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Nature of Operations and Organization
12 Months Ended
Dec. 31, 2016
Nature of Operations and Organization [Abstract]  
NATURE OF OPERATIONS AND ORGANIZATION

NOTE 1 - NATURE OF OPERATIONS AND ORGANIZATION

 

The Company is a regional, vertically integrated solid waste services company that provides collection, transfer, disposal and landfill services. The Company is primarily in the business of residential and commercial waste disposal and hauling and has contracts with various cities and municipalities. The majority of the Company’s customers are located in the St. Louis metropolitan and surrounding areas.

 

Meridian Waste Solutions, Inc. (the “Company” or “Meridian”) is currently operating under four separate Limited Liability Companies:

 

(1) Here To Serve Missouri Waste Division, LLC (“HTSMWD”), a Missouri Limited Liability Company;

(2) Here To Serve Georgia Waste Division, LLC (“HTSGWD”), a Georgia Limited Liability Company;

(3) Meridian Land Company, LLC (“MLC”), a Georgia Limited Liability Company;

(4) Christian Disposal, LLC and subsidiary (“CD”), a Missouri Limited Liability Company.

 

In 2014, HTSMWD purchased the assets of a large solid waste disposal company in the St. Louis, Missouri market. This acquisition is considered the platform company for future acquisitions in the solid waste disposal industry. HTSGWD was created to facilitate expansion in this industry throughout the Southeast.

 

Reverse Stock Split

 

On November 2, 2016, the Company effected a reverse stock split of the Company’s common stock whereby each 20 shares of common stock was replaced with one share of common stock. The par value and the number of authorized shares of the common stock were not adjusted. All common share and per share amounts for all periods presented in these financial statements have been adjusted retroactively to reflect the reverse stock split. The quantity of common stock equivalents and the conversion and exercise ratios were adjusted for the effect of the reverse stock split.

 

Basis of Consolidation

 

The consolidated financial statements for the year ended December 31, 2016 include the operations of the Company and its wholly-owned subsidiaries, Here To Serve Missouri Waste Division, LLC, Meridian Land Company, LLC, Here to Serve Technology, LLC, Here To Serve Georgia Waste Division, LLC, Brooklyn Cheesecake & Dessert Acquisition Corp, Meridian Waste Missouri, LLC and Christian Disposal, LLC. The following two subsidiaries of the Company, Here To Serve Georgia Waste Division, LLC and Here to Serve Technology, LLC ("HTST"), had no operations during the period. The consolidated financial statements for the year-ended December 31, 2015 include the operations of the Company and its wholly-owned subsidiaries, Here To Serve Missouri Waste Division, LLC, Here To Serve Georgia Waste Division, LLC, Brooklyn Cheesecake & Acquisition Corp., and Here to Serve Technology, LLC.

 

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 $8,800,000. In addition, as of December 31, 2016, the Company was in violation of covenants within its credit agreement with Goldman, Sachs & Co. The lenders and agents and the Company and its affiliates entered into a waiver and amendment letter on April 11, 2017 whereby the covenant violations at December 31, 2016 were waived.

 

During 2016, the Company was able to obtain additional financial capital through the following transactions: (1) $2.2 million raised through the sale of common stock; (2) $1.2 million raised through the sale of Series C Preferred Stock; and (3) $3.2 million raised through the issuance of debt. During 2016, we implemented several measures to reduce our cash outflow for operations. These measures including absorbing recently acquired businesses into our corporate structure and becoming a more vertically integrated entity. The Company was able to generate positive cash flow from operating activities of approximately $70,000 for the year-ended December 31, 2016. In addition, as of December 31, 2016, the Company had approximately $800,000 in cash to cover its short term cash requirements. Further, the Company has approximately $12,000,000 of borrowing capacity on its multi-draw term loans and revolving commitments. See note 5, under the heading Goldman Sachs Credit Agreement. This borrowing capacity is available for working capital and general corporate purposes.

 

Further, in 2017, the Company raised additional capital with the January 30, 2017 equity offering that raised approximately $11 million dollars. See note 15, Subsequent Events. 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 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) expanding the geographical footprint of the entity and focusing on integrating the various business units into the Company to maximize synergies and operational savings; (2) aggressively renegotiating contracts to increase revenue; and (3) aggressively seeking additional contracts in Missouri and surrounding areas. The Company has already been successful in increasing rates on several recently negotiated contracts and acquiring additional contracts in the St. Louis area, both of which are accretive to net income and operating cash flow.

 

The Company believes that because of (1) the additional financial capital realized in 2016 and 2017, as described above, and (ii) the actions it has already implemented to reduce operating costs and grow revenue, the Company has sufficient financial resources to operate for the ensuing 12 months.