UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: March 31, 2020

Or

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 333-140299

CREATIVE WASTE SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

Nevada

98-0425627

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

1440 NW 1^st Court, Boca Raton, Florida		33432
(Address of principal executive offices)		(Zip Code)

(561) 757-3585

(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 period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☐ Yes ☒ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☐ Yes ☒ No

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

Indicate by check mark whether the Company is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 28, 2021 there were 6,025,974 shares of Common Stock of the issuer outstanding.

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PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis or Plan of Operation.	20

Item 3.	Quantitative and Qualitative Disclosure about Market Risk.	23

Item 4.	Controls and Procedures.	23

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings.	25

Item 1A.	Risk Factors.	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	25

Item 3.	Defaults Upon Senior Securities.	25

Item 4.	Mine Safety Disclosures.	25

Item 5.	Other Information.	25

Item 6.	Exhibits.	26

Signatures		27

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PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

CREATIVE WASTE SOLUTIONS, INC. & SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2020 AND 2019

Contents

		Page

Financial Statements:

Consolidated Balance Sheets as of March 31, 2020 and September 30, 2019 (Unaudited)		4

Consolidated Statements of Operations for the three and six months ended March 31, 2020 and 2019 (Unaudited)		5

Consolidated Statements of Cash Flows for the three and six months ended March 31, 2020 and 2019 (Unaudited)		6

Notes to Interim Unaudited Consolidated Financial Statements		7

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CREATIVE WASTE SOLUTIONS, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED

	March 31,			September 30,
	2020			2019

ASSETS
Current assets -
Cash	$	35,369		$	393
Total current assets		35,369			393

Deposit		7,000			57,000
Equipment, net		27,700			36,700
Intangible assets, net		150,000			150,000
Goodwill		149,500			149,500
Total assets	$	369,569		$	393,593

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities -
Accounts payable and accrued liabilities	$	168,184		$	176,564
Convertible debentures and notes payable, related parties		554,396			554,396
Convertible debentures and notes payable, net of discount		203,412			158,830
Advances-related parties		330,692			97,621
Derivative liability		45,962			210,336
Total current liabilities		1,302,646			1,197,747

Total liabilities		1,302,646			1,197,747

Stockholders’ deficit:
Preferred Stock; $.001 value 5,000,000 shares authorized, none issued and outstanding		-			-
Common Stock; $.001 par value, 225,000,000 shares authorized and 6,015,974 shares issued and outstanding in 2020 and 2019		6,016			6,016
Additional-paid in capital		3,048,598			3,011,608
Accumulated deficit		(3,987,691	)		(3,821,778	)
Total stockholders’ deficit		(933,077	)		(804,154	)

Total liabilities and stockholders’ deficit	$	369,569		$	393,593

The accompanying notes are an integral part of these consolidated financial statements.

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CREATIVE WASTE SOLUTIONS, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED

	Three Months Ended March 31,						Six Months Ended March 31,
	2020			2019			2020			2019

Sales	$	2,169		$	76,122		$	7,620		$	154,241
Cost of goods sold		1,850			58,684			7,192			106,695
Gross profit		319			17,438			428			47,546

Operating expenses:
General and administrative		108,735			44,101			147,362			99,697
Loss from operations		(108,416	)		(26,663	)		(146,934	)		(52,151	)

Other income (expenses):
Gain on derivative liability		3,691			7,001			127,384			59,167
Interest expense		(87,903	)		(7,673	)		(146,363	)		(12,199	)
Total other income (expenses)		(84,212	)		(672	)		(18,979	)		46,968

Net (loss)	$	(192,628	)	$	(27,335	)	$	(165,913	)	$	(5,183	)

Basic (loss) per common share
Net (loss)	$	(0.03	)	$	(0.00	)	$	(0.03	)	$	(0.00	)

Diluted (loss) per common share
Net income (loss)	$	(0.03	)	$	(0.00	)	$	(0.03	)	$	(0.00	)

Basic weighted average shares outstanding		6,015,974			6,015,974			6,015,974			6,015,974
Diluted weighted average shares outstanding		6,015,974			6,015,974			6,015,974			6,015,974

The accompanying notes are an integral part of these consolidated financial statements.

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CREATIVE WASTE SOLUTIONS, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED

	Six Months Ended March 31,
	2020			2019

CASH FLOW FROM OPERATING ACTIVITIES
Net (loss)	$	(165,913	)	$	(5,183	)
Adjustments to reconcile net income (loss) to net cash Provided by (used in) operating activities:
(Gain) in fair value of derivative liability		(127,384	)		(59,167	)
Depreciation and amortization		128,582			20,213
Changes in operating assets and liabilities
Deposit		50,000			-
Accounts receivable		-			7,124
Accounts payable and accrued liabilities		(8,380	)		(10,919	)
NET CASH (USED IN) OPERATING ACTIVITIES		(123,095	)		(47,932	)

CASH FLOW FROM INVESTING ACTIVITIES		-			-

CASH FLOW FROM FINANCING ACTIVITIES
Advances from related parties		233,071			20,565
Repayment of debt		(75,000	)		-
Issuance of debt		-			25,000
NET CASH PROVIDED BY FINANCING ACTIVITIES		158,071			45,565

Net increase (decrease) in cash		34,976			(2,367	)
Cash, beginning of period		393			3,132
Cash, end of period	$	35,369		$	765

SUPPLEMENTAL CASH FLOWS INFORMATION
Interest paid	$	20,000		$	-
Income taxes paid	$	-		$	-

The accompanying notes are an integral part of these consolidated financial statements.

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CREATIVE WASTE SOLUTIONS, INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED MARCH 31, 2020 AND 2019

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Creative Waste Solutions, Inc. (formally Silverstar Resources, Inc.) (the “Company”) was incorporated under the laws of the State of Nevada on December 5, 2003. On June 23, 2016, the Company’s Board of Directors approved of a change of name from Silverstar Resources, Inc. to Creative Waste Solutions Inc. The Company operates in the waste management industry.

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 April 7, 2016, the Company entered into a membership purchase agreement with Creative Waste Solutions, LLC, a Florida limited liability corporation (“Creative”) whereby the Company purchased 100% of the membership interest for $25,000.

On May 22, 2016, the Company entered into a stock purchase agreement with Florida based, Integrated Waste Transportation Services, Inc. (“Integrated”). Pursuant to the agreement, the Company acquired 100% of the outstanding equity of Integrated in exchange for $300,000 and 50,000 Shares of common stock of the Company.

On August 26, 2016, the Company purchased certain assets of Easy Disposal, Inc. (“Easy”), for an aggregate amount of $396,500 which includes 50,000 shares of common stock of the Company, valued at $2.19 per share and the remainder in cash.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 at the date of the balance sheet. Actual results could differ from those estimates.

Presentation

The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (SEC), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s September 30, 2019 Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year ended September 30, 2019 as reported on Form 10-K, have been omitted.

Principles of Consolidation

The consolidated financial statements of the Company include the Company and its wholly-owned subsidiaries, 1030029 Ltd., Creative and Integrated. All material intercompany balances and transactions have been eliminated. 1030029 Ltd. has been dormant for years and has no assets or liabilities.

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Cash and Cash Equivalents

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

Accounts Receivable

The Company grants credit to customers under credit terms that it believes are customary in the industry and does not require collateral to support customer receivables. The Company evaluates its provision for an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the customer. At March 31, 2020 and September 30, 2019, the Company did not have any accounts receivable.

Revenue Recognition

The Company recognizes revenue from waste removal services it provides to its customers. The Company’s revenue recognition policies comply with FASB ASC Topic 606 “Revenues From Contracts With Customers”. Revenue is recognized at the time the waste removal services is completed, when a formal arrangement exists, the price is fixed or determinable, and no other significant obligations of the Company exist and collectability is reasonably assured.

For revenue from product sales, the Company recognizes revenue in accordance with FASB ASC 606. A five-step analysis must be met as outlined in Topic 606: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) performance obligations are satisfied. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required. Adoption of ASC 606 had no material effect on the Company’s financial statements.

Equipment

Equipment are carried at the cost of acquisition and depreciated over the estimated useful lives of the assets. Costs associated with repair and maintenance is expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of our property and equipment are capitalized and depreciated over the remaining life of the related asset. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method.

Stock-Based Compensation

The Company records stock-based compensation in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation.” FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees. There were no options outstanding during the periods presented.

Related Parties

The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

Long-lived Assets

The Company assesses long-lived assets, including intangible assets, for impairment in accordance with the provisions of FASB ASC 360 Property, Plant and Equipment. A long-lived asset (or group of assets) shall be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The carrying amount of a long lived asset is not recoverable if it exceeds the sum of the undiscounted net cash flows expected to result from the use and eventual disposition of the asset. The amount of impairment loss, if any, is measured as the difference between the net book value of the asset and its estimated fair value. For purposes of these tests, long-lived assets must be grouped with other assets and liabilities for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company follows ASC Topic 350 in accounting for intangible assets, which requires impairment losses to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts.

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Goodwill

Goodwill represents the excess of purchase price over the underlying net assets of businesses acquired. Under accounting requirements, goodwill is not amortized but is subject to annual impairment tests. The Company recorded goodwill of $149,500 related to its August 2016 acquisition of Easy.

Basic and Diluted Earnings Per Share

Earnings per share is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS is based on the assumption that all dilutive convertible instruments were converted. The Company had outstanding convertible notes during the three and six months ended March 31, 2020 and 2019, however, the Company had a net loss during these interim periods, accordingly, the potential convertible shares were not considered in the EPS calculation for those periods due to their anti-dilutive effect.

Income Taxes

Income taxes are provided in accordance with ASC Topic 740 Accounting for 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 of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

Reclassifications

Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. These reclassifications had no effect on the previously reported net loss or stockholders’ deficit.

New Accounting Pronouncements

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, current U.S. GAAP requires the performance of procedures to determine the fair value at the impairment testing date of assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, the amendments under this ASU require the goodwill impairment test to be performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU becomes effective for the Company on January 1, 2020. The amendments in this ASU should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed. We are evaluating what impact, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows or financial disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing a right-of-use asset and a lease liability on the balance sheet for leases with terms longer than 12 months and disclosing key information about leasing transactions. Leases are classified as either operating or financing, with such classification affecting the pattern of expense recognition in the income statement. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842) – Targeted Improvements, which provides an optional transition method to apply the new lease requirements through a cumulative-effect adjustment in the period of adoption. We are evaluating what impact, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows or financial disclosures.

On November 15, 2019, the FASB issued ASU 2019-10 which amended the effective dates for certain major accounting standards, including ASC 842, to give implementation relief to certain types of entities. Under the FASB’s new framework, two “buckets” were defined. Bucket 1 includes public companies that are SEC filers but excludes “Small Reporting Companies” (SRC’s). Bucket 2 includes all other entities, including SRC’s. Bucket 2 entities have to apply ASC 842 for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. The Company plans to adopt ASU 2016-02, Leases (Topic 842), during our fiscal year ending September 30, 2022.

No other new accounting pronouncements were issued during the six months ended March 31, 2020 that we expect will have a material effect on the Company’s fiscal year 2020 consolidated financial statements.

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NOTE 3 - EQUIPMENT

Equipment at March 31, 2020 and September 30, 2019 consisted of the following:

	March 31			Sept. 30
Equipment		92,200		$	92,200
		92,200			92,200
Less accumulated depreciation		(64,500	)		(55,500	)
Equipment, net	$	27,700		$	36,700

Depreciation expense for the six months ended March 31, 2020 and 2019 was $9,000 and $9,000, respectively.

NOTE 4 – INTANGIBLE ASSETS

Intangible assets at March 31, 2020 and September 30, 2019 consisted of the following:

	March 31			Sept. 30
Customer lists	$	375,000		$	375,000
Licenses		150,000			150,000
Less accumulated amortization		(375,000	)		(375,000	)
Intangible assets, net	$	150,000		$	150,000

The customer lists were amortized over 24 months and were fully amortized as of June 30, 2018.

Amortization expense for the six months ended March 31, 2020 and 2019 was $-0- and $-0-, respectively.

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NOTE 5 – CONVERTIBLE DEBENTURES - RELATED PARTY AND UNRELATED PARTIES

Related Party

On January 15, 2015, the Company amended the convertible debenture of a shareholder, with a principal balance of $75,754, so that the debenture became anti-dilutive with a conversion price set at $0.35 regardless of any forward or reverse splits in the Company’s common stock.

On February 23, 2015, the aforementioned shareholder holding a debenture with a principal balance of $75,754 made demand for payment of the total amounts owed including interest. The Company was not able to pay the outstanding balances. The Company and the shareholder came to an agreement that the shareholder could convert his $75,754 convertible note payable and accrued interest at $0.15 per share.

The change in terms of the $75,754 convertible note created a derivative liability and required the Company to record fair value at the inception of the derivative and for each subsequent reporting period. The fair value of the embedded derivative at March 31, 2020 was determined using the Black Scholes method based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 398%, (3) weighted average risk-free interest rate of 0.17%, (4) expected term of one year, and (5) estimated fair value of the Company’s common stock is $0.02. The fair value as of March 31, 2020 and September 30, 2019 was $17,272 and $42,787, respectively. During the six months ended March 31, 2020 and 2019 the decrease in fair value was $25,515 and $2,628,479, respectively, which is included in other income in the statement of operations.

As of March 31, 2020 and September 30, 2019, the principal amount due under the convertible debenture to the shareholder was $75,754 and $75,754, respectively. As of March 31, 2020 and September 30, 2019, the accrued interest due under the convertible debenture to the shareholder was $69,656 and $69,656, respectively.

Effective September 30, 2018 the shareholder agreed that there will be no further accrual of interest on the debt instrument referred to above.

Unrelated Parties

On November 8, 2018, the Company issued a convertible debenture of $25,000 bearing interest of 10% per annum with an August 8, 2019 maturity date that was extended to September 30, 2021. The accrued interest and principal amount are payable in one lump-sum payment on the maturity date unless the holder of the note converts the debt to common stock at $0.10 per share. The imbedded conversion feature has been recorded as a derivative liability valued using the Black Scholes method using the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 495%, (3) weighted average risk-free interest rate of 0.19%, (4) expected term of eighteen months, and (5) estimated fair value of the Company’s common stock is $0.02. The fair value on the issuance date was $21,407 which was recorded as a discount to the note payable and was fully amortized as of September 30, 2019. The fair value on March 31, 2020 and September 30, 2019 is $5,471 and $13,177, respectively. During the six months ended March 31, 2020 and 2019 the decrease in fair value was $7,706 and $18,238, respectively, which is included as other income in the statement of operations. The amortization of the note discount for the six months ended March 31, 2020 and 2019 was $0 and $11,213, respectively, and is shown as interest expense in the statement of operations. At March 31, 2020 and September 30, 2019, the principal balance of the convertible debenture was $25,000 and $25,000, respectively, and the balance of accrued interest payable was $3,491 and $2,240, respectively.

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On April 4, 2019, the Company issued a convertible debenture of $45,000 bearing interest of 10% per annum with a December 15, 2019 maturity date that was extended to September 30, 2021. The accrued interest and principal amount are payable in one lump-sum payment on the maturity date unless the holder of the note converts the debt to common stock at $0.15 per share. The imbedded conversion feature has been recorded as a derivative liability valued using the Black Scholes method using the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 495%, (3) weighted average risk-free interest rate of 0.19%, (4) expected term of eighteen months, and (5) estimated fair value of the Company’s common stock is $0.02. The fair value on the issuance date was $9,819 which was recorded as a discount to the note payable and was fully amortized as of December 31, 2019. The fair value on March 31, 2020 and September 30, 2019 is $6,356 and $3,960, respectively. During the six months ended March 31, 2020 the increase in fair value was $2,396, which is included as a reduction in other income in the statement of operations. The amortization of the note discount for the six months ended March 31, 2020 was $2,915, and is shown as interest expense in the statement of operations. At March 31, 2020 and September 30, 2019, the principal balance of the convertible debenture, net of discount, was $45,000 and $42,085, respectively, and the balance of accrued interest payable was $4,472 and $2,219, respectively.

On August 29, 2019, the Company issued a convertible debenture of $75,000 bearing interest of 10% per annum with a May 29, 2020 maturity date that was extended to January 12, 2021. The accrued interest and principal amount are payable in one lump-sum payment on the maturity date unless the holder of the note converts the debt to common stock. Conversion is based on the lowest of (a) the lowest closing share price during the 20 preceding days ending on the note date or (b) 60% of the lowest closing share price during the 20 preceding days prior to conversion. The embedded conversion feature has been recorded as a derivative liability using the Black Scholes method using the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 361%, (3) weighted average risk-free interest rate of 0.41%, (4) expected term of five months, (5) estimated fair value of the Company’s common stock is $0.02. The fair value on the issuance date was $129,650, since the fair value exceeded the note’s principal amount, $75,000 was recorded as a discount to the note payable and is being amortized over nine months. The fair value on the March 6, 2020 note pay-off date is $36,990. During the period from October 1, 2019 through March 6, 2020 the decrease in fair value was $61,417 which is included as other income in the statement of operations. The amortization of the note discount for the six months ended March 31, 2020 was $66,667, and is shown as interest expense in the statement of operations. At March 31, 2020 and September 30, 2019, the principal balance of the convertible debenture, net of discount, was $-0- and $8,333, respectively, and the balance of accrued interest payable was $200 and $678, respectively. This note payable and all but $200 of accrued interest was paid prior to maturity on March 6, 2020. The $200 of accrued interest was paid on April 16, 2020 upon the issuance of 10,000 shares of the Company’s common stock. The $36,990 fair value of the derivative liability on the March 6, 2020 note pay-off date has been credited to additional paid-in capital.

On August 29, 2019, the Company issued a convertible debenture of $75,000 bearing interest of 10% per annum with a May 29, 2020 maturity date that was extended to September 30, 2021, the note was funded on September 11, 2019. The accrued interest and principal amount are payable in one lump-sum payment on the maturity date unless the holder of the note converts the debt to common stock. Conversion is based on the lowest of (a) the lowest closing share price during the 20 preceding days ending on the note date or (b) 60% of the lowest closing share price during the 20 preceding days prior to conversion. The embedded conversion feature has been recorded as a derivative liability using the Black Scholes method using the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 293%, (3) weighted average risk-free interest rate of 0.12%, (4) expected term of two months, (5) estimated fair value of the Company’s common stock is $0.02. The fair value on the issuance date was $101,078, since the fair value exceeded the note’s principal amount, $75,000 was recorded as a discount to the note payable and is being amortized over eight and one-half months. The fair value on March 31, 2020 and September 30, 2019 was $16,863 and $52,005, respectively. During the six months ended March 31, 2020 the decrease in fair value was $35,142 which is included as other income in the statement of operations. The amortization of the note discount for the six months ended March 31, 2020 was $50,000, and is shown as interest expense in the statement of operations. At March 31, 2020 and September 30, 2019, the principal balance of the convertible debenture, net of discount, was $54,412 and $4,411, respectively, and the balance of accrued interest payable was $4,068 and $313, respectively.

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NOTE 6 - NOTES PAYABLE – RELATED PARTIES AND UNRELATED PARTY

Related Parties

On December 29, 2015, the Company issued a $17,500, 6% annual interest, demand note payable to an unrelated party that is payable upon demand. The note holder agreed to the cessation of accrued interest as of September 30, 2018. During the year ended December 31, 2019, a shareholder of the Company purchased the note payable from the unrelated party. At March 31, 2020 and September 30, 2019, the principal balance of the note payable is $17,500 and $17,500, respectively, and the balance of accrued interest payable was $2,895 and $2,895, respectively.

On August 16, 2016, the Company issued a $17,000, 10% annual interest, demand note payable to a shareholder. The shareholder agreed to the cessation of accrued interest as of September 30, 2018. At March 31, 2020 and September 30, 2019, the principal balance of the note payable was $17,000 and $17,000, respectively, and the balance of accrued interest payable was $3,152 and $3,152, respectively.

On August 26, 2016, the Company issued two demand notes payable to an unrelated party totaling $300,000 ($175,000 and $125,000) that bear annual interest at 10%. The proceeds of the note were used to purchase Easy (see Note 1). The note holder agreed to the cessation of accrued interest as of September 30, 2018. During the year ended December 31, 2019, a shareholder of the Company purchased the notes payable from the unrelated party and the Company made a $5,000 principal payment, accordingly, the aggregate principal balance of the note payables at March 31, 2020 and September 30, 2019 was $295,000 and $295,000, respectively, and the aggregate balance of accrued interest payable was $62,916 and $62,916, respectively.

Unrelated Party

On April 4, 2016 and July 30, 2017, the Company issued demand notes payable of $29,000 and $50,000, respectively, to an unrelated party. The notes bear annual interest of 10% The note holder agreed to the cessation of accrued interest as of September 30, 2018. At March 31, 2020 and September 30, 2019, the aggregate principal balance of the notes payable was $79,000 and $79,000, respectively, and the aggregate balance of accrued interest payable was $13,082 and $13,082, respectively.

NOTE 7 – ADVANCES - RELATED PARTIES

The Company received advances from related parties totaling $330,692 and $97,621 as of March 31, 2020 and September 30, 2019, respectively. The advances are unsecured, do not have a maturity term and carry no interest rate.

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NOTE 8 – DERIVATIVE INSTRUMENTS

During the year ended September 30, 2016, the Company changed the conversion features on a convertible instrument that require liability classification under ASC 815. The Company subsequently issued additional convertible instruments. These instruments are measured at fair value at the end of each reporting period. (See Note 5).

As defined in FASB ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. FASB ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

The three levels of the fair value hierarchy are as follows:

	·	Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities

	·	Level 2 - Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

	·	Level 3 - Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as of March 31, 2020 and 2019:

Recurring Fair Value Measures	Level 1		Level 2		Level 3		Total

Derivative liabilities at March 31, 2020	$	-	$	-	$	45,962	$	45,962
Derivative liabilities at March 31, 2019	$	-	$	-	$	34,322	$	34,322

The following table represents the change in the fair value of the derivative liabilities during the six months ended March 31, 2020 and 2019:

Fair value of derivatives, September 30, 2019	$	210,336
Change in fair value of derivative liability – gain		(127,384	)
Fair value on March 6, 2020 note pay-off		(36,990	)
Fair value of derivatives, March 31, 2020		45,962

Fair value of derivatives, September 30, 2018		72,082
Change in fair value of derivative liability – gain of $59,167 less $21,407 note discount		(37,760	)
Fair value of derivatives, March 31, 2019	$	34,322

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NOTE 9 – EARNINGS (LOSS) PER SHARE

Earnings (loss) per share is calculated using the weighted average number of shares of common stock outstanding during the applicable period. Basic weighted average common shares outstanding is computed using the weighted average shares outstanding during the period. Diluted earnings (loss) per share is computed using the weighted average number of common shares outstanding and if dilutive, potential common shares outstanding during the period. Potential common shares consist of the additional common shares issuable upon the conversion of convertible debentures. The effect on the number of common shares outstanding assuming conversion of the convertible debentures as of March 31, 2020 and 2019 would result in an increase of approximately 4,219,723 and 2,213,680 shares, respectively. The Company incurred a net loss for the three and six months ended March 31, 2020 and 2019, accordingly, none of the convertible shares were used to calculate EPS for those periods due to their anti-dilutive effect.

NOTE 10 – ACQUISITIONS

On April 7, 2016, the Company entered into a membership purchase agreement with Creative Waste Solutions, LLC whereby the Company purchased 100% of the membership interest for $25,000.

On May 22, 2016, the “Company entered into a stock purchase agreement with Integrated. Pursuant to the agreement, the Company acquired 100% of the outstanding equity of Integrated in exchange for $300,000 and 50,000 shares of common stock of the Company. The common stock was valued at $1.00 per shares which was the closing price of the Company’s common stock on May 22, 2016.

On August 26, 2016, the Company purchased certain assets of Easy for an aggregate amount of $396,500 which includes 50,000 shares of common stock of the Company and $287,000 in cash. The common stock was valued at $2.19 per shares, which was the closing price of the Company’s common stock on August 26, 2016.

The Company purchased Creative, Integrated and Easy to integrate itself in the waste management business in southeastern region of the United States.

The transactions are accounted for as business combinations in accordance with ASC 805. A summary of the purchase price allocations at fair value is below.

	Creative		Integrated		Easy

Furniture and equipment	$	-	$	-	$	90,000
Deposit		-		-		7,000
Customer list		25,000		350,000		-
License		-		-		150,000
Goodwill		-		-		149,500
Purchase price	$	25,000	$	350,000	$	396,500

The customer lists were amortized over 24 months and were fully amortized as of June 30, 2018.

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NOTE 11 – EQUITY AND RECONCILIATION OF CHANGES IN STOCKHOLDERS’ DEFICIT

During the six months ended March 31, 2020 and 2019, the Company did not issue any shares of common or preferred stock.

For purposes of the stockholders’ deficit reconciliation schedules shown below, additional paid in capital is referred to as APIC.

CHANGE IN COMMON STOCK AND APIC – THREE AND SIX MONTHS ENDED MARCH 31, 2020:

	THREE MONTHS						SIX MONTHS
	Shares		Amount		APIC		Shares		Amount		APIC
Common stock and APIC – beginning of period		6,015,974	$	6,016	$	3,011,608		6,015,974	$	6,016	$	3,011,608
Fair value of derivative liability on note pay-off date	-0-		-0-			36,990	-0-		-0-			36,990
Common shares issued	-0-		-0-		-0-		-0-		-0-		-0-
Common stock and APIC – end of period		6,015,974	$	6,016	$	3,048,598		6,015,974	$	6,016	$	3,011,608

CHANGE IN COMMON STOCK AND APIC – THREE AND SIX MONTHS ENDED MARCH 31, 2019:

	THREE MONTHS						SIX MONTHS
	Shares		Amount		APIC		Shares		Amount		APIC
Common stock and APIC – beginning of period		6,015,974	$	6,016	$	3,011,608		6,015,974	$	6,016	$	3,011,608
Common shares issued	-0-		-0-		-0-		-0-		-0-		-0-
Common stock and APIC – end of period		6,015,974	$	6,016	$	3,011,608		6,015,974	$	6,016	$	3,011,608

CHANGE IN ACCUMULATED DEFICIT – THREE AND SIX MONTHS ENDED MARCH 31, 2020 AND MARCH 31, 2019:

Three and Six Months Ended March 31, 2020:
Accumulated deficit – December 31, 2019	$	(3,795,063	)
Net loss – three months ended March 31, 2020		(192,628	)
Accumulated deficit – March 31, 2020	$	(3,987,691	)

Accumulated deficit – September 30, 2019	$	(3,821,778	)
Net loss – six months ended March 31, 2020		(165,913	)
Accumulated deficit – March 31, 2020	$	(3,987,691	)

Three and Six Months Ended March 31, 2019:
Accumulated deficit – December 31, 2018	$	(3,609,316	)
Net loss – three months ended March 31, 2019		(27,335	)
Accumulated deficit – March 31, 2019	$	(3,636,651	)

Accumulated deficit – September 30, 2018	$	(3,631,468	)
Net loss – six months ended March 31, 2019		(5,183	)
Accumulated deficit – March 31, 2019	$	(3,636,651	)

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CHANGE IN STOCKHOLDERS’ DEFICIT – THREE AND SIX MONTHS ENDED MARCH 31, 2020 AND MARCH 31, 2019:

Three and Six Months Ended March 31, 2020:
Stockholders’ deficit – December 31, 2019	$	(777,439	)
Net loss – three months ended March 31, 2020		(192,628	)
Fair value of derivative liability on note pay-off date.		36,990
Stockholders’ deficit – March 31, 2020	$	(933,077	)

Stockholders’ deficit – September 30, 2019	$	(804,154	)
Net loss – six months ended March 31, 2020		(165,913	)
Fair value of derivative liability on note pay-off date.		36,990
Stockholders’ deficit – March 31, 2020	$	(933,077	)

Three and Six Months Ended March 31, 2019:
Stockholders’ deficit – December 31, 2018	$	(591,692	)
Net loss – three months ended March 31, 2019		(27,335	)
Stockholders’ deficit – March 31, 2019	$	(619,027	)

Stockholders’ deficit – September 30, 2018	$	(613,844	)
Net loss – six months ended March 31, 2019		(5,183	)
Stockholders’ deficit – March 31, 2019	$	(619,027	)

NOTE 12 – INCOME TAXES

The Company has losses carried forward for income tax purposes through March 31, 2020. There are no current or deferred tax expenses for the six months ended March 31, 2020 and 2019 due to the Company’s tax loss position. The Company has fully reserved for any benefits of these losses utilizing a statutory federal income tax rate of 21%. The deferred tax consequences of temporary differences in reporting items for financial statement and income tax purposes are recognized, as appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carry-forward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes.

The deferred income tax asset for the six months ended March 31, 2020 and 2019 consists of the following:

	2020			2019

Deferred income tax asset attributed to:
Current operations	$	61,159		$	13,514
Less: Change in valuation allowance		(61,159	)		(13,514	)
Net refundable amount	$	-		$	-

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The composition of the Company’s deferred tax assets as at March 31, 2020 and September 30, 2019 are as follows:

	March 31, 2020			Sept. 30, 2019

Income tax operating loss carryforward	$	3,574,226		$	3,282,991

Statutory federal income tax rate		21	%		21	%
Effective income rate		0	%		0	%

Deferred tax assets:
Net operating loss carryforward	$	677,087		$	615,928
Amortization of intangible assets		73,500			73,500
Total deferred tax assets		750,587			689,428
Less: valuation allowance		(750,587	)		(689,428	)
Net deferred tax asset		-			-

The potential income tax benefit of these losses has been offset by a full valuation allowance.

As of March 31, 2020, the Company has an unused net operating loss carry-forward balance of approximately $3,574,000 that is available to offset future taxable income. This unused net operating loss carry-forward balance expires between 2026 and 2039.

The issuance of 2,532,054 shares of common stock during the year ended September 30, 2014 affected a change in control of the Company. Due to the change in control, the tax loss carryforward may only be used on a formula basis under IRS section 382 which will affect the benefit the Company can gain from the tax loss.

The Company has not filed federal income tax returns for more than five years. Management believes that due to the large net operating loss carryforward and the lack of any net taxable income during the Company’s history it is not liable for any income tax. Management intends to file the past due income tax returns during the fiscal year ending September 30, 2021.

NOTE 13 – DISCONTINUED OPERATIONS

Prior to the waste transfer station business acquisitions referred to in Note 1, the Company operated in the oil and gas industry. The Company discontinued operating in the oil and gas industry and operates in the waste management industry. Accordingly, the financial statements for the year ended September 30, 2015 reflect a loss from discontinued operations from the oil and gas operations. The Company wrote-off an asset consisting of two oil and gas properties located in Alberta Canada in the September 30, 2015 fiscal year. The Company is actively seeking to dispose of the asset through a sale and will account for the disposition of this property as a discontinued operation.

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NOTE 14 – COMMITMENTS AND CONTINGENCIES

Lease

The Company leases its operations facility located in Hollywood, FL under a long-term operating lease expiring on January 31, 2023. The lease was acquired with the acquisition of Easy. Upon the exercise of the five-year renewal option, effective February 1, 2018, the monthly base rent increased to $6,000 with annual increases of 4% plus sales tax and utilities. Rent expense was $55,608 and $53,059 for the six months ended March 31, 2020 and 2019, respectively, which includes monthly rent of $2,450 and $2,330, respectively, for administrative offices which are leased on a month to month basis.

As of March 31, 2020, future minimum annual payments, including sales tax, under an operating lease agreement for fiscal year ending September 30 are as follows:

2020	$	41,469
2021		85,149
2022		88,555
2023		29,902
	$	245,075

On September 16, 2019, the Company entered into an agreement to purchase real estate at a price of $300,000. The agreement stated that if the full purchase price was not paid by December 31, 2019 any deposit made by the Company would be forfeited. The Company paid a $50,000 deposit and was not able to obtain the necessary financing to pay the full purchase price, accordingly, on January 1, 2020 the Company received written notice from the seller that the $50,000 deposit was forfeited. The $50,000 forfeited deposit was charged to operations and included in general and administrative expenses in the quarter ended March 31, 2020.

NOTE 15 – SUBSEQUENT EVENTS

In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued and has determined that there are no material subsequent events that would require an adjustment to the financial statements. The subsequent events disclosures are shown below.

From October 1, 2019 through February 28, 2020, the Company conducted limited operations primarily due to a lack of capital that precluded the completion of structural repairs, mandated by its landlord, to the interior of its operations facility. Also, from March 2020 through the middle of June 2020, the Company experienced a decline in revenues of approximately $74,000 compared to the average revenues generated during the prior fiscal year for a three and one-half month period. The principal reason for the aforementioned revenue decrease is the outbreak of the coronavirus (COVID-19) which resulted in mandates from federal, state, and local authorities resulting in an overall decline in economic activity. Due to the reasons referred to in this paragraph, the Company’s revenues for the fiscal year ended September 30, 2020 declined by approximately 37% as compared to the September 30, 2019 fiscal year revenues.

On May 20, 2021, the SEC issued an order instituting administrative proceedings and notice of hearing pursuant to Section 12(j) of the 1934 Act due to the Company being delinquent in its periodic filings. Due to this delinquency, our shares of common stock were delisted from the Over the Counter (OTC) Market. Our common stock is traded on the Expert Market which is a private market to serve broker-dealer pricing and best execution needs in securities that are restricted from public quoting or trading.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

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-Q.

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) 757-3585. 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.

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.

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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.

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 of Directors approved of a change of name from Silverstar Resources, Inc. to Creative Waste Solutions Inc.

Results of Operations

The following summary of our results of operations should be read in conjunction with our condensed consolidated financial statements for the three and six months ended June 30, 2020 and 2019, which are included herein.

Sales

Sales for the three months ended March 31, 2020 were $2,169 as compared to $76,122 for the same period in 2019. Sales for the six months ended March 31, 2020 and 2019 were $7,620 and $154,241, respectively. The sales decline is primarily due to the Company conducting limited operations primarily due to a lack of capital that precluded the completion of structural repairs, mandated by our landlord, to the interior of our operations facility. The Company also experienced a decline in economic activity due to the outbreak of the coronavirus (COVID-19) which resulted in restrictive mandates from federal, state, and local authorities.

Cost of Goods Sold

Cost of goods sold for the three months ended March 31, 2020 were $1,850 as compared to $58,684 for the same period in 2019. Cost of goods sold for the six months ended March 31, 2020 and 2019 were $7,192 and $106,695, respectively. The decrease in cost of goods sold is primarily due to the Company conducting limited operations primarily due to a lack of capital that precluded the completion of structural repairs, mandated by our landlord, to the interior of our operations facility. The Company also experienced a decline in economic activity due to the outbreak of the coronavirus (COVID-19) which resulted in restrictive mandates from federal, state, and local authorities.

Operating Expenses

Operating expenses for the three months ended March 31, 2020 were $108,735 as compared to $44,101 for the same period in 2019. Operating expenses for the six months ended March 31, 2020 and 2019 were $147,362 and $99,697, respectively. The increase in operating expenses for the three and six-month period is primarily a result of the Company incurring a $50,000 expense on January 1, 2020 due to a forfeited real estate deposit.

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Net Income (Loss)

Net loss for the three months ended March 31, 2020 was $192,628 compared to net loss of $27,335 for the same period in 2019. Net loss for the six months ended March 31, 2020 was $165,913 versus net loss of $5,183 in the same 2019 period. The increase in net loss of $165,293 in the three months ended March 31, 2020 is primarily due to (a) a reduction in gross profit of $17,119 in 2020 due to the reduced economic activity referred to above, (b) the $50,000 forfeited real estate deposit referred to in the previous paragraph, (c) an increase in amortization of debt discount of $66,667 due to convertible debentures not present in 2019, and (d) an increase in interest expense of $13,563 due to the issuance of convertible debentures not present in 2019. The increase in net loss of $160,730 in the six months ended March 31, 2020 is primarily due to (a) a reduction in gross profit of $47,118 in 2020 due to the reduced economic activity referred to above, (b) the $50,000 forfeited real estate deposit referred to in the previous paragraph, (c) an increase in amortization of debt discount of $119,582 due to convertible debentures not present in 2019, (d) an increase in interest expense of $14,583 due to the issuance of convertible debentures not present in 2019, and (e) an increase in other income of $68,217 resulting from the change in fair value of the derivative liability.

Liquidity and Capital Resources

At March 31, 2020 we had cash of $35,369 as compared to $393 in cash at September 30, 2019. The increase in cash of $34,976 is due to $233,071 of advances received from related parties offset by cash used in operating activities of $123,095 and the repayment of a $75,000 convertible debenture. Our accounts payable and accrued liabilities at March 31, 2020 were $168,184 and $176,564 as of September 30, 2019. The $8,380 decrease in accounts payable and accrued liabilities is due to a reduction of accrued rent and financing costs of $15,161 offset by an increase in accrued interest of $6,781 from convertible debentures. On March 31, 2020 and September 30, 2019 we had convertible debentures and notes payable of $554,396 due to related parties. We had $330,692 and $97,621 in advances payable to related parties at March 31, 2020 and September 30, 2019, respectively. The increase of $233,071 in advances from related parties is due to advances made by a shareholder of the Company. Our derivative liability was $45,962 as of March 31, 2020 and $210,336 as of September 30, 2019. The decrease in derivative liability of $164,374 is primarily due to a decrease in the price of our common stock, $0.02 at March 31, 2020 and $0.05 at September 30, 2019, and the repayment of a $75,000 convertible debenture. Our total liabilities were $1,302,646 on March 31, 2020 as compared to $1,197,747 on September 30, 2019. The details of the increase in total liabilities of $104,899 is disclosed in the preceding sentences. We have a working capital deficit of $1,267,277 as of March 31, 2020 as compared to our working capital deficit of $1,197,354 as of September 30, 2019. The increase in working capital deficit of $69,923 is primarily due to an increase of (a) $44,582 in convertible debentures due to unrelated parties, and (b) $233,071 in advances from related parties, offset by a decrease in derivative liability of $164,374 and an increase in cash of $34,976.

Working Capital

We had current assets on March 31, 2020 and September 30, 2019 of $35,369 and $393, respectively, comprised entirely of cash. The increase in current assets is explained in the previous paragraph.

We had current liabilities on March 31, 2020 and September 30, 2019 of $1,302,646 and $1,197,747, respectively. The details of the increase in current liabilities is explained above in the discussion of liquidity and capital resources.

Cash Flows

Operating Activities

Cash used in operating activities was $123,095 for the six months ended March 31, 2020 compared to cash used in operating activities of $47,932 for the six months ended March 31, 2019. The $75,163 increase in cash used in operating activities in the 2020 period was primarily due to an increase in loss from operations of $94,783, and an increase in interest expense (exclusive of amortization of debt discount) of $14,583, offset by a decrease in deposit of $50,000 in the 2020 period and a $7,124 decrease in accounts receivable in the 2019 period.

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Investing Activities

There was no cash provided by or used in investing activities the six months ended March 31, 2020 and 2019.

Financing Activities

Net cash provided by financing activities for the six months ended March 31, 2020 and 2019 was $158,071 and $45,565, respectively. For the six months ended March 31, 2020, cash provided by financing activities consisted of $233,071 from related party advances less a $75,000 repayment of a convertible debenture. For the six months ended March 31, 2019, cash provided by financing activities consisted of related party advances of $20,565 and $25,000 from the issuance of a convertible debenture.

Income Taxes

We paid no income taxes in the six months ended March 31, 2020 and 2019 due to the Company’s net operating tax loss.

Cash Requirements

For the 12 months ended December 31, 2020 we required additional funds of approximately $176,000 to fund our budgeted expenses as follows: Rent $110,000, office administration and other $30,000, contract labor $21,000, management fees $9,000, and repairs and maintenance of $6,000. 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

This report includes the certifications of our Chief Executive Officer and Chief Financial Officer required by Rule 13a14 under the Securities Exchange Act of 1934 (the “Exchange Act”). See Exhibits 31.1 and 32.1. This Item 4 includes information concerning the controls and control evaluations referred to in those certifications.

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Evaluation of Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer/ Chief Financial Officer has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2020. Based upon such evaluation, the Chief Executive Officer/Chief Financial Officer has concluded that, as of March 31, 2020, the Company’s disclosure controls and procedures were not effective. This conclusion by the Company’s Chief Executive Officer/Chief Financial Officer does not relate to reporting periods after March 31, 2020.

Management’s Report on Internal Control over Financial Reporting

Under the supervision and with the participation of our management, including our Chief Executive Officer/Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2020 based on the framework stated by the Committee of Sponsoring Organizations of the Treadway Commission. Furthermore, due to our financial situation, we intend to implement further internal controls when we are financially able to do so as to fully comply with the standards set by the Committee of Sponsoring Organizations of the Treadway Commission.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles. Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on its evaluation as of March 31, 2020, our management concluded that our internal controls over financial reporting were not effective as of March 31, 2020 due to the material weaknesses set forth below. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses are as follows:

1. Accounting and Finance Personnel Weaknesses – Our current accounting staff is relatively small and we do not have the required infrastructure of meeting the higher demands of being a U.S. public company, accordingly, we do not have the segregation of duties consistent with a strong system of internal control.

2. Lack of Internal Audit Function – We lack sufficient resources to have an internal audit function.

In order to mitigate these material weaknesses to the fullest extent possible, all work of the CFO is reviewed by a Director of the Company. All unexpected results are investigated. At any time, if it appears that any control can be implemented to continue to mitigate such weaknesses, it will be immediately implemented. The Company continues to study the implementation of additional internal controls over accounting and financial reporting.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management believes that the Unaudited Financial Statements included herein present, in all material respects, the Company’s financial condition, results of operations and cash flows for the periods presented.

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PART II - OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS.

None

ITEM 1A: RISK FACTORS.

There have been no material changes to our risk factors as previously disclosed in our most recent 10-K filing for the year ended September 30, 2019.

ITEM 2: SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES.

None

ITEM 4: MINE SAFETY INFORMATION.

Not Applicable

ITEM 5: OTHER INFORMATION.

None

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ITEM 6: EXHIBITS

The following exhibits are included as part of this report:

31.1		Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

101*		XBRL Interactive Data Files

___________

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CREATIVE WASTE SOLUTIONS, INC.

Date: July 28, 2021	By:	/s/ Jared Robinson
		Jared Robinson
		Chairman, Chief Executive Officer and Director
		(Principal Executive Officer)

Creative Waste Solutions, Inc. 10-Q