What changed in this filing

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Item 1. Financial Statements

2020-06-25 compared with 2019-11-14 · 492 added, 650 removed, 673 unchanged (63% of the section changed)

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CONSOLIDATED BALANCE SHEETS

September 30,

Current Assets

Cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts of $227,500 and $227,500, respectively

Notes receivable, net

Accounts receivable, net of allowance for doubtful accounts of $11,700

and $11,800, respectively

Costs and estimated earnings in excess of billings on uncompleted contracts

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Intangible Assets, net

Notes receivable, net of current portion

LIABILITIES AND STOCKHOLDERS’

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70,000,000 shares authorized;

62,253,575 and 61,703,575 shares issued, issuable** and outstanding September 30, 2019 and December 31, 2018, respectively

and 62,591,075 shares issued, issuable ** and outstanding March 31, 2020 and December 31, 2019, respectively

Common stock issuable

1 unchanged sentence

Stock Subscription receivable

Adoption of ASU 2016-02, Leases (Topic 842)

Accumulated deficit

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TOTAL LIABILITIES AND STOCKHOLDERS’

accompanying notes.

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

numbers were derived from the audited financial statements for the year ended December 31, 2019.

See accompanying notes.

350,000 and 3,200,000 shares issuable at September 30, 2019 and December 31, 2018, respectively, per terms of note agreements.

1,240,000 and 887,500 shares issuable at March 31, 2020 and December 31, 2019, respectively, per terms of note agreements.

ENVIRONMENTAL & ENERGY RESOURCES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

For the Three Months Ended March 31,

Total revenue

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Products costs

Services costs

Solid waste costs

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Interest expense

Gain on debt extinguishment

Total non-operating expense, net

Loss from continuing operations

Gain on sale of rail operations

Net loss from discontinued operations

Discontinued operations, net of tax

Net loss attributable to non-controlling interest

$ (1,072,400 )

$ (1,982,400 )

$ (2,830,000 )

Net loss attributable to SEER common stockholders

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basic and diluted

accompanying notes.

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

ENVIRONMENTAL & ENERGY RESOURCES, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’

Preferred Stock

Non-controller

Stockholders’

Balances at December 31, 2019

$ (21,471,900 )

$ (2,715,200 )

$ (3,339,900 )

Issuance of common stock upon debt penalty

Stock-based compensation

Sale of common stock

Allocated value

of common stock and warrants related to debt

Balances at March 31, 2020

(22,202,600 )

Issuance of common stock upon debt penalty

Stock-based compensation

Issuance of common stock for services

Balances at June 30, 2018

(23,229,500 )

Issuance of common stock upon debt penalty

Issuance of common stock upon debt interest

Stock-based compensation

Sale of common stock

Issuance of common stock for services

Investment in subsidiary

Balances at September 30, 2018

$ (24,301,900 )

$ (2,460,400 )

$ (4,251,800 )

Preferred Stock

Stockholders’

Additional Paid-in

Stock Subscription

Non-controller

Total Stockholders’

Balances at December 31, 2018

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$ (4,238,300 )

Issuance of common stock upon debt penalty

Issuance of common stock

upon debt penalty

Stock-based compensation

Adoption of ASU 2016-02, Leases (Topic 842)

Adoption of ASU 2016-02,

Leases (Topic 842)

Investment in subsidiary

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(24,976,900 )

Issuance of common stock upon debt penalty

Stock-based compensation

Balances at June 30, 2019

(25,928,700 )

Issuance of common stock upon debt penalty

Stock-based compensation

Balances at September 30, 2019

$ (26,408,700 )

$ (1,978,900 )

$ (5,702,200 )

accompanying notes.

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

ENVIRONMENTAL & ENERGY RESOURCES, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the Nine Months Ended

September 30,

For the Three Months Ended March 31,

Cash flows from operating activities:

$ (2,085,800 )

$ (2,875,200 )

Income from discontinued operations

Net loss from continuing operations

Loss from discontinued operations

Adjustments to reconcile net loss to net cash provided by operating activities:

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Note receivable discount

Stock issued for services

Non-cash expense for interest, common stock issued for debt penalty

Amortization of note discount

Non-cash expense for interest, warrants –

accretion of debt discount

Non-cash expense for interest

Gain on disposition of assets

Gain on debt extinguishment

Non-cash relief of aged accounts payable

Changes in operating assets and liabilities:

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Accounts payable and accrued liabilities

Revenue contract liabilities

Billings in excess of revenue on uncompleted contracts

Deferred revenue

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Purchase of property and equipment

Proceeds (purchase) of intangibles

Proceeds from notes receivable

Net cash provided by investing activities

Net cash (used) provided by investing activities

Cash flows from financing activities:

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Proceeds from short-term notes

Proceeds from outside minority investment in new subsidiary

Proceeds from the sale of common stock and warrants, net of expenses

Net cash provided by financing activities

Net cash flows from discontinued operations

Net decrease in cash

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Financing of prepaid insurance premiums

accompanying notes.

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

ORGANIZATION AND FINANCIAL CONDITION

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of next-generation clean-technologies, waste management innovations and related services.

SEER has three wholly owned subsidiaries

in continuing operations, and three majority-owned subsidiaries;

all of which together provide technology solutions and services

to companies primarily in the oil and gas, refining, landfill, food, beverage & agriculture and renewable fuel industries.

The three wholly-owned subsidiaries include:

1) REGS, LLC (d/b/a Resource Environmental Group Services (“REGS”)) provides

industrial and proprietary cleaning services to refineries, oil fields and other private and governmental entities;

(d/b/a MV Technologies) (“MV”), designs and builds biogas conditioning solutions for the production of renewable natural

gas and odor control systems primarily for landfill operations, waste-water treatment facilities, oil and gas fields, refineries,

municipalities and food, beverage & agriculture operations throughout the U.S.;

3) SEER Environmental Materials, LLC,(“SEM”),

a materials technology company focused on development of cost-effective chemical absorbents.

three majority-owned subsidiaries are;

1) Paragon Waste Solutions, LLC (“PWS”);

2) ReaCH4Biogas (“Reach”)

SEER has three wholly owned operating

subsidiaries and three majority-owned subsidiaries;

all of which together provide technology solutions and services to companies

primarily in the oil and gas, refining, landfill, food, beverage & agriculture and renewable fuel industries.

The three wholly-owned

subsidiaries include:

1) REGS, LLC (d/b/a Resource Environmental Group Services (“REGS”)) provided industrial and

proprietary cleaning services to refineries, oil fields and other private and governmental entities, which is included in discontinued

operations for fiscal years 2019.

REGS is solely engaged in building kilns after the industrial cleaning has been discontinued;

2) MV, LLC (d/b/a MV Technologies) (“MV”), designs and builds biogas conditioning solutions for the production of

renewable natural gas, odor control systems and natural gas vapor capture primarily for landfill operations, waste-water treatment

facilities, oil and gas fields, refineries, municipalities and food, beverage & agriculture operations throughout the U.S.;

3) Strategic Environmental Materials, LLC,(“SEM”), a materials technology company focused on development of cost-effective

chemical absorbents.

three majority-owned subsidiaries include 1) Paragon Waste Solutions, LLC (“PWS”), 2) ReaCH4Biogas (“Reach”),

and 3) PelleChar, LLC (“PelleChar”).

PWS is currently owned 54% by SEER (see Note 7), Reach is owned 85% by SEER and

PelleChar is owned 51% by SEER.

is developing specific opportunities to deploy and commercialize patented technologies for a non-thermal plasma-assisted oxidation

process that makes possible the clean and efficient destruction of solid hazardous chemical and biological waste ( i.e .,

PWS is currently owned 54% by SEER, Reach is owned 85% by SEER and PelleChar

is owned 90% by SEER.

has and continues to develop specific opportunities to deploy and commercialize patented technologies for a non-thermal plasma-assisted

oxidation process that makes possible the clean and efficient destruction of solid hazardous chemical and biological waste ( i.e .,

regulated medical waste, chemicals, pharmaceuticals and refinery tank waste, etc .) without landfilling or traditional incineration

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oil fields, and many others.

(the trade name for BeneFuels, LLC) focuses specifically on developing renewable biomethane projects that convert raw biogas to

pipeline quality gas and/or compressed natural gas (“CNG”) for fleet vehicle fuel.

Reach had no operations for the

quarters ended September 30, 2019 and 2018.

was formed in September 2018 and recently has secured third-party pellet manufacturing capabilities from one of the nation’s

premier pellet manufacturer.

Working closely with Biochar Now, LLC, PelleChar commenced sales in 2019 of its proprietary pellets

containing the proven and superior Biochar Now product, starting with the landscaping and big agriculture markets.

At this time,

PelleChar is the only company able to offer a soil amendment pellet containing the Biochar Now product that is produced using

the patented pyrolytic process.

For the quarter ended September 30, 2019 PelleChar had minimal activity related to formation,

and the increasing sales effort.

Reach (the trade name for BeneFuels, LLC),

is currently owned 85% by SEER and focuses specifically on treating biogas for conversion to pipeline quality gas and/or compressed

natural gas (“CNG”) for fleet vehicle fuel.

Reach had minimal operations for the quarter ended March 31,

was established in September 2018 and is owned 90% by SEER as of December 31, 2019.

Pellechar has secured third-party pellet manufacturing

capabilities from one of the nation’s premier pellet manufacturer.

Working closely with Biochar Now, LLC, Pellechar commenced

sales in late 2019 of its proprietary pellets containing the proven and superior Biochar Now product starting with the landscaping

and big agriculture markets.

At this time, Pellechar is the only company able to offer a soil amendment pellet containing the

Biochar Now product that is produced using the patented pyrolytic process.

For the three months ended March 31, 2020 PelleChar

had minimal activity related to formation, and an increasing sales effort.

of Consolidation

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in joint ventures, which are reported on the equity method.

shown in the accompanying condensed consolidated financial statements, the Company has experienced recurring losses, and has accumulated

a deficit of approximately $26.4 million as of September 30, 2019, and $24.4 million as of December 31, 2018.

For the nine months

ended September 30, 2019 and 2018 the Company had net losses from continuing operations before adjustment for losses attributable

to non-controlling interest of approximately $2.1 million and $2.9 million, respectively.

As of September 30, 2019, and December

31, 2018 our current liabilities exceed our current assets by approximately $6.5 million and $5.4 million, respectively.

The primary reason for the increase in negative working capital from December 31, 2018 to September 30, 2019 is due to a net increase

in short term debt of approximately $1.0 million, and losses from operations.

The Company has limited common shares available

for issue which may limit the ability to raise capital or settle debt through issuance of shares.

shown in the accompanying consolidated financial statements, the Company has experienced recurring losses, and has accumulated

a deficit of approximately $27.6 million as of March 31, 2020, and $27.0 million as of December 31, 2019.

For the three months

ended March 31, 2020, and 2019, the Company incurred net losses from continuing operations of approximately $0.7 million and $0.2

million, respectively.

The Company had a working capital deficit of approximately $7.6 million at March 31, 2020, a increase

of $0.6 million in working capital deficit from $7.0 million at December 31, 2019.

These factors raise substantial

doubt about the ability of the Company to continue to operate as a going concern for a period of at least one year after the date

of the issuance of our audited financial statements for the period ended December 31, 2018.

of a major portion of our assets as of December 31, 2018, is dependent upon our continued operations.

The Company is dependent

on generating additional revenue or obtaining adequate capital to fund operating losses until it becomes profitable.

the Company has undertaken a number of specific steps to continue to operate as a going concern.

The Company continues to focus

on developing organic growth in our operating companies, diversifying our service customer base and market concentrations and

improving gross and net margins through increased attention to pricing, aggressive cost management and overhead reductions.

to achieving profitability will be our ability to license and or sell, permit and operate through our joint ventures and licensees

our CoronaLux™

doubt about the ability of the Company to continue to operate as a going concern.

of a major portion of the Company’s assets as of March 31, 2020, is dependent upon continued operations.

The Company is

dependent on generating additional revenue or obtaining adequate capital to fund operating losses until it becomes profitable.

For the three months ended March 31, 2020 the Company raised approximately $0.2 million from the issuance of short-term and long-term

debt, offset by payments of principal on short term notes and capital leases of $0.1 million.

In addition, the Company has undertaken

a number of specific steps to continue to operate as a going concern.

The Company continues to focus on developing organic growth

in our operating companies and improving gross and net margins through increased attention to pricing, aggressive cost management

and overhead reductions, including discontinuing a line of business with insufficient margins.

Critical to achieving profitability

will be the ability to license and or sell, permit and operate though the Company’s joint ventures and licensees the CoronaLux™

waste destruction units.

The Company has increased our business development efforts to address opportunities

identified in expanding domestic markets attributable to increased federal and state emission control regulations (particularly

in the nation’s oil and gas fields) and a growing demand for energy conservation and renewable energies.

In addition, the

Company is evaluating various forms of financing that may be available to it.

There can be no assurance that the Company will

secure additional financing for working capital, increase revenues and achieve the desired result of net income and positive cash

flow from operations in future years.

These financial statements do not give any effect to any adjustments that would be necessary

should the Company be unable to report on a going concern basis.

The Company has increased business development efforts to address opportunities identified in expanding

markets attributable to increased interest in energy conservation and emission control regulations.

In addition, the Company is

evaluating various forms of financing which may be available to it.

There can be no assurance that the Company will secure additional

financing for working capital, increase revenues and achieve the desired result of net income and positive cash flow from operations

in future years.

These financial statements do not give any effect to any adjustments that would be necessary should the Company

be unable to report on a going concern basis.

of presentation Unaudited Interim Financial Information

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In the opinion of management, the accompanying

unaudited condensed consolidated financial statements contain all of the normal recurring adjustments necessary to present fairly

unaudited condensed consolidated financial statements contain all the normal recurring adjustments necessary to present fairly

the financial position and results of operations as of and for the periods presented.

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These consolidated financial statements should be read in conjunction with the Company’s

audited consolidated financial statements and the notes thereto included in the Company’s Report on Form 10-K filed on April

16, 2019 for the years ended December 31, 2018 and 2017.

audited consolidated financial statements and the notes thereto included in the Company’s Report on Form 10-K filed on May

15, 2020 for the year ended December 31, 2019.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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project materials, contract labor and other costs associated with ongoing product development and enhancement efforts.

expenses were $0 for both the three months ended September 30, 2019 and 2018.

R&D expenses were $0 and $600 for the nine months

ended September 30, 2019 and 2018, respectively.

expenses were $0 for both the three months ended March 31, 2020 and 2019.

are stated at the lower of cost or market and maintained on a first in, first out basis and includes the following amounts at

December 31, 2019

Finished goods

Work in process

Raw materials

Company accounts for income taxes pursuant to Accounting Standards Codification (“ASC”) 740, Income Taxes,

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the effective date to be recognized.

During the three and nine months ended September 30, 2019 and 2018 the Company recognized

no adjustments for uncertain tax positions.

During the three months ended March 31, 2020 and 2019 the Company recognized no adjustments

for uncertain tax positions.

Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

No interest and penalties

related to uncertain tax positions were recognized at September 30, 2019 and December 31, 2018.

The Company expects no material

changes to unrecognized tax positions within the next twelve months.

related to uncertain tax positions were recognized at March 31, 2020 and December 31, 2019.

The Company expects no material changes

to unrecognized tax positions within the next twelve months.

Company has filed federal and state tax returns through December 31, 2018.

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The Company considers the applicability and impact of all new or revised ASU’s.

February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) in order to increase transparency and comparability among organizations

by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under prior

Accounting Pronouncements Implemented

February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations

by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under current

ASU 2016-02 requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use

asset representing its right to use the underlying asset for the lease term on the balance sheet.

The Company adopted ASU 2016-02

in the first quarter of 2019 utilizing the modified retrospective transition method.

The Company has elected the package of practical

expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are

or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct

costs for any existing leases as of the adoption date.

The Company did not elect to apply the hindsight practical expedient when

determining lease term and assessing impairment of right-to-use assets.

The adoption of ASU 2016-02 on January 1, 2019 resulted

in the recognition of right-of-use assets of approximately $225,300, lease liabilities of $246,100 on its Condensed Consolidated

Balance Sheets and a cumulative-effect adjustment on retained earnings of $20,800 on its Condensed Consolidated Balance Sheets

with no material impact to its Condensed Consolidated Statement of Operations.

Company adopted the provisions of the guidance in the new revenue standard under ASC 606 effective January 1, 2018 applying the

modified retrospective method to all contracts.

Results for reporting periods beginning after January 1, 2018 are presented under

the new revenue recognition guidance, while prior period amounts are not adjusted and continue to be reported in accordance with

the historic accounting under previous revenue recognition guidance.

The adoption of this guidance did not have any material impact

on the Company’s consolidated condensed financial statements.

There was no impact to net revenue for the year ended December

31, 2018 as a result of applying the new revenue recognition guidance.

ASU 2016-02 is effective for

fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective

approach and early adoption is permitted.

The Company adopted ASU 2016-02 in the first quarter of 2019.

(See Note 6).

revenue generated from contracts with customers, for the manufacture of products for the removal and treatment of hazardous vapor

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Disaggregation

Three months ended September 30, 2019

Environmental

Sources of Revenue

Industrial cleaning services

Product sales

Licensing fees

Operating fees

Management fees

Total Revenue

Three months ended September 30, 2018

Environmental

Sources of Revenue

Industrial cleaning services

Mobile rail car cleaning services

Product sales

Licensing fees

Operating fees

Management fees

Total Revenue

Nine months ended September 30, 2019

Environmental

Three months ended March 31, 2020

Environmental Solutions

Sources of Revenue

Industrial cleaning services

Product sales

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Total Revenue

Nine months ended September 30, 2018

Environmental

Three months ended March 31, 2019

Environmental Solutions

Sources of Revenue

Industrial cleaning services

Mobile rail car cleaning services

Product sales

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Contract Liabilities

Receivable, net

(non-current)

Balance as of September 30, 2019

Balance as of March 31, 2020

Balance as of December 31, 2019

(Decrease) increase

majority of the Company’s revenue is generally invoiced on a weekly or monthly basis, and the payments are generally received

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Performance Obligations

of September 30, 2019, the aggregate amount of the transaction price allocated to the remaining performance obligations was approximately

$1,041,700, of which the Company expects to recognize revenue of approximately 99% over the next 24 months, including 96% over

the next 12 months.

of March 31, 2020, the aggregate amount of the transaction price allocated to the remaining performance obligations was approximately

$1.1 million, of which the Company expects to recognize 100% of this revenue over the next 12 months.

Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected term of

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and equipment was comprised of the following:

September 30,

Field and shop equipment

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Property and equipment, net

expense for the three months ended September 30, 2019 and 2018 was $73,100 and $88,800, respectively.

Depreciation expense for

the nine months ended September 30, 2019 and 2018 was $247,100 and $318,100, respectively.

For the three months ended September

30, 2019 depreciation expense included in cost of goods sold was $51,200 and $70,700 respectively.

expense for the three months ended March 31, 2020 and 2019 was $35,900 and $100,700, respectively.

For the three months ended

September 30, 2018 depreciation expense included in selling, general and administrative expenses was $22,000 and $18,100 respectively.

For the nine months ended September 30, 2019 depreciation expense included in cost of goods sold was $187,700 and $263,100 respectively.

For the nine months ended September 30, 2018 depreciation expense included in selling, general and administrative expenses was

March 31, 2020 and 2019, depreciation expense included in cost of goods sold was $21,000 and $83,400, respectively.

For the three

months ended March 31, 2020 and 2019, depreciation expense included in selling, general and administrative expenses was $14,900

and $17,300, respectively.

depreciation on leased CoronaLux™

units included in accumulated depreciation and amortization above is $304,700 and $298,100

as of September 30, 2019 and 2018, respectively.

Depreciation expense on leased CoronaLux™

units included in accumulated depreciation and amortization above is $9,700 and $26,700 as of March 31, 2020 and

2019, respectively.

and equipment included the following amounts for leases that have been capitalized at:

September 30,

Vehicles, field and shop equipment

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assets were comprised of the following:

September 30, 2019

March 31, 2020

Gross carrying amount

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Amortization expense was $8,000 and $11,700 for

the three months ended September 30, 2019 and 2018, respectively.

Amortization expense was $28,600 and $77,700 for the nine months

ended September 30, 2019 and 2018, respectively.

Company has entered into operating leases primarily for real estate.

These leases have terms which range from 4 year to 6 years,

and often include one or more options to renew.

These renewal terms can extend the lease term from 1 year to month-to-month and

are included in the lease term when it is reasonably certain that the Company will exercise the option.

These operating leases

are included in “Prepaid expenses and other current assets”

and “Other assets”

on the Company’s

September 30, 2019 Condensed Consolidated Balance Sheets and represent the Company’s right to use the underlying asset for

the lease term.

The Company’s obligation to make lease payments are included in “Accrued liabilities”

and “Other

non-current liabilities”

on the Company’s September 30, 2019 Condensed Consolidated Balance Sheets.

Based on the present

value of the lease payments for the remaining lease term of the Company’s existing leases, the Company recognized right-of-use

assets of approximately $225,300 and lease liabilities for operating leases of approximately $246,100 on January 1, 2019.

lease right-of-use assets and liabilities commencing after January 1, 2019 are recognized at commencement date based on the present

value of lease payments over the lease term.

As of September 30, 2019, total right-of-use assets and operating lease liabilities

were approximately $478,700.

the three months ended March 31, 2020 and 2019, respectively.

Company has entered operating leases primarily for real estate.

These leases have terms which range from 4 year to 6 years, and

often include one or more options to renew.

These renewal terms can extend the lease term from 1 year to month-to-month and are

included in the lease term when it is reasonably certain that the Company will exercise the option.

These operating leases are

included in “Other assets”

on the Company’s March 31, 2020 Condensed Consolidated Balance Sheets and represent

the Company’s right to use the underlying asset for the lease term.

The Company’s obligation to make lease payments

are included in “Accrued liabilities”

and “Other non-current liabilities”

on the Company’s March

31, 2020 Condensed Consolidated Balance Sheets.

Based on the present value of the lease payments for the remaining lease term

of the Company’s existing leases, the Company recognized right-of-use assets of approximately $225,300 and lease liabilities

for operating leases of approximately $246,100 on January 1, 2019.

Operating lease right-of-use assets and liabilities commencing

after January 1, 2019 are recognized at commencement date based on the present value of lease payments over the lease term.

of March 31, 2020, and December 31, 2019, total right-of-use assets were $396,400 and $437,300, respectively.

March 31, 2020, and December 31, 2019, total operating lease liabilities were $426,800 and $437,300, respectively.

All operating lease expense is recognized on a straight-line basis over the lease term.

months ended September 30, 2019, the Company recognized approximately $51,900 in operating lease costs for right-of-use assets.

In the nine months ended September 30, 2019, the Company recognized approximately $183,000 in operating lease costs for right-of-use

In the three months ended March 31, 2020

and 2019, the Company recognized approximately $52,300 and $65,600, respectively, in operating lease costs for right-of-use

the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the

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related to the Company’s right-of-use assets and related lease liabilities were as follows:

Nine Months Ended

September 30, 2019

Three Months Ended March 31,

Cash paid for operating lease liabilities

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Weighted-average discount rate

(1) Includes $225,300 for operating leases existing on January 1, 2019.

Maturities of lease liabilities as of June 30, 2019 were as follows:

Due in the 12-month period ended September 30,

Maturities of lease liabilities in 12-month period ended March 31, 2020 were

Less imputed interest

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liabilities were comprised of the following:

September 30,

Accrued compensation and related taxes

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estimated earnings and billings on uncompleted contracts are as follows:

September 30,

Revenue recognized

billings to date

Costs and estimated earnings in excess of

billings on uncompleted contracts

Costs and estimated earnings in excess of billings on uncompleted contracts

Billings to date

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INVESTMENT IN PARAGON WASTE SOLUTIONS LLC

its inception through September 30, 2019, the Company has provided approximately $6.6 million in funding to PWS for working capital

its inception through March 31, 2020, the Company has provided approximately $6.9 million in funding to PWS for working capital

and the further development and construction of various prototypes and commercial waste destruction units.

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received for non-refundable licensing and placement fees have been recorded as deferred revenue in the accompanying consolidated

balance sheets at September 30, 2019 and December 31, 2018 and are recognized as revenue ratably over the term of the contract.

balance sheets at March 31, 2020 and December 31, 2019 and are being recognized as revenue ratably over the term of the

PAYROLL TAXES PAYABLE

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interest and penalties were incurred related to these unpaid payroll taxes.

of September 30, 2019, and December 31, 2018, the outstanding balance due to the IRS was $1,047,400, and $1,022,500, respectively.

than this outstanding payroll tax matter arising in 2009 and 2010, all state and federal taxes have been paid by REGS in a timely

as of September 30, 2019 and December 31, 2018, was comprised of the following:

September 30,

As of March 31, 2020 and December 31, 2019,

the outstanding balance due to the IRS by REGS was $1,060,400, and $1,052,200, respectively.

Other than this outstanding payroll tax matter

owed exclusively by REGS arising in 2009 and 2010, all state and federal payroll taxes have been paid by REGS in a timely

as of March 31, 2020 and December 31, 2019, was comprised of the following:

SHORT TERM NOTES

Secured short term note payable dated September 13, 2017 with principal and interest due 60 days from issuance.

The note requires a one-time fee in the amount of $15,000 to compensate for the first two weeks of the term and each week thereafter (weeks 3-8) a fee of $1,500 shall be due and owing accruing on the first day of the week.

The total one-time fee paid was $24,000.

A fee of 100,000 shares of restricted common stock shall be issued as a penalty for each month or prorated for any two-week portion of any month the note is outstanding past the original maturity date for months 3 through 6, and a fee of 200,000 shares of restricted common stock shall be issued to lender for each month or prorated for each two-week portion of any month the note is outstanding past the original maturity date beginning in month 7 until paid in full.

The note is secured by the future sale of CoronaLux units and a personal guarantee of an officer of the Company.

The penalty period for shares to be issued has been reached.

For the year ended December 31, 2018, the Company recorded 2,300,000 shares of its common stock as issuable under the terms of this agreement, valued at $667,800 and recorded as interest expense.

For the quarter ended March 31, 2019, the Company recorded an additional 200,000 shares of its common stock under the terms of this agreement, valued at $19,000 and recorded as interest expense.

This note was converted to minority investment in new subsidiary in February 2019.

Secured short term note payable dated October 13, 2017 with principal and interest due 60 days from issuance.

The note requires a one-time fee in the amount of $4,000 to compensate for the first two weeks of the term and each week thereafter (weeks 3-8) a fee of $400 shall be due and owing accruing on the first day of the week.

The total one-time fee paid was $6,400.

A fee of 40,000 shares of restricted common stock shall be issued as a penalty for each month or prorated for any two-week portion of any month the note is outstanding past the original maturity date for months 3 through 6, and a fee of 80,000 shares of restricted common stock shall be issued to lender for each month or prorated for each two-week portion of any month the note is outstanding past the original maturity date beginning in month 7 until paid in full.

The note is secured by the future sale of CoronaLux units and a personal guarantee of an officer of the Company.

The penalty period for shares to be issued has been reached for the years ended December 31, 2018 and 2017, however, the debt holder agreed to a reduction and a fixed amount of penalty shares in 2018, and the Company recorded 310,000 shares and 40,000 shares of its common stock, respectively, as issuable under the terms of this agreement.

The shares were valued at $137,500 and $30,000 for the years ended December 31, 2018 and 2017, respectively, and were recorded as interest expense in the applicable period.

No additional shares will be issued by the Company.

Secured short term note payable dated October 13, 2017 with principal and interest

due 60 days from issuance.

The note requires a one-time fee in the amount of $4,000 to compensate for the first two weeks

of the term and each week thereafter (weeks 3-8) a fee of $400 shall be due and owing accruing on the first day of the week.

The total one-time fee paid was $6,400 and was recorded as interest.

A fee of 40,000 shares of restricted common stock shall

be issued as a penalty for each month or prorated for any two-week portion of any month the note is outstanding past the original

maturity date for months 3 through 6, and a fee of 80,000 shares of restricted common stock shall be issued to lender for

each month or prorated for each two-week portion of any month the note is outstanding past the original maturity date beginning

in month 7 until paid in full.

The note is secured by the future sale of CoronaLux units and a personal guarantee of an officer

of the Company.

The penalty period for shares to be issued has been reached, however, the debt holder agreed to a reduction

and a fixed amount of penalty shares in 2018, as issuable under the terms of this agreement.

No additional shares will be

issued by the Company.

The reduction of penalty shares was accounted for as debt extinguishment and a gain was recorded in

Secured short term note payable dated November 6, 2017 with principal and interest due 60 days from issuance.

The note requires a one-time fee in the amount of $5,000 to compensate for the first two weeks of the term and each week thereafter (weeks 3-8) a fee of $400 shall be due and owing accruing on the first day of the week.

The total one-time fee paid was $7,400.

A fee of 50,000 shares of restricted common stock shall be issued as a penalty for each month or prorated for any two-week portion of any month the note is outstanding past the original maturity date for months 3 through 6, and a fee of 100,000 shares of restricted common stock shall be issued to lender for each month or prorated for each two-week portion of any month the note is outstanding past the original maturity date beginning in month 7 until paid in full.

The note is secured by the future sale of CoronaLux units and a personal guarantee of an officer of the Company.

The penalty period for shares to be issued had not been reached as of December 31, 2017 but was reached as of December 31, 2018, however, the debt holder agreed to a reduced and fixed amount of penalty shares during 2018.

During the year ended December 31, 2018, the Company recorded 350,000 shares of its common stock as issuable under the terms of this agreement.

The shares were valued at $153,900 recorded as interest expense.

No interest accrues on the unpaid balance.

Secured short term note payable dated November 6, 2017 with principal and interest due 60 days

from issuance.

The note requires a one-time fee in the amount of $5,000 to compensate for the first two weeks of the term

and each week thereafter (weeks 3-8) a fee of $400 shall be due and owing accruing on the first day of the week.

one-time fee paid was $7,400 and was recorded as interest.

A fee of 50,000 shares of restricted common stock shall be issued

as a penalty for each month or prorated for any two-week portion of any month the note is outstanding past the original maturity

date for months 3 through 6, and a fee of 100,000 shares of restricted common stock shall be issued to lender for each month

or prorated for each two-week portion of any month the note is outstanding past the original maturity date beginning in month

7 until paid in full.

The note is secured by the future sale of CoronaLux units and a personal guarantee of an officer of

The penalty period for shares to be issued has been reached, however, the debt holder agreed to a reduced and

fixed amount of penalty shares during 2018.

No additional shares will be issued by the Company.

The reduction of penalty shares was accounted for as debt extinguishment and a gain was recorded in 2018.

The reduction of penalty shares

was accounted for as debt extinguishment and a gain was recorded in 2018.

No interest accrues on the unpaid balance.

Note payable dated November 20, 2017, interest at 30% per annum, principal and accrued interest due on or before February 28, 2018.

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The Company made interest payments totaling $84,100 of which $37,726 of interest and principal reduction of $1,900 was paid by the issuance of 140,000 shares of common stock during 2018 and the note holder has continued to extend the due date.

Unpaid interest at September 30, 2019 is approximately $84,600.

Secured short term note payable dated January 26, 2018 with principal and interest due 60 days from issuance.

The note required a one-time fee in the amount of $12,500 to compensate for the first two weeks of the term and each week thereafter (weeks 3-8) a fee of $1,250 accrued on the first day of the week.

The total one-time fee of $17,500 remains unpaid and accrues interest until paid.

A fee of 100,000 shares of restricted common stock accrued as a penalty for each month or prorated for any two-week portion of any month the note was outstanding past the original maturity date for months 3 through 6, and a fee of 200,000 shares of restricted common stock accrued to the lender for each month or prorated for each two-week portion of any month the note was outstanding past the original maturity date beginning in month 7 until paid in full.

The note was secured by the future sale of CoronaLux™

units and a personal guarantee of an officer of the Company.

This note was paid in full during September 2018 and 700,000 of penalty shares were issued, valued at $200,000 recorded as interest.

Unpaid interest at June 30, 2019 is approximately $19,000.

Note payable dated February 27, 2018 due on or before May 31, 2018 requiring a one-time fee in the amount of $25,000 to be paid as interest along with the principal on the due date.

Because the note and interest were not paid on or before June 1, 2018, a fee of $5,000 accrued on the first day of each month commencing June 1, 2018.

The note was secured by all of the proceeds from the sale of SEM’s BioActive Media paid to or received by SEM or MV.

This note principal was paid in full in September 2018.

Unpaid interest at June 30, 2019 is approximately $44,400.

Secured short term note payable dated February 1, 2019 with principal and interest due 90 days

from issuance.

The note requires a one-time fee in the amount of $15,000 to compensate for the first two weeks of the term

and each week thereafter (weeks 3-12) a fee of $1,500 shall be due and owing accruing on the first day of the week.

one-time fee paid was $30,000.

A fee of 50,000 shares of restricted common stock shall be issued as a penalty for each month

or prorated for any two-week portion of any month the note is outstanding past the original maturity date for months 4 through

6, and a fee of 100,000 shares of restricted common stock shall be issued to lender for each month or prorated for each two-week

portion of any month the note is outstanding past the original maturity date beginning in month 7 until paid in full.

note is secured by the future sale of any and all PelleChar products and a personal guarantee of an officer of the Company.

Unpaid interest at March 31, 2020 is approximately $129,500.

Secured short term note payable dated February 1, 2019 with principal and interest due 90 days from issuance.

The note requires a one-time fee in the amount of $15,000 to compensate for the first two weeks of the term and each week thereafter (weeks 3-12) a fee of $1,500 shall be due and owing accruing on the first day of the week.

The total one-time fee totals $30,000 and was recorded as interest.

A fee of 50,000 shares of restricted common stock shall be issued as a penalty for each month or prorated for any two-week portion of any month the note is outstanding past the original maturity date for months 4 through 6, and a fee of 100,000 shares of restricted common stock shall be issued to lender for each month or prorated for each two-week portion of any month the note is outstanding past the original maturity date beginning in month 7 until paid in full.

The note is secured by the future sale of any and all PelleChar products and a personal guarantee of an officer of the Company.

The penalty period for shares to be issued has been reached.

For the period ended September 30, 2019, the Company

recorded 350,000 shares of its common stock as issuable under the terms of this agreement value at $31,200 and

recorded as interest expense.

Unpaid interest at September 30, 2019 is approximately $30,000.

Note payable insurance premium financing, interest at 2.12% per annum, payable in 10 installments of $33,000, due November 1, 2019.

For the three months ended March 31, 2020, the Company recorded 300,000 shares of its common stock as issuable under the terms of this agreement value at $28,000 and recorded as interest expense.

Unpaid one-time fees at March 31, 2020 is approximately $30,000.

Secured short term note payable dated July 2, 2019 with principal and interest due 60 days from issuance.

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The note accrues interest at 12% annually.

For the quarter ended September 30, 2019, the Company recorded interest expense of $3,000, and $37,300 of interest related to debt discount.

Unpaid interest at September 30, 2019 is approximately $3,000.

The note is past due as the date of this filing.

The Company has not received notice from the lender and continue to accrue interest.

For the three months ended March 31, 2020, the Company recorded interest expense of $3,000.

Unpaid interest at December 31, 2019 is approximately $9,000.

Secured short term note payable dated July 18, 2019 with principal and interest due 60 days from issuance.

The note requires a one-time fee in the amount of $5,000 to compensate for the first two weeks of the term and each week thereafter (weeks 3-12) a fee of $500 shall be due and owing accruing on the first day of the week.

A fee of 15,000 shares of restricted common stock shall be issued as a penalty for each month or prorated for any two-week portion of any month the note is outstanding past the original maturity date for months 3 through 6, and a fee of 30,000 shares of restricted common stock shall be issued to lender for each month or prorated for each two-week portion of any month the note is outstanding past the original maturity date beginning in month 7 until paid in full.

The note is secured by the future sale of any and all MV Technolofy, LLC products.

For the quarter ended September 30, 2019, the Company recorded interest expense of $9,000, which included the $5,000 up front fee.

Unpaid interest at September 30, 2019 is approximately $9,000.

The note is secured by the future sale of any and all MV Technology, LLC products.

The penalty period for shares to be issued has been reached.

For the period ended March 31, 2020, the Company recorded 52,500 shares of its common stock as issuable under the terms of this agreement value at $5,100 and recorded as interest expense.

Unpaid interest at March 31, 2020 is approximately $10,000.

Secured short term note payable dated October 1, 2019 with principal and interest due 6 months from issuance.

On April 24, 2020, this note was extended to October 15, 2020.

The note requires a one-time issuance of 200,000 common shares of the Company upon the maturity date of the note, which the company recorded the fair value of $13,000 as debt discount, amortized over the life of the note.

The note accrues interest at 15% annually.

For the three months ended March 31, 2020, the Company recorded interest expense of $11,200, and $6,500 of interest related to debt discount.

Unpaid interest at March 31, 2020 is approximately $20,600.

Secured short term note payable dated December 14, 2019 with principal and interest due 6 months from issuance.

The note requires a one-time issuance of 250,000 common shares of the Company upon the maturity date of the note, which the company recorded the fair value of $16,300 as debt discount, amortized over the life of the note.

The note accrues interest at 15% annually.

For the three months ended March 31, 2020, the Company recorded interest expense of $16,800, and $8,200 of interest related to debt discount.

Unpaid interest at March 31, 2020 is approximately $20,000.

Secured short term note payable dated September 18, 2019 with no stated maturity date.

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Payments will be offset by SEER building and delivering 20 kilns for BIOCHAR to the debtor.

For the quarter ended September 30, 2019, the Company recorded interest expense of $600.

Unpaid interest at September 30, 2019 is approximately $600.

For the three months ended March 31, 2020, the Company recorded interest expense of $4,500.

Unpaid interest at March 31, 2020 is approximately $9,700.

Secured short term note payable dated October 1, 2019 with no stated maturity date.

The note accrues interest at 6% annually for the first 18 months, and 12% thereafter if not paid in full.

Payments will be offset by SEER building and delivering 20 kilns for BIOCHAR to the debtor.

For the three months ended March 31, 2020, the Company recorded interest expense of $1,300.

Unpaid interest at March 31, 2020 is approximately $2,600.

Secured short term note payable dated March 16, 2020, maturing on March 15, 2021.

The note bears annual simple interest, at a rate of 14%, and matures on March 15, 2021.

The Lender receives a one-time option grant to purchase 60,000 shares of the Company’s common stock for $0.10 per share for a period of 3 years from grant date, on the maturity date, with payment of principal and interest.

These options were value at approximately $3,500, and are recorded as debt discount, and amortized over the life of the loan.

For the three months ended March 31, 2020, the Company recorded interest expense of $600.

Unpaid interest at March 31, 2020 is approximately $600.

Secured short term note payable dated March 17, 2020, maturing on March 16, 2021.

The note bears annual simple interest, at a rate of 14%, and matures on March 16, 2021.

The Lender receives a one-time option grant to purchase 30,000 shares of the Company’s common stock for $0.10 per share for a period of 3 years from grant date, on the maturity date, on the maturity date, with payment of principal and interest.

These options were value at approximately $2,000, and are recorded as debt discount, and amortized over the life of the loan.

For the three months ended March 31, 2020, the Company recorded interest expense of $300.

Unpaid interest at March 31, 2020 is approximately $300.

Note payable insurance premium financing, interest at approximately 5.1% per annum, payable in 10 installments of $9,700, due November 1, 2020.

Total Short-term notes

Secured short term note payable dated August 21, 2019 with principal and interest due 60 days

from issuance.

The note requires a one-time fee in the amount of $500 to compensate for the first two weeks of the term and

each week thereafter (weeks 3-8) a fee of $50 shall be due and owing accruing on the first day of the week, after which the

fee is $75 per week.

Unsecured short term note payable dated August 21, 2019 with principal and interest due 60 days from issuance.

The note requires a one-time fee in the amount of $500 to compensate for the first two weeks of the term and each week thereafter (weeks 3-8) a fee of $50 shall be due and owing accruing on the first day of the week, after which the fee is $75 per week, which is recorded as interest expense.

The note is from the CEO, and thus classified as a related party note.

For the quarter ended September

30, 2019, the Company recorded interest expense of $700, which included the $500 upfront fee.

Unpaid interest at September

30, 2019 is approximately $700.

Secured short term note payable dated August 21, 2019 with principal and interest due 60 days from issuance.

The note requires a one-time fee in the amount of $4,150 to compensate for the first two weeks of the term and each week thereafter (weeks 3-8) a fee of $415 shall be due and owing accruing on the first day of the week, after which the fee is $600 per week.

For the three months ended March 31, 2020, the Company recorded interest expense of $900.

Unpaid interest at March 31, 2020 is approximately $2,500.

Unsecured short term note payable dated August 21, 2019 with principal and interest due 60 days from issuance.

The note is from a family member of the CEO, and thus classified as a related party note.

For the quarter ended September 30, 2019, the Company recorded interest expense of $5,800, which included the $4,150 up front fee.

Unpaid interest at September 30, 2019 is approximately $5,800.

Total Short-term notes –

related party

Convertible notes payable, interest at 8% per annum, unpaid principal and interest maturing 3

years from note date between August 2018 and October 2019, convertible into common stock at the option of the lenders at a

rate of $0.70 per share;

For the three months ended March 31, 2020, the Company recorded interest expense of $7,200.

Unpaid interest at March 31, 2020 is approximately $19,800.

Unsecured short term note payable dated October 7, 2019 with principal and interest due 60 days from issuance.

The note is from the CEO, and thus classified as a related party note.

For the three months ended March 31, 2020, the Company recorded interest expense of $900.

Unpaid interest at March 31, 2020 is approximately $2,000.

Total short-term notes - related party

Convertible notes payable, interest at 8% per annum, unpaid principal and interest maturing 3 years from note date between August 2018 and October 2019, convertible into common stock at the option of the lenders at a rate of $0.70 per share;

one convertible note for $250,000 has a personal guarantee of an officer of the Company.

that matured in August 2018, were subsequently extended by one year to August 2019, all other terms remained the same.

note that matured November 2018 was subsequently extended to May 2019 and the interest rate increased to 13% per annum.

default notice has been received from the noteholders.

Unpaid interest at September 30, 2019 is approximately $226,900.

Debt discount

The notes that matured in August 2018, were subsequently extended by one year to August 2019, all other terms remained the same.

The note that matured November 2018 was subsequently extended to May 2019 and the interest rate increased to 13% per annum.

No default notice has been received from the noteholders.

For the three months ended March 31, 2020, the Company recorded interest expense of $35,100.

Unpaid interest at March 31, 2020 is approximately $297,300.

Total convertible notes

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Note payable dated July 13, 2018, interest at 20% per annum, payable July 13, 2021.

payments are due for the first six months, commencing in month seven, principal and accrued interest will be amortized and

payable over the remaining 30 months.

The note is secured by all assets of SEM and personally guaranteed by an officer of

No monthly payments are due for the first six months, commencing in month seven, principal and accrued interest will be amortized and payable over the remaining 30 months.

Monthly payments of principal and accrued interest did not commence in 2019.

The note is secured by all assets of SEM and personally guaranteed by an officer of the Company.

A fee of 200,000 shares of restricted common stock was issuable at the time of funding.

During the year ended

December 31, 2018, the Company recorded 200,000 shares of its common stock as issuable under the terms of this agreement.

During the year ended December 31, 2018, the Company recorded 200,000 shares of its common stock as issuable under the terms of this agreement.

The shares were valued at $44,000 recorded as debt discount.

Unpaid interest at September 30, 2019 was approximately $126,500.

The scheduled monthly payments have not commenced at September 30, 2019.

For the three months ended March 31, 2020, the Company recorded interest expense of $24,900.

Unpaid interest at March 31, 2020 was approximately $178,400.

Debt discount

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Secured by real estate and other assets of SEM and guaranteed by SEER and MV.

Capital lease obligations, secured by certain assets, maturing through Nov 2020

Capital lease obligations, secured by certain assets, maturing through

November 2020

Total long-term notes and capital lease obligations

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parties accrued interest due to certain related parties are as follows:

September 30,

Accrued interest

Company believes the stated interest rates on the related party notes payable represent reasonable market rates based on the note

payable arrangements executed with third parties.

March 2012, the Company entered into an Irrevocable License & Royalty Agreement with PWS that grants PWS an irrevocable world-wide

license to the IP in exchange for a 5% royalty on all revenues from PWS and its affiliates.

The term commenced as of the date

of the Agreement and shall continue for a period not to exceed the life of the patent or patents filed by the Company.

sub license the IP and any revenue derived from sub licensing shall be included in the calculation of Gross Revenue for purposes

of determining royalty payments due the Company.

Royalty payments are due 30 days after the end of each calendar quarter.

generated licensing and unit sales revenues of approximately $8,200 and $41,700 for the three and nine months ended September

30, 2019 and $134,800 for the years ended December 31, 2018, as such, royalties of $122,400 and $30,300 were due at September

30, 2019 and December 31, 2018, respectively.

October 2014, PWS and Medical Waste Services, LLC (“MWS”) formed a contractual joint venture to exploit the PWS medical

waste destruction technology.

In 2015, MWS licensed and installed a CoronaLux™

unit at an MWS facility, and subsequently

received a limited permit to operate.

In November 2017 a full permit was issued, and the unit is now fully operating.

to date have included the destruction of medical waste.

For the nine months ended September 30, 2019 and the year ended December

31, 2018, PWS has recorded $13,900 and $34,400 in income which represents their 50% interest in the net income of the joint venture,

respectively.

PWS did not incur any costs incurred on behalf of the joint venture for the nine months ended September 30, 2019

nor the year ended December 31, 2018.

13 –DISCONTINUED OPERATIONS

REGS services division

the fourth quarter of 2019, the Company ceased bidding on, and accepting contracts for the services division of its REGS subsidiary.

No contracts have been uncompleted;

therefore, the division does not have any performance obligations at December 31, 2019.

employees in the division were terminated at December 31, 2019.

The Company is investigating the sale of REGS services division

assets as of December 31, 2019.

Accordingly, the revenue and expenses associated with the services division are presented as “Discontinued

operations”

on our consolidated statement of operations and on our consolidated statement of cash flows for the three months

ended March 31, 2020, and corresponding 2019 results were reclassified from the reporting classification in fiscal year 2019 for

comparative purposes.

For the three months ended March 31, 2020 and 2019 we recorded net loss from discontinued operations equal

to $0 and $336,700, respectively.

classes of line items constituting pretax loss on discontinued operations:

For the three months ended

Services revenue

Services costs

General and administrative expenses

Salaries and related expenses

Other income (expense)

Total expenses

Operating income

Income tax benefit

Total income from discontinued operations

EQUITY TRANSACTIONS

the nine months ended September 30, 2019, the Company issued 550,000 shares of $0.001 par value common stock to short-term

note holders as required under their respective agreements.

the three months ended March 31, 2020, the Company recorded 352,500 shares of $.001 par value common stock as issued and issuable

to short-term note holders as required under their respective short-term notes valued at approximately $33,100.

(See Note 11)

the nine months ended September 30, 2019, the Company issued options to purchase 1,000,000 shares of $0.001 par value common stock

to an officer of the Company, at $0.70 per share.

The Company valued the options using the Black-Sholes model, using a volatility

of 461%, a risk-free rate of 1.39%, and an expected term, using the simplified method, of 4.5 years.

The fair value at grant date

of $100,000 will be amortized over the vesting period and recorded as stock-based compensation.

the nine months ended September 30, 2019, the Company issued options to purchase 500,000 shares of $0.001 par value common stock

to a short-term note holder of the Company, at $0.70 per share.

The options were in connection with a new short-term note, and

therefore recorded as debt discount.

The Company valued the options using the Black-Sholes model, using a volatility of 258%,

a risk-free rate of 1.71%, and an expected term, using the simplified method, of 3.0 years.

The fair value at grant date of $37,300

will be amortized over the vesting period and recorded as interest expense.

the nine months ended September 30, 2018, the Company sold 1,000,000 shares of $.001 par value common stock at $.30 per share

in a private placement, receiving proceeds of $300,000.

the nine months ended September 30, 2018, the Company issued 140,000 shares of $.001 par value common stock at $.28 per share

as a non-cash payment of accrued interest on a note payable valued at approximately $39,600.

the nine months ended September 30, 2018, the Company issued 200,000 shares of $.001 par value common stock at $.22 per share

as a one-time fee for debt valued at approximately $44,000.

the nine months ended September 30, 2018, the Company recorded 2,910,000 shares of $.001 par value common stock as issuable to

short-term note holders as required under their respective agreements.

the nine months ended September 30, 2018, the Company sold 250,000 shares of $.001 par value common stock at $.48 per share in

a private placement, receiving proceeds of $120,000.

the nine months ended September 30, 2018, the Company issued 75,000 shares of $.001 par value common stock at $.77 per share for

services valued at approximately $58,000.

During the three months ended March 31,

2020, the Company issued options to purchase 60,000 shares of $0.001 par value common stock to a short-term note holder of the

Company, at $0.10 per share.

The options were in connection with a new short-term note, and therefore recorded as debt discount.

The Company valued the options using the Black-Sholes model, using a volatility of 134%, a risk-free rate of 0.29%, and an expected

term, using the simplified method, of 3.0 years.

The fair value at grant date of $3,500 will be amortized over the vesting period

and recorded as interest expense.

the three months ended March 31, 2020, the Company issued options to purchase 30,000 shares of $0.001 par value common stock to

a short-term note holder of the Company, at $0.10 per share.

The options were in connection with a new short-term note, and therefore

recorded as debt discount.

The Company valued the options using the Black-Sholes model, using a volatility of 134%, a risk-free

rate of 0.30%, and an expected term, using the simplified method, of 3.0 years.

The fair value at grant date of $2,000 will be

amortized over the vesting period and recorded as interest expense.

the three months ended March 31, 2019, the Company issued 200,000 shares of $.001 par value common stock to short-term note holders

as required under their respective agreements.

(See Note 11)

Non-controlling

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CUSTOMER CONCENTRATIONS

Company had sales from operations to three customers for the nine months ended September 30, 2019 and one customer for the nine

months ended September 30, 2018, that surpassed the 10% threshold of total revenue.

In total, these customers represented approximately

31% and 20% of our total sales, respectively.

The concentration of the Company’s business with a relatively small number

of customers may expose us to a material adverse effect if one or more of these large customers were to experience financial difficulty

or were to cease being customers for non-financial related issues.

Company had sales from operations to three customers for the three months ended March 31, 2020 and 2019, that surpassed the 10%

threshold of total revenue.

In total, these customers represented approximately 50% and 74% of our total sales, respectively.

The concentration of the Company’s business with a relatively small number of customers may expose us to a material adverse

effect if one or more of these large customers were to experience financial difficulty or were to cease being customers for non-financial

related issues.

NET LOSS PER SHARE

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would be anti-dilutive.

For all years presented in the consolidated financial statements, all potentially dilutive securities

have been excluded from the diluted share calculations as they were anti-dilutive as a result of the net losses incurred for the

respective years.

For all periods presented in the condensed consolidated financial statements, all potentially dilutive

securities have been excluded from the diluted share calculations as they were anti-dilutive as a result of the net losses incurred

for the respective years.

Accordingly, basic shares equal diluted shares for all years presented.

dilutive securities were comprised of the following:

Nine Months Ended September 30,

Three Months Ended March 31,

Convertible notes payable, including accrued interest

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SEGMENT INFORMATION AND MAJOR CUSTOMERS

Company currently has identified three segments as follows:

SEM, PelleChar

The Company currently has identified two

segments as follows:

SEM, PelleChar, REGS in FY20 (1)

Environmental

has had no operations through September 30, 2019.

industrial cleaning was discontinued in 2019 and is reported in discontinued operations.

REGS in 2020 is reported in environmental solutions.

composition of our reportable segments is consistent with that used by our Chief Operating Decision Maker (“CODM”)

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been eliminated.

information for the three and nine months ended September 30, 2019 and 2018 is as follows:

Three Months ended

Environmental

Depreciation and amortization (1)

Interest expense

Stock-based compensation

Net income (loss)

Capital expenditures (cash and noncash)

Environmental

Depreciation and amortization (1)

Interest expense

Stock-based compensation

Net income (loss)

Capital expenditures (cash and noncash)

Nine Months ended

information for the three months ended March 31, 2020 and 2019 is as follows:

Environmental

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Capital expenditures (cash and noncash)

Includes depreciation of property, equipment and leasehold improvement and amortization of intangibles

depreciation of property, equipment and leasehold improvement and amortization of intangibles

January 2016, an employee of SEM was involved in a vehicle accident while on Company business.

13 unchanged sentences

parties that all pending state and/or federal claims will be dismissed with prejudice.

The accrued litigation outstanding at September

The accrued litigation outstanding at March

31, 2020 and December 31, 2019 was $150,000 and $150,000, respectively.

October 2018, a complaint was filed by a contractor company of a mutual customer of MV, a subsidiary of the Company.

The complaint

claimed that in 2016 MV delivered defective and poorly manufactured treatment vessels to the project and that due to such delivery,

the contractor company sustained $251,160 in damages in the effort to repair the error.

At the same time, the mutual customer

had an outstanding balance due MV of $224,000 and MV had an outstanding balance due the vessel manufacturer of $82,600.

first quarter of 2019, the parties reached a settlement whereby MV paid the contractor company a total of $160,000, the joint

customer paid the outstanding invoice amounts of $224,000 and the vessel manufacturer waived the $82,600 due from MV for the faultily

manufactured vessel.

The case was dismissed with prejudiced and the matter is closed.

SUBSEQUENT EVENTS

October 17, 2019, the Company borrowed $300,000 under a short-term note, secured by future sales of SEM media, and by the CEO

of the Company.

The note bears annual simple interest, at a rate of 15%, and matures on April 16, 2020.

The Lender receives a

one time grant of 200,000 shares of the Company’s common stock, on the maturity date, with payment of principal and interest.

On April 29, 2020, the Company borrowed $10,000

under a short-term note, from a related party.

The note bears interest at an annual rate of 8% and matured on June

This note was subsequently paid on May 11, 2020.

On May 4, 2020, the Company borrowed $140,000

under a short-term note, from a related party.

The note bears interest at an annual rate of 15% and matured on June

This note was subsequently paid on May 11, 2020.

Under the Small Business Administration (“SBA”),

the Company applied for the Paycheck Protection Program (“PPP”) loan.

These loans are forgiven if used for

payroll, payroll benefits, including health insurance and retirement plans, as well as certain rent payments, leases,

and utility payments, which are limited to 40% of the loan proceeds, all of which if paid

within either 8 weeks or 24 weeks of the receipt of the loan proceeds.

At the time of this filing, we have

been funded for $590,300 in loans through SEER and our subsidiaries.

At the time of this filing, we anticipate having a

significant amount of this loan forgiven, however the forgiveness application process is not yet complete.

If we do have a

portion of these loans not being forgiven, the unqualified portion is to be repaid over 5 years, accruing interest at 1%

Company owes two notes to a lender, that accrue penalty shares until the notes are paid in full.

The aggregate principal of these

notes is $650,000, and shares accrued after April 1, 2020, to the date of this filing total 160,000 shares.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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in conjunction with the Condensed Consolidated Financial Statements and the related notes that appear elsewhere in this report

as well as our Report on Form 10K filed with the Securities and Exchange Commission on April 16, 2019.

as well as our Report on Form 10-K filed with the Securities and Exchange Commission on May 14, 2020.

Certain statements made

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Through these operating companies, SEER provides products and services throughout the U.S.

and has licensed technologies

and has licensed and owned technologies

with many customer installations throughout the U.S.

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and, simultaneously, establish long-term alliances with and/or acquire complementary domestic businesses in rapidly growing markets

for renewable energy, waste and water treatment and oil & gas services.

The focus of the SEER family of companies, however

is to increase margins by securing or developing proprietary patented and patent-pending technologies and then leveraging its

for renewable energy, waste and water treatment and industrial services.

The focus of the SEER family of companies, however is

to increase margins by securing or developing proprietary patented and patent-pending technologies and then leveraging its 20

plus-year service experience to place these innovations and solutions into the growing markets of emission capture and control,

renewable “green gas”

capture and sale, compressed natural gas (“CNG”) fuel generation, as well as general

solid waste and medical/pharmaceutical waste destruction.

Many of SEER’s current operating companies share customer bases

and each provides truly synergistic services, technologies and products as well as annuity type revenue streams.

capture and sale, compressed natural gas fuel generation, as well as general solid waste and

medical/pharmaceutical waste destruction.

Many of SEER’s current operating companies share customer bases and each provides

truly synergistic services, technologies and products as well as annuity type revenue streams.

company now owns and manages four operating entities and two entities that has no significant operations to date.

LLC d/b/a Resource Environmental Group Services (“REGS”):

(operating since 1994) provides general industrial

cleaning services and waste management to many industry sectors focusing primarily on oil & gas production (upstream) and

refineries (downstream).

(operating since 1994) designs and manufactures

environmental systems and provides general industrial cleaning services and waste management consulting to many industry sectors.

During the fourth quarter of 2019, the Company ceased bidding on, and accepting contracts for the services division of its REGS

The results from the subsidiary are included in discontinued operations for the years ended 2019 and 2018.

have been uncompleted;

therefore, the division does not have any performance obligations at December 31, 2019.

Fifteen employees

in the division were terminated at December 31, 2019.

Subsequent to January 1, 2020, REGS is engaged solely to build kilns for

PWS, and other customers.

The Company is investigating the sale of REGS assets as of December 31, 2019.

LLC (d/b/a MV Technologies), (“MV”) :

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natural gas projects that convert raw biogas into pipeline quality gas and/or Renewable, “RNG”, for fleet vehicles.

Reach had no operations as of September 30, 2019.

Reach had minimal operations as of March 31, 2020.

Environmental Materials, LLC (“SEM”):

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capabilities from one of the nation’s premier pellet manufacturer.

Working closely with Biochar Now, LLC, PelleChar intends

to commence sales in 2019 of its proprietary pellets containing the proven and superior Biochar Now product starting with the

landscaping and big agriculture markets.

At this time, PelleChar is the only company able to offer a soil amendment pellet containing

the Biochar Now product that is produced using the patented pyrolytic process.

PelleChar had minimal operations as of September

Working closely with Biochar Now, LLC, PelleChar commenced

sales in 2019 of its proprietary pellets containing the proven and superior Biochar Now product starting with the landscaping

and big agriculture markets.

At this time, PelleChar is the only company able to offer a soil amendment pellet containing the

Biochar Now product that is produced using the patented pyrolytic process.

RCM Joint Venture :

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units at an PSMW facility.

Operations in the form of medical

waste destruction began in the first quarter of 2018.

Financial Condition and Liquidity

shown in the accompanying consolidated financial statements, the Company has experienced recurring losses, and has accumulated

a deficit of approximately $26.4 million as of September 30, 2019, and $24.4 million as of December 31, 2018.

a deficit of approximately $27.6 million as of March 31, 2020, and $27.0 million as of December 31, 2019.

For the three months

ended September 30, 2019 and 2018 we had net losses from continuing operations before adjustment for losses attributable to non-controlling

ended March 31, 2020 and 2019 we had net losses from continuing operations before adjustment for losses attributable to non-controlling

interest of approximately $0.7 million and $0.6 million, respectively.

For the nine months ended September 30, 2019 and 2018 we

had net losses from continuing operations before adjustments for losses attributable to non-controlling interest of approximately

$2.1 million and $2.9 million, respectively.

As of September 30, 2019, and December 31, 2018 our current liabilities exceed our

current assets by approximately $6.5 million and $5.3 million, respectively.

The primary reason for the increase in negative

working capital from December 31, 2018 to September 30, 2019 is due to a net increase in short term debt of approximately $1.0

As of March 31, 2020, and December 31, 2019 our current

liabilities exceed our current assets by approximately $7.6 million and $7.0 million, respectively.

The primary reason for the

increase in negative working capital from December 31, 2019 to March 31, 2020 is due to a net increase in short term debt of approximately

$0.2 million, and losses from operations.

The Company has limited common shares available for issue which may limit the ability to

raise capital or settle debt through issuance of shares.

The Company has limited common shares available for issue which may limit the ability

to raise capital or settle debt through issuance of shares.

These factors raise substantial doubt about the ability of the Company

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statements for the period ended December 31, 2019.

of a major portion of our assets as of September 30, 2019, is dependent upon our continued operations.

The Company is dependent

on generating additional revenue or obtaining adequate capital to fund operating losses until it becomes profitable.

of a major portion of our assets as of March 31, 2020, is dependent upon our continued operations.

The Company is dependent on

generating additional revenue or obtaining adequate capital to fund operating losses until it becomes profitable.

we have undertaken a number of specific steps to continue to operate as a going concern.

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growth in our operating companies, diversifying our service customer base and market concentrations and improving gross and net

margins through increased attention to pricing, aggressive cost management and overhead reductions.

Critical to achieving profitability

will be our ability to license and or sell, permit and operate through our joint ventures and licensees our CoronaLux™

destruction units.

We have increased our business development efforts to address opportunities identified in expanding domestic

markets attributable to increased federal and state emission control regulations (particularly in the nation’s oil and gas

fields) and a growing demand for energy conservation and renewable energies.

In addition, the Company is evaluating various forms

of financing that may be available to it.

There can be no assurance that the Company will secure additional financing for working

capital, increase revenues and achieve the desired result of net income and positive cash flow from operations in future years.

These financial statements do not give any effect to any adjustments that would be necessary should the Company be unable to report

on a going concern basis.

primary need for liquidity is to fund working capital requirements of our businesses, capital expenditures and for general corporate

purposes, including debt repayment.

We have incurred losses and experienced negative operating cash flows for the past several

years, and accordingly, the Company has taken a number of actions to continue to support its operations and meet its obligations.

The sale of assets and liabilities of Tactical and certain locations within REGS provided the Company working capital in 2017

to repay short-term notes totaling $650,000 and accelerate growth of our high-margin technology divisions.

We reduced selling,

general and administrative (SG&A) expenses in 2018 as a result of the sale of those assets.

We formed PelleChar and raised

$1 million of minority interest investment to bring that product to market and add to the operating cash flows of the Company.

We believe that the actions discussed above are probable of occurring and mitigating the substantial doubt raised by our historical

operating results and satisfying our estimated liquidity needs 12 months from the issuance of the financial statements.

we cannot predict, with certainty, the outcome of our actions to generate liquidity, including the availability of additional

debt financing, or whether such actions would generate the expected liquidity as currently planned.

If we continue to experience

operating losses, and we are not able to generate additional liquidity through the mechanisms described above or through some

combination of other actions, while not expected, we might need to secure additional sources of funds, which may or may not be

available to us.

Additionally, a failure to generate additional liquidity could negatively impact our access to inventory or services

that are important to the operation of our business.

of Operations for the Three Months Ended September 30, 2019 and 2018

revenues were approximately $1.3 million and $1.7 million for the three months ended September 30, 2019 and 2018, respectively.

The decrease in revenue comparing Q3 2019 to Q3 2018 is driven by a decrease of approximately $0.5 million or 59% in industrial

cleaning revenue.

The decrease in the industrial cleaning revenue is due largely to a lack of mobile rail car cleaning services

further reduced by a decrease in overall utilization of assets.

This was partially offset by an increase of environmental solutions

revenue of $0.2 million, or 20%, over Q3 2018.

The increase in environmental solutions revenue is due to increase demand in media

sales for the quarter, and the increase in sales in our PelleChar subsidiary, which is just starting to show activity.

costs, which include cost of products, cost of services, solid waste costs, general and administrative (G&A) expenses and

salaries and related expenses, were $2.0 million for the three months ended September 30, 2019 compared to $2.5 million for the

three months ended September 30, 2018.

The decrease in operating costs between the quarters was primarily the result of a 1) a

49% decrease in industrial cleaning revenue resulting in a 26% decrease in industrial cleaning costs totaling approximately ($0.2

million), 2) a 23% decrease in environmental solutions costs, although revenue was stronger, creating a stronger margin for the

third quarter resulting in a decrease in costs totaling approximately ($0.2 million), 3) an approximately ($0.1 million) decrease

in general and administrative expenses primarily driven by a decrease of approximately ($0.1 million) in salaries and related

Product costs as a percentage of product revenues were 52% for the quarter ended September 30, 2019 and 82% for the

quarter ended September 30, 2018.

The increase in margin performance for the product sales is due to an increased long-term project

margins, and the realization of revenue from our PelleChar subsidiary.

Services costs as a percentage of services revenues were

188% for the quarter ended September 30, 2019 and 104% for the quarter ended September 30, 2018.

The decrease in margin performance

for the services sector is due to a decreased utilization of manpower and the ability to utilize and bill our own equipment versus

renting third-party equipment.

We also were not able to recapture all project startup costs during the quarter.

margins through increased attention to pricing, aggressive cost management and overhead reductions, including discontinuing a

line of business with insufficient margins.

Critical to achieving profitability will be our ability to license and or sell, permit

and operate through our joint ventures and licensees our CoronaLux™

waste destruction units.

We have increased our business

development efforts to address opportunities identified in expanding domestic markets attributable to increased federal and state

emission control regulations (particularly in the nation’s oil and gas fields) and a growing demand for energy conservation

and renewable energies.

In addition, the Company is evaluating various forms of financing that may be available to it.

be no assurance that the Company will secure additional financing for working capital on favorable terms or at all, increase revenues

and achieve the desired result of net income and positive cash flow from operations in future years.

These financial statements

do not give any effect to any adjustments that would be necessary should the Company be unable to report on a going concern basis.

of Operations for the Three Months Ended March 31, 2020 and 2019

revenues were $0.8 million and $1.2 million for the three months ended March 31, 2020 and 2019, respectively.

The decrease of

approximately $0.4 million or 33% in revenues comparing the three months ended March 31, 2020 to the three months ended March

31, 2019 is primarily attributable to the decreases in revenues from our products segment revenue, which includes our environmental

solutions segment, which decreased from $1.1 million for the three months ended March 31, 2019 to $0.8 million for the three months

ended March 31, 2020, a decrease of approximately $0.3 million or approximately 30%.

Environmental solutions segment generated

less revenue as the volume of media sales decreased, primarily due to a shortage of capital to produce the media internally.

expenses, which include cost of products, cost of solid waste and general and administrative (G&A) expenses, and salaries

and related expenses, were approximately $1.5 million for the three months ended March 31, 2020 compared to $1.4 million for the

three months ended March 31, 2019.

The increase primarily consists of an increase in salaries and related expenses of approximately

$0.1 million in the first quarter of 2020 from the first quarter of 2019, which was a result of classifying most REGS employees

in the first quarter of 2019 in discontinued operations, resulting in less comparable employees remaining in continuing operations

Also contributing, was an increase in stock-based compensation in 2020.

Product costs as a percentage of product revenues

was 81% in 2020 compared to 59% in 2019.

The decrease in margin is primarily due to more media being produced internally in 2019,

and REGS costs, related to building kilns, being included in product costs in 2020, which did not exist in 2019.

Solid waste costs

as a percentage of revenues were 17% for the quarter ended September 30, 2019 and 4% for the quarter ended September 30, 2018.

The decrease in margin performance for the solid waste segment is related to a decrease in operating fee revenue.

non-operating other income (expense), net was $0.2 million for the three months ended September 30, 2019 compared to ($0.3 million)

for the three months ended September 30, 2018.

For the three months ended September 30, 2019 non-operating expenses were comprised

of interest expense of ($0.1 million) and other income of $0.3 million.

For the three months ended September 30, 2018 non-operating

expenses were comprised of interest expense of ($0.4 million) offset by other income of $0.1 million.

in interest expense in Q3 2019 compared to Q3 2018 was primarily the result of timing of short term debt and the Company having

to issue common stock to note holders in accordance with penalty clauses included in the short term notes when the Company was

unable to satisfy the notes when they came due.

The $0.3 million in other income for the quarter ended September 20, 2019 consisted

of a note receivable we collected, that was previously written down to a carrying value of $0.

is no provision for income taxes for the quarter ended September 30, 2019 and 2018 due to prior year losses and for year-to-date

Company had a net loss, before non-controlling interest, for the three months ended September 30, 2019 of ($0.5 million) compared

to a net loss, before non-controlling interest, of ($1.1 million) for the three months ended September 30, 2018.

Net loss attributable

to SEER after deducting $36,000 for the non-controlling interest income was ($480,000) for the three months ended September 30,

2019 compared to a net loss attributable to SEER of ($1,072,400), after deducting $24,400 in non-controlling interest loss for

the three months ended September 30, 2018.

of Operations for the Nine Months Ended September 30, 2019 and 2018

revenues were approximately $4.2 million and $6.0 million for the nine months ended September 30, 2019 and 2018, respectively.

The decrease in revenue comparing the nine months ending September 30, 2019 to the nine months ending September 30, 2018 is driven

by a decrease of approximately $1.5 million or 58% in industrial cleaning revenue and by a decrease of $0.3 million or 9% in environmental

solutions revenue.

The decrease in the industrial cleaning revenue is due largely to a lack of mobile rail car cleaning services

further reduced by a decrease in overall utilization of assets.

The decrease in environmental solutions revenue is due to a decrease

in media sales for the nine months ended.

Solid waste revenue decreased by $0.01 million or 26% for the nine months ended September

30, 2019 as compared to the nine months ended September 30, 2018, due to an overall reduction in revenue in our Paragon Waste

costs, which include cost of products, cost of services, solid waste costs, general and administrative (G&A) expenses and

salaries and related expenses, were $6.3 million for the nine months ended September 30, 2019 compared to $7.7 million for the

nine months ended September 30, 2018.

The decrease in operating costs between the nine months ending September 30, 2019 compared

to the nine months ending September 30, 2018 was primarily the result of a 1) a 9% decrease in environmental solutions revenue

resulting in a 19% decrease in environmental solutions costs totaling approximately ($0.4 million), 2) a 58% decrease in industrial

cleaning revenue resulting in a 27% decrease in industrial cleaning costs totaling approximately ($0.7 million), 3) an approximately

($0.3 million) decrease in general and administrative expenses primarily driven by a decrease ($0.3 million) in salaries and related

Product costs as a percentage of product revenues were 58% for the nine months ended September 30, 2019 and 66% for

the nine months ended September 30, 2018.

Services costs as a percentage of services revenues were 168% for the nine months ended

September 30, 2019 and 96% for the nine months ended September 30, 2018.

The decrease in margin performance for the services sector

is due to a decreased utilization of manpower and the ability to utilize and bill our own equipment versus renting third-party

We also were not able to recapture all project startup costs during the nine months ended.

Solid waste costs as a percentage

of revenues were 23% for the nine months ended September 30, 2019 and 11% for the nine months ended September 30, 2018.

in margin performance for the solid waste segment is related to a decrease in joint venture operating revenue.

non-operating other income (expense), net was $65,700 for the nine months ended September 30, 2019 compared to ($1.2 million)

for the nine months ended September 30, 2018.

For the nine months ended September 30, 2019 non-operating expenses were comprised

of interest expense of ($0.5 million) offset by other income of $0.5 million primarily related to a reduction of aged accounts

payable balances which have passed their statute of limitations for collections, and a collection of a note receivable we collected,

that was previously written down to a carrying value of $0.

For the nine months ended September 30, 2018 non-operating expenses

of $1.2 million were comprised of interest expense of ($1.4 million) offset by interest income of $21,700 and other income

of $0.2 million.

The decrease in interest expense for the nine months ended September 30, 2019 as compared to the nine

months ended September 30, 2018 was primarily the result of timing of short term debt and the Company having to issue common stock

to note holders in accordance with penalty clauses included in the short term notes when the Company was unable to satisfy the

notes when they came due.

is no provision for income taxes for the nine months ended September 30, 2019 and 2018 due to prior year losses and year-to-date

Company had a net loss, before non-controlling interest, for the nine months ended September 30, 2019 of ($2.1 million) compared

to a net loss, before non-controlling interest, of ($2.9 million) for the nine months ended September 30, 2018.

Net loss attributable

to SEER after deducting $0.1 million for the non-controlling interest income was ($2.0 million) for the nine months ended September

30, 2019 compared to a net loss attributable to SEER of ($2.8 million), after deducting $45,200 in non-controlling interest loss

for the nine months ended September 30, 2018.

Company had net cash used by operating activities for the nine months ended September 30, 2019 of $1.6 million compared to net

cash used by operating activities for the nine months ended September 30, 2018 of $1.1, an increase of cash used of approximately

$0.5 million.

Cash used by operating activities is driven by our net loss and adjusted by non-cash items as well as changes in

operating assets and liabilities.

Non-cash adjustments primarily include depreciation, amortization of intangible assets, stock-based

compensation expense and non-cash interest expense.

Non-cash adjustment totaled $0.4 million and $1.6 million for the nine months

ended September 30, 2019 and 2018, respectively, therefore non-cash adjustments had a larger impact on net cash used by operating

activities for the nine months ended September 30, 2018 when compared to the nine months ended September 30, 2019 by approximately

$1.2 million.

For the nine months ended September 30, 2018, the net positive change in operating assets and liabilities was $0.1

million compared to the nine months ended September 30, 2019 of $0.3 million.

The primary changes were the collections of accounts

receivable and increase in revenue contract liabilities.

cash provided by investing activities was $0.5 million for the nine months ended September 30, 2019 compared to $0.2 million for

the nine months ended September 30, 2018.

The purchase of property and equipment was $0.1 million for the nine months ended September

30, 2019 compared to only $15,600 for the purchase of property and equipment for the nine months ended September 30, 2018.

proceeds from notes receivable totaled $0.5 million and $0.2 million for the nine months ended September 30, 2019 and 2018, respectively.

remained consistent in 2020 and 2019.

non-operating other expense, net was a $400 benefit for the three months ended March 31, 2020 compared to $39,900 expense for

the three months ended March 31, 2019.

The decrease in expense in 2020 compared to 2019 is primarily due to an increase in other

income of $0.1 million due to a gain on sale of disposed assets.

This was offset by an increase in interest expense of $0.1 million

as a result of the increase overall debt outstanding.

is no provision for income taxes for both the three months ended March 31, 2020 and 2019, due to our net losses for both periods

and we continue to maintain full allowances covering our net deferred tax benefits as of March 31, 2020 and 2019.

loss, before non-controlling interest, for the three months ended March 31, 2020 was $0.7 million compared to a net loss, before

non-controlling interest, of $0.6 million for the three months ended March 31, 2019.

The net loss attributable to SEER after deducting

$27,300 for the non-controlling interest was $0.6 million for the three months ended March 31, 2020 as compared to $0.6 million,

after deducting $28,300 in non-controlling interest, and $0.3 million for discontinued operations for the three months ended March

As noted above, the 30% decrease in revenue in 2020 compared to 2019 and an increase of operating expenses of 8% and

offset by non-operating expenses during 2020 of 101% was the primary reason for the increase in the net loss.

of Discontinued Operations for the Three Months Ended March 31, 2020 and 2019

the fourth quarter of 2019, the Company ceased bidding on, and accepting contracts for the services division of its REGS subsidiary.

All revenue and expenses of our REGS subsidiary for 2019 are classified as discontinued operations.

Commencing in 2020, all REGS

operations involve the building of kilns for PWS and other customers.

All discontinued operations consist of our industrial cleaning

operations, reported during 2019.

We are presenting these in a table form, as the industrial cleaning business operations did

not have results in 2020.

For the three months ended

Services revenue

Services costs

General and administrative expenses

Salaries and related expenses

Other income (expense)

Total expenses

Operating income

Income tax benefit

Total income from discontinued operations

is no provision for income taxes for both the three months ended March 31, 2020 and 2019, due to our net losses for both periods

and we continue to maintain full allowances covering our net deferred tax benefits as of March 31, 2020 and 2019.

Company had net cash used by operating activities for the three months ended March 31, 2020 of $0.3 million compared to net cash

used by operating activities for the three months ended March 31, 2019 of $0.6, an decrease of cash used of approximately $0.3

Cash used by operating activities is driven by our net loss and adjusted by non-cash items as well as changes in operating

assets and liabilities.

Non-cash adjustments primarily include depreciation, amortization of intangible assets, stock-based compensation

expense and non-cash interest expense.

Non-cash adjustments were consistent and totaled $0.1 million for both the three months

ended March 31, 2020 and 2019.

Changes in account receivable provided $0.6 million more cash in the first quarter of 2020.

in account payable and accrued expenses provided $0.4 million, and the increase in deferred revenue provided $0.2 million more

These were offset by increase in costs in excess of billing using $0.5 more cash in 2020, the increase in prepaid expenses

using $0.2 million in 2020, and the increase in inventory used $0.1 million more in cash in the three months ended March 31, 2020.

cash used by investing activities was $19,300 for the three months ended March 31, 2020 compared to $211,000 of cash provided

for the three months ended March 31, 2019.

The purchase of property and equipment was $19,300 for the three months ended March

31, 2020 compared to $15,000 for the purchase of property and equipment for the three months ended March 31, 2019.

from notes receivable totaled $0.0 million and $0.2 million for the three months ended March 31, 2020 and 2019, respectively.

The increase in notes receivable proceeds relates to the Company’s negotiation of an early earnout payment received in full.

cash provided by financing activities was $1.1 million for the nine months ended September 30, 2019 compared to $0.8 million for

the nine months ended September 30, 2018.

The primary difference is that in the nine months ended September 30, 2019, was the

net proceeds related to debt of approximately $1.2 million compared to approximately $0.9 million in the nine months ended September

30, 2018 and proceeds from the sale of common stock of $0.4 million for the nine months ended September 30, 2018, and no proceeds

from the sale of common stock for the nine months ended September 30, 2019.

During the nine months ended September 30, 2019, the

Company also received $226,000 in proceeds from outside minority investment in PelleChar.

cash provided by financing activities was $0.1 million for the three months ended March 31, 2020 compared to $0.4 million for

the three months ended March 31, 2019.

The net proceeds related to debt of approximately $150,000 in the three months ended March

31, 2020 compared to approximately $500,000 in the three months ended March 31, 2019 and principal payments on debt of $52,500

for the three months ended March 31, 2020 compared to $119,400 for the three months ended March 31, 2019.

Accounting Policies, Judgments and Estimates

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An allowance for doubtful accounts of approximately $11,700 and $11,800

$227,500 has been reserved as of September 30, 2019 and December 31, 2018, respectively.

has been reserved as of March 31, 2020 and December 31, 2019, respectively.

are exposed to credit risk in the normal course of business, primarily related to accounts receivable.

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an allowance for doubtful accounts.

As of September 30, 2019, and December 31, 2018, we do not believe that we have significant

As of March 31, 2020, and December 31, 2019, we do not believe that we have significant credit

Value of Financial Instruments

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the amount and timing of estimated future cash flows.

No impairment was determined as of September 30, 2019.

As of December 31,

2018, the Company determined an impairment to one CoronaLux™

units of $70,700 incurred due to lack of use of the licensed

No impairments were determined as of March 31, 2020.

May 2014, the FASB issued guidance on revenue from contracts with customers that superseded most current revenue recognition guidance,

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The adoption of this guidance did not

have any material impact on the Company’s consolidated condensed financial statements (see Note 3).

have any material impact on the Company’s consolidated condensed financial statements.

account for stock-based awards at fair value on the date of grant and recognize compensation over the service period that they

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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-Q

Item 1. Financial Statements