-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KAPOQMYLCmeMrTDbAFUW3Xrz6nOv4VFxZ8Pg4OF6nZsIy5QseknK8XoByrs2Er3y fHI7/LZOUTcaEdp6YYQ+bA== 0001165527-09-000098.txt : 20090217 0001165527-09-000098.hdr.sgml : 20090216 20090217170305 ACCESSION NUMBER: 0001165527-09-000098 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20081231 FILED AS OF DATE: 20090217 DATE AS OF CHANGE: 20090217 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BWI Holdings, Inc. CENTRAL INDEX KEY: 0001405260 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 000000000 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-145471 FILM NUMBER: 09615255 BUSINESS ADDRESS: STREET 1: 3915 - 61ST AVE. S.E. CITY: CALGARY STATE: A0 ZIP: T2C 1V5 BUSINESS PHONE: 403-255-2900 MAIL ADDRESS: STREET 1: 3915 - 61ST AVE. S.E. CITY: CALGARY STATE: A0 ZIP: T2C 1V5 FORMER COMPANY: FORMER CONFORMED NAME: Gray Creek Mining Inc. DATE OF NAME CHANGE: 20070629 10-Q 1 g2932.txt QTRLY REPORT FOR THE QTR ENDED 12-31-08 UNITED STATES SECURITY AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2008 Commission file number 333-145471 BWI HOLDINGS, INC. (formerly Gray Creek Mining, Inc.) (Exact name of the registrant as specified in its charter) Nevada (State or other jurisdiction of incorporation or organization) 3915 61 Avenue South East Calgary, Alberta, Canada T2C 1V5 (formerly 313-6688 Willingdon Ave. Burnaby, British Columbia, Canada, V5H 2V8) (Address of principal executive offices, including zip code) (403) 255-2900 (formerly (604) 434-8539) (Telephone number, including area code) Val-U-Corp Services, Inc. 1802 North Carson Street, Suite 212 Carson City, NV 89701-9141 (800) 555-0738 (775) 887-0738 (Name and address of agent for Service (Telephone Number) (Fax Number) Check whether the issuer (1) filed all reports required to be filed by section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last90 days. YES [X] NO [ ] 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", "non-accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X] State the number of shares outstanding of each of the issuer's classes of common equity as of the last practicable date: As at December 31, 2008 Common 10,696,054 Preferred nil PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The un-audited quarterly financial statements for the period ended December 31, 2008, prepared by the company immediately follow. 2 BWI HOLDINGS, INC. (FORMERLY GRAY CREEK MINING, INC.) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS\ (UNAUDITED - PREPARED BY MANAGEMENT) Consolidated Balance Sheets Statement "A" Consolidated Statements of Income and Comprehensive Income Statement "B" Consolidated Statements of Stockholders' Equity Statement "C" Consolidated Statements of Cash Flows Statement "D" Notes to Consolidated Financial Statements Statement "E" 3 STATEMENT "A" BWI HOLDINGS, INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Balance Sheets (Unaudited - Prepared by Management) (US Dollars) December 31, 2008 December 31, March 31, 2008 2008 ----------- ----------- ASSETS Current: Cash $ 29,902 $ -- Accounts receivable 1,582,124 2,190,912 Prepaid expenses 159,848 110,940 ----------- ----------- 1,771,673 2,301,852 ----------- ----------- Performance bonds 24,631 48,645 Property and equipment, net 5,846,041 7,674,767 Goodwill 2,622,293 3,107,397 Customer lists 94,589 179,339 ----------- ----------- 8,587,554 11,010,148 ----------- ----------- $10,359,226 $13,312,000 =========== =========== Approved on Behalf of the Board: "Jim Can", Director "Kendall Dilling", Director - - See accompanying notes - 4 STATEMENT "A" CONTINUED BWI HOLDINGS, INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Balance Sheets (Unaudited - Prepared by Management) (US Dollars) December 31, 2008
December 31, March 31, 2008 2008 ------------ ------------ LIABILITIES Current: Bank overdraft $ -- $ 39,009 Revolving bank loan 15,218 56,743 Accounts payables and accrued liabilities 2,951,724 4,380,479 Notes payable 13,240 47,068 Due to related parties 222,607 811,289 Corporate taxes payable 21,210 23,825 Due to shareholders 520,438 1,738,755 Current portion of long-term debt 26,453 34,433 Current portion of obligations under capital lease 1,077,868 1,374,549 ------------ ------------ 4,848,758 8,507,150 ------------ ------------ Long-term debt 11,022 36,572 Obligations under capital lease 1,930,801 3,100,043 Non-controlling interest -- 3,307,861 ------------ ------------ 1,941,823 6,444,476 ------------ ------------ 6,790,581 14,951,626 ------------ ------------ STOCKHOLDERS' EQUITY Common stock Authorized 100,000,000 common voting stocks with a par value of $0.001 each 20,000,000 preferred non-voting stock with a par value of $0.001 each Issued and outstanding (10,746,054, 2008 - 5,250,000) common stock par value 10,746 95,734 Contributed surplus 10,661,733 5,905,201 Cumulative other comprehensive income (loss) (782,186) 150,319 Accumulated deficit (6,321,648) (7,790,880) ------------ ------------ 3,568,645 (1,639,426) ------------ ------------ Nature of operations (Note 1) Commitments, contingencies, and subsequent events (Note 10) $ 10,359,226 $ 13,312,000 ============ ============
- - See accompanying notes - 5 Statement "B" BWI HOLDINGS, INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Statements of Income (Unaudited - Prepared by Management) (US Dollars) For the Eight Months Ended December 31, 2008 and the nine Months Ended December 31, 2007
2008 2007 ------------ ------------ Revenue $ 1,738,958 $ 4,160,039 Cost of sales 1,057,316 2,742,406 ------------ ------------ Gross earnings before general and administrative expenses 681,642 1,417,634 ------------ ------------ General and Administrative Expenses: Advertising and promotion 39,836 34,983 Automotive 2,019 3,745 Bad debts (recovery) (97,633) -- Depreciation 223,785 478,971 Insurance 7,382 0 Interest and bank charges 14,332 57,687 Interest on long-term debt 65,970 105,603 Office 30,276 145,182 Professional fees 39,715 211,145 Rent 76,970 188,983 Repairs and maintenance 18,666 84,154 Salaries and benefits 202,260 234,916 Telephone 32,180 42,331 Travel 2,376 -- ------------ ------------ 658,134 1,478,352 ------------ ------------ Income (Loss) before other items and income taxes 23,508 (60,718) ------------ ------------ Other Income (Expenses): Write off mining claims -- -- Gain on sale of assets -- 541,257 ------------ ------------ Income (Loss) before income taxes 23,508 480,539 Income taxes -- -- ------------ ------------ Net Income (Loss) 23,086 480,539 Other comprehensive income (loss) Foreign currency translation adjustment (74,328) (150,403) ------------ ------------ Total comprehensive Loss for the quarter $ 51,242 $ 330,136 ============ ============ Basic and diluted Income (Loss) per share $ 0.00 $ (0.01) Weighted average stock outstanding 10,746,054 48,861,043 ============ ============
- - See accompanying notes - 6 Statement "B" Continued BWI HOLDINGS, INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Statements of Income (Unaudited - Prepared by Management) (US Dollars) For the Eight Months Ended December 31, 2008 and the nine Months Ended December 31, 2007
2008 2007 ------------ ------------ Revenue $ 8,339,263 $ 12,128,636 Cost of sales 5,850,877 8,976,127 ------------ ------------ Gross earnings before general and administrative expenses 2,488,386 3,152,509 ------------ ------------ General and Administrative Expenses: Advertising and promotion 219,885 141,719 Automotive 11,100 7,489 Bad debts (242,288) -- Depreciation 861,538 1,315,876 Insurance 10,971 -- Interest and bank charges 58,185 137,742 Interest on long-term debt 270,912 372,472 Office 114,253 545,357 Professional fees 114,015 173,125 Rent 278,692 157,481 Repairs and maintenance 50,811 11,242 Salaries and benefits 862,903 894,338 Telephone 114,791 117,077 Travel 24,171 -- ------------ ------------ 2,768,605 4,164,326 ------------ ------------ Income (Loss) before other items and income taxes (280,219) (1,011,817) ------------ ------------ Other Income (Expenses): Write off of mining claim (8,000) Gain on sale of assets 441,695 541,257 ------------ ------------ Income (Loss) before income taxes 153,476 (470,560) Income taxes -- -- ------------ ------------ Net Income (Loss) 153,476 (470,560) Other comprehensive income (loss) Foreign currency translation adjustment (826,549) (335,894) ------------ ------------ Total comprehensive loss for the year $ 673,073 $ 806,454 ============ ============ Basic and diluted Income (Loss) per share $ 0.01 $ (0.02) Weighted average stock outstanding 10,746,054 48,900,751 ============ ============
- - See accompanying notes - 7 Statement "C" BWI HOLDINGS, INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Statement of Stockholders' Equity (Unaudited - Prepared by Management) (US Dollars) For the Two Months Ended December 31, 2008 and the Three Months Ended December 31, 2007
Retained Common Stock Stock to Contributed Comprehensive Earnings Comment Number Par Value be Issued Surplus Income (Deficit) Total ------- ------ --------- --------- ------- ------ --------- ----- Balance 8/10/06 -- $ -- $ -- $ -- $ -- $ -- $ -- Issued for cash 5,250,000 5,250 -- 20,250 -- -- 25,500 Net loss -- -- -- -- -- (174) (174) ----------- ------- -------- ----------- --------- ----------- ---------- Balance 4/30/07 5,250,000 5,250 -- 20,250 -- (174) 25,326 ----------- ------- -------- ----------- --------- ----------- ---------- Net loss -- -- -- -- -- (23,838) (23,838) ----------- ------- -------- ----------- --------- ----------- ---------- Balance 4/30/08 5,250,000 5,250 -- 20,250 -- (24,012) 1,488 ----------- ------- -------- ----------- --------- ----------- ---------- Issued on recapitalization and acquisition of Budget Waste Inc. 5,496,054 5,496 -- 10,641,483 150,319 (6,581,080) 4,216,218 Other Comprehensive Income -- -- -- -- (752,221) -- (752,221) Net Income -- -- -- -- -- 129,968 129,968 ----------- ------- -------- ----------- --------- ----------- ---------- Balance 10/31/08 10,746,054 10,746 -- 10,661,733 (601,902) (6,451,112) 3,619,465 ----------- ------- -------- ----------- --------- ----------- ---------- Other Comprehensive Income -- -- -- -- (74,328) -- (74,328) Net Income -- -- -- -- -- 23,508 23,508 ----------- ------- -------- ----------- --------- ----------- ---------- Balance 12/31/08 10,746,054 $10,746 $ -- $10,661,733 $(676,230) $(6,427,604) $3,568,645 =========== ======= ======== =========== ========= =========== ==========
- - See accompanying notes - 8 Statement "D" BWI HOLDINGS, INC. (FORMERLY GRAY CREEK MINING, INC.) (Unaudited - Prepared by Management) Consolidated Statement of Cash Flows For the Eight Months Ended December 31, 2008 and the Nine Months Ended December 31, 2007
2008 2007 ----------- ----------- Operating Activities: Net Income (Loss), per Statement "B" $ 153,476 $ (470,561) Adjustments for non-cash items - Depreciation 861,538 1,315,876 Loss (Gain) on sale of asset (433,695) -- Changes in non-cash working capital - (Increase) Decrease in accounts receivable 297,491 (571,794) (Increase) Decrease prepaid expenses (77,296) (36,988) Increase (Decrease) in corporate taxes payable (1,231) (16,879) Increase (Decrease) in accounts payable and accrued liabilities (348,889) 1,130,583 ----------- ----------- Cash flows from (used in) operating activities 297,918 1,069,478 Investing Activities: (Increase) Decrease in performance bonds 20,000 (6,464) Additions to property and equipment (498,356) (1,479,828) Proceeds on sale of property and equipment 122,419 -- Acquisitions of business assets, net of cash acquired -- (117,776) ----------- ----------- Cash flows from (used in) investing activities (355,937) (1,604,068) Financing Activities: Increase (Decrease) in revolving bank loans (36,712) (73,793) Increase (Decrease) in bank overdraft (39,009) 60,557 Increase (Decrease) in notes payable (29,530) (16,732) Proceeds on issuance of capital stock -- 475,442 Repayment of long-term debt (25,971) (76,725) Repayment of obligations under capital lease (855,787) (929,293) Proceeds from related parties 866,445 (473,148) Proceeds from shareholders 188,614 545,206 ----------- ----------- Cash flows from (used in) financing activities 68,050 (949,745) ----------- ----------- Effect of exchange rate changes on cash -- -- Net Increase (Decrease) in Cash and Cash Equivalents 19,871 415,156 Cash and cash equivalents, beginning -- (42) ----------- ----------- Cash and cash equivalents, ending $ 29,902 $ (58,958) =========== =========== Supplemental Disclosure of Cash Flow Information: Interest paid $ 270,912 $ 372,595 Income taxes paid -- 31,342
- - See accompanying notes - 9 Statement "E" BWI HOLDINGS INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Notes to Financial Statements (Unaudited - Prepared by Management) (US Dollars) 1. NATURE OF OPERATIONS: a) Condensed Financial Statements - These financial statements do not include all of the disclosure contained in the Company's April 30, 2008 year end financial statements, but only descriptions of significant and material changes that have incurred in this interim period. Readers are requested to read these financial statements in conjunction with the financial statements included in the Company's 10-K Annual Report filed July 24, 2008 and the Company's 8-K Entry Into a Material Definitive Agreement filed November 13, 2008.. b) Company Description - These financial statements include the accounts of BWI Holdings, Inc. (formerly Gray Creek Mining, Inc.) (Formerly Cray Creek Mining, Inc. a Nevada Corporation) (the "Company") and its wholly owned subsidiary Budget Waste Inc. (an Alberta Corporation) "Alta". Alta is the successor corporation following the July 1, 2006 amalgamation of Alta and its wholly owned subsidiaries: Kosland Waste Removal Ltd. (acquired February 15, 2006); DB Waste Disposal 2005 Ltd. (acquired March 1, 2006); Strathmore Septic Services (1980) Ltd. (acquired March 1, 2006), 593250 Alberta Ltd. (operating as DB Port-a-Pod acquired March 1, 2006); All Waste Systems Ltd. (acquired March 1, 2006); Rocky Mountain Waste Services Inc. (acquired March 1, 2006); 882880 Alberta Ltd. (acquired April 30, 2006) and Finnie Water Hauling Ltd. (acquired June 30, 2006). Subsequent to the amalgamation, the Company also acquired Hydrovac Alberta Inc. (acquired December 1, 2006) and 4M Water Hauling Ltd. (acquired February 16, 2007). The Company also acquired the assets only of 202287 Construction Services Ltd. (acquired November 30, 2006), Muldowney Holdings Ltd. (acquired December 1, 2006) and PJ.s Waste and Recycling Services Ltd. (acquired February 14, 2007). The Company provides non-hazardous waste collection, transfer, recycling and disposal services. Additionally, the Company provides support to the construction industry such as fence rentals, sanitary facility rentals, bin rentals, hydrovac and water hauling. The Company operates primarily, but not exclusively, in Alberta, Canada. The Company evaluates principal operations through three functional departments: Solid Waste, Liquid Waste and Water Hauling. The Company has ceased its mineral exploration activities. 10 Statement "E" BWI HOLDINGS INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Notes to Financial Statements (Unaudited - Prepared by Management) (US Dollars) c) Consolidated Statements - Effective November 10, 2008 the Company completed the acquisition of Budget Waste Inc. (Alta). According to accounting principles generally accepted in the United States, the above noted acquisition is considered to be a capital transaction in substance, rather than a business combination. That is, the acquisition is equivalent to the issuance of stock by Budget Waste Inc. (Alta) for the net monetary assets of BWI Holdings, Inc. (formerly Gray Creek Mining, Inc.) accompanied by a recapitalization and is accounted for as a change in capital structure. Accordingly, the accounting for the acquisition is identical to that resulting from a reverse acquisition. All material inter-company balances and transaction have been eliminated in consolidation. d) Comparative Figures - The comparative figures are of Budget Waste, Inc. As discussed above, the continuing operations are of Budget Waste Inc. and the operations of Gray Creek ceased following the capital transaction described above. BWI Holdings, Inc. (formerly Gray Creek Mining, Inc.) reported on an April 30 fiscal year end. Prior to the acquisition, Budget Waste reported on a March 31 fiscal year end. Effective December 3, 2008, the consolidated company adopted a March 31 fiscal end. To reflect this change, the current figures are for the two and eight months ended December 31, 2008 while the comparative figures are for the three and nine months ended December 31, 2007. Comparative figures have been reclassified, where applicable, in order to conform to the current periods' presentation. e) Going Concern - The Company's ability to continue as a going concern is dependant upon achieving profitable operations and upon the continued financial support of its lenders and investors. The outcome of these matters cannot be predicted at this time. Due to the recurring losses of the Company, the Company must continue to obtain external investment capital and financing. On going operations will be dependant upon the execution of the Company's business plan including achieving more efficient operations and marketing initiatives and the successful listing of the Company on a public market. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. 2. SIGNIFICANT ACCOUNTING POLICIES: a) Cash and Cash Equivalents - Cash and cash equivalents consist of cash and deposit instruments with an initial maturity of three months or less. 11 Statement "E" BWI HOLDINGS INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Notes to Financial Statements (Unaudited - Prepared by Management) (US Dollars) 2. SIGNIFICANT ACCOUNTING POLICIES: CONTINUED b) Accounts Receivable - Receivables are recorded when invoiced or advanced and represent claims against third parties that will be settled in cash. The carrying value of receivables, net of the allowance for doubtful accounts, represents the estimated net realizable value. The estimate for the allowance for doubtful accounts is based upon historic collection trends, type of customer and age of receivables. If events indicate that specific receivable balances may be impaired, further consideration is given to those balances and the allowance is adjusted accordingly. Accounts are written off when the Company's efforts to collect are unsuccessful. c) Income Taxes - The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards ("SFAS") No. 109 "Accounting for Uncertainty in Income Taxes". Under SFAS No. 109, deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax assets and liabilities of a change in tax rates realized. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. FIN No.48 prescribes a recognition threshold and measurement attribute for financial statement recognition ad measurement of tax positions taken into in tax returns. To the extent interest and penalties may be assessed by taxing authorities on any underpayment of income tax, such amounts have been accrued and are classified as a component of income tax expense in our Consolidated Statements of Operations. The Company elected this accounting policy, which is a continuation of our historical policy, in connection with our adoption of FIN 48. 12 Statement "E" BWI HOLDINGS INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Notes to Financial Statements (Unaudited - Prepared by Management) (US Dollars) 2. SIGNIFICANT ACCOUNTING POLICIES: CONTINUED d) Property and Equipment - Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized while major maintenance expenditures are expensed as incurred. In accordance with SFAS 144 "Accounting for the Impairment or Disposal of Long-Lived Assets", the Company reviews its assets annually for impairment. Depreciation is provided over the estimated useful lives of the assets on a declining balance basis at the following annual rates: Equipment 20% Waste bins 10% Automotive 20% Port-a-Potties 20% Trailers 20% Assets under capital lease 20% Office 20% Heavy trucks and equipment 20% Computer equipment 30% Tools and equipment 20% Leasehold developments 20% Buildings 4% Depreciation for property and equipment purchased during the year is calculated at one-half of the above rates. e) Leases - The Company leases property and equipment in the ordinary course of business. Significant lease obligations relate to trucks, waste bins, and compactors. These leases have varying terms and may or may not include purchase or buyout options and guaranteed residuals. The terms of these leases are considered when determining whether a lease is classified as operating or capital. The majority of the Company's leases are capital leases. Assets under capital lease are capitalized using interest rates appropriate at the inception of each lease and are amortized over their estimated useful lives, using the same method as similar assets that the Company owns. The present value of the lease payments is recorded as a debt obligation as disclosed in Note 11. Other leases are classified as operating when lease terms are significantly shorter than the assets' economic useful lives, or relatively low fixed minimum lease payments. Management expects that in the normal course of business, these leases will be renewed, replaced with new leases or replaced with fixed asset expenditures. 13 Statement "E" BWI HOLDINGS INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Notes to Financial Statements (Unaudited - Prepared by Management) (US Dollars) 2. SIGNIFICANT ACCOUNTING POLICIES: CONTINUED f) Goodwill and Intangible Assets - Through expansion by acquisition, the Company has acquired goodwill and intangible assets - mainly customer lists. In accordance with SFAS 142 "Accounting for Goodwill and Intangible Assets", goodwill is recorded at cost and is not subject to amortization. Customer lists are recorded at cost and amortized over their estimate useful lives on a straight-line basis. The useful lives of customer lists are estimated to be three years. These assets are reviewed annually for impairment; more frequently if management has reason to believe that conditions exist that may lead to impairment. g) Impairment of Long-Lived Assets - As described above, the Company assesses the recoverability of its long-lived tangible and intangible assets at least annually. Management assesses if there have been significant events or changes in circumstances that indicate an asset or group of assets may have become impaired. A test of recoverability is performed comparing the carrying value of a group of assets to its undiscounted future cash flows. If carrying values are in excess undiscounted future cash flows, impairment is measured by comparing the internal discounted cash flow analysis or a third party valuation. Estimating future cash flows required significant judgment and projections may vary from cash flows eventually realized. h) Foreign Currency Translation - The functional currency for Budget Waste Inc. (Alta) is the Canadian dollar. The reporting currency of BWI Holdings, Inc. (formerly Gray Creek Mining, Inc.) is the US dollar. Translation of foreign currency denominated transactions - Transactions undertaken in foreign currencies are translated into the functional currency at the actual exchange rates prevailing at the time of the transaction. Exchange gains or losses are a result of exchange rate changes between the time the transaction is recognized and the collection of funds and are included as a component of net income. Translation of account balances denominated in foreign currencies on consolidation - The Company follows FAS 52 "Foreign Currency Translation" and uses the current rate method whereby assets and liabilities are translated at the rate of exchange at the Balance Sheet date. Revenues and expenses are translated at the weighted average rate of exchange for the period. Components of stockholders' deficiency are translated at the appropriate historic rate of exchange. Exchange gains or losses on transaction of foreign currency are included as a component of comprehensive income. 14 Statement "E" BWI HOLDINGS INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Notes to Financial Statements (Unaudited - Prepared by Management) (US Dollars) 2. SIGNIFICANT ACCOUNTING POLICIES: CONTINUED i) Comprehensive Income - Other comprehensive income refers to revenues, expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income but are excluded from net income as these amounts are recorded directly as an adjustment to stockholders' deficiency. The Company's other comprehensive income is primarily comprised of unrealized foreign exchange gains and losses. j) Revenue Recognition - In accordance with SEC Staff Accounting Bulletin 104, the Company recognizes revenue when there is persuasive evidence of an arrangement, delivery has occurred, the fee is fixed or determinable, collectibility is reasonably assured and there are no significant remaining performance obligations. For providing services and short-term rentals, revenue is recognized when services or rentals have been completed. For long-term rentals, revenue is recognized monthly over the term of the contract. For special events, fencing, port-a-potties and other assets that can be rented on a per diem basis, revenue is recognized when the equipment is collected or returned. k) Advertising - Advertising costs are expensed as incurred and amounted to $39,836 and $219,885 for the two and eight months ended December 31, 2008 and $34,983 and $141,719 for the three and nine months ended December 31, 2007. l) Share-Based Payment - The Company has not issued any warrants or stock options, nor has it established any compensation plan under which options or warrants may be issued. The Company has adopted SFAS No. 123(r) "Share Based Payment" but it does not have any effect on the financial statements. From time to time, employees and suppliers have been issued stock as compensation for goods and services rendered to the Company. These issuances of stock were valued at the value of goods and services received in accordance with pre-established rates of pay and contractual amounts. m) Contingencies - The potential exposure the Company has with respect to claims, assessments and litigation has been estimated in accordance with SFAS No. 5. It is not always possible to predict the outcome of litigation as it is subject to many uncertainties. It is also not always possible for management to make a meaningful estimate of the protection loss or range of loss associated with such litigation. 15 Statement "E" BWI HOLDINGS INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Notes to Financial Statements (Unaudited - Prepared by Management) (US Dollars) 2. SIGNIFICANT ACCOUNTING POLICIES: CONTINUED n) Use of Estimates - The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Significant areas requiring the use of management estimates relate to revenue recognition, the determination of impairment of long-lived assets, the estimation of useful lives, rates and methods of depreciation, income taxes, recognition of bad debts allowances, accounts payable and accrued liabilities, recognition of capital leases and contingencies. Management believes the estimates are reasonable. Actual results could differ from these estimates and assumptions. o) Supplemental Cash Flow Information - Non-cash investing and financing activities are excluded from the statement of cash flows. Non-cash transactions are disclosed throughout the notes to the consolidated financial statements. Total amounts paid for income taxes and interest are disclosed on the consolidated statement of cash flows. p) Net loss per share before comprehensive income - The Company computes net income (loss) per share in accordance with SFAS No. 128, "EARNINGS PER Share". SFAS No. 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive (i.e. reducing loss per share). 16 Statement "E" BWI HOLDINGS INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Notes to Financial Statements (Unaudited - Prepared by Management) (US Dollars) q) Mineral Claims - Mineral property acquisitions, exploration and development costs are expensed as incurred until such time as economic reserves are quantified. To date, the company has not established any probable or proven reserves on its mineral properties. The Company has adopted the provisions of SFAS No. 143 "ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS" which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment, or other disposal of long-lived tangible assets arising from acquisition, construction or development and for any development of such assets. Effective November 10, 2008, the Company has abandoned these claims and anticipates no further costs associated with these claims 3. RISK MANAGEMENT RELATED TO FINANCIAL INSTRUMENTS: The company is exposed to various types of risks owing to the nature of the business activities it carries on, including those related to the use of financial instruments. In order to manage the risks associated with using financial instruments, such as loan, deposit and securities, controls have been implemented, such as risk management policies and various risk limits. These measures aim to optimize the return/risk ratio in all its operations. The main risks to which the company is exposed are set out below. Fair Value - In accordance with SFAS 107 "DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS", the Company's financial instruments include accounts receivable, performance bonds, bank overdraft, revolving bank loan, accounts payable and accrued liabilities, notes payable, amounts due to related parties, amounts due to shareholders, long-term debt, and obligations under capital leases. The fair value of financial instruments recognized in the balance sheet approximate their carrying amounts. Market Risk - Market risk corresponds to the financial losses that the company could incur because of unfavourable fluctuations in the value of financial instruments following variations in the parameters underlying their evaluation, such as interest rates. The policies and limits implemented are designed to mitigate exposure to market risk arising from asset and liability management activities. 17 Statement "E" BWI HOLDINGS INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Notes to Financial Statements (Unaudited - Prepared by Management) (US Dollars) 3. RISK MANAGEMENT RELATED TO FINANCIAL INSTRUMENTS: Credit Risk - Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and accounts receivable. The Company deposits cash with financial institutions it believes to be creditworthy. Cash balances at these financial institutions may exceed the federally guaranteed amount. The Company's accounts receivable are primarily derived from trade. The Company will maintain an allowance for doubtful accounts receivable in those cases for which the expected collectability of accounts receivable is in question. Liquidity Risk - Liquidity risk represents the possibility that the company may not be able to gather sufficient cash resources, when required and under reasonable conditions, to meet its financial obligations. The company's overall liquidity risk is managed by the chief financial officer and supervised by the Board of Directors. The company monitors cash resources daily and makes sure the liquidity indicators are in compliance with limits established in the policies set by the company. Interest Risk - The Company finances its property and equipment assets through short-term borrowing, long-term borrowing and capital and operating leases. The Company's greatest exposure to interest risk is from its short-term borrowings, as long-term borrowings and leases have fixed interest rates or fixed minimum lease payments. 4. PROVISION FOR DOUBTFUL ACCOUNTS: The Company determines its provision for doubtful accounts based upon the accounting policy described in Note 2(b). The Company's allowance for doubtful accounts at October 31, 2008 is $74,457 and March 31, 2008 is $989,686. During the period, the Company sold accounts receivable for proceeds of $144,655. These receivables had a face value of approximately $750,000 and were fully allowed for. 18 Statement "E" BWI HOLDINGS INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Notes to Financial Statements (Unaudited - Prepared by Management) (US Dollars) 5. MINERAL INTERESTS: On November 29, 2006, the Company entered into a purchase and sale agreement to acquire a 100% interest in one mineral claim located in the Nicola Valley mining division located approximately 17 kilometres north of Merritt, British Columbia, Canada, for a total consideration of $8,000. The mineral interest was held in trust for the Company by the vendor of the property. Effective November 10, 2008, the Company has abandoned this claim and has written the investment off. 6. REVOLVING BANK LOAN: The revolving bank loan bears interest at prime plus 2 percent per annum and is secured by a fixed and floating charge against the Company's assets. The maximum amount available is $58,374. 7. DUE TO RELATED PARTIES: Amounts due to related parties have no specific terms of repayment, are non-interest bearing and are unsecured. 8. DUE TO SHAREHOLDERS: Amounts due to shareholders are unsecured, non-interest bearing with no specific terms of repayment. 9. STOCKHOLDERS' DEFICIENCY: a) Warrants - There are no warrants outstanding at December 31, 2008 or 2007 . b) Stock Options - There are no stock options outstanding at December 31, 2008 or 2007. 19 Statement "E" BWI HOLDINGS INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Notes to Financial Statements (Unaudited - Prepared by Management) (US Dollars) 10. COMMITMENTS AND CONTINGENCIES: a) The Company has entered into various operating leases for equipment and premises. Minimum payments over the next five years are as follows: 2009 $408,555 2010 361,891 2011 314,537 2012 26,177 2013 400 b) The Company is involved in the following litigation - Corey Finnie and Virginia Finnie are disputing the acquisition of Finnie Water Hauling Ltd. by Budget and are requesting damages of $Cdn 1,000,000 ($US 867,000) and 1,000,000 (after adjusting for stock splits) shares of the Company. Approximately $948,000 of the $Cdn 1,000,000 was purportedly related to the assumption of liabilities related to capital leases. The plaintiff is claiming that these obligations were not assumed by the company. The company has assumed these obligations. The outcome of this lawsuit is indeterminable at this time. c) Environmental - The Company's operations are subject to federal, provincial and municipal laws and regulations over the collection, transport, transfer and disposal of waste products. The Company does not maintain its own landfill sites, so is not subject to any remediation costs with respect to contaminated sites. The Company does not transport hazardous wastes. The Company is not exposed to significant environmental risk. 20 Statement "E" BWI HOLDINGS INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Notes to Financial Statements (Unaudited - Prepared by Management) (US Dollars) 11. RELATED PARTY TRANSACTIONS: The Company has transactions with various related parties, including the Company's officers, directors and significant shareholders and companies controlled by shareholders, directors or family members, and a company controlled by the spouse of a shareholder. These transactions are in the normal course of operations and are transacted at the exchange amount agreed to by the related parties. December 31, 2008 March 31, 2008 ----------------- -------------- Included in accounts receivable $ -- $ -- Included in accounts payable 56,765 87,941 Transactions during the nine months ended December 31, 2008 and 2007 Revenue earned -- -- Rent 7,325 -- Repairs and supplies 97,131 104,640 Loan interest 107,643 159,787 During the nine months ended December 31, 2008, the company sold land and a building to a Company controlled by a shareholder for $Cdn 736,000. The property was appraised at $ Cdn 610,000. The Company recognized a gain of $Cdn 357,190 on this transaction During the year ended March 31, 2008 the company issued 25,000,000 common shares to a director and officer of the Company in order to settle $250,000 of accounts payable for management fees recorded in 2006 and 2007. Additionally, during the year ended March 31, 2008 the Company sold property to a related Company for proceeds of $CAD $1,200,000. The property was independently appraised at $1,167,000. The proceeds were used to repay a mortgage and to reduce debt owing to the related company. The company recognized a gain of $511,876 on this sale. 21 Statement "E" BWI HOLDINGS INC. (FORMERLY GRAY CREEK MINING, INC.) Consolidated Notes to Financial Statements (Unaudited - Prepared by Management) (US Dollars) 12. SEGMENTED REPORTING: The Company operates in four distinct business segments: Solid Waste, Liquid Services, Water Hauling and Septic Services. Results of operations for these segments for the six months ended October 31, 2008 and September 30, 2007 are as follows: December, 2008 - US dollars
Operating Gross Administration Net Revenue Expenses Profit Amortization & Other Income ------- -------- ------ ------------ ------- ------ Solid waste 5,985,096 4,196,820 1,788,276 617,266 1,056,132 114,877 Liquid Services 1,050,354 737,987 312,367 109,428 185,842 17,097 Water Hauling 1,006,615 707,256 299,359 104,221 178,153 16,985 Septic 297,198 208,813 88,384 30,623 53,244 4,517 --------- --------- --------- --------- --------- --------- 8,339,263 5,850,877 2,488,386 861,538 1,473,372 153,476 ========= ========= ========= ========= ========= ========= December, 2007 - US dollars Operating Gross Administration Net Revenue Expenses Profit Amortization & Other Income ------- -------- ------ ------------ ------- ------ Solid waste 9,577,776 7,088,293 2,489,482 1,039,125 1,821,951 (371,593) Liquid Services 625,707 463,072 162,636 67,885 119,026 (24,276) Water Hauling 909,955 673,437 236,518 98,724 173,098 (35,304) Septic 1,015,199 751,325 263,873 110,142 193,118 (39,387) ---------- ---------- ---------- ---------- ---------- ---------- 12,128,636 8,976,127 3,152,509 1,315,876 2,307,193 (470,560) ========== ========== ========== ========== ========== ==========
22 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. The following discussion of our financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and Notes thereto in Item I, and the Company's 10-K Annual Report, the Company's 8-K Entry into a Material Definitive Agreement and other publicly available financial information. This discussion contains forward-looking statements and involves numerous risks and uncertainties. Our actual results may differ materially from those contained in any forward-looking statements. COMPANY OVERVIEW The Company has been engaged in the acquisition of mining properties with a view to exploit any mineral deposits discovered that demonstrate economic feasibility. We have a 100% interest, held in trust by the vendor, in three mineral claims known as the Swakum Mountain property located in the Nicola Valley mining district located approximately 17 km north of Merritt, British Columbia, Canada. The Company has decided to abandon these claims and pursue other business interests through its wholly owned subsidiary Budget Waste Inc. Budget Waste Inc. is a regional solid and liquid waste services company that provides collection, disposal, fencing and recycling services to residential and commercial customers in Alberta, Canada. Our Company was founded in 2001 (prior to acquisition by BWI Holdings, Inc. (formerly Gray Creek Mining, Inc.), a Nevada company) with one truck and 10 large roll off containers. The Company has expanded steadily until February 2006 when it acquired the first of ten companies through the next year. SOURCES OF REVENUE Our revenue consists primarily of fees charged to customers for solid and liquid waste collection, landfill disposal and recycling services. We derive our collection revenue from services provided to commercial and residential customers. Services to commercial customers are generally performed under service agreements or pursuant to contracts with municipalities. We recognize revenue when services are rendered. Amounts billed to customers prior to providing the related services are reflected as deferred revenue and reported as revenue in the periods in which the services are rendered. We determine the fees we charge our customers based on a variety of factors, including collection frequency, level of service, route density, the type, volume and weight of the waste collected, type of equipment and containers furnished, the distance to the disposal, the cost of disposal and prices charged by competitors for similar services. Our contracts with commercial customers typically allow us to pass on increased costs resulting from variable items such 23 as disposal and fuel costs and surcharges. Our ability to pass on cost increases is however, sometimes limited by the terms of our contracts. EXPENSE STRUCTURE Our cost of operations primarily includes tipping fees and related disposal costs, labor and related benefit costs, equipment maintenance, fuel, liability and workers compensation insurance and related leasing costs. Selling, general and administrative expenses include managerial costs, information systems, administrative expenses and professional fees. Depreciation and amortization includes depreciation of fixed assets over their estimated useful lives using the declining balance method and amortization of customer lists over their estimated useful lives on a straight-line basis. OPERATING RESULTS FOR THE TWO MONTHS ENDED DECEMBER 31, 2008 The company changed its fiscal year end from April 30 to March 31 in order to conform to the same fiscal year end as its wholly owned subsidiary. Consequently, this quarterly report is for the two and eight months ended December 31, 2008. For the two months ended December 31, 2008, the company reported revenues of $1,739M ("M" representing thousands), compared to $4,160M for the three months ended December 31, 2007. The company's revenues decreased for the following reasons: the company reduced its fuel surcharge as the price of fuel declined from its peak during June and July; the economy continued to slow, especially in the construction industry; the weather in December was extremely cold, so that many of our customers elected to shut down operations over the holiday season. Additionally, the company reports in U.S. dollars while the company's functional currency is the Canadian dollar which has declined against the U.S. dollar during this period. The gross margin for the two months ended December 31, 2008 of $682M represented 39.2% of revenue as compared to $1,418M for the three months ended December 31, 2007 or 34.0%. This improvement resulted from a concerted effort to stabilize costs and to implement stronger systems of internal control.. Moving all vehicle repairs and maintenance from outside vendors to an in house mechanical shop and consolidation of operations also contributed to a more positive result. Selling, general and administrative expenses decreased to $658M for the two months ended December 31, 2008 from $1,478M for the three months ended December 31, 2007. This decrease is due in part from depreciation which decreased to $224M in the current year's quarter from $479M in 2008. General administrative and operating expenses decreased due to the company's commitment to stronger systems of internal controls and internal reporting. Management is encouraged by 24 the results but believes there is still room to achieve better operational efficiencies and will work to continue improving the company's operations, especially with the future expected economic conditions. The company's EBITDA for the quarter was $313M which has been used to retire current and long-term debt compared to EBITDA of $1,065M for the previous year's quarter which included the disposal of surplus assets at a gain of $524. The Company experienced income from operations of $29M for the two months ended December 31, 2008 compared to a loss from operations of $61M for 2007. This is a significant improvement arising from improved gross margins and reduced general and administrative expenses. OPERATING RESULTS FOR THE EIGHT MONTHS ENDED DECEMBER 31, 2008 For the eight months ended December 31, 2008, the company reported revenues of $8,339M ("M" representing thousands), compared to $12,129M for the nine months ended December 31, 2008. The company adjusted fuel surcharges in response to the volatility of the cost of fuel during the period, but was not 100% successful in passing these increased costs on to our customers. The Calgary area incurred severe weather in April, May and December and the slowing of the economy, especially in the construction industry also negatively affected sales. The company reports in U.S. dollars, but its functional currency is the Canadian dollar which has declined 20% against the U.S. dollar during the period. The gross margin for the eight months ended December 31, 2008 of $2,488M represented 29.8% of revenue as compared to $3,152M for the nine months ended December 31, 2007 or 25.9%. Although overall sales decreased, the gross margin increased in percentage if not absolute dollar amount. This improvement resulted from a concerted effort to stabilize costs and to implement stronger systems of internal control. Moving all vehicle repairs and maintenance from outside vendors to an in house mechanical shop and consolidation of operations also contributed to a more positive result. Selling, general and administrative expenses decreased to $2,769M for the eight months ended December 31, 2008 from $4,164M for the nine months ended December 31, 2007. This decrease is due in part from depreciation which decreased to $862 in 2009 fiscal year to date from $1,316M in 2008 fiscal year to date. Additionally, general administrative and operating expenses decreased due to the company's commitment to stronger systems of internal controls which included the completion of the company's 2008, 2007 and 2006 audits and ongoing communication with the company's auditors. General and administrative expenses decreased minimally to 33.1% of revenue in 2009 fiscal year to date compared to 34.3% in 2008 due to increases in salaries advertising and rents required to remain competitive with other companies in the Calgary area. Additionally, costs were incurred to implement a safety program that will result in lower costs and potential new customers. 25 Management also entered into a factoring agreement where approximately $750M of doubtful receivables were sold for proceeds of $242M. These receivables had all previously been allowed for, so the factoring agreement resulted in a recovery of bad debts of $242M. Management will continue to monitor these expenses to determine where additional costs can be reduced. The company disposed of surplus assets in the 2009 and 2008 fiscal years' to date that resulted in gains of $442M and $541M. This made the company's EBITDA for fiscal 2009 year to date $1,286M compared to $1,218M. For 2009, this cash from operations has been used to retire current and long-term debt. The Company experienced net income of $153M for the eight months ended December 31, 2008 compared to a loss of $(471M) for the nine months ended December 31, 2007. This is a significant improvement arising from improved gross margins and reduced administrative spending. LIQUIDITY AND CAPITAL RESOURCES FOR THE EIGHT MONTHS ENDED DECEMBER 31, 2008 For the eight months ended December 31, 2008 there was a cash surplus from operations of 298M as even after the company retired 349M of current payables the company ended the quarter with positive cash of $30M. In comparison, for the nine months ended December 31, 2007, the $1,069M cash from operations was due to an increase in trade payables of $1,131 for the nine months ended December 31, 2007. $498M was used to acquire additional equipment; $122M was raised on the disposal of surplus equipment; and 882M was used to retire debt and obligations under capital lease. This resulted in a cash deficiency that was provided primarily by increases in amounts due to related parties and shareholders. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our significant accounting policies are more fully discussed in the Notes to our Consolidated Financial Statements. BAD DEBT ALLOWANCE Estimates are used in determining our allowance for bad debts and are based on our historical collection experience, current trends, credit policy and a review of our accounts receivable by aging category. Our reserve is evaluated and revised on a quarterly basis. As discussed above, the company entered into a factoring agreement to recover some funds from accounts which were fully allowed for in prior years. 26 INFLATION AND PREVAILING ECONOMIC CONDITIONS To date, inflation has not had a significant impact on our operations. Consistent with industry practice, most of our contracts provide for a pass-through of certain costs, including increases in landfill tipping fees and, in some cases, fuel costs. We have implemented a fuel surcharge program, which is designed to recover fuel price fluctuations. We therefore believe we should be able to implement price increases sufficient to offset most cost increases resulting from inflation. However, competitive factors may require us to absorb at least a portion of these cost increases, particularly during periods of high inflation. OFF-BALANCE SHEET ARRANGEMENTS The Company has approximately 30 operating leases for vehicles and waste bins used in the operations of the company. Approximate future lease payments over the next five years are as follows: 2009, $408,000; 2010, $362,000; 2011, $314,000; 2012, $26,000; 2013, $500. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not required for a small issuer ITEM 4T. CONROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES & CHANGES TO INTERNAL CONTROLS Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, particularly during the period when this report was being prepared. Additionally, there were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date. 27 MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the Company. Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of the Evaluation Date, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation under this framework, management concluded that our internal control over financial reporting was not effective as of the Evaluation Date. Management assessed the effectiveness of the Company's internal control over financial reporting as of Evaluation Date and identified the following material weaknesses: INSUFFICIENT RESOURCES: We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting. INADEQUATE SEGREGATION OF DUTIES: We have an inadequate number of personnel to properly implement control procedures. LACK OF AUDIT COMMITTEE & OUTSIDE DIRECTORS: We do not have a functioning audit committee and we have no outside directors serving on the Company's Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures. 28 Management is committed to improving its internal controls and will (1) continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (3) may consider appointing outside directors and audit committee members in the future. Management, including our Chief Executive Officer and Chief Financial Officer, has discussed the material weakness noted above with our independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected. This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report. PART 2 - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Corey Finnie and Virginia Finnie are disputing the acquisition of Finnie Water Hauling Ltd. by Budget and are requesting damages of $Cdn 1,000,000 ($US 867,000) and 1,000,000 (after adjusting for stock splits) shares of the Company. Approximately $948,000 of the $Cdn 1,000,000 was purportedly related to the assumption of liabilities related to capital leases. The plaintiff is claiming that these obligations were not assumed by the company. The company has assumed these obligations. The outcome of this lawsuit is indeterminable at this time. ITEM 2. UNREGISTERED SALES OF EQUITY AND USE OF PROCEEDS On October 1, 2008, certain shareholders of the company entered into an agreement to sell 100% of the outstanding stock of the company to certain purchasers for a cash price of $275,000. On November 10, 2008, the company acquired 100% of the outstanding shares of Budget Waste Inc., an Alberta, Canada corporation from Budget Waste, Inc. a Nevada corporation. The purchase price for the stock of Budget waste Inc. was 5,496,054 newly issued and restricted shares of the company's stock, representing approximately 52% of the outstanding shares of the company post-acquisition ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS See ITEM 2 29 ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS Exhibits Description - -------- ----------- 31.1 Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 31.2 Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant, BWI Holdings, Inc., caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: February 16, 2009 /s/ Jim Can ----------------------------------- Jim Can, CEO 30 EX-31.1 2 ex31-1.txt CEO SECTION 302 CERTIFICATION Exhibit 31.1 CERTIFICATION I, Jim Can, certify that: 1. I have reviewed this report on Form 10-Q of BWI Holdings, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 16, 2009 /s/ Jim Can - --------------------------- Jim Can President, CEO EX-31.2 3 ex31-2.txt CFO SECTION 302 CERTIFICATION Exhibit 31.2 CERTIFICATION I, Bruce Milroy, certify that: 1. I have reviewed this report on Form 10-Q of BWI Holdings, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 16, 2009 /s/ Bruce Milroy - ------------------------------ Bruce Milroy Chief Financial Officer EX-32.1 4 ex32-1.txt CEO SECTION 906 CERTIFICATION Exhibit 32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of BWI Holdings, Inc. (the "Company") on Form 10-Q for the period ending december 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jim Can, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. IN WITNESS WHEREOF, the undersigned has executed this certification as of the 16th day of February, 2009. /s/ Jim Can - --------------------------- Jim Can President, CEO EX-32.2 5 ex32-2.txt CFO SECTION 906 CERTIFICATION Exhibit 32.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of BWI Holdings, Inc. (the "Company") on Form 10-Q for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Bruce Milroy, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. IN WITNESS WHEREOF, the undersigned has executed this certification as of the 16th day of February, 2009. /s/ Bruce Milroy - ------------------------------ Bruce Milroy Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----