Strategic Environmental & Energy Resources, Inc. 10-Q

Item 1. Financial Statements STRATEGIC ENVIRONMENTAL & ENERGY RESOURCES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31, * 2022 2021 * (unaudited) ASSETS Current Assets Cash and cash equivalents $ 68,400 $ 188,800 Accounts receivable, net of allowance for doubtful accounts of $ 19,800 and $ 0 , respectively 729,600 536,600 Inventory 130,400 201,700 Contract assets 14,900 3,600 Prepaid expenses and other current assets 194,000 111,300 Total Current Assets 1,137,300 1,042,000 Property and equipment, net 436,500 433,000 Intangible Assets, net 413,800 419,300 Right of use assets 289,600 302,300 Other assets 40,600 40,600 TOTAL ASSETS $ 2,317,800 $ 2,237,200 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current Liabilities Accounts payable $ 600,100 $ 471,200 Accrued liabilities 2,432,100 2,230,100 Contract liabilities 523,500 525,900 Paycheck protection program liabilities — 96,600 Short term notes 2,832,300 2,843,900 Short term notes and accrued interest - related party 188,000 180,800 Convertible notes 1,605,000 1,605,000 Current portion of long term debt and capital lease obligations 530,200 525,600 Current portion of lease liabilities 56,700 54,700 Total Current Liabilities 8,767,900 8,533,800 Lease liabilities net of current portion 265,500 280,300 Long term debt and capital lease obligations, net of current portion 1,871,600 1,619,600 Total Liabilities 10,905,000 10,433,700 Commitments and contingencies — — Stockholders’ deficit Preferred stock; $ .001 par value; 5,000,000 shares authorized; - 0 - shares issued — — Common stock; $ .001 par value; 70,000,000 shares authorized; 65,088,575 shares issued, issuable ** and outstanding March 31, 2022 and December 31, 2021 65,100 65,100 Common stock issuable 25,000 25,000 Additional paid-in capital 22,973,800 22,973,800 Stock Subscription receivable ( 25,000 ) ( 25,000 ) Accumulated deficit ( 29,751,400 ) ( 29,364,800 ) Total stockholders’ deficit ( 6,712,500 ) ( 6,325,900 ) Non-controlling interest ( 1,874,700 ) ( 1,870,600 ) Total Deficit ( 8,587,200 ) ( 8,196,500 ) TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 2,317,800 $ 2,237,200 The accompanying notes are an integral part of these consolidated financial statements. * These numbers were derived from the audited financial statements for the year ended December 31, 2021. ** Includes 2,785,000 shares issuable as of March 31, 2022, and December 31, 2021, per terms of note agreements. 3 STRATEGIC ENVIRONMENTAL & ENERGY RESOURCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) 2022 2021 For the Three Months Ended March 31, 2022 2021 Revenue: Products $ 859,900 $ 686,000 Solid waste 50,000 58,200 Total revenue 909,900 744,200 Operating expenses: Products costs 659,100 488,900 Solid waste costs 7,400 7,400 General and administrative expenses 273,000 311,000 Salaries and related expenses 344,600 136,400 Total operating expenses 1,284,100 943,700 Loss from operations ( 374,200 ) ( 199,500 ) Other income (expense): Interest expense ( 190,100 ) ( 194,200 ) Gain on abandonment - - Gain on debt extinguishment 96,600 - Other 77,000 29,800 Total non-operating expense, net ( 16,500 ) ( 164,400 ) Loss from continuing operations ( 390,700 ) ( 363,900 ) Gain from discontinued operations, net of tax - 33,500 Net loss ( 390,700 ) ( 330,400 ) Less: Net income (loss) attributable to non-controlling interest ( 4,100 ) ( 12,800 ) Net loss attributable to SEER common stockholders $ ( 386,600 ) $ ( 317,600 ) Basic and diluted loss per share attributable to SEER common stockholders Loss from continuing operations, per share $ ( 0.01 ) $ ( 0.01 ) Income from discontinued operations, per share - - Net loss per share, basic and diluted $ ( 0.01 ) $ ( 0.01 ) Weighted average shares outstanding – basic and diluted 65,088,575 65,088,575 The accompanying notes are an integral part of these consolidated financial statements. 4 STRATEGIC ENVIRONMENTAL & ENERGY RESOURCES, INC. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT (Unaudited) Additional Common Stock Non- Total Preferred Stock Common Stock Paid-in Stock Subscription Accumulated controller Stockholders’ Shares Amount Shares Amount Capital Subscribed Receivable Deficit Interest Deficit Balances at December 31, 2021 - $ - 65,088,600 $ 65,100 $ 22,973,800 $ 25,000 $ ( 25,000 ) $ ( 29,364,800 ) $ ( 1,870,600 ) $ ( 8,196,500 ) Issuance of common stock upon debt penalty - - - - - - - - - - Stock-based compensation - - - - - - - - - - Allocated value of common stock and warrants related to debt - - - - - - - - - - Net loss - - - - - - - ( 386,600 ) ( 4,100 ) ( 390,700 ) Balances at March 31, 2022 - - 65,088,600 65,100 22,973,800 25,000 ( 25,000 ) ( 29,751,400 ) ( 1,874,700 ) ( 8,587,200 ) Additional Common Stock Non- Total Preferred Stock Common Stock Paid-in Stock Subscription Accumulated controller Stockholders’ Shares Amount Shares Amount Capital Subscribed Receivable Deficit Interest Deficit Balances at December 31, 2020 - $ - 65,088,600 $ 65,100 $ 22,961,200 $ 25,000 $ ( 25,000 ) $ ( 29,693,700 ) $ ( 2,061,400 ) $ ( 8,728,800 ) Balance - $ - 65,088,600 $ 65,100 $ 22,961,200 $ 25,000 $ ( 25,000 ) $ ( 29,693,700 ) $ ( 2,061,400 ) $ ( 8,728,800 ) Issuance of common stock upon debt penalty - - - - - - - - - - Stock-based compensation - - - - 4,700 - - - - 4,700 Allocated value of common stock and warrants related to debt - - - - - - - - - - Net loss - - - - - - - ( 317,600 ) ( 12,800 ) ( 330,400 ) Balances at March 31, 2021 - - 65,088,600 65,100 22,965,900 25,000 ( 25,000 ) ( 30,011,300 ) ( 2,074,200 ) ( 9,054,500 ) Balance - - 65,088,600 65,100 22,965,900 25,000 ( 25,000 ) ( 30,011,300 ) ( 2,074,200 ) ( 9,054,500 ) The accompanying notes are an integral part of these consolidated financial statements. 5 STRATEGIC ENVIRONMENTAL & ENERGY RESOURCES, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) 2022 2021 For the years ended March 31, 2022 2021 Cash flows from operating activities: Loss from continuing operations $ ( 390,700 ) $ ( 363,900 ) Income from discontinued operations - 33,500 Net loss ( 390,700 ) ( 330,400 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 30,300 34,600 Stock-based compensation expense - 4,700 Non-cash expense for interest, accretion of debt discount - 20,000 Gain on debt distinguishment ( 96,600 ) - Gain on disposition of assets - ( 75,800 ) Bad debt 19,800 - Changes in operating assets and liabilities: Accounts receivable ( 212,700 ) ( 172,200 ) Contract assets ( 11,300 ) 6,800 Inventory 71,300 ( 53,700 ) Prepaid expenses and other assets ( 70,000 ) ( 221,400 ) Accounts payable, accrued liabilities, and customer deposits 274,300 ( 17,100 ) Contract liabilities ( 2,400 ) 84,600 Deferred revenue - ( 8,200 ) Net cash used in operating activities ( 388,000 ) ( 728,100 ) Cash flows from investing activities: Purchase of property and equipment ( 28,300 ) - Proceeds from the sale of fixed assets - 75,800 Net cash provided (used) by investing activities ( 28,300 ) 75,800 Cash flows from financing activities: Payments of notes and capital lease obligations ( 23,400 ) ( 63,400 ) Payments of short-term notes - related party - ( 10,000 ) Proceeds from short-term notes - related party - 10,000 Proceeds from short-term and long-term debt 319,300 650,000 Proceeds from paycheck protection program - 130,100 Net cash provided by financing activities 295,900 716,700 Net increase (decrease) in cash ( 120,400 ) 64,400 Cash at the beginning of period 188,800 47,300 Cash at the end of period $ 68,400 $ 111,700 Supplemental disclosures of cash flow information: Cash paid for interest $ 1,500 $ 24,700 Financing of prepaid insurance premiums $ - $ 52,400 Cash paid for income taxes $ - $ - Non-cash repayment of debt $ 50,800 $ 154,700 Non-cash repayment of debt - PPP Loan $ 96,600 $ - Non-cash payment of interest $ 15,400 $ 22,500 The accompanying notes are an integral part of these consolidated financial statements. 6 NOTE 1 – ORGANIZATION AND FINANCIAL CONDITION Organization and Going Concern Strategic Environmental & Energy Resources, Inc. (“SEER,” or the “Company”), a Nevada corporation, is a provider of next-generation clean-technologies, waste management innovations and related services. SEER has two 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 two wholly owned subsidiaries include: 1) 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.; 2) Strategic Environmental Materials, LLC, (“SEM”), a materials technology company focused on development of cost-effective chemical absorbents. The Company had a third wholly owned subsidiary, REGS, LLC (d/b/a Resource Environmental Group Services (“REGS”)), which was discarded and abandoned September 1, 2021, and all operations included in discontinued operations (See Note 15). The two majority-owned subsidiaries include 1) Paragon Waste Solutions, LLC (“PWS”), and 2) PelleChar, LLC (“PelleChar”). PWS is currently owned 54 % by SEER and PelleChar is owned 51 % by SEER. PWS has developed specific opportunities to deploy and commercialize patented technologies for a non-thermal plasma-assisted oxidation process that makes possible the clean and efficient destruction of solid hazardous chemical and biological waste ( i.e ., regulated medical waste, chemicals, pharmaceuticals and refinery tank waste, etc .) without landfilling or traditional incineration and without harmful emissions. Additionally, PWS’ 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. 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 manufacturers. 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, 2022, 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 three months then ended. Principals of Consolidation The accompanying consolidated financial statements include the accounts of SEER, its wholly owned subsidiaries, SEM, MV and REGS (through September 1, 2021, as discontinued operations), and its majority-owned subsidiaries PWS 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. Going Concern As shown in the accompanying consolidated financial statements, the Company has experienced recurring losses, and has accumulated a deficit of approximately $ 29.8 million as of March 31, 2022, and $ 29.4 million as of December 31, 2021. For the three months ended March 31, 2022, the Company incurred a net loss of approximately $ 0.4 million and for the three months ended March 31, 2021, the Company incurred a net loss of approximately $ 0.3 million. The Company had a working capital deficit of approximately $ 7.6 million as of March 31, 2022, and a working capital deficit of $ 7.5 million as of December 31, 2021. These factors raise substantial doubt about the ability of the Company to continue to operate as a going concern. 7 Realization of a major portion of the Company’s assets as of March 31, 2022, 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, 2022, the Company raised approximately $ 0.3 million from the issuance of short-term and long-term debt, offset by payments of principal on short term notes and capital leases of $ 23,400 , for a net cash provided by financing activities of approximately $ 0.3 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 REGS, a line of business with historically 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 limited common shares available for issue which may limit the ability to raise capital or settle debt through issuance of shares. The Company has increased business development efforts to address opportunities identified in expanding markets attributable to increased interest in energy conservation and emission control regulations. In addition, the Company is evaluating various forms of financing which may be available to it. There can be no assurance that the Company will secure additional financing for working capital, increase revenues and achieve the desired result of net income and positive cash flow from operations in future years. These financial statements do not give any effect to any adjustments that would be necessary should the Company be unable to report on a going concern basis. Basis of Presentation Unaudited Interim Financial Information The 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. Certain 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 April 15, 2022, for the year ended December 31, 2021. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United States (U.S. 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. Actual results could differ from those estimates. Reclassifications Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported consolidated net loss. 8 Revenue Recognition Revenue 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 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. (See Note 3) Sequencing On December 31, 2021, the Company adopted a sequencing policy under ASC 815-40-35 whereby in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares as a result of certain securities with a potentially indeterminable number of shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. Pursuant to ASC 815, issuance of securities to the Company’s employees or directors are not subject to the sequencing policy. Research and Development Research 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. R&D expenses were $ 0 for both the three months ended March 31, 2022, and 2021. Inventories Inventories are stated at the lower of cost or net realizable value on a first in, first out basis and includes the following amounts: SCHEDULE OF INVENTORY March 31, 2022 December 31, 2021 (unaudited) Finished goods $ 105,500 $ 98,200 Work in process 15,900 28,400 Raw materials 9,000 75,100 Inventory, net 130,400 201,700 Income Taxes The 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. ASC 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 three months ended March 31, 2022, and 2021 the Company recognized no adjustments for uncertain tax positions. The 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 as of March 31, 2022, and 2021. The Company expects no material changes to unrecognized tax positions within the next twelve months. The Company has filed federal and state tax returns through December 31, 2020. The tax periods for the years ending December 31, 2018, through 2021 are open to examination by federal and state authorities. 9 NOTE 3 – REVENUE Products Revenue Product revenue generated from contracts with customers, for the manufacture of products for the removal and treatment of hazardous vapor and gasses. 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. Such changes are “change orders” 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 liability. The 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. Products revenue also includes media sales which are recognized as the product is shipped to the customer for use. Solid Waste Revenue The Company’s revenues from waste destruction licensing agreements are recognized as a single accounting unit over the term of the license. Revenue from joint venture operations of the Company’s CoronaLux™ units is recognized as the revenue is earned by the joint venture. Revenue from management services is recognized as services are performed. Disaggregation of Revenue (Unaudited) SCHEDULE OF DISAGGREGATION OF REVENUE Environmental Solutions Solid Waste Total Three months ended March 31, 2022 Environmental Solutions Solid Waste Total Sources of Revenue Product sales $ 666,300 - $ 666,300 Media sales 193,600 - 193,600 Licensing fees - - - Management fees - 50,000 50,000 Total Revenue $ 859,900 $ 50,000 $ 909,900 Environmental Solutions Solid Waste Total Three months ended March 31, 2021 Environmental Solutions Solid Waste Total Sources of Revenue Product sales 431,600 - 431,600 Media sales 254,400 - 254,400 Licensing fees - 8,200 8,200 Management fees - 50,000 50,000 Total Revenue $ 686,000 $ 58,200 $ 744,200 10 Contract Balances Where 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. The opening and closing balances of the Company’s accounts receivables and contract liabilities (current and non-current) are as follows: SCHEDULE OF CONTRACT BALANCES Accounts Receivable, net Contract Assets Contract Liabilities Balance as of March 31, 2022 $ 729,600 $ 14,900 $ 523,500 Balance as of December 31, 2021 536,600 3,600 525,900 Increase (decrease) $ 193,000 $ 11,300 $ ( 2,400 ) The 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. Contract liabilities are recorded when cash payments are received or due in advance of the Company’s performance, including amounts that are refundable. Remaining Performance Obligations As of March 31, 2022, the aggregate amount of the transaction price allocated to the remaining performance obligations was approximately $ 1.6 million, of which the Company expects to recognize approximately 85 % of this revenue over the next 12 months. The 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. NOTE 4 – PROPERTY AND EQUIPMENT Property and equipment was comprised of the following: SCHEDULE OF PROPERTY PLANT AND EQUIPMENT March 31, 2022 December 31, 2021 Field and shop equipment $ 578,000 $ 553,200 Vehicles 72,500 72,500 Waste destruction equipment, placed in service 553,300 553,300 Furniture and office equipment 345,800 342,400 Leasehold improvements 36,200 36,200 Building and improvements 21,200 21,200 Land 162,900 162,900 Property and equipment, gross 1,769,900 1,741,700 Less: accumulated depreciation and amortization ( 1,333,400 ) ( 1,308,700 ) Property and equipment, net $ 436,500 $ 433,000 Depreciation expense for the three months ended March 31, 2022, and 2021 was $ 24,800 and $ 26,500 , respectively. For the three months ended March 31, 2022, and 2021, depreciation expense included in cost of goods sold was $ 18,400 and $ 20,100 , respectively. For the three months ended March 31, 2022, and 2021, depreciation expense included in selling, general and administrative expenses was $ 6,400 and $ 6,400 , respectively. Depreciation expense on leased CoronaLux™ units included in depreciation and amortization above is $0 as of March 31, 2022, and 2021, respectively. Property and equipment included the following amounts for leases that have been capitalized at: SCHEDULE OF PROPERTY AND EQUIPMENT FOR LEASES CAPITALIZED March 31, December 31, 2022 2021 Vehicles, field and shop equipment $ 10,200 $ 10,200 Less: accumulated amortization ( 10,200 ) ( 10,200 ) Property and equipment for lease capitalized $ - $ - 11 NOTE 5 – INTANGIBLE ASSETS SCHEDULE OF INTANGIBLE ASSETS Gross carrying amount Accumulated amortization Net carrying value March 31, 2022 Gross carrying amount Accumulated amortization Net carrying value Goodwill $ 277,800 $ - $ 277,800 Customer list 42,500 ( 42,500 ) - Technology 1,021,900 ( 885,900 ) 136,000 Trade name 54,900 ( 54,900 ) - $ 1,397,100 $ ( 983,300 ) $ 413,800 Gross carrying amount Accumulated amortization Net carrying value December 31, 2021 Gross carrying amount Accumulated amortization Net carrying value Goodwill $ 277,800 $ - $ 277,800 Customer list 42,500 ( 42,500 ) - Technology 1,021,900 ( 880,400 ) 141,500 Trade name 54,900 ( 54,900 ) - $ 1,397,100 $ ( 977,800 ) $ 419,300 The estimated useful lives of the intangible assets range from seven to twenty years . Amortization expense was $ 5,500 and $ 8,000 for the three months ended March 31, 2022, and 2021, respectively. NOTE 6 – LEASES The Company has entered into operating leases primarily for real estate. These leases have terms which range from 1 to 8 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 March 31, 2022, 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, 2022, 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, when the new lease standard was effective. 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, 2022, total right-of-use assets and operating lease liabilities were approximately $ 289,600 and $ 322,200 , respectively. All operating lease expense is recognized on a straight-line basis over the lease term. In the three months ended March 31, 2022, the Company recognized approximately $ 20,900 in operating lease costs for right-of-use assets. Because 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. 12 Information related to the Company’s right-of-use assets and related lease liabilities were as follows (Unaudited): SCHEDULE OF RIGHT-OF-USE ASSETS AND RELATED LEASE LIABILITIES Three Months Ended March 31, 2022 2021 Cash paid for operating lease liabilities $ 36,700 $ 77,000 Right-of-use assets obtained in exchange for new operating lease obligations - - Weighted-average remaining lease term 53 months 0 months Weighted-average discount rate 10 % 10 % Maturities of lease liabilities as of March 31, 2022 were as follows: SCHEDULE OF MATURITIES OF LEASE LIABILITIES 2023 $ 86,300 2024 88,900 2025 91,600 2026 94,300 2027 40,300 Thereafter - Lease liabilities 401,400 Less imputed interest ( 79,200 ) Total lease liabilities 322,200 Current operating lease liabilities 56,700 Non-current operating lease liabilities 265,500 Total lease liabilities $ 322,200 NOTE 7 – ACCRUED LIABILITIES Accrued liabilities were comprised of the following: SCHEDULE OF ACCRUED LIABILITIES March 31, December 31, 2022 2021 Accrued compensation and related taxes $ 158,500 $ 124,600 Accrued interest 1,980,500 1,818,500 Accrued settlement/litigation claims 150,000 150,000 Warranty and defect claims 40,500 40,000 Other 102,600 97,000 Total Accrued Liabilities $ 2,432,100 $ 2,230,100 13 NOTE 8 – UNCOMPLETED CONTRACTS Costs, estimated earnings and billings on uncompleted contracts are as follows: SCHEDULE OF UNCOMPLETED CONTRACTS March 31, December 31, 2022 2021 (unaudited) Revenue recognized $ 679,300 $ 285,600 Less: billings to date ( 664,400 ) ( 282,000 ) Contract assets 14,900 3,600 Billings to date 1,032,000 1,578,300 Revenue recognized ( 508,500 ) ( 1,052,400 ) Contract liabilities $ 523,500 $ 525,900 NOTE 9 – INVESTMENT IN PARAGON WASTE SOLUTIONS LLC Since its inception through March 31, 2022, the Company has provided approximately $ 6.4 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. NOTE 10 – DEBT Debt as of March 31, 2022 (Unaudited), and December 31, 2021, was comprised of the following: SCHEDULE OF DEBT Paycheck protection program Short term notes Convertible notes, unsecured Current portion of long-term debt and capital lease obligations Long term debt and capital lease obligations Total Balance December 31, 2021 $ 96,600 $ 2,843,900 $ 1,605,000 $ 525,600 $ 1,619,600 (4) $ 6,690,700 Increase in borrowing - - - 4,600 (2) 258,800 (2) 263,400 Principal reductions(1) ( 96,600 ) ( 11,600 ) - - ( 6,800 ) ( 115,000 ) Long term debt to current - - - - - - Amortization of debt discount - - - - - - Balance March 31, 2022 $ - $ 2,832,300 (3) $ 1,605,000 $ 530,200 $ 1,871,600 $ 6,839,100 (1) The Payroll Protection Program final note forgiveness was confirmed during the first quarter of 2022. (2) A) Secured note payable of $ 13,300 , secured by and proceeds used to buy a forklift, dated March 15, 2022, interest at an annual rate of 6.5 % simple interest and matures on February 15, 2025 , with payments of approx $ 400 per month, in accordance with the note’s provisions. For the three months ended March 31, 2022, the Company recorded interest expense of $ 100 . Unpaid interest at March 31, 2022 was $ 0 . $ 4,200 of this note is included in the current portion of long-term debt. B) Note payable of $ 250,000 dated February 11, 2022, interest at an annual rate of 8 % simple interest and matures on February 10, 2027 . 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, 2022, the Company recorded interest expense of $ 2,700 . Unpaid interest at March 31, 2022 was approximately $ 2,700 . (3) The balance consists of $ 2,410,200 of secured notes, and $ 422,100 unsecured notes payable. (4) Secured notes. 14 NOTE 11 – RELATED PARTY TRANSACTIONS Notes payable and accrued interest, related parties Related parties accrued interest due to certain related parties are as follows: SCHEDULE OF RELATED PARTIES, NOTES PAYABLE AND ACCRUED INTEREST March 31, December 31, 2022 2021 (unaudited) Short term notes $ 125,000 $ 125,000 Accrued interest 63,000 55,800 Total short-term notes and accrued interest - Related parties $ 188,000 $ 180,800 NOTE 12 – EQUITY TRANSACTIONS 2022 Common Stock Transactions During the three months ended March 31, 2022, no new equity transactions have occurred. 2021 Common Stock Transactions During the three months ended March 31, 2021, no new equity transactions have occurred. Non-controlling Interest The non-controlling interest presented in our condensed consolidated financial statements reflects a 46% non-controlling equity interest 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. The non-controlling interest is reflected within stockholders’ equity on the condensed consolidated balance sheet. NOTE 13 – CUSTOMER CONCENTRATIONS The Company had sales from operations to three, for the three months ended March 31, 2022, and 2021 that surpassed the 10 % threshold of total revenue, respectively. In total, these customers represented approximately 68 % and 64 % 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. NOTE 14 – NET GAIN OR LOSS PER SHARE Basic net gain or loss per share is computed by dividing net gain or loss attributable to common shareholders by the weighted average number of common shares outstanding. Diluted net gain or 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 three months ended March 31, 2022, all potentially dilutive securities have been excluded from the diluted share calculations because they were anti-dilutive as a result of the net losses incurred for the respective period, or were dilutive, but the exercise prices were above the stock price for the entire period, deeming them not to be converted, or exercised during the period. Accordingly, basic shares equal diluted shares for all periods presented. 15 Potentially dilutive securities were comprised of the following (unaudited): SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES 2022 2021 Three Months Ended March 31, 2022 2021 Warrants 200,000 271,000 Options 1,590,000 1,640,000 Convertible notes payable, including accrued interest 3,120,500 2,918,900 Potentially dilutive securities 4,910,500 4,829,900 NOTE 15 – ABANDONMENT OF SUBSIDIARY On September 1, 2021, the Company’s board of directors, by unanimous consent, adopted a resolution to abandon the Company’s wholly owned subsidiary, REGS, LLC. The abandonment resulted in a gain to the Company of approximately $ 1.5 million for the year ended December 31, 2021. For the three months ended March 31, 2021, all operations from REGS have been reported as discontinued operations. Major classes of line items constituting pretax income on discontinued operations: SCHEDULE OF DISPOSAL GROUPS, INCLUDING DISCONTINUED OPERATIONS 2022 2021 For the three months ended March 31, 2022 2021 Services revenue $ - $ 177,200 Services costs - ( 179,600 ) General and administrative expenses - ( 2,700 ) Salaries and related expenses - ( 29,000 ) Other income - 67,600 Gain on debt extinguishment - - Total expenses - ( 143,700 ) Operating income - 33,500 Income tax benefit - - Total income from discontinued operations $ - $ 33,500 NOTE 16 – SEGMENT INFORMATION AND MAJOR CUSTOMERS The Company currently has identified two segments as follows: MV, SEM, PelleChar Environmental Solutions PWS Solid Waste The composition of our reportable segments is consistent with that used by our chief decision makers to evaluate performance and allocate resources. 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. 16 Segment information for the three months ended March 31, 2022 (Unaudited), and 2021 is as follows: SCHEDULE OF SEGMENT INFORMATION Three Months ended March 31, Environmental Solid 2022 Solutions Waste Corporate Total Revenue $ 859,900 $ 50,000 $ - $ 909,900 Depreciation and amortization (1) 11,000 7,400 11,900 30,300 Interest expense 1,300 4,100 185,200 190,600 Net income (loss) 36,500 ( 5,900 ) ( 417,200 ) ( 386,600 ) Capital expenditures (cash and noncash) 28,300 - - 28,300 Total assets $ 1,547,700 $ 277,600 $ 492,500 $ 2,317,800 Environmental Solid 2021 Solutions Waste Corporate Total Revenue $ 627,800 $ 58,200 $ - $ 686,000 Depreciation and amortization (1) 17,200 8,500 8,900 34,600 Interest expense 1,400 - 192,800 194,200 Stock-based compensation - - 4,700 4,700 Net income (loss) 138,200 ( 22,300 ) ( 433,500 ) ( 317,600 ) Capital expenditures (cash and noncash) - - - - Total assets $ 1,470,300 $ 354,200 $ 685,000 $ 2,509,500 17