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Item 8. Financial Statements and Supplementary Data

2023-04-10 compared with 2023-04-06 · 18 added, 509 removed, 362 unchanged (59% of the section changed)

63 unchanged sentences

Accounts payable

Accrued expenses

Payable to related entities

Current portion of financing agreement

Current portion of long term obligations

Current portion of acquisition notes payable

Total current liabilities

Long term obligations, net of current portion

Acquisition notes payable, net of current portion

Total liabilities

6 unchanged sentences

Total stockholders’

(51,353,761 )

(47,878,241 )

Total liabilities and stockholders' deficit

3 unchanged sentences

Other income (expenses)

Interest and financing costs

Gain on the extinguishment of debt

Total other income (expenses), net

2 unchanged sentences

Net income(loss)

$ (3,475,520 )

$ (3,475,536 )

Basic and diluted loss per share consolidated

8 unchanged sentences

$ (51,353,761 )

Forgiveness of related party debt

Balance, December 31, 2017

$ (57,381,515 )

$ (47,878,241 )

Stockholders’

1 unchanged sentence

$ (57,381,515 )

$ (47,878,241 )

Balance, December 31, 2018

$ (57,381,515 )

$ (51,353,761 )

The accompanying notes are

5 unchanged sentences

Net income (loss)

$ (3,475,520 )

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Changes in assets and liabilities

Accrued expenses and other liabilities

Gain on the extinguishment of debt

(50,422,035 )

Net cash provided by (used in) operating activities

95 unchanged sentences

The Company utilized cash in operations of $0- for

the year ended December 31, 2016 and as of December 31, 2016 the Company had a working capital deficiency of $39,398,168 and had

a stockholders’

deficit of $107,803,550.

These matters raise substantial doubt about the Company’s ability to continue as

a going concern.

The Company will also research technological opportunities

in the waste-to-energy (W-T-E) marketplace as a further resource for our non-hazardous waste water treatment facilities.

solution for managing the treating waste provides a significant advantage for generators of the waste, the environment, and the Company.

The Company will continue to develop SCWW as the

foundation of our core business in the non-hazardous waste water treatment sector.

We intend to do this through internal growth

by offering SCWW’s integrated solution for generators of non-hazardous waste water and by making strategic acquisitions of non-hazardous

waste water treatment companies.

the year ended December 31, 2018 and as of December 31, 2018 the Company had no cash on hand and a stockholders’

These matters raise substantial doubt about the Company’s ability to continue as a going concern.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

89 unchanged sentences

impact on the Company's present or future consolidated financial statements.

RELATED PARTY TRANSACTIONS

Advances from Related Parties

During 2008, General Pacific Partners (“GPP”), a company operated by a prior member of the Board of Directors of the Company’s wholly owned subsidiary, General Environmental Management, Inc.

of Delaware, made two unsecured advances to the Company totaling $472,500.

The rate of interest on the advances was 10% per annum.

As of December 31, 2009, $534,129 was outstanding under this advance (including accrued interest of $61,719).

In 2008, GPP also provided certain financing services for which the Company agreed to pay GPP $250,000.

The balance due to GPP for these services was $100,000 as of December 31, 2009.

During the three month period ended March 31, 2010, General Pacific Partners agreed to convert $575,000 of the indebtedness to GPP into 1,437,500 shares of the Company’s common stock.

The shares issued to GPP were valued at $273,125 based upon the trading price of the shares at the date of the agreement, resulting in a gain to the Company of $301,875.

As of March 31, 2010, the remaining balance due to GPP was $69,226.

During the year ended December 31, 2009 a

related individual made an unsecured advance with no formal terms of repayment to the Company totaling $115,000.

were used for working capital purposes.

At December 31, 2016 and December 31, 2015 the balance due on the advance was $97,500 and

$97,500, respectively.

Due to Officers and Directors

Commensurate with the closing of the sale to Luntz

(see Note 4), certain officers and directors were granted a bonus $765,000 which is outstanding as of December 31, 2016.

SECURED FINANCING AGREEMENTS

During the period 2008 through 2009, the Company

entered into a series of financings with CVC California, LLC (“CVC”).

The amounts due under these financings at December 31,

2016 and December 31, 2015 are as follows:

Secured Notes from CVC California

Valuation Discount

Note Agreements with CVC California

On September 4, 2009, the Company entered into

a series of agreements with CVC that amended these agreements, including an Amended and Restated Revolving Credit and Term Loan Agreement,

an Amended and Restated Revolving Credit Note, an Amended and Restated Convertible Term Note, a new Term Note, and Amended and Restated

Warrants to purchase shares of the Company's common stock.

Pursuant to the Amended and Restated Revolving Credit and Term Loan Agreement,

(the "Amended Agreement") dated as of September 4, 2009 the Company issued to CVC:

(i) an Amended and Restated secured convertible

term note (“

Convertible Note”) in the principal amount of $6,314,700.

The principal amount of the Convertible Note bears

an interest rate of fourteen percent, subject to adjustment, with interest payable monthly commencing November 1, 2009.

The principal

of the convertible Note is payable on demand or, in the absence of demand, (i) in seven (7) equal monthly installments of $138,000 each,

due and payable on the first day of each calendar month commencing December 1, 2009 and continuing through and including June 1, 2010,

and (ii) a final installment due and payable on December 31, 2010 in an amount equal to the entire remaining principal balance of this

In the event of a prepayment of the Convertible Note, the Company must pay a prepayment premium in an amount equal to

( a ) two (2%) percent of the principal amount being prepaid if the prepayment is made on or prior to February 28, 2010, and (b)

one (1%) percent of the principal amount being prepaid if such prepayment is made subsequent to February 28, 2010 and prior to August

1, 2011, unless the prepayment is made with the proceeds received from the sale of any business unit or units of the Company.

balance of the note outstanding at December 31, 2009 was $6,314,700.

The note was paid in full on February 26, 2010 with the proceed

from the sale of GEM Delaware (see Note 4).

The principal amount of the Convertible Note and

accrued interest thereon due CVC was convertible into shares of the Company's common stock at a price of $0.60 per share, subject to certain

The convertible feature gave rise to a derivative liability that was valued at $896,542 at December 31, 2009.

Concurrent with the extinguishment of the convertible note, the derivative liability was extinguished and a gain of $896,542 was recorded.

(ii) an Amended and Restated Secured Non-convertible

Revolving Credit Note in the principal amount of up to $1.7 million (the "

Revolving Note").

The principal amount

of the Revolving Note bears interest at the rate of 10% per annum and is payable on demand (or, in the absence of demand, on August 31,

2011, or sooner by reason of an Event of Default or other mandatory prepayment event.

The balance of the note outstanding at December

31, and December 31, 2009 was $1,177,027 and $1,700,000, respectively.

The Amended and restated Secured Non-convertible

Revolving Credit Note was amended on November 25, 2009 with an Overadvance Note in the amount of $1,190,357.The principal amount of the

Overadvance Note bears interest at the rate of 15% per annum and is payable on demand or, in the absence of demand, on August 31, 2011,

or sooner by reason of an Event of Default or other mandatory prepayment event.

The balance of the Overadvance Note outstanding

at December 31, 2009 was $1,043,665.

The overadvance note was paid in full with the proceeds from the sale of GEM Delaware

(see Note 4).

In connection with the Convertible Note and the

Amended and restated Secured Non-convertible Revolving Credit Note, the Company had granted to CVC a Warrant to purchase Two

Million Seven Hundred Thousand (2,700,000) fully paid and non-assessable shares (the “Warrant Shares”) of the Company’s

common stock, for cash at a price of $0.01 per share.

The Company had previously determined that as the exercise price

of the warrant contained reset provisions, the warrant was characterized as a derivative liability at December 31, 2009 in accordance

with authorative guidance issued by FASB.

Concurrent with the payoff of these notes, the warrant was converted to common shares and the

derivative liability was extinguished (see Note 10).

(iii) a Term Note (“Term Note ”) in

the principal amount of $5.6 million.

The principal amount of the Term Note bears interest at the rate of 8% per annum and

is payable as follows:

on the first day of each calendar month commencing October 1, 2009 through and including August 1, 2010, accrued

Interest on the outstanding principal shall be due and payable.

Thereafter, principal and interest is payable in thirty-six

(36) consecutive equal monthly installments of principal and interest of $174,321.50 each, with the first installment due and payable

on September 1, 2010, and with subsequent installments due and payable on the first day of each calendar month thereafter through and

including August 1, .

There is no pre-payment penalty in the event of a pre-payment.

The balance of the Term Note outstanding

at December 31, 2011 was $5,600,000.

On August 17, 2009, the Company had entered into

a Stock Purchase Agreement with MTS Acquisition Company ("MTS"), pursuant to which the Company sold all of the issued and outstanding

common stock of GEM Mobile Treatment Services, Inc.

(“GEM MTS”).

Consideration for the sale of GEM MTS was in the form of

a promissory note (“the MTS Note") in the aggregate amount of $5.6 million, (payable on the same dates and terms as the Term

Note), the assignment of approximately $1.0 million of accounts payable and possible future royalties.

The consideration

was immediately assigned to CVC.

As the MTS Note is paid to CVC by MTS, the Company's indebtedness to CVC will be reduced.

Following the Closing of the sale of GEM Delaware

and the payoff of the notes to CVC, the Revolving Credit Note was amended and restated so as to provide for (a) the reduced principal

balance (after giving effect to the payment described above), (b) the elimination of any right to further Advances;

principal balance from time to time to be paid monthly in arrears as currently provided in the Revolving Credit Note, and (d) principal

to be payable (i) as, when and to the extent that payments are received by GEM under the Royalty Provisions, (ii) from amounts paid to

or in respect of the Borrower under Section 10.12 of the GEM MTS Purchase Agreement or otherwise in respect of the $900,000 deposit in

the Union Bank trust account, and (iii) to the extent not theretofore paid, any remaining balance of the amended and restated Revolving

Credit Note shall be due and payable on demand (or, if no demand is earlier made, then on March 1, 2011).

(Other than as stated

herein, the Revolving Credit Note shall remain unchanged and shall remain in full force and effect.) In furtherance of the

foregoing, immediately after the Closing, GEM gave irrevocable written instructions to MTS Acquisition Company, Inc.

(“MTS”)

to remit all payments on the Purchase Money Note and pursuant to the Royalty Provisions directly to CVC, until otherwise instructed in

writing by the CVC, and (B) GEM gave irrevocable written instructions to PSC to remit all amounts payable under Section 10.12 of the Purchase

Agreement directly to CVC;

and GEM shall not agree to any amendment of Section 10.12 of the Purchase Agreement or waive any required performance

there-under without the Lender’s prior written consent.

To the extent that, at any time, CVC shall have received payment

in full of the amended and restated Revolving Credit Note and all other Obligations pursuant to the direct payments contemplated in the

preceding sentence or otherwise, then CVC shall promptly (x) remit any excess amounts collected to GEM, and (y) give written notice to

MTS and/or PSC (as applicable) that payments that would otherwise thereafter be made to CVC as aforesaid shall instead be paid directly

to GEM or whomever else shall be entitled thereto.

The balance of the revolving credit note was $1,177,027 at December 31,

Valuation Discount and Modification of Debt

In connection with the CVC financing and subsequent

modifications, the Company had recorded valuation discounts against the notes relating to closing fees paid, relative value of warrants

issued and the conversion features of the notes.

The note discount was $2,196,585 as of December 31, 2009.

the three months ended March 31, 2010, the Company amortized $382,646 of the note discount until February 26, 2010, and recorded a charge

of $1,813,939 to remove the discount when the debt was retired.

ACQUISITION NOTES PAYABLE

On November 6, 2009, Company entered into a Stock

Purchase Agreement ("CLW Agreement") with United States Environmental Response, LLC, a California limited liability

company pursuant to which the Company has purchased all of the issued and outstanding capital stock of California Living Waters, Incorporated

("CLW"), a privately held company.

In consideration for the sale, the Company issued six promissory notes (individually a "CLW

and collectively, the "CLW Notes") in the aggregate principal amount of $9,003,000.

As of March 31, 2010

and December 31, 2009, aggregate amounts outstanding under these notes was $8,739,208 and $8,994,648 as follows:

$2,000,000 CLW the Seller's Note-- Payment of

the outstanding principal of the CLW the Seller’s Note is due and payable in four (4) installments as follows:

(A) Two Hundred Fifty

Thousand Dollars ($250,000) in November, 2009, (B) Five Hundred Thousand Dollars ($500,000) and accrued interest on December 31 2010;

(C) One Million Dollars ($1,000,000) and accrued interest on January 1, 2011 (D) the balance of all residual principal and accrued interest

on March 31, 2011.

The balance of the Note at March 31, 2010 and December 31, 2009 was $1,750,000 and $2,000,000, respectively.

$1,700,000 CLW Note One-- Payment of the outstanding

principal of CLW Note One is due and payable in 120 installments commencing on December 1, 2009 and continuing on the first day of each

calendar month through November 1, 2019.

Installments are payable in the following amounts (subject to the other terms

of this Note):

(A) the amount of principal and accrued interest payable in the first one hundred nineteen (119) Installments shall be

equal Installments of principal and interest, calculated on the basis of a 30-year amortization of this Note and (B) the one hundred twentieth

(120th) Installment shall be a final, “balloon”

The balance of the Note at March 31, 2010 and December 31, 2009 was

$1,693,803 and $1,696,917, respectively.

$1,100,000 CLW Note Two-- Payment of the outstanding

principal of this CLW Note Two is due and payable in sixty (60) installments commencing on December 1, 2009 and continuing on the first

day of each calendar month through November 1, 2014.

Installments are payable in the following amounts (subject to the other terms of

(A) the amount of principal and accrued interest payable in the first fifty-nine (59) Installments shall be equal Installments

of principal and interest, calculated on the basis of a 30-year amortization of this Note;

and (B) the final, “balloon”

on November 1, 2015.

The balance of the Note at March 31, 2010 and December 31, 2009 was $1,090,955 and $1,095,501, respectively.

$425,000 CLW Note Three-- Payment of

the outstanding principal of the CLW Note is due and payable in 120 installments commencing on December 1, 2009 and continuing on the

first day of each calendar month through November 1, 2019.

Installments are payable in the following amounts (subject to the

other terms of this Note):

(A) the amount of principal and accrued interest payable in the first one hundred nineteen (119) Installments

shall be equal Installments of principal and interest, calculated on the basis of a 30-year amortization of this Note and (B) the one

hundred twentieth (120th) Installment shall be a final, “balloon”.

CLW Note Three is convertible at any time in full or in

part (but if in part, then only in principal increments of $100,000 or an integral multiple thereof) into shares of common stock of Company

at the conversion rate of Four Dollars ($4.00) per share, subject to adjustment.

The balance of the Note at March 31, 2010 and December

31, 2009 was $423,451 and $424,230, respectively.

$1,600,000 CLW Note Four-- Payment of

the outstanding principal of the CLW Note Four is due and payable in 41 installments commencing on July 1, 2010 and continuing on the

first day of each calendar month through November 1, 2013.

Installments are payable in the following amounts (subject to the other

terms of this Note):

(A) the amount of principal and accrued interest payable in the first forty Installments shall be equal Installments

of principal and interest, calculated on the basis of a 30-year amortization of this Note, provided that the first Installment

shall also include all interest accrued during the first seven months from the date of this Note;

Four and (B) the final, “balloon”,

Installment shall be in the amount of all then-outstanding principal, interest and other amounts then outstanding.

Note Four is convertible

into 5% of the common stock of Company on a fully diluted basis until Company achieves a Capital Restructuring Goal.

Capital Restructuring

Goal means the concurrent fulfillment of each of the following events:

(i) the CLW Seller’s Note shall have been fully paid on the

terms thereof as to all theretofore outstanding principal, interest, costs and expenses;

(ii) Company shall have available, as properly

reflected in Company’s books one million dollars ($1,000,000) in uncommitted working capital (not including any working capital

lines of credit);

and (iii) Company shall have invested into SCWW capital of at least one million dollars $1,000,000.

The balance of the

Note at March 31, 2010 and December 31, 2009 was $1,600,000 and $1,600,000, respectively.

$2,178,000 CLW Note Five-- Payment of

the outstanding principal of the CLW Note Five is due and payable in 41 installments commencing on July 1, 2010 and continuing on the

first day of each calendar month through November 1, 2013.

Installments are payable in the following amounts (subject to the other

terms of this Note):

(A) the amount of principal and accrued interest payable in the first forty Installments shall be equal Installments

of principal and interest, calculated on the basis of a 30-year amortization of this Note, provided that the first Installment

shall also include all interest accrued during the first seven months from the date of this Note;

Four and (B) the final, “balloon”,

Installment shall be in the amount of all then-outstanding principal, interest and other amounts then outstanding.

Note Four is convertible

into 10% of the common stock of Company on a fully diluted basis until Company achieves the Capital Restructuring Goal.

The balance at

December 31, 2016 and December 31, 2015 was $2,178,000 and $ 2,178,000, respectively.

Current portion

Long Term portion

LONG TERM OBLIGATIONS

Long term obligations consist of the following at December 31, 2016

and December 31, 2015:

(a) Notes Payable, National Bank of California

(b) Notes Payable, Island Acquisition

(d) Note payable, Wiker Trust

(e) Note payable, Agua de Oro 2

(f) Equipment Note payable, OMNI Bank

(g) Note payable, Individual

(h) Subordinated notes payable

Total Notes Payable

Less Note discount

Less current portion

Notes payable, net of current portion

Notes payable to National Bank of California consists of the following at December 31, 2016 and December 31, 2015 :

(i) Notes Payable, National Bank of California 1

(ii) Notes Payable, National Bank of California 2

(iii) Notes Payable, National Bank of California 3

(iv) Notes Payable, National Bank of California 4

(v) Notes Payable, National Bank of California 5

(i) Note payable to National Bank

of California, 80% guaranteed by the USDA and various related parties of the Company, bears interest at Prime plus 1%, and is payable

over 20 years.

(i) Note payable to National Bank of California, 80% guaranteed by the USDA and various related parties of the Company,

bears interest at Prime plus 1%, and is payable over 20 years.

The loan is secured by a first lien on all assets and commercial real estate

of the Company, including the pipeline, and is due in 2026.

(ii) Note payable National Bank

of California, 80% guaranteed by the USDA and various related parties of the Company, bears interest at Prime plus 1%, and is payable

over 20 years.

The loan is secured by a first lien on all assets and commercial real estate of the Company’s California Living Water

Subsidiary, including the pipeline, and is due in 2026.

(iii) Note payable to National Bank

of California, 80% guaranteed by the USDA and various insiders of the Company, bears interest at Prime plus 1%, and is payable over 5

The loan is secured by a first lien on all assets and commercial real estate of the Company’s California Living Water Subsidiary,

and is due in 2011.

(iv) Note payable to National Bank

of California, guaranteed by various related parties of the Company, interest at Prime plus 2%, payable over five years.

secured by equipment and is cross collateralized to all other notes with National Bank of California.

(v) Note payable to National

Bank of California, secured primarily by accounts receivable, bearing interest at Prime plus 2%.

The note was due on March

5, 2010 and has been extended until June 2010.

The above loans are subject to certain

covenants with the senior lender, National Bank of California.

The affirmative covenants apply to the financial results of

the Company’s subsidiary, SCWW, and include certain ratio requirements such as current ratio, Debt / Worth ratio and debt service.

December 31, 2009, SCWW was not in compliance with certain of these covenants, and as such, the notes are in default.

The company is currently

in discussions to resolve the default, and has classified the notes as current in the accompanying March 31, 2010 balance sheet.

(b) On August 31, 2008, the Company entered into

a stock purchase agreement with Island Environmental.

As part of the consideration for the purchase, the Company issued two three year

promissory notes totaling $1.25 million.

The first note is payable to the former owners in the amount of $1,062,500.

second note is payable to NCF Charitable Trust in the amount of $187,500.

The notes bear interest at eight percent (8%) with

the entire balance of interest and principal payable August 31, 2011.

In conjunction with the revision to the agreements with

CVC described in Note 7 an amendment to these notes was executed that all interest payments and principal payments due pursuant to the

notes were deferred until August 31, 2011.

22, 2004, the Company entered into a Loan and Security Agreement with several investors to provide the funding necessary for the purchase

of the Transfer Storage Disposal Facility (TSDF) located in Rancho Cordova, California.

The notes were secured by the

TSDF, carried an interest rate of eight percent (8%) per annum, and principal and interest are convertible at $30.00 per share into common

In addition, the note holders were issued warrants to purchase common stock.

The notes were initially due

December 31, 2009, but were extended to September 30, 2011.

As of December 31, 2008, notes payable of $422,500 plus accrued

interest of $67,105 remained outstanding.

On July 1, 2009 three note holders entered into

new promissory note agreements that replaced in full the principal of the Loan and Security Agreement dated June 1, 2004.

The notes are

unsecured and carry an interest rate of ten percent (10%) per annum.

The principal of the notes is due December 31, 2011.

On August 1, 2009 accrued interest of $168,528

was converted into 485,150 shares of common stock.

As an incentive to convert the accrued interest into shares of the Company's common

stock, the Board of Directors awarded 663,814 fully vested warrants to purchase common stock of the Company to the three convertible

note holders.

The warrants are exercisable at $0.52 per share and have a forty (40) month term.

The value of these warrants was calculated

at $231,140 and included in the statement of operations for the year ending December 31, 2009 as a cost to induce conversion.

the Black Scholes calculation, the Company assumed no dividend yield, a risk free interest rate of 1.72 % and expected volatility of 104.54

As of December 31, 2009, notes payable of $500,000 and accrued interest of $21,252 remained outstanding.

(d) The Wiker Trust obligation is interest only,

bearing interest at 7.75% per annum, due August 1, 2012.

This is an unsecured note that is subordinated to the National Bank of California

(e) An unsecured four-year note, bearing interest

at 15%, payable in monthly installments of $6,130, including interest.

This note is subordinated to the National Bank of California notes.

(f) Note payable relating to the purchase of equipment.

The note bears interest at 10.88% per annum, payable in 36 monthly installments of principal and interest at $2,456.

This obligation is

subordinated at the National Bank of California notes.

(g) An unsecured four-year note, bearing interest

at 15%, payable in monthly installments of $6,130, including interest.

This note is subordinated to the National Bank of California notes.

(h) The Company has two notes payable

that are subordinated to the notes payable to National Bank of California.

The subordinated Notes Payable consists of the following at

December 31, 2016:

(i) Note payable, Wiker Trust

(ii) Note payable, US Environmental Response

(i) The Wiker Trust obligation is interest only,

bearing interest at 7.75% per annum, due August 1, 2012.

This is an unsecured note that is subordinated to the National Bank of California

The Wiker Trust is a charitable remainder trust who made the initial loan to the Company in order to fund the acquisition of SCWW

The CEO of SCWW is a trustee of the Wiker Trust.

(ii) The United States Environmental Response

(“USER”) note, formerly held by Aqua de Oro, is a four year note, bearing interest at 7.75%, payable in monthly installments

of $6,458 for 7 years, with all remaining principal and interest due on July 31, 2011.

The CEO of SCWW is the President of USER.

due represents funds paid by Company to the court appointed disbursing agent for the benefit of approved creditors.

This is an unsecured

note that is subordinated to the National Bank of California notes and all debts allowed in the Company's bankruptcy reorganization.

DERIVATIVE LIABILITIES

In 2009, the Company adopted the FASB’s

guidance on “Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity’s Own Stock.”

This guidance

requires that instruments which do not have fixed settlement provisions are deemed to be derivative instruments.

The conversion

feature of the Company’s Secured Financing and the related warrants, do not have fixed settlement provisions because their conversion

and exercise prices, respectively, may be lowered if the Company issues securities at lower prices in the future.

was required to include the reset provisions in order to protect the note holders from the potential dilution associated with future financings.

In accordance with current guidance, the conversion feature of the notes was separated from the host contract (i.e., the notes) and recognized

as an embedded derivative instrument at December 31, 2009.

During the three months ended March 31, 2011, the Company eliminated these

derivative liabilities.

Warrant Liability

In connection with the CVC financings described

in Note 7, the Company had granted to CVC an Amended and Restated Warrant to purchase Two Million Seven Hundred Thousand (2,700,000)

fully paid and non-assessable shares (the “Warrant Shares”) of the Company’s common stock, for cash at a price of $0.01

per share at any time and from time to time from and after the date hereof and until 5:00 p.m.

(Pacific time) on August 31, .

had the right and option, exercisable effective at any time upon or after the consummation of a Sale of the Company’s revenue-generating

business units, or upon and after the occurrence and during the continuance of an Event of Default or any other event or circumstance

which causes, effects or requires any payment in full under the Loan Agreement and until the Expiration Date, to require the Company to

redeem and purchase any or all Warrant Shares or rights to purchase Warrant Shares hereunder, for a cash purchase price of $0.75 per Warrant

Share or per right to purchase a Warrant Share hereunder, such option purchase price to be subject to adjustment from time to time in

respect of certain events.

The total value of the put if all shares are redeemed was $2,025,000, and was recorded as a derivative liability

at December 31, 2009.

In conjunction with the closing and the Amended and Restated Warrant to Purchase Shares of Common Stock, CVC of

California exercised its put option related to its warrant for 2,700,000 shares for a cash purchase price of $0.75 per Warrant Share or

At closing, CVC was paid $500,000 and issued 3,750,000 shares of the Company’s common stock valued at $712,500 to satisfy

the put option, resulting in a gain on extinguishment of the derivative liability of $812,500 in the accompanying March 31, 2011 statement

of operations.

Conversion feature

The principal amount of the Convertible Note and

accrued interest thereon due CVC was convertible into shares of the Company's common stock at a price of $0.60 per share, subject to certain

The convertible feature gave rise to a derivative liability that was valued at $896,542 at December 31, 2009.

Concurrent with the extinguishment of the convertible note during 2011, the derivative liability was extinguished and a gain of $896,542

was recorded in the accompanying March 31, 2011 statement of operations.

STOCK OPTIONS AND WARRANTS

On March 28, 2007 the Board of Directors approved

and implemented the 2007 Stock Option Plan (the “Plan”).

The plan authorized option grants to employees and other

persons closely associated with the Company for the purchase of up to 5,500,000 shares.

No options were issued during the year ended December

Weighted Avg.

Exercise Price

Life in Years

Options outstanding, January 1, 2010

Options granted

Options exercised

Options cancelled

Options outstanding, March 31, 2010

Options exercisable, March 31, 2010

The options had no intrinsic value at December 31, 2016.

For the three months ended March 31, 2010 and

2009, the fair value of options vesting during the period was $119,677 and $261,734 respectively, and has been reflected as compensation

As of March 31, 2010, the Company has unvested options valued at $151,287 which will be reflected as compensation cost over the

estimated remaining vesting period of 24 months.

A summary of the warrant activity during the period is as follows:

of exercise prices

Warrants outstanding, January 1, 2010

$ 0.52-$37.50

Warrants granted

Warrants exercised

Warrants expired

Warrants outstanding, March 31, 2010

$ 0.52-$37.50

The warrants had no intrinsic value at December

COMMITMENTS AND CONTINGENCIES

Legal Proceeding

On July 5, 2007, a lawsuit was instituted by Romic

Environmental Technologies Corp.

(“RET”) against the Company and four of its senior executives, all of whom were formerly

employed by RET.

The lawsuit was brought in the Superior Court of the State of California, County of Los Angeles.

was settled by the Company in February 2010 with the majority of the settlement payment funded by insurance.

The Company is subject to legal proceedings and

claims that arise in the ordinary course of its business.

Although occasional adverse decisions or settlements may occur, the

Company believes that the final disposition of such matters will not have material adverse effect on its financial position, results of

operations or liquidity.

The Company's net deferred tax assets consisted

of the following at December 31, 2016 and December 31, 2015:

Deferred tax asset, net operating loss

Less valuation allowance

Net deferred tax asset

As of March 31, 2010, the Company had federal net operating loss carry forwards of approximately $27,245,415 expiring in various

years through 2025, which can be used to offset future taxable income, if any.

No deferred asset benefit for these operating losses has

been recognized in the financial statements due to the uncertainty as to their realizability in future periods.

As of March 31, 2010, the Company recorded a gain

on the sale of General Environmental Management, Inc.

(DE) and its subsidiaries (“GEM Delaware”), which include

five service centers, the TSDF of GEM Rancho Cordova LLC, and the Island Environmental Services business (See Note 4).

to the State of California disallowing the use of NOL carryforwards for the calendar year 2010, the Company recorded a state tax provision

Due to the affect of the Federal Alternative Minimum Tax on the gain transaction, the Company recorded a $100,000

federal tax provision.

Reconciliation of the effective income tax rate

to the United States statutory income tax rate for the year ended December 31, 2016 is as follows:

Tax expense at U.S.

statutory income tax rate

Increase in the valuation allowance

Effective rate

Effective January 1, 2007, the Company adopted a

new accounting requirement to Account for Uncertainty in Income Taxes.

The interpretation addresses the determination of whether

tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

Under the new accounting

requirements, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position

will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The tax benefits recognized

in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent

likelihood of being realized upon ultimate settlement.

The new requirements also provides guidance on derecognition, classification,

interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

At the date of adoption, and

as of March 31, 2010, the Company did not have a liability for unrecognized tax uncertainties.

The Company files income tax returns in the U.S.

federal jurisdiction and various states.

The Company is subject to U.S.

federal or state income tax examinations by tax authorities for

years after 2002.

During the periods open to examination, the Company has net operating loss and tax credit carry forwards for U.S.

federal and state tax purposes that have attributes from closed periods.

Because these NOLs and tax credit carry forwards may

be utilized in future periods, they remain subject to examination.

The Company’s policy is to record interest

and penalties on uncertain tax provisions as income tax expense.

As of March 31, 2010 the Company has no accrued interest or penalties

related to uncertain tax positions.

As of December 31, 2018 Company has 1,000,000,000

shares of common authorized and 22,945,388 shares of common stock issued and outstanding.

Changes in and Disagreements with Accountants on Accounting

2 unchanged sentences

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision

and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness

of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act

(defined below)).

Based upon that evaluation, our principal executive officer and principal financial officer concluded that,

as of the end of the period covered in this report, our disclosure controls and procedures were effective to ensure that information required

to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed,

summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal

executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the

supervision and with the participation of our management, including our principal executive officer and principal financial officer,

of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and

15d-15(e) of the Exchange Act (defined below)).

Based upon that evaluation, our principal

executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure

controls and procedures were effective to ensure that information required to be disclosed in reports filed under the Securities

Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized and reported within the required

time periods and is accumulated and communicated to our management, including our principal executive officer and principal

financial officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our principal executive

62 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data