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 March 31, 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.

(Previously Kopjaggers, Inc.)

(Exact name of registrant 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 60,100,000 shares outstanding as of May 14, 2015.

 

 

 

 
 

 

TABLE OF CONTENTS

 

    Page
  PART I — Financial Information  
Item 1. Consolidated Financial Statements (unaudited) 1-13
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 14-15
Item 3. Quantitative  and Qualitative Disclosures about Market Risk 17
Item 4. Controls and Procedures 17
     
  PART II — Other Information  
Item 1. Legal Proceedings 18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Mine Safety Disclosures 18
Item 5. Other Information 18
Item 6. Exhibits 18
  Signatures 19

 

 
 

 

PART I – FINANCIAL INFORMATION

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

(PREVIOUSLY KOPJAGGERS, INC.)

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE QUARTER ENDED MARCH 31, 2015

 

Index to Consolidated Financial Statements

 

  PAGE
   
Unaudited Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014 2
   
Unaudited Consolidated Statements of Operations for the Three Months Ended March 31, 2015 and 2014 3
   
Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2015 and 2014 4
   
Unaudited Consolidated Notes to the Financial Statements 5-13

2
 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2015 AND DECEMBER 31, 2014

 

  2015   2014 
   (unaudited)   (unaudited) 
Assets         
Current assets:            
 Cash and cash equivalents  $251,367   $108,642 
 Accounts receivable, net   78,119    105,625 
 Other current assets    12,084    3,685 
 Due from related party     8,400    8,400 
           
     Total current assets   349,970    226,352 
           
 Property and equipment, net   708,927    744,405 
           
Other assets:             
 Intangible assets, net    30,780    36,325 
 Secured letter of credit    324,950    324,950 
 Deposits         17,412    17,412 
           
     Total other assets   373,142    378,687 
           
     Total assets  $1,432,039   $1,349,444 
           
Liabilities and Stockholder's Equity (Deficit)          
Current liabilities:           
 Accounts payable and accrued expenses  $50,356   $19,336 
 Current portion of capital lease obligations   22,143    21,228 
 Due to related party - accrued interest   24,199    22,308 
 Income taxes payable    52,825    32,242 
           
     Total current liabilities   149,523    95,114 
           
Long-term liabilities:           
 Capital lease obligatins, net of current portion   117,872    128,060 
 Environmental remediation obligation   424,596    424,596 
 Loan from shareholder    756,337    756,337 
 Long term deferred tax liability   48,709    48,709 
           
     Total liabilities  $1,497,037   $1,452,816 
Commitments and Contingencies (see note 6)          
           
Stockholders' deficit:           
 Common stock, no par value; 250,000,000 authorized, 60,000,000 and 47,500,000 shares issued and oustanding at December 31, 2014 and 2013, respectively  $-   $- 
 Additional paid-in capital   9,454    9,454 
 Accumulated deficit    (74,452)   (112,826)
           
     Total stockholders' deficit   (64,998)   (103,372)
           
     Total liabilities and stockholders' deficit  $1,432,039   $1,349,444 

3
 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

 

   2015   2014 
   (unaudited)   (unaudited) 
         
Revenues     $390,592   $394,336 
           
Cost of revenues      197,907    240,720 
           
  Gross profit   192,685    153,616 
           
Selling, general and administrative expenses   120,755    105,188 
           
  Income from operations   71,930    48,428 
           
Other income (expenses):             
 Interest expense    (8,166)   (2,337)
 Other expenses    (4,807)     
 Gain on sale of assets    -    - 
           
  Total other income (expenses)   (12,973)   (2,337)
           
Income before income taxes      58,957    46,091 
           
Income tax expense       20,583    - 
           
Net income      $38,374   $46,091 
           
Net income per common share:              
           
  Basic  $0.001   $0.001 
  Diluted  $0.001   $0.001 
           
Weighted average number of shares outstanding          
           
  Basic   60,000,000    47,450,000 
  Diluted   60,000,000    47,450,000 

4
 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

 

   2014   2013 
         
Cash flow from operating activities:        
Net income     $38,374   $46,091 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization expenses   41,023    29,721 
Bad debt expense   -    342 
(Increase) decrease in assets:          
Accounts receivable, net   27,506    (5,940)
Other current assets   (8,399)   - 
(Decrease) increase in liabilities:          
Accounts payable and accrued expenses   31,020    3,597 
Related party accrued interest   1,891    2,337 
Income taxes payable   20,583    - 
Net cash provided by operating activities  $151,998   $76,148 
           
Cash flows from financing activities:          
Payments on capital lease obligation   (9,273)   - 
Advances from shareholder   -    8,100 
Payments on loan from shareholder   -    (64,606)
Net cash provided by financing activities  $(9,273)  $(56,506)
           
Net increase (decrease) in cash  $142,725   $19,642 
           
Cash, beginning of year   108,642    57,447 
           
Cash, end of year   $251,367   $77,089 
           
Supplemental disclosure of cash flow information:          
           
Cash paid during the year for interest  $6,275   $- 
Cash paid during the year for income taxes  $-   $- 

  

5
 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 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.

 

6
 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 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-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the sales price is fixed or determinable, (iii) collectability is reasonably assured and (iv) goods have been shipped and/or services rendered.

 

7
 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 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 March 31, 2015 and December 31, 2014, the allowance for doubtful accounts was approximately $112,000. Bad debt expense recognized for the three months ended March 31, 2015 and 2014 was $0 and $342, respectively.

 

Property, Plant and Equipment

 

Property, plant and equipment are recorded at cost less accumulated depreciation. Expenditures for major additions and improvements are capitalized. As property and equipment are sold or retired, the applicable cost and accumulated depreciation are removed from the accounts and any resulting gain or loss thereon is recognized as operating expenses.

 

Depreciation is calculated using the straight-line method over the estimated useful lives or, in the case of leasehold improvements, the term of the related lease, including renewal periods, if shorter. Estimated useful lives are as follows:

 

Transportation equipment   5 years 
Office and machinery equipment   5 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.

 

8
 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 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 March 31, 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.

 

Advertising Costs

 

The Company expenses all advertising costs as incurred. Advertising expense for the three months ended March 31, 2015 and 2014 was $1,206 and $1,149, 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.

 

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.

 

9
 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDTED NOTES TO THE FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

  

Note 3 – Property, Plant and Equipment

 

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

 

   2015   2014 
Machinery and equipment   2,094,316   $2,094,316 
Airspace   865,076    865,076 
Transportation  equipment   561,240    561,240 
Improvements   306,372    306,372 
Office furniture and equipment   2,117    2,117 
Land Fill Area   72,098    72,098 
Total Property, plant and equipment   3,901,219    3,901,219 
Less: accumulated depreciation   (3,192,292)   (3,156,814)
Property, plant and equipment, net  $708,927   $744,405 

 

Depreciation expense for the three months ended March 31, 2015 and 2014 was $35,478 and $13,177, respectively.

 

Note 4 – Amortizable Intangible Assets

 

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

 

           Amortization
   2015   2014   Period
Customer list  $90,813   $90,813   5 years
Less accumulated amortization   (60,033)   (54,488)   
Intangible assets, net  $30,780   $36,325    

         

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

 

Year Ending    
2015  $12,618 
2016   18,162 
   $30,780 

 

Amortization expense for the three months ended March 31, 2015 and 2014 was $5,545 and $4,541, respectively.

 

10
 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

 

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 March 31, 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.

 

As discussed in note 7 to the financial statements, as of March 31, 2015 and December 31, 2014 and for the three months ended March 31, 2015 and 2014, approximately 26% and 28% of the Company’s revenues were generated from a related party, respectively and approximately 43% and 36% of net accounts receivable were due from related parties as of March 31, 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 March 31, 2015 are as follows:

 

2015   22,143 
2016   25,131 
2017   29,753 
2018   35,224 
2019   27,764 
Total capital lease obligation  $140,015 

 

11
 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

 

Note 6 – Capital Leases (Continued)

 

The following is a summary of leased assets included in machinery and equipment as of March 31,:

 

   2014 
Leased Equipment  $179,620 
Less accumulated depreciation   (8,981)
Net leased assets  $170,639 

 

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 three months ended March 31, 2015 and 2014 were $100,350 and $111,600 or 26% and 28% of total revenue, respectively. Total related party accounts receivable as of March 31, 2015 and December 31, 2014 related to these sales was approximately $33,300 and $37,033, or 43% and 36% of total net accounts receivable, respectively.

 

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 March 31, 2015 and December 31, 2014 was $756,337 and $756,337 respectively. The balance of the related accrued interest at March 31, 2015 and December 31, 2014 was $24,199 and $22,308, respectively. Related party interest expense for the three months ended March 31, 2015 and 2014 was $1,891 and $2,337, respectively.

 

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

 

Year Ending    
2015  $- 
2016   756,337 
   $756,337 

 

Note 8 – Stockholders’ Deficit

 

On July 9, 2014, the Company cancelled 8,000,000 shares of the Company’s common stock. All cancelled shares were those of Insiders, the Board of Directors or Officers of the Company.

 

12
 

 

NATIONAL WASTE MANAGEMENT HOLDINGS, INC.

CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

 

Note 8 – Stockholders’ Deficit (Continued)

 

On October 31, 2014, a 5:1 stock split and an increase in the Company’s authorized shares from 20,000,000 to 250,000,000 was approved by FINRA and became effective. These changes have been reflected in the equity section of the financial statements, retroactively for all periods presented.

 

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”.

 

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 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 March 31, 2015 or the date of this filing. The Company has a related 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 related third party for the non-refundable deposit payments if the closing of the deal does not occur. As of March 31, 2015, the related third party had made three payments of $25,000, totaling $75,000. As of the date of the filing, the related third party has made a total of five payments, totaling $125,000.

 

 

13
 

 

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;

 

14
 

 

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 three months ended March 31, 2015 and 2014

 

Sales for the three months ended March 31, 2015 and 2014 were $390,592 and $394,336, respectively, a decrease of $3,744 or approximately 1%, a slight retraction in consolidated revenue. Our primary focus has been to increase landfill services, our primary revenue growth category. Year over year landfill services increased to $252,783 during the three months ended March 31, 2015 as compared to $224,668 at March 31, 2014, a 12.5% increase. The small overall retraction is due to less resources being committed to the auxiliary services offered by the Company that are associated with the Landfill services, primarily the associated trucking services, which retracted by approximately $22,000 or 40% . The Company has begun working with a new customer and expects the trucking revenue to surpass that of prior year by year end due to a more favorable arrangement.

 

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Cost of revenues for the three months ended March 31, 2015 and 2014 were $197,907 and $240,720 respectively, a decrease of $42,813 or approximately 18%. This is primarily attributable to cost cutting efforts and increased overall margins.

 

General and administrative cost for the three months ended March 31, 2015 and 2014 respectively, were $120,755 and $105,188 respectively, an increase of $15,567 or approximately 15%. The increase is primarily due to increased depreciation expense due to purchase of equipment in 2014 and increased salaries year over year.

 

Interest expense was $8,166 and $2,337 for the three months ended March 31, 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 March 31, 2015 and 2014 was $38,374 and $46,091 respectively. The decrease of $7,717 is 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 March 31, 2015 was $20,583. With income taxes eliminated for comparative purposes, the Company’s income would have increased $12,866 or 27%. .

 

Liquidity and Capital Resources

 

As of March 31, 2015, we had cash and cash equivalents of $251,367 and working capital of $200,447 as compared to cash of $108,642 and working capital of $131,238 at December 31, 2014.

 

Cash Flows for the Three Months Ended March 31, 2015 Compared to the Three Months Ended March 31, 2014

 

Cash flows from operating activities for the three months ended March 31, 2015 provided cash of $151,998 compared to $76,148 for the three months ended March 31, 2014, an increase of $75,850 or 100%. This increase was primarily due to the timing of collection of receivables and payments on payables and accrued expenses. Our cash flows used in financing activities were $9,273 and $56,506 respectively, a decrease of $47,233 or 84%. The decrease is due to no payments being made on the Shareholder loan during the three months ended March 31, 2015.

 

Off-Balance sheet arrangements

 

A related party of the Company has made non-refundable deposits on a potential landfill acquisition of the Company. The Company is note required to repay any of these deposits if the deal does not close. There has been no liability or assets booked as part of these deposits. The transaction is disclosed in Note 9 to the financial statements.

 

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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 March 31, 2015.

 

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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

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.

 

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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.

 

Date: May 14, 2015

 

  NATIONAL WASTE MANAGEMENT HOLDINGS, INC.
   
  /s/ Louis Paveglio
  Name: Louis Paveglio
  Chief Executive Officer & Chief Financial Officer
  (Principal Executive Officer & Principal Financial Officer)

  

 

 

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