Equibles

10-K

Strategic Environmental & Energy Resources, Inc. (SENR)

10-K 2020-05-15 For: 2019-12-31
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Added on April 06, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,D.C. 20549

FORM10-K

[X] ANNUAL<br> REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Forthe Year Ended December 31, 2019

OR

[  ] TRANSITION<br> REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number 000-54987

StrategicEnvironmental & Energy Resources, Inc.

(Exactname of registrant as specified in its charter)

Nevada 02-0565834
(State or other jurisdiction of Incorporation or organization) (IRS Employee Identification Number)
370 Interlocken Blvd, Suite 680, Broomfield, CO 80021
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(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code 720-460-3522

Securities registered pursuant to Section 12(b) of the Act:

Title<br> of each class Trading<br> Symbol(s) Name<br> of each exchange on which registered
N/A N/A N/A

Securities registered pursuant to Section 12(g) of the Act:

CommonStock, $.001 par value

(Titleof class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [  ] No [X]

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.

Yes [X]      No [  ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X]      No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large<br> accelerated filer [  ] Accelerated<br> filer [  ]
Non-accelerated<br> filer [  ] Smaller<br> reporting company [X]
Emerging<br> growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]       No [X]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter; 53,471,944 shares of common stock at a price of $.08 per share for an aggregate market value of $4,277,944.

As of May 14, 2020, there were 62,703,575 shares of the registrant’s $.001 par value common stock outstanding. No other class of equity securities is issued or outstanding.

Documents incorporated by reference: None

StrategicEnvironmental & Energy Resources, Inc.

Form10-K for the year ended December 31, 2019

Tableof Contents

Page<br> No.
PART I ****
Item<br> 1. Business 4
Item<br> 1A. Risk Factors 11
Item<br> 1B. Unresolved Staff Comments 21
Item<br> 2. Properties 21
Item<br> 3. Legal Proceedings 22
Item<br> 4. Mine Safety Disclosures 22
PART II
Item<br>5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 23
Item<br> 6. Selected Financial Data 24
Item<br>7. Management’s Discussion and Analysis of Financial Condition and Results of Operation 24
Item<br> 7A. Quantitative and Qualitative Disclosures About Market Risk 29
Item<br> 8. Financial Statements and Supplementary Data 29
Item<br>9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 29
Item<br> 9A. Controls and Procedures 29
Item<br> 9B. Other Information 30
PART III
Item<br> 10. Directors and Executive Officers of the Registrant 31
Item<br> 11. Executive Compensation 33
Item<br>12. Security<br> Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 34
Item<br> 13. Certain Relationships and Related Transactions 36
Item<br> 14. Principal Accountant Fees and Services 36
Part IV
Item<br> 15. Exhibits, Financial Statement Schedules 37
Signatures 39 
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PARTI

CautionaryStatement Concerning Forward-Looking Statements

The information contained in this Annual Report may contain certain statements about SEER that are or may be “forward-looking statements” that is, statements related to future, not past, events, including forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations of the management of SEER and are subject to uncertainty and changes in circumstances and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Factors that could cause our results to differ materially from current expectations include, but are not limited to factors detailed in our reports filed with the U.S. Securities and Exchange Commission (“SEC”), including but not limited to those under the caption “Risk Factors” contained herein. In addition, these statements are based on a number of assumptions that are subject to change. The forward-looking statements contained in the information in this Annual Report may include all other statements in this document other than historical facts. Without limitation, any statements preceded or followed by, or that include the words “targets”, “plans”, “believes”, “expects”, “aims”, “intends”, “will”, “may”, “anticipates”, “estimates”, “approximates”, “projects”, “seeks”, “sees”, “should,” “would,” “expect,” “positioned,” “strategy,” or words or terms of similar substance or derivative variation or the negative thereof, are forward-looking statements. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, losses and future prospects; (ii) business and management strategies and the expansion and growth of SEER; (iii) the effects of government regulation on SEER’s business, and (iv) our plans, objectives, expectations and intentions generally.

There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. Additional particular uncertainties that could cause our actual results to be materially different than those expressed in forward-looking statements include: risks associated with our international operations; changes in the general economy, as well as the cyclical nature of our markets; availability and cost of raw materials, parts and components used in our products; the competitive environment in the areas of our planned industrial activities; our ability to identify, finance, acquire and successfully integrate attractive acquisition targets, expected earnings of SEER; the amount of and our ability to estimate known and unknown liabilities; material disruption at any of our significant manufacturing facilities; the solvency of our insurers and the likelihood of their payment for losses; our ability to manage and grow our business and execution of our business and growth strategies; our ability and the ability our customers to access required capital at a reasonable costs; our ability to expand our business in our targeted markets; the level of capital investment and expenditures by our customers in our strategic markets; our financial performance; our ability to identify, address and remediate any material weakness in our internal control over financial reporting; our ability to achieve or maintain credit ratings and the impact on our funding costs and competitive position if we do not do so; and other risk factors as disclosed herein under the caption “Risk Factors”. Other unknown or unpredictable factors could also cause actual results to differ materially from those in any forward-looking statement.

Due to such uncertainties and risks, readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. SEER undertakes no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required. Nothing contained herein shall be deemed to be a forecast, projection or estimate of the future financial performance of SEER unless otherwise expressly stated.

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ITEM1. BUSINESS

Overview

Strategic Environmental & Energy Resources, Inc. (“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 U.S. Through these operating companies, SEER provides products and services throughout the U.S. and has licensed technologies with many customer installations throughout the U.S. Each of the five operating companies is discussed in more detail below. The Company also has non-controlling interests in joint ventures, some of which have no or minimal operations.

The 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 oil & gas services. The focus of the SEER family of companies, however is to increase margins by securing or developing proprietary patented and patent-pending technologies and then leveraging its 20 plus-year service experience to place these innovations and solutions into the growing markets of emission capture and control, renewable “green gas” capture and sale, compressed natural gas (“CNG”) fuel generation, as well as general solid waste and medical/pharmaceutical waste destruction. Many of SEER’s current operating companies share customer bases and each provides truly synergistic services, technologies and products as well as annuity type revenue streams.

The Company now owns and manages five operating entities and one entity that has no significant operations to date.

Subsidiaries

REGS,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 subsidiary. The results from the subsidiary are included in discontinued operations for the years ended 2019 and 2018. No contracts have been uncompleted; therefore, the division does not have any performance obligations at December 31, 2019. Fifteen employees in the division were terminated at December 31, 2019. The Company is investigating the sale of REGS assets as of December 31, 2019.

MV,LLC (d/b/a MV Technologies), (“MV”): (operating since 2003) MV designs and sells patented and/or proprietary, dry scrubber solutions for management of Hydrogen Sulfide (H2S) in biogas, landfill gas, and petroleum processing operations. These system solutions are marketed under the product names H2SPlus™ and OdorFilter™. The markets for these products include land fill operations, agricultural and food product processors, wastewater treatment facilities, and petroleum product refiners. 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.

ParagonWaste 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” assisted oxidation. 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). PWS is a 54% owned subsidiary.

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ReaCH4BioGas(“Reach”) (trade name for Benefuels, LLC): (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 has had minimal operations as of December 31, 2019.

SEEREnvironmental 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.

PelleChar,LLC (“PelleChar”): (formed September 2018) owned 51% by SEER. PelleChar has secured third-party pellet manufacturing capabilities from one of the nation’s premier pellet manufacturer. PelleChar commenced sales in early 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.

JointVentures

MVRCM 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.

ParagonWaste (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. 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.

P&PCompany: 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. 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™ unit to Particle Science in China.

PWSMWS 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 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 the MWS facility.

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ParagonSouthwest 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 has an exclusive license to the CoronaLux™ technology in a six-state area of the Southern United States. In addition to the equity position, PWS is the operating partner for the business and sell a number of additional systems to the joint venture over the next five years. In 2017, PSMW purchased and installed three CoronaLux™ units at an PSMW facility. Operations in the form of medical waste destruction began in the first quarter of 2018.

SegmentInformation

The Company currently has identified three segments as follows:

% of Annual Revenues
2019 2018
REGS Industrial Cleaning * 28 % 36 %
MV, SEM, PelleChar Environmental Solutions 68 % 60 %
PWS Solid Waste 4 % 4 %

* Reported in discontinued operations.

Reach is not currently operating but should operations commence it will be part of the Environmental Solutions segment. The MV RCM Joint Venture is not currently operating but should operations commence it will be part of the Environmental Solutions segment.

As of December 31, 2019, we had two customers with sales in excess of 10% of our revenues. As of December 31, 2018, we had three customers with sales in excess of 10% of our revenue. See Item 1A Risk Factors.

FinancialCondition

As shown in the accompanying consolidated financial statements, the Company has experienced recurring losses, and has an accumulated deficit of approximately $26.9 million as of December 31, 2019 and for the years ended December 31, 2019, and 2018, we incurred net losses, from continuing operations, of approximately $2.7 million and $3.1 million, respectively. As of December 31, 2019, and 2018 our current liabilities exceed our current assets by approximately $7.0 million and $5.4 million, respectively. Our total liabilities exceed total assets at December 31, 2019 by approximately $6.3 million and at December 31, 2018 our total liabilities exceeded our total assets by approximately $4.2 million. The primary reason for the reduction in total assets over total liabilities from 2018 to 2019 is due to the increase in debt during the year, the interest expense incurred during 2019, and the net loss incurred in 2019 as noted above.

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Realization of a major portion of our assets as of December 31, 2019, is dependent upon our continued operations. The Company is dependent on generating additional revenue or obtaining adequate capital to fund operating losses until it becomes profitable. 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 efforts to address opportunities identified in expanding domestic markets attributable to increased federal and state emission control regulations (particularly in the nation’s oil and gas fields) and a growing demand for energy conservation and renewable energies. In addition, the Company is evaluating various forms of financing that may be available to it. There can be no assurance that the Company will secure additional financing for working capital, increase revenues and achieve the desired result of net income and positive cash flow from operations in future years. These financial statements do not give any effect to any adjustments that would be necessary should the Company be unable to report on a going concern basis.

Industry

SEER, with its diverse services, technologies, and environmental solution offerings, participates in the worldwide markets of environmental compliance, renewable energy and gaseous and solid waste minimization/management. There are ever-increasing emissions and solid waste regulations, as well as statutory programs at the local, state, federal and international levels that create and mandate the need for renewable energies and waste minimization, proper handling, storage, treatment and disposal of virtually all types of waste.

The industrial waste management industry in North America was shaped first by the Resource Conservation and Recovery Act of 1976 (“RCRA”), which requires waste generators to, among other things, transport, treat, store and dispose of hazardous waste in accordance with specific regulations. Subsequent to RCRA, growing national awareness of environmental issues, coupled with corporate and institutional awareness of environmental liabilities, have contributed to the growth of the industry and associated governing legislation on the state and federal levels.

Today, collection and disposal of solid and hazardous wastes are subject to local, state, and federal requirements and controls that regulate health, safety, the environment, zoning and land-use. Included in these regulations is the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), of the United States. CERCLA holds generators and transporters of hazardous substances, as well as past and present owners and operators of sites where there has been a hazardous release, strictly, jointly and severally liable for environmental cleanup costs resulting from the release or threatened release of hazardous materials.

The enactment of the federal Clean Air Act of 1970 (CAA) resulted in a major shift in the federal government’s role in air pollution control. This legislation authorized the development of comprehensive federal and state regulations to limit emissions from both stationary (industrial) sources and mobile sources. The Act has been amended and expanded in scope many times since its enactment and remains a major consideration for safely and responsibly conducting business in the U.S.

These and countless other similar regulatory programs mandate the need for environmental services and technologies such as those offered by SEER and its companies.

There are substantial barriers to entry in the waste management industry, including the high degree of expertise and training required, regulatory compliance, insurance, and licensing costs and procedures, strict federal, state, provincial and local permitting and oversight processes, and significant capital costs of equipment and qualified personnel.

BusinessStrategy

SEER’s operations to date has been fueled by a combination of synergistic and vertical integration, acquisitions, strategic alliances and organic growth. SEER acquired REGS, and MV as wholly owned subsidiaries. In 2015 SEM was created to provide recurring and high-margin revenue to the Company by offering an internal source of diverse media solutions that are required for the treatment of various waste and off gas streams, particularly digesters and landfills. This enables pricing flexibility by the technology solutions affiliates that, in turn, should result in increased sales of systems that leads to greater demand of media. The increased installation and demand for media change outs creates service opportunities for the Company’s service sector. We intend to continue pursuing an aggressive strategy of both acquisitions, strategic partnerships, and organic growth while expanding our geographic footprint into other regions of the United States and foreign markets. Potential acquisitions may include businesses that secure supply chain and vendor logistics or are complementary to our core businesses or companies that provide a similar set of services in regions where the Company does not currently have operations.

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Upon full development of certain of our patented and patent-pending technologies, we intend to explore licensing relationships with larger, established companies to generate sustainable revenue streams from both domestic and international applications.

IntellectualProperty

MV was issued a patent in 2012 related to “Oil-Gas Vapor Collection, Storage, and Recovery System, etc.” Patent No. US 8,206,124 B1. MV was issued a second patent in 2014 titled “Fugitive Gas Capture”, US Patent No. 8,708,663 B1, that expanded claims in the earlier patent. In 2017, MV was issued a third patent titled “Dry Chemical Scrubber with Ph Adjustment” Patent No. US 9,630,144 B2. The patents will expire in 2029 and 2031, unless otherwise extended. MV is in the process of expanding the scope and number of claims of this issued patent.

In 2013, PWS filed provisional and non-provisional patent applications in the name and for the benefit of SEER arising out of and related to its waste disposal technology involving a pyrolitic first phase and a “cold plasma” second phase system referred to as “plasma light,” or CoronaLux™ technology. In October 2014 SEER was issued patent No. 8,870,735 for this CoronaLux™ technology. In 2014, PWS filed a provisional patent related to destruction of volatile organic compounds. A pyrolytic process is basically the decomposition of any material at elevated temperatures in a very low oxygen-containing atmosphere, as compared to conventional incineration or pyrolysis processes. In July 2016 SEER was issued patent No. 9,393,519 for this CoronaLux™ technology. In January 2017 SEER was issued patent No. 9,550,148 for heavy metal control adding to the pollution control aspect of the CoronaLux™ technology. The patents will expire in or around 2033.

Competition

The industrial services industry is highly competitive. We compete with a number of small and medium size companies in the gas treatment sector. In the face of this competition we have been effective in maintaining, and in some sectors, growing our revenue opportunities due to the wide range of services we offer, a competitive pricing structure, our innovative and proprietary/patent pending technologies, and a reputation for reliability, built over the nearly 20 years of business operations as well as the care we take in performing and completing each customer project.

The medical waste industry is also highly competitive with fewer, but larger businesses in the space and one entity having a dominant position in the industry.

In all its businesses, the Company currently holds very small parts of very large and growing markets. MV competes by providing superior hydrogen sulfide (“H2S”) “scrubbing” solutions that result in more cost-effective removal of H2S from process gas streams. H2S is highly corrosive, and is a precursor to sulfur dioxide, a highly regulated air pollutant. Therefore, removing H2S from industrial process waste streams is important in order to enhance the safety of personnel, extend the life of industrial equipment, and to minimize resulting air pollution. In the markets served by MV there are a number of competing technologies employed such as: biological scrubbing, chemical scrubbing, and dry scrubbing with activated carbon. PWS competes by offering a unique on-site, on-demand waste destruction solution, eliminating the need for waste segregation, transportation, incineration, autoclaving and/or landfilling; in turn, eliminating all of the associated costs and legacy liabilities associated with current options for medical waste handling. We believe that the patented CoronaLux™ technology results in a superior option in the medical waste management sector and in ultimate emissions cleaner than other solutions available in the market.

EnvironmentalMatters and Regulation

Significant 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”).

*RCRA.*RCRA is the principal federal statute governing hazardous waste generation, treatment, transportation, storage and disposal. Pursuant to RCRA, the U.S. Environmental Protection Agency (the “EPA”) has established a comprehensive “cradle-to-grave” system for the management of a wide range of materials identified as hazardous or solid waste. States that have adopted hazardous waste management programs with standards at least as stringent as those promulgated by the EPA have been delegated authority by the EPA to administer their facility permitting programs in lieu of the EPA’s program. Every facility that treats, stores or disposes of hazardous waste must obtain a RCRA permit from the EPA or an authorized state agency, unless a specific exemption exists, and must comply with certain operating requirements.

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TheSuperfund Act. The Superfund Act is the primary federal statute regulating the cleanup of inactive hazardous substance sites and imposing liability for cleanup on the responsible parties. It also provides for immediate response and removal actions coordinated by the EPA, of the release of hazardous substances into the environment, and authorizes the government to respond to the release or threatened release of hazardous substances or to order responsible persons to perform any necessary cleanup. The statute provides for strict, and in certain cases, joint and several liability for these responses and other related costs, and for liability for the cost of damages to natural resources, to the parties involved in the generation, transportation and disposal of such hazardous substances. Under the statute, we may be deemed liable as a generator or transporter of a hazardous substance which is released into the environment, or as the owner or operator of a facility from which there is a release of a hazardous substance into the environment.

TheClean Air Act. The Clean Air Act was passed by Congress to control the emissions of pollutants into the air and requires permits to be obtained for certain sources of toxic air pollutants such as vinyl chloride, or criteria pollutants, such as carbon monoxide. In 1990, Congress amended the Clean Air Act to require further reductions of air pollutants with specific targets for non-attainment areas in order to meet certain ambient air quality standards. These amendments also require the EPA to promulgate regulations, which (i) control emissions of 189 hazardous air pollutants; (ii) create uniform operating permits for major industrial facilities similar to RCRA operating permits; (iii) mandate the phase-out of ozone depleting chemicals; and (iv) provide for enhanced enforcement.

CleanWater Act. This legislation prohibits discharges into the waters of the United States without governmental authorization and regulates the discharge of pollutants into surface waters and sewers from a variety of sources, including disposal sites and treatment facilities.

ToxicSubstances Control Act. TSCA established a national program for the management of substances classified as PCBs, which include waste PCBs as well as RCRA wastes contaminated with PCBs. We conduct field services (remediation) activities that are regulated under provisions of the TSCA.

OtherFederal Laws. In addition to regulations specifically directed at the transportation, storage, and disposal facilities, there are a number of regulations that may “pass-through” to the facilities based on the acceptance of regulated waste from affected client facilities. Each facility that accepts affected waste must comply with the regulations for that waste, facility or industry. In our transportation operations, we are regulated by the U.S. Department of Transportation, the Federal Railroad Administration, the Federal Aviation Administration and the U.S. Coast Guard, as well as by the regulatory agencies of each state in which we operate or through which our vehicles pass. Health and safety standards under the Occupational Safety and Health Act, or “OSHA”, are applicable to all of our operations.

Pursuant to the EPA’s authorization of their RCRA equivalent programs, a number of states have regulatory programs governing the permitting and operation 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. Although our facilities occasionally have been cited for regulatory violations, we believe we are in substantial compliance with all federal, state and local laws regulating our business.

Income/PayrollTaxes

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

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In or around 2010, REGS retained Washington D.C.-based legal counsel specializing in resolving federal tax matters. REGS has been represented by this firm throughout all phases of this tax matter and related proceedings. In September 2011, REGS received approval from the Internal Revenue Service (“IRS”) to begin paying the outstanding federal payroll tax liability plus related interest and penalties totaling approximately $971,000, in installments (the “Installment Plan”). Under the Installment Plan, we were required to pay minimum monthly installments of $12,500 commencing September 2011, which increased to $25,000 per month in September 2012, until the liability was paid in full. Through the duration of the Installment Plan, the IRS continued to charge penalties and interest at statutory rates. If the conditions of the Installment Plan were not met, the IRS could cancel it and could demand the outstanding liability to be repaid through traditional enforcement proceedings available to the IRS. Additionally, the IRS has filed a notice of federal tax lien against certain of REGS assets in order to secure the obligation. The IRS is to release this lien if and when we pay 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.

In May 2013, REGS filed an Offer in Compromise (“OIC”) with the IRS. While the OIC was under review by the IRS, the requirement to pay $25,000 a month under the Installment Plan was suspended. REGS was informed by its legal counsel that the IRS had accepted REGS’ OIC. However, by a letter dated March 27, 2014 REGS was notified that the OIC had been rejected. REGS appealed that rejection decision, however that appeal has been denied. As a result, the Installment Plan is terminated. In June 2014 and September 2018, REGS received notices of intent to levy property or rights to property from the IRS for the amounts owed for the past due payroll taxes, penalty and interest. The IRS has not taken any current action against REGS and REGS continues to be represented by its legal counsel.

As of December 31, 2019, and December 31, 2018, the outstanding balance due to the IRS was $1,052,200, and $1,022,500, respectively.

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

REGS operations have been reported in discontinued operations for the years ended 2019 and 2018. This does not alleviate the IRS obligations REGS currently has.

Insurance

To cover potential risks associated with the variety of services that the operating companies provide, we maintain adequate insurance coverages, including: 1) Casualty Insurance providing coverage for Commercial General Liability, Automotive Liability, Professional Liability Insurance and Employee Benefits Liability in the amounts of $1 million each, respectively, per year; 2) Contractor’s Pollution Liability Insurance, which has limits of $1 million per occurrence and $1 million in the aggregate; and 3) An Excess Umbrella Liability Policy of $5 million per occurrence and $5 million aggregate limit overall.

Health,Safety and Compliance

Preserving the health and safety of our employees and the communities in which we operate, as well as remaining in compliance with local, state and federal rules and regulations are the highest priorities for us and our companies. We strive to maintain the highest professional standards in our compliance and health and safety activities. To achieve this objective, we engage with a professional safety firm and emphasize comprehensive training programs for new employees as well as ongoing mandatory refresher programs, and safety bonus programs for existing employees. These programs are administered at both the corporate and field levels on a daily basis. Our efforts to ensure the health and safety of employees have been formally recognized by our customers as well as by the Colorado Department of Labor and Employment.

Researchand Development

Research and Development (“R&D”) costs are charged to operations when incurred and are included in operating expenses. R&D expenses consist primarily of salaries, project materials, contract labor and other costs associated with ongoing product development and enhancement efforts. We spent approximately $0 and $600 on R&D for the years ended December 31, 2019 and 2018, respectively.

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Employees

As of December 31, 2019, we employed approximately 22 full time non-union hourly and salaried employees. There is some seasonality to our business which requires us to use day laborers.

ITEM1A. RISK FACTORS

Youshould carefully consider the following risks. These risks could materially affect our business, results of operations or financialcondition, cause the trading price of our common stock to decline materially or cause our actual results to differ materiallyfrom 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 weare not presently aware or that we currently believe are immaterial that could have an adverse impact on our business.

RisksRelated to Our Business

Ourauditors 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 $26.9 million as of December 31, 2019 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.

Weare 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.

Thelevel of governmental enforcement of environmental and other regulations has an uncertain effect on our business and could reducethe 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.

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Wemay incur significant charges as a result of divestitures.

During the third quarter of 2017, we sold our fixed railcar cleaning division which includes substantially all assets and liabilities of Tactical (except for cash) as well as three locations in REGS, including Illinois, Maryland and Pennsylvania. In the fourth quarter of 2019, we ceased bidding on or accepting all new contracts in the REGS industrial cleaning activities and discontinued the operations of REGS going forward. 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.

Oursubstantial 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, 2019, we had an accumulated deficit of approximately $27.0 million, with total current assets and liabilities of approximately $1.6 million and $8.6 million respectively. Included in the liabilities are approximately $2.4 million of short-term notes, $155,000 of short-term notes to a related party and approximately $1.6 million of convertible notes. In addition, as of December 31, 2019, the amounts owed for past due payroll taxes, penalty and interest was approximately $1.1 million. There can be no assurance that the IRS will not demand immediate payment of the amounts owed.

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, 2019, we have cash and cash equivalent assets of $354,700. 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<br> may be unable to satisfy our obligations under our outstanding indebtedness;
● we<br> may be more vulnerable to adverse general economic and industry conditions;
● we<br> may find it more difficult to fund future working capital, capital expenditures, acquisitions, general corporate purposes<br> or other purposes; and
● we<br> may have to dedicate a substantial portion of our cash resources to the payments on our outstanding indebtedness, thereby<br> reducing the funds available for operations and future business opportunities.

Wehave 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 $27.0 million as of December 31, 2019. For the year ended December 31, 2019, we incurred net losses from continuing operations of approximately $0.9 million. We had a working capital deficit of approximately $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. 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 2020 and 2021. 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.

Weare 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.

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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.

Wehave substantial customer concentration, with a limited number of customers accounting for a substantial portion of our 2019 revenues.

As of December 31, 2019, 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.

Aggressivepricing 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.

Adverseeconomic 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.

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Ourproprietary 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.

Wemay 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.

Oursuccess in the future may depend on our ability to establish and maintain strategic alliances, and any failure on our part toestablish 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.

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Attackson our information technology systems could damage our reputation, negatively impact our businesses and expose us to litigationrisk.

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.

Thehandling 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.

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Wehave significant deferred tax assets, and any impairments of or valuation allowances against these deferred tax assets in thefuture 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.

Ourbusinesses 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.

Theextensive environmental regulations to which we are subject may increase our costs and potential liabilities and limit our abilityto 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.

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Wemay 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.

Wemay 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.

Inthe 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.

Acquisitionsthat we undertake could be difficult to integrate, disrupt our business, dilute stockholder value and adversely affect our resultsof 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<br> of the acquired company to achieve anticipated revenues, earnings or cash flows;
● assumption<br> of liabilities, including those related to environmental matters, that were not disclosed to us or that exceed our estimates;
● problems<br> integrating the purchased operations with our own, which could result in substantial costs and delays or other operational,<br> technical or financial problems;
● potential<br> compliance issues relating to the protection of health and the environment, compliance with securities laws and regulations,<br> adequacy of internal controls and other matters;
● diversion<br> of management’s attention or other resources from our existing business;
● risks<br> associated with entering markets or product/service areas in which we have limited prior experience;
● increases<br> in working capital investment to fund the growth of acquired operations;
● unexpected<br> capital expenditures to upgrade waste handling or other infrastructure or replace equipment to operate safely and efficiently;
● potential<br> loss of key employees and customers of the acquired company; and
● future<br> write-offs of intangible and other assets, including goodwill, if the acquired operations fail to generate sufficient cash<br> 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.

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Weface 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.

Someof 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.

Oursuccess depends on our executive officers and other key personnel. If we lose key personnel or are unable to hire additional qualifiedpersonnel, 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 twenty-two 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.

Naturaldisasters, terrorist attacks or other catastrophic events could negatively affect our business, financial condition, and resultsof 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, we may 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 coronavirus may 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.

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RisksRelated to Our Common Stock

Thematerial 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.

Weare 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.

Theissuance 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.

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Wemay experience volatility in our stock price, which could negatively affect your investment, and you may not be able to resellyour 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.

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<br> ability to commercialize our products, services and technologies;
● the<br> amount and timing of expenses associated with our research and development programs and our ability to develop enhancements<br> to our products and services;
● additions<br> or departures of key personnel;
● our<br> ability to effectively manage our growth;
● our<br> ability and the terms upon which we are able to raise capital sufficient to continue our operations;
● our<br> cash position;
● sales<br> of our common stock by us or our stockholders in the future;
● trading<br> volume of our common stock;
● changes<br> in accounting practices;
● ineffectiveness<br> of our internal controls;
● disputes<br> or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent<br> protection for our technologies;
● significant<br> lawsuits, including creditor, customer, patent or stockholder litigation;
● industry<br> adoption of our technology or other new competing technologies;
● our<br> ability to establish and expand key distribution partners;
● our<br> ability to establish strategic relationships with third parties to accelerate our growth plans;
● announcements<br> of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors;
● developments<br> in the competitive environment, including the introduction of improved products or services by our competitors;
● overall<br> performance of the equity markets;
● publication<br> of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by<br> securities analysts;
● our<br> failure to meet the estimates and projections of the investment community or that we may otherwise provide to the public;
● changes<br> in the market valuations of similar companies;
● general<br> political and economic conditions; and
● other<br> 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.

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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.

Wedo 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.

Becauseour 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.

ITEM1B. UNRESOLVED STAFF COMMENTS

None

ITEM2. PROPERTIES

Location Owned/Leased Function Building(s) Sq. Footage Total Acreage
Broomfield, CO (1) Leased Corporate office, MV, PWS 3,864 n/a
Commerce City, CO (2) Leased REGS operations 8,686 1.8
(1) On<br> May 1, 2019, the Company executed a lease for 3,864 square feet of office space that serves as the headquarters for SEER,<br> MV and PWS. The new lease terminates August 31, 2026, unless otherwise extended.
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(2) On<br> April 1, 2016 REGS executed a four-year lease for 8,686 square feet of building and approximately 1.8 acres of yard. The discontinuing<br> of REGS operations does not reduce the lease obligations at December 31, 2019. 
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ITEM3. LEGAL PROCEEDINGS

In 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 December 31, 2019 and December 31, 2018 was $150,000 and $150,000, respectively.

ITEM4. MINE SAFETY DISCLOSURES

None

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PARTII

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDERS MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MarketInformation for Common Stock

The Company’s common stock is quoted on the OTCQB marketplace, operated by OTC Markets Group, under the symbol “SENR.” The following table sets forth the range of high and low bid prices for the periods indicated. The quotations reflect inter-dealer prices without retail mark-up, mark-down or commission and may not represent actual transactions.

Quarter Ended High Low
December 31, 2019 $ 0.07 $ 0.05
September 30, 2019 $ 0.12 $ 0.07
June 30, 2019 $ 0.13 $ 0.07
March 31, 2019 $ 0.16 $ 0.07
December 31, 2018 $ 0.20 $ 0.06
September 30, 2018 $ 0.34 $ 0.16
June 30, 2018 $ 0.52 $ 0.26
March 31, 2018 $ 0.73 $ 0.41

Stockholders

As of May 14, 2020, there were approximately 81 recordholders holding 61,703,575 common shares issued and outstanding. There are no preferred shares issued or outstanding.

Dividends

We have not declared or paid a cash dividend on our common stock. We currently intend to retain future earnings, if any, to finance the growth and development of our business and, therefore, do not anticipate paying cash dividends in the foreseeable future. There can be no assurance that our operations will prove profitable to the extent necessary to pay cash dividends. Moreover, even if such profits are achieved, the future dividend policy will depend upon our earnings, capital requirements, financial condition, and other factors considered relevant by our board of directors.

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RecentSales of Unregistered Securities

From January 1, 2019 to December 31, 2019, we had the following sales and issuances of unregistered equity securities:

Consideration Received and Description of Underwriting or If Option, Warrant
**** **** **** Other Discounts to Market Price or Convertible Security Exemption from or Convertible Security, Terms of ****
Date of Sale Title of Security Number Sold Afforded to Purchases Registration Claimed Exercise or Conversion Security Holder
May<br> 2019 Common<br> Stock 50,000 Shares<br> issued as penalty for not meeting short term note maturity date; no commissions paid Section<br> 4(2); and/or Rule 506 Not<br> applicable Clyde<br> Berg, an individual
June<br> 2019 Common<br> Stock 50,000 Shares<br> issued as penalty for not meeting short term note maturity date; no commissions paid Section<br> 4(2); and/or Rule 506 Not<br> applicable Clyde<br> Berg, an individual
July<br> 2019 Common<br> Stock 50,000 Shares<br> issued as penalty for not meeting short term note maturity date; no commissions paid Section<br> 4(2); and/or Rule 506 Not<br> applicable Clyde<br> Berg, an individual
August<br> 2019 Common<br> Stock 100,000 Shares<br> issued as penalty for not meeting short term note maturity date; no commissions paid Section<br> 4(2); and/or Rule 506 Not<br> applicable Clyde<br> Berg, an individual
September<br> 2019 Common<br> Stock 100,000 Shares<br> issued as penalty for not meeting short term note maturity date; no commissions paid Section<br> 4(2); and/or Rule 506 Not<br> applicable Clyde<br> Berg, an individual
October<br> 2019 Common<br> Stock 107,500 Shares<br> issued as penalty for not meeting short term note maturity date; no commissions paid Section<br> 4(2); and/or Rule 507 Not<br> applicable Clyde<br> Berg, an individual
November<br> 2019 Common<br> Stock 115,000 Shares<br> issued as penalty for not meeting short term note maturity date; no commissions paid Section<br> 4(2); and/or Rule 508 Not<br> applicable Clyde<br> Berg, an individual
December<br> 2019 Common<br> Stock 115,000 Shares<br> issued as penalty for not meeting short term note maturity date; no commissions paid Section<br> 4(2); and/or Rule 509 Not<br> applicable Clyde<br> Berg, an individual

These transactions were conducted in reliance on the exemptions from the registration requirements of the Securities Act of 1933, as amended, based on the private sale of the securities and the Company’s relationships with the security holders.

ITEM6. SELECTED FINANCIAL DATA

Not Applicable.

ITEM7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’sDiscussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to assist in understanding our business and the results of our operations. It should be read in conjunction with the Consolidated Financial Statements and the related footnotes and “Risk Factors” that appear elsewhere in this Report. Certain statements in this Report constitute “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause such a difference include, among others, uncertainties relating to general economic and business conditions; industry trends; changes in demand for our products and services; uncertainties relating to customer plans and commitments and the timing of orders received from customers; announcements or changes in our pricing policies or that of our competitors; unanticipated delays in the development, market acceptance or installation of our products and services; changes in government regulations; availability of management and other key personnel; availability, terms and deployment of capital; relationships with third-party equipment suppliers; and worldwide political stability and economic growth. The words “believe,” “expect,” “anticipate,” “intend” and “plan” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. Unless the context requires otherwise, when we refer to “we,” “us” and “our,” we are describing SEER and its consolidated subsidiaries on a consolidated basis.

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Overview

SEER was formed as a publicly traded company in early 2008 through a reverse merger. 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 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. The Company also has non-controlling interests in joint ventures, some of which have no or minimal operations.

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

FinancialCondition

At December 31, 2019, we had approximately $7.0 million in negative working capital, which represents a decrease of approximately $1.7 million from $5.4 million in negative working capital at December 31, 2018. The decrease in our working capital, results primarily from the net loss, before non-controlling interest, of $2.7 million for 2018 offset by proceeds of $0.6 million from notes receivable, non-cash adjustments to net income of $0.3 million during 2019 and proceeds from outside minority investors of $0.2 million during 2019.

In May 2013, REGS filed an Offer in Compromise with the IRS. REGS received a letter from the IRS, dated March 27, 2014, rejecting its Offer in Compromise and in accordance with the rejection letter REGS has submitted a written appeal. As a result of the IRS rejection of the Offer in Compromise, the Installment Plan, mentioned in Part 1, Item 1, was terminated. In June 2014, REGS received notices of intent to levy property or rights to property from the IRS for the amounts owed for the past due payroll taxes, penalty and interest. The appeal submitted by REGS was denied by the IRS, however, the IRS has not taken any current action. As of December 31, 2019, the outstanding balance due to the IRS was $1,052,200 and REGS continues to be represented by tax counsel specializing in federal tax matters.

As shown in the accompanying consolidated financial statements, the Company has experienced recurring losses, and has accumulated a deficit of approximately $27.0 million as of December 31, 2019, and $24.4 million as of December 31, 2018. For the years ended December 31, 2019, and 2018, we incurred net losses of approximately $2.6 million and $2.9 million, respectively.

Realization of a major portion of our assets as of December 31, 2019, is dependent upon our continued operations. The Company is dependent on generating additional revenue or obtaining adequate capital to fund operating losses until it becomes profitable. 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 efforts to address opportunities identified in expanding domestic markets attributable to increased federal and state emission control regulations (particularly in the nation’s oil and gas fields) and a growing demand for energy conservation and renewable energies. In addition, the Company is evaluating various forms of financing that may be available to it. There can be no assurance that the Company will secure additional financing for working capital 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.

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Resultsof Continuing Operations for the Years Ended December 31, 2019 and 2018

Total revenues were $4.3 million and $5.3 million for the years ended December 31, 2019 and 2018, respectively. The decrease of approximately $1.0 million or 18% in revenues comparing the year ended December 31, 2019 to the year ended December 31, 2018 is primarily attributable to the decreases in revenues from our products segment revenue, which includes our environmental solutions segment, which decreased from $4.9 million for the year ended December 31, 2018 to $4.1 million for the year ended December 31, 2019, a decrease of approximately $0.9 million or approximately 17%. 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. The solid waste disposal segment also generated licensing and placement fees of $49,900 in 2019 compared to $134,800 in 2018, a decrease of $84,900 or 63%, primarily due to having fewer active units operative in the field, of which generating fees. In addition, the solid waste disposal segment generated approximately $200,000 in management fees and $0 in joint operating income for 2019 compared to $200,000 in management fees and $34,400 in joint operating income for 2018, due to an overall reduction in activity in our Paragon Waste subsidiary.

Operating expenses, which include cost of products, cost of solid waste and general and administrative (G&A) expenses, salaries and related expenses, and fixed asset and other asset impairment, were approximately $5.1 million for the year ended December 31, 2019 compared to $5.9 million for the year ended December 31, 2018. The changes which consist of 1) A decrease of product cost of $0.7 million, or 22%, which corresponds with the decrease in product revenue compared to 2018, 2) an increase in general and administrative expenses of approximately $0.2 million in 2019, primarily a result of an increase in bad debt expense of $0.2 million, 3) a decrease in salaries and related expenses of approximately $0.3 million in 2019, this was primarily a result of less employees 2019, and a reduction in stock-based compensation of $0.1 million in 2019, and 4) a decrease of approximately $0.1 million in asset impairment, which was incurred in 2018. We incurred impairment charge in 2019, although it is classified in discontinued operations below. Product costs as a percentage of product revenues was 57% in 2019 compared to 61% in 2018. The increase in margin is primarily due to an increase in recurring product sales, the commencement of PelleChar activity in 2019, with additional contributions from one-time sales, services and equipment rentals. Solid waste costs remained consistent at $0.1 million in 2019 and 2018.

Total non-operating other expense, net was $0.1 million for the year ended December 31, 2019 compared to $1.3 for the year ended December 31, 2018. The decrease in 2019 compared to 2018 is primarily due to a decrease in interest expense of $0.8 million as a result of a decrease penalty shares related to the short-term debt and negotiated extensions of debt. Other income also increased, reducing other expense, as a result of a note receivable, previously 100% allowed for, being collected in 2019.

There is no provision for income taxes for both the year ended December 31, 2019 and 2018, due to our net losses for both periods and we continue to maintain full allowances covering our net deferred tax benefits as of December 31, 2019 and 2018.

Net loss, before non-controlling interest, for the year ended December 31, 2019 was $2.7 million compared to a net loss, before non-controlling interest, of $3.1 million for the year ended December 31, 2018. The net loss attributable to SEER after deducting $151,200 for the non-controlling interest, and $1.8 million for discontinued operations was $2.6 million for the year ended December 31, 2019 as compared to $2.9 million, after deducting $160,300 in non-controlling interest, and $1.1 million for discontinued operations for the year ended December 31, 2018. As noted above, the 18% decrease in revenue in 2019 compared to 2018 offset with a reduction of operating expenses of 15% and offset by non-operating expenses during 2019 of 89% was the primary reason for the decrease in the net loss.

Resultsof Discontinued Operations for the Years Ended December 31, 2019 and 2018

During 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 are now classified as discontinued operations, and 2018 was reclassified for the presentation of the consolidated financial statements for the year ended December 31, 2019.

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Total revenues were approximately $1.7 million and $2.9 million for the years ended December 31, 2019 and 2018, respectively.

Operating costs, which include cost of services, general and administrative (G&A) expenses, and salaries and related expenses, were $3.4 million for the year ended December 31, 2019 compared to $4.1 million for the year ended December 31, 2018. The decrease in operating costs is due to the cost cutting measures taken during the year, as utilization of the REGS assets, and REGS margins had decreased.

Total net loss from discontinued operations was $1.8 million for the year ended December 31, 2019 compared to $1.1 million for the year ended December 31, 2018.

There is no provision for income taxes for the year ended December 31, 2018 due to prior year consolidated losses and for the year ended December 31, 2017, due to year-to-date consolidated net loss.

Liquidityand Capital Resources

The following table summarizes the net cash provided by (used in) operating, investing and financing activities for the periods indicated:

Years Ended
December 31,
2019 2018
Operating activities $ (2,100,800 ) $ (1,003,600 )
Investing activities 482,700 163,600
Financing activities $ 1,857,100 $ 901,600

OperatingActivities

Net cash used in operating activities during the year ended December 31, 2019 was $2.1 million compared to $1.0 million during the year ended December 31, 2018. Cash used in operating activities is driven by our net loss and adjusted by non-cash items and changes in operating assets and liabilities. Non-cash adjustments primarily include depreciation and amortization of property & equipment and intangible assets, stock-based compensation expense, asset impairment expense, non-cash interest expense related to the issuance of common stock for short-term debt penalty, a change in the provision for doubtful accounts. In 2019, net non-cash adjustments totaled approximately $0.3 million and in 2018, net non-cash adjustments totaled $1.7 million. In 2019, the net effect of changes in operating assets and liabilities was an increase in cash by $0.3 million, primarily due to an increase of $0.6 million in collections of accounts receivable, offset by a decrease in cash due to decrease in deferred revenue of $0.2 million. The increase in accounts payable and accrued liabilities is based on timing and paying vendors on a slower basis due to the intent to conserve cash at year end. The decrease in accounts receivable is primarily due to the timing of invoicing on client contracts and the increase in accounts payable and accrued liabilities is primarily due to the timing of payments of invoices from vendors.

Investingactivities

Net cash provided by investing activities is primarily attributable to the purchase of property and equipment, and the proceeds from notes receivable. Our net cash flow provided by investing activities was $0.6 million for the year ended December 31, 2019 and $0.2 million for the year ended December 31, 2018. During 2019, we had additions to property and equipment of $70,100, and proceeds of $552,800 from a notes receivable that includes a previously impaired note. During 2018, we had additions to property and equipment of $60,300, increases in intangible assets of $100, and proceeds of $224,000 from a note receivable.

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FinancingActivities

Net cash provided by financing activities was approximately $1.9 million for 2019 and net cash used in financing activities was approximately $0.9 million for 2018. Proceeds from the issuance of convertible and short-term debt was $2.0 million and $0.9 million in 2019 and 2018, respectively. Payments on notes payable and capital lease obligations was $0.4 million in 2019 and $0.8 million in 2018. Proceeds from the outside investment of new subsidiaries was $0.2 million in 2019 and $0.5 million in 2018. Proceeds from the sale of common stock was was $0 in 2019 and $0.4 million in 2018.

Overall, our cash increased from 2018 to 2019 primarily due to the proceeds from the issuance of short term and convertible debt, collections on notes receivable in 2019 that provided some working capital to offset our operating losses.

CriticalAccounting Policies, Judgments and Estimates

Useof 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, 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.

AccountsReceivable and Concentration of Credit Risk

Accounts receivable are recorded at the invoiced amounts less an allowance for doubtful accounts and do not bear interest. The allowance for doubtful accounts is based on our estimate of the amount of probable credit losses in our accounts receivable. We determine the allowance for doubtful accounts based upon an aging of accounts receivable, historical experience and management judgment. Accounts receivable balances are reviewed individually for collectability, and balances are charged off against the allowance when we determine that the potential for recovery is remote. An allowance for doubtful accounts of approximately $11,800 and $227,500 had been reserved as of December 31, 2019 and 2018, respectively.

We 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 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 December 31, 2019, and 2018, we do not believe that we have significant credit risk.

FairValue of Financial Instruments

The 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.

Long-livedAssets

We 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 the 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. For the year ended December 31, 2018, the Company recognized an impairment to one CoronaLux ™ unit of $70,700. For the year ended December 31, 2019, the Company did not have any impairment charges.

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RevenueRecognition

In May 2014, the FASB issued guidance on revenue from contracts with customers that superseded most current revenue recognition guidance, including industry-specific guidance. The underlying principle of the guidance is to recognize revenue to depict the transfer of goods or services to customers at an amount to which the company expects to be entitled in exchange for those goods or services. The new guidance 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. The Company adopted the provisions of this guidance effective January 1, 2018 as required under the guidance. The adoption of this guidance did not have any material impact on the Company’s consolidated financial statements.

Stock-basedCompensation

We 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 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.

ITEM7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable

ITEM8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information regarding Financial Statements and Supplementary Data appears on pages F-1 through F-30 under the caption “Consolidated Balance Sheets,” “Consolidated Statements of Operations,” “Consolidated Statements of Stockholders’ Equity,” “Consolidated Statements of Cash Flows” and “Notes to Consolidated Financial Statements.”

ITEM9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM9A. CONTROLS AND PROCEDURES

We carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Accounting Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Principal Accounting Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2018.

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Management’sAnnual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2019. In making this assessment, management used the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on its assessment of internal control over financial reporting, management has concluded that, as of December 31, 2019, our internal control over financial reporting were not effective, and material weaknesses over financial reporting were identified. Material weakness means a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified were:

● due<br> to ongoing financial constraints, we have not been devoting adequate resources to our<br> accounting and reporting functions in order to properly record, file and review our financial<br> transactions on a regular basis in order to ensure accuracy;
● through<br> the year, management authorized a number of payments for services without providing proper<br> support and documentation, nor notifiying accounting of the expenditures so that they<br> could be properly documented and recorded; and
● we<br> do not have a properly documented internal control system in accordance with the requirements<br> of COSO or some similarly appropriate internal control methodology or formal documentation<br> of our systems of internal control.

We are currently working to remediate the material weaknesses. We cannot be sure when we will successfully remediate the material weaknesses 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.

This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.

ChangesIn Internal Control Over Financial Reporting

There were no significant changes in our internal control over financial reporting during the year ended December 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM9B. OTHER INFORMATION

None

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PARTIII

ITEM10. DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information regarding our executive officers and directors as of March 30, 2020.

Name Age Position
J.<br> John Combs III 62 President,<br> Chief Executive Officer, Director, Chairman of the Board, Secretary
Christopher<br> H. Dieterich 72 Director
Christopher<br> Scott Yenzer 53 Director
Clark<br> Knopik 49 Interim<br> Chief Financial Officer

JosephJohn Combs III, Esq., President, Chief Executive Officer, Chairman of the Board, and Secretary. Mr. Combs, a SEER Founder, is currently CEO. He also serves as General Counsel. Mr. Combs has been Vice President of REGS since 2004. Before joining the Company, he owned and operated the law firm of Combs & Associates from 1989 to 2003. Prior to that he was an associate in the law firm of Berman & Blanchard in Los Angeles from 1987 to 1989, and an associate in the law firm of Parker, Milliken, Clark, O’hara & Samuelian, in Los Angeles from 1983 to 1987. His experience in private practice has included corporate maintenance, international finance, and business litigation. Over the last 30 years he has served as an officer and director of various sized corporations, both public and private, and was a Director and Officer of Armada Water Assets, Inc until his resignation in September 2014. For the past five years Mr. Combs has not served as a director of a public company, other than SEER. He received his B.A. from the University of Colorado, with honors, and a Juris Doctorate from Duke University School of Law in 1983. Mr. Combs was chosen as a Director because of his leadership experience, public company experience, experience serving on the boards of directors and committees of both public and private entities and other experience as a practicing attorney.

ChristopherH. Dieterich, Director. Mr. Dieterich is the founder and managing partner of Dieterich & Associates, a litigation and commercial law firm based in Los Angeles, California, providing legal services to entrepreneurial and emerging technology companies during the past 34 years. His firm specializes in venture capital and private equity financings, as well as in SEC compliance issues for public companies. He obtained his undergraduate engineering degree from Virginia Tech, graduate engineering degree from UC Berkeley (1970) and graduated from the joint Law and Economics program at UCLA in 1979, after serving six years in the US Air Force as a flight instructor in advanced jets. He has been a Director of the Company since 2008 and was Secretary from 2008 until November 2013. Mr. Dieterich was chosen as a Director because of his experience in a broad range of businesses as well experience serving on the boards of directors and committees of private entities.

Christopher **Scott Yenzer,**Director, has served on the board since January 2019. Mr. Yenzer has served as corporate development officer of Blackeagle Energy Services until May 2019, is a 30-year engineering industry veteran with demonstrated strengths in the area of global relationships and operations growth plans. Mr. Yenzer’s extensive engineering and management background includes domestic and global, commercial oil and gas transaction management for some of the world’s largest engineering firms. He provides the SEER management team with a complementary perspective that is grounded in practical, hands-on experience in growing diverse businesses in both up and down cycles. Prior to his current role, Mr. Yenzer was COO and co-owner of Caribou Energy Corporation, which was sold in 2017. Prior to Caribou Energy, Mr. Yenzer served as vice president of Jacobs/CH2M, responsible for developing Enterprise Account Management on the executive committee for all business groups: Oil & Gas and Chemicals, Environmental & Nuclear, Water, and Infrastructure and Power. Mr. Yenzer built the successful Oil & Gas and Chemicals Global Strategic Account Team which included BP, ExxonMobil, Shell, Conoco, Hess TransCanada and Noble and led development of uniform account plans and growth strategies. During his tenure with Jacobs, Mr. Yenzer has held various positions from Project Engineer to Program Manager to VP of Business Development and his CV hosts a list of impressive ‘wins’ resulting from his ability to grow relationships and revenues across all markets, while increasing value to clients.

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ClarkKnopik, Interim Chief Financial Officer. Mr. Knopik joined the Company in August 2019 as a consultant in the role of Interim Chief Financial Officer. Mr. Knopik is a consulting Chief Financial Officer for Lost Pines Partners, LLC and provides CFO services to businesses primarily in oil and gas, and related services, bio-pharma services, and technology markets, including hardware, software, and IP. Mr. Knopik has extensive experience with positions in accounting, finance, Securities and Exchange Commission (SEC) financial reporting, Sarbanes Oxley (SOX) compliance, and strategic planning. Mr. Knopik also began his career at KPMG, LLLP. Mr. Knopik received a B.S. degree in Accounting from the Montana State University and is a CPA.

DirectorIndependence

The board of directors has determined that Christopher Dieterich is considered an “independent director.” Under the National Association of Securities Dealers Automated Quotations (“NASDAQ”) definition, an “independent director” means a person other than an officer or employee of the Company or its subsidiaries or any other individuals having a relationship that, in the opinion of the Company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of the director. The board of directors’ discretion in determining director independence is not completely unfettered. Further, under the NASDAQ definition, an independent director is a person who (1) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years), employed by the company; (2) has not (or whose immediate family members have not) been paid more than $120,000 during the current or past three fiscal years; (3) has not (or whose immediately family has not) been a partner in or controlling shareholder or executive officer of an organization which the company made, or from which the company received, payments in excess of the greater of $200,000 or 5% of that organizations consolidated gross revenues, in any of the most recent three fiscal years; (4) has not (or whose immediate family members have not), over the past three years been employed as an executive officer of a company in which an executive officer of the company has served on that company’s compensation committee; or (5) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years) a partner of the company’s outside auditor.

BoardMeetings and committees; annual meeting attendance

There is no Nominating Committee for directors, which the Company considers reasonable, as there is no direct compensation to directors who are not also officers, and there is no liability insurance available for errors and omissions, should they occur. Therefore, the Company has found it extremely difficult to attract independent directors. There were no changes to the procedures by which security holders may recommend nominees to the Company’s board of directors.

AuditCommittee and Audit Committee Financial Expert

We do not have a standing audit committee, an audit committee financial expert, or any committee or person performing a similar function. The entire board of directors acts as the audit committee. We currently have limited working capital and a history of losses. Our board of directors does not believe that it would be in our best interests at this time to identify and retain independent directors to sit on an audit committee or a director that qualifies as an audit committee financial expert under SEC regulations.

CompensationCommittee

As of this filing there was no compensation committee.

DelinquentSection 16(a) Reports

None

Codeof Ethics

Our Board has adopted a Code of Ethics and Business Conduct for Officers, Directors and Employees, which includes our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. A current copy of the code is posted on our website, www.seer-corp.com.

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ITEM11. EXECUTIVE COMPENSATION

SUMMARYCOMPENSATION TABLE

The following table sets forth a summary of the compensation for each of our named executive officers for the financial years ended December 31, 2019 and 2018.

Fiscal<br> Year Salary<br> () Bonus<br> () Stock<br> Awards () Warrants<br> or Option Awards (1) Non-Equity<br> Incentive Plan Compensation () Nonqualified<br> Deferred Compensation Earnings () All<br> Other Compensation () Total<br> ()
Officers
J. John Combs III (1) 2019 -
Chief Execurive Officer, President and Secretary 2018 -
Fortunato Villamagna 2019 -
Chief Execurive Officer, Paragon Waste Systems 2018 -
Tom Jones 2019 -
VP Business Development, MV Technologies (2) 2018 -

All values are in US Dollars.

(1) The<br> table is on an accrual basis. Amounts accrued and unpaid at December 31, 2019 for Mr. Combs is approximately $7,900.
(2) Mr.<br> Jones salary was increased to $150,000 annually, commencing on July 16, 2018.

EmploymentAgreements

There are no employment agreements or contracts with any named executive officers.

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2019Director Compensation

For the fiscal year ended December 31, 2019, compensation paid to directors (other than those listed in the Summary Compensation Table above) was as follows:

Fiscal<br> Year Salary<br> () Bonus<br> () Stock<br> Awards () Warrants<br> or Option Awards (1) Non-Equity<br> Incentive Plan Compensation () Nonqualified<br> Deferred Compensation Earnings <br> () All<br> Other Compensation () Total<br> ()
Directors
Christopher H. Dieterich<br><br> <br>Director 2019 -
Scott Yenzer<br><br> <br>Director 2019 38,000

All values are in US Dollars.

(1) The<br> options and restricted stock awards presented in this table for 2019 and 2018 reflect the entire fair value of such awards<br> in the year of grant. However, the accompanying consolidated financial statements reflect the dollar amount expensed by the<br> company during applicable fiscal year for financial statement reporting purposes pursuant to guidance issued by the FASB.<br> Such guidance requires the company to determine the overall value of the stock awards and options as of the date of grant.<br> The stock awards are valued based on the fair market value of such shares on the date of grant and are charged to compensation<br> expense over the related vesting period. The options are valued at the date of grant based upon the Black-Scholes method of<br> valuation, which is expensed over the service period over which the options become vested. As a general rule, for time-in-service-based<br> options, the company will immediately expense any option or portion thereof which is vested upon grant, while expensing the<br> balance on a pro rata basis over the remaining vesting term of the option. For a description of the guidance issued by the<br> FASB and the assumptions used in determining the value of the options under the Black-Scholes model of valuation, see the<br> notes to the consolidated financial statements included with this Prospectus.

OutstandingEquity Awards to Directors at Fiscal Year-End 2019

Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Option Exercise Price () Option Expiration Date
Directors
Christopher H. Dieterich - -
Director
Scott Yenzer 750,000 (1) 250,000 09/01/2026
Director

All values are in US Dollars.

(1) In<br> September 2019, Mr. Yenzer was granted options to purchase 1,000,000 shares of common stock at $0.70. The options vest<br> quarterly over 2 years, becoming fully vested on September 1, 2021. Each tranche of vested options begins to expire 5 years<br> after they vest, therefore these options expire quarterly, as they vested, between September 1, 2024 through September 1,<br> 2026.

ITEM12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of May 14, 2020 certain information regarding beneficial ownership of our common stock by:

● Each<br> person known to us to beneficially own 5% or more of our common stock;
● Each<br> executive officer who in this proxy statement are collectively referred to as the “Named Executive Officers;”
● Each<br> of our directors; and
● All<br> of our executive officers (as that term is defined under the rules and regulations of the SEC) and directors as a group.

We have determined beneficial ownership in accordance with Rule 13d-3 under the Exchange Act. Beneficial ownership generally means having sole or shared voting or investment power with respect to securities. Unless otherwise indicated in the footnotes to the table, each shareholder named in the table has sole voting and investment power with respect to the shares of common stock set forth opposite the shareholder’s name. As of May 14, 2020, 62,703,575shares of our Common Stock were issued and outstanding.

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| --- | | Name and address of beneficial owners | Number of shares beneficially<br><br> owned (1) | | | Percentage <br><br>of class | | | | --- | --- | --- | --- | --- | --- | --- | | Joseph John Combs, III | | 3,606,315 | (2) | | 5.8 | % | | CEO, President, Secretary | | | | | | | | 370 Interlocken Blvd., Ste 680 | | | | | | | | Broomfield, CO 80021 | | | | | | | | Michael Cardillo | | 3,925,316 | (3) | | 6.3 | % | | President - REGS | | | | | | | | 370 Interlocken Blvd., Ste 680 | | | | | | | | Broomfield, CO 80021 | | | | | | | | Christopher H. Dieterich | | - | | | * | | | Director | | | | | | | | 370 Interlocken Blvd., Ste 680 | | | | | | | | Broomfield, CO 80021 | | | | | | | | Christopher Scott Yenzer | | 500,000 | (4) | | * | | | Director | | | | | | | | 370 Interlocken Blvd., Ste 680 | | | | | | | | Broomfield, CO 80021 | | | | | | | | Fortunato Villamagna | | - | | | * | | | President - PWS | | | | | | | | 370 Interlocken Blvd., Ste 680 | | | | | | | | Broomfield, CO 80021 | | | | | | | | Clark Knopik | | - | | | * | | | Interim Chief Financial Officer | | | | | | | | 370 Interlocken Blvd., Ste 680 | | | | | | | | Broomfield, CO 80021 | | | | | | | | LPD Investments, Ltd. | | 6,390,832 | (5) | | 10.2 | % | | 25025 145 North, Ste 410 | | | | | | | | The Woodlands, TX 77380 | | | | | | | | Clyde Berg | | 4,987,500 | (6) | | 8.0 | % | | 10050 Brandley Drive | | | | | | | | Cupertino, CA 95014 | | | | | | | | Carl Berg | | 3,100,000 | (7) | | 5.0 | % | | 10050 Brandley Drive | | | | | | | | Cupertino, CA 95014 | | | | | | | | All Officers and Directors as a Group (5 persons) | | 8,031,631 | | | 12.7 | % |

* Represents less than 1%

(1) “Beneficial<br> ownership” is defined in the regulations promulgated by the U.S. Securities and Exchange Commission as having or sharing,<br> directly or indirectly (1) voting power, which includes the power to vote or to direct the voting, or (2) investment power,<br> which includes the power to dispose or to direct the disposition, of shares of the common stock of an issuer. The definition<br> of beneficial ownership includes shares underlying options or warrants to purchase common stock, or other securities convertible<br> into common stock, that currently are exercisable or convertible or that will become exercisable or convertible within 60<br> days. Unless otherwise indicated, the beneficial owner has sole voting and investment power.
(2) Consists<br> of 3,606,315 shares owned by Mr. Combs.
(3) Consists<br> of 100,000 shares owned by M. Cardillo, 3,825,316 shares owned by Cardillo Enterprises, Inc from which Mr. Cardillo has beneficial<br> ownership.
(4) Consists<br> of options to purchase 500,000 shares of common stock, which were exercisable as of the date of this report, and shares<br> becoming vested within 60 days of this report.
(5) Consists<br> of 5,140,832 shares according to Form 13G filed on August 29, 2014, 200,000 shares of common stock issued in August 2017 related<br> to penalty on payment of short term debt, 250,000 shares of common stock issued in March 2018 related to a private offering,<br> warrants to purchase 100,000 shares of common stock issued on August 27, 2015 which are currently exercisable, and 700,000<br> shares which were issued to LPD during fiscal year 2019 related to penalty on late payment of short term note.
(6) Consists<br> of 3,800,000 shares owned by Mr. Clyde Berg, warrants to purchase 500,000 shares of common stock, which are currently exercisable,<br> and 687,500 shares which are issuable as of December 31, 2018 related to penalty on late payment of short-term note.
(7) Consists<br> of 400,000 shares owned by Mr. Carl Berg and 2,400,000 shares owned by Carl and Mary Ann Berg CRT for which Mr. Berg has beneficial<br> ownership, warrants to purchase 100,000 shares of common stock issued on August 27, 2015 which are currently exercisable,<br> and 200,000 shares which are issuable as of December 31, 2019 related to long term debt issued in July 2018. 
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ITEM13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

CERTAINRELATIONSHIPS AND RELATED PERSON TRANSACTIONS

Notespayable, related parties

Notes payable, related parties and accrued interest due to certain related parties as of December 31, 2019 and 2018 are as follows:

December 31,
2018
Unsecured short<br> term note payable dated August 21, 2019 with principal and interest due 60 days from<br> issuance. The note requires a one-time fee in the amount of 500 to compensate for the<br> first two weeks of the term and each week thereafter (weeks 3-8) a fee of 50 shall be<br> due and owing accruing on the first day of the week, after which the fee is 75 per week<br> which was recorded as interest expense. The note is from the CEO, and thus classified<br> as a related party note. For the year ended December 31, 2019, the Company recorded interest<br> expense of 1,600, which included the 500 upfront fee. Unpaid interest at December<br> 31, 2019 is approximately 1,600. 15,000 -
Unsecured short term note<br> payable dated August 21, 2019 with principal and interest due 60 days from issuance. The note<br> requires a one-time fee in the amount of 4,150 to compensate for the first two weeks of the<br> term and each week thereafter (weeks 3-8) a fee of 415 shall be due and owing accruing on the<br> first day of the week, after which the fee is 600 per week which was recorded as interest<br> expense. The note is from a family member of the CEO, and thus classified as a related party<br> note. For the year ended December 31, 2019, the Company recorded interest expense of 12,600,<br> which included the 4,150 upfront fee. Unpaid interest at September 30, 2019 is approximately<br> 12,600. 125,000 -
Unsecured<br> short term note payable dated October 7, 2019 with principal and interest due 60<br> days from issuance. The note requires a one-time fee in the amount of 500 to compensate<br> for the first two weeks of the term and each week thereafter (weeks 3-8) a fee of 50<br> shall be due and owing accruing on the first day of the week, after which the fee is<br> 75 per week which was recorded as interest expense. The note is from the CEO,<br> and thus classified as a related party note. For the year ended December 31, 2019, the<br> Company recorded interest expense of 1,600, which included the 500 upfront fee.<br> Unpaid interest at December 31, 2019 is approximately 1,600. 15,000 -
Total short-term notes - related party 155,000 $ -

All values are in US Dollars.

December 31,
2019 2018
Accrued interest $ 27,100 $ 11,800
$ 27,100 $ 11,800

Review,Approval or Ratification of Transactions with Related Persons

The Company does not maintain a written policy with respect to related party transactions and our board of directors does not routinely review potential transactions with those parties we have identified as related parties prior to the consummation of the transaction.

ITEM14. Principal Accountant Fees and Services

The following table presents aggregate fees billed to the Company for professional services rendered by L J Soldinger Associates, LLC for the years ended December 31, 2019 and 2018:

2019 Fees 2018 Fees
Audit Fees $ 215,800 $ 238,800
Audit-Related Fees - -
Tax Fees 57,100 24,900
Total Fees $ 272,900 $ 263,700

AuditFees were for professional services rendered for the audit of the Company’s annual consolidated financial statements and review of consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements. The 2019 and 2018 fees include not only the annual audit fees but the review of the three quarterly 10-Q’s in 2019 and 2018, respectively.

Audit-RelatedFees were for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “Audit Fees.”

TaxFees were for professional services rendered for federal, state and international tax compliance, tax advice and tax planning.

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ITEM15. FINANCIAL STATEMENTS AND EXHIBITS

a) Financial Statements

The following financial statements are included as Exhibit 99.1 and are hereby incorporated by reference:

Audited Financial Statements

Page
Report of Independent Registered Public Accounting Firm F-1
Consolidated Balance Sheets as of December 31, 2019 and 2018 F-2
Consolidated Statements of Operations for the Years Ended December 31, 2019 and 2018 F-3
Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2019 and 2018 F-4
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019 and 2018 F-5
Notes to Consolidated Financial Statements F-7 
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(b) Exhibits

EXHIBIT INDEX

3.1 Articles of Incorporation, dated February 13, 2002 (1)
3.2 Amendment to the Articles of Incorporation, dated December 19, 2007, changing the name and effecting a reverse stock split (1)
3.3 Bylaws of the corporation, effective February 13, 2002 (1)
4.1 $225,000 Convertible Note and Note Agreement of the Corporation, issued February 14, 2012 (2)
4.2 Form of Warrant, having a 3-year life with $0.50 exercise price (1)
4.3 Form of Warrant, having a 5-year life with $0.50 exercise price (1)
10.1 Agreement for acquisition of MV, dated June 13, 2008 (1)
10.2 Agreement for acquisition of intellectual property from Black Stone Management Services, LLC, dated August 10, 2011 (1)
10.3 Agreement for Merger with Satellite Organizing Solutions, Inc. (1)
10.4 Consulting Agreement between the Company and Monty R. Lamirato, dated October 8, 2013 (3)
10.5 Irrevocable License and Royalty Agreement between the Company and Paragon Waste Solutions, LLC, dated March 21, 2012 (3)
10.7 Form of Option Grant SEER 2013 Equity Incentive Plan (4)
14.1 Code of Ethics (1)
21.1 Subsidiaries of Registrant (1)
31.1* Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
31.2* Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32.1** Certification of Principal Executive Officer ) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2** Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1 Financial Statements
101.INS*** XBRL<br> Instance Document
101.SCH*** XBRL<br> Taxonomy Extension Schema Document
101.CAL*** XBRL<br> Taxonomy Extension Calculation Linkbase Document
101.DEF*** XBRL<br> Taxonomy Extension Definition Linkbase Document
101.LAB*** XBRL<br> Taxonomy Extension Label Linkbase Document
101.PRE*** XBRL<br> Taxonomy Extension Presentation Linkbase Document
(1) Incorporated<br> by reference to the Company’s Report on Form 10 filed May 21, 2013.
--- ---
(2) Incorporated<br> by reference to the Company’s Report on Form 10 Amendment No. 1 filed July 23, 2013.
(3) Incorporated<br> by reference to the Company’s Report on Form 10-Q filed November 14, 2013
(4) Incorporated<br> by reference to the Company’s Report on Form 10-K filed March 27, 2014
* Filed<br> herewith
** This<br> certification is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange<br> Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into<br> any filing under the Securities Act of 1933, as amended or the Exchange Act.
*** Pursuant<br> to applicable securities laws and regulations, these interactive data files will not be deemed “filed” for the<br> purposes of Section 18 of the Securities and Exchange Act of 1934 or otherwise subject to the liability of that section, nor<br> will they be deemed filed or made a part of a registration statement or prospectus for purposes of Sections 11 and 12 of the<br> Securities Act of 1933, or otherwise subject to liability under those sections. 
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SIGNATURES

Pursuant to the requirements of Section 13or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated:<br> May 14, 2020 STRATEGIC<br> ENVIRONMENTAL & ENERGY RESOURCES, INC.
By /s/ J. John Combs III
J.<br> John Combs III<br><br> <br>Chief<br> Executive Officer with<br><br> <br>Responsibility<br> to sign on behalf of Registrant as a<br><br> <br>Duly<br> authorized officer and principal executive officer
By /s/ Clark Knopik
Clark<br> Knopik
Interim<br> Chief Financial Officer with
responsibility<br> to sign on behalf of Registrant as a
duly<br> authorized officer and principal financial officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

/s/ J. John Combs III Chairman of the Board of Directors May 14, 2020
J. John Combs III
/s/ Christopher Scott Yenzer Director May 14, 2020
Christopher Scott Yenzer
/s/ Christopher Dieterich Director May 14, 2020
Christopher Dieterich 
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EXHIBIT31.1

CERTIFICATIONOF CHIEF EXECUTIVE OFFICERPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, J. John Combs III, certify that:

1. I have reviewed this Annual Report on Form 10-K of Strategic Environmental & Energy Resources, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:<br> May 14, 2020
/s/ J. John Combs III
J.<br> John Combs III
Chief<br> Executive Officer

EXHIBIT31.2

CERTIFICATIONOF THE CHIEF FINANCIAL OFFICER

PURSUANTTO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Clark Knopik, certify that:

1. I have reviewed this Annual Report on Form 10-K of Strategic Environmental & Energy Resources, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:<br> May 14, 2020
/s/ Clark Knopik
Clark<br> Knopik
Interim<br> Chief Financial Officer

EXHIBIT32.1

CERTIFICATIONOF THE CHIEF EXECUTIVE OFFICER

Pursuantto 18 U.S.C. 1350

(Section906 of the Sarbanes-Oxley Act of 2002)

In connection with this Annual Report on Form 10-K of Strategic Environmental & Energy Resources, Inc. (the “Company”) for the year ended December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, J. John Combs III, Chief Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The<br> Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended;<br> and
(2) The<br> information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results<br> of operations of the Company.
/s/ J. John Combs III
---
J.<br> John Combs III
President<br> and Chief Executive Officer (Principal Executive Officer)
May<br> 14, 2020

EXHIBIT32.2

CERTIFICATIONOF THE CHIEF FINANCIAL OFFICER

Pursuantto 18 U.S.C. 1350

(Section906 of the Sarbanes-Oxley Act of 2002)

In connection with this Annual Report on Form 10-K of Strategic Environmental & Energy Resources, Inc. (the “Company”) for the year ended December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Clark Knopik, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(3) The<br> Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended;<br> and
(4) The<br> information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results<br> of operations of the Company.
/s/ Clark Knopik
---
Clark<br> Knopik
Interim<br> Chief Financial Officer (Principal Financial Officer)
May<br> 14, 2020

Exhibit99.1 Financial Statements

Annual<br> Audited Consolidated Financial Statements
Page
Report<br> of Independent Registered Public Accounting Firm F-1
Consolidated<br> Balance Sheets as of December 31, 2019 and 2018 F-2
Consolidated<br> Statements of Operations for the Years Ended December 31, 2019 and 2018 F-3
Consolidated<br> Statements of Stockholders’ Deficit for the Years Ended December 31, 2019 and 2018 F-4
Consolidated<br> Statements of Cash Flows for the Years Ended December 31, 2019 and 2018 F-5
Notes<br> to Consolidated Financial Statements F-6

REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Strategic Environmental & Energy Resources, Inc.

Opinionon the Financial Statements

We have audited the accompanying consolidated balance sheets of Strategic Environmental & Energy Resources, Inc. and subsidiaries (the “Company”) as of December 31, 2019 and December 31, 2018, the related consolidated statements of operations, stockholders’ deficit and cash flows for the years ended December 31, 2019 and December 31, 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and December 31, 2018, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

ExplanatoryParagraph – Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has incurred significant losses since inception and has an accumulated deficit of approximately $27 million as of December 31, 2019 and needs to raise substantial amounts of additional funds to meet its obligations and afford it time to develop profitable operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basisfor Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/LJ Soldinger Associates, LLC

Deer Park, IL

May 14, 2020

We have served as the Company’s auditor since 2013.

| F-1 |

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STRATEGICENVIRONMENTAL & ENERGY RESOURCES, INC.

CONSOLIDATEDBALANCE SHEETS

December 31,
2018
ASSETS
Current Assets
Cash<br> and cash equivalents 354,700 $ 115,700
Accounts receivable,<br> net of allowance for doubtful accounts of 11,800 and 227,500, respectively 686,800 1,063,500
Notes receivable,<br> net - 310,700
Inventory 104,100 130,200
Costs and estimated<br> earnings in excess of billings on uncompleted contracts 242,500 314,300
Prepaid<br> expenses and other current assets 225,500 235,000
Total Current Assets 1,613,600 2,169,400
Property and Equipment, net 561,800 831,900
Intangible Assets, net 479,500 516,800
Notes receivable, net of current portion - 232,200
Other Assets 407,000 29,800
TOTAL ASSETS 3,061,900 $ 3,780,100
LIABILITIES AND STOCKHOLDERS’<br> DEFICIT
Current Liabilities
Accounts payable 1,189,400 $ 1,772,400
Accrued liabilities 1,592,900 1,446,500
Billings in excess<br> of costs and estimated earnings on uncompleted contracts 327,100 470,200
Deferred revenue 32,900 191,500
Payroll taxes payable 1,052,200 1,022,500
Customer deposits 10,900 1,600
Short term notes 2,408,100 823,100
Short term notes<br> - related party 155,000 -
Convertible notes 1,605,000 1,603,600
Current portion<br> of long-term debt and capital lease obligations 258,100 179,200
Accrued<br> interest - related party 27,100 11,800
Total Current Liabilities 8,658,700 7,522,400
Deferred revenue, non-current 30,200 63,200
Other non-current liabilities 381,900 -
Long term debt<br> and capital lease obligations, net of current portion 268,400 432,800
Total Liabilities 9,339,200 8,018,400
Commitments and contingencies - -
Stockholders’ deficit
Preferred stock; .001 par value;<br> 5,000,000 shares authorized; -0- shares issued - -
Common stock; .001 par value; 70,000,000<br> shares authorized; 62,591,075 and<br> 61,703,575 shares issued, issuable** and outstanding December 31, 2019<br> and December 31, 2018, respectively 62,600 61,700
Common stock issuable 25,000 25,000
Additional paid-in<br> capital 22,651,100 22,531,000
Stock Subscription<br> receivable (25,000 ) (25,000 )
Accumulated<br> deficit (26,964,300 ) (24,405,500 )
Total<br> stockholders’ deficit (4,250,600 ) (1,812,800 )
Non-controlling<br> interest (2,026,700 ) (2,425,500 )
Total<br> Deficit (6,277,300 ) (4,238,300 )
TOTAL LIABILITIES<br> AND STOCKHOLDERS’ DEFICIT 3,061,900 $ 3,780,100

All values are in US Dollars.

******Includes 887,500 and 3,200,000 shares issuable at December 31, 2019 and December 31, 2018, respectively, per terms of note agreements.

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

| F-2 |

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STRATEGICENVIRONMENTAL & ENERGY RESOURCES, INC.

CONSOLIDATEDSTATEMENTS OF OPERATIONS

For<br> the Years Ended December 31,
2019 2018
Revenue:
Products $ 4,052,900 $ 4,900,900
Services - -
Solid<br> waste 249,900 369,200
Total<br> revenue 4,302,800 5,270,100
Operating expenses:
Products costs 2,314,400 2,969,100
Services costs - -
Solid waste costs 60,100 78,000
General and administrative<br> expenses 1,483,100 1,305,700
Salaries and related<br> expenses 1,200,300 1,504,500
Fixed<br> asset impairment - 70,700
Total<br> operating expenses 5,057,900 5,928,000
Loss from operations (755,100 ) (657,900 )
Other income (expense):
Interest income - 39,400
Interest expense (553,200 ) (1,410,000 )
Other 404,500 28,400
Total<br> non-operating expense, net (148,700 ) (1,342,200 )
Loss from continuing operations (903,800 ) (2,000,100 )
Net loss<br> from discontinued operations (1,785,400 ) (1,093,800 )
Discontinued operations, net of tax (1,785,400 ) (1,093,800 )
Less: Net loss<br> attributable to non-controlling interest (151,200 ) (160,300 )
Net loss attributable<br> to SEER common stockholders $ (2,538,000 ) $ (2,933,600 )
Net loss from continuing operations $ (0.01 ) $ (0.03 )
Loss from<br> discontinued operations (0.03 ) (0.02 )
Net loss per<br> share, basic and diluted $ (0.04 ) $ (0.05 )
Weighted average shares outstanding<br> – basic and diluted 62,110,753 59,237,822

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

| F-3 |

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STRATEGICENVIRONMENTAL & ENERGY RESOURCES, INC.

CONSOLIDATEDSTATEMENT OF STOCKHOLDERS’ DEFICIT

Additional Common Stock Non- Total
Preferred<br> Stock Common<br> Stock Paid-in Stock Subscription Accumulated controller Stockholders’
Shares Amount Shares Amount Capital Subscribed Receivable Deficit Interest Deficit
Balances at December 31, 2017 - $ - 56,528,600 $ 56,500 $ 20,790,700 $ 25,000 $ (25,000 ) $ (21,471,900 ) $ (2,715,200 ) $ (3,339,900 )
Issuance of common stock<br> for cash - - 1,250,000 1,300 418,700 - - - - 420,000
Issuance of common stock<br> upon debt penalty - - 3,510,000 3,500 1,055,800 - - - - 1,059,300
Issuance of common stock<br> to acquire debt - - 200,000 200 43,800 - - - - 44,000
Issuance of common stock<br> for services - - 75,000 100 57,900 - - - - 58,000
Issuance of common stock<br> for interest
and principal reduction - - 140,000 100 39,500 - - - - 39,600
Stock-based compensation - - - - 124,600 - - - - 124,600
Investment in subsidiary - - - - - - - - 450,000 450,000
Net<br> loss - - - - - - - (2,933,600 ) (160,300 ) (3,093,900 )
Balances at December<br> 31, 2018 - - 61,703,600 61,700 22,531,000 25,000 (25,000 ) (24,405,500 ) (2,425,500 ) (4,238,300 )
Issuance of common stock<br> upon debt penalty - - 887,500 900 69,600 - - - - 70,500
Stock-based compensation - - - - 7,300 - - - - 7,300
Allocated value of options<br> related to note payable - - - - 13,900 - - - - 13,900
Allocated value of warrants<br> related to note payable - - - - 29,300 - - - - 29,300
Adoption of ASU 2016-02,<br> Leases (Topic 842) - - - - - - - (20,800 ) - (20,800 )
Investment in subsidiary - - - - - - - - 550,000 550,000
Net<br> loss - - - - - - - (2,538,000 ) (151,200 ) (2,689,200 )
Balances at December<br> 31, 2019 - - 62,591,100 62,600 22,651,100 25,000 (25,000 ) (26,964,300 ) (2,026,700 ) (6,277,300 )

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

| F-4 |

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STRATEGICENVIRONMENTAL & ENERGY RESOURCES, INC.

CONSOLIDATEDSTATEMENT OF CASH FLOWS

For<br> the Years Ended December 31,
2019 2018
Cash flows from operating activities:
Net<br> loss from continuing operations $ (903,800 ) $ (2,000,100 )
Loss<br> from discontinued operations (1,785,400 ) (1,093,800 )
Net loss (2,689,200 ) (3,093,900 )
Adjustments to reconcile net loss to<br> net cash provided by operating activities:
Depreciation and<br> amortization 346,900 541,300
Stock-based compensation<br> expense 7,300 101,400
Note receivable<br> discount (9,900 ) (39,400 )
Stock issued for<br> services - 102,000
Non-cash expense<br> for interest, common stock issued for debt penalty 71,600 1,226,900
Impairment of patent<br> costs - 19,200
Impairment of assets 32,900 70,700
Provision for doubtful<br> accounts receivable (215,700 ) (232,600 )
Non-cash expense<br> for interest, warrants – accretion of debt discount 36,700 -
Gain on disposition<br> of assets (2,200 ) -
Gain on debt extinguishment - (128,000 )
Changes in operating<br> assets and liabilities:
Accounts receivable 592,400 (138,500 )
Costs in excess<br> of billings on uncompleted contracts 71,800 (314,300 )
Inventory 26,100
Prepaid expenses<br> and other assets 187,800 332,900
Accounts payable<br> and accrued liabilities (252,300 ) 443,600
Billings in excess<br> of revenue on uncompleted contracts (85,900 ) 242,900
Deferred revenue (248,800 ) (162,600 )
Payroll<br> taxes payable 29,700 24,800
Net cash used<br> by operating activities (2,100,800 ) (1,003,600 )
Cash flows from investing activities:
Purchase of property<br> and equipment (70,100 ) (60,300 )
Purchase of intangibles - (100 )
Proceeds<br> from notes receivable 552,800 224,000
Net cash provided<br> by investing activities 482,700 163,600
Cash flows from financing activities:
Payments of notes<br> and capital lease obligations (408,900 ) (818,400 )
Proceeds from<br> short-term notes – related party 155,000 -
Proceeds from short-term<br> notes 1,885,000 850,000
Proceeds from outside<br> minority investment in new subsidiary 226,000 450,000
Proceeds<br> from the sale of common stock and warrants, net of expenses - 420,000
Net<br> cash provided by financing activities 1,857,100 901,600
Net increase in cash 239,000 61,600
Cash<br> at the beginning of period 115,700 54,100
Cash<br> at the end of period $ 354,700 $ 115,700
Supplemental disclosures<br> of cash flow information:
Cash<br> paid for interest $ 134,500 $ 12,100
Financing<br> of prepaid insurance premiums $ 330,200 $ 373,900

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

| F-5 |

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STRATEGICENVIRONMENTAL & ENERGY RESOURCES, INC.

Notesto Consolidated Financial Statements

NOTE1 - 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 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 and 2018; 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.

The three majority-owned subsidiaries include; 1) Paragon Waste Solutions, LLC (“PWS”), 2) ReaCH4Biogas (“Reach”) and 3) PelleChar, LLC (“PelleChar”). PWS is currently owned 54% by SEER (see Note 9), Reach is owned 85% by SEER and PelleChar is owned 90% by SEER.

PWS has and continues to develop specific opportunities to deploy and commercialize patented technologies for a non-thermal plasma-assisted oxidation process that makes possible the clean and efficient destruction of solid hazardous chemical and biological waste (i.e., regulated medical waste, chemicals, pharmaceuticals and refinery tank waste, etc.) without landfilling or traditional incineration 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.

Reach (the trade name for BeneFuels, LLC), is currently owned 85% by SEER and focuses specifically on treating biogas for conversion to pipeline quality gas and/or compressed natural gas (“CNG”) for fleet vehicle fuel. Reach had minimal operations for the year ended December 31, 2019 and 2018.

PelleChar 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 year ended December 31, 2019 PelleChar had minimal activity related to formation, and an increasing sales effort.

Principals of Consolidation

The 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.

Going Concern

As shown in the accompanying consolidated financial statements, the Company has experienced recurring losses, and has accumulated a deficit of approximately $26.9 million as of December 31, 2019, and $24.4 million as of December 31, 2018. For the years ended December 31, 2019, and 2018, we incurred net losses from continuing operations of approximately $0.9 million and $2.0 million, respectively. The Company had a working capital deficit of approximately $7.1 million at December 31, 2019, an increase of $1.7 million in working capital from $5.4 million at December 31, 2018. These factors raise substantial doubt about the ability of the Company to continue to operate as a going concern.

| F-6 |

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Realization of a major portion of the Company’s assets as of December 31, 2019, 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 year ended December 31, 2019 we raised approximately $2.0 million from the issuance of short-term and long-term debt, and $0.2 million from outside minority investment in a new subsidiary, offset by payments of principal on short term notes and capital leases of $0.4 million. In addition, the Company has undertaken a number of specific steps to continue to operate as a going concern. The Company continues to focus on developing organic growth in our operating companies and improving gross and net margins through increased attention to pricing, aggressive cost management and overhead reductions, including discontinuing a line of business with insufficient margins. Critical to achieving profitability will be the ability to license and or sell, permit and operate though the Company’s joint ventures and licensees the CoronaLux™ waste destruction units. The Company has increased 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.

NOTE2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reclassifications

Certain reclassifications have been made in the 2018 consolidated financial statements to conform to the 2019 presentation. These reclassifications have no effect on net income for 2018.

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 cash flows used in the impairment testing of definite lived tangible and intangible assets; valuation allowances and reserves for receivables; revenue recognition related to contracts accounted for under the percentage of completion method; revenue recognition method for perpetual technology license agreements; share-based compensation; discontinued operations future consideration and carrying amounts of equity investments. Actual results could differ from those estimates.

Cash and Cash Equivalents

We consider all highly liquid debt investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. Periodically, we maintain deposits in financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. As of December 31, 2019, and 2018, we did not hold any assets that would be deemed to be cash equivalents.

Accounts Receivable and Concentration of Credit Risk

Accounts receivable are recorded at the invoiced amounts less an allowance for doubtful accounts. The allowance for doubtful accounts is based on our estimate of the amount of probable credit losses in our accounts receivable. We determine the allowance for doubtful accounts based upon an aging of accounts receivable, historical experience and management judgment. Accounts receivable balances are periodically reviewed for collectability, and balances are charged off against the allowance when we determine that the potential for recovery is remote. An allowance for doubtful accounts of approximately $11,800 and $227,500 had been reserved as of December 31, 2019 and 2018, respectively.

| F-7 |

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We 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, biogas generating landfill 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 December 31, 2019, we do not believe that we have significant credit risk.

As of December 31, 2019, we had two customers who comprised 10% or more of our accounts receivable and their combined accounts receivable equaled approximately $379,600. As of December 31, 2018, we had three customers who comprised 10% or more of our accounts receivable and their combined accounts receivable equaled approximately $675,100.

For the year ended December 31, 2019 we had two customers with sales in excess of 10% of our revenue and they represented approximately 23% of total revenue for the year ended December 31, 2019. For the year ended December 31, 2018 we had one customer with sales in excess of 10% of our revenue and that represented approximately 23% of total revenue for the year ended December 31, 2018.

Inventories

Inventories are stated at the lower of cost or market and maintained on a first in, first out basis and includes the following amounts at December 31:

December<br> 31, 2019 December<br> 31, 2018
Finished goods $ 60,400 $ 96,800
Work in process 15,800 -
Raw materials 27,900 33,400
$ 104,100 $ 130,200

Vendor Concentration

The Company has purchases from one vendor comprising more that 10% of total purchases for both 2019 and 2018. The Company does not believe it is substantially dependent upon nor exposed to any significant concentration risk related to purchases from any single vendor.

Fair Value of Financial Instruments

The 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. Receivables and payables, due to short term nature, approximate their fair values.

Fair Value

As defined in authoritative guidance, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (“exit price”). To estimate fair value, the Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable.

| F-8 |

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The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (“Level 1” measurements) and the lowest priority to unobservable inputs (“Level 3” measurements). The three levels of the fair value hierarchy are as follows:

Level 1 - Observable inputs such as quoted prices in active markets at the measurement date for identical, unrestricted assets or liabilities.

Level 2 - Other inputs that are observable, directly or indirectly, such as quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 - Unobservable inputs for which there is little or no market data and which the Company makes its own assumptions about how market participants would price the assets and liabilities.

In instances in which multiple levels of inputs are used to measure fair value, hierarchy classification is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation. Expenditures for replacements, renewals and betterments are capitalized. Repairs and maintenance costs are expensed as incurred.

Depreciation is calculated using the straight-line method over the estimated useful lives of the assets of generally five to seven years for equipment, five to ten years for vehicles and three years for computer related assets. Assets are depreciated starting at the time they are placed into service. A portion of depreciation expense is charged to cost of product revenue on the consolidated statement of operations.

Leasehold improvements are amortized using the straight-line method over the shorter of the lease term (including reasonably assured renewal periods), which range from three to seven years, or their estimated useful life.

Intangible Assets

Intangible assets with estimable useful lives are amortized using the straight-line method over their respective estimated useful lives verses their estimated residual values, and are reviewed for impairment annually, or whenever events or circumstances indicate their carrying amount may not be recoverable. We conduct our annual impairment test on December 31 of each year. The Company has evaluated its intangibles for impairment and has determined that no impairment was necessary as of December 31, 2019.

Impairment of Long-lived Assets

We 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. Further testing of specific assets or grouping of assets is required when undiscounted future cash flows associated with the assets is less than their carrying amounts. 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. In our solid waste business segment, we recorded impairment to one CoronaLux ™ units of approximately $70,700 incurred due to lack of sale or license of the units for a period of more than 12 months since completion of the units for the year ended December 31, 2018. We recorded an impairment of long-lived assets for the year ended December 31, 2019 of $32,900, which was included in discontinued operation in the Statement of Operations.

| F-9 |

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Revenue Recognition

In May 2014, the FASB issued guidance on revenue from contracts with customers that superseded most current revenue recognition guidance, including industry-specific guidance. The underlying principle of the guidance is to recognize revenue to depict the transfer of goods or services to customers at an amount to which the company expects to be entitled in exchange for those goods or services. The new guidance 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. The Company adopted the provisions of this guidance effective January 1, 2018 as required under the guidance. The adoption of this guidance did not have any material impact on the Company’s consolidated financial statements (see Note 3).

Stock-based Compensation

We 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 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 using the simplified method to estimate the expected term of the option and recorded in the period that estimates are revised.

Research and Development

Research and development (“R&D”) costs are charged to expense as incurred and are included in selling, general and administrative costs in the accompanying consolidated statement of operations. 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 and $600 for the years ended December 31, 2019 and 2018, respectively. R & D expenses are included in general and administrative expenses.

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 years ended December 31, 2019 and 2018 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 at December 31, 2019 and 2018. 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, 2018. The tax periods for the years ending December 31, 2016 through 2019 are open to examination by federal and state authorities.

| F-10 |

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Recently issued accounting pronouncements

Changes to accounting principles generally accepted in the United States of America (U.S. GAAP) are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (ASU’s) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all new or revised ASU’s.

NewAccounting Pronouncements Implemented

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under current GAAP. ASU 2016-02 requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective approach and early adoption is permitted. The Company adopted ASU 2016-02 in the first quarter of 2019. (See Note 6)

NOTE3 – REVENUE

The Company adopted the provisions of the guidance in the new revenue standard under ASC 606 effective January 1, 2018 applying the modified retrospective method to all contracts. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue recognition guidance, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting under previous revenue recognition guidance. The adoption of this guidance did not have any material impact on the Company’s consolidated financial statements. There was no impact to net revenue for the December 31, 2018 as a result of applying the new revenue recognition guidance.

ProductsRevenue

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, we found no change in the manner we recognize product revenue. 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.

| F-11 |

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ServicesRevenue

Our services revenue is primarily comprised of services related to industrial cleaning and mobile railcar cleaning, which we recognize as services are rendered. These lines of business have been included in discontinued operations as of December 31, 2019, and 2018, respectively.

SolidWaste 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.

Disaggregationof Revenue

Year<br> ended December 31, 2019
Industrial<br> Cleaning Environmental<br> Solutions Solid<br> Waste Total
Sources of Revenue
Product sales - 2,952,100 - 2,952,100
Media sales - 1,100,800 - 1,100,800
Licensing fees - - 49,900 49,900
Operating fees - - - -
Management<br> fees - - 200,000 200,000
Total<br> Revenue - Continuing operations - 4,052,900 249,900 4,302,800
Industrial<br> cleaning services – Discontinued operations 1,661,500 - - 1,661,500
Total<br> Revenue $ 1,661,500 $ 4,052,900 $ 249,900 $ 5,964,300
Year<br> ended December 31, 2018
Industrial<br> Cleaning Environmental<br> Solutions Solid<br> Waste Total
Sources of Revenue
Product sales - 3,237,900 - 3,237,900
Media sales - 1,663,000 - 1,663,000
Licensing fees - - 134,800 134,800
Operating fees - - 34,400 34,400
Management<br> fees - - 200,000 200,000
Total<br> Revenue - Continuing operations - 4,900,900 369,200 5,270,100
Industrial<br> cleaning services 1,897,600 - - 1,897,600
Mobile rail<br> car cleaning services 1,049,200 - - 1,049,200
Total<br> Revenue - Discontinued operations $ 2,946,800 $ - $ - $ 2,946,800
Total<br> Revenue $ 2,946,800 $ 4,900,900 $ 369,200 $ 8,216,900 
| F-12 |

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ContractBalances

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:

Contract<br> Liabilities
Accounts<br> Receivable, net Revenue<br> Contract Liabilities Deferred<br> Revenue<br> (current) Deferred<br> Revenue<br> (non-current)
Balance as of December 31,<br> 2019 $ 686,800 $ 327,100 $ 32,900 $ 30,200
Balance as of<br> December 31, 2018 1,063,500 470,200 191,500 63,200
Decrease $ (376,700 ) $ (143,100 ) $ (158,600 ) $ (33,000 )

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

RemainingPerformance Obligations

As of December 31, 2019, the aggregate amount of the transaction price allocated to the remaining performance obligations was approximately $1.1 million, of which the Company expects to recognize 100% over the next 24 months, including 97% 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.

| F-13 |

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NOTE4 - PROPERTY AND EQUIPMENT

Property and equipment was comprised of the following:

December<br> 31, 2019 December<br> 31, 2018
Field and shop equipment $ 2,240,700 $ 2,272,100
Vehicles 689,700 690,000
Waste destruction equipment, placed<br> in service 557,100 557,100
Furniture and office equipment 346,300 312,400
Leasehold improvements 36,300 10,000
Building and improvements 21,200 21,200
Land 162,900 162,900
4,054,200 4,025,700
Less: accumulated<br> depreciation and amortization (3,492,400 ) (3,193,800 )
Property<br> and equipment, net $ 561,800 $ 831,900

Depreciation expense for the years ended December 31, 2019 and 2018 was $309,600 and $454,100, respectively. For the year ended December 31, 2019 depreciation expense included in cost of goods sold and selling, general and administrative expenses was $232,700 and $76,900, respectively. For the year ended December 31, 2018 depreciation expense included in cost of goods sold and selling, general and administrative expenses was $381,300 and $72,800, respectively.

The Company has evaluated its fixed assets, and has determined that an impairment charge was required for shop equipment that will not be utilized in 2020 of approximately $32,800.

Depreciation expense on leased CoronaLux™ units included in accumulated depreciation and amortization above is $55,900 and $70,100 for the years ended December 31, 2019 and 2018, respectively.

Property and equipment includes the following amounts for leases that have been capitalized at December 31:

December 31, December 31,
2019 2018
Vehicles, field and shop<br> equipment $ 370,900 $ 407,100
Less: accumulated<br> amortization (316,300 ) (298,100 )
$ 54,600 $ 109,000

The capitalized leases have a security interest held by the lessor in their respective equipment.

The Company has evaluated its fixed assets and has determined that an impairment charge was required for one licensed CoronaLux™ unit of approximately $70,700 in the year ended December 31, 2018. No impairment was required upon analysis for the year ended December 31, 2019.

| F-14 |

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NOTE5 – INTANGIBLE ASSETS

Intangible assets were comprised of the following:

December<br> 31, 2019
Gross<br> carrying amount Accumulated<br> amortization Net<br> carrying value
Goodwill $ 277,800 $ - $ 277,800
Customer list 42,500 (42,500 ) -
Technology 1,021,900 (820,200 ) 201,700
Trade name 54,900 (54,900 ) -
$ 1,397,100 $ (917,600 ) $ 479,500
December<br> 31, 2018
--- --- --- --- --- --- --- ---
Gross<br> carrying amount Accumulated<br> amortization Net<br> carrying value
Goodwill $ 277,800 $ - $ 277,800
Customer list 42,500 (42,500 ) -
Technology 1,021,900 (782,900 ) 239,000
Trade name 54,900 (54,900 ) -
$ 1,397,100 $ (880,300 ) $ 516,800

The estimated useful lives of the intangible assets range from seven to ten years. Amortization expense, included in selling, general and administrative expenses in the accompanying consolidated statements of operations, was $37,300 and $87,200 for the years ended December 31, 2019 and 2018, respectively.

NOTE6 – LEASES

The Company has entered into operating leases primarily for real estate. These leases have terms which range from 4 year to 6 years, and often include one or more options to renew. These renewal terms can extend the lease term from 1 year to month-to-month and are included in the lease term when it is reasonably certain that the Company will exercise the option. These operating leases are included in “Prepaid expenses and other current assets” and “Other assets” on the Company’s December 31, 2019 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 December 31, 2019 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 December 31, 2019, total right-of-use assets and operating lease liabilities were approximately $437,300. All operating lease expense is recognized on a straight-line basis over the lease term. In the year ended December 31, 2019, the Company recognized approximately $236,700 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.

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

Year<br> Ended
December 31,<br> 2019
Cash paid for operating<br> lease liabilities $ 307,100
Right-of-use assets obtained in exchange<br> for new operating lease obligations (1) 75,600
Weighted-average remaining lease term 6.5<br> months
Weighted-average discount rate 10 %

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

Maturities of lease liabilities as of December 31, 2019 were as follows:

2020 $ 127,900
2021 83,300
2022 85,700
2023 88,300
2024 90,900
Thereafter 157,600
633,700
Less imputed<br> interest (165,700 )
Total lease liabilities 468,000
Current operating lease liabilities 86,100
Non-current operating<br> lease liabilities 381,900
Total lease liabilities $ 468,000

NOTE7 - ACCRUED LIABILITIES

Accrued liabilities were comprised of the following:

December<br> 31, 2019 December<br> 31, 2018
Accrued compensation and<br> related taxes $ 498,000 $ 565,800
Accrued interest 648,600 362,000
Accrued settlement/litigation claims 150,000 150,000
Warranty and defect claims 48,200 55,000
Lease liabilities 86,100 -
Other 162,000 313,700
Total<br> Accrued Liabilities $ 1,592,900 $ 1,446,500 
| F-16 |

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NOTE8 - UNCOMPLETED CONTRACTS

Costs, estimated earnings and billings on uncompleted contracts are as follows:

December<br> 31, December<br> 31,
2019 2018
Revenue<br> Recognized $ 1,074,800 $ 499,600
Less:<br> Billings to date (832,300 ) (185,300 )
Costs<br> and estimated earnings in excess of billings on uncompleted contracts 242,500 314,300
Billings<br> to date 2,707,200 1,642,600
Revenue<br> recognized (2,322,900 ) (1,172,400 )
Revenue<br> contract liabilities $ 384,300 $ 470,200

NOTE9 – INVESTMENT IN PARAGON WASTE SOLUTIONS LLC

In 2010, the Company and Black Stone Management Services, LLC (“Black Stone”) formed PWS, whereby a total of 1,000,000 membership units were issued, 600,000 membership units to the Company and 400,000 membership units to Black Stone. Fortunato Villamagna, who serves as President of our PWS subsidiary, is a managing member and Chairman of Black Stone. In June 2012, the Company and Blackstone each allocated 10% of their respective membership units in PWS to Mr. J John Combs III, an officer and shareholder of the Company and Mr. Michael Cardillo, a shareholder of the Company and an officer of a subsidiary. There was no value attributable to the units at the time of the allocation. At December 31, 2019 and 2018 the Company owned 54% of the membership units, Black Stone owned 36% of the membership units, and two related parties (as noted above), each owned 5% of the membership units.

In August 2011, the Company acquired certain intellectual property in regard to waste destruction technology (the “IP”) from Black Stone in exchange for 1,000,000 shares of our common stock valued at $100,000. We estimated the useful life of the IP at ten years, which was consistent with the useful life of other technology included in our intangible assets, and management’s initial assessment of the potential marketability of the IP. In March 2012, the Company entered into an Irrevocable License & Royalty Agreement with PWS that grants PWS an irrevocable world-wide license to the IP in exchange for a 5% royalty on all revenues from the sale or lease of all CoronaLux™ units from PWS and its affiliates. The term commenced as of the date of the Agreement and shall continue for a period not to exceed the life of the patent or patents filed by the Company. PWS may sub license the IP and any revenue derived from sub licensing shall be included in the calculation of Gross Revenue for purposes of determining royalty payments due the Company. Royalty payments are due 30 days after the end of each calendar quarter. PWS generated licensing and unit sales revenues of approximately $49,900 and $134,800 for the years ended December 31, 2019 and 2018, respectively, as such, royalties of $2,500 and $120,300 were due at December 31, 2019 and 2018, respectively.

Since its inception through December 31, 2019, we have provided approximately $6.8 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 that we will provide the funding as an advance against future earnings distributions made by PWS.

| F-17 |

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Licensing Agreements

On November 17, 2014, PWS entered into an Exclusive Licensing and Equipment Lease Agreement, for a limited license territory, with Medical Waste Services, LLC (“MWS”). The License Agreement grants to MWS the use of the PWS Technology and the CoronaLux™ waste destruction units for an initial term of seven years and required a payment of $225,000 as a non-refundable initial licensing fee and distributions of 50% of net operating profits, as defined in the agreement, in lieu of continuing royalty payments for the use of the licensed technology. PWS and Medical Waste Services, LLC (“MWS”) formed a contractual joint venture to exploit the PWS medical waste destruction technology. MWS has received approval from the California Department of Public Health and a restricted permit from the South Coast Air Quality Management District (“SCAQMD”) to operate the CoronaLux™ unit licensed by MWS at its facility in Southern California. Operations to date have included the destruction of medical waste under a temporary operating permit issued by SCAQMD since May 2015 and efforts to obtain a full operating permit from SCAQMD were successful and SCAQMD issued a ‘Notice of Intent to Issue Permit to Operate’ in March 2017. In November 2017, the full operating permit was issued by SCAQMD.

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 sell a number of additional systems to the joint venture over the next five years. In 2017, PSMW purchased and installed three CoronaLux™ units for $600,000. PWS incurred costs of $525,700 to prepare the three units for sale. Operations in the form of medical waste destruction began in 2018.

Payments received for non-refundable licensing and placement fees have been recorded as deferred revenue in the accompanying consolidated balance sheets at December 31, 2019 and 2018 and are recognized as revenue ratably over the term of the contract.

| F-18 |

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NOTE10 – INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

The Company has a non-controlling interest in several joint ventures, currently four primarily for licensing and operating PWS CoronaLux™ waste destruction units and one for development of hybrid scrubber systems. Two joint ventures have limited their activity to formation only, no other operations have commenced. The following is summary information on the joint ventures that have had some activity in 2019 and 2018. The Company has no fixed commitment to fund any losses of the operating joint ventures and has no investment basis in any of the joint ventures therefore the Company has suspended the recognition of losses under the equity method of accounting.

December 31, December 31,
2019 2018
PWS-MWS Joint Venture
Revenues $ 228,300 $ 227,400
Operating<br> costs 232,500 158,700
Net<br> income (4,200 ) 68,700
Company’s<br> share of net income - 34,400
PWS-Paragon Southwest Joint Venture
Revenues $ 1,196,800 $ 216,000
Operating<br> costs 2,381,100 953,700
Net<br> loss (1,184,300 ) (737,700 )
Company’s<br> share of net income - -
June 30, June 30,
--- --- --- --- ---
2019 2018
PWS UK Joint Venture
Assets $ 671,100 $ 295,900
Liabilities 154,400 91,500
Net<br> assets 516,700 204,400
Net<br> loss 73,600 28,800
Company’s<br> share of net income - - 
| F-19 |

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NOTE11 - PAYROLL TAXES PAYABLE

In 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.

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

As of December 31, 2019, and 2018, the outstanding balance due to the IRS was $1,052,200, and $1,022,500, respectively.

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

NOTE12 – DEBT

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

December<br> 31, December<br> 31,
2019 2018
SHORT TERM NOTES
Secured short term note payable dated<br> September 13, 2017 with principal and interest due 60 days from issuance. The note requires a one-time fee in the amount of<br> $15,000 to compensate for the first two weeks of the term and each week thereafter (weeks 3-8) a fee of $1,500 shall be due<br> and owing accruing on the first day of the week. The total one-time fee paid was $24,000. A fee of 100,000 shares of restricted<br> 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<br> past the original maturity date for months 3 through 6, and a fee of 200,000 shares of restricted common stock shall be issued<br> to lender for each month or prorated for each two-week portion of any month the note is outstanding past the original maturity<br> date beginning in month 7 until paid in full. The note is secured by the future sale of CoronaLux units and a personal guarantee<br> of an officer of the Company. The penalty period for shares to be issued has been reached. For the year ended December 31,<br> 2018, the Company recorded 2,300,000 shares of its common stock as issuable under the terms of this agreement, valued at $667,800<br> and recorded as interest expense. For the quarter ended March 31, 2019, the Company recorded an additional 200,000 shares<br> of its common stock under the terms of this agreement, valued at $19,000 and recorded as interest expense. This note was converted<br> to minority investment in new subsidiary in February 2019. $ - $ 300,000 
| F-20 |

| --- | | Secured<br> short term note payable dated October 13, 2017 with principal and interest due 60 days<br> from issuance. The note requires a one-time fee in the amount of $4,000 to compensate<br> for the first two weeks of the term and each week thereafter (weeks 3-8) a fee of $400<br> shall be due and owing accruing on the first day of the week. The total one-time fee<br> paid was $6,400 and was recorded as interest. A fee of 40,000 shares of restricted<br> common stock shall be issued as a penalty for each month or prorated for any two-week<br> portion of any month the note is outstanding past the original maturity date for months<br> 3 through 6, and a fee of 80,000 shares of restricted common stock shall be issued to<br> lender for each month or prorated for each two-week portion of any month the note is<br> outstanding past the original maturity date beginning in month 7 until paid in full.<br> The note is secured by the future sale of CoronaLux units and a personal guarantee of<br> an officer of the Company. The penalty period for shares to be issued has been reached<br> for the years ended December 31, 2019 and 2018, however, the debt holder agreed to a<br> reduction and a fixed amount of penalty shares in 2018, and the Company recorded 0 shares<br> and 350,000 shares of its common stock, respectively, as issuable under the terms<br> of this agreement. The shares were valued at $0 and $137,500 for the years ended December<br> 31, 2019 and 2018, respectively, and were recorded as interest expense in the applicable<br> period. No additional shares will be issued by the Company. The reduction of penalty<br> shares was accounted for as debt extinguishment and a gain was recorded in 2018. | 100,000 | 100,000 | | --- | --- | --- | | Secured<br> short term note payable dated November 6, 2017 with principal and interest due 60 days from issuance.<br> The note requires a one-time fee in the amount of $5,000 to compensate for the first two weeks<br> of the term and each week thereafter (weeks 3-8) a fee of $400 shall be due and owing accruing<br> on the first day of the week. The total one-time fee paid was $7,400 and was recorded as interest.<br> A fee of 50,000 shares of restricted common stock shall be issued as a penalty for each month<br> or prorated for any two-week portion of any month the note is outstanding past the original maturity<br> date for months 3 through 6, and a fee of 100,000 shares of restricted common stock shall be<br> issued to lender for each month or prorated for each two-week portion of any month the note is<br> outstanding past the original maturity date beginning in month 7 until paid in full. The note<br> is secured by the future sale of CoronaLux units and a personal guarantee of an officer of the<br> Company. The penalty period for shares to be issued had not been reached as of December 31, 2017<br> but was reached as of December 31, 2018, however, the debt holder agreed to a reduced and fixed<br> amount of penalty shares during 2018. During the year ended December 31, 2018, the Company recorded<br> 350,000 shares of its common stock as issuable under the terms of this agreement. The shares<br> were valued at $153,900 recorded as interest expense. No additional shares will be issued by<br> the Company. The reduction of penalty shares was accounted for as debt extinguishment and a gain<br> was recorded in 2018. | 125,000 | 125,000 | | Note payable dated November 20, 2017,<br> interest at 30% per annum, principal and accrued interest due on or before February 28, 2018. The note is unsecured.<br> During 2018, a verbal agreement was made to allow month-to-month extension of the due date as long as interest payments were<br> made monthly. The Company made interest payments totaling $84,100 of which $37,726 of interest and principal reduction of<br> $1,900 was paid by the issuance of 140,000 shares of common stock during 2018 and the note holder has continued to extend<br> the due date. Unpaid interest at December 31, 2019 is approximately $107,200. | 298,100 | 298,100 | | Secured<br> short term note payable dated February 1, 2019 with principal and interest due 90 days from issuance.<br> The note requires a one-time fee in the amount of $15,000 to compensate for the first two weeks<br> of the term and each week thereafter (weeks 3-12) a fee of $1,500 shall be due and owing accruing<br> on the first day of the week. The total one-time fee totals $30,000 and was recorded<br> as interest. A fee of 50,000 shares of restricted common stock shall be issued as a penalty<br> for each month or prorated for any two-week portion of any month the note is outstanding past<br> the original maturity date for months 4 through 6, and a fee of 100,000 shares of restricted<br> common stock shall be issued to lender for each month or prorated for each two-week portion of<br> any month the note is outstanding past the original maturity date beginning in month 7 until<br> paid in full. The note is secured by the future sale of any and all PelleChar products and a<br> personal guarantee of an officer of the Company. The penalty period for shares to be issued has<br> been reached. For the period ended December 31, 2019, the Company recorded 650,000 shares of<br> its common stock as issuable under the terms of this agreement value at $49,200 and recorded<br> as interest expense. Unpaid one-time fees at December 31, 2019 is approximately $30,000. | 500,000 | - | | Secured short term note payable dated<br> July 2, 2019 with principal and interest due 60 days from issuance. The note requires a one-time issuance of 500,000 options,<br> which the company recorded the fair value of $37,300 as debt discount, amortized over the life of the note. The note accrues<br> interest at 12% annually. The note is past due as the date of this filing. The Company has not received notice from the lender<br> and continue to accrue interest. For the year ended December 31, 2019, the Company recorded interest expense of $6,000,<br> and $37,300 of interest related to debt discount. Unpaid interest at December 31, 2019 is approximately $6,000. | 100,000 | - |

| F-21 |

| --- | | Secured<br> short term note payable dated July 18, 2019 with principal and interest due 60 days from<br> issuance. The note requires a one-time fee in the amount of 5,000 to compensate for<br> the first two weeks of the term and each week thereafter (weeks 3-12) a fee of 500 shall<br> be due and owing accruing on the first day of the week and was recorded as interest.<br> A fee of 15,000 shares of restricted common stock shall be issued as a penalty for<br> each month or prorated for any two-week portion of any month the note is outstanding<br> past the original maturity date for months 3 through 6, and a fee of 30,000 shares of<br> restricted common stock shall be issued to lender for each month or prorated for each<br> two-week portion of any month the note is outstanding past the original maturity date<br> beginning in month 7 until paid in full. The note is secured by the future sale of any<br> and all MV Technology, LLC products. The penalty period for shares to be issued<br> has been reached. For the period ended December 31, 2019, the Company recorded 37,500<br> shares of its common stock as issuable under the terms of this agreement value at 2,300<br> and recorded as interest expense. For the year ended December 31, 2019, the Company recorded<br> interest expense of 12,300, which included the 5,000 up front fee. Unpaid interest<br> at December 31, 2019 is approximately 10,000. | 150,000 | | | - | | | --- | --- | --- | --- | --- | --- | | Secured<br> short term note payable dated October 1, 2019 with principal and interest due 6 months from<br> issuance. On April 24, 2020, this note was extended to October 15, 2020. The note requires<br> a one-time issuance of 200,000 common shares of the Company upon the maturity date of the<br> note, which the company recorded the fair value of 13,000 as debt discount, amortized over<br> the life of the note. The note accrues interest at 15% annually. For the year ended December<br> 31, 2019, the Company recorded interest expense of 9,400, and 5,400 of interest related<br> to debt discount. Unpaid interest at December 31, 2019 is approximately 5,400. | 300,000 | | | - | | | Secured short term note payable dated<br> December 14, 2019 with principal and interest due 6 months from issuance. The note requires a one-time issuance of 250,000<br> common shares of the Company upon the maturity date of the note, which the company recorded the fair value of 16,300 as debt<br> discount, amortized over the life of the note. The note accrues interest at 15% annually. For the year ended December 31,<br> 2019, the Company recorded interest expense of 3,100, and 1,400 of interest related to debt discount. Unpaid interest at<br> December 31, 2019 is approximately 3,100. | 450,000 | | | - | | | Secured short term note payable dated<br> September 18, 2019 with no stated maturity date. The note accrues interest at 6% annually for the first 18 months, and 12%<br> thereafter if not paid in full. Payments will be offset by SEER building and delivering 20 kilns for BIOCHAR to the debtor.<br> For the year ended December 31, 2019, the Company recorded interest expense of 5,200. Unpaid interest at December 31, 2019<br> is approximately 5,200. | 300,000 | | | - | | | Secured short<br> term note payable dated October 1, 2019 with no stated maturity date. The note accrues interest at 6% annually for the first<br> 18 months, and 12% thereafter if not paid in full. Payments will be offset by SEER building and delivering 20 kilns for BIOCHAR<br> to the debtor. For the year ended December 31, 2019, the Company recorded interest expense of 1,300. Unpaid interest at December<br> 31, 2019 is approximately 1,300. | 85,000 | | | - | | | Total Short-term notes | 2,408,100 | | | 823,100 | | | Unsecured<br> short term note payable<br> dated August 21, 2019 with principal and interest due 60 days from issuance. The note requires<br> a one-time fee in the amount of 500 to compensate for the first two weeks of the term and<br> each week thereafter (weeks 3-8) a fee of 50 shall be due and owing accruing on the first<br> day of the week, after which the fee is 75 per week, which is recorded as interest expense.<br> The note is from the CEO, and thus classified as a related party note. For the year ended<br> December 31, 2019, the Company recorded interest expense of 1,600, which included the 500<br> upfront fee. Unpaid interest at December 31, 2019 is approximately 1,600. | 15,000 | | | - | | | Unsecured<br> short term note payable<br> dated August 21, 2019 with principal and interest due 60 days from issuance. The note requires<br> a one-time fee in the amount of 4,150 to compensate for the first two weeks of the term and<br> each week thereafter (weeks 3-8) a fee of 415 shall be due and owing accruing on the first<br> day of the week, after which the fee is 600 per week, which is recorded as interest expense.<br> The note is from a family member of the CEO, and thus classified as a related party note.<br> For the year ended December 31, 2019, the Company recorded interest expense of 12,600, which<br> included the 4,150 up front fee. Unpaid interest at September 30, 2019 is approximately 12,600. | 125,000 | | | - | | | Unsecured<br> short term note payable<br> dated October 7, 2019 with principal and interest due 60 days from issuance. The note<br> requires a one-time fee in the amount of 500 to compensate for the first two weeks of<br> the term and each week thereafter (weeks 3-8) a fee of 50 shall be due and owing accruing<br> on the first day of the week, after which the fee is 75 per week, which is recorded<br> as interest expense. The note is from the CEO, and thus classified as a related party<br> note. For the year ended December 31, 2019, the Company recorded interest expense of<br> 1,600, which included the 500 upfront fee. Unpaid interest at December 31, 2019 is<br> approximately 1,600. | 15,000 | | | - | | | Total short-term<br> notes - related party | 155,000 | | $ | - | | | Convertible notes payable, interest<br> at 8% per annum, unpaid principal and interest maturing 3 years from note date between August 2018 and October 2019, convertible<br> 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<br> guarantee of an officer of the Company. The notes that matured in August 2018, were subsequently extended by one year to August<br> 2019, all other terms remained the same. The note that matured November 2018 was subsequently extended to May 2019 and the<br> interest rate increased to 13% per annum. No default notice has been received from the noteholders. Unpaid interest at December<br> 31, 2019 is approximately 262,200. | 1,605,000 | | $ | 1,605,000 | | | Debt discount | - | | | (1,400 | ) | | Total convertible notes | 1,605,000 | | | 1,603,600 | | | Less: current<br> portion | (1,605,000 | ) | | (1,603,600 | ) | | Long term<br> convertible notes, including debt discount | - | | $ | - | |

All values are in US Dollars.

| F-22 |

| --- |

LONG TERM NOTES AND CAPITAL LEASE OBLIGATIONS

Note<br> payable dated July 13, 2018, interest at 20% per annum, payable July 13, 2021. No monthly<br> payments are due for the first six months, commencing in month seven, principal and accrued<br> interest will be amortized and payable over the remaining 30 months. Monthly payments<br> of principal and accrued interest did not commence in 2019. The note is secured by<br> all assets of SEM and personally guaranteed by an officer of the Company. A fee of 200,000<br> shares of restricted common stock was issuable at the time of funding. During the year<br> ended December 31, 2018, the Company recorded 200,000 shares of its common stock as issuable<br> under the terms of this agreement. The shares were valued at 44,000 recorded as debt<br> discount. Unpaid interest at December 31, 2019 was approximately 153,600. 500,000 $ 500,000
Debt discount (45,700 ) (37,900 )
Note payable dated October 13, 2015,<br> interest at 8% per annum, payable in 60 monthly installments of principal and interest 4,562, due October 1, 2020. Secured<br> by real estate and other assets of SEM and guaranteed by SEER and MV. 43,700 92,000
Capital lease<br> obligations, secured by certain assets, maturing through Nov 2020 28,500 57,900
Total long-term notes and capital lease<br> obligations 526,500 612,000
Less: current<br> portion (258,100 ) (179,200 )
Long term<br> notes and capital lease obligations, long-term, including debt discount 268,400 $ 432,800

All values are in US Dollars.

Debt maturities as of December 31, 2019 are as follows:

Year<br> Ending December 31,
2019<br> (Past due) $ 1,600,500
2020 2,821,200
2021 314,100
2022 -
2023 -
Thereafter -
$ 4,735,800

Future minimum lease payments under capital leases, which include bargain purchase options, are as follows at December 31, 2019:

Year<br> Ending December 31,
2020 $ 29,300
2021 4,800
34,100
Amount representing<br> interest (5,500 )
Present value of lease payments 28,600
Less current<br> portion 23,000
Non-current portion $ 5,600 
| F-23 |

| --- |

NOTE13 – RELATED PARTY TRANSACTIONS NOT DISCLOSED ELSEWHERE

Notes payable, related parties

Notes payable, related parties and accrued interest due to certain related parties as of December 31, 2019 and 2018 are as follows:

December<br> 31,
2019 2018
Accrued<br> interest $ 27,100 $ 11,800
$ 27,100 $ 11,800

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. Operations to date have included the destruction of medical waste.

Due to the ability of the Company to rescind the shares issued at the commencement of the transaction the shares were considered contingently issuable shares and as such the 1,200,000 shares were not considered issued and outstanding at December 31, 2015. The 15% ownership interest in Sterall was considered contingently held until the conclusion of this transaction.

As of December 31, 2015, an independent appraisal was not performed, and the Amended Equity Agreement expired by its terms. The 1,200,000 shares subject to the original Equity Agreement and the Amended Equity Agreement became unrestricted in 2016 and are considered issued and outstanding. The shares were valued at $720,000 and were originally recorded as a long-term other asset pending resolution of claims by the parties involved related to the Sterall licensing agreement from September 2013, Sterall equipment deposits of $330,000 from 2014 and the equity purchase agreement noted above. As of December 31, 2016, a settlement was not reached by the parties and an impairment of the long-term asset in the amount of $720,000 was recorded by the Company. In July 2017, the Company and Sterall signed a Settlement Agreement and Mutual Release which allows Sterall to retain the one unit delivered in 2014 and another unit also on site, in exchange for the Company’s retention of the $330,000 deposit paid by Sterall and the issuance of 300,000 shares of restricted common stock.

| F-24 |

| --- |

NOTE14 - COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments

Future commitments under non-cancellable operating leases with terms longer than one year for office and warehouse space as of December 31, 2019 are as follows:

Year<br> Ending December 31,
2020 $ 127,900
2021 83,200
2022 85,700
2023 88,300
2024 90,900
Thereafter 157,600
$ 633,600

For the years ended December 31, 2019 and 2018, rent expense, including prorated charges and net of sub-lease income, was $284,700 and $329,000, respectively.

NOTE15 –DISCONTINUED OPERATIONS

2017REGS Railcar cleaning division

During the third quarter of 2017, the Company sold our fixed railcar cleaning division which includes substantially all assets and liabilities of Tactical (except for cash) as well as three locations in REGS including Illinois, Maryland and Pennsylvania for a sales price of $2.4 million of proceeds received at the close on July 31, 2017, subject to an adjustment for working capital changes, and guaranteed payments of $1.1 million over the next three years. In addition, the Company is entitled to receive up to $1.5 million based on the performance of the fixed railcar cleaning locations, also over the next three years. Accordingly, the revenue and expenses associated with the railcar cleaning locations are presented as “Discontinued operations” on our consolidated statement of operations and on our consolidated statement of cash flows for the years ended December 31, 2018. The sale was completed on July 31, 2017. For the years ended December 31, 2019 and 2018 we recorded net income from discontinued operations equal to $0 and $41,000, respectively.

| F-25 |

| --- |

Major classes of line items constituting pretax loss on discontinued operations:

For<br> the year ending
December<br> 31,
2019 2018
Services<br> revenue $ - $ -
Services<br> costs - -
General<br> and administrative expenses - -
Salaries<br> and related expenses - -
Other<br> income (expense) - 41,000
Total<br> expenses - 41,000
Operating<br> income - 41,000
Income<br> tax benefit - -
Total<br> income from discontinued operations $ - $ 41,000

2019REGS services division

During 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. Fifteen 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 years ended December 31, 2019, and corresponding 2018 results were reclassified from the reporting classification in fiscal year 2018 for comparative purposes. For the years ended December 31, 2019 and 2018 we recorded net income from discontinued operations equal to $0 and $41,000, respectively.

| F-26 |

| --- |

Major classes of line items constituting pretax loss on discontinued operations:

For<br> the year ending
December<br> 31,
2019 2018
Services<br> revenue $ 1,661,500 $ 2,946,800
Services<br> costs (2,481,400 ) (3,126,900 )
General<br> and administrative expenses (502,400 ) (412,000 )
Salaries<br> and related expenses (512,400 ) (502,100 )
Other<br> income (expense) 49,300 (40,600 )
Total<br> expenses (3,446,900 ) (4,081,600 )
Operating<br> income (1,785,400 ) (1,134,800 )
Income<br> tax benefit - -
Total<br> income from discontinued operations $ (1,785,400 ) $ (1,134,800 )

NOTE16 – EQUITY TRANSACTIONS

2019 Common Stock Transactions

During the year ended December 31, 2019, the Company recorded 887,500 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 $70,500. (See Note 12)

2018 Common Stock Transactions

During the year ended December 31, 2018, the Company sold 1,000,000 shares of $.001 par value common stock at $.30 per share in a private placement, receiving proceeds of $300,000.

During the year ended December 31, 2018, the Company issued 140,000 shares of $.001 par value common stock at $.28 per share as a non-cash payment of accrued interest on a note payable valued at approximately $39,600.

During the year ended December 31, 2018, the Company recorded 200,000 shares of $.001 par value common stock at $.22 per share as issuable as a one-time fee for debt valued at approximately $44,000.

During the year ended December 31, 2018, the Company recorded 3,510,000 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 $1.059 million. (See Note 11)

During the year ended December 31, 2018, the Company sold 250,000 shares of $.001 par value common stock at $.48 per share in a private placement, receiving proceeds of $120,000.

During the year ended December 31, 2018, the Company issued 75,000 shares of $.001 par value common stock at $.77 per share for services valued at approximately $58,000.

Warrants

In 2018, the Company recorded compensation expense of approximately $23,200 for its extension of the term of warrants set to expire in 2018.

| F-27 |

| --- |

In 2019, no warrants were issued

A summary of warrant activity for the years ended December 31, 2019 and December 31, 2018 is presented as follows:

Weighted
Weighted Average
Average Remaining
Exercise Number of Contractual
Price Warrants Term<br> in Years
Balance as of December 31, 2017 0.74 8,016,441 1.2
Expired - -
Granted - -
Exercised - -
Cancelled 0.72 (5,120,078 )
Balance as of December 31, 2018 $ 0.79 2,896,363 1.1
Expired - -
Granted - -
Exercised - -
Cancelled 0.87 (1,675,363 )
-
Balance as of December 31, 2019 $ 0.67 1,221,000 1.0
Vested and exercisable as of December<br> 31, 2019 $ 0.67 1,221,000 1.0

NOTE17 – STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLAN

Except as noted below, we do not have a qualified stock option plan, but have issued stock purchase warrants and stock options on a discretionary basis to employees, directors, service providers, private placement participants and outside consultants.

The Company utilizes ASC 718, Stock Compensation, related to accounting for share-based payments and, accordingly, records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards. The Black Scholes option pricing model was used to estimate the fair value of the options granted. This option pricing model requires a number of assumptions, of which the most significant are the expected stock price volatility and the expected option term (the amount of time from the grant date until the options are exercised or expire). The Company does not estimate forfeitures, and accounts for forfeitures as they occur. The Company estimated a volatility factor utilizing a weighted average of comparable published volatilities. The Company applied the simplified method to determine the expected term of all stock-based compensation grants. The risk-free interest rate is based on or approximates the U.S. Treasury yield curve in effect at the time of the grant.

Stock compensation expense for stock options is recognized on a straight-line basis over the vesting period of the award. The Company accounts for stock options as equity awards.

| F-28 |

| --- |

The weighted average estimated fair value of stock option grants and the weighted average assumptions that were used in calculating such values for the years ended December 31, 2019 and 2018 are as follows:

Years Ended
December<br> 31,
2019 2018
Expected volatility 98.97%<br> -121.17 % -
Expected dividend yield - -
Risk-free interest rates 1.39%<br> - 1.71 % -
Expected term (in years) 3.0<br> - 4.5 -

For the years ended December 31, 2019 and 2018, we recorded stock-based compensation awarded to employees of $7,300 and $101,400, respectively, which is included in selling, general and administrative expense in our consolidated statements of operations.

A summary of stock option activity for the year ended December 31, 2019 and 2018 is presented as follows:

Weighted<br><br> Average<br><br> Exercise<br><br> Price Number<br> of<br><br> Optioned<br><br> Shares Weighted<br><br> Average<br><br> Remaining<br><br> Contractual<br><br> Term in Years Weighted<br><br> Average<br><br> Optioned<br><br> Grant Date<br><br> Fair Value Aggregate<br><br> Intrinsic<br><br> Value
Balance as of December 31, 2017 $ 0.85 2,135,000 8.30 $ 0.17 $ -
Granted - - -
Exercised - - -
Cancelled/expired 0.92 (1,385,000 ) -
Balance as of December 31, 2018 $ 0.72 750,000 1.20 $ 0.24 $ -
Granted 0.70 1,500,000 0.03
Exercised - - -
Cancelled/expired 0.73 (675,000 ) 0.25
Balance as of December 31, 2019 $ 0.69 1,575,000 3.82 $ 0.04 $ -
Vested and exercisable as of December<br> 31, 2019 $ 0.69 825,000 3.05 $ 0.05 $ -

As of December 31, 2019, there was approximately $33,600 of total unrecognized compensation cost related to non-vested stock options that is expected to be recognized over a weighted-average period of approximately 1.67 years.

Employee Benefit Plan

The Company has a defined contribution 401(k) plan that covers substantially all employees. Additionally, at the discretion of management, the Company may make contributions to eligible participants, as defined. During the years ended December 31, 2019 and 2018, we made no contributions in each year.

NOTE18 – NET LOSS PER SHARE

Basic 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 years presented in the consolidated financial statements, all potentially dilutive securities have been excluded from the diluted share calculations as they were anti-dilutive as a result of the net losses incurred for the respective years. Accordingly, basic shares equal diluted shares for all years presented.

| F-29 |

| --- |

Potentially dilutive securities were comprised of the following:

Year<br> Ended December 31,
2019 2018
Warrants 1,221,000 8,861,400
Options 1,575,000 2,155,000
Convertible notes<br> payable, including accrued interest 3,555,200 2,339,100
6,351,200 13,355,500

NOTE19 - SEGMENT INFORMATION AND MAJOR SEGMENT CUSTOMERS

The Company currently has identified three segments as follows:

REGS Industrial<br> Cleaning
MV,<br> SEM, PelleChar Environmental<br> Solutions
PWS Solid<br> Waste

Reach has had no operations through December 31, 2019.

The Industrial Cleaning segment was discontinued effective December 31, 2019.

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

| F-30 |

| --- |

Segment information as of December 31, 2019 and 2018 and for the years then ended is as follows:

2019 Industrial Environmental Solid
Cleaning<br> (2) Solutions Waste Corporate Total
Revenue $ 1,661,500 $ 4,052,900 $ 249,900 $ - $ 5,964,300
Depreciation<br> and amortization (1) 154,100 43,300 61,400 88,200 347,000
Interest expense 47,700 11,700 1,600 539,900 600,900
Stock-based<br> compensation - - - 7,300 7,300
Net income (loss) (1,735,600 ) 903,600 (295,100 ) (1,562,100 ) (2,689,200 )
Capital expenditures<br> (cash and noncash) 5,300 3,000 - 67,100 75,400
Total assets $ 432,100 $ 1,491,900 $ 330,700 $ 807,200 $ 3,061,900
2018 Industrial Environmental Solid
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Cleaning<br> (2) Solutions Waste Corporate Total
Revenue $ 2,946,800 $ 4,900,900 $ 369,200 $ - $ 8,216,900
Depreciation<br> and amortization (1) 272,500 103,900 94,500 82,300 553,200
Interest expense 49,700 9,300 - 1,400,700 1,459,700
Stock-based<br> compensation - - - 124,600 124,600
Net income (loss) (1,055,000 ) 1,192,500 (258,400 ) (2,973,000 ) (3,093,900 )
Capital expenditures (cash and noncash) 12,900 47,900 - - 60,800
Goodwill - 227,800 - - 227,800
Total assets $ 502,200 $ 2,091,000 $ 401,300 $ 785,600 $ 3,780,100
(1) Includes<br> depreciation of property, equipment and leasehold improvement and amortization of intangibles
--- ---
(2) Included<br> in discontinued operations.

CustomerConcentrations by Segment

Industrial Cleaning

For the year ended December 31, 2019, we had two customers with sales in excess of 10% of industrial cleaning segment revenue and combined were 48% of segment revenues. For the year ended December 31, 2018, we had two customers with sales in excess of 10% of industrial cleaning segment revenue and combined were 50% of segment revenues.

Environmental Solutions

For the year end December 31, 2019, we had two customers with sales in excess of 10% of environmental solutions segment revenue for a total of 28% of segment revenues. For the year end December 31, 2018, we had two customers with sales in excess of 10% of environmental solutions segment revenue for a total of 27% of segment revenues.

NOTE20 - INCOME TAXES

As of December 31, 2019, we estimate we will have net operating loss carryforwards available to offset future federal income tax of approximately $17.4 million. These carryforwards will expire between the years 2032 through 2037. Under the Tax Reform Act of 1986, the amount of and the benefit from net operating losses that can be carried forward may be limited in certain circumstances. Events that may cause changes in our tax carryovers include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. Therefore, the amount available to offset future taxable income may be limited. We carry a deferred tax valuation allowance equal to 100% of total deferred assets. In recording this allowance, we have considered a number of factors, but chiefly, our operating losses from inception. We have concluded that a valuation allowance is required for 100% of the total deferred tax assets as it is more likely than not that the deferred tax assets will not be realized.

| F-31 |

| --- |

Deferred tax assets were comprised of the following as of December 31, 2019 and 2018:

2019 2018
Allowance for doubtful accounts $ 3,000 $ 58,000
Accrued expenses 97,000 110,000
Current deferred<br> tax asset 100,000 168,000
Intangible and fixed assets 79,000 (263,000 )
NOL carryforward 4,660,000 3,988,000
Long-term deferred<br> tax asset 4,739,000 3,725,000
Total deferred tax asset 4,839,000 3,892,000
Less valuation<br> allowance (4,839,000 ) (3,892,000 )
Net deferred<br> tax asset $ - $ -

The benefit for income taxes differed from the amount computed using the U.S. federal income tax rate of 21% and 34% for December 31, 2019 and 2018, respectively, as follows:

2019 2018
Income tax benefit $ 655,000 $ 793,000
Non-deducible items 48,000 34,000
State and other benefits included in<br> valuation 319,000 32,000
Provisional impact of the TCIA - -
Exclusion of losses of pass through<br> entity (75,000 ) (89,000 )
Change in valuation<br> allowance (947,000 ) (770,000 )
Income tax benefit $ - $ -

NOTE21 – ENVIRONMENTAL COMPLIANCE

Significant 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”).

Pursuant 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. We believe we are in substantial compliance with all federal, state and local laws regulating our business.

NOTE22 – LITIGATION

In 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 December 31, 2019 and December 31, 2018 was $150,000 and $150,000, respectively.

In October 2018, a complaint was filed by a contractor company of a mutual customer of MV, a subsidiary of the Company. The complaint claimed that in 2016 MV delivered defective and poorly manufactured treatment vessels to the project and that due to such delivery, the contractor company sustained $251,160 in damages in the effort to repair the error. At the same time, the mutual customer had an outstanding balance due MV of $224,000 and MV had an outstanding balance due the vessel manufacturer of $82,600. In the first quarter of 2019, the parties reached a settlement whereby MV paid the contractor company a total of $160,000, the joint customer paid the outstanding invoice amounts of $224,000 and the vessel manufacturer waived the $82,600 due from MV for the faultily manufactured vessel. The case was dismissed with prejudiced and the matter is closed.

NOTE23 - SUBSEQUENT EVENTS

On March 16, 2020, the Company borrowed $100,000 under a short-term note. 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.

On March 17, 2020, the Company borrowed $50,000 under a short-term note. The note bears annual simple interest, at a rate of 14%, and matures on March 16, 2021. The Lender receives a one-time option grant to purchase 30,000 shares of the Company’s common stock for $0.10 per share for a period of 3 years from grant date, on the maturity date, on the maturity date, with payment of principal and interest.

On April 29, 2020, the Company borrowed $10,000 under a short-term note, from a related party. The note bears annual interest, at a rate of 8%, and matures on June 1, 2020. This note was subsequently paid on May 11, 2020.

On May 4, 2020, the Company borrowed $140,000 under a short-term note, from a related party. The note bears annual interest, at a rate of 15%, and matures on the earlier of i) June 3, 2020, or ii) the Company’s receipt of the Payroll Protection Loan (“PPP), secured by the SBA connected to the COVID-19 epidemic. This note was subsequently paid on May 11, 2020.

Under the Small Business Administration (“SBA”), the Company has applied for the PPP program. These loans are forgiven if used for payroll, payroll benefits including health insurance, and rent and utilities which is limited based on 25% of the loan, all of which is paid within 8 weeks of the approval of the loans. At the time of this filing, we have been approved for $590,300 in loans through SEER and our subsidiaries, and $503,400 has been funded. At the time of this filing, we do not anticipate having unqualified expenses which would not be forgiven. If we do have a portion of these loans not being forgiven, the unqualified portion is to be repaid over 2 years, accruing interest at 1% per annum.

The Company owes two notes to a lender, that accrue penalty shares until the notes are paid in full. The aggregate principal of these notes is $650,000, and shares accrued after year ended December 31, 2019, to the date of this filing total 482,500 shares.

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(b)Financial Statement Schedules:

Schedule II - Valuation and Qualifying Accounts
For the year ended Balance at beginning of period Charged to costs and expenses Charged to other accounts Deductions Balance at end of period
--- --- --- --- --- --- --- --- --- --- ---
December 31, 2018
Valuation<br> allowance on deferred tax assets $ 3,520,000 $ 372,000 $ - $ - $ 3,892,000
December 31, 2019
Valuation allowance<br> on deferred tax assets $ 3,892,000 $ 947,000 $ - $ - $ 4,839,000

All other financial schedules are not required under the related instructions or are inapplicable and therefore have been omitted.

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