UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
(Amendment No. 1)
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): December 1, 2015
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
(Exact
name of registrant as specified in its charter)
Florida |
|
000-30424 |
|
27-2037711 |
(State
or other jurisdiction of
incorporation
or organization) |
|
(Commission
File Number) |
|
(IRS
Employer
Identification
No.) |
5920
N. Florida Avenue
Hernando,
FL |
|
34442 |
(Address
of principal executive offices) |
|
(Zip
Code) |
Registrant’s
telephone number, including area code: (352) 489-6912 |
|
Not
Applicable |
|
|
(Former
name or former address, if changed since last report) |
|
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)
☐ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))
☐ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))
Explanatory
Note
On
December 4, 2015, National Waste Management Holdings, Inc. (the “Company”) filed a Form 8-K describing its acquisition
on December 1, 2015 of 100% of the membership interests in Gateway Rolloff Service, L.P. (“Gateway”). At the time
of the filing, audited financial statements of Gateway required by Item 9.01 were not yet available. As a result, the pro forma
consolidated financial information required by the Securities Exchange Act of 1934, as amended, could not be prepared. The purpose
of this Form 8-K/A is to amend the initial filing with respect to the Gateway acquisition and provide the required audited financial
statements and pro forma financial information reflecting the acquisition. No other amendments to the Form 8-K filed December
4, 2015 are being made by this Form 8-K/A.
Item
1.01. Entry into a Material Definitive Agreement
The
applicable information set forth in Item 2.01 of this Current Report on Form 8-K is incorporated by reference in this Item 1.01.
Item
2.01 Completion of Acquisition or Disposition of Assets.
On
December 1, 2015, National Waste Management Holdings, Inc. (the “Company”) entered into two Partnership Purchase Interest
Agreements (the “Agreements”) with National Waste Management, Inc., (“National Waste”), a Florida corporation
and PDA Management Corp., a Nevada corporation qualified to do business in Florida (“PDA”, and together with National
Waste, the “Sellers”) whereby the Company effectively acquired 100% interests in Gateway Rolloff Service, L.P. (“Gateway”),
a Nevada limited partnership qualified to do business in Florida. Pursuant to the terms of the Agreements, in exchange for 100%
of the outstanding partnership interests in Gateway, the Company (i) agreed to pay PDA $450,000 in cash and 750,000 shares of
common stock of the Company and (2) issued National Waste 1,650,000 shares of common stock of the Company.
Headquartered
in Odessa, Florida, Gateway Rolloff Services, L.P. (“Gateway”) is a portable dumpster service with pick up and drop
off collection, specializing in the removal of debris, garbage, waste, hauling construction, and demolition debris. With
thirty years of experience in waste management, Gateway provides customized services to its customers. Equipped with new and well-maintained
dumpsters and trucks with containers of various sizes, Gateway is able to provide same day service as well as priority and emergency
dispatch.
Immediately
upon signing the Agreement with PDA, National Waste and Gateway entered into an employment agreement (the “Employment Agreement”)
to employ Paul Simon as the general manager of Gateway, who shall perform the functions and responsibilities customary of that
position. Without Employee's advance written approval, National Waste and Gateway agreed not, directly or indirectly, (a) to assign
to Mr. Simon employment duties that are inconsistent with those customarily associated with the responsibilities of a general
manager, (b) require a change in the location of Mr. Simon primary business office outside of the Tampa Bay Metropolitan Area,
(c) change Mr. Simon’s employment duties, office facilities, or secretarial support in a way that materially diminishes
the prestige or responsibilities of Mr. Simon’s corporate titles or offices.
The
Agreements and the Employment Agreement are filed hereto as Exhibit 10.1, 10.2 and 10.3 to this Current Report on Form 8-K. The
foregoing summary of the terms of the Agreements and the Employment Agreement are subject to, and qualified in its entirety by,
the Agreements and the Employment Agreement attached hereto, which are incorporated herein by reference.
Item
9.01 Financial Statements and Exhibits.
(a) |
Financial
Statements of Business Acquired. |
|
|
|
Financial
statements of Gateway including related notes and independent accountant’s report are attached hereto as Exhibit 99.1 and
are incorporated herein by reference. |
(b) |
Pro
Forma Financial Information. |
|
|
|
Unaudited
pro forma consolidated financial information reflecting the Gateway acquisition, including related explanatory notes, are attached
hereto as Exhibit 99.2 and are incorporated herein by reference. |
Exhibit No. | |
Description |
10.1 | |
Partnership Interest Purchase Agreement, dated November 23, 2015 between PDA Management Corp. and National Waste Management Holdings, Inc.* |
10.2 | |
Partnership Interest Purchase Agreement, dated December 1, 2015 between National Waste Management, Inc. and National Waste Management Holdings, Inc.* |
10.3 | |
Employment Agreement, dated November 23, 2013 between Paul Simon and Gateway Rolloff Service, L.P* |
99.1 | |
Gateway Rolloff Services, LP Financial Statements as of September 30, 2015 (unaudited) and December 31, 2014 and 2013 (audited), including the notes thereto. |
99.2 | |
Unaudited Pro Forma Consolidated Financial Data for the acquisition of Gateway. |
*Exhibits
incorporated by reference to the Form 8-K, filed on December 4, 2015.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report on Form 8-K to be signed
on its behalf by the undersigned hereunto duly authorized.
|
NATIONAL
WASTE MANAGEMENT
HOLDINGS, INC. |
|
|
Date: January
7, 2016 |
By: |
/s/
Louis Paveglio |
|
|
Louis
Paveglio
Chief
Executive Officer |
4
Exhibit
99.1
GATEWAY
ROLLOFF SERVICES, LP
FINANCIAL
STATEMENTS
For
the Nine Months Ended September 30, 2015 and
For
the Years Ended
December
31, 2014 and 2013
GATEWAY
ROLLOFF SERVICES, LP
FINANCIAL
STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED)
AND FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
Table
of Contents
|
PAGE
|
|
|
Report
of Independent Certified Public Accountants |
1 |
|
|
Unaudited
Balance Sheet as of September 30, 2015 and Audited Balance Sheets as of December 31, 2014 and 2013 |
2 |
|
|
Unaudited
Statement of Operations for the Nine Months Ended September 30, 2015 and Audited Statements of Operations for the Years Ended
December 31, 2014 and 2013 |
3 |
|
|
Unaudited
Statement of Partners’ Capital for the Nine Months Ended September 30, 2015 and Audited Statements of Partners’
Capital for the Years Ended December 31, 2014 and 2013 |
4 |
|
|
Unaudited
Statement of Cash Flows for the Nine Months Ended September 30, 2015 and Audited Statements of Cash Flows for the Years Ended
December 31, 2014 and 2013 |
5 |
|
|
Notes
to the Financial Statements |
6-11 |
INDEPENDENT
ACCOUNTANT’S REVIEW REPORT
To
the Members
Gateway
Rolloff Service, LP
Odessa,
Florida
We
have reviewed the accompanying balance sheet of Gateway Rolloff Service, LP as of September 30, 2015, and the related statements
of operations, statements of members’ deficit, and cash flows for the nine months then ended. A review includes primarily
applying analytical procedures to the Company’s financial data and making inquiries of Company personnel. A review is substantially
less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole.
Accordingly, we do not express such an opinion.
Management
is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles
generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant
to the preparation and fair presentation of the financial statements.
Our
responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by
the American Institute of Certified Public Accountants. Those standards require us to perform procedures to obtain limited assurance
that there are no material modifications that should be made to the financial statements. We believe that the results of our procedures
provide a reasonable basis for our report.
Based
on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in
order for them to be in conformity with accounting principles generally accepted in the United States of America.
Scrudato
& Company
December
2, 2015
GATEWAY
ROLLOFF SERVICES, LP
BALANCE
SHEETS
AS
OF SEPTEMBER 30, 2015 (UNAUDITED) AND DECEMBER 31, 2014 AND 2013 (AUDITED)
| |
2015 | | |
2014 | | |
2013 | |
| |
(Unaudited) | | |
(Audited) | | |
(Audited) | |
Assets | |
| | |
| | |
| |
Current
assets: | |
| | |
| | |
| |
Cash
and cash equivalents | |
$ | 132,108 | | |
$ | 61,699 | | |
$ | 45,897 | |
Accounts
receivable, net | |
| 203,727 | | |
| 205,708 | | |
| 155,405 | |
Total
current assets | |
| 335,835 | | |
| 267,407 | | |
| 201,302 | |
| |
| | | |
| | | |
| | |
Property
and equipment, net | |
| - | | |
| - | | |
| 223 | |
| |
| | | |
| | | |
| | |
Other
assets: | |
| | | |
| | | |
| | |
Note
receivable due from related party | |
| - | | |
| 244,500 | | |
| 244,500 | |
Total
assets | |
$ | 335,835 | | |
$ | 511,907 | | |
$ | 446,025 | |
| |
| | | |
| | | |
| | |
Liabilities
and Members' Capital | |
| | | |
| | | |
| | |
Current
liabilities: | |
| | | |
| | | |
| | |
Accounts
payable and accrued expenses | |
$ | 231,147 | | |
$ | 159,959 | | |
$ | 201,500 | |
Related
party note payable | |
| 26,000 | | |
| 26,000 | | |
| 26,000 | |
Total
current liabilities | |
| 257,147 | | |
| 185,959 | | |
| 227,500 | |
| |
| | | |
| | | |
| | |
Partners'
capital | |
| | | |
| | | |
| | |
Partners'
capital (deficit) | |
| 78,688 | | |
| 325,948 | | |
| 218,525 | |
Total
liabilities and members' capital | |
$ | 335,835 | | |
$ | 511,907 | | |
$ | 446,025 | |
Read
Independent Accountants’ Review Report and the Notes to the Financial Statements
GATEWAY
ROLLOFF SERVICES, LP
STATEMENTS
OF OPERATIONS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED) AND FOR THE YEARS ENDED
DECEMBER 31, 2014 AND 2013 (AUDITED)
| |
2015 | | |
2014 | | |
2013 | |
| |
(Unaudited) | | |
(Audited) | | |
(Audited) | |
| |
| | |
| | |
| |
Revenues | |
$ | 1,741,513 | | |
$ | 2,300,303 | | |
$ | 1,863,387 | |
Cost
of revenues | |
| 1,121,188 | | |
| 1,532,492 | | |
| 1,359,595 | |
Gross
profit | |
| 620,325 | | |
| 767,811 | | |
| 503,792 | |
| |
| | | |
| | | |
| | |
Selling,
general and administrative expenses | |
| 728,195 | | |
| 652,918 | | |
| 786,179 | |
Income
from operations | |
| (107,870 | ) | |
| 114,893 | | |
| (282,387 | ) |
| |
| | | |
| | | |
| | |
Other
income (expenses): | |
| | | |
| | | |
| | |
Interest
income | |
| 17 | | |
| 16 | | |
| 442 | |
Other
income | |
| 594 | | |
| - | | |
| 310,480 | |
Other
expenses | |
| - | | |
| (87 | ) | |
| - | |
Total
other income (expenses) | |
| 611 | | |
| (71 | ) | |
| 310,922 | |
| |
| | | |
| | | |
| | |
Net
income | |
$ | (107,259 | ) | |
$ | 114,822 | | |
$ | 28,535 | |
Read
Independent Accountants’ Review Report and the Notes to the Financial Statements
GATEWAY ROLLOFF SERVICES, LP
STATEMENTS OF PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED) AND FOR THE YEARS ENDED
DECEMBER
31, 2014 AND 2013 (AUDITED)
Partners' Capital Balance at December 31, 2012 | |
$ | 189,990 | |
| |
| | |
Net income (loss) | |
| 28,535 | |
| |
| | |
Partner distributions | |
| - | |
| |
| | |
Partners' Capital Balances at December 31, 2013 | |
$ | 218,525 | |
| |
| | |
Net income (loss) | |
| 114,822 | |
| |
| | |
Partner distributions | |
| (7,399 | ) |
| |
| | |
Partners' Capital Balances at December 31, 2014 | |
$ | 325,948 | |
| |
| | |
Net income (loss) | |
| (107,259 | ) |
| |
| | |
Partner distributions | |
| (140,001 | ) |
| |
| | |
Partners' Capital Balances at September 30, 2015 | |
$ | 78,688 | |
Read
Independent Accountants’ Review Report and the Notes to the Financial Statements
GATEWAY ROLLOFF SERVICES, LP
STATEMENTS
OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 (UNAUDITED) AND FOR THE YEARS ENDED
DECEMBER 31, 2014 AND 2013 (AUDITED)
| |
2015 | | |
2014 | | |
2013 | |
| |
(Unaudited) | | |
(Audited) | | |
(Audited) | |
Cash flow from operating activities: | |
| | |
| | |
| |
Net income | |
$ | (107,259 | ) | |
$ | 114,822 | | |
$ | 28,535 | |
Adjustments to reconcile net income to net cash provided by
operating activities: | |
| | | |
| | | |
| | |
Depreciation and amortization expenses | |
| - | | |
| 223 | | |
| 89 | |
Bad debt expense | |
| 6,804 | | |
| 3,227 | | |
| 13,025 | |
(Increase) decrease in assets: | |
| | | |
| | | |
| | |
Accounts receivable, net | |
| (4,823 | ) | |
| (53,530 | ) | |
| 19,541 | |
Other current assets | |
| - | | |
| - | | |
| 4,890 | |
(Decrease) increase in liabilities: | |
| | | |
| | | |
| | |
Accounts payable and accrued expenses | |
| 71,188 | | |
| (41,541 | ) | |
| (21,470 | ) |
Other current liabilities | |
| - | | |
| - | | |
| (5,576 | ) |
Net cash provided by operating activities | |
| (34,090 | ) | |
| 23,201 | | |
| 39,034 | |
| |
| | | |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | | |
| | |
Distributions to partners | |
| (140,001 | ) | |
| (7,399 | ) | |
| - | |
Payments on loan from shareholder | |
| 244,500 | | |
| - | | |
| (2,000 | ) |
Net cash provided by financing activities | |
| 104,499 | | |
| (7,399 | ) | |
| (2,000 | ) |
| |
| | | |
| | | |
| | |
Net increase (decrease) in cash | |
$ | 70,409 | | |
$ | 15,802 | | |
$ | 37,034 | |
| |
| | | |
| | | |
| | |
Cash, beginning of year | |
| 61,699 | | |
| 45,897 | | |
| 8,863 | |
| |
| | | |
| | | |
| | |
Cash, end of period | |
| 132,108 | | |
$ | 61,699 | | |
$ | 45,897 | |
| |
| | | |
| | | |
| | |
Supplemental disclosure of cash flow information: | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Cash paid during the year for interest | |
$ | - | | |
$ | - | | |
$ | - | |
Cash paid during the year for income taxes | |
$ | - | | |
$ | - | | |
$ | - | |
Read
Independent Accountants’ Review Report and the Notes to the Financial Statements
GATEWAY
ROLLOFF SERVICES, LP
NOTES
TO FINANCIAL STATEMENTS
Note
1 – Business Organization
These
financial statements represent the financial statements of Gateway Rolloff Services, LP (“Gateway” or “the Company”).
The Company was formed in the year 2000, Near Tampa, FL as Limited Partnership. The Company has two partners as of September 30,
2015, December 31, 2014 and 2013, respectively, each owning 50% of the entity. There have been no changes to the partners of the
Company or ownership percentages as of September 30, 2015 and for the period from January 1, 2013 through September 30, 2015,
the period covered by the financial statements.
The
Company offers commercial and residential dumpster service and roll-off boxes for construction and clean up projects. The Company’s
headquarters are in Odessa, FL.
Note
2 – Significant Accounting Policies
Basis
of Presentation
The
financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally
accepted in the United States of America (“GAAP”).
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the amounts reported in the financial statements. Actual results could differ from those estimates.
Fair
Value of Financial Instruments
For
certain financial instruments, including accounts receivable, accounts payable, accrued expenses, interest payable, advances payable
and notes payable, the carrying amounts approximate fair value due to their relatively short maturities.
The
Company adopted ASC 820-10, “Fair Value Measurements and Disclosures.” ASC 820-10 defines fair value, and establishes
a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value
measures. The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial
instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of
such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy
are defined as follows:
| ● | Level
1 inputs to the valuation methodology are quoted prices for identical assets or liabilities
in active markets. |
| ● | Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities
in active markets, and inputs that are observable for the asset or liability, either
directly or indirectly, for substantially the full term of the financial instrument. |
| ● | Level
3 inputs to the valuation methodology are unobservable and significant to the fair value
measurement. |
GATEWAY
ROLLOFF SERVICES, LP
NOTES
TO FINANCIAL STATEMENTS
Note
2 – Significant Accounting Policies (Continued)
Fair
Value of Financial Instruments (Continued)
The
Company did not identify any non-recurring assets and liabilities that are required to be presented in the balance sheets at fair
value in accordance with ASC 815.
In
February 2007, the FASB issued ASC 825-10 “Financial Instruments.” ASC 825-10 permits entities to choose to measure
many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option
has been elected are reported in earnings.
At
September 30, 2015, December 31, 2014 and 2013, the carrying amounts of cash, accounts receivable and current liabilities approximate
fair value due to the short maturity of these items. These fair value estimates are subjective in nature and involve uncertainties
and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly
affect these estimates. The Company does not hold or issue financial instruments for trading purposes, nor does it utilize derivative
instruments in the management of foreign exchange, commodity price, or interest rate market risks.
Revenue
and Cost Recognition
The
Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes
revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all
of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the sales price is fixed or determinable,
(iii) collectability is reasonably assured and (iv) goods have been shipped and/or services rendered.
Cash
and Cash Equivalents
For
purposes of reporting cash flows, the Company considers cash and cash equivalents to be all highly liquid deposits with maturities
of three months or less. Cash equivalents are carried at cost, which approximates market value.
The
Company maintains its cash and cash equivalents at various financial institutions where they are insured by the Federal Deposit
Insurance Corporation (FDIC) up to $250,000. The balances of these accounts from time to time exceed federally insured limits.
The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit
risk on cash and cash equivalents.
GATEWAY
ROLLOFF SERVICES, LP
NOTES
TO FINANCIAL STATEMENTS
Note
2 – Significant Accounting Policies (Continued)
Accounts
Receivable, Bad Debts and Allowance for Doubtful Accounts
Trade
receivables are carried at their estimated collectible amounts. Trade receivables are generally extended on a short-term basis,
thus trade receivables do not bear interest. A finance charge may be applied to such receivables that are more than 30 days past
due. The Company estimates the allowance for doubtful accounts based on a percentage of past due receivables. The Company charges
uncollectible receivables against the allowance when management determines ultimate collection is unlikely.
As
of and for the nine months ended September 30, 2015 and the twelve months ended December 31, 2014 and 2013, bad debt expense was
$6,804, $3,227 and $13,025, respectively.
Property,
Plant and Equipment
Property,
plant and equipment are recorded at cost less accumulated depreciation. Expenditures for major additions and improvements are
capitalized. As property and equipment are sold or retired, the applicable cost and accumulated depreciation are removed from
the accounts and any resulting gain or loss thereon is recognized as operating expenses.
Depreciation
is calculated using the straight-line method over the estimated useful lives or, in the case of leasehold improvements, the term
of the related lease, including renewal periods, if shorter. Estimated useful lives are as follows:
Transportation
equipment |
5
years |
Office
and machinery equipment |
5-7
years |
Roll
off containers |
5-7
years |
Machinery
and equipment |
5
years |
The
Company reviews property, plant and equipment and all amortizable intangible assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of these assets may not be recoverable. Recoverability is based on estimated
undiscounted cash flows. Measurement of the impairment loss, if any, is based on the difference between the carrying value and
fair value.
Impairment
of Long-Lived Assets
The
Company follows ASC 360-10, “Property, Plant, and Equipment,” which established a “primary asset” approach
to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for
a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset
is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition
of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
Through September 30, 2015, the Company has not experienced impairment losses on its long-lived assets.
GATEWAY
ROLLOFF SERVICES, LP
NOTES
TO FINANCIAL STATEMENTS
Note
2 – Significant Accounting Policies (Continued)
Advertising
Costs
The
Company expenses all advertising costs as incurred. Advertising expenses for the nine months ended September 30, 2015 and for
the years ended December 31, 2014 and 2013 were $0, $0 and $0, respectively.
Income
Taxes
The
Company is a Limited Partnership. With this type of business structure, income and losses of the Company are passed through to
its Partners for federal and state income tax purposes. The Company’s Partners are responsible for the payment of taxes
thereon. Accordingly, the financial statements do not include a provision for federal and state income taxes.
The
company accounts for income tax positions in accordance with Accounting Standards Codification Topic 740, “Income Taxes”
(“ASC Topic 740”). This standard prescribes a recognition and measurement of tax positions taken or expected to be
taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination
by taxing authorities. There was no material impact on the Company’s financial position or results of operations as a result
of the application of this standard. The Company files income tax returns in the United States and New York, which are subject
to examination by the tax authorities in these jurisdictions, generally for three years after the filing date.
As
of September 30, 2015, the following tax years are subject to examination:
Jurisdiction |
|
Open
Years for Filed Returns |
Federal
and Florida |
|
December
31, 2011 – 2014 |
Reclassifications
Certain
reclassifications have been made in prior year balances to conform to the current year presentation. Such reclassifications had
no effect on net income as previously reported.
GATEWAY
ROLLOFF SERVICES, LP
NOTES
TO FINANCIAL STATEMENTS
Note
3 – Property, Plant and Equipment
Property,
plant and equipment and the related accumulated depreciation consist of the following as of September 30, 2015, December 31, 2014
and 2013:
| |
2015 | | |
2014 | | |
2013 | |
Office
furniture and equipment | |
$ | 10,185 | | |
$ | 10,185 | | |
$ | 10,185 | |
Vehicles | |
| 802,556 | | |
| 802,556 | | |
| 802,556 | |
Rolloff
containers | |
| 1,007,762 | | |
| 1,007,762 | | |
| 1,007,762 | |
Total Property, plant
and equipment | |
| 1,820,503 | | |
| 1,820,503 | | |
| 1,820,503 | |
Less:
accumulated depreciation | |
| (1,820,503 | ) | |
| (1,820,503 | ) | |
| (1,820,280 | ) |
Property,
plant and equipment, net | |
$ | - | | |
$ | - | | |
$ | 223 | |
Depreciation
expense for the nine months ended September 30, 2015 and the twelve months ended December 31, 2014 and 2013 was $0, $223 and $89,
respectively.
Note
4 – Related Party Transactions
One
of the Company’s partners owns a transfer station. The Company uses this transfer station for disposal of a large portion
of the waste accumulated during trash collection and the rented rolloff containers. This cost is included in cost of sales. For
the nine months ended September 30, 2015 and for the years ended December 31, 2014 and 2013, total related party disposal costs
incurred were $124,230, $322,350 and $228,810, respectively. The Company had an outstanding accounts payable balance due this
related party at September 30, 2015 and December 31, 2014 and 2013 of $19,164, $48,794 and $48,694, respectively.
One
of the Company’s partners also consults for the Company, which is additional compensation above the Partners compensation
package. The Partner is 1099’d by the Company at year end for the total of consulting charges incurred. Total consulting
expenses incurred and paid to this related party by the Company for the nine months ended September 30, 2015 and the years ended
December 31, 2014 and 2013 was $338,350, $192,297 and $247,956, respectively. The Company had an outstanding accounts payable
balance due this related party at September 30, 2015 and December 31, 2014 and 2013 of $115,000, $0 and $0, respectively.
One
of the Company’s partner’s wives is the Company’s office Manager. Her salary is approximately $35,000 per year.
For the nine months ended September 30, 2015 and the years ended December 31, 2014 and 2013, her salary expense was approximately
$35,000 per year.
The
Company’s second partner received a consulting payout, similar to the above note. Total consulting expenses incurred and
paid to this related party by the Company during the nine months ended September 30, 2015 and the years ended December 31, 2014
and 2013 was $20,000, $13,000 and $20,000, respectively. There was no outstanding payable due this related party as of September
30, 2015, December 31, 2014 or 2013.
GATEWAY
ROLLOFF SERVICES, LP
NOTES
TO FINANCIAL STATEMENTS
Note
4 – Related Party Transactions (Continued)
The
Company had a note receivable due from a partner of the Company; the note was paid by the Partner during the nine months ended
September 30, 2015 with the proceeds of a consulting fee paid to this partner. The note carried a zero interest rate and was due
on demand. The balance of the Note as of September 30, 2015, December 31, 2014 and 2013 was $0, $244,500 and $244,500, respectively.
There was no activity in the Note during the years ended December 31, 2014 and 2013.
The
Company has a note payable due a Partner of the Company. The original purpose of the loan was for working capital. The balance
of this related party note payable as of September 30, 2015, December 31, 2014 and 2013 was $26,000. There was no activity in
this related party note payable during the period from December 1, 2013 through September 30, 2015, the period covered by the
financial statements.
On
November 23, 2015, the Company was acquired by National Waste Management Holdings, Inc., a related party of the Company. The purchase
price included a cash payment of $450,000 and a total of 2,400,000 shares of National Waste Management Holdings, Inc.
Note
5 – Subsequent Events
Management
has evaluated subsequent events through November 30, 2015, the date on which the financial statements were available to be issued.
On
November 23, 2015, the Company was acquired by National Waste Management Holdings, Inc. The purchase price was $450,000 in cash
and a total of 2,400,000 restricted shares of National Waste Management Holdings, Inc.
11
Exhibit 99.2
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
PRO
FORMA CONSOLIDATED BALANCE SHEET
AS
OF SEPTEMBER 30, 2015
(UNAUDITED)
| |
National
Waste Management Holdings, Inc. | | |
Waste
Recovery Enterprises, LLC | | |
Gateway
Rolloff Services, LP | | |
Pro-forma
Adjustments | | |
Pro
Forma Consolidated | |
| |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| |
| | |
| | |
| | |
| | |
| |
Assets | |
| | |
| | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| | |
| |
Current
assets: | |
| | |
| | |
| | |
| | |
| |
Cash
and cash equivalents | |
$ | 471,514 | | |
$ | 30,320 | | |
$ | 132,108 | | |
| (100,000 | ) (a) | |
$ | 533,942 | |
Accounts
receivable, net | |
| 217,172 | | |
| 115,618 | | |
| 203,727 | | |
| | | |
| 536,517 | |
Other
current assets | |
| 10,010 | | |
| 45,276 | | |
| - | | |
| | | |
| 55,286 | |
Due
from related party | |
| 8,400 | | |
| 46,018 | | |
| - | | |
| | | |
| 54,418 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total
current assets | |
| 707,096 | | |
| 237,232 | | |
| 335,835 | | |
| (100,000 | ) | |
| 1,180,163 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Property
and equipment, net | |
| 672,627 | | |
| 688,997 | | |
| - | | |
| | | |
| 1,361,624 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Other
assets: | |
| | | |
| | | |
| | | |
| | | |
| | |
Intangible
assets, net | |
| 45,905 | | |
| - | | |
| - | | |
| | | |
| 45,905 | |
Secured
letter of credit | |
| 324,950 | | |
| - | | |
| - | | |
| | | |
| 324,950 | |
Deposits
on landfill acquisition | |
| 225,000 | | |
| - | | |
| - | | |
| | | |
| 225,000 | |
Other
deposits | |
| 8,750 | | |
| - | | |
| - | | |
| | | |
| 8,750 | |
Other
assets | |
| - | | |
| - | | |
| - | | |
| | | |
| - | |
Note
receivable due from related party | |
| - | | |
| - | | |
| - | | |
| | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total
other assets | |
| 604,605 | | |
| - | | |
| - | | |
| | | |
| 604,605 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total
assets | |
$ | 1,984,328 | | |
$ | 926,229 | | |
$ | 335,835 | | |
| (100,000 | ) | |
$ | 3,146,392 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Liabilities
and Stockholder's Equity (Deficit) | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Current
liabilities: | |
| | | |
| | | |
| | | |
| | | |
| | |
Accounts
payable and accrued expenses | |
| 65,461 | | |
| 67,314 | | |
| 231,147 | | |
| | | |
| 363,922 | |
Current
portion of long term debt | |
| - | | |
| 127,713 | | |
| | | |
| | | |
| 127,713 | |
Current
portion of capital lease obligations | |
| 24,093 | | |
| - | | |
| | | |
| | | |
| 24,093 | |
Due
to related party - accrued interest | |
| 27,841 | | |
| 606,312 | | |
| | | |
| (606,312 | ) (b) | |
| 27,841 | |
Due
to related party | |
| - | | |
| 30,000 | | |
| 26,000 | | |
| | | |
| 56,000 | |
Income
taxes payable | |
| 126,287 | | |
| - | | |
| - | | |
| | | |
| 126,287 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total
current liabilities | |
| 243,682 | | |
| 831,339 | | |
| 257,147 | | |
| | | |
| 725,856 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Long-term
liabilities: | |
| | | |
| | | |
| | | |
| | | |
| | |
Long
term debt, net of current portion | |
| - | | |
| 127,173 | | |
| - | | |
| | | |
| 127,173 | |
Capital
lease obligations, net of current portion | |
| 109,614 | | |
| - | | |
| - | | |
| | | |
| 109,614 | |
Environmental
remediation obligation | |
| 424,596 | | |
| - | | |
| - | | |
| | | |
| 424,596 | |
Loan
due shareholder or member | |
| 704,547 | | |
| 906,442 | | |
| - | | |
| 606,312 | (b) | |
| 2,467,301 | |
| |
| | | |
| | | |
| | | |
| 250,000 | (c) | |
| | |
Long
term deferred tax liability | |
| 48,709 | | |
| | | |
| - | | |
| | | |
| 48,709 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total
liabilities | |
$ | 1,531,148 | | |
$ | 1,864,954 | | |
$ | 257,147 | | |
| 250,000 | | |
$ | 3,903,249 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Commitments
and Contingencies | |
| | | |
| | | |
| | | |
| | | |
| | |
Stockholders'
equity (deficit): | |
| | | |
| | | |
| | | |
| | | |
| | |
Common
stock, no par value; 250,000,000 shares authorized, 60,451,842 shares issued and outstanding at September 30, 2015 | |
$ | - | | |
$ | - | | |
$ | - | | |
| | | |
$ | - | |
Preferred
stock, no par value, 10,000,000 shares authorized, 1 share and 0 shares issued and outstanding as of June 30, 2015 | |
| - | | |
| - | | |
| - | | |
| | | |
| - | |
Additional
paid-in capital | |
| 267,496 | | |
| - | | |
| - | | |
| (250,000 | ) (c) | |
| 367,496 | |
| |
| | | |
| | | |
| | | |
| 450,000 | (d) | |
| | |
| |
| | | |
| | | |
| | | |
| (100,000 | ) (a) | |
| | |
Common
stock subscribed | |
| 113,640 | | |
| - | | |
| | | |
| (450,000 | ) (d) | |
| (336,360 | ) |
Members'
deficit | |
| - | | |
| (938,725 | ) | |
| - | | |
| 937,729 | (e) | |
| (996 | ) |
Partners'
capital | |
| - | | |
| | | |
| 78,688 | | |
| 78,688 | (e) | |
| 157,376 | |
Retained
earnings (deficit) | |
| 72,044 | | |
| | | |
| | | |
| (1,016,417 | ) (f) | |
| (944,373 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total
stockholders' equity (deficit) | |
| 453,180 | | |
| (938,725 | ) | |
| 78,688 | | |
| (350,000 | ) | |
| (756,857 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total
liabilities and stockholders' equity | |
$ | 1,984,328 | | |
$ | 926,229 | | |
$ | 335,835 | | |
| (100,000 | ) | |
$ | 3,146,392 | |
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
PRO
FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2015
(UNAUDITED)
| |
National Waste Management Holdings, Inc. | | |
Waste Recovery Enterprises, LLC | | |
Gateway Rolloff Services, LP | | |
Pro-forma Adjustments | | |
Pro Forma Consolidated | |
| |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| |
| | |
| | |
| | |
| | |
| |
Revenues | |
$ | 1,349,824 | | |
$ | 1,033,296 | | |
$ | 1,741,513 | | |
$ | - | | |
$ | 4,124,633 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Cost of revenues | |
| 661,622 | | |
| 608,299 | | |
| 1,121,188 | | |
| - | | |
| 2,391,109 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Gross profit | |
| 688,202 | | |
| 424,997 | | |
| 620,325 | | |
| - | | |
| 1,733,524 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Selling, general and administrative expenses | |
| 380,775 | | |
| 399,159 | | |
| 728,195 | | |
| - | | |
| 1,508,129 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Income from operations | |
| 307,427 | | |
| 25,838 | | |
| (107,870 | ) | |
| - | | |
| 225,395 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Other income (expenses): | |
| | | |
| | | |
| | | |
| | | |
| | |
Gain on sale of assets | |
| - | | |
| 28,040 | | |
| - | | |
| - | | |
| 28,040 | |
Extinguishment of related party debt | |
| - | | |
| (236,100 | ) | |
| - | | |
| - | | |
| (236,100 | ) |
Interest expense | |
| (23,705 | ) | |
| (39,311 | ) | |
| - | | |
| - | | |
| (63,016 | ) |
Other Income (expenses) | |
| (4,807 | ) | |
| 2,504 | | |
| 611 | | |
| - | | |
| (1,692 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total other income (expenses) | |
| (28,512 | ) | |
| (244,867 | ) | |
| 611 | | |
| - | | |
| (272,768 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Income before income taxes | |
| 278,915 | | |
| (219,029 | ) | |
| (107,259 | ) | |
| - | | |
| (47,373 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Income tax expense | |
| 94,045 | | |
| - | | |
| - | | |
| - | | |
| 94,045 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net income | |
$ | 184,870 | | |
$ | (219,029 | ) | |
$ | (107,259 | ) | |
$ | - | | |
$ | (141,418 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net income per common share: | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | 0.003 | | |
| | | |
| | | |
$ | - | | |
$ | (0.002 | ) |
Diluted | |
$ | 0.003 | | |
| | | |
| | | |
$ | - | | |
$ | (0.002 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Weighted average number of shares outstanding | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic | |
| 60,451,842 | | |
| | | |
| | | |
| 5,150,000 | (g) | |
| 65,601,842 | |
Diluted | |
| 60,451,842 | | |
| | | |
| | | |
| 5,150,000 | (g) | |
| 65,601,842 | |
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
PRO
FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR
THE YEAR ENDED DECEMBER 31, 2014
(UNAUDITED)
| |
National Waste Management Holdings, Inc. | | |
Waste Recovery Enterprises, LLC | | |
Gateway Rolloff Services, LP | | |
Pro-forma Adjustments | | |
Pro Forma Consolidated | |
| |
| | |
| | |
| | |
| | |
| |
Revenues | |
$ | 1,668,354 | | |
$ | 1,502,290 | | |
$ | 2,300,303 | | |
$ | - | | |
$ | 5,470,947 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Cost of revenues | |
| 934,251 | | |
| 926,588 | | |
| 1,532,492 | | |
| - | | |
| 3,393,331 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Gross profit | |
| 734,103 | | |
| 575,702 | | |
| 767,811 | | |
| - | | |
| 2,077,616 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Selling, general and administrative expenses | |
| 485,403 | | |
| 538,393 | | |
| 652,918 | | |
| - | | |
| 1,676,714 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Income from operations | |
| 248,700 | | |
| 37,309 | | |
| 114,893 | | |
| - | | |
| 400,902 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Other income (expenses): | |
| | | |
| | | |
| | | |
| | | |
| | |
Gain on sale of assets | |
| - | | |
| 80,000 | | |
| - | | |
| - | | |
| 80,000 | |
Interest expense | |
| (10,610 | ) | |
| (55,697 | ) | |
| - | | |
| - | | |
| (66,307 | ) |
Other income | |
| - | | |
| - | | |
| 16 | | |
| - | | |
| 16 | |
Other expenses | |
| - | | |
| 1,880 | | |
| (87 | ) | |
| - | | |
| 1,793 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total other income (expenses) | |
| (10,610 | ) | |
| 26,183 | | |
| (71 | ) | |
| - | | |
| 15,502 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Income before income taxes | |
| 238,090 | | |
| 63,492 | | |
| 114,822 | | |
| - | | |
| 416,404 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Income tax expense | |
| 80,951 | | |
| - | | |
| - | | |
| 67,759 | (g) | |
| 148,710 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net income | |
$ | 157,139 | | |
$ | 63,492 | | |
$ | 114,822 | | |
$ | (67,759 | ) | |
$ | 267,694 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net income per common share: | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | 0.003 | | |
$ | | | |
| | | |
| | | |
$ | 0.004 | |
Diluted | |
$ | 0.003 | | |
$ | | | |
| | | |
| | | |
$ | 0.004 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Weighted average number of shares outstanding | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic | |
| 60,054,444 | | |
| | | |
| | | |
| 5,150,000 | (h) | |
| 65,204,444 | |
Diluted | |
| 60,054,444 | | |
| | | |
| | | |
| 5,150,000 | (h) | |
| 65,204,444 | |
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
PRO
FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR
THE YEAR ENDED DECEMBER 31, 2013
(UNAUDITED)
| |
National Waste Management Holdings, Inc. | | |
Waste Recovery Enterprises, LLC | | |
Gateway Rolloff Services, LP | | |
Pro-forma Adjustments | | |
Pro Forma Consolidated | |
| |
| | |
| | |
| | |
| | |
| |
Revenues | |
$ | 1,262,506 | | |
$ | 1,392,323 | | |
$ | 1,863,387 | | |
$ | | | |
$ | 4,518,216 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Cost of revenues | |
| 576,764 | | |
| 868,771 | | |
| 1,359,595 | | |
| | | |
| 2,805,130 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Gross profit | |
| 685,742 | | |
| 523,552 | | |
| 503,792 | | |
| - | | |
| 1,713,086 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Selling, general and administrative expenses | |
| 515,987 | | |
| 503,377 | | |
| 786,179 | | |
| | | |
| 1,805,543 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Income from operations | |
| 169,755 | | |
| 20,175 | | |
| (282,387 | ) | |
| - | | |
| (92,457 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Other income (expenses): | |
| | | |
| | | |
| | | |
| | | |
| | |
Other income | |
| - | | |
| 3,327 | | |
| 310,922 | | |
| | | |
| 314,249 | |
Other expenses | |
| (9,519 | ) | |
| - | | |
| - | | |
| | | |
| (9,519 | ) |
Gain on sale of assets | |
| 10,800 | | |
| 12,444 | | |
| - | | |
| | | |
| 23,244 | |
Interest expense | |
| - | | |
| (63,095 | ) | |
| - | | |
| | | |
| (63,095 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total other income (expenses) | |
| 1,281 | | |
| (47,324 | ) | |
| 310,922 | | |
| - | | |
| 264,879 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Income before income taxes | |
| 171,036 | | |
| (27,149 | ) | |
| 28,535 | | |
| | | |
| 172,422 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Income tax expense | |
| - | | |
| - | | |
| - | | |
| | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net income | |
$ | 171,036 | | |
$ | (27,149 | ) | |
$ | 28,535 | | |
$ | - | | |
$ | 172,422 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net income per common share: | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | 0.004 | | |
| | | |
| | | |
| | | |
$ | 0.003 | |
Diluted | |
$ | 0.004 | | |
| | | |
| | | |
| | | |
$ | 0.003 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Weighted average number of shares outstanding | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic | |
| 47,450,000 | | |
| | | |
| | | |
| 5,150,000 | | |
| 52,600,000 | |
Diluted | |
| 47,450,000 | | |
| | | |
| | | |
| 5,150,000 | | |
| 52,600,000 | |
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
NOTES
TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On
October 27, 2015 and December 1, 2015, National Waste Management Holdings, Inc. (the “Company”, “NWMH, Inc.”)
acquired Waste Recovery Enterprises, LLC and Gateway Rolloff Services, LLC, respectively. The Chairman of the Company, who is
also the largest individual shareholder of the Company, owned 50% of each of these entities prior to closing on the acquisitions;
these entities had a high degree of common ownership but were not considered to be under common control, as the ownership percentages
and interests are not the same before and after the transaction, and thus a substantive transaction has occurred with economic
substance and should be accounted for using the acquisition method of accounting in accordance with the guidance included in the
Accounting Standards Codification (“ASC”) 805, Business Combinations. The acquisition method of accounting requires
assets and liabilities to be recorded at fair value, including intangible assets, with goodwill as the residual. As of the date
of the filing, the purchase price allocation was not complete or available as related to these acquisitions. The pro-forma financial
statements are based on the unaudited historical performance of the Companies as of and for the nine months ended September 30,
2015, as well as the financial statements as of and the for the years ended December 31, 2014 and 2013 subject to pro-forma adjustments
discussed in Note 2. Assets and liabilities of the acquired entities have been recorded at cost for pro-forma purposes and will
be adjusted to fair value once the purchase price allocation is complete.
These
unaudited pro forma financial statements have been prepared in accordance with accounting principles generally accepted in the
United States and are expressed in U.S. dollars. These pro forma financial statements do not contain all of the information required
for annual financial statements. Accordingly, they should be read in conjunction with the most recent annual and interim financial
statements of the Company and Sandland.
These
unaudited pro forma financial statements have been compiled from and include:
| (a) | an
unaudited pro forma balance sheet combining the unaudited interim consolidated balance
sheet of the Company, Waste Recovery Enterprises, LLC and Gateway Rolloff Services, LP
as of September 30, 2015, giving effect to the transaction as if it occurred on the respective
balance sheet date. |
| (b) | an
unaudited interim pro forma consolidated statement of operations combining the unaudited
statements of operations of the Company, Waste Recovery Enterprises, LLC and Gateway
Rolloff Services, LP for the nine months ended September 30, 2015, and the audited annual
statements of operations of the Company and Waste Recovery Enterprises, LLC and Gateway
Rolloff Services, LP for the years ended December 31, 2014 and 2013. |
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
NOTES
TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The
unaudited pro forma financial statements have been compiled using the significant accounting policies as set out in the unaudited
financial statements of the Company, Waste Recovery Enterprises, LLC and Gateway Rolloff Services, LP for the nine months ended
September 30, 2015. It is management’s opinion that these pro forma financial statements include all adjustments necessary
for the fair presentation, in all material respects, of the proposed transaction described above in accordance with United States
generally accepted accounting principles applied on a basis consistent with the Company, Waste Recovery Enterprises, LLC and Gateway
Rolloff Services, LP’s accounting policies. No adjustments have been made to reflect the fair value of assets and liabilities
of the acquired subsidiaries, the fair value of the restricted stock issued as part of the purchase price of the acquisitions
or the potential cost savings that may occur subsequent to completion of the transaction. The pro forma statement of operations
does not reflect non-recurring charges or credits directly attributable to the transaction, of which none are currently anticipated.
The
unaudited pro forma financial statements are not intended to reflect the financial position of the Company which would have actually
resulted had the proposed transaction been effected on the date indicated.
The
unaudited pro forma consolidated financial statements do not incorporate the following pro forma assumptions and adjustments:
| (a) | Elimination
of certain of the Company’s assets and liabilities upon closing the agreement as
follows: |
| a. | Cash
- $100,000 – due to a working capital adjustment clause requiring the Company to
reimburse one of the previous owners for current assets in excess of liabilities to be
calculated 30 days after the closing. The expected adjustment is expected to be equal
to the maximum threshold of $100,000 |
| (b) | This
accrued interest will be converted to long term debt |
| (c) | The
Company financed $250,000 of the cash portion of these acquisitions with an owner financed
note due January 4, 2016 |
| (d) | $450,000
of the purchase price of one of the acquisitions was financed by a third party who has
been promised stock at $1 per share, totaling 450,000 shares of common stock subscribed |
| (e) | Elimination
of partners equity and members in acquired subsidiaries |
| (f) | Tax
affects the previously pass through entities at the estimated statutory tax rate of 38% |
| (g) | The
Company issued restricted common stock of the Company as a portion of the consideration
for the acquisitions. 2,750,000 shares were issued as part of the purchase price of Waste
Recovery Services, LLC and 2,400,000 shares were issued as part of the purchase price
of Gateway Rolloff Services, LP, for a total of 5,150,000 shares of restricted common
stock. |
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
NOTES
TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
|
Note 3 - Pro Forma Equity | |
| | |
| | |
| |
|
| |
Number of | | |
| | |
Additional Paid | |
|
| |
Common Shares | | |
Par Value | | |
in Capital | |
|
Issued and outstanding common shares of the Company | |
| 60,451,842 | | |
$ | - | | |
$ | 267,496 | |
|
Restricted shares issued and note payable to acquire Waste Recovery Services, LLC | |
| 2,750,000 | | |
| - | | |
| (250,000 | ) |
|
Restricted shares issued, cash paid to acquire Gateway Rolloff Services, LP (net of working capital adjustment of $100,000) | |
| 2,400,000 | | |
| - | | |
| 350,000 | |
|
Pro Forma Balance, September 30, 2015 | |
| 65,601,842 | | |
$ | - | | |
$ | 367,496 | |
7
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