NOTE 3 – ACQUISITIONS

The CFS Group Acquisition

On February 15, 2017, the Company, in order to expand its geographical footprint to new markets outside of the state of Missouri, acquired 100% of the membership interests of The CFS Group, LLC, The CFS Group Disposal & Recycling Services, LLC and RWG5, LLC (“The CFS Group”) pursuant to that certain Membership Interest Purchase Agreement, dated February 15, 2017. This acquisition was consummated to define the Company’s growth strategy of targeting and expanding within vertically integrated markets and serve as a platform for further growth.

The acquisition was accounted for by the Company using acquisition method under business combination accounting. Under this method, the purchase price paid by the acquirer is allocated to the assets acquired and liabilities assumed as of the acquisition date based on the fair value. Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions. Certain amounts below are provisional based on our best estimates using information available as of the reporting date. The Company is waiting for information to become available to finalize its valuation of certain elements of this transaction. Specifically, the assigned values for property, plant and equipment, trade names and trademarks, landfill permits, customer relationships, capital leases payable, mortgage payable, asset retirement obligations and goodwill are provisional in nature and subject to change upon the completion of the final valuation of such elements. All fair value measurements of acquired assets and liabilities assumed are non-recurring in nature and classified as level 3 on the fair value hierarchy.

The aggregate purchase price consisted of the following:

Cash consideration	$	3,933,000
Cash consideration funded through debt issuance		34,100,000
Restricted stock consideration		1,390,000
Total	$	39,423,000

Goldman Sachs was a lender to both the Company and CFS at the time of the acquisition. Goldman Sachs novated this debt from CFS to the Company as part of the acquisition. See note 6.

As noted in the table above, the Company issued 500,000 restricted shares of common stock as consideration which was valued at market at the date of the closing, fair value of approximately $1,390,000.

The following table summarizes the estimated fair value of The CFS Group assets acquired and liabilities assumed at the date of acquisition:

Accounts receivable		2,793,000
Prepaid expenses and other current assets		845,000
Property, plant and equipment (provisional)		14,179,000
Trade names and trademarks (provisional)		780,000
Landfill permits (provisional)		27,566,000
Customer relationships (provisional)		560,000
Accounts payable and accrued liabilities		(2,654,000	)
Capital leases payable (provisional)		(6,896,000	)
Mortgage payable (provisional)		(1,429,000	)
Asset retirement obligations (provisional)		(7,904,000	)
Non-controlling interest (provisional)		(71,000	)
Goodwill (provisional)		11,654,000
Total	$	39,423,000

Revenue and net loss included in the three months ended March 31, 2017 financial statements attributable to the CFS Group is $2,725,000 and $966,000, respectively. Transaction costs related to this acquisition were approximately $207,000 and were expensed within selling, general, and administrative expense on the consolidated statement of operations.

The following unaudited pro forma information below presents the consolidated results operations data as if the acquisition of the CFS Group took place on January 1, 2016:

	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016

Total Revenue	$	13,361,038		$	12,501,682
Net Loss	$	(5,889,139	)	$	(7,036,425	)
Basic Net Loss Per Share	$	(1.14	)	$	(6.49	)