Court issued
a Default Judgment against the Company in the amount of $32,580.73 and court costs of $251. Said total is to draw interest at
the legal rate of 4.0% interest per annum beginning on April 30, 2018. As of December 31, 2019, $32,580.73 principal plus all
post-judgment interest remains due.
On
October 30, 2018, CoreCivic of Tennessee, LLC (“Plaintiff”) filed a complaint against Deep Green Waste & Recycling,
LLC (“Defendant”) with the Chancery Court for Davidson County, Tennessee at Nashville, alleging that the Defendant
defaulted on its payment obligations in the amount of $411,210.42 under the Master Waste & Recycling Agreement entered into
between the parties and dated May 4, 2017. On January 14, 2019, the Court issued a a Default Judgment Certificate against the
Company in the amount of $411,210.42 principal, $11,942.00 in prejudgment interest and post-judgment interest until the judgment
is paid in full for a per diem interest amount of $81.15. As of December 31, 2019, $423,152.42 principal plus all post-judgment
interest remains due.
On
December 17, 2018, Angelo’s Aggregate Materials, Ltd (“Plaintiff”) filed a complaint against Deep Green Waste
& Recycling, LLC (“Defendant”) with the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County,
Florida, alleging that the Defendant failed to pay Plaintiff for services rendered from January 5, 2018 through March 31, 2018
in the amount of $29,777.41. On January 24, 2019, the Court issued a Default Judgment against the Company in the amount of $29,777.41,
court costs in the sum of $510 and prejudgment interest from April 30, 2018 to January 30, 2019, in the sum of $1,349.62, computed
at the statutory rate of 5.72% per annum, for the months of April through June 2018; 5.97% per annum for the months of July through
September, 2018; 6.09% per annum for the months of October through December, 2018; and 6.33% per annum for the month of January
2019, for a total of $31,631.03, all which shall bear interest at the prevailing statutory rate of 6.33% per year from this date
through December 31, 2019, for which let execution issue forthwith. As of December 31, 2019, $31,631.03 principal plus all post-judgment
interest remains due.
Sources
and Availability of Raw Materials
We
do not use raw materials in our business.
Seasonal
Aspect of our Business
None
of our products are affected by seasonal factors.
Reports
to Security Holders
We
are required to file reports and other information with the SEC. You may read and copy any document that we file at the SEC’s
public reference facilities at 100 F. Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-732-0330 for more information
about its public reference facilities. Our SEC filings are available to you free of charge at the SEC’s web site at www.sec.gov.
We are an electronic filer with the SEC and, as such, our information is available through the Internet site maintained by the
SEC that contains reports, proxy and information statements and other information regarding issuers that file electronically with
the SEC. This information may be found at www.sec.gov and posted on our website for investors at http://www.deepgreenwaste.com/overview/.
PROPERTIES
Our
current office space is located at 13110 NE 177th Place., Suite 293, Woodinville, WA 98072. As our operations
grow, we anticipate requiring additional space during the second quarter of 2020. We are currently entered into a month
to month lease, but we believe will be at our current office space for the foreseeable future.
We
believe that our facilities are adequate for our current needs and that, if required, we will be able to expand our current space
or locate suitable new office space and obtain a suitable replacement for our executive and administrative headquarters.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATION
Please
read the following discussion of our financial condition and results of operations in conjunction with financial statements and
notes thereto, as well as the “Risk Factors” and “Description of Business” sections included elsewhere
in this prospectus. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.
Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or
contribute to these differences include those discussed below and elsewhere in this prospectus, particularly in “Risk Factors”.
Overview
Deep
Green Waste & Recycling, Inc. (f/k/a Critic Clothing, Inc.) (“Deep Green”, the “Company”, “we”,
“us”, or “our”) was organized as a Nevada Corporation on August 24, 1995 under the name of Evader,
Inc. On May 25, 2012, the Company filed its Foreign Profit Corporation Articles of Domestication to change the domicile of
the Company from Nevada to Wyoming. On November 4, 2015, the Company filed an Amendment to its Articles of Incorporation to change
the name of the Company to Critical Clothing, Inc. and on August 28, 2017 an Amendment was filed to change the Company name to
Deep Green Waste & Recycling, Inc.
Deep
Green was a full-service waste & recycling company that managed services to and logistics for large commercial properties
throughout the continental U.S. The Company served retail malls and shopping centers, multi-family apartment and townhome communities,
hospitals, hotels, correctional institutions, office parks and more. Our unique value proposition was in the design and execution
of end-to-end waste management programs for our clients. Our programs not only saved money on direct waste disposal, lower administrative
costs and equipment costs, but they also provided income from direct recycling rebates. We had a presence in over 30 states across
all regions of the United States and served approximately 300 commercial customers.
On
August 10, 2017, our majority shareholder and our board of directors approved an amendment to our Articles of Incorporation for
the purpose of approving a reverse split of one to one thousand in which each shareholder will be issued one common share in exchange
for every one thousand common shares of their currently issued common stock. Prior to approval of the reverse split, we had a
total of 99,997,102,862 issued and outstanding shares of common stock, par value $0.0001. On September 27, 2017, the effective
date of the reverse split, we had a total of 99,997,102 issued and 90,697,102 outstanding shares of common stock, par value $0.0001.
Please see NOTE G - CAPITAL STOCK for further information.
On
August 24, 2017, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations
(the “Agreement”) with St. James Capital Management, LLC. Under the terms of the Agreement, the Company transferred
and assigned all of the assets of the Company related to its extreme sports apparel design and manufacturing business in exchange
for the assumption of certain liabilities and cancellation of 3,000,000,000 shares of common stock of the Company.
On
August 24, 2017, the Company entered into a Merger Agreement (the “Merger Agreement”) with Deep Green Acquisition,
LLC, a Georgia limited liability company and wholly owned subsidiary of the Company (“Merger Sub”) and Deep Green
Waste and Recycling, LLC, a privately held Georgia limited liability company (“Deep Green Waste”). In connection with
the closing of this merger transaction, Merger Sub merged with and into Deep Green Waste (the “Merger”) on August
24, 2017, with the filing of Articles of Merger with the Georgia Secretary of State.
On
October 1, 2017, the Company acquired Compaction and Recycling Equipment Inc (CARE), a Portland, Oregon based company that sells
and services waste and recycling equipment. The Company purchased 100% of the common stock for $902,700, of which $586,890 was
paid in cash at closing and a promissory note was executed in the amount of $315,810. The note pays simple interest at the rate
of 7% per annum on the outstanding balance due, amortized over forty-eight months and payable in quarterly installments, with
the first payment being due on the first day of the first month following 90 days after closing.
On
October 1, 2017, the Company acquired Columbia Financial Services Inc (CFSI), a Portland, Oregon based company that finances the
purchases of waste and recycling equipment. Deep Green purchased 100% of the common stock for $597,300, of which $418,110 was
paid in cash at closing and a promissory note was executed in the amount of $179,190. The note pays simple interest at the rate
of 7% per annum on the outstanding balance due, amortized over forty-eight months and payable in quarterly installments, with
the first payment being due on the first day of the first month following 90 days after closing.
On
August 7, 2018, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Subsidiaries and Assumption of
Obligations (the “Agreement”) with Mirabile Corporate Holdings, Inc. Under the terms of the Agreement, the
Company transferred all capital stock of its two wholly owned subsidiaries, Compaction and Recycling Equipment, Inc. and Columbia
Financial Services, Inc., to Mirabile Corporate Holdings, Inc. in exchange for the assumption and cancellation of certain liabilities.
Please see NOTE C – DISCONTINUED OPERATIONS for additional information.
12
MONTH MILESTONES TO IMPLEMENT BUSINESS OPERATIONS
The
Milestones encompass what management believes the Company needs to accomplish to be successful. The Milestones are broken down
by quarters and projected costs.
Assumptions:
Accounting/Audit
related fees, edgar fees and legal and professional fees are compliance related and are not included within the Company’s
Business milestones.
Quarterly
Milestones:
A.
0-3 Months
|
|
○
|
Fund
the “going fully reporting” event for Deep Green Waste & Recycling,
Inc. inclusive of; accounting, audit, legal and regulatory fees through unsecured
promissory notes
|
|
|
|
|
|
|
○
|
Identify
first acquisition candidate(s); prepare them for the acquisition audit process
|
|
|
|
|
|
|
○
|
Complete
accounting including audit review for quarter end and file 10-Q at a cost of $5,000
|
B.
4-6 Months
|
|
○
|
Complete
first acquisition in the waste and recycling management sector at an estimated cost of $800,000 through a mix of cash and
stock
|
|
|
|
|
|
|
○
|
Hire
ancillary staff to support the Company’s operations
|
|
|
|
|
|
|
○
|
Establish
working relationships with food waste and next generation plastics recycling partners
|
|
|
|
|
|
|
○
|
Retain
consultant for SEO (Search Engine Optimization) web services for the Company’s corporate website and that of its subsidiaries
|
|
|
|
|
|
|
○
|
Complete
accounting including audit review for quarter end and file 10-Q at an estimated cost of $5,000
|
|
|
|
|
|
|
○
|
Appoint
1 additional Board member
|
|
|
|
|
|
|
○
|
We
anticipate increased revenue during this quarter as a result of our first acquisition
|
|
|
|
|
|
|
○
|
Identify
and complete due diligence on second acquisition candidate(s); prepare them for the acquisition and audit process
|
C.
7-9 Months
|
|
○
|
Hire
interns and part-time experts to develop the Company’s supply chain and logistics infrastructure that will drive new
business and revenues
|
|
|
|
|
|
|
○
|
Focus
the Company’s sales and marketing efforts to help accelerate growth of the Company’s subsidiary sales and revenues
|
|
|
|
|
|
|
○
|
Complete
accounting including audit review for quarter end and file 10-Q at an estimated cost of $5,000
|
|
|
|
|
|
|
○
|
Thorough
evaluation of the Company’s business plan to date with a focus on profitability and sustainability
|
|
|
|
|
|
|
○
|
Perform
website maintenance and upgrades at a projected cost of $2,000 for the quarter
|
|
|
|
|
|
|
○
|
We
anticipate continued and increased revenue during this quarter from the operations of our subsidiary
|
D.
10-12 Months
|
|
○
|
Complete
second acquisition in the waste and recycling brokerage industry at an estimated cost of $1,500,000 through a mix of cash
and stock
|
|
|
|
|
|
|
○
|
Review
SEO plan and make changes as needed
|
|
|
|
|
|
|
○
|
Identify
direct investments and/or acquisitions in private companies within the next generation plastics recycling partners sector
with a potential investment amount of $100,000
|
|
|
|
|
|
|
○
|
Complete
accounting including audit for year end and file 10-K at an estimated cost of $20,000
|
|
|
|
|
|
|
○
|
Develop
business plan for years two and three
|
|
|
|
|
|
|
○
|
We
anticipate continued and increased revenue during this quarter from the operations of our subsidiaries
|
|
|
|
|
|
|
○
|
Employee
evaluations and changes if needed
|
The
below discussions are as of the date stated (unless specifically noted otherwise) and should be read in conjunction with financial
statements and notes thereto for the applicable period referenced. These discussions may include information that has since changed
and may not be consistent with other sections of this prospectus.
Recent
Developments- For the twelve months ended December 31, 2019
On
December 16, 2019, the Company entered into a Consulting Agreement (the “Agreement”) with Sylios Corp (the “Consultant”).
Under the terms of the Agreement, the Consultant is to assist the Company in the preparation of its Registration Statement on
Form S-1, introduce the Company to a PCAOB audit firm and introduce potential funding sources. The term of the Agreement is for
six months and the Consultant is to be paid compensation of $7,500. The Company made its first payment of $5,000 on January 13,
2020.
On
December 4, 2019, the Company entered into an agreement with Lloyd Spencer as President and Chief Executive Officer. In connection
with his appointment, the Company and Mr. Spencer entered into a written employment agreement (the “Employment Agreement”)
for an initial three-year term, which provides for the following compensation terms for Mr. Spencer. Pursuant to the Employment
Agreement, Mr. Spencer will receive a base salary of $10,000 per month starting when the corporation receives its first round
of equity or debt financing. Mr. Spencer shall receive 500,000 restricted shares of the Company’s common stock on or before
January 31, 2020 as a sign-on bonus. In addition, the Company shall issue to Mr. Spencer restricted shares in the form of stock
grants equivalent to 6,120,000 shares of the Corporation’s Common Stock over a 3-year period. Stock Grant shares shall vest
170,000 shares each month after the Stock Grant date, December 4, 2019, over a three year period, except that all unvested Stock
Grant shares shall vest immediately if the Corporation terminates Executive’s employment without Just Cause, or Executive
resigns for Good Reason. The number of shares vested shall be adjusted in the event of subsequent stock splits.
On
December 3, 2019, David Bradford submitted his resignation as President, Chief Executive Officer Secretary a member of the Board
of Directors of the Company, effectively immediately. Mr. Bradford retained his role as Chief operating Officer of the Company.
Financing
Needs
In
order to fund our operations, we rely upon direct investments, partnerships and joint ventures with accredited investors. Once
the Company becomes profitable, we intend to fund our operations from free cash flow.
At
present, the Company only has sufficient funds to conduct its operations for three to six months. There can be no assurance that
additional financing will be available in amounts or on terms acceptable to the Company, if at all.
If
we are not successful in generating sufficient liquidity from Company operations or in raising sufficient capital resources, on
terms acceptable to us, this could have a material adverse effect on the Company’s business, results of operations liquidity
and financial condition.
The
Company presently does not have any available credit, bank financing or other external sources of liquidity. Due to its brief
history and historical operating losses, the Company’s operations have not been a source of liquidity. The Company will
need to obtain additional capital in order to expand operations and become profitable. In order to obtain capital, the Company
may need to sell additional shares of its common stock or borrow funds from private lenders. There can be no assurance that the
Company will be successful in obtaining additional funding.
The
Company will need additional investments in order to continue operations. Additional investments are being sought, but the Company
cannot guarantee that it will be able to obtain such investments. Financing transactions may include the issuance of equity or
debt securities, obtaining credit facilities, or other financing mechanisms. In the event there is a downturn in the U.S. stock
and debt markets, this could make it more difficult to obtain financing through the issuance of equity or debt securities. Even
if the Company is able to raise the funds required, it is possible that it could incur unexpected costs and expenses, fail to
collect significant amounts owed to it, or experience unexpected cash requirements that would force it to seek alternative financing.
Further, if the Company issues additional equity or debt securities, stockholders may experience additional dilution or the new
equity securities may have rights, preferences or privileges senior to those of existing holders.
Discussion
for the twelve months ended December 31, 2019 and December 31, 2018 (Audited):
Results
of Operations:
For
the Fiscal Year ended
|
|
|
31-Dec-19
|
|
|
31-Dec-18
|
|
|
$
Change
|
|
|
Gross
revenue
|
|
$
|
-
|
|
|
$
|
6,375,693
|
|
|
$
|
(6,375,693
|
)
|
|
Operating
expenses
|
|
|
41,403
|
|
|
|
2,647,682
|
|
|
|
(2,606,279
|
)
|
|
Loss
from Operations
|
|
|
(41,403
|
)
|
|
|
(1,302,084
|
)
|
|
|
(1,260,681
|
)
|
|
Other
Income (Expense)
|
|
|
(50,973
|
)
|
|
|
(1,247,374
|
)
|
|
|
1,196,401
|
)
|
|
Net
Income (Loss)
|
|
|
(92,376
|
)
|
|
|
(2,549,458
|
)
|
|
|
(2,457,082
|
)
|
|
Net
loss per share - basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
0.02
|
|
Revenues
Since
our inception on August 24, 1995, we have generated minimal revenue from our operations. We cannot guarantee we will be successful
in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including
the financial risks associated with the limited capital resources currently available to us and risks associated with the implementation
of our business strategies.
For
the year ended December 31, 2019, we generated $- revenue as compared to revenue of $6,375,693 for the year
ended December 31, 2018, a decrease of $6,375,693. In 2018, the Company’s revenue was derived from its operations as
a full-service waste broker providing all traditional waste and recycling services as well as sales and rental of compacting
and baling equipment. On August 7, 2018, the Company ceased its waste recycling business.
Operating
Expenses
Our
operating expenses were $41,403 and $2,647,682 during fiscal years 2019 and 2018, respectively.
We
anticipate that our cost of revenues will increase in 2020 and for the foreseeable future as we continue to identify acquisition
opportunities in the waste and recycling sector.
We
incurred $0 and $15,113 in advertising expenses during fiscal years 2019 and 2018, respectively.
We
incurred $0 and $0 in Payroll and related expenses during fiscal years 2019 and 2018, respectively. All wages during
the years 2019 and 2018 were accrued. The Company anticipates that it will need to expand its management team with future
acquisitions or joint ventures.
Loss
from Operations
The
Company’s loss from operations decreased to $41,403
for fiscal year 2019 from $1,302,084 in 2018, a decrease of $1,260,681.
Other
Income (Expenses)
Other
Income (Expenses) included interest expense, interest income, gain on settlement of accounts payable and loss on the sale of
the Company’s two subsidiaries in the amount of ($50,973) during fiscal year 2019 as compared to ($1,247,374) during fiscal
year 2018. The decrease in other income (expenses) in fiscal year 2019 is attributed to the Company’s transfer of its two
operational subsidiaries, Compaction and Recycling Equipment, Inc. and Columbia Financial Services, Inc., on August 7, 2018.
Net
Income (Loss)
For
the fiscal year ended 2019, our net loss decreased to ($92,376), as compared to a net loss of ($2,549,458)
for the year ended December 31, 2018, a decrease of $2,457,082. The decrease in net loss is attributed
to the transfer of its two operational subsidiaries, Compaction and Recycling Equipment, Inc. and Columbia Financial Services,
Inc., on August 7, 2018.
Liquidity
and Capital Resources
Capital
Raising
For
the twelve months ended December 31, 2019, the Company raised $0 through the issuance of Convertible Promissory Notes
or Securities Purchase Agreements.
Cash
on Hand
Our
cash on hand as of December 31, 2019 and December 31, 2018 was $735 and $1,694, respectively.
We
currently have no external sources of liquidity such as arrangements with credit institutions or off-balance sheet arrangements
that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.
We
are dependent on the sale of our securities to fund our operations and will remain so until we generate sufficient revenues to
pay for our operating costs. Our officers and directors have made no written commitments with respect to providing a source of
liquidity in the form of cash advances, loans and/or financial guarantees.
If
we are unable to raise the funds, we will seek alternative financing through means such as borrowings from institutions or private
individuals. There can be no assurance that we will be able to raise the capital we need for our operations from the sale of our
securities. We have not located any sources for these funds and may not be able to do so in the future. We expect that we will
seek additional financing in the future. However, we may not be able to obtain additional capital or generate sufficient revenues
to fund our operations. If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, we may
be forced to cease operations. If we fail to raise funds, we expect that we will be required to seek protection from creditors
under applicable bankruptcy laws.
Our
independent registered public accounting firm has expressed doubt about our ability to continue as a going concern and believes
that our ability is dependent on our ability to implement our business plan, raise capital and generate revenues. Please see
NOTE J - GOING CONCERN UNCERTAINITY for further information.
Debt
Our Debt was $888,109 and $888,109
at December 31, 2019 and December 31, 2018, respectively. Please see NOTE F – DEBT for further information.
Use
of Cash
We
had net cash provided (used) in operating activities for the years ended December 31, 2019 and December 31, 2018 of ($959)
and ($234,951), respectively.
We
had net cash (used) in investing activities for the years ended December 31, 2019 and December 31, 2018 of $- and ($184,701),
respectively.
We
had net cash provided in financing activities for the years ended December 31, 2019 and December 31, 2018 of $- and $138,967,
respectively.
Required
Capital Over the Next Fiscal Year
We
expect to incur losses from operations for the near future. We believe we will have to raise an additional $500,000 to fund our
operations through the end of the 2020 fiscal year, including roughly $50,000 to remain current in our filings with the
SEC.
Future
financing may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. Even
if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses or experience unexpected
cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities,
existing holders of our securities may experience additional dilution or the new equity securities may have rights, preferences
or privileges senior to those of existing holders of our securities.
If
additional financing is not available or is not available on acceptable terms, we may be required to delay or alter our business
plan based on available financing.
Off-Balance
Sheet Arrangements
We
do not have any off-balance sheet arrangements.
Critical
Accounting Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Recent
Accounting Pronouncements
There
were various updates recently issued, most of which represented technical corrections to the accounting literature or application
to specific industries and are not expected to a have a material impact on the Company’s consolidated financial position,
results of operations or cash flows. See the Notes to the Financial Statements for more information.
OTC
Bulletin Board Considerations
As
discussed elsewhere in this registration statement, the Company’s common stock is currently traded on the OTC Markets “PINK”
under the symbol “DGWR.”
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
Directors
and Executive Officers
The
names and ages of our Directors and Executive Officers are set forth below. Our By-Laws provide for not less than one Director.
All Directors are elected annually by the stockholders to serve until the next annual meeting of the stockholders and until their
successors are duly elected and qualified. The officers are elected by our Board.
|
Name
|
|
Age
|
|
|
Position
and Term
|
|
Lloyd
Spencer
|
|
|
63
|
|
|
President,
Chief Executive Officer and Director (Since 2019)
|
|
Bill
Edmonds
|
|
|
52
|
|
|
Interim
Chief Financial Officer and Chairman of the Board
|
|
David
Bradford
|
|
|
72
|
|
|
Chief
Operating Officer
|
Lloyd
Spencer- President and Chief Executive Officer- Lloyd Spencer is President and Chief Executive Officer of Deep Green Waste
& Recycling, serves as the company’s Corporate Secretary, and is a member of the Company’s Board of Directors.
From 2017 to 2019, Mr. Spencer served as Corporate Secretary of TraqIQ, Inc. From 2006 to 2016, Mr. Spencer served as President
and CEO of CoroWare. From 2004 to 2006, Mr. Spencer was a co-founder and President of CoroWare, Inc., a Washington State private
company that was acquired by Innova Holdings, Inc., which is now known as CoroWare, Inc. From 2002 to 2004, Mr. Spencer was Vice
President of Sales at Planet Technologies, a systems integration company based in Germantown, MD. From 1996 to 2002, Mr. Spencer
was Solutions Unit Manager and Group Product Manager at Microsoft in Redmond, Washington. Prior to Microsoft, Mr. Spencer served
as Assistant Vice-President and Business Unit Manager at Newbridge Networks; and Product Line Manager at Sun Microsystems. Mr.
Spencer began his career as a software development engineer at Hewlett-Packard Corporation in Cupertino, California. Mr. Spencer
received his Bachelor’s degree from Cornell University in 1980 with a major in Biology and Animal Science and with
an emphasis in Immunogenetics.
Bill
Edmonds- Interim Chief Financial Officer and Chairman of the Board- Bill Edmonds is the Chairman of the Board of Directors
and serves as Interim Chief Financial Officer of Deep Green Waste & Recycling. Before starting Deep Green Waste & Recycling,
Bill spent several years in telecommunications leadership positions, serving as CFO and VP of Operations at International Environmental
Management (IEM), a waste & recycling business that was focused exclusively on retail mall businesses. Mr. Edmonds has an
extensive background in Finance and is a CPA. He graduated from Georgia Tech University with a Bachelor of Science degree, and
Emory University with an Executive Masters of Business Administration degree.
David
Bradford- Chief Operating Officer- David Bradford serves as the Chief Operating Officer of Deep Green Waste & Recycling
and is responsible for implementing acquisitions and improving operations. Mr. Bradford devoted the majority of his senior
management career to the telecommunications industry. From 1977 through 1987, Mr. Bradford served in executive positions at the
Chicago Tribune’s broadcast and cable television divisions. Positions included Vice President and General Manager for Tribune
Cable Communications, Vice President of Operations for WGN Electronic Systems, and Director of Strategic Planning for Tribune
Cable and subsidiaries. At Tribune Cable, Mr. Bradford helped grow the company from a small 2,000 subscriber property to a major
multiple system operator managing over 300,000 customers nationwide. Mr. Bradford brings three decades of successful customer
based operating experience to the team as well as many years of participation, guidance, and oversight in numerous debt and equity
financings, acquisitions, and strategic restructuring.
Family
Relationships
There
are no family relationships among the directors and executive officers.
EXECUTIVE
COMPENSATION
Executive
Compensation
Summary
Compensation Table
|
Name
and Principal Position
|
|
Year
|
|
|
Salary-
Paid or accrued
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan Compensation
($)
|
|
|
Change
in Pension
Value &
Non-Qualified Deferred Compensation Earnings
($)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)(5)
|
|
|
|
|
|
|
|
|
(e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lloyd
Spencer- President, Chief Executive Officer, Secretary, Director
(4)(6)
|
|
|
2019
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bill
Edmonds- Interim Financial Officer, Chairman of the Board (1)(2)(6)
|
|
|
2019
|
|
|
|
6,886
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
6,886
|
|
|
|
|
|
2018
|
|
|
|
60,125
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
60,125
|
|
|
|
|
|
2017
|
|
|
|
212,333
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
212,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Bradford- Chief Operating Officer (1)(3)(6)
|
|
|
2019
|
|
|
|
217
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
217
|
|
|
|
|
|
2018
|
|
|
|
38,100
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
38,100
|
|
|
|
|
|
2017
|
|
|
|
127,381
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
127,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Josh
Beckham- Chief Financial Officer (5)(6)
|
|
|
2018
|
|
|
|
62,068
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
62,068
|
|
|
(1)
|
Messrs.
Edmonds and Bradford entered into 5-year employment agreements with Deep Green Waste and Recycling, LLC on January 1, 2016,
which were assigned and assumed by Deep Green Waste and Recycling, Inc. on August 24, 2017 following the closing of
the Purchase and Conveyance Agreement between the Company and Deep Green Waste and Recycling, LLC.
|
|
|
|
|
(2)
|
On
January 1, 2016, the Deep Green Waste & Recycling, LLC (the ‘LLC”) entered into an Employment Agreement
(the “Agreement”) with Bill Edmonds as Managing Member, President and Chief Financial Officer. Mr. Edmonds
became Chief Executive Officer of the Company in 2011. In connection with his appointment, the LLC and Mr. Edmonds
entered into a written Agreement for an initial five-year term, which provides for the following compensation terms
for Mr. Edmonds. Pursuant to the Agreement, Mr. Edmonds will receive a base salary of $200,000 per year, subject to increase
of not less than 10% per year. The Company (i) shall remit payment of One Hundred Sixty Thousand Dollars ($160,000) of the
Base Salary; and (ii) shall defer payment of Forty Thousand Dollars ($40,000) of the Base Salary, in a proportionate basis
and allocated over each payment of the Base Salary so remitted (the “Deferred Base Salary”). The Deferred Base
Salary shall earn seven percent (7%) simple interest per annum until paid in full. The Executive, in his sole and absolute
discretion, shall determine when and how Deferred Base Salary shall be paid, without limitation; and may also elect to acquire
additional ownership interest in the LLC in exchange for all or any portion of the Deferred Base Salary then outstanding,
at the lesser of (i) the then-current value of the ownership interest in the LLC; or (ii) the price at which ownership
interest in the LLC was most recently purchased by any party, including the LLC. Mr. Edmonds is eligible for
a cash bonus equal to 2.5% of Adjusted EBITDA over $2,000,000 at the end of each respective annual period. On July 17,
2017, Mr. Bradford and the LLC agreed to amend the terms of the Agreement, as follows: (i) upon initiation of its Incentive
Stock Plan, the LLC hereby grants the Executive an additional two and one-fourth percent (2.25%) ownership interest in the
LLC, with 0.5625% granted upon the date of initiation and 0.5625% granted on the anniversary date of the ISP for each of the
following three years, and (ii) for each year of the Agreement in which the LLC’s after-tax profits exceed $2,00000,000,
the LLC will pay the Executive a Discretionary Incentive Bonus of no less than two and one half percent (2.5%) of the LLC’s
after-tax profits, as determined by the LLC’s independent certified public accountant(s) in accordance with generally
accepted accounting principles. On August 24, 2017, simultaneous with the entry into the Merger Agreement between Deep Green
Waste & Recycling, LLC, Critic Clothing, Inc. and Deep Green Acquisition, LLC dated August 24, 2017, Deep Green Waste
& Recycling, Inc. (the “Company”)(f/k/a Critic Clothing, Inc.) entered into an Assignment and Assumption Agreement
of Mr. Bradford’s Agreement.
|
|
|
|
|
(3)
|
On
January 1, 2016, Deep Green Waste & Recycling, LLC (the “LLC”) entered into an Employment Agreement
(the “Agreement”) with David A. Bradford as Chief Operating Officer. In connection with his appointment, the
LLC and Mr. Bradford entered into a written Agreement for an initial five-year term, which provides for the
following compensation terms for Mr. Bradford. Pursuant to the Agreement, Mr. Bradford will receive a base salary of $108,000
per year, subject to increase of not less than 10% per year. The LLC (i) shall remit payment of Eighty-Four Thousand
Dollars ($84,000) of the Base Salary; and (ii) shall defer payment of Twenty-Four Thousand Dollars ($24,000) of the Base Salary,
in a proportionate basis and allocated over each payment of the Base Salary so remitted (the “Deferred Base Salary”).
The Deferred Base Salary shall earn seven percent (7%) simple interest per annum until paid in full. The Executive, in his
sole and absolute discretion, shall determine when and how the Deferred Base Salary shall be paid, without limitation; and
may also elect to acquire additional ownership interest in the LLC in exchange for all or any portion of the Deferred
Base Salary then outstanding, at the lesser of (i) the then-current value of the ownership interest in the Company; or (ii)
the price at which ownership interest in the LLC was most recently purchased by any party, including the LLC.
Mr. Bradford is eligible for a cash bonus equal to 1.5% of Adjusted EBITDA over $2,000,000 at the end of each respective annual
period. As an inducement to the Executive to enter into this Agreement, the LLC hereby granted the Executive
an initial three and one-half percent (3.5%) ownership interest in the LLC. In addition, the executive has the right
to purchase equity at the most recently traded rate. In 2016, the executive converted $19,947 of deferred compensation to
4.76% members’ equity. On July 17, 2017, Mr. Bradford and the LLC agreed to amend the terms of the Agreement, as
follows: (i) upon initiation of its Incentive Stock Plan, the LLC hereby grants the Executive an additional one and one half
percent (1.5%) ownership interest in the LLC, with 0.375% granted upon the date of initiation and 0.375% granted on the anniversary
date of the ISP for each of the following three years, and (ii) for each year of the Agreement in which the Company’s
after-tax profits exceed $2,000,000, the LLC will pay the Executive a Discretionary Incentive Bonus of no less than one and
one-half percent (1.5%) of the LLC’s after-tax profits, as determined by the LLC’s independent certified public
accountant(s) in accordance with generally accepted accounting principles. On August 24, 2017, simultaneous with the entry
into the Merger Agreement between Deep Green Waste & Recycling, LLC, Critic Clothing, Inc. and Deep Green Acquisition,
LLC dated August 24, 2017, Deep Green Waste & Recycling, Inc. (the “Company”)(f/k/a Critic Clothing, Inc.)
entered into an Assignment and Assumption Agreement of Mr. Bradford’s Agreement. On December 3, 2019, Mr. Bradford submitted
his resignation as President, Chief Executive Officer, Secretary and as a member of the Board of Directors of the Company,
effectively immediately. Mr. Bradford retained his role as Chief Operating Officer of the Company.
|
|
|
|
|
(4)
|
On
December 4, 2019, the Company entered into an agreement with Lloyd Spencer as President and Chief Executive Officer. In connection
with his appointment, the Company and Mr. Spencer entered into a written employment agreement (the “Employment Agreement”)
for an initial three-year term, which provides for the following compensation terms for Mr. Spencer. Pursuant to the Employment
Agreement, Mr. Spencer will receive a base salary of $10,000 per month starting when the corporation receives its first round
of equity or debt financing. Mr. Spencer shall receive 500,000 restricted shares of the Company’s common stock on or
before January 31, 2020 as a sign-on bonus. In addition, the Company shall issue to Mr. Spencer restricted shares in the form
of stock grants equivalent to 6,120,000 shares of the Corporation’s Common Stock over a 3-year period. Stock Grant shares
shall vest 170,000 shares each month after the Stock Grant date, December 4, 2019, over a three year period, except that all
unvested Stock Grant shares shall vest immediately if the Corporation terminates Executive’s employment without Just
Cause, or Executive resigns for Good Reason. The number of shares vested shall be adjusted in the event of subsequent stock
splits.
|
|
|
|
|
(5)
|
On
February 1, 2018, the Company entered into an employment agreement with Josh Beckham. The agreement stipulates that Mr. Beckham
shall be employed as Chief Financial Officer of the Company. This Agreement shall be for a period of four years (the “Initial
Term”), commencing upon the date of this Agreement and expiring on midnight of the last night immediately preceding
the first day of the fifth (5th) year thereafter, and extended for additional one (1) year “Terms”, unless at
least six (6) months prior to the expiration of the then-current Term, written notice is delivered by the party desiring to
terminate the Agreement to the other party stating that the Agreement will terminate and not be extended. This Agreement is
also subject to early termination, as provided for within the agreement. Mr. Beckham shall receive a salary of One Hundred
Twenty-Eight Thousand Dollars ($128,000) per annum and shall be increased not less than ten percent (10%) and not more than
the greater of (i) twenty percent (20%) of the most recent Base Salary; or (ii) a percentage equal to an increase in the Company’s
Enterprise Value over the most recently ended calendar year. For purposes of this Agreement, “Enterprise Value”
shall mean 1.2 times the Company’s gross annual revenue, net only of any taxes collected for and remitted to a governing
body, and less the Company’s total liabilities, as reflected on the Company’s balance sheet. As an inducement
to Mr. Beckham to enter into this Agreement, the Company hereby grants the Executive a vesting ownership interest in the Company.
The Company shall grant the Executive 800,000 shares of the Company’s common stock, 200,000 shares of which will vest
immediately upon commencement of employment, and 200,000 shares of which will vest on each of the three subsequent anniversary
dates of employment in which the Executive is in the employ of the Company. In addition, on the first anniversary of employment,
the Company will pay Mr. Beckham a “Stay” Bonus equal to ten percent (10%) of the Executive’s first year
salary of $128,000. For each year of the Agreement in which the Company’s after-tax profits exceed Five Hundred Thousand
Dollars ($500,000.00) the Company will pay the Executive a Discretionary Incentive Bonus of no less than three percent (3%)
of the Company’s after-tax profits, as determined by the Company’s independent certified public accountant(s)
in accordance with generally accepted accounting principles. At the Executive’s sole and absolute election, any Discretionary
Incentive Bonus shall be paid in any combination (i) of cash; (ii) pursuant to a deferred cash compensation arrangement; (iii)
in ownership interest; and/or; (iv) in Options. On June 11, 2018, Mr. Beckham submitted his
resignation as Chief Financial Officer of the Company, effective immediately.
|
|
|
|
|
(6)
|
The
values shown in this column represent the aggregate grant date fair value of equity-based awards granted during the fiscal
year, in accordance with ASC 718, “Share Based-Payment”. The fair value of the stock options at the date of grant
was estimated using the Black-Scholes option-pricing model, based on the assumptions described in the Notes to Financial Statements
included in this Registration Statement filed on Form S-1.
|
|
|
(a)
|
Accrued
salary and salary paid.
|
|
|
|
|
|
|
(b)
|
Accrued
bonus to employee for execution of employment agreement.
|
|
|
|
|
|
|
(c)
|
Delivery
of common stock to employee for execution of employment agreements.
|
|
|
|
|
|
|
(d)
|
Options
issued to employee for execution of employment agreement. More details on Options noted under Employment Agreements section
below.
|
|
|
|
|
|
|
(e)
|
Equity
compensation received as a Director of the Company.
|
We
have no plans in place and have never maintained any plans that provide for the payment of retirement benefits or benefits that
will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental
executive retirement plans, tax-qualified deferred contribution plans and nonqualified deferred contribution plans.
Except
as indicated below, we have no contracts, agreements, plans or arrangements, whether written or unwritten, that provide for payments
to the named executive officers listed above.
Equity
Compensation, Pension or Retirement Plans
No
retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by the Company
for the benefit of its employees.
Audit
Committee
Presently,
our Board of Directors is performing the duties that would normally be performed by an audit committee. We intend to form a separate
audit committee, and plan to seek potential independent directors. In connection with our search, we plan to appoint an individual
qualified as an audit committee financial expert.
Options/SARS
Grants During Last Fiscal Year
None.
Directors’
Compensation
None. Please see NOTE
L - SUBSEQUENT EVENTS for further information.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information,
as of March 13, 2020, with respect to any person (including any “group”, as that term is used in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) who is known to us to be the beneficial owner
of more than five percent (5%) of any class of our voting securities, and as to those shares of our equity securities beneficially
owned by each of our directors and executive officers and all of our directors and executive officers as a group. Unless otherwise
specified in the table below, such information, other than information with respect to our directors and executive officers, is
based on a review of statements filed with the Securities and Exchange commission (the “Commission”) pursuant to Sections
13 (d), 13 (f), and 13 (g) of the Exchange Act with respect to our common stock. As of March 13, 2020, there were 105,891,540
shares of common stock outstanding, 6,000,000 common shares to be issued under the Convertible Note between the Company
and Armada Investment Fund, LLC dated March 12, 2020, 262,500 shares of common stock to be issued under the Common
Stock Purchase Warrant Agreement between the Company and Armada Investment Fund, LLC dated March 12, 2020, 25,000
shares of common stock to be issued under the Common Stock Purchase Warrant Agreement between the Company and Anna & Michele
Castoro dated October 30, 2017, 25,000 shares of common stock to be issued under the Common Stock Purchase Warrant Agreement between
the Company and John Figiolini dated October 30, 2017, 425,000 shares of common stock to be issued under the Common Stock Purchase
Warrant Agreement between the Company and John Tirante Financial, Ltd dated October 30, 2017, 25,000 shares of common stock to
be issued under the Common Stock Purchase Warrant Agreement between the Company and John Torey Gault dated October 30, 2017, 200,000
shares of common stock to be issued under the Common Stock Purchase Warrant Agreement between the Company and White Crest assets,
LLC dated October 20, 2017, 5,000,000 shares of common stock to be issued under the Common Stock Purchase Warrant Agreement between
the Company and St. James Capital Management, LLC dated June 25, 2017, 25,000 shares of common stock to be issued under the Common
Stock Purchase Warrant Agreement between the Company and Transglobal Finance, Inc. dated November 20, 2017, 14,473 shares of common
stock to be issued under the Common Stock Purchase Warrant Agreement between the Company and Mary Williams dated November 30,
2017, 14,473 shares of common stock to be issued under the Common Stock Purchase Warrant Agreement between the Company and Jonja
Maner dated November 30, 2017, 11,579 shares of common stock to be issued under the Common Stock Purchase Warrant Agreement between
the Company and Chris Montag dated November 30, 2017, 11,579 shares of common stock to be issued under the Common Stock Purchase
Warrant Agreement between the Company and Josh Beckham dated November 30, 2017, 20,500 shares of common stock to be issued under
the Common Stock Purchase Warrant Agreement between the Company and Virginia Haubert dated November 30, 2017, 151,852 shares of
common stock to be issued under the Common Stock Purchase Warrant Agreement between the Company and David Smith dated November
30, 2017, 243,607 shares of common stock to be issued under the Common Stock Purchase Warrant Agreement between the Company and
the Smith Trust dated November 30, 2017, 17,368 shares of common stock to be issued under the Common Stock Purchase Warrant Agreement
between the Company and Virginia Haubert dated November 30, 2017, 30,000 shares of common stock to be issued under the Common
Stock Purchase Warrant Agreement between the Company and Mary Williams dated February 19, 2018, 25,000 shares of common stock
to be issued under the Common Stock Purchase Warrant Agreement between the Company and C. Alvin Roberds, Jr. dated March 16, 2018
and 25,000 shares of common stock to be issued under the Common Stock Purchase Warrant Agreement between the Company and Ellen
Bailey dated March 16, 2018. The number of common shares outstanding used in computing the percentages is 118,444,471.
The
number of shares of common stock beneficially owned by each person is determined under the rules of the Commission and the information
is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any
shares as to which such person has sole or shared voting power or investment power and also any shares which the individual has
the right to acquire within sixty (60) days after the date hereof, through the exercise of any stock option, warrant or other
right. Unless otherwise indicated, each person has sole investment and voting power (or shares such power with his or her spouse)
with respect to the shares set forth in the following table. The inclusion herein of any shares deemed beneficially owned does
not constitute an admission of beneficial ownership of those shares.
The
table below shows the number of shares beneficially owned as of March 13, 2020 by each of our individual directors and executive
officers, by other holders of 5% or more of the outstanding stock and by all our current directors and executive officers as a
group.
|
|
|
Common
Stock
|
|
|
Percentage
of
|
|
|
|
|
Beneficially
|
|
|
Common
Stock
|
|
|
Name
of Beneficial Owner (1)
|
|
Owned
|
|
|
(3)
|
|
|
Lloyd
Spencer (3)(4)
|
|
|
840,000
|
|
|
|
*
|
%
|
|
Bill
Edmonds (5)(6)
|
|
|
62,906,800
|
|
|
|
53.11
|
%
|
|
David
Bradford (7)(8)
|
|
|
12,005,400
|
|
|
|
10.14
|
%
|
|
Armada
Investment Fund, LLC (9)(10)
|
|
|
6,262,500
|
|
|
|
5.29
|
%
|
|
David Smith
|
|
|
7,351,393
|
|
|
|
6.21
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Officers
and Directors as a Group
|
|
|
75,752,200
|
|
|
|
63.96
|
%
|
|
|
(1)
|
Beneficial
Ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting
or investment power with respect to securities. Shares of common stock subject to options, warrants, or convertible debt currently
exercisable or convertible, or exercisable or convertible within 60 days of March 13, 2020 are deemed outstanding for
computing percentage of the person holding such option or warrant but are not deemed outstanding for computing the percentage
of any person. Percentages are based on a total of shares of common stock outstanding on March 13, 2020, and the shares
issuable upon exercise of options, warrants exercisable, and debt convertible on or within 60 days of March 13, 2020.
|
|
|
|
|
|
|
(2)
|
The
number of common shares outstanding used in computing the percentages is 118,444,471.
|
|
|
|
|
|
|
(3)
|
Included
within Lloyd Spencer’s beneficial ownership includes 840,000 shares of common stock issued to Mr. Spencer as per
the terms of the Employment Agreement entered into between the Company and Mr. Spencer dated December 4, 2019.
|
|
|
|
|
|
|
(4)
|
The
address for Mr. Spencer is 13110 NE 177th Place, Suite 293, Woodinville,
WA 98072.
|
|
|
|
|
|
|
(5)
|
Included
within Bill Edmonds’ beneficial ownership includes 62,906,800 shares of common stock issued to Mr. Edmonds in exchange
for membership units held by Mr. Edmonds, issued by Deep Green Waste & Recycling, LLC, in the Merger Agreement by and
between Deep Green Waste & Recycling, LLC, Critic Clothing, Inc. and Deep Green Acquisition, LLC dated August 24, 2017.
|
|
|
|
|
|
|
(6)
|
The
address for Mr. Edmonds is 13110 NE 177th Place, Suite 293, Woodinville, WA
98072.
|
|
|
|
|
|
|
(7)
|
Included
within David Bradford’s beneficial ownership includes 12,005,400 shares of common stock issued to Mr. Bradford in exchange
for membership units held by Mr. Bradford, issued by Deep Green Waste & Recycling, LLC, in the Merger Agreement by and
between Deep Green Waste & Recycling, LLC, Critic Clothing, Inc. and Deep Green Acquisition, LLC dated August 24, 2017.
|
|
|
|
|
|
|
(8)
|
The
address for Mr. Bradford is 13110 NE 177th Place, Suite 293, Woodinville,
WA 98072.
|
|
|
|
|
|
|
(9)
|
Included
within Armada Investment Fund, LLC’s (“ARMADA”) beneficial
ownership includes 6,000,000 shares of the Company’s common stock reserved as per
the terms of the Securities Purchase Agreement dated January 13, 2020 and to be issued
upon the conversion issued to ARMADA dated March 12, 2020 and 262,500 shares of common
stock issuable to ARMADA as per the warrant issued on March 12, 2020.
|
|
|
|
|
|
|
(10)
|
The
address for Armada Investment Fund, LLC is 7703 Springfield Lake Dr., Lake Worth, FL
33467 and its principal is Gabriel Berkowitz.
|
|
|
|
|
|
|
(11)
|
Included
within David Smith’s beneficial ownership includes 3,001,350 shares of common stock issued to Mr. Smith in exchange
for membership units held by Mr. Smith, issued by Deep Green Waste & Recycling, LLC, in the Merger Agreement by and between
Deep Green Waste & Recycling, LLC, Critic Clothing, Inc. and Deep Green Acquisition, LLC dated August 24, 2017, 2,436,067
shares of common stock issued as per the terms of the Debt Conversion Agreement dated November 30, 2017, 1,518,517 shares
of common stock held in the name of the David Smith Trust issued as per the terms of the Debt Conversion Agreement dated November
30, 2017, 151,852 shares of common stock issuable upon exercise of the warrant issued to Mr. Smith on November 30, 2017 and
243,607 shares of common stock issuable upon exercise of the warrant issued to the Smith Trust on November 30, 2017.
|
|
|
|
|
|
|
(12)
|
The
address for Mr. Smith and the David Smith Trust is 550 Brayford Way, Suwanee, GA 30024.
|
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market
Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters.
Market
Information
The
Common Stock of the Company is currently trading on the OTC Markets “PINK” under the symbol “DGWR.” The
following information reflects the high and low closing prices of the Company’s common stock on the OTC Markets “PINK.”
|
Quarterly
period
|
|
High
|
|
|
Low
|
|
|
Fiscal year
ended December 31, 2019:
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
$
|
0.10
|
|
|
$
|
0.03
|
|
|
Second
Quarter
|
|
$
|
0.0491
|
|
|
$
|
0.01
|
|
|
Third
Quarter
|
|
$
|
0.04
|
|
|
$
|
0.01
|
|
|
Fourth
Quarter
|
|
$
|
0.18
|
|
|
$
|
0.0025
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year
ended December 31, 2019:
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
$
|
0.72
|
|
|
$
|
0.35
|
|
|
Second
Quarter
|
|
$
|
0.40
|
|
|
$
|
0.15
|
|
|
Third
Quarter
|
|
$
|
0.18
|
|
|
$
|
0.05
|
|
|
Fourth
Quarter
|
|
$
|
0.10
|
|
|
$
|
0.0177
|
|
Holders
As
of December 31, 2019, the approximate number of stockholders of record of the Common Stock of the Company was 301.
Dividend
Policy
The
Company has never declared or paid any cash dividends on its common stock. We currently intend to retain future earnings, if any,
to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.
Indemnification
for Securities Act Liabilities
Our
Certificate of Incorporation provides to the fullest extent permitted by Florida Law that our directors or officers shall not
be personally liable to us or our shareholders for damages for breach of such director’s or officer’s fiduciary duty.
The effect of this provision of our Articles of Incorporation is to eliminate our rights and our shareholders (through shareholders’
derivative suits on behalf of our company) to recover damages against a director or officer for breach of the fiduciary duty of
care as a director or officer (including breaches resulting from negligent or grossly negligent behavior), except under certain
situations defined by statute. We believe that the indemnification provisions in our Articles of Incorporation, as amended, are
necessary to attract and retain qualified persons as directors and officers.
Our
By-Laws also provide that the Board of Directors may also authorize us to indemnify our employees or agents, and to advance the
reasonable expenses of such persons, to the same extent, following the same determinations and upon the same conditions as are
required for the indemnification of and advancement of expenses to our directors and officers. As of the date of this Registration
Statement, the Board of Directors has not extended indemnification rights to persons other than directors and officers.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons
controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable.
Where
You Can Find More Information
We
have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock
we and the selling stockholders are offering by this prospectus. This prospectus does not contain all of the information included
in the registration statement. For further information pertaining to us and our common stock, you should refer to the registration
statement and to its exhibits. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents,
the references are not necessarily complete, and you should refer to the exhibits attached to the registration statement for copies
of the actual contract, agreement or other document.
We
are subject to the informational requirements of the Securities Exchange Act of 1934 and file annual, quarterly and current reports,
proxy statements and other information with the SEC. You can read our SEC filings, including the registration statement, over
the Internet at the SEC’s website at www.sec.gov. You may also read and copy any document we file with the SEC at its public
reference facility at 100 F Street, N.E., Room 1580, Washington, D.C. 20549.
You
may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street,
N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference
facilities.
Legal
Proceedings
We
know of no pending proceedings to which any director, member of senior management, or affiliate is either a party adverse to us
or has a material interest adverse to us.
|
|
●
|
None
of our executive officers or directors have (i) been involved in any bankruptcy proceedings within the last five years, (ii)
been convicted in or has pending any criminal proceedings (other than traffic violations and other minor offenses), (iii)
been subject to any order, judgment or decree enjoining, barring, suspending or otherwise limiting involvement in any type
of business, securities or banking activity or (iv) been found to have violated any Federal, state or provincial securities
or commodities law and such finding has not been reversed, suspended or vacated.
|
Experts
The
validity of the shares of common stock offered hereby will be passed upon for the Registrant by McMurdo Law Group, LLC.
The financial statements for the years ended December 31, 2019 and 2018 for Deep Green Waste & Recycling, Inc. included in
this prospectus and elsewhere in the registration statement have been audited by Michael T. Studer CPA P.C., as indicated in its
report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in auditing and accounting
in giving said reports.
Changes
in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
CORPORATE
GOVERNANCE
Governance
of Our Company
We
seek to maintain high standards of business conduct and corporate governance, which we believe are fundamental to the overall
success of our business, serving our shareholders well and maintaining our integrity in the marketplace. Our corporate governance
guidelines and code of business conduct, together with our Articles of Incorporation, Bylaws and the charters for each of our
Board committees, form the basis for our corporate governance framework. We also are subject to certain provisions of the Sarbanes-Oxley
Act and the rules and regulations of the SEC. The full text of the Code of Conduct is available on our website at https://www.deepgreenwaste.com
Our
Board of Directors
Our
Board currently consists of two members. The number of directors on our Board can be determined from time to time by action
of our Board.
Our
Board believes its members collectively have the experience, qualifications, attributes and skills to effectively oversee the
management of our Company, including a high degree of personal and professional integrity, an ability to exercise sound business
judgment on a broad range of issues, sufficient experience and background to have an appreciation of the issues facing our Company,
a willingness to devote the necessary time to their Board and committee duties, a commitment to representing the best interests
of the Company and our stockholders and a dedication to enhancing stockholder value.
Risk
Oversight. Our Board oversees the management of risks inherent in the operation of our business and the implementation of
our business strategies. Our Board performs this oversight role by using several different levels of review. In connection with
its reviews of the operations and corporate functions of our Company, our Board of Directors addresses the primary risks associated
with those operations and corporate functions. In addition, our Board of Directors reviews the risks associated with our Company’s
business strategies periodically throughout the year as part of its consideration of undertaking any such business strategies.
Each of our Board committees also coordinates oversight of the management of our risk that falls within the committee’s
areas of responsibility. In performing this function, each committee has full access to management, as well as the ability to
engage advisors. The Board also is provided updated by the CEO and other executive officers of the Company on a regular basis.
Shareholder
Communications. Although we do not have a formal policy regarding communications with the Board, shareholders may communicate
with the Board by writing to us at 13110 NE 177th Place, Suite 293, Woodinville, WA 98072, Attention: Investor
Relations or via e-mail communication at info@deepgreenwaste.com. Shareholders who would like their submission directed
to a member of the Board may so specify, and the communication will be forwarded, as appropriate. Please note that the foregoing
communication procedure does not apply to (i) shareholder proposals pursuant to Exchange Act Rule 14a-8 and communications made
in connection with such proposals or (ii) service of process or any other notice in a legal proceeding.
Board
Committees
None.
PART
II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution.
The
following table sets forth expenses (estimated except for the NASDAQ Listing Fee, SEC registration fees and FINRA notice fee)
in connection with the offering described in the Registration Statement:
|
SEC
registration fees
|
|
$
|
141.25
|
|
|
Legal
fees and expenses
|
|
$
|
5,000
|
|
|
Accountants
fees and expenses
|
|
$
|
30,000
|
|
|
TOTAL
|
|
$
|
35,141.25
|
|
Item
14. Indemnification of Directors and Officers.
The
Certificate of Incorporation of the Company provides that:
|
|
●
|
The
Corporation shall indemnify a director or officer of the Corporation who was wholly successful, on the merits or otherwise,
in the defense of any proceeding to which the director or office was a party because the director or officer is or was a director
or officer of the Corporation against reasonable attorney fees and expenses incurred by the director or officer in connection
with the proceeding. The Corporation may indemnify an individual made a party to a proceeding because the individual is or
was a director, officer, employee or agent of the Corporation against liability if authorized in the specific case after determination,
in the manner required by the board of directors, that indemnification of the director, officer, employee or agent, as the
case may be, is permissible in the circumstances because the director, officer, employee or agent has met the standard of
conduct set forth by the board of directors. The indemnification and advancement of attorney fees and expenses for directors,
officers, employees and agents of the Corporation shall apply when such persons are serving at the Corporation’s request
while a director, officer, employee or agent of the Corporation, as the case may be, as a director, officer, partner, trustee,
employee or agent of another foreign or domestic Corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, whether or not for profit, as well as in their official capacity with the Corporation. The Corporation also
may pay for or reimburse the reasonable attorney fees and expenses incurred by a director, officer, employee or agent of the
Corporation who is a party to a proceeding in advance of final disposition of the proceeding. The Corporation also may purchase
and maintain insurance on behalf of an individual arising from the individual’s status as a director, officer, employee
or agent of the Corporation, whether or not the Corporation would have power to indemnify the individual against the same
liability under the law. All references in these Articles of Incorporation are deemed to include any amendment or successor
thereto. Nothing contained in these Articles of Incorporation shall limit or preclude the exercise of any right relating to
indemnification or advance of attorney fees and expenses to any person who is or was a director, officer, employee or agent
of the Corporation or the ability of the Corporation otherwise to indemnify or advance expenses to any such person by contract
or in any other manner. If any word, clause or sentence of the foregoing provisions regarding indemnification or advancement
of the attorney fees or expenses shall be held invalid as contrary to law or public policy, it shall be severable and the
provisions remaining shall not be otherwise affected. All references in these Articles of Incorporation to “director”,
“officer”, “employee”, and “agent” shall include the heirs, estates, executors, administrators
and personal representatives of such persons.
|
Any
indemnification as outlined above is not exclusive of any other rights to indemnification afforded by Florida law.
Item
15. Recent Sales of Unregistered Securities.
Each
of the below transactions were exempt from the registration requirements of the Securities Act in reliance upon Rule 701 promulgated
under the Securities Act, Section 4(a)(2) of the Securities Act or Regulation D promulgated under the Securities Act.
For
the fiscal years ended in December 31, 2019 and December 31, 2018, the Company issued and/or sold the following unregistered securities:
2019
None.
2018
On
January 17, 2018, the Company issued 1,000,000 shares of its common stock to Antevorta Capital Partners, Ltd for a conversion
in the amount of $15,000 principal against the note issued to Online Business Services, Inc. dated August 15, 2013.
On
January 19, 2018, the Company issued 1,000,000 shares of its common stock to Antevorta Capital Partners, Ltd for a conversion
in the amount of $15,000 principal against the note issued to Business Direct, Inc. dated May 13, 2010 and as amended on August
24, 2017.
On
March 6, 2018, the Company issued 1,000,000 shares of its common stock to Antevorta Capital Partners, Ltd for a conversion in
the amount of $15,000 principal against the note issued to Online Business Services, Inc. dated August 15, 2013.
On
March 23, 2018, the Company issued 3,666,667 shares of its common stock to Antevorta Capital Partners, Ltd for a conversion in
the amount of $55,000 principal against the note issued to Online Business Services, Inc. dated August 15, 2013.
On
April 18, 2018, the Company issued 2,633,333 shares of its common stock to Antevorta Capital Partners, Ltd for a conversion in
the amount of $39,850 principal against the note issued to Business Direct, Inc. dated May 13, 2010 and as amended on August 24,
2017.
On
April 5, 2018, the Company issued 115,786 shares of its common stock to Chris Montag as per the terms of the Debt Conversion Agreement
dated July 27, 2017 in satisfaction of $20,841 principal and interest.
On
April 5, 2018, the Company issued 378,679 shares of its common stock to Virginia Haubert as per the terms of the Debt Conversion
Agreement dated July 27, 2017 in satisfaction of $68,162 principal and interest.
On
April 5, 2018, the Company issued 144,732 shares of its common stock to Jonja Maner as per the terms of the Debt Conversion Agreement
dated July 27, 2017 in satisfaction of $26,052 principal and interest.
On
April 5, 2018, the Company issued 144,732 shares of its common stock to Mary Williams as per the terms of the Debt Conversion
Agreement dated July 27, 2017 in satisfaction of $26,052 principal and interest.
On
April 5, 2018, the Company issued 115,786 shares of its common stock to Josh Beckham as per the terms of the Debt Conversion Agreement
dated July 27, 2017 in satisfaction of $20,841 principal and interest.
On
April 5, 2018, the Company issued 2,436,067 shares of its common stock to David Smith as per the terms of the Debt Conversion
Agreement dated July 27, 2017 in satisfaction of $438,492 principal and interest.
On
April 5, 2018, the Company issued 1,518,517 shares of its common stock to the David Smith Trust as per the terms of the Debt Conversion
Agreement dated July 27, 2017 in satisfaction of $273,333 principal and interest.
Effective February 1, 2018, the Company
agreed to issue Josh Beckham 200,000 shares of its common stock pursuant to an employment agreement dated February 1, 2018. The
$124,000 fair value of the 200,000 shares at February 1, 2018 was expensed and included in the Consolidated Statement of Operations
for the three months ended March 31, 2018 as “Selling General and Administrative” expenses.
The
number of common shares authorized with a par value of $0.0001 per share at December 31, 2019 and 2018 is 250,000,000 and 250,000,000,
respectively. At December 31, 2019 and 2018, there are 105,051,540 and 105,051,540 shares of common stock issued and outstanding,
respectively.
Except
as noted, none of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering,
and the Registrant believes each transaction was exempt from the registration requirements of the Securities Act as stated above.
All recipients of the foregoing transactions either received adequate information about the Registrant or had access, through
their relationships with the Registrant, to such information. Furthermore, the Registrant affixed appropriate legends to the share
certificates and instruments issued in each foregoing transaction setting forth that the securities had not been registered and
the applicable restrictions on transfer.
Item
16. Exhibits and Financial Statement Schedules.
INDEX
TO FINANCIAL STATEMENTS
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders of Deep Green Waste & Recycling, Inc.:
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets
of Deep Green Waste & Recycling, Inc.: (the “Company”) as of December 31, 2019 and 2018 and the related consolidated
statements of operations, stockholders’ (deficiency), and cash flows for the years then ended, and the related notes (collectively
referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all
material respects, the financial position of Deep Green Waste & Recycling, Inc. as of December 31, 2019 and 2018 and the results
of its operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United
States.
Going
Concern Uncertainty
The
accompanying financial statements referred to above have been prepared assuming that the Company will continue as a going concern.
As discussed in Note O to the financial statements, the Company’s present financial situation raises substantial doubt about
its ability to continue as a going concern. Management’s plans in regard to this matter are also described in Note O. The
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We
conducted our audit in accordance with the standards
of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we
are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express
no such opinion.
Our
audit included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable
basis for our opinion.
|
/s/
Michael T. Studer CPA P.C.
|
|
|
Michael
T. Studer CPA P.C.
|
|
Freeport,
New York
March
17, 2020
We
have served as the Company’s
auditor since 2019.
DEEP
GREEN WASTE & RECYCLING, INC.
CONSOLIDATED
BALANCE SHEETS
|
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
735
|
|
|
$
|
1,694
|
|
|
Accounts
receivable, net of allowance for doubtful account of $542,745 at December 31, 2019 and $555,410 at December 31, 2018
|
|
|
2,675
|
|
|
|
2,675
|
|
|
Total
current assets
|
|
|
3,410
|
|
|
|
4,369
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
20,789
|
|
|
|
43,132
|
|
|
Other
assets:
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
5,000
|
|
|
|
5,000
|
|
|
Total
other assets
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
29,199
|
|
|
$
|
52,501
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
portion of debt
|
|
$
|
764,359
|
|
|
$
|
640,609
|
|
|
Accounts
payable
|
|
|
2,919,628
|
|
|
|
2,910,315
|
|
|
Accrued
expenses
|
|
|
78,272
|
|
|
|
78,272
|
|
|
Deferred
compensation
|
|
|
105,325
|
|
|
|
98,223
|
|
|
Accrued
interest
|
|
|
88,924
|
|
|
|
36,265
|
|
|
Customer
deposits payable
|
|
|
68,851
|
|
|
|
68,851
|
|
|
Total
current liabilities
|
|
|
4,025,359
|
|
|
|
3,832,535
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities
|
|
|
|
|
|
|
|
|
|
Long-term
portion of debt
|
|
|
123,750
|
|
|
|
247,500
|
|
|
Total
long-term liabilities
|
|
|
123,750
|
|
|
|
247,500
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
4,149,109
|
|
|
|
4,080,035
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock, $.0001 par value; 250,000,000 shares authorized; 105,051,540 and 105,051,540 shares issued and outstanding as of December
31, 2019 and December 31, 2018, respectively
|
|
|
10,505
|
|
|
|
10,505
|
|
|
Preferred
Stock, $.0001 par value, 2,000,000 shares authorized; 0 and 0 shares issued and outstanding as of December 31, 2019 and December
31, 2018, respectively
|
|
|
-
|
|
|
|
-
|
|
|
Additional
paid-in capital
|
|
|
2,913,369
|
|
|
|
2,913,369
|
|
|
Accumulated
deficit
|
|
|
(7,043,784
|
)
|
|
|
(6,951,408
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
stockholders’ deficit
|
|
|
(4,119,910
|
)
|
|
|
(4,027,534
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ deficit
|
|
$
|
29,199
|
|
|
$
|
52,501
|
|
The
accompanying notes are an integral part of these consolidated financial statements.
DEEP
GREEN WASTE & RECYCLING, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
For
the years ended December 31, 2019 and 2018
|
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
|
|
|
|
|
|
|
|
|
Revenues
from discontinued operations
|
|
$
|
-
|
|
|
$
|
6,375,693
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
|
-
|
|
|
|
6,375,693
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of revenues from discontinued operations
|
|
|
-
|
|
|
|
5,030,095
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin from discontinued operations
|
|
|
-
|
|
|
|
1,345,598
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative
|
|
|
20,390
|
|
|
|
1,941,769
|
|
|
Professional
and consulting
|
|
|
11,335
|
|
|
|
236,844
|
|
|
Provision
for doubtful accounts
|
|
|
(12,665
|
)
|
|
|
372,629
|
|
|
Depreciation
and amortization
|
|
|
22,343
|
|
|
|
96,440
|
|
|
Total
operating expenses
|
|
|
41,403
|
|
|
|
2,647,682
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
(loss)
|
|
|
(41,403
|
)
|
|
|
(1,302,084
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other
income/(expense):
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
-
|
|
|
|
1,279
|
|
|
Interest
expense (including amortization of debt discounts of $0 and $151,916, respectively)
|
|
|
(95,309
|
)
|
|
|
(775,568
|
)
|
|
Gain
on settlement of accounts payable
|
|
|
44,336
|
|
|
|
-
|
|
|
Loss
on sale of two subsidiaries
|
|
|
-
|
|
|
|
(473,085
|
)
|
|
Total
other income/(expense)
|
|
|
(50,973
|
)
|
|
|
(1,247,374
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
$
|
(92,376
|
)
|
|
$
|
(2,549,458
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
per common share:
|
|
|
|
|
|
|
|
|
|
Basic
and diluted net loss per common share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.02
|
)
|
|
Basic
and diluted weighted-average common shares outstanding
|
|
|
105,051,540
|
|
|
|
103,154,371
|
|
The
accompanying notes are an integral part of these consolidated financial statements.
DEEP
GREEN WASTE & RECYCLING, INC.
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ (DEFICIENCY)
For
the years ended December 31, 2019 and 2018
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
Paid
in
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances
at December 31, 2017
|
|
|
95,551,540
|
|
|
$
|
9,555
|
|
|
$
|
2,510,470
|
|
|
$
|
(4,401,950
|
)
|
|
$
|
(1,881,925
|
)
|
|
Issuance
of common stock in satisfaction of convertible debt, accrued interest and fees
|
|
|
9,300,000
|
|
|
|
930
|
|
|
|
118,919
|
|
|
|
-
|
|
|
|
119,849
|
|
|
Common
stock to be issued in connection with employment agreement dated February 1, 2018
|
|
|
200,000
|
|
|
|
20
|
|
|
|
123,980
|
|
|
|
-
|
|
|
|
124,000
|
|
|
Beneficial
conversion features and warrants relating to issuance of convertible notes
|
|
|
-
|
|
|
|
-
|
|
|
|
160,000
|
|
|
|
-
|
|
|
|
160,000
|
|
|
Net
loss for the year ended December 31, 2018
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,549,458
|
)
|
|
|
(2,549,458
|
)
|
|
Balances
at December 31, 2018
|
|
|
105,051,540
|
|
|
|
10,505
|
|
|
$
|
2,913,369
|
|
|
|
(6,951,408
|
)
|
|
|
(4,027,534
|
)
|
|
Net
loss for the year ended December 31, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(92,376
|
)
|
|
|
(92,376
|
)
|
|
Balances
at December 31, 2019
|
|
|
105,051,540
|
|
|
$
|
10,505
|
|
|
$
|
2,913,369
|
|
|
$
|
(7,043,784
|
)
|
|
$
|
(4,119,910
|
)
|
The
accompanying notes are an integral part of these statements.
DEEP
GREEN WASTE & RECYCLING, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
For
the years ended December 31, 2019 and 2018
|
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net
income (loss) for the period
|
|
$
|
(92,376
|
)
|
|
$
|
(2,549,458
|
)
|
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
22,343
|
|
|
|
96,440
|
|
|
Provision for
doubtful accounts
|
|
|
(12,665
|
)
|
|
|
372,629
|
|
|
Amortization of
debt discounts
|
|
|
-
|
|
|
|
151,916
|
|
|
Common stock to
be issued in connection with employment agreement dated February 1, 2018
|
|
|
-
|
|
|
|
124,000
|
|
|
Gain on settlement
of accounts payable
|
|
|
(44,336
|
)
|
|
|
-
|
|
|
Loss on sale of
two subsidiaries
|
|
|
-
|
|
|
|
473,085
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
12,665
|
|
|
|
(294,838
|
)
|
|
Inventory
|
|
|
-
|
|
|
|
(28,277
|
)
|
|
Prepaid expenses
|
|
|
-
|
|
|
|
31,192
|
|
|
Deposits
|
|
|
-
|
|
|
|
3,300
|
|
|
Accounts payable
|
|
|
53,649
|
|
|
|
1,222,524
|
|
|
Accrued expenses
|
|
|
-
|
|
|
|
39,504
|
|
|
Leases payable
|
|
|
-
|
|
|
|
(8,603
|
)
|
|
Deferred compensation
|
|
|
7,102
|
|
|
|
25,876
|
|
|
Accrued interest
|
|
|
52,659
|
|
|
|
39,246
|
|
|
Deferred revenue
|
|
|
-
|
|
|
|
(19,652
|
)
|
|
Customer
deposits payable
|
|
|
-
|
|
|
|
86,165
|
|
|
Net
cash used in operating activities
|
|
|
(959
|
)
|
|
|
(234,951
|
)
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Purchase of property
and equipment
|
|
|
-
|
|
|
|
(97,669
|
)
|
|
Sale of subsidiaries:
|
|
|
|
|
|
|
|
|
|
CARE
|
|
|
-
|
|
|
|
(53,345
|
)
|
|
CFSI
|
|
|
-
|
|
|
|
(33,687
|
)
|
|
Net
cash used in investing activities
|
|
|
-
|
|
|
|
(184,701
|
)
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Proceeds from
notes payable
|
|
|
-
|
|
|
|
285,000
|
|
|
Repayment
of notes payable
|
|
|
-
|
|
|
|
(146,033
|
)
|
|
Net
cash provided by financing activities
|
|
|
-
|
|
|
|
138,967
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH
|
|
|
(959
|
)
|
|
|
(280,685
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH, BEGINNING
OF PERIOD
|
|
|
1,694
|
|
|
|
282,379
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH, END OF
PERIOD
|
|
$
|
735
|
|
|
$
|
1,694
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
|
Cash paid during
the year for:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
42,650
|
|
|
$
|
584,406
|
|
|
Income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Non-Cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
Issuance of common
stock in satisfaction of convertible debt ($94,850) and accrued interest and fees ($24,999)
|
|
$
|
-
|
|
|
$
|
119,849
|
|
|
Deep Green loans
payable assumed by Mirabile Corporate Holdings, Inc. in connection with sale of CARE and CFSI (net of $639,460 debt discounts
at August 7, 2018)
|
|
$
|
-
|
|
|
$
|
969,513
|
|
|
Beneficial conversion
feature and warrants relating to issuance of convertible notes
|
|
$
|
-
|
|
|
$
|
160,000
|
|
The
accompanying notes are an integral part of these consolidated financial statements.
DEEP
GREEN WASTE & RECYCLING, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended December 31, 2019 and 2018
NOTE
A – ORGANIZATION
Deep
Green Waste & Recycling, Inc. (f/k/a Critic Clothing, Inc.) (“Deep Green”, the “Company”, “we”,
“us”, or “our”) was organized as a Nevada Corporation on August 24, 1995 under the name of Evader, Inc.
On May 25, 2012, the Company filed its Foreign Profit Corporation Articles of Domestication to change the domicile of the Company
from Nevada to Wyoming. On November 4, 2015, the Company filed an Amendment to its Articles of Incorporation to change the name
of the Company to Critical Clothing, Inc. and on August 28, 2017 an Amendment was filed to change the Company name to Deep Green
Waste & Recycling, Inc.
On
August 24, 2017, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations
(the “Agreement”) with St. James Capital Management, LLC. Under the terms of the Agreement, the Company transferred
and assigned all of the assets of the Company related to its extreme sports apparel design and manufacturing business in exchange
for the assumption of certain liabilities and cancellation of 3,000,000 shares (as adjusted for the September 27, 2017 reverse
stock split of 1 share for 1000 shares) of common stock of the Company.
On
August 24, 2017, the Company acquired all the membership units of Deep Green Waste and Recycling, LLC (“DGWR LLC”),
a Georgia limited liability company engaged in the waste recycling business since 2011, in exchange for 85,000,000 shares (as
adjusted for the September 27, 2017 reverse stock split of 1 share for 1000 shares) of the Company’s common stock. The transaction
was accounted for as a “reverse merger” where DGWR LLC was considered the accounting acquiror and the Company was
considered the accounting acquiree.
Effective
October 1, 2017, Deep Green acquired Compaction and Recycling Equipment, Inc. (CARE), a Portland, Oregon based company that sells
and services waste and recycling equipment. Deep Green purchased 100% of the common stock for $902,700. $586,890 was paid in cash
at closing and a promissory note was executed in the amount of $315,810.
Effective
October 1, 2017, Deep Green acquired Columbia Financial Services, Inc, (CFSI), a Portland, Oregon based company that finances
the purchases of waste and recycling equipment. Deep Green purchased 100% of the common stock for $597,300. $418,110 was paid
in cash at closing and a promissory note was executed in the amount of $179,190.
On
August 7, 2018, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Subsidiaries and Assumption of
Obligations (the “Agreement”) with Mirabile Corporate Holdings, Inc. Under the terms of the Agreement, the Company
transferred all capital stock of its two wholly owned subsidiaries, Compaction and Recycling Equipment, Inc. and Columbia Financial
Services, Inc., to Mirabile Corporate Holdings, Inc. in exchange for the assumption and cancellation of certain liabilities. Deep
Green’s then Chief Executive Officer owns a 7.5% equity interest in Mirabile Corporate Holdings, Inc.
On August 7, 2018, the Company ceased its
waste recycling business.
Going
forward, the company plan is to obtain additional funding and re-launch its waste and recycling services business. The Company
plans to:
|
|
●
|
Provide
sustainable waste management services that minimizes costs based on volume and content of waste streams, and methods of disposal,
including landfills, transfer stations and recycling centers; and
|
|
|
●
|
Offer
innovative recycling services that significantly reduce the disposal of plastics, electronic wastes, food wastes, and hazardous
wastes; and
|
|
|
●
|
Establish
partnerships with innovative universities and companies, and acquire profitable waste and recycling services companies, that
can help the Company achieve these objectives; and
|
|
|
●
|
Attract
investment funds who will actively work with the Company to achieve these goals and help the Company grow into a leading waste
and recycling services supplier in North America.
|
NOTE
B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Summary
of Significant Accounting Policies
This
summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial
statements. The financial statements and notes are representations of the Company’s management, which is responsible for
their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States
and have been consistently applied in the preparation of the financial statements.
Principles
of Consolidation
The
consolidated financial statements include the accounts of Deep Green Waste & Recycling, Inc. (“Deep Green”),
DGWR, LLC and Deep Green’s wholly owned subsidiaries, Compaction and Recycling
Equipment Inc (“CARE”) and Columbia Financial Services Inc (“CFSI”),
for the period of Deep Green’s ownership of CARE and CFSI from October 1, 2017 to August 7, 2018. All
inter-company balances and transactions have been eliminated in consolidation.
DEEP
GREEN WASTE & RECYCLING, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended December 31, 2019 and 2018
NOTE
B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash
Equivalents
Investments
having an original maturity of 90 days or less that are readily convertible into cash are considered to be cash equivalents. For
the periods presented, the Company had no cash equivalents.
Income
Taxes
In
accordance with Accounting Standards Codification (ASC) 740 - Income Taxes, the provision for income taxes is computed using the
asset and liability method. The asset and liability method measures deferred income taxes by applying enacted statutory rates
in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts
on the financial statements. The resulting deferred tax assets or liabilities are adjusted to reflect changes in tax laws as they
occur. A valuation allowance is provided when it is not more likely than not that a deferred tax asset will be realized.
We
expect to recognize the financial statement benefit of an uncertain tax position only after considering the probability that a
tax authority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold,
the amount to be recognized in the financial statements will be the benefit expected to be realized upon settlement with the tax
authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. As of December 31, 2019,
we had no uncertain tax positions. We recognize interest and penalties, if any, related to uncertain tax positions as general
and administrative expenses. We currently have no federal or state tax examinations nor have we had any federal or state examinations
since our inception. To date, we have not incurred any interest or tax penalties.
Financial
Instruments and Fair Value of Financial Instruments
We
adopted ASC Topic 820, Fair Value Measurements and Disclosures, for assets and liabilities measured at fair value on a
recurring basis. ASC Topic 820 establishes a common definition for fair value to be applied to existing US GAAP that requires
the use of fair value measurements that establishes a framework for measuring fair value and expands disclosure about such fair
value measurements.
ASC
820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Additionally, ASC Topic 820 requires the use of valuation techniques that
maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
|
Level
1:
|
|
Observable
inputs such as quoted market prices in active markets for identical assets or liabilities
|
|
Level
2:
|
|
Observable
market-based inputs or unobservable inputs that are corroborated by market data
|
|
Level
3:
|
|
Unobservable
inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.
|
The
carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial
assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement
is prepared. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when
a significant event occurs. We had no financial assets or liabilities carried and measured at fair value on a recurring
or nonrecurring basis during the periods presented.
DEEP
GREEN WASTE & RECYCLING, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended December 31, 2019 and 2018
NOTE
B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Derivative
Liabilities
We
evaluate convertible notes payable, stock options, stock warrants and other contracts to determine if those contracts or embedded
components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC Topic 815-40,
Derivative Instruments and Hedging: Contracts in Entity’s Own Equity.
The
result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument
and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as
a liability, the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion
or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value
is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification
under ASC Topic 815-40 are reclassified to a liability account at the fair value of the instrument on the reclassification date.
Impairment
of Long-Lived Assets
The
Company’s long-lived assets (consisting primarily of property and equipment) are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets
to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net cash flows expected
to be generated by that asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment
charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Through December
31, 2019, the Company has not experienced impairment losses on its long-lived assets.
Property
and Equipment
Property
and equipment are stated at cost less accumulated depreciation
and amortization. Routine maintenance and repairs and minor replacement costs are charged to expense as incurred, while expenditures
that extend the life of these assets are capitalized. Depreciation and amortization are provided for in amounts sufficient to
write off the cost of depreciable assets to operations over their estimated service lives. The Company uses the straight-line
method of depreciation method for both financial reporting and tax purposes. Upon the sale or retirement of property and equipment,
the cost and related accumulated depreciation and amortization will be removed from the accounts and the resulting profit or loss
will be reflected in the statement of income. The estimated lives used to determine depreciation and amortization are:
|
Software
|
|
2-3
Years
|
|
Office
Equipment
|
|
3-7 Years
|
|
Furniture
and Fixtures
|
|
8 Years
|
|
Waste
and Recycling Equipment
|
|
5 Years
|
|
Leasehold
Improvements
|
|
Varies
by Lease
|
|
Service
Equipment
|
|
5 Years
|
*Construction
in Progress (CIP) is not depreciated until it is place in service.
DEEP
GREEN WASTE & RECYCLING, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended December 31, 2019 and 2018
NOTE
B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Equity
Instruments Issued to Non-Employees for Acquiring Goods or Services
Issuances
of our common stock or warrants for acquiring goods or services are measured at the fair value of the consideration received or
the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for the fair value
of the equity instruments issued to consultants or vendors is determined at the earlier of (i) the date at which a commitment
for performance to earn the equity instruments is reached (a “performance commitment” which would include a penalty
considered to be of a magnitude that is a sufficiently large disincentive for nonperformance) or (ii) the date at which performance
is complete.
Although
situations may arise in which counter performance may be required over a period of time, the equity award granted to the party
performing the service may be fully vested and non-forfeitable on the date of the agreement. As a result, in this situation
in which vesting periods do not exist if the instruments are fully vested on the date of agreement, we determine such date to
be the measurement date and will record the estimated fair market value of the instruments granted as a prepaid expense and amortize
such amount to expense over the contract period. When it is appropriate for us to recognize the cost of a transaction during financial
reporting periods prior to the measurement date, for purposes of recognition of costs during those periods, the equity instrument
is measured at the then-current fair values.
Stock-Based
Compensation
We
account for share-based awards to employees in accordance with ASC 718 “Stock Compensation”. Under this guidance,
stock compensation expense is measured at the grant date, based on the fair value of the award, and is recognized as an expense
over the estimated service period (generally the vesting period) on the straight-line attribute method. Share-based awards to
non-employees are accounted for in accordance with ASC 505-50 “Equity”, wherein such awards are expensed over the
period in which the related services are rendered.
Related
Parties
A
party is considered to be related to us if the party directly or indirectly or through one or more intermediaries, controls, is
controlled by, or is under common control with us. Related parties also include our principal owners, our management, members
of the immediate families of our principal owners and our management and other parties with which we may deal if one party controls
or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties
might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or
operating policies of the transacting parties, or if it has an ownership interest in one of the transacting parties and can significantly
influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate
interests, is also a related party.
Revenue
Recognition
Revenue
is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) the price is fixed
or determinable, (3) collectability is reasonably assured, and (4) delivery has occurred.
Advertising
Costs
Advertising
costs are expensed as incurred. Advertising and promotions expense was $0 and $15,113
for the year ended December 31, 2019 and December 31, 2018, respectively.
Loss
per Share
We
compute net loss per share in accordance with FASB ASC 260. The ASC specifies the computation, presentation and disclosure requirements
for loss per share for entities with publicly held common stock.
Basic
loss per share amounts are computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted
net loss per common share is computed on the basis of the weighted average number of common shares and dilutive securities (such
as stock options, warrants and convertible securities) outstanding. Dilutive securities having an anti-dilutive effect on diluted
net loss per share are excluded from the calculation.
For
the years ended December 31, 2019 and 2018, we have excluded the 6,290,431 warrants outstanding at December 31, 2019 and 2018 (Please
see NOTE G - CAPITAL STOCK for further information) from our diluted net loss per share calculation as the effect
of their inclusion would be anti-dilutive.
DEEP
GREEN WASTE & RECYCLING, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended December 31, 2019 and 2018
NOTE
B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recently
Enacted Accounting Standards
In
May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts
with Customers, which will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU
2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration
to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this
core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than was
required under prior U.S. GAAP. We adopted ASU 2014-09 effective January 1, 2018. ASU 2014-09 has not had any
significant effect on our Financial statements for the periods presented.
In
February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to provide guidance on recognizing lease assets and lease
liabilities on the balance sheet and disclosing key information about leasing arrangements, specifically differentiating between
different types of leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise
from all leases. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have
not significantly changed from previous GAAP. There continues to be a differentiation between finance leases and operating leases.
However, the principal difference from previous guidance is that the lease assets and lease liabilities arising from operating
leases should be recognized in the balance sheet. The accounting applied by a lessor is largely unchanged from that applied under
previous GAAP. We adopted ASU 2016-02 effective January 1, 2019. ASU No. 2016-02 has not had any significant effect on
our Financial statements for the periods presented.
On
July 13, 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) 2017-11.
Among other things, ASU 2017-11 provides guidance that eliminates the requirement to consider “down round” features
when determining whether certain financial instruments or embedded features are indexed to an entity’s stock and need to
be classified as liabilities. ASU 2017-11 provides for entities to recognize the effect of a down round feature only when it is
triggered and then as a dividend and a reduction to income available to common stockholders in basic earnings per share. The guidance
is effective for annual periods beginning after December 15, 2018; early adoption is permitted.
The
Company has early adopted ASU 2017-11. As a result, we have not recognized the fair value of the warrants containing down round
features as liabilities. Please see NOTE G - CAPITAL STOCK for further information.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during
the reporting periods. Actual results could differ from those estimates.
DEEP
GREEN WASTE & RECYCLING, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended December 31, 2019 and 2018
NOTE
B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair
Value of Financial Instruments
The
Company defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current
transaction between willing parties. Financial instruments included in the Company’s financial statements include cash,
accounts payable and accrued expenses, accrued interest payable and debt. Unless otherwise disclosed in the notes to the
financial statements, the carrying value of financial instruments is considered to approximate fair value due to the short maturity
and characteristics of those instruments. The carrying value of debt approximates fair value as terms approximate those currently
available for similar debt instruments.
NOTE C –
DISCONTINUED OPERATIONS
As described in
Note 1 above, the Company sold its two subsidiaries, CARE and CFSI, and ceased its waste recycling business on August 7, 2018.
For
the year ended December 31, 2018, consolidated operating results consisted of:
|
|
|
Deep
Green
and
DGWR, LLC
|
|
|
CARE
|
|
|
CFSI
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
4,608,264
|
|
|
$
|
1,672,374
|
|
|
$
|
95,055
|
|
|
$
|
6,375,693
|
|
|
Cost
of revenues
|
|
|
(4,098,241
|
)
|
|
|
(914,024
|
)
|
|
|
(17,830
|
)
|
|
|
(5,030,095
|
)
|
|
Gross
margin
|
|
|
510,023
|
|
|
|
758,350
|
|
|
|
77,225
|
|
|
|
1,345,598
|
|
|
Operating
expenses
|
|
|
(1,846,926
|
)
|
|
|
(789,362
|
)
|
|
|
(11,394
|
)
|
|
|
(2,647,682
|
)
|
|
Operating
income (loss)
|
|
|
(1,336,903
|
)
|
|
|
(31,012
|
)
|
|
|
65,831
|
|
|
|
(1,302,084
|
)
|
|
Interest
income
|
|
|
46
|
|
|
|
1,233
|
|
|
|
-
|
|
|
|
1,279
|
|
|
Interest
expense
|
|
|
(769,245
|
)
|
|
|
(3,492
|
)
|
|
|
(2,831
|
)
|
|
|
(775,568
|
)
|
|
Loss
on sale of two subsidiaries
|
|
|
(473,085
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(473,085
|
)
|
|
Other
income (expense)
|
|
|
(1,242,284
|
)
|
|
|
(2,259
|
)
|
|
|
(2,831
|
)
|
|
|
(1,247,374
|
)
|
|
Net
income (loss)
|
|
$
|
(2,579,187
|
)
|
|
$
|
(33,271
|
)
|
|
$
|
63,000
|
|
|
$
|
(2,549,458
|
)
|
The
loss on the sale of CARE and CFSI on August 7, 2018 was $473,085 as follows:
|
Deep Green loans payable assumed by Mirabile Corporate Holdings, Inc. (less
$639,460 debt discounts)
|
|
$
|
969,513
|
|
|
Forgiveness of Deep Green intercompany loans payable to CARE and CFSI
|
|
|
103,564
|
|
|
Total consideration received by Deep Green
|
|
|
1,073,077
|
|
|
Net assets of CARE and CFSI at August 7, 2018
|
|
|
1,546,162
|
|
|
Loss on sale of CARE and CFSI
|
|
$
|
(473,085
|
)
|
NOTE
D - PROPERTY AND EQUIPMENT
Property
and Equipment consist of the following at:
|
|
|
12/31/2019
|
|
|
12/31/2018
|
|
|
Software
|
|
|
99,025
|
|
|
|
99,025
|
|
|
Office
equipment
|
|
|
60,974
|
|
|
|
60,974
|
|
|
Furniture
and Fixtures
|
|
|
948
|
|
|
|
948
|
|
|
Waste
and Recycling Equipment
|
|
|
18,800
|
|
|
|
18,800
|
|
|
Leasehold
Improvements
|
|
|
2,100
|
|
|
|
2,100
|
|
|
Total
|
|
|
181,847
|
|
|
|
181,847
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
depreciation and amortization
|
|
|
(161,058
|
)
|
|
|
(138,715
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
$
|
20,789
|
|
|
$
|
43,132
|
|
DEEP
GREEN WASTE & RECYCLING, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended December 31, 2019 and 2018
NOTE
E – ACCOUNTS PAYABLE
Accounts
payable consist of the following at:
|
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
|
August 1, 2018 Default
Judgment payable to Ohio vendor
|
|
$
|
32,832
|
|
|
$
|
32,832
|
|
|
January 14, 2019 Default Judgment payable
to Tennessee customer
|
|
|
423,152
|
|
|
|
423,152
|
|
|
January 24, 2019 Default judgment payable
to Florida vendor
|
|
|
31,631
|
|
|
|
31,631
|
|
|
Other vendors of materials and services
|
|
|
2,211,707
|
|
|
|
2,231,623
|
|
|
Credit card
obligations
|
|
|
220,306
|
|
|
|
191,077
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,919,628
|
|
|
$
|
2,910,315
|
|
Most
of the accounts payable relate to services performed by subcontractors prior to the cessation of our waste recycling business
on August 7, 2018. In many cases, these subcontractors have subsequently reached agreements with our former customers to continue
the provision of services to such customers.
NOTE
F – DEBT
Debt
consists of the following at:
|
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
|
Note
payable to Seller of CARE dated October 20, 2017, interest at 7% per annum, payable in 16 quarterly installments of principal
and interest commencing on January 1, 2018 and ending October 1, 2021 (1)
|
|
$
|
315,810
|
|
|
$
|
315,810
|
|
|
Note
payable to Seller of CFSI dated October 20, 2017, interest at 7% per annum, payable in 16 quarterly installments of principal
and interest commencing on January 1, 2018 and ending October 1, 2021 (1)
|
|
|
179,190
|
|
|
|
179,190
|
|
|
Claimed
amount due to Factor pursuant to Factor’s Notice of Default dated July 31, 2018
|
|
|
387,535
|
|
|
|
387,535
|
|
|
Short-term
capital lease
|
|
|
5,574
|
|
|
|
5,574
|
|
|
Total
|
|
|
888,109
|
|
|
|
888,109
|
|
|
Current
portion of debt
|
|
|
(764,359
|
)
|
|
|
(640,609
|
)
|
|
Long-term
portion of debt
|
|
$
|
123,750
|
|
|
$
|
247,500
|
|
|
(1)
|
The
Company disputes these liabilities based on Seller’s misrepresentations in connection with the sale of CARE and CFSI
to Deep Green effective October 1, 2017. The Company has not made any of the payments required under these notes.
|
DEEP
GREEN WASTE & RECYCLING, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended December 31, 2019 and 2018
DEEP
GREEN WASTE & RECYCLING, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended December 31, 2019 and 2018
NOTE
G - CAPITAL STOCK
Preferred
Stock
On
July 18, 2010, the Board of Directors unanimously approved the designation of a series of preferred stock to be known as
“Series A Convertible Preferred Stock” (hereinafter “Series A”) with a stated par value of $0.0001
per share. The designations, powers, preferences and rights, and the qualifications, limitations or restrictions hereof, in
respect of the Series A shall be as hereinafter described. The holders of Series A, shall not be entitled to receive
dividends, nor shall dividends be paid on common stock or any other Series of Preferred Stock while Series A shares are
outstanding. The holders of Series A shall be entitled to vote on all matters submitted to a vote of the Shareholders of the
Company. The holders of the Series A shall be entitled to one thousand (1,000) votes per one share of Series A held. Upon the
availability of a sufficient number of authorized but unissued and unreserved shares of common stock, the holders of any
Series A Preferred Stock shall be entitled to convert such shares in to fully paid and non-assessable shares of common stock
at the rate of 1000 shares of common stock for each share of Series A. In the event of any liquidation, dissolution or
winding up of the Corporation, either voluntarily or involuntarily, after setting apart or paying in full the preferential
amounts due the Holders of senior capital stock, if any, the Holders of Series A and parity capital stock, if any, shall be
entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to
the Holders of junior capital stock, including Common Stock, an amount equal to $0.125 per share.
On June 26, 2017, the Company entered into
a conversion agreement with Saint James Capital Management LLC and agreed to convert 2,000,000 shares of the Company’s Series
A Preferred Stock held by Saint James into a warrant to purchase 5,000,000 shares of the Company’s common stock at an exercise
price of $0.30 per share and a term of three years. On August 23, 2017, the Company’s Board of Directors approved a reduction
of the warrant exercise price from $0.30 to $0.20 per share.
At December 31, 2019 and December 31, 2018,
there are 0 and 0 shares of Series A issued and outstanding, respectively.
On
January 22, 2020, the Board of Directors unanimously approved the designation of a series of preferred stock to be known as
“Series B Convertible Preferred Stock” (hereinafter “Series B”) with a stated par value of $0.0001
per share. The designations, powers, preferences and rights, and the qualifications, limitations or restrictions hereof, in
respect of the Series B shall be as hereinafter described.
The
holders of the Series B, shall not be entitled to receive dividends, nor shall dividends be paid on common stock or any other
Series of Preferred Stock while Series B shares are outstanding. The holders of Series B shall be entitled to vote on all matters
submitted to a vote of the Shareholders of the Company. The holders of the Series B shall be entitled to twenty thousand (20,000)
votes per one share of Series B held. Upon the availability of a sufficient number of authorized but unissued and unreserved shares
of common stock, the holders of any Series B Preferred Stock shall be entitled to convert such shares in to fully paid and non-assessable
shares of common stock at the following conversion feature: the Conversion Price for each share of Series B Preferred Stock in
effect on any Conversion Date shall be (i) eighty five percent (85%) of the average closing bid price of the Common Stock over
the twenty (20) trading days immediately preceding the date of conversion, (ii) but no less than Par Value of the Common Stock.
For purposes of determining the closing bid price on any day, reference shall be to the closing bid price for a share of Common
Stock on such date on the NASD OTC Bulletin Board, as reported on Bloomberg, L.P. Any conversion shall be for a minimum Stated
Value of $500.00 of Series B shares.
If
the Corporation shall commence a voluntary case under the U.S. Federal bankruptcy laws or any other applicable bankruptcy, insolvency
or similar law, or consent to the entry of an order for relief in an involuntary case under any law or to the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Corporation or of any substantial
part of its property, or make an assignment for the benefit of its creditors, or admit in writing its inability to pay its debts
generally as they become due, or if a decree or order for relief in respect of the Corporation shall be entered by a court having
jurisdiction in the premises in an involuntary case under the U.S. Federal bankruptcy laws or any other applicable bankruptcy,
insolvency or similar law resulting in the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
other similar official) of the Corporation or of any substantial part of its property, or ordering the winding up or liquidation
of its affairs, and any such decree or order shall be unstayed and in effect for a period of sixty (60) consecutive days and,
on account of any such event, the Corporation shall liquidate, dissolve or wind up, or if the Corporation shall otherwise liquidate,
dissolve or wind up, including, but not limited to, the sale or transfer of all or substantially all of the Corporation’s
assets in one transaction or in a series of related transactions (a “Liquidation Event”), no distribution shall be
made to the holders of any shares of capital stock of the Corporation (other than Senior Securities and Pari Passu Securities)
upon liquidation, dissolution or winding up unless prior thereto the Holders of shares of Series B Preferred Stock shall have
received the Liquidation Preference (as defined below) with respect to each share. If, upon the occurrence of a Liquidation Event,
the assets and funds available for distribution among the Holders of the Series B Preferred Stock and Holders of Pari Passu Securities
shall be insufficient to permit the payment to such holders of the preferential amounts payable thereon, then the entire assets
and funds of the Corporation legally available for distribution to the Series B Preferred Stock and the Pari Passu Securities
shall be distributed ratably among such shares in proportion to the ratio that the Liquidation Preference payable on each such
share bears to the aggregate Liquidation Preference payable on all such shares.
At December 31, 2019 and December 31,2018,
there are 0 and 0 Series B shares issued and outstanding. Please see NOTE L - SUBSEQUENT EVENTS for further information.
DEEP
GREEN WASTE & RECYCLING, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended December 31, 2019 and 2018
NOTE
G - CAPITAL STOCK (continued)
Common
Stock
Holders
of the Company’s common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders
of common stock do not have cumulative voting rights. A vote by the holders of a majority of the Company’s outstanding voting
shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to the Company’s
articles of incorporation.
Holders
of the Company’s common stock are entitled to share in all dividends that the board of directors, in its discretion, declares
from legally available funds. In the event of a liquidation, dissolution or winding up, each outstanding share entitles its holder
to participate pro rata in all assets that remain after payment of liabilities and after providing
for each class of stock, if any, having preference over the common stock. The Company’s common stock has no pre-emptive
rights, no conversion rights and there are no redemption provisions applicable to the Company’s common stock.
DEEP
GREEN WASTE & RECYCLING, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended December 31, 2019 and 2018
NOTE
G - CAPITAL STOCK (continued)
Our
majority shareholder and our board of directors approved an amendment to our Articles of Incorporation for the purpose of approving
a reverse split of one to one thousand in which each shareholder was issued one common share in exchange for every one thousand
common shares of their issued common stock. Prior to approval of the reverse split we had a total of 99,997,102,862 issued and
outstanding shares of common stock, par value $0.0001. On September 27, 2017, the effective date of the reverse split, we had
a total of 99,997,102 issued and 90,697,102 outstanding shares of common stock, par value $0.0001.
Common
Stock and Preferred Stock Issuances
For
the fiscal years ended December 31, 2019 and 2018, the Company issued and/or sold the following securities:
2019
None
2018
From
January 17, 2018 to April 18, 2018, the Company issued a total of 9,300,000 shares of its common stock to Antevorta Capital Partners,
Ltd in satisfaction of a total of $94,850 notes payable and $24,999 accrued interest.
Effective
February 1, 2018, the Company agreed to issue Josh Beckham 200,000 shares of its common stock pursuant to an employment agreement
dated February 1, 2018. The $124,000 fair value of the 200,000 shares at February 1, 2018 was expensed and included in the Consolidated
Statement of Operations for the three months ended March 31, 2018 as “Selling General and Administrative” expenses.
The
number of common shares authorized with a par value of $0.0001 per share at December 31, 2019 and 2018 is
250,000,000 and 250,000,000, respectively. At December 31, 2019 and 2018, there are 105,051,540
and 105,051,540 shares of common stock issued and outstanding, respectively.
DEEP
GREEN WASTE & RECYCLING, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended December 31, 2019 and 2018
NOTE
G - CAPITAL STOCK (continued)
Warrants
and options
A
summary of warrants and options activity follows:
|
|
|
Shares
Equivalent
|
|
|
|
|
Options
|
|
|
Warrants
|
|
|
Total
|
|
|
Balance
December 31, 2017
|
|
|
-
|
|
|
|
6,210,431
|
|
|
|
6,210,431
|
|
|
Warrants
(exercisable at $0.175 per share) issued to an investor in connection with sale of $60,000
Promissory Note on February 19, 2018
|
|
|
-
|
|
|
|
30,000
|
|
|
|
30,000
|
|
|
Warrants
(exercisable at $0.175 per share) issued to an investor. in connection with sale of $50,000
Promissory Note on March 16, 2018
|
|
|
-
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
Warrants
(exercisable at $0.175 per share) issued to an investor in connection with sale of $50,000
Promissory Note on March 16, 2018
|
|
|
-
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
Balance,
December 31, 2018
|
|
|
-
|
|
|
|
6,290,431
|
|
|
|
6,290,431
|
|
|
Balance,
December 31, 2019
|
|
|
-
|
|
|
|
6,290,431
|
|
|
|
6,290,431
|
|
As
of December 31, 2019, the Company had eighteen warrants issued and outstanding granting the holders the right to purchase up
to a total of 6,290,431 shares of its common stock. Please see NOTE L - SUBSEQUENT EVENTS for further
information.
The
following table summarizes information about warrants outstanding as of December 31, 2019:
|
Number
Outstanding
|
|
|
|
|
|
At
December 31, 2019
|
|
Exercise
Price
|
|
Expiration
Date
|
|
|
|
|
|
|
|
|
500,000
|
|
|
$
|
0.175
|
|
|
October
30, 2020
|
|
|
200,000
|
|
|
$
|
0.175
|
|
|
October
20, 2020
|
|
|
5,000,000
|
|
|
$
|
0.20
|
|
|
June
20, 2020
|
|
|
25,000
|
|
|
$
|
0.175
|
|
|
November
20, 2020
|
|
|
30,000
|
|
|
$
|
0.175
|
|
|
February
19, 2021
|
|
|
50,000
|
|
|
$
|
0.175
|
|
|
March
16, 2021
|
|
|
485,431
|
|
|
$
|
0.20
|
|
|
November
30, 2020
|
|
|
6,290,431
|
|
|
|
|
|
|
|
DEEP
GREEN WASTE & RECYCLING, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended December 31, 2019 and 2018
NOTE
H - INCOME TAXES
The
provision for (benefit from) income taxes differs from the amount computed by applying the statutory United States federal income
tax rate for the periods presented to income (loss) before income taxes. The income tax rate was 21% for the years ended
December 31, 2019 and 2018. The sources of the difference are as follows:
|
|
|
Year
Ended
|
|
|
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
|
Expected
tax at 21%
|
|
$
|
(19,399
|
)
|
|
$
|
(535,386
|
)
|
|
Non-deductible
loss on sale of two subsidiaries
|
|
|
-
|
|
|
|
99,348
|
|
|
Non-deductible
amortization of debt discounts
|
|
|
-
|
|
|
|
31,902
|
|
|
Increase
(decrease) in Valuation allowance
|
|
|
19,399
|
|
|
|
404,136
|
|
|
Provision
for (benefit from) income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
All
tax years remain subject to examination by the Internal Revenue Service.
Based
on management’s present assessment, the Company has not yet determined it to be more likely than not that a deferred tax
asset attributable to the future utilization of the net operating loss carryforward as of December 31, 2019 will be realized.
Accordingly, the Company has provided a 100% allowance against the deferred tax asset in the financial statements at December
31, 2019. The Company will continue to review this valuation allowance and make adjustments as appropriate.
Current
tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership
occurs. Therefore, the amount available to offset future taxable income may be limited.
DEEP
GREEN WASTE & RECYCLING, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended December 31, 2019 and 2018
NOTE
I - COMMITMENTS AND CONTINGENCIES
Occupancy
On
December 6, 2019, the Company entered into a rental agreement for a facility located at 13110 NE 177th Place, #293, Woodinville,
WA 98072. The rental was for a term of one quarter with a quarterly rental rate of $70 and continues on a month-to-month
basis. The Company anticipates that it will need to lease additional
space upon the completion of an acquisition and as its business plan develops.
DEEP
GREEN WASTE & RECYCLING, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended December 31, 2019 and 2018
NOTE
I - COMMITMENTS AND CONTINGENCIES (continued)
Employment
and Director Agreements
On
January 1, 2016, Deep Green Waste & Recycling, LLC (the “LLC”) entered into an Employment Agreement (the “Agreement”)
with David A. Bradford as Chief Operating Officer. In connection with his appointment, the LLC and Mr. Bradford entered into a
written Agreement for an initial five-year term, which provides for the following compensation terms for Mr. Bradford. Pursuant
to the Agreement, Mr. Bradford will receive a base salary of $108,000 per year, subject to increase of not less than 10% per year.
The LLC (i) shall remit payment of Eighty-Four Thousand Dollars ($84,000) of the Base Salary; and (ii) shall defer payment of
Twenty-Four Thousand Dollars ($24,000) of the Base Salary, in a proportionate basis and allocated over each payment of the Base
Salary so remitted (the “Deferred Base Salary”). The Deferred Base Salary shall earn seven percent (7%) simple interest
per annum until paid in full. The Executive, in his sole and absolute discretion, shall determine when and how the Deferred Base
Salary shall be paid, without limitation; and may also elect to acquire additional ownership interest in the LLC in exchange for
all or any portion of the Deferred Base Salary then outstanding, at the lesser of (i) the then-current value of the ownership
interest in the Company; or (ii) the price at which ownership interest in the LLC was most recently purchased by any party, including
the LLC. Mr. Bradford is eligible for a cash bonus equal to 1.5% of Adjusted EBITDA over $2,000,000 at the end of each respective
annual period. As an inducement to the Executive to enter into this Agreement, the LLC hereby granted the Executive an initial
three and one-half percent (3.5%) ownership interest in the LLC. In addition, the executive has the right to purchase equity at
the most recently traded rate. In 2016, the executive converted $19,947 of deferred compensation to 4.76% members’ equity.
On July 17, 2017, Mr. Bradford and the LLC agreed to amend the terms of the Agreement, as follows: (i) upon initiation of its
Incentive Stock Plan, the LLC hereby grants the Executive an additional one and one half percent (1.5%) ownership interest in
the LLC, with 0.375% granted upon the date of initiation and 0.375% granted on the anniversary date of the ISP for each of the
following three years, and (ii) for each year of the Agreement in which the Company’s after-tax profits exceed $2,000,000,
the LLC will pay the Executive a Discretionary Incentive Bonus of no less than one and one-half percent (1.5%) of the LLC’s
after-tax profits, as determined by the LLC’s independent certified public accountant(s) in accordance with generally accepted
accounting principles. On August 24, 2017, simultaneous with the entry into the Merger Agreement between Deep Green Waste &
Recycling, LLC, Critic Clothing, Inc. and Deep Green Acquisition, LLC dated August 24, 2017, Deep Green Waste & Recycling,
Inc. (the “Company”)(f/k/a Critic Clothing, Inc.) entered into an Assignment and Assumption Agreement of Mr. Bradford’s
Agreement. Effective May 1, 2018, Mr. Bradford agreed to forgo payment of his salary until circumstances allow a resumption. On
December 3, 2019, Mr. Bradford submitted his resignation as President, Chief Executive Officer, Secretary and as a member of the
Board of Directors of the Company, effectively immediately. Mr. Bradford retained his role as Chief Operating Officer of the Company.
As of December 31, 2019, the deferred compensation balance due Mr. Bradford is $0.
On
January 1, 2016, Deep Green Waste & Recycling, LLC (the ‘LLC”) entered into an Employment Agreement (the “Agreement”)
with Bill Edmonds as Managing Member, President and Chief Financial Officer. Mr. Edmonds became Chief Executive Officer of the
Company in 2011. In connection with his appointment, the LLC and Mr. Edmonds entered into a written Agreement for an initial five-year
term, which provides for the following compensation terms for Mr. Edmonds. Pursuant to the Agreement, Mr. Edmonds will receive
a base salary of $200,000 per year, subject to increase of not less than 10% per year. The Company (i) shall remit payment of
One Hundred Sixty Thousand Dollars ($160,000) of the Base Salary; and (ii) shall defer payment of Forty Thousand Dollars ($40,000)
of the Base Salary, in a proportionate basis and allocated over each payment of the Base Salary so remitted (the “Deferred
Base Salary”). The Deferred Base Salary shall earn seven percent (7%) simple interest per annum until paid in full. The
Executive, in his sole and absolute discretion, shall determine when and how Deferred Base Salary shall be paid, without limitation;
and may also elect to acquire additional ownership interest in the LLC in exchange for all or any portion of the Deferred Base
Salary then outstanding, at the lesser of (i) the then-current value of the ownership interest in the LLC; or (ii) the price at
which ownership interest in the LLC was most recently purchased by any party, including the LLC. Mr. Edmonds is eligible for a
cash bonus equal to 2.5% of Adjusted EBITDA over $2,000,000 at the end of each respective annual period. On July 17, 2017, Mr.
Edmonds and the LLC agreed to amend the terms of the Agreement, as follows: (i) upon initiation of its Incentive Stock Plan, the
LLC hereby grants the Executive an additional two and one-fourth percent (2.25%) ownership interest in the LLC, with 0.5625% granted
upon the date of initiation and 0.5625% granted on the anniversary date of the ISP for each of the following three years, and
(ii) for each year of the Agreement in which the LLC’s after-tax profits exceed $2,000,000, the LLC will pay the Executive
a Discretionary Incentive Bonus of no less than two and one half percent (2.5%) of the LLC’s after-tax profits, as determined
by the LLC’s independent certified public accountant(s) in accordance with generally accepted accounting principles. On
August 24, 2017, simultaneous with the entry into the Merger Agreement between Deep Green Waste & Recycling, LLC, Critic Clothing,
Inc. and Deep Green Acquisition, LLC dated August 24, 2017, Deep Green Waste & Recycling, Inc. (the “Company”)(f/k/a
Critic Clothing, Inc.) entered into an Assignment and Assumption Agreement of Mr. Edmond’s Agreement. Effective May 1, 2018,
Mr. Edmonds agreed to forgo payment of his salary until circumstances allow a resumption. As of December 31, 2019, the deferred
compensation balance due Mr. Edmonds is $105,325.
On
December 4, 2019, the Company entered into an agreement with Lloyd Spencer as President and Chief Executive Officer. In connection
with his appointment, the Company and Mr. Spencer entered into a written employment agreement (the “Employment Agreement”)
for an initial three-year term, which provides for the following compensation terms for Mr. Spencer. Pursuant to the Employment
Agreement, Mr. Spencer will receive a base salary of $10,000 per month starting when the corporation receives its first round
of equity or debt financing. Mr. Spencer shall receive 500,000 restricted shares of the Company’s common stock on or before
January 31, 2020 as a sign-on bonus. In addition, the Company shall issue to Mr. Spencer restricted shares in the form of stock
grants equivalent to 6,120,000 shares of the Corporation’s Common Stock over a 3-year period. Stock Grant shares shall vest
170,000 shares each month after the Stock Grant date, December 4, 2019, over a three year period, except that all unvested Stock
Grant shares shall vest immediately if the Corporation terminates Executive’s employment without Just Cause, or Executive
resigns for Good Reason. The number of shares vested shall be adjusted in the event of subsequent stock splits.
For
the year ended December 31, 2019, no compensation expense was recognized under the above employment agreements.
Legal
As
indicated in NOTE E – ACCOUNTS PAYABLE, one customer and two vendors have received Default Judgments against Deep
Green aggregating $487,615 that remain unpaid by Deep Green. Also, Deep Green has accounts payable to other vendors of materials
and services and credit card companies aggregating $2,432,013, which are past due and remain unpaid by Deep Green. Also,
Deep Green has not paid any of the required installments due under the two notes payable aggregating $495,000 due the Seller of
CARE and CFSI and has not paid any amounts to satisfy the $387,535 claimed by the factor pursuant to the Factor’s Notice
of Default dated July 31, 2018 (Please see NOTE F – DEBT for further information).
DEEP
GREEN WASTE & RECYCLING, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
For
the years ended December 31, 2019 and 2018
NOTE
J - GOING CONCERN UNCERTAINITY
Under
ASC 205-40, we have the responsibility to evaluate whether conditions and/or events raise substantial doubt about our ability
to meet our future financial obligations as they become due within one year after the date that the financial statements are issued.
As required by this standard, our evaluation shall initially not take into consideration the potential mitigating effects of our
plans that have not been fully implemented as of the date the financial statements are issued.
In
performing the first step of this assessment, we concluded that the following conditions raise substantial doubt about our ability
to meet our financial obligations as they become due. We have a history of net losses: As of December 31, 2019, we had
cash of $735, current assets of $3,410, current liabilities of $4,025,359 and an accumulated deficit of $7,043,784.
For the years ended December 31, 2019 and 2018, we used cash from operating activities of $959 and $234,951,
respectively. We expect to continue to incur negative cash flows until such time as our operating segments generate sufficient
cash inflows to finance our operations and debt service requirements.
In
performing the second step of this assessment, we are required to evaluate whether our plans to mitigate the conditions above
alleviate the substantial doubt about our ability to meet our obligations as they become due within one year after the date that
the financial statements are issued. Our future plans include securing additional funding sources that may include establishing
corporate partnerships, establishing licensing revenue agreements, issuing additional convertible debentures and issuing public
or private equity securities, including selling common stock through an at-the-market facility (ATM).
There
is no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds
will be available through external sources. The lack of additional capital resulting from the inability to generate cash flow
from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations
and would, therefore, have a material effect on the business. Furthermore, there can be no assurance that any such required funds,
if available, will be available on attractive terms or they will not have a significant dilutive effect on the Company’s
existing shareholders. We have therefore concluded there is substantial doubt about our ability to continue as a going concern
through March 2021.
The
accompanying consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. The accompanying consolidated financial statements
do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from our failure to continue as a going concern.
NOTE
K – RELATED PARTY TRANSACTIONS
During
the period January 1, 2018 to August 7, 2018 (the date of Deep Green’s cessation of its waste recycling business), Deep
Green used an entity controlled by Deep Green’s then Chief Executive Officer as a subcontractor to service certain customers
of Deep Green. Charges to cost of revenues from this related party totaled $29,190 for the year ended December 31, 2018. At December
31, 2018 and 2019, Deep Green had an account payable to this entity of $57,600.
NOTE
L - SUBSEQUENT EVENTS
On
January 9, 2020, the Company and Bill Edmonds (the “Director”) entered into a Board of Directors Services Agreement
whereby the Director shall receive compensation for serving on the Company’s Board of Directors equivalent to Five Thousand
and no/100 dollars ($5,000.00) of the Company’s common stock, paid to the Director on the last calendar day of each fiscal
quarter as long as Director continues to fulfill his duties and provide the services set forth above. The pricing of the stock
to be delivered shall be calculated as: $5,000/(Closing stock price on the last calendar day of the fiscal quarter x 0.8). The
Director shall begin receiving compensation for services rendered under this Agreement beginning during the first calendar quarter
of 2020.
On
January 9, 2020, the Company and Lloyd Spencer (the “Director”) entered into a Board of Directors Services Agreement
whereby the Director shall receive compensation for serving on the Company’s Board of Directors equivalent to Five Thousand
and no/100 dollars ($5,000.00) of the Company’s common stock, paid to the Director on the last calendar day of each fiscal
quarter as long as Director continues to fulfill his duties and provide the services set forth above. The pricing of the stock
to be delivered shall be calculated as: $5,000/(Closing stock price on the last calendar day of the fiscal quarter x 0.8). The
Director shall begin receiving compensation for services rendered under this Agreement beginning during the first calendar quarter
of 2020.
On
January 13, 2020, the Company entered into a Securities Purchase Agreement (the “Agreement”) with Sylios Corp (hereinafter
“Sylios”) wherein the Company issued to Sylios a Convertible Promissory Note (the “Note”) in the amount
of $23,000 ($3,000 OID). The Note has a term of one (1) year (due on January 13, 2021) and bears interest at 8% annually. As part
and parcel of the foregoing transaction, Sylios was issued a warrant granting the holder the right to purchase up to 262,500 shares
of the Company’s common stock at an exercise price of $0.04 for a term of 5-years. As part of the Note, the Company executed
a Registration Rights Agreement (the “RRA”) dated January 13, 2020. Among other things, the RRA provides for the Company
to file a Registration Statement with the SEC covering the resale of shares underlying the Note and the warrant and to have declared
effective such Registration Statement. In the event that the Company doesn’t meet the registration requirements provided
for in the RRA, the Company is obligated to pay to Sylios certain payments for such failures. The transaction closed on January
16, 2020. In addition, 6,000,000 shares of the Company’s common stock have been reserved at Transfer Online, the Company’s
transfer agent, for Sylios for the issuance upon the conversion of the Note into shares of the Company’s common stock.
On
January 22, 2020, the Company’s Board of Directors approved a new designation of preferred stock titled Series B Convertible
Preferred Stock. The Company filed the Certificate of Designation with the State of Wyoming on February 4, 2020. Please
see NOTE G - CAPITAL STOCK for further information.
On January 24, 2020, the Company issued
Lloyd Spencer 840,000 shares of its common stock as per the terms of the Employment Agreement entered into between the Company
and Mr. Spencer dated December 4, 2019. The $33,600 estimated fair value of the 840,000 shares of common stock at January 24,
2020 will be charged to operations in the three months ended March 31, 2020. Please see NOTE I - COMMITMENTS AND CONTINGENCIES
for further information.
On
February 4, 2020, the Company issued Bill Edmonds 25,000 shares of its Series B Convertible Preferred Stock in satisfaction of
$25,000 of deferred compensation.
On March 6, 2020, the Company executed
an Acknowledgement of the Assignment Agreement (the “Agreement”) entered into between Armada Investment Fund, LLC
(“Assignee”) and Sylios Corp (“Assignor”) dated March 6, 2020. Under the terms of the Agreement, the
Assignor assigned all of its rights under the Securities Purchase Agreement, Convertible Promissory Note, Stock Purchase
Warrant Agreement and Registration Rights Agreement all dated January 13, 2020 issued by the Company to the Assignee. On
March 12, 2020, the Company reissued the Assignee a Convertible Promissory Note in the amount of $23,000 and a Stock Purchase
Warrant Agreement granting the holder the right to purchase 262,500 shares of common stock at an exercise price of $0.04 for
a term of 5-years from the original issue date.
Item
16. Exhibits and Financial Statement Schedules.
Exhibits
required by Item 601 of Regulation S-K
The
following exhibits are filed with this registration statement:
|
No.
|
|
Description
|
|
2.1
|
|
Merger
Agreement by and between Deep Green Waste & Recycling, LLC, Critic Clothing, Inc.
and Deep Green Acquisition, LLC dated August 24, 2017
|
|
2.2
|
|
Articles
of Merger of Deep Green Acquisition, LLC and Deep Green Waste & Recycling, LLC dated August 24, 2017
|
|
2.3
|
|
Share
Purchase Agreement between Gordon Boorse and Deep Green Waste & Recycling, LLC dated
June 2017 (Compaction and Recycling Equipment, Inc.)
|
|
2.4
|
|
Share
Purchase Agreement between Gordon Boorse and Deep Green Waste & Recycling, LLC dated June 2017 (Columbia Financial services,
Inc.)
|
|
2.5
|
|
Agreement
of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations with St. James
Capital Management, LLC dated August 24, 2017
|
|
2.6
|
|
Agreement
of Conveyance, Transfer and Assignment of Subsidiaries and Assumption of Obligations
with Mirabile Corporate Holdings, Inc. dated August 7, 2018
|
|
3.1
|
|
Articles
of Incorporation Evader, Inc. dated August 24, 1995
|
|
3.2
|
|
Certificate
of Correction for Evader, Inc. dated December 28, 2005
|
|
3.3
|
|
Certificate
of Designation of Series A Preferred Stock dated July 18, 2010
|
|
3.4
|
|
Articles
of Conversion of Evader, Inc., Inc. dated April 25, 2012 effective May 25, 2012
|
|
3.5
|
|
Restated
Certificate of Incorporation of Evader, Inc., Inc. (previously filed with Form 1-A on May 17, 2018)
|
|
3.6
|
|
Bylaws
of Evader, Inc. (previously filed with Form 1-A on May 17, 2018)
|
|
3.7
|
|
Amendment
to Articles of Incorporation of Evader, Inc. dated July 24, 2014
|
|
3.8
|
|
Amendment
to Articles of Incorporation of Evader, Inc. dated August 14, 2014
|
|
3.9
|
|
Amendment
to Articles of Incorporation of Evader, Inc. dated December 8, 2014
|
|
3.10
|
|
Amendment
to Articles of Incorporation of Evader, Inc. dated August 13, 2015
|
|
3.11
|
|
Amendment
to Articles of Incorporation of Evader, Inc. dated July 20, 2017 (name change to Critical Clothing, Inc.)
|
|
3.12
|
|
Amendment
to Articles of Incorporation of Critical Clothing, Inc. dated July 20, 2017
|
|
3.13
|
|
Amendment
to Articles of Incorporation of Critical Clothing, Inc. dated November 6, 2017 (name change to Deep Green Waste & Recycling,
Inc.)
|
|
3.14
|
|
Certificate
of Designation Series B Convertible Preferred Stock dated January 22, 2020
|
|
4.1
|
|
Specimen
certificate of common stock
|
|
5.1
|
|
Legal Opinion of McMurdo Law Group, LLC
|
|
10.1
|
|
Board
of Directors Services Agreement with Bill Edmonds dated January 9, 2020
|
|
10.2
|
|
Board
of Directors Services Agreement with Lloyd Spencer dated January 9, 2020
|
|
10.3
|
|
Indemnification
Agreement between Green Deep Waste & Recycling, Inc. and Bill Edmonds dated January 9, 2020
|
|
10.4
|
|
Indemnification
Agreement between Green Deep Waste & Recycling, Inc. and Lloyd Spencer dated January 9, 2020
|
|
10.5
|
|
Employment
Agreement between Deep Green Waste & Recycling, Inc. and Lloyd Spencer dated December 4, 2019
|
|
10.6
|
|
Employment
Agreement between Deep Green Waste & Recycling, LLC and David Bradford dated January 1, 2016
|
|
10.7
|
|
Employment
Agreement between Deep Green Waste & Recycling, LLC and Bill Edmonds dated December 4, 2019
|
|
10.8
|
|
Employment
Agreement between Deep Green Waste & Recycling, Inc. and Josh Beckham dated February 5, 2018
|
|
10.9
|
|
Amendment
to Deep Green Waste & Recycling, LLC Employment Agreement with David Bradford dated July 20, 2017
|
|
10.10
|
|
Amendment
to Deep Green Waste & Recycling, LLC Employment Agreement with Bill Edmonds dated July 20, 2017
|
|
10.11
|
|
Consulting
Agreement between Deep Green Waste & Recycling, Inc. and Sylios Corp dated December 16, 2019
|
|
10.12
|
|
Securities
Purchase Agreement between Sylios Corp and Deep Green Waste & Recycling, Inc. dated
as of January 13, 2020
|
|
10.13
|
|
Convertible
Promissory Note between Sylios Corp and Deep Green Waste & Recycling, Inc. dated
as of January 13, 2020
|
|
10.14
|
|
Common
Stock Purchase Warrant Agreement between Sylios Corp and Deep Green Waste & Recycling, Inc. dated
as of January 13, 2020
|
|
10.15
|
|
Registration
Rights Agreement between Sylios Corp and Deep Green Waste & Recycling, Inc. dated
as of January 13, 2020
|
|
10.16
|
|
Acknowledgement
of Assignment Agreement between Sylios Corp and Armada Capital Partners, LLC dated March 6, 2020
|
|
10.17
|
|
Assignment Agreement between Sylios Corp and Armada Capital Partners, LLC dated March 6, 2020
|
|
10.18
|
|
Convertible Promissory Note between Armada Investment Fund, LLC and Deep Green Waste & Recycling, Inc. dated as of March 12, 2020
|
|
10.19
|
|
Common
Stock Purchase Warrant Agreement between Armada Investment Fund, LLC and Deep Green Waste & Recycling, Inc. dated
as of March 12, 2020
|
|
14.1
|
|
Code
of Business Conduct and Ethics
|
|
21.1
|
|
Certificate
of Organization of Deep Green Waste & Recycling, LLC dated August 2, 2011
|
|
21.2
|
|
Articles
of Incorporation of Jetty Enterprises, Inc. dated November 4, 1987
|
|
21.3
|
|
Amendment
to Articles of Incorporation for Jetty Enterprises, Inc. dated May 21, 2993 (name change to Compaction and Recycling Equipment,
Inc.)
|
|
21.4
|
|
Articles
of Incorporation for Columbia Financial Services, Inc. dated October 3, 1988
|
|
23.1
|
|
Consent of McMurdo Law Group, LLC (Please see Exhibit 5.1 Legal Opinion of McMurdo Law Group, LLC
|
|
23.2
|
|
Consent
of Michael T. Studer, CPA
|
|
Graphic
|
|
Corporate
logo- Deep Green Waste & Recycling, Inc.
|
+
Filed hereby with this Registration Statement.
++
To be filed by subsequent amendment.
XBRL
Exhibits will be filed by subsequent amendment.
Item
17. Undertakings.
The
undersigned Company hereby undertakes to:
|
(1)
|
To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
|
|
|
(i)
|
To
include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
|
|
|
|
|
|
|
(ii)
|
To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a
20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table
in the effective registration statement, and
|
|
|
|
|
|
|
(iii)
|
To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.
|
|
(2)
|
That,
for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
|
|
|
|
|
(3)
|
To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
|
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of such issue.
The
undersigned registrant hereby undertakes:
That,
for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to
Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B
or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement
as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into
the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract
of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that
was part of the registration statement or made in any such document immediately prior to such date of first use.
That,
for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution
of the securities:
The
undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or
sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser
and will be considered to offer or sell such securities to such purchaser:
|
|
(i)
|
Any
preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant
to Rule 424;
|
|
|
|
|
|
|
(ii)
|
Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred
to by the undersigned registrant;
|
|
|
|
|
|
|
(iii)
|
The
portion of any other free writing prospectus relating to the offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the undersigned registrant; and
|
|
|
|
|
|
|
(iv)
|
Any
other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
|
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement on Form S-1 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City of St. Petersburg, State of Florida, on March 18, 2020.
DEEP
GREEN WASTE & RECYCLING, INC.
|
By:
|
/s/
Lloyd Spencer
|
|
By:
|
/s/
Bill Edmonds
|
|
|
Lloyd
Spencer
|
|
|
Bill
Edmonds
|
|
|
President
|
|
|
Interim
Chief Financial Officer
|
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
|
Signatures
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/
Lloyd Spencer
|
|
President
(Principal Executive Officer), Director
|
|
March
18, 2020
|
|
/s/
Bill Edmonds
|
|
(Principal
Accounting Officer) and Chairman of the Board of Directors
|
|
|
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