Executive Summary

Q3 2020 revenue decreased 2.4% year over year to $0.917M, and fell 13.1% sequentially from Q2; gross profit turned to a loss of $(0.017)M and operating loss widened to $(1.184)M, while GAAP net income was $5.018M driven by a large non-cash derivative liability revaluation .
Nine-month 2020 revenue rose 14% to $3.065M with gross profit up 20% to $0.348M; however, Q3 standalone showed weaker execution and negative gross margin, highlighting near-term project timing and mix headwinds .
Management cited “a boost in booked orders late in the third quarter, including approximately $450,000 in jobs in progress which have not yet been recognized,” supporting near-term backlog, but provided no formal financial guidance ranges .
No earnings call transcript or S&P Global consensus estimates were available; the quarter’s stock reaction catalyst would likely center on the headline GAAP profit from derivative revaluation vs. underlying operational weakness and booked order commentary .

What Went Well and What Went Wrong

Bookings momentum: “We saw a boost in booked orders late in the third quarter, including approximately $450,000 in jobs in progress which have not yet been recognized.” — CEO Riggs Eckelberry .
Nine-month growth: Revenue up 14% to $3.065M and gross profit up 20% to $0.348M vs 2019; operating losses narrowed 5% over nine months, reflecting cost discipline .
Strategic execution: COO Tom Marchesello noted progress at Progressive Water Treatment and Modular Water Systems, indicating operational traction despite COVID-19 disruptions .

Q3 margin compression: Q3 gross profit swung to a loss of $(0.017)M (vs $0.081M prior year), with operating loss widening to $(1.184)M (vs $(0.965)M prior year), signaling project timing/mix and cost pressure in the quarter .
Sequential revenue decline: Revenue fell to $0.917M from $1.055M in Q2 2020; gross profit fell to $(0.017)M from $0.152M, indicating weaker execution vs prior quarter .
Liquidity and going concern: Management continues to flag substantial doubt about going concern; working capital deficit remains large at $(12.536)M despite cash improving to $0.758M .

Metric	Q3 2019	Q2 2020	Q3 2020
Revenue ($USD)	$939,468	$1,055,000	$917,320
Gross Profit ($USD)	$80,640	$152,271	$(17,388)
Loss from Operations ($USD)	$(964,655)	$(748,030)	$(1,183,722)
Net Income ($USD)	$(1,220,875)	$(6,233,838)	$5,018,166
EPS (Basic, $)	$(0.54)	$(0.66)	$0.27
EPS (Diluted, $)	$(0.03)	$(0.06)	$0.03
Gross Profit Margin (%)	8.6% (80,640/939,468)	14.4% (152,271/1,055,000)	-1.9% (-17,388/917,320)

Segment reporting: Company operates a single segment .

Revenue mix (9M):

KPIs and balance items:

KPI	Q3 2020
Booked orders not yet recognized	~$450,000
Contract Liabilities	$454,681
Contract Assets	$407
Cash	$757,945
Derivative Liabilities (fair value)	$8,012,677
Working Capital Deficit	$(12,535,889)

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2020	None provided	None provided	Maintained: No formal guidance
Margins	FY2020	None provided	None provided	Maintained: No formal guidance
OpEx	FY2020	None provided	None provided	Maintained: No formal guidance
Tax Rate / OI&E / Dividends	FY2020	None provided	None provided	Maintained: No formal guidance

No Q3 2020 earnings call transcript available.

Topic	Previous Mentions (Q-2)	Previous Mentions (Q-1)	Current Period (Q3)	Trend
COVID-19 operations	“Went all-out to ensure COVID-19 work restrictions didn’t impact our business… It appears we succeeded.” — CEO	Not available	Stable operations with bookings boost late Q3	Improving bookings; execution mixed
Order pipeline/backlog	Operational streamlining paying off; revenue and operating loss improvements in 1H	Not available	~$450k jobs in progress not yet recognized	Strengthening backlog
Margins/Execution	Q2 gross profit $0.152M; loss from ops $(0.748)M	Not available	Q3 gross loss $(0.017)M; loss from ops $(1.184)M	Weaker in Q3
Liquidity/Capital	PPP $345k; EIDL $150k; preferred raises	Not available	Cash $0.758M; working capital deficit $(12.536)M; continued raises	Slight improvement; risk remains
Derivative liabilities	Large non-cash swings impacting GAAP results	Not available	GAAP net income driven by derivative revaluation	Persistent volatility
Legal/regulatory	Multiple merchant cash advance/usury actions, TROs	Not available	Additional actions and motions in Oct/Nov	Ongoing litigation

“Thanks to the hard work of our Texas-based team, we are continuing to outpace 2019… we saw a boost in booked orders late in the third quarter, including approximately $450,000 in jobs in progress which have not yet been recognized.” — Riggs Eckelberry, CEO .
“I’m pleased with the pace of new business on Progressive Water Treatment and Modular Water Systems. Our team efforts are paying off.” — Tom Marchesello, COO .
On Q3 GAAP profitability: the increase in net income was “primarily the result of a decrease in other expenses associated with the net change in derivative instruments… inputs are subject to significant changes from period to period,” creating material fluctuations .

No Q3 2020 earnings call transcript was available; therefore, no Q&A details could be reviewed.

Wall Street consensus (S&P Global) for Q3 2020 revenue and EPS was unavailable at the time of request due to a provider limit error. Values retrieved from S&P Global were unavailable.

Where estimates may need to adjust:

Given negative gross margin and sequential revenue decline in Q3, while management flagged ~$450k of booked but unrecognized work, sell-side models (if any) would likely lower near-term margin assumptions and shift revenue recognition timing into Q4/Q1, while excluding non-cash derivative impacts from normalized EPS.

Underlying operations were soft in Q3: sequential revenue down 13% and gross margin negative despite nine-month growth; monitor conversion of the ~$450k booked orders into recognized revenue in Q4/Q1 .
GAAP net income was driven by non-cash derivative liability revaluation; use operating loss and cash flow, not GAAP EPS, to assess performance quality .
Liquidity improved modestly (cash $0.758M), but working capital deficit remains substantial; continued reliance on preferred equity and SBA programs underscores financing risk .
Revenue mix shows growth in component sales (+52% YTD) and steady equipment contracts; margin consistency will depend on project mix and execution .
Legal overhang persists (merchant cash advance usury actions/TROs); factor potential legal costs and uncertainty into risk assessment .
No formal guidance provided; near-term narrative hinges on backlog conversion and cost controls, not headline GAAP profitability .
Trading implication: expect volatility tied to derivative revaluation headlines vs. operational metrics; focus on sequential revenue/margin recovery and backlog realization to gauge sustainable fundamentals .