Quarterly report pursuant to Section 13 or 15(d)

Nature of Operations and Organization

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Nature of Operations and Organization
6 Months Ended
Jun. 30, 2017
Nature of Operations and Organization [Abstract]  
NATURE OF OPERATIONS AND ORGANIZATION

NOTE 1 – NATURE OF OPERATIONS AND ORGANIZATION

 

The Company is primarily in the business of residential and commercial waste disposal and hauling, transfer, and landfill disposal and recycling services. The Company has contracts with various cities and municipalities. The majority of the Company’s customers are located in the St. Louis metropolitan and surrounding areas and throughout central Virginia.

 

In 2014, the Company purchased the assets of a solid waste disposal company in the St. Louis, MO market. This acquisition is considered the platform company for future acquisitions in the solid waste disposal industry.

 

Basis of Presentation

 

The accompanying condensed consolidated financial statements of Meridian Waste Solutions, Inc. and its subsidiaries (collectively called the “Company”) included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited condensed consolidated financial statements do not include all of the information and footnotes required by US Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements and notes for the year ended December 31, 2016 included in our Annual Report on Form 10-K for the Company as filed with the SEC. The condensed consolidated balance sheet at December 31, 2016 contained herein was derived from audited financial statements, but does not include all disclosures included in the Form 10-K for Meridian Waste Solutions, Inc., and applicable under accounting principles generally accepted in the United States of America. Certain information and footnote disclosures normally included in our annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America, but not required for interim reporting purposes, have been omitted or condensed.

 

As noted in NOTE 3, the Company entered into a share exchange agreement with Mobile Science Technologies, Inc., a Georgia corporation (“MSTI”) which was deemed to be an entity under common control. Accordingly, the financial statements have been retrospectively adjusted to furnish comparative information for all periods presented in accordance with Accounting Standards Codification (ASC) 805-50-45-5. Specifically, the financial statements include the financial information of MSTI for all periods presented.

 

In the opinion of management, all adjustments (consisting of normal recurring items) necessary for a fair presentation of the unaudited condensed consolidated financial statements as of June 30, 2017, and the results of operations and cash flows for the three and six months ended June 30, 2017 have been made. The results of operations for the six months ended June 30, 2017 are not necessarily indicative of the results to be expected for a full year.

 

Basis of Consolidation

 

The condensed consolidated financial statements for the three and six months ended June 30, 2017 include the operations of the Company and its wholly-owned subsidiaries, and a Variable Interest Entity (“VIE”) owned 20% by the Company.

 

All significant intercompany accounts and transactions have been eliminated in consolidation.

 

Liquidity and Capital Resources

 

We have experienced recurring operating losses in recent years. Because of these losses, the Company had negative working capital of approximately $4,700,000 at June 30, 2017. As of June 30, 2017 the Company had approximately $2,300,000 in cash to cover its short term cash requirements. Further, the Company is still evaluating raising capital through the public markets as well as looking for capital partners to assist with operating activities and growth strategies.

 

Further, the Company has approximately $1,500,000 of borrowing capacity on its multi-draw term loans and revolving commitments available for working capital and general corporate purposes. See note 6, under the heading Goldman Sachs Credit Agreement.

 

In 2017, the Company raised additional capital with the January 30, and June 30, 2017 equity offerings that raised approximately $13.8 million dollars. See note 7, Shareholder’s equity. Also in 2017, the Company completed a significant $42 million acquisition of a waste management business in Virginia that is expected to be accretive to operating cash flows in the fourth quarter of 2017.

 

The Company has prepared its business plan for the ensuing twelve months, and believes it has sufficient resources to operate for the ensuing 12 month period. The Company’s objectives in preparing this plan include: (1) renegotiating contracts to increase revenue; (2) increasing fees on existing contracts and (3) reducing costs. The Company has already been successful in increasing rates on several recently negotiated contracts and acquiring additional contracts, both of which are accretive to net income and operating cash flow.

 

Further, the Company believes that net income will improve enough beginning in the third quarter of 2017 and that along with our available debt and cash on hand will provide enough resources for the Company to have the cash flow to fund operations.