Brooklyn Cheesecake & Desert Com (BCKE) SEC Quarterly Report (10-Q) for Q3 2015

NOTE 1 – NATURE OF OPERATIONS AND ORGANIZATION

Nature of Operations

Meridian Waste Solutions, Inc. (formerly Brooklyn Cheesecake and Desserts Company, Inc.) (the "Company") is currently operating under  two separate Limited Liability Companies; Here To Serve-Missouri Waste Division, LLC ("HTSMWD"), a Missouri Limited Liability Company and Here To Serve Georgia Waste Division, LLC ("HTSGWD"), a Georgia Limited Liability Company.

In 2014, HTSMWD purchased the assets of a solid waste disposal company in the St. Louis, MO market. See Explanation of Change in Accounting Basis below.  This acquisition is considered the platform company for future acquisitions in the solid waste disposal industry.  HTSGWD was created to facilitate expansion in this industry throughout the Southeast.  The Company is primarily in the business of residential and commercial waste hauling and has contracts with various cities and municipalities.  The majority of the Company's customers are located in the St. Louis metropolitan area.

Organization

Spinoff of Here to Serve Technology, LLC

On January 7, 2015, in an effort to give investors a more concentrated presence in the waste industry the Company sold the capitalized software assets of Here to Serve Technology, LLC (HTST) to Mobile Science Technologies, Inc., a Georgia corporation (MSTI), a related party due to being owned by some of the shareholders of the Company. No gain or loss was recognized on this transaction as the Company received equity equal to book value ($434,532) of the capitalized software in the exchange.  This represents approximately 15% of the equity of MSTI and is reflected in the accompanying balance sheet as "investment".  This investment is accounted for using the cost basis method (see Investment in Note 2 below).

Recapitalization

On October 17, 2014, Here to Serve-Missouri Waste Division, LLC, (HTSMWD) a Missouri Limited Liability Company, which is the historical business, entered into a Share Exchange Agreement with the Company and the sole member of HTSMWD whereby the Company agreed to acquire the membership interest of HTSMWD, HTST and HTSGWD in exchange for 9,054,134 shares of the Company's common stock.  This transaction was closed on October 17, 2014 and HTSMWD became wholly-owned by the Company.  The Company is deemed to have issued 1,139,284 shares of common stock which represents the outstanding common shares of the Company just prior to the closing of the transaction.

NOTE 1 – NATURE OF OPERATIONS AND ORGANIZATION (CONTINUED)

At closing, the Company issued 9,054,134 shares of its common stock to the sole member of HTSMWD and the shareholders of the sole member who obtained approximately 90% control and management control of the Company.  The transaction was accounted for as a reverse acquisition and recapitalization of HTSMWD whereby HTSMWD is considered the acquirer for accounting purposes.  The consolidated financial statements after the acquisition include the balance sheets of both companies and HTST and HTSGWD at historical cost, the historical results of HTSMWD, HTST and HTSGWD.  All share and per share information in the accompanying consolidated financial statements and footnotes has been retroactively restated to reflect the recapitalization (see Explanation of Membership Interest Purchase Agreement below).

Explanation of Membership Interest Purchase Agreement

NOTE 1 – NATURE OF OPERATIONS AND ORGANIZATION (CONTINUED)

On October 17, 2014, the directors and majority shareholders of the Company approved the Purchase Agreement and the transactions contemplated under the Purchase Agreement. The directors of Here to Serve and the Here to Serve Shareholders approved the Purchase Agreement and the transactions contemplated thereunder.  This closing of the Purchase

Agreement results in a change of control of the Company and the Company changed its business plan to that of HTSMWD.

Explanation of Change in Accounting Basis

The merger of Here to Serve Holding Corp. (Here to Serve), a Delaware Corporation, and Meridian Waste Services, LLC became effective May 15, 2014.  The merger was accounted for by Here to Serve using business combination accounting.  Under this method, the purchase price paid by the acquirer is allocated to the assets acquired and liabilities assumed as of the acquisition date based on the fair value.  By the application of "push-down" accounting, our assets, liabilities and equity were accordingly adjusted to fair value on May 15, 2014.  Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions.

At the time of merger Here to Serve was a company with nominal operations whereas Meridian Waste Services, LLC consisted of the active and carry-forward business.  Accordingly Meridian Waste Services, LLC is deemed to be the predecessor entity and as such is presented as the comparable financial statements.  As such our financial statements are presented in two distinct periods to indicate the application of two different basis of accounting.  The Statement of Operations and Statement Cash Flows for the periods ending September 30, 2014 represent the results of operation of Meridian Waste Services, LLC, the predecessor and are presented for comparison purposes.

Also, see Note 5 – Acquisition below.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Basis

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP") for interim financial information and with the instructions to Form 10-Q and

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Article 8-03 of Regulation S-X.  Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by US GAAP for complete financial statements.  The unaudited consolidated financial statements and notes included herein should be read in conjunction with the annual consolidated financial statements and notes for the year ended December 31, 2014 included in our Annual Report on Form 10-K filed with the SEC on April 15, 2015.

In the opinion of management, all adjustments (consisting of normal recurring items) necessary to present fairly the Company's financial position as of September 30, 2015 , and the results of operations and cash flows for the three and nine months ending September 30, 2015 are not necessarily indicative of the results to be expected for a full year.

Basis of Consolidation

The consolidated financial statements for the nine months ending September 30, 2015 include the operations of the Company and its wholly-owned subsidiary Here to Serve-Missouri Waste Division, LLC.  The consolidated financial statements for the year ended December 31, 2014 include the operations of the Company and its wholly-owned subsidiaries, Here To Serve-Missouri Waste Division, LLC and Here To Serve Technology, LLC (See Note 1 above for information related to the spinoff of Here To Serve Technology, LLC.)  The other subsidiary of the Company, Here To Serve Georgia Waste Division, LLC had no operations during the period.

All significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period consolidated financial statements.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.

Fair Value of Financial Instruments

The Company's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, other liabilities, accrued interest, notes payable, and an amount due to a related party. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these consolidated financial statements.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Impairment of long-lived assets

The Company periodically reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable.  The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less that the carrying amount of the asset.  The amount of impairment is measured as the difference between the asset's estimated fair value and its book value.  During the nine months ending September 30, 2015, the Company experienced no losses due to impairment.

Income Taxes

The Company accounts for income taxes pursuant to the provisions of ASC 740-10, "Accounting for Income Taxes," which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.

The Company follows the provisions of the ASC 740 -10 related to, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits.

The Company has adopted ASC 740-10-25 Definition of Settlement, which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. As of December 31, 2014, tax years ended December 31, 2013, 2012, 2011 are still potentially subject to audit by the taxing authorities.

Use of Estimates

Accounts Receivable

At September 30, 2015 the Company had $624,431 of gross trade receivables.    At December 31, 2014, the Company had $659,646 of gross trade receivables.

Allowance for Doubtful Accounts

The Company provides an allowance for doubtful accounts equal to the estimated collection losses that will be incurred in collection of receivables related to residential customers and commercial project invoices.  The estimated losses are based on managements' evaluation of outstanding accounts receivable at the end of the accounting period.  At September 30, 2015, an allowance of $35,230 was recorded.  At December 31, 2014, the Company had an allowance of $71,167.

Intangible Assets

Intangible assets consist of assets acquired and costs incurred in connection with the development of the Company's capitalized software. See note below.  The Company also has intangible assets related to the purchase of Meridian Waste Services, LLC.  See Note 4 below.  These intangibles assets are amortized over periods between 3 and 5 years.

Investment

The Company has an investment in a privately held corporation in the mobile apps industry.  As the Company does not exercise significant influence on this entity, this investment is recorded using the cost method of accounting.  The Company monitors this investment for impairment and makes appropriate reductions in the carrying value if the Company

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

determines that an impairment charge is required based primarily on the financial condition and near-term prospect of this entity.

Capitalized Software

The Company acquired a software product that is under further development. This asset was being amortized over a three to five year period using the straight-line method of depreciation for book purposes beginning when the software is completed.

The Company capitalizes internal software development costs subsequent to establishing technological feasibility of a software application in accordance with guidelines established by "ASC 985-20-25" Accounting for the Costs of Computer Software to Be Sold, Leased or Otherwise Marketed, requiring certain software development costs to be capitalized upon the establishment of technological feasibility.  The establishment of technological feasibility and the ongoing assessment of the recoverability of these costs require considerable judgement by management with respect to certain external factors such as anticipated future revenue, estimated economic life and changes in software and hardware technologies.  Amortization of the capitalized software development costs begins when the product is available for general release to customers.  Capitalized costs are amortized over the remaining estimated economic life of the product.  For the year ended December 31, 2014, the Company has capitalized costs associated with the development of several mobile science technology products and mobile apps that has not been placed into service.  The assets were disposed of in the Spinoff discussed in Note 1 above.

Website Development Costs

The Company accounts for website development costs in accordance with Accounting Standards Codification 350-50 "Website Development Costs".  Accordingly, all costs incurred in the planning stage are expensed as incurred, costs incurred in the website application and infrastructure development stage that meet specific criteria are capitalized and costs incurred in the day to day operation of the website are expensed as incurred.

Revenue Recognition

The Company recognizes revenue when there is persuasive evidence of that an arrangement exists, the revenue is fixed or determinable, the products are fully delivered or services have been provided and collection is reasonably assured.   The majority of the Company's revenues are generated from the fees charged for waste collection, transfer, disposal and recycling.  The fees charged for our services are generally defined in service agreements and vary based on contract-specific terms such as frequency of service, weight, volume and the general market factors influencing a region's rate.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Deferred Revenue

The Company's Missouri Waste Division bills one month in advance for the following three months.  The balance in deferred revenue represents amounts billed in July, August and September for services that will be provided during October, November and December.

Cost of Services

Cost of services include all employment costs associated with waste collection, transfer and disposal, damage claims, landfill costs, personal property taxes associated with collection vehicles and other direct costs of the collection and disposal process.

Concentration of Credit Risks

The Company maintains its cash and cash equivalents in bank deposit accounts, which could, at times, exceed federally insured limits. The Company has not experienced any losses in such accounts; however, amounts in excess of the federally insured limit may be at risk if the bank experiences financial difficulties.  The Company places its cash with high credit quality financial institutions.  The Company's accounts at these institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000.

Financial instruments which also potentially subject the Company to concentrations of credit risk consist principally of trade accounts receivable; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment terms.

The Company's subsidiary, HTSMWD has two municipal contracts that account for a significant portion of the Company's long-term contracted revenue.   One contract accounted for 28% and 27% and the other accounted for 19% and 18% of HTS Waste's long-term contracted revenue for the three months ended September 30, 2015 and 2014 respectively.  One contract accounted for 29% and 28% and the other accounted for 20% and 19% of HTS Waste's long-term contracted revenue for the six months ended September 30, 2015 and 2014 respectively.

Basic Income (Loss) Per Share

Basic income (loss) per share is calculated by dividing the Company's net loss applicable to common shareholders by the weighted average number of common shares during the period. A diluted earnings per share is calculated by dividing the Company's net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. At

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

September 30, 2015 the Company had a series of convertible notes outstanding that could be converted into approximately 253,620 common shares.  Also, in connection with the debt refinancing (see Note 6 below), stock warrants were issued for 1,293,022 common shares.  These are not presented in the statement of operations since the company incurred a loss and the effect of these shares is anti- dilutive.

Stock-Based Compensation

Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period).  The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share based payments to consultants and other third-parties, compensation expense is determined at the "measurement date."  The expense is recognized over the service period of the award.  Until the measurement date is reached, the total amount of compensation expense remains uncertain.  The Company initially records compensation expense based on the fair value of the award at the reporting date.

The Company recorded stock based compensation expense of $7,599,150 during the nine months ended September 30, 2015.

Recent Accounting Pronouncements

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position or cash flow.

NOTE 3 – OTHER CURRENT ASSETS

Other current assets are refundable deposits owned by HTSMWD.

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment, including purchased and developed software is recorded at cost. The Company has depreciated or amortized these assets using the straight-line method over the useful lives of the asset. The useful lives are estimated to be between 2 and 7 years.

Property and equipment consisted of the following:

Depreciation Expense for the nine months ending September 30, 2015 and 2014 was $1,224,871 and $1,090,687, respectively.

NOTE 5 – INTANGIBLE ASSETS AND ACQUISITION

On May 15, 2014, the Company, in order to establish a presence in the solid waste disposal industry, entered into an asset purchase agreement by and among the Company, HTSMWD, Meridian Waste Services, LLC ("MWS") and the members of MWS, pursuant to which HTSMWD acquired certain assets and liabilities of MWS, in exchange for $11,000,000 cash, 13,191,667 shares of Class A Common Stock of HTSHC and 71,210 shares of Series B Cumulative Convertible Preferred Stock of HTSHC.

The purchase of MWS included the acquisition of assets of $22,175,706 and liabilities of $2,075,956.  The aggregate purchase price consisted of the following:

NOTE 5 – INTANGIBLE ASSETS AND ACQUISITION (CONTINUED)

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

Intangible Assets

The following table sets forth the intangible assets, both acquired and developed, including accumulated amortization:

Amortization expense amounted to $2,138,359 and $1,186,817 for the nine months ending September 30, 2015 and 2014, respectively

NOTE 6 – NOTES PAYABLE AND CONVERTIBLE NOTES

The Company issued two promissory notes to related parties during the year ended December 31, 2014. These notes totaled $125,000 and are generally convertible into common stock of the Company at discounts of 20 % to 25% of the lowest average trading prices for the stock during periods five to one day prior to the conversion date. These notes bears interest at 10% to 12%, are unsecured, and matures within one year of the date issued. The notes were issued to provide working capital for the Company.  These notes are considered a stock settled debt in accordance with ASC 480 since any future stock issued upon conversion will have a fixed monetary value.  Due to the conversion feature included in the notes, the Company has recorded a premium on the notes totaling $31,250 as of December 31, 2014.  This amount has been charged to interest expense by the Company.

In previous periods the Company issued two other notes to other related parties. These notes totaled $110,000 and are generally convertible into common stock of the Company at discounts of 20% to 25% of the lowest average trading prices for the stock during periods five to one day prior to the conversion date.  These notes bear interest at 10% to 12%, are unsecured, and mature within one year of the date issued. The notes were issued to provide working capital for the Company.   These notes are considered a stock settled debt in accordance with ASC 480 since any future stock issued upon conversion will have a fixed monetary value.  Due to the conversion feature included in the notes, the Company has recorded a premium on the notes totaling $35,833 as of December 31, 2014.  This amount has been charged to interest expense by the Company.

At September 30, 2015 the Company had $75,000 in convertible notes to related parties which includes $15,000 in put premiums.

At December 31, 2014 the Company had a short term, non-interest bearing note payable of $150,000 which was incurred in connection with the Membership Interest Purchase Agreement discussed above.  This note was paid in January, 2015.  The Company also had a loan from Here to Serve Holding Corp. due to expenses paid by Here to Serve on behalf of the Company prior to the recapitalization which totaled $376,585.  The balance of these notes payable was $322,141 and $526,585 at September 30, 2015 and December 31, 2014, respectively.

NOTE 6 – NOTES PAYABLE AND CONVERTIBLE NOTES (CONTINUED)

The Company had the following long-term debt

On August 6, 2015, the Company refinanced its long-term debt payable to Comerica Bank.  Proceeds from notes issued by the Company to Praesidian Capital Opportunity Fund III, LP and Praesidian Capital Opportunity Fund III-A, LP (together referred to as Praesidian) were $10,845,000.  These funds were distributed as follows:

The debt to Praesidian matures on August 6, 2020 with interest paid monthly at an annual rate of 14%.  In addition to the 14% interest rate, the Company issued to Praesidian warrants to purchase 1,293,022 shares of Common Stock of the Company.  The difference between the market price and the exercise price per the warrant was recorded as debt discount and will be amortized over the term of the debt.  Debt discount amortization for the nine months ended September 30, 2015 was $27,720.  See Derivative Liability below.

NOTE 6 – NOTES PAYABLE AND CONVERTIBLE NOTES (CONTINUED)

In connection with the merger with Meridian Waste Services, LLC on May 15, 2014, notes payable to the sellers of Meridian were five-year term subordinated debt loans paying interest at 8%.

The Company's Senior Secured Loan with Comerica Bank had an interest rate LIBOR plus 4.25% with a two-year term based on a seven-year amortization schedule.  In addition, the Company had a working capital line of credit with Comerica Bank of $1,250,000 at 4.75% of which the Company had drawn down $1,185,081 and $1,085,160 as of August 6, 2015 and December 31, 2014, respectively.  There is CAPEX line of credit of $750,000, of which the Company had drawn down $560,718 and $590,000 as of August 6, 2015 and December 31, 2014, respectively; again at 4.75% interest.

Finally, during the nine months ending September 30, 2015, the Company entered into four long-term loan agreements in connection with the purchase of equipment with rates between 4% and 5%.  At September 30, 2015, the balance of these four loans was $425,149.

Derivative Liability - Warrants

As indicated above, the Company issued warrants to purchase shares of Common Stock.  Due to the put feature contained in the agreement, a derivative liability was recorded for the warrants.   The Company's derivative warrant instruments have been measured at fair value at September 30, 2015 using the Black-Scholes model.  The liability is revalued at each reporting period and changes in fair value are recognized currently in the consolidated statement of operations.

The Company has used the Black-Scholes pricing model to calculate the fair value as of September 30, 2015.  The Back-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk free interest rate, the current stock price, the estimated volatility of the stock price in the future and the dividend rate.  The key inputs used in the September 30, 2015 fair value calculations were as follows:

NOTE 6 – NOTES PAYABLE AND CONVERTIBLE NOTES (CONTINUED)

The change in the market value for the period ending September 30, 2015 is as follows:

Derivative Liability – Interest Rate Swap

The Company sometimes borrows at variable rates and uses interest rate swaps as cash flow hedges of future interest payments, which have the economic effect of converting borrowings from floating rates to fixed rates.  The interest rate swaps allow the Company to raise long-term borrowings at floating rates and swap them into fixed rates that are lower than those available if it borrowed at fixed rates directly.  Under the interest rate swaps, the Company agrees with other parties to exchange, at specified intervals, the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts.

At December 31, 2014, the Company had $5,414,634 of non-amortizing variable rate debt outstanding with interest payments due on a monthly basis.  The note accrues interest at the 1-month LIBOR plus 4.25%.  In order to hedge interest rate risk, the Company entered into an interest rate swap for a notional amount of $5,414,634 at fixed rate of 4.75%.  Under the swap agreement, the Company pays the fixed rate on the $5,414,634 notional amount on a monthly basis, and receives the 1-month LIBOR plus 4.25% on a monthly basis.  Payments are settled on a net basis, and the Company has effectively converted its variable-rate debt into fixed-rate debt with an effective interest rate of 4.75%.  , The net settlement amount of the interest rate swap as of September 30, 2015 and December 31, 2014 was $0 and $40,958, respectively.  The Company no longer has this swap as it was settled in the debt restructuring discussed above.

NOTE 7 – STOCKHOLDERS' EQUITY

The Company has 75,000,000 shares of common stock authorized with a par value of $0.025 and 71,261 shares of Preferred stock with a par value of $0.001.  There were 16,028,644 and 9,963,418 common shares outstanding as of September 30, 2015 and December 31, 2014, respectively.  There were 71,261 of Preferred shares outstanding at September 30, 2015 and December 31, 2014.  There are two classes of Preferred stock, Series A and Series B.

There are 51 shares of Series A Preferred stock issued and outstanding as of September 30, 2015 and December 31, 2014.   Series A stock has no conversion rights, is senior to any

NOTE 7 – STOCKHOLDERS' EQUITY (CONTINUED)

other class or series of capital 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.

There are 71,210 shares of Series B Preferred Stock issued and outstanding as of September 30, 2015 and December 31, 2014.  Holders of Series B Preferred stock shall be entitled to receive when, as and if declared by the Board of Directors cumulative dividends at the rate of twelve percent (12%) of the Original Issue Price.  The maximum potential dividend through September 30, 2015 would be $961,335.  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": divide the Original Issue Price 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 notice of conversion.

During the nine months ending September 30, 2015, 5,864,393 shares of common stock were issued.  The fair value of the shares of common stock were based on the quoted trading price on the date of issuance.  173,550 of these shares were issued to vendors for services generating a professional fees expense of $242,970.  5,690,843 of these shares were issued to officers and employees as incentive compensation resulting in compensation expense of $7,356,180.

NOTE 8 – COMMON STOCK WARRANTS

The Company has issued and outstanding warrants for 1,293,022 common shares, as adjusted, with the current exercise price of $0.025, as adjusted, expiring August 6, 2016.

NOTE 8 – COMMON STOCK WARRANTS (CONTINUED)

A summary of the status of the Company's outstanding common stock warrants as of September 30, 2015 and changes during the nine months ending on that date is as follows:

The following table summarizes information about common stock warrants outstanding at September 30, 2015:

NOTE 9 – COMMITMENTS AND CONTINGENCIES

The Company has leased office space at 12540 Broadwell Rd., Suite 1203 Milton, GA 30004.

NOTE 10 – FAIR VALUE MEASUREMENT

The Company has adopted new guidance under ASC Topic 820, effective January 1, 2009. New authoritative accounting guidance (ASC Topic 820-10-15) under ASC Topic 820, Fair Value Measurement and Disclosures, delayed the effective date of ASC Topic 820-10 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis, until 2009. ASC Topic 820 establishes a fair value hierarchy, giving the highest priority to quoted prices in active markets and the lowest priority to unobservable data and requires disclosures for assets and liabilities measured at fair value based on their level in the hierarchy. Further new authoritative accounting guidance (ASU No. 2009-05) under ASC Topic 820, provides clarification that in circumstances in which a quoted price in an active market for the identical liabilities is not available, a reporting entity is required to measure fair value using one or more of the techniques provided for in this update.

NOTE 10 – FAIR VALUE MEASUREMENT (CONTINUED)

The standard describes a fair value hierarchy based on three levels of input, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following:

Level 1 – Quoted prices in active markets for identical assets and liabilities.

Level 2 – Input other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets of liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The following table sets forth the liabilities at September 30, 2015, which is recorded on the balance sheet at fair value on a recurring basis by level within the fair value hierarchy. As required, these are classified based on the lowest level of input that is significant to the fair value measurement:

NOTE 11 – LEASES

The Company's subsidiary Here to Serve-Missouri Waste Division, LLC leases its office and warehouse facilities.  The lease agreement commenced September 1, 2010 and expires August 30, 2017.  This lease was assigned to the Company when the subsidiary purchased Meridian Waste Services, LLC on May 16, 2014.  Future minimum lease payments at September 30, 2015 are as follows:

Rent expense amounted to $222,869 and $221,302 for the nine months ended September 30, 2015 and 2014, respectively.

NOTE 12 – BONDING

In connection with its normal activities, the Company may be required to acquire a Performance bond on contracts with customers.  There were not any performance bonds required for the nine months ended September 30, 2015.

NOTE 13 – RELATED PARTY

As discussed in Note 1 above as Spinoff of Here to Serve Technology, LLC, the Company sold certain of its assets to Mobile Science Technologies, Inc. (MSTI), which is a related party.  MSTI is related in that it has common shareholders with the Company.  Related to this spinoff, there were certain consulting/professional expenses incurred by the Company after the spin-off due to commitments made prior to the spinoff.  These expenses ($427,570) were recorded as professional fees included in Selling, general and administrative as they are not recoverable from the affiliate.

As indicated above in Note 6, the Company has certain convertible notes payables to related parties.  These parties are related in that they are shareholders of the Company.

NOTE 14 – SUBSEQUENT EVENTS