SEER Reports Fourth Quarter and Full Year 2017 Financial Results

GOLDEN, CO–(Marketwired – April 17, 2018) – Strategic Environmental & Energy Resources, Inc. (SEER) (OTCQB: SENR), a provider of environmental, renewable fuels and industrial waste stream management services, reported financial results for its fourth quarter and full year ended December 31, 2017.

As previously announced, as part of SEER’s strategic shift to a dedicated environmental technology company, SEER completed the sale of its railcar cleaning division, Tactical Cleaning Company, on July 31, 2017. Under the requirements of GAAP, the operations of the railcar cleaning division are included as assets and liabilities held for sale in the consolidated balance sheets at December 31st, 2016 and as discontinued operations in the consolidated statements of operations for the year ended December 31st, 2017 and 2016. The following highlights our financial results from continuing operations for Q4 2017 and 2016.

Fourth Quarter and Full Year 2017 Financial Highlights

  • Total revenue in Q4 2017 was $1.8 million versus $1.6 million in Q4 2016, with the full year 2017 revenue at $8.4 million versus $7.7 million in 2016.
  • Q4 2017 net revenue was $0.5 million in Industrial Cleaning (REGS), $1.0 million in Environmental Technology Solutions (MV/SEM) and $0.3 million in Solid Waste (Paragon Waste Solutions).
  • Full year 2017 net revenue was $2.3 million in Industrial Cleaning (REGS), $5.3 million in Environmental Technology Solutions (MV/SEM) and $0.9 million in Solid Waste (Paragon Waste Solutions).
  • Gross profit margin in Q4 2017 was -18.0% vs. -2.5% in Q4 2016, with FY 2017 gross profit margin at 10.8% vs 16.5% in FY 2016.
  • GAAP net loss attributable to SEER was $2.1 million in Q4 2017 versus a net loss of $2.4 million in Q4 2016. Net loss from continuing operations was $2.5 million in Q4 2017 versus $3.0 million in Q4 2016.
  • Q4 2017 adjusted EBITDA loss was $1.6 million compared to a loss of $2.1 million in Q4 2016, with a full year 2017 adjusted EBITDA gain of $0.3 million compared to a loss of $2.7 million in 2016: a $3.0 million improvement over prior year.

2017 and Subsequent Financial and Operational Highlights by Division

  • Environmental Technology Solutions (MV & SEM)


    • Environmental Solutions 2017 revenue increased 18% to $5.3 million compared to $4.5 million in 2016. Gross profits were $1.6 million in FY 2017 compared to $1.1 million in FY 2016: a 45% improvement year over year.
    • Environmental Solutions Q4 2017 revenue was $1.0 million, flat when compared to Q4 2016 revenue of $1.0 million. Gross profits increased substantially from $16,800 in Q4 2016 to $0.3 million in Q4 2017: more than a 25% increase in gross profit margin. The higher gross margin in Q4 2017 was primarily due to an increase in recurring product sales produced in-house that generate higher margins when compared to being sourced from third parties.
  • Operational

    • MV now has more than 30 anaerobic digester systems installed and operational across the continental U.S., with its reach now extending to Hawaii and Canada. All of these installations will drive high-margin recurring revenue for years to come and minimize revenue swings quarter to quarter.
    • MV brought its 14th landfill gas project online in the fourth quarter of 2017. This facility is located in NJ and is MV’s fourth LFG project in NJ. This system treats approximately 3000 scfm and will need almost 20,000 ft3 of SEER’s proprietary BioActive Media™ (“BAM”) on an annual basis. This will contribute about $340,000 each year in recurring revenue through the continuing sale of BAM.
    • Continued targeting replacement media sales to the large, existing base of non-MV systems with its exclusive distributorship of Axens NA media, which is also expected to minimize the impact of periodic lulls in new system orders.
    • Kicked off new marketing campaign focused on placement of rental systems and already received a PO for a rental system from a landfill in Northern California. The rental system uses MV’s exclusively licensed Axens NA AxTrap granular iron oxide media. This media is specifically formulated to comply with California’s more stringent disposal requirements. The rental system will generate approximately $75,000/month of revenue between the equipment and the ongoing sales of AxTrap media. It is estimated the rental system will be in place for 6-12 months. MV is working with the landfill to design, supply and install a permanent system to keep the landfill in long-term compliance and has been contacted by another landfill operator in Central California to install a similar rental system.
    • One of 12 in the nation selected to present SEER’s patented V3RU™ technology to a panel of oil and gas industry leaders at the CCIA Oil & Gas Cleantech Challenge in September 2017 in Denver, Colorado.
    • Appointed biogas industry veteran, David Millan, President of Novo Environmental, as MV’s exclusive representative for the Southern California region.
  • Paragon Waste Solutions – CoronaLux™

    • Received final air quality permit approval from South Coast Air Quality Management District (SCAQMD) in December 2017, the first of its kind in California in recent history.
    • Completed the commissioning and start-up of Paragon Southwest Medical Waste, LLC (PSMW), a waste destruction facility in Anahuac, Texas. This facility has been audited by all three major waste collection companies in the medical waste business, and two industrial services companies. Volume has been ramping up weekly; medical waste is being processed daily and the operation is already generating revenue. This facility now represents the first-time “bypass” medical waste is being destroyed in the United States on a large-scale, commercial basis in a manner other than traditional incineration. The PSMW JV is also the first time where an established incinerator operator has idled operations in favor of adopting the CoronaLux technology.
    • Several significant customer waste agreements have been signed by the Texas facility in the first months of operation, and a number of other agreements are being negotiated.
    • The PSMW JV in Texas, is the first venture that relied on utilizing third-party funding (as opposed to being capitalized by the partner) to adequately capitalize Paragon JV projects.
    • Received air quality emission permits in Southern California, Texas, Florida (Broward and Orange counties), and North Carolina (Guilford County) and is in active negotiations with new or existing medical waste partners to set up and/or expand operations in all of these highly populated regions.
    • Completed the design of the next generation units, which incorporate all the know-how obtained from operations to date, and take advantage of new features to improve efficiency, reliability/operability, and further reduce the already low maintenance costs. These units will be introduced in the next round of manufacturing of systems expected this year.
  • REGS/Tactical (Services)

    • In July 2017, completed sale of railcar cleaning division, Tactical Cleaning Company, LLC for gross proceeds of $2.5 million with $1.0 million in guaranteed future payments and an additional potential compensation based on performance bonus awards over the next three years.
    • Secured several large, long-term projects in Colorado, Wisconsin, Pennsylvania and Ohio, with a new total service revenue opportunity of over $2.7M over the next 3-4 quarters.
    • Commencement of initial projects with a major U.S. based brewery and continuing to receive increasing volume of work from a wider variety of customers throughout the South East and Western U.S. regions.
    • Partnered with Biochar Now, (“BCN”) a leading engineer and manufacturer of high-quality and patented biochar. Received exclusive rights to perform 1) all fabrication and manufacturing of BCN kilns, and 2) all environmental/remediation services on mining reclamation and cleanup projects.
    • Debt financing imminent to establish increased and specialized manufacturing capabilities to fulfill anticipated kiln orders from BCN estimated to be approximately $2.4M in the next two quarters.
    • Received a new Master Services Agreement from one of the largest refiners in the nation.
      • Pipeline service work has increased and new services are being performed with this customer.
    • Awarded new projects in Oklahoma with one of the largest paper companies in the nation.

Management Commentary

2017 was a year of strong operational execution with several significant events that confirmed several of our technologies’ effectiveness and disruptive capabilities,” said John Combs, CEO of SEER. “We are developing a strong recurring revenue base in our Environmental Solutions segment and expect continued revenue growth as Paragon Waste Solutions expects to ramp operations in Texas, Florida and expand throughout California.

“With new high-margin revenue objectives for our service segment, we continued to focus on and grow our Environmental Solutions and Solid Waste segments. Based on results in the fourth quarter 2017, we are optimistic that in 2018 we will see additional growth in both new system installations and our recurring media sales revenue base. As our customers’ media comes due for replacement, we expect to see increasingly steady recurring, high-margin media sales, which are expected to minimize the impact of periodic lulls in large, new system orders. Second, the large installed base of non-MV systems located at landfills across the country are excellent targets for additional replacement media sales of our exclusively licensed Axens product. Third, the initial success of securing very high-margin MV rental revenue also creates a sustainable source of recurring revenue that will stabilize annual revenue and otherwise contribute appreciably to the profits of MV for years to come.

“Over the past few months, Paragon has demonstrated the strongest potential for near-term growth across SEER, as we are finally reaching full-scale commercialization of our CoronaLux™ technology in Texas. The facility commenced operations with three CoronaLux™ Model L systems, that can each destroy three tons of medical waste per day. Paragon Southwest Medical Waste has committed to purchasing up to 25 systems in total over five years as existing units are brought to capacity. Paragon has now demonstrated commercial success and is receiving industry attention and inquiries, including promising initial discussions with the major collectors and medical waste players about using the patented Paragon technology,” continued Combs.

“In Southern California, our final approval from South Coast Air Quality regulators represents a major milestone in the California waste market as Paragon and its partner, MWS, become the first and only fully permitted facility to destroy medical waste on a commercial scale in the state of California. This allows us to increase our usage of the CoronaLux™ system in Paramount from hours a day to five days a week. We estimate that the potential for up to 16 CoronaLux™ placements exist over the next several years in California alone.

“Additional projects on the same or larger scale than the one in Texas are in the planning stage. Paragon is actively in negotiations for third-party funding to create these facilities as a joint venture entity similar to both the California and Texas operations. Key features will be proximity to regional concentration of customers, where our easily deployable CoronaLux technology will have a distinct industry advantage, without the limitations and complications of large-scale, centralized incinerator sites. Because of the distribution of old, large-scale fixed incinerator sites, freight costs to customers can be almost as high as destruction costs offered by the incinerators. This opens a tremendous disruptive opportunity and a distinct market advantage for Paragon.

“Turning to REGS, we view our partnership with Biochar Now as extremely promising and a strategic part of our long-term plan to migrate from a strictly service oriented operation. In addition to the steadily growing service base, SEER holds exclusive rights for BCN’s water and soil cleanup work in the mining sector and hopes to initiate large-scale, long-term clean-up projects within this sector the next several quarters. We have investment partners intent to fund BCN’s national expansion standing by that are also proposing to fund REGS’ manufacturing expansion plans in order to fulfill BCN’s kilns needs. Initial POs from BCN are expected to exceed $2 million this year alone.

“We anticipate a strong 2018 as we now have a clear line of sight to sustainable GAAP profitability, spurred primarily by 1) the recent developments at Paragon, 2) increasing media replacements from the growing installed base of MV and non-MV systems, as well as 3) large and imminent manufacturing revenue opportunities being secured for REGS. This potential has not gone unnoticed by industry lenders and SEER anticipates it can secure very attractive debt financing that will enable SEER to restructure its debt, clean up its balance sheet, address short-term cash flow issues while its divisions ramp and generate sufficient revenue to make our operations profitable going forward. This is a turning point for SEER and we are looking forward to what we believe will be a breakout year of operational execution and shareholder value creation,” concluded Combs.

Fourth Quarter and Full Year 2017 Financial Results

Total revenue in the fourth quarter of 2017 increased to $1.8 million compared to $1.6 million in the same year-ago quarter. For the full year of 2017, total revenue was $8.4 million versus $7.7 million in 2016. The increase in both periods is primarily attributable to the increases in revenue from our Environmental Solution and Solid Waste segments, which increased from approximately $4.5 and $0.2 million respectively in 2016 to approximately $5.3 and $0.9 million respectively in 2017, an overall increase of approximately 32%.

Industrial Cleaning revenue in the fourth quarter of 2017 totaled $0.5 million versus $0.5 million in the same year-ago quarter and for the full year of 2017 totaled $2.3 million versus $2.9 million in 2016.

Environmental Solutions revenue in the fourth quarter of 2017 totaled $1.0 million versus $1.0 million in the same year-ago quarter and for the full year of 2017 totaled $5.3 million versus $4.5 million in 2016. The increase in the annual figures are primarily attributable to higher media replacement sales and higher long-term contracts.

Solid Waste (PWS) net revenue in the fourth quarter of 2017 totaled $0.3 million versus $0.1 million in the same year-ago quarter and for the full year of 2017 totaled $0.9 million versus $0.2 million in 2016. The increase in solid waste revenue in both periods is primarily attributable to sales of CoronaLux™ units during 2017 in the amount of $0.6 million.

Gross margin in the fourth quarter of 2017 decreased to -18.0%% from -2.5% in the same year-ago quarter, and for the full year of 2017 decreased to 10.8% versus 16.5% in 2016. The decrease in full year gross margin was due to a reduced utilization of equipment and manpower as a result of the reduction in service revenue.

Total operating expenses for the full year of 2017 increased to $13.2 million compared to $12.4 million in 2016. The increase in total operating expenses year-over-year can primarily be attributed to an increase in SG&A of $0.6 million, an increase in product costs of $0.2 million and an increase in solid waste costs of approx. $0.9 million, offset by a decrease of approximately $0.9 million in asset impairment and litigation settlement costs.

Net loss attributable to SEER in the fourth quarter of 2017 totaled $2.1 million or ($0.04) per diluted share, compared to net loss of $2.4 million or ($0.04) per diluted share in the same year-ago quarter. For the full year of 2017, net loss attributable to SEER totaled $2.2 million or ($0.10) per diluted share, compared to net loss of $3.9 million or ($0.07) per diluted share in 2016. The decrease in net loss for both periods was primarily due to the 9% increase in revenue in 2017 versus 2016 coupled with the gain recognized on sale of the rail operations.

Adjusted EBITDA loss in the fourth quarter of 2017 totaled $1.6 million, compared to a loss of $2.1 million in the same year-ago quarter. Adjusted EBITDA gain in 2017 totaled $0.3 million compared to an adjusted EBITDA loss of $2.7 million in 2016 (see definition and further discussion about the presentation of adjusted EBITDA, a non-GAAP term, below).

Cash at December 31, 2017, totaled $54,100 compared to $233,200 at December 31, 2016. Subsequent to the closing of the fourth quarter and full year 2017, the company expects to enter into definitive documents for $2.0 million of unsecured and minimally dilutive debt financing anticipated to be closed in late April or early May 2018.

Further details about the company’s results in 2017 are available in its Annual Report Form 10-K, accessible in the investor relations section of the company’s website at

Conference Call

Strategic Environmental & Energy Resources CEO John Combs and CFO Heidi Anderson will host the conference call, followed by a question and answer period.

Date: Tuesday, April 17, 2018
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Toll-free dial-in number: 1-800-263-0877
International dial-in number: 1-323-794-2094
Conference ID: 3645915

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact MZ Group at 1-949-491-8235.

The conference call will be broadcast live and available for replay at and via the investor relations section of the company’s website at

A replay of the conference call will be available after 7:30 p.m. Eastern time through June 17, 2018.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 3645915

Fourth Quarter and Full Year 2017 Financial Summary Tables

The following financial information should be read in conjunction with the unaudited financial statements and accompanying notes filed by the company with the Securities and Exchange Commission on April 17, 2018 in its Annual Report on Form 10-K for the period ended December 31, 2017, and which can be viewed at and in the investor relations section of the company’s website at

Use of Non-GAAP Financial Information

The Company believes that the presentation of results excluding certain items in “Modified EBITDA,” such as non-cash equity compensation charges, provides meaningful supplemental information to both management and investors, facilitating the evaluation of performance across reporting periods. The Company uses these non-GAAP measures for internal planning and reporting purposes. These non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net income or net income per share prepared in accordance with generally accepted accounting principles.

Set forth below is a reconciliation of Adjusted EBITDA to net income (loss):

    Year Ended   Three Months Ended
    12/31/2017   12/31/2016   12/31/2017   12/31/2016
Net Income (Loss) Continuing Operations   ($6,133,600)   ($5,063,100)   ($2,520,700)   ($2,970,000)
Net Income (Loss) Discontinued Operations   3,389,600   423,300   23,000   25,700
Noncontrolling Interest   545,400   753,500   430,300   530,400
Net Income (Loss) Applicable to SEER   (2,198,600)   (3,886,300)   (2,067,400)   (2,413,900)
Interest   1,425,900   331,900   213,400   76,700
Depreciation and Amortization   768,700   784,900   173,300   244,700
EBITDA, Including Noncontrolling Interest   (4,000)   (2,769,500)   (1,680,700)   (2,092,500)
Stock Based Compensation (Option Comp, Warrant Comp, Stock Issued for Services and Settlements, Warrant Extensions)   276,700   86,900   67,600   2,900
Modified EBITDA, Including Noncontrolling Interest   $272,700   ($2,682,600)   ($1,613,100)   ($2,089,600)
EBITDA, Excluding Noncontrolling Interest   ($549,400)   ($3,523,000)   ($2,111,000)   ($2,622,900)
Modified EBITDA, Excluding Noncontrolling Interest   ($272,700)   ($3,436,100)   ($2,043,400)   ($2,620,000)

About Strategic Environmental & Energy Resources, Inc.

Strategic Environmental & Energy Resources, Inc. (SEER) (OTCQB: SENR), identifies, secures, and commercializes patented and proprietary environmental clean technologies in several multibillion dollar sectors (including oil & gas, renewable fuels, and all types of waste management, both solid and gaseous) for the purpose of either destroying/minimizing hazardous waste streams more safely and at lower cost than any competitive alternative, and/or processing the waste for use as a renewable fuel for the benefit of the customers and the environment. SEER has three wholly-owned operating subsidiaries: REGS, LLC; MV Technologies, LLC and SEER Environmental Materials, LLC; and two majority-owned subsidiaries: Paragon Waste Solutions, LLC; and ReaCH4biogas (“Reach”). For more information about the Company visit:

Forward Looking Statements

This press release contains “forward-looking statements” within the meaning of various provisions of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, commonly identified by such terms as “believes,” “looking ahead,” “anticipates,” “estimates,” and other terms with similar meaning. Although the company believes that the assumptions upon which its forward-looking statements are based are reasonable, it can give no assurance that these assumptions will prove to be correct. Such forward-looking statements should not be construed as fact. Statements in this press release regarding future performance or fiscal projections, the cost effectiveness, impact and ability of the Company’s products to handle the future needs of customers are forward-looking statements. The information contained in such statements is beyond the ability of the Company to control, and in many cases the Company cannot predict what factors would cause results to differ materially from those indicated in such statements. All forward-looking statements in the press release are expressly qualified by these cautionary statements and by reference to the underlying assumptions.

ASSETS   December 31,  
Current assets:   2017     2016  
  Cash   $ 54,100     $ 233,200  
  Accounts receivable, net of allowance for doubtful accounts of $460,100 and $235,500, respectively     692,400       1,188,100  
  Notes receivable, net     184,600        
  Costs and estimated earnings in excess billings on uncompleted contracts           13,600  
  Assets held for sale           1,024,600  
  Prepaid expenses and other current assets     340,900       518,500  
    Total current assets     1,272,000       2,978,000  
Property and equipment, net     1,296,400       2,805,100  
Intangible assets, net     623,100       738,000  
Notes receivable, net of current portion     542,900        
Other assets     16,500       16,400  
TOTAL ASSETS   $ 3,750,900     $ 6,537,500  
Current liabilities:                
  Accounts payable   $ 1,436,900     $ 1,643,500  
  Accrued liabilities     1,307,600       1,381,000  
  Billings in excess of costs and estimated earnings on uncompleted contracts     227,300       1,090,800  
  Deferred revenue     304,200       188,300  
  Payroll taxes payable     997,700       993,300  
  Customer deposits     21,600       330,000  
  Liabilities held for sale           603,100  
  Current portion of notes payable and capital lease obligations     2,166,300       571,800  
  Notes payable – related parties, including accrued interest     11,800       11,800  
    Total current liabilities     6,473,400       6,813,600  
Deferred revenue, non-current     113,100       283,600  
Notes payable and capital lease obligations, net of current portion     504,300       1,751,500  
    Total liabilities     7,090,800       8,848,700  
Commitments and contingencies                
Stockholders’ Equity):                
  Preferred stock; $.001 par value; 5,000,000 shares authorized; -0- shares issued                
  Common stock; $.001 par value; 70,000,000 shares authorized; 56,528,575 and 54,525,079 shares issued, issuable** and outstanding 2017 and 2016, respectively     56,500       54,500  
  Common stock subscribed     25,000       25,000  
  Additional paid-in capital     20,790,700       19,077,600  
  Stock subscription receivable     (25,000 )     (25,000 )
  Accumulated deficit     (21,471,900 )     (19,273,500 )
    Total stockholders’ equity (deficit)     (624,700 )     (141,400 )
  Non-controlling interest     (2,715,200 )     (2,169,800 )
    Total equity (deficit)     (3,339,900 )     (2,311,200 )
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 3,750,900     $ 6,537,500  

**Includes 190,000 shares issuable at December 31, 2017 per terms of short-term note agreements.
The accompanying notes are an integral part of these consolidated financial statements.

    For the Year Ended December 31,  
    2017     2016  
  Products   $ 5,256,300     $ 4,494,700  
  Services     2,254,200       2,929,000  
  Solid waste disposal     917,500       230,200  
    Total revenue     8,428,000       7,653,900  
Operating expenses:                
  Products costs     3,636,100       3,417,000  
  Services costs     2,718,100       2,657,400  
  Solid waste disposal costs     1,150,700       315,000  
  General and administrative expenses     2,521,500       2,034,800  
  Salaries and related expenses     2,238,400       2,182,800  
  Loss on settlement     254,900          
  Other asset impairment     322,000       720,000  
  Fixed asset impairment     354,000       809,000  
  Litigation settlement           277,500  
    Total operating expenses     13,195,700       12,413,500  
Loss from operations     (4,767,700 )     (4,759,600 )
Other income (expense):                
  Interest expense net     (1,425,600 )     (324,200 )
  Gain on disposition of assets           27,800  
  Other     59,700       (22,900 )
    Total non-operating expense, net     (1,365,900 )     (319,300 )
Loss from continuing operations     (6,133,600 )     (5,078,900 )
Net income from discontinued operations     694,300       423,300  
Gain recognized on sale of rail operations     2,695,300        
Discontinued operations, net of tax     3,389,600       423,300  
Loss before earnings from equity method joint ventures     (2,744,000 )     (4,655,600 )
Income from equity method joint ventures           15,700  
Net Loss     (2,744,000 )     (4,639,900 )
Less: Loss attributable to non-controlling interest     (545,400 )     (753,500 )
Net loss attributable to SEER common stockholders   $ (2,198,600 )   $ (3,886,400 )
Net loss per share from continuing operations   $ (.11 )   $ (.08 )
Discontinued operations   $ .01     $ .01  
Net loss per share, basic and diluted   $ (.10 )   $ (.07 )
Weighted average shares outstanding – basic and diluted     55,264,804       53,951,309  
    For the Year Ended December 31,  
Cash flows from operating activities:   2017     2016  
Net loss   $ (2,744,000 )   $ (4,639,900 )
  Income from discontinued operations     3,389,600       423,300  
Net loss from continuing operations     (6,133,600 )     (5,078,900 )
Adjustments to reconcile net loss to net cash provided by operating activities:                
  Depreciation, amortization and impairment     774,800       740,700  
  Stock-based compensation expense     246,600       91,500  
  Non-cash expense for interest     1,147,000       97,100  
  Provision for doubtful accounts receivable     224,600        
  Cost of sale of equipment to joint venture     316,800        
  Settlement expense     254,900        
  Gain on disposition of asset           (25,600 )
  Impairment of assets     676,000       1,529,000  
Changes in operating assets and liabilities:                
  Accounts receivable     271,100       (397,400 )
  Costs in Excess of billings on uncompleted contracts     13,600       190,400  
  Prepaid expenses and other assets     593,800       296,900  
  Accounts payable and accrued liabilities     (279,800 )     1,282,000  
  Billings in excess of revenue on uncompleted contracts     (863,500 )     502,900  
  Customer deposits     21,600        
  Deferred revenue     (54,600 )     800  
  Payroll taxes payable     4,400       22,800  
Net cash used in operating activities     (2,786,300 )     (747,800 )
Cash flows from investing activities:                
  Purchase of property and equipment     (199,800 )     (163,700 )
  Proceeds from sale of discontinued operations, net of costs     2,510,900        
  Proceeds from the sale of property and equipment     74,300        
  Insurance proceeds           59,000  
  Purchase of intangible assets     (18,600 )     (45,100 )
  Distributions for notes receivable     (300,000 )      
Net cash used in investing activities     2,066,800       (149,800 )
Cash flows from financing activities:                
  Principal payments of notes and capital lease obligations     (1,468,000 )     (863,600 )
  Payments of related party notes payable and accrued interest           (20,000 )
  Proceeds from issuance of convertible and short-term debt     1,275,000       1,155,000  
  Proceeds from issuance of capital leases     88,800        
  Proceeds from the extension of warrants     155,500        
  Proceeds from the sale of common stock and warrants, net of expenses           454,900  
Net cash provided by financing activities     (37,500 )     726,300  
Net cash flows from discontinued operations     577,900       173,900  
Net decrease in cash     (179,100 )     2,600  
  Cash at the beginning of year     233,200       230,600  
  Cash at the end of year   $ 54,100     $ 233,200  
Supplemental disclosures of cash flow information:                
  Cash paid for income taxes            
  Cash paid for interest   $ 211,600     $ 257,500  
Supplemental disclosure of noncash financing and investing activities:                
  Financed equipment   $ 88,400     $  
  Financing of insurance premiums   $ 438,300     $ 278,600  
  Discount on convertible debt   $     $ 97,100  
  Offset accounts receivable with note payable   $     $ 68,000  

Investor Relations
MZ Group
Chris Tyson
Managing Director – MZ North America
Direct: 949-491-8235
[email protected]