Item 1. Financial Statements

 

* These numbers were derived from the audited financial statements for the year ended December 31, 2012.    See accompanying notes

 

3

* Less than $.01 per share

 

See accompanying notes

 

4

 

See accompanying notes.

 

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Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 1 - ORGANIZATION AND FINANCIAL CONDITION

Organization

Strategic Environmental & Energy Resources, Inc. (“SEER“, “we“ or the “Company“), a Nevada corporation, is a provider of industrial products and services in the environmental, energy, and rail transportation sectors.  SEER has three wholly-owned operating subsidiaries which provide industrial services to companies in the petroleum, industrial, manufacturing, and medical industries:  REGS, LLC (d/b/a Resource Environmental Group Services (“REGS“)) provides mobile cleaning services to refineries and other entities in Colorado, Wyoming, Oklahoma, Kansas and Utah and also operates a site in Utah, on behalf of another company, to treat frac and produced water resulting from oil and gas exploration;  Tactical Cleaning Company, LLC (“TCC“) provides cleaning services to railcar tankers from its sites in Colorado and Kansas; MV, LLC (“MV“), located in Colorado, designs and builds emission and odor control units for refineries, food, beverage & agricultural businesses municipalities and other corporate entities.MV also treats biogas streams, primarily from large digesters and in landfill operations, for beneficial use and renewable energy; and two majority-owned subsidiaries,   Paragon Waste Solutions, LLC (“PWS“) an operating company formed in November 2010, owned 54% by SEER (see Note 7) th at is developing specific opportunities to deploy and commercialize certain patent-pending technologies for a cold plasma oxidation process that makes possible the clean destruction of hazardous chemical and biological waste ( i.e ., hospital red bag waste) without traditional incineration with harmful emissions and BeneFuels, LLC (“BeneFuels“), formed in February 2013, is owned 85% by SEER and was formed to focus specifically on treating biogas for conversion to pipeline quality gas and/or CNG for fleet vehicles.  BeneFuels had no operations as of September 30, 2013.

In April 2013, MV Technologies, Inc (“MV“) and RCM International, LLC (“RCM“) entered into a Joint Development and Marketing Agreement to develop, implement, market and distribute certain hybrid scrubber systems that employ elements of RCM Technology and MV Technology (the “Joint Venture“). Operations to date of the Joint Venture have been limited to formation activities.

RCM shall supply, under license to MV for use in the Joint Venture only, RCM biological scrubber technology and MV shall supply, under license to RCM for use in the Joint Venture only, MV Technology, including its products marketed under the H2SPlus™ System trademark or trade name. The sale of biogas conditioning products having  both biological and chemical scrubber components by either party will be subject to a royalty of up to 17% due to the joint venture.

Paragon successfully completed the installation of its first commercial solid-waste CoronaLux™ destruction system in Broward County, Florida with a medical waste treatment company in October 2013. Paragon has entered into an exclusive licensing agreement with the customer granting it the right to install Paragon’s patent-pending systems throughout Florida. With Paragon’s assistance, the customer received in August 2013 its “Final Permit“ to install the system.  As part of the permit process, both Broward County and the State of Florida, Department of Health, mandated and directed extensive testing of the technology all of which has been completed successfully.  Paragon expects the final air quality permit from the State to be issued by the end of 2013 and then commence full commercial operations for regulated medical waste (RMW) destruction.

Principals of Consolidation

The accompanying consolidated financial statements include the accounts of SEER, its wholly-owned subsidiaries, REGS, TCC and MV and its majority-owned subsidiaries PWS and BeneFuels, since their respective acquisition or formation dates. All material intercompany accounts, transactions, and profits have been eliminated in consolidation.

Basis of presentation Unaudited Interim Financial Information

The accompanying interim condensed consolidated financial statements are unaudited. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all of the normal recurring adjustments necessary to present fairly the financial position and results of operations as of and for the periods presented. The interim results are not necessarily indicative of the results to be expected for the full year or any future period .

 

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Basis of presentation Unaudited Interim Financial Information, continued

Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC“). The Company believes that the disclosures are adequate to make the interim information presented not misleading. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Report on Form 10-12G/A filed on August 12, 2013 for the years ended December 31, 2012 and 2011.

The preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United States (U.S. GAAP) requires management to make a number of estimates and assumptions related to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period.  Significant items subject to such estimates and assumptions include the carrying amount of intangible assets; valuation allowances and reserves for receivables and inventory and deferred income taxes; revenue recognition related to contracts accounted for under the percentage of completion method; share-based compensation; and loss contingencies, including those related to litigation.  Actual results could differ from those estimates.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reclassifications

Certain amounts in September 30, 2012 consolidated financial statements have been reclassified to conform to the September 30, 2013 presentation. This reclassification had no effect on net loss, total assets, total liabilities or total stockholders’ equity, as previously reported.
 

Research and Development

Research and development costs are charged to expense as incurred.  Such expenses were $31,800, $211,600, for the three months ended September 30, 2013 and 2012, respectively and $167,600 and $218,400 for the nine months ended September 30, 2013 and 2012, respectively.

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. The current and deferred tax provision is allocated among the members of the consolidated group on the separate income tax return basis.

ASC 740 also provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Tax positions must meet a “more-likely-than-not“ recognition threshold at the effective date to be recognized. During the three months and nine months ended September 30, 2013 and 2012 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 September 30, 2013 and December 31, 2012. The Company expects no material changes to unrecognized tax positions within the next twelve months.

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Income Taxes, continued

The Company has filed federal and state tax returns through December 31, 2011 but has not filed its return for 2012.  The tax periods for the years ending December 31, 2008 through 2012 are open to examination by federal and state authorities. The Company has not been contacted by federal and state taxing authorities regarding these open tax periods although there can be no assurance they will not commence investigative procedures. Since we have had significant operating losses for the open years we do not believe that taxes owed, if any, would be material. The income tax returns for the year ended December 31, 2012 is in the process of being prepared by independent certified public accountants.

Recently issued accounting pronouncements

New Accounting Pronouncements Implemented

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.

In July 2012, the Financial Accounting Standards Board (“FASB“) issued Accounting Standards Update (“ASU“) No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, which simplifies how entities test indefinite-lived intangible assets for impairment and improves consistency in impairment testing requirements among long-lived asset categories. These amended standards permit an assessment of qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. For assets in which this assessment concludes that it is more likely than not that the fair value is more than its carrying value, these amended standards eliminate the requirement to perform quantitative impairment testing. The amended guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. Our adoption of this guidance effective January 1, 2013 did not materially impact our condensed consolidated financial statements.

In February 2013, the Financial Accounting Standards Board (“FASB“) issued new accounting guidance to update the presentation of reclassifications from comprehensive income to net income in consolidated financial statements. Under this new guidance, an entity is required to provide information about the amounts reclassified out of accumulated other comprehensive income either by the respective line items of net income or by cross-reference to other required disclosures. The new guidance does not change the requirements for reporting net income or other comprehensive income in financial statements. This guidance is effective for fiscal years beginning after December 15, 2012. We adopted this guidance effective January 1, 2013, and it did not have any effect on our consolidated financial statements

In July 2013, the FASB issued ASU No. 2013-10, Derivatives and Hedging (Topic 815): Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes , permitting entities to use the Fed Funds Effective Swap Rate as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815, in addition to the U.S. Treasury rate and the London Interbank Offered Rate (LIBOR). The amendments also remove the restriction on using different benchmark rates for similar hedges. The amendments in this ASU were effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. We adopted the amendments in this ASU effective July 17, 2013, and the initial adoption of the amendments in this ASU did not impact our condensed consolidated financial statements .

 

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STRATEGIC ENVIRONMENTAL & ENERGY RESOURCES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

 

 

Recently issued accounting pronouncements, continued

 

New Accounting Pronouncements to be Implemented

 

In March 2013, the FASB issued ASU 2013-05, “Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity,” (“ASU 2013-05”). The objective of ASU 2013-05 is to clarify the applicable guidance for the release into net income of the cumulative translation adjustment upon derecognition of a subsidiary or group of assets within a foreign entity. ASU 2013-05 is effective for annual and interim reporting periods beginning after December 15, 2013 with early adoption permitted. The Company is currently evaluating the impact that the adoption will have on the determination or reporting of its financial results.

 

New Accounting Pronouncements to be Implemented, continued

 

In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU No. 2013-11 requires that entities with an unrecognized tax benefit and a net operating loss carryforward or similar tax loss or tax credit carryforward  in the same jurisdiction as the uncertain tax position present the unrecognized tax benefit as a reduction of the deferred tax asset for the loss or tax credit carryforward rather than as a liability, when the uncertain tax position would reduce the loss or tax credit carryforward under the tax law, thereby eliminating diversity in practice regarding this presentation issue. This new guidance is effective prospectively for annual reporting periods beginning on or after December 15, 2013, although retrospective application in permitted. We are currently assessing the impact of this guidance, if any, on our condensed consolidated financial statements.

 

 

Depreciation expense and amortization of leasehold improvements was $74,500 and $59,300, respectively, for the three months ended September 30, 2013 and 2012, and was $212,000 and $183,300, respectively, for the nine months ended September 30, 2013 and 2012.

 

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

 

 

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The estimated useful lives of the intangible assets range from seven to ten years.  Amortization expense was $21,300 and $21,300 for the three months ended September 30, 2013 and 2012, respectively and was $63,800 and $63,800 for the nine months ended September 30, 2013 and 2012, respectively.  The estimated aggregate amortization expense for each of the next five years is as follows:

 

 

 

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NOTE 7– INVESTMENT IN PARAGON WASTE SOLUTIONS LLC

 

In November 2010, the Company and Black Stone Management Services, Inc. (“Black Stone”) formed PWS whereby 1,000,000 membership units were issued, the Company acquired 60% (600,000) of the membership units in PWS and Black Stone acquired 40% (400,000) of the membership units in PWS, respectively. In September 2012, the Company and Black Stone each allocated 10% of their respective membership units in PWS to two individuals, one of which is an officer of the Company and one which is a shareholder of the Company and an officer of a subsidiary. There was no value to the units at the time of the allocation.  In 2013, Blackstone exchanged 10% of their membership units in PWS with a third party consultant in exchange for equity interests in unrelated entities and 875,000 shares of the Company’s common stock.  As of September 30, 2013, the Company owns 54% of the membership units, Black Stone 26% of the membership units, a third party consultant 10% and two individuals, one of which is an officer of the Company and one who is a shareholder, each own 5% each of the membership units.

 

In August, 2011, the Company acquired certain waste destruction technology intellectual property (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 and Royalty Agreement (“Royalty Agreement”) with PWS whereby we will license to PWS the IP acquired in August 2011 (see above) in exchange for a royalty of 5% of any and all revenues generated by PWS.  The term of the agreement shall continue for a period not to exceed the life of the patent or patents filed by the Company.  Royalty payment are due 30 days after the end of every quarter as long as the agreement is in effect.  As of September 30, 2013 PWS has not generated any revenues and as such no payments are due to the Company.

 

Since its inception through September 30, 2013 we have provided approximately $879,000 in funding to PWS for operating expenses and further development and construction of a prototype commercial waste destruction unit.  Black Stone has made no capital contributions or other funding to PWS.  The intent of the operating agreement is that we will provide the funding as an advance against future earnings distributions made by PWS.

 

NOTE 8 - PAYROLL TAXES PAYABLE

 

In 2009 and 2010, REGS became delinquent for unpaid federal employer and employee payroll taxes and accrued interest and penalties related to the unpaid payroll taxes. Additionally, REGS had amounts outstanding for certain unpaid state payroll taxes and accrued interest and penalties applicable to 2012 and 2011. All interest and penalties related to the delinquent federal and state payroll taxes are included in the section labeled “other income and expenses” in the consolidated statement of operations. Additionally, the IRS has filed a notice of federal tax lien against certain of our assets to satisfy the obligation. The IRS is to release this lien if and when we pay the full amount due.

 

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In September 2011, REGS received approval from the IRS to begin paying our outstanding federal payroll tax and related interest and penalties liabilities totaling approximately $971,000, for the aforementioned years 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 is paid in full.  Through the duration of the Installment Plan, the IRS continues to charge penalties and interest at statutory rates.  If the conditions of the Installment Plan are not met, the IRS may cancel it and may demand the outstanding liability to be repaid through a levy on income, bank accounts or other assets, or by seizing certain of our assets.  Additionally, the IRS has filed a notice of federal tax lien against certain of our assets to satisfy the obligation.  The IRS is to release this lien if and when we pay the full amount due. Two of the officers’ of the Company also have liability exposure for a portion of the taxes if REGS does not pay them.

 

In May 2013, the Company filed an Offer in Compromise with the IRS to reduce its outstanding liability to $250,000.  While the Offer in Compromise is under review by the IRS, the Company requirement to pay $25,000 a month under the Installment Plan is suspended.  There can be no assurance that the Offer in Compromise will be accepted by the IRS.

 

 

NOTE 9 – DEBT

 

In June 2011, we issued an unsecured promissory note to a third party in the amount of $40,000 (the “June 2011 Note”) bearing interest at a rate of 10% per annum and a three year warrant to purchase 13,000 shares of our common stock at an exercise price of $1.00 per share.  In addition, a second note payable, to the same third party, in the amount of $25,000 plus $3,000 of accrued interest was also converted into the June 2011 Note, resulting in a new principal balance of $68,000.  Principal payments were due beginning November 2011 and the June 2011 Note is in default as of December 31, 2012, as no payments have been made to date.  We valued the warrant at $170 using the Black-Scholes model and recorded this amount as a debt discount.  The debt discount was fully amortized during 2011.

 

In December 2011, we issued a secured promissory note to a third party in the amount of $50,000 (the “December 2011 Note”) bearing interest at 18% per year, secured by certain assets in TCC and a five year warrant to purchase 25,000 shares of our common stock at an exercise price of $0.50 per share. We valued the warrant at $5,749 using the Black-Scholes model and recorded this amount as a debt discount.  The December 2011 Note was paid in full in June 2012.

 

The Company entered into a loan agreement evidenced by a convertible secured promissory note with Advanced Technology Materials, Inc. on February 14, 2012.  The amount of the convertible secured promissory note is $225,000.  The loan agreement allows for an additional $225,000 to be borrowed upon meeting certain defined milestones and stipulates the Company provide the lenders, among other things, a security agreement which also identifies the collateral, a registration rights agreement granting piggy-back registration rights to the lender, a development agreement and use the loan proceeds for projects and transactions contemplated in the term sheet and development agreement.  The note bears interest at 5 percent per annum.  The entire loan and/or unpaid balance of the loan and accrued interest can be converted into the Company’s common stock at $0.50 per share at any time at the option of the holder.  However, if the lender does not convert any of the principal or interest into common stock then $112,500 of principal plus accrued interest will be due on demand on or after December 31, 2014.

 

STRATEGIC ENVIRONMENTAL & ENERGY RESOURCES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

 

NOTE 9 – DEBT, continued

 

Debt as of September 30, 2013 and December 31, 2012, was comprised of the following:

 

		2013				2012
June 2011 Note  (See above)		$	68,000			$	68,000
Note payable dated February 2012, interest at 5% per annum, $112,500 is due December 31, 2014, convertible in whole or in part to common stock at $.50 per share.			225,000				225,000
Promissory note dated April 2008, secured by certain of our assets, bearing interest at 6.65% per annum; 60 monthly payments of $14,276, maturing April 2013.			—				70,200
Promissory note dated December 2009, unsecured, bearing interest at 6% per annum, six monthly payments ranging from $10,000 to $25,000 commencing February 2010, balloon payment for outstanding balance due July 2010. The promissory note is in default as of December 31, 2012 and 2011.			104,200				104,200
Promissory note dated November 2010, unsecured, bearing interest at 8% per annum, balloon payment for outstanding balance due October 2011. The promissory note is in default as of December 31, 2012 and 2011.			25,000				25,000
Convertible note, unsecured, dated August 2013, bearing interest at 8% per annum, due December 31, 2013 (See Note 11)			50,000				—
Note payble for purchase of certain equipment, twenty-four  payments of $4,583, due August 15, 2015. The note payable is secured by the certain equipment.			110,000				—
Capital lease obligations, secured by certain assets, maturing September 2011 through August 2016			78,900				109,000
Debt discount			(3,000	)
Total notes payable and capital lease obligation			658,100				601,400
Less:  current portion, including debt discount			(314,800	)			(319,800	)
Notes payable and capital lease obligation, long-term		$	343,300			$	281,600

 

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NOTE 10 – RELATED PARTY TRANSACTIONS

 

Notes payable, related parties

 

In February 2011, we executed a secured, promissory note with one of our officers in the amount of $50,000 (the “2011 Officer Note”).  The 2011 Officer Note is secured by certain assets in MV and bears interest at 8% per annum and was originally due on August 15, 2011.  It is currently due on demand.  As additional consideration, we issued to the officer a five-year warrant to purchase 25,000 shares of our common stock at an exercise price of $0.60 per share.  We valued the warrant at approximately $6,000 using the Black-Scholes model and recorded this amount as a debt discount.  The debt discount was fully amortized during 2011.

 

Notes payable, related parties and accrued interest due to certain related parties as of September 30, 2013 and December 31, 2012 are as follows:

 

 

We believe the stated interest rates on the related party notes payable represent reasonable market rates based on the note payable arrangements we have executed with third parties.

 

 

In December 2012, we initiated a new sale of units in a private placement.  Each unit was priced at $50,000 and was comprised of 200,000 shares and 100,000 warrants.  Each warrant is exercisable for a period of three years at an exercise price of $.50 per share. For the nine months ended September 30, 2013 we sold 15.7 units (3,141,200 shares) for proceeds of $785,300.

 

For the nine months ended September 30, 2013 we issued 100,000 shares of common stock valued at $60,000 ($.60 per share) for services.

 

For the nine months ended September 30, 2013 we issued 14,461 shares of common stock upon the cashless exercise of 45,900 common stock options.

 

For the nine months ended September 30, 2013, we issued 550,000 common stock options exercisable at prices ranging from $.70 to $.715.  The options vest over three years and are exercisable for four years from the date of issuance.

 

In August 2013, the Company received $50,000 in return for issuing convertible debt. The convertible debt bears interest at 8% per annum and is due December 31, 2013.  As an inducement to enter into the convertible debt, the convertible note holder received 5,000 shares of common stock and warrants to purchase 5,000 shares of common stock at $.75 per share exercisable for a period of 3 years. The convertible debt also contained a conversion feature whereby the payee has the option to convert the note and any accrued and unpaid interest to common stock at a rate of $.75 per share. The proceeds from the convertible debt was allocated to the common stock and warrants based on their relative fair values and the intrinsic value on the embedded conversion feature resulted in an increase in additional paid in capital and a debt discount of $4,900.

 

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The fair value of the warrants was approximately $1,500 using the Black-Scholes Option Pricing Model and the fair value of the common stock was approximately $3,400, based on cash selling price.  The convertible note and accrued interest was repaid in October 2013.

 

Non-controlling Interest

 

The non-controlling interest presented in our condensed consolidated financial statements reflects a 46% non-controlling equity interest in PWS (see Note 7).  Net loss attributable to non-controlling interest, as reported on our condensed consolidated statements of operations, represents the net loss of PWS attributable to the non-controlling equity interest. The non-controlling interest is reflected within stockholders’ equity on the condensed consolidated balance sheet.

 

 

The Company had sales from operations to two customers for the three months and nine months ended September 30, 2013 that represented approximately 53% and 41%, respectively, of our total sales. We had sales from operations to three customers for the three months September 30, 2012 that represented approximately 49% of our sales and we had sales from operations to one customer for the nine months September 30, 2012 that represented approximately 24% of our sales. The concentration of the Company’s business with a relatively small number of customers may expose us to a material adverse effect if one or more of these large customers were to experience financial difficulty or were to cease being customer for non-financial related issues.

 

NOTE 13 – 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.

 

Potentially dilutive securities were comprised of the following:

 

 

NOTE 14 - ENVIRONMENTAL MATTERS 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”).

 

Pursuant to the EPA’s authorization of their 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. 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.

 

 

NOTE 15 - SEGMENT INFORMATION AND MAJOR CUSTOMERS

 

The Company currently has identified four segments as follows:

 

	REGS	Industrial Cleaning
	TCC	Rail Car Cleaning
	MV	Environmental Solutions
	PWS	Solid Waste

                                      

BeneFuels is not currently operating but when operations commence would be part of the Environmental Solutions segment.

 

The composition of our reportable segments is consistent with that used by our chief operating decision maker to evaluate performance and allocate resources.  All of our operations are located in the U.S.  We have allocated corporate selling, general and administrative expenses, interest expense, depreciation and amortization and stock-based compensation to the segments based on a percentage of a segment’s revenue to total consolidated revenue.  All intercompany transactions have been eliminated.

 

Segment information for the three months ended September 30, 2013 and 2012 is as follows:

 

(1)	Includes depreciation of property, equipment and leasehold improvement and amortization of intangibles

 

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