Overview
Deep Green Waste & Recycling, Inc. (f/k/a Critic Clothing, Inc.) ("Deep Green",
the "Company", "we", "us", or "our") is a publicly quoted company seeking to
create value for its shareholders by seeking to acquire other operating entities
for growth in return for shares of our common stock.
The Company was organized as a Nevada Corporation on August 24, 1995 under the
name of Evader, Inc. On May 25, 2012, the Company filed its Foreign Profit
Corporation Articles of Domestication to change the domicile of the Company from
Nevada to Wyoming. On November 4, 2015, the Company filed an Amendment to its
Articles of Incorporation to change the name of the Company to Critical
Clothing, Inc. and on August 28, 2017 an Amendment was filed to change the
Company name to Deep Green Waste & Recycling, Inc.
On August 24, 2017, the Company entered into an Agreement of Conveyance,
Transfer and Assignment of Assets and Assumption of Obligations (the
"Agreement") with St. James Capital Management, LLC. Under the terms of the
Agreement, St. James Capital Management, LLC transferred and assigned all of the
assets of the Company related to its extreme sports apparel design and
manufacturing business in exchange for the assumption of certain liabilities and
cancellation of 3,000,000 shares (as adjusted for the September 27, 2017 reverse
stock split of 1 share for 1000 shares) of common stock of the Company.
On August 24, 2017, the Company acquired all the membership units of Deep Green
Waste and Recycling, LLC ("DGWR LLC"), a Georgia limited liability company
engaged in the waste recycling business since 2011, in exchange for 85,000,000
shares (as adjusted for the September 27, 2017 reverse stock split of 1 share
for 1000 shares) of the Company's common stock. The transaction was accounted
for as a "reverse merger" where DGWR LLC was considered the accounting acquiror
and the Company was considered the accounting acquiree.
Effective October 1, 2017, Deep Green acquired Compaction and Recycling
Equipment, Inc. (CARE), a Portland, Oregon based company that sells and services
waste and recycling equipment. Deep Green purchased 100% of the common stock for
$902,700. $586,890 was paid in cash at closing and a promissory note was
executed in the amount of $315,810. Please see NOTE F - DEBT for further
information.
Effective October 1, 2017, Deep Green acquired Columbia Financial Services, Inc,
(CFSI), a Portland, Oregon based company that finances the purchases of waste
and recycling equipment. Deep Green purchased 100% of the common stock for
$597,300. $418,110 was paid in cash at closing and a promissory note was
executed in the amount of $179,190. Please see NOTE F - DEBT for further
information.
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On August 7, 2018, the Company entered into an Agreement of Conveyance, Transfer
and Assignment of Subsidiaries and Assumption of Obligations (the "Agreement")
with Mirabile Corporate Holdings, Inc. Under the terms of the Agreement, the
Company transferred all capital stock of its two wholly owned subsidiaries,
Compaction and Recycling Equipment, Inc. and Columbia Financial Services, Inc.,
to Mirabile Corporate Holdings, Inc. in exchange for the assumption and
cancellation of certain liabilities. Deep Green's then Chief Executive Officer
owned a 7.5% equity interest in Mirabile Corporate Holdings, Inc.
On August 7, 2018, the Company ceased its waste recycling business.
The Company re-launched its waste and recycling services operation and has begun
to re-engage with customers, waste haulers and recycling centers, which are
critical elements of its historically successful business model: designing and
managing waste programs for commercial and institutional properties for cost
savings, ease of operation, and minimal administrative stress for its clients.
Asset Purchase Agreement
On February 8, 2021, the Company, through its wholly owned subsidiary DG
Research, Inc. (the "Buyer"), entered into an Asset Purchase Agreement (the
"Agreement") with Amwaste, Inc. (the "Seller"). Under the terms of the
Agreement, the Buyer agreed to purchase from the Seller certain assets (the
"Assets") utilized in the Seller's waste management business located in Glynn
County, Georgia. In consideration for the purchase of the Assets, the Buyer paid
the seller $160,000 and issued the Seller 2,000,000 shares of the Company's
restricted common stock. The Buyer remitted $50,000 at Closing and issued the
Seller a Promissory Note (the "Note") in the amount of $110,000, which was paid
April 9, 2021. The Note was secured by the Assets purchased through the
Agreement. The transaction closed on February 11, 2021.
On July 11, 2021, the Company's Board unanimously approved an Amendment to our
Articles of Incorporation (the "Authorized Share Amendment") to increase the
number of authorized shares of Common Stock of the Company from 250,000,000 to
500,000,000 and to increase the number of authorized shares of Preferred Stock
of the Company from 2,000,000 to 5,000,000 with the Board maintaining the
discretion of whether or not to implement the increase in authorized shares of
Common and Preferred Stock. On July 11, 2021, the Majority Stockholders
delivered an executed written consent in lieu of a special meeting (the
"Stockholder Consent") authorizing and approving the Authorized Share Amendment
and the increase in authorized shares of Common and Preferred Stock.
Securities Purchase Agreement
On August 11, 2021, the Company entered into a Securities Purchase Agreement
(the "Agreement") with Jeremy Lyell (the "Shareholder") and Lyell Environmental
Services, Inc. (hereinafter "LES"). On October 19, 2021, the Company closed on
the Securities Purchase Agreement (the "Agreement") with Jeremy Lyell (the
"Shareholder"). In consideration for the purchase of all Lyell Environmental
Services, Inc. shares from the Shareholder, the Company was to pay the
Shareholder (i) $50,000 upon execution of the Agreement that was held in escrow,
(ii) $1,300,000 at Closing, and (iii) 1,000,000 shares of the Company's common
stock. Under the amended Agreement (the "Amended Agreement"), the Company paid
to the Shareholder (i) the $50,000 paid upon execution of the Agreement and that
was held in escrow, (ii) $1,000,000 at Closing, and (iii) 1,000,000 shares of
the Company's common stock. The Company also issued the Shareholder a Promissory
Note (the "Promissory Note") in the amount of $186,537.92. The Promissory Note
accrues interest at 7% per annum and is due on December 18, 2021. The
transaction closed on October 19, 2021.
In order to further grow its business, the Company plans to:
? expand its service offerings to provide additional sustainable waste
management solutions that further minimize costs based on volume and content
of waste streams, and methods of disposal, including landfills, transfer
stations and recycling centers;
? Acquire profitable waste and recycling services companies with similar or
compatible and synergistic business models, that can help the Company achieve
these objectives;
? Offer innovative recycling services that significantly reduce the disposal of
plastics, electronic wastes, food wastes, and hazardous wastes in the
commercial property universe;
? Establish partnerships with innovative universities, municipalities and
companies; and
? Attract investment funds who will actively work with the Company to achieve
these goals and help the Company grow into a leading waste and recycling
services supplier in North America.
Some potential merger/acquisition candidates have been identified and
discussions initiated. These candidates are within the Company's core business
model, serving commercial properties, accretive to cash flow, and geographically
favorable. While seeking to identify acquisition candidates, the Company seeks
to identify target entities with a similar core business model or a model which
naturally integrates with its own, and which are situated in opportunistic
geographic locations.
We have unrestricted discretion in seeking and participating in a business
opportunity, subject to the availability of such opportunities, economic
conditions, and other factors.
The selection of a business opportunity in which to participate is complex and
risky. Additionally, we have only limited resources and may find it difficult to
locate good opportunities. There can be no assurance that we will be able to
identify and acquire any business opportunity which will ultimately prove to be
beneficial to us and our shareholders. We will select any potential business
opportunity based on our management's best business judgment.
Our activities are subject to several significant risks, which arise primarily
as a result of the fact that we have no specific business and may acquire or
participate in a business opportunity based on the decision of management, which
potentially could act without the consent, vote, or approval of our
shareholders. The risks faced by us are further increased as a result of its
lack of resources and our inability to provide a prospective business
opportunity with significant capital.
Critical Accounting Policies and Significant Judgments and Estimates
Our management's discussion and analysis of our financial condition and results
of operations are based on our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States of America, or GAAP. The preparation of these consolidated
financial statements requires us to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities as of the date of the consolidated financial statements
as well as the reported expenses during the reporting periods. The accounting
estimates that require our most significant, difficult and subjective judgments
have an impact on revenue recognition, the determination of share-based
compensation and financial instruments. We evaluate our estimates and judgments
on an ongoing basis. Actual results may differ materially from these estimates
under different assumptions or conditions.
Our significant accounting policies are more fully described in NOTE B - SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES to our consolidated financial statements
included elsewhere in this Quarterly Report on Form 10-Q.
29
Discussion for the three months ended September 30, 2021 and September 30, 2020
(Unaudited):
Results of Operations:
September 30, September 30,
2021 2020 $ Change
Gross revenue $ 43,915 $ - $ 43,915
Operating expenses 203,275 127,255 76,020
Loss from Operations (189,290 ) (127,255 ) (62,035 )
Other income (expense) 457,866 (73,577 ) 531,443
Net income (loss) 268,576 (200,832 ) 469,408
Net loss per share - basic and diluted $ (0.00 ) $ (0.00 ) $ -
Revenues
For the three months ended September 30, 2021 and 2020, we generated $43,915 and
$0 revenue, respectively.
Operating Expenses
Our operating expenses were $203,275 and $127,255 for the three months ended
September 30, 2021 and 2020, respectively.
We anticipate that our cost of revenues will increase in 2021 and for the
foreseeable future as we continue to build out our waste management services and
identify acquisition opportunities in the waste and recycling sector.
We incurred $16,817 and $18,768 in stock-based compensation for the three months
ended September 30, 2021 and 2020. Other officers and directors compensation for
the three months ended September 30, 2021 and 2020 was $84,828 and $27,500
respectively.
Loss from Operations
The Company's loss from operations increased to $189,290 for the three months
ended September 30, 2021 from operating loss of $127,255 in 2020, an increase of
$62,035.
Other Income (Expense)
Other income (expense) was $457,866 for the three months ended September 30,
2021 and included interest expense of ($188,937), loss on conversions of debt of
($354,423) offset by derivative liability income of $366,414 and gain on write
off of notes payable of $652,559. Other expense was ($73,577) for the three
months ended September 30, 2020 and included interest expense of ($115,303) and
loss on conversions of convertible notes payable of ($114,652) offset by
derivative income of $156,378
Net Income (Loss)
For the three months ended September 30, 2021, our net income was $268,576, as
compared to a net loss of ($200,832) for three months ended September 30, 2020,
an increase of $469,408. The increase in net income was largely attributable to
the gain on write off of notes payable of $652,559 and derivative liability
income in the amount of $366,414.
Discussion for the nine months ended September 30, 2021 and September 30, 2020
(Unaudited):
Results of Operations:
September 30, September 30,
2021 2020 $ Change
Gross revenue $ 120,180 $ - $ 120,180
Operating expenses 558,622 251,846 306,776
Loss from operations (496,537 ) (251,846 ) (244,691 )
Other income (expense) (238,369 ) (204,318 ) (34,051 )
Net income (loss) (734,906 ) (456,164 ) (278,742 )
Net loss per share - basic and diluted $ (0.00 ) $ (0.00 ) $ -
Revenues
For the nine months ended September 30, 2021 and 2020, we generated $120,180 and
$0 revenue, respectively.
Operating Expenses
Our operating expenses were $558,622 and $251,846 for the nine months ended
September 30, 2021 and 2020, respectively.
We anticipate that our cost of revenues will increase in 2021 and for the
foreseeable future as we continue to build out our waste management services and
identify acquisition opportunities in the waste and recycling sector.
We incurred $63,728 and $52,368 in stock-based compensation for the nine months
ended September 30, 2021 and 2020. Other officers and directors compensation for
the nine months ended September 30, 2021 and 2020 was $128,856 and $47,500
respectively.
Loss from Operations
The Company's loss from operations increased to $496,537 for the nine months
ended September 30, 2021 from $251,846 in 2020, an increase of $252,671.
Other Income (Expense)
Other income (expense) increased to ($238,369) for the nine months ended
September 30, 2021 and included interest expense of ($539,823) and loss on
conversions of convertible notes payable of ($797,252) offset by derivative
liability income of $463,894 and gain on write off of notes payable of $652,559.
Other income (expense) was ($204,318) for the nine months ended September 30,
2020 and included interest expense of ($169,523) and loss on conversions of
convertible notes payable of ($114,652) offset by derivative liability income of
$79,857.
Net Income (Loss)
For the nine months ended September 30, 2021, our net income (loss) increased to
($734,906), as compared to a net loss of ($456,164) for nine months ended
September 30, 2020, an increase of ($278,842). The increase in net loss was
largely attributable to the loss on conversions of debt of $797,252 and interest
expenses of $539,823.
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Liquidity and Capital Resources
At September 30, 2021, we had current assets of $97,200 and current liabilities
of $3,966,187 resulting in negative working capital of $3,868,987, of which
$2,979,179 was accounts payable and $66,011 was included in accrued interest. At
September 30, 2021, we had total assets of $384,756 and total liabilities of
$3,966,187 resulting in stockholders' deficit of ($3,581,431).
At December 31, 2020, we had current assets of $757 and current liabilities of
$4,373,037 resulting in negative working capital of $4,372,280, of which
$2,948,964 was accounts payable and $86,307 was included in deferred
compensation. At December 31, 2020, we had total assets of $15,555 and total
liabilities of $4,373,037 resulting in stockholders' deficit of $4,357,482.
Accounts Payable
At September 30, 2021, the Company had accounts payable of $2,979,179 that
consisted of $492,319 in default judgments due to prior vendors, $2,266,554 due
to vendors for materials and services and $220,306 due for credit card
obligations.
At December 31, 2020, the Company had accounts payable of $2,948,964 that
consisted of $487,615 in default judgments due to prior vendors, $2,241,043 due
to vendors for materials and services and $220,306 due for credit card
obligations.
Debt
At September 30, 2021, the Company had outstanding debt of $525,854 that
consisted of $387,535 of debt in technical default, $104,377 in loans payable to
officers and directors, $5,574 due a capital lease and $28,368 due to others.
Please see NOTE F - DEBT for further information.
At December 31, 2020, the Company had outstanding debt of $896,584 that
consisted of $888,109 of debt in technical default and $8,475 other debt. Please
see NOTE F - DEBTfor further information.
Capital Raising
For the nine months ended September 30, 2021 and the twelve months ended
December 31, 2020, the Company raised $720,877 and $131,475 through the issuance
of convertible promissory notes or loans from officers, respectively.
Cash on Hand
Our cash on hand as of September 30, 2021 and December 31, 2020 was $51,878 and
$757, respectively.
Satisfaction of Outstanding Liabilities
As of September 30, 2021, the Company has a liability of $492,319 as a result of
three (3) default judgments. The Company intends to negotiate settlements and
establish payment plans with each creditor that will satisfy these judgements.
Nonetheless, some or all of the creditors may elect to bring further litigation
to protect their claims or perfect their judgments.
The Company accrued customer deposits in the form of advance payments for waste
management services that could not be delivered when the Company suspended
operations in August 2018. The Company intends to either resume waste management
services with those customers or refund the advance payments through a repayment
plan.
31
There can be no assurance that sufficient funds required during the next year or
thereafter will be generated from operations or that funds will be available
from external sources such as debt or equity financings or other potential
sources to satisfy these outstanding liabilities. The lack of additional capital
resulting from the inability to generate cash flow from operations or to raise
capital from external sources would force the Company to substantially curtail
or cease operations and would, therefore, have a material adverse effect on its
business.
We currently have no external sources of liquidity such as arrangements with
credit institutions or off-balance sheet arrangements that will have or are
reasonably likely to have a current or future effect on our financial condition
or immediate access to capital.
We are dependent on the sale of our securities to fund our operations and will
remain so until we generate sufficient revenues to pay for our operating costs.
Our officers and directors have made no written commitments with respect to
providing a source of liquidity in the form of cash advances, loans and/or
financial guarantees.
If we are unable to raise the funds, we will seek alternative financing through
means such as borrowings from institutions or private individuals. There can be
no assurance that we will be able to raise the capital we need for our
operations from the sale of our securities. We have not located any sources for
these funds and may not be able to do so in the future. We expect that we will
seek additional financing in the future. However, we may not be able to obtain
additional capital or generate sufficient revenues to fund our operations. If we
are unsuccessful at raising sufficient funds, for whatever reason, to fund our
operations, we may be forced to cease operations. If we fail to raise funds, we
expect that we will be required to seek protection from creditors under
applicable bankruptcy laws.
Our independent registered public accounting firm has expressed substantial
doubt about our ability to continue as a going concern and believes that our
ability is dependent on our ability to implement our business plan, raise
capital and generate revenues. Please see NOTE L - GOING CONCERN UNCERTAINTY for
further information.
Convertible Notes
On July 2, 2021, the Company entered into a Securities Purchase Agreement
("SPA") with Labrys Fund, LP ("Labrys") and issued Labrys a Promissory Note (the
"Note") in the amount of One Hundred Thousand and NO/100 Dollars ($100,000). The
Note is convertible, in whole or in part, at any time and from time to time
before maturity (July 2, 2022) at the option of the holder at the Conversion
Price that shall equal $0.015. If at any time the Conversion Price as determined
hereunder for any conversion would be less than the par value of the Common
Stock, then at the sole discretion of the Holder, the Conversion Price hereunder
may equal such par value for such conversion and the Conversion Amount for such
conversion may be increased to include Additional Principal, where "Additional
Principal" means such additional amount to be added to the Conversion Amount to
the extent necessary to cause the number of conversion shares issuable upon such
conversion to equal the same number of conversion shares as would have been
issued had the Conversion Price not been adjusted by the Holder to the par value
price. The Conversion Price is subject to equitable adjustments for stock
splits, stock dividends or rights offerings by the Borrower relating to the
Borrower's securities or the securities of any subsidiary of the Borrower,
combinations, recapitalization, reclassifications, extraordinary distributions
and similar events. Holder shall be entitled to deduct $1,750.00 from the
conversion amount in each Notice of Conversion to cover Holder's fees associated
with each Notice of Conversion. The Note has a term of one (1) year and bears
interest at 12% annually. The transaction closed on July 2, 2021. As part and
parcel of the foregoing transaction, Labrys was issued a warrant granting the
holder the right to purchase up to 5,000,000 shares of the Company's common
stock at an exercise price of $0.02 for a term of 5-years. On July 8, 2021, the
Company issued Labrys 1,000,000 shares of common stock as Commitment Shares as
per the terms of the SPA. As of September 30, 2021, $100,000 principal and
$2,959 interest were due. Please see NOTE G - CONVERTIBLE NOTES PAYABLE for
further information.
On June 4, 2021, the Company issued Quick Capital, LLC ("Quick") a Convertible
Promissory Note (the "Note") in the amount of One Hundred Fifty Thousand and
NO/100 Dollars ($150,000). The Note is convertible, in whole or in part, at any
time and from time to time before maturity (June 4, 2022) at the option of the
holder at the Conversion Price that shall equal the lesser of: a) $0.01 or b)
Sixty Percent (60%) of the lowest Trading Price (defined below) during the
Valuation Period (defined below), and the Conversion Amount shall be the amount
of principal or interest electively converted in the Conversion Notice. The
total number of shares due under any conversion notice ("Notice Shares") will be
equal to the Conversion Amount divided by the Conversion Price. "Trading Price"
means, for any security as of any date, any trading price on the OTC Markets, or
other applicable trading market (the "OTCBB") as reported by a reliable
reporting service ("Reporting Service") mutually acceptable to Maker and Holder
(i.e. Bloomberg) or, if the OTCBB is not the principal trading market for such
security, the price of such security on the principal securities exchange or
trading market where such security is listed or traded. The "Valuation Period"
shall mean twenty (20) Trading Days, commencing on the first Trading Day
following delivery and clearing of the Notice Shares in Holder's brokerage
account, as reported by Holder ("Valuation Start Date"). The Note has a term of
one (1) year and bears interest at 10% annually. The Company and Quick also
entered into a Registration Rights Agreement ("RRA") that provided for the
Company to file a Registration Statement with the SEC covering the resale of up
to 20,000,000 shares underlying the Note and to have filed such Registration
Statement within 30 days of the RRA. In the event that the Company doesn't
maintain the registration requirements provided for in the RRA, the Company is
obligated to pay Quick certain payments for such failures. The transaction
closed on June 8, 2021. As of September 30, 2021, the Note was paid in full.
On June 4, 2021, the Company issued GPL Ventures, LLC ("GPL") a Convertible
Promissory Note (the "Note") in the amount of One Hundred Fifty Thousand and
NO/100 Dollars ($150,000). The Note is convertible, in whole or in part, at any
time and from time to time before maturity (June 4, 2022) at the option of the
holder at the Conversion Price that shall equal the lesser of: a) $0.01 or b)
Sixty Percent (60%) of the lowest Trading Price (defined below) during the
Valuation Period (defined below), and the Conversion Amount shall be the amount
of principal or interest electively converted in the Conversion Notice. The
total number of shares due under any conversion notice ("Notice Shares") will be
equal to the Conversion Amount divided by the Conversion Price. "Trading Price"
means, for any security as of any date, any trading price on the OTC Markets, or
other applicable trading market (the "OTCBB") as reported by a reliable
reporting service ("Reporting Service") mutually acceptable to Maker and Holder
(i.e. Bloomberg) or, if the OTCBB is not the principal trading market for such
security, the price of such security on the principal securities exchange or
trading market where such security is listed or traded. The "Valuation Period"
shall mean twenty (20) Trading Days, commencing on the first Trading Day
following delivery and clearing of the Notice Shares in Holder's brokerage
account, as reported by Holder ("Valuation Start Date"). The Note has a term of
one (1) year and bears interest at 10% annually. The Company and GPL also
entered into a Registration Rights Agreement ("RRA") that provided for the
Company to file a Registration Statement with the SEC covering the resale of up
to 20,000,000 shares underlying the Note and to have filed such Registration
Statement within 30 days of the RRA. In the event that the Company doesn't
maintain the registration requirements provided for in the RRA, the Company is
obligated to pay GPL certain payments for such failures. The transaction closed
on June 8, 2021. As of September 30, 2021, the Note was paid in full.
On March 2, 2021, the Company issued GPL Ventures, LLC ("GPL") a Convertible
Promissory Note (the "Note") in the amount of Fifty Thousand and NO/100 Dollars
($50,000). The Note is convertible, in whole or in part, at any time and from
time to time before maturity (March 2, 2022) at the option of the holder at the
Conversion Price that shall equal the lesser of: a) $0.01 or b) Sixty Percent
(60%) of the lowest Trading Price (defined below) during the Valuation Period
(defined below), and the Conversion Amount shall be the amount of principal or
interest electively converted in the Conversion Notice. The total number of
shares due under any conversion notice ("Notice Shares") will be equal to the
Conversion Amount divided by the Conversion Price. "Trading Price" means, for
any security as of any date, any trading price on the OTC Markets, or other
applicable trading market (the "OTCBB") as reported by a reliable reporting
service ("Reporting Service") mutually acceptable to Maker and Holder (i.e.
Bloomberg) or, if the OTCBB is not the principal trading market for such
security, the price of such security on the principal securities exchange or
trading market where such security is listed or traded. The "Valuation Period"
shall mean twenty (20) Trading Days, commencing on the first Trading Day
following delivery and clearing of the Notice Shares in Holder's brokerage
account, as reported by Holder ("Valuation Start Date"). The Note has a term of
one (1) year and bears interest at 10% annually. The Company and GPL also
entered into a Registration Rights Agreement ("RRA") that provided for the
Company to file a Registration Statement with the SEC covering the resale of up
to 10,000,000 shares underlying the Note and to have filed such Registration
Statement within 30 days of the RRA. In the event that the Company doesn't
maintain the registration requirements provided for in the RRA, the Company is
obligated to pay GPL certain payments for such failures. The transaction closed
on March 9, 2021. As of September 30, 2021, the Note was paid in full.
On February 5, 2021, the Company issued GPL Ventures, LLC ("GPL") a Convertible
Promissory Note (the "Note") in the amount of Seventy-Five Thousand and NO/100
Dollars ($75,000). The Note is convertible, in whole or in part, at any time and
from time to time before maturity (February 5, 2022) at the option of the holder
at the Conversion Price that shall equal the lesser of: a) $0.01 or b) Sixty
Percent (60%) of the lowest Trading Price (defined below) during the Valuation
Period (defined below), and the Conversion Amount shall be the amount of
principal or interest electively converted in the Conversion Notice. The total
number of shares due under any conversion notice ("Notice Shares") will be equal
to the Conversion Amount divided by the Conversion Price. "Trading Price" means,
for any security as of any date, any trading price on the OTC Markets, or other
applicable trading market (the "OTCBB") as reported by a reliable reporting
service ("Reporting Service") mutually acceptable to Maker and Holder (i.e.
Bloomberg) or, if the OTCBB is not the principal trading market for such
security, the price of such security on the principal securities exchange or
trading market where such security is listed or traded. The "Valuation Period"
shall mean twenty (20) Trading Days, commencing on the first Trading Day
following delivery and clearing of the Notice Shares in Holder's brokerage
account, as reported by Holder ("Valuation Start Date"). The Note has a term of
one (1) year and bears interest at 10% annually. The Company and GPL also
entered into a Registration Rights Agreement ("RRA") that provided for the
Company to file a Registration Statement with the SEC covering the resale of up
to 10,000,000 shares underlying the Note and to have filed such Registration
Statement within 30 days of the RRA. In the event that the Company doesn't
maintain the registration requirements provided for in the RRA, the Company is
obligated to pay GPL certain payments for such failures. As of September 30,
2021, the Note was paid in full.
On June 23, 2020, the Company issued GPL Ventures LLC ("GPL") a Convertible
Promissory Note (the "Note") in the amount of One Hundred Thousand and NO/100
Dollars ($100,000). The Note is convertible, in whole or in part, at any time
and from time to time before maturity (June 23, 2021) at the option of the
holder at the Conversion Price that shall equal the lesser of a) $0.01 or b)
Sixty Percent (60%) of the lowest Trading Price (defined below) during the
Valuation Period (defined below), and the Conversion Amount shall be the amount
of principal or interest electively converted in the Conversion Notice. The
total number of shares due under any conversion notice ("Notice Shares") will be
equal to the Conversion Amount divided by the Conversion Price. "Trading Price"
means, for any security as of any date, any trading price on the OTC Markets, or
other applicable trading market (the "OTCBB") as reported by a reliable
reporting service ("Reporting Service") mutually acceptable to Maker and Holder
(i.e. Bloomberg) or, if the OTCBB is not the principal trading market for such
security, the price of such security on the principal securities exchange or
trading market where such security is listed or traded. The "Valuation Period"
shall mean twenty (20) Trading Days, commencing on the first Trading Day
following delivery and clearing of the Notice Shares in Holder's brokerage
account, as reported by Holder ("Valuation Start Date"). The Note has a term of
one (1) year and bears interest at 10% annually. The Company and GPL also
entered into a Registration Rights Agreement ("RRA") that provided for the
Company to file a Registration Statement with the SEC covering the resale of
shares underlying the Note and the warrant and to have declared effective such
Registration Statement (which occurred on July 13, 2020). In the event that the
Company doesn't maintain the registration requirements provided for in the RRA,
the Company is obligated to pay GPL certain payments for such failures. In the
twelve months ended December 31, 2020, a total of $84,000 (of the $100,000 Note)
was converted into shares of the Company's common stock. As of September 30,
2021, the Note was paid in full. Please see NOTE G - CONVERTIBLE NOTES PAYABLE
for further information.
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Cash Flows
We had net cash used in operating activities for the nine months ended September
30, 2021 and 2020 of ($364,267) and ($126,281), respectively.
We had net cash used in investing activities for the nine months ended September
30, 2021 and 2020 of ($215,382) and $0, respectively.
We had net cash provided by financing activities for the nine months ended
September 30, 2021 and 2020 of $630,770 and $128,445, respectively.
Required Capital Over the Next Twelve Months
We expect to incur losses from operations for the near future. We believe we
will have to raise an additional $2,500,000 to expand our operations over the
next twelve months, including roughly $75,000 to remain current in our filings
with the SEC. The additional funds will be utilized for hiring ancillary staff
and key personnel, corporate website and SEO development, acquisition(s) in the
waste and recycling management sector and day to day operations.
Future financing may include the issuance of equity or debt securities,
obtaining credit facilities, or other financing mechanisms. Even if we are able
to raise the funds required, it is possible that we could incur unexpected costs
and expenses or experience unexpected cash requirements that would force us to
seek alternative financing. Furthermore, if we issue additional equity or debt
securities, existing holders of our securities may experience additional
dilution or the new equity securities may have rights, preferences or privileges
senior to those of existing holders of our securities.
If additional financing is not available or is not available on acceptable
terms, we may be required to delay or alter our business plan based on available
financing.
Critical Accounting Policies and Estimates
The SEC issued Financial Reporting Release No. 60, "Cautionary Advice Regarding
Disclosure About Critical Accounting Policies" suggesting that companies provide
additional disclosure and commentary on their most critical accounting policies.
In Financial Reporting Release No. 60, the SEC has defined the most critical
accounting policies as the ones that are most important to the portrayal of a
company's financial condition and operating results and require management to
make its most difficult and subjective judgments, often as a result of the need
to make estimates of matters that are inherently uncertain. Based on this
definition, we have identified the following significant policies as critical to
the understanding of our financial statements. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make a variety of estimates and assumptions that affect (i) the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities as of the date of the financial statements and (ii) the reported
amounts of revenues and expenses during the reporting periods covered by the
financial statements. Our management expects to make judgments and estimates
about the effect of matters that are inherently uncertain. As the number of
variables and assumptions affecting the future resolution of the uncertainties
increase, these judgments become even more subjective and complex. Although we
believe that our estimates and assumptions are reasonable, actual results may
differ significantly from these estimates. Changes in estimates and assumptions
based upon actual results may have a material impact on our results.
Off-Balance Sheet Arrangements
We did not have, during the periods presented, and we do not currently have, any
relationships with any organizations or financial partnerships, such as
structured finance or special purpose entities, that would have been established
for the purpose of facilitating off-balance sheet arrangements or other
contractually narrow or limited purposes.
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DEEP GREEN WASTE & RECYCLING, INC. 
