New York
|
13-3832215
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer
|
o |
Non-accelerated filer
|
o |
Accelerated filer
|
o |
Smaller reporting company
|
þ |
Page
|
|||
PART I
|
|||
Item 1.
|
Business
|
3 | |
Item 1A.
|
Risk Factors
|
12 | |
Item 1B.
|
Unresolved Staff Comments
|
20 | |
Item 2.
|
Properties
|
20 | |
Item 3.
|
Legal Proceedings
|
20 | |
Item 4.
|
Mine Safety Disclosures
|
20 | |
PART II
|
|||
Item 5.
|
Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
21 | |
Item 6
|
Selected Financial Data
|
22 | |
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
22 | |
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
30 | |
Item 8.
|
Financial Statements and Supplementary Data
|
30 | |
Item 9.
|
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
|
30 | |
Item 9A.
|
Controls and Procedures
|
30 | |
Item 9B.
|
Other Information
|
31 | |
PART III
|
|||
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
32 | |
Item 11.
|
Executive Compensation
|
34 | |
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
36 | |
Item 13.
|
Certain Relationships and Related Transactions, and Direct Independence
|
38 | |
Item 14.
|
Principal Accountant Fees and Services
|
39 | |
PART IV
|
|||
Item 15.
|
Exhibits, Financial Statement Schedules
|
40 | |
SIGNATURES
|
45 |
●
|
Stringent industry regulations have caused operating and capital costs to rise, with many local industry participants finding these costs difficult to bear and deciding to either close their operations or sell them to larger operators; and
|
●
|
Larger operators are increasingly pursuing economies of scale by vertically integrating their operations or by utilizing their facility, asset and management infrastructure over larger volumes and, accordingly, larger solid waste collection and disposal companies have become more cost-effective and competitive by controlling a larger waste stream and by gaining access to significant financial resources to make acquisitions.
|
●
|
variations in our operating results, earnings per share, cash flows from operating activities, deferred revenue, and other financial metrics and non-financial metrics, and how those results compare to analyst expectations;
|
|
●
|
issuances of new stock which dilutes earnings per share;
|
|
●
|
forward looking guidance to industry and financial analysts related to future revenue and earnings per share;
|
|
●
|
the net increases in the number of customers and paying subscriptions, either independently or as compared with published expectations of industry, financial or other analysts that cover our company;
|
|
●
|
changes in the estimates of our operating results or changes in recommendations by securities analysts that elect to follow our common stock;
|
|
●
|
announcements of technological innovations, new services or service enhancements, strategic alliances or significant agreements by us or by our competitors;
|
|
●
|
announcements by us or by our competitors of mergers or other strategic acquisitions, or rumors of such transactions involving us or our competitors;
|
|
●
|
announcements of customer additions and customer cancellations or delays in customer purchases;
|
|
●
|
recruitment or departure of key personnel;
|
|
●
|
trading activity by a limited number of stockholders who together beneficially own a majority of our outstanding common stock.
|
Period
|
High
|
Low
|
||||||
Fiscal Year 2015:
|
||||||||
First Quarter
|
$
|
1.80 | 1.30 | |||||
Second Quarter
|
1.60 | 1.02 | ||||||
Third Quarter
|
1.11 | 0.55 | ||||||
Fourth Quarter
|
2.00 | 0.30 | ||||||
Fiscal Year 2014:
|
||||||||
First Quarter
|
$
|
0.60
|
$
|
0.60
|
||||
Second Quarter
|
0.60
|
0.60
|
||||||
Third Quarter
|
0.60
|
0.60
|
||||||
Fourth Quarter
|
1.38
|
1.38
|
Plan Category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
|
Weighted-average exercise price of outstanding options, warrants and rights compensation plans (excluding securities reflected in column (a))
(b)
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
|
|||||||||
Equity compensation plans approved by security holders
|
0
|
0 |
0
|
|||||||||
E Equity compensation plans not approved by security holders
|
4,253,074
|
0 |
7,500,000
|
|||||||||
Total
|
4,253,074
|
0 |
7,500,000
|
2015
|
2014
|
2013
|
||||||||||||||||||||||
%
|
%
|
%
|
||||||||||||||||||||||
$
|
increase
|
$
|
increase
|
$
|
Increase
|
|||||||||||||||||||
Revenue
|
13,506
|
11
|
%
|
12,202
|
8
|
%
|
11,350
|
11
|
%
|
o
|
An increase in working capital requirements to finance additional marketing efforts,
|
o
|
Increases in advertising, public relations and sales promotions for existing customers and to attract new customers as the company expands, and
|
o
|
The cost of being a public company.
|
●
|
Persuasive evidence of an arrangement exists such as a service agreement with a municipality, a hauling customer or a disposal customer;
|
●
|
Services have been performed such as the collection and hauling of waste;
|
●
|
The price of the services provided to the customer is fixed or determinable; and
|
●
|
Collectability is reasonably assured.
|
●
|
Final capping — Involves the installation of flexible membrane liners and geosynthetic clay liners, drainage and compacted soil layers and topsoil over areas of a landfill where total airspace capacity has been consumed. Final capping asset retirement obligations are recorded on a units-of-consumption basis as airspace is consumed related to the specific final capping event with a corresponding increase in the landfill asset. The final capping is accounted for as a discrete obligation and recorded as an asset and a liability based on estimates of the discounted cash flows and capacity associated with the final capping.
|
●
|
Closure — Includes the construction of the final portion of methane gas collection systems (when required), demobilization and routine maintenance costs. These are costs incurred after the site ceases to accept waste, but before the landfill is certified as closed by the applicable state regulatory agency. These costs are recorded as an asset retirement obligation as airspace is consumed over the life of the landfill with a corresponding increase in the landfill asset. Closure obligations are recorded over the life of the landfill based on estimates of the discounted cash flows associated with performing closure activities.
|
●
|
Post-closure — Involves the maintenance and monitoring of a landfill site that has been certified closed by the applicable regulatory agency. Generally, we are required to maintain and monitor landfill sites for a 30-year period. These maintenance and monitoring costs are recorded as an asset retirement obligation as airspace is consumed over the life of the landfill with a corresponding increase in the landfill asset. Post-closure obligations are recorded over the life of the landfill based on estimates of the discounted cash flows associated with performing post-closure activities.
|
●
|
Remaining permitted airspace — Our engineers, in consultation with third-party engineering consultants and surveyors, are responsible for determining remaining permitted airspace at our landfills. The remaining permitted airspace is determined by an annual survey, which is used to compare the existing landfill topography to the expected final landfill topography.
|
●
|
Expansion airspace — We also include currently unpermitted expansion airspace in our estimate of remaining permitted and expansion airspace in certain circumstances. First, to include airspace associated with an expansion effort, we must generally expect the initial expansion permit application to be submitted within one year and the final expansion permit to be received within five years. Second, we must believe that obtaining the expansion permit is likely, considering the following criteria:
|
o
|
Personnel are actively working on the expansion of an existing landfill, including efforts to obtain land use and local, state or provincial approvals;
|
o
|
We have a legal right to use or obtain land to be included in the expansion plan;
|
o
|
There are no significant known technical, legal, community, business, or political restrictions or similar issues that could negatively affect the success of such expansion; and
|
o
|
Financial analysis has been completed based on conceptual design, and the results demonstrate that the expansion meets the Company’s criteria for investment.
|
Name
|
Age
|
Position
|
||
Jeffrey Cosman (1)
|
45
|
Chief Executive Officer, Chairman of the Board of Directors
|
||
Walter H. Hall (2)
|
58
|
President, Chief Operating Officer, Director
|
(1)
|
Jeffrey Cosman was appointed Chief Executive Officer and Chairman of the Board of Directors on October 31, 2014.
|
(2)
|
Walter H. Hall was appointed President, Chief Operating Officer, and a member of the Board of Directors on March 11, 2016.
|
Name and Principal Position
|
Year
|
Salary ($)
|
Option
Awards ($)
|
Other
Compensation
|
Total
|
||||||||||||
Jeffrey Cosman (1) (2)
|
2015
|
$ | 500,000 | $ | 0 | $ | 7,216,180 | (3) | $ | 7,716,180 | |||||||
Chief Executive Officer, Director
|
2014
|
$ | 574,017 | $ | 0 | $ | 0 | $ | 574,017 | ||||||||
Anthony Merante (1)
|
2015
|
-- | -- | -- | -- | ||||||||||||
Chief Executive Officer, Chief Financial Officer, Director
|
2014
|
0 | 0 | 0 | 0 | ||||||||||||
Walter H. Hall, Jr.
|
2015
|
-- | -- | -- | -- | ||||||||||||
President, Chief Operating Officer, Director (4)
|
2014
|
-- | -- | -- | -- |
(1)
|
Anthony Merante, former Director, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Corporate Secretary resigned from all positions effective as of October 31, 2014.
|
(2)
|
Effective October 31, 2014, Jeffrey S. Cosman was appointed Chief Executive Officer of the Company and Director. All of Mr. Cosman’s salary was accrued for 2014; $187,500 of Mr. Cosman’s salary was accrued for 2015.
|
(3)
|
Mr. Cosman received 5,590,843 shares of common stock.
|
(4)
|
Mr. Hall was appointed President, Chief Operating Officer and Director on March 11, 2016.
|
Shareholder
|
Common Stock Owned
Beneficially
|
Percent
of Class (1)
|
Series A Preferred Stock Owned
Beneficially
|
Percent
of Class (2)
|
Series B Preferred Stock owned Beneficially
|
Percent
of Class (3)
|
||||||||||||||||||
Jeffrey Cosman, Chairman, Chief Executive Officer, Chairman
12540 Broadwell Road, Suite 2104
Milton, GA 30004
|
11,361,652 | (4) | 48.98% | (4) | 51 | 100 | % | 0 | 0 | % | ||||||||||||||
Walter H. Hall
12540 Broadwell Road, Suite 2104
Milton, GA 30004
|
2,000,000 | 8.04 % | 0 | % | 0 | 0 | % | |||||||||||||||||
All directors and officers as a group (2 persons)
|
13,361,652 | (4) | 57.60% | (4) | 51 | 100 | % | 0 | 0 | % | ||||||||||||||
5% or greater shareholders
|
||||||||||||||||||||||||
Edward H. Kniep IV Trust
651 Sunbridge Drive
Chesterfield, MO 63017
|
1,350,108 | (5) | 5.8% | (5) | 0 | 0 | % | 23,706.67 | 33.3% | |||||||||||||||
Patricia S. Reich Trust
4721 Butler Crossing Court
Saint Louis MO 63128
|
1,350,108 | (5) | 5.8% | (5) | 0 | 0 | % | 23,706.67 | 33.3 | % | ||||||||||||||
Charles E. Barcom
1920 Briarfield Drive
Lake St. Louis, MO 63367
|
1,350,108 | (5) | 5.8% | (5) | 0 | 0 | % | 23,706.67 | 33.3 | % | ||||||||||||||
Praesidian Funds(6)
419 Park Avenue South
New York 10016
|
1,600,000 | 6.90% | % | 0 | 0 | % | 0 | 0 | % | |||||||||||||||
The Goldman Sachs Group, Inc.
200 West Street
New York, NY 10282
|
1,746,493 | (7) | 7.00% | (7) | 0 | 0 | % | 0 | 0 | % | ||||||||||||||
20,758,469 | 76.95% | 51 | 100 | % | 71,120 | 100 | % |
(1)
|
Based on a total of 23,197,223 shares of common stock outstanding as of April 13, 2016.
|
(2)
|
Based on a total of 51 shares of Series A Preferred outstanding as of April 13, 2016.
|
(3)
|
Based on a total of 71,120 shares of Series B Preferred outstanding as of April 13, 2016.
|
(4)
|
Includes 3,322,809 shares of the common stock of the Company issued to Here to Serve Holding Corp. Mr. Cosman is the Chief Executive Officer and Director of Here to Serve Holding Corp. and, accordingly, has sole voting power and sole dispositive power over such 3,322,809 shares. This amount does not include 4,253,074 shares of restricted stock issued to Mr. Cosman, which has not yet vested.
|
(5)
|
Assumes conversion of Series B shares at $3.50 per agreement with Series B shareholders; includes 672,775 shares of common stock
|
(6)
|
These shares are owned by the following persons: Praesidian Capital Opportunity Fund III, LP; Praesidian Capital Opportunity Fund III-A, LP; Praesidian Capital Opportunity Management III, LLC; Praesidian Capital Opportunity Management III-A, LLC; and Jason Drattell
|
(7)
|
Assumes full exercise of Purchase Warrant for Common Shares dated December 22, 2015.
|
●
|
general business conditions;
|
|
●
|
industry practice;
|
|
●
|
our financial condition and performance;
|
|
●
|
our future prospects;
|
|
●
|
our cash needs and capital investment plans;
|
|
●
|
our obligations to holders of any preferred stock we may issue;
|
|
●
|
income tax consequences; and
|
|
●
|
the restrictions New York and other applicable laws and our credit arrangements then impose.
|
Fiscal 2015
|
Fiscal 2014
|
|||||||
Audit Fees
|
$
|
68,500
|
$
|
53,250
|
||||
Audit-Related Fees
|
0
|
0
|
||||||
Tax Fees
|
0
|
0
|
||||||
All Other Fees
|
0
|
0
|
||||||
Total
|
$
|
68,500
|
$
|
53,250
|
Exhibit No.
|
Description
|
|
2.1
|
Purchase Agreement dated October 17, 2014 (incorporated herein by reference to Exhibit 10.1 to the Brooklyn Cheesecake & Desserts Company, Inc. Current Report on Form 8-K filed with the SEC on October 22, 2014)
|
|
3.1
|
Restated Certificate of Incorporation of Brooklyn Cheesecake & Deserts Company, Inc. (incorporated herein by reference to Exhibit 3.1 to the Brooklyn Cheesecake & Desserts Company, Inc. Current Report on Form 8-K filed with the SEC on December 15, 2014)
|
|
3.12
|
Certificate of Incorporation of Brooklyn Cheesecake & Dessert Acquisition Corp. (incorporated herein by reference to Exhibit 3.12 to the Brooklyn Cheesecake & Desserts Company, Inc. Current Report on Form 8-K filed with the SEC on December 15, 2014)
|
|
3.123
|
Certificate of Amendment of the Certificate of Incorporation of Brooklyn Cheesecake and Desserts Company, Inc. (incorporated herein by reference to Exhibit 3.1 to the Brooklyn Cheesecake & Desserts Company, Inc. Annual Report on Form 10-K filed with the SEC on April 15, 2015)
|
|
3.2
|
Amended and Restated By-laws of Brooklyn Cheesecake & Deserts Company, Inc. (incorporated herein by reference to Exhibit 3.2 to the Brooklyn Cheesecake & Desserts Company, Inc. Current Report on Form 8-K filed with the SEC on December 15, 2014)
|
|
3.21
|
By-Laws of Brooklyn Cheesecake & Dessert Acquisition Corp. (incorporated herein by reference to Exhibit 3.21 to the Brooklyn Cheesecake & Desserts Company, Inc. Current Report on Form 8-K filed with the SEC on December 15, 2014)
|
|
4.1
|
First Amendment to Credit and Guaranty Agreement, dated as of March 9, 2016, entered into by and among Here to Serve – Missouri Waste Division, LLC, Here to Serve – Georgia Waste Division, LLC, Brooklyn Cheesecake & Desserts Acquisition Corp., Meridian Land Company, LLC, Christian Disposal, LLC, and FWCD, LLC, Meridian Waste Solutions, Inc. (“Holdings”) and certain subsidiaries of Holdings, as Guarantors, the Lenders party hereto from time to time and Goldman Sachs Specialty Lending Group, L.P., as Administrative Agent, Collateral Agent, and Lead Arranger (incorporated herein by reference to Exhibit 4.1 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on March 15, 2016)
|
|
4.2
|
Credit and Guaranty Agreement, dated as of December 22, 2015, entered into by and among Here to Serve – Missouri Waste Division, LLC, Here to Serve – Georgia Waste Division, LLC, Brooklyn Cheesecake & Desserts Acquisition Corp., Meridian Land Company, LLC, Christian Disposal, LLC, and FWCD, LLC, Meridian Waste Solutions, Inc. (“Holdings”) and certain subsidiaries of Holdings, as Guarantors, the Lenders party thereto from time to time and Goldman Sachs Specialty Lending Group, L.P., as Administrative Agent, Collateral Agent, and Lead Arranger (incorporated herein by reference to Exhibit 4.1 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on December 29, 2015)
|
|
4.3
|
Tranche A Term Loan Note, issued in favor of Goldman Sachs Specialty Lending Holdings, Inc., in the principal amount of $40,000,000, dated December 22, 2015 (incorporated herein by reference to Exhibit 4.2 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on December 29, 2015)
|
|
4.4
|
MDTL Note, issued in favor of Goldman Sachs Specialty Lending Holdings, Inc., in the principal amount of $10,000,000, dated December 22, 2015 (incorporated herein by reference to Exhibit 4.3 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on December 29, 2015)
|
|
4.5
|
Revolving Loan Note, issued in favor of Goldman Sachs Specialty Lending Holdings, Inc., in the principal amount of $5,000,000, dated December 22, 2015 (incorporated herein by reference to Exhibit 4.4 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on December 29, 2015)
|
|
4.6
|
Purchase Warrant for Common Shares issued in favor of Goldman, Sachs & Co., dated December 22, 2015 (incorporated herein by reference to Exhibit 4.5 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on December 29, 2015)
|
|
4.7
|
Pledge and Security Agreement between the grantors party thereto and Goldman Sachs Specialty Lending Group, L.P., dated December 22, 2015 (incorporated herein by reference to Exhibit 4.6 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on December 29, 2015)
|
|
4.8
|
Note and Warrant Purchase Agreement and Security Agreement, by and among Meridian Waste Solutions, Inc., Here to Serve - Missouri Waste Division, LLC, Here to Serve - Georgia Waste Division, LLC, Meridian Land Company, LLC, certain subsidiaries of the Company, the purchasers from time to time party thereto and Praesidian Capital Opportunity Fund III, LP, dated August 6, 2015 (incorporated herein by reference to Exhibit 4.1 to the Meridian Waste Solutions, Inc. Quarterly Report on Form 10-Q filed with the SEC on November 16, 2015)
|
|
4.9
|
Note A, issued in favor of Praesidiant Capital Opportunity Fund III, LP, in the principal amount of $2,644,812.57, dated August 6, 2015 (incorporated herein by reference to Exhibit 4.2 to the Meridian Waste Solutions, Inc. Quarterly Report on Form 10-Q filed with the SEC on November 16, 2015)
|
|
4.10
|
Note A, issued in favor of Praesidian Capital Opportunity Fund III-a, LP, in the principal amount of $1,025,187.43, dated August 6, 2015 (incorporated herein by reference to Exhibit 4.3 to the Meridian Waste Solutions, Inc. Quarterly Report on Form 10-Q filed with the SEC on November 16, 2015)
|
|
4.11
|
Note B, issued in favor of Praesidian Capital Opportunity Fund III, LP, in the principal amount of $5,170,716.68, dated August 6, 2015 (incorporated herein by reference to Exhibit 4.4 to the Meridian Waste Solutions, Inc. Quarterly Report on Form 10-Q filed with the SEC on November 16, 2015)
|
|
4.12
|
Note B, issued in favor of Praesidian Capital Opportunity Fund III-a, LP, in the principal amount of $2,004,283.32, dated August 6, 2015 (incorporated herein by reference to Exhibit 4.5 to the Meridian Waste Solutions, Inc. Quarterly Report on Form 10-Q filed with the SEC on November 16, 2015)
|
|
4.13
|
Warrant issued in favor of Praesidian Capital Opportunity Fund III, LP, dated August 6, 2015 (incorporated herein by reference to Exhibit 4.6 to the Meridian Waste Solutions, Inc. Quarterly Report on Form 10-Q filed with the SEC on November 16, 2015)
|
|
4.14
|
Warrant issued in favor of Praesidian Capital Opportunity Fund III-a, LP, dated August 6, 2015 (incorporated herein by reference to Exhibit 4.7 to the Meridian Waste Solutions, Inc. Quarterly Report on Form 10-Q filed with the SEC on November 16, 2015)
|
|
4.15
|
Warrant Cancellation and Stock Issuance Agreement made and entered into as of December 22, 2015, by and among Praesidian Capital Opportunity Fund III, LP, Praesidian Capital Opportunity Fund III-A, LP, and Meridian Waste Solutions, Inc. (incorporated herein by reference to Exhibit 4.15 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on December 29, 2015)
|
|
4.16
|
Convertible Promissory Note, issued in favor of Timothy Drury, in the principal amount of $1,250,000, dated December 22, 2015 (incorporated herein by reference to Exhibit 4.16 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on December 29, 2015)
|
|
10.1
|
Employment Agreement by and between Here to Serve Holding Corp. and Jeffrey S. Cosman dated January 1, 2014 (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on November 5, 2014)
|
|
10.2
|
2004 Stock Incentive Plan (incorporated herein by reference to Appendix B of the Definitive 14A filed with the SEC on July 15, 2004)
|
|
10.3
|
Credit Agreement (incorporated herein by reference to Exhibit 10.1 to the Brooklyn Cheesecake & Desserts Company, Inc. Current Report on Form 8-K filed with the SEC on February 17, 2015)
|
|
10.4
|
Solid Waste Municipal Contract by and between the City of Wildwood, Missouri, and Meridian Waste Services LLC (incorporated herein by reference to Exhibit 10.4 to the Brooklyn Cheesecake & Desserts Company, Inc. Current Report on Form 8-K filed with the SEC on February 17, 2015)
|
|
10.5
|
Solid Waste Municipal Contract by and between the City of Florissant, Missouri, and Meridian Waste Services LLC (incorporated herein by reference to Exhibit 10.5 to the Brooklyn Cheesecake & Desserts Company, Inc. Current Report on Form 8-K filed with the SEC on February 17, 2015)
|
|
10.6
|
Form of Subscription Agreement (incorporated herein by reference to Exhibit 10.1 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on March 29, 2016)
|
|
10.7
|
Employment Agreement, dated March 11, 2016, by and between the Company and Jeffrey Cosman (incorporated herein by reference to Exhibit 10.1 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on March 17, 2016)
|
|
10.8
|
Form of Director Agreement (incorporated herein by reference to Exhibit 10.2 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on March 17, 2016)
|
|
10.9
|
Executive Employment Agreement, dated March 11, 2016, by and between the Company and Walter Hall (incorporated herein by reference to Exhibit 10.3 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on March 17, 2016)
|
|
10.10
|
Meridian Waste Solutions, Inc, 2016 Equity and Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on March 16, 2016)
|
|
10.11
|
Form of Restricted Stock Agreement (incorporated herein by reference to Exhibit 10.2 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on March 16, 2016)
|
|
10.12
|
Form of Nonqualified Stock Option Agreement (Non-Employee) (incorporated herein by reference to Exhibit 10.3 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on March 16, 2016)
|
|
10.13
|
Form of Nonqualified Stock Option Agreement (Employee) (incorporated herein by reference to Exhibit 10.4 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on March 16, 2016)
|
|
10.14
|
Form of Incentive Stock Option Agreement (incorporated herein by reference to Exhibit 10.5 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on March 16, 2016)
|
|
10.15
|
Amended and Restated Membership Interest Purchase Agreement made and entered into as of October 16, 2015, by and among Timothy M. Drury; Christian Disposal LLC; FWCD, LLC; Meridian Waste Solutions, Inc.; Here to Serve Missouri Waste Division, LLC; and Here to Serve Georgia Waste Division, LLC (incorporated herein by reference to Exhibit 10.1 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on October 22, 2015)
|
|
10.16
|
First Amendment to Amended and Restated Membership Interest Purchase Agreement by and among Timothy M. Drury; Christian Disposal LLC; FWCD, LLC; Meridian Waste Solutions, Inc.; Here to Serve Missouri Waste Division, LLC; and Here to Serve Georgia Waste Division, LLC, dated December 4, 2015 (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Commission on December 9, 2015)
|
|
10.17
|
Lease Agreement, dated December 22, 2015, by and between 4551 Commerce Holdings LLC and Christian Disposal, LLC (incorporated herein by reference to Exhibit 10.3 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on December 29, 2015)
|
|
10.18
|
Employment Agreement, dated December 22, 2015, by and among Christian Disposal, LLC, Meridian Waste Solutions, Inc. and Patrick McLaughlin (incorporated herein by reference to Exhibit 10.4 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on December 29, 2015)
|
|
10.19
|
Asset Purchase Agreement made and entered into as of November 13, 2015, by and between Meridian Land Company, LLC and Eagle Ridge Landfill, LLC (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Commission on November 18, 2015)
|
|
10.20
|
First Amendment to Asset Purchase Agreement by and among Meridian Land Company, LLC, Eagle Ridge Landfill, LLC, Meridian Waste Solutions, Inc., and WCA Waste Corporation, dated December 18, 2015 (incorporated herein by reference to Exhibit 10.6 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on December 29, 2015)
|
|
10.21
|
Amended and Restated Membership Interest Purchase Agreement made and entered into as of October 16, 2015, by and among Timothy M. Drury; Christian Disposal LLC; FWCD, LLC; Meridian Waste Solutions, Inc.; Here to Serve Missouri Waste Division, LLC; and Here to Serve Georgia Waste Division, LLC, filed with Current Report on Form 8-K filed with the Securities and Exchange Commission on October 22, 2015 (incorporated herein by reference to Exhibit 10.1 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on December 9, 2015)
|
|
10.22
|
First Amendment to Amended and Restated Membership Interest Purchase Agreement by and among Timothy M. Drury; Christian Disposal LLC; FWCD, LLC; Meridian Waste Solutions, Inc.; Here to Serve Missouri Waste Division, LLC; and Here to Serve Georgia Waste Division, LLC, dated December 4, 2015 (incorporated herein by reference to Exhibit 10.2 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on December 9, 2015)
|
|
10.23
|
Membership Interest Purchase Agreement, dated as of February 12, 2015 (incorporated herein by reference to Exhibit 10.2 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on March 2, 2015)
|
|
10.24
|
Form of Business Loan and Security Agreement, dated February 17, 2015, as amended (incorporated herein by reference to Exhibit 10.1 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on March 2, 2015)
|
|
10.25
|
Form of Business Loan and Security Agreement, dated February 19, 2015, as amended (incorporated herein by reference to Exhibit 10.2 to the Meridian Waste Solutions, Inc. Current Report on Form 8-K filed with the SEC on March 2, 2015)
|
|
10.26
|
Pledge Agreement by and among Meridian Waste Solutions, Inc., the pledgors party thereto and Praesidian Capital Opportunity Fund III, LP, dated August 6, 2015 (incorporated herein by reference to Exhibit 10.1 to the Meridian Waste Solutions, Inc. Quarterly Report on Form 10-Q filed with the SEC on November 16, 2015)
|
|
10.27
|
Form of First Amendment to Director Agreement dated April 13, 2016*
|
|
31.1
|
Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).*
|
|
31.2
|
Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).*
|
|
32.1
|
Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
32.2
|
Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
101.INS
|
XBRL Instance Document*
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document*
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document*
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document*
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document*
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document*
|
MERIDIAN WASTE SOLUTIONS, INC.
|
|||
Date: April 14, 2016
|
By:
|
/s/ Jeffrey Cosman
|
|
Name:
|
Jeffrey Cosman
|
||
Title:
|
Chief Executive Officer
|
||
(Principal Executive Officer)
|
|||
(Principal Financial Officer)
|
|||
(Principal Accounting Officer)
|
Signature
|
Title
|
Date
|
||
/s/ Jeffrey Cosman
|
Chief Executive Officer, Chairman
|
April 14, 2016
|
||
Jeffrey Cosman
|
Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer
|
|||
/s/ Walter H. Hall, Jr.
|
President, Chief Operating Officer, Director
|
April 14, 2016
|
||
Walter H. Hall, Jr.
|
Page | |||
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANT
|
|
F-3 | |
CONSOLIDATED FINANCIAL STATEMENTS
|
|||
Consolidated Balance Sheets
|
F-4
|
||
Consolidated Statements of Operations
|
F-5
|
||
Consolidated Statements of Changes in Shareholders’ Equity
|
F-6
|
||
Consolidated Statements of Cash Flows
|
F-7
|
||
Notes to the Consolidated Financial Statements
|
F-8
|
/s/ D’Arelli Pruzansky, P.A. | |||
Certified Public Accountants | |||
Assets
|
2015
|
2014
|
||||||
Current assets:
|
||||||||
Cash
|
$ | 2,729,795 | $ | 438,907 | ||||
Accounts receivable, net of allowance
|
1,707,818 | 588,479 | ||||||
Prepaid expenses
|
427,615 | 221,999 | ||||||
Other current assets
|
52,359 | 41,852 | ||||||
Total current assets
|
4,917,587 | 1,291,237 | ||||||
Property, plant and equipment, at cost net of accumulated depreciation
|
14,433,740 | 7,654,765 | ||||||
Other assets:
|
||||||||
Investment in related party affiliate
|
364,185 | - | ||||||
Deposits
|
10,954 | 8,303 | ||||||
Capitalized software
|
- | 434,532 | ||||||
Loan fees, net of accumulated amortization
|
1,416,697 | 39,365 | ||||||
Goodwill
|
7,479,642 | - | ||||||
Landfill assets, net of accumulated amortization
|
3,393,476 | - | ||||||
Customer list, net of accumulated amortization
|
19,500,362 | 12,139,792 | ||||||
Non-compete, net of accumulated amortization
|
155,699 | 130,000 | ||||||
Website, net of accumulated amortization
|
10,904 | 13,688 | ||||||
Total other assets
|
32,331,919 | 12,765,680 | ||||||
Total assets
|
$ | 51,683,246 | $ | 21,711,682 | ||||
Liabilities and Shareholders' Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 1,988,050 | $ | 449,840 | ||||
Accrued expenses
|
280,069 | 67,365 | ||||||
Notes payable, related party
|
359,891 | 526,585 | ||||||
Deferred compensation
|
996,380 | 729,000 | ||||||
Deferred revenue
|
2,912,264 | 1,929,882 | ||||||
Convertible notes due related parties, includes put premiums
|
15,065 | 302,083 | ||||||
Operating line of credit and capital expenditure line of credit
|
- | 1,675,160 | ||||||
Contingent liability
|
1,000,000 | - | ||||||
Derivative liability - stock warrants
|
2,820,000 | - | ||||||
Current portion - long term debt
|
417,119 | 1,357,143 | ||||||
Total current liabilities
|
10,788,838 | 7,037,058 | ||||||
Long term liabilities:
|
||||||||
Derivative liability - interest rate swap
|
- | 40,958 | ||||||
Asset retirement obligation
|
200,252 | - | ||||||
Long term debt, net of current
|
40,587,493 | 8,826,190 | ||||||
Total long term liabilities
|
40,787,745 | 8,867,148 | ||||||
Total liabilities
|
51,576,583 | 15,904,206 | ||||||
Shareholders' equity:
|
||||||||
Preferred Series A stock, par value $.001, 51 shares authorized, issued and outstanding
|
- | - | ||||||
Preferred Series B stock, par value $.001, 71,210 shares authorized, issued and outstanding
|
71 | 71 | ||||||
Common stock, par value $.025, 75,000,000 shares authorized, 21,038,650 and 9,963,618 share issued and outstanding, respectively
|
525,966 | 249,085 | ||||||
Treasury stock, at cost
|
(224,250 | ) | (224,250 | ) | ||||
Additional paid in capital
|
27,624,492 | 14,370,296 | ||||||
Accumulated deficit
|
(27,819,616 | ) | (8,587,726 | ) | ||||
Total shareholders' equity
|
106,663 | 5,807,476 | ||||||
Total liabilities and shareholders' equity
|
$ | 51,683,246 | $ | 21,711,682 |
Successor
|
Predecessor
|
|||||||||||
Year Ended December 31, 2015
|
Period from Acquisition May 16, 2014 to December 31, 2014
|
Period from January 1, 2014 to May 15, 2014
|
||||||||||
Revenue
|
||||||||||||
Software sales
|
$ | - | $ | 1,864 | $ | - | ||||||
Services
|
13,506,097 | 7,951,607 | 4,248,605 | |||||||||
Total revenue
|
13,506,097 | 7,953,471 | 4,248,605 | |||||||||
Cost of sales and services
|
||||||||||||
Cost of sales and services
|
8,521,379 | 5,019,286 | 2,603,280 | |||||||||
Depreciation
|
1,614,225 | 932,526 | 504,515 | |||||||||
Total cost of sales and services
|
10,135,604 | 5,951,812 | 3,107,795 | |||||||||
Gross Profit
|
3,370,493 | 2,001,659 | 1,140,810 | |||||||||
Expenses
|
||||||||||||
Bad debt expense
|
37,467 | 98,381 | - | |||||||||
Compensation and related expense
|
9,107,497 | 751,398 | 213,391 | |||||||||
Depreciation and amortization
|
2,940,724 | 1,932,459 | 5,748 | |||||||||
Selling, general and administrative
|
5,555,207 | 1,397,570 | 469,593 | |||||||||
Total expenses
|
17,640,895 | 4,179,808 | 688,732 | |||||||||
Other income (expenses):
|
||||||||||||
Miscellaneous income
|
27,623 | 1,331 | 2,996 | |||||||||
Loss on disposal of assets
|
(21,851 | ) | (20,830 | ) | - | |||||||
Unrealized gain (loss) on interest rate swap
|
40,958 | (40,958 | ) | - | ||||||||
Unrealized loss on change in fair value of derivative liability
|
(1,664,213 | ) | - | - | ||||||||
Loss on extinguishment of debt
|
(1,899,161 | ) | - | - | ||||||||
Loss from proportionate share of equity investment
|
(70,347 | ) | - | - | ||||||||
Recapitalization expense
|
- | (70,000 | ) | - | ||||||||
Interest expense
|
(1,374,497 | ) | (348,136 | ) | (184,011 | ) | ||||||
Total other income (expenses)
|
(4,961,488 | ) | (478,593 | ) | (181,015 | ) | ||||||
Net (loss) income
|
$ | (19,231,890 | ) | $ | (2,656,742 | ) | $ | 271,063 | ||||
Basic net loss per share
|
$ | (1.33 | ) | $ | (0.27 | ) | ||||||
Weighted average number of shares outstanding
|
||||||||||||
(Basic and Diluted)
|
14,468,576 | 9,963,418 |
Common Shares
|
Common Stock, Par
|
Preferred Series A Shares
|
Preferred Series A Stock, Par
|
Preferred Series B Shares
|
Preferred Series B Stock, Par
|
Treasury Stock
|
Additional Paid in Capital
|
Members' Equity
|
Accumulated Deficit
|
Total
|
||||||||||||||||||||||||||||||||||
Predecessor
|
||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2013
|
- | $ | - | - | $ | - | - | $ | - | $ | - | $ | - | $ | 1,539,738 | $ | 1,539,738 | |||||||||||||||||||||||||||
Net income, from January 1 to
|
||||||||||||||||||||||||||||||||||||||||||||
May 15, 2014
|
- | - | - | - | - | - | - | - | 271,063 | - | 271,063 | |||||||||||||||||||||||||||||||||
Members' distributions, from
|
||||||||||||||||||||||||||||||||||||||||||||
January 1 to May 15, 2014
|
- | - | - | - | - | - | - | - | (585,000 | ) | - | (585,000 | ) | |||||||||||||||||||||||||||||||
Balance at May 15, 2014
|
- | - | - | - | - | - | - | - | 1,225,801 | - | 1,225,801 | |||||||||||||||||||||||||||||||||
Successor
|
||||||||||||||||||||||||||||||||||||||||||||
Balance at May 16, 2014
|
9,054,134 | $ | 226,353 | 51 | $ | - | 71,210 | $ | 71 | $ | - | $ | 12,992,347 | $ | (5,930,984 | ) | $ | 7,287,787.0 | ||||||||||||||||||||||||||
Recapitalization of
|
||||||||||||||||||||||||||||||||||||||||||||
the Company
|
1,139,284 | 28,482 | - | - | - | - | - | (28,482 | ) | - | - | |||||||||||||||||||||||||||||||||
Treasury stock purchased
|
||||||||||||||||||||||||||||||||||||||||||||
as part of recapitalization
|
(230,000 | ) | (5,750 | ) | - | - | - | - | (224,250 | ) | - | - | (230,000 | ) | ||||||||||||||||||||||||||||||
Common stock issued for conversion of related party debt
|
- | - | - | - | - | - | - | 1,406,431 | - | 1,406,431 | ||||||||||||||||||||||||||||||||||
Net loss
|
- | - | - | - | - | - | - | - | (2,656,742 | ) | (2,656,742 | ) | ||||||||||||||||||||||||||||||||
Balance at December 31, 2014
|
9,963,418 | $ | 249,085 | 51 | $ | - | 71,210 | $ | 71 | $ | (224,250 | ) | $ | 14,370,296 | $ | (8,587,726 | ) | $ | 5,807,476 | |||||||||||||||||||||||||
Common stock exchanged for services
|
1,573,550 | $ | 39,339 | - | $ | - | - | $ | - | $ | - | $ | 791,631 | $ | - | $ | 830,970 | |||||||||||||||||||||||||||
Common stock issued for compensation
|
5,690,843 | 142,271 | - | - | - | - | - | 7,213,909 | - | 7,356,180 | ||||||||||||||||||||||||||||||||||
Common stock issued for conversion of related party debt
|
460,839 | 11,521 | - | - | - | - | - | 307,406 | - | 318,927 | ||||||||||||||||||||||||||||||||||
Common stock issued in connection with Membership Purchase
|
1,750,000 | 43,750 | - | - | - | - | - | 2,581,250 | - | 2,625,000 | ||||||||||||||||||||||||||||||||||
Common stock issued in connection with cancellation of Praesidian warrants
|
1,600,000 | 40,000 | - | - | - | - | - | 2,360,000 | - | 2,400,000 | ||||||||||||||||||||||||||||||||||
Net loss
|
- | - | - | - | - | - | - | - | (19,231,890 | ) | (19,231,890 | ) | ||||||||||||||||||||||||||||||||
Balance December 31, 2015
|
21,038,650 | $ | 525,966 | 51 | $ | - | 71,210 | $ | 71 | $ | (224,250 | ) | $ | 27,624,492 | $ | - | $ | (27,819,616 | ) | $ | 106,663 |
Successor
|
Predecessor
|
|||||||||||
Year Ended December 31, 2015
|
Period from Acquisition May 16, 2014 to December 31, 2014
|
Period from January 1, 2014 to May 15, 2014
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net (loss) income
|
$ | (19,231,890 | ) | $ | (2,656,742 | ) | $ | 271,063 | ||||
Adjustments to reconcile net income to net cash (used in) provided
|
||||||||||||
from operating activities:
|
||||||||||||
Depreciation and amortization
|
4,554,949 | 2,864,985 | 510,263 | |||||||||
Unrealized gain on swap agreement
|
(40,958 | ) | - | - | ||||||||
Unrealized loss on derivatives
|
1,664,213 | - | - | |||||||||
Stock issued to vendors for services
|
830,970 | - | - | |||||||||
Stock issued to employees as incentive compensation
|
7,356,180 | - | - | |||||||||
Loss on extinguishment of debt
|
1,899,161 | - | - | |||||||||
Loss from proportionate share of equity investment
|
70,347 | - | - | |||||||||
Loss on disposal of equipment
|
21,851 | 20,830 | - | |||||||||
Changes in working capital items net of acquisitions:
|
||||||||||||
Accounts receivable, net of allowance
|
325,322 | 43,843 | (153,443 | ) | ||||||||
Prepaid expenses and other current assets
|
(71,247 | ) | (140,307 | ) | 66,176 | |||||||
Due to Here to Serve Holding Corp.
|
- | 376,585 | - | |||||||||
Deposits
|
(2,651 | ) | - | - | ||||||||
Accounts payable and accrued expenses
|
642,797 | 431,328 | 133,219 | |||||||||
Deferred compensation
|
267,380 | 243,000 | - | |||||||||
Deferred revenue
|
(112,361 | ) | 51,778 | (32,360 | ) | |||||||
Derivative liability
|
- | 40,958 | - | |||||||||
Other current liabilities
|
- | 932,135 | - | |||||||||
Net cash (used in) provided from operating activities
|
(1,825,937 | ) | 2,208,392 | 794,918 | ||||||||
Cash flows from investing activities:
|
||||||||||||
Cash portion paid for acquisition
|
(22,667,862 | ) | - | - | ||||||||
Purchased capitalized software
|
- | (60,512 | ) | - | ||||||||
Acquisition of property, plant and equipment
|
(1,280,011 | ) | (1,407,251 | ) | (170,886 | ) | ||||||
Purchased software
|
- | (13,920 | ) | - | ||||||||
Proceeds from sale of property, plant and equipment
|
79,737 | - | - | |||||||||
Net cash used in investing activities
|
(23,868,136 | ) | (1,481,682 | ) | (170,886 | ) | ||||||
Cash flows from financing activities:
|
||||||||||||
(Repayments) borrowings on notes due related parties
|
(134,785 | ) | 123,333 | - | ||||||||
Member distributions
|
- | - | (585,000 | ) | ||||||||
Proceeds from loans
|
52,207,716 | - | - | |||||||||
Payments for purchase of treasury stock
|
- | (230,000 | ) | - | ||||||||
Increase in capitalized loan fees
|
(1,395,903 | ) | - | - | ||||||||
Principle payments on notes payable
|
(21,016,907 | ) | (791,667 | ) | (449,499 | ) | ||||||
(Repayments on) proceeds from line of credit
|
(1,675,160 | ) | 590,000 | - | ||||||||
Net cash provided from (used in) financing activities
|
27,984,961 | (308,334 | ) | (1,034,499 | ) | |||||||
Net change in cash
|
2,290,888 | 418,376 | (410,467 | ) | ||||||||
Beginning cash
|
438,907 | 20,531 | 1,461,372 | |||||||||
Ending cash
|
$ | 2,729,795 | $ | 438,907 | $ | 1,050,905 | ||||||
Supplemental Disclosures of Cash Flow Information:
|
||||||||||||
Cash paid for interest
|
$ | 1,374,497 | $ | 348,136 | $ | 52,559 | ||||||
Supplemental Non-Cash Investing and Financing Information:
|
||||||||||||
Stock as consideration in acquisition
|
$ | 2,625,000 | $ | - | $ | - | ||||||
Stock for cancellation of warrants
|
$ | 2,400,000 | $ | - | $ | - | ||||||
Stock in exchange for forgiveness of debt
|
$ | 318,927 | $ | - | $ | - | ||||||
Contingent liability in conjunction with acquisition
|
$ | 1,000,000 | $ | - | $ | - | ||||||
Debt forgiveness by related party in connection with recapitalization
|
$ | - | $ | 1,406,431 | $ | - | ||||||
Convertible promissory note issued for acquisition
|
$ | 1,250,000 | $ | - | $ | - |
Acquisition of Christian Disposal, LLC and Eagle Ridge Landfill, LLC
|
Recapitalization
|
I.
|
100% of the membership interests of Here to Serve – Missouri Waste Division, LLC d/b/a Meridian Waste, a Missouri limited liability company (“HTS Waste”);
|
II.
|
100% of the membership interests of Here to Serve Technology, LLC, a Georgia limited liability company (“HTS Tech”); and
|
III.
|
100% of the membership interests of Here to Serve - Georgia Waste Division, LLC, a Georgia limited liability company (“HTS Waste Georgia”, and together with HTS Waste and HTS Tech, collectively, the “Membership Interests”). As consideration for the Membership Interests:
|
i.
|
the Company shall issue to Here to Serve 9,054,134 shares of the Company’s common stock, (the “Common Stock”);
|
ii.
|
the Company shall issue to the holder of Class A Preferred Stock of Here to Serve (“Here to Serve’s Class A Preferred Stock”) 51 shares of the Company’s to-be-designated Class A Preferred Stock (the “Class A Preferred Stock”), which Class A Preferred Stock shall have the rights and preferences as described in the Purchase Agreement.
|
iii.
|
the Company shall issue to the holder of Class B Preferred Stock of Here to Serve (Here to Serve’s Class B Preferred Stock”) an aggregate of 71,120 shares of the Company’s to-be-designated Class B Preferred Stock (the “Class B Preferred Stock”), (the Common Stock, the Class A Preferred Stock and the Class B Preferred Stock are referred to as the “Purchase Price Shares;”), and
|
iv.
|
the Company shall assume certain assumed liabilities (the “Initial Consideration”).
|
a.
|
in satisfaction of all accounts payable and shareholder loans, Here to Serve will pay to Company Majority Shareholder $70,000 and
|
b.
|
the Company purchased from the then Company Majority Shareholder 230,000 shares of the Company’s common stock for a purchase price of $230,000. Pursuant to the Purchase Agreement, to the extent Purchase Price Shares are issued to individual shareholders of Here to Serve at or upon closing of the Purchase Agreement:
|
a.
|
shares of common stock of Here to Serve held by the individuals will be cancelled
|
b.
|
1,000,000 shares of Here to Serve’s Class A Preferred Stock will be cancelled; and
|
c.
|
71,120 shares of Here to Serve’s Class B Preferred Stock will be cancelled (the “Additional Consideration”).
|
Change in Reporting Entity
|
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Cost basis of landfill assets — We capitalize various costs that we incur to make a landfill ready to accept waste. These costs generally include expenditures for land (including the landfill footprint and required landfill buffer property); permitting; excavation; liner material and installation; landfill leachate collection systems; landfill gas collection systems; environmental monitoring equipment for groundwater and landfill gas; and directly related engineering, capitalized interest, on-site road construction and other capital infrastructure costs. The cost basis of our landfill assets also includes asset retirement costs, which represent estimates of future costs associated with landfill final capping, closure and post-closure activities. These costs are discussed below.
|
Final capping, closure and post-closure costs — Following is a description of our asset retirement activities and our related accounting:
|
·
|
Final capping — Involves the installation of flexible membrane liners and geosynthetic clay liners, drainage and compacted soil layers and topsoil over areas of a landfill where total airspace capacity has been consumed. Final capping asset retirement obligations are recorded on a units-of-consumption basis as airspace is consumed related to the specific final capping event with a corresponding increase in the landfill asset. The final capping is accounted for as a discrete obligation and recorded as an asset and a liability based on estimates of the discounted cash flows and capacity associated with the final capping.
|
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
·
|
Closure — Includes the construction of the final portion of methane gas collection systems (when required), demobilization and routine maintenance costs. These are costs incurred after the site ceases to accept waste, but before the landfill is certified as closed by the applicable state regulatory agency. These costs are recorded as an asset retirement obligation as airspace is consumed over the life of the landfill with a corresponding increase in the landfill asset. Closure obligations are recorded over the life of the landfill based on estimates of the discounted cash flows associated with performing closure activities.
|
·
|
Post-closure — Involves the maintenance and monitoring of a landfill site that has been certified closed by the applicable regulatory agency. Generally, we are required to maintain and monitor landfill sites for a 30-year period. These maintenance and monitoring costs are recorded as an asset retirement obligation as airspace is consumed over the life of the landfill with a corresponding increase in the landfill asset. Post-closure obligations are recorded over the life of the landfill based on estimates of the discounted cash flows associated with performing post-closure activities.
|
We develop our estimates of these obligations using input from our operations personnel, engineers and accountants. Our estimates are based on our interpretation of current requirements and proposed regulatory changes and are intended to approximate fair value. Absent quoted market prices, the estimate of fair value is based on the best available information, including the results of present value techniques. In many cases, we contract with third parties to fulfill our obligations for final capping, closure and post closure. We use historical experience, professional engineering judgment and quoted and actual prices paid for similar work to determine the fair value of these obligations. We are required to recognize these obligations at market prices whether we plan to contract with third parties or perform the work ourselves. In those instances where we perform the work with internal resources, the incremental profit margin realized is recognized as a component of operating income when the work is performed.
|
Once we have determined the final capping, closure and post-closure costs, we inflate those costs to the expected time of payment and discount those expected future costs back to present value. During the year ended December 31, 2015 we inflated these costs in current dollars until the expected time of payment using an inflation rate of 2.5%. We discounted these costs to present value using the credit-adjusted, risk-free rate effective at the time an obligation is incurred, consistent with the expected cash flow approach. Any changes in expectations that result in an upward revision to the estimated cash flows are treated as a new liability and discounted at the current rate while downward revisions are discounted at the historical weighted average rate of the recorded obligation. As a result, the credit-adjusted, risk-free discount rate used to calculate the present value of an obligation is specific to each individual asset retirement obligation. The weighted average rate applicable to our long-term asset retirement obligations at December 31, 2015 is approximately 8.5%.
|
We record the estimated fair value of final capping, closure and post-closure liabilities for our landfills based on the capacity consumed through the current period. The fair value of final capping obligations is developed based on our estimates of the airspace consumed to date for the final capping. The fair value of closure and post-closure obligations is developed based on our estimates of the airspace consumed to date for the entire landfill and the expected timing of each closure and post-closure activity. Because these obligations are measured at estimated fair value using present value techniques, changes in the estimated cost or timing of future final capping, closure and post-closure activities could result in a material change in these liabilities, related assets and results of operations. We assess the appropriateness of the estimates used to develop our recorded balances annually, or more often if significant facts change.
|
Changes in inflation rates or the estimated costs, timing or extent of future final capping, closure and post-closure activities typically result in both (i) a current adjustment to the recorded liability and landfill asset and (ii) a change in liability and asset amounts to be recorded prospectively over either the remaining capacity of the related discrete final capping or the remaining permitted and expansion airspace (as defined below) of the landfill. Any changes related to the capitalized and future cost of the landfill assets are then recognized in accordance with our amortization policy, which would generally result in amortization expense being recognized prospectively over the remaining capacity of the final capping or the remaining permitted and expansion airspace of the landfill, as appropriate. Changes in such estimates associated with airspace that has been fully utilized result in an adjustment to the recorded liability and landfill assets with an immediate corresponding adjustment to landfill airspace amortization expense.
|
·
|
Remaining permitted airspace — Our engineers, in consultation with third-party engineering consultants and surveyors, are responsible for determining remaining permitted airspace at our landfills. The remaining permitted airspace is determined by an annual survey, which is used to compare the existing landfill topography to the expected final landfill topography.
|
·
|
Expansion airspace — We also include currently unpermitted expansion airspace in our estimate of remaining permitted and expansion airspace in certain circumstances. First, to include airspace associated with an expansion effort, we must generally expect the initial expansion permit application to be submitted within one year and the final expansion permit to be received within five years. Second, we must believe that obtaining the expansion permit is likely, considering the following criteria:
|
o
|
Personnel are actively working on the expansion of an existing landfill, including efforts to obtain land use and local, state or provincial approvals;
|
o
|
We have a legal right to use or obtain land to be included in the expansion plan;
|
o
|
There are no significant known technical, legal, community, business, or political restrictions or similar issues that could negatively affect the success of such expansion; and
|
o
|
Financial analysis has been completed based on conceptual design, and the results demonstrate that the expansion meets the Company’s criteria for investment.
|
Landfill Assets
|
Year Ended December 31, 2015
|
|||
January 1, 2015, Beginning Balance
|
$ | - | ||
Capital additions (Landfill acquired on December 22, 2015)
|
3,396,519 | |||
Amortization of landfill assets
|
(3,043 | ) | ||
Asset retirement adjustments
|
- | |||
December 31, 2015, Ending Balance
|
$ | 3,393,476 | ||
Landfill Liability
|
||||
January 1, 2015, Beginning Balance
|
$ | - | ||
Obligations incurred and capitalized (Landfill acquired on December 22, 2015)
|
196,519 | |||
Obligations settled
|
- | |||
Interest accretion
|
3,733 | |||
Revisions in estimates and interest rate assumption
|
- | |||
Acquisition, divestures and other adjustments
|
- | |||
December 31, 2015, Ending Balance
|
$ | 200,252 |
2015
|
2014
|
|||||||
Land
|
$ | 1,690,000 | $ | - | ||||
Building & Improvements
|
692,156 | - | ||||||
Furniture & Office Equipment
|
258,702 | 240,102 | ||||||
Containers
|
4,453,386 | 2,847,205 | ||||||
Truck, Machinery & Equipment
|
9,948,686 | 5,523,773 | ||||||
Total Cost
|
17,042,930 | 8,611,080 | ||||||
Less accumulated depreciation
|
(2,609,190 | ) | (956,315 | ) | ||||
Net property, plant and Equipment
|
$ | 14,433,740 | $ | 7,654,765 |
Cash consideration
|
$ | 13,008,109 | ||
Restricted stock consideration
|
2,625,000 | |||
Convertible Promissory Note
|
1,250,000 | |||
Contingent additional purchase price
|
1,000,000 | |||
Total
|
$ | 17,883,109 |
Cash
|
$ | 197,173 | ||
Accounts receivable
|
974,538 | |||
Prepaid expense
|
84,196 | |||
Other current assets
|
53,810 | |||
Customer lists intangible assets
|
8,180,000 | |||
Non-competition agreement intangible asset
|
56,000 | |||
Goodwill
|
5,849,332 | |||
Property, plant, and equipment
|
4,640,798 | |||
Account payable
|
(1,001,721 | ) | ||
Deferred revenue
|
(1,007,525 | ) | ||
Accrued expenses
|
(106,396 | ) | ||
Capital lease
|
(37,096 | ) | ||
Total
|
$ | 17,883,109 |
Cash
|
$ | 470 | ||
Accounts receivable
|
272,480 | |||
Prepaid expense
|
6,870 | |||
Customer lists intangible assets
|
2,000,000 | |||
Landfill permit (including ARO)
|
3,396,519 | |||
Goodwill
|
1,630,310 | |||
Land
|
1,550,000 | |||
Property, Plant, and Equipment
|
1,090,575 | |||
Deferred revenue
|
(87,218 | ) | ||
Asset retirement obligation - permits
|
(196,519 | ) | ||
Total
|
$ | 9,663,487 |
Successor
|
Predecessor
|
|||||||||||
Year Ended December 31, 2015
|
Period from Acquisition May 16, 2014 to December 31, 2014
|
Period from January 1, 2014 to May 15, 2014
|
||||||||||
Total Revenue
|
$ | 28,861,001 | $ | 17,872,328 | $ | 10,199,328 | ||||||
Net (loss) income
|
(17,763,377 | ) | (1,581,195 | ) | 916,391 | |||||||
Basic net loss per share
|
$ | (1.23 | ) | $ | (0.16 | ) | $ | - |
Cash consideration
|
$ | 11,000,000 | ||
Estimated value of common stock issued to sellers
|
1,978,750 | |||
Estimated value of preferred stock issued to sellers
|
7,121,000 | |||
Total
|
$ | 20,099,750 |
Accounts receivable
|
$ | 632,322 | ||
Prepaid expenses
|
123,544 | |||
Deposits
|
8,303 | |||
Containers
|
2,710,671 | |||
Furniture and equipment
|
299,450 | |||
Trucks
|
4,243,964 | |||
Customer lists
|
14,007,452 | |||
Non-compete agreement
|
150,000 | |||
Accounts payable and accrued expenses
|
(54,387 | ) | ||
Notes payable
|
(143,464 | ) | ||
Deferred revenue
|
(1,878,105 | ) | ||
Total
|
$ | 20,099,750 |
December 31, 2015 | |||||||||||||
Remaining
|
Accumulated
|
Net Carrying
|
|||||||||||
Useful Life
|
Cost
|
Amortization
|
Value
|
||||||||||
Customer lists
|
13.7 years
|
$ | 24,187,452 | $ | 4,687,090 | $ | 19,500,362 | ||||||
Non compete agreement
|
4.2 years
|
206,000 | 50,301 | 155,699 | |||||||||
Website
|
3.9 years
|
13,920 | 3,016 | 10,904 | |||||||||
$ | 24,407,372 | $ | 4,740,407 | $ | 19,666,965 |
December 31, 2014 | |||||||||||||
Remaining
|
Accumulated
|
Net Carrying
|
|||||||||||
Useful Life
|
Cost
|
Amortization
|
Value
|
||||||||||
Capitalized software
|
5.0 years
|
$ | 434,532 | $ | - | $ | 434,532 | ||||||
Customer list
|
4.5 years
|
14,007,452 | 1,867,660 | 12,139,792 | |||||||||
Loan fees
|
4.5 years
|
50,613 | 11,248 | 39,365 | |||||||||
Non compete agreement
|
4.5 years
|
150,000 | 20,000 | 130,000 | |||||||||
Website
|
4.9 years
|
13,920 | 232 | 13,688 | |||||||||
$ | 14,656,517 | $ | 1,899,140 | $ | 12,757,377 |
December 31, 2015
|
December 31, 2014
|
|||||||
Debt payable to Comerica Bank, senior debt
|
$ | - | $ | 8,708,333 | ||||
Debt payable to Praesidian Capital Opportunity Fund III, senior lender
|
- | - | ||||||
Debt payable to Praesidian Capital Opportunity Fund III-A, senior lender
|
- | - | ||||||
Goldman Sachs - Tranche A Term Loan - LIBOR Interest
|
40,000,000 | - | ||||||
Goldman Sachs - Revolver
|
- | - | ||||||
Goldman Sachs - MDTL
|
- | - | ||||||
Convertible Notes Payable
|
1,250,000 | - | ||||||
Capitalized lease - financing company, secured by equipment,
|
37,097 | |||||||
Equipment loans
|
395,118 | - | ||||||
Notes payable to seller of Meridian, subordinated debt
|
1,475,000 | 1,475,000 | ||||||
Less: debt discount
|
(2,152,603 | ) | - | |||||
Total debt
|
41,004,611 | 10,183,333 | ||||||
Less: current portion
|
(417,119 | ) | (1,357,143 | ) | ||||
Long term debt less current portion
|
$ | 40,587,493 | $ | 8,826,190 |
Payoff of short term bridge financing
|
$ | 432,938 | ||
Payoff of lines of credit with Commerica Bank
|
1,745,799 | |||
Payoff of senior debt to Comerica Bank
|
7,953,433 | |||
Refinancing fees
|
712,830 | |||
$ | 10,845,000 |
Aggregate outstanding principal balance of the Notes
|
$ | 10,845,043 | ||
Aggregate accrued but unpaid interest on the Notes
|
82,844 | |||
Prepayment Premium1
|
325,351 | |||
Accrued PIK
|
9,941 | |||
Tax Liability
|
150,000 | |||
Accrued but unpaid fees and expenses
|
4,000 | |||
Payoff Amount
|
$ | 11,417,179 |
December 22, 2015
|
||||
Current exercise price
|
$ | 0.025 | ||
Time to expiration
|
8/6/2016
|
|||
Risk-free interest rate
|
0.33 | % | ||
Estimated volatility
|
230 | % | ||
Dividend
|
0 | % | ||
Stock price on December 22, 2015
|
$ | 1.50 | ||
Expected forfeiture rate
|
0 | % |
December 22, 2015
|
||||
Purchase Price
|
$ | 450,000 | ||
Time to expiration
|
12/22/2023
|
|||
Risk-free interest rate
|
2.11 | % | ||
Estimated volatility
|
45 | % | ||
Dividend
|
0 | % | ||
Stock price on December 22, 2015
|
$ | 1.50 | ||
Expected forfeiture rate
|
0 | % |
December 31, 2015
|
||||
Purchase Price
|
$ | 450,000 | ||
Time to expiration
|
12/22/2023
|
|||
Risk-free interest rate
|
2.15 | % | ||
Estimated volatility
|
45 | % | ||
Dividend
|
0 | % | ||
Stock price on December 31, 2015
|
$ | 1.90 | ||
Expected forfeiture rate
|
0 | % |
Fair value of warrants @ December 31, 2014
|
$ | - | ||
Issuance of Praesdian warrants @ August 6, 2015
|
904,427 | |||
Unrealized loss on derivative liability
|
1,004,213 | |||
Cancellation of Praesidian warrants @ December 22, 2015
|
(1,908,640 | ) | ||
Issuance of Goldman warrants @ December 22, 2015
|
2,160,000 | |||
Unrealized loss on derivative liability
|
660,000 | |||
Fair value of warrants @ December 31, 2015
|
$ | 2,820,000 |
Common Stock
|
Treasury Stock
|
Preferred Stock
|
Common Stock Transactions
|
1.
|
Issued 1,573,550 of these shares were issued to vendors for services generating a professional fees expense of $830,970;
|
2.
|
Issued 5,690,843 of these shares to officers and employees as incentive compensation resulting in compensation expense of $7,356,180;
|
3.
|
Issued 460,839 shares of common stock, due to the conversion of related party debt. Per the convertible note agreement, the shares were converted at 75% of the closing bid price on the date of conversion. The value of the debt and accrued interest converted was $318,927;
|
4.
|
Issued 1,750,000 shares as part of the acquisition of Christian Disposal LLC, these shares were record as part of the purchased price consideration as noted above. These share were valued at market as of the date of the acquisition; and,
|
5.
|
Issued 1,600,000 shares of common stock, due to the cancellation of Praesidian warrants. As part of this extinguishment of debt the company recorded a loss of approximately, $1.8 million.
|
Number
of
Shares
|
Average Exercise Price
|
If
Exercised
|
Expiration Date
|
|||||||||||||
Outstanding, January 1, 2014
|
- | $ | - | $ | - | - | ||||||||||
Granted
|
- | - | - | - | ||||||||||||
Forfeited
|
- | - | - | - | ||||||||||||
Exercised
|
- | - | - | - | ||||||||||||
Outstanding, December 31, 2014
|
- | $ | - | $ | - | |||||||||||
Granted - Praesidian
|
1,293,022 | $ | 0.025 | $ | 32,326 | - | ||||||||||
Forfeited/Cancellation - Praesidian
|
(1,293,022 | ) | $ | 0.025 | (32,326 | ) | - | |||||||||
Granted - Goldman Sachs
|
1,673,559 | $ | 0.269 | 449,518 |
December 31, 2023
|
|||||||||||
Forfeited/Cancellation - Goldman Sachs
|
- | - | - | - | ||||||||||||
Exercised
|
- | - | - | - | ||||||||||||
Outstanding, December 31, 2015
|
1,673,559 | $ | - | $ | 449,518 | - | ||||||||||
Warrants exercisable at December 31, 2015
|
1,673,559 |
Years Ended December 31, | ||||||||
2015
|
2014
|
|||||||
Computed "expected" benefit
|
$ | (6,538,843 | ) | $ | (773,000 | ) | ||
Effect of state income taxes, net of federal benefit
|
(769,276 | ) | (136,000 | ) | ||||
Effect of change in tax rates
|
- | (280,760 | ) | |||||
Pre-acquisition losses
|
- | 640,000 | ||||||
Stock based compensation and other permanent differences | 4,577,831 | - | ||||||
Increase in valution allowance
|
2,730,288 | 549,760 | ||||||
$ | - | $ | - |
Years Ended December 31, | ||||||||
2015
|
2014
|
|||||||
Net operating loss carry forward
|
$ | 4,686,288 | $ | 1,956,000 | ||||
Less: Valuation allowance
|
(4,686,288 | ) | (1,956,000 | ) | ||||
$ | - | $ | - |
Fair Value Measurements at Reporting Date Using
|
||||||||||||||||
December 31, 2015
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant Other
Observable
Inputs
(Level 3)
|
|||||||||||||
Derivative liability
|
$ | 2,820,000 | $ | - | $ | - | $ | 2,820,000 | ||||||||
Stock settled debt premium
|
12,500 | 10,000 | - | 2,500 | ||||||||||||
Total
|
$ | 2,832,500 | $ | 10,000 | $ | - | $ | 2,822,500 |
Fair Value Measurements at Reporting Date Using
|
||||||||||||||||
December 31, 2014
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant Other
Observable
Inputs
(Level 3)
|
|||||||||||||
Interest Rate Swap
|
$ | 40,958 | $ | - | $ | - | $ | 40,958 | ||||||||
Stock settled debt
|
308,083 | 235,000 | - | 67,083 | ||||||||||||
Total
|
$ | 349,041 | $ | 235,000 | $ | - | $ | 108,041 |
2016
|
$ | 442,408 | ||
2017
|
448,408 | |||
2018
|
164,493 | |||
2019
|
111,103 | |||
2020
|
71,500 | |||
Thereafter
|
- | |||
Total
|
$ | 1,237,912 |
Sale of Capitalized Software
|
Following is a summary of financial position and results of operations of MSTI:
|
Summary of Statements of Financial Condition
|
2015
|
|||
(UNAUDITED)
|
||||
Assets
|
||||
Current assets
|
$ | 4,481 | ||
Noncurrent assets
|
2,869,553 | |||
Total assets
|
$ | 2,874,034 | ||
Liabilities and Equity
|
||||
Current liabilities
|
$ | 213,264 | ||
Noncurrent liabilities
|
- | |||
Equity
|
2,660,770 | |||
Total liabilities and equity
|
$ | 2,874,034 | ||
Summary of Statements of Operations
|
||||
Revenues
|
$ | 1,364 | ||
Expense
|
470,342 | |||
Net loss
|
$ | (468,978 | ) |
EQUITY AND INCENTIVE PLAN
|
(i)
|
The Committee determines the strike price of Incentive Options at the time the Incentive Options are granted. The assigned strike price must be no less than 100% of the Fair Market Value (as defined in the Plan) of the Company’s Common Stock. In the event that the recipient is a Ten Percent Owner (as defined in the Plan), the strike price must be no less than 110% of the Fair Market Value of the Company.
|
(ii)
|
The strike price of each Non-qualified Option will be at least 100% of the Fair Market Value of such share of the Company’s Common Stock on the date the Non-qualified Option is granted, unless the Committee, in its sole and absolute discretion, elects to set the strike price of such Non-qualified Option below Fair Market Value.
|
(iii)
|
The Committee fixes the term of Options, provided that Options may not be exercisable more than ten years from the date the Option is granted, and provided further that Incentive Options granted to a Ten Percent Owner may not be exercisable more than five years from the date the Incentive Option is granted.
|
(iv)
|
The Committee may designate the vesting period of Options. In the event that the Committee does not designate a vesting period for Options, the Options will vest in equal amounts on each fiscal quarter of the Company through the five (5) year anniversary of the date on which the Options were granted. The vesting period accelerates upon the consummation of a Sale Event (as defined in the Plan).
|
(v)
|
Options are not transferable and Options are exercisable only by the Options’ recipient, except upon the recipient’s death.
|
(vi)
|
Incentive Options may not be issued in an amount or manner where the amount of Incentive Options exercisable in one year entitles the holder to Common Stock of the Company with an aggregate Fair Market value of greater than $100,000.
|
Awards of Restricted Stock are subject to the following conditions:
|
(i)
|
The Committee grants Restricted Stock Options and determines the restrictions on each Restricted Stock Award (as defined in the Plan). Upon the grant of a Restricted Stock Award and the payment of any applicable purchase price, grantee is considered the record owner of the Restricted Stock and entitled to vote the Restricted Stock if such Restricted Stock is entitled to voting rights.
|
(ii)
|
Restricted Stock may not be delivered to the grantee until the Restricted Stock has vested.
|
(iii)
|
Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as provided in the Plan or in the Award Agreement (as defined in the Plan).
|
EMPLOYMENT AGREEMENT
|
1.
|
Section 3 of the Original Agreement is hereby deleted in its entirety and replaced with the following:
|
|
“3. Expense Reimbursement. To the extent not covered under the terms of Director’s employment with the Company, during the Directorship Term, the Company shall reimburse the Director for (i) all reasonable out-of-pocket expenses incurred by the Director in attending any in-person meetings, provided that the Director complies with the generally applicable policies, practices and procedures of the Company for submission of expense reports, receipts or similar documentation of such expenses, and (ii) any costs associated with filings required to be made by the Director or any of the entities managed or controlled by Director to report beneficial ownership or the acquisition or disposition of securities of the Company. Any reimbursements for allocated expenses (as compared to out-of-pocket expenses of the Director) must be approved in advance by the Company.”
|
MERIDIAN WASTE SOLUTIONS, INC. | |||
By:
|
|||
Name | |||
Title | |||
[●], an individual
|
|||
1.
|
I have reviewed this Form 10-K of Meridian Waste Solutions, 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 present in this report;
|
|
|
4.
|
I am 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 13-a-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 financing 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.
|
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 the 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 involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: April 14, 2016
|
By:
|
/s/ Jeffrey Cosman
|
|
Jeffrey Cosman
|
|||
Principal Executive Officer
Meridian Waste Solutions, Inc.
|
1.
|
I have reviewed this Form 10-K of Meridian Waste Solutions, 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 present in this report;
|
|
|
4.
|
I am 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 13-a-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 financing 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.
|
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 the 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 involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: April 14, 2016
|
By:
|
/s/ Jeffrey Cosman
|
|
Jeffrey Cosman
|
|||
Principal Financial Officer
Meridian Waste Solutions, Inc.
|
(1)
|
Such Annual Report on Form 10-K for the period ended December 31, 2015, 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 such Annual Report on Form 10-K for the period ended December 31, 2015, fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: April 14, 2016
|
By:
|
/s/ Jeffrey Cosman
|
|
Jeffrey Cosman
|
|||
Principal Executive Officer
Meridian Waste Solutions, Inc.
|
(1)
|
Such Annual Report on Form 10-K for the period ended December 31, 2015, 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 such Annual Report on Form 10-K for the period ended December 31, 2015, fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: April 14, 2016
|
By:
|
/s/ Jeffrey Cosman
|
|
Jeffrey Cosman
|
|||
Principal Financial Officer
Meridian Waste Solutions, Inc.
|
AZ;I?C34?$VIZIH^LM&EQ)&K7+26KR#E7C(
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M<-^TO\,+OXS? ?Q/X9T^:-4LREJ\V?+$RL'0-CD*64 GT->?ZE'X^^/\
MXT\"V^L>!)_!FG>%-9CUW4[R[U.WN5N)88I42"V6)F9@SR9+N%PJ],G%>]44
M@/G37O@-XGN_@KX^TF+2XSJ.N?$$:[:1^?&/.M?[1M9O-+9P#Y<3'!^;Y0,=
M*K^,_@YXOTY/$NIV>@RZG(OQ.L?%-M9P74*RWUE%!;(Y0LP4-E'^5B/N^XKZ
M3HH YSXG7WB:S\!W-UX2LK"\UZ+RY8;*_D,<=PH=3)%O!PKE-P5C\H;&>,UX
M)??LY:W\4;#XD-IGAA/AQI?B?0HK.UTB>6'%]J< &-1UTZ)(YFGT;5O[.UK2RT04/;2%T1U8@K(C.,J00"5K4_
M9-^$-W\'_ASJ$5_:)IMYKVLW>M2V*W)NOL(F8;(FF))E<(B;WR=SEB"1S7J%
M%( HHHH **** "BBB@ HHHH **** "BBB@ HHHH **** "BBB@ HHHH ****
M "BBB@ HHHH **** "BBB@ HHHH **** "BBB@ HHHH **** "BBB@ HHHH
M**** "BBB@ HHHH **** "BBB@ HHHH **** "BBB@ HHHH **** "BBB@ H
MHHH **** "BBB@ HHHH **** "BBB@ HHHH **** "BBB@ HHHH **** "BB
MB@ HHHH **** "BBB@ HHHH **** "BBB@ HHHH **** "BBB@ HHHH ****
M "BBB@ HHHH **** "BBB@ HHHH **** "BBB@ HHHH **** "BBB@ HHHH
M**** "BBB@ HHHH **** "BBB@ HHHH **** "BBB@ HHHH **** "BBB@ H
MHHH **** "BBB@ HHHH **** "BBB@ HHHH **** "BBB@ HHHH **** "BB
MB@ HHHH **** "BBB@ HHHH **** "BBB@ HHHH **** "BBB@ HHHH ****
3 "BBB@ HHHH **** "BBB@#_V0$!
end
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Apr. 14, 2016 |
Jun. 30, 2015 |
|
License Agreement Fee Charged Percent Of Sales | |||
Entity Registrant Name | Meridian Waste Solutions, Inc. | ||
Entity Central Index Key | 0000949721 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 23,197,223 | ||
Public Float | $ 4,884,005 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheet (Unaudited) (Parenthetical) - $ / shares |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Common stock par value (in dollars per share) | $ 0.025 | $ 0.025 |
Common stock, shares authorized (in shares) | 75,000,000 | 75,000,000 |
Common stock, shares issued (in shares) | 21,038,650 | 9,963,418 |
Common stock, shares outstanding (in shares) | 21,038,650 | 9,963,418 |
Preferred Series A | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 51 | 51 |
Preferred stock, shares issued (in shares) | 51 | 51 |
Preferred stock, shares outstanding (in shares) | 51 | 51 |
Preferred Series B | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 71,210 | 71,210 |
Preferred stock, shares issued (in shares) | 71,210 | 71,210 |
Preferred stock, shares outstanding (in shares) | 71,210 | 71,210 |
1. NATURE OF OPERATIONS AND ORGANIZATION |
12 Months Ended | ||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||
1. NATURE OF OPERATIONS AND ORGANIZATION | Meridian Waste Solutions, Inc. (formerly Brooklyn Cheesecake and Desserts Company, Inc.) (the Company or Meridian) is currently operating under five separate Limited Liability Companies:
(1) Here To Serve Missouri Waste Division, LLC (HTSMWD), a Missouri Limited Liability Company; (2) Here To Serve Georgia Waste Division, LLC (HTSGWD), a Georgia Limited Liability Company; (3) Meridian Land Company, LLC (MLC), a Georgia Limited Liability Company; (4) Here to Serve Technology, LLC (HTST), a Georgia Limited Liability Company; and (5) Christian Disposal, LLC and subsidiary (CD), a Missouri Limited Liability Company.
On January 7, 2015, in an effort to give investors a more concentrated presence in the waste industry the Company sold the assets of HTST to Mobile Science Technologies, Inc., a Georgia corporation (MSTI), a related party due to being owned and managed by some of the shareholders of the Company. On this date HTST ceased operations and became a dormant Limited Liability Company (LLC). Currently, Meridian is formalizing plans to dissolve HTST, in which this LLC will cease to exist.
In 2014, HTSMWD purchased the assets of a large solid waste disposal company in the St. Louis, MO market. This acquisition is considered the platform company for future acquisitions in the solid waste disposal industry. HTSGWD was created to facilitate expansion in this industry throughout the Southeast.
The Company is primarily in the business of residential and commercial waste disposal and hauling and has contracts with various cities and municipalities. The majority of the Companys customers are located in the St. Louis metropolitan and surrounding areas.
On December 22, 2015, Meridian Waste Solutions, Inc. and subsidiaries (the Company) completed its acquisition of Christian Disposal LLC, and subsidiary (Christian Purchase Agreement). Pursuant to the Christian Purchase Agreement, the Company acquired 100% of the membership interests of Christian Disposal, which is integrated into the operations of the Company; refer to intangible assets and acquisition footnote below.
Simultaneous with the closing thereof, Christian Disposal LLC, and subsidiary, entered into a Lease Agreement, in which, the Company leased 4551 Commerce Avenue, High Ridge, Missouri, for a five-year term at a monthly rent of $6,500. Additionally, the Company entered into an employment agreement with an executive employee for a term of five years.
Concurrently, the Company completed an asset purchase agreement with WCA Waste Corporation (the Eagle Purchase Agreement). The Company acquired all of the assets of Eagle Ridge Landfill, LLC (ERL), its rights and properties related to such business of ERL, which includes certain assets and operations of the Eagle Ridge Hauling Business (ERH) and certain debts, which is now operating under Meridian Land Company, LLC. Refer to intangible assets and acquisition footnote below.
On October 17, 2014 Here to Serve Missouri Waste Division, LLC, (HTSMWD) a Missouri Limited Liability Company, which is the historical business, entered into a Share Exchange Agreement with the Company and the sole member of HTSMWD whereby the Company agreed to acquire the membership interest of HTSMWD, HTST and HTSGWD in exchange for 9,054,134 shares of the Companys common stock. This transaction was closed on October 17, 2014 and HTSMWD became wholly-owned by the Company. The Company is deemed to have issued 1,139,284 shares of common stock which represents the outstanding common shares of the Company just prior to the closing of the transaction.
At closing, the Company issued 9,054,134 shares of its common stock to the sole member of HTSMWD and the shareholders of the sole member who obtained approximately 90% control and management control of the Company. The transaction was accounted for as a reverse acquisition and recapitalization of HTSMWD, HTST and HTSGWD whereby HTSMWD is considered the acquirer for accounting purposes. The consolidated financial statements after the acquisition include the balance sheets of both companies and HTST and HTSGWD at historical cost, the historical results of HTSMWD, HTST and HTSGWD. All share and per share information in the accompanying consolidated financial statements and footnotes has been retroactively restated to reflect the recapitalization (see Explanation of Membership Interest Purchase Agreement below).
Acquisition of Here to Serve Holding Corporation
On October 17, 2014, (the Execution Date), Meridian Waste Solutions, Inc. entered into that certain Membership Interest Purchase Agreement (the Purchase Agreement) by and among Here to Serve Holding Corp., a Delaware corporation, as seller (Here to Serve), the Company, as parent, Brooklyn Cheesecake & Dessert Acquisition Corp., a wholly-owned subsidiary of the Company, as buyer (the Acquisition Corp.), the Chief Executive Officer of the Company (the Company Executive), the majority shareholder of the Company (the Company Majority Shareholder) and certain shareholders of Seller (the Seller Shareholders), pursuant to which the Acquisition Corp shall acquire from Here to Serve all of Here to Serves right, title and interest in and to:
As further consideration, at the closing of the transaction contemplated under the Purchase Agreement:
On October 17, 2014, the directors and majority shareholders of the Company approved the Purchase Agreement and the transactions contemplated under the Purchase Agreement. The directors of Here to Serve and the Here to Serve Shareholders approved the Purchase Agreement and the transactions contemplated thereunder. This closing of the Purchase Agreement results in a change of control of the Company and the Company changed its business plan to that of HTSMWD.
The merger of Here to Serve Holding Corp. (Here to Serve), a Delaware Corporation, and Meridian Waste Services, LLC became effective May 15, 2014. The merger was accounted for by the Company using business combination accounting. Under this method, the purchase price paid by the acquirer is allocated to the assets acquired and liabilities assumed as of the acquisition date based on the fair value. By the application of pushdown accounting, our assets, liabilities and equity were accordingly adjusted to fair value on May 15, 2014. Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions.
At the time of merger Here to Serve was a company with nominal operations whereas Meridian Waste Services, LLC consisted of the active and carry-forward business. Accordingly Meridian Waste Services, LLC is deemed to be the predecessor entity and as such is presented as the comparable financial statements. As such our financial statements are presented in two distinct periods to indicate the application of two different basis of accounting. Periods prior to May 15, 2014 are identified herein as Predecessor, while periods subsequent to the Here to Serve merger are identified as Successor. As a result of the change in basis of accounting from historical cost to reflect the Here to Serves purchase cost, the financial statements for Predecessor periods are not comparable to those of Successor periods. |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Accounting Basis
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (GAAP accounting).
Basis of Consolidation
The consolidated financial statements for the year ended December 31, 2015 include the operations of the Company and its wholly-owned subsidiaries, Here To Serve Missouri Waste Division, LLC, Meridian Land Company, LLC, Here to Serve Technology, LLC and Christian Disposal, LLC. The following two subsidiaries of the Company, Here To Serve Georgia Waste Division, LLC and Here to Serve Technology, LLC, a Georgia Limited Liability Company had no operations during the period.
The consolidated financial statements for the year ended December 31, 2014 include the operations of the Company and its wholly-owned subsidiaries, Here To Serve Missouri Waste Division, LLC and Here To Serve Technology, LLC. The following subsidiary of the Company, Here To Serve Georgia Waste Division, LLC had no operations during the period.
All significant intercompany accounts and transactions have been eliminated in consolidation.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.
Fair Value of Financial Instruments
The Companys financial instruments consist of cash and cash equivalents, accounts receivable, account payable, accrued expenses, and notes payable. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these consolidated financial statements.
Derivative Instruments
The Company enters into financing arrangements that consist of freestanding derivative instruments or are hybrid instruments that contain embedded derivative features. The Company accounts for these arrangements in accordance with Accounting Standards Codification topic 815, Accounting for Derivative Instruments and Hedging Activities (ASC 815) as well as related interpretations of this standard. In accordance with this standard, derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, considering all of the rights and obligations of each instrument.
The Company estimates fair values of derivative financial instruments using various techniques (and combinations thereof) that are considered consistent with the objective measuring fair values. In selecting the appropriate technique, the Company considers, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. For less complex derivative instruments, such as freestanding warrants, the Company generally use the Black-Scholes model, adjusted for the effect of dilution, because it embodies all of the requisite assumptions (including trading volatility, estimated terms, dilution and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques (such as Black-Scholes model) are highly volatile and sensitive to changes in the trading market price of our common stock. Since derivative financial instruments are initially and subsequently carried at fair values, our income (expense) going forward will reflect the volatility in these estimates and assumption changes. Under the terms of this accounting standard, increases in the trading price of the Companys common stock and increases in fair value during a given financial quarter result in the application of non-cash derivative expense. Conversely, decreases in the trading price of the Companys common stock and decreases in trading fair value during a given financial quarter result in the application of non-cash derivative income.
Impairment of long-lived assets
The Company periodically reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less that the carrying amount of the asset. The amount of impairment is measured as the difference between the assets estimated fair value and its book value. During the year ending December 31, 2015, the Company experienced no losses due to impairment.
Income Taxes
The Company accounts for income taxes pursuant to the provisions of ASC 740-10, Accounting for Income Taxes, which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.
The Company follows the provisions of the ASC 740 -10 related to, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits.
The Company analyzes its tax positions by utilizing ASC 740-10-25 Definition of Settlement, which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. As of December 31, 2015, tax years ended December 31, 2014, 2013, 2012 are still potentially subject to audit by the taxing authorities.
Use of Estimates
Management estimates and judgments are an integral part of consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). We believe that the critical accounting policies described in this section address the more significant estimates required of management when preparing our consolidated financial statements in accordance with GAAP. We consider an accounting estimate critical if changes in the estimate may have a material impact on our financial condition or results of operations. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, actual results could differ from the original estimates, requiring adjustment to these balances in future periods.
Accounts Receivable
Accounts receivable are recorded at managements estimate of net realizable value. At December 31, 2015 and 2014 the Company had approximately $2,326,000 and $660,000 of gross trade receivables, respectively.
Our reported balance of accounts receivable, net of the allowance for doubtful accounts, represents our estimate of the amount that ultimately will be realized in cash. We review the adequacy and adjust our allowance for doubtful accounts on an ongoing basis, using historical payment trends and the age of the receivables and knowledge of our individual customers. However, if the financial condition of our customers were to deteriorate, additional allowances may be required. At December 31, 2015 and 2014 the Company had approximately $618,000 and $71,000 recorded for the allowance for doubtful accounts, respectively.
Advertising costs
Advertising costs, except for costs associated with direct-response advertising, are charged to operations when incurred. The costs of direct-response advertising are capitalized and amortized over the period during which future benefits are expected to be received. The Company did not capitalize any advertising for the years ended December 31, 2015 and 2014, respectively. Advertising expenses were approximately $79,000 and $65,000 for the years ended December 31, 2015 and 2014, respectively.
Property, plant and equipment
The cost of property, plant, and equipment is depreciated over the estimated useful lives of the related assets utilizing the straight-line method of depreciation. The cost of leasehold improvements is depreciated (amortized) over the lesser of the length of the related leases or the estimated useful lives of the assets. Ordinary repairs and maintenance are expensed when incurred and major repairs will be capitalized and expensed if it benefits future periods.
Intangible Assets
Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Assets not subject to amortization are tested for impairment at least annually. The Company has intangible assets related to its purchase of Meridian Waste
Services, LLC, Christian Disposal LLC and Eagle Ridge Landfill, LLC, which are further discussed in the notes below.
During 2015 and 2014, the Company assessed its intangible assets, based on estimated future cash flows and concluded that the carrying amount of its intangible assets did not exceed its fair value.
Investment in Related Party Affiliate
The Company has an investment in a privately held corporation in the mobile apps industry. As the Company exercises significant influence on this entity, this investment is recorded using the equity method of accounting. The Company monitors this investment for impairment and makes appropriate reductions in the carrying value if the Company determines that an impairment charge is required based primarily on the financial condition and near-term prospect of this entity.
Goodwill
Goodwill is the excess of our purchase cost over the fair value of the net assets of acquired businesses. We do not amortize goodwill, but as discussed in the impairment of long lived assets section above, we assess our goodwill for impairment at least annually.
Capitalized Software
The Company acquired a software product that is under further development. This asset was being amortized over a three to five year period using the straight-line method of depreciation for book purposes beginning when the software is completed.
The Company capitalizes internal software development costs subsequent to establishing technological feasibility of a software application in accordance with guidelines established by ASC 985-20-25 Accounting for the costs of Computer Software to Be Sold, Leased or Otherwise Marketed, requiring certain software development costs to be capitalized upon the establishment of technological feasibility. The establishment of technological feasibility and the ongoing assessment of the recoverability of these costs require considerable judgement by management with respect to certain external factors such as anticipated future revenue, estimated economic life and changes in software and hardware technologies. Amortization of the capitalized software development costs begins when the product is available for general release to customers. Capitalized costs are amortized over the remaining estimated economic life of the product. For the year ended December 31, 2014, the Company has capitalized costs associated with the development of several mobile science technology products and mobile apps that has not been placed into service. In 2015, the Company sold the software to a related party. Refer to the related party note below for further discussion.
Website Development Costs
The Company accounts for website development costs in accordance with Accounting Standards Codification 350-50 Website Development Costs. Accordingly, all costs incurred in the planning stage are expensed as incurred, costs incurred in the website application and infrastructure development stage that meet specific criteria are capitalized and costs incurred in the day to day operation of the website are expensed as incurred.
Landfill Accounting
Capitalized landfill costs
For unpermitted airspace to be initially included in our estimate of remaining permitted and expansion airspace, the expansion effort must meet all of the criteria listed above. These criteria are evaluated by our field-based engineers, accountants, managers and others to identify potential obstacles to obtaining the permits. Once the unpermitted airspace is included, our policy provides that airspace may continue to be included in remaining permitted and expansion airspace even if certain of these criteria are no longer met as long as we continue to believe we will ultimately obtain the permit, based on the facts and circumstances of a specific landfill.
When we include the expansion airspace in our calculations of remaining permitted and expansion airspace, we also include the projected costs for development, as well as the projected asset retirement costs related to the final capping, closure and post-closure of the expansion in the amortization basis of the landfill.
Once the remaining permitted and expansion airspace is determined in cubic yards, an airspace utilization factor (AUF) is established to calculate the remaining permitted and expansion capacity in tons. The AUF is established using the measured density obtained from previous annual surveys and is then adjusted to account for future settlement. The amount of settlement that is forecasted will take into account several site-specific factors including current and projected mix of waste type, initial and projected waste density, estimated number of years of life remaining, depth of underlying waste, anticipated access to moisture through precipitation or recirculation of landfill leachate, and operating practices. In addition, the initial selection of the AUF is subject to a subsequent multi-level review by our engineering group, and the AUF used is reviewed on a periodic basis and revised as necessary. Our historical experience generally indicates that the impact of settlement at a landfill is greater later in the life of the landfill when the waste placed at the landfill approaches its highest point under the permit requirements.
After determining the costs and remaining permitted and expansion capacity at each of our landfill, we determine the per ton rates that will be expensed as waste is received and deposited at the landfill by dividing the costs by the corresponding number of tons. We calculate per ton amortization rates for the landfill for assets associated with each final capping, for assets related to closure and post-closure activities and for all other costs capitalized or to be capitalized in the future. These rates per ton are updated annually, or more often, as significant facts change.
It is possible that actual results, including the amount of costs incurred, the timing of final capping, closure and post-closure activities, our airspace utilization or the success of our expansion efforts could ultimately turn out to be significantly different from our estimates and assumptions. To the extent that such estimates, or related assumptions, prove to be significantly different than actual results, lower profitability may be experienced due to higher amortization rates or higher expenses; or higher profitability may result if the opposite occurs. Most significantly, if it is determined that expansion capacity should no longer be considered in calculating the recoverability of a landfill asset, we may be required to recognize an asset impairment or incur significantly higher amortization expense. If at any time management makes the decision to abandon the expansion effort, the capitalized costs related to the expansion effort are expensed immediately.
For the year ended December 31, 2015 the Company operations related to its landfill assets and liability are presented in the tables below:
Revenue Recognition
The Company recognizes revenue when there is persuasive evidence that services have been provided and a collection is reasonably assured. The majority of the Companys revenues are generated from the fees charged for waste collection, transfer, disposal and recycling. The fees charged for our services are generally defined in service agreements and vary based on contract-specific terms such as frequency of service, weight, volume and the general market factors influencing a regions rate.
Deferred Revenue
The Company records deferred revenue for customers that were billed in advance of services. The balance in deferred revenue represents amounts billed in October, November and December for services that will be provided during January, February and March.
Cost of Services
Cost of services include all employment costs associated with waste collection, transfer and disposal, damage claims, landfill costs, personal property taxes associated with collection vehicles and other direct cost of the collection and disposal process.
Concentrations
The Company maintains its cash and cash equivalents in bank deposit accounts, which could, at times, exceed federally insured limits. The Company has not experienced any losses in such accounts; however, amounts in excess of the federally insured limit may be at risk if the bank experiences financial difficulties. The Company places its cash with high credit quality financial institutions. The Companys accounts at these institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000.
Financial instruments which also potentially subject the Company to concentrations of credit risk consist principally of trade accounts receivable; however, concentrations of credit risk with respect to trade accounts receivables are limited due to generally short payment terms.
The Company has two contracts that account for a large portion of the Companys revenue. During the year ended December 31, 2015, these contracts accounted for approximately 44% of the Companys revenues and less than 5% of the Companys accounts receivable balance at December 31, 2015. During the year ended December 31, 2014, the Company had two customers that accounted for approximately 46% of the Companys revenues and approximately 53% of the Companys accounts receivable balance at December 31, 2014. The Company did not have any other customers that represented a significant portion of the Companys revenue or account receivables for the fiscal years ended December 31, 2015 and 2014, respectively.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Companys net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Companys net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. At December 31, 2015 the Company had two convertible notes outstanding that is not convertible into common stock until June 2016. Additionally, the Company issued stock warrants for 1,673,559 common shares.
For the year ended December 31, 2015, the Company had 1,673,559 of weighted-average common shares relating to the convertible debt, under the if-converted method, however, these shares are not dilutive because the Company recorded a loss during the fiscal year.
At December 31, 2015, and 2014 the Company had a series of convertible notes and warrants outstanding that could be converted into approximately, 2,548,559 and 291,047 common shares, respectively. These are not presented in the consolidated statements of operations since the company incurred a loss and the effect of these shares is anti- dilutive.
Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.
Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also require measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
Pursuant to ASC Topic 505-50, for share based payments to consultants and other third-parties, compensation expense is determined at the measurement date. The expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.
The Company recorded stock based compensation expense of $7,356,000 and $339,000 during the years ended December 31, 2015 and 2014, respectively.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Companys results of operations, financial position or cash flow. |
3. PROPERTY, PLANT AND EQUIPMENT |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3. PROPERTY, PLANT AND EQUIPMENT |
The following is a summary of property, plant, and equipmentat cost, less accumulated depreciation:
As of December 31, 2015 the Company has $395,000 of land and building which are held for sale and included in amounts noted above. These held for sale assets were not depreciated during the year ending December 31, 2015. Depreciation expense for the years ended December 31, 2015 and 2014 was $1,683,000 and $965,000, respectively.
During 2015 and 2014, the Company assessed these long-term assets, based on estimated future cash flows and concluded that the carrying amount of its long-term assets did not exceed its fair value, therefore the Company did not record any impairment loss on these assets. |
4. INTANGIBLE ASSETS AND ACQUISITION |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4. INTANGIBLE ASSETS AND ACQUISITION |
Christian Disposal Acquisition
On December 22, 2015, the Company, in order to expand into new markets and maximize the rate of waste internalization, acquired 100% of the membership interests of Christian Disposal LLC pursuant to that certain Amended and Restated Membership Interest Purchase Agreement, dated October 16, 2015, as amended by that certain First Amendment thereto, dated December 4, 2015.
The acquisition was accounted for by the Company using acquisition method under business combination accounting. Under this method, the purchase price paid by the acquirer is allocated to the assets acquired and liabilities assumed as of the acquisition date based on the fair value. By the application of push-down accounting, our assets, liabilities and equity were accordingly adjusted to fair value on December 22, 2015. Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions.
The purchase of Christian Disposal, LLC included the acquisition of assets of $20,035,847 and liabilities of $2,152,738. The aggregate purchase price consisted of the following:
As noted in the table above, the purchase price could be increased by a maximum amount of $2,000,000 depending upon the extension of certain contracts to which Christian Disposal, LLC is a party. At December 31, 2015, the fair value of the additional purchase price was determined to be $1,000,000. Also, the Company issued 1,750,000 restricted shares of common stock as consideration which was valued at market at the date of the closing.
The following table summarizes the estimated fair value of Christian Disposal LLC, and subsidiary, assets acquired and liabilities assumed at the date of acquisition:
Eagle Ridge Landfill, LLC and Hauling Acquisition
On December 22, 2015, the Company, in order to expand into new markets and maximize the rate of waste internalization, consummated the closing of the certain Asset Purchase Agreement dated November 13, 2015, by and between the Company and Eagle Ridge Landfill, LLC, as amended by the certain Amendment to Asset Purchase Agreement, dated December 18, 2015, to which the Company and WCA Waste Corporation are also party. Pursuant to the Eagle Ridge Purchase Agreement, Meridian Land acquired a landfill located in Pike County, Missouri and certain assets, rights, and properties related to such business of Eagle Ridge, including certain debts.
The acquisition was accounted for by the Company using business combination accounting. Under this method, the purchase price paid by the acquirer is allocated to the assets acquired and liabilities assumed as of the acquisition date based on the fair value. By the application of push-down accounting, our assets, liabilities and equity were accordingly adjusted to fair value on December 22, 2015. Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions.
The purchase of Eagle Ridge Landfill, LLC and certain assets included the acquisition of assets of $9,947,224 and liabilities of $283,737. The aggregate purchase price consisted of a cash consideration of $9,663,487.
The following table summarizes the estimated fair value of Eagle Ridge Landfill LLC., assets acquired and liabilities assumed at the date of acquisition:
The following unaudited pro forma consolidated results of operations have been prepared as if the acquisitions of Christian Disposal and Eagle Ridge occurred at January 1, 2014:
Meridian Waste Services, LLC Acquisition
In 2014, the Company, in order to establish a presence in the solid waste disposal industry, entered into an asset purchase agreement by and among the Company, HTSMWD, Meridian Waste Services, LLC (MWS) and the members of MWS, pursuant to which HTSMWD acquired certain assets and liabilities of MWS, in exchange for $11,115,000 cash, 13,191,667 shares of Class A Common Stock of HTSHC and 71,210 shares of Series B Cumulative Convertible Preferred Stock of HTSHC.
The acquisition was accounted for by the Company using the acquisition method under business combination accounting. Under this method, the purchase price paid by the acquirer is allocated to the assets acquired and liabilities assumed as of the acquisition date based on the fair value. By the application of push-down accounting, our assets, liabilities and equity were accordingly adjusted to fair value on May 15, 2014. Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions.
The purchase of MWS included the acquisition of assets of $22,175,706 and liabilities of $2,075,956. The aggregate purchase price consisted of the following:
The following table summarizes the estimated fair value of MWS assets acquired and liabilities assumed at the date of acquisition:
The following tables set forth the intangible assets, both acquired and developed, including accumulated amortization for the years ended December 31, 2015 and December 31, 2014:
In the year ended December 31, 2015, customer lists include the intangible assets related to customer relationships acquired through the acquisition of Christian Disposal and Eagle Ridge with a cost basis of $10,180,000. The customer list intangible assets are amortized over their useful life which ranged from 5 to 20 years. Amortization expense, excluding amortization of landfill assets of $3,043, amounted to $2,869,385 and $1,899,140 for the period ending December 31, 2015 and 2014 respectively. |
5. NOTES PAYABLE AND CONVERTIBLE NOTES |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5. NOTES PAYABLE AND CONVERTIBLE NOTES | The Company had the following long-term debt:
Convertible Notes Payable
The Company issued two promissory notes to related parties during the year ended December 31, 2014. These notes totaled $125,000 and are generally convertible into common stock of the Company at discounts of 20% to 25% of the lowest average trading prices for the stock during periods five to one day prior to the conversion date. These notes bear interest at 10% to 12%, are unsecured, and mature within one year of the date issued. The notes were issued to provide working capital for the Company. These notes are considered a stock settled debt in accordance with ASC 480 since any future stock issued upon conversion will have a fixed monetary value. Due to the conversion feature included in the notes, the Company has recorded a premium on the notes totaling $31,250 as of December 31, 2014. This amount has been charged to interest expense by the Company.
In 2015, as part of the purchase price consideration of the Christian Disposal acquisition, the Company issued a convertible promissory note to seller in the amount of $1,250,000. The note bears interest at 8% and matures on December 31, 2020. The seller may convert all or any part of the outstanding and unpaid amount of this note into fully paid and non-assessable common stock in accordance with the agreement.
In previous periods the Company issued two other notes to other related parties. These notes totaled $110,000 and are generally convertible into common stock of the Company at discounts of 20% to 25% of the lowest average trading prices for the stock during periods five to one day prior to the conversion date. These notes bear interest at 10% to 12%, are unsecured, and mature within one year of the date issued. The notes were issued to provide working capital for the Company. These notes are considered a stock settled debt in accordance with ASC 480 since any future stock issued upon conversion will have a fixed monetary value. Due to the conversion feature included in the notes, the Company has recorded a premium on the notes totaling $35,833 as of December 31, 2014. This amount has been charged to interest expense by the Company.
In 2015, approximately $225,000 of the issued promissory notes were converted into approximately 461,000 shares at the contractual conversion price. At December 31, 2015 the Company had $12,500 remaining in convertible notes to related parties, which includes $2,500 in put premiums.
Notes Payable
At December 31, 2014 the Company had a short term, non-interest bearing note payable of $150,000 which was incurred in connection with the Membership Interest Purchase Agreement discussed above. The Company also had a loan from Here to Serve Holding Corp. due to expenses paid by Here to Serve on behalf of the Company prior to the recapitalization. This loan totaled $376,585 bringing total notes payable to $526,585. In 2015, the short term, non-interest bearing note was paid off, and at December 31, 2015, the Companys loan from Here to Serve Holding Corp. was $359,891.
Praesidian Notes Payable
On August 6, 2015, the Company refinanced its long-term debt payable to Comerica Bank. Proceeds from notes issued by the Company to Praesidian Capital Opportunity Fund III, LP and Praesidian Capital Opportunity Fund III-A, LP (together referred to as Praesidian) were $10,845,000. These funds were distributed as follows:
The Companys Senior Secured Loan with Comerica Bank had an interest rate of LIBOR plus 4.25% with a two-year term based on a seven-year amortization schedule. In addition, the Company had a working capital line of credit with Comerica Bank of $1,250,000 at 4.75% of which the Company had drawn down $1,185,081 and $1,085,160 as of August 6, 2015 and December 31, 2014, respectively. There was CAPEX line of credit of $750,000, of which the Company had drawn down $560,718 and $590,000 as of August 6, 2015 and December 31, 2014, respectively; again at 4.75% interest. As noted above, these debts were paid off from the proceeds received from Praesidian.
The debt to Praesidian had a maturity date of August 6, 2020 with interest paid monthly at an annual rate of 14%. In addition to the 14% interest rate, the Company issued to Praesidian warrants to purchase 1,293,022 shares of Common Stock of the Company.
Goldman Sachs Credit Agreement
On December 22, 2015, in connection with the closing of acquisitions of Christian Disposal, LLC and certain assets of Eagle Ridge Landfill, LLC, the Company was extended certain credit facilities by Goldman Sachs, consisting of $40,000,000 aggregate principal amount of Tranche A Term Loans, $10,000,000 aggregate principal amount of Multi- Draw Term Loans and up to $5,000,000 aggregate principal amount of Revolving Commitments. At December 31, 2015, only the Tranche A Term Loan was drawn and had an outstanding balance of $40,000,000. It is collateralized by the assets of the Company. The debt has a maturity date of December 22, 2020 with interest paid monthly at an annual rate of 9%. In addition, there is a commitment fee paid monthly on the Mutli-Draw Term Loans and Revolving Commitments at an annual rate of 0.5%.
The proceeds of the loans were used to partially fund the acquisitions referenced above and refinance existing debt with Praesidian, among other things. The funds to payoff the Praesidian notes were distributed as follows:
The Company re-paid in full and terminated its agreements with Praesidian which effected the cancellation of certain warrants that the Company issued to Fund III for the purchase of 931,826 shares of the Companys common stock and to Fund III-A for the purchase of 361,196 shares of the Companys common stock. In consideration for the cancellation of the Praesidian Warrants, the Company issued to Praesidian Capital Opportunity Fund III, LP, 1,153,052 shares of common stock and issued to Praesidian Capital Opportunity Fund III-A, LP, 446,948 shares of common stock. Due to the early termination of the notes and cancellation of the warrants, the Company recorded a loss on extinguishment of debt of $1,899,161 in the year ended December 31, 2015.
In addition, in connection with the credit agreement, the Company issued warrants to Goldman Sachs for the purchase of shares of the Companys common stock equivalent to a 6.5% Percentage Interest at a purchase price equal to $449,553, exercisable on or before December 22, 2023. The warrants grant the holder certain other rights, including registration rights, preemptive rights for certain capital raises, board observation rights and indemnification. See discussion of warrants below.
Subordinated Debt
In connection with the acquisition with Meridian Waste Services, LLC on May 15, 2014, notes payable to the sellers of Meridian issued five-year term subordinated debt loans paying interest at 8%. At December 31, 2015 and December 31, 2014, the balance on these loans was $1,475,000 and $1,475,000, respectively.
The debt payable to Comerica at December 31, 2014 and the Equipment loans at December 31, 2015 were the debt of Here to Serve- Missouri Waste Division, LLC, a subsidiary of the Company.
Equipment Loans
Finally, during the year ended December 31, 2015, the Company entered into four long-term loan agreements in connection with the purchase of equipment with rates between 4% and 5%. At December 31, 2015, the balance of these four loans was $425,149.
Derivative Liability - Warrants
As indicated above, the Company issued warrants to Praesidian and Goldman Sachs to purchase shares of common stock. Due to the put features contained in the agreements, derivative liabilities were recorded for the warrants.
The Companys derivative warrant instruments related to Praesidian have been measured at fair value at the date of cancellation, December 22, 2015, using the Black-Scholes model. The Back-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk free interest rate, the current stock price, the estimated volatility of the stock price in the future and the dividend rate. The key inputs used in the December 22, 2015 fair value calculations were as follows:
The Companys derivative warrant instruments related to Goldman Sachs have been measured at fair value at the date of issuance December 22, 2015 and December 31, 2015, using the Black-Scholes model. The liability is revalued at each reporting period and changes in fair value are recognized currently in the consolidated statement of operations.
The key inputs used in the December 22, and December 31, 2015 fair value calculations were as follows:
The change in the market value for the period ending December 31, 2015 is as follows:
Derivative Liability Interest Rate Swap
The Company sometimes borrows at variable rates and uses interest rate swaps as cash flow hedges of future interest payments, which have the economic effect of converting borrowings from floating rates to fixed rates. The interest rate swaps allow the Company to raise long-term borrowings at floating rates and swap them into fixed rates that are lower than those available if it borrowed at fixed rates directly. Under the interest rate swaps, the Company agrees with other parties to exchange, at specified intervals, the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts.
At December 31, 2014, the Company had $5,414,634 of non-amortizing variable rate debt outstanding with interest payments due on a monthly basis. The note accrues interest at the 1-month LIBOR plus 4.25%. In order to hedge interest rate risk, the Company entered into an interest rate swap for a notional amount of $5,414,634 at fixed rate of 4.75%. Under the swap agreement, the Company pays the fixed rate on the $5,414,634 notional amount on a monthly basis, and receives the 1-month LIBOR plus 4.25% on a monthly basis. Payments are settled on a net basis, and the Company has effectively converted its variable-rate debt into fixed-rate debt with an effective interest rate of 4.75%. As discussed above, the debts to Comerica were paid off from the funding received from Praesidian. The net settlement amount of the interest rate swap as of December 31, 2015 and December 31, 2014 was $0 and $40,958, respectively.
|
6. SHAREHOLDERS' EQUITY |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6. SHAREHOLDERS' EQUITY |
The Company has authorized 75,000,000 shares of $0.025 par common stock. At December 31, 2015 and 2014 there were 21,038,650 and 9,963,418 shares issued and outstanding.
During 2014, the Companys Board of Directors authorized a stock repurchase of 230,000 shares of its common stock for approximately $230,000 at an average price of $1.00 per share. As of December 31, 2015 and 2014 the Company holds 230,000 shares of its common stock in its treasury.
The Company has authorized 5,000,000 shares of Preferred Stock, for which two classes have been designated to date. Series A has 51 shares issued and outstanding and Series B has 71,210 shares issued and outstanding as of December 31, 2015 and 2014, respectively.
Each share of Series A Preferred Stock has no conversion rights, is senior to any other class or series of capital stock of the Company and special voting rights. Each one (1) share of Series A Preferred Stock shall have voting rights equal to (x) 0.019607 multiplied by the total issued and outstanding Common Stock eligible to vote at the time of the respective vote (the Numerator), divided by (y) 0.49, minus (z) the Numerator.
Holders of Series B Preferred Stock shall be entitled to receive when and if declared by the Board of Directors cumulative dividends at the rate of twelve percent (12%) of the Original Issue Price. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the holders of Series B Preferred Stock shall be entitled to receive, immediately prior and in preference to any distribution to holders of the Companys common stock, an amount per share equal to the sum of $100.00 and any accrued and unpaid dividends of the Series B Preferred Stock. Each share of Series B Preferred Stock may be converted at the option of the holder into the Companys Common stock. The shares shall be converted using the Conversion Formula: divide the Original Issue Price by 75% of the average closing bid price of the Common Stock for the five (5) consecutive trading days ending on the trading day of the receipt by the Company of the notice of conversion.
At December 31, 2015 and 2014, the Companys Series B Preferred Stock dividends in arrears on the 12% cumulative preferred stock were approximately $1,033,000 ($14.50 per share) and $2.50 ($2.50 per share), respectively.
During the years ended December 31, 2015 and 2014, the Company issued, 11,075,232 and 9,054,134 shares of common stock, respectively. The fair values of the shares of common stock were based on the quoted trading price on the date of issuance. Of the 11.1 million shares issued for year ending December 31, 2015, the Company:
For fiscal year ended December 31, 2014, the Company acquired the membership interest of HTSMWD, HTST and HTSGWD in exchange for 9,054,134 shares of the Companys common stock. This transaction was closed on October 17, 2014 and HTSMWD became wholly-owned by the Company. The Company is deemed to have issued 1,139,284 shares of common stock which represents the outstanding common shares of the Company just prior to the closing of the transaction.
The Company has issued and outstanding warrants of 1,673,559 common shares, as adjusted, with the current exercise price of $0.269, as adjusted, expiring December 31, 2023. A summary of the status of the Companys outstanding common stock warrants as of December 31, 2015 and 2014, with changes during the years ending on those dates are as follows:
|
7. INCOME TAXES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7. INCOME TAXES |
The Company accounts for income taxes in accordance with Accounting Standards Codification (ASC-740) Accounting for Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and income tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.
The Company had a net operating loss carry forward of approximately $12.3 million at December 31, 2015 and had no Federal or State income tax obligations. The Company had no significant tax effects resulting from the temporary differences that give rise to deferred tax assets and deferred tax liabilities for the years ended December 31, 2015 and 2014 other than net operating losses.
The Companys loss carry forward of approximately $12.3 may offset future taxable income through tax year 2035. However, in accordance with IRC Section 382, the availability and utilization of the losses may be severely limited since the business combination that occurred on October 17, 2014 triggered the IRC Section 382 limitations.
Prior to October 17, 2014, the date of the reverse acquisition transaction discussed in Note 1 above, the operating entities were owned by unrelated third party partners/members, and as limited liability companies, the operating companies losses for the period January 1, 2014 to October 17,2014 flowed through to such partners/members. Therefore, as there were no tax allocation arrangements with the previous partners/members, the Company has not recorded in these financials statements any current or deferred income tax expense, income tax liabilities or deferred tax assets/liabilities relating to such pre-acquisition activity (losses).
The table below summarizes the differences between the Companys effective tax rate and the statutory federal rate of 34% as follows for the periods ended December 31, 2015 and 2014:
Deferred tax assets and liabilities are provided for significant income and expense items recognized in different year for tax and financial reporting purposes. The Components of the net deferred tax assets for the years ended December 31, 2015 and 2014 were as follows:
The valuation allowance was increased by approximately $2,730,288 and $550,000 during the years ended December 31, 2015 and 2014. |
8. FAIR VALUE MEASUREMENT |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8. FAIR VALUE MEASUREMENT | ASC Topic 820 establishes a fair value hierarchy, giving the highest priority to quoted prices in active markets and the lowest priority to unobservable data and requires disclosures for assets and liabilities measured at fair value based on their level in the hierarchy. Also, ASC Topic 820 provides clarification that in circumstances, in which a quoted price in an active market for the identical liabilities is not available, a reporting entity is required to measure fair value using one or more of the techniques provided for in this update.
The standard describes a fair value hierarchy based on three levels of input, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following:
Level 1 - Quoted prices in active markets for identical assets and liabilities. Level 2 - Input other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets of liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
The following table sets forth the liabilities at December 31, 2015 and 2014, which is recorded on the balance sheet at fair value on a recurring basis by level within the fair value hierarchy. As required, these are classified based on the lowest level of input that is significant to the fair value measurement:
|
9. LEASES |
12 Months Ended | |||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||
9. LEASES | The Companys has entered into non-cancellable leases for its office, warehouse facilities and some equipment. These lease agreements commence on various dates from September 1, 2010 to December 2015 and all expires on or before December, 2020. Future minimum lease payments at December 31, 2015 are as follows:
The Company has also entered into various other leases on a month to month basis for machinery and equipment. Rent expense amounted to $320,154 and $177,801 for the year ended December 31, 2015 and 2014, respectively. |
10. BONDING |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Notes to Financial Statements | |
10. BONDING |
In connection with normal business activities of a company in the solid waste disposal industry, Meridian may be required to acquire a performance bond. As part of the Companys December 22, 2015 acquisitions of Christian Disposal, LLC and Eagle Ridge Landfill, LLC, Meridian acquired a performance bond in the approximate amount of $7,400,000 with annual expenses of $221,000. For fiscal year ended December 31, 2015, the Company had approximately $6,000 of expenses related to this performance bond and for fiscal year ended December 31, 2014, the Company was not required to obtain a performance bond. |
11. EMPLOYMENT CONTRACT |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Employment Contract | |
11. EMPLOYMENT CONTRACT | Pursuant to the Christian Disposal, LLC and subsidiary purchase, the company has entered into an employment contract with its Area Vice President of Business Development and Marketing through 2020 that provides for a minimum annual salary, cash and stock option bonuses. At December 31, 2015, the total commitment, excluding incentives, was approximately $1,500,000. |
12. LITIGATION |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Litigation | |
12. LITIGATION | The Company is involved in various lawsuits related to the operations of its subsidiaries. Management believes that it has adequate insurance coverage and/or has appropriately accrued for the settlement of these claims. If applicable, claims that exceed amounts accrued and/or that are covered by insurance, management believes they are without merit and intends to vigorously defend and resolve with no material impact on financial condition. |
13. RELATED PARTY TRANSACTIONS |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
13. RELATED PARTY TRANSACTIONS |
On January 7, 2015, in an effort to give investors a more concentrated presence in the waste industry the Company sold the capitalized software assets of Here to Serve Technology, LLC (HTST) to Mobile Science Technologies, Inc., a Georgia corporation (MSTI), a related party due to being owned by some of the shareholders of the Company. No gain or loss was recognized on this transaction as the Company received equity equal to book value ($434,532) of the capitalized software in the exchange. This represents approximately 15% of the equity of MSTI and is reflected in the accompanying balance sheet as investment in related party affiliate. The Company's investment of 15% of the common stock of MSTI is accounted for under the equity method because the company exercises significant influence, over its operating and financial activities. Significant influence is exercised because both Companies have a Board Member in common. Accordingly, the investment in MSTI is carried at cost, adjusted for the Company's proportionate share of earnings or losses.
The following presents unaudited summary financial information for MSTI. Such summary financial information has been provided herein based upon the individual significance of this unconsolidated equity investment to the consolidated financial information of the Company.
The Company recorded losses from its investment in MSTI, accounted for under the equity method, of approximately $70,000 during fiscal year ended 2015. The charge reflected the Companys share of MSTI losses recorded in that period, as well as the write-down of the investment and the write-off of certain receivables. While the Company has ongoing agreements with MSTI relating to the use of MSTI's software technology, the Company has no obligation to otherwise support the activities of MSTI. As of December 31, 2015, the Company has $133,000 in prepaid expenses related to MSTI. |
14. SUBSEQUENT EVENTS |
12 Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||
Subsequent Events [Abstract] | ||||||||||||||||||||||
14. SUBSEQUENT EVENTS |
Effective March 10, 2016, the Board of Directors (the Board) of the Company approved, authorized and adopted the 2016 Equity and Incentive Plan (the Plan) and certain forms of ancillary agreements to be used in connection with the issuance of stock and/or options pursuant to the Plan (the Plan Agreements). The Plan provides for the issuance of up to 7,500,000 shares of common stock, par value $.025 per share (the Common Stock), of the Company through the grant of non-qualified options (the Non-qualified options), incentive options (the Incentive Options and together with the Non-qualified Options, the Options) and restricted stock (the Restricted Stock) to directors, officers, consultants, attorneys, advisors and employees.
The Plan shall be administered by a committee consisting of two or more independent, non-employee and outside directors (the Committee). In the absence of such a Committee, the Board shall administer the Plan. The Plan is currently being administered by the Board.
Options are subject to the following conditions:
Jeffrey Cosman - Employment Agreement, Director Agreement and Restricted Stock Agreement
On March 11, 2016, the Company entered into an employment agreement with Mr. Cosman (the Cosman Employment Agreement). Mr. Cosman is currently the Chief Executive Officer and Chairman of the Board of Directors of the Company and prior to the execution and delivery of the Cosman Employment Agreement, terms of Mr. Cosmans employment were governed by that certain previous employment agreement assumed by the Company in connection with the Companys purchase of certain membership interests owned by such previous employer on October 17, 2014. The Cosman Employment Agreement has an initial term from March 11, 2016 through December 31, 2017 and the term will automatically renew for one (1) year periods unless otherwise terminated in accordance with the terms therein. Mr. Cosman will receive a base salary of $525,000 and Mr. Cosmans compensation will increase by 5% on January 1 of each year. Mr. Cosman may also receive a cash bonus based on the Companys performance relative to its annual target performance, as well as an annual equity bonus in the form of restricted common stock, in accordance with the Companys 2016 Equity and Incentive Plan (the Plan) and subject to the restrictions contained therein, equivalent to 6% of the value of all acquisitions by the Company or its subsidiaries of substantially all the assets of existing businesses or of controlling interests in existing business entities and equity or debt financings during the preceding year. Upon any termination of Mr. Cosmans employment with the Company, except for a termination for Cause, Mr. Cosman shall be entitled to a severance payment equal to the greater of (i) five years worth of the then existing base salary and (ii) the last years bonus.
On March 11, 2016, the Company entered into a director agreement with the Companys Chairman of the Board and Chief Executive Officer, Jeffrey Cosman, as amended by the First Amendment to Director Agreement entered into by the parties on April 13, 2016 (the "Cosman Director Agreement").
On March 11, 2016, the Company entered into a restricted stock agreement with Mr. Cosman (the Cosman Restricted Stock Agreement), pursuant to which 4,253,074 shares of the Company's common stock, subject to certain restrictions set forth in the Cosman Restricted Stock Agreement, were issued to Mr. Cosman pursuant to the Cosman Employment Agreement and the Plan.
Walter H. Hall, Jr. - Director Agreement and Employment Agreement
On March 11, 2016, the Company entered into a director agreement with Mr. Walter H. Hall, Jr., as amended by the First Amendment to Director Agreement entered into by the parties on April 13, 2016 (the Hall Director Agreement), concurrent with Mr. Halls appointment to the Board of Directors of the Company (the Board) effective March 11, 2016 (the Effective Date).
On March 11, 2016, the Company entered into an executive employment agreement with Mr. Hall (the Hall Employment Agreement). Mr. Hall will have the title of President and Chief Operating Officer. The Hall Employment Agreement has an initial term of thirty-six (36) months and the term will automatically renew for one (1) year periods, unless otherwise terminated pursuant to the terms contained therein. Mr. Hall will receive a base salary of $300,000 beginning upon the Companys closing of acquisitions in the aggregate amount of $35,000,000 from the date the Hall Employment Agreement is executed. Mr. Hall may also receive an annual bonus of up to $175,000, or such larger amount approved by the Board, as well as an annual equity bonus (in the form of restricted common stock, in accordance with the Plan and subject to the restrictions contained therein) equivalent to 2% of the value of all acquisitions by the Company or its subsidiaries of substantially all the assets of existing businesses or of controlling interests in existing business entities and equity or debt financings during the preceding year. Additionally, Mr. Hall received two million (2,000,000) restricted shares of the Companys common stock upon the execution of the Hall Employment Agreement
EQUITY SUBSCRIPTION AGREEMENT
On April 8, 2016, the Company completed the final closing (the the Closing) of a private placement offering to accredited investors (the Offering) of up to $1,600,000 of the Companys restricted common stock, par value $0.025 per share.
In connection with the Closing, the Company entered into definitive subscription agreements (the Subscription Agreements) with five (5) accredited investors (the Investors) and issued an aggregate of 1,428,573 shares of Common Stock for aggregate gross proceeds to the Company of $1,600,000.
The Subscription Agreements provide that the Company shall issue additional shares of Common Stock in the event that, prior to the first anniversary of the Subscription Agreement, such Investor sells all of the Common Stock purchased under the Subscription Agreement and receives less than the full amount of the purchase price paid under the Subscription Agreement, and the Subscription Agreements contain typical representations and warranties. |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Basis | The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (GAAP accounting). |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Consolidation | The consolidated financial statements for the year ended December 31, 2015 include the operations of the Company and its wholly-owned subsidiaries, Here To Serve Missouri Waste Division, LLC, Meridian Land Company, LLC, Here to Serve Technology, LLC and Christian Disposal, LLC. The following two subsidiaries of the Company, Here To Serve Georgia Waste Division, LLC and Here to Serve Technology, LLC, a Georgia Limited Liability Company had no operations during the period.
The consolidated financial statements for the year ended December 31, 2014 include the operations of the Company and its wholly-owned subsidiaries, Here To Serve Missouri Waste Division, LLC and Here To Serve Technology, LLC. The following subsidiary of the Company, Here To Serve Georgia Waste Division, LLC had no operations during the period.
All significant intercompany accounts and transactions have been eliminated in consolidation. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents | The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | The Companys financial instruments consist of cash and cash equivalents, accounts receivable, account payable, accrued expenses, and notes payable. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these consolidated financial statements. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | The Company enters into financing arrangements that consist of freestanding derivative instruments or are hybrid instruments that contain embedded derivative features. The Company accounts for these arrangements in accordance with Accounting Standards Codification topic 815, Accounting for Derivative Instruments and Hedging Activities (ASC 815) as well as related interpretations of this standard. In accordance with this standard, derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, considering all of the rights and obligations of each instrument.
The Company estimates fair values of derivative financial instruments using various techniques (and combinations thereof) that are considered consistent with the objective measuring fair values. In selecting the appropriate technique, the Company considers, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. For less complex derivative instruments, such as freestanding warrants, the Company generally use the Black-Scholes model, adjusted for the effect of dilution, because it embodies all of the requisite assumptions (including trading volatility, estimated terms, dilution and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques (such as Black-Scholes model) are highly volatile and sensitive to changes in the trading market price of our common stock. Since derivative financial instruments are initially and subsequently carried at fair values, our income (expense) going forward will reflect the volatility in these estimates and assumption changes. Under the terms of this accounting standard, increases in the trading price of the Companys common stock and increases in fair value during a given financial quarter result in the application of non-cash derivative expense. Conversely, decreases in the trading price of the Companys common stock and decreases in trading fair value during a given financial quarter result in the application of non-cash derivative income. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of long-lived assets | The Company periodically reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less that the carrying amount of the asset. The amount of impairment is measured as the difference between the assets estimated fair value and its book value. During the year ending December 31, 2015, the Company experienced no losses due to impairment. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | The Company accounts for income taxes pursuant to the provisions of ASC 740-10, Accounting for Income Taxes, which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.
The Company follows the provisions of the ASC 740 -10 related to, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits.
The Company analyzes its tax positions by utilizing ASC 740-10-25 Definition of Settlement, which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. As of December 31, 2015, tax years ended December 31, 2014, 2013, 2012 are still potentially subject to audit by the taxing authorities. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of Estimates | Management estimates and judgments are an integral part of consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). We believe that the critical accounting policies described in this section address the more significant estimates required of management when preparing our consolidated financial statements in accordance with GAAP. We consider an accounting estimate critical if changes in the estimate may have a material impact on our financial condition or results of operations. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, actual results could differ from the original estimates, requiring adjustment to these balances in future periods. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable | Accounts receivable are recorded at managements estimate of net realizable value. At December 31, 2015 and 2014 the Company had approximately $2,326,000 and $660,000 of gross trade receivables, respectively.
Our reported balance of accounts receivable, net of the allowance for doubtful accounts, represents our estimate of the amount that ultimately will be realized in cash. We review the adequacy and adjust our allowance for doubtful accounts on an ongoing basis, using historical payment trends and the age of the receivables and knowledge of our individual customers. However, if the financial condition of our customers were to deteriorate, additional allowances may be required. At December 31, 2015 and 2014 the Company had approximately $618,000 and $71,000 recorded for the allowance for doubtful accounts, respectively. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Advertising Costs | Advertising costs, except for costs associated with direct-response advertising, are charged to operations when incurred. The costs of direct-response advertising are capitalized and amortized over the period during which future benefits are expected to be received. The Company did not capitalize any advertising for the years ended December 31, 2015 and 2014, respectively. Advertising expenses were approximately $79,000 and $65,000 for the years ended December 31, 2015 and 2014, respectively. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment | The cost of property, plant, and equipment is depreciated over the estimated useful lives of the related assets utilizing the straight-line method of depreciation. The cost of leasehold improvements is depreciated (amortized) over the lesser of the length of the related leases or the estimated useful lives of the assets. Ordinary repairs and maintenance are expensed when incurred and major repairs will be capitalized and expensed if it benefits future periods. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Assets not subject to amortization are tested for impairment at least annually. The Company has intangible assets related to its purchase of Meridian Waste
Services, LLC, Christian Disposal LLC and Eagle Ridge Landfill, LLC, which are further discussed in the notes below.
During 2015 and 2014, the Company assessed its intangible assets, based on estimated future cash flows and concluded that the carrying amount of its intangible assets did not exceed its fair value. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Related Party Affiliate | The Company has an investment in a privately held corporation in the mobile apps industry. As the Company exercises significant influence on this entity, this investment is recorded using the equity method of accounting. The Company monitors this investment for impairment and makes appropriate reductions in the carrying value if the Company determines that an impairment charge is required based primarily on the financial condition and near-term prospect of this entity. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill |
Goodwill is the excess of our purchase cost over the fair value of the net assets of acquired businesses. We do not amortize goodwill, but as discussed in the impairment of long lived assets section above, we assess our goodwill for impairment at least annually. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized Software | The Company acquired a software product that is under further development. This asset was being amortized over a three to five year period using the straight-line method of depreciation for book purposes beginning when the software is completed.
The Company capitalizes internal software development costs subsequent to establishing technological feasibility of a software application in accordance with guidelines established by ASC 985-20-25 Accounting for the costs of Computer Software to Be Sold, Leased or Otherwise Marketed, requiring certain software development costs to be capitalized upon the establishment of technological feasibility. The establishment of technological feasibility and the ongoing assessment of the recoverability of these costs require considerable judgement by management with respect to certain external factors such as anticipated future revenue, estimated economic life and changes in software and hardware technologies. Amortization of the capitalized software development costs begins when the product is available for general release to customers. Capitalized costs are amortized over the remaining estimated economic life of the product. For the year ended December 31, 2014, the Company has capitalized costs associated with the development of several mobile science technology products and mobile apps that has not been placed into service. In 2015, the Company sold the software to a related party. Refer to the related party note below for further discussion. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Website Development Costs | The Company accounts for website development costs in accordance with Accounting Standards Codification 350-50 Website Development Costs. Accordingly, all costs incurred in the planning stage are expensed as incurred, costs incurred in the website application and infrastructure development stage that meet specific criteria are capitalized and costs incurred in the day to day operation of the website are expensed as incurred. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Landfill Accounting | Capitalized landfill costs
For unpermitted airspace to be initially included in our estimate of remaining permitted and expansion airspace, the expansion effort must meet all of the criteria listed above. These criteria are evaluated by our field-based engineers, accountants, managers and others to identify potential obstacles to obtaining the permits. Once the unpermitted airspace is included, our policy provides that airspace may continue to be included in remaining permitted and expansion airspace even if certain of these criteria are no longer met as long as we continue to believe we will ultimately obtain the permit, based on the facts and circumstances of a specific landfill.
When we include the expansion airspace in our calculations of remaining permitted and expansion airspace, we also include the projected costs for development, as well as the projected asset retirement costs related to the final capping, closure and post-closure of the expansion in the amortization basis of the landfill.
Once the remaining permitted and expansion airspace is determined in cubic yards, an airspace utilization factor (AUF) is established to calculate the remaining permitted and expansion capacity in tons. The AUF is established using the measured density obtained from previous annual surveys and is then adjusted to account for future settlement. The amount of settlement that is forecasted will take into account several site-specific factors including current and projected mix of waste type, initial and projected waste density, estimated number of years of life remaining, depth of underlying waste, anticipated access to moisture through precipitation or recirculation of landfill leachate, and operating practices. In addition, the initial selection of the AUF is subject to a subsequent multi-level review by our engineering group, and the AUF used is reviewed on a periodic basis and revised as necessary. Our historical experience generally indicates that the impact of settlement at a landfill is greater later in the life of the landfill when the waste placed at the landfill approaches its highest point under the permit requirements.
After determining the costs and remaining permitted and expansion capacity at each of our landfill, we determine the per ton rates that will be expensed as waste is received and deposited at the landfill by dividing the costs by the corresponding number of tons. We calculate per ton amortization rates for the landfill for assets associated with each final capping, for assets related to closure and post-closure activities and for all other costs capitalized or to be capitalized in the future. These rates per ton are updated annually, or more often, as significant facts change.
It is possible that actual results, including the amount of costs incurred, the timing of final capping, closure and post-closure activities, our airspace utilization or the success of our expansion efforts could ultimately turn out to be significantly different from our estimates and assumptions. To the extent that such estimates, or related assumptions, prove to be significantly different than actual results, lower profitability may be experienced due to higher amortization rates or higher expenses; or higher profitability may result if the opposite occurs. Most significantly, if it is determined that expansion capacity should no longer be considered in calculating the recoverability of a landfill asset, we may be required to recognize an asset impairment or incur significantly higher amortization expense. If at any time management makes the decision to abandon the expansion effort, the capitalized costs related to the expansion effort are expensed immediately.
For the year ended December 31, 2015 the Company operations related to its landfill assets and liability are presented in the tables below:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | The Company recognizes revenue when there is persuasive evidence that services have been provided and a collection is reasonably assured. The majority of the Companys revenues are generated from the fees charged for waste collection, transfer, disposal and recycling. The fees charged for our services are generally defined in service agreements and vary based on contract-specific terms such as frequency of service, weight, volume and the general market factors influencing a regions rate. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Revenue | The Company records deferred revenue for customers that were billed in advance of services. The balance in deferred revenue represents amounts billed in October, November and December for services that will be provided during January, February and March. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of Services | Cost of services include all employment costs associated with waste collection, transfer and disposal, damage claims, landfill costs, personal property taxes associated with collection vehicles and other direct cost of the collection and disposal process. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentrations |
The Company maintains its cash and cash equivalents in bank deposit accounts, which could, at times, exceed federally insured limits. The Company has not experienced any losses in such accounts; however, amounts in excess of the federally insured limit may be at risk if the bank experiences financial difficulties. The Company places its cash with high credit quality financial institutions. The Companys accounts at these institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000.
Financial instruments which also potentially subject the Company to concentrations of credit risk consist principally of trade accounts receivable; however, concentrations of credit risk with respect to trade accounts receivables are limited due to generally short payment terms.
The Company has two contracts that account for a large portion of the Companys revenue. During the year ended December 31, 2015, these contracts accounted for approximately 44% of the Companys revenues and less than 5% of the Companys accounts receivable balance at December 31, 2015. During the year ended December 31, 2014, the Company had two customers that accounted for approximately 46% of the Companys revenues and approximately 53% of the Companys accounts receivable balance at December 31, 2014. The Company did not have any other customers that represented a significant portion of the Companys revenue or account receivables for the fiscal years ended December 31, 2015 and 2014, respectively. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic Income (Loss) Per Share |
Basic income (loss) per share is calculated by dividing the Companys net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Companys net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. At December 31, 2015 the Company had two convertible notes outstanding that is not convertible into common stock until June 2016. Additionally, the Company issued stock warrants for 1,673,559 common shares.
For the year ended December 31, 2015, the Company had 1,673,559 of weighted-average common shares relating to the convertible debt, under the if-converted method, however, these shares are not dilutive because the Company recorded a loss during the fiscal year.
At December 31, 2015, and 2014 the Company had a series of convertible notes and warrants outstanding that could be converted into approximately, 2,548,559 and 291,047 common shares, respectively. These are not presented in the consolidated statements of operations since the company incurred a loss and the effect of these shares is anti- dilutive. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.
Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also require measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
Pursuant to ASC Topic 505-50, for share based payments to consultants and other third-parties, compensation expense is determined at the measurement date. The expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.
The Company recorded stock based compensation expense of $7,356,000 and $339,000 during the years ended December 31, 2015 and 2014, respectively. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements | The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Companys results of operations, financial position or cash flow. |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Significant Accounting Policies Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operations related to its landfill assets and liability |
|
3. PROPERTY, PLANT AND EQUIPMENT (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment |
|
4. INTANGIBLE ASSETS AND ACQUISITION (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Christian Disposal LLC | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate purchase price and assets acquired and liabilities assumed |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated fair value |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Eagle Ridge | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated fair value |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pro forma results |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MWS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate purchase price and assets acquired and liabilities assumed |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated fair value |
|
5. NOTES PAYABLE AND CONVERTIBLE NOTES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable And Convertible Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long term debt |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fund distribution |
On August 6, 2015, the Company refinanced its long-term debt payable to Comerica Bank. Proceeds from notes issued by the Company to Praesidian Capital Opportunity Fund III, LP and Praesidian Capital Opportunity Fund III-A, LP (together referred to as Praesidian) were $10,845,000. These funds were distributed as follows:
The proceeds of the loans were used to partially fund the acquisitions referenced above and refinance existing debt with Praesidian, among other things. The funds to payoff the Praesidian notes were distributed as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair value calculation |
The key inputs used in the December 22, 2015 fair value calculations were as follows:
The key inputs used in the December 22, and December 31, 2015 fair value calculations were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Change in the market value |
|
6. SHAREHOLDERS' EQUITY (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders Equity Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrant activity |
|
7. INCOME TAXES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effective tax rate |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax assets and liabilities |
|
8. FAIR VALUE MEASUREMENT (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value by hierarchy |
|
9. LEASES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||
Future minimum lease payments |
|
13. RELATED PARTY TRANSACTIONS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of financial position and results of operations of MSTI |
|
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) |
12 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Landfill Assets | |
January 1, 2015 Beginning Balance | $ 0 |
Capital additions (Landfill acquired on December 22, 2015) | 3,396,519 |
Amortization of landfill assets | (3,043) |
Asset retirement adjustments | 0 |
December 31, 2015 Ending Balance | 3,393,476 |
Landfill Liability | |
January 1, 2015 Beginning Balance | 0 |
Obligations incurred and capitalized (Landfill acquired on December 22, 2015) | 196,519 |
Obligations settled | 0 |
Interest accretion | 3,733 |
Revisions in estimates and interest rate assumption | 0 |
Acquisition, divestures and other adjustments | 0 |
December 31, 2015 Ending Balance | $ 200,252 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Summary Of Significant Accounting Policies Details Narrative | ||
Advertising costs | $ 79,000 | $ 65,000 |
Allowance for doubtful accounts | 618,000 | 71,000 |
Stock based compensation expense | $ 7,356,000 | $ 339,000 |
3. PROPERTY AND EQUIPMENT (Details) - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Land | $ 1,690,000 | $ 0 |
Building & Improvements | 692,156 | 0 |
Furniture & office equipment | 258,702 | 240,102 |
Containers | 4,453,386 | 2,847,205 |
Truck, Machinery & Equipment | 9,948,686 | 5,523,773 |
Total Property and Equipment | 17,042,930 | 8,611,080 |
Less: Accumulated Depreciation | (2,609,190) | (956,315) |
Net Property and Equipment | $ 14,433,740 | $ 7,654,765 |
4. INTANGIBLE ASSETS AND ACQUISITION (Details) |
12 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Christian Disposal LLC | |
Cash | $ 13,008,109 |
Restricted stock consideration | 2,625,000 |
Convertible Promissory Note | 1,250,000 |
Contingent additional purchase price | 1,000,000 |
Total | 17,883,109 |
MWS | |
Cash | 11,000,000 |
Estimated value of common stock issued to sellers | 1,978,750 |
Estimated value of preferred stock issued to sellers | 7,121,000 |
Total | $ 20,099,750 |
4. INTANGIBLE ASSETS AND ACQUISITION (Details 2) - Eagle Ridge - USD ($) |
4 Months Ended | 8 Months Ended | 12 Months Ended |
---|---|---|---|
May. 15, 2014 |
Dec. 31, 2014 |
Dec. 31, 2015 |
|
Total Revenue | $ 28,861,001 | ||
Net (loss) income | $ (17,763,377) | ||
Basic net loss per share | $ (1.23) | ||
Successor | |||
Total Revenue | $ 17,872,328 | ||
Net (loss) income | $ (1,581,195) | ||
Basic net loss per share | $ (0.16) | ||
Predecessor | |||
Total Revenue | $ 10,199,328 | ||
Net (loss) income | $ 916,391 | ||
Basic net loss per share | $ 0.00 |
4. INTANGIBLE ASSETS AND ACQUISITION (Details 3) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Cost | $ 24,407,372 | $ 14,656,517 |
Accumulated Amortization | 4,740,407 | 1,899,140 |
Net Carrying Value | 19,666,965 | 12,757,377 |
Customer list | ||
Cost | 24,187,452 | 14,007,452 |
Accumulated Amortization | 4,687,090 | 1,867,660 |
Net Carrying Value | $ 19,500,362 | $ 12,139,792 |
Remaining Useful Life | 13 years 8 months 12 days | 4 years 6 months |
Non compete agreement | ||
Cost | $ 206,000 | $ 150,000 |
Accumulated Amortization | 50,301 | 20,000 |
Net Carrying Value | $ 155,699 | $ 130,000 |
Remaining Useful Life | 4 years 2 months 12 days | 4 years 6 months |
Website | ||
Cost | $ 13,920 | $ 13,920 |
Accumulated Amortization | 3,016 | 232 |
Net Carrying Value | $ 10,904 | $ 13,688 |
Remaining Useful Life | 3 years 10 months 24 days | 4 years 10 months 24 days |
Capitalized Software | ||
Cost | $ 434,532 | |
Accumulated Amortization | 0 | |
Net Carrying Value | 434,532 | |
Remaining Useful Life | 5 years | |
Loan fees | ||
Cost | 50,613 | |
Accumulated Amortization | 11,248 | |
Net Carrying Value | $ 39,365 | |
Remaining Useful Life | 4 years 6 months |
5. NOTES PAYABLE AND CONVERTIBLE NOTES (Details) - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Notes Payable And Convertible Notes Details | ||
Debt payable to Comerica Bank, senior debt | $ 0 | $ 8,708,333 |
Debt payable to Praesidian Capital Opportunity Fund III, senior lender | 0 | 0 |
Debt payable to Praesidian Capital Opportunity Fund III-A, senior lender | 0 | 0 |
Goldman Sachs - Tranche A Term Loan - LIBOR Interest | 40,000,000 | 0 |
Goldman Sachs - Revolver | 0 | 0 |
Goldman Sachs - MDTL | 0 | 0 |
Convertible Notes Payable | 1,250,000 | 0 |
Capitalized lease - financing company, secured by equipment, | 37,097 | 0 |
Equipment loans | 395,118 | 0 |
Notes payable to seller of Meridian, subordinated debt | 1,475,000 | 1,475,000 |
Less: debt discount | (2,152,603) | 0 |
Total debt | 41,004,611 | 10,183,333 |
Less: current portion | (417,119) | (1,357,143) |
Long term debt less current portion | $ 40,587,493 | $ 8,826,190 |
5. NOTES PAYABLE AND CONVERTIBLE NOTES (Details 1) |
12 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Notes Payable And Convertible Notes Details 1 | |
Payoff of short term bridge financing | $ 432,938 |
Payoff of lines of credit with Commerica Bank | 1,745,799 |
Payoff of senior debt to Comerica Bank | 7,953,433 |
Refinancing fees | 712,830 |
Total | 10,845,000 |
Aggregate outstanding principal balance of the Notes | 10,845,043 |
Aggregate accrued but unpaid interest on the Notes | 82,844 |
Prepayment Premium1 | 325,351 |
Accrued PIK | 9,941 |
Tax Liability | 150,000 |
Accrued but unpaid fees and expenses | 4,000 |
Payoff Amount | $ 11,417,179 |
5. NOTES PAYABLE AND CONVERTIBLE NOTES (Details 2) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 22, 2015 |
|
Praesidian | ||
Current exercise price | $ 0.025 | |
Time to expiration | Aug. 06, 2016 | |
Risk-free interest rate | 0.33% | |
Estimated volatility | 230.00% | |
Dividend | 0.00% | |
Stock price | $ 1.50 | |
Expected forfeiture rate | 0.00% | |
Goldman Sachs | ||
Purchase Price | $ 450,000 | $ 450,000 |
Time to expiration | Dec. 22, 2023 | Dec. 22, 2023 |
Risk-free interest rate | 2.15% | 2.11% |
Estimated volatility | 45.00% | 45.00% |
Dividend | 0.00% | 0.00% |
Stock price | $ 1.90 | $ 1.50 |
Expected forfeiture rate | 0.00% | 0.00% |
5. NOTES PAYABLE AND CONVERTIBLE NOTES (Details 3) |
12 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Notes Payable And Convertible Notes Details 3 | |
Fair value of warrants, beginning | $ 0 |
Issuance of Praesdian warrants | 904,427 |
Unrealized loss on derivative liability | 1,004,213 |
Cancellation of Praesidian warrants | (1,908,640) |
Issuance of Goldman warrants | 2,160,000 |
Unrealized loss on derivative liability | 660,000 |
Fair value of warrants, ending | $ 2,820,000 |
6. SHAREHOLDERS' EQUITY (Details) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|||
Number of Warrants | ||||
Balance, beginning | 0 | 0 | ||
Granted | 0 | |||
Exercised | 0 | 0 | ||
Forfeited/Cancelled | 0 | |||
Balance, ending | 1,673,559 | 0 | ||
Exercisable | 1,673,559 | |||
Average Exercise Price | ||||
Balance, beginning | $ 0.00 | $ 0.00 | ||
Granted | 0.00 | |||
Exercised | 0.00 | 0.00 | ||
Forfeited/Cancelled | 0.00 | |||
Balance, ending | $ 0.00 | $ 0.00 | ||
If Exercised | ||||
Balance, beginning | $ 0 | $ 0 | ||
Granted | 0 | |||
Exercised | 0 | 0 | ||
Forfeited/Cancelled | 0 | |||
Balance, ending | $ 449,518 | $ 0 | ||
Praesidian | ||||
Number of Warrants | ||||
Granted | 1,293,022 | |||
Forfeited/Cancelled | (1,293,022) | |||
Average Exercise Price | ||||
Granted | $ .025 | |||
Forfeited/Cancelled | $ .025 | |||
If Exercised | ||||
Granted | $ 32,326 | |||
Forfeited/Cancelled | $ (32,326) | |||
Goldman Sachs | ||||
Number of Warrants | ||||
Granted | [1] | 1,673,559 | ||
Forfeited/Cancelled | 0 | |||
Average Exercise Price | ||||
Granted | $ .269 | |||
If Exercised | ||||
Granted | $ 449,518 | |||
Forfeited/Cancelled | $ 0 | |||
|
7. INCOME TAXES (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Taxes Tables | ||
Computed "expected" benefit | $ (6,538,843) | $ (773,000) |
Effect of state income taxes, net of federal benefit | (769,276) | (136,000) |
Effect of change in tax rates | 0 | (280,760) |
Pre-acquisition losses | 0 | 640,000 |
Stock based compensation and other permanent differences | 4,577,831 | 0 |
Increase in valuation allowance | 2,730,288 | 549,760 |
Total | $ 0 | $ 0 |
7. INCOME TAXES (Details 1) - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Income Taxes Tables | ||
Net operating loss carry forward | $ 4,686,288 | $ 1,956,000 |
Less: Valuation allowance | (4,686,288) | (1,956,000) |
Total | $ 0 | $ 0 |
8. FAIR VALUE MEASUREMENT (Details) - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Interest rate swap | $ 40,958 | |
Derivative liability | $ 2,820,000 | |
Stock settled debt | 12,500 | 308,083 |
Total | 2,832,500 | 349,041 |
Level 1 | ||
Interest rate swap | 0 | |
Derivative liability | 0 | |
Stock settled debt | 10,000 | 235,000 |
Total | 10,000 | 235,000 |
Level 2 | ||
Interest rate swap | 0 | |
Derivative liability | 0 | |
Stock settled debt | 0 | 0 |
Total | 0 | 0 |
Level 3 | ||
Interest rate swap | 40,958 | |
Derivative liability | 2,820,000 | |
Stock settled debt | 2,500 | 67,083 |
Total | $ 2,822,500 | $ 108,041 |
9. LEASES (Details) |
Dec. 31, 2015
USD ($)
|
---|---|
Leases Details | |
2016 | $ 442,408 |
2017 | 448,408 |
2018 | 164,493 |
2019 | 111,103 |
2020 | 71,500 |
Thereafter | 0 |
Total | $ 1,237,912 |
9. LEASES (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Leases Details Narrative | ||
Rent expense | $ 320,154 | $ 177,801 |
13. RELATED PARTY TRANSACTIONS (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Assets | ||
Current assets | $ 4,917,587 | $ 1,291,237 |
Noncurrent assets | 32,331,919 | 12,765,680 |
Total assets | 51,683,246 | 21,711,682 |
Liabilities and Equity | ||
Current liabilities | 10,788,838 | 7,037,058 |
Noncurrent liabilities | 40,787,745 | 8,867,148 |
Total liabilities and equity | 51,683,246 | $ 21,711,682 |
Summary of Statements of Operations | ||
Revenues | 13,506,097 | |
Expense | 8,521,379 | |
Gross profit | 3,370,493 | |
Net loss | (19,231,890) | |
MSTI | ||
Assets | ||
Current assets | 4,481 | |
Noncurrent assets | 2,869,553 | |
Total assets | 2,874,034 | |
Liabilities and Equity | ||
Current liabilities | 213,264 | |
Noncurrent liabilities | 0 | |
Equity | 2,660,770 | |
Total liabilities and equity | 2,874,034 | |
Summary of Statements of Operations | ||
Revenues | 1,364 | |
Expense | 470,342 | |
Net loss | $ (468,978) |
)^;=YE=7X*8?=
MA7]+9FP9FA^6?ZPH]__X+#LO<6W[JZ"?S([!^F!C*N?::C/L&]63"ZM?SJV^
M ?V?,Y([X.39Z56---;^ &PO=V]R:W-H965T
M Z
M$ EQIVH^!&!1 IL(B6PZU6PCVE@6.@W!5D-BFTY=:"($NPA);#HU>=RIYI#I
MM=Q'1*AOT:E]D#T*]B%*+#J5CDV&L20@L?$1TX5F1+$94>W])(DM2N W%+KX
M%85BCZ#L<:-MZ=@C"$W IQ;K ,5.08/'3WE+QS;PP1X,NP'5W<"F!'8#&LW-
M#>OY:D' +'"PV&D\-R\#3KP8)\%3DBPU2,!"!7]N2GH)P5BH0&'DH]-(6*Q
MYB9E0!J+\(,M%%8B:*\%Q.93X;]OA<5*!*Q$F%5B%_2B!T%@E!!HM.
M!Y;1Q\]^!+O]-K;@:58\ASRKI#W>JKNM2%19?9=IJRY5*2V36G0Y9UB?[,%G
M+D6]_-#;\BKCA>J!S+[AI=5KT[:[S3K?2%79'\OJBUP)H>38W&\VRT/LX3H;
MV:.;!H&K8Z2Y[\S^/K:CONL=EJE
Z4KGRKJ?U-5357][K*IOY,>N*-55/7&V6N^O^GVUWHH=5[UJ+TJXMZGJ
M'==P6G_M5YN-7(M9M3[L1*G[=# 8]6M1<"VK4FWE7CG/-/46FMK7@N=J*X3>
M%4?8CLO2^?Q)76UD(>Y%K0!,^'X?\9V8.#\*AQ1
RW3M/"NPL\L":1DITH"
MDZ)2%:%_EW@\OA$BN$%$$T2@0F2/(;()8I+T4N)O_" VJ2J[RLH2:BRARI(_
M1DDFEE")DL:^_)F$U5.AE2C2B"*%*#,&VD5*H #X89;$9B)5F.=)&(%L&2C6
M@&(5"!B!XK5 \?\ )1I0HKZS:-D^U>Q3=4&!,?_2Q\SR@3'_["HK2Z:Q9"I+
M:-S<3(D2&_>_LDBL%+E&D:L4D9$B7Z:P2*P4P-O(['+IMX/.70'N 9_83DW/34V6/&SW]Y6)\P9H@[
M\S?<6
I.0WE.!'?
MEH?EW6SV- L60$+M@@+WRPGN0
M.2P^%R@6@2()%/\;,6&.UYC=/TW8Q9XJ,%V\.I;4.&J7MG2MKK?S-H]G\@ZO
MRH%W\(N;3FA+3NC\R<9C:!$=>!/9S8Z2WK^?-9'0NA!^];%)5RHE#H?E@:RO
MM'H#4$L#!!0 ( !J&CDB ]8ALH0$ +$# 9 >&PO=V]R:W-H965T
M
SE=Z'W56N2M;)N=^ZVTIU25CH[\.16
MRL&=FK=!+7?6=[GKZ_X
V2!C0FJ /S5@1NFP#8:3PRN+8"@[[2BL7/
MG2.XK@*#MM+N''F2Q;44\/$4B'M9.N7V0QX+<=T$?.P$DG$A_9#'0NYL!&P?
M\?!%<(T$?)P$;"OQO'C ]1/P,11(.R;L>?> :RS@XRS0,8U';M]!3:9>MP]V
MG04/.DMS[6+4K?U>4OL,Z%I0>G\#1=8+Z$0/["<5AZR4P88K_9BJ7CY[SA73
MV="+;L*C?N3>)CG;*S.