UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

 

For the fiscal year ended December 31, 2016

 

or

 

 

COMMISSION FILE NO. 000-55682

 

(Exact name of registrant as specified in its charter)

 

 

9100 Kiln Waveland Cutoff Road

Waveland, Mississippi 39520

(Address of principal executive office, including Zip Code)

 

Registrant's telephone number, including area code: 800-793-0355

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

 

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).

Securities registered pursuant to Section 12(g) of the Exchange Act: None

 

Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes ☐  No ☒

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐   No ☒

 

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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, 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 if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained in this form and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a 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 aggregate market value of the Common Stock held by non-affiliates of the Registrant cannot be determined because the registrant does not yet have a trading symbol.

 

As of March 29, 2017, the registrant had 76,978,320 shares of common stock issued and outstanding.

 

TABLE OF CONTENTS

 

  

FORWARD LOOKING STATEMENTS133

 

This report contains forward-looking statements, including statements regarding future financial performance and results and other statements that are not historical facts. Such statements are included in "Business," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this report. When used in this report, words such as "may," "will," "should," "could," "anticipate," "believe," "expect," "estimate," "intend," "plan," "predict," "potential," "continue" and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, there can be no assurance that actual results or developments anticipated by the Company will be realized or, even if realized, that they will have the expected effects on its business or operations. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors beyond the Company's control.

 

PART I

 

Item 1. Business

 

Organization

We were incorporated in the state of Florida on October 31, 2015. We have never been the subject of a material reclassification, merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course. Further, we have never been the subject of a bankruptcy, receivership or similar proceeding.

Types of Services

We provide services in 4 major categories, as follows:

(1) Field and Industrial Services

Field and industrial services involve any one or a combination of the following:

(2) Emergency Response and Disaster Recovery

(3) Waste Transportation and Disposal Services

(4) Remediation and Construction Services

(a) Site Remediation

(b) Demolition

Plant decommissioning, dismantlement, asset recovery

Marketing Strategies

We intend to grow our business through the following marketing strategies:

Target Market

Our target market includes utilities, petro-chemical, manufacturing, transportation, government, military, refineries, insurance corporations, engineering firms, energy companies and federal, state and local entities.

Reliance Upon One or a Few Customers

During our fiscal year 2016, 3 environmental and emergency response customers accounted for 86% of our revenues, as follows:

a)

SET 52%

b)	SWS Environmental Services 22%

c)	Red Hawk Industrial Services 12%

Reliance Upon Emergency Response Services

Historically 50% of our business is derived from emergency response services and 45% of our revenues in fiscal year 2016 are attributable to our emergency response work.  Emergency response services are unpredictable because they are based solely on unexpected emergency needs.

Our Expansion Plans

We intend to expand our business, as follows:

·	Secure agreements for our services in the industrial corridor between Lake Charles, Louisiana to Pensacola, Florida covering Louisiana, Mississippi, Alabama and Florida;

·	Secure agreements for our services in the Midwestern United States

·	Build stronger relationships as a premier environmental contractor by securing client agreements leading to opening additional service centers;

·	Attempt to secure master service agreements with companies in need of environmental maintenance as well as an environmental responder if the need arises; and.

·	Establish Service Centers strategically located cover an approximately 100-200 mile radius.

Service Center locations are a traditional format for conducting the environmental services business. Each Service Center will be a base of operations to provide environmental services for a radius of approximately 100 - 200 miles and will consist of a manager, foreman, multiple technicians, supplies and the necessary equipment to provide the environmental services

We plan on establishing our third Service Center in Northern, Florida to cover the territory from Lake Charles, Louisiana and Pensacola, Florida. Because this Service Center is contingent upon adequate funding and/or raising capital, we do not have a schedule for establishing this Service Center. Assuming we do receive adequate funds to establish the Northern, Florida Service Center, it will take approximately 3 months to become operational.

We intend to fund each Service Center through existing revenues and/or raising capital or a combination of the foregoing; however, there is no assurance that we will be successful in generating sufficient revenues or raising adequate capital for the foregoing purposes.

Geographic Territory

Our emergency response/emergency management services are available upon request in all 50 states. Based on our level of expertise we are commonly contracted to be present and assist with management and execution of environmental/emergency based situations throughout the USA. For example, one of our largest projects to date in Iowa for the Avian Bird Flu for which we were contracted not only for labor support but also for management support. Dynamic Environmental has performed work in the following states: Florida, Alabama, Louisiana, Mississippi, Tennessee, Missouri, Illinois, Michigan, Iowa, Wisconsin, Georgia, New York, New Jersey, Indiana, Oklahoma, Arkansas, California, Texas, Kentucky and New Jersey.  We have performed work in the following states: Iowa, Louisiana, Mississippi, Tennessee, Missouri, Illinois, Michigan, Wisconsin, New York, Indiana, Kentucky, Oklahoma, Alabama, Florida, Arkansas, California, New Jersey and Texas. Our services were provided in the foregoing states through various companies we had prior business arrangements and/or services previously performed for such companies. With the exception of Mississippi, Florida and Illinois, we performed the services in the foregoing states by transporting certain of our employees to projects in those states and hiring other employees located in the states where the project was being conducted on an as-needed basis.

We currently have two regional service centers, one is in Waveland, Mississippi and covers from Lafayette, Louisiana to Pensacola, Florida, which represents a 150-mile radius, and the other in Roxana, Illinois which covers Illinois, Missouri, Kentucky and Indiana, which represents a 300-mile radius.

Competition

We compete with large and small companies in each of the markets in which we operate. The environmental cleanup and emergency response industry is highly competitive and rapidly evolving. There are a number of major competitors in this industry, including Clean Harbors, USES and SWS. Price, response time, reliability and safety record are the principal methods of choosing a contractor in the industry. Based upon these criteria, our position in the industry is relatively small. Our competitors have established market positions more prominent than ours, and if we fail to attract and retain customers and establish a successful distribution network, we may be unable to achieve additional sales and market share.

The principal competitive factors applicable to our industry are:

While we believe we are competitive based on each of these factors, many of our competitors have greater brand name recognition and greater financial and operational recourse than we do and to such extent that this is a competitive disadvantage.

Government Regulation

The only recurring costs associated with environmental regulation are continuing education for our employees regarding local, state and federal environmental rules and regulations that impact our clients.

Health and safety standards under the Occupational Safety and Health Act, or "OSHA," are also applicable to all of our operations.

Hazardous Waste Operations and Emergency Response (HAZWOPER) is a set of guidelines produced and maintained by the Occupational Safety and Health Administration, which regulates hazardous waste operations, and emergency services in the United States and its territories. With these guidelines, the U.S. government regulates hazardous wastes and dangerous goods from inception to disposal.

HAZWOPER applies to five groups of employers and their employees. This includes employees who are exposed (or potentially exposed) to hazardous substances (including hazardous waste) and who are engaged in one of the following operations as specified by OSHA regulations

Environmental Regulation

Because we remedy certain environmental matters on behalf of our clients, our business has benefited substantially from increased governmental regulation of hazardous waste transportation, storage and disposal. The environmental services industry itself, as it applies to our customers is the subject of extensive and evolving regulation by federal, state and local authorities. Our own direct compliance with environmental regulations is limited to training of environmental regulations by our Chief Executive Officer, of which there is no material expenditures.

Compliance with Other Regulations

We are required to obtain federal, state, and local permits or approvals for the transportation of hazardous waste. We have acquired all operating permits and approvals now required for the current operation of our business, and have applied for, or are in the process of applying for all permits and approvals needed in connection with continued operation and planned expansion or modifications of our operations.

We are required to conform to OSHA regulations, which have consisted of purchase of safety equipment and personal protective equipment. During our fiscal year 2014 and fiscal year 2015, we spent $21,828 and $13,786, respectively, pertaining to OSHA related expenditures.

HAZWOPER pertains to all aspects of our operations.

Training

We meet and exceed all requirements mandated by OSHA on our projects. We maintain guidelines in accordance with 1926 construction standards as well as OSHA guidelines and all other regulations that pertain to our work. We have in house trainers and we utilize third party trainers in special scenarios when necessary. We are a member of Avetta Auditing and IS Net World  which monitors our safety program.

Employees

We have 29 employees, 24 of whom are Haz Mat Technicians. A Haz Mat Technician is one who responds to potential releases or releases of hazardous materials for the purpose of controlling the release. Haz Mat Technicians are more aggressive than first responders at the operations level since they will approach the point of release to plug, patch, or otherwise stop the release of a hazardous materials substance. We adhere to all OSHA requirements with respect to specialized chemical protective clothing and specialized control equipment.

We have the following employees:

We also hire Haz Mat Technicians on a part time as-needed basis when workload exceeds our full time staff.

Liability Insurance and Bonding

The nature of our business exposes us to the possible risk of liabilities arising out of our operations, including damages to the environment, property, employees or the general public. Although we focus on operating safely and prudently, we could receive claims, alleging damages, negligence or other wrongdoing in the planning or performance of work, which resulted in harm to the environment, property, employees or the general public. These liabilities can be significant. We also could be subject to fines and civil and criminal penalties in connection with alleged violations of regulatory requirements. We maintain a $1,000,000 liability policy with an umbrella policy of $5,000,000, subject to limitations, exclusions, deductibles or self-insurance, provide coverage for these types of claims. While we believe the amount of insurance is appropriate for our type of business, we can neither assure you that such insurance will be adequate, in scope or amount, in the event of a major loss, nor that we will not be exposed to uninsured liabilities that could have a material adverse effect on our consolidated financial condition, results of operations or cash flows. We also cannot assure you that we would continue to maintain the insurance should market conditions in the insurance industry make such coverage cost prohibitive.

Accruals for self-insurance or deductibles are based on claims filed and actuarial estimates of claims development and claims incurred but not reported. Due to the variable condition of the insurance market, we have experienced, and may experience in the future, increased self-insurance or deductible retention levels and increased premiums. As we assume more risk for self-insurance through higher retention levels, we may experience more variability in our self-insurance reserves and expense.

In the normal course of business, we also purchase surety bonds, insurance policies and letters of credit.

Item 1A. Risk Factors

 

Because we are a smaller reporting company as defined in Item 10(f)(1) of Regulation S-K, we are not required to provide risk factors in this Form 10-K; however, risk factors are available for review in our S-1 filing at www.sec.gov.

 

Item 1B. Unresolved Staff Comments

None 

Item 2. Properties.

Our service center in Mississippi is located at 9100 Kiln Waveland Cutoff Road, Waveland, MS 39520 and serves as our principal executive office and a shop building which stores equipment for our operations, the lease here expires in December 2017 which we intend on renewing. The lease cost is $900.00 per month.

Our second location is in Roxana, Illinois, a St. Louis, Missouri suburb, and serves as our Midwest Regional service center. This service center consists of two buildings, one will serve as an administrative building (2,400 square feet) and another building (5,000 square feet) will be utilized to perform maintenance, store equipment and to support our Midwest operations. The lease cost is $5,547 per month.

 

We do not own or invest in real estate, interests in real estate, real estate mortgages or securities of or interests in persons primarily engaged in real estate activities.

Item 3. Legal Proceedings.

 

We are not a party or otherwise involved in any pending legal proceedings nor are we aware of any pending or threatened litigation against us

 

Item 4. Mine Safety Disclosures.

 

Not Applicable

 

PART II

 

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities .

 

Market Information

Our shares of common stock are not yet quoted on otcmarkets' OTCQB.

 

Cash Dividends

 

We have never paid cash dividends on our common stock, have no plans to pay any dividends, and it is unlikely that we will pay any dividends in the foreseeable future. We currently intend to invest future earnings, if any, to finance expansion of our business. Any payment of cash dividends in the future will be dependent upon our earnings, financial condition, capital requirements, and other factors deemed relevant by our board of directors.

 

Common Stock

We are authorized to issue 200,000,000 shares of Common Stock, $0.001 par value per share. Currently we have 76,978,320 shares of Common Stock issued and outstanding.

Each share of Common Stock shall have one (1) vote per share for all purposes. Our Common Stock does not provide preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our Common Stock holders are not entitled to cumulative voting for election of the Board.

 

Preferred Stock

 

We are authorized to issue 30,000,000 preferred shares, no shares of which have been issued.

 

Warrants

We have no warrants issued or outstanding

 

Options

 

There are no outstanding options to purchase our securities.

 

Transfer Agent and Registrar

 

Our transfer agent is Cleartrust.

 

Holders of Capital Stock:

 

As of the date of this Annual Report, we have 47 holders of our Common Stock.

 

Stock Option Grants

 

We do not have a stock option plan in place and have not granted any stock options at this time.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

We do not have in effect any compensation plans under which our equity securities are authorized for issuance.

 

Purchase of Equity Securities by the Issuer and Affiliated Purchasers

 

We did not purchase of our shares of common stock or other securities during our fiscal year ended March 31, 2015.

 

Recent Sales of Unregistered Securities

During the year ended December 31, 2016, we sold 480,000 shares of common stock at $0.05 per share for cash proceeds of $24,000, as follows:

a)	On January 27, 2016, we sold 30,000 shares to Benjamin Kreitl for $,1500.
b)	On January 27, 2016, we sold 50,0000 shares to Rich Larkin for $2,500
c)	On January 27, 2016, we sold 50,000 shares to David Darrow for $2,500.
d)	On January 27, 2016, we sold 10,000 shares to Daniel McLaughlin for $500.
e)	On February 8, 2016, we sold 50,000 shares to Rich Larkin for $2,500
f)	On March 1, 2016, we sold 10,000 shares to S & S Metal Stud Contractors for $500.
g)	On March 1, 2016, we sold 20,000 shares to Jason Miller for $1,000
h)	On March 1, 2016, we sold 10,000 shares to Joshua Parks for $500
i)	On March 18, 2016, we sold 200,000 shares to Kevin Ziffra for $10,000.
j)	On March 23, 2016, we sold 50,000 shares to Robert Beckman for $2,500
k)	On December 23, 2016, we sold 35,000 shares at ten cents per share to Alan Chandler for a $3,500.

 

During the year ended December 31, 2016, we received cash proceeds of $11,000 from the collection of a subscription receivable, as follows: (a) on January 20, 2016, $10,000 for 200,000 shares and (b) on April 29, 2016, $1,000.00 for 20,000 shares from Ed Doyle on 4/29/16.

On March 16, 2016, we issued 5,000 shares of common stock with a fair value of $250 to a Glenn MacGraw, our Board member as compensation for consulting services.

 

 

Item 6. Selected Financial Data

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Critical accounting policies and estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to income taxes, and the valuation of equity transactions. We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the consolidated financial statements.

Although we have elected to take advantage of the extended transition provided by Securities Act Section 7(a)(2)(B) for complying with new and revised accounting standards, as of present, there are no new or revised accounting standards that have been issued by the PCAOB or the SEC applicable to us for which we have adopted the application date for private companies.

Accounts Receivable

We recognize allowances for doubtful accounts to ensure accounts receivable are not overstated due to the inability or unwillingness of its customers to make required payments. The allowance is based on historical bad debt expense, the age of receivable and the specific identification of receivables that we consider at risk.

Revenue Recognition

We recognize revenue when all of the following criteria are met: (1) the Company has evidence of an arrangement with a customer; (2) we deliver the specified services; (3) terms are fixed or determinable; and (4) collection is probable.

Long-lived Assets

In accordance with ASC 360, "Property Plant and Equipment", we test long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

Stock-based Compensation

We record stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505, Equity Based Payments to Non-Employees, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options.

Trends and Uncertainties

Our business is subject to the following trends and uncertainties:

Going Concern

Our financial statements have been prepared on a going concern basis which assumes that we will be able to realize our assets and discharge its liabilities and commitments in the normal course of business for the foreseeable future. We had a working capital deficit of $253,781 at December 31, 2016 and have suffered net losses. We have funded our activities to date from debt financings and earnings. These factors raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our generating profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our management intends to finance operating costs over the next twelve months with existing cash on hand and public issuance of common stock. While we believe that we will be successful in obtaining the necessary financing and generating revenue to fund our operations, meet regulatory requirements and achieve commercial goals, there are no assurances that such additional funding will be achieved and that we will succeed in our future operations.

We will attempt to overcome the going concern opinion by increasing our revenues, as follows:

 Our attempt to overcome the going concern opinion may fail since all of the above will lead to increased expenses and possible net losses.

 COMPARATIVE RESULTS FOR FISCAL YEARS 2016 AND 2015

 Results of Operations: For the years ended December 31, 2016 and December 31, 2015

 Liquidity and Capital Resources

 Revenues

Our revenues for the years ended December 31, 2016 and December 31, 2015 were $1,535,092 and $1,905,069, respectively, reflecting decreased revenues of $369,977, which is primarily attributable to a decrease in emergency response projects in 2016.

As an emergency response company, our revenues have historically been contingent upon the occurrence of emergency incidents and the corresponding need for our services. Apart from whether the level of our emergency response business will materially increase or decrease contingent upon the occurrence of such emergency incidents, there are no known trends and uncertainties that are attributable to our increased revenues or are revenues in the immediate future. Additionally, there have been no increased prices or introduction of new services that were factors in our increased revenues.

Net Profit/Net Loss

We had a net loss of $312,579 for the year ended December 31, 2016 and a net loss of $206,780 for the year ended December 31, 2015. Our increased net loss of $105,799 in fiscal year 2016 compared to fiscal year 2015 is primarily attributable to decreased revenues of $369,977 in fiscal year 2016 compared to fiscal year 2015.

We had a working capital surplus/deficit of $253,781 for the fiscal year ended December 31, 2016 and a working capital deficit of $17,183 for the fiscal year ended December 31, 2015. The $253,781 working capital in 2016 is primarily attributable to a $387,172 increase in current liabilities from fiscal year 2016 to fiscal year 2015, consisting of a $107,795 increase in accounts payable, a $193,261 increase in accrued expenses and a $100,561 increase in line of credit.  Our cash flows from operating activities was ($143,033) for the year ended December 31, 2016 compared to cash flows used in operating activities of ($2,128) for the year ended December 31, 2015.

Operating Expenses

We incurred total operating expenses of $891,909 and $1,008,137 for the years ended December 31, 2016 and December 31, 2015 respectively, reflecting a decrease of $116,228 from fiscal year 2016 to fiscal year 2015. The primary components of this $116,228 decrease mainly consist a $112,226 decrease in general and administrative expenses from fiscal year 2016 to fiscal year 2015. The $116,228 decrease in operating expenses from the prior year is primarily attributable to a reduction in stock based compensation and a decrease in the number of environmental projects that we engaged in as reflected by decreased revenue of $369,977 from fiscal year 2016 to fiscal year 2015 and a cost of revenue decrease of $146,229 from $955,435 in 2016 compared to $1,101,664 in 2015.

Our net cash used in investing activities were $6,000 and $42,284 for the years ended December 31, 2016 and December 31, 2015, respectively, reflecting a $36,284 decrease in net cash used in investing activities. This $36,284 decrease in net cash used in investing activities comparing the fiscal years 2016 and 2015 consists of a $25,003 decrease in purchase of property and equipment and an $18,000 decrease in down payment for property and equipment.

Our net cash used in financing activities was $131,547 in 2016, compared to $49,823 provided by financing activities in 2015. The $131,547 reflecting our net cash provided for financing activities for the year ended December 31, 2016 primarily consists of proceeds from credit line of $100,561, $11,000 proceeds from subscriptions receivable and $27,500 proceeds received from issuance of common stock.

Off-balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

 

As a smaller reporting company, we are not required to provide the information required by this item.

 

Item 8. Financial Statements and Supplementary Data.

 

Item 9A. Internal control over financial reporting

 

Management's Annual Report on Internal Control over Financial Reporting

 

Our management, including our principal executive officer and principal financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2016, Our management's evaluation of our internal control over financial reporting was based on the framework in Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that as of December 31, 2016, our internal control over financial reporting was not effective.

 

The ineffectiveness of our internal control over financial reporting was due to the following material weaknesses which we identified in our internal control over financial reporting: (1) the lack of multiples levels of supervision and review on accounting and financial reporting issues, and (2) a lack of adequate segregation of duties and necessary corporate accounting resources in our financial reporting process and accounting function as a result of our limited financial resources to support hiring of personnel and implementation of accounting systems. Until such time as we expand our staff to include additional accounting personnel and hire a full time chief financial officer, it is likely we will continue to report material weaknesses in our internal control over financial reporting.

 

A material weakness is a deficiency or a combination of control deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

 

In light of these material weaknesses, we performed additional analyses and procedures in order to conclude that our consolidated financial statements for the year ended December 31, 2016 included in this Annual Report on Form 10-K were fairly stated in accordance with GAAP.

 

Limitations on Effectiveness of Controls

 

Our principal executive officer and principal financial officer do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additional controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report.

 

Changes in Internal Control over Financial Reporting

 

No changes were made to our internal control over financial reporting during the quarter ended December 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Item 9B. Other Information.

 

Not Applicable.

 

PART III

 

Item 10. Directors, Executive Officers and Corporate Governance

 

Board of Directors

 

Directors are elected at our annual meeting of shareholders and serve for one year until the next annual meeting of shareholders or until their successors are elected and qualified. We reimburse all directors for their expenses in connection with their activities as our directors.

 

Board Leadership Structure and Role in Risk Oversight

 

Although we have not adopted a formal policy on whether the Chairman and Chief Executive Officer positions should be separate or combined, we have determined that it is in our best interests and its shareholders to combine these roles. Due to the small size and our early development stage, we believe it is currently most effective to have the Chairman and Chief Executive Officer positions combined.

 

Our board of directors is primarily responsible for overseeing our risk management processes. The board of directors receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our assessment of risks. The board of directors focuses on the most significant risks facing us and our general risk management strategy, and also ensures that risks undertaken by us are consistent with the board's appetite for risk. While the board oversees our risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing us and that our board leadership structure supports this approach.

 

Directors and Executive Officers and Corporate Governance.

 

The following information sets forth the names of our officers and directors, their present positions, and some brief information about their background.

Directors and Executive Officers and Corporate Governance.

The following information sets forth the names of our officers and directors, their present positions, and some brief information about their background.

Background of Officers and Directors

 Brant Cochran

Brant Cochran has been our President/Director since October 28, 2014 and our Chief Executive Officer since June 15, 2015. From May 2016 to September 2016, Brant Cochran supervised and directed the Avian Bird Flu Response in the State of Iowa on our behalf. From June 2005 to January 2015, he was the President/Owner of Dynamic Environmental, an Illinois corporation, and directed the following Dynamic Environmental projects:

 

	2005- Harland, KY	12M Cap of existing landfill, State of Kentucky
	2006- Atlanta, GA	Removal of 12 – 20000 gallon UST's at Hartsfield Airport
	2006- Jonesboro, GA	Installed 3000' of drain around perimeter of Clayton County Landfill
	2007- Houma, LA	Remediation of 60000 gallons of crude oil from a bayou
	2007-Blytheville, AR	Nucor Steel Corp. Shutdown Maintenance work
	2008- Des Moines, IA	Iowa Floods, Quaker Oats clean up
	2008- New Orleans, LA	ACL oil spill in Mississippi River, 460k gallons
	2008- Beaumont, TX	Exxon Mobil Refinery, Hurricane Gustav / Ike clean up

14

---

 

	2008- Houston, TX	CentePoint Energy, Hurricane Gustav/Ike clean- up of transformers/PCB related oils
	2009- Blytheville, AR	Nucor Steel Corp. Shutdown maintenance work
	2009- San Francisco, CA	Cosco-Busan oil release
	2009- Atlanta, GA	Flood debris clean up
	2010- Port Arthur, TX	Exxon Mobil AET Oil spill
	2010- Gulf of Mexico	BP Oil spill
	2010- Romeoville, IL	Enbridge Pipeline spill
	2010-14- Marshal, MI	Enbridge Pipeline spill and clean up
	2013- Mayflower, AR	Exxon Pipeline release
	2014- Galveston, TX	Kirby Towing oil spill
	2014- Chicago, IL	Enbridge Pipeline facility oil spill

Brant Cochran has over 20 years' management and supervisory experience in the fields of environmental cleanup, engineering and construction.

Alfred Chisholm

Alfred Chisholm has been our Chief Financial Officer/Chief Accounting Officer/Director since October 13, 2015. From May 2010 to January 2011, Alfred Chisholm was our Manager of Field Operations and from February 2011 to present he has been our Operations Manager. In addition to the foregoing positions, from 2006 to 2015 he has served as our technician, supervisor, project manager and in those capacities worked on the following projects:

	2008 Houston, TX	Hurricanes Ike & Gustav, PCB remediation
	2009 Atlanta, GA	Flood debris project
	2009- Midwest Region	Various small clean- up projects
	2010 Gulf of Mexico,	BP Oil spill, managed 228 personnel at Pensacola Naval Air Station
	2011- 2015,	Enbridge Spill, Michigan, Hurricane Sandy, Galveston, TX oil spill
	2015- Iowa	Avian Bird Flu Project
	2015	Louisiana, Tank cleaning a large crude oil vessel

 

In 1992, Alfred Chisholm received a BS Degree in Finance from California State University in Chico, California.

Glenn MacGraw

Glenn R. MacGraw has been our Director since October 13, 2015.

Glenn MacGraw is an environmental scientist with over 30 years of environmental services experience ranging from regulatory affairs to emergency response throughout the United States, primarily in Florida. In connection with his public service with the Florida Department of Environmental Protection, he has developed various Florida's Petroleum Cleanup Regulations as well as groundwater protection through Wellhead Protection.

Since March 2015, Glenn MacGraw has been one of two owners of Clean Asset Environmental, LLC, a multi-disciplinary environmental consulting business headquartered in Tallahassee, Florida. From January 25, 2005 to January 21, 2015, he was one of 5 Partners in ownership of The FGS Group, Inc., a consulting and environmental remediation firm located in Tallahassee, Florida. From January 1996 to February 2005 Mr. MacGraw, P.G. was a Program Manager for Handex of Florida, Inc., a full service environmental remediation firm located in Tallahassee, Florida.

Glenn MacGraw has 30 years' experience in Hazardous Waste and Industrial Services, as follows:

In 2009, Glenn MacGraw was a member of the National Quality Assurance Committee called the INELA- Field Activities Committee, which writes technical guidance documents and certification and accreditation standards for field sampling and measurement organizations.

His environmental consulting duties with environmental consulting firms have included project management, quality assurance/quality control, extensive regulatory and client communication, cost estimating, budget tracking, soil/groundwater sample collection and analysis, pump test design and analysis, remedial system conceptual design and installation, vehicular accident emergency response actions, conducting public meetings and press conferences, contract management, and report preparation.

In connection with his position as Program Manager with Handex of Florida, Inc., a full service environmental remediation firm located in Tallahassee, Florida. He was responsible for winning a $100-million-dollar contract with a Houston Energy Company to perform assessment and remediation services in 26 states as liability managers to close out all environmental issues in their contaminated sites portfolio. He was Program Manager for the entire portfolio and client management and service issues.

As a Program Manager at Westinghouse Remediation Services, Inc., from 1993-1996, Glenn MacGraw managed the cleanup of the Fairbanks Disposal Pit under joint CERCLA and RCRA supervision, managed all aspects of the cleanup including source removal, 230 private well closures and replacement well installation, assessment activities in a heavily contaminated multi-aquifer plume characterization, RCRA Cap installation, public relations and press conferences, Corrective Action Document preparation and groundwater treatment system installation, fiscal projections and meetings for the Governor of Florida, and over a 20 million dollar budget.

From 1987 -1990, Mr. MacGraw also served as an outside member of several Florida Department of Transportation (FDOT) teams concerning contamination issues. In these duties he prepared and presented a comprehensive storm water management program, a best management practices manual and a training program for FDOT on a statewide basis.

 

Family Relationships

  

There are no family relationships among our directors and/or our officers.

 

Committees of the Board of Directors

  

We presently do not have an audit committee, compensation committee, nominating committee, corporate governance committee or any other committee of our board of directors. Our entire Board of Directors meets to undertake the responsibilities that would otherwise be delegated to a committee of our board of directors.

  

Audit Committee Financial Expert

 

We have not established an audit committee. Therefore, our Board of Directors have not designated any of its members as an "audit committee financial expert" as defined by the rules and regulations of the Securities and Exchange Commission.

 

Meetings of our Board of Directors

  

We have had no meetings of our Board of Directors. Our Board of Directors have approved corporate actions by Board resolution.

  

Terms of Office

  

Our directors are appointed for one-year terms to hold office until the next annual general meeting of the holders of our Common Stock or until removed from office in accordance with our by-laws. Our officers are appointed by our board of directors and hold office until removed by our Board of Directors or terminated pursuant to their employment agreements.

  

Potential Conflicts of Interest

 

We are not aware of any conflicts of interest with our officers and directors.

 

Overview of Compensation Program 

  

Long-Term Incentive Plan Awards

 

We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.

 

Director Independence

 

We have one independent director as defined by the rules of any securities exchange or inter-dealer quotation system.

 

Code of Ethics

 

We have not yet adopted a formal, written Code of Business Conduct and Ethics.

 

Involvement in Certain Legal Proceedings

 

To the best of our knowledge, none of our directors or executive officers has, during the past ten years, been involved in any of the items below that we deem material to their service on our behalf:

 

 

 

 

 

 

 

 

 

There are currently no legal proceedings to which any of our directors or officers is a party adverse to us or in which any of our directors or officers has a material interest adverse to us.

 

Compliance with Section 16(a) of the Exchange Act

 

 Our officers and directors have filed all of their insider reports in compliance with Section 16(a) of the Exchange Act.

 

Item 11. Executive Compensation

 

The following summary compensation table indicates the cash and non-cash compensation earned during the years ended December 31, 2016 and 2015 by each person who served as chief executive officer and chief financial officer.  No other executive officer received compensation equal or exceeding $100,000.

 

 

* In accordance with the rules promulgated by the Securities and Exchange Commission, certain columns relating to information that is not applicable have been omitted from this table.

** Alfred Chisholm is not currently being paid a salary as Chief Financial Officer; during fiscal year 2016 and 2015, we paid him $27,907 and $31,677, respectively, as our Manager of Field Operations.  The $10,000 stock award for Alfred Chisholm reflects the 200,000 restricted common stock shares issued to Alfred Chisholm on November 23, 2015 for his services as our Chief Financial Officer.

 

Compensation of Directors

 

Long-Term Incentive Plan Awards

 

We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.

 

Grants of Plan-Based Awards

 

There were no grants of plan-based awards during the fiscal year ended December 31, 2016.

 

Outstanding Equity Awards at Fiscal Year End

 

There were no outstanding equity awards at the year ended December 31, 2016.

 

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.

 

Indemnification

 

Under our Articles of Incorporation and Bylaws, we may indemnify an Officer or Director who is made a party to any proceeding, including a lawsuit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Florida.

 

Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.

 

 

Director Compensation

 

 

This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Except as set forth above, applicable percentages are based upon 76,978,320 shares of common stock outstanding as of the date of this annual report.

 

Item 13. Certain Relationships and Related Transaction, and Director Independence.

 

 

Apart from the above, none of our Officers or Directors have any direct or indirect material interest in any transaction to which we are a party during the past two years, or in any proposed transaction to which we are proposed to be a party.

  

We have no independent directors.

 

Item 14. Principal Accounting Fees and Services

 

The following table sets forth the fees billed by our principal independent accountants, Malone and Bailey, for each of our last two fiscal years for the categories of services indicated.

 

 

 

 

 

PART IV

 

Item 15. Exhibits, Financial Statement Schedules

 

 

*    Previously filed as exhibit to Form S-1 Registration Statement

**  Filed herein

1.

Nature of Operations

2.

Summary of Significant Accounting Policies

a)

Basis of Presentation

b)

Use of Estimates

c)

Cash and Cash Equivalents

d)

Basic and Diluted Net Income (Loss) Per Share

e)

Accounts Receivable

f)

Revenue Recognition

g)

Property and Equipment

	Equipment	5 years straight-line
	Vehicles	5 years straight-line

h)

Long-lived Assets

i)

Related Party Transactions

j)

Fair Value of Financial Instruments

Level 1

Financial assets and liabilities for which values are based on unadjusted quoted prices for identical assets or liabilities in an active market that management has the ability to access.

Level 2

Financial assets and liabilities for which values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability (commodity derivatives and interest rate swaps).

Level 3

Financial assets and liabilities for which values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.  These inputs reflect management's own assumptions about the assumptions a market participant would use in pricing the asset or liability.

k)

Stock-based Compensation

l)

Income Taxes

m)

Recent Accounting Pronouncements

3.

Property and Equipment

		Equipment $				Vehicles $				Total $
Cost:
Balance, December 31, 2014			67,816				205,530				273,346
Additions			31,003				_				31.003
Sale of Equipment			(5,739	)			–				(5,739	)
Balance, December 31, 2015			93,080				205,530				298,610
Additions			–				19,366				19,366
Balance, December 31, 2016			93,080				224,896				317,976
Accumulated amortization:
Balance, December 31, 2014			63,297				154,349				217,646
Additions			3,281				26,751				30,032
Balance, December 31, 2015			66,578				181,100				247,678
Additions			3,281				21,769				25,050
Balance, December 31, 2016			69,859				202,869				272,728
Carrying amounts:
Balance, December 31, 2015			26,502				24,430				50,932
Balance, December 31, 2016			23,221				22,027				45,248

4.

Purchase Agreement

5.

Related Party Transactions

As at December 31, 2016, the Company owes the President of the Company $26,030 (December 31, 2015 - $38,030) for advances payable to the fund Company. The amount is unsecured, non-interest bearing and due on demand.

On April 13, 2016, the Company purchased a vehicle from the President of the Company for a total purchase price of $19,366. The $19,366 will be paid by a $6,000 down payment followed by monthly payments of $338 until the total balance is paid off. As at December 31, 2016, the Company owes the President of the Company $12,352 for the purchase of the vehicle.

6.

Line of Credit

During the year ended December 31, 2016, the Company entered a credit line agreement with a non-related third party for $100,000. The loan is secured by certain assets of the Company, bears interest at a rate of 7.25% and is due on demand. As of December 31, 2016 the Company has an outstanding balance of $100,561.

7.

Notes Payable

On November 4, 2011, the Company entered into a loan agreement to purchase equipment for $74,059. The Company made a down payment of $7,406 and the remaining $66,653 was to be paid on a monthly basis with an annual interest of 2.34% for a term of 4 years. During the year ended December 31, 2015, the Company made payments of $16,709 (2014 - $18,024) and recorded $328 (2014 - $1,054) of interest. As of December 31, 2016, and 2015, the Company owed $nil.

During the year ended December 31, 2013, the Company entered a loan agreement with a non-related third party for $32,651. The loan is unsecured, non-interest bearing and due on demand. During the year ended December 31, 2016, the Company made payments of $6,500 (2015 - $0). As of December 31, 2016, the Company owed $15,651 (2015 - $22,151).

8.

Stockholders' Equity

On July 30, 2015, the Company issued 600,000 shares of common stock with a fair value of $30,000 to a non-related third party as compensation for legal services.

On July 30, 2015, the Company issued 350,000 shares of common stock with a fair value of $17,500 to a consultant as compensation for consulting services.

On August 30, 2015, the Company issued 59,250,000 shares of common stock with a fair value of $83,898 to the President of the Company as compensation for management services. The value is determined by the weighted average price of common stock sold for cash during the year.

On November 18, 2015, the Company issued 200,000 shares of common stock with a fair value of $10,000 to the Chief Financial Officer of the Company as compensation for management services.

During the year ended December 31, 2015, the Company issued 15,733,320 shares of common stock for cash proceeds of $51,666, of which $11,000 has not been received as at December 31, 2015 and is classified as a subscription receivable.   During the year ended December 31, 2016, the Company issued 480,000 shares of common stock at $0.05 per share for cash proceeds of $24,000.   During the year ended December 31, 2016, the Company issued 35,000 shares of common stock at $0.10 per share for cash proceeds of $3,500.   During the year ended December 31, 2016, the Company received cash proceeds of $11,000 from the collection of a subscription receivable.   During the year ended December 31, 2016, the Company issued 5,000 shares of common stock with a fair value of $250 to a new board member as compensation for consulting services.   During the year ended December 31, 2016, the Company issued 200,000 shares of common stock with a fair value of $10,000 to a non-related third party as compensation for marketing services.   During the year ended December 31, 2016, the Company issued 125,000 shares of common stock with a fair value of $6,250 to a non-related third party as compensation for legal services.

9.

Concentrations

Customer		Revenue for the Year Ended December 31, 2016		Receivables as of December 31, 2016
1		52%		98%
2		22%		*%
3		12%		*%

Customer		Revenue for the Year Ended December 31, 2015		Receivables as of December 31, 2015
1		46%		62%
2		41%		22%
3		*		16%

10.

Income Taxes

		Year Ended December 31,				Year Ended December 31,
		2016				2015
Income tax benefit computed at the statutory rate		$	296,079			$	20,976
Change in valuation allowance			(296,079	)			(20,976	)
Provision for income taxes		$	–			$	–

		December 31, 2016				December 31, 2015
Deferred income tax assets
Net operating losses		$	124,604			$	20,976
Valuation allowance			(124,604	)			(20,976	)
Net deferred income tax assets		$	–			$	–

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

 

 

	By:	/s/ Alfred Chisholm
		Alfred Chisholm
		(Principal  Financial Officer / Chief Accounting Officer)

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.