UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2015

 

or

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____to_____.

 

Commission File Number 000-54307

 

National Waste Management Holdings, Inc.

(Exact name of small business issuer as specified in its charter)

 

FLORIDA		27-2037711
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

5920 N. Florida Avenue

Hernando, FL 34442

(Address of principal executive offices)

 

(352) 489-6912

(Company’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☒  No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

	Large accelerated filer	☐	Accelerated filer	☐
	Non-accelerated filer	☐	Smaller reporting company	☒

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

 

The Company has 60,351,842shares issued and outstanding as of August 14, 2015.

 

 

 

TABLE OF CONTENTS

 

		Page
	PART I — Financial Information
Item 1.	Consolidated Financial Statements (unaudited)	1-14
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15-18
Item 3.	Quantitative  and Qualitative Disclosures about Market Risk	19
Item 4.	Controls and Procedures	19
	PART II — Other Information
Item 1.	Legal Proceedings	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	20
Item 4.	Mine Safety Disclosures	20
Item 5.	Other Information	20
Item 6.	Exhibits	20
	Signatures	21

 

 

PART I – FINANCIAL INFORMATION

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.
(PREVIOUSLY KOPJAGGERS, INC.)

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE QUARTER ENDED JUNE 30, 2015

 

Index to Consolidated Financial Statements

 

	PAGE
Unaudited Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014	2
Unaudited Consolidated Statements of Operations for the Six and Three Months Ended June 30, 2015 and 2014	3
Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014	4
Unaudited Consolidated Notes to the Financial Statements	5-14

 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2015 AND DECEMBER 31, 2014

 

		2015				2014
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	340,052			$	108,642
Accounts receivable, net			189,633				105,625
Other current assets			2,660				3,685
Due from related party			8,400				8,400
Total current assets			540,745				226,352
Property and equipment, net			692,302				744,405
Other assets:
Intangible assets, net			51,516				36,325
Secured letter of credit			324,950				324,950
Deposits on landfill acquisition			150,000				-
Other deposits			8,750				17,412
Total other assets			535,216				378,687
Total assets		$	1,768,263			$	1,349,444
Liabilities and Stockholder's Equity (Deficit)
Current liabilities:
Accounts payable and accrued expenses		$	71,437			$	19,336
Current portion of capital lease obligations			23,098				21,228
Due to related party - accrued interest			26,080				22,308
Income taxes payable			95,986				32,242
Total current liabilities			216,601				95,114
Long-term liabilities:
Capital lease obligations, net of current portion			116,024				128,060
Environmental remediation obligation			424,596				424,596
Loan from shareholder			704,547				756,337
Long term deferred tax liability			48,709				48,709
Total liabilities		$	1,510,477			$	1,452,816
Commitments and Contingencies (see note 5)
Stockholders' equity (deficit):
Common stock, no pair value; 250,000,000 shares authorized, 61,000,000 and 47,500,000 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively		$	-			$	-
Preferred stock, no par value; 10,000,000 shares authorized, 1 share and 0 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively			-				-
Additional paid-in capital			12,054				9,454
Common stock subscribed			255,442				-
Accumulated deficit			(9,710	)			(112,826	)
Total stockholders' equity (deficit)			257,786				(103,372	)
Total liabilities and stockholders' equiy (deficit)		$	1,768,263			$	1,349,444

 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2015 AND 2014

 

		Six Months				Six Months				Three Months				Three Months
		Ended				Ended				Ended				Ended
		June 30, 2015				June 30, 2014				June 30, 2015				June 30, 2014
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Revenues		$	870,126			$	818,936			$	479,534			$	424,600
Cost of revenues			445,539				474,105				247,632				233,385
Gross profit			424,587				344,831				231,902				191,215
Selling, general and  administrative expenses			233,300				196,058				112,545				90,872
Income from operations			191,287				148,773				119,357				100,343
Other income (expenses):
Interest expense			(19,620	)			(4,528	)			(11,454	)			(2,191	)
Other expenses			(4,807	)			-				-				-
Total other income (expenses)			(24,427	)			(4,528	)			(11,454	)			(2,191	)
Income before income taxes			166,860				144,245				107,903				98,152
														$	-
Income tax expense			63,744				-				43,161				-
Net income		$	103,116			$	144,245			$	64,742			$	98,152
Net income per common share:
Basic		$	0.002			$	0.003			$	0.001			$	0.002
Diluted		$	0.002			$	0.003			$	0.001			$	0.002
Weighted average number of shares outstanding:
Basic			60,054,444				51,537,222				60,100,000				54,831,111
Diluted			60,054,444				51,537,222				60,100,000				54,831,111

 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

 

		2015				2014
		(unaudited)				(unaudited)
Cash flow from operating activities:
Net income		$	103,116			$	144,245
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expenses			80,279				59,907
Non-cash professional expenses			108,042				-
Bad debt expense			(81,761	)			762
(Increase) decrease in assets:
Accounts receivable, net			(2,247	)			(20,540	)
Other current assets			1,025				-
Deposits			8,662				-
(Decrease) increase in liabilities:
Accounts payable and accrued expenses			52,101				7,331
Related party accrued interest			3,772				4,528
Income taxes payable			63,744				-
Net cash provided by operating activities		$	336,733			$	196,233
Cash flows from investing activities:
Purchases of property and equipment			(19,095	)			(30,131	)
Purchase of intangible assets			(24,272	)			-
Net cash used in investing activities		$	(43,367	)		$	(30,131	)
Cash flows from financing activities:
Payments on capital lease obligation			(10,166	)			-
Advances from shareholder			-				8,100
Payments on loan from shareholder			(51,790	)			(134,719	)
Net cash provided by financing activities		$	(61,956	)		$	(126,619	)
Net increase (decrease) in cash		$	231,410			$	39,483
Cash, beginning of year			108,642				57,447
Cash, end of year		$	340,052			$	96,930
Supplemental disclosure of cash flow information:
Cash paid during the year for interest		$	15,903			$	-
Cash paid during the year for income taxes		$	-			$	-
Supplemental schedule of non-cash activities:
Issuances of shares for professional services		$	2,600			$	-
Issuances of shares subscribed for deposit on landfill		$	150,000			$	-
Issuances of shares subscribed for professional services		$	111,642			$	-

 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDTED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

 

Note 1 – Business Organization

 

These financial statements represent the financial statements of National Waste Management Holdings, Inc. (“NWMH”) (previously known as Kopjaggers, Inc.) and its wholly owned operating subsidiary, Sand/Land of Florida Enterprises, Inc. (“Sand/Land”). NWMH and Sand/Land are collectively referred to herein as the “Company”. The Company changed its name from Kopjaggers, Inc. to National Waste Management Holdings, Inc. effective October 31, 2014.

 

On June 16, 2014, pursuant to a share exchange agreement, NWMH merged with Sand/Land of Florida Enterprises, Inc. (“Sand/Land”), a Florida corporation formed as a S-Corporation under the laws of the State of Florida on August 15, 1986, in which the existing stockholders of Sand/Land exchanged all of their issued and outstanding shares of common stock for 9,490,000 shares of common stock of NWMH (the “Reverse Merger”). After the consummation of the Reverse Merger, stockholders of Sand/Land owned 47.45% of NWMH outstanding common stock.

 

As a result of the Reverse Merger, Sand/Land became a wholly owned subsidiary of NWMH. For accounting purposes, the Reverse Merger was treated as a reverse acquisition with Sand/Land as the acquirer and NWMH as the acquired party. As a result, the business and financial information included in this Annual Report on Form 10-K is the business and financial information of Sand/Land. The accumulated deficit of NWMH has been included in additional paid-in-capital. Pro-forma information has not been presented as the financial information of NWMH was insignificant.

 

The Company operates as a licensed Construction & Demolition landfill. The Company’s primary operations are based near Tampa, Florida.

 

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.

 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDTED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

 

Note 2 – Significant Accounting Policies (Continued)

 

Fair Value of Financial Instruments (Continued)

 

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 consolidated 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.

 

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.

 

The carrying amounts of cash and current liabilities approximate fair value due to the short maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The Company does not hold or issue financial instruments for trading purposes, nor does it utilize derivative instruments in the management of foreign exchange, commodity price, or interest rate market risks.

 

Revenue and Cost Recognition

 

The Company applies paragraph 605-10-99-1 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.

 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDTED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

 

Note 2 – Significant Accounting Policies (Continued)

 

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.

 

Accounts Receivable, Bad Debts and Allowance for Doubtful Accounts

 

An allowance for doubtful accounts is provided for as a percentage of trade accounts receivable based on historical loss experience. At June 30, 2015 and December 31, 2014, the allowance for doubtful accounts was approximately $70,000 and $112,000. Bad debt expense recognized for the six and three months ended June 30, 2015 and 2014 was $(81,761), $0, $762 and $420, respectively. The reason for the negative bad debt expense balance at June 30, 2015 is due to the allowance being overstated at June 30, 2015 and requiring adjustment.

 

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 years
Roll off containers	5-7 years
Airspace	39.5 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.

 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDTED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

 

Note 2 – Significant Accounting Policies (Continued)

 

Impairment of Long-Lived Assets and Amortizable Intangible Assets

 

The Company follows ASC 360-10, “Property, Plant, and Equipment,” which established a “primary asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. Through June 30, 2015, the Company has not experienced impairment losses on its long-lived assets.

 

Intangible Assets – Customer List

 

A Customer list was bought from a related party in 2011. It is being amortized over five years.

 

The Company incurred website development costs in 2015. Once completed, It will be amortized over three years.

 

The Company incurred engineering costs as part of a 10 year permit renewal with the Department of Environmental Protection. These costs were capitalized and will begin being amortized over 10 years when the Permit is finalized.

 

Advertising Costs

 

The Company expenses all advertising costs as incurred. Advertising expenses for the six and three months ended June 30, 2015 and 2014 were $2,674, $1,206, $2,302 and $1,153, respectively.

 

Income Taxes

 

The Company files income tax returns in the United States and Florida, which are subject to examination by the tax authorities in these jurisdictions, generally for three years after the filing date.

 

Management has evaluated tax positions in accordance with FASB ASC 740, Income Taxes, and has not identified any tax positions that require disclosure.

 

Environmental Remediation Liability

 

The Company accrues for losses associated with environmental remediation obligations when such losses are probable and reasonably estimable. Accruals for estimated losses from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study. Such accruals are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value. Recoveries of environmental remediation costs from other parties are recorded as assets when their receipt is deemed probable.

 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDTED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

 

Note 2 – Significant Accounting Policies (Continued)

 

Stock Issued to Non-Employees for Services Rendered

 

The Company accounts for stock issued to non-employees in accordance with the provisions of FASB ASC 505-50 “Equity Based Payments to Non-Employees.” FASB ASC 505-50 states that equity instruments that are issued in exchange for the receipt of goods or services should be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date occurs as of the earlier of (a) the date at which a performance commitment is reached or (b) absent a performance commitment, the date at which the performance necessary to earn the equity instruments is complete (that is, the vesting date).

 

Reclassifications

 

Certain reclassifications have been made in prior year balances to conform to the current year presentation. Such reclassifications had no effect on net income as previously reported.

 

Note 3 – Property, Plant and Equipment

 

Property, plant and equipment and related accumulated depreciation consist of the following at June 30, 2015 and December 31, 2014:

 

		2015				2014
Machinery and equipment			2,098,138			$	2,094,316
Airspace			865,076				865,076
Transportation  equipment			561,240				561,240
Improvements			321,645				306,372
Office furniture and equipment			2,117				2,117
Land Fill Area			72,098				72,098
Total Property, plant and equipment			3,920,314				3,901,219
Less: accumulated depreciation			(3,228,012	)			(3,156,814	)
Property, plant and equipment, net		$	692,302			$	744,405

 

Depreciation expense for the six and three months ended June 30, 2015 and 2014 was $71,198, $35,720, $39,736 and $20,100, respectively.

 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDTED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

 

Note 4 – Amortizable Intangible Assets

 

Intangible assets consist of the following as of June 30, 2015 and December 31, 2014:

 

										Amortization
		2015				2014				Period
Customer list		$	90,813			$	90,813				5 years
Website costs			7,954				-				3 years
Licenses and permits			16,318								10 Years
Less accumulated amortization			(63,569	)			(54,488	)
Intangible assets, net		$	51,516			$	36,325

 

The estimated aggregate amortization expense for each of the next five years is as follows:

 

Year Ending
2015		$	10,560
2016			22,446
2017			4,283
2018			3,620
2019			1,632
Thereafter			8,975
		$	51,516

 

Amortization expense for the six and three months ended June 30, 2015 and 2014 was $9,081, $3,536, $9,081 and $4,540, respectively.

 

Note 5 – Commitments and Contingencies

 

During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with FASB ASC 450, Contingencies. The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines than an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. Certain insurance policies held by the Company may reduce the cash outflows with respect to an adverse outcome of certain of these litigation matters.

 

The Company currently operates a fully licensed landfill under approval by the Florida Department of Environmental Protection. As such the company has set up a reserve allowance of $424,596 against estimated future closing cost. As of December 31, 2013 the Florida Department of Environmental Protection has approved the secured letter of credit cash reserve of $324,950 set aside by the Company at June 30, 2015 and December 31, 2014, respectively, in order to be in compliance with the financial assurance requirements for long term care cost of the facility. It is reasonably possible that the recorded estimate of the obligation may change in the near term.

 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDTED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

 

Note 5 – Commitments and Contingencies (continued)

 

As discussed in note 7 to the financial statements, during the six months ended June 30, 2015 and 2014, approximately 26% and 38% of the Company’s revenues were generated from a related party, respectively and approximately 51% and 56% of net accounts receivable were due from related parties as of June 30, 2015 and December 31, 2014, respectively.

 

Note 6 – Capital Leases

 

During 2014, the Company purchased equipment under a capital lease obligation. The lease is payable in 60 monthly payments of $3,750, beginning December 20, 2014, maturing December 20, 2019. The capital lease is collateralized by the equipment purchased. The capital lease is personally guaranteed by the Chairman and CEO of the Company.

 

Future minimum lease payments under the lease for the three months ended June 30, 2015 are as follows:

 

2015			23,098
2016			27,345
2017			32,373
2018			38,326
2019			17,980
Total capital lease obligation		$	139,122

 

The following is a summary of leased assets included in machinery and equipment as of June 30,:

 

		2015				2014
Leased Equipment		$	179,620			$	179,620
Less accumulated depreciation			(17,962	)			-
Net leased assets		$	161,658			$	179,620

 

Note 7 – Related Party Transactions

 

Related Party Sales and Accounts Receivable

 

The Company generates a significant portion of their revenue from related parties, companies owned by the majority shareholder of the Company. Total revenue generated from the related parties during the six months ended June 30, 2015 and 2014 was $224,485 and $312,224 or 26% and 38% of total revenue, respectively. Total revenue generated from the related parties during the three months ended June 30, 2015 and 2014 were $124,135 and $166,250 or 26% and 39% of total revenue, respectively. Total related party accounts receivable as of June 30, 2015 and 2014 related to these sales was approximately $97,465 and $66,585, or 51% and 56% of total net accounts receivable, respectively.

 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDTED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

 

Note 7 – Related Party Transactions (continued)

 

Related Party Shareholder Loan

 

The Company has a note with the sole shareholder of the Company. This note is unsecured, matures on December 31, 2016 and carries a 1% interest rate. Though this note is due during 2016, the Company makes periodic payments on the Note when excess cash is available.

 

The balance of the note at June 30, 2015 and December 31, 2014 was $704,547 and $756,337 respectively. The balance of the related accrued interest at June 30, 2015 and December 31, 2014 was $26,080 and $22,308, respectively. Related party interest expense for the six and three months ended June 30, 2015 and 2014 was $3,772, $1,881, $4,528 and $2,191, respectively.

 

The aggregate annual maturities of the related party long-term debt are as follows:

 

Year Ending
2015		$	-
2016			704,547
		$	704,547

 

Workers’ Compensation

 

The Company pays for workers compensation insurance for a related entity and is then reimbursed by the related party after payment is made. Total costs incurred on behalf of the related party for the six months ended June 30, 2015 were $13,533. The related party owed the Company $7,286 as of June 30, 2015 related to workers compensation insurance paid on the related parties’ behalf.

 

Expenses Paid by Related Party

 

Throughout the period ending June 30, 2015, Strategic Capital Markets (“Strategic”), a related party, paid for expenditures of the Company as well as deposits on a landfill acquisition on behalf of the Company. These expenditures primarily related to professional fees incurred for compliance related to being a public company as well as marketing the Company’s investment strategy. Total expenses incurred for these services were $97,138. Total deposits on the landfill (see note 9) paid by Strategic totaled $150,000 through June 30, 2015. Strategic also incurred costs to build the Company’s investor relations website of $7,594, $4,704 of which was paid and $3,250 which is an outstanding payable to the vendor as of June 30, 2015. Total cash outlays by Strategic were $251,842 through June 30, 2015. During June 2015, the Company and Strategic agreed to settle this amount for 251,842 of the Company’s common shares. The shares were issued subsequent to June 30, 2015 and thus were not accounted for as stock subscribed as of June 30, 2015.

 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDTED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

Note 8 – Stockholders’ Deficit

 

On March 23, 2015 the Company issued 100,000 shares of restricted common stock for services related to Corporate Governance. The common shares were valued based on the fair value of the services provided rather than the common stock issued because it was determined by management that the fair value of the services rendered was more readily available than the fair value of the restricted common stock issued. The total value assigned to these services was $6,100; $3,500 was paid in cash and $2,500 was recognized related to the issuance of the restricted common stock. The Company receiving the shares paid the Company $100 for the shares as part of the consulting agreement.

 

During May 2015, the Company amended the Articles of Incorporation to authorize 10,000,000 shares of the Company’s Series A preferred stock, no par value per share. On June 17, 2015, the Company issued one share of Series A Preferred Stock, no par value, to the Company’s Chairman of the Board (the “Chairman”). As a holder of the outstanding share of Series A Preferred Stock, the Chairman is entitled to voting power equivalent to the number of votes equal to the total number of the Company’ common stock outstanding as of the record date for the determination of stockholders entitled to vote at each meeting of stockholders of the Company and entitled to vote on all matters submitted or required to be submitted to a vote of the stockholders of the Company.

 

The Company promised 100,000 shares of common stock to an attorney who worked with the Company. The shares are being issued as compensation for services provided as part of the original reverse merger filed by the Company. The shares were promised prior to the Company being a public entity and thus had no trading value or history. The shares were valued at $3,600. The common shares were valued based on the fair value of the services provided rather than the common stock issued because it was determined by management that the fair value of the services rendered was more readily available than the fair value of the restricted common stock issued. The shares were issued subsequent to June 30, 2015, and thus have been accounted for as stock subscribed as of June 30, 2015.

 

As discussed in Note 7, a related entity incurred costs and paid deposits on an acquisition on behalf of the Company. Total cash outlays by Strategic were $251,842 through June 30, 2015. During June 2015, the Company and Strategic agreed to settle this amount for 251,842 of the Company’s common shares. The shares were issued subsequent to June 30, 2015 and thus were accounted for as stock subscribed as of June 30, 2015.

 

Note 9 – Landfill Acquisition

 

On January 25, 2015, Sand/Land of Florida Enterprises, Inc., a Florida corporation and a wholly-owned subsidiary of National Waste Management Holdings, Inc. (the “Company”), entered into a commercial property purchase agreement (the “Agreement”) with Nova Resources, LLC (“Nova”), a Florida limited liability company, to acquire a certain commercial and industrial construction and demolition landfill (the “Transaction”) located at 3890 Grover Cleveland, County of Citrus, Homosassa, Florida 34465 (the “Property”) for $2,500,000, on an “as is” basis. The Property services regions in and around Citrus County, Florida. The Property is approximately eighty (80) acres and is permitted by the State of Florida Department of Environmental Protection as a “Construction and Demolition Landfill”.

 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDTED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

 

Note 9 – Landfill Acquisition (continued)

 

Pursuant to the terms of the Agreement, the Company agreed to pay an initial non-refundable down payment of $25,000 on January 25, 2015 (the “Initial Payment Day”) and may pay up to five additional non-refundable monthly payments of $25,000 due on the 15th day of each month (the “Extension Payment”) following the Initial Payment Day to extend the closing date for an additional thirty (30) days. Each Extension Payment shall be credited towards the total amount payable to Nova, with any remaining balance due no later than thirty (30) days after the fifth Extension Payment. The Agreement may be terminated at the election of either party in the event that the Transaction does not close.

 

Nova agreed to a certain non-compete provision for a period of five (5) years from the closing date. Nova also agreed to provide, at the closing date, certain completed permit applications.

 

The Transaction is not subject to any realty commission and has not closed as of June 30, 2015 or the date of this filing. The Company has a third party making the deposit payments and are thus not recorded on the Company’s books. If the deal does not close, the Company will not be required to reimburse the third party for the non-refundable deposit payments if the closing of the deal does not occur. As of June 30, 2015, the third party had made six payments of $25,000, totaling $150,000. This agreement was extended for an additional six months as the deal was not closed as of June 30, 2015 or the date of the filing.

 

Note 10 – Subsequent Events

 

Subsequent to June 30, 2015, the Company issued all of the shares subscribed as discussed in Note 8 to the financial statements. Total shares issued were 351,842.

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

FORWARD-LOOKING STATEMENTS

 

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

 

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.

 

Although we believe that the expectations reflected in any of our forward- looking statements are reasonable, actual results could differ materially from those projected or assumed in any or our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

 

●

Our results are vulnerable to economic conditions;

 

●

Our ability to raise adequate working capital;

 

●

Loss of customers or sales weakness;

 

●

Inability to achieve sales levels or other operating results;

 

●

The unavailability of funds for capital expenditures;

 

●

Operational inefficiencies;

 

●

Increased competitive pressures from existing competitors and new entrants;

 

●

Competition for acquisition candidates, consolidation within the waste industry and economic and market conditions may limit our ability to grow through acquisitions;

 

●

We may incur charges related to capitalized expenditures of landfill development projects, which would decrease our earnings;

 

●

Pending or future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements;

 

 

●

We may be subject in the normal course of business to judicial, administrative or other third-party proceedings that could interrupt or limit our operations, require expensive remediation, result in adverse judgments, settlements or fines and create negative publicity;

 

●

Our accruals for our landfill site closure and post-closure costs may be inadequate;

 

●

Liabilities for environmental damage may adversely affect our financial condition, business and earnings;

 

●

Our financial and operating performance may be affected by the inability to renew landfill operating permits, obtain new landfills and expand existing ones;

 

●

Extensive and evolving environmental, health and safety laws and regulations may restrict our operations and growth and increase our costs;

 

●

Extensive regulations that govern the design, operation and closure of landfills may restrict our landfill operations or increase our costs of operating landfills; and

 

●

Alternatives to landfill disposal may cause our revenues and operating results to decline.

 

These risks and uncertainties, as well as others, are discussed in greater detail in this Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission, or SEC, including our most recent Annual Report on Form 10-K. There may be additional risks of which we are not presently aware or that we currently believe are immaterial which could have an adverse impact on our business. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change.

 

GENERAL

 

Overview

 

We are a landfill service that provides landfill services, roll-off dumpster service, and mulch products. We service the counties of Citrus, Hernando, and Marion in Florida. We average annual disposals of approximately 110,000 cubic yards of construction debris and manage our 54 acre landfill facility. We started operations with one roll-off truck and now operate four trucks and 350 containers. We have maintained a contract with Citrus County Solid Waste Management landfill to back-up their roll-off trucks since 2000.

 

Results of Operations

 

Comparison for the six months ended June 30, 2015 and 2014

 

Sales for the six months ended June 30, 2015 and 2014 were $870,126 and $818,936, respectively, an increase of $51,190 or approximately 6% of consolidated revenue. This is due to execution of our business model, increasing our customer base and expanded sales to current customers.

 

Cost of revenues for the six months ended June 30, 2015 and 2014 were $445,539 and $474,105, respectively, a decrease of $28,566 or approximately 6%. This is primarily attributable to cost cutting efforts and increased overall margins, including reduced fuel costs and adding fuel to our location at wholesale rather than retail prices.

 

 

Selling, general and administrative costs for the six months ended June 30, 2015 and 2014 respectively, were $233,300 and $196,058, respectively, an increase of $37,242 or approximately 19%. The increase is primarily due to increased professional fees to support the compliance aspect of being a public company, including additional legal and accounting fees for various SEC filings, preparation and counsel. Other increases include increased salaries year over year. The primary increase in salary was to the CEO of the Company who had extended responsibilities once the Company was a public entity.

 

Interest expense was $19,620 and $4,528 for the six months ended June 30, 2015 and 2014, respectively. The increase is attributable to the Company entering into a capital lease obligation to purchase equipment during the fourth quarter of 2014.

 

Net income for the six months ended June 30, 2015 and 2014 was $103,116 and $144,245 respectively. The decrease of $41,129 is primary attributable to the Company now recognizing income tax expense at the entity level rather than the shareholder level when the Company was an S-Corp. Income tax expense recognized over the six month period ended June 30, 2015 was $63,744. With income taxes eliminated for comparative purposes, the Company’s income (income before income taxes) would have been $166,860, an increase of $22,615 or 16%, primarily attributable to execution of our business model, increased revenues and reduced cost of sales as discussed above.

 

Comparison for the three months ended June 30, 2015 and 2014

 

Sales for the three months ended June 30, 2015 and 2014 were $479,534 and $424,600, respectively, an increase of $54,934 or approximately 13% of consolidated revenue. This is due to execution of our business model, increasing our customer base and expanded sales to current customers.

 

Cost of revenues for the three months ended June 30, 2015 and 2014 were $247,632 and $233,385, respectively, an increase of $14,247 or approximately 6%. This increase is in line with the increase in sales. The six months cost of sales decreased overall due to the lower fuel costs in quarter 1 of 2015 as compared to higher fuel costs in quarter 2 of 2015. Other increases include increased depreciation expense due to purchase of equipment in December of 2014 that was not being depreciated during the three months ended June 30, 2014.

Selling, general and administrative costs for the three months ended June 30, 2015 and 2014 respectively, were $112,545 and $90,872 respectively, an increase of $21,673 or approximately 24%. The increase is primarily due to increased professional fees to support the compliance aspect of being a public company, including additional legal and accounting fees for filing preparation and counsel. Other increases include increased salaries year over year. The primary increase in salary was to the CEO of the Company who had extended responsibilities once the Company was a public entity.

 

Interest expense was $11,454 and $2,191 for the three months ended June 30, 2015 and 2014, respectively. The increase is attributable to the Company entering into a capital lease during the fourth quarter of 2014.

 

Net income for the three months ended June 30, 2015 and 2014 was $64,742 and $98,152 respectively. The decrease of $33,410 is primary attributable to the Company now recognizing income tax expense at the entity level rather than the shareholder level when the Company was an S-Corp. Income tax expense recognized over the three month period ended June 30, 2015 was $43,161. With income taxes eliminated for comparative purposes, the Company’s income (income before income taxes) would have been $107,903, an increase of $9,751 or 10%, primarily attributable to execution of our business model, increased revenues and reduced cost of sales as discussed above.

 

 

Liquidity and Capital Resources

 

Our primary sources of cash are cash flows from operations. We intend to use excess cash on hand and cash from operating activities, together with borrowings, to fund purchases of equipment, working capital, acquisitions and debt repayments. As of June 30, 2015, we had cash and cash equivalents of $340,052 and working capital of $324,144 as compared to cash of $108,642 and working capital of $131,238 at December 31, 2014.

 

Cash Flows for the Six Months Ended June 30, 2015 Compared to the Six Months Ended June 30, 2014

 

Cash flows from operating activities for the six months ended June 30, 2015 provided cash of $336,733 compared to $196,233 for the six months ended June 30, 2014, an increase of $140,500 or 72%. This increase was primarily due to increased sales, expenses incurred where stock was issued to settle the professional fee liability rather than cash, and the timing of payments on payables, accrued expenses and taxes. Our cash flows used in investing activities were $43,367 and $30,131 for the six months ended June 30, 2015 and 2014, respectively, an increase of $13,236 or 44%. The increase is due to the purchase of equipment and intangible assets, including a permit with the Department of Labor with an expected useful life of 10 years and the investment in our webpage. Our cash flows used in financing activities were $61,956 and $126,619. The decrease is due to less payments being made on the Shareholder demand loan during the six months ended June 30, 2015 as compared to the prior year six month period ended June 30, 2015.

 

Off-Balance sheet arrangements

 

None.

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable

 

Item 4. Controls and Procedures.

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

 

As required by SEC Rule 15d-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2015.

 

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

We know of no material pending legal proceedings to which our company or our subsidiary is a party or of which any of our properties, or the properties of our subsidiary, is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.

 

We know of no material proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder is a party adverse to our company or our subsidiary or has a material interest adverse to our company or our subsidiary.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None

 

Item 4. Mine Safety Disclosures.

 

None

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits.

 

Exhibit Index

 

Exhibit Number		Description
31.1		Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2+		Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 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.LAB		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

 

+ In accordance with the SEC Release 33-8238, deemed being furnished and not filed.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	NATIONAL WASTE MANAGEMENT HOLDINGS, INC.
Date: August 14, 2015	/s/ Louis Pavglio
	Name: Louis Pavglio
	Chief Executive Officer & Chief Financial Officer
	(Principal Executive Officer & Principal Financial Officer)

 

 

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