DGWR.OTC.PinkDeep Green Waste & Recycling, INC
10-Q: Deep Green Waste & Recycling Reports Increased Revenue in Q1 2024, Despite Ongoing Financial Challenges
Sentiment:
Quarterly Report
Deep Green Waste & Recycling saw revenue growth in Q1 2024, but continues to face significant financial hurdles and going concern uncertainty.
Capital raiseThe company states that it believes it will have to raise an additional $500,000 to expand its operations over the next twelve months, including roughly $50,000 to remain current in its filings with the SEC.Future financing may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms.
Better than expectedThe company's revenue increased significantly compared to the same period last year.The net loss was substantially reduced compared to the same period last year.
Summary
- Deep Green Waste & Recycling, Inc. reported its financial results for the quarter ended March 31, 2024.
- The company's revenue increased to $342,325, compared to $178,763 in the same period last year.
- The net loss for the quarter was $10,680, a significant improvement from the $210,524 loss in Q1 2023.
- Despite the improved results, the company faces substantial financial challenges, including negative working capital of $4,091,772 and an accumulated deficit of $13,072,257.
- The company's independent auditor has expressed substantial doubt about its ability to continue as a going concern.
- Management plans to secure additional funding through various means, but there is no guarantee of success.
- The company sold substantially all of the assets of its AMWASTE subsidiary for $185,000.
- Lyell Environmental Services, Inc. executed a lease agreement for office and warehouse space effective January 1, 2024, with monthly rent ranging from $5,344 to $6,195 over the 61-month term.
Sentiment
Score: 5
Explanation: The document presents a mixed picture. While revenue increased and losses decreased, the company faces significant financial challenges and going concern uncertainty. The sentiment is neutral, reflecting both positive and negative aspects.
Positives
- The company experienced a significant increase in revenue year-over-year.
- The net loss was substantially reduced compared to the same period last year.
- The sale of AMWASTE provided the company with additional cash proceeds of $175,000.
- Gross profit increased to $270,742 and $107,318 for the three months ended March 31, 2024 and 2023, respectively.
Negatives
- The company has a significant amount of negative working capital.
- The company has a large accumulated deficit.
- The company's independent auditor has expressed substantial doubt about its ability to continue as a going concern.
- The company has a significant amount of accounts payable, including default judgments.
- The company is dependent on raising additional capital to fund its operations.
Risks
- The company's ability to continue as a going concern is uncertain.
- The company may be unable to secure additional funding.
- The company faces significant financial challenges, including high levels of debt and accounts payable.
- The company's disclosure controls and procedures are not effective.
- The company is subject to legal proceedings.
Future Outlook
The company plans to expand its service offerings, acquire profitable waste and recycling services companies, offer innovative recycling services, establish partnerships, and attract investment funds to grow into a leading waste and recycling services supplier in North America. The company expects to incur losses from operations for the near future and will need to raise additional capital to expand operations.
Industry Context
The waste and recycling industry is highly competitive and evolving, requiring companies to adapt to changes in technology and customer behavior. Deep Green's focus on sustainable waste management solutions and strategic acquisitions aligns with industry trends towards environmentally conscious practices and consolidation.
Comparison to Industry Standards
- It is difficult to compare Deep Green Waste & Recycling's results to industry standards due to its small size and unique business model.
- Larger waste management companies like Waste Management and Republic Services have significantly higher revenues and profitability, but also operate on a larger scale with different cost structures.
- Deep Green's focus on commercial properties and specialized services like asbestos removal may differentiate it from competitors, but also limit its market reach.
- The company's financial performance is significantly below industry benchmarks, highlighting the need for improved operational efficiency and access to capital.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chief Executive Officer | Lloyd T. Spencer | Bill Edmonds | 2022-03-14 | Resignation of Lloyd T. Spencer |
| President | NA | David Bradford | 2022-03-14 | Appointment by Board of Directors |
Legal Proceedings
- A complaint filed in the Supreme Court of the State of New York by Owen May and MD Global alleging breach of contract, conversion, fraud, and securities fraud was dismissed on May 29, 2024.
Stakeholder Impact
- Shareholders face potential dilution from future equity issuances.
- Employees' job security is uncertain due to the company's going concern issues.
- Customers may be affected by potential service disruptions if the company's financial situation worsens.
- Suppliers and creditors face the risk of non-payment due to the company's financial difficulties.
Next Steps
- Secure additional funding through corporate partnerships, licensing agreements, convertible debentures, and equity securities.
- Negotiate settlements and establish payment plans with creditors holding default judgments.
- Resume waste management services with customers holding accrued customer deposits or refund advance payments through a repayment plan.
- Expand service offerings to provide additional sustainable waste management solutions.
- Identify and acquire profitable waste and recycling services companies with similar or compatible business models.
Key Dates
| Date | Description |
|---|---|
| 1995-08-24 | Company organized as Evader, Inc. |
| 2011 | Deep Green Waste and Recycling, LLC (DGWR LLC) engaged in the waste recycling business |
| 2012-05-25 | Company filed its Foreign Profit Corporation Articles of Domestication to change the domicile of the Company from Nevada to Wyoming. |
| 2015-11-04 | Company filed an Amendment to its Articles of Incorporation to change the name of the Company to Critical Clothing, Inc. |
| 2016-01-01 | Deep Green Waste & Recycling, LLC (the LLC) entered into an Employment Agreement (the Agreement) with David A. Bradford as Chief Operating Officer. |
| 2016-01-01 | Deep Green Waste & Recycling, LLC (the LLC) entered into an Employment Agreement (the Agreement) with Bill Edmonds as Managing Member, President and Chief Financial Officer. |
| 2017-07-17 | Mr. Bradford and the LLC agreed to amend the terms of the Agreement. |
| 2017-07-17 | Mr. Edmonds and the LLC agreed to amend the terms of the Agreement. |
| 2017-08-07 | Company entered into an Agreement of Conveyance, Transfer and Assignment of Subsidiaries and Assumption of Obligations (the Agreement) with Mirabile Corporate Holdings, Inc. |
| 2017-08-24 | Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (the Agreement) with St. James Capital Management, LLC. |
| 2017-08-24 | Company acquired all the membership units of Deep Green Waste and Recycling, LLC (DGWR LLC). |
| 2017-08-28 | An Amendment was filed to change the Company name to Deep Green Waste & Recycling, Inc. |
| 2017-10-01 | Deep Green acquired Compaction and Recycling Equipment, Inc. (CARE). |
| 2017-10-01 | Deep Green acquired Columbia Financial Services, Inc, (CFSI). |
| 2018-08-07 | The Company ceased its waste recycling business. |
| 2019-12-04 | Company entered into an agreement with Lloyd Spencer as President and Chief Executive Officer. |
| 2020-01-09 | The Company and Lloyd Spencer (the Director) entered into a Board of Directors Services Agreement. |
| 2020-01-09 | The Company and Bill Edmonds (the Director) entered into a Board of Directors Services Agreement. |
| 2020-01-22 | The Board of Directors unanimously approved the designation of a series of preferred stock to be known as Series B Convertible Preferred Stock |
| 2021-02-08 | Company, through its wholly owned subsidiary DG Research, Inc. (the Buyer), entered into an Asset Purchase Agreement (the Agreement) with Amwaste, Inc. (the Seller). |
| 2021-08-11 | Company entered into a Securities Purchase Agreement (the Agreement) with Jeremy Lyell (the Shareholder) and Lyell Environmental Services, Inc. |
| 2021-10-14 | Company (the Borrower) entered into a Note Purchase Agreement (NPA) with each of BHP Capital NY Inc. and Quick Capital, LLC (together, the Investors). |
| 2022-02-28 | Company (the Borrower) entered into a Note Purchase Agreement (NPA) with each of BHP Capital NY Inc. and Quick Capital, LLC (together, the Investors). |
| 2023-06-20 | Company effectuated a 1 for 1,500 shares reverse stock split which reduced the issued and outstanding shares of common stock from 1,896,216,952 shares to 1,264,165 shares. |
| 2023-07-31 | Lyell Environmental Services, Inc (the Borrower) entered into a Note Purchase Agreement (NPA) with each of BHP Capital NY Inc. and Quick Capital, LLC (together, the Investors). |
| 2024-01-01 | Lyell executed a Lease Agreement with a lessor to rent approximately 4,500 square feet of office and warehouse space in Hermitage Tennessee. |
| 2024-03-20 | Deep Green Waste & Recycling, Inc. and its subsidiary DG Research Inc. dba AMWASTE (DGRI), along with Tylers Couch, LLC, a single member LLC owned by Bill Edmonds, Deep Greens Chairman and CEO, (collectively, the Sellers) completed the sale of substantially all of the assets of DGRI to Amwaste of Georgia, LLC (Buyer). |
| 2024-03-31 | End of the quarterly period. |
| 2024-06-17 | As of June 17, 2024, there were 8,814,613 shares of the registrants common stock outstanding. |
Keywords
financial results, waste recycling, going concern, revenue, net loss, debt, AMWASTE, Lyell Environmental Services, working capital, accumulated deficit
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