Item 1A. Risk Factors
ITEM
1A. RISK FACTORS
You
should carefully consider the following risks. These risks could materially affect our business, results of operations or financial condition,
cause the trading price of our common stock to decline materially or cause our actual results to differ materially from those expected
or those expressed in any forward-looking statements made by us or on our behalf. In addition, there may be additional risks of which
we are not presently aware or that we currently believe are immaterial that could have an adverse impact on our business.
Risks
Related to Our Business
Our
auditors have expressed substantial doubt about our ability to continue as a going concern.
The
accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. As discussed in
Note 1 to the consolidated financial statements included in this report, we have incurred significant losses since inception and have
an accumulated deficit of approximately $32.0 million as of December 31, 2022 and need to raise substantial amounts of additional funds
to meet our obligations and afford us time to develop profitable operations. There can be no assurance that we will be able to raise
capital, obtain debt financing, or improve operating results sufficiently to continue as a going concern, if at all. The consolidated
financial statements included in this report do not include any adjustments that might result from the outcome of this uncertainty.
We
are subject to extensive governmental regulation, which is frequently difficult, expensive, and time-consuming with which to comply;
noncompliance could adversely affect our operations and efforts to grow our business results.
The
industries in which we operate are subject to extensive federal, state and local laws and regulations. Our business requires us to obtain
many approvals, certificates, licenses, permits and other types of governmental authorizations and to comply with various laws and regulations
in every jurisdiction in which we operate. Federal, state and local regulations change often, and new regulations are frequently adopted.
Changes in the regulations could require us to obtain new authorizations or to change the way in which we operate our business. We might
be unable to obtain the new authorizations that we require, and the cost of compliance with new or changed laws and regulations could
be significant.
Many
of the authorizations that we require, especially those to build and operate facilities, are difficult and time-consuming to obtain.
They may also contain conditions or restrictions that limit our ability to operate efficiently, and they may not be issued as quickly
as we need them or at all. If we cannot obtain the authorizations, or if they contain unfavorable conditions, it could substantially
impair our operations and reduce our revenues and have a material adverse effect on our business, results of operations and financial
condition.
If
we encounter regulatory compliance issues in the course of operating our businesses, we may experience adverse publicity, which may intensify
if such non-compliance results in civil or criminal liability. This adverse publicity may harm our reputation, and result in difficulties
in attracting new customers, or retaining existing customers.
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The
level of governmental enforcement of environmental and other regulations has an uncertain effect on our business and could reduce the
demand for our services.
We
believe that strict enforcement of laws and regulations relating to regulated industrial cleaning, environmental compliance, renewable
energy and waste minimization/management can have a positive effect on our business, as these laws and regulations may increase the demand
for our products and services. Relaxation of enforcement, government shutdowns, or other changes in governmental regulation of the industries
in which we operate could increase the number of competitors we face or reduce or delay the need for our services.
We
may incur significant charges as a result of divestitures.
We
continue to evaluate the performance of our assets and businesses. Based on this evaluation, we may sell certain assets or businesses
or exit particular markets. Any impairments and losses on divestiture resulting from this process may cause us to record significant
charges, including those related to goodwill and other intangible assets. In addition, divestitures may not yield the targeted improvements
in our business. Divestitures involve risks, including difficulties in the separation of operations, services, products and personnel,
disruption in our operations or businesses, finding a suitable purchaser, the diversion of management’s attention from our other
businesses, the potential loss of key employees, the erosion of employee morale or customer confidence, and the retention of contingent
liabilities related to the divested business. Any charges that we are required to record or the failure to achieve the intended financial
results associated with divestitures of businesses or assets could have a material adverse effect on our business, financial condition
or results of operations. On September 1, 2021, REGS was abandoned and discarded by the Company.
Our
substantial indebtedness could adversely affect our financial condition and ability to fulfill our obligations.
We
currently have a substantial amount of outstanding indebtedness. As of December 31, 2022, we had an accumulated deficit of approximately
$32.0. million, with total current assets and liabilities of approximately $0.9 million and $10.5 million respectively. Included in the
liabilities are approximately $3.5 million of short-term notes, $125,000 of short-term notes to a related party and approximately $1.6
million of convertible notes.
There
can be no assurance that we 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. As of December 31, 2022, we have cash and cash equivalent assets of
$21,500. If we are unable to generate sufficient cash flow in the future to service our debt, we may be required to refinance all or
a portion of our existing debt or to obtain additional financing. There can be no assurance that any refinancings will be possible or
that any additional financing could be obtained on terms acceptable to us. The inability to obtain additional financing could have a
material adverse effect on our financial position, liquidity and results of operations. Our substantial indebtedness subjects us to various
risks, including:
●
we
may be unable to satisfy our obligations under our outstanding indebtedness;
●
we
may be more vulnerable to adverse general economic and industry conditions;
●
we
may find it more difficult to fund future working capital, capital expenditures, acquisitions, general corporate purposes or other
purposes; and
●
we
may have to dedicate a substantial portion of our cash resources to the payments on our outstanding indebtedness, thereby reducing
the funds available for operations and future business opportunities.
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We
have a history of losses and we may not be able to achieve profitability in the future.
We
continue to incur losses in operations. We have experienced recurring losses and have accumulated a deficit of approximately $32.0 million
as of December 31, 2022. For the year ended December 31, 2022, we had a net loss from continuing operations of approximately $2.7 million.
We had a working capital deficit of approximately $9.6 million as of December 31, 2022. These factors raise substantial doubt about the
ability of the Company to continue to operate as a going concern. It may be necessary for us to rely on external financing to supplement
working capital to meet our liquidity needs in the fiscal years ended 2023 and 2024. The success of securing such financing on terms
acceptable to us, if at all, cannot be assured. If we are unable to achieve the financing necessary to continue our plan of operations,
our stockholders may lose their entire investment in the Company.
We
are subject to operating and litigation risks that may not be covered by insurance.
Our
business operations are subject to all of the operating hazards and risks normally incidental to the handling, storage and disposal of
hazardous products. These risks could result in substantial losses due to personal injury and/or loss of life, and severe damage and
destruction of property and equipment arising from explosions or other catastrophic events. As a result, we may become a defendant in
legal proceedings and litigation arising in the ordinary course of business. Additionally, environmental contamination could result in
future legal proceedings. There can be no assurance that our insurance coverage will be adequate to protect us from all material expenses
related to pending and future claims or that such levels of insurance would be available in the future at acceptable prices, if at all.
In
addition, a disruption of our business caused by a casualty event at a facility of ours or one of our customers may result in the loss
of business, profits or customers during the time of the disruption. As such, our insurance policies may not fully compensate us for
these losses.
We
have substantial customer concentration, with a limited number of customers accounting for a substantial portion of our 2022 revenues .
As
of December 31, 2022, we had two customers with sales in excess of 10% of our revenues. There are risks whenever a large percentage
of total revenues are concentrated with a limited number of customers. It is not possible for us to predict the future level of demand
for our services that will be generated by these customers or the future demand for the products and services of these customers in the
end-user marketplace. In addition, revenues from these larger customers may fluctuate from time to time based on the commencement and
completion of projects, the timing of which may be affected by market conditions or other facts, some of which may be outside of our
control. These customers may pressure us to reduce the prices we charge for our products and services which could have an adverse effect
on our margins and financial position and could negatively affect our revenues and results of operations. If either of our two largest
customers terminates our arrangements, such termination would negatively affect our revenues and results of operations.
Aggressive
pricing by existing competitors and the entrance of new competitors could significantly and adversely affect our results of operations.
The
industries in which we participate are highly competitive. This competition may require us to reduce our prices in the future or may
affect our ability to increase prices in the future. Price reductions or our inability to increase prices could significantly and adversely
affect our results of operations.
We
face direct competition from a large number of small, local competitors. We face competition from companies with greater resources than
us, companies with closer geographic proximity to our customers and potential customers, companies with service offerings we do not provide
and companies that can provide lower pricing than we can in certain instances. An increase in the number or location of commercial treatment
or disposal facilities for waste, significant expansion of existing competitor permitted capabilities, acquisitions by competitors or
a decrease in the treatment or disposal fees charged by competitors could materially and adversely affect our results of operations.
We face competition from these businesses, and competition from them is likely to exist in new locations to which we may expand in the
future. In addition, large national companies with substantial resources operate in the markets we serve.
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Adverse
economic conditions, government funding or competitive pressures affecting our customers could harm our business.
We
serve a diverse customer base that includes oil and gas refineries, regional landfills, medical waste destruction operations, agricultural
companies and food and beverage companies and other commercial and industrial customers that are, or may be, affected by changing economic
conditions and competition. These customers may be significantly impacted by deterioration in the general economy and may curtail waste
production and/or delay spending on plant maintenance, waste cleanup projects and other discretionary work. Factors that can impact general
economic conditions and the level of spending by customers include the general level of consumer and industrial spending, increases in
fuel and energy costs, residential and commercial real estate and mortgage market conditions, labor and healthcare costs, access to credit,
consumer confidence and other macroeconomic factors affecting spending behavior. Market forces may also compel customers to cease or
reduce operations, declare bankruptcy, liquidate or relocate to other countries, any of which could adversely affect our business.
Our
operations are significantly affected by potential seasonal fluctuations due to weather; budgetary decisions and cash flow limitations
influencing the timing of customer spending for the products and services we provide; the timing of regulatory agency decisions and judicial
proceedings; changes in government regulations and enforcement policies and other factors that may delay or cause the cancellation of
projects involving our products and services. We do not control such factors, which can cause our revenue and income to vary significantly
from quarter to quarter and year to year.
Our
proprietary rights may be difficult to enforce.
We
generally rely on patents, copyrights, trademarks, and trade secret laws to establish and maintain proprietary rights in our technology
and products. Although we hold several patents and other patent applications are currently pending, there can be no assurance that any
of these patents or other proprietary rights will not be challenged, invalidated, or circumvented or that our rights will, in fact, provide
competitive advantages to us. In addition, there can be no assurance that patents will be issued from pending applications or that claims
allowed on any patents will be sufficiently broad to protect our technology. If we are unable to protect our proprietary rights, we may
find ourselves at a competitive disadvantage to others who need not incur the substantial expense, time and effort required to create
innovative products that have enabled us to be successful, which could have a material adverse effect on our business, financial condition
and results of operations.
We
may be found to infringe on intellectual property rights of others.
Third
parties may assert claims or initiate litigation related to exclusive patent, copyright, trademark, and other intellectual property rights
that are relevant to us. The asserted claims and/or initiated litigation can include claims against us or our manufacturers, suppliers,
or customers, alleging infringement of their proprietary rights with respect to our existing or future products or components of those
products. Regardless of the merit of these claims, they can be time-consuming, result in costly litigation and diversion of technical
and management personnel, or require us to develop a non-infringing technology or enter into license agreements. Where claims are made
by customers, resistance even to unmeritorious claims could damage customer relationships. There can be no assurance that licenses will
be available on acceptable terms and conditions, if at all, or that any arrangements with our suppliers will be available or adequate
to cover our costs if a claim were brought directly against us or our customers. Furthermore, because of the potential for high court
awards that are not necessarily predictable, it is not unusual to find even arguably unmeritorious claims settled for significant amounts.
If any infringement or other intellectual property claim made against us by any third party is successful, if we are required to indemnify
a customer with respect to a claim against the customer, or if we fail to develop non-infringing technology or license the proprietary
rights on commercially reasonable terms and conditions, our business, operating results, and financial condition could be materially
and adversely affected.
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Our
success in the future may depend on our ability to establish and maintain strategic alliances, and any failure on our part to establish
and maintain such relationships could adversely affect our market penetration and revenue growth.
Our
ability to establish strategic relationships will depend on a number of factors, many of which are outside our control, such as the competitive
position of our technology and our products relative to our competitors. We can provide no assurance that we will be able to establish
strategic relationships successfully. In addition, strategic alliances that we may establish could subject us to a number of risks, including
risks associated with sharing proprietary information and loss of control of operations that are material to our business and profit-sharing
arrangements. Moreover, strategic alliances may be expensive to implement, require us to issue additional shares of our common stock
and subject us to the risk that the third party will not perform its obligations pursuant to the arrangement, which may subject us to
losses over which we have no control or expensive termination arrangements.
Due
to financial and experience constraints, we expect to rely on strategic relationships to develop our business, including those relating
to product development, manufacturing, marketing and sales. Identifying and developing strategic alliance candidates is expensive and
time-consuming. In addition, these arrangements may leave us vulnerable to capacity constraints and reduced component availability, and
our control over customer relationships, product delivery schedules, manufacturing and costs would be limited. In addition, we may have
limited control over quality systems and controls, and therefore must rely on our relationships to manufacture our products to our quality
and performance standards and specifications. Delays, component shortages, including custom components that are manufactured for us at
our direction, and other manufacturing and supply problems, could impair the manufacture and distribution of our products and ultimately
our company’s reputation. Furthermore, any adverse change in the financial or business condition of our strategic alliance counterparts
could disrupt our ability to develop, manufacture, market and sell our products. If we are required to change our strategic alliance
counterparts or bring those functions in-house, we may lose revenue, incur increased costs, and damage our relationships with other customers
and strategic alliances.
Attacks
on our information technology systems could damage our reputation, negatively impact our businesses and expose us to litigation risk.
We
use computers in substantially all aspects of our business operations. We also use mobile devices, social networking and other online
activities to connect with our employees and our customers. We rely heavily on various proprietary and third-party information systems.
Our reputation for the secure handling of customer and other sensitive information is critical to the success of our business. We are
potentially subject to cyber-attacks, including state-sponsored cyber-attacks, industrial espionage, insider threats, computer denial-of-service
attacks, computer viruses, ransomware and other malware, wire fraud and other cyber incidents. Our incident response efforts, business
continuity procedures and disaster recovery planning may not be entirely effective as our information technology and network infrastructure
may still be vulnerable to attacks by hackers or breaches due to employee error, malfeasance, computer viruses, power outages, natural
disasters, acts of terrorism, breaches with respect to third-party systems or other disruptions. A cybersecurity incident and breach
of our information systems could lead to theft, destruction, misappropriation or release of sensitive and/or confidential information
or intellectual property, which could result in business disruption, negative publicity, violation of privacy laws, loss of customers,
brand damage, adverse financial and operational results, and potential litigation.
Our
management depends on relevant and reliable information for decision-making purposes, including key performance indicators and financial
reporting. Any significant loss of data, failure to maintain reliable data, disruptions affecting our information systems, or delays
or difficulties in transitioning to new systems could adversely affect our business, financial condition and results of operations. In
addition, our ability to continue to operate our businesses without significant interruption in the event of a disaster or other disruption
depends in part on the ability of our information systems to operate in accordance with our disaster recovery and business continuity
plans. If our information systems fail and our redundant systems or disaster recovery plans are not adequate to address such failures,
or if our business interruption insurance does not sufficiently compensate us for any losses that we may incur, our revenues and profits
could be reduced, and the reputation of our brands and our business could be adversely affected. In addition, remediation of such problems
could result in significant, unplanned capital investments.
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The
handling of regulated waste exposes us to the risk of environmental liabilities.
As
a company engaged in regulated waste management, we face risks of liability for environmental contamination. CERCLA and similar state
laws impose strict liability on current or former owners and operators of facilities that release hazardous substances into the environment
as well as on the businesses that generate those substances and the businesses that transport them to our facilities. Responsible parties
may be liable for substantial investigation and clean-up costs even if they operated their businesses properly and complied with applicable
federal and state laws and regulations. Liability under CERCLA may be joint and several, which means that if we were found to be a business
with responsibility for a particular CERCLA site, we could be required to pay the entire cost of the investigation and clean-up even
if we were not the party responsible for the release of the hazardous substance and other companies might also be liable.
If
we were to incur liability under CERCLA and if we could not identify other parties responsible under the law whom we are able to compel
to contribute to our expenses, the cost to us could be substantial and could have a material adverse effect on our business, results
of operations and financial condition and reduce our liquidity. If there were a claim against us that a customer might be legally liable
for, we might not be successful in recovering our damages from the customer.
We
have significant deferred tax assets, and any impairments of or valuation allowances against these deferred tax assets in the future
could materially adversely affect our results of operations and financial condition.
We
intend to use significant deferred tax assets to offset income. The extent to which we can use deferred tax assets may be limited for
various reasons, including but not limited to changes in tax rules or regulations and if projected future taxable income becomes insufficient
to recognize the full benefit of our net operating loss (“NOL”) carryforwards prior to their expiration. Additionally, our
ability to fully use these tax assets will also be adversely affected if we have an “ownership change” within the meaning
of Section 382 of the U.S. Internal Revenue Code of 1986, as amended. An ownership change is generally defined as a greater than 50%
increase in equity ownership by “5% stockholders” (as that term is defined for purposes of Section 382) in any three-year
period. Future changes in our stock ownership, depending on the magnitude, including the purchase or sale of our common stock by 5% stockholders,
and issuances or redemptions of common stock by us, could result in an ownership change that would trigger the imposition of limitations
under Section 382. Accordingly, there can be no assurance that in the future we will not experience limitations with respect to recognizing
the benefits of our NOL carryforwards and other tax attributes for which limitations could have a material adverse effect on our results
of operations, cash flows or financial condition.
Our
businesses are subject to operational and safety risks.
Provision
of environmental, energy and industrial services to our customers involves risks such as equipment defects, malfunctions and failures
and natural disasters, which could potentially result in releases of hazardous materials, damage to or total loss of our property or
assets, injury or death of our employees or a need to shut down or reduce operations while remedial actions are undertaken. Our employees
often work under potentially hazardous conditions. These risks expose us to potential liability for pollution and other environmental
damages, personal injury, loss of life, business interruption and property damage or destruction. We must also maintain a solid safety
record in order to remain a preferred supplier to our major customers. While we seek to minimize our exposure to such risks, such efforts
and insurance may not be adequate to cover all of our potential liabilities, which would have a material adverse effect on our operations,
financial condition and financial results.
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The
extensive environmental regulations to which we are subject may increase our costs and potential liabilities and limit our ability to
expand our facilities.
Our
operations and those of others in the environmental services industry are subject to extensive federal, state and local environmental
requirements. In particular, if we fail to comply with government regulations governing the handling and transport of hazardous materials,
such failure could negatively impact our ability to operate our business. Efforts to conduct our operations in compliance with all applicable
laws and regulations, including environmental rules and regulations, require programs to promote compliance, such as training employees
and customers and purchasing health and safety equipment. Even with these programs, we and other companies in the environmental services
industry are routinely faced with government enforcement proceedings, which can result in fines or other sanctions and require expenditures
for remedial work on waste management facilities and contaminated sites. Certain of these laws impose strict and, under certain circumstances,
joint and several liability on current and former owners and operators of facilities that release regulated materials or that generate
those materials and arrange for their disposal or treatment at contaminated sites. Such liabilities can relate to required cleanup of
releases of regulated materials and related natural resource damages. The landscape of environmental regulation to which we are subject
can change. Changes to environmental regulation may result in increased operating and compliance costs or, in more significant cases,
changes to how our facilities are able to operate. We constantly monitor the landscape of environmental regulation; however, our ability
to navigate through any changes to such regulations may result in a material effect on our operations, cash flows or financial condition.
Some
environmental laws and regulations impose liability and responsibility on present and former owners, operators or users of facilities
and sites for contamination at such facilities and sites without regard to causation or knowledge of contamination. Releases of regulated
materials at and from our facilities and those of our customers, or the disposal of regulated materials at third-party sites, which may
require investigation and remediation, and potentially result in claims of personal injury, property damage and damages to natural resources.
Investigations undertaken in connection with these activities may lead to discoveries of contamination that must be remediated, and closures
of facilities might trigger compliance requirements that are not applicable to operating facilities. Remedial activities could result
in a material effect upon our operations or financial condition and result in material costs.
We
may not be able to obtain timely or cost-effective transportation services which could adversely affect our profitability.
Revenue
at each of our facilities is subject to potential risks from disruptions in rail or truck transportation services relied upon to deliver
waste. Increases in fuel or labor costs, shortages of qualified drivers and unforeseen events such as labor disputes, public health pandemics,
severe weather, natural disasters and other acts of God, war or terror could prevent or delay shipments and reduce both volumes and revenue.
Transportation services may also be limited by economic conditions, including increased demand for rail or trucking services, resulting
in periods of slower service to the point that individual customer needs cannot be met. No assurance can be given that we can procure
transportation services in a timely manner at competitive rates or pass-through fuel cost increases in all cases. Such factors could
also limit our ability to achieve revenue and earnings objectives.
We
may not be able to effectively adopt or adapt to new or improved technologies.
We
expect to continue implementing new or improved technologies at our facilities to meet customer service demands and expand our business.
If we are unable to identify and implement new technologies in response to market conditions and customer requirements in a timely, cost-effective
manner, our financial condition and results of operations could be adversely impacted.
In
the event that we undertake future acquisitions, we may not be able to successfully execute our acquisition strategy.
We
may experience delays in making acquisitions or be unable to make acquisitions we desire for a number of reasons. Suitable acquisition
candidates may not be available at purchase prices that are attractive to us or on terms that are acceptable to us. In pursuing acquisition
opportunities, we typically compete with other companies, some of which have greater financial and other resources than we do. We may
not have available funds or common stock with a sufficient market price to complete an acquisition. If we are unable to secure sufficient
funding for potential acquisitions, we may not be able to complete acquisitions that we otherwise find advantageous.
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Acquisitions
that we undertake could be difficult to integrate, disrupt our business, dilute stockholder value and adversely affect our results of
operations.
Acquisitions
involve multiple risks. Our inability to successfully integrate an acquired business could have a material adverse effect on our financial
condition and results of operations. These risks include but are not limited to:
●
failure
of the acquired company to achieve anticipated revenues, earnings or cash flows;
●
assumption
of liabilities, including those related to environmental matters, that were not disclosed to us or that exceed our estimates;
●
problems
integrating the purchased operations with our own, which could result in substantial costs and delays or other operational, technical
or financial problems;
●
potential
compliance issues relating to the protection of health and the environment, compliance with securities laws and regulations, adequacy
of internal controls and other matters;
●
diversion
of management’s attention or other resources from our existing business;
●
risks
associated with entering markets or product/service areas in which we have limited prior experience;
●
increases
in working capital investment to fund the growth of acquired operations;
●
unexpected
capital expenditures to upgrade waste handling or other infrastructure or replace equipment to operate safely and efficiently;
●
potential
loss of key employees and customers of the acquired company; and
●
future
write-offs of intangible and other assets, including goodwill, if the acquired operations fail to generate sufficient cash flows.
If
we are not able to achieve these objectives, the anticipated benefits of the acquisition may not be realized fully, if at all, or may
take longer to realize than expected. It is possible that the integration process could result in the loss of key employees, the disruption
of our ongoing business, failure to implement the business plan for the combined businesses, unanticipated issues in integrating service
offerings, logistics information, communications and other systems or other unanticipated issues, expenses and liabilities, any or all
of which could adversely affect our ability to maintain relationships with customers and employees or to achieve the anticipated benefits
of the acquisition.
We
face risks associated with project work and services that are provided on a non-recurring basis.
A
portion of our revenue is derived from short-term projects or services that we provide on a non-recurring basis, which are not predictable
in terms of frequency, size or duration. Our customers’ need for these services could be influenced by regulatory changes, fluctuations
in commodity market performance, natural disasters and acts of God, or other factors beyond our control. Variability in the demand for
these services could adversely affect our business, financial condition and results of operations.
Some
of our customers have suffered financial difficulties, which could negatively impact our operating results.
We
provide service to a number of customers, some of which have suffered significant financial difficulties in recent years. Some of these
entities could be unable to pay amounts owed to us or renew contracts with us at previous or increased rates. The inability of our customers
to pay us in a timely manner or to pay increased prices, particularly our larger accounts, could negatively affect our operating results.
Our
success depends on our executive officers and other key personnel. If we lose key personnel or are unable to hire additional qualified
personnel, our business may be harmed.
We
have traditionally operated with limited resources and infrastructure. As of the date of this report, we have a total of fourteen employees,
including our management team. We believe our success will depend in large part on our ability to attract and retain highly skilled administrative,
technical, managerial, sales, and marketing personnel. Competition for these personnel is intense. Our financial condition or volatility
or lack of positive performance in our stock price or equity incentive awards may also adversely affect our ability to hire and retain
key employees. In addition, there is some seasonality to our business which requires us to use day laborers. The loss of services of
any of our key personnel, the inability to retain and attract qualified personnel in the future, or delays in hiring required personnel,
particularly engineering and sales personnel, could make it difficult to meet key objectives, such as timely and effective product development,
manufacturing and sales.
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Natural
disasters, terrorist attacks or other catastrophic events could negatively affect our business, financial condition, and results of operations.
Natural
disasters such as hurricanes, typhoons or earthquakes could negatively affect our operations and financial performance. Such events could
result in physical damage to one or more of our facilities or equipment, the temporary lack of an adequate work force in a market, and
the temporary disruption in transportation services which we rely on to deliver waste to our facilities. These events could prevent or
delay shipments and reduce both volumes and revenue. Weather conditions and other event driven special projects may also cause variations
in our results. We may be required to suspend operations in some of our locations, which could have a material adverse effect on our
business, financial condition, and results of operations.
The
long-term impact of terrorist attacks, such as the attacks that occurred on September 11, 2001, and the magnitude of the threat of future
terrorist attacks are not known at this time. Uncertainty surrounding hostilities in the Middle East or other sustained military campaigns
may affect our operations in unpredictable ways. Changes in the insurance markets attributable to terrorist attacks may make certain
types of insurance more difficult for us to obtain. Moreover, the insurance that may be available to us may be significantly more expensive
than our existing insurance coverage. Instability in the business and financial markets as a result of terrorism or war could also affect
our ability to raise capital and conduct business.
In
late 2019, a novel strain of coronavirus, COVID-19, was reported to have surfaced in Wuhan, China. Since then, the COVID-19 coronavirus
has spread to multiple countries, including the United States. If the COVID-19 coronavirus continues to spread or additional variants
develop, we may continue to experience disruptions that could severely impact our business, including availability of necessary items
or availability of workforce in a non-essential business either due to voluntary or mandated quarantine. The global outbreak of the COVID-19
coronavirus continues to rapidly evolve. The extent to which the COVID-19 may continue to impact our business will depend on future developments,
which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration
of the outbreak, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions
and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.
Risks
Related to Our Common Stock
The
material weaknesses in our internal control over financial reporting may adversely impact our company.
As
discussed in Part II, Item 9A, entitled “Controls and Procedures,” in this report, we have concluded that our internal control
over financial reporting was not effective.
We
are currently working to remediate the material weaknesses. We cannot be sure when we will successfully remediate the material weakness
or whether compensating controls will be effective in preventing or detecting material errors. The remediation may require substantial
time and resources to successfully implement. We may be unable to remediate these weaknesses until we have received additional funding
that may be necessary to hire additional personnel. Until we have sufficient internal finance and accounting staff, we plan to work closely
with external financial advisors to document the existing financial processes, risk assessment, and internal controls systematically.
These material weaknesses could cause creditors, customers, investors, regulators, strategic alliances and others to lose confidence
in the effectiveness of our internal controls and the accuracy of our financial statements and other information, all of which could
have a material adverse impact on our business, results of operations and financial condition.
We
are subject to the reporting requirements of the federal securities laws, which can be expensive .
We
are a public reporting company in the United States and therefore, we are subject to the information and reporting requirements of the
Securities Exchange Act of 1934 and other federal securities laws, and the compliance obligations of the Sarbanes-Oxley Act. The costs
of preparing and filing annual and quarterly reports and other information with the SEC will cause our expenses to be higher than they
would be if we were a privately held company.
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The
issuance or sale of equity, convertible or exchangeable securities in the market, or the perception of such future sales or issuances,
could lead to a decline in the price, if any, of our common stock.
Our
board of directors has the authority to issue up to 70,000,000 shares of our common stock. Any issuance of equity or securities convertible
into or exchangeable for our equity securities, including for the purposes of expansion of our business, may have a dilutive effect on
our existing stockholders.
The
perceived risk associated with the possible issuance of a large number of shares of common stock or securities convertible into or exchange
for a large number of shares of our common stock could cause some of our stockholders to sell their stock, thus causing the price of
our stock to decline. Subsequent sales of our common stock in the open market or the private placement of our common stock or securities
convertible into or exchangeable for our common stock could also have an adverse effect on the market price, if any, of our shares. If
our stock price declines, it may be more difficult for us to or we may be unable to raise additional capital.
Over
the course of meeting our capital needs, we have entered into various instruments that are convertible into shares of our common stock.
We may conduct further equity offerings in the future. If common stock is issued in return for additional funds, property or services,
the price per share could be lower than that paid by our current stockholders. Also, any stock we sell in the future may be valued on
an arbitrary basis by us and the issuance of shares of common stock for future services, acquisitions or other corporate actions may
have the effect of diluting the value of the shares held by our existing stockholders.
Future
sales of substantial amounts of our currently outstanding common stock in the public market, or the perception that such sales could
occur, could adversely affect prevailing trading prices of our common stock and could impair our ability to raise capital through future
offerings of equity or equity-related securities. We cannot predict what effect, if any, future sales of our common stock, or the availability
of shares for future sales, will have on the market price of our stock.
We
may not have enough authorized shares of capital stock to satisfy our contractual obligations.
Our
board of directors has the authority to issue up to 70,000,000 shares of our common stock. As of March 31, 2022, there were 65,088,575
shares of our common stock issued and outstanding and an additional 3,292,400 shares of common stock issuable upon conversion of outstanding
convertible promissory notes. As interest accrues on the notes and the interest and principal under those notes remain unpaid, the number
of shares issuable upon conversion of the notes continues to increase. If the number of shares of common stock issuable upon conversion
of the notes exceeds the number of authorized shares of common stock, we could be in default under those notes, and the holders of the
notes could declare a default and accelerate the indebtedness under those notes, which we do not have the cash to repay as of the filing
of this report. As a result, our inability to maintain an adequate number of authorized but unissued shares of our common stock to issue
upon conversion of our convertible instruments could result in defaults on our indebtedness, impair our ability to raise capital through
the issuance of equity securities or debt securities convertible into our common stock, and have a material adverse effect on our business,
results of operations and financial condition.
We
may experience volatility in our stock price, which could negatively affect your investment, and you may not be able to resell your shares
at or above the offering price.
Our
common stock has traded in the over-the-counter marketplace on the OTCQB under the symbol “SENR.”. There can be no assurance
that our common stock will continue to be, or be admitted to, trade on any established trading market or exchange. Additionally, there
can be no assurance that we will maintain the requirements for continued listing or trading on an established trading market or exchange.
20
Our
common stock may not be traded actively. An illiquid market for shares of our common stock may result in lower trading prices and increased
volatility, which could negatively affect the value of your investment or your ability to sell your shares. If an active trading market
does develop, it may not last and the trading price of the shares may fluctuate widely as a result of a number of factors, many of which
are outside our control. The market price of our common stock may fluctuate significantly in response to a number of factors, some of
which are beyond our control, including:
●
our
ability to commercialize our products, services and technologies;
●
the
amount and timing of expenses associated with our research and development programs and our ability to develop enhancements to our
products and services;
●
additions
or departures of key personnel;
●
our
ability to effectively manage our growth;
●
our
ability and the terms upon which we are able to raise capital sufficient to continue our operations;
●
our
cash position;
●
sales
of our common stock by us or our stockholders in the future;
●
trading
volume of our common stock;
●
changes
in accounting practices;
●
ineffectiveness
of our internal controls;
●
disputes
or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection
for our technologies;
●
significant
lawsuits, including creditor, customer, patent or stockholder litigation;
●
industry
adoption of our technology or other new competing technologies;
●
our
ability to establish and expand key distribution partners;
●
our
ability to establish strategic relationships with third parties to accelerate our growth plans;
●
announcements
of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors;
●
developments
in the competitive environment, including the introduction of improved products or services by our competitors;
●
overall
performance of the equity markets;
●
publication
of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities
analysts;
●
our
failure to meet the estimates and projections of the investment community or that we may otherwise provide to the public;
●
changes
in the market valuations of similar companies;
●
general
political and economic conditions; and
●
other
events or factors, many of which are beyond our control.
We
anticipate that our operating expenses will increase significantly. If our revenues in any quarter do not increase correspondingly, our
net losses for that period will increase. Moreover, given that a significant portion of our operating expenses cannot be quickly reduced,
if we cannot obtain revenues from operations or our revenues are delayed or below expectations, our operating results are likely to be
adversely and disproportionately affected.
The
stock market in general, and the market for technology companies in particular, has experienced extreme price and volume fluctuations
that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors
may seriously affect the market price of companies’ stock, including ours, regardless of actual operating performance. In addition,
in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities
class action litigation has often been instituted against these companies. This type of litigation, if instituted, could result in substantial
costs and a diversion of management’s attention and resources, which would harm our business, operating results or financial condition.
We
do not presently intend to pay any cash dividends on or repurchase any shares of our common stock.
We
do not presently intend to pay any cash dividends on our common stock. Any payment of future dividends will be at the discretion of the
board of directors and will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness,
statutory and contractual restrictions applying to the payment of dividends and other considerations that our board of directors deems
relevant. Cash dividend payments in the future may only be made out of legally available funds and, if we experience substantial losses,
such funds may not be available. Accordingly, you may have to sell some or all of your common stock in order to generate cash flow from
your investment and there is no guarantee that the price of our common stock that will prevail in the market after this offering may
never exceed the price paid by you in this offering.
21
Because
our shares are deemed “penny stock,” you may have difficulty selling them in the secondary trading market.
The
SEC has adopted regulations which generally define a “penny stock” to be any equity security that has a market price of less
than $5.00 per share or with an exercise price of less than $5.00 per share. Additionally, if the equity security is not registered or
authorized on a national securities exchange, the equity security also would constitute a “penny stock.” As our common stock
falls within the definition of penny stock, these regulations require the delivery, prior to any transaction involving our common stock,
of a risk disclosure schedule explaining the penny stock market and the risks associated with it. Disclosure is also required to be made
regarding compensation payable to both the broker-dealer and the registered representative and current quotations for the securities.
In addition, monthly statements are required to be sent disclosing recent price information for the penny stocks. The ability of broker-dealers
to sell our common stock and the ability of stockholders to sell our common stock in the secondary market would be limited. As a result,
the market liquidity for our common stock would be severely and adversely affected. We can provide no assurance that trading in our common
stock will not be subject to these or other regulations in the future, which would negatively affect the market for our common stock.
ITEM
1B. UNRESOLVED STAFF COMMENTS
None
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.