What changed in this filing

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Item 1. Financial Statements

2021-05-14 compared with 2020-11-23 · 595 added, 971 removed, 324 unchanged (83% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

Current Assets

Cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts of $1,000 and $11,800, respectively

Accounts receivable, net of allowance for doubtful accounts of $800

and $11,800, respectively

Costs and estimated earnings in excess of billings on uncompleted contracts

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Short term notes

Short term notes - related party

Short term notes and accrued interest - related party

Convertible notes

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Current portion of lease liabilities

Accrued interest - related party

Total Current Liabilities

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70,000,000 shares authorized;

and 62,591,075 shares issued, issuable ** and outstanding September 30, 2020 and December 31, 2019, respectively

65,088,575 shares issued,

issuable ** and outstanding December 31, 2020 and December 31, 2019

Common stock issuable

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numbers were derived from the audited financial statements for the year ended December 31, 2020.

**Includes 2,795,000 and 887,500

shares issuable at September 30, 2020 and December 31, 2019, respectively, per terms of note agreements.

3,185,000 shares issuable as of March 31, 2021 and December 31, 2020, 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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Other income (expense):

Interest income

Interest expense

Total non-operating expense, net

Loss from continuing operations

Net loss from discontinued operations

Discontinued operations, net of tax

Net loss attributable to non-controlling interest

Net loss attributable to SEER common stockholders

$ (1,814,300 )

$ (1,982,400 )

Net loss from continuing operations

Discontinued operations

Net loss per share, basic and diluted

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CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’

Preferred Stock

Additional Paid-in

Stock Subscription

Non-controller

Total Stockholders’

Balances at December 31, 2019

$ (26,964,300 )

$ (2,026,700 )

$ (6,277,300 )

Issuance of common stock upon debt penalty

Stock-based compensation

Allocated value of common stock and warrants related to debt

Balances at March 31, 2020

(27,590,400 )

Issuance of common stock upon debt penalty

Stock-based compensation

Balances at June 30, 2020

Stockholders’

at December 31, 2020

$ (29,693,700 )

Issuance of common stock upon debt penalty

Stock-based compensation

Allocated value of common stock and warrants related to debt

Balances at September 30, 2020

$ (2,061,400 )

$ (8,728,800 )

of common stock upon debt penalty

value of common stock and warrants

related to debt

at March 31, 2021

(30,011,300 )

Preferred Stock

Additional Paid-in

Stock Subscription

Non-controller

Total Stockholders’

Balances at December 31, 2018

$ (24,405,500 )

$ (2,425,500 )

$ (4,238,300 )

Issuance of common stock upon debt penalty

Stock-based compensation

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

Investment in subsidiary

Balances at March 31, 2019

(24,976,900 )

Issuance of common stock upon debt penalty

Stock-based compensation

Balances at June 30, 2019

Stockholders’

at December 31, 2019

$ (26,964,300 )

Issuance of common stock upon debt penalty

Stock-based compensation

Balances at September 30, 2019

$ (2,026,700 )

$ (6,277,300 )

of common stock upon debt penalty

value of common stock and warrants

related to debt

at March 31, 2020

(27,590,400 )

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CONSOLIDATED STATEMENT OF CASH FLOWS

For the Nine Months Ended

For the three months ended March 31,

Cash flows from operating activities:

Loss from continuing operations

$ (1,910,300 )

Loss from discontinued operations

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

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Stock-based compensation expense

Note receivable discount

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

Provision for doubtful accounts receivable

Non-cash expense for interest, accretion of debt discount

Gain on disposition of assets

Non-cash relief of aged accounts payable

Changes in operating assets and liabilities:

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Prepaid expenses and other assets

Accounts payable and accrued liabilities

Accounts payable, accrued liabilities, and customer deposits

Billings in excess of revenue on uncompleted contracts

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Purchase of property and equipment

Proceeds from outside minority investment in new subsidiary

Proceeds from notes receivable

Net cash (used in) provided by investing activities

Proceeds from the sale of fixed assets

Net cash provided (used) by investing activities

Cash flows from financing activities:

Payments of notes and capital lease obligations

Proceeds from short-term notes

Payments of short-term notes - related party

Proceeds of short-term notes - related party

Proceeds from short-term and long-term debt

Proceeds from paycheck protection program

Net cash provided by financing activities

Net decrease in cash

Net (decrease) increase in cash

Cash at the beginning of period

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Financing of prepaid insurance premiums

Non-cash repayment of

Non-cash payment of interest

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

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(“SEER,”

or the “Company”), a Nevada corporation, is a provider

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

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.

or the “Company”), a Nevada corporation, is a provider of

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

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

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

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.

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, Reach is owned 85% by SEER and PelleChar

is owned 51% by SEER.

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

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

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technology “cleans”

and conditions emissions and gaseous waste

streams ( i.e ., volatile organic compounds and other greenhouse gases) generated from diverse sources such as refineries,

oil fields, and many others.

(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 nine months ended September 30, 2020.

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 nine months ended September 30, 2020 PelleChar

activity related to startup of operations, and an increasing sales effort.

Revenue and expenses of PelleChar were not material

for the nine months then ended.

and conditions emissions and gaseous waste streams

( i.e ., volatile organic compounds and other greenhouse gases) generated from diverse sources such as refineries, oil fields, and

(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 no operations for the three months

ended March 31, 2021.

PelleChar was established in September 2018 and

is owned 51% by SEER.

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, 2021 PelleChar activity related to startup of operations that were interrupted by the pandemic

in 2020, and a commencement to market its product.

Revenue and expenses of PelleChar were not material for the nine months

of Consolidation

accompanying consolidated financial statements include the accounts of SEER, its wholly owned subsidiaries, REGS, MV and SEM and

its majority-owned subsidiaries PWS, Reach and PelleChar, since their respective acquisition or formation dates.

intercompany accounts, transactions, and profits have been eliminated in consolidation.

The Company has non-controlling interest

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

accompanying consolidated financial statements include the accounts of SEER, its wholly owned subsidiaries, REGS, MV and SEM and its

majority-owned subsidiaries PWS, Reach and PelleChar, since their respective acquisition or formation dates.

All material intercompany

accounts, transactions, and profits have been eliminated in consolidation.

The Company has non-controlling interest in joint ventures,

which are reported on the equity method.

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

a deficit of approximately $28.8 million as of September 30, 2020, and $27.0 million as of December 31, 2019.

For the nine months

ended September 30, 2020 and 2019, the Company incurred net losses from continuing operations of approximately $1.9 million and

$0.8 million, respectively.

The Company had a working capital deficit of approximately $8.8 million at September 30, 2020, an

increase of $1.7 million in working capital deficit from $7.1 million at December 31, 2019.

These factors raise substantial 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 September 30, 2020, is dependent upon continued operations.

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

For the nine months ended September 30, 2020 the Company raised approximately $1.5 million from the issuance of short-term and

long-term debt, offset by payments of principal on short term notes and capital leases of $0.2 million, for a net cash provided

by financing activities of approximately $1.3 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™

destruction units.

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.

a deficit of approximately $30.0 million as of March 31, 2021, and $29.7 million as of December 31, 2020.

For the three months

ended March 31, 2021 and 2020, the Company incurred net losses from continuing operations of approximately $0.2 million

and $0.6 million, respectively.

The Company had a working capital deficit of approximately $9.4 million as of March 31,

2021, a decrease of $0.4 million in working capital deficit from $9.8 million as of December 31, 2020.

These factors raise substantial

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, 2021, 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, 2021 the Company raised approximately $0.7 million from the issuance of short-term and long-term debt, offset by payments

of principal on short term notes and capital leases of $0.2 million, for a net cash provided by financing activities of approximately

$0.1 million.

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

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 business development efforts to address opportunities

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

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

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accompanying interim condensed consolidated financial statements are unaudited.

In the opinion of management, the accompanying

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.

The interim results are not necessarily

indicative of the results to be expected for the full year or any future period.

In the opinion of management, the accompanying 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.

The interim results are not necessarily indicative of the results to be

expected for the full year or any future period.

information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting

principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the

Securities and Exchange Commission (“SEC”).

The Company believes that the disclosures are adequate to make the interim

information presented not misleading.

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 May

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

principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities

and Exchange Commission (“SEC”).

The Company believes that the disclosures are adequate to make the interim information presented

not misleading.

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 15, 2021 for the year ended December

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United

GAAP) requires management to make a number of estimates and assumptions related to the reported amount of assets

and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and

the reported amounts of revenues and expenses during the period.

Significant items subject to such estimates and assumptions include

the carrying amount of intangible assets;

valuation allowances and reserves for receivables and inventory and deferred income

revenue recognition related to contracts accounted for under the percentage of completion method;

preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United States

GAAP) requires management to make a number of estimates and assumptions related to the reported amount of assets and liabilities

and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts

of revenues and expenses during the period.

Significant items subject to such estimates and assumptions include the carrying amount of

intangible assets;

valuation allowances and reserves for receivables and inventory and deferred income taxes;

revenue recognition related

to contracts accounted for under the percentage of completion method;

share-based compensation;

and loss contingencies, including those related to litigation.

and loss contingencies, including those

related to litigation.

Actual results could differ from those estimates.

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had no effect on reported consolidated net loss.

is recognized under FASB guidelines, which requires an evaluation

of revenue arrangements with customers following a five-step approach:

is recognized under FASB guidelines, which requires an evaluation of revenue arrangements with customers following a five-step approach:

(1) identify the contract with a customer;

the performance obligations in the contract;

(2) identify the performance obligations in the contract;

(3) determine the transaction price;

(4) allocate the transaction price to the performance

and (5) recognize revenue when (or as) the company satisfies each performance obligation.

Revenues are recognized

when control of the promised services are transferred to the customers in an amount that reflects the expected consideration in

exchange for those services.

A customer obtains control when it has the ability to direct the use of and obtain the benefits from

the services.

Other major provisions of the guidance include capitalization of certain contract costs, consideration of the time

value of money in the transaction price and allowing estimates of variable consideration to be recognized before contingencies

are resolved in certain circumstances.

The guidance also requires enhanced disclosures regarding the nature, amount, timing and

uncertainty of revenue and cash flows arising from contracts with customers.

(4) allocate the transaction price to the performance obligations;

and (5) recognize revenue when (or as) the company satisfies each

performance obligation.

Revenues are recognized when control of the promised services are transferred to the customers in an amount that

reflects the expected consideration in exchange for those services.

A customer obtains control when it has the ability to direct the

use of and obtain the benefits from the services.

Other major provisions of the guidance include capitalization of certain contract costs,

consideration of the time value of money in the transaction price and allowing estimates of variable consideration to be recognized before

contingencies are resolved in certain circumstances.

The guidance also requires enhanced disclosures regarding the nature, amount, timing

and uncertainty of revenue and cash flows arising from contracts with customers.

and Development

and development (“R&D”) costs are charged to expense as incurred.

R&D expenses consist primarily of salaries,

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

expenses were $0 for both the nine months ended September 30, 2020 and 2019.

R&D expenses consist primarily of salaries, project

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

R&D expenses were

$0 for both the three months ended March 31, 2021 and 2020.

are stated at the lower of cost or net realizable value on a first in, first out basis and includes the following amounts:

September 30, 2020

December 31, 2020

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Raw materials

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

which utilizes the asset and liability method of computing deferred income taxes.

The objective of this method is to establish

deferred tax assets and liabilities for any temporary differences between the financial reporting basis and the tax basis of the

Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled.

740 also provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions

recognized in the financial statements.

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

utilizes the asset and liability method of computing deferred income taxes.

The objective of this method is to establish deferred tax

assets and liabilities for any temporary differences between the financial reporting basis and the tax basis of the Company’s assets

and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled.

740 also provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized

in the financial statements.

Tax positions must meet a “more-likely-than-not”

recognition threshold at

the effective date to be recognized.

During the six months ended September 30, 2020 and 2019 the Company recognized no adjustments

for uncertain tax positions.

recognition threshold at the effective date

to be recognized.

During the three months ended March 31, 2021 and 2020 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, 2020 and 2019.

The Company expects no material changes to

unrecognized tax positions within the next twelve months.

No interest and penalties related

to uncertain tax positions were recognized as of March 31, 2021 and 2020.

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, 2019.

The tax periods for the years ending December 31, 2016

through 2019 are open to examination by federal and state authorities.

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

The tax periods for the years ending December 31, 2017 through

2019 are open to examination by federal and state authorities.

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

Total estimated revenue includes all of the following:

(1) the basic contract price, (2) contract options, and (3)

change orders.

Once contract performance is underway, the Company may experience changes in conditions, client requirements, specifications,

designs, materials, and expectations regarding the period of performance.

(1) the basic contract price, (2) contract options, and (3) change orders.

Once contract performance is underway, the Company may experience changes in conditions, client requirements, specifications, designs,

materials, and expectations regarding the period of performance.

Such changes are “change orders”

be initiated by us or by our clients.

In many cases, agreement with the client as to the terms of change orders is reached prior

to work commencing;

and may be initiated by

us or by our clients.

In many cases, agreement with the client as to the terms of change orders is reached prior to work commencing;

however, sometimes circumstances require that work progress without obtaining client agreement.

Revenue related

to change orders is recognized as costs are incurred if it is probable that costs will be recovered by changing the contract price.

The Company does not incur pre-contract costs.

Under the new revenue recognition guidance, the Company found no change in the

manner product revenue is recognized.

Provisions for estimated losses on uncompleted contracts are recorded in the period in which

the losses are identified and included as additional loss.

Provisions for estimated losses on contracts are shown separately as

liabilities on the balance sheet, if significant, except in circumstances in which related costs are accumulated on the balance

sheet, in which case the provisions are deducted from the accumulated costs.

A provision as a liability is reported as a current

Revenue related to change orders is recognized

as costs are incurred if it is probable that costs will be recovered by changing the contract price.

The Company does not incur pre-contract

Under the new revenue recognition guidance, the Company found no change in the manner product revenue is recognized.

for estimated losses on uncompleted contracts are recorded in the period in which the losses are identified and included as additional

Provisions for estimated losses on contracts are shown separately as liabilities on the balance sheet, if significant, except in

circumstances in which related costs are accumulated on the balance sheet, in which case the provisions are deducted from the accumulated

A provision as a liability is reported as a current liability.

Company includes in current assets and current liabilities amounts related to contracts realizable and payable.

Costs and estimated

earnings in excess of billings on uncompleted contracts represent the excess of contract costs and profits recognized to date

over billings to date and are recognized as a current asset.

Revenue contract liabilities represent the excess of billings to

date over the amount of contract costs and profits recognized to date and are recognized as a current liability.

Costs and estimated earnings

in excess of billings on uncompleted contracts represent the excess of contract costs and profits recognized to date over billings to

date and are recognized as a current asset.

Revenue contract liabilities represent the excess of billings to date over the amount of

contract costs and profits recognized to date and are recognized as a current liability.

revenue also includes media sales which are recognized as the product is shipped to the customer for use.

Waste Revenue

Company’s revenues from waste destruction licensing agreements are recognized as a single accounting unit over the term

of the license.

Company’s revenues from waste destruction licensing agreements are recognized as a single accounting unit over the term of the

Revenue from joint venture operations of the Company’s CoronaLux™

units is recognized as the revenue

is earned by the joint venture.

units is recognized as the revenue is earned by

the joint venture.

Revenue from management services is recognized as services are performed.

Disaggregation

Three months ended September 30, 2020

Environmental Solutions

Sources of Revenue

Product sales

Licensing fees

Operating fees

Management fees

Total Revenue

Three months ended September 30, 2019

Environmental Solutions

Sources of Revenue

Product sales

Licensing fees

Operating fees

Management fees

Total Revenue

Nine months ended September 30, 2020

Three months ended March 31, 2021

Environmental Solutions

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Total Revenue

Nine months ended September 30, 2019

Three months ended March 31, 2020

Environmental Solutions

5 unchanged sentences

Total Revenue

a performance obligation has been satisfied but not yet invoiced at the reporting date, a contract asset is recognized on the

balance sheet.

Where a performance obligation has not yet been satisfied but an invoice has been raised at the reporting date,

a contract liability is recognized on the balance sheet.

opening and closing balances of the Company’s accounts receivables and contract liabilities (current and non-current) are

a performance obligation has been satisfied but not yet invoiced at the reporting date, a contract asset is recognized on the balance

Where a performance obligation has not yet been satisfied but an invoice has been raised at the reporting date, a contract liability

is recognized on the balance sheet.

opening and closing balances of the Company’s accounts receivables and contract liabilities (current and non-current) are as follows:

Contract Liabilities

Accounts Receivable, net

Revenue Contract Assets

Revenue Contract Liabilities

Deferred Revenue

(non-current)

Balance as of September 30, 2020

Balance as of March 31, 2021

Balance as of December 31, 2020

(Decrease) increase

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

within approximately 30-60 days.

Deferred revenue is recorded when cash payments are received or due in advance of the Company’s

performance, including amounts that are refundable.

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

approximately 30-60 days.

Deferred revenue is recorded when cash payments are received or due in advance of the Company’s performance,

including amounts that are refundable.

Performance Obligations

of September 30, 2020, the aggregate amount of the transaction price allocated to the remaining performance obligations was approximately

of March 31, 2021, the aggregate amount of the transaction price allocated to the remaining performance obligations was approximately

$0.9 million, of which the Company expects to recognize approximately 75% 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

one year or less and (ii) contracts for which the Company recognizes revenue at the amounts to which it has the right to invoice

for services performed.

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

or less and (ii) contracts for which the Company recognizes revenue at the amounts to which it has the right to invoice for services

PREPAID EXPENSES AND OTHER CURRENT ASSETS

expenses and other current assets are assets and payments previously made, that benefit future periods.

The balance as of March

31, 2021 includes Employee Retention Tax Credit (“ERTC”) program from the U.S Treasury, as part of the COVID-19 stimulus

The ERTC program refunds a portion of taxes paid for payroll.

We accrued the amounts that we qualify for, and this reduced

our payroll expenses during the quarter applied for and approved.

Prepaid and other current assets comprised of the following:

Prepaid expenses

Total prepaid expenses and other current assets

PROPERTY AND EQUIPMENT

and equipment was comprised of the following:

September 30, 2020

December 31, 2020

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Property and equipment, net

expense for the three months ended September 30, 2020 and 2019 was $33,700 and $73,100, respectively.

expense for the three months ended March 31, 2021 and 2020 was $26,600 and $35,900, respectively.

For the three months ended March 31,

2021 and 2020, depreciation expense included in cost of goods sold was $20,100 and $21,000, respectively.

For the three months ended

September 30, 2020 and 2019, depreciation expense included in cost of goods sold was $26,500 and $51,200, respectively.

three months ended September 30, 2020 and 2019, depreciation expense included in selling, general and administrative expenses

was $7,200 and $22,000, respectively.

expense for the nine months ended September 30, 2020 and 2019 was $107,600 and $247,100, respectively.

For the nine months ended

September 30, 2020 and 2019, depreciation expense included in cost of goods sold was $72,200 and $187,700, respectively.

nine months ended September 30, 2020 and 2019, depreciation expense included in selling, general and administrative expenses was

$35,300 and $59,400, respectively.

March 31, 2021 and 2020, depreciation expense included in selling, general and administrative expenses was $6,400 and $14,900, respectively.

expense on leased CoronaLux™

units included in depreciation and amortization above is $29,200 and $39,800 as of September

30, 2020 and 2019, respectively.

units included in depreciation and amortization above is $0 and $9,700 as of March 31, 2021 and 2020,

respectively.

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

September 30,

Vehicles, field and shop equipment

2 unchanged sentences

assets were comprised of the following:

September 30, 2020

March 31, 2021 (Unaudited)

Gross carrying amount

8 unchanged sentences

estimated useful lives of the intangible assets range from seven to ten years.

Amortization expense was $8,000 and $8,100 for

the three months ended September 30, 2020 and 2019, respectively.

Amortization expense was $24,100 and $28,600 for the nine months

ended September 30, 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 September 30, 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 September

30, 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 September 30, 2020, and December 31, 2019, total right-of-use assets were $425,000 and $437,300, respectively.

As of September

30, 2020, and December 31, 2019, total operating lease liabilities were $457,400 and $468,000, respectively.

All operating lease

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

In the three months ended September 30, 2020 and 2019, the

Company recognized approximately $51,900 and $51,900, respectively, in operating lease costs for right-of-use assets.

months ended September 30, 2020 and 2019, the Company recognized approximately $168,900 and $183,000, respectively, in operating

lease costs for right-of-use assets.

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

present value of the lease payments.

The Company has certain contracts for real estate which may contain lease and non-lease components

which it has elected to treat as a single lease component.

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

Nine Months Ended September 30,

Amortization expense was $6,400 and $8,000 for the three

months ended March 31, 2021 and 2020, respectively.

Company has entered into operating leases primarily for real estate.

These leases have terms which range from 4 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 “Right

of use assets”

on the Company’s December 31, 2020 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 “Current portion

of lease liabilities”

and “Lease liabilities net of current portion”

on the Company’s March 31, 2021 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.

As of March 31, 2021, total right-of-use assets and operating

lease liabilities were approximately $338,300.

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

In the three months ended March 31, 2021, the Company recognized approximately $20,900 in operating lease costs for right-of-use assets.

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

value of the lease payments.

The Company has certain contracts for real estate which may contain lease and non-lease components which

it has elected to treat as a single lease component.

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

Three Months Ended March 31,

Cash paid for operating lease liabilities

2 unchanged sentences

Weighted-average discount rate

of lease liabilities in 12 month period ended September 30, 2020 were as follows:

Maturities of lease liabilities as of March 31, 2021 were as follows:

Less imputed interest

5 unchanged sentences

liabilities were comprised of the following:

September 30,

Accrued compensation and related taxes

5 unchanged sentences

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

Billings to date

2 unchanged sentences

INVESTMENT IN PARAGON WASTE SOLUTIONS LLC

its inception through September 30, 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.

No members of PWS have

made capital contributions or other funding to PWS other than SEER.

The intent of the operating agreement is to provide the funding

as an advance against future earnings distributions made by PWS.

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

balance sheets.

The balance at September 30, 2020 and December 31, 2019 are $38,400 and $63,100, respectively, and are being recognized

as revenue ratably over the term of the contract.

its inception through March 31, 2021, 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.

No members of PWS have made capital

contributions or other funding to PWS other than SEER.

The intent of the operating agreement is to provide the funding as an advance

against future earnings distributions made by PWS.

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

The balance as of March 31, 2021 and December 31, 2020 are $22,000 and $30,200, respectively, and are being recognized as revenue

ratably over the term of the contract.

PAYROLL TAXES PAYABLE

2009 and 2010, REGS, a subsidiary of the Company, became delinquent for unpaid federal employer and employee payroll taxes, accrued

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

2010 the IRS filed notices of federal tax liens against certain of REGS assets in order to secure certain tax

The IRS is to release this lien if and when REGS pays the full amount due.

Two of the officers of REGS also have

liability exposure for a portion of the taxes if REGS does not pay the liability.

of September 30, 2020, and December 31, 2019, the outstanding balance due to the IRS by REGS was $1,077,100, and $1,052,200, respectively.

2009 and 2010, REGS, a subsidiary of the Company, became delinquent for unpaid federal employer and employee payroll taxes, accrued interest

and penalties were incurred related to these unpaid payroll taxes.

2010 the IRS filed notices of federal tax liens against certain of REGS assets in order to secure certain tax obligations.

to release this lien if and when REGS pays the full amount due.

Two of the officers of REGS also have liability exposure for a portion

of the taxes if REGS does not pay the liability.

of March 31, 2021, and December 31, 2020, the outstanding balance due to the IRS by REGS was $1,093,700, and $1,085,400, respectively.

than this outstanding payroll tax matter, which is owed exclusively by REGS, arising in 2009 and 2010, all state and federal payroll

taxes have been paid by REGS in a timely manner.

as of September 30, 2020 and December 31, 2019, was comprised of the following:

September 30,

PAYROLL PROTECTION PROGRAM

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

The Company has elected to record these advances under the debt treatment for these loans, under GAAP guidance.

Unforgiven portions of these loans is to be repaid over 5 years, accruing interest at 1% per annum.

as of March 31, 2021 and December 31, 2020, was comprised of the following:

Paycheck protection program

Short term notes

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 2018.

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.

The total 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 Company.

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.

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.

The note is unsecured.

During 2018, a verbal agreement was made to allow month-to-month extension of the due date as long as interest payments were made monthly.

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, 2020 is approximately $174,300.

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 nine months ended September 30, 2020, the Company recorded 900,000 shares of its common stock as issuable under the terms of this agreement value at $99,000 and recorded as interest expense.

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

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

The note requires a one-time issuance of 500,000 options, which the company recorded the fair value of $37,300 as debt discount, amortized over the life of the note.

The note accrues interest at 12% annually.

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 nine months ended September 30, 2020, the Company recorded interest expense of $9,000.

Unpaid interest at September 30, 2020 is approximately $15,000.

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 and was recorded as interest.

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 Technology, LLC products.

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

For the nine months ended September 30, 2020, the Company recorded 232,500 shares of its common stock as issuable under the terms of this agreement value at $26,400 and recorded as interest expense.

Unpaid interest atSeptember 30, 2020 is approximately $10,000.

Secured short term note payable dated October 17, 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 extension requires a one-time issuance of 200,000 common shares of

the Company upon the extended maturity date of the note, which the company recorded the fair value of $20,000 as debt discount,

amortized over the life of the note.

On November 3, 2020, this note was extended to April 16, 2021.

The note extension requires

a one-time issuance of 200,000 common shares of the Company upon the extended maturity date of the note, which the company

recorded the fair value of $30,000 as debt discount, amortized over the life of the note.

The note accrues interest

at 15% annually.

For the nine months ended September 30, 2020, the Company recorded interest expense of $33,800, and $31,200

of interest related to debt discount.

Unpaid interest at September 30, 2020 is approximately $43,200.

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.

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

For the nine months ended

September 30, 2020, the Company recorded interest expense of $50,700, and $14,900 of interest related to debt discount.

interest at September 30, 2020 is approximately $53,800.

Secured short term note payable dated September 18, 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 nine months ended September 30, 2020, the Company recorded interest expense of $12,800.

Unpaid interest at June 30, 2020 is approximately $18,000.

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 nine months ended September 30, 2020, the Company recorded interest expense of $3,800.

Unpaid interest at September 30, 2020 is approximately $5,100.

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 nine months ended June 30, 2020, the Company recorded interest expense of $7,600.

Unpaid interest at September 30, 2020 is approximately $7,600.

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%.

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 nine months ended September 30, 2020, the Company recorded interest expense of $3,800.

Unpaid interest at September 30, 2020 is approximately $3,800.

Secured short term note payable dated July 8, 2020, maturing on December 7, 2020, bearing annual simple interest at a rate of 15%.

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 $11,300 as debt discount, amortized over the life of the note.

For the nine months ended September 30, 2020, the Company recorded interest expense of $7,600, and $14,900 of interest related to debt discount.

Unpaid interest at September 30, 2020 is approximately $7,600.

Secured short term note payable dated August 18, 2020, maturing on November 17, 2020, bearing

annual simple interest at a rate of 15%.

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

For the nine months ended

September 30, 2020, the Company recorded interest expense of $2,000.

Unpaid interest at September 30, 2020 is approximately

Secured short term note payable dated September 3, 2020, maturing on December 4, 2020, bearing annual simple interest at a rate of 15%.

For the nine months ended September 30, 2020, the Company recorded interest expense of $3,100.

Unpaid interest at September 30, 2020 is approximately $3,100.

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

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 nine months ended September 30, 2020, the Company recorded interest expense of $2,700.

Unpaid interest at September 30, 2020 is approximately $4,300.

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 $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, which is recorded as interest expense.

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

For the nine months ended September 30, 2020, the Company recorded interest expense of $21,600.

Unpaid interest at September 30, 2020 is approximately $34,200.

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 nine months ended September 30, 2020, the Company recorded interest expense of $2,700.

Unpaid interest at September 30, 2020 is approximately $3,800.

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;

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

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 nine months ended September 30, 2020, the Company recorded interest expense of $105,800.

Unpaid interest at September 30, 2020 is approximately $368,000.

convertible notes

LONG TERM NOTES AND CAPITAL LEASE OBLIGATIONS

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

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.

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

For the nine months ended September 30, 2020, the Company recorded interest expense of $67,700.

Unpaid interest at September 30, 2020 was approximately $221,300.

Note payable dated April 2020, interest at 6.8% per annum, secured by a piece of heavy equipment, of which the borring was used to purchase.

Forty-eight monthly payments of principal and accrued interest of $2,400, commence on April 17, 2020.

For the nine months ended September 30, 2020, the Company recorded interest expense of $3,300.

Unpaid interest at September 30, 2020 was $0.

Debt discount

Note payable dated October 13, 2015, interest at 8% per annum, payable in 60 monthly installments of principal and interest $4,562, due October 1, 2020.

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

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

Total long-term notes and capital lease obligations

current portion

Long term notes and capital lease obligations, long-term, including debt discount

Convertible notes, unsecured

Current portion of long-term

debt and capital lease obligations

Long term debt and capital lease obligations

Balance December 31, 2020

Increase in borrowing

Principal reductions

Amortization of debt discount

Balance March 31, 2021

$ 2,914,600 (4)

Protection Program (“PPP”) draw #2, received the first quarter of 2021.

(2) Unsecured

note payable insurance premium financing, interest at approximately 5.1% per annum, payable in

10 installments of $5,400, maturing on November 1, 2021.

Unsecured note payable dated January 19, 2021, interest at an annual rate of 8% simple interest and

matures on January 18, 2026.

This note is included as part of a series of anticipated notes,

all of which will be converted into common equity of Paragon Waste Services, LLC.

(Note 1), in accordance

with the note’s provisions.

For the three months ended March 31, 2021, the Company

recorded interest expense of $2,400.

Unpaid interest at March 31, 2021 was approximately

Note payable dated February 2, 2021, interest at an annual rate of 8% simple interest and

matures on January 18, 2026.

This note is included as part of a series of anticipated notes,

all of which will be converted into common equity of Paragon Waste Services, LLC.

(Note 1), in accordance

with the note’s provisions.

For the three months ended March 31, 2021, the Company

recorded interest expense of $6,200.

Unpaid interest at March 31, 2021 was approximately

balance consists of $2,460,000 of secured notes, and $454,600 unsecured notes payable.

RELATED PARTY TRANSACTIONS

payable, related parties

payable and accrued interest, related parties

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

September 30,

Short term notes

Accrued interest

Note 11 –

Debt for short term notes payable to related parties.

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 and

six months ended June 30, 2020, and corresponding 2019 results were reclassified from the reporting classification in fiscal year

2019 for comparative purposes.

For the three months ended September 30, 2020 and 2019 we recorded net loss from discontinued operations

equal to $0 and $0.5 million, respectively.

For the nine months ended September 30, 2020 and 2019 we recorded net loss from discontinued

operations equal to $0 and $1.3 million, respectively.

classes of line items constituting pretax loss on discontinued operations:

the three months ended

the nine months ended

and administrative expenses

and related expenses

income (expense)

income from discontinued operations

$ (1,320,900 )

Total short-term notes and accrued interest - Related parties

On January 6, 2021, the Company signed

a $10,000 short-term note payable to the CEO.

The note accrued interest at 8% interest per annum, with a $250 minimum interest

The loan was paid back withing the quarter, and $250 was recorded as interest expense.

EQUITY TRANSACTIONS

the nine months ended September 30, 2020, the Company issued 1,132,500 shares of $.001 par value common stock to short-term note

holders as required under their respective short-term notes valued at approximately $125,400 (See Note 11).

During the nine months ended September

30, 2020, the Company issued 575,000 shares of $.001 par value common stock to short-term note holders as required under origination

agreements for the respective short-term notes, valued at approximately $60,500 in aggregate, and this debt discount is amortized

over the life of the agreements as interest expense.

the nine months ended September 30, 2020, the Company issued 200,000 shares of $.001 par value common stock to short-term note

holders as required under an extension agreement for the respective short-term note, valued at approximately $20,000.

the nine months ended September 30, 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 nine months ended September 30, 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 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.

Common Stock Transactions

the three months ended March 31, 2021, no new equity transactions have occurred.

Common Stock Transactions

During 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.

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.

During 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.

Non-controlling

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in PWS and 49% non-controlling equity interest in PelleChar.

Net losses attributable to non-controlling interest, as reported

on our condensed consolidated statements of operations, represents the net loss of each entity attributable to the non-controlling

equity interest.

Net losses attributable to non-controlling interest, as reported on our

condensed consolidated statements of operations, represents the net loss of each entity attributable to the non-controlling equity interest.

The non-controlling interest is reflected within stockholders’

equity on the condensed consolidated balance

equity on the condensed consolidated balance sheet.

CUSTOMER CONCENTRATIONS

Company had sales from operations to one customer for the nine months ended September 30, 2020 and three for the nine months ended

September 30, 2019, that surpassed the 10% threshold of total revenue.

In total, these customers represented approximately 17%

and 31% 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, 2021 and

2020 that surpassed the 10% threshold of total revenue.

In total, these customers represented approximately 64% and 50%

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

net loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of common

shares outstanding.

Diluted net loss per share is computed by dividing net loss attributable to common shareholders by the weighted

average number of common shares outstanding plus the number of common shares that would be issued assuming exercise or conversion

of all potentially dilutive common shares.

Potentially dilutive securities are excluded from the calculation when their effect

would be anti-dilutive.

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,

net loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares

Diluted net loss per share is computed by dividing net loss attributable to common shareholders by the weighted average

number of common shares outstanding plus the number of common shares that would be issued assuming exercise or conversion of all potentially

dilutive common shares.

Potentially dilutive securities are excluded from the calculation when their effect would be anti-dilutive.

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.

basic shares equal diluted shares for all years presented.

dilutive securities were comprised of the following (unaudited):

Three Months Ended March 31,

Convertible notes payable, including accrued interest

ENVIRONMENTAL MATTERS AND REGULATION

federal environmental laws affecting us are the Resource Conservation and Recovery Act (“RCRA”), the Comprehensive

Environmental Response, Compensation and Liability Act (“CERCLA”), also known as the “Superfund Act”,

the Clean Air Act, the Clean Water Act and the Toxic Substances Control Act (“TSCA”).

to the EPA’s authorization of the RCRA equivalent programs, a number of states have regulatory programs governing the operations

and permitting of hazardous waste facilities.

Our facilities are regulated pursuant to state statutes, including those addressing

clean water and clean air.

Our facilities are also subject to local siting, zoning and land use restrictions.

The Company believes

it is in substantial compliance with all federal, state and local laws regulating our business.

SEGMENT INFORMATION AND MAJOR CUSTOMERS

Company currently has identified two segments as follows:

SEM, PelleChar, REGS in FY20 (1)

SEM, PelleChar, REGS

Environmental

services division was discontinued in 2019 and is reported in discontinued operations.

The remaining manufacturing

division is reported in environmental solutions 2020.

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

to evaluate performance and allocate resources.

composition of our reportable segments is consistent with that used by our chief decision makers to evaluate performance and allocate

All of our operations are located in the U.S.

The Company has not allocated corporate

selling, general and administrative expenses, and stock-based compensation to the segments.

All intercompany transactions have

been eliminated.

information for the three and nine months ended September 30, 2020 and 2019 is as follows (does not include discontinued operations):

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)

The Company has not allocated corporate selling, general and administrative

expenses, and stock-based compensation to the segments.

All intercompany transactions have been eliminated.

information for the three and three months ended March 31, 2021 and 2020 is as follows:

Environmental

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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.

Various actions were filed by the

claimants in both state and federal courts.

In August 2016, an involuntary proceeding was commenced by one of the claimants against

SEM under Chapter 7 of the Bankruptcy code.

In September 2016, the case was converted to a Chapter 11 under the Bankruptcy code.

During the pendency of all actions, SEM continued to manage its affairs and operate normally.

In the fourth quarter of 2016, the

parties reached a settlement concerning the distribution of insurance proceeds and all issues of liability.

On March 27, 2017,

the Bankruptcy Courts confirmed the dismissal of the SEM Chapter 11 case.

As part of the bankruptcy proceedings, the Company reached

a settlement with claimants and recorded an accrued litigation expense of $212,500 at December 31, 2016.

It was agreed among the

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

The accrued litigation outstanding at September

30, 2020 and December 31, 2019 was $150,000.

SUBSEQUENT EVENTS

$300,000 secured short-term note issued on October 17, 2019 was extended on November 3, 2020 to mature April 16, 2021.

extension requires a one-time issuance of 200,000 common shares of the Company upon the extended maturity date of the note, which

the company recorded the fair value of $30,000 as debt discount, amortized over the life of the note.

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

following discussion is intended to assist you in understanding our business and the results of our operations.

It should be read

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 10-K filed with the Securities and Exchange Commission on May 15, 2020.

Certain statements made

in our discussion may be forward looking.

Forward-looking statements involve risks and uncertainties and a number of factors could

cause actual results or outcomes to differ materially from our expectations.

These risks, uncertainties, and other factors include,

among others, the risks described in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, as well

as other risks described in this Quarterly Report.

It should be read 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 10-K filed with the Securities and Exchange Commission on April 15, 2021.

Certain statements made in our discussion

may be forward looking.

Forward-looking statements involve risks and uncertainties and a number of factors could cause actual results

or outcomes to differ materially from our expectations.

These risks, uncertainties, and other factors include, among others, the risks

described in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, as well as other risks described in this

Quarterly Report.

Unless the context requires otherwise, when we refer to “we,”

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and “our,”

we are describing Strategic Environmental & Energy Resources, Inc.

and its consolidated subsidiaries

on a consolidated basis.

are describing Strategic Environmental & Energy Resources, Inc.

and its consolidated subsidiaries on a consolidated basis.

BUSINESS OVERVIEW

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(“the Company”

or “SEER”) was originally organized under the

laws of the State of Nevada on February 13, 2002 for the purpose of acquiring one or more businesses, under the name of Satellite

Organizing Solutions, Inc (“SOZG”).

In January 2008, SOZG changed its name to Strategic Environmental & Energy

Resources, Inc., reduced its number of outstanding shares through a reverse stock split and consummated the acquisition of both,

REGS, LLC and Tactical Cleaning Company, LLC.

SEER is dedicated to assembling complementary service and environmental, clean-technology

businesses that provide safe, innovative, cost effective, and profitable solutions in the oil & gas, environmental, waste

management and renewable energy industries.

SEER currently operates five companies with four offices in the western and mid-western

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

and has licensed and owned technologies

with many customer installations throughout the U.S.

or “SEER”) was originally organized under the laws

of the State of Nevada on February 13, 2002 for the purpose of acquiring one or more businesses, under the name of Satellite Organizing

Solutions, Inc.

(“SOZG”).

In January 2008, SOZG changed its name to Strategic Environmental & Energy Resources, Inc.,

reduced its number of outstanding shares through a reverse stock split and consummated the acquisition of both, REGS, LLC and Tactical

Cleaning Company, LLC.

SEER is dedicated to assembling complementary service and environmental, clean-technology businesses that provide

safe, innovative, cost effective, and profitable solutions in the environmental, waste management and renewable energy industries.

currently operates five companies with four offices in the western and mid-western U.S.

Through these operating companies, SEER provides

products and services throughout the U.S.

and has licensed and owned technologies with many customer installations throughout the U.S.

Each of the five operating companies is discussed in more detail below.

Company also has non-controlling interests in joint ventures, some of which have no or minimal operations.

The Company also has non-controlling interests in joint ventures,

some of which have no or minimal operations.

Company’s domestic strategy is to grow internally through SEER’s subsidiaries that have well established revenue streams

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 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 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

synergistic services, technologies and products.

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 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 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 synergistic services, technologies and products.

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

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

(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 relating to the services division;

therefore, the division did not have any performance obligations at December

31, 2019, nor thereafter.

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.

(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 subsidiary.

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

No contracts have been uncompleted relating

to the services division;

therefore, the division did not have any performance obligations as of December 31, 2019, nor thereafter.

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.

LLC (d/b/a MV Technologies), (“MV”) :

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and OdorFilter™.

The markets for these products

include land fill operations, agricultural and food product processors, wastewater treatment facilities, and petroleum product

MV also develops and designs proprietary technologies and systems used to condition biogas for use as renewable natural

gas (“RNG”), for a number of applications, such as transportation fuel and natural gas pipeline injection.

The markets for these products include

land fill operations, agricultural and food product processors, wastewater treatment facilities, and petroleum product refiners.

develops and designs proprietary technologies and systems used to condition biogas for use as renewable natural gas (“RNG”),

for a number of applications, such as transportation fuel and natural gas pipeline injection.

Environmental Materials, LLC (“SEM”):

(formed September 2015) is a wholly owned subsidiary established as a materials

technology business with the purpose of developing advanced chemical absorbents and catalysts that enhance the capability of biogas produced

from, landfill, wastewater treatment operations and agricultural digester operations.

Waste Solutions, LLC (“PWS”):

(formed late 2010) PWS is an operating company that has developed a patented waste

destruction technology using a pyrolytic heating process combined with “non-thermal plasma”

(formed late 2010) PWS is an operating company that has developed a patented waste destruction

technology using a pyrolytic heating process combined with “non-thermal plasma”

assisted oxidation.

technique involves gasification of solid waste by heating the waste in a low-oxygen environment, followed by complete oxidation

at higher temperatures in the presence of plasma.

This technique involves

gasification of solid waste by heating the waste in a low-oxygen environment, followed by complete oxidation at higher temperatures in

the presence of plasma.

The term “non-thermal plasma”

refers to a low energy ionized gas

that is generated by electrical discharges between two electrodes.

This technology, commercially referred to as CoronaLux™,

is designed and intended for the “clean”

destruction of hazardous chemical and biological waste (i.e ., hospital

“red bag”

waste) thereby eliminating the need for costly segregation, transportation, incineration or landfill (with

their associated legacy liabilities).

refers to a low energy ionized gas that is generated by electrical

discharges between two electrodes.

This technology, commercially referred to as CoronaLux™, is designed and intended for the “clean”

destruction of hazardous chemical and biological waste (i.e ., hospital “red bag”

waste) thereby eliminating the need

for costly segregation, transportation, incineration or landfill (with their associated legacy liabilities).

PWS is a 54% owned subsidiary.

1 unchanged sentence

(formed February 2013) owned 85% by SEER.

Reach develops renewable

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

Reach had minimal operations as of September 30, 2020.

Environmental Materials, LLC (“SEM”):

(formed September 2015) is a wholly owned subsidiary established as a materials

technology business with the purpose of developing advanced chemical absorbents and catalysts that enhance the capability of biogas

produced from, landfill, wastewater treatment operations and agricultural digester operations.

Reach develops renewable natural

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

Reach had minimal

operations as of March 31, 2021.

LLC (“PelleChar”):

2 unchanged sentences

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.

PelleChar activity to date relates to startup of operations,

and an increasing sales effort.

Revenue and expenses of PelleChar were not material for the nine months ended September 30, 2020.

RCM Joint Venture :

In April 2013, MV Technologies, Inc (“MV”) and RCM International, LLC (“RCM”) entered

into an Agreement to develop hybrid scrubber systems that employ elements of RCM Technology and MV Technology (the “Joint

Venture”).

RCM and MV Technologies will independently market the hybrid scrubber systems.

The contractual Joint Venture

has an initial term of five years and will automatically renew for successive one-year periods unless either Party gives the other

Party one hundred and eighty (180) days’

notice prior to the applicable renewal date.

Operations to date of the Joint Venture

have been limited to formation activities.

To date, the automatic renewal periods are in effect.

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

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 activity to date relates to startup of operations, and an increasing sales effort.

Revenue and expenses of PelleChar were not material for the three months ended March 31, 2021.

Waste (UK) Ltd :

In June 2014, PWS and PCI Consulting Ltd (“PCI”) formed Paragon Waste (UK) Ltd (“Paragon

UK Joint Venture”) to develop, permit and exploit the PWS waste destruction technology within the territory of Ireland and

the United Kingdom.

In June 2014, PWS and PCI Consulting Ltd (“PCI”) formed Paragon Waste (UK) Ltd (“Paragon UK Joint

Venture”) to develop, permit and exploit the PWS waste destruction technology within the territory of Ireland and the United Kingdom.

PWS and PCI each own 50% of the voting shares of Paragon UK Joint Venture.

Operations to date of the Paragon

UK Joint Venture have been limited to formation, the delivery of a CoronaLux™

unit with a third party in the United Kingdom

and application and permitting efforts with regulatory entities.

Operations to date of the Paragon UK Joint Venture have been

limited to formation, the delivery of a CoronaLux™

unit with a third party in the United Kingdom and application and permitting

efforts with regulatory entities.

In February 2015, PWS and Particle Science Tech of Environmental Protection, Inc.

(“Particle Science”)

formed a joint venture, Particle & Paragon Environmental Solutions, Inc (“P&P”) to exploit the PWS technology

in China, including Hong Kong, Macao and Taiwan.

(“Particle Science”) formed

a joint venture, Particle & Paragon Environmental Solutions, Inc (“P&P”) to exploit the PWS technology in China,

including Hong Kong, Macao and Taiwan.

PWS and Particle Science each own 50% of P&P.

Operations to date have been

limited to formation of P&P and the sale and delivery of a CoronaLux™

Operations to date have been limited to formation

of P&P and the sale and delivery of a CoronaLux™

unit to Particle Science in China.

MWS Joint Venture :

In October 2014, PWS and Medical Waste Services, LLC (“MWS”) formed a contractual joint venture

to exploit the PWS medical waste destruction technology.

In 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 from the South Coast Air Quality Management District (“SCAQMD”)

and the California Department of Public Health.

In November 2017, PWS received final air quality permit approval from SCAQMD allowing

for full operations of the CoronaLux™

unit at an MWS facility,

and subsequently received a limited permit to operate from the South Coast Air Quality Management District (“SCAQMD”) and

the California Department of Public Health.

In November 2017, PWS received final air quality permit approval from SCAQMD allowing for

full operations of the CoronaLux™

unit at the MWS facility.

Southwest Joint Venture :

In December 2017, PWS and GulfWest Waste Solutions, LLC (“GWWS”) formed Paragon Southwest

Medical Waste, LLC (“PSMW”) to exploit the PWS medical waste destruction technology.

PSMW will have an exclusive license

to the CoronaLux™

In December 2017, PWS and GulfWest Waste Solutions, LLC (“GWWS”) formed Paragon Southwest Medical

Waste, LLC (“PSMW”) to exploit the PWS medical waste destruction technology.

PSMW will have an exclusive license to the CoronaLux™

technology in a six-state area of the Southern United States.

In addition to the equity position, PWS

will be the operating partner for the business and intends to sell a number of additional systems to the joint venture.

PSMW purchased and installed three CoronaLux™

In addition to the equity position, PWS will be the operating partner for

the business and intends to sell a number of additional systems to the joint venture.

In 2017, PSMW purchased and installed three CoronaLux™

units at an PSMW facility.

Financial Condition and Liquidity

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

a deficit of approximately $28.8 million as of September 30, 2020, and $27.0 million as of December 31, 2019.

For the nine months

ended September 30, 2020 and 2019 we had net losses from continuing operations before adjustment for losses attributable to non-controlling

interest of approximately $1.9 million and $0.8 million, respectively.

As of September 30, 2020, and December 31, 2019 our current

liabilities exceed our current assets by approximately $8.8 million and $7.1 million, respectively.

The primary reason for the

increase in negative working capital from December 31, 2019 to September 30, 2020 is due to a net increase in short term debt

of approximately $1.2 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.

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, 2019.

of a major portion of our assets as of September 30, 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.

We continue 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, 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™

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

of approximately $30.0 million as of March 31, 2021, and $29.7 million as of December 31, 2020.

For the three months ended March 31,

2021 and 2020 we had net losses from continuing operations before adjustment for losses attributable to non-controlling interest of approximately

$0.3 million and $0.7 million, respectively.

As of March 31, 2021, and December 31, 2020 our current liabilities exceed our current assets

by approximately $9.4 million and $9.8 million, respectively.

The primary reason for the decrease in negative working capital from December

31, 2020 to March 31, 2021 is due to a net increase in COVID-19 related stimulus related payroll tax credits.

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 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 March 31, 2021.

of a major portion of our assets as of March 31, 2021, 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.

In addition, we have undertaken

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

We continue 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, 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 focus to address opportunities identified in 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

We have increased our business development focus to address opportunities identified in

domestic markets attributable to increased federal and state emission control regulations 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 on favorable terms or at all, increase revenues and achieve

There can 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 September 30, 2020 and 2019

revenues were $1.1 million and $1.0 million for the three months ended September 30, 2020 and 2019, respectively.

of approximately $0.1 million or 10% in revenues comparing the three months ended September 30, 2020 to the three months ended

September 30, 2019 is attributable to the increases in revenues from our products segment revenue, which includes our environmental

solutions segment, which increased from $953,300 for the three months ended September 30, 2019 to $992,000 for the three months

ended September 30, 2020, an increase of approximately $39,000 or approximately 4%.

Environmental solutions segment generated

more revenue as 10 internally built kilns were delivered to PWS, offset slightly by a decreased volume of media sales.

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 September 30, 2020 compared to $1.1 million for

the three months ended September 30, 2019.

The increase primarily consists of an increase in product costs of approximately $0.3

million in the third quarter of 2020 from the third quarter of 2019, which was a result of material and labor costs associated

to the 10 internally built kilns delivered to PWS during the quarter.

non-operating other expense, net was $0.2 million for the three months ended September 30, 2020 compared to income of $0.1 million

for the three months ended September 30, 2019.

The increase in expense in 2020 compared to 2019 is primarily due to the reduced

other income, which in 2019 included the collection of a $0.3 million note receivable that had been previously been written off,

and 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 September 30, 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 September 30, 2020 and 2019.

loss, before non-controlling interest, for the three months ended September 30, 2020 was $655,700 compared to a net loss, before

non-controlling interest, of $516,000 for the three months ended September 30, 2019.

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, 2021 and 2020

revenues were $0.9 million and $0.8 million for the three months ended March 31, 2021 and 2020, respectively.

The increase of approximately

$0.1 million or 12% in revenues comparing the three months ended March 31, 2021 to the three months ended March 31, 2020 is attributable

to the increases in revenues from our products segment revenue, which includes our environmental solutions segment, which increased from

$765,800 for the three months ended March 31, 2020 to $863,200 for the three months ended March 31, 2021, an increase of approximately

$97,400 or approximately 13%.

Environmental solutions segment generated more revenue as 10 internally built kilns were delivered during

the first quarter of 2021, and an increased volume of media sales from the first quarter of 2021 over the first quarter of 2020, partially

offset by reduced revenue recognized in our construction contracts, due to a general slowdown in the economy attributable to the COVID-19

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

expenses, were approximately $1.2 million for the three months ended March 31, 2021 compared to $1.5 million for the three months ended

March 31, 2020.

The decrease primarily consists of a decrease in general and administrative costs of approximately $0.1 million, as a

result of reduced professional fees during the quarter, and a reduction in salaries and related of approximately $0.2 million due to

the Employee Retention Tax Credit (“ERTC”) program from the U.S Treasury, as part of the COVID-19 stimulus package.

program refunds a portion of taxes paid for payroll.

We accrued the amounts that we qualify for, and this reduced our payroll expenses

during the quarter.

non-operating other expense, net was $0.1 million for the three months ended March 31, 2021 compared to $4,100 for the three months ended

March 31, 2020.

The increase in expense in 2021 compared to 2020 is primarily due to the reduced other income, which in 2020 included

a greater amount of gain on sale of fixed assets.

is no provision for income taxes for both the three months ended March 31, 2021 and 2020, 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, 2021 and 2020.

Net loss, before non-controlling

interest, for the three months ended March 31, 2021 was $330,400 compared to a net loss, before non-controlling interest,

of $653,400 for the three months ended March 31, 2020.

The net loss attributable to SEER after deducting $12,800

$30,700 for the non-controlling interest was $625,000 for the three months ended September 30, 2020 as compared to $480,000, after

deducting $36,000 in non-controlling interest, and a loss of $505,400 for discontinued operations for the three months ended September

As noted above, an increase in non-operating expenses during 2020 of 271%, a increase of operating expenses of 30%,

offset by a 4% increase in revenue, and a 100% reduction in net loss due to discontinued operations in 2020 compared to 2019,

was the primary reason for the increase in the net loss.

of Operations for the Nine Months Ended September 30, 2020 and 2019

revenues were $2.7 million and $3.1 million for the nine months ended September 30, 2020 and 2019, respectively.

of approximately $0.5 million or 15% in revenues comparing the nine months ended September 30, 2020 to the nine months ended September

30, 2019 is primarily attributable to the decreases in revenues from our products segment revenue, which includes our environmental

solutions segment, which decreased from approximately $2.9 million for the nine months ended September 30, 2019 to approximately

$2.5 million for the nine months ended September 30, 2020, a decrease of approximately $0.4 million or approximately 15%.

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, and the general slowdown of our construction contracts due to the slowdown in the economy attributable to

the COVID-19 pandemic.

This was offset by the completion of 10 internally built kilns were delivered to PWS.

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

and related expenses, were approximately $4.2 million for the nine months ended September 30, 2020 compared to $3.9 million for

the nine months ended September 30, 2019.

The increase primarily consists of an increase in product costs of approximately $0.2

million in the nine months ended September 30, 2020 from the nine months ended September 30, 2019, which was a result of material

and labor costs associated to the 10 internally built kilns delivered to PWS during the quarter, and increase of $0.3 million

in salaries and related expenses, as this amount of payroll related expenses were allocated to discontinued operations in 2019,

but those expenses are now in continuing operations in our subsidiary building kilns.

This was partially offset by a decrease

in general and administrative expenses of approximately $0.2 million in the nine months ending September 30, 2020 from the nine

months ended September 30, 2019, which was a result of reduced insurance expenses, and professional services during 2020.

non-operating other expense, net was $0.4 million for the nine months ended September 30, 2020 compared to $31,000 for the nine

months ended September 30, 2019.

The increase in expense in 2020 compared to 2019 is primarily due to the reduced other income,

which in 2019 included the collection of a $0.3 million note receivable that had been previously been written off, and an increase

in interest expense of $0.2 million as a result of the increase overall debt outstanding.

is no provision for income taxes for both the nine months ended September 30, 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 September 30, 2020 and 2019.

loss, before non-controlling interest, for the nine months ended September 30, 2020 was $1.9 million compared to a net loss, before

non-controlling interest, of $2.1 million for the nine months ended September 30, 2019.

The net loss attributable to SEER after

deducting $96,000 for the non-controlling interest was $1.8 million for the nine months ended September 30, 2020 as compared to

$2.0 million, after deducting $103,400 in non-controlling interest, and $1.3 million for discontinued operations for the nine

months ended September 30, 2019.

As noted above, a 1,270% increase in non-operating expenses, an increase of operating expenses

of 7%, and a decrease in revenue of 15% in 2020 compared to 2019, offset by a 100% decrease in net loss of discontinued operations

was the primary reason for the decrease in the net loss.

of Discontinued Operations for the Three and Nine Months Ended September 30, 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

For the nine months ended

September 30,

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

$ (1,320,900 )

is no provision for income taxes for both the three or nine months ended September 30, 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 September 30, 2020 and 2019.

Company had net cash used by operating activities for the nine months ended September 30, 2020 of $1.3 million compared to net

cash used by operating activities for the nine months ended September 30, 2019 of $1.6, an decrease of cash used of approximately

$0.3 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, provision for bad debt, and non-cash interest expense.

Non-cash adjustments provided $0.3 million for the

nine months ended September 30, 2020, compared to providing $0.4 million for the nine months ended September 30, 2019.

and amortization totaled $131,700 during the nine months ended September 30, 2020 compared to $275,700 in the comparative period

for the non-controlling interest was $317,600 for the three months ended March 31, 2021 as compared to $626,100, after deducting

$27,300 in non-controlling interest, for the three months ended March 31, 2020.

As noted above, a decrease in operating expenses

during 2021 of 22%, an increase in revenue of 12%, offset by increase in non-operating expenses, was the primary reason for the

decrease in the net loss.

Company had net cash used by operating activities for the three months ended March 31, 2021 of $0.7 million compared to net cash used

by operating activities for the three months ended March 31, 2020 of $0.3 million, an increase of cash used of approximately $0.4 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

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

provision for bad debt, and non-cash interest expense.

Non-cash adjustments reduced cash flows $16,500 for the three months ended March

31, 2021, compared to increasing cash flows $68,100 for the three months ended March 31, 2020.

Depreciation and amortization totalled

$34,600 during first quarter 2021 compared to $44,000 in the first quarter of 2020, non-cash expense for interest was $33,100 in the

first quarter 2020, and $0 in the first quarter of 2021, and gain on disposal of fixed assets was $75,800 in the first quarter of 2021,

and $0 in the first quarter of 2020.

In addition to the non-cash adjustments to net income, changes in assets and liabilities include:

a) changes in account

receivable provided $0.2 million in cash in the first three quarters of 2020, compared to $0.6 million in the first three quarters

of 2019, a net decrease in cash of $0.4 million, b) increase in accounts payable and accrued expenses provided $220,000 in the

first three quarters of 2020, compared to using $600 in the first three quarters of 2019, a net increase in cash of $0.2 million,

c) decrease in billings in excess of revenue on uncompleted contracts used $15,000 in the first three quarters of 2020, compared

to using $250,800 in the first three quarters of 2019, a net increase in cash of $0.2 million, d) decrease in deferred revenue

used $24,700 in the first three quarters of 2020, compared to using $183,300 in the first three quarters of 2019, a net increase

in cash of $0.2 million, and e) increase in inventory used $136,300 in the first three quarters of 2020, compared to $0 in the

first three quarters of 2019, a net decrease in cash of $0.1 million.

cash used by investing activities was $0.1 million for the nine months ended September 30, 2020 compared to $0.7 million of cash

provided for the nine months ended September 30, 2019.

The purchase of property and equipment was consistent at $0.1 for the nine

months ended September 30, 2020 and 2019, respectively.

The proceeds from notes receivable totaled $0 and $0.6 million for the

nine months ended September 30, 2020 and 2019, respectively.

The increase in notes receivable proceeds relates to the Company’s

negotiation of an early earnout payment received in full.

The proceeds from outside minority interest investment in new subsidiary

totaled $0 and $0.2 million for the nine months ended September 30, 2020 and 2019, respectively.

cash provided by financing activities was $1.3 million for the nine months ended September 30, 2020 compared to $0.9 million for

the nine months ended September 30, 2019.

The net proceeds related to debt of approximately $1.5 in the nine months ended September

30, 2020 compared to approximately $1.2 million in the nine months ended September 30, 2019 and principal payments on debt of

$0.2 million for the nine months ended September 30, 2020 compared to $0.3 million for the nine months ended September 30, 2019.

a) changes in account receivable used $0.2 million in cash in the first quarter of 2021, compared to providing $0.2 million

in the first quarter of 2020, a net decrease in cash of $0.6 million, b) changes in prepaid expenses and other assets used

$0.2 million in the first quarter of 2021, compared to use of $0.1 million in the first quarter of 2020, c) changes in accounts payable

and accrued expenses used $25,400 in the first quarter of 2021, compared to providing $112,300 in the first quarter of 2020, a net increase

in cash of $0.1 million, d) changes in billings in excess of revenue on uncompleted contracts provided $6,800 in the first quarter

of 2021, compared to using $243,100 in the first quarter of 2020, a net increase in cash of $0.2 million, e) changes in deferred

revenue used $8,200 in the first quarter of 2021, compared to providing $76,000 in the first quarter of 2020, a net decrease in cash

of $0.1 million, and f) changes in prepaid expenses and other assets used $0.2 million in the first quarter of 2021, compared

to using $0.1 million in the first quarter of 2020, a net decrease in cash of $0.1 million.

cash provided by investing activities was $0.1 million for the three months ended March 31, 2021 compared to using $19,300 of cash for

the three months ended March 31, 2020.

The purchase of property and equipment was $19,300 for the three months ended March 30, 2020,

while $0 for the three months ended March 31, 2021.

The proceeds from sale of fixed assets totalled $75,800 for the three months ended

March 31, 2021, while $0 for the three months ended March 31, 2020.

cash provided by financing activities was $0.7 million for the three months ended March 31, 2021 compared to $0.1 million for

the three months ended March 31, 2020.

The net of proceeds and payments related to debt of approximately $0.6

million in the three months ended March 31, 2021 compared to approximately $0.1 million in the three months ended March

31, 2020 and the net proceeds related to paycheck protection program of approximately $0.1 in the three months ended March 31,

2021 compared to approximately $0 in the three months ended March 31, 2020.

Accounting Policies, Judgments and Estimates

preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United

GAAP) requires management to make a number of estimates and assumptions related to the reported amount of assets

and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and

the reported amounts of revenues and expenses during the period.

Significant items subject to such estimates and assumptions include

the carrying amount of intangible assets;

preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United States

GAAP) requires management to make a number of estimates and assumptions related to the reported amount of assets and liabilities

and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts

of revenues and expenses during the period.

Significant items subject to such estimates and assumptions include the carrying amount of

intangible assets;

valuation allowances and reserves for receivables, inventory and deferred income taxes;

revenue recognition related to contracts accounted for under the percentage of completion method;

revenue recognition related

to contracts accounted for under the percentage of completion method;

share-based compensation;

loss contingencies, including those related to litigation.

and loss contingencies, including those

related to litigation.

Actual results could differ from those estimates.

7 unchanged sentences

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

has been reserved as of September 30, 2020 and December 31, 2019, respectively.

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

Our customers operate primarily

in the oil production and refining, rail transport, biogas generating and wastewater treatment industries in the United States.

Accordingly, we are affected by the economic conditions in these industries as well as general economic conditions in the United

To limit credit risk, management periodically reviews and evaluates the financial condition of its customers and maintains

an allowance for doubtful accounts.

As of September 30, 2020, and December 31, 2019, we do not believe that we have significant

has been reserved as of March 31, 2021 and December 31, 2020, respectively.

Company is exposed to credit risk in the normal course of business,

primarily related to accounts receivable.

Our customers operate primarily in the biogas generating and wastewater treatment industries

in the United States.

Accordingly, we are affected by the economic conditions in these industries as well as general economic conditions

in the United States.

To limit credit risk, management periodically reviews and evaluates the financial condition of its customers and

maintains an allowance for doubtful accounts.

As of March 31, 2021, and December 31, 2020, we do not believe that we have significant

Value of Financial Instruments

carrying amounts of our financial instruments, including accounts receivable and accounts payable, are carried at cost, which

approximates their fair value due to their short-term maturities.

We believe that the carrying value of notes payable with third

parties, including their current portion, approximate their fair value, as those instruments carry market interest rates based

on our current financial condition and liquidity.

We believe the amounts due to related parties also approximate their fair value,

as their carried interest rates are consistent with those of our notes payable with third parties.

evaluate the carrying value of long-lived assets for impairment on an annual basis or whenever events or changes in circumstances

indicate that the carrying amounts may not be recoverable.

An asset is considered to be impaired when the anticipated undiscounted

future cash flows of an asset group are estimated to be less than its carrying value.

The amount of impairment recognized is the

difference between the carrying value of the asset group and its fair value.

Fair value estimates are based on assumptions concerning

the amount and timing of estimated future cash flows.

No impairments were determined as of September 30, 2020.

Revenue is recognized

under FASB guidelines, which requires an evaluation of revenue arrangements with customers following a five-step approach:

carrying amounts of our financial instruments, including accounts receivable and accounts payable, are carried at cost, which approximates

their fair value due to their short-term maturities.

We believe that the carrying value of notes payable with third parties, including

their current portion, approximate their fair value, as those instruments carry market interest rates based on our current financial

condition and liquidity.

We believe the amounts due to related parties also approximate their fair value, as their carried interest rates

are consistent with those of our notes payable with third parties.

Company evaluates the carrying value of long-lived assets for

impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.

An asset is considered to be impaired when the anticipated undiscounted future cash flows of an asset group are estimated to be less

than its carrying value.

The amount of impairment recognized is the difference between the carrying value of the asset group and its

Fair value estimates are based on assumptions concerning the amount and timing of estimated future cash flows.

No impairments

were determined as of March 31, 2021.

is recognized under FASB guidelines, which requires an evaluation of revenue arrangements with customers following a five-step approach:

(1) identify the contract with a customer;

(2) identify the performance obligations in the contract;

(3) determine the transaction

(3) determine the transaction price;

(4) allocate the transaction price to the performance obligations;

and (5) recognize revenue when (or as) the company satisfies

each performance obligation.

Revenues are recognized when control of the promised services are transferred to the customers in

an amount that reflects the expected consideration in exchange for those services.

A customer obtains control when it has the

ability to direct the use of and obtain the benefits from the services.

Other major provisions of the guidance include capitalization

of certain contract costs, consideration of the time value of money in the transaction price and allowing estimates of variable

consideration to be recognized before contingencies are resolved in certain circumstances.

The guidance also requires enhanced

disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

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

are expected to vest.

We estimate the fair value of stock options and stock purchase warrants using the Black-Scholes option pricing

The estimated value of the portion of a stock-based award that is ultimately expected to vest, taking into consideration

estimated forfeitures, is recognized as expense over the requisite service periods.

The estimate of stock awards that will ultimately

vest requires judgment, and to the extent that actual forfeitures differ from estimated forfeitures, such differences are accounted

for as a cumulative adjustment to compensation expenses and recorded in the period that estimates are revised.

and (5) recognize revenue when (or as) the company satisfies each

performance obligation.

Revenues are recognized when control of the promised services are transferred to the customers in an amount that

reflects the expected consideration in exchange for those services.

A customer obtains control when it has the ability to direct the

use of and obtain the benefits from the services.

Other major provisions of the guidance include capitalization of certain contract costs,

consideration of the time value of money in the transaction price and allowing estimates of variable consideration to be recognized before

contingencies are resolved in certain circumstances.

The guidance also requires enhanced disclosures regarding the nature, amount, timing

and uncertainty of revenue and cash flows arising from contracts with customers.

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

We estimate the fair value of stock options and stock purchase warrants using the Black-Scholes option pricing model.

The estimated

value of the portion of a stock-based award that is ultimately expected to vest, taking into consideration estimated forfeitures, is

recognized as expense over the requisite service periods.

The estimate of stock awards that will ultimately vest requires judgment, and

to the extent that actual forfeitures differ from estimated forfeitures, such differences are accounted for as a cumulative adjustment

to compensation expenses and recorded in the period that estimates are revised.

Quantitative and Qualitative Disclosures About Market Risk

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