The following discussion of our financial condition and results of operations
should be read in conjunction with our financial statements and the related
notes, and other financial information included in this Form 10-K.
Our Management's Discussion and Analysis contains not only statements that are
historical facts, but also statements that are forward-looking. Forward-looking
statements are, by their very nature, uncertain and risky. These risks and
uncertainties include international, national, and local general economic and
market conditions; our ability to sustain, manage, or forecast growth; our
ability to successfully make and integrate acquisitions; new product development
and introduction; existing government regulations and changes in, or the failure
to comply with, government regulations; adverse publicity; competition; the loss
of significant customers or suppliers; fluctuations and difficulty in
forecasting operating results; change in business strategy or development plans;
business disruptions; the ability to attract and retain qualified personnel; the
ability to protect technology; the risk of foreign currency exchange rate; and
other risks that might be detailed from time to time in our filings with the
Securities and Exchange Commission.
Although the forward-looking statements in this Report reflect the good faith
judgment of our management, such statements can only be based on facts and
factors currently known by them. Consequently, and because forward-looking
statements are inherently subject to risks and uncertainties, the actual results
and outcomes may differ materially from the results and outcomes discussed in
the forward-looking statements. You are urged to carefully review and consider
the various disclosures made by us in this report as we attempt to advise
interested parties of the risks and factors that may affect our business,
financial condition, and results of operations and prospects.
Overview
The address of our principal executive office is located at 1440 NW 1st Court,
Boca Raton FL 33432. Our telephone number is (561)-943-5970. Our company was
incorporated in the State of Nevada on December 5, 2003 under the name Computer
Maid, Inc. Our company was inactive until February 2006, when we changed our
name to Rose Explorations Inc. and became engaged in the exploration of mining
properties.
On March 4, 2008, our company completed a merger with our wholly-owned
subsidiary, SilverStar Resources, Inc., which was incorporated solely to effect
the name change of our company to Silverstar Resources, Inc.
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On March 4, 2008, we affected a 3 for 1 forward stock split of our authorized,
issued and outstanding common stock. As a result, our authorized capital
increased from 75,000,000 shares of common stock with a par value of $0.001 to
225,000,000 shares of common stock with a par value of $0.001.
On April 13, 2011, we incorporated a wholly owned subsidiary, Silverstar Mining
(Canada) Inc., under the federal laws of Canada. The subsidiary's main purpose
is to hold title to mineral property rights situated in Canada as the laws of
that country require that only local entities can hold title to mineral property
rights situated within its borders.
Effective September 26, 2011, we affected a reverse split our common stock on a
1,000 for 1 basis. As a result of the foregoing, we reduced the number of
authorized shares of our common stock from 225,000,000 to 225,000.
On February 29, 2012, we filed a Certificate of Amendment to our company's
Articles of Incorporation with the Nevada Secretary of State increasing the
number of authorized shares from 225,000 to 225,000,000 shares of common stock
$0.001 par value.
On July 22, 2013 we entered into settlement agreements with four debt holders of
our company pursuant to which we restructured outstanding demand loans payable
in the aggregate amount of $175,028 (inclusive of accrued interest) as
convertible debentures.
On February 15, 2013, we closed a Share Exchange Agreement pursuant to which we
intended to acquire a wholly owned subsidiary, Arriba Resources Inc. However,
effective November 13, 2013 our Board of Directors approved the cancellation and
reversal of the Share Exchange Agreement due to a failure of consideration on
the part of the seller. As a result of the cancellation and reversal of the
Share Exchange Agreement, 2,139,926 shares of our common stock and warrants to
acquire 2,078,477 shares of our common stock which were previously authorized
(but not issued from treasury) have been cancelled with immediate effect.
Consequently, the change of control announced in our current report on Form 8-K
filed on May 21, 2013 has been reversed.
As a result of the cancellation and reversal of the Share Exchange Agreement
with Arriba, the consolidated financial statements of our Company for the
quarterly periods ended March 31, 2013 (filed with the SEC on August 14, 2013)
and June 30, 2013 (filed with the SEC on May 20, 2013) may no longer be relied
upon owing to their inclusion of the financial information of Arriba. We
informed our independent accountants of the cancellation and reversal of the
Share Exchange Agreement and intend to file amendments to our Quarterly Reports
on Form 10-Q for the periods ended March 31 and June 30, 2013 to reflect our
financial condition without consolidation of the financial information of
Arriba. The financial statements contained in this current report accurately
reflect the deconsolidation of the financial information of Arriba.
On January 23, 2015 the board of directors with the consent of a majority of its
shareholders approved amended articles of incorporation to include a change of
name to Silverstar Resources, Inc. and a reverse split of its common stock
resulting in shareholders receiving one share for every five shares (5 to 1)
they hold as of record of that date. In addition, the amendment set the
authorized shares of common stock at 220,000,000 and preferred stock at
5,000,000 shares both at a par value of $0.001.
On March 10, 2015 the Company formed 1030029 Ltd, an Alberta numbered company as
a wholly owned subsidiary to meet the requirements of holding working interest
of Alberta producing oil and gas properties
On June 23, 2016 the company's board changed its name to Creative Waste
Solutions, Inc., to address its business focus.
Results of Operations
OVERVIEW
The following discussion should be read in conjunction with our audited
consolidated financial statements and the related notes for the years ended
September 30, 2019 and 2018 that appear elsewhere in this annual report. The
following discussion contains forward-looking statements that reflect our plans,
estimates and beliefs. Our actual results could differ materially from those
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to those discussed
below and elsewhere in this annual report, particularly in the section entitled
"Risk Factors" beginning on page 8 of this annual report.
Our consolidated financial statements are stated in United States Dollars and
are prepared in accordance with United States Generally Accepted Accounting
Principles.
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Results of Operations
The following summary of our results of operations should be read in conjunction
with our consolidated financial statements for the year ended September 30,
2019, which are included herein.
Expenses
Operating expenses for the year ended September 30, 2019 were $223,909,
representing a decrease of $166,660 from the $390,569 in expenses incurred
during fiscal 2018. The decrease was primarily a result of a decrease in our
business operations due to the phase-out of services to our largest customer.
Revenue, Net Income and Loss
We had $271,355 in revenues for the year ended September 30, 2019 and $598,348
in revenues for the year ended September 30, 2018. The decrease of $326,993 in
revenues was primarily due to the phased-out of the services we provided to our
largest customer. Our gross profit in fiscal 2019 was $62,781 versus $241,092 in
fiscal 2018, the decrease of $178,311 is primarily attributable to the fact that
we phased-out providing services to our largest volume customer.
For the year ended September 30, 2019 we had a net loss of $190,310 compared to
a net income of $2,408,986 during the year ended September 30, 2018. The
$2,599,296 decrease in net income was primarily due to a derivative gain in
fiscal 2018 of $2,612,064 whereas in fiscal 2019 we had a derivative income of
$18,972. The large increase in the derivative liability gain in fiscal 2018 was
primarily due to a significant decrease in our stock price.
Our loss from operations was $161,128 in fiscal 2019 versus $149,477 in fiscal
2018. The increase of $11,651 was primarily due to the decrease in gross profit
of $178,311 and the decrease in operating expenses of $166,660 as explained in
the previous paragraphs.
Our operations to date have been financed by the sale of our common stock and
third party loans. Our largest operating expenses that affect cash are rent,
professional fees, and independent contractor services. The majority of our
professional fees consist of auditing expenses incurred in connection with our
regulatory filings with the SEC.
We are attempting to generate additional revenues and improve our gross profit,
however, revenues that we generate may not be sufficient to cover our operating
expenses. If we do not succeed in raising additional capital, we may have to
cease operations and you may lose your entire investment.
Liquidity and Capital Resources
At September 30, 2019 we had cash of $393 and no accounts receivable as compared
to $3,132 in cash and accounts receivable of $8,914 at September 30, 2018. The
decrease in cash of $2,739 is due to cash used in operating activities of
$161,314 and cash used in investing activities of $50,000 offset by cash
provided by financing activities of $208,575. The decrease in accounts
receivable of $8,914 is due to the Company not providing terms to in customers
in fiscal 2019 due to lack of cash flow. Our accounts payable and accrued
expenses at September 30, 2019 were $176,564 and $196,566 as of September 30,
2018, the decrease of $20,002 is due to a decrease in accounts payable of
$46,512 due to a reduction in operations activity as a result of the loss of a
major customer and the facilities plant being closed the last three weeks in
September 2019 offset by an increase in accrued interest payable of $7,099 due
to more convertible debt outstanding and an increase in accrued liabilities of
$17,611 primarily due to delinquent rent. On September 30, 2019 and 2018 we had
$554,396 and $241,896 of convertible debentures and notes payable to related
parties, respectively, and advances from related parties of $97,621 and $80,046,
respectively. The increase in related party notes payable of $312,500 is due to
the acquisition of notes payable by two of the Company's shareholders from note
holders that were not related parties. The increase in advances from related
parties of $17,575 is primarily due to an advance of $15,100 from one
shareholder. As of September 30, 2019 and 2018 we had a derivative liability of
$210,336 and $72,082, respectively. The increase in derivative liability of
$138,254 is attributable to the issuance of four convertible debentures in
fiscal 2019 that contained embedded derivatives. We had notes payable and
convertible debentures to unrelated parties of $158,830 at September 30, 2019
and $396,500 at September 30, 2018. The decrease in notes payable and
convertible debentures to unrelated parties of $237,670 is due to $312,500 of
notes payable that were acquired by shareholders from unrelated parties offset
by an increase in convertible debentures, net of debt discount, of $74,830. Our
total liabilities were $1,198,747 on September 30, 2019 as compared to $987,090
as at September 30, 2018. The details of the decrease in total liabilities of
$211,657 is disclosed in the preceding sentences. We had a working capital
deficit of $1,197,354 as of September 30, 2019 as compared to our working
capital deficit of $975,044 as of September 30, 2018. The increase in working
capital deficit of $222,310 is primarily due to a loss from operations of
$162,129, accrued interest expense of $48,154, $50,000 of funds used on a real
estate deposit, offset by $59,056 of depreciation and amortization expense which
is included in the loss from operations. However, excluding the non-cash
derivative liability, our September 30, 2019 and 2018 working capital deficits
were $987,018 and $902,962, respectively.
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Working Capital
Our total current assets as of September 30, 2019 consisted of cash of $393 as
compared to total current assets of $12,046 as of September 30, 2018. The
decrease in current assets was primarily due to accounts receivable decreasing
due to the phase-out of the services we provided to our largest customer in
fiscal 2019.
Our total current liabilities as of September 30, 2019 were $1,197,747 as
compared to total current liabilities of $987,090 as of September 30, 2018. The
increase in current liabilities was primarily attributed to an increase in
convertible debentures of $74,830 and an increase in derivative liability of
$138,254 resulting from the issuance of new convertible debt in fiscal 2019.
Cash Flows
Operating Activities
Cash used by operating activities was $161,314 for the fiscal year ended
September 30, 2019 compared to cash provided by operating activities of $352 for
the fiscal year ended September 30, 2018. The decrease of $161,666 in cash
provided by operating activities was primarily due to an increase in loss from
operations of $14,300, a decrease in depreciation and amortization expense of
$81,861 and in the comparative changes in operating assets and liabilities as
follows: accounts receivable and deposit decrease of $75,802, and accounts
payable and accrued expenses decrease of $2,201.
Investing Activities
Cash used in investing activities was $50,000 for the fiscal year ended
September 30, 2019 compared to cash used in investing activities of $2,200 for
the fiscal year ended September 30, 2018, an increase of $47,800. The increase
was due to a $50,000 property deposit made in fiscal 2019 while in fiscal 2018
our only investing activity was the purchase of $2,200 of fixed assets.
Financing Activities
Net cash provided by financing activities for the fiscal year ended September
30, 2019 was $208,575 compared to $3,500 in the year ended September 30, 2018.
The increase of $205,075 was primarily due to notes payable proceeds in fiscal
2019 of $196,000 less a $5,000 note payment, whereas there were no issuances of
notes payable in fiscal 2018, and advances from related parties of $15,575
versus $3,500 of a related party advance in fiscal 2018.
Income & Operation Taxes
We are subject to income taxes in the U.S.
We paid no income taxes in USA for the fiscal year end ended September 30, 2019
due to the net operating loss carryforwards that are available to us in the USA.
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Cash Requirements
For the twelve months ended September 30, 2020 we required additional funds of
approximately $176,000 to fund our budgeted expenses as follows: Rent $110,000,
office administration and other $27,000, contract labor $12,000, accounting and
bookkeeping $10,000, management fees $6,000, auditor and professional fees
$6,000, and repairs and maintenance $5,000. These funds were primarily raised
from advances received from a shareholder and an entity owned by said
shareholder. There is still no assurance that we will be able to maintain
operations at a level sufficient for investors to obtain returns on their
investments in our common stock. Further, we may continue to be unprofitable.
Off-Balance Sheet Arrangements
We currently have no off-balance sheet arrangements.
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