Exhibit 99.5
RESOURCE GROUP US HOLDINGS LLC AND SUBSIDIARIES
TABLE OF CONTENTS
F-1
RESOURCE GROUP US HOLDINGS LLC AND SUBSIDIARIES
Consolidated Balance Sheets (unaudited)
| March 31, 2025 | December 31, 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 361,139 | $ | 403,043 | ||||
| Accounts receivable, net | 1,402,611 | 1,490,995 | ||||||
| Inventory | 923,928 | 738,297 | ||||||
| Prepaid expenses and other current assets | 47,863 | 59,560 | ||||||
| Current Assets | 2,735,541 | 2,691,895 | ||||||
| Property and equipment, net | 5,861,455 | 6,296,723 | ||||||
| Intangible assets, net | - | 13,889 | ||||||
| Right-of-use assets | 331,192 | 348,575 | ||||||
| Total Assets | $ | 8,928,188 | $ | 9,351,082 | ||||
| Liabilities and Member’s Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 3,228,809 | $ | 2,912,508 | ||||
| Due to affiliates | 2,575,720 | 2,502,241 | ||||||
| Notes payable, current | 5,857,990 | 5,494,786 | ||||||
| Notes payable – related party, current | 4,992,266 | 4,992,266 | ||||||
| Operating lease liabilities, current | 53,887 | 50,536 | ||||||
| Finance lease liabilities, current | 187,158 | 202,886 | ||||||
| Total Current Liabilities | 16,895,830 | 16,155,223 | ||||||
| Notes payable, net of current portion | 3,728,278 | 4,110,484 | ||||||
| Operating lease liabilities, net of current portion | 297,519 | 305,502 | ||||||
| Finance lease liabilities, net of current portion | 1,124,349 | 1,166,248 | ||||||
| Total Liabilities | 22,055,976 | 21,737,457 | ||||||
| Member’s Deficit: | ||||||||
| Common Class A Units (9,536,000 units authorized, issued and outstanding as of March 31, 2025 and December 31, 2024) | 342,996 | 342,732 | ||||||
| Common Class B Units (475,000 units authorized, issued and outstanding as of March 31, 2025 and 0 units issued and outstanding as of December 31, 2024) | - | - | ||||||
| Preferred Class A-1 Units (6,485,962 units authorized, issued and outstanding as of March 31, 2025 and December 31, 2024) | 6,485,962 | 6,485,962 | ||||||
| Preferred Class A-2 Units (10,510,000 authorized,0 issued and outstanding as of March 31, 2025 and 10,510,000 issued and outstanding as of December 31, 2024) | - | 10,510,000 | ||||||
| Preferred Class A-3 Units (1,325,000 units authorized, issued and outstanding as of March 31, 2025 and December 31, 2024) | 1,629,928 | 1,629,928 | ||||||
| Accumulated Deficit | (21,586,674 | ) | (31,354,997 | ) | ||||
| Total Member’s Deficit: | (13,127,788 | ) | (12,386,375 | ) | ||||
| Total Liabilities and Member’s Deficit | $ | 8,928,188 | $ | 9,351,082 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
F-2
RESOURCE GROUP US HOLDINGS LLC AND SUBSIDIARIES
Consolidated Statements of Operations (unaudited)
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue: | $ | 5,278,563 | $ | 4,091,988 | ||||
| Costs of revenue | 3,225,633 | 3,354,307 | ||||||
| Gross profit | 2,052,930 | 737,681 | ||||||
| General and administrative expenses | 2,135,408 | 1,919,506 | ||||||
| Operating income (loss) | (82,478 | ) | (1,181,825 | ) | ||||
| Other income (expense): | ||||||||
| Interest expense | (756,697 | ) | (470,726 | ) | ||||
| Gain on settlement of debt | 97,498 | |||||||
| Net loss | $ | (741,677 | ) | $ | (1,652,551 | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
RESOURCE GROUP US HOLDINGS LLC AND SUBSIDIARIES
Consolidated Statements of Changes in Members’ Deficit (unaudited)
For the Period Ended
March 31, 2025 and March 31, 2024
| Common Class A Units (9,536,000 shares outstanding) | Preferred Class A-1 Units (6,485,962 shares outstanding) | Preferred Class A-2 Units (10,510,000 shares outstanding) | Preferred Class A-3 Units (1,325,000 shares outstanding) | Accumulated Deficit | Total | |||||||||||||||||||
| Balance at January 1, 2024 | $ | 337,332 | $ | 6,485,962 | $ | 10,510,000 | $ | 1,629,928 | $ | (26,878,730 | ) | $ | (7,915,508 | ) | ||||||||||
| Member contributions | 5,400 | 5,400 | ||||||||||||||||||||||
| Net loss | - | - | - | - | (1,652,551 | ) | (1,652,551 | ) | ||||||||||||||||
| Balance at March 31, 2024 | $ | 342,732 | $ | 6,485,962 | $ | 10,510,000 | $ | 1,629,928 | $ | (28,531,281 | ) | $ | (9,562,659 | ) | ||||||||||
| Common Class A Units (9,536.000 shares outstanding) | Common Class B Units (475,000 shares outstanding) | Preferred Class A-1 Units (6,485,962 shares outstanding) | Preferred Class A-2 Units (10,510,000 shares outstanding) | Preferred Class A-3 Units (1,325,000 shares outstanding) | Accumulated Deficit | Total | ||||||||||||||||||||||
| Balance at January 1, 2025 | $ | 342,732 | $ | - | $ | 6,485,962 | $ | 10,510,000 | $ | 1,629,928 | $ | (31,354,997 | ) | $ | (12,386,375 | ) | ||||||||||||
| Member contributions | 264 | - | - | - | - | - | 264 | |||||||||||||||||||||
| Conversion Units Relinquished | - | - | - | (10,510,000 | ) | 10,510,000, | - | |||||||||||||||||||||
| Net loss | - | - | - | - | - | (741,677 | ) | (741,677 | ) | |||||||||||||||||||
| Balance at March 31, 2025 | $ | 342,996 | $ | - | $ | 6,485,962 | $ | - | $ | 1,629,928 | $ | (21,586,674 | ) | $ | (13,127,788 | ) | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
RESOURCE GROUP US HOLDINGS LLC AND SUBSIDIARIES
Consolidated Statements of Cash Flows (unaudited)
| For the Three Months Ended March 31, 2025 |
For the Three Months Ended March 31, 2024 |
|||||||||
| Cash flows from operating activities: | ||||||||||
| Net loss | $ | (741,677 | ) | $ | (1,652,551 | ) | ||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||
| Depreciation | 439,333 | 377,221 | ||||||||
| Amortization of debt discount | 260,345 | 138,183 | ||||||||
| Amortization of right-of-use asset | 17,383 | 12,228 | ||||||||
| Amortization of intangible assets | 13,889 | 8,334 | ||||||||
| Bad debt expense | - | 5,343 | ||||||||
| Gain on settlement of debt | (97,498 | ) | - | |||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | 88,384 | 42,703 | ||||||||
| Inventory | (185,631 | ) | - | |||||||
| Prepaid assets and other current assets | 11,697 | 264,229 | ||||||||
| Accounts payable and accrued expenses | 316,301 | 585,568 | ||||||||
| Operating lease liabilities | (4,632 | ) | (3,422 | ) | ||||||
| Net cash provided by (used in) operating activities | 117,894 | (222,164 | ) | |||||||
| Cash flows from investing activities: | ||||||||||
| Purchase of property and equipment | (4,065 | ) | (131,716 | ) | ||||||
| Net cash used in investing activities | (4,065 | ) | (131,716 | ) | ||||||
| Cash flows from financing activities: | ||||||||||
| Proceeds from notes payable | 1,296,500 | - | ||||||||
| Principal payments on notes payable | (1,128,810 | ) | - | |||||||
| Payments on finance leases | (57,627 | ) | (36,019 | ) | ||||||
| Payments on equipment leases | (339,539 | ) | (304,005 | ) | ||||||
| Net borrowings from affiliates | 73,479 | 340,267 | ||||||||
| Member contributions | 264 | 5,400 | ||||||||
| Net cash provided by financing activities | (155,733 | ) | 5,643 | |||||||
| Net change in cash | (41,904 | ) | (348,237 | ) | ||||||
| Cash – beginning of year | 403,043 | 765,277 | ||||||||
| Cash – end of year | $ | 361,139 | $ | 417,040 | ||||||
| Cash paid for: | ||||||||||
| Interest | $ | 267,278 | $ | 176,141 | ||||||
| Supplemental disclosure of non-cash activities: | ||||||||||
| Borrowing on equipment leases | $ | - | $ | 406,956 | ||||||
| Preferred stock relinquishment | $ | 10,510,000 | $ | - | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Resource Group US Holdings
LLC and Subsidiaries
Notes to Financial Statements (Unaudited)
For the Three Months Ended March 31, 2025, and 2024
| 1. | Description of Business |
Resource Group US Holdings LLC (the “Company”) is a limited liability company formed in Florida. The Company holds a 100% ownership interest in Resource Group US LLC (“Resource”), Zimmer Equipment Inc. (“ZEI”) and ETS Realty 1, LLC (“ETS”).
The Company is a next-generation, full-service organic recycling and compost technology company specializing in transforming targeted organic green waste materials into engineered, environmentally friendly soil and mulch products. In addition, the Company offers year-round collection and disposal services through high-capacity grapple trucks, open-top walking floor trailers, and variable-sized containers serving green waste generators, landscaping companies, golf courses, communities, and municipalities. The Company works to streamline operations by internalizing transportation services, reducing over-the-road mileage, lowering disposal costs, and maximizing efficiency.
The Company is governed by an operating agreement (“Operating Agreement”) and shall continue in existence until it is dissolved in accordance with the provisions of such agreement. The Company primarily operates in the state of Florida.
Going Concern
The Company has incurred net losses since inception and has a net equity deficiency, which raises substantial doubt about its ability to continue as a going concern. The Company has historically funded its operations through various debt financing. The above conditions raise substantial doubt about the Company’s ability to continue as a going concern.
| 2. | Summary of Significant Accounting Policies |
Basis of presentation and principals of consolidation — The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Resource, ZEI and ETS.
Recently adopted accounting pronouncements — New accounting pronouncements implemented by the Company are discussed below or in the related notes, where appropriate.
Accounting estimates — The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. Actual results could differ from those estimates.
Revenue recognition – The Company determines, at contract inception, whether it will transfer control of a promised good or service over time or at a point in time, regardless of the length of contract or other factors. The recognition of revenue aligns with the timing of when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To achieve this core principle, the Company applies the following five steps in accordance with its revenue policy:
| (1) | Identify the contract with a customer |
| (2) | Identify the performance obligations in the contract |
| (3) | Determine the transaction price |
| (4) | Allocate the transaction price to performance obligations in the contract |
| (5) | Recognize revenue as performance obligations are satisfied |
The Company recognizes revenue from the sale of materials (compost, soil and mulch) as well as the collection and disposal services of waste, which at times, is produced into saleable materials.
The sale of materials is recognized at the point in time when control of the product transfers to the customer, which typically occurs upon delivery or customer pickup at the Company’s facility. Revenue from the sale of materials amounted to $490,142 and $343,862 for the period ended March 31, 2025 and 2024, respectively. Revenue from collection and disposal services is recognized over time as the service is rendered, which is typically within the same day. In connection with these contracts, the Company at times receives non-cash consideration as partial consideration for services provided. The Company retains any materials which can be cleansed and sold. Revenue from collection and disposal services amounted to $4,700,068 and $3,649,450 for the period ended March 31, 2025, and 2024, respectively. There is also a small amount of income related to renting trailers. This accounts for $88,353 and $98,676 for the period ended March 31, 2025 and 2024, respectively.
F-6
Resource Group US
Holdings LLC and Subsidiaries
Notes to Financial Statements
For the Three Months Ended March 31, 2025, and 2024
|
2. |
Summary of Significant Accounting Policies (cont.) |
Cash and cash equivalents — The Company considers cash and cash equivalents to include all short-term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less upon acquisition.
Accounts receivable and allowance for credit losses – Accounts receivable are receivables generated from sales to customers. Amounts included in accounts receivable are deemed to be collectible within the Company’s operating cycle. The Company recognizes accounts receivable at invoiced amounts.
The Company adopted ASC 326, Current Expected Credit Losses, on January 1, 2023, which requires the measurement and recognition of expected credit losses using a current expected credit loss model. The allowance for credit losses on expected future uncollectible accounts receivable is estimated considering forecasts of future economic conditions in addition to information about past events and current conditions.
The allowance for credit losses reflects the Company’s best estimate of expected losses inherent in the accounts receivable balances. Management provides an allowance for credit losses based on the Company’s historical losses, specific customer circumstances, and general economic conditions. Periodically, management reviews accounts receivable and adjusts the allowance based on current circumstances and charges off uncollectible receivables when all attempts to collect have been exhausted and the prospects for recovery are remote. Recoveries are recognized when they are received. Actual collection losses may differ from the Company’s estimates and could be material to its consolidated financial position, results of operations, and cash flows. As of March 31, 2025 and December 31, 2024, the Company’s allowance for credit losses amounted to $117,137.
Inventory – Inventory consists of dirt, sand, mulch and compost. The Company’s inventory is valued at the lower of cost (first-in, first-out method) or net realizable value, and consists of all finished goods. As of March 31, 2025 and December 31, 2024 there was inventory of $923,928 and $738,297, respectively.
Property, plant and equipment — Property, plant and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated lives of each asset. Repairs and maintenance are charged to expenses when incurred.
Intangible assets – Intangible assets consist of $100,000 of a non-compete agreement that are being amortized over 3 years. Amortization expense for the three months ended March 31, 2025 and 2024 was $13,889 and $8,333, respectively. The accumulated amortization as of March 31, 2025 and December 31, 2024 was $100,000 and $86,111, respectively. Remaining amortization expense is $0.
Income taxes — The Company is a limited liability company, treated as a partnership under the Internal Revenue Code (IRC) and for Florida purposes. As a result, all profits and losses are reflected in the respective members’ tax return. Accordingly, the accompanying consolidated financial statements do not include any provision for federal and state income taxes.
The Company evaluates uncertain income tax positions taken or expected to be taken in a tax return for recognition in its consolidated financial statements. The Company was not required to recognize any amounts from uncertain tax positions for the period ended March 31, 2025 and 2024. The Company’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analyses of tax laws, regulations and interpretations thereof, as well as other factors. Generally, federal, state and local authorities may examine the Company’s tax returns for three years from the date of filing.
F-7
Resource Group US Holdings
LLC and Subsidiaries
Notes to Financial Statements
For the Three Months Ended March 31, 2025, and 2024
| 2. | Summary of Significant Accounting Policies (cont.) |
Business Combinations — The Company accounts for business acquisitions using the acquisition method of accounting in accordance with ASC 805 “Business Combinations”, which requires recognition and measurement of all identifiable assets acquired and liabilities assumed at their fair value as of the date control is obtained. The Company determines the fair value of assets acquired and liabilities assumed based upon its best estimates of the acquisition-date fair value of assets acquired and liabilities assumed in the acquisition. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired. Subsequent adjustments to fair value of any contingent consideration are recorded to the Company’s consolidated statements of operations. Costs that the Company incurs to complete the business combination are charged to general and administrative expenses as they are incurred.
For acquisitions of assets that do not constitute a business, any assets and liabilities acquired are recognized at their cost based upon their relative fair value of all asset and liabilities acquired.
Concentrations of credit risk — Financial instruments, that potentially subject the Company to concentration of credit risk, consist principally of cash and cash equivalents. The Company places its cash with high credit quality institutions. At times, such amounts may be in excess of the FDIC insurance limits. The Company has not experienced any losses in such account and believes that it is not exposed to any significant credit risk on the account.
Accounting Standards Recently Adopted - On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07 Segment Reporting (Topic 280):
Improvements to Reportable Segment Disclosures. Among other new disclosure requirements, ASU 2023-07 requires companies to disclose significant segment expenses that are regularly provided to the chief operating decision maker. ASU 2023-07 is effective for annual periods beginning on January 1, 2024 and interim periods beginning on January 1, 2025. ASU 2023-07 must be applied retrospectively to all prior periods presented in the consolidated financial statements. The Company adopted ASU 2023-07 during the year ended December 31, 2024.
|
3. |
Property and Equipment |
Property and equipment are stated at cost less accumulated depreciation and amortization and depreciated using the straight-line method over their useful lives. At March 31, 2025 and December 31, 2024 the Company’s property and equipment, net consisted of the following:
| March 31, 2025 | December 31, 2024 | Estimated Life | ||||||||
| Equipment | $ | 4,912,163 | $ | 4,908,098 | 5 – 10 years | |||||
| Land improvements | 321,922 | 321,922 | 7 – 20 years | |||||||
| Vehicles and trailers | 5,651,095 | 5,651,095 | 5 – 7 years | |||||||
| Less: accumulated depreciation | (5,023,725 | ) | (4,584,392 | ) | ||||||
| Property and equipment, net | $ | 5,861,455 | $ | 6,296,723 | ||||||
Included in property and equipment is $1,252,739 and $1,325,137 of finance lease right of use assets as of March 31, 2025, and December 31, 2024, respectively.
Depreciation expense for the period ended March 31, 2025 and 2024 amounted to $439,333 and $377,221, respectively, of which $72,398 and $61,478 related to finance leases.
F-8
Resource Group US Holdings
LLC and Subsidiaries
Notes to Financial Statements
For the Three Months Ended March 31, 2025, and 2024
| 4. | Notes Payable & Notes Payable – Related Party |
As of March 31, 2025 and December 31, 2024, notes payable consisted of the following:
| March 31, 2025 | December 31, 2024 | |||||||
| Gail Baird Foundation – Mortgage note payable with an original principal amount of $2,500,000 dated October 23, 2023 with a maturity date of April 21, 2025 and interest rate of 14% per annum. Guaranteed by a member of the Company, collateralized by land held by the Company and the entire principal balance due upon maturity. The Company recognized a discount of $350,000 on such note, of which amortization of debt discount of $0 and $138,183 has been recognized during the periods ending March 31, 2025 and 2024, respectively. | $ | 2,500,000 | $ | 2,500,000 | ||||
| Star Capital Group – Note payable with an original principal amount of $28,355 dated March 19, 2023 with a maturity date of January 1, 2025, interest rate of 15% per annum, secured by underlying equipment and monthly payments of principal and interest. | - | 2,526 | ||||||
| CCG Loan1 – Note payable with an original principal amount of $389,469 dated July 12, 2022 with a maturity date of April 12, 2026, interest rate of 10.89% per annum, secured by underlying equipment and monthly payments of principal and interest. | 119,665 | 145,365 | ||||||
| CCG Loan2 – Note payable with an original principal amount of $507,935 dated August 26, 2022 with a maturity date of May 26, 2026, interest rate of 11.18% per annum, secured by underlying equipment and monthly payments of principal and interest. | 167,806 | 201,049 | ||||||
| CCG Loan3 – Note payable with an original principal amount of $428,446 dated October 13, 2023 with a maturity date of August 13, 2027, interest rate of 12.4% per annum, secured by underlying equipment and monthly payments of principal and interest. | 278,124 | 302,507 | ||||||
| John Deere Equipment – Note payable with an original principal amount of $91,778 dated March 4, 2022 with a maturity date of March 4, 2026, no interest and monthly principal payments. | 21,032 | 26,768 | ||||||
| Loeb – Note payable with an original principal amount of $3,196,215 dated September 7, 2023 with a maturity date of September 7, 2026, interest rate of 15.5% per annum during 2023 and 14.5% per annum during 2024, secured by underlying equipment and monthly payments of principal and interest with $1,796,979 due upon maturity. $2,601,704 of the proceeds were used to pay off the Garrington note as described above. | 2,652,803 | 2,778,763 | ||||||
| MCS (related party) – Note payable with an original principal amount of $4,960,517 dated January 31, 2023 with a maturity date of January 1, 2025, interest rate of 12.5% per annum, with the entire principal amount due upon maturity.$4,097,990 of the proceeds were used to pay off the CA Funding note as described above, along with $866,088 amounts that were due from related parties and accrued interest | 4,960,517 | 4,960,517 | ||||||
| Index Loan2 (related party) – Note payable dated November 8, 2022 due on demand and interest rate of 11.5% per annum. Convertible into preferred units of the Company. | 31,749 | 31,749 | ||||||
| ZEI Seller Loan – Note payable with an original principal amount of $750,000 dated March 21, 2022 with a maturity date of April 30, 2025 and interest rate of 7% per annum and entire principal balance due upon maturity. | 250,000 | 500,000 | ||||||
| Moorback 6600 STA – Note payable with an original principal amount of $312,350 dated January 31, 2024 with a maturity date of February 28, 2029, interest rate of 12.89% per annum, secured by underlying equipment and monthly payments of principal and interest. | 262,590 | 275,634 | ||||||
| Blending Line STA – Note payable with an original principal amount of $94,605 dated February 1, 2024 with a maturity date of March 5, 2029, interest rate of 12.89% per annum, secured by underlying equipment and monthly payments of principal and interest. | 79,533 | 83,484 | ||||||
| Dollinger Bridge – Note payable with an original principal amount of $600,000 dated July 25, 2024 with a maturity date of October 23, 2024, interest rate of 14% per annum, with the entire principal amount due upon maturity. Subsequent to March 31, 2024, the note was extended to March 31, 2025. | 600,000 | 600,000 | ||||||
| 911 Grapple Truck – Note payable with an original principal amount of $305,985 dated September 1, 2024 with a maturity date of August 30, 2029, interest rate of 7.74% per annum, secured by underlying equipment and monthly payments of principal and interest. | 276,062 | 293,326 | ||||||
| Ford T350 – Note payable with an original principal amount of $39,066 dated October 1, 2024 with a maturity date of September 30, 2029, interest rate of 9% per annum, secured by underlying equipment and monthly payments of principal and interest. | 35,250 | 37,812 | ||||||
| BMO Note payable – Note payable with an original principal amount of $861,485 dated August 22, 2022 with a maturity date of September 30, 2028, interest rate of 6.35% per annum, secured by underlying equipment and monthly payments of principal and interest. | 540,056 | 574.461 | ||||||
| Huntington Note Payable – Note payable with an original amount of $317,571 dated March 23, 2022 with a maturity date of March 31, 2028, interest rate of 7.29% per annum, secured by underlying equipment and monthly payments of principal and interest. | 218,489 | 226,677 | ||||||
| Xerox Copier Note Payable – Note payable with an original amount of $10,423 dated July 1, 2020 with a maturity date of September 30, 2025, interest rate of 4% per annum, secured by underlying equipment and monthly payments of principal and interest | 1,626 | 1,626 | ||||||
| PNC Equipment Finance – Note payable with an original amount of $158,429 dated March 27, 2022 with a maturity date of January 31, 2029, interest rate of 8% per annum, secured by underlying equipment and monthly payments of principal and interest. | 109,721 | 115,779 | ||||||
| SMFL Note Payable – Note payable with an original amount of $357,260 dated March 27, 2022 with a maturity date of January 31, 2029, no interest, secured by underlying equipment and monthly payments of principal and interest. | 218,325 | 233,211 | ||||||
| Verdant – Note payable with an original amount of $496,993 dated September 18, 2022 with a maturity date of October 16, 2027, interest rate of 6.67% per annum, secured by underlying equipment and monthly payments of principal and interest | 233,651 | 255,282 | ||||||
| MCA-CFG Merchant Solutions – Cash advance agreement dated October 4, 2024 with a maturity date of May 11, 2025 and weekly estimated payments of $15,682. The Company recognized a discount of $76,001 on such note, of which amortization of debt discount of $16,498 has been recognized during the period ending March 31, 2025 | - | 565,000 | ||||||
| MCA-CFG Merchant Solutions – Cash advance agreement dated January 30, 2025 with a maturity date of December 15, 2025 and weekly estimated payments of $14,914. | 596,538 | - | ||||||
| MCA-CFG Merchant Solutions3 – Cash advance agreement dated March 21, 2025 with a maturity date of January 23, 2026 and weekly estimated payments of $18,818. | 828,000 | - | ||||||
| Total | 14,981,537 | 14,711,536 | ||||||
| Less: debt discount | (393,003 | ) | (114,000 | ) | ||||
| Total Debt | 14,588,534 | 14,597,536 | ||||||
| Less: current maturities, net | (10,850,256 | ) | (10,487,052 | ) | ||||
| Long-term debt, net | $ | 3,738,278 | $ | 4,110,484 | ||||
F-9
Resource Group US Holdings
LLC and Subsidiaries
Notes to Financial Statements
For the Three Months Ended March 31, 2025, and 2024
| 4. | Note Payable & Notes Payable – Related Party (cont.) |
Scheduled maturities of the Company’s notes payable is as follows for the period ending March 31, 2025
| 2025 | $ | 10,469,547 | ||
| 2026 | 3,041,855 | |||
| 2027 | 556,892 | |||
| 2028 | 459,444 | |||
| 2029 | 60,796 | |||
| $ | 14,588,534 |
For the periods ended March 31, 2025 and 2024, the Company recognized amortization of debt discount of $260,345 and $138,183, respectively. For the periods ended March 31, 2025 and March 31, 2024, the Company recognized interest expense of $756,697 and $472,091, respectively. During period ended March 31, 2025 the MCA-CFG Merchant Solutions debt was settled. The note contained a provision for a discount if paid off early and therefore, the company recognized a gain in the amount of $97,498.
| 5. | Leases |
The Company leases office space with non-cancellable operating lease agreements. The leases have remaining lease terms ranging from approximately five years to six years. Such leases have been recognized as operating leases.
Supplemental balance sheet information related to leases is as follows:
| Balance Sheet Location | March 31, 2025 | December 31, 2024 | ||||||
| Operating Leases | ||||||||
| Right-of-use assets | $ | 331,192 | $ | 348,575 | ||||
| Current liabilities | ||||||||
| Lease liability, current maturities | 53,887 | 50,536 | ||||||
| Non-current liabilities | ||||||||
| Lease liability, net of current maturities | 297,519 | 305,502 | ||||||
| Total operating lease liabilities | $ | 351,406 | $ | 356,038 | ||||
| Weighted Average Remaining Lease Term | ||||||||
| Operating leases | 5.13 years | |||||||
| Weighted Average Discount Rate | ||||||||
| Operating leases | 8 | % | ||||||
The Company leases various equipment under non-cancellable operating lease agreements. The leases have remaining lease terms ranging from approximately one year to six years. Such leases have been recognized as operating leases.
Supplemental balance sheet information related to leases is as follows:
| Balance Sheet Location | March 31, 2025 | December 31, 2024 | ||||||
| Finance Leases | ||||||||
| Right-of-use assets (included in property and equipment) | $ | 1,252,739 | $ | 1,325,137 | ||||
| Current liabilities | ||||||||
| Lease liability, current maturities | 187,158 | 202,886 | ||||||
| Non-current liabilities | ||||||||
| Lease liability, net of current maturities | 1,124,349 | 1,166,248 | ||||||
| Total finance lease liabilities | $ | 1,311,507 | $ | 1,369,134 | ||||
| Weighted Average Remaining Lease Term | ||||||||
| Finance leases | 4.22 years | |||||||
| Weighted Average Discount Rate | ||||||||
| Finance leases | 8 | % | ||||||
F-10
Resource Group US Holdings
LLC and Subsidiaries
Notes to Financial Statements
For the Three Months Ended March 31, 2025, and 2024
| 5. | Leases (cont.) |
As the leases do not provide an implicit rate, the Company used an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments, which is reflective of the specific term of the leases and economic environment of each geographic region.
Anticipated future lease costs, which are based in part on certain assumptions to approximate minimum annual rental commitments under non-cancellable leases, are as follows:
| Year Ending December 31: | Operating | |||
| 2025 | $ | 303,988 | ||
| 2026 | 374,871 | |||
| 2027 | 374,240 | |||
| 2028 | 376,015 | |||
| 2029 | 372,469 | |||
| Thereafter | 364,965 | |||
| Total lease payments | 2,166,548 | |||
| Less: Imputed interest | (503,635 | ) | ||
| Present value of lease liabilities | $ | 1,662,913 | ||
| 6. | Member’s Deficit |
As of March 31, 2025, 9,536,000 Class A Units, 6,485,962 Class A-1 Preferred Units, 0 Class A-2 Units, 475,000 Class B Units and 1,325,000 Class A-3 Preferred Units were held by the members of the Company. Each preferred member shall be entitled to receive, subject to the Operating Agreement, annual non-liquidating cash distributions in an amount equal to 11.5% of such preferred member’s aggregate original purchase price with respect to the preferred units. Such preferred return shall accrue and is payable in cash upon: (i) any merger or consolidation of the Company with any other entity in which the Company is not the surviving entity, (ii) the sale of substantially all the assets of the Company, (iii) a change in control, and (iv) any voluntary or involuntary liquidation, dissolution, or winding up of the Company. Under the Operating Agreement, the managers of the Company may make distributions of available cash to the members as follows: first, to the preferred members holding Class A-1 Preferred Units proportionately in accordance with their respective accrued but unpaid preferred return, then second, to the preferred members holding Class A-1 Preferred Units proportionately in accordance with their original purchase price, then third, to the preferred members holding Class A-2 and A-3 Preferred Units, proportionately, in accordance with their respective accrued but unpaid preferred return, then fourth, to the preferred members holding Class A-2 and A-3 Preferred Units in accordance with their original purchase price, then fifth, to the Class A members proportionally in accordance with their unpaid Class A return, and thereafter to the members proportionately in accordance with their percentage interests.
As of December 31, 2024, the Company had 10,510,000 Class A-2 Units outstanding. During the three months ended March 31, 2025, the Company and its Class A-2 Unit holder entered into a Unit Relinquishment and Release Agreement (the “Release”) whereas the unit holder relinquished all of it 10,510,000 Class A-2 Units which were outstanding.
During the three months ended March 31, 2025, the Company issued 475,000 Class B Units of the Company. These units were issued to membersfor grants issued in prior periods.
| 7. | Related Party Transactions |
As of March 31, 2025 and December 31, 2024, the Company had $2,575,720 and $2,502,241, respectively, due to related parties. These amounts resulted from advances from members of the Company and are non-interest bearing and due on demand.
As disclosed in Note 4, the Company has a note payable from a related party (MCS) in the amount of $4,960,517 as of March 31, 2025 and December 31, 2024. The company also has a note payable from a related party (Index) in the amount of $31,749 as of March 31, 2025 and December 31, 2024.
F-11
Resource Group
US Holdings LLC and Subsidiaries
Notes to Financial Statements
For the Three Months Ended March 31, 2025, and 2024
| 8. | Commitments and Contingencies |
At times the Company may be subject to certain claims and lawsuits arising in the normal course of business. The Company will assess liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that the Company will incur a loss and the amount of the loss can be reasonably estimated, the Company will record a liability in our consolidated financial statements. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of the loss is not estimable, the Company will not record an accrual, consistent with applicable accounting guidance. The Company is not currently involved in any legal proceedings.
| 9. | Segment Reporting |
The Company’s Chief Operating Decision Maker (“CODM”) as defined under GAAP, who is the Company’s Manager, has determined that the Company is currently organized its operations into two segments: Resource and ZEI. These segments reflect the way our executive team evaluates the Company’s business performance and manages its operations. The CODM used the below financial information to assess financial performance and allocate resources. Information for the Company’s segments is provided in the following table:
| Resource | ZEI | Consolidated | ||||||||||
| Period Ended March 31, 2025 | ||||||||||||
| Revenue | $ | 1,991,570 | $ | 3,286,993 | $ | 5,278,563 | ||||||
| Cost of revenue | ||||||||||||
| Purchases | 142,468 | - | 142,468 | |||||||||
| Outside labor and payroll | 168,880 | 2,004,829 | 2,173,709 | |||||||||
| Fuel | 209,574 | 139,470 | 349,044 | |||||||||
| Other cost of revenue | 114.390 | 446,022 | 560,412 | |||||||||
| Total cost of revenue | 635,312 | 2,590,321 | 3,225,633 | |||||||||
| General and administrative expenses: | ||||||||||||
| Payroll and related expenses | 338,524 | 362,231 | 700,755 | |||||||||
| Professional fees and consulting | 468,368 | 12,000 | 480,368 | |||||||||
| Other operating expenses | 680,491 | 273,794 | 954,285 | |||||||||
| Total general and administrative expenses | 1,487,383 | 648,025 | 2,135,408 | |||||||||
| Operating (loss) income | (131,125 | ) | 48,647 | (82,478 | ) | |||||||
| Interest expense | (640,340 | ) | (116,357 | ) | (756,697 | ) | ||||||
| Gain on settlement of debt | - | 97,498 | 97,498 | |||||||||
| Net (loss) income | $ | (771,465 | ) | $ | (29,788 | ) | $ | (741,677 | ) | |||
| Total assets | $ | 5,066,749 | $ | 3,861,439 | $ | 8,928,188 | ||||||
F-12
Resource Group
US Holdings LLC and Subsidiaries
Notes to Financial Statements
For the Three Months Ended March 31, 2025, and 2024
| 9. | Segment Reporting (cont.) |
| Resource | ZEI | Consolidated | ||||||||||
| Period Ended March 31, 2024 | ||||||||||||
| Revenue | $ | 727,703 | $ | 3,364,285 | $ | 4,091,988 | ||||||
| Cost of revenue | ||||||||||||
| Purchases | 127,883 | - | 127,883 | |||||||||
| Outside labor and payroll | 208,077 | 1,978,184 | 2,186,261 | |||||||||
| Fuel | 199,592 | 174,039 | 373,631 | |||||||||
| Other cost of revenue | 127,648 | 538,884 | 666,532 | |||||||||
| Total cost of revenue | 663,200 | 2,691,107 | 3,354,307 | |||||||||
| General and administrative expenses: | ||||||||||||
| Payroll and related expenses | 402,085 | 396,253 | 798,338 | |||||||||
| Professional fees and consulting | 61,406 | - | 61,406 | |||||||||
| Other operating expenses | 871,963 | 187,799 | 1,059,762 | |||||||||
| Total general and administrative expenses | 1,335,454 | 584,052 | 1,919,506 | |||||||||
| Operating (loss) income | (1,270,951 | ) | 89,126 | (1,181,825 | ) | |||||||
| Interest expense | (369,150 | ) | (101,576 | ) | (470,726 | ) | ||||||
| Net (loss) income | $ | (1,640,101 | ) | $ | (12,450 | ) | $ | (1,652,551 | ) | |||
| Total assets | $ | 4,014,558 | $ | 5,184,560 | $ | 9,199,118 | ||||||
| 10. | Subsequent Events |
In February 2025, the Company entered into a Membership Interest Purchase Agreement (the “Membership Interest Purchase Agreement”) with Safe and Green Development Corporation (“SG DevCorp”) and the Company’s members (“Equityholders”) whereas SG DevCorp will acquire 100% of the membership interests of the Company.
On June 2, 2025, the Company and Safe and Green Development Corporation (“SG DevCorp”) entered into an Amendment (the “Amendment”) to the Membership Interest Purchase Agreement, dated February 25, 2025, (the “Purchase Agreement”). The Amendment alters the consideration to be paid by SG DevCorp to the Company’s members (“Equityholders”) in connection with the purchase of 100% of the membership interests of the Company. Pursuant to the Amendment, the purchase price for the membership interests of the Company was amended to be comprised of (i) $480,000 in principal amount of unsecured 6% promissory notes due on the first anniversary of the closing, (ii) the issuance of shares of the Company’s restricted common stock (the “Closing Shares”) equal to 19.99% of SG DevCorp’s outstanding shares of common stock on the date the Purchase Agreement was executed; and (iii) 1,500,000 shares of a newly designated series of non-voting Series A Convertible Preferred Stock (the “Series A Preferred Stock”) (which, subject to the approval of SG DevCorp’s stockholders and The Nasdaq Stock Market (“Nasdaq”) not objecting to the conversion and SG DevCorp continuing to meet and being eligible to meet the Nasdaq continued listing requirements after conversion), would be convertible into 9,000,000 restricted shares of SG DevCorp’s common stock). The Amendment also provides that, subject to shareholder approval, SG DevCorp will issue an aggregate of 41,182 additional shares of SG DevCorp’s common stock to the Equityholders upon the approval of such issuance by SG DevCorp’s stockholders and provided that the Company continues to meet and is eligible to meet the Nasdaq continued listing requirements.
F-13