Quarterly report pursuant to Section 13 or 15(d)

Acquisitions

v3.5.0.2
Acquisitions
9 Months Ended
Sep. 30, 2016
Acquisitions [Abstract]  
Acquisitions

Note 10 – Acquisitions

 

Related Party Acquisitions

 

Waste Recovery Enterprises, LLC

 

On October 15, 2015, the Company acquired WRE, an entity that was 50% owned by the majority shareholder of the Company. WRE offers residential trash pickup, commercial or residential dumpster service and roll-off boxes for construction and clean-up projects. The Company has a transfer station that accepts construction and demolition debris, household trash, furniture and appliances. The Company also offers wood grinding, demolition, and mulch and gravel services. The Company’s primary operations are based near Binghamton, New York.

 

See the table below summarizing the purchase price paid to the related party owner and the second, non-related party entity:

 

Party   Cash     Owner Financed Short Term Note     Restricted
Common Shares
    Value Assigned to
Shares ($1/share)
    Total Purchase
Price
 
Majority Shareholder – 50% owner   $ -     $ -       1,500,000     $ 1,500,000     $ 1,500,000  
Non-related entity - 50% owner     -       250,000       1,250,000       1,250,000       1,500,000  
Total   $ -     $ 250,000       2,750,000     $ 2,750,000     $ 3,000,000  

 

Operations on and after October 15, 2015 are included in the accompanying consolidated financial statements. The acquisition has been accounted for using the purchase method of accounting. The purchase price of $3,000,000 was allocated as follows:

 

Assets      
Cash   $ 29,625  
Accounts receivable     32,706  
Other current assets     54,598  
Due from related party     30,097  
Total current assets     162,882  
Property and Equipment        
Transportation equipment     1,116,682  
Machinery and Equipment     756,800  
Buildings     493,225  
Land     225,000  
Containers     160,400  
Leasehold improvements     17,154  
Furniture and fixtures     2,069  
Total property and equipment     2,771,330  
Goodwill and intangible assets        
Customer relationships     639,433  
Licenses and permits     50,000  
Goodwill     1,238,173  
Total goodwill and intangible assets     1,927,607  
Total assets     4,861,819  
Liabilities        
Accounts payable and accrued liabilities     (64,179 )
Due to related entity     (30,000 )
Total current liabilities     (94,179 )
Related party debt     (1,512,754 )
Long term debt     (254,886 )
Total liabilities     1,861,819  
Total consideration for acquisition   $ 3,000,000  

 

Gateway Rolloff Services, LP

 

On December 1, 2015, the Company acquired Gateway, an entity that was 50% owned by the majority shareholder of the Company. Gateway offers commercial and residential dumpster service and roll-off boxes for construction and clean-up projects specializing in the removal of debris, garbage, waste, hauling construction and demolition debris, focused on servicing general contractors, new home builders, reconstruction, renovation, landscaping and home improvement professionals. The Company’s primary operations are based near Tampa, FL.

 

See the table below summarizing the purchase price paid to the related party owner and the 2nd, non-related party entity.

 

Party   Cash Paid on Behalf of Strategic     Restricted Common Shares     Owner financed short term note     Value Assigned to Shares ($1/share)     Total Purchase Price  
Majority Shareholder – 50% owner   $ -       1,650,000       -     $ 1,650,000     $ 1,650,000  
Non-related entity - 50% owner     450,000       750,000       100,000       750,000       1,300,000  
Total   $ 450,000       2,400,000     $ 100,000     $ 2,400,000     $ 2,950,000  

 

Operations after November 30, 2015 are included in the accompanying consolidated financial statements. The acquisition has been accounted for using the purchase method of accounting. The purchase price of $2,950,000 was allocated as follows:

 

Assets      
Cash   $ 24,912  
Accounts receivable     238,753  
Total current assets     263,665  
Property and Equipment        
Transportation equipment     417,350  
Containers     782,000  
Total property and equipment     1,199,350  
Goodwill and intangible assets        
Customer relationships     683,626  
Goodwill     941,010  
Total goodwill and intangible assets     1,624,636  
Total assets     3,087,651  
Liabilities        
Accounts payable and accrued liabilities     (111,651 )
Due to related party     (26,000 )
Total current liabilities     (137,651 )
Total consideration for acquisition   $ 2,950,000  

 

The Majority shareholder received a total of 3,150,000 shares of the Company’s restricted common stock. The shares were note issued as of December 31, 2015 and were included on the balance sheet as common stock subscribed. The shares were issued during the three months ended March 31, 2016.

 

The $450,000 paid in cash by Strategic for the acquisition of Gateway was settled in restricted common stock after December 31, 2015 at $1 per share, for a total of 450,000 shares of the Company’s restricted common stock.

 

Acquisition of Business – Unrelated Entity

 

On May 11, 2016, the Company purchased a business in Upstate New York, incorporating it into WRE’s operations. The business was purchased for $230,000.

 

Operations on and after May 11, 2016 are included in the accompanying consolidated financial statements. The acquisition has been accounted for using the purchase method of accounting. The purchase price of $230,000 was allocated as follows:

 

Assets      
Property and Equipment   $ 104,400  
Goodwill and intangible assets        
Customer list     79,547  
5 year, 100 miles non-compete agreement     10,000  
Goodwill     36,053  
Total goodwill and intangible assets     125,600  
Total purchase price   $ 230,000  

 

Landfill Acquisition – Unrelated Entity

 

On January 25, 2015, Sand/Land of Florida Enterprises, Inc., a Florida corporation and a wholly-owned subsidiary of NWMH, 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 in the County of Citrus, Homosassa, Florida for $2,500,000, on an “as is” basis.

 

The Contract required monthly non-refundable payments towards the purchase price, with a final closing to be no later than February 26, 2016. The Company had a third party making the deposit payments as discussed in Note 9, “Stockholders’ Deficit”. During the nine months ended September 30, 2016, the third party had made two payments of $25,000, totaling $50,000 and the Company made one payment of $22,473. The Company has written off a total of $72,473 of these non-cash deposits and cash deposits during the nine months ended September 30, 2016 due to the Company not closing on the landfill by February 26, 2016. The expense was included in other expenses as a one-time write off.