UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
(Amendment
No. 1)
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): October 27, 2015
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
(Exact
name of registrant as specified in its charter)
| Florida |
|
000-30424 |
|
27-2037711 |
(State
or other jurisdiction of
incorporation
or organization) |
|
(Commission
File Number) |
|
(IRS
Employer
Identification
No.) |
5920
N. Florida Avenue
Hernando,
FL |
|
34442 |
| (Address
of principal executive offices) |
|
(Zip
Code) |
| Registrant’s
telephone number, including area code: (352) 489-6912 |
Not
Applicable
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)
☐ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))
☐ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))
Explanatory
Note
On
November 5, 2015, National Waste Management Holdings, Inc. (the “Company”) filed a Form 8-K describing its acquisition
on October 27, 2015 of 100% of the membership interests in Waste Recovery Enterprises, LLC (“Waste Recovery Enterprises”).
At the time of the filing, audited financial statements of Waste Recovery Enterprises required by Item 9.01 were not yet available.
As a result, the pro forma consolidated financial information required by the Securities Exchange Act of 1934, as amended, could
not be prepared. The purpose of this Form 8-K/A is to amend the initial filing with respect to the Waste Recovery Enterprises
acquisition and provide the required audited financial statements and pro forma financial information reflecting the acquisition.
No other amendments to the Form 8-K filed November 5, 2015 are being made by this Form 8-K/A.
Item
1.01. Entry into a Material Definitive Agreement
The
applicable information set forth in Item 2.01 of this Current Report on Form 8-K is incorporated by reference in this Item 1.01.
Item
2.01 Completion of Acquisition or Disposition of Assets.
On
October 27, 2015, National Waste Management Holdings, Inc. (the “Company”) entered into Membership Purchase Interest
Agreements (the “Agreements”) with Denton L. Reed, an individual, (“Reed”) and National Waste Management
Systems, LP, a Florida limited partnership, (“National Waste”, and together with Reed, the “Sellers”)
whereby the Company acquired 100% membership interests in Waste Recovery Enterprises, LLC, (“Waste Recovery Enterprises”)
a permitted waste processing and disposal facility in Bainbridge, New York. Pursuant to the terms of the Agreements, in exchange
for 100% of the outstanding membership interests in Waste Recovery Enterprises, the Company (i) issued Reed a 4% promissory note
in the principal amount of $250,000 (the “Note”) and 1,250,000 shares of common stock of the Company and (2) issued
National Waste 1,500,000 shares of common stock of the Company.
Waste
Recovery Enterprises has been in continuous operation since 1998 and principally serves the Northeastern U.S. industrial and residential
markets. Waste Recovery's facility is expected to enhance the service offerings of the Company, bid and win more work, and increase
penetration of key accounts, while extending the Company’s footprint in the New York Region. The acquisition of Waste Recovery
is consistent with the Company’s business strategy to acquire facilities that increase the geographic footprint, augment
services to existing customers, and attract new customers in under serviced markets.
The
Agreements and Note are filed hereto as Exhibit 4.1, 10.1 and 10.2, to this Current Report on Form 8-K. The foregoing summary
of the terms of the Agreements and the Note are subject to, and qualified in its entirety by, the Agreements and Note attached
hereto, which are incorporated herein by reference.
Item
9.01 Financial Statements and Exhibits.
|
(a) |
Financial
Statements of Business Acquired. |
Financial
statements of Waste Recovery Enterprises including related notes and independent accountant’s report are attached hereto
as Exhibit 99.2 and are incorporated herein by reference.
|
(b) |
Pro
Forma Financial Information. |
Unaudited
pro forma consolidated financial information reflecting the Waste Recovery Enterprises acquisition, including related explanatory
notes, are attached hereto as Exhibit 99.3 and are incorporated herein by reference.
Exhibit
No. |
|
Description |
| 4.1 |
|
Promissory
Note, issued to Denton L. Reed, dated October 27, 2015.* |
| 10.1 |
|
Membership
Interest Purchase Agreement, dated October 27, 2015 between National Waste Management Systems, LP and National Waste Management
Holdings, Inc.* |
| 10.2 |
|
Membership
Interest Purchase Agreement, dated October 27, 2015 between Denton L. Reed and National Waste Management Holdings, Inc.* |
| 99.1 |
|
Press
Release* |
| 99.2 |
|
Waste
Recovery Enterprises Financial Statements as of September 30, 2015 (unaudited) and December 31, 2014 and 2013 (audited), including
the notes thereto. |
| 99.3 |
|
Unaudited
Pro Forma Consolidated Financial Data for the acquisition of Waste Recovery Enterprises. |
*Exhibits
incorporated by reference to the Form 8-K, filed on November 5, 2015.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report on Form 8-K to be signed
on its behalf by the undersigned hereunto duly authorized.
| |
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC. |
| |
|
| Date:
January 7, 2016 |
By: |
/s/
Louis Paveglio |
| |
|
Louis
Paveglio
Chief
Executive Officer |
3
Exhibit
99.2
WASTE
RECOVERY ENTERPRISES, LLC
FINANCIAL
STATEMENTS
For
the Nine Months Ended September 30, 2015 and
For
the Years Ended
December
31, 2014 and 2013
WASTE
RECOVERY ENTERPRISES, LLC
FINANCIAL
STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
| Table
of Contents |
| |
|
| |
PAGE |
| |
|
| Audit
Report of Independent Certified Public Accountants for the years ended December 31, 2014 and 2013 |
1-2 |
| |
|
Review
Report of Independent Certified Public Accountants for the nine months ended September 30, 2015 |
3 |
| |
|
| Unaudited
Balance Sheet as of September 30, 2015 and Audited Balance Sheets as of December 31, 2014 and 2013 |
4 |
| |
|
| Unaudited
Statement of Operations for the Nine Months Ended September 30, 2015 and Audited Statements of Operations for the Years Ended
December 31, 2014 and 2013 |
5 |
| |
|
| Unaudited
Statement of Members’ Equity for the Nine Months Ended September 30, 2015 and Audited Statements of Members’
Equity for the Years Ended December 31, 2014 and 2013 |
6 |
| |
|
| Unaudited
Statement of Cash Flows for the Nine Months Ended September 30, 2015 and Audited Statements of Cash Flows for the Years Ended
December 31, 2014 and 2013 |
7 |
| |
|
| Notes
to the Financial Statements |
8-15 |
REPORT
OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Members
Waste
Recovery Enterprises, LLC
Sidney,
New York
Report
on the Financial Statements
We
have audited the accompanying financial statements of Waste Recovery Enterprises, LLC (“Company”), which comprise
the balance sheets as of December 31, 2014 and 2013, and the related statements of operations and comprehensive income, statements
of members deficit, and cash flows for the years then ended, and the related notes to the financial statements.
Management’s
Responsibility for the Financial Statements
Management
is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles
generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due
to fraud or error.
Auditor’s
Responsibility
Our
responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance
with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An
audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to
the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of significant accounting estimates made by management, as well as evaluating overall presentation
of the financial statements.
We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
REPORT
OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS (Continued)
Opinion
In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Waste
Recovery Enterprises, LLC as of December 31, 2014 and 2013, and the results of their operations and their cash flows for the years
then ended in accordance with accounting principles generally accepted in the United States of America.
Scrudato
& Company
Califon,
New Jersey
November
13, 2015
INDEPENDENT
ACCOUNTANT’S REVIEW REPORT
To
the Members
Waste
Recovery Enterprises, LLC
Sidney,
New York
We
have reviewed the accompanying balance sheet of Waste Recovery Enterprises, LLC as of September 30, 2015, and the related statement
of operations, statement of members’ deficit, and cash flows for the nine months then ended. A review includes primarily
applying analytical procedures to the Company’s financial data and making inquiries of Company personnel. A review is substantially
less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole.
Accordingly, we do not express such an opinion.
Management
is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles
generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant
to the preparation and fair presentation of the financial statements.
Our
responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by
the American Institute of Certified Public Accountants. Those standards require us to perform procedures to obtain limited assurance
that there are no material modifications that should be made to the financial statements. We believe that the results of our procedures
provide a reasonable basis for our report.
Based
on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in
order for them to be in conformity with accounting principles generally accepted in the United States of America.
Scrudato
& Company
Califon,
New Jersey
December
14, 2015
WASTE
RECOVERY ENTERPRISES, LLC
BALANCE
SHEETS
AS
OF SEPTEMBER 30, 2015 (UNAUDITED) AND DECEMBER 31, 2014 AND 2013 (AUDITED)
| | |
2015 | | |
2014 | | |
2013 | |
| | |
(Unaudited) | | |
(Audited) | | |
(Audited) | |
| Assets | |
| | |
| | |
| |
| Current assets: | |
| | |
| | |
| |
| Cash and cash equivalents | |
$ | 30,320 | | |
$ | 10,207 | | |
$ | 30,961 | |
| Accounts receivable, net | |
| 115,618 | | |
| 118,893 | | |
| 109,599 | |
| Prepaid expenses | |
| 45,276 | | |
| 42,586 | | |
| 36,442 | |
| Due from related party | |
| 46,018 | | |
| 29,986 | | |
| 30,166 | |
| Total current assets | |
| 237,232 | | |
| 201,672 | | |
| 207,168 | |
| | |
| | | |
| | | |
| | |
| Property and equipment, net | |
| 688,997 | | |
| 793,531 | | |
| 824,576 | |
| | |
| | | |
| | | |
| | |
| Other assets: | |
| | | |
| | | |
| | |
| Note receivable from member | |
| - | | |
| 222,202 | | |
| 204,903 | |
| Total assets | |
$ | 926,229 | | |
$ | 1,217,405 | | |
$ | 1,236,647 | |
| | |
| | | |
| | | |
| | |
| Liabilities and Members' Deficit | |
| | | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | | |
| | |
| Accounts payable and accrued expenses | |
$ | 67,314 | | |
$ | 43,008 | | |
$ | 70,010 | |
| Related party accrued interest | |
| 606,312 | | |
| 574,700 | | |
| 532,551 | |
| Due to related party | |
| 30,000 | | |
| 30,000 | | |
| 30,000 | |
| Current portion of long term debt | |
| 127,713 | | |
| 148,543 | | |
| 206,738 | |
| Total current liabilities | |
| 831,339 | | |
| 796,251 | | |
| 839,299 | |
| | |
| | | |
| | | |
| | |
| Long-term liabilities: | |
| | | |
| | | |
| | |
| Long term debt, net of current portion | |
| 127,173 | | |
| 189,657 | | |
| 191,344 | |
| Loan from member | |
| 906,442 | | |
| 906,442 | | |
| 906,442 | |
| Total liabilities | |
$ | 1,864,954 | | |
$ | 1,892,350 | | |
$ | 1,937,085 | |
| | |
| | | |
| | | |
| | |
| Members' deficit | |
| | | |
| | | |
| | |
| Members' deficit | |
$ | (938,725 | ) | |
$ | (674,945 | ) | |
$ | (700,438 | ) |
| | |
| | | |
| | | |
| | |
| Total liabilities and members' capital | |
$ | 926,229 | | |
$ | 1,217,405 | | |
$ | 1,236,647 | |
Read
Independent Auditors Report, Independent Accountants’ Review Report and the Notes to the Financial Statements
WASTE
RECOVERY ENTERPRISES, LLC
STATEMENTS
OF OPERATIONS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED) AND THE YEARS ENDED
DECEMBER 31, 2014 AND 2013 (AUDITED)
| | |
2015 | | |
2014 | | |
2013 | |
| | |
(Unaudited) | | |
(Audited) | | |
(Audited) | |
| | |
| | |
| | |
| |
| Revenues | |
$ | 1,033,296 | | |
$ | 1,502,290 | | |
$ | 1,392,323 | |
| Cost of revenues | |
| 608,299 | | |
| 926,588 | | |
| 868,771 | |
| Gross profit | |
| 424,997 | | |
| 575,702 | | |
| 523,552 | |
| | |
| | | |
| | | |
| | |
| Selling, general and administrative expenses | |
| 399,159 | | |
| 538,393 | | |
| 503,377 | |
| Income from operations | |
| 25,838 | | |
| 37,309 | | |
| 20,175 | |
| | |
| | | |
| | | |
| | |
| Other income (expenses): | |
| | | |
| | | |
| | |
| Other income (expense) | |
| 2,504 | | |
| 1,880 | | |
| 3,327 | |
| Gain on sale of assets | |
| 28,040 | | |
| 80,000 | | |
| 12,444 | |
| Extinguishment of related party debt | |
| (236,100 | ) | |
| - | | |
| - | |
| Interest expense | |
| (39,311 | ) | |
| (55,697 | ) | |
| (63,095 | ) |
| Total other income (expenses) | |
| (244,867 | ) | |
| 26,183 | | |
| (47,324 | ) |
| | |
| | | |
| | | |
| | |
| Net income (loss) | |
$ | (219,029 | ) | |
$ | 63,492 | | |
$ | (27,149 | ) |
Read
Independent Auditors Report, Independent Accountants’ Review Report and the Notes to the Financial Statements
WASTE
RECOVERY ENTERPRISES, LLC
STATEMENTS
OF MEMBERS’ DEFICIT
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED) AND FOR THE YEARS ENDED
DECEMBER 31, 2014 AND 2013 (AUDITED)
| | |
Total | |
| | |
| |
| | |
| |
| Members deficit at December 31, 2012 | |
$ | (572,791 | ) |
| | |
| | |
| Net loss | |
| (27,149 | ) |
| | |
| | |
| Distributions to members' | |
| (100,498 | ) |
| | |
| | |
| Members' deficit at December 31, 2013 (audited) | |
$ | (700,438 | ) |
| | |
| | |
| Net income | |
| 63,492 | |
| | |
| | |
| Distributions to members' | |
| (37,999 | ) |
| | |
| | |
| Members' deficit at December 31, 2014 (audited) | |
$ | (674,945 | ) |
| | |
| | |
| Net loss | |
| (219,029 | ) |
| | |
| | |
| Distributions to members' | |
| (44,751 | ) |
| | |
| | |
| Members' deficit at September 30, 2015 (unaudited) | |
$ | (938,725 | ) |
Read
Independent Auditors Report, Independent Accountants’ Review Report and the Notes to the Financial Statements
WASTE
RECOVERY ENTERPRISES, LLC
STATEMENTS
OF CASH FLOWS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND FOR THE YEARS ENDED
DECEMBER 31, 2014 AND 2013
| | |
2015 | | |
2014 | | |
2013 | |
| | |
(Unaudited) | | |
(Audited) | | |
(Audited) | |
| Cash flow from operating activities: |
| Net income (loss) | |
$ | (219,029 | ) | |
$ | 63,492 | | |
$ | (27,149 | ) |
| Adjustments to reconcile net income to net cash provided by operating activities: | |
| | | |
| | | |
| | |
| Gain on sale of assets | |
| (28,040 | ) | |
| - | | |
| - | |
| Forgiveness of related party debt | |
| 236,100 | | |
| | | |
| | |
| Depreciation expense | |
| 118,316 | | |
| 165,143 | | |
| 168,584 | |
| Non-cash interest expense | |
| 31,612 | | |
| 42,149 | | |
| 42,150 | |
| (Increase) decrease in assets: | |
| | | |
| | | |
| | |
| Accounts receivable, net | |
| 3,275 | | |
| (9,294 | ) | |
| 15,967 | |
| Prepaid expenses | |
| (2,690 | ) | |
| (6,144 | ) | |
| (7,461 | ) |
| Related party receivables | |
| (16,032 | ) | |
| 180 | | |
| 8,000 | |
| (Decrease) increase in liabilities: | |
| | | |
| | | |
| | |
| Accounts payable and accrued expenses | |
| 24,306 | | |
| (27,002 | ) | |
| 27,625 | |
| Net cash provided by operating activities | |
$ | 147,818 | | |
$ | 228,524 | | |
$ | 227,716 | |
| | |
| | | |
| | | |
| | |
| Cash flows from investing activities: | |
| | | |
| | | |
| | |
| Purchases of property and equipment | |
| (16,742 | ) | |
| (134,098 | ) | |
| (234,408 | ) |
| Proceeds from sale of assets | |
| 31,000 | | |
| - | | |
| 12,444 | |
| Payments received on related party note receivable | |
| - | | |
| - | | |
| 12,370 | |
| Advances on related party note receivable | |
| (13,898 | ) | |
| (17,299 | ) | |
| - | |
| Net cash provided (used) in investing activities | |
$ | 360 | | |
$ | (151,397 | ) | |
$ | (209,594 | ) |
| | |
| | | |
| | | |
| | |
| Cash flows from financing activities: | |
| | | |
| | | |
| | |
| Payments on long-term debt | |
| (130,423 | ) | |
| (240,369 | ) | |
| (180,652 | ) |
| Proceeds from long-term debt | |
| 47,109 | | |
| 180,487 | | |
| 221,455 | |
| Member distributions | |
| (44,751 | ) | |
| (37,999 | ) | |
| (100,498 | ) |
| Net cash used in financing activities | |
$ | (128,065 | ) | |
$ | (97,881 | ) | |
$ | (59,695 | ) |
| | |
| | | |
| | | |
| | |
| Net increase (decrease) in cash | |
$ | 20,113 | | |
$ | (20,754 | ) | |
$ | (41,573 | ) |
| | |
| | | |
| | | |
| | |
| Cash, beginning of year | |
| 10,207 | | |
| 30,961 | | |
| 72,534 | |
| | |
| | | |
| | | |
| | |
| Cash, end of year | |
$ | 30,320 | | |
$ | 10,207 | | |
$ | 30,961 | |
| | |
| | | |
| | | |
| | |
| Supplemental disclosure of cash flow information: | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | |
| Cash paid during the year for interest | |
$ | 7,649 | | |
$ | 13,632 | | |
$ | 19,920 | |
| Cash paid during the year for income taxes | |
$ | - | | |
$ | - | | |
$ | - | |
Read
Independent Auditors Report, Independent Accountants’ Review Report and the Notes to the Financial Statements
WASTE
RECOVERY ENTERPRISES, LLC
NOTES
TO FINANCIAL STATEMENTS – FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
(UNAUDITED) AND THE YEARS ENDED DECEMBER 31,
2014 AND 2013 (AUDITED)
Note
1 – Business Organization
These
financial statements represent the financial statements of Waste Recovery Enterprises, LLC (“WRE” or “the Company”).
The
Company offers residential trash pickup, commercial or residential dumpster service and roll-off boxes for construction and clean
up projects. The Company’s transfer station accepts construction and demolition debris, household trash and furniture and
appliances. The Company also offers wood grinding, demolition, mulch and gravel services. The Company’s primary operations
are based near Binghamton, New York.
Note
2 – Significant Accounting Policies
Basis
of Presentation
The
financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally
accepted in the United States of America (“GAAP”).
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the amounts reported in the financial statements. Actual results could differ from those estimates.
Fair
Value of Financial Instruments
For
certain financial instruments, including accounts receivable, accounts payable and accrued expenses, and notes payable, the carrying
amounts approximate fair value due to their relatively short maturities.
The
Company adopted ASC 820-10, “Fair Value Measurements and Disclosures.” ASC 820-10 defines fair value, and establishes
a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value
measures. The carrying amounts reported in the balance sheets for receivables and current liabilities and debt, each qualify as
financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination
of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy
are defined as follows:
| ● | Level
1 inputs to the valuation methodology are quoted prices for identical assets or liabilities
in active markets. |
| ● | Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities
in active markets, and inputs that are observable for the asset or liability, either
directly or indirectly, for substantially the full term of the financial instrument. |
| ● | Level
3 inputs to the valuation methodology are unobservable and significant to the fair value
measurement. |
WASTE
RECOVERY ENTERPRISES, LLC
NOTES
TO FINANCIAL STATEMENTS – FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
(UNAUDITED) AND THE YEARS ENDED DECEMBER 31,
2014 AND 2013 (AUDITED)
Note
2 – Significant Accounting Policies (Continued)
Fair
Value of Financial Instruments (Continued)
The
Company did not identify any non-recurring assets and liabilities that are required to be presented in the balance sheets at fair
value in accordance with ASC 815.
The
carrying amounts of cash and current liabilities approximate fair value due to the short maturity of these items. These fair value
estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined
with precision. Changes in assumptions could significantly affect these estimates. The Company does not hold or issue financial
instruments for trading purposes, nor does it utilize derivative instruments in the management of foreign exchange, commodity
price, or interest rate market risks.
Revenue
and Cost Recognition
The
Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes
revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all
of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the sales price is fixed or determinable,
(iii) collectability is reasonably assured and (iv) goods have been shipped and/or services rendered.
Cash
and Cash Equivalents
For
purposes of reporting cash flows, the Company considers cash and cash equivalents to be all highly liquid deposits with maturities
of three months or less. Cash equivalents are carried at cost, which approximates market value.
The
Company maintains its cash and cash equivalents at various financial institutions where they are insured by the Federal Deposit
Insurance Corporation (FDIC) up to $250,000. The balances of these accounts may from time to time exceed federally insured limits.
The Company has not experienced any losses in such accounts.
Accounts
Receivable, Bad Debts and Allowance for Doubtful Accounts
Trade
receivables are carried at their estimated collectible amounts. Trade receivables are generally extended on a short-term basis,
thus trade receivables do not bear interest. A finance charge may be applied to such receivables that are more than 30 days past
due. The Company estimates the allowance for doubtful accounts based on a percentage of past due receivables. The Company charges
uncollectible receivables against the allowance when management determines ultimate collection is unlikely.
WASTE
RECOVERY ENTERPRISES, LLC
NOTES
TO FINANCIAL STATEMENTS – FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
(UNAUDITED) AND THE YEARS ENDED DECEMBER 31,
2014 AND 2013 (AUDITED)
Note
2 – Significant Accounting Policies (Continued)
Property,
Plant and Equipment
Property,
plant and equipment are recorded at cost less accumulated depreciation. Expenditures for major additions and improvements are
capitalized. As property and equipment are sold or retired, the applicable cost and accumulated depreciation are removed from
the accounts and any resulting gain or loss thereon is recognized as operating expenses.
Depreciation
is calculated using the straight-line method over the estimated useful lives or, in the case of leasehold improvements, the term
of the related lease, including renewal periods, if shorter. Estimated useful lives are as follows:
| Buildings |
39.5 years |
| Land improvements |
7-20 years |
| Transportation equipment |
5 years |
| Office and machinery equipment |
5-7 years |
| Roll off containers |
5-7 years |
| Machinery and equipment |
5 years |
The
Company reviews property, plant and equipment and all amortizable intangible assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of these assets may not be recoverable. Recoverability is based on estimated
undiscounted cash flows. Measurement of the impairment loss, if any, is based on the difference between the carrying value and
fair value.
Impairment
of Long-Lived Assets and Amortizable Intangible Assets
The
Company follows ASC 360-10, “Property, Plant, and Equipment,” which established a “primary asset” approach
to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for
a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset
is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition
of the asset. Long-lived assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to
sell. Through September 30, 2015, the Company has not experienced impairment losses on its long-lived assets.
Advertising
Costs
The
Company expenses all advertising costs as incurred. Advertising expenses for the nine months ended September 30, 2015 and for
the years ended December 31, 2014 and 2013 were $5,736, $6,191 and $6,348, respectively.
WASTE
RECOVERY ENTERPRISES, LLC
NOTES
TO FINANCIAL STATEMENTS – FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
(UNAUDITED) AND THE YEARS ENDED DECEMBER 31,
2014 AND 2013 (AUDITED)
Note
2 – Significant Accounting Policies (Continued)
Income
Taxes
The
Company is a Limited Liability Company. With this type of business structure, income and losses of the Company are passed through
to its Members for federal and state income tax purposes. The Company’s Members are responsible for the payment of taxes
thereon. Accordingly, the financial statements do not include a provision for federal and state income taxes.
The
Company accounts for income tax positions in accordance with Accounting Standards Codification Topic 740, “Income Taxes”
(“ASC Topic 740”). This standard prescribes a recognition and measurement of tax positions taken or expected to be
taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination
by taxing authorities. There was no material impact on the Company’s financial position or results of operations as a result
of the application of this standard. The Company files income tax returns in the United States and New York, which are subject
to examination by the tax authorities in these jurisdictions, generally for three years after the filing date.
As
of September 30, 2015, the following tax years are subject to examination:
| Jurisdiction |
|
Open
Years for Filed Returns |
| Federal
and New York State |
|
December
31, 2011 – 2014 |
Reclassifications
Certain
reclassifications have been made in prior year balances to conform to the current year presentation. Such reclassifications had
no effect on net income as previously reported.
Note
3 – Concentrations
For
the nine months ended September 30, 2015 and the years ended December 31, 2014 and 2013, the Company had sales to one customer
of $190,960, $220,660 and $110,457 or 30%, 15% and 7% of total revenues, respectively. As of September 30, 2015, December 31,
2014 and 2013, this customer had a receivable balance of $47,789, $39,094 and $35,388 or 38%, 33% and 31% of trade receivables,
respectively.
WASTE
RECOVERY ENTERPRISES, LLC
NOTES
TO FINANCIAL STATEMENTS – FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
(UNAUDITED) AND THE YEARS ENDED DECEMBER 31, 2014
AND 2013 (AUDITED)
Note
4 - Property, Plant and Equipment
Property,
plant and equipment and the related accumulated depreciation consist of the following at September 30, 2015 and December 31, 2014
and 2013:
| | |
2015 | | |
2014 | | |
2013 | |
| Buildings | |
$ | 335,544 | | |
$ | 335,544 | | |
$ | 335,554 | |
| Vehicles | |
| 1,632,595 | | |
| 1,636,566 | | |
| 1,772,566 | |
| Improvements | |
| 43,830 | | |
| 41,124 | | |
| 41,124 | |
| Office furniture and equipment | |
| 1,605,017 | | |
| 1,606,555 | | |
| 1,617,457 | |
| Land | |
| 151,000 | | |
| 151,000 | | |
| 151,000 | |
| Total Property, plant and equipment | |
| 3,767,986 | | |
| 3,770,789 | | |
| 3,917,691 | |
| Less: accumulated depreciation | |
| (3,078,989 | ) | |
| (2,977,258 | ) | |
| (3,093,115 | ) |
| Property, plant and equipment, net | |
$ | 688,997 | | |
$ | 793,531 | | |
$ | 824,576 | |
Depreciation
expense for the nine months ended September 30, 2015 and for the years ended December 31, 2014 and 2013 was $118,316, $165,143
and $168,584, respectively.
As
discussed in Note 6 – Long Term Debt, the Company has financed various equipment that is encumbered by the Lender. Total
encumbered equipment as of September 30, 2015 is approximately $328,000.
Note
5 – Commitments and Contingencies
The
Company rents various equipment from a related party from time to time. The Company’s related party equipment rent expense
for the nine months ended September 30, 2015 and for the years ended December 31, 2014 and 2013 was $0, $18,634 and $8,277, respectively.
There is no future commitment for these rentals.
WASTE
RECOVERY ENTERPRISES, LLC
NOTES
TO FINANCIAL STATEMENTS – FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
(UNAUDITED) AND THE YEARS ENDED DECEMBER 31, 2014
AND 2013 (AUDITED)
Note
6 – Long Term Debt
Long
term debt consists of the following at September 30, 2015 and December 31, 2014 and 2013 (does not include related party debt):
| | |
2015 | | |
2014 | | |
2013 | |
| Notes payable to various banks, to finance various equipment purchases, payable in monthly installments between $646 and $6,412, with interest rates ranging from 2.39% to 8%, maturing from December 30, 2015 through December 28, 2020. | |
$ | 254,886 | | |
$ | 338,200 | | |
$ | 398,082 | |
| Less current portion of long-term debt: | |
| (127,713 | ) | |
| (148,543 | ) | |
| (206,738 | ) |
| Long-term debt, net of current portion | |
$ | 127,173 | | |
$ | 189,657 | | |
$ | 191,344 | |
The
maturities of long-term debt (not including related party debt) at September 30, 2015 are as follows:
| Year Ending | |
| | |
| 2016 | |
$ | 127,713 | |
| 2017 | |
| 50,231 | |
| 2018 | |
| 26,640 | |
| 2019 | |
| 21,591 | |
| 2020 | |
| 22,807 | |
| Thereafter | |
| 5,904 | |
| | |
$ | 254,886 | |
Related
Party Shareholder Loan:
The
Company has a note payable due a member of the Company. The balance of this note at September 30, 2015 and December 31, 2014 and
2013 was $906,442. There was no activity in this loan during the period covered by these financial statements. The note accrues
interest at approximately 4.65%. Total accrued interest at September 30, 2015 and December 31, 2014 and 2013 was $606,312, $574,700
and $532,551, respectively. Total related party interest expense for the nine months ended September 30, 2015, twelve months ended
December 31, 2014 and 2013 was $31,612, $42,150 and $42,150, respectively. Total related party accrued interest as of September
30, 2015, December 31, 2014 and 2013 was $606,312, $574,700 and $532,551, respectively. See Note 7, Related Party Transactions.
WASTE
RECOVERY ENTERPRISES, LLC
NOTES
TO FINANCIAL STATEMENTS – FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
(UNAUDITED) AND THE YEARS ENDED DECEMBER 31, 2014
AND 2013 (AUDITED)
Note
7 – Related Party Transactions
Related
Party Accounts Receivable, Note Receivable and Pass Through of Receivables:
The
Company has two related companies that it bills their customers through the Company’s accounting software and then reimburses
the related party companies for the receivables it collects on their behalf. Following is a table of the balances by year due
from these related parties as well as the activity of the pass through activity:
| Due from related party balance as of December 31, 2012 | |
$ | 38,166 | |
| Collections from related parties: | |
| (28,141 | ) |
| Payments to related parties: | |
| 20,141 | |
| Due from related party balance as of December 31, 2013 | |
| 30,166 | |
| Collections from related parties: | |
| (53,401 | ) |
| Payments to related parties: | |
| 53,221 | |
| Due from related party balance as of December 31, 2014 | |
| 29,986 | |
| Collections from related parties: | |
| (28,286 | ) |
| Payments to related parties: | |
| 44,318 | |
| Due from related party balance as of September 30, 2015 | |
$ | 46,018 | |
The
Company is owed $5,300 at September 30, 2015 and December 31, 2014 and 2013 from a related party related to sales that occurred
prior to 2013. This amount is included in the trade accounts receivable balances at September 30, 2015 and December 31, 2014 and
2013.
Extinguishment
of Related Party Debt
The
Company had a related note receivable due from a member of the Company that carries a zero percent interest rate and is due on
demand by the Company. At September 30, 2015 the Company elected to forgive the balance of the note. The activity of the loan
due from the member as of September 30, 2015 and December 31, 2014 and 2013 is summarized in the following table:
| Balance as of December 31, 2012 | |
$ | 217,273 | |
| Advances on note receivable | |
| 35,597 | |
| Payments on note receivable | |
| (47,967 | ) |
| Balance at December 31, 2013: | |
| 204,903 | |
| Advances on related party note receivable | |
| 19,804 | |
| Payments on related party note receivable | |
| (2,505 | ) |
| Balance at December 31, 2014: | |
| 222,202 | |
| Advances on related party note receivable | |
| 19,407 | |
| Payments on related party note receivable | |
| (5,509 | ) |
| Forgiveness of related party debt | |
| (236,100 | ) |
| Balance at September 30, 2015: | |
$ | - | |
WASTE
RECOVERY ENTERPRISES, LLC
NOTES
TO FINANCIAL STATEMENTS – FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
(UNAUDITED) AND THE YEARS ENDED DECEMBER 31, 2014
AND 2013 (AUDITED)
Note
7 – Related Party Transactions (Continued)
Related
Party Shareholder Loan:
The
Company has a note payable due a member of the Company. This note is unsecured, matures on December 31, 2016 and carries a 4.65%
interest rate. The balance of the note at September 30, 2015 and December 31, 2014 and 2013 was $906,442. There was no activity
in this loan during the period covered by these financial statements. Total related party accrued interest at September 30, 2015
and December 31, 2014 and 2013 was $606,312, $574,700 and $532,551, respectively. Related party interest expense for the nine
months ended September 30, 2015 and the years ended December 31, 2014 and 2013 was $31,612, $42,150 and $42,150, respectively.
The
Company owes a related party $30,000 as of September 30, 2015 and December 31, 2014 and 2013 for working capital and funding provided
prior to January 1, 2013. There was no activity in this payable during the period covered by these financial statements.
On
October 15, 2015, the Company was acquired by National Waste Management Holdings, Inc. The purchase price included $250,000 and
a total of 2,750,000 shares of the acquirers’ restricted common stock. The acquisition closed on October 15, 2015.
Note
8 – Subsequent Events
Management
has evaluated subsequent events through December 14, 2015, the date on which the financial statements were available to be issued.
On
October 15, 2015, the Company was acquired by National Waste Management Holdings, Inc. The purchase price included $250,000 and
a total of 2,750,000 shares of the acquirers’ restricted common stock. The acquisition closed on October 15, 2015.
15
Exhibit 99.3
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
PRO
FORMA CONSOLIDATED BALANCE SHEET
AS
OF SEPTEMBER 30, 2015
(UNAUDITED)
| | |
National
Waste Management Holdings, Inc. | | |
Waste
Recovery Enterprises, LLC | | |
Gateway
Rolloff Services, LP | | |
Pro-forma
Adjustments | | |
Pro
Forma Consolidated | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| | |
| | |
| | |
| | |
| | |
| |
| Assets | |
| | |
| | |
| | |
| | |
| |
| | |
| | |
| | |
| | |
| | |
| |
| Current
assets: | |
| | |
| | |
| | |
| | |
| |
| Cash
and cash equivalents | |
$ | 471,514 | | |
$ | 30,320 | | |
$ | 132,108 | | |
| (100,000 | ) (a) | |
$ | 533,942 | |
| Accounts
receivable, net | |
| 217,172 | | |
| 115,618 | | |
| 203,727 | | |
| | | |
| 536,517 | |
| Other
current assets | |
| 10,010 | | |
| 45,276 | | |
| - | | |
| | | |
| 55,286 | |
| Due
from related party | |
| 8,400 | | |
| 46,018 | | |
| - | | |
| | | |
| 54,418 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total
current assets | |
| 707,096 | | |
| 237,232 | | |
| 335,835 | | |
| (100,000 | ) | |
| 1,180,163 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Property
and equipment, net | |
| 672,627 | | |
| 688,997 | | |
| - | | |
| | | |
| 1,361,624 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Other
assets: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Intangible
assets, net | |
| 45,905 | | |
| - | | |
| - | | |
| | | |
| 45,905 | |
| Secured
letter of credit | |
| 324,950 | | |
| - | | |
| - | | |
| | | |
| 324,950 | |
| Deposits
on landfill acquisition | |
| 225,000 | | |
| - | | |
| - | | |
| | | |
| 225,000 | |
| Other
deposits | |
| 8,750 | | |
| - | | |
| - | | |
| | | |
| 8,750 | |
| Other
assets | |
| - | | |
| - | | |
| - | | |
| | | |
| - | |
| Note
receivable due from related party | |
| - | | |
| - | | |
| - | | |
| | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total
other assets | |
| 604,605 | | |
| - | | |
| - | | |
| | | |
| 604,605 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total
assets | |
$ | 1,984,328 | | |
$ | 926,229 | | |
$ | 335,835 | | |
| (100,000 | ) | |
$ | 3,146,392 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Liabilities
and Stockholder's Equity (Deficit) | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Current
liabilities: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accounts
payable and accrued expenses | |
| 65,461 | | |
| 67,314 | | |
| 231,147 | | |
| | | |
| 363,922 | |
| Current
portion of long term debt | |
| - | | |
| 127,713 | | |
| | | |
| | | |
| 127,713 | |
| Current
portion of capital lease obligations | |
| 24,093 | | |
| - | | |
| | | |
| | | |
| 24,093 | |
| Due
to related party - accrued interest | |
| 27,841 | | |
| 606,312 | | |
| | | |
| (606,312 | ) (b) | |
| 27,841 | |
| Due
to related party | |
| - | | |
| 30,000 | | |
| 26,000 | | |
| | | |
| 56,000 | |
| Income
taxes payable | |
| 126,287 | | |
| - | | |
| - | | |
| | | |
| 126,287 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total
current liabilities | |
| 243,682 | | |
| 831,339 | | |
| 257,147 | | |
| | | |
| 725,856 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Long-term
liabilities: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Long
term debt, net of current portion | |
| - | | |
| 127,173 | | |
| - | | |
| | | |
| 127,173 | |
| Capital
lease obligations, net of current portion | |
| 109,614 | | |
| - | | |
| - | | |
| | | |
| 109,614 | |
| Environmental
remediation obligation | |
| 424,596 | | |
| - | | |
| - | | |
| | | |
| 424,596 | |
| Loan
due shareholder or member | |
| 704,547 | | |
| 906,442 | | |
| - | | |
| 606,312 | (b) | |
| 2,467,301 | |
| | |
| | | |
| | | |
| | | |
| 250,000 | (c) | |
| | |
| Long
term deferred tax liability | |
| 48,709 | | |
| | | |
| - | | |
| | | |
| 48,709 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total
liabilities | |
$ | 1,531,148 | | |
$ | 1,864,954 | | |
$ | 257,147 | | |
| 250,000 | | |
$ | 3,903,249 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Commitments
and Contingencies | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stockholders'
equity (deficit): | |
| | | |
| | | |
| | | |
| | | |
| | |
| Common
stock, no par value; 250,000,000 shares authorized, 60,451,842 shares issued and outstanding at September 30, 2015 | |
$ | - | | |
$ | - | | |
$ | - | | |
| | | |
$ | - | |
| Preferred
stock, no par value, 10,000,000 shares authorized, 1 share and 0 shares issued and outstanding as of June 30, 2015 | |
| - | | |
| - | | |
| - | | |
| | | |
| - | |
| Additional
paid-in capital | |
| 267,496 | | |
| - | | |
| - | | |
| (250,000 | ) (c) | |
| 367,496 | |
| | |
| | | |
| | | |
| | | |
| 450,000 | (d) | |
| | |
| | |
| | | |
| | | |
| | | |
| (100,000 | ) (a) | |
| | |
| Common
stock subscribed | |
| 113,640 | | |
| - | | |
| | | |
| (450,000 | ) (d) | |
| (336,360 | ) |
| Members'
deficit | |
| - | | |
| (938,725 | ) | |
| - | | |
| 937,729 | (e) | |
| (996 | ) |
| Partners'
capital | |
| - | | |
| | | |
| 78,688 | | |
| 78,688 | (e) | |
| 157,376 | |
| Retained
earnings (deficit) | |
| 72,044 | | |
| | | |
| | | |
| (1,016,417 | ) (f) | |
| (944,373 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total
stockholders' equity (deficit) | |
| 453,180 | | |
| (938,725 | ) | |
| 78,688 | | |
| (350,000 | ) | |
| (756,857 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total
liabilities and stockholders' equity | |
$ | 1,984,328 | | |
$ | 926,229 | | |
$ | 335,835 | | |
| (100,000 | ) | |
$ | 3,146,392 | |
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
PRO
FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2015
(UNAUDITED)
| | |
National Waste Management Holdings, Inc. | | |
Waste Recovery Enterprises, LLC | | |
Gateway Rolloff Services, LP | | |
Pro-forma Adjustments | | |
Pro Forma Consolidated | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| | |
| | |
| | |
| | |
| | |
| |
| Revenues | |
$ | 1,349,824 | | |
$ | 1,033,296 | | |
$ | 1,741,513 | | |
$ | - | | |
$ | 4,124,633 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cost of revenues | |
| 661,622 | | |
| 608,299 | | |
| 1,121,188 | | |
| - | | |
| 2,391,109 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Gross profit | |
| 688,202 | | |
| 424,997 | | |
| 620,325 | | |
| - | | |
| 1,733,524 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Selling, general and administrative expenses | |
| 380,775 | | |
| 399,159 | | |
| 728,195 | | |
| - | | |
| 1,508,129 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income from operations | |
| 307,427 | | |
| 25,838 | | |
| (107,870 | ) | |
| - | | |
| 225,395 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Other income (expenses): | |
| | | |
| | | |
| | | |
| | | |
| | |
| Gain on sale of assets | |
| - | | |
| 28,040 | | |
| - | | |
| - | | |
| 28,040 | |
| Extinguishment of related party debt | |
| - | | |
| (236,100 | ) | |
| - | | |
| - | | |
| (236,100 | ) |
| Interest expense | |
| (23,705 | ) | |
| (39,311 | ) | |
| - | | |
| - | | |
| (63,016 | ) |
| Other Income (expenses) | |
| (4,807 | ) | |
| 2,504 | | |
| 611 | | |
| - | | |
| (1,692 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total other income (expenses) | |
| (28,512 | ) | |
| (244,867 | ) | |
| 611 | | |
| - | | |
| (272,768 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income before income taxes | |
| 278,915 | | |
| (219,029 | ) | |
| (107,259 | ) | |
| - | | |
| (47,373 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income tax expense | |
| 94,045 | | |
| - | | |
| - | | |
| - | | |
| 94,045 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income | |
$ | 184,870 | | |
$ | (219,029 | ) | |
$ | (107,259 | ) | |
$ | - | | |
$ | (141,418 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income per common share: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic | |
$ | 0.003 | | |
| | | |
| | | |
$ | - | | |
$ | (0.002 | ) |
| Diluted | |
$ | 0.003 | | |
| | | |
| | | |
$ | - | | |
$ | (0.002 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Weighted average number of shares outstanding | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| 60,451,842 | | |
| | | |
| | | |
| 5,150,000 | (g) | |
| 65,601,842 | |
| Diluted | |
| 60,451,842 | | |
| | | |
| | | |
| 5,150,000 | (g) | |
| 65,601,842 | |
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
PRO
FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR
THE YEAR ENDED DECEMBER 31, 2014
(UNAUDITED)
| | |
National Waste Management Holdings, Inc. | | |
Waste Recovery Enterprises, LLC | | |
Gateway Rolloff Services, LP | | |
Pro-forma Adjustments | | |
Pro Forma Consolidated | |
| | |
| | |
| | |
| | |
| | |
| |
| Revenues | |
$ | 1,668,354 | | |
$ | 1,502,290 | | |
$ | 2,300,303 | | |
$ | - | | |
$ | 5,470,947 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cost of revenues | |
| 934,251 | | |
| 926,588 | | |
| 1,532,492 | | |
| - | | |
| 3,393,331 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Gross profit | |
| 734,103 | | |
| 575,702 | | |
| 767,811 | | |
| - | | |
| 2,077,616 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Selling, general and administrative expenses | |
| 485,403 | | |
| 538,393 | | |
| 652,918 | | |
| - | | |
| 1,676,714 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income from operations | |
| 248,700 | | |
| 37,309 | | |
| 114,893 | | |
| - | | |
| 400,902 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Other income (expenses): | |
| | | |
| | | |
| | | |
| | | |
| | |
| Gain on sale of assets | |
| - | | |
| 80,000 | | |
| - | | |
| - | | |
| 80,000 | |
| Interest expense | |
| (10,610 | ) | |
| (55,697 | ) | |
| - | | |
| - | | |
| (66,307 | ) |
| Other income | |
| - | | |
| - | | |
| 16 | | |
| - | | |
| 16 | |
| Other expenses | |
| - | | |
| 1,880 | | |
| (87 | ) | |
| - | | |
| 1,793 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total other income (expenses) | |
| (10,610 | ) | |
| 26,183 | | |
| (71 | ) | |
| - | | |
| 15,502 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income before income taxes | |
| 238,090 | | |
| 63,492 | | |
| 114,822 | | |
| - | | |
| 416,404 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income tax expense | |
| 80,951 | | |
| - | | |
| - | | |
| 67,759 | (g) | |
| 148,710 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income | |
$ | 157,139 | | |
$ | 63,492 | | |
$ | 114,822 | | |
$ | (67,759 | ) | |
$ | 267,694 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income per common share: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic | |
$ | 0.003 | | |
$ | | | |
| | | |
| | | |
$ | 0.004 | |
| Diluted | |
$ | 0.003 | | |
$ | | | |
| | | |
| | | |
$ | 0.004 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Weighted average number of shares outstanding | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| 60,054,444 | | |
| | | |
| | | |
| 5,150,000 | (h) | |
| 65,204,444 | |
| Diluted | |
| 60,054,444 | | |
| | | |
| | | |
| 5,150,000 | (h) | |
| 65,204,444 | |
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
PRO
FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR
THE YEAR ENDED DECEMBER 31, 2013
(UNAUDITED)
| | |
National Waste Management Holdings, Inc. | | |
Waste Recovery Enterprises, LLC | | |
Gateway Rolloff Services, LP | | |
Pro-forma Adjustments | | |
Pro Forma Consolidated | |
| | |
| | |
| | |
| | |
| | |
| |
| Revenues | |
$ | 1,262,506 | | |
$ | 1,392,323 | | |
$ | 1,863,387 | | |
$ | | | |
$ | 4,518,216 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cost of revenues | |
| 576,764 | | |
| 868,771 | | |
| 1,359,595 | | |
| | | |
| 2,805,130 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Gross profit | |
| 685,742 | | |
| 523,552 | | |
| 503,792 | | |
| - | | |
| 1,713,086 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Selling, general and administrative expenses | |
| 515,987 | | |
| 503,377 | | |
| 786,179 | | |
| | | |
| 1,805,543 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income from operations | |
| 169,755 | | |
| 20,175 | | |
| (282,387 | ) | |
| - | | |
| (92,457 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Other income (expenses): | |
| | | |
| | | |
| | | |
| | | |
| | |
| Other income | |
| - | | |
| 3,327 | | |
| 310,922 | | |
| | | |
| 314,249 | |
| Other expenses | |
| (9,519 | ) | |
| - | | |
| - | | |
| | | |
| (9,519 | ) |
| Gain on sale of assets | |
| 10,800 | | |
| 12,444 | | |
| - | | |
| | | |
| 23,244 | |
| Interest expense | |
| - | | |
| (63,095 | ) | |
| - | | |
| | | |
| (63,095 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total other income (expenses) | |
| 1,281 | | |
| (47,324 | ) | |
| 310,922 | | |
| - | | |
| 264,879 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income before income taxes | |
| 171,036 | | |
| (27,149 | ) | |
| 28,535 | | |
| | | |
| 172,422 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income tax expense | |
| - | | |
| - | | |
| - | | |
| | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income | |
$ | 171,036 | | |
$ | (27,149 | ) | |
$ | 28,535 | | |
$ | - | | |
$ | 172,422 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income per common share: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic | |
$ | 0.004 | | |
| | | |
| | | |
| | | |
$ | 0.003 | |
| Diluted | |
$ | 0.004 | | |
| | | |
| | | |
| | | |
$ | 0.003 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Weighted average number of shares outstanding | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| 47,450,000 | | |
| | | |
| | | |
| 5,150,000 | | |
| 52,600,000 | |
| Diluted | |
| 47,450,000 | | |
| | | |
| | | |
| 5,150,000 | | |
| 52,600,000 | |
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
NOTES
TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On
October 27, 2015 and December 1, 2015, National Waste Management Holdings, Inc. (the “Company”, “NWMH, Inc.”)
acquired Waste Recovery Enterprises, LLC and Gateway Rolloff Services, LLC, respectively. The Chairman of the Company, who is
also the largest individual shareholder of the Company, owned 50% of each of these entities prior to closing on the acquisitions;
these entities had a high degree of common ownership but were not considered to be under common control, as the ownership percentages
and interests are not the same before and after the transaction, and thus a substantive transaction has occurred with economic
substance and should be accounted for using the acquisition method of accounting in accordance with the guidance included in the
Accounting Standards Codification (“ASC”) 805, Business Combinations. The acquisition method of accounting requires
assets and liabilities to be recorded at fair value, including intangible assets, with goodwill as the residual. As of the date
of the filing, the purchase price allocation was not complete or available as related to these acquisitions. The pro-forma financial
statements are based on the unaudited historical performance of the Companies as of and for the nine months ended September 30,
2015, as well as the financial statements as of and the for the years ended December 31, 2014 and 2013 subject to pro-forma adjustments
discussed in Note 2. Assets and liabilities of the acquired entities have been recorded at cost for pro-forma purposes and will
be adjusted to fair value once the purchase price allocation is complete.
These
unaudited pro forma financial statements have been prepared in accordance with accounting principles generally accepted in the
United States and are expressed in U.S. dollars. These pro forma financial statements do not contain all of the information required
for annual financial statements. Accordingly, they should be read in conjunction with the most recent annual and interim financial
statements of the Company and Sandland.
These
unaudited pro forma financial statements have been compiled from and include:
| (a) | an
unaudited pro forma balance sheet combining the unaudited interim consolidated balance
sheet of the Company, Waste Recovery Enterprises, LLC and Gateway Rolloff Services, LP
as of September 30, 2015, giving effect to the transaction as if it occurred on the respective
balance sheet date. |
| (b) | an
unaudited interim pro forma consolidated statement of operations combining the unaudited
statements of operations of the Company, Waste Recovery Enterprises, LLC and Gateway
Rolloff Services, LP for the nine months ended September 30, 2015, and the audited annual
statements of operations of the Company and Waste Recovery Enterprises, LLC and Gateway
Rolloff Services, LP for the years ended December 31, 2014 and 2013. |
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
NOTES
TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The
unaudited pro forma financial statements have been compiled using the significant accounting policies as set out in the unaudited
financial statements of the Company, Waste Recovery Enterprises, LLC and Gateway Rolloff Services, LP for the nine months ended
September 30, 2015. It is management’s opinion that these pro forma financial statements include all adjustments necessary
for the fair presentation, in all material respects, of the proposed transaction described above in accordance with United States
generally accepted accounting principles applied on a basis consistent with the Company, Waste Recovery Enterprises, LLC and Gateway
Rolloff Services, LP’s accounting policies. No adjustments have been made to reflect the fair value of assets and liabilities
of the acquired subsidiaries, the fair value of the restricted stock issued as part of the purchase price of the acquisitions
or the potential cost savings that may occur subsequent to completion of the transaction. The pro forma statement of operations
does not reflect non-recurring charges or credits directly attributable to the transaction, of which none are currently anticipated.
The
unaudited pro forma financial statements are not intended to reflect the financial position of the Company which would have actually
resulted had the proposed transaction been effected on the date indicated.
The
unaudited pro forma consolidated financial statements do not incorporate the following pro forma assumptions and adjustments:
| (a) | Elimination
of certain of the Company’s assets and liabilities upon closing the agreement as
follows: |
| a. | Cash
- $100,000 – due to a working capital adjustment clause requiring the Company to
reimburse one of the previous owners for current assets in excess of liabilities to be
calculated 30 days after the closing. The expected adjustment is expected to be equal
to the maximum threshold of $100,000 |
| (b) | This
accrued interest will be converted to long term debt |
| (c) | The
Company financed $250,000 of the cash portion of these acquisitions with an owner financed
note due January 4, 2016 |
| (d) | $450,000
of the purchase price of one of the acquisitions was financed by a third party who has
been promised stock at $1 per share, totaling 450,000 shares of common stock subscribed |
| (e) | Elimination
of partners equity and members in acquired subsidiaries |
| (f) | Tax
affects the previously pass through entities at the estimated statutory tax rate of 38% |
| (g) | The
Company issued restricted common stock of the Company as a portion of the consideration
for the acquisitions. 2,750,000 shares were issued as part of the purchase price of Waste
Recovery Services, LLC and 2,400,000 shares were issued as part of the purchase price
of Gateway Rolloff Services, LP, for a total of 5,150,000 shares of restricted common
stock. |
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
NOTES
TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
| |
Note 3 - Pro Forma Equity | |
| | |
| | |
| |
| |
| |
Number of | | |
| | |
Additional Paid | |
| |
| |
Common Shares | | |
Par Value | | |
in Capital | |
| |
Issued and outstanding common shares of the Company | |
| 60,451,842 | | |
$ | - | | |
$ | 267,496 | |
| |
Restricted shares issued and note payable to acquire Waste Recovery Services, LLC | |
| 2,750,000 | | |
| - | | |
| (250,000 | ) |
| |
Restricted shares issued, cash paid to acquire Gateway Rolloff Services, LP (net of working capital adjustment of $100,000) | |
| 2,400,000 | | |
| - | | |
| 350,000 | |
| |
Pro Forma Balance, September 30, 2015 | |
| 65,601,842 | | |
$ | - | | |
$ | 367,496 | |
7
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