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EX-31.1 - EXHIBIT 31.1 - BIOHITECH GLOBAL, INC.v417925_ex31-1.htm
EX-32.1 - EXHIBIT 32.1 - BIOHITECH GLOBAL, INC.v417925_ex32-1.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended: June 30, 2015

 

or

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number: 001-36843

 

http:||www.sec.gov|Archives|edgar|data|1590383|000114420415048189|image_001.jpg

BIOHITECH GLOBAL, INC.

(Exact name of registrant as specified in its charter)

 

Delaware 46-2336496
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

 

80 Red Schoolhouse Road

Chestnut Ridge, New York 10977

(Address of principal executive offices)(Zip Code)

 

(845) 262-1081

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Yes x No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in rule 12b-2 of the Exchange Act.

 

  Large accelerated filer ¨   Accelerated filer ¨
  Non-accelerated filer ¨   Smaller reporting company x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Yes ¨ No x

 

As of August 19, 2015, the registrant had 7,500,000 shares of its common stock outstanding.

 

 

 

 

BIOHITECH GLOBAL, INC.

Quarterly Period on Form 10-Q

June 30, 2015

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION  
Item 1. Financial Statements. 3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 15
Item 4. Controls and Procedures. 15
     
PART II – OTHER INFORMATION  
     
Item 1. Legal Proceedings. 16
Item 1A. Risk Factors. 16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 16
Item 3. Defaults Upon Senior Securities. 16
Item 4. Mine Safety Disclosures. 16
Item 5. Other Information. 16
Item 6. Exhibits. 16
     
SIGNATURES 17

 

 2 

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

Balance Sheet

 

   June 30,   December 31, 
   2015   2014 
   (Unaudited)   (Audited) 
ASSETS          
           
Current Assets:          
Cash  $51   $38 
Total current assets   51    38 
           
Total assets  $51   $38 
           
           
LIABILITIES AND STOCKHOLDERS' DEFICIT     
           
Current Liabilities:          
Accounts payable  $3,550   $2,000 
Advances   -    28,400 
Loan payable - related party   -    28,730 
Total current liabilities   3,550    59,130 
           
Stockholders' Deficit:          
Preferred stock, 10,000,000 shares authorized, par value $0.0001, 0 shares issued and outstanding   -    - 
Common stock, 20,000,000 shares authorized, par value $0.0001,9,040,000 shares issued and outstanding   904    904 
Additional paid in capital   117,460    33,896 
Accumulated deficit   (121,863)   (93,892)
Total stockholders' deficit   (3,499)   (59,092)
           
Total liabilities and stockholders' deficit  $51   $38 

  

 3 

 

 

Income Statements

 

   For the three months ended   For the six months ended 
   June 30,   June 30, 
   2015   2014   2015   2014 
                 
Revenue  $-   $891   $-   $1,782 
                     
General and Administrative expenses   12,873    9,360    27,971    30,566 
Operating loss   (12,873)   (8,469)   (27,971)   (28,784)
                     
Loss before income taxes   (12,873)   (8,469)   (27,971)   (28,784)
                     
Provision for Income Taxes   -    -    -    - 
                     
Net loss  $(12,873)  $(8,469)  $(27,971)  $(28,784)
                     
Basic and Diluted                    
Loss Per Common Share  $(0.00)  $(0.00)  $(0.00)  $(0.00)
                     
Weighted Average Number of Common Shares Outstanding   9,040,000    9,040,000    9,040,000    9,040,000 

 

 4 

 

 

Statement of Shareholders’ Equity

 

   Common Stock             
   Shares   Amount   Additional Paid
in Capital
   Accumulated
Deficit
   Total Equity
(Deficit)
 
                     
Balances -  December 31,  2013   9,040,000   $904   $33,796   $(31,165)  $3,535.00 
                          
Capital contribution   -    -    100    -    100 
Net loss   -    -    -    (62,727)   (62,727)
Balance - December 31, 2014   9,040,000    904    33,896    (93,892)   (59,092)
                          
Capital contribution             83,564         83,564 
Net loss   -    -    -    (27,971)   (27,971)
Balance - June 30, 2015   9,040,000    904    117,460    (121,863)   (3,499)

 

 5 

 

 

Cash Flows

 

   For the six months ended 
   June 30, 
   2015   2014 
OPERATING ACTIVITIES:          
Net loss  $(27,971)  $(28,784)
Adjustments to reconcile net loss to cash used in operating activities:          
Decrease (increase) in prepaid expenses   -    7,500 
Increase in accounts payable   1,550    - 
Increase in deferred revenues   -    (1,782)
Net cash used in operating activities   (26,421)   (23,066)
           
 FINANCING ACTIVITIES:          
Proceeds from advances   26,434    - 
Proceeds from loan payable - related party   -    22,880 
Cash provided by financing activities   26,434    22,880 
           
Net change in cash   13    (186)
           
Cash, Beginning of Period  $38   $286 
           
Cash, End of Period  $51   $100 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION          
Cash paid during the period for:          
Interest  $0   $0 
Income taxes  $0   $0 

 

During the six months ended June 30, 2015, the Company reclassified $83,564 of related party loans and advances to additional paid in capital for the forgiveness of the liabilities by the shareholders.

 

 6 

 

 

BioHiTech Global, Inc.

 

NOTES TO FINANCIAL STATEMENTS

June 30, 2015

 

NOTE 1. GENERAL ORGANIZATION AND BUSINESS

 

Swift Start Corp (“the Company”) was incorporated under the laws of the state of Delaware on March 20, 2013. The Company began limited operations on May 30, 2013. The Company is engaged in the internet based education business.

 

On August 6, 2015, the Company consummated a reverse acquisition of Bio Hi Tech America, LLC (“BHT”) through BioHiTech Global, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Acquisition”). Acquisition merged with and into BHT in a statutory reverse triangular merger in consideration for an aggregate of 6,975,000 newly-issued shares of the Company’s common stock. Also on August 6, 2015, the Company amended its Certificate of Incorporation (the “Amendment”) to (i) change its name to BioHiTech Global, Inc. and (ii) to amend the number of its authorized shares of capital stock from 200,000,000 to 30,000,000 shares, of which 20,000,000 shares were designated common stock, par value $0.0001 per share (the “Common Stock”) and 10,000,000 shares were designated “blank check” preferred stock, par value $0.0001 per share.

 

In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments necessary to present fairly the Company’s financial position as of June 30, 2015 and its results of operations for the three months and six months ended June 30, 2015 and cash flows for the six months ended June 30, 2015. The accompanying unaudited interim financial statements have been prepared in accordance with instructions to Form 10-Q and therefore do not include all information and footnotes required by accounting principles generally accepted in the United States of America. The results of operations for the six months ended June 30, 2015 are not necessarily indicative of the results to be expected for the full year.

 

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES 

 

Basis of Accounting

 

The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a December 31 fiscal year end.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

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

 

Fair Value of Financial Instruments

 

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

 

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

 

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

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Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

 

As of June 30, 2015, the carrying value of payables and loans that are required to be measured at fair value approximated fair value due to the short-term nature and maturity of these instruments.

  

Revenue recognition 

 

The Company recognizes revenues in accordance with ASC No. 605-10-S99, (SEC Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition”), when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered to the customer, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured.

 

Deferred revenues primarily include unearned amounts received from customers but not recognized as revenues.

 

Income Taxes

 

A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

When required, the Company records a liability for unrecognized tax positions, defined as the aggregate tax effect of differences between positions taken on tax returns and the benefits recognized in the financial statements. Tax positions are measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. No tax benefits are recognized for positions that do not meet this threshold. The Company has no uncertain tax positions that require the Company to record a liability. The federal income tax returns of the Company are subject to examination by the IRS, generally for three years after they are filed.

 

The Company recognizes penalties and interest associated with tax matters as part of the income tax provision and includes accrued interest and penalties with the related tax liability in the balance sheet. The Company had no accrued penalties and interest as of June 30, 2015.

 

Loss per Share

 

The basic loss per share is calculated by dividing our net loss available to common shareholders by the number of common shares during the year. The diluted earnings (loss) per share is calculated by dividing our net income (loss) 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 as of the first of the year for any potentially dilutive debt or equity. The Company has not issued any potentially dilutive debt or equity securities.

 

Recently issued accounting pronouncements

 

Recent accounting pronouncements other than below issued by the FASB (including its EITF), the AICPA and the SEC did not or are not believed by management to have a material effect on the Company’s present or future financial statements.

 

In June 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-10, “Development Stage Entities (Topic 915) Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. This ASU does the following among other things: a) eliminates the requirement to present inception-to-date information on the statements of income, cash flows, and shareholders’ equity, b) eliminates the need to label the financial statements as those of a development stage entity, c) eliminates the need to disclose a description of the development stage activities in which the entity is engaged, and d) amends FASB ASC 275, Risks and Uncertainties, to clarify that information on risks and uncertainties for entities that have not commenced planned principal operations is required. The amendments in ASU No. 2014-10 related to the elimination of Topic 915 disclosures and the additional disclosure for Topic 275 are effective for public companies for annual and interim reporting periods beginning after December 15, 2014. Early adoption is permitted. The Company has evaluated this ASU and early adopted beginning with the year ended December 31, 2014.

 

 8 

 

 

In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The Company is currently assessing the impact the adoption of ASU 2014-15 will have on its financial statements.

 

Other recent accounting pronouncements issued by the FASB (including its EITF), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company’s financial statements.

 

NOTE 3. INCOME TAXES

 

The Company uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes.   As of June 30, 2015, the Company had a deferred tax asset of approximately $39,600 related to net operating losses (based on an estimated 34% tax rate). A valuation allowance was recorded against the tax asset to reduce the carrying value to zero.   

 

NOTE 4. STOCKHOLDERS’ EQUITY (DEFICIT)

 

Authorized

 

The Company is authorized to issue 200,000,000 shares of $0.0001 par value common stock. All common stock shares have equal voting rights, are non-assessable and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company.

 

On February 6, 2015, shareholders holding a majority of the Company’s outstanding capital stock authorized an amendment to the Company’s Certificate of Incorporation to change its name to BioHiTech Global, Inc. and to decrease the number of authorized shares of capital stock from 200,000,000 to 30,000,000 shares of which 20,000,000 shares will be designated common stock, par value $0.0001 per share and 10,000,000 shares will be designated “blank check” preferred stock, par value $0.0001 per share.

 

NOTE 5. CONFLICTS OF INTEREST

 

The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts.

 

NOTE 6. GOING CONCERN

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company’s continuation as a going concern is dependent on its ability to meet its obligations, to obtain additional financing as may be required and ultimately to attain profitability. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Management is planning to raise funds through debt or equity offerings. There is no guarantee that the Company will be successful in these efforts.

 

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NOTE 7. RELATED PARTY LOANS AND TRANSACTIONS

 

As of March 31, 2015, loans from related parties amounted to $28,840, and represented working capital advances from an officer who is also a stockholder of the Company. The related party agreed to forgive the outstanding balance during the three months ended June 30, 2015 as a capital contribution.

  

On September 30, 2014, the Company received $100 from a related party as a capital contribution.

 

NOTE 8. ADVANCES

 

During the six months ended June 30, 2015, the Company received advances from a third party which amounted to $49,224 and represented working capital advances. These advances were forgiven during the six months ended June 30, 2015 as a capital contribution.

 

NOTE 9. SUBSEQUENT EVENTS

 

Management has evaluated all events that occurred after the balance sheet date through the date when these financial statements were issued to determine if they must be reported. The management of the Company determined the following reportable events were required to be disclosed:

 

On August 6, 2015, the Company amended its Certificate of Incorporation (the “Amendment”) to (i) change its name to BioHiTech Global, Inc. and (ii) to amend the number of its authorized shares of capital stock from 200,000,000 to 30,000,000 shares, of which 20,000,000 shares were designated common stock, par value $0.0001 per share (the “Common Stock”) and 10,000,000 shares were designated “blank check” preferred stock, par value $0.0001 per share. As previously reported on February 10, 2015, the Amendment was approved by holders of a majority of the Company’s Common Stock on February 6, 2015.

 

Also, on August 6, 2015, the Company entered into and consummated an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”), with BioHiTech Global, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Acquisition”) and Bio Hi Tech America, LLC, a Delaware limited liability company (“BHT”). Pursuant to the terms of the Merger Agreement, Acquisition merged with and into BHT in a statutory reverse triangular merger (the “Merger”), with BHT surviving as a wholly-owned subsidiary of the Company. As consideration for the Merger, the Company issued the interest holders of BioHiTech LLC an aggregate of 6,975,000 shares of our Common Stock in accordance with their respective pro rata ownership of BHT membership interests. Following the Merger, the Company adopted the business plan of BioHiTech LLC in the development, marketing and sales of food waste disposal systems which transforms food waste into nutrient-neutral water which may then be disposed of via sewer systems, while utilizing proprietary software to collect and transmit environmental performance data to its customers.

 

Immediately prior to the Merger, the Registrant had 9,040,000 shares of Common Stock issued and outstanding. In connection with the Merger, the Majority Shareholder and other shareholders collectively agreed to retire and cancel an aggregate of 8,515,000 shares of Common Stock. Following the consummation of the Merger, the issuance of the Merger Shares, and the retirement of the 8,515,000 shares of Common Stock, the Registrant had 7,500,000 shares of Common Stock issued and outstanding and the BioHiTech Holders beneficially own 6,975,000 shares or approximately ninety three percent (93%) of such issued and outstanding Common Stock.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements regarding future events and future results of BioHitech Global, Inc. (the “Company”, “we”, “us” and “our”). Forward-looking statements are based on current expectations, estimates, forecasts and projections about us, our future performance and the industries in which we operate as well as our management’s assumptions and beliefs. Statements that contain words like “believe”, “expect”, “anticipate”, “optimistic”, “intend”, “will”, or variations of such words and similar expressions are forward-looking statements. In addition, any statements that refer to trends in our businesses, future financial results, and our liquidity and business plans are forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. There can be no assurance that forward-looking statements will be achieved, and actual results could differ materially from those expressed or implied by forward-looking statements. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Report. The following information should be read in conjunction with the interim financial statements for the period ended June 30, 2015 and notes thereto appearing elsewhere in this Report.

 

Plan of Operations

 

Prior to the Company’s acquisition of Bio Hi Tech America, LLC on August 6, 2015 (the “Merger”), we had commenced limited operations and our proposed business plan was not yet fully operational. As of June 30, 2015, we had three clients and were working on cultivating more and growing the business.

 

Prior to the Merger, the Company was in the business of providing online courses for computer programming. In November 2013, we began providing online private lessons before the permanent website is completed. This allowed us to begin to establish a customer base immediately. Following the Merger, we adopted the  business plan of BioHiTech in the development, marketing and sales of food waste disposal systems which transform food waste into nutrient-neutral water which may be disposed of via sewer systems while utilizing proprietary software to collect and transmit environmental performance data to its customers.

 

Following the completion of the Merger, our development efforts have been focused primarily on the development and marketing of BioHiTech’s Eco-Safe Digester and related products and services. Subsequent to the Merger, the Company expects to generate revenues from sales of its Eco-Safe Digester and related goods and services. The Company's other known potential sources of capital are possible proceeds from private placements, issuance of notes payable, loans from its officers, and cash from future revenues after the Company commences sales. The Company will require additional financing to continue operations, and there is no assurance that such additional financing will be available or available on terms that are favorable to the Company.

 

Results of Operations

 

For the Three Months Ended June 30, 2015

 

We had a net loss of $12,873 for the three months ended June 30, 2015, compared to a net loss of $8,469 for the three months ended June 30, 2014. For the three months ended June 30, 2015, we generated no revenues.

 

During the three months ended June 30, 2015, we experienced general and administrative expenses of $12,873. These expenses consist of professional fees, computer and internet expenses and other miscellaneous items.

 

For the Six Months Ended June 30, 2015

 

We had a net loss of $27,971 for the six months ended June 30, 2015, compared to a net loss of $22,784 for the six months ended June 30, 2014. For the six months ended June 30, 2015, we generated no revenues.

 

During the six months ended June 30, 2015, we experienced general and administrative expenses of $27,971. These expenses consist of professional fees, computer and internet expenses and other miscellaneous items.

 

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Liquidity and Capital Resources

 

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. We have been funding our operations through the sale of our common stock and related party loans.

 

Our primary uses of cash have been for fees paid to third parties for the development of our products. All funds received have been expended in the furtherance of growing the business and establishing our brand. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:

 

·An increase in working capital requirements to finance additional product development;
·Addition of administrative and sales personnel as the business grows;
·Increases in advertising, public relations and sales promotions for existing and new brands as the company expands within existing markets or enters new markets;
·The cost of being a public company; and
·Capital expenditures to add additional technology.

 

Our net revenues are not sufficient to fund our operating expenses. At June 30, 2015, we had a cash balance of $51 and working capital deficit of $3,499. From inception to June 30, 2015, we had raised a total of $34,700. We currently have no material commitments for capital expenditures. We will be required to raise additional funds, particularly if we are unable to generate positive cash flow as a result of our operations. We estimate that based on current plans and assumptions, that our available cash will not be sufficient to satisfy our cash requirements under our present operating expectations, without further financing, for the next twelve (12) months. We presently have no other alternative source of working capital. We may not have sufficient working capital to fund the expansion of our operations and to provide working capital necessary for our ongoing operations and obligations. We will need to raise significant additional capital to fund our operating expenses, pay our obligations, and grow our company. We do not anticipate we will be profitable in 2015. Therefore our future operations will be dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our marketing and development plans and possibly cease our operations.

 

We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.

 

Our liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly.

 

Going Concern

 

Our financial statements have been prepared on a going concern basis. As of June 30, 2015, we have not generated material revenues. We expect to finance our operations primarily through our existing cash, our operations and any future financing. However, there exists substantial doubt about our ability to continue as a going concern because we will be required to obtain additional capital in the future to continue our operations and there is no assurance that we will be able to obtain such capital, through equity or debt financing, or any combination thereof, or on satisfactory terms or at all. Additionally, no assurance can be given that any such financing, if obtained, will be adequate to meet our capital needs. If adequate capital cannot be obtained on a timely basis and on satisfactory terms, our operations would be materially negatively impacted. Therefore, there is substantial doubt as to our ability to continue as a going concern. Our ability to complete additional offerings is dependent on the state of the debt and/or equity markets at the time of any proposed offering, and such market’s reception of the Company and the offering terms. There is no assurance that capital in any form would be available to us, and if available, on terms and conditions that are acceptable.

 

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Off Balance Sheet Arrangements

 

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity or capital expenditures, or capital resources that are material to an investment in our securities.

 

Critical Accounting Policies

 

Basis of Accounting

 

The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a December 31 fiscal year end.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

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

 

Fair Value of Financial Instruments

 

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

 

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

 

·Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

·Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

 

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As of June 30, 2015, the carrying value of loans that are required to be measured at fair value, approximated fair value due to the short-term nature and maturity of these instruments.

 

Revenue Recognition 

 

The Company recognizes revenues in accordance with ASC No. 605-10-S99, (SEC Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition”), when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered to the customer, (iii) the fee is fixed or determinable and (iv) collectability is reasonably assured.

 

Deferred revenues primarily include unearned amounts received from customers but not recognized as revenues.

 

Income Taxes

 

A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

When required, the Company records a liability for unrecognized tax positions, defined as the aggregate tax effect of differences between positions taken on tax returns and the benefits recognized in the financial statements. Tax positions are measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. No tax benefits are recognized for positions that do not meet this threshold. The Company has no uncertain tax positions that require the Company to record a liability. The federal income tax returns of the Company are subject to examination by the IRS, generally for three years after they are filed.

 

The Company recognizes penalties and interest associated with tax matters as part of the income tax provision and includes accrued interest and penalties with the related tax liability in the balance sheet. The Company had no accrued penalties and interest as of June 30, 2015.

 

Loss per Share

 

The basic loss per share is calculated by dividing our net loss available to common shareholders by the number of common shares during the year. The diluted earnings (loss) per share is calculated by dividing our net income loss 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 as of the first of the year for any potentially dilutive debt or equity. The Company has not issued any potentially dilutive debt or equity securities.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

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

 

Recently Issued Accounting Pronouncements

 

Recent accounting pronouncements other than below issued by the FASB (including its EITF), the AICPA and the SEC did not or are not believed by management to have a material effect on the Company’s present or future financial statements.

 

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In June 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-10, “Development Stage Entities (Topic 915) Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. This ASU does the following among other things: (a) eliminates the requirement to present inception-to-date information on the statements of income, cash flows, and shareholders’ equity, (b) eliminates the need to label the financial statements as those of a development stage entity, (c) eliminates the need to disclose a description of the development stage activities in which the entity is engaged, and (d) amends FASB ASC 275, Risks and Uncertainties, to clarify that information on risks and uncertainties for entities that have not commenced planned principal operations is required. The amendments in ASU No. 2014-10 related to the elimination of Topic 915 disclosures and the additional disclosure for Topic 275 are effective for public companies for annual and interim reporting periods beginning after December 15, 2014. Early adoption is permitted. The Company has evaluated this ASU and adopted beginning with the quarterly period ended June 30, 2014. The adoption of this ASU resulted in the Company no longer reporting inception-to-date financial reporting for the Company’s Statements of Comprehensive Loss, Statement of Changes in Stockholders’ Deficit and Statements of Cash Flows.

 

In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The Company is currently assessing the impact the adoption of ASU 2014-15 will have on its financial statements.

 

In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest” (“ASU 2015-03”). ASU 2015-03 simplifies the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs would not be affected by the amendments of ASU 2015-03. For public business entities, ASU 2015-03 is effective for financial statements issued for fiscal years beginning after December 31, 2015, and interim periods within those fiscal years. For all other entities, ASU 2015-03 is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued. The Company does not anticipate that the adoption of ASU 2015-03 will have a material effect on its financial position or results of operations.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable because we are a smaller reporting company.

 

Item 4. Controls and Procedures.

 

Disclosure Controls and Procedures

 

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”) for the period reported herein, the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s then-serving Chief Executive Officer (the Company’s principal executive officer, principal financial officer and principal accounting officer) (“PEO/PFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Report. Based upon that evaluation, the Company’s then-serving PEO/PFO concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2015, to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s PEO/PFO, as appropriate, to allow timely decisions regarding required disclosure for the reason described below.

 

Because of our limited operations we have a small number of employees which prohibits a segregation of duties. In addition, we lack a formal audit committee with a financial expert. As we grow and expand our operations we will engage additional employees and experts as needed. However, there can be no assurance that our operations will expand.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during the period covered by this Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II—OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, 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. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

 

Item 1A. Risk Factors.

 

Not applicable for smaller reporting companies.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits.

 

The following exhibits are filed herewith:

 

Exhibit No.   Document
     

 31.1

 

Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *

     
32.1   Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **
     
101.INS   XBRL Instance Document *
     
101.SCH   XBRL Taxonomy Extension Schema Document *
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document *
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document *
     
101.LAB   XBRL Taxonomy Extension Label Linkbase Document *
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document *

 

* Filed with this Report.

 

** In accordance with SEC Release 3308238, Exhibit 32.1 is being furnished with this Report.

 

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SIGNATURES

 

Pursuant to the requirements of the Exchange Act, the Company caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  BIOHITECH GLOBAL, INC.  
       
       
Date: August 19, 2015 By: /s/ Frank E. Celli  
    Name: Frank E. Celli  
    Title: Chief Executive Officer  
      (Principal Executive Officer)  
     

(Principal Financial Officer)

 
      (Principal Accounting Officer)  

 

 

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