Midwest Energy Emissions Corp
For the period ended Jun 30, 2024. Filed Aug 12, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 12, 2024
BCHT$1.15+11.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001477932-24-003003
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-12.
0001477932-24-004672
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 62 previous paragraphs and 66 current paragraphs.
41 unchanged; 20 reworded; 5 added; 1 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
Unless indicated otherwise, references in this report to the “Company,” “we,” “us,” or “our” refer collectively to Midwest Energy Emissions Corp. and its consolidated subsidiaries.
Current report
In July 2024, we commenced three patent infringement lawsuits against multiple defendants, including coal-fired power utilities, in three separate U.S. District Courts in Arizona, Iowa and Missouri. Such lawsuits claim infringement of our patent rights related to our mercury emissions reduction technologies. Named as defendants in the action filed in the U.S. District Court for the District of Arizona are Tucson Electric Power Co., San Carlos Resources, Inc., Salt River Project Agricultural Improvement and Power District, Tri-State Generation and Transmission Association, Inc., Springerville Unit 3 Holding LLC, and Springerville Unit 3 Partnership LP. Named as defendants in the action filed in the U.S. District Court for the Southern District of Iowa are Berkshire Hathaway Energy Company, MidAmerican Energy Company, PacifiCorp, Alliant Energy Corporation, Interstate Power and Light Company, and Wisconsin Power and Light Company, and named as defendants in the action filed in the U.S. District Court for the Eastern District of Missouri are Ameren Corp. and Union Electric Co. In each lawsuit, we request a trial by jury against the defendants and seek damages, costs, and legal expenses, along with a finding of willful infringement by the defendants, and an injunction prohibiting the defendants from further acts of infringement.
Current report
In April 2024, the EPA issued the first-ever national, enforceable drinking water standard, a move to protect communities from exposure to harmful per-and polyfluoroalkyl substances (PFAS), also known as “forever chemicals”. The EPA rule requires public water systems to monitor for six PFAS chemicals, giving them three years to complete the initial monitoring by 2027.
Current report
In May 2024, we announced the appointment of David Mazyck as Division Director of WE 2 C Environmental, a new division of the Company focused on PFAS removal from potable water. Dr. Mazyck will oversee the development of WE 2 C’s activated carbon technologies for the removal of PFAS for water treatment utilities.
Current report
In addition, in May 2024, we announced the appointment of Dennis Baranik as Director of National Sales. Mr. Baranik will oversee product sales and IP licensing in the Company’s core business for mercury emissions capture as well as support both product and business development for WE 2 C Environmental.
Removed paragraphs (1)
Previous report
On April 20, 2023, we received conditional approval to list our shares of common stock on the TSX Venture Exchange (the “TSX-V”). The listing was subject to our fulfilling certain requirements of the TSX-V in accordance with the terms of the conditional approval letter. On July 6, 2023, the Company received final approval from the TSX-V. The Company’s shares commenced trading on the TSX-V on July 10, 2023 under the symbol “MEEC”. The Company is listed as a Tier 1 Industrial, Technology, or Life Sciences Issuer.
Reworded paragraphs (20)
Previous wording
We continue to seek new utility customers for our technology in order for them to meet the MATS requirements as well as maintaining our contractual arrangements with our current customers. We also seek license agreements with utilities while allowing them to use our SEA® technologies without our supply of products. Since 2021, we have announced various supply contract extensions, new supply business and license agreements. We expect additional supply business and license agreements during 2024 and thereafter, including converting certain licensees to supply customers.
Current wording
We continue to seek new utility customers for our technology in order for them to meet the MATS requirements as well as maintaining our contractual arrangements with our current customers. We also seek license agreements with utilities while allowing them to use our SEA® technologies without our supply of products. Since 2021, we have announced various supply contract extensions, new supply business and license agreements. We expect additional supply business and license agreements during the remainder of 2024 and thereafter, including converting certain licensees to supply customers.
Previous wording
In addition to facilitating the private sale to third parties as described above, AC Midwest has granted the Company the exclusive right until December 31, 2024 to facilitate the sale of all or a portion of the remaining balance of the shares of common stock of the Company held by AC Midwest, which proceeds above a certain amount will be applied as a credit against the Restructured Profit Share dollar for dollar.
Current wording
In addition to facilitating the private sale to third parties as described above, AC Midwest has granted the Company the exclusive right until December 31, 2024 to facilitate the sale of all or a portion of the remaining balance of the shares of common stock of the Company held by AC Midwest, which proceeds above a certain amount will be applied as a credit against the Restructured Profit Share dollar for dollar. This has the potential to pay off the Restructured Profit Share in full although we cannot guarantee that such result will be achieved.
Previous wording
We are in the process of developing and testing other business opportunities which include the extracting and processing of rare earth elements (REEs) in North America, remediation technologies for wastewater and coal ash from coal-fired power plants, as well as drinking water treatment technologies. We believe the market for water treatment is large and significantly growing both in the United States and abroad. This expansion in water treatment and wastewater remediation will allow us to support the growing needs of the energy sector, as well as provide vital technologies for considerable environmental concerns. There can be no assurance that we will be successful in the development of these technologies.
Current wording
We are in the process of developing other business opportunities which include drinking water treatment technologies and remediation technologies for wastewater and coal ash from coal-fired power plants. We believe the market for water treatment is large and significantly growing both in the United States and abroad. This expansion in water treatment and wastewater remediation will allow us to support the growing needs of the energy sector, as well as provide vital technologies for considerable environmental concerns. There can be no assurance that we will be successful in the development of these technologies.
Previous wording
We generated revenues of approximately $3,557,000 and $3,013,000 for the three months ended March 31, 2024 and 2023, respectively. Such revenues were primarily derived from sorbent product sales which were approximately $3,084,000 and $2,516,000 for the three months ended March 31, 2024 and 2023, respectively. The increase in revenues from prior year period is primarily due to the mix of plants running in 2024 resulting in increased revenues.
Current wording
We generated revenues of approximately $3,361,000 and $4,112,000 for the three months ended June 30, 2024 and 2023, respectively, and approximately $6,918,000 and $7,124,000 for the six months ended June 30, 2024 and 2023, respectively. Such revenues were primarily derived from sorbent product sales which were approximately $3,303,000 and $3,915,000 for the three months ended June 30, 2024 and 2023, respectively and approximately $6,387,000 and $6,431,000 for the six months ended June 30, 2024 and 2023, respectively. The decrease in revenues from prior year periods is primarily due to the mix of plants running in 2024 to date resulting in decreased revenues for the three and six months ended June 30, 2024.
Previous wording
Licensing revenues were approximately $456,000 and $456,000 for the three months ended March 31, 2024 and 2023, respectively. Licensing revenues were comparable for both periods.
Current wording
Licensing revenues were approximately $Nil and $163,000 for the three months ended June 30, 2024 and 2023, respectively and approximately $456,000 and $619,000 for the six months ended June 30, 2024 and 2023, respectively. Licensing revenues have decreased in the first six months of 2024 compared to the prior year period.
Previous wording
Equipment sales and other revenues for the three months ended March 31, 2024 and 2023 were approximately $17,000 and $40,000, respectively. This decrease was primarily due to random fluctuations of these sales which make up an immaterial portion of the Company’s revenues.
Current wording
Equipment sales and other revenues for the three months ended June 30, 2024 and 2023 were approximately $46,500 and $6,900, respectively and approximately $57,550 and $20,600 for the six months ended June 30, 2024 and 2023, respectively. These were comparable to prior year and make up an immaterial portion of the Company’s revenues.
Previous wording
Total costs and expenses were approximately $6,151,000 and $4,440,000 during the three months ended March 31, 2024 and 2023, respectively. The increase in total costs and expenses for the three months ended March 31, 2024 is primarily attributable to the increase in cost of sales and general and administrative expenses.
Current wording
Total costs and expenses were approximately $9,520,000 and $4,876,000 during the three months ended June 30, 2024 and 2023, respectively and approximately $15,636,000 and $9,316,000 during the six months ended June 30, 2024 and 2023, respectively. The increase in total costs and expenses for the three and six months ended June 30, 2024 is primarily attributable to the increase in selling, general and administrative expenses and a loss on change in fair value of profit share which is a non-cash expense.
Previous wording
Cost of sales were approximately $2,113,000 and $1,995,000 for the three months ended March 31, 2024 and 2023, respectively. This increase in cost of sales of approximately $118,000 is primarily attributable to an increase in sales offset by a decrease in the Company’s cost of carbon in the first quarter compared to the prior year period.
Current wording
Cost of sales were approximately $2,301,000 and $2,651,000 for the three months ended June 30, 2024 and 2023, respectively, and approximately $4,414,000 and $4,646,000 during the six months ended June 30, 2024 and 2023, respectively. This decrease in cost of sales of approximately $232,000 for six months is primarily attributable to a decrease in sales offset by a decrease in the Company’s cost of carbon in the first six months of 2024 compared to the prior year period.
Previous wording
Selling, general and administrative expenses were approximately $3,527,000 and $1,918,000 for the three months ended March 31, 2024 and 2023, respectively. Such increase was primarily due to an increase in salaries and wages and stock-based compensation.
Current wording
Selling, general and administrative expenses were approximately $4,634,000 and $1,762,000 for the three months ended June 30, 2024 and 2023, respectively. Selling, general and administrative expenses were approximately $8,161,000 and $3,680,000 for the six months ended June 30, 2024 and 2023, respectively. Such increase was primarily due to an increase in salaries and wages, including the payment and accrual of bonus compensation and engagement of new senior personnel, along with stock-based compensation for the first six months of 2024 compared to the prior year periods.
Previous wording
Interest expense related to the financing of capital was approximately $246,000 and $336,000 for the three months ended March 31, 2024 and 2023, respectively. The breakdown of interest expense for the three months ended March 2024 and 2023 is as follows:
Current wording
Interest expense related to the financing of capital was approximately $6,000 and $339,000 for the three months ended June 30, 2024 and 2023, respectively and $252,000 and $675,000 for the six months ended June 30, 2024 and 2023. The breakdown of interest expense for the three and six months ended June 30, 2024 and 2023 is as follows:
Previous wording
Loss on change in fair value of profit share liability and unsecured note was approximately $265,000 and $191,000 for the three months ended March 31, 2024 and 2023, respectively. The change is primarily attributed to the modification of the terms of the profit share liability (see Note 7 to the condensed consolidated financial statements).
Current wording
Loss on change in fair value of profit share liability and unsecured note was approximately $2,689,000 and $123,000 for the three months ended June 30, 2024 and 2023, respectively and $2,955,000 and $314,000 for the six months ended June 30, 2024 and 2023, respectively. The change is primarily attributed to the modification of the terms of the profit share liability (see Note 7 to the unaudited condensed consolidated financial statements).
Previous wording
For the three months ended March 31, 2024, we had a net loss of approximately $2,559,000 compared to a net loss of $1,447,000 for the three months ended March 31, 2023. Such change was primarily due to the increase in selling, general and administrative expenses and an increase in the change in value of the profit share liability, offset by an increase in gross profit.
Current wording
For the three months ended June 30, 2024, we had a net loss of approximately $6,159,000 compared to a net loss of approximately $764,000 for the three months ended June 30, 2023. For the six months ended June 30, 2024, we had a net loss of approximately $8,718,000 compared to a net loss of approximately $2,211,000 for the six months ended June 30, 2023. Such change was primarily due to the increase in selling, general and administrative expenses and an increase in the change in value of the profit share liability, offset by an increase in gross profit.
Previous wording
We had approximately $11,189,000 in cash on our balance sheet at March 31, 2024 compared to approximately $20,940,000 at December 31, 2023. Total current assets were approximately $13,670,000 and total current liabilities were approximately $5,434,000 at March 31, 2024, resulting in working capital of approximately $8,236,000. This compares to total current assets of approximately $24,152,000 and total current liabilities of approximately $2,183,000 at December 31, 2023, resulting in working capital of approximately $21,969,000. Our accumulated deficit was approximately $65.4 million at March 31, 2024 compared to approximately $62.8 million at December 31, 2023. Additionally, we had a net loss in the amount of approximately $2,559,000 and cash used in operating activities of approximately $439,000 for the three months ended March 31, 2024.
Current wording
We had approximately $8,439,000 in cash on our balance sheet at June 30, 2024 compared to approximately $20,940,000 at December 31, 2023. Total current assets were approximately $11,328,000 and total current liabilities were approximately $6,498,000 at June 30, 2024, resulting in working capital of approximately $4,830,000. This compares to total current assets of approximately $24,152,000 and total current liabilities of approximately $2,183,000 at December 31, 2023, resulting in working capital of approximately $21,968,000. Our accumulated deficit was approximately $71.5 million at June 30, 2024 compared to approximately $62.8 million at December 31, 2023. Additionally, we had a net loss in the amount of approximately $8,718,000 and cash used in operating activities of approximately $3,123,000 for the six months ended June 30, 2024.
Previous wording
Total assets were approximately $17,084,000 at March 31, 2024 versus approximately $27,468,000 at December 31, 2023. The change in total assets is primarily attributable to a decrease in cash and accounts receivable.
Current wording
Total assets were approximately $14,750,000 at June 30, 2024 versus approximately $27,468,000 at December 31, 2023. The change in total assets is primarily attributable to a decrease in cash and accounts receivable.
Previous wording
Total liabilities were approximately $8,828,000 at March 31, 2024 versus approximately $28,250,000 at December 31, 2023. The decrease is primarily attributable to a decrease in outstanding debt as a result of the modification of the terms of the profit share liability, the repayment of the secured note and the repayment of a substantial portion of the unsecured note.
Current wording
Total liabilities were approximately $12,517,000 at June 30, 2024 versus approximately $28,250,000 at December 31, 2023. The decrease is primarily attributable to a decrease in outstanding debt as a result of the modification of the terms of the profit share liability, the repayment of the secured note and the repayment of a substantial portion of the unsecured note.
Previous wording
Net cash used by operating activities was approximately $439,000 for the three months ended March 31, 2024 compared to net cash provided by operating activities of approximately $778,000 for the three months ended March 31, 2023.
Current wording
Net cash used by operating activities was approximately $3,123,000 for the six months ended June 30, 2024 compared to net cash provided by operating activities of approximately $232,000 for the six months ended June 30, 2023.
Previous wording
There was no net cash provided or used in investing activities for the three months ended March 31, 2024 and March 31, 2023.
Current wording
Net cash used in investing activities for the six months ended June 30, 2024 was approximately $66,000. During the six months ended June 30, 2024, we paid $66,274 to purchase a truck. There was no net cash provided or used in investing activities for the six months ended June 30, 2023.
Previous wording
Net cash utilized in financing activities was approximately $9,312,000 for the three months ended March 31, 2024 compared to approximately $210,000 provided by financing activities for the three months ended March 31, 2023. During the three months ended March 31, 2024, we repaid $272,000 of the AC Midwest secured note and $9,040,000 of the AC Midwest unsecured note.
Current wording
Net cash utilized in financing activities was approximately $9,312,000 for the six months ended June 30, 2024 compared to approximately $210,000 provided by financing activities for the six months ended June 30, 2023. During the six months ended June 30, 2024, we repaid $272,000 of the AC Midwest secured note and $9,040,000 of the AC Midwest unsecured note. During the six months ended June 30, 2023, we received approximately $210,000 from the exercise of stock options.
Previous wording
Our critical accounting policies and estimated are discussed in our Annual Report on Form 10-K for the year ended December 31, 2023, and there have been no material changes to such policies or estimates during the three months ended March 31, 2024.
Current wording
Our critical accounting policies and estimated are discussed in our Annual Report on Form 10-K for the year ended December 31, 2023, and there have been no material changes to such policies or estimates during the six months ended June 30, 2024.
Previous wording
The following table shows our reconciliation of net loss to adjusted EBITDA for the three months ended March 31, 2024 and 2023, respectively:
Current wording
The following table shows our reconciliation of net loss to adjusted EBITDA for the three and six months ended June 30, 2024 and 2023, respectively: