As filed with the Securities and Exchange Commission on
September 10, 1999June 15, 2017Registration No.
: ================================================================================333-216621UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
----------Amendment No.2
to
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------- CREATIVE BAKERIES,MERIDIAN WASTE SOLUTIONS, INC.
(Exact(Exact name of registrant as specified in its charter)
New York 13-3832215 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 20 Passaic Avenue Fairfield, New Jersey 07004 (973) 808-8248 (Address,
| New York | 13-3832215 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
12540 Broadwell Road, Suite 2104
Milton, GA 30004
(404) 539-1147
(Address, including zip code, and telephone number, including area code, of Registrant'sregistrant’s principal executive offices)
PHILIP GRABOW
President and Chief Executive Officer
Creative Bakeries, Inc.
20 Passaic Avenue
Fairfield, New Jersey 07004
(973) 808-8248
(Name, address,
Jeffrey S. Cosman
12540 Broadwell Road, Suite 2104
Milton, GA 30004
(404) 539-1147
(Address, including zip code, and telephone number, including area code, of agent for service)
Copy To:
Richard S. Frazer,
Copies to:
Joseph M. Lucosky, Esq.
Pryor Cashman Sherman & Flynn
Scott E. Linsky, Esq.
Lucosky Brookman LLP
410 Park
101 Wood Avenue New York, New York 10022
(212) 421-4100
ApproximateSouth, 5th Floor
Iselin, NJ 08830
(732) 395-4400
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:From time to time after the effective date of commencement of proposed sale of the securities to the
public: As soon as possible after this Registration Statement becomes effective.
If the only securities being registered on this Form are to bebeing offered pursuant to dividend or interest reinvestment plans, please check the following box. |_|
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If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, please check the following box. |X|
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If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, of 1933,please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_|
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If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_|
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If delivery ofthis Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective on filing with the Prospectus is expected to be madeCommission pursuant to Rule 434,462(e) under the Securities Act, check the following box. |_|
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Calculation Of Registration Fee
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in accordance with Rule 457(c) solely for the purpose of
calculating the registration fee (based on the average12b-2 of the bid and
asked priceExchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| Non-accelerated filer | ☐(Do not check if a smaller reporting company) | Smaller reporting company | ☒ | |||
| Emerginggrowthcompany | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of our common stock as quoted on the NASD OTC Bulletin Board
on September 3, 1999.)
Securities Act. ☐
CALCULATION OF REGISTRATION FEE
Title of each class of securities to be registered | Amount to be registered/proposed maximum offering price per unit/proposed maximum aggregate offering price | Amount of registration fee | ||||||
| Common Stock | (1)(2) | (3) | ||||||
| Preferred Stock | (1)(2) | (3) | ||||||
| Warrants | (1)(2) | (3) | ||||||
| Rights | (1)(2) | (3) | ||||||
| Units | (1)(2) | (3) | ||||||
| Total | $ | 50,000,000 | $ | 5,795 | ||||
| (1) | This registration statement covers an indeterminate number of shares of common stock, shares of preferred stock, warrants, rights, and units that may be sold by the registrant from time to time, for a maximum aggregate offering price of all securities not to exceed $50,000,000. Any securities registered hereunder may be sold separately or as units with other securities registered hereunder. The securities registered also include an indeterminate amount and number of shares of common stock as may be issued upon exercise of warrants, conversion of preferred stock, or pursuant to the anti-dilution provisions of any such securities. The securities registered also include an indeterminate amount and number of shares of preferred stock as may be issued upon exercise of warrants or pursuant to the anti-dilution provisions of any such securities. |
| (2) | The proposed maximum aggregate offering price per class of security will be determined from time to time by the registrant in connection with the issuance by the registrant of the securities registered hereunder and is not specified as to each class of security pursuant to General Instruction II.D. of Form S-3 under the Securities Act of 1933, as amended (the “Securities Act”). |
| (3) | The registration fee has been calculated in accordance with Rule 457(o) under the Securities Act. |
The Registrantregistrant hereby amends this Registration Statementregistration statement on such date or dates as may be necessary to delay its effective date until the Registrantregistrant shall file a further amendment which specifically states that this Registration
Statementregistration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statementthe registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
PROSPECTUS
891,250 Shares
CREATIVE BAKERIES, INC.
Common Stock
(Par value $.001 Per Share)
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The shareholders listedinformation in this prospectus areis not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject to Completion, dated June 15, 2017.
PROSPECTUS
MERIDIAN WASTE SOLUTIONS, INC.
$50,000,000
Common Stock
Preferred Stock
Warrants
Rights
Units
We may offer and sell up to $50 million in the aggregate of the securities identified above from time to time in one or more offerings. This prospectus provides you with a general description of the securities.
Each time we offer and sell securities, we will provide a supplement to this prospectus that contains specific information about the offering and selling upthe amounts, prices and terms of the securities. The supplement may also add, update or change information contained in this prospectus with respect to 891,250 sharesthat offering. You should carefully read this prospectus and the applicable prospectus supplement before you invest in any of common stockour securities.
We may offer and sell the securities described in this prospectus and any prospectus supplement to or through one or more underwriters, dealers and agents, or directly to purchasers, or through a combination of Creative Bakeries, Inc. Wethese methods. If any underwriters, dealers or agents are involved in the sale of any of the securities, their names and any applicable purchase price, fee, commission or discount arrangement between or among them will not receive
any proceedsbe set forth, or will be calculable from the information set forth, in the applicable prospectus supplement. See the sections of this prospectus entitled “About this Prospectus” and “Plan of Distribution” for more information. No securities may be sold without delivery of this prospectus and the applicable prospectus supplement describing the method and terms of the offering of such sale.
securities.
INVESTING IN OUR SECURITIES INVOLVES RISKS. SEE THE “RISK FACTORS” ON PAGE 13 OF THIS PROSPECTUS AND ANY SIMILAR SECTION CONTAINED IN THE APPLICABLE PROSPECTUS SUPPLEMENT CONCERNING FACTORS YOU SHOULD CONSIDER BEFORE INVESTING IN OUR SECURITIES.
Our common stock is quotedlisted on the NASD OTC Bulletin BoardNasdaq Capital Market under the symbol "CBAK." The“MRDN.” On June 13, 2017, the last reported bidsale price for theof our common stock on September 3, 1999,the Nasdaq Capital Market was $0.38$3.00 per share.
The aggregate market value of our outstanding common stock held by non-affiliates is $17,485,476 based on 7,354,420 shares of outstanding common stock, of which 5,828,492 shares are held by non-affiliates, and a per share (rounded toprice of $3.00 based on the nearest cent). The last reported askclosing sale price for theof our common stock on such date was $0.50 per share.
The selling shareholders may offer their sharesJune 13, 2017. Pursuant to General Instruction I.B.6 of Form S-3, in no event will we sell our common stock throughin a public or private transactionsprimary offering with a value exceeding more than one-third of our public float in any 12-month period so long as our public float remains below $75,000,000. We have not offered any securities pursuant to General Instruction I.B.6. of Form S-3 during the over-the-counter markets,prior 12 calendar month period that ends on or offand includes the United States exchanges, at prevailing market prices or at privately negotiated
prices. The selling shareholders may engage brokers or dealers who may receive
commissions or discounts from the selling shareholders.
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See "Risk Factors" at page 5date of this prospectus for a discussion of
certain material factors which you should consider before investing in the
common stock offered by this prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
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The date of this Prospectusprospectus is September _, 1999.
This prospectus is part of a registration statement that we filed with the SEC.
You should rely only onU.S. Securities and Exchange Commission, or the SEC, using a “shelf” registration process. By using a shelf registration statement, we may sell securities from time to time and in one or more offerings up to a total dollar amount of $50 million as described in this prospectus. Each time that we offer and sell securities, we will provide a prospectus supplement to this prospectus that contains specific information providedabout the securities being offered and sold and the specific terms of that offering. The prospectus supplement may also add, update or incorporated by referencechange information contained in this prospectus orwith respect to that offering. If there is any related supplement. We are not offering to sell or buyinconsistency between the common stock offeredinformation in this documentprospectus and the applicable prospectus supplement, you should rely on the prospectus supplement. Before purchasing any securities, you should carefully read both this prospectus and the applicable prospectus supplement, together with the additional information described under the heading “Where You Can Find More Information; Incorporation by Reference.”
We have not authorized any other person to any person unauthorizedprovide you with different information. If anyone provides you with different or prohibited to do so. The selling shareholdersinconsistent information, you should not rely on it. We will not make an offer ofto sell these sharessecurities in any statejurisdiction where the offer or sale is not permitted. You should not assume that the information appearing in this prospectus or anyand the applicable prospectus supplement to this prospectus is accurate as of any date
other than the date on its respective cover, and that any information incorporated by reference is accurate only as of the frontdate of the document incorporated by reference, unless we indicate otherwise. Our business, financial condition, results of operations and prospects may have changed since those documents.
dates.
When we refer to “Meridian,” “we,” “our,” “us” and the “Company” in this prospectus, we mean Meridian Waste Solutions, Inc., unless otherwise specified. When we refer to “you,” we mean the holders of the applicable series of securities.
WHERE YOU CAN FIND MORE INFORMATION
INFORMATION; INCORPORATION BY REFERENCE
Available Information
We file annual, quarterly and special reports, proxy statements and other information with the Securities Exchange Commission (the "SEC"). You may
readSEC. Information filed with the SEC by us can be inspected and copy any document we filecopied at the SEC's public reference room located
450 FifthPublic Reference Room maintained by the SEC at 100 F Street, N.W.N.E., Washington, D.C. 20549. Please callYou may also obtain copies of this information by mail from the Public Reference Room of the SEC at 1-800-SEC-0330 for furtherprescribed rates. Further information on the operation of such public reference
room. You may also request copies of such documents, upon payment of a
duplicating fee,the SEC’s Public Reference Room in Washington, D.C. can be obtained by writing tocalling the SEC at 450 Fifth Street, N.W.,1-800-SEC-0330. The SEC also maintains a web site that contains reports, proxy and information statements and other information about issuers, such as us, who file electronically with the SEC. The address of that website ishttp://www.sec.gov.
Our website address ishttp://www.mwsinc.com. The information on our website, however, is not, and should not be deemed to be, a part of this prospectus.
This prospectus and any prospectus supplement are part of a registration statement that we filed with the SEC and do not contain all of the information in the registration statement. The full registration statement may be obtained from the SEC or us, as provided below. Forms of the documents establishing the terms of the offered securities are or may be filed as exhibits to the registration statement. Statements in this prospectus or any prospectus supplement about these documents are summaries and each statement is qualified in all respects by reference to the document to which it refers. You should refer to the actual documents for a more complete description of the relevant matters. You may inspect a copy of the registration statement at the SEC’s Public Reference Room in Washington, D.C. 20549 or obtain copiesthrough the SEC’s website, as provided above.
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Incorporation by Reference
The SEC allowsSEC’s rules allow us to "incorporate“incorporate by reference" thereference” information we file
with them,into this prospectus, which means that we can disclose important information to you by referring you to those documents.another document filed separately with the SEC. The information we incorporateincorporated by reference is considereddeemed to be part of this prospectus, and subsequent information that we file later with the SEC will automatically update and supersede that information. Any statement contained in a previously filed document incorporated by reference will be deemed to be modified or superseded for purposes of this information. prospectus to the extent that a statement contained in this prospectus modifies or replaces that statement.
We incorporate by reference theour documents listed below and any future filings we makemade by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended:
(1) Annual Report onamended, which we refer to as the “Exchange Act” in this prospectus, between the date of this prospectus and the termination of the offering of the securities described in this prospectus. We are not, however, incorporating by reference any documents or portions thereof, whether specifically listed below or filed in the future, that are not deemed “filed” with the SEC, including any information furnished pursuant to Items 2.02 or 7.01 of Form 10-KSB for8-K or related exhibits furnished pursuant to Item 9.01 of Form 8-K.
This prospectus and any accompanying prospectus supplement incorporate by reference the fiscal year ended December 31,
1998;documents set forth below that have previously been filed with the SEC:
| ● | Our Annual Report on Form 10-K and 10-K/A for the year ended December 31, 2016, filed with the SEC on April 17, 2017 and May 31, 2017, respectively. | |
| ● | Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 22, 2017. | |
| ● | Our Current Report on Form 8-K and 8-K/A filed with the SEC on December 29, 2015 and March 30, 2016, respectively. | |
| ● | Our Current Report on Form 8-K and 8-K/A filed with the SEC on February 15, 2017, May 1, 2017 and May 31, 2017, respectively. | |
| ● | Our Current Reports on Form 8-K filed with the SEC on May 20, 2016, June 9, 2016, June 17, 2016, June 27, 2016, July 25, 2016, September 1, 2016, October 18, 2016, November 7, 2016, December 1, 2016, December 5, 2016, December 15, 2016, January 9, 2017, January 13, 2017, January 26, 2017, February 3, 2017, February 6, 2017, April 24, 2017, April 27, 2017 and June 6, 2017. | |
| ● | The description of our Common Stock contained in our Registration Statement on Form S-1, filed with the SEC on September 9, 2016, as amended, and any amendment or report filed with the SEC for the purpose of updating the description. |
All reports and (2) Quarterly Report on Form 10-QSB forother documents we subsequently file pursuant to Section 13(a), 13(c), 14 or 15(d) of the fiscal quarter ended March
31, 1999;
(3) Quarterly Report on Form 10-QSB forExchange Act prior to the fiscal quarter ended June
30, 1999;
termination of this offering, including all such documents we may file with the SEC after the date of the initial registration statement and prior to the effectiveness of the registration statement, but excluding any information furnished to, rather than filed with, the SEC, will also be incorporated by reference into this prospectus and deemed to be part of this prospectus from the date of the filing of such reports and documents.
You may request a free copy of these filings (excludingany of the documents incorporated by reference in this prospectus (other than exhibits, to such
filings that we have notunless they are specifically incorporated by reference in such
filings), at no cost,the documents) by writing or telephoning us at the following address:
Creative Bakeries,
Meridian Waste Solutions, Inc.
20 Passaic Avenue
Fairfield, New Jersey 07004
Attn: Mr. Philip Grabow, President
(973) 808-8248
12540 Broadwell Road, Suite 2104
Milton, GA 30004
(404) 539-1147
Exhibits to the filings will not be sent, however, unless those exhibits have specifically been incorporated by reference in this prospectus and any accompanying prospectus supplement.
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Overview
Meridian Waste Solutions, Inc. is an integrated provider of non-hazardous solid waste collection, transfer and disposal services. We currently have all of our operations in Missouri and Virginia but are aggressively looking to expand our presence across the Midwest, South and East regions of the United States.
Corporate Structure
Missouri Waste Operations
Here to Serve – Missouri Waste Division, LLC d/b/a Meridian Waste
Here to Serve – Missouri Waste Division, LLC (“HTS Waste”) is a non-hazardous solid waste management company providing collection services for approximately 45,000 commercial, industrial and residential customers in Missouri. We own one collection operation based out of Bridgeton, Missouri. Approximately 100% of HTS Waste’s 2015 revenue and revenue in 2016 through September 30, 2016, was from collection, utilizing over 60 collection vehicles.
HTS began non-hazardous waste collection operations in May 2014 upon the acquisition of nearly all of the assets from Meridian Waste Services, LLC that in turn became the core of our operations. From our formation through today, we have begun to create the infrastructure needed to expand our operations through acquisitions and market development opportunities.
Christian Disposal, LLC; FWCD
Effective December 22, 2015, the Company consummated the closing of the Amended and Restated Membership Interest Purchase Agreement, dated October 16, 2015, by and among the Company, Timothy M. Drury, Christian Disposal LLC (“Christian Disposal”), FWCD, LLC (“FWCD”), Missouri Waste and Georgia Waste; as amended by that certain First Amendment thereto, dated December 4, 2015, pursuant to which Christian Disposal became a wholly-owned subsidiary of the Company in exchange for: (i) Thirteen Million Dollars ($13,000,000), subject to working capital adjustment, (ii) 87,500 shares of the Company’s Common Stock, (iii) a Convertible Promissory Note in the amount of One Million Two Hundred Fifty Thousand Dollars ($1,250,000), bearing interest at 8% per annum and (iv) an additional purchase price of Two Million Dollars ($2,000,000), due upon completion of an extension under a certain contract to which Christian Disposal is party (the "Additional Purchase Price"), each payable to the former stockholders of Christian Disposal. The following discussionAdditional Purchase Price has not, and analysis contains forward-looking statements.
Such statementslikely will not, become due, as it presently appears that an extension will not be granted in connection with the relevant contract.
Christian Disposal, along with its subsidiary, FWCD, LLC, is a non-hazardous solid waste management company providing collection and transfer services for approximately 35,000 commercial, industrial and residential customers in Missouri. Christian Disposal’s collection operation is based out of Winfield, Missouri. Along with operations in Winfield, Christian Disposal operates two transfer stations, in O’Fallon, Missouri and St. Peters, Missouri, and owns one transfer station, in Winfield, Missouri. Approximately 100% of Christian Disposal and FWCD’s 2015 revenue and revenue in 2016 through September 30, 2016 was from collection and transfer, utilizing over 35 collection vehicles.
Christian Disposal began non-hazardous waste collection operations in 1978. Our acquisition of Christian Disposal is a key element of our strategy to create the vertically integrated infrastructure needed to expand our operations.
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Meridian Land Company, LLC (Assets of Eagle Ridge Landfill & Hauling)
Effective December 22, 2015, Meridian Land Company, LLC, a wholly-owned subsidiary of the Company, consummated the closing of that certain Asset Purchase Agreement, dated November 13, 2015, by and between Meridian Land Company, LLC and Eagle Ridge Landfill, LLC (“Eagle”), as amended by that certain Amendment to Asset Purchase Agreement, dated December 18, 2015, to which the Company and WCA Waste Corporation are also party, pursuant to which the Company, through Meridian Land Company, LLC, purchased from Eagle, a landfill in Pike County, Missouri (the “Eagle Ridge Landfill”) and substantially all of the assets used by Eagle related to the Eagle Ridge Landfill, including certain debts, in exchange for $9,506,500 in cash, subject to a working capital adjustment.
The Eagle Ridge Landfill is currently permitted to accept municipal solid waste. The Eagle Ridge Landfill is located in Bowling Green, Missouri. Meridian Land Company currently owns 265 acres at Eagle Ridge with 56.7 acres permitted and constructed to receive waste.
In addition to the Eagle Ridge Landfill, the Company operates, through Meridian Land Company, hauling operations in Bowling Green, Missouri, servicing commercial, residential and roll off customers in this market. The Company will be looking to expand its footprint in the market through an aggressive sales and marketing strategy, as well as through additional acquisitions.
Virginia Waste Operations
The CFS Group, LLC; The CFS Disposal & Recycling Services, LLC; RWG5, LLC
On February 15, 2017, the Company consummated the closing of the Membership Interest Purchase Agreement (the “Virginia Purchase Agreement”) by and between the Company and Waste Services Industries, LLC ("Seller"), pursuant to which the Company purchased from Seller 100% of the membership interests of The CFS Group, LLC (“CFS”), The CFS Disposal & Recycling Services, LLC (“CFS Disposal”), RWG5, LLC (“RWG5” and, together with CFS and CFS Disposal, the “CFS Companies”), in exchange for the following: (i) $40,000,000 in cash and assumption of certain capital leases, subject to a working capital adjustment in accordance with Section 2.6 of the Virginia Purchase Agreement and (ii) 500,000 shares of the Company’s common stock.
Collectively, the CFS Companies are non-hazardous solid waste management companies providing collection and transfer services for more than 30,000 commercial, industrial and residential customers in Virginia, with main facilities in Petersburg, Virginia and satellite facilities in Lunenberg, Virginia and Prince George, Virginia. Along with collection operations in Petersburg, the CFS Companies operate a transfer station, in Lunenberg, and owns two landfills, in Petersburg and Lunenberg. Approximately 81% of the CFS Companies’ 2015 revenue was from collection and transfer, utilizing over 60 collection vehicles.
Our acquisition of the CFS Companies is a key element of our strategy to create the vertically integrated infrastructure needed to expand our operations.
Customers
For the nine months ended September 30, 2016, Meridian has one municipal contract that accounted for 11% of HTS Waste’s long-term contracted revenue for such period. Meridian had two municipal contracts, the first of which accounted for 26%, and the second of which accounted for 18%, of HTS Waste’s long-term contracted revenue for the year ended December 31, 2015.
Collection Services
Meridian, through its subsidiaries, provides solid waste collection services to approximately 65,000 industrial, commercial and residential customers in the Metropolitan St. Louis, Missouri area. In 2015, its collection revenue consisted of approximately 17% from services provided to industrial customers, 13% from services provided to commercial customers and 70% from services provided to residential customers.
In our commercial collection operations, we supply our customers with waste containers of various types and sizes. These containers are designed so that they can be lifted mechanically and emptied into a collection truck to be transported to a disposal facility. By using these containers, we can service most of our commercial customers with trucks operated by a single employee. Commercial collection services are generally discuss future expectations. Youperformed under service agreements with a duration of one to five years with possible renewal options. Fees are generally determined by such considerations as individual market factors, collection frequency, the type of equipment we furnish, the type and volume or weight of the waste to be collected, the distance to the disposal facility and the cost of disposal.
Residential solid waste collection services often are performed under contracts with municipalities, which we generally secure by competitive bid and which give us exclusive rights to service all or a portion of the homes in these municipalities. These contracts usually range in duration from one to five years with possible renewal options. Generally, the renewal options are automatic upon the mutual agreement of the municipality and the provider; however, some agreements provide for mandatory re-bidding. Alternatively, residential solid waste collection services may be performed on a subscription basis, in which individual households or homeowners’ or similar associations contract directly with us. In either case, the fees received for residential collection are based primarily on market factors, frequency and type of service, the distance to the disposal facility and the cost of disposal.
Additionally, we rent waste containers and provide collection services to construction, demolition and industrial sites. We load the containers onto our vehicles and transport them with the waste to either a landfill or a transfer station for disposal. We refer to this as “roll-off” collection. Roll-off collection services are generally performed on a contractual basis. Contract terms tend to be shorter in length, in some cases having terms of only six months, and may vary according to the customers’ underlying projects.
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Transfer and Disposal Services
Landfills are the main depository for solid waste in the United States. Solid waste landfills are built, operated, and tied to a state permit under stringent federal, state and local regulations. Currently, solid waste landfills in the United States must be designed, permitted, operated, closed and maintained after closure in compliance with federal, state and local regulations pursuant to Subtitle D of the Resource Conservation and Recovery Act of 1976, as amended. We do not operate hazardous waste landfills, which may be subject to even greater regulations. Operating a solid waste landfill includes excavating, constructing liners, continually spreading and compacting waste and covering waste with earth or other inert material as required, final capping, closure and post-closure monitoring. The objectives of these operations are to maintain sanitary conditions, to ensure the best possible use of the airspace and to prepare the site so that it can identifyultimately be used for other end use purposes.
Access to a disposal facility is a necessity for all solid waste management companies. While access to disposal facilities owned or operated by third parties can be obtained, we believe that it is preferable to internalize the waste streams when possible. Meridian is targeting further geographic, as well as operational expansion by focusing on markets with transfer stations and landfills available for acquisition.
Our transfer stations allow us to consolidate waste for subsequent transfer in larger loads, thereby making disposal in our otherwise remote landfills economically feasible. A transfer station is a facility located near residential and commercial collection routes where collection trucks take the solid waste that has been collected. The waste is unloaded from the collection trucks and reloaded onto larger transfer trucks for transportation to a landfill for final disposal. Transfer stations are generally owned by municipalities, with contracts to operate such statements bytransfer stations awarded based on bids. As an alternative to operating a transfer station directly, we could negotiate the use of forward looking terminologya transfer station owned by a private party or operated by a competitor, which may not be as "may," "will," "expect,"
"anticipate" or other similar words.
You shouldprofitable as operating our own transfer station. In addition to increasing our ability to internalize the waste that our collection operations collect, using transfer stations reduces the costs associated with transporting waste to final disposal sites because the trucks we use for transfer have a larger capacity than collection trucks, thus allowing more waste to be aware that any such forward-looking statements are not guaranteestransported to the disposal facility on each trip.
Our Operating Strengths
| Experienced Leadership |
We have a proven and experienced senior management team. Our Chief Executive Officer, Jeffrey S. Cosman, and President and COO Walter H. Hall, Jr. combine over 35 years of future performance and involve risks and uncertainties. Actual results may
differ materially from thoseexperience in the forward-looking statementssolid waste industry, including significant experience inlocal and regional operations, local and regional accounting, mergers & acquisitions, integration and the development of disposal capacity. Members of our team have held senior positions at Republic Services, Advanced Disposal, Southland Waste Services and Browning Ferris Industries. Our team has a proven track record withdevelopment and implementation of strategic marketplace plans, sales, safety, acquisitions, and coordination of assets and personnel.While our senior leadership team creates and drives our overall growth strategy, we rely on a decentralized management structure which does not interfere with local management and may afford us the opportunity to capitalize on growth and cost reduction at the local level.
| Vertically Integrated Operations |
The vertical integration of our operations allows us to manage the waste stream from the point of collection through disposal, which we hope will enable us to maximize profit by controlling costs and gaining competitive advantages, while still providing high-quality service to our customers. In the St. Louis market, because we have integrated our network of collection, transfer and disposal assets, primarily using our own resources, we generate a steady, predictable stream of waste volume and capture an incremental disposal margin. We charge tipping fees to third-party collection service providers for the use of our transfer stations or landfills, providing a source of recurring revenue. We believe this internalization rate provides us with a significant cost advantage over our competitors, positioning us well to win additional profitable business through new customer acquisition and municipal contract awards. We also believe this vertically integrated structure enables us to quickly and efficiently integrate future acquisitions of transfer stations, collection operations or landfills into our current operations.
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| Landfill and Transfer Station Assets |
We have one active and strategically located landfill at the core of our integrated operations which we believe provides us a significant competitive advantage in Missouri, in that we do not need to use our competitors’ landfills. Our landfill has substantial remaining airspace.
The value of our landfill may be further enhanced by synergies associated with our vertically integrated operations, including our transfer stations, which enable us to cover a greater geographic area surrounding the landfill, and provide competitive advantages in that we would not need to use our competitors’ landfills. In our experience there has generally been a shift towards fewer, larger landfills, which has resulted in landfills that are generally located farther from population centers, with waste being transported longer distances between collection and disposal, typically after consolidation at a transfer station. With a landfill, transfer stations and collection services in place, we aim to provide vertically integrated operations that cover the substantial geographic area surrounding the landfill.
| Acquisition Integration and Municipal Contracts |
Our business model contemplates our ability to execute and integrate value-enhancing, tuck-in acquisitions and win new municipal contracts as a core component of our growth.
As a management team, we have experience executing large-scale transactions by direct association with our historical success at Republic Services, Advanced Disposal and Browning Ferris Industries. In addition to significantly expanding our scale of operations, the acquisitions of Christian Disposal and Eagle Ridge Landfill enhanced our geographic footprint by providing us with complementary operations throughout the state of Missouri. This has helped us realize cost efficiencies through improved internalization by virtue of increased route concentration and more efficient utilization of our assets.
Finally, our management team has demonstrated success in municipal contract bidding, as we currently serve approximately 30 municipalities and townships via contracts, historical arrangements or subscriptions with residents.
| Long-Term Contracts |
We serve approximately 65,000 residential, commercial and Construction and Industrial customers, with no single customer representing more than 12% of revenue in 2015. Our municipal customer relationships are generally supported by contracts ranging from three to seven years in initial duration with subsequent renewal periods, and we have a historical renewal rate of 100% with such customers. Our standard C&I service agreement is a five-year renewable agreement. We believe our customer relationships, long-term contracts and exceptional retention rate provide us with a high degree of stability as we continue to grow.
| Customer Service |
We maintain a central focus on customer service and we pride ourselves on trying to consistently exceed our customers' expectations. We believe investing in our customers' satisfaction will ultimately maximize customer loyalty price stability.
Commitment to Safety
The safety of our employees and customers is extremely important to us and we have a strong track record of safety and environmental compliance. We constantly review and assess our policies practices and procedures in order to create a safer work environment for our employees and to reduce the frequency of workplace injuries.
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| Our Growth Strategy |
| Growth of Existing Markets |
We believe that as the residential population and number of businesses grow in our existing market, we will see waste volumes increase organically. We seek to remain active and alert with respect to the changing landscapes in the communities in which we already provide service in order obtain long-term contracts for collecting solid waste for residential collection, collection from municipalities, as well as collection from small and large commercial and industrial contracts. Obtaining long-term contracts may enable us to grow our revenue base at the same rate as the underlying economic growth in these markets. Furthermore, securing long-term contracts provides a significant barrier to entry from competitors in these markets.
Expanding into New Markets
Our operating model focuses on vertically integrated operations. We continue to pursue a growth strategy that includes acquiring solid waste companies that complement our existing business. Our goal is to create market-specific, vertically integrated operations consisting of one or more collection operations, transfer stations and landfills.
As we expand, we plan to focus our business in the secondary markets where competition from national service providers is limited. We plan to start new market development projects in certain disposal-neutral markets in which we will provide services under exclusive arrangements with municipal customers, which facilitates highly-efficient and profitable collection operations and lower capital requirements. We believe this strategic focus positions us to maintain significant share within our target markets, maximize customer retention and benefit from a higher and more stable pricing environment.
| Acquisition and Integration |
Our revenue model is based on organic growth of operations, the acquisition of established operations in new markets as well as being able execute value-adding, tuck-in acquisitions. We hope to direct acquisition efforts towards those markets in which we would be able to provide vertically integrated collection and disposal services and/or provide waste collection services, pursuant to contracts that grant exclusivity. Prior to acquisition, we analyze each prospective target for cost savings through the elimination of inefficiencies and excesses that are typically associated with private companies competing in fragmented industries. We aim to realize synergies from consolidating businesses into our existing operations, which we hope will allow us to reduce capital and expense requirements associated with truck routing, personnel, fleet maintenance, inventories and back-office administration.
| Pursue Additional Exclusive Municipal Contracts |
We intend to devote significant resources to securing additional municipal contracts. Our management team is well versed in bidding for municipal contracts with over 35 years of experience and working knowledge in the solid waste industry and local service areas in existing and target markets. We hope to procure and negotiate additional exclusive municipal contracts, allowing us to maintain stable recurring revenue but also providing a significant barrier to entry to our competitors in those markets.
| Invest in Strategic Infrastructure |
We will continue to invest in our infrastructure to support growth and increase our margins. Given the long remaining life of our existing landfill, we will invest resources toward its development and enhancement in order to increase our disposal capacity. Similarly, we will continue to evaluate opportunities to maximize the efficiency of our collection operations.
Waste Industry Overview
The non-hazardous solid waste industry can be divided into the following three categories: collection, transfer and disposal services. In our management’s experience, companies engaging in collection and/or transfer operations of solid waste typically have lower margins than those performing disposal service operations. By vertically integrating collection, transfer and disposal operations, operators seek to capture significant waste volumes and improve operating margins.
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During the past four decades, our industry has experienced periods of substantial consolidation activity; however, we believe significant fragmentation remains. We believe that there are two primary factors that lead to consolidation:
| ● | Stringent industry regulations have caused operating and capital costs to rise, with many local industry participants finding these costs difficult to bear and deciding to either close their operations or sell them to larger operators; and | |
| ● | Larger operators are increasingly pursuing economies of scale by vertically integrating their operations or by utilizing their facility, asset and management infrastructure over larger volumes and, accordingly, larger solid waste collection and disposal companies aim to become more cost-effective and competitive by controlling a larger waste stream and by gaining access to significant financial resources to make acquisitions. |
Competition
The solid waste collection and disposal industry is highly competitive and, following consolidation, remains fragmented, and requires substantial labor and capital resources. The industry presently includes large, publicly-held, national waste companies such as Republic Services, Inc. and Waste Management, Inc., as well as numerous other public and privately-held waste companies. Our existing market and certain of the markets in which we will likely compete are served by one or more of these companies, as well as by numerous privately-held regional and local solid waste companies of varying sizes and resources, some of which have accumulated substantial goodwill in their markets. We also compete with operators of alternative disposal facilities and with counties, municipalities and solid waste districts that maintain their own waste collection and disposal operations. Public sector operations may have financial advantages over us because of potential access to user fees and similar charges, tax revenues and tax-exempt financing.
We compete for collection based primarily on geographic location and the price and quality of our services. From time to time, our competitors may reduce the price of their services in an effort to expand their market share or service areas or to win competitively bid municipal contracts. These practices may cause us to reduce the price of our services or, if we elect not to do so, to lose business.
Our management has observed significant consolidation in the solid waste collection and disposal industry, and, as a result of various factors. Factors that might cause such a difference include, among
others, general economicthis perceived consolidation, we encounter competition in our efforts to acquire landfills, transfer stations and business conditions. See "Risk Factors."
ABOUT THE COMPANYcollection operations. Competition exists not only for collection, transfer and disposal volume but also for acquisition candidates. We Creative Bakeries, Inc., through our two operating subsidiaries,
WGJ Desserts and Cafes, Inc. (the "WGJ Subsidiary") and Batter Bake-Chatterley
Inc. (the "BBC Subsidiary"), offer a broad line of premium quality pastries,
cakes, pies, cookies and other assorted desserts which are produced at our
baking facility. We market and distribute our baked goods on a wholesale basis
to supermarkets, restaurants and institutional dining facilitiesgenerally compete for acquisition candidates with large, publicly-held waste management companies, private equity backed firms as well as numerous privately-held regional and local solid waste companies of varying sizes and resources. Competition in the disposal industry may also be affected by mail order. Recently,the increasing national emphasis on recycling and other waste reduction programs, which may reduce the volume of waste deposited in landfills. Accordingly, it may become uneconomical for us to make further acquisitions or we completed a corporate restructuring pursuantmay be unable to which
we closed down our William Greenberg retail operations while consolidating into
the BBC Subsidiary the wholesale operations of JMS Specialities, Inc. ("JMS"),
which we acquired in January 1997,locate or acquire suitable acquisition candidates at price levels and Chatterley Elegant Desserts, Inc.
("Chatterley") which we acquired in August 1997. We continue to seek potential
acquisition or merger candidates to expand our existing product offeringson terms and geographic markets. However, we can offer no assuranceconditions that we will be able to
identify successfully such candidates on terms acceptable to us or at all.
Our Business Strategy
Retail. After carefully analyzing our retail operations,consider appropriate, particularly in markets we concluded that
the William Greenberg stores we had recently opened weredo not generating the
sales revenue required to become profitablealready serve.
Sales and that the resources required to
increase our retail sales would be better used to expand our wholesale division.
Therefore, we closed down all our of retail stores.
Institutional/Wholesale. Marketing
We plan to increase our penetration in the
institutional/wholesale food market by expandingfocus our marketing efforts to
restaurants, hotelson increasing and corporate dining facilities and by offering our products
to supermarkets on a national basis. We plan to expand both our product line and
geographic distribution through the following strategies:
o Expand geographic distribution by acquiring new food distributors in
the Connecticut and Philadelphia areas as well as key distributor
areas throughout the United States. To do this, we intend to appoint
food brokers in various states to handle sales on a commission-only
basis.
o Continue to expand the fat-free product line targetingextending business with existing customers, as well as increasing our new customers;customer base. Our sales and o Enter into co-packing arrangements whereby we introduce private
label products of other bakery operations.
Mail Order. Our WGJ Subsidiary is offering its products through other
specialty food retailers and through its mail order catalogue business. Mail
order sales accounted for approximately 1% of total sales for each fiscal year
ended December 31, 1998, 1997 and 1996, respectively.
Kosher Foods. We are also seeking to benefit from the growth of the kosher
food
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industry. According to Prepared Foods, the kosher food industry generated
approximately $33 billion in sales in 1994 and has been growing at a rate of
approximately 15% per annum. The WGJ Subsidiary and the BBC Subsidiary each have
a kosher certification and we believe that we can benefit from the projected
growth of this market.
Our Business Philosophy
High Quality Ingredients. We believe that developing and maintaining
premium quality products is the key to our future success. We use fresh
ingredients in our products, including AA creamy butter, fresh eggs, premium
fruits, nuts, and chocolates blended for our unique recipes. We seek to maintain
rigorous standards of freshness, quality and consistency.
Customer Service. Our goalmarketing strategy is to provide prompt, high quality, comprehensive solid waste collection to our customers at competitive prices. We target potential customers of all sizes, from small quantity generators to large companies and municipalities. Because the waste collection and disposal business is a highly localized business, most of our marketing activity is local in nature.
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Government Contracts
We are party to contracts with warm,
courteousmunicipalities and efficient service.other associations and agencies. Many of these contracts are or will be subject to competitive bidding. We depend on and enjoy a high ratemay not be the successful bidder, or we may have to substantially lower prices in order to be the successful bidder. In addition, some of repeat
business. We believe thatour customers may have the qualityright to terminate their contracts with us before the end of the relationship between our employeescontract term.
Municipalities may annex unincorporated areas within counties where we provide collection services, and our customers is critical to our success. We strive to hire and train
well-qualified, highly motivated employees committed to providing superior
levels of customer service.
Our Products
Baked Goods. Our BBC Subsidiary markets a full line of premium quality
baked products such as cheese cakes, mousse cakes and tart shells. Additionally,
we have expanded our offerings to include a line of frozen batter and baked
products, including a variety of Gourmet Frozen Muffin Batter products, No Sugar
Added Batters, as well as, a selection of Fully Baked Thaw & Sell muffins and
cakes. We continue to develop new products and welcome customer requests.
Kosher Foods. The Kosher Foods industry is a rapidly growing segment of
the prepared foods industry. Both our WGJ Subsidiary and our BBC Subsidiary have
kosher certifications and we believe that we can capitalize on the projected
growth of this market. We believe that our kosher certification will enable us
to better penetrate certain market areas. Our products are not kosher for
Passover.
Customers
Retail. Our WGJ Subsidiary has licensed the "William Greenberg Jr." name
to a retail operator who sells our products directly to individual consumers.
The retailer also sells our specialty desserts to customers for parties,
weddings, bar mitzvahs and other specialty occasions.
Institutional/Wholesale. This market is mainly served through the BBC
Subsidiary. With the acquisition of Chatterley, we now offer our institutional
and wholesale customers an expanded line of baked goods, batter and
frozen-finished cakes, brownies and muffins.
The BBC Subsidiary sells its products through food distributors to hotels,
hospitals and institutional feeders such as coffee shops, Marriott, Restaurants
Associates, etc. The products are also sold retail through food distributors and
direct to supermarket distribution centers.
Mail Order. The WGJ Subsidiary sells select products through mail order.
These products are shipped via overnight delivery and second day delivery
throughout the United States and internationally. We have a toll free number
(800) 564-2470 for our mail order operations.
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Distribution and Marketing
Recently, we decided to close four retail stores operated by our WGJ
Subsidiary in New York City, including the commissary located at Macy's Herald
Square. As an alternative to the operation of retail stores, the WGJ Subsidiary
has licensed its name to an operator who runs retail and wholesale operations.
The BBC Subsidiary bakes all of its products at its 30,000 square foot
facility in Fairfield, New Jersey. Although utilization of the facility varies
based on seasonal fluctuation, the facility is operated on the basis of two
shifts, five days a week. We believe that the BBC Subsidiary has the capacity to
meet future requirements, including those arising out of the consolidation with
Creative Bakeries, Inc. The BBC Subsidiary delivers 90% of its products by truck
to its institutional/wholesale customers. About 10% of its customers pick up
their orders directly at the bakery and utilize their own distribution networks.
Historically, we have relied upon word-of-mouth and customer satisfaction
to market our products to new customers and to make existing customers aware of
new products.
Executive Offices
Creative Bakeries, Inc. was incorporated under the laws of New York in
November 1993. Our executive offices are located at 20 Passaic Avenue,
Fairfield, New Jersey 07004 and our telephone number at that address is (973)
808-8248.
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RISK FACTORS
The purchase of our common stock involves a high degree of risk. You
should carefully consider the following risk factors and other information in
this prospectus before deciding to invest in such stock.
Historical Losses
For the fiscal years ended December 31, 1998 and 1997, we generated
consolidated revenues from continuing operations in the aggregate amount of
$3,814,440.00 and $5,014,558.00, respectively, a decrease of 24%. For the fiscal
years ended December 31, 1998 and 1997, our costs of goods sold were
$3,137,519.00 and $4,224,113.00, respectively, a decrease 26%, due to the
overall decrease in sales. Operating expenses were $1,300, 317.00 and
$1,867,242.00 for 1998 and 1997, respectively, a decrease of 31%, mainly
attributable to the termination of certain management and other personnel. As a
result, the loss from continuing operations was $576,796.00 and $1,464,235.00
for 1998 and 1997 respectively, a decrease of 61%.
In the six months ended June 30, 1999, we generated consolidated revenues
from continuing operations in the aggregate amount of $2,036,252.00. During the
same period last year, our consolidated revenues were $1,959,341.00. Our cost of
goods sold during the first six months of 1999 and 1998 were $1,611,200.00 and
$1,646,774.00, respectively. Our operating expenses also decreased for the same
period from $614,680.00 in 1998 to $529,842.00 in 1999. As a result, our loss
from continuing operations was reduced from $279,801.00customers in 1998 to $60,610 in
1999.
Management attributes this positive trend to its overrall restructuring
efforts. Although we anticipate that this positive trend will continue, we can
not offer assurance that we will become profitable or, if we become profitable,
that we will be able to sustain our profitability.
Success of Revised Business Strategy
We intend to re-focus our business strategy on our institutional/wholesale
and mail order operations; and recently, we have closed down all of our retail
operations. Having recently embarked on such strategy, there can be no assurance
that we will successfully implement our strategy or that our strategy will
result in profitability.
Need For Additional Financing; Increase in Operating Costs; Availability of
Supplies.
Although we believe we have adequate capital to fund current operations
for the next 12 months, weannexed areas may be required to obtain additional financing
earlier in order to continue our operations and expansion strategy. We can offer
no assurances that we will be able to obtain additional funds, or if we are able
to obtain additional funds, such funds will be obtainable on terms or in the
amounts required. If we are not able to raise additional funding, we may be
required to delay, scale back or eliminate some or all of its efforts or other
operations, which will have a material adverse effect on our business, results
of operations and prospects. Any future issuance of our securities will dilute
the common stock of our then existing stockholders, which in certain
circumstances could be substantial.
Currently, we purchase all of our ingredients, such as butter, eggs, sugar
and flour,service from three suppliers. The costs of such items, like other
commodities, are subject to fluctuations due to changes in economic conditions,
weather, demand and other factors, many of which are beyond our control.
Historically, wecompetitors who have been ablefranchised or contracted by the annexing municipalities to pass significant price increases through
5
our customers. However, we can offer no assurances that we will be able tocollection and disposal companies, others may do so in the future.future, and we may enter markets where franchises are granted by certain municipalities, thereby reducing the potential market opportunity for us.
Regulation
Our business is subject to extensive and evolving federal, state and local environmental, health, safety and transportation laws and regulations. These laws and regulations are administered by the U.S. Environmental Protection Agency, or EPA, and various other federal, state and local environmental, zoning, air, water, transportation, land use, health and safety agencies. Many of these agencies regularly inspect our operations to monitor compliance with these laws and regulations. Governmental agencies have the authority to enforce compliance with these laws and regulations and to obtain injunctions or impose civil or criminal penalties in cases of violations. We believe that regulation of the waste industry will continue to evolve, and we will adapt to future legal and regulatory requirements to ensure compliance.
The bond for our landfill is approximately $7.4 million, with premiums in the approximate amount of $250,000.
Our operations are subject to extensive regulation, principally under the federal statutes described below.
The Resource Conservation and Recovery Act of 1976, as amended, or RCRA. RCRA regulates the handling, transportation and disposal of hazardous and non-hazardous wastes and delegates authority to states to develop programs to ensure the safe disposal of solid wastes. On October 9, 1991, the EPA promulgated Solid Waste Disposal Facility Criteria for non-hazardous solid waste landfills under Subtitle D of RCRA. Subtitle D includes location standards, facility design and operating criteria, closure and post-closure requirements, financial assurance standards and groundwater monitoring, as well as corrective action standards, many of which had not commonly been in place or enforced at landfills. Subtitle D applies to all solid waste landfill cells that received waste after October 9, 1991, and, with limited exceptions, required all landfills to meet these requirements by October 9, 1993. All states in which we operate have EPA-approved programs which implemented at least the minimum requirements of Subtitle D and in some states even more stringent requirements.
The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or CERCLA. CERCLA, which is also known as Superfund, addresses problems created by the release or threatened release of hazardous substances (as defined in CERCLA) into the environment. CERCLA’s primary mechanism for achieving remediation of such problems is to impose strict joint and several liability for cleanup of disposal sites on current owners and operators of the site, former site owners and operators at the time of disposal and parties who arranged for disposal at the facility (i.e., generators of the waste and transporters who select the disposal site). The costs of a CERCLA cleanup can be substantial. In addition to ordering remediation work to be undertaken, federal or state agencies can perform remediation work themselves and seek reimbursement of their costs from potentially liable parties, and may record liens to enforce their cost recovery claims. Beyond cleanup costs, federal and state agencies may also assert claims for damages to natural resources, like groundwater aquifers, surface water bodies and ecosystems. Liability under CERCLA is not dependent on the existence or intentional disposal of “hazardous wastes” (as defined under RCRA), but can also be based upon the release or threatened release, even as a result of lawful, unintentional and non-negligent action, of any one of the more than 700 “hazardous substances” listed by the EPA, even in minute amounts.
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The Federal Water Pollution Control Act of 1972, as amended, or the Clean Water Act. This act establishes rules regulating the discharge of pollutants into streams and other waters of the United States (as defined in the Clean Water Act) from a variety of sources, including solid waste disposal sites. If wastewater or stormwater from our transfer stations may be discharged into surface waters, the Clean Water Act requires us to apply for and obtain discharge permits, conduct sampling and monitoring and, under certain circumstances, reduce the quantity of pollutants in those discharges. In 1990, the EPA issued additional rules under the Clean Water Act, which establish standards for management of storm water runoff from landfills and which require landfills that receive, or in the past received, industrial waste to obtain storm water discharge permits. In addition, if a landfill or transfer station discharges wastewater through a sewage system to a publicly-owned treatment works, the facility must comply with discharge limits imposed by the treatment works. Also, if development of a landfill may alter or affect “wetlands,” the owner may have to obtain a permit and undertake certain mitigation measures before development may begin. This requirement is likely to affect the construction or expansion of many solid waste disposal sites.
The Clean Air Act of 1970, as amended, or the Clean Air Act. The Clean Air Act provides for increased federal, state and local regulation of the emission of air pollutants. The EPA has applied the Clean Air Act to solid waste landfills and vehicles with heavy duty engines, such as waste collection vehicles. Additionally, in March 1996, the EPA adopted New Source Performance Standards and Emission Guidelines (the “Emission Guidelines”) for municipal solid waste landfills to control emissions of landfill gases. These regulations impose limits on air emissions from solid waste landfills. The Emission Guidelines impose two sets of emissions standards, one of which is applicable to all solid waste landfills for which construction, reconstruction or modification was commenced before May 30, 1991. The other applies to all municipal solid waste landfills for which construction, reconstruction or modification was commenced on or after May 30, 1991. These guidelines, combined with the new permitting programs established under the Clean Air Act, could subject solid waste landfills to significant permitting requirements and, in some instances, require installation of gas recovery systems to reduce emissions to allowable limits. The EPA also regulates the emission of hazardous air pollutants from municipal landfills and has promulgated regulations that require measures to monitor and reduce such emissions.
Climate Change. A variety of regulatory developments, proposals or requirements have been introduced that are focused on restricting the emission of carbon dioxide, methane and other gases known as greenhouse gases. Congress has considered legislation directed at reducing greenhouse gas emissions. There has been support in various regions of the country for legislation that requires reductions in greenhouse gas emissions, and some states have already adopted legislation addressing greenhouse gas emissions from various sources. In 2007, the U.S. Supreme Court held in Massachusetts, et al. v. EPA that greenhouse gases are an increase“air pollutant” under the federal Clean Air Act and, thus, subject to future regulation. In a move toward regulating greenhouse gases, on December 15, 2009, the EPA published its findings that emission of carbon dioxide, methane and other greenhouse gases present an endangerment to human health and the environment because greenhouse gases are, according to EPA, contributing to climate change. On October 30, 2009, the EPA published the greenhouse gas reporting final rule, effective December 29, 2009, which establishes a new comprehensive scheme requiring certain specified industries as well as operators of stationary sources emitting more than established annual thresholds of carbon dioxide-equivalent greenhouse gases to inventory and report their greenhouse gas emissions annually. Municipal solid waste landfills are subject to the rule. In 2009, the EPA also proposed regulations that would require a reduction in coffeeemissions of greenhouse gases from motor vehicles. According to the EPA, the final motor vehicle greenhouse gas standards will trigger construction and operating permit requirements for stationary sources that exceed potential-to-emit (PTE) thresholds for regulated pollutants. As a result, the EPA has proposed to tailor these programs such that only large stationary sources, such as electric generating units, cement production facilities, and petroleum refineries will be required to have air permits that authorize greenhouse gas emissions.
The Occupational Safety and Health Act of 1970, as amended, or OSHA. OSHA establishes certain employer responsibilities, including maintenance of a workplace free of recognized hazards likely to cause death or serious injury, compliance with standards promulgated by the Occupational Safety and Health Administration and various record keeping, disclosure and procedural requirements. Various standards, including standards for notices of hazards, safety in excavation and demolition work and the handling of asbestos, may apply to our operations.
Flow Control/Interstate Waste Restrictions. Certain permits and approvals, as well as certain state and local regulations, may limit a landfill or transfer station to accepting waste that originates from specified geographic areas, restrict the importation of out-of-state waste or wastes originating outside the local jurisdiction or otherwise discriminate against non-local waste. From time to time, federal legislation is proposed that would allow some local flow control restrictions. Although no such federal legislation has been enacted to date, if such federal legislation should be enacted in the future, states in which we use landfills could limit or prohibit the importation of out-of-state waste or direct that wastes be handled at specified facilities. These restrictions could also result in higher disposal costs for our collection operations. If we were unable to pass such higher costs through to our customers, our business, financial condition and operating results could be adversely affected.
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State and Local Regulation. Each state in which we now operate or may operate in the future has laws and regulations governing the generation, storage, treatment, handling, transportation and disposal of solid waste, occupational safety and health, water and air pollution and, in most cases, the siting, design, operation, maintenance, closure and post-closure maintenance of landfills and transfer stations. State and local permits and approval for these operations may be required and may be subject to periodic renewal, modification or revocation by the issuing agencies. In addition, many states have adopted statutes comparable to, and in some cases more stringent than, CERCLA. These statutes impose requirements for investigation and cleanup of contaminated sites and liability for costs and damages associated with such sites, and some provide for the imposition of liens on property owned by responsible parties. Furthermore, many municipalities also have ordinances, local laws and regulations affecting our operations. These include zoning and health measures that limit solid waste management activities to specified sites or activities, flow control provisions that direct or restrict the delivery of solid wastes to specific facilities, laws that grant the right to establish franchises for collection services and then put such franchises out for bid and bans or other restrictions on the movement of solid wastes into a municipality.
Certain state and local jurisdictions may also seek to enforce flow control restrictions through local legislation or contractually. In certain cases, we may elect not to challenge such restrictions. These restrictions could reduce the volume of waste going to landfills in certain areas, which may adversely affect our ability to operate our landfills at their full capacity and/or reduce the prices that we can charge for landfill disposal services. These restrictions may also result in higher disposal costs for our collection operations. If we were unable to pass such higher costs through to our customers, our business, financial condition and operating results could be adversely affected.
Permits or other land use approvals with respect to a landfill, as well as state or local laws and regulations, may specify the quantity of waste that may be accepted at the landfill during a given time period and/or specify the types of waste that may be accepted at the landfill. Once an operating permit for a landfill is obtained, it must generally be renewed periodically.
There has been an increasing trend at the state and local level to mandate and encourage waste reduction and recycling and to prohibit or restrict the disposal in landfills of certain types of solid wastes, such as construction and demolition debris, yard wastes, food waste, beverage containers, unshredded tires, lead-acid batteries, paper, cardboard and household appliances.
Many states and local jurisdictions have enacted “bad boy” laws that allow the agencies that have jurisdiction over waste services contracts or permits to deny or revoke these contracts or permits based on the applicant’s or permit holder’s compliance history. Some states and local jurisdictions go further and consider the compliance history of the parent, subsidiaries or affiliated companies, in addition to that of the applicant or permit holder. These laws authorize the agencies to make determinations of an applicant’s or permit holder’s fitness to be awarded a contract to operate and to deny or revoke a contract or permit because of unfitness unless there is a showing that the applicant or permit holder has been rehabilitated through the adoption of various operating policies and procedures put in place to assure future compliance with applicable laws and regulations.
Some state and local authorities enforce certain federal laws in addition to state and local laws and regulations. For example, in some states, RCRA, OSHA, parts of the Clean Air Act and parts of the Clean Water Act are enforced by local or state authorities instead of the EPA, and in some states those laws are enforced jointly by state or local and federal authorities.
Public Utility Regulation. In many states, public authorities regulate the rates that landfill operators may charge.
Seasonality
Based on our industry and our historic trends, we expect our operations to vary seasonally. Typically, revenue will be highest in the second and third calendar quarters and lowest in the first and fourth calendar quarters. These seasonal variations result in fluctuations in waste volumes due to weather conditions and general economic activity. We also expect that our operating expenses may be higher during the winter months due to periodic adverse weather conditions that can slow the collection of waste, resulting in higher labor and operational costs.
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Employees
As of December 31, 2016, we have approximately 180 full-time employees. None of our employees are represented by a labor union. We have not experienced any work stoppages and we believe that our relations with our employees are good.
Properties
Our principal executive office is located at 12540 Broadwell Road, Suite 2104, Milton, Georgia and is an approximately 3,500 sq. ft. office space rented at a rate of $2,600 per month. We also lease approximately 8,500 sq. ft. of office space rented at a rate of $23,000 per month in Bridgeton, Missouri. It is our belief that such space is adequate for our immediate office needs. Additional space may be required as we expand our business activities, but we do not foresee any significant difficulties in obtaining additional office facilities if deemed necessary.
Our principal property and equipment is comprised of land, a landfill, buildings, vehicles and equipment in the State of Missouri. In addition, we lease real property and own a landfill. These properties are sufficient to meet the Company’s current operational needs; however, the Company is exploring the potential acquisition and/or leasing of additional properties pursuant to its growth strategies.
Legal Proceedings
There are no material proceedings to which any director or officer, or any associate of any such director or officer, is a party that is adverse to our Company or any of our subsidiaries or has a material interest adverse to our Company or any of our subsidiaries. No director or executive officer has been a director or executive officer of any business which has filed a bankruptcy petition or had a bankruptcy petition filed against it during the past ten years. Except as described below, no current director or executive officer has been convicted of a criminal offense or is the subject of a pending criminal proceeding during the past ten years. No current director or executive officer has been the subject of any order, judgment or decree of any court permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities during the past ten years. No current director or officer has been found by a court to have violated a federal or state securities or commodities law during the past ten years.
In addition, there are no material proceedings to which any affiliate of our Company, or any owner of record or beneficially of more than five percent of any class of voting securities of our Company, is a party that is adverse to our Company or any of our subsidiaries or has a material interest adverse to our Company or any of our subsidiaries. We are not currently involved in any litigation that we believe could have a material adverse effect on our results of operations. We believe that
alternative sources for our ingredients are readily available and we do not
believe that the loss of any of our current suppliers would have a material
adverse effect on our business, financial condition or results of operations.
Dependence
However, from time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
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Investment in any securities offered pursuant to this prospectus and the applicable prospectus supplement involves risks. You should carefully consider the risk factors incorporated by reference to our Registration Statement on Key PersonnelForm S-1, filed with the SEC on September 9, 2016, as amended, our most recent Annual Report on Form 10-K and 10-K/A and any subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K and 8-K/A we file after the date of this prospectus, and all other information contained or incorporated by reference into this prospectus, as updated by our subsequent filings under the Exchange Act, and the risk factors and other information contained in the applicable prospectus supplement before acquiring any of such securities. The occurrence of any of these risks might cause you to lose all or part of your investment in the offered securities.
SPECIAL NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and uncertainties, principally in the sections entitled “Risk Factors.” All statements other than statements of historical fact contained in this prospectus, including statements regarding future events, our future financial performance, business strategy and plans and objectives of management for future operations, are forward-looking statements. We are dependent onhave attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” or “will” or the experience, abilities and continued servicesnegative of Philip Grabow, our President and Chief Executive Officer.these terms or other comparable terminology. Although we have
entered into an employment agreement with Mr. Grabow, the loss of his services
coulddo not make forward looking statements unless we believe we have a material adverse effect onreasonable basis for doing so, we cannot guarantee their accuracy. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined under “Risk Factors” or elsewhere in this prospectus, which may cause our business, financial conditionor our industry’s actual results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of operations.
Controlthe times at, or by which, that performance or those results will be achieved. Forward-looking statements are based on information available at the time they are made and/or management’s good faith belief as of Companythat time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from what is expressed in or suggested by Management
Philip Grabowthe forward-looking statements.
Forward-looking statements speak only as of the date they are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
We intend to use the net proceeds from the sale of the securities as set forth in the applicable prospectus supplement.
The following description of our capital stock is not complete and Yona Gonen (formerly Abrahami), Chief Operating Officermay not contain all the information you should consider before investing in our capital stock. This description is summarized from, and qualified in its entirety by reference to, our Certificate of Chatterley, own an aggregateIncorporation and Bylaws, which have been publicly filed with the SEC. See “Where You Can Find More Information; Incorporation by Reference.”
Our authorized capital stock consists of 1,000,00075,000,000 shares of common stock, representing approximately 19%par value of the$0.025 per share, and 5,000,000 shares of preferred stock, par value of $0.001 per share. As of June 13, 2017 there were 7,354,420 shares of our common stock issued and outstanding held by 145 holders of record. We currently have (i) 51 shares of Series A Preferred Stock authorized of which 51 shares of Series A Preferred Stock are issued and outstanding; (ii) 71,120 shares of Series B Preferred Stock authorized of which 0 shares of Series B Preferred Stock are issued and outstanding; (iii) 67,361 shares of Series C Preferred Stock authorized of which 0 shares of Series C Preferred Stock are issued and outstanding; and (iv) 4,861,468 shares of undesignated “blank check” preferred stock.
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Common Stock
Each share of our common stock. Accordingly, Mr. Grabowstock entitles its holder to one vote in the election of each director and Ms. Gonenon all other matters voted on generally by our stockholders. No share of our common stock affords any cumulative voting rights. This means that the holders of a majority of the voting power of the shares voting for the election of directors can elect all directors to be elected if they choose to do so.
Holders of our common stock will be ableentitled to effectively controldividends in such amounts and at such times as our Board of Directors in its discretion may declare out of funds legally available for the electionpayment of dividends. We currently do not anticipate paying any cash dividends on the common stock in the foreseeable future. Any future dividends will be paid at the discretion of our Board of Directors and in general to effectively determine
the outcome of any corporation transactionafter taking into account various factors, including:
| ● | general business conditions; | |
| ● | industry practice; | |
| ● | our financial condition and performance; | |
| ● | our future prospects; | |
| ● | our cash needs and capital investment plans; | |
| ● | our obligations to holders of any preferred stock we may issue; | |
| ● | income tax consequences; and | |
| ● | the restrictions New York and other applicable laws and our credit arrangements may impose, from time to time. |
If we liquidate or other matters submitted to our
shareholders for approval including mergers, acquisitions, consolidations or the
sale of all or substantially all of our assets. See "Description of Securities."
Potential Liability; Availability of Insurance
From time to time, we are subject to lawsuits as a result of our business;
and currently, we maintain insurance relating to personal injury and product
liability in amounts that we consider adequate and customary for the food
industry. While we have been able to obtain such insurance in the past, no
assurances can be given that we will be able to maintain these insurance
policies in the future. In addition, any successful claim against us, in an
amount exceeding our insurance coverage, could have a material adverse effect ondissolve our business, financial condition or results of operations.
Risks of Acquisition Strategy
We intend to develop and expand our business. Among the risks associated
with such strategy, which could materially adversely affect our business,
financial condition, results of operations and profitability, are the following:
o we may not be able to identify, acquire or profitably manage
such additional businesses;
o we may incur substantial costs, delays or other operational or
financial problems in integrating acquired businesses;
o such acquisitions may adversely affect our operating results;
o such acquisitions may divert management's attention;
o we may not be able to retain acquired key personnel;
o we may encounter unanticipated events, circumstances or legal
liabilities; and
o the value of acquired intangible assets could decrease.
6
Government Regulation; Maintenance of Licenses and Certification
We are subject to numerous state regulations relating to the preparation
and sale of food. We are also subject to federal and state laws governing our
relationship with employees, including minimum wage requirements, overtime,
working and safety conditions, and citizenship requirements. The failure to
obtain or retain the required food licenses or to be in compliance with
applicable governmental regulations, or any increase in the minimum wage rate,
employee benefits costs (including costs associated with mandated health
insurance coverage) or other costs associated with employees, could adversely
affect our business, financial condition or results of operations. Changes in
the laws regarding the minimum wage rate and other employee benefits and the
preparation and sale of food could adversely affect our operations as well as
the food industry in general. In addition, our products are certified as kosher
by independent entities. We believe that we will continue to meet the kosher
certification requirements; however, to the extent that we rely on our kosher
clientele, the failure to retain or obtain such certification in the future
could have a material adverse effect on our business, financial condition or
results of operations.
Risks Associated With Food Service Industry
The results of operations of food service businesses are affected by,
among other things, changes in consumer tastes, national, regional and local
economic conditions, demographic trends, traffic patterns and the type, number,
and location of competing units. Food service companies also can be
substantially adversely affected by publicity resulting from poor food quality,
illness, injury, health concerns, methods of food preparation or operating
difficulties. We can not offer assurance that we will be able to maintain the
quality of our products or avoid adverse publicity in the event of an illness,
injury or the like. We are dependent on frequent deliveries of fresh
ingredients. Therefore, we are subject to the risk that shortages or
interruptions in supply caused by adverse weather or other conditions could
adversely affect the availability, quality, and cost of such ingredients. To the
extent that we supply baked goods to various restaurants and caterers, we are
subject to frequent menu changes by such customers adding and deleting items.
Accordingly, we are subject to the additional risk of order cancellations and
increases, often on short notice.
Competition
The baking industry is a highly competitive and highly fragmented
industry. Competition in both the retail and institutional/wholesale baking
industry is based on product quality, brand name loyalty, price and customer
service. We compete with national, regional and local retail and wholesale
bakeries as well as supermarket chains that have in-store bakeries. Many of our
competitors are larger, more established and have greater financial and other
resources than we do. The specialty coffee/cafe business has become increasingly
competitive and relatively few barriers exist to entry. Some of our major
competitors include Au Bon Pain, Karps, Pillsbury, Country Muffins and
Bake-N-Joy. Our competitors with significant economic resources in the baking
industry or existing non-specialty and specialty coffee/cafe businesses could,
at any time, enter the wholesale or retail bakery/cafe business.
7
Quarterly Fluctuations; Seasonality; Possible Volatility of Stock Price
Our operating results are subject to seasonal fluctuations. Historically,
we have realized our highest level of sales in the second and fourth quarters
due to increased sales during the Thanksgiving, Christmas, Chanukah, Easter and
Passover seasons. In addition, our operating results could be subject to
quarterly fluctuations due to the timing of the opening of additional cafes and
kiosks. Such quarterly variations could cause the market price of our common
stock to fluctuate substantially. In addition, the stock markets in the United
States have, from time to time, experienced significant price and volume
fluctuations that are unrelated or disproportionate to the operating
performances of individual companies. Such fluctuations may adversely affect the
price of our common stock.
Lack of Liquidity of Common Stock
Our common stock was delisted from the Nasdaq SmallCap Market in September
1998 and since we were delisted, our common stock has been traded on the NASD
OTC Bulletin Board. Accordingly, an investor will likely find it more difficult
to dispose of, or to obtain accurate quotations as to the market value of, our
common stock. In addition, our common stock may become subject to "penny stock"
regulations promulgated by the Securities and Exchange Commission. Under such
regulations, brokers-dealers are required, among other things, to comply with
disclosure requirements and special investor suitability determinations prior to
a sale. If our common stock becomes subject to these regulations, the market
price of our common stock and liquidity thereof would be adversely affected. See
"Description of Securities."
State Registration Required for Sales of Shares
Under the securities laws of certain states, our securities may not be
sold unless they are qualified for sale or are exempt from regulation under the
state securities laws of the state in which the prospective purchaser resides.
Dilution
As of the date of this Prospectus, there are outstanding (i) options to
purchase 100,000 shares of common stock and (ii) warrants to purchase 2,485,000
shares of our common stock. The exercise of all or a substantial portion of all
of the outstanding options and warrants (including the warrants), and the
issuance of any additional securities which are exercisable for or convertible
into sharesholders of our common stock will have a dilutive effect, which could be
substantial, onshare ratably in all our assets that are available for distribution to our stockholders after our creditors are paid in full and the valueholders of the then outstanding sharesall series of our outstanding preferred stock, if any, receive their liquidation preferences in full.
Our common stock.
Possible Adverse Effectstock has no preemptive rights and is not convertible or redeemable or entitled to the benefits of Issuance of any sinking or repurchase fund.
Preferred Stock
Our Restated Certificate of Incorporation authorizes the issuance of
2,000,000
The Company has 5,000,000 authorized shares of preferred stock with designations, rightspar value $0.001 per share, which have three classes. The Series A Preferred Stock has 51 shares issued and preferences
as determined from time to time byoutstanding, the Board of Directors. As a result ofSeries B Preferred Stock has 0 shares issued and outstanding and the foregoing, theSeries C Preferred Stock has 0 shares issued and outstanding.
Our Board of Directors can issue, without further shareholder
approval, preferred stock with dividend, liquidation, conversion, voting or
other rights that could adversely affect the voting power or other rights of the
holders of the common stock. The issuance of preferred stock could, under
certain circumstances, discourage, delay or prevent a change in control.
Although we have no plans to issue any shares of preferred stock, there can be
no assurance that we will not issue preferred stock at some future date.
Shares Eligible for Future Sale
As of the date of this Prospectus, there are 5,305,250 shares of our
common stock outstanding. Of such shares, 2,608,252 shares of our common stock
are "restricted securities"
8
under Rule 144. Of such shares, 891,250 are being registered herein. The
remaining 1,717,002 outstanding restricted securities may be sold only pursuant
to a registration statement under the Securities Act of 1933, as amended
("Securities Act"), or an applicable exemption, including pursuant to Rule 144.
Under Rule 144, a person who has owned Common Stock for at least one year may,
under certain circumstances, sell within any three-month period, a number of
shares of Common Stock that does not exceed the greater of 1% of the then
outstanding shares of Common Stock or the average weekly trading volume during
the four calendar weeks prior to such sale. In addition, a person who is not
deemed to have been an affiliate of the Company at any time during the three
months preceding a sale, and who has beneficially owned the restricted
securities for the last two years, is entitled to sell all such shares without
regard to the volume limitations, current public information requirements,
manner of sale provisions and notice requirements. Sales or the expectation of
sales of a substantial number of shares of Common Stock in the public market
following this offering could adversely affect the prevailing market price of
the Common Stock.
Dividend Policy
Generally. We expect to retain earnings, if any, to finance the expansion
and development of our business and we do not anticipate making any cash
dividend payment in the foreseeable future.
Effect of Certain Charter Provisions.
Authority of Board of Directors to Issue Preferred Stock. Pursuant to the
terms of our charter, our Board of Directors has the authority, within the limitations and restrictions in our certificate of incorporation, to issue up to
2,000,000 shares of preferred stock in one or more series. Our Board of
Directors may also determineseries and to fix the prices, rights, preferences, privileges and restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares within eachconstituting any series or the designation of any series, without any further shareholder vote or action.action by the stockholders. The issuance of shares of preferred stock may have the effect of delaying, deferring or preventing a change in our control without further action by the stockholders. The issuance of shares of preferred stock with voting and conversion rights may adversely affect the voting power of the holders of our common stock. In some circumstances, this issuance could have the effect of decreasing the market price of our common stock.
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Undesignated preferred stock thatmay enable our Board to render more difficult or to discourage an attempt to obtain control of Directors may issueour company by means of a tender offer, proxy contest, merger or otherwise, and thereby to protect the continuity of our management. The issuance of shares of preferred stock may adversely affect the rights of our common stockholders. For example, any shares of preferred stock issued may rank prior to the holderscommon stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of common stock. WhileAs a result, the issuance of suchshares of preferred stock, could
facilitate possible acquisitions and other corporate activities, it could also
impede a third party's abilityor the issuance of rights to acquire controlpurchase shares of preferred stock, may discourage an unsolicited acquisition proposal or bids for our common stock or may otherwise adversely affect the market price of our company.
Limitationcommon stock or any existing preferred stock.
Series A Preferred Stock
Each share of Liabilitythe Series A Preferred Stock has no conversion rights, is senior to any other class or series of Directors. Pursuantcapital stock of the Company and special voting rights. Each one (1) share of Series A Preferred Stock shall have voting rights equal to (x) 0.019607 multiplied by the total issued and outstanding Common Stock eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (z) the Numerator.
The Company and the holder(s) of the Series A Preferred Stock intend to reach agreement providing for the cancelation of the Series A Preferred Stock at such time that the holder(s) no longer have in place any personal guaranties on the Company's liabilities, provided that such disposition of the Series A Preferred Stock by the holder(s) thereof would not result in an event of default under any material contract of the Company. There can be no assurances, however, that any such agreement with respect to the terms of our charterthe Series A Preferred Stock will occur.
There are currently 51 shares of Series A Preferred Stock outstanding.
Series B Preferred Stock
Holders of the Series B Preferred Stock shall be entitled to receive when and toif declared by the extent New York law permits, we and our shareholders may not hold our
directors personally liable for monetary damages inBoard of Directors cumulative dividends at a rate of twelve percent (12%) of the Original Issue Price. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the holders of Series B Preferred Stock shall be entitled to receive, immediately prior and in preference to any distribution to holders of the Company’s common stock, an amount per share equal to the sum of $100.00 and any accrued and unpaid dividends of the Series B Preferred Stock. Each share of Series B Preferred Stock may be converted at the option of the holder into the Company’s common stock. The shares shall be converted using the “Conversion Formula” set forth in the Series B Preferred Stock Certificate of Designations, which is equal to the Original Issue Price divided by 75% of the average closing bid price of the Common Stock for the five (5) consecutive trading days ending on the trading day of the receipt by the Company of the applicable notice of conversion. In no event shall a breachholder of fiduciary duty.
ImpactSeries B Preferred Stock be entitled to make conversions that would result in beneficial ownership by such holder and its affiliates of Year 2000more than 9.99% of the outstanding shares of Common Stock of the Company. The Year 2000 issueSeries B Preferred Stock may be redeemed at the Company’s option, in whole or in part, at any time and from time to time, at a redemption price per share equal to $100 per share, plus any accrued and unpaid dividends on the shares to be redeemed; provided, however, that if there are any accrued yearly dividends on the Series B Preferred Stock which have not been paid or declared and a sum sufficient for the payment thereof set apart, the Company may not redeem any shares of Series B Preferred Stock unless all then outstanding shares of such stock are so redeemed.
There are currently no shares of Series B Preferred Stock outstanding.
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Series C Preferred Stock
Holders of the Series C Preferred Stock shall be entitled to receive dividends out of any assets legally available at a rate of eight percent (8%) per share per annum, payable quarterly. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the holders of the Series C Preferred Stock shall be entitled to receive, immediately prior and in preference to any distribution to the holders of the Company's other equity securities, including the Common Stock, Series A Preferred Stock, and Series B Preferred Stock, a liquidation preference equal to $22.40 per share plus all accrued and unpaid dividends of the Series C Preferred Stock. Pursuant a Qualified Offering, the shares of Series C Preferred Stock were automatically converted at a conversion price that reflected a 20% discount to the price of the Common Stock pursuant to such Qualified Offering.
There are currently no shares of Series C Preferred Stock outstanding.
Options and Warrants
As of June 13, 2017, we have 12,250 outstanding options and 3,112,871 shares issuable upon the exercise of warrants. There are no other outstanding warrants or options at this time.
Anti-Takeover Provisions
Mr. Jeffrey S. Cosman, our chief executive officer, is the resultbeneficial owner of computer-controlled systems using two
digits rather than four to define the applicable year. For example, computer
programs that have time sensitive software may recognize a date using "00" as
the year 1900 instead100% of the year 2000.outstanding shares of the Company’s Series A Preferred Stock. As a result, our chief executive officer would have significant influence over most matters that require approval by our stockholders, including the election of directors and approval of significant corporate transactions, even if other stockholders oppose them. This reading could result in a system
failureconcentration of ownership might also have the effect of delaying or miscalculations and cause a disruption in operations, including,
among other things, a temporary inability to process transactions, send invoices
or engage in similar normal business activity.
Based on a recent assessment, we have determined that we will be required
to modify or replace portions of our software and hardware so that our systems
will function properly with respect to the dates in the year 2000 and
thereafter. We presently believe that with modifications to existing software
and hardware, the Year 2000 issue will not pose significant operational
9
problems for our systems.
Anti-takeover Effects of New York Law.
Certain anti-takeover provisions of New York law could delay or hinderpreventing a change of control of our company. WhileCompany that other stockholders may view as beneficial.
These provisions are intended to enhance the likelihood of continued stability in the composition of our board of directors and its policies and to discourage certain types of transactions that may involve an actual or threatened acquisition of us.
These provisions are also designed to reduce our vulnerability to an unsolicited acquisition proposal and to discourage certain tactics that may be used in proxy fights. However, such provisions generally facilitatecould have the effect of discouraging others from making tender offers for our Boardshares and may have the effect of Directors' ability to maximize shareholder value, theydeterring hostile takeovers or delaying changes in our control or management. As a consequence, these provisions also may discourage
takeovers that could beinhibit fluctuations in the best interest of certain shareholders. Such
provisions could adversely affect the market valueprice of our stock that could result from actual or rumored takeover attempts.
The NASDAQ Capital Market Listing
Our common stock is listed on the NASDAQ Capital Market under the symbol “MRDN.”
Transfer Agent and Registrar
Our transfer agent and registrar for our common stock is Issuer Direct Corporation, 500 Perimeter Park Drive, Morrisville, NC 27560.
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General
We may issue warrants to purchase shares of our common stock and preferred stock in one or more series together with other securities or separately, as described in the future.
USE OF PROCEEDS
applicable prospectus supplement. Below is a description of certain general terms and provisions of the warrants that we may offer. Particular terms of the warrants will be described in the warrant agreements to be entered into by the Company, a warrant agent to be named by the Company, and the holders from time to time of the warrants and the prospectus supplement relating to the warrants. Copies of the form agreement for each warrant and the warrant certificate, if any, reflecting the provisions to be included in such agreements that will be entered into with respect to a particular offering of each type of warrant, will be filed with the SEC and incorporated by reference as exhibits to the registration statement of which this prospectus forms a part. You should read the applicable warrant agreement for additional information before you purchase any of our warrants.
The prospectus supplement relating to any warrants we offer will describe the specific terms relating to the offering. These terms may include some or all of the following:
| ● | the specific designation and aggregate number of, and the price at which we will issue, the warrants; | |
| ● | the currency or currency units in which the offering price, if any, and the exercise price are payable; | |
| ● | the designation, amount and terms of the securities purchasable upon exercise of the warrants; | |
| ● | if applicable, the exercise price for shares of our common stock and the number of shares of common stock to be received upon exercise of the warrants; | |
| ● | if applicable, the exercise price for shares of our preferred stock, the number of shares of preferred stock to be received upon exercise, and a description of that series of our preferred stock; | |
| ● | the date on which the right to exercise the warrants will begin and the date on which that right will expire or, if you may not continuously exercise the warrants throughout that period, the specific date or dates on which you may exercise the warrants; | |
| ● | whether the warrants will be issued in fully registered form or bearer form, in definitive or global form or in any combination of these forms, although, in any case, the form of a warrant included in a unit will correspond to the form of the unit and of any security included in that unit; | |
| ● | any applicable material U.S. federal income tax consequences; | |
| ● | the identity of the warrant agent for the warrants and of any other depositaries, execution or paying agents, transfer agents, registrars or other agents; | |
| ● | the proposed listing, if any, of the warrants or any securities purchasable upon exercise of the warrants on any securities exchange; | |
| ● | if applicable, the date from and after which the warrants and the common stock and preferred stock will be separately transferable; | |
| ● | if applicable, the minimum or maximum amount of the warrants that may be exercised at any one time; | |
| ● | the procedures and conditions relating to the exercise of the warrants; | |
| ● | information with respect to book-entry procedures, if any; | |
| ● | the triggering event and the terms upon which the exercise price and the number of underlying securities that the warrants are exercisable into may be adjusted; |
| 17 |
| ● | the anti-dilution provisions of the warrants, if any; | |
| ● | any redemption or call provisions; | |
| ● | whether the warrants may be sold separately or with other securities as parts of units; and | |
| ● | any additional terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants. |
Until the warrants are exercised, holders of the warrants will not have any rights of holders of the underlying securities.
Outstanding Warrants
As of June 13, 2017, we had warrants (the “Warrants”, and each a “Warrant”) to purchase up to 3,112,871 shares of our common stock outstanding. Such warrants are listed on the Nasdaq Capital Market under the symbol “MRDNW.” On June 13, 2017, the last reported sale price of the Warrants on the Nasdaq Capital Market was $0.43 per share. The provisions of the Warrants are summarized below, but are qualified in their entirety by the language of the Warrants as filed with our Registration Statement on Form S-1, filed with the SEC on September 9, 2016, as amended, and any amendment or report filed with the SEC for the purpose of updating the description.
Exercisability. The Warrants are exercisable immediately upon issuance and at any time up to the date that is five years from the date of issuance. The Warrants are exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise (except in the case of a cashless exercise as discussed below).
Cashless Exercise. In the event that a registration statement covering shares of common stock offered hereby are being registeredunderlying the Warrants, or an exemption from registration, is not available for the accountresale of such shares of common stock underlying the Warrants, the holder may, in its sole discretion, exercise the Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the selling shareholders identified in this prospectus. See "Selling
Shareholders." Allaggregate exercise price, elect instead to receive upon such exercise the net proceeds from the sale of the common stock will go to the
shareholders who offer and sell their shares. Accordingly, we will not receive
any part of the proceeds from such sales of the common stock.
SELLING SHAREHOLDERS
The selling shareholders have informed us that the name, address, maximum number of shares of common stock determined according to the formula set forth in the warrant. In no event shall we be soldrequired to make any cash payments or net cash settlement to the registered holder in lieu of issuance of common stock underlying the warrants.
Certain Adjustments. The exercise price and totalthe number of shares of common stock that each selling shareholder ownspurchasable upon the exercise of the Warrants are subject to adjustment upon the occurrence of specific events, including stock dividends, stock splits, combinations and reclassifications of our common stock.
Transferability. Subject to applicable laws, the Warrants may be transferred at the option of the holders upon surrender of the Warrants to us together with the appropriate instruments of transfer.
Warrant Agent and Exchange Listing. The Warrants were issued in registered form under a warrant agency agreement between Issuer Direct Corporation, as set forth inwarrant agent, and us.
Fundamental Transactions. If, at any time while the following
table. The selling shareholders mayWarrants are outstanding, (1) we consolidate or merge with or into another corporation and we are not the surviving corporation, (2) we sell, lease, license, assign, transfer, convey or otherwise dispose of all or partsubstantially all of our assets, (3) any purchase offer, tender offer or exchange offer (whether by us or another individual or entity) is completed pursuant to which holders of our shares of common stock are permitted to sell, tender or exchange their shares of common stock pursuant to this prospectus. The offeringfor other securities, cash or property and has been accepted by the holders of such50% or more of our outstanding shares of common stock, is not being underwritten on(4) we effect any reclassification or recapitalization of our shares of common stock or any compulsory share exchange pursuant to which our shares of common stock are converted into or exchanged for other securities, cash or property, or (5) we consummate a firm commitment basis. As a result, we cannot
give you estimates as to the number and percentagestock or share purchase agreement or other business combination with another person or entity whereby such other person or entity acquires more than 50% of our outstanding shares of common stock, each selling shareholder will holda “Fundamental Transaction,” then upon termination of this offering. However,
we have assumed, for purposesany subsequent exercise of the Warrants, the holder thereof will have the right to receive the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of warrant shares then issuable upon exercise of the Warrant, and any additional consideration payable as part of the Fundamental Transaction.
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Rights as a Stockholder. Except as otherwise provided in the warrants or by virtue of such holder’s ownership of shares of our common stock, the holder of a warrant does not have the rights or privileges of a holder of our common stock, including any voting rights, until the holder exercises the Warrant.
Governing Law. The Warrants and the warrant agency agreement are governed by New York law.
We may issue rights to our stockholders to purchase shares of our common stock or preferred stock described in this prospectus. We may offer rights separately or together with one or more additional rights, preferred stock, common stock, warrants or any combination of those securities in the form of units, as described in the applicable prospectus supplement. Each series of rights will be issued under a separate rights agreement to be entered into between us and a bank or trust company, as rights agent. The rights agent for any rights we offer will be set forth in the applicable prospectus supplement. The rights agent will act solely as our agent in connection with the certificates relating to the rights of the series of certificates and will not assume any obligation or relationship of agency or trust for or with any holders of rights certificates or beneficial owners of rights. The following table,description sets forth certain general terms and provisions of the rights to which any prospectus supplement may relate. The particular terms of the rights to which any prospectus supplement may relate and the extent, if any, to which the general provisions may apply to the rights so offered will be described in the applicable prospectus supplement. To the extent that any particular terms of the rights, rights agreement or rights certificates described in a prospectus supplement differ from any of the terms described below, then the terms described below will be deemed to have been superseded by that prospectus supplement. We encourage you to read the applicable rights agreement and rights certificate for additional information before you decide whether to purchase any of our rights.
The prospectus supplement relating to any rights that we offer will include specific terms relating to the offering, including, among other matters:
| ● | the date of determining the stockholders entitled to the rights distribution; | |
| ● | the aggregate number of shares of common stock, preferred stock or other securities purchasable upon exercise of the rights; | |
| ● | the exercise price; | |
| ● | the aggregate number of rights issued; | |
| ● | whether the rights are transferrable and the date, if any, on and after which the rights may be separately transferred; | |
| ● | the date on which the right to exercise the rights will commence, and the date on which the right to exercise the rights will expire; | |
| ● | the method by which holders of rights will be entitled to exercise; | |
| ● | the conditions to the completion of the offering; | |
| ● | the withdrawal, termination and cancellation rights; |
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| ● | whether there are any backstop or standby purchaser or purchasers and the terms of their commitment; | |
| ● | whether stockholders are entitled to oversubscription right; | |
| ● | any U.S. federal income tax considerations; and | |
| ● | any other terms of the rights, including terms, procedures and limitations relating to the distribution, exchange and exercise of the rights. |
If less than all of the sharesrights issued in any rights offering are exercised, we may offer any unsubscribed securities directly to persons other than stockholders, to or through agents, underwriters or dealers or through a combination of such methods, including pursuant to standby arrangements, as described in the applicable prospectus supplement. In connection with any rights offering, we may enter into a standby underwriting or other arrangement with one or more underwriters or other persons pursuant to which such underwriters or other persons would purchase any offered securities remaining unsubscribed for after such rights offering.
We may issue units consisting of any combination of the other types of securities offered under this prospectus in one or more series. We may evidence each series of units by unit certificates that we will issue under a separate agreement. We may enter into unit agreements with a unit agent. We will indicate the name and address of the unit agent in the applicable prospectus supplement relating to a particular series of units.
The following description, together with the additional information included in any applicable prospectus supplement, summarizes the general features of the units that we may offer under this prospectus. You should read any prospectus supplement and any free writing prospectus that we may authorize to be provided to you related to the series of units being offered, hereunderas well as the complete unit agreements that contain the terms of the units. Specific unit agreements will contain additional important terms and provisions and we will file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference from another report that we file with the SEC, the form of each unit agreement relating to units offered under this prospectus.
If we offer any units, certain terms of that series of units will be sold.
Selling Shareholders
described in the applicable prospectus supplement, including, without limitation, the following, as applicable:
| ● | the title of the |
| ● | identification and description of | |
| ● | the price or prices at which the units will be issued; | |
| ● | the date, if any, on and after which the constituent securities comprising the units will be separately transferable; | |
| ● | a discussion of | |
| ● | any other terms of |
We may sell the securities from time to time pursuant to underwritten public offerings, negotiated transactions, block trades or a combination of these methods or through underwriters or dealers, through agents and/or directly to one or more purchasers. The securities may be distributed from time to time in one or more transactions:
| ● | at a fixed price or prices, which may be changed; | |
| ● | at market prices prevailing at the time of | |
| ● | at prices related to such prevailing market prices; or | |
| ● | at negotiated prices. |
| 20 |
Each time that we sell securities covered by this prospectus, we will provide a prospectus supplement or supplements that will describe the method of distribution and set forth the terms and conditions of Shares of Common Stock Common Stock
Beneficially Owned Common Stock to be Owned to be Owned
Name and Address Prior to Offering to be Offered After Offering After Offering (#)
---------------- ----------------- ------------- -------------- ------------------
Geraldine P. Baileys, TTEE 200,000 200,000 0 *
Baileys Family Trust
Attn: Karen Brenner
1300 Bristol Street North
Suite 230
Newport Beach, CA 92660
Pearlman Family Revocable 56,250 56,250 0 *
Trust
c/o Al Pearlman
17 Barry Street
Randolph, MA 02368
Swan Alley (Nominees) Ltd. 175,000 75,000 100,000 2%
40 Queen Street
London, EC4R1DD
England
- ----------
* Percentage of ownership after the offering of such securities, including the offering price of the securities and the proceeds to us, if applicable.
Offers to purchase the securities being offered by this prospectus may be solicited directly. Agents may also be designated to solicit offers to purchase the securities from time to time. Any agent involved in the offer or sale of our securities will be identified in a prospectus supplement.
If a dealer is less than 1%.
(1) In 1998, Mr. Abrahami resignedutilized in the sale of the securities being offered by this prospectus, the securities will be sold to the dealer, as our Chief Operating Officer.principal. The dealer may then resell the securities to the public at varying prices to be determined by the dealer at the time of resale.
If an underwriter is utilized in the sale of the securities being offered by this prospectus, an underwriting agreement will be executed with the underwriter at the time of sale and the name of any underwriter will be provided in the prospectus supplement that the underwriter will use to make resales of the securities to the public. In connection with the resignation,sale of the securities, we entered into a settlement agreement
pursuantor the purchasers of securities for whom the underwriter may act as agent, may compensate the underwriter in the form of underwriting discounts or commissions. The underwriter may sell the securities to which we are required to register 60,000 shares of Mr.
Abrahami's common stock owned by Mr. Abrahami.
PLAN OF DISTRIBUTION
The selling shareholders may offer their shares of common stock directly or through pledgees, donees, transfereesdealers, and those dealers may receive compensation in the form of discounts, concessions or other successorscommissions from the underwriters and/or commissions from the purchasers for which they may act as agent. Unless otherwise indicated in interesta prospectus supplement, an agent will be acting on a best efforts basis and a dealer will purchase securities as a principal, and may then resell the securities at varying prices to be determined by the dealer.
Any compensation paid to underwriters, dealers or agents in one
or moreconnection with the offering of the following types of transactions:
osecurities, and any discounts, concessions or commissions allowed by underwriters to participating dealers will be provided in the over-the-counter market;
o on any stock exchange on which shares of common stock may be
listed atapplicable prospectus supplement. Underwriters, dealers and agents participating in the time of sale;
o in negotiated transactions; or
o in a combination of anydistribution of the above transactions.
The selling shareholders may offer their shares of common stock at any of
the following prices:
o fixed prices which may be changed;
o market prices prevailing at the time of sale;
o prices related to such prevailing market prices; or
o at negotiated prices.
11
The selling shareholders may sell their shares of common stock by one or
more of the following methods, without limitation:
o a block trade in which the broker-dealer so engaged will
attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the
transaction;
o a broker or dealer may purchase as principal and resell for
its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and
o face-to-face transactions between the selling shareholders and
purchasers without a broker-dealer.
In effecting sales, brokers or dealers that the selling shareholders
engage may arrange for other brokers or dealers to participate. The selling
shareholders may give such brokers or dealers commissions or discounts in
amounts to be negotiated immediately prior to the sale. Such brokers or dealers
and any other participating brokers or dealerssecurities may be deemed to be "underwriters"underwriters within the meaning of Section 2(11) of the Securities Act in
connection with such sales.
In addition, any securities covered by this prospectus that qualify for
sale pursuant to Rule 144 might be sold under Rule 144 rather than pursuant to
this prospectus. The selling shareholdersof 1933, as amended, and any broker-dealers acting in
connection with the sale of shares of common stock hereunder may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act,discounts and
any commissions received by them and any profit realized by them on the resale of shares of common stock as principalsthe securities may be deemed to be underwriting compensation
under the Securities Act.
Ifdiscounts and when a selling shareholder notifies us of that he or she has
enteredcommissions. We may enter into a material arrangement with a broker-dealer for the sale of shares
of common stock through a block trade, special offering or secondary
distribution or a purchase by a broker or dealer, we will file a supplemental
prospectus, if required pursuantagreements to Rule 424(c)indemnify underwriters, dealers and agents against civil liabilities, including liabilities under the Securities Act, disclosing (1)or to contribute to payments they may be required to make in respect thereof and to reimburse those persons for certain expenses.
Any common stock will be listed on the nameNasdaq Capital Market, but any other securities may or may not be listed on a national securities exchange. To facilitate the offering of securities, certain persons participating in the offering may engage in transactions that stabilize, maintain or otherwise affect the price of the selling shareholder andsecurities. This may include over-allotments or short sales of the securities, which involve the sale by persons participating broker-dealer(s); (2)in the numberoffering of shares of common stock involved; (3)more securities than were sold to them. In these circumstances, these persons would cover such over-allotments or short positions by making purchases in the open market or by exercising their over-allotment option, if any. In addition, these persons may stabilize or maintain the price at which such shares of common stock were sold; (4) the commissions paidsecurities by bidding for or discountspurchasing securities in the open market or by imposing penalty bids, whereby selling concessions allowed to dealers participating in the offering may be reclaimed if securities sold by them are repurchased in connection with stabilization transactions. The effect of these transactions may be to stabilize or maintain the market price of the securities at a level above that which might otherwise prevail in the open market. These transactions may be discontinued at any time.
We may engage in at the market offerings into an existing trading market in accordance with Rule 415(a)(4) under the Securities Act.
| 21 |
In addition, we may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement so indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third party may use securities pledged by us or borrowed from us or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from us in settlement of those derivatives to close out any related open borrowings of stock. The third party in such broker-dealer(s), where applicable;
(5)sale transactions will be an underwriter and, if not identified in this prospectus, will be named in the applicable prospectus supplement (or a post-effective amendment). In addition, we may otherwise loan or pledge securities to a financial institution or other third party that in turn may sell the securities short using this prospectus and an applicable prospectus supplement. Such financial institution or other third party may transfer its economic short position to investors in our securities or in connection with a concurrent offering of other securities.
We do not make any representation or prediction as to the direction or magnitude of any effect that the transactions described above might have on the price of the securities. In addition, we do not make any representation that underwriters will engage in such transactions or that such broker-dealer(s) didtransactions, once commenced, will not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus; and (6)
other facts material to the transaction.
be discontinued without notice.
The selling shareholders reserve the sole right to accept and, together
with any agentspecific terms of any selling shareholder, to rejectlock-up provisions in whole or in part any
proposed purchase of the shares of common stock. The selling shareholders will
pay any sales commissions or other seller's compensation applicable to such
transactions.
We have not registered or qualified offers and sales of shares of the
common stock under
12
the lawsrespect of any country, other thangiven offering will be described in the United States. applicable prospectus supplement.
To comply with certain
states'applicable state securities laws, the securities offered by this prospectus will be sold, if applicable, the selling shareholders will offer and
sell their shares of common stocknecessary, in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain states the selling
shareholderssecurities may not offer or sell shares of common stockbe sold in some states unless wethey have been registered or qualified such shares for sale in such statesthe applicable state or we have complied
with an available exemption from the registration or qualification.
Under applicable rulesqualification requirement is available and regulations under the Exchange Act, any person
engaged in a distribution of shares of the common stockis complied with.
The underwriters, dealers and agents may not simultaneously engage in market-making activitiestransactions with respect to such shares of common stockus, or perform services for a period of two to nine business days prior to the commencement of such
distribution. In addition, the selling shareholders and any other person
participating in a distribution will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including without
limitation, Rules 10b-2, 10b-6 and 10b-7. Such provisions may limit the timing
of purchases and sales of any of the shares of common stock by the selling
shareholders or any such other person. This may affect the marketability of the
common stock and the brokers' and dealers' ability to engage in market-marking
activities with respect to the common stock.
We will pay substantially all of the expenses incident to the registration
of the shares of common stock by filing the registration statement of which this
prospectus is a part, estimated to be approximately $6000.00.
DESCRIPTION OF SECURITIES TO BE REGISTERED
Our authorized capital stock consists of 10,000,000 shares of common
stock, par value $.001 per share, and 2,000,000 shares of preferred stock, par
value $.001 per share. As of the date of this Prospectus, 5,305,250 shares of
our common stock were issued and outstanding, no shares of preferred stock were
issued and outstanding and approximately 2,585,000 shares of common stock
(subject to adjustment) were issuable upon exercise of outstanding options and
warrants.
Common Stock
Voting, Dividend and Other Rights. Each outstanding share of common stock
will entitle the holder to one vote on all matters presented to the shareholders
for a vote. Holders of shares of common stock will have no preemptive,
subscription or conversion rights. All shares of common stock to be outstanding
following this offering will be duly authorized, fully paid and nonassessable.
Our Board of Directors will determine if and when distributions may be paid out
of legally available funds to the holders. We have not declared any cash
dividends during the past fiscal year with respect to the common stock. Our
declaration of any cash dividendsus, in the future will depend on our Boardordinary course of Directors' determination as to whether, in light of our earnings, financial
position, cash requirements and other relevant factors existing at the time, it
appears advisable to do so.
Rights Upon Liquidation. Upon liquidation, subject to the rights of any
holders of the preferred stock, if any, tobusiness for which they receive preferential distributions,
each outstanding share of common stock may participate pro rata in the assets
remaining after payment of, or adequate provision for,
13
all our known debts and liabilities.
Majority Voting. The holders of a majority of the outstanding shares of
common stock constitute a quorum at any meeting of the shareholders. A plurality
of the votes cast at a meeting of shareholders elects our directors. The common
stock does not have cumulative voting rights. Therefore, the holders of a
majority of the outstanding shares of common stock can elect all of our
directors. In general, a majority of the votes cast at a meeting of shareholders
must authorize shareholders action other than the election of directors.
However, the Business Corporation Law of the State of New York provides that
certain extraordinary matters, such as a merger or consolidation in which we are
a constituent corporation, a sale or other disposition of all or substantially
all of our assets, and our dissolution, require the vote of the holders of
two-thirds of all outstanding voting shares. Most amendments to our certificate
of incorporation require the vote of the holders of a majority of all
outstanding voting shares.
Preferred Stock
Authority of Board of Directors to Create Series and Fix Rights. Under our
certificate of incorporation, as amended, our Board of Directors can issue up to
2,000,000 shares of preferred stock from time to time in one or more series. The
Board of Directors is authorized to fix by resolution as to any series the
designation and number of shares of the series, the voting rights, the dividend
rights, the redemption price, the amount payable upon liquidation or
dissolution, the conversion rights, and any other designations, preferences or
special rights or restrictions as may be permitted by law. Unless the nature of
a particular transaction and the rules of law applicable thereto require such
approval, the Board of Directors has the authority to issue these shares of
preferred stock without shareholder approval.
Potential Dilution of Share Value; Preferences. Any issuance of shares of
preferred stock could dilute the earnings per share and book value of existing
shares of common stock. Because our Board of Directors has the authority to fix
the voting rights for any series of preferred stock, the holders of shares of a
new series of preferred stock could be entitled to vote separately as a class in
connection with the approval of certain extraordinary corporate transactions
where New York law does not require such class vote, or might be given a
disproportionately large number of votes. The issuance of shares of preferred
stock could also result in a class of securities outstanding that would have
certain preferences (for example, with respect to dividends or liquidation), or
would enjoy certain voting rights in addition to those of the common stock.
Potential Frustration in Change of Control . Although we currently have no
such intention, we could use authorized but unissued shares of preferred stock
to hinder a change in control of our company. Any issuance of shares of
preferred stock could dilute the stock ownership of persons seeking to gain
control. Shares of a new series of preferred stock could also be convertible
into a large number of shares of common stock or have other terms that might
make more difficult or costly the acquisition of a controlling interest in our
company. Under certain circumstances, such shares could be used to create voting
impediments or to frustrate persons attempting to effect a takeover or otherwise
gain control. Such shares could be privately placed with purchasers who might
side with the Board of Directors in opposing a hostile takeover bid. In
addition, the Board of Directors could authorize holders of a series of
preferred stock to vote as a class, either separately or with the holders of the
common stock, on any merger, sale or exchange of assets by us or any other
extraordinary corporate transactions. The
14
ability of the Board of Directors to take such actions might be considered as
having an effect of discouraging any attempt by another person or entity to
acquire control of our company.
Transfer Agent
The registrar and transfer agent for our common stock is American
Securities Transfer & Trust, Inc.
compensation.
LEGAL MATTERS
Pryor Cashman Sherman & Flynn
Lucosky Brookman LLP New York, New York, will pass upon certain legal matters in connection with this offering, includingrelating to the validityissuance and sale of the issuancesecurities offered hereby on behalf of Meridian Waste Solutions, Inc. Additional legal matters may be passed upon for us or any underwriters, dealers or agents, by counsel that we will name in the sharesapplicable prospectus supplement.
The consolidated financial statements of common stock offered by this prospectus.
EXPERTS
Our consolidated balance sheetsMeridian Waste Solutions, Inc. as of December 31, 19982016 and 1997, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the two yearsyear then ended December 31, 1998 appearingincorporated in this Prospectus by reference from our Annual Report on Form 10-KSB10-K for the year ended December 31, 1998,2016 have been audited by Zeller
WeissHein & Kahn,Associates LLP, an independent auditors,registered public accounting firm, as set forthstated in their report thereon, included therein and incorporated herein by reference. The financial statements
referred to above are incorporated herein by reference, and have been incorporated in this Prospectus and Registration Statement in reliance upon such report givenand upon the authority of such firm as experts in accounting and auditing.
15
================================================================================
No dealer, sales representative, or other person has
The consolidated financial statements of Meridian Waste Solutions, Inc. as of December 31, 2015 and for the year then ended incorporated in this Prospectus by reference from our Annual Report on Form 10-K for the year ended December 31, 2016 have been authorized to
give any information or to make any representationsaudited by D’Arelli Pruzansky, P.A., an independent registered public accounting firm, as stated in connection with this
offering other than those containedtheir report thereon, incorporated herein by reference, and have been incorporated in this Prospectus and if given or made,Registration Statement in reliance upon such information or representation must not be reliedreport and upon the authority of such firm as having been
authorized by the Company or any Underwriter. This Prospectus does not
constitute an offer to sell or a solicitationexperts in accounting and auditing.
The combined and consolidated financial statements of an offer to buy anyThe CFS Group as of December 31, 2016 and, 2015 and for each of the securities offered hereby by anyoneyears then ended incorporated in any jurisdiction in which such offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to any person to whom it is unlawful
to make such offer or solicitation. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create any implication
that there hasby reference from our Amendment No. 1 to Current Report on Form 8-K filed on May 1, 2017 have been no changeaudited by Hein & Associates LLP, an independent registered public accounting firm, as stated in their report thereon, incorporated herein by reference, and have been incorporated in this Prospectus and Registration Statement in reliance upon such report and upon the affairsauthority of the Company since the date
hereof or that the information contained herein is correctsuch firm as experts in accounting and auditing.
| 22 |
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM
Item 14.Other Expenses of Issuance and Distribution.
EstimatedDistribution
The following is an estimate of the expenses (all of which are to be paid by the Companyregistrant) that we may incur in connection with the issuance and distribution of the securities being registered are as follows:
Registration Fee .............................................. $
------------
Legal Fees and Expenses ....................................... $ 5000.00
------------
Accounting Fees and Expenses .................................. $1000.00
------------
Miscellaneous ................................................. $ 0
------------
Total $ 6000.00
------------
ITEMhereby.
| SEC registration fee | $ | 5,795 | ||
| FINRA filing fee | * | |||
| Printing expenses | * | |||
| Legal fees and expenses | * | |||
| Accounting fees and expenses | * | |||
| Blue Sky, qualification fees and expenses | * | |||
| Transfer agent fees and expenses | * | |||
| Trustee fees and expenses | * | |||
| Warrant agent fees and expenses | * | |||
| Miscellaneous | * | |||
| Total | $ | * |
| * | These fees are calculated based on the securities offered and the number of issuances and accordingly cannot be estimated at this time. |
Item 15.Indemnification of Directors and Officers
Reference is made to Sections 721 through 725 of the
The New York Business Corporation Law of the State of New York (the "BCL"(“NYBCL”), which provides for indemnification of permits a corporation to indemnify its current and former directors and officers of New York corporations under certain circumstances.
Section 722 of the BCL provides that a corporation may indemnify directors
and officers as well as other employees and individuals against expenses, judgments, fines and amounts paid in settlement and reasonable expenses, including attorneys'
fees, in connection with actions or proceedings, whether civil or criminal
(other than an action by or ina legal proceeding. To be indemnified, the right of the corporation, a "derivation
action"), if theyperson must have acted in good faith and in a manner theythe person reasonably believed to be in, orand not opposed to, the best interests of the corporation, and, withcorporation. With respect to any criminal action or proceeding, the person must not have had no reasonable cause to believe theirthe conduct was unlawful. A similar standard is applicable in
Our Certificate of Incorporation and By-laws provide that, to the casefullest extent permitted by the NYBCL, we will indemnify our present and future directors and officers against all expenses actually and reasonably incurred by them as a result of derivative actions, except that indemnification only extends to amounts paid in
settlement and reasonable expenses (including attorneys' fees) incurred in
connectiontheir being threatened with the defense or settlement of such actions, and the statute does
not apply in respect of a threatened action, or a pending action that is settled or otherwise disposed of, and requires court approval before there can beinvolved in any indemnification where the person seeking indemnification has been found liable
to the corporation. Section 721action, suit or proceeding (other than an action commenced on our own behalf) by virtue of the BCL providesfact that Article 7they are or were one of the BCL is
not exclusive of other indemnificationour officers or directors.
Our by-laws also provide that we may be granted by a corporation's
certificate of incorporation, disinterested director vote, shareholders vote,
agreement or otherwise.
The Registrant's bylaws limit the indemnification that the Registrant
shall providepurchase and maintain insurance to judgments, fines, amounts paid in settlement and reasonable
expenses, including attorney's fees, actually and necessarily incurredindemnify us for any obligation we incur as a result of the actionindemnification of directors and officers, or proceeding. Notwithstanding such limitation,to indemnify directors and officers, pursuant to our by-laws and in accordance with the Registrant may pay in advance of final disposition expenses incurred by such
person in defending such action or proceeding. The Registrant's bylaws apply the
same limitation to all actions or proceedings, including derivation actions.
Section 402(b) of the BCL provides that a corporation's certificate of
incorporation may include a provision that eliminates or limits the personal
liability of the corporation's directorsNYBCL.
In addition to the corporation or its shareholders
for damages for any breachprovisions of a director's duty, provided that such provision
does not eliminate or limit (1) the liability of any director if a judgment or
other final adjudication adverse to the director establishes that the director's
acts or omissions were in bad faith or involved intentional misconduct or a
knowing violation of law or that the director personally gained a financial
profit or other advantage to which the director was not legally entitled or that
the director's acts violated Section 719 of the BCL; or (2) the liability of any
director for any act or omission prior to the adoption of a provision authorized
by Section 402(b) of the BCL. Article Ninth of the Registrant'sour Certificate of Incorporation as amended, provides that no directorand By-laws providing for indemnification of the Registrant shall be
liable to the Registrant or its shareholders for any breach of duty in such
capacity except as provided in Section 402(b) of the BCL.
Any amendment to or repeal of the Registrant's Certificate of
Incorporation or by-laws shall not adversely affect any right or protection of a
director or officer of the Registrant for or with respect to any acts or
omissions of such director or officer occurring prior to such amendment or
repeal.
The Registrant maintains directors and officers, insurancewe have entered into an employment agreement with Jeffrey Cosman, our Chief Executive Officer, which subjectprovides for us to certain exclusions, insures the directorsindemnify Mr. Cosman against all expenses actually and officersreasonably incurred by him as a result of his being threatened with or otherwise involved in any action, suit or proceeding by virtue of the Registrant
against certain losses which arise outfact that he is or was one of any neglect or breach of duty
(including, but not limited to, any error, misstatement, act, or omission) by
the directors or officers in the discharge of their duties, and insures the
Registrant against amounts which it has paid or may become obligated to pay as
indemnification to its directors and/or officers to cover such losses.
our officers.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to officers, directors officers or persons controlling the
Registrantus pursuant to the foregoing the Registrant hasprovisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Item 16.Exhibits
(a)Exhibits
A list of exhibits filed with this registration statement on Form S-3 is set forth on the Exhibit No. Description
----------- -----------
5 Opinion of Pryor Cashman Sherman & Flynn LLP
23.1 Consent of Pryor Cashman Sherman & Flynn LLP
(included as part of Exhibit 5)
23.2 Consent of Zeller Weiss & Kahn, LLP
24 Powers of Attorney (included in the signature page
of this Registration Statement)
Index and is incorporated herein by reference.
Item 17.Undertakings
(a) The undersigned Registrant hereby undertakes:
II-2
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
| II-1 |
(ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statementregistration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement.registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high andend of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a
20 percent change in the maximum aggregate offering price set forth in the "Calculation“Calculation of Registration Fee"Fee” table in the effective Registration Statement;
registration statement; and
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration
Statementregistration statement or any material change to such information in the Registration Statement;
provided,registration statement;
Provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(ii)(iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the SEC by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement.
registration statement or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof.Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
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(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b) The undersigned Registrantregistrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant'sregistrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan'splan’s annual report pursuant to Section 15(d) of the Securities Exchange Act)Act of 1934) that is incorporated by reference in the Registration Statementregistration statement shall be deemed to be a new Registration Statementregistration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof.
(c)
(h) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrantregistrant pursuant to the foregoing provisions, described in Item 15 of this
Registration Statement, or otherwise, the Registrantregistrant has been advised that in the opinion of the SECSecurities and Exchange Commission such indemnification is against public policy as II-3
Registrantregistrant of expenses incurred or paid by a director, officer or controlling person of the Registrantregistrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrantregistrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
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| II-3 |
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrantregistrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration
Statementregistration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Thethe City of New York,Milton, State of New YorkGeorgia, on this 9th day of
September, 1999.
CREATIVE BAKERIES, INC.
By: /s/ Philip Grabow
-----------------------
Philip Grabow
President and
Chief Executive Officer
By: /s/ Ashwin R. Shah
-----------------------
Ashwin R. Shah
Chief Financial Officer
| MERIDIAN WASTE SOLUTIONS, INC. | ||
| By: | /s/ Jeffrey S. Cosman | |
| Jeffrey S. Cosman | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| By: | /s/ Chris Diaz | |
| Chris Diaz | ||
Chief Financial Officer Principal Accounting Officer) | ||
KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature appears below hereby constitutes Philip
Grabow,and appoints each of Jeffrey S. Cosman and Chris Diaz, his true and lawful attorney-in-factattorneys-in-fact and agents with full power of substitution, for him and in his name, place and stead, in any and all capacities, to execute in the
name of such person, in the capacities stated below,sign any and to file, such one or
moreall amendments (including post-effective amendments) to this Registration Statement, asand to sign any registration statement for the Registrant deems
appropriate, and generallysame offering covered by the Registration Statement that is to do all such things in the name and on behalf of
such person, in the capacities stated below,be effective upon filing pursuant to enable the Registrant to comply
with the provisions ofRule 462(b) promulgated under the Securities Act, of 1933, and all requirements ofpost-effective amendments thereto, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, thereunder,granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming the signature of such person as may be signed byall that said attorneys-in-fact and agents or any one of them, or his, her or their substitute or substitutes, may lawfully do or cause to any and all amendments to this Registration Statement.
be done or by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Dated: September 9, 1999 /s/ Philip Grabow
-------------------------------------
(Philip Grabow)
President and Chief Executive Officer
Dated: September 9, 1999 /s/ Richard Fector
-------------------------------------
(Richard Fector)
Director
Dated: September 9, 1999 /s/ Raymond J. McKinstry
-------------------------------------
(Raymond J. McKinstry)
Director
Dated: September 9, 1999 /s/ Kenneth Sitomer
-------------------------------------
(Kenneth Sitomer)
Director
Dated: September 9, 1999 /s/ Karen Brenner
-------------------------------------
(Karen Brenner)
Director
Dated: September 9, 1999 /s/ Yona Gonen
-------------------------------------
(Yona Gonen)
Director
indicated:
| Signature | Title | Date | ||
| /s/ Jeffrey S. Cosman | Chief Executive Officer, Chairman | June 15, 2017 | ||
| Jeffrey S. Cosman | ||||
| /s/ Chris Diaz | Chief Financial Officer | June 15, 2017 | ||
| Chris Diaz | ||||
| /s/ Walter H. Hall, Jr. | President, Chief Operating Officer, Director | June 15, 2017 | ||
| Walter H. Hall, Jr. | ||||
| /s/ Thomas Cowee | Director | June 15, 2017 | ||
| Thomas Cowee | ||||
| /s/ Jackson Davis, Jr. | Director | June 15, 2017 | ||
| Jackson Davis, Jr. | ||||
| /s/ Joseph Ardagna | Director | June 15, 2017 | ||
| Joseph Ardagna |
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EXHIBIT INDEX
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| II-6 |
* To be filed by reference in connection with the offering of the securities.
† Filed herewith.
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