Overview

Deep Green Waste & Recycling, Inc. (f/k/a Critic Clothing, Inc.) ("Deep Green",
the "Company", "we", "us", or "our") is a publicly quoted company seeking to
create value for its shareholders by seeking to acquire other operating entities
for growth in return for shares of our common stock.



The Company was organized as a Nevada Corporation on August 24, 1995 under the
name of Evader, Inc. On May 25, 2012, the Company filed its Foreign Profit
Corporation Articles of Domestication to change the domicile of the Company from
Nevada to Wyoming. On November 4, 2015, the Company filed an Amendment to its
Articles of Incorporation to change the name of the Company to Critical
Clothing, Inc. and on August 28, 2017 an Amendment was filed to change the
Company name to Deep Green Waste & Recycling, Inc.



On August 24, 2017, the Company entered into an Agreement of Conveyance,
Transfer and Assignment of Assets and Assumption of Obligations (the
"Agreement") with St. James Capital Management, LLC. Under the terms of the
Agreement, St. James Capital Management, LLC transferred and assigned all of the
assets of the Company related to its extreme sports apparel design and
manufacturing business in exchange for the assumption of certain liabilities and
cancellation of 3,000,000 shares (as adjusted for the September 27, 2017 reverse
stock split of 1 share for 1000 shares) of common stock of the Company.



On August 24, 2017, the Company acquired all the membership units of Deep Green
Waste and Recycling, LLC ("DGWR LLC"), a Georgia limited liability company
engaged in the waste broker business since 2011, in exchange for 85,000,000
shares (as adjusted for the September 27, 2017 reverse stock split of 1 share
for 1000 shares) of the Company's common stock. The transaction was accounted
for as a "reverse merger" where DGWR LLC was considered the accounting acquiror
and the Company was considered the accounting acquiree.



Effective October 1, 2017, Deep Green acquired Compaction and Recycling
Equipment, Inc. (CARE), a Portland, Oregon based company that sells and services
waste and recycling equipment. Deep Green purchased 100% of the common stock for
$902,700. $586,890 was paid in cash at closing and a promissory note was
executed in the amount of $315,810.



Effective October 1, 2017, Deep Green acquired Columbia Financial Services, Inc,
(CFSI), a Portland, Oregon based company that finances the purchases of waste
and recycling equipment. Deep Green purchased 100% of the common stock for
$597,300. $418,110 was paid in cash at closing and a promissory note was
executed in the amount of $179,190.



On August 7, 2018, the Company entered into an Agreement of Conveyance, Transfer
and Assignment of Subsidiaries and Assumption of Obligations (the "Agreement")
with Mirabile Corporate Holdings, Inc. Under the terms of the Agreement, the
Company transferred all capital stock of its two wholly owned subsidiaries,
Compaction and Recycling Equipment, Inc. and Columbia Financial Services, Inc.,
to Mirabile Corporate Holdings, Inc. in exchange for the assumption and
cancellation of certain liabilities. Deep Green's Chief Executive Officer owned
a 7.5% equity interest in Mirabile Corporate Holdings, Inc.

On August 7, 2018, the Company ceased its waste broker business.


The Company re-launched its waste and recycling services operation and has begun
to re-engage with customers, waste haulers and recycling centers, which are
critical elements of its historically successful business model: designing and
managing waste programs for commercial and institutional properties for cost
savings, ease of operation, and minimal administrative stress for its clients.



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Asset Purchase Agreement



On February 8, 2021, the Company, through its wholly owned subsidiary DG
Research, Inc. (the "Buyer"), entered into an Asset Purchase Agreement (the
"Agreement") with Amwaste, Inc. (the "Seller"). Under the terms of the
Agreement, the Buyer agreed to purchase from the Seller certain assets (the
"Assets") utilized in the Seller's waste management business located in Glynn
County, Georgia. In consideration for the purchase of the Assets, the Buyer paid
the seller $150,000 and issued the Seller 2,000,000 shares of the Company's
restricted common stock. The Buyer remitted $50,000 at Closing and issued the
Seller a Promissory Note (the "Note") in the amount of $110,000. The Note
principal shall be reduced by $10,000 if the Note is paid in full on or before
March 8, 2021. The Note is secured by the Assets purchased through the
Agreement. The transaction closed on February 11, 2021.

In order to further grow its business, the Company plans to:

? expand its service offerings to provide additional sustainable waste

management solutions that further minimize costs based on volume and content

of waste streams, and methods of disposal, including landfills, transfer

stations and recycling centers;

? Acquire profitable waste and recycling services companies with similar or

compatible and synergistic business models, that can help the Company achieve

these objectives;

? Offer innovative recycling services that significantly reduce the disposal of


    hazardous wastes, food wastes, plastics and electronic wastes in the
    commercial and residential property collective;

  ? Establish partnerships with innovative companies, municipalities and
    institutions; and

? Attract investment funds who will actively work with the Company to achieve

these goals and help the Company grow into a leading waste and recycling


    services supplier in North America.




Some potential merger/acquisition candidates have been identified and
discussions initiated. These candidates are within the Company's core business
model, serving commercial properties, accretive to cash flow, and geographically
favorable. While seeking to identify acquisition candidates, the Company seeks
to identify target entities with a similar core business model or a model which
naturally integrates with its own, and which are situated in opportunistic
geographic locations.

We have unrestricted discretion in seeking and participating in a business opportunity, subject to the availability of such opportunities, economic conditions, and other factors.


The selection of a business opportunity in which to participate is complex and
risky. Additionally, we have only limited resources and may find it difficult to
locate good opportunities. There can be no assurance that we will be able to
identify and acquire any business opportunity which will ultimately prove to be
beneficial to us and our shareholders. We will select any potential business
opportunity based on our management's best business judgment.



Our activities are subject to several significant risks, which arise primarily
as a result of the fact that we have no specific business and may acquire or
participate in a business opportunity based on the decision of management, which
potentially could act without the consent, vote, or approval of our
shareholders. The risks faced by us are further increased as a result of its
lack of resources and our inability to provide a prospective business
opportunity with significant capital.

Critical Accounting Policies and Significant Judgments and Estimates





Our management's discussion and analysis of our financial condition and results
of operations are based on our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States of America, or GAAP. The preparation of these consolidated
financial statements requires us to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities as of the date of the consolidated financial statements
as well as the reported expenses during the reporting periods. The accounting
estimates that require our most significant, difficult and subjective judgments
have an impact on revenue recognition, the determination of share-based
compensation and financial instruments. We evaluate our estimates and judgments
on an ongoing basis. Actual results may differ materially from these estimates
under different assumptions or conditions.



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Our significant accounting policies are more fully described in NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.





Discussion for the three months ended March 31, 2022 and March 31, 2021
(Unaudited):



Results of Operations:



                                                  March 31, 2022       March 31, 2021       $ Change
Gross revenue                                    $        219,741     $         24,837     $  194,904
Operating expenses                                        612,213              149,525        450,785
Loss from Operations                                     (392,472 )           (131,709 )     (248,862 )
Other Income (Expense)                                   (104,934 )           (196,429 )      117,810
Net Income (Loss)                                        (497,406 )           (328,138 )     (131,052 )

Net loss per share - basic and diluted           $          (0.00 )   $    

     (0.00 )   $        -




Revenues

For the three months ended March 31, 2022 and 2011, we generated $219,741 and $24,837 revenue, respectively.





Operating Expenses

Our operating expenses were $612,213 and $149,525 for the three months ended March 31, 2022 and 2021, respectively.

We anticipate that our cost of revenues will increase in 2022 and for the foreseeable future as we continue to build out our waste management services and identify acquisition opportunities in the waste and recycling sector.

We incurred $147,525 and $45,790 in Payroll and related expenses for the three months ended March 31, 2022 and 2021.

We incurred $145,259 and $24,790 in stock-based compensation for the three months ended March 31, 2022 and 2021.





Loss from Operations

The Company's loss from operations was $497,406 for the three months ended March 31, 2022 from $328,138 in 2021, an increase of $131,052.





Other Income (Expense)



Other expense decreased to $104,934 for the three months ended March 31, 2022
and included interest expense of $656,739 and derivative liability gain of
$697,777. Other expense was $196,429 for the three months ended March 31, 2021
and included interest expense of $38,493 and derivative liability expense of
$157,936.



Net Loss



For the three months ended March 31, 2022, our net loss increased to $497,406,
as compared to a net loss of $328,138 for three months ended March 31, 2021, an
increase of $169,268. The increase in net loss was largely attributable to the
Company's derivative liability expense.



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Liquidity and Capital Resources





At March 31, 2022, we had current assets of $228,264 and current liabilities of
$5,528,868 resulting in negative working capital of $5,300,604, of which
$3,095,020 was accounts payable and $118,405 was included in accrued interest.
At March 31, 2022, we had total assets of $1,605,606 and total liabilities of
$5,528,868 resulting in stockholders' deficit of $3,896,247.



At December 31, 2021, we had current assets of $231,280 and current liabilities
of $5,992,412 resulting in negative working capital of $5,761,132, of which
$3,098,770 was accounts payable and $93,661 was included in deferred
compensation. At December 31, 2021, we had total assets of $1,686,833 and total
liabilities of $5,992,412 resulting in stockholders' deficit of $4,305,579.




Accounts Payable



At March 31, 2022, the Company had accounts payable of $3,095,020 that consisted
of $487,615 in default judgments due to prior vendors, $2,387,099 due to vendors
for materials and services and $220,306 due for credit card obligations.

At December 31, 2021, the Company had accounts payable of $2,948,964 that consisted of $487,615 in default judgments due to prior vendors, $2,373,492 due to vendors for materials and services and $220,306 due for credit card obligations.





Debt



At March 31, 2022, the Company had outstanding debt of $1,271,603 that consisted
of $398,691 of convertible debt, $392,000 in a short term note $49,179 remaining
for Lyell Purchase, $5,574 due under a short-term capital lease and $119,876 in
loans payable to officers and directors. Please see NOTE F - DEBT for further
information.



At December 31, 2021, the Company had outstanding debt of $730,532 that
consisted of$267,111 of net convertible notes, $189,179 for remaining balance of
Lyell Purchase agreement, $119,877 of debt due to officers and directors, $5,574
due under a short-term capital lease. Please see NOTE F - DEBT for further

information.



Capital Raising



For the three months ended March 31, 2022 and the twelve months ended December
31, 2021, the Company raised $304,000 and $1,848,910 through the issuance of
Convertible Promissory Notes or loans from officers, respectively.



Cash on Hand

Our cash on hand as of March 31, 2022 and December 31, 2021 was $5,269 and $46,350, respectively.

Satisfaction of Outstanding Liabilities





As of March 31, 2022, the Company has a liability of $487,615 as a result of
three (3) default judgments. The Company intends to negotiate settlements and
establish payment plans with each creditor that will satisfy these judgements.
Nonetheless, some or all of the creditors may elect to bring further litigation
to protect their claims or perfect their judgments.



The Company accrued customer deposits in the form of advance payments for waste
management services that could not be delivered when the Company suspended
operations in August 2018. The Company intends to either resume waste management
services with those customers or refund the advance payments through a repayment
plan.



37






There can be no assurance that sufficient funds required during the next year or
thereafter will be generated from operations or that funds will be available
from external sources such as debt or equity financings or other potential
sources to satisfy these outstanding liabilities. The lack of additional capital
resulting from the inability to generate cash flow from operations or to raise
capital from external sources would force the Company to substantially curtail
or cease operations and would, therefore, have a material adverse effect on

its
business.



We currently have no external sources of liquidity such as arrangements with
credit institutions or off-balance sheet arrangements that will have or are
reasonably likely to have a current or future effect on our financial condition
or immediate access to capital.



We are dependent on the sale of our securities to fund our operations and will
remain so until we generate sufficient revenues to pay for our operating costs.
Our officers and directors have made no written commitments with respect to
providing a source of liquidity in the form of cash advances, loans and/or
financial guarantees.



If we are unable to raise the funds, we will seek alternative financing through
means such as borrowings from institutions or private individuals. There can be
no assurance that we will be able to raise the capital we need for our
operations from the sale of our securities. We have not located any sources for
these funds and may not be able to do so in the future. We expect that we will
seek additional financing in the future. However, we may not be able to obtain
additional capital or generate sufficient revenues to fund our operations. If we
are unsuccessful at raising sufficient funds, for whatever reason, to fund our
operations, we may be forced to cease operations. If we fail to raise funds, we
expect that we will be required to seek protection from creditors under
applicable bankruptcy laws.



Our independent registered public accounting firm has expressed substantial
doubt about our ability to continue as a going concern and believes that our
ability is dependent on our ability to implement our business plan, raise
capital and generate revenues. Please see NOTE L - GOING CONCERN UNCERTAINTY for
further information.



Debt



Our Debt was $1,257,353 and $1,047,506 at March 31, 2022 and December 31, 2021,
respectively. Included within the Debt was the following at March 31, 2022: (i)
$387,535 due under Factor agreement with AEC Yield Capital, LLC and Notice of
Default; and (ii) $49,179 due to Seller of Lyell Environmental; and (iii) $5,574
due under a short-term capital lease; and (iv) $124,373 as loans payable to
officers; and (v) Unsecured Convertible Promissory Note payable to BHP Capital
NY Inc.: Issue date October 14, 2021 - net of unamortized debt discount of
$238,919 and $526,028 at March 31, 2022 and December 31, 2021, respectively and
(vi) Unsecured Convertible Promissory Note payable to Quick Capital, LLC: Issue
date October 14, 2021 - net of unamortized debt discount of $226,087 and
$465,532 at March 31, 2022 and December 31, 2021, respectively (ii) $8,325 other
debt. Please see NOTE F - DEBT for further information.



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Convertible Notes


(iii) On October 14, 2021, the Company (the "Borrower") entered into a Note
Purchase Agreement ("NPA") with each of BHP Capital NY Inc. and Quick Capital,
LLC (together, the "Investors") and issued each of the Investors a Secured
Convertible Promissory Note (the "Note") in the amount of Six Hundred Sixty-Six
Thousand Six Hundred Sixty-Seven and NO/100 Dollars ($666,667). The Note is
convertible, in whole or in part, at any time and from time to time before
maturity (October 14, 2022) at the option of the holder at the Fixed Conversion
Price that shall be the lesser of: (a) $0.01 or (b) 70% multiplied by the Market
Price (as defined herein) (representing a discount rate of 30%) (the "Fixed
Conversion Price"). "Market Price" means the average of the two lowest Closing
Prices (as defined below) for the Common Stock during the twenty (20) Trading
Day period ending on the latest complete Trading Day prior to the Conversion
Date "Trading Day" shall mean any day on which the Common Stock is tradable for
any period on the OTCBB, OTCQB or on the principal securities exchange or other
securities market on which the Common Stock is then being quoted or traded. To
the extent the Conversion Price of the Borrower's Common Stock closes below the
par value per share, the Borrower will take all steps necessary to solicit the
consent of the stockholders to reduce the par value of the Common Stock to the
lowest value possible under law. The Borrower agrees to honor all conversions
submitted pending this adjustment. If the shares of the Borrower's Common Stock
have not been delivered within three (3) business days to the Holder, the Notice
of Conversion may be rescinded by the Holder. If the Trading Price cannot be
calculated for such security on such date in the manner provided above, the
Trading Price shall be the fair market value as mutually determined by the
Borrower and the Holder for which the calculation of the Trading Price is
required in order to determine the Conversion Price of such Notes. If at any
time the Conversion Price as determined hereunder for any conversion would be
less than the par value of the Common Stock, then at the sole discretion of the
Holder, the Conversion Price hereunder may equal such par value for such
conversion and the Conversion Amount for such conversion may be increased to
include Additional Principal, where "Additional Principal" means such additional
amount to be added to the Conversion Amount to the extent necessary to cause the
number of conversion shares issuable upon such conversion to equal the same
number of conversion shares as would have been issued had the Conversion Price
not been adjusted by the Holder to the par value price. The Note has a term of
one (1) year and bears interest at 10% annually. As part and parcel of the
foregoing transaction, each of the Investors was issued 2,298,852 shares of
common stock as Commitment shares and a warrant (the "Warrant") granting the
holder the right to purchase up to 66,666,667 shares of the Company's common
stock at an exercise price of $0.015 for a term of 5-years. The transaction
closed on October 19, 2021. As of December 31, 2021, $592,004 principal plus $0
interest were due on the Quick Capital Note.

On March 2, 2021, the Company issued GPL Ventures, LLC ("GPL") a Convertible
Promissory Note (the "Note") in the amount of Fifty Thousand and NO/100 Dollars
($50,000). The Note is convertible, in whole or in part, at any time and from
time to time before maturity (March 2, 2022) at the option of the holder at the
Conversion Price that shall equal the lesser of: a) $0.01 or b) Sixty Percent
(60%) of the lowest Trading Price (defined below) during the Valuation Period
(defined below), and the Conversion Amount shall be the amount of principal or
interest electively converted in the Conversion Notice. The total number of
shares due under any conversion notice ("Notice Shares") will be equal to the
Conversion Amount divided by the Conversion Price. "Trading Price" means, for
any security as of any date, any trading price on the OTC Markets, or other
applicable trading market (the "OTCBB") as reported by a reliable reporting
service ("Reporting Service") mutually acceptable to Maker and Holder (i.e.
Bloomberg) or, if the OTCBB is not the principal trading market for such
security, the price of such security on the principal securities exchange or
trading market where such security is listed or traded. The "Valuation Period"
shall mean twenty (20) Trading Days, commencing on the first Trading Day
following delivery and clearing of the Notice Shares in Holder's brokerage
account, as reported by Holder ("Valuation Start Date"). The Note has a term of
one (1) year and bears interest at 10% annually. The Company and GPL also
entered into a Registration Rights Agreement ("RRA") that provided for the
Company to file a Registration Statement with the SEC covering the resale of up
to 10,000,000 shares underlying the Note and to have filed such Registration
Statement within 30 days of the RRA. In the event that the Company doesn't
maintain the registration requirements provided for in the RRA, the Company is
obligated to pay GPL certain payments for such failures. The transaction closed
on March 9, 2021. Please see NOTE G - CONVERTIBLE NOTES PAYABLE for further

information.

39





On February 5, 2021, the Company issued GPL Ventures, LLC ("GPL") a Convertible
Promissory Note (the "Note") in the amount of Seventy-Five Thousand and NO/100
Dollars ($75,000). The Note is convertible, in whole or in part, at any time and
from time to time before maturity (February 5, 2022) at the option of the holder
at the Conversion Price that shall equal the lesser of: a) $0.01 or b) Sixty
Percent (60%) of the lowest Trading Price (defined below) during the Valuation
Period (defined below), and the Conversion Amount shall be the amount of
principal or interest electively converted in the Conversion Notice. The total
number of shares due under any conversion notice ("Notice Shares") will be equal
to the Conversion Amount divided by the Conversion Price. "Trading Price" means,
for any security as of any date, any trading price on the OTC Markets, or other
applicable trading market (the "OTCBB") as reported by a reliable reporting
service ("Reporting Service") mutually acceptable to Maker and Holder (i.e.
Bloomberg) or, if the OTCBB is not the principal trading market for such
security, the price of such security on the principal securities exchange or
trading market where such security is listed or traded. The "Valuation Period"
shall mean twenty (20) Trading Days, commencing on the first Trading Day
following delivery and clearing of the Notice Shares in Holder's brokerage
account, as reported by Holder ("Valuation Start Date"). The Note has a term of
one (1) year and bears interest at 10% annually. The Company and GPL also
entered into a Registration Rights Agreement ("RRA") that provided for the
Company to file a Registration Statement with the SEC covering the resale of up
to 10,000,000 shares underlying the Note and to have filed such Registration
Statement within 30 days of the RRA. In the event that the Company doesn't
maintain the registration requirements provided for in the RRA, the Company is
obligated to pay GPL certain payments for such failures. Please see NOTE G -
CONVERTIBLE NOTES PAYABLE for further information.

On February 5, 2021, the Company issued Quick Capital, LLC ("Quick") a
Convertible Promissory Note (the "Note") in the amount of Twenty-Five Thousand
and NO/100 Dollars ($25,000). The Note is convertible, in whole or in part, at
any time and from time to time before maturity (February 5, 2022) at the option
of the holder at the Conversion Price that shall equal the lesser of a) $0.01 or
b) Sixty Percent (60%) of the lowest Trading Price (defined below) during the
Valuation Period (defined below), and the Conversion Amount shall be the amount
of principal or interest electively converted in the Conversion Notice. The
total number of shares due under any conversion notice ("Notice Shares") will be
equal to the Conversion Amount divided by the Conversion Price. "Trading Price"
means, for any security as of any date, any trading price on the OTC Markets, or
other applicable trading market (the "OTCBB") as reported by a reliable
reporting service ("Reporting Service") mutually acceptable to Maker and Holder
(i.e. Bloomberg) or, if the OTCBB is not the principal trading market for such
security, the price of such security on the principal securities exchange or
trading market where such security is listed or traded. The "Valuation Period"
shall mean twenty (20) Trading Days, commencing on the first Trading Day
following delivery and clearing of the Notice Shares in Holder's brokerage
account, as reported by Holder ("Valuation Start Date"). The Note has a term of
one (1) year and bears interest at 10% annually. The Company and Quick also
entered into a Registration Rights Agreement ("RRA") that provided for the
Company to file a Registration Statement with the SEC covering the resale of up
to 10,000,000 shares underlying the Note and to have filed such Registration
Statement within 30 days of the RRA. In the event that the Company doesn't
maintain the registration requirements provided for in the RRA, the Company is
obligated to pay Quick certain payments for such failures. The transaction
closed on February 12, 2021. Please see NOTE G - CONVERTIBLE NOTES PAYABLE for
further information.

On June 23, 2020, the Company issued GPL Ventures LLC ("GPL") a Convertible
Promissory Note (the "Note") in the amount of One Hundred Thousand and NO/100
Dollars ($100,000). The Note is convertible, in whole or in part, at any time
and from time to time before maturity (June 23, 2021) at the option of the
holder at the Conversion Price that shall equal the lesser of a) $0.01 or b)
Sixty Percent (60%) of the lowest Trading Price (defined below) during the
Valuation Period (defined below), and the Conversion Amount shall be the amount
of principal or interest electively converted in the Conversion Notice. The
total number of shares due under any conversion notice ("Notice Shares") will be
equal to the Conversion Amount divided by the Conversion Price. "Trading Price"
means, for any security as of any date, any trading price on the OTC Markets, or
other applicable trading market (the "OTCBB") as reported by a reliable
reporting service ("Reporting Service") mutually acceptable to Maker and Holder
(i.e. Bloomberg) or, if the OTCBB is not the principal trading market for such
security, the price of such security on the principal securities exchange or
trading market where such security is listed or traded. The "Valuation Period"
shall mean twenty (20) Trading Days, commencing on the first Trading Day
following delivery and clearing of the Notice Shares in Holder's brokerage
account, as reported by Holder ("Valuation Start Date"). The Note has a term of
one (1) year and bears interest at 10% annually. The Company and GPL also
entered into a Registration Rights Agreement ("RRA") that provided for the
Company to file a Registration Statement with the SEC covering the resale of
shares underlying the Note and the warrant and to have declared effective such
Registration Statement (which occurred on July 13, 2020). In the event that the
Company doesn't maintain the registration requirements provided for in the RRA,
the Company is obligated to pay GPL certain payments for such failures. In the
twelve months ended December 31, 2021, a total of $84,000 (of the $100,000 Note)
was converted into shares of the Company's common stock. Please see NOTE G -
CONVERTIBLE NOTES PAYABLE for further information.

Cash Flows

We had net cash provided by (used) in operating activities for the three months ended March 31, 2022 and 2021 of ($432,695) and ($493,003), respectively.



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We had net cash used in investing activities for the three months ended March 31, 2022 and 2021 of $0 and $50,000, respectively.

We had net cash provided by financing activities for the three months ended March 31, 2022 and 2021 of $381,202 and $155,330, respectively.

Required Capital Over the Next Twelve Months



We expect to incur losses from operations for the near future. We believe we
will have to raise an additional $2,500,000 to expand our operations over the
next twelve months, including roughly $50,000 to remain current in our filings
with the SEC. The additional funds will be utilized for hiring ancillary staff
and key personnel, corporate website and SEO development, acquisition(s) in the
waste and recycling management sector and day to day operations.

Future financing may include the issuance of equity or debt securities,
obtaining credit facilities, or other financing mechanisms. Even if we are able
to raise the funds required, it is possible that we could incur unexpected costs
and expenses or experience unexpected cash requirements that would force us to
seek alternative financing. Furthermore, if we issue additional equity or debt
securities, existing holders of our securities may experience additional
dilution or the new equity securities may have rights, preferences or privileges
senior to those of existing holders of our securities.

If additional financing is not available or is not available on acceptable terms, we may be required to delay or alter our business plan based on available financing.

Critical Accounting Policies and Estimates



The SEC issued Financial Reporting Release No. 60, "Cautionary Advice Regarding
Disclosure About Critical Accounting Policies" suggesting that companies provide
additional disclosure and commentary on their most critical accounting policies.
In Financial Reporting Release No. 60, the SEC has defined the most critical
accounting policies as the ones that are most important to the portrayal of a
company's financial condition and operating results and require management to
make its most difficult and subjective judgments, often as a result of the need
to make estimates of matters that are inherently uncertain. Based on this
definition, we have identified the following significant policies as critical to
the understanding of our financial statements. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make a variety of estimates and assumptions that affect (i) the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities as of the date of the financial statements and (ii) the reported
amounts of revenues and expenses during the reporting periods covered by the
financial statements. Our management expects to make judgments and estimates
about the effect of matters that are inherently uncertain. As the number of
variables and assumptions affecting the future resolution of the uncertainties
increase, these judgments become even more subjective and complex. Although we
believe that our estimates and assumptions are reasonable, actual results may
differ significantly from these estimates. Changes in estimates and assumptions
based upon actual results may have a material impact on our results.

Off-Balance Sheet Arrangements



We did not have, during the periods presented, and we do not currently have, any
relationships with any organizations or financial partnerships, such as
structured finance or special purpose entities, that would have been established
for the purpose of facilitating off-balance sheet arrangements or other
contractually narrow or limited purposes.

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