Birchtech Corp
For the period ended Sep 30, 2024. Filed Nov 14, 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.
Sep 30, 2024 · Filed Nov 14, 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 2024-06-30; filed 2024-08-12.
0001477932-24-004672
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001477932-24-007130
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 66 previous paragraphs and 78 current paragraphs.
45 unchanged; 21 reworded; 12 added; 0 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 (12)
Current report
Effective as of October 8, 2024, we entered into agreement with one of the utilities and an affiliated entity named as defendants in the patent infringement lawsuit commenced by us in Arizona action (the “Arizona Action”). Such agreement provides such parties and their affiliates with a non-exclusive license to certain of our patents related to our two-part Sorbent Enhancement Additive (SEA®) process for use in connection with a certain designated coal-fired power plant operated by such utility. The agreement includes a one-time license fee and provides the Company with a right of first refusal for certain of such utility’s product supply for mercury emissions capture at such designated power plant. Such lawsuit will continue against the other non-affiliated defendants named in the Arizona Action.
Current report
On August 26 and 27, 2024, the Company repaid AC Midwest the remaining principal of $3,154,931 on the New Note together with accrued interest of $119,964. As a result, the only remaining debt obligation under the Debt Restructuring Agreement is the profit participation as described below.
Current report
Effective on October 17, 2024, as part of our rebranding, Midwest Energy Emissions Corp. changed its corporate name to Birchtech, Inc. pursuant to a certificate of amendment to its certificate of incorporation filed with the State of Delaware, and on October 17, 2024 our common stock commenced trading under the ticker symbol “BCHT”.
Current report
On October 9, 2024, we received conditional approval to list our shares of common stock on the Toronto Stock Exchange (“TSX”) and graduate from the TSX Venture Exchange ( “TSXV”) to the TSX. The listing is subject to our fulfilling certain requirements of the TSX in accordance with the terms of the conditional approval letter. On November 12, 2024, our shares commenced trading on the TSX under the ticker symbol “BCHT”.
Current report
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Current report
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Current report
Item 4. Controls and Procedures.
Current report
Evaluation of Disclosure Controls and Procedures
Current report
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Based on that evaluation, our principal executive officer and principal financial officer concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were not effective as a result of material weaknesses in our internal control over financial reporting. The ineffectiveness of our disclosure controls and procedures was due to the following material weaknesses in our internal control over financial reporting: (i) lack of a sufficient complement of personnel commensurate with the Company’s reporting requirements; and (ii) insufficient written documentation or training of our internal control policies and procedures which provide staff with guidance or framework for accounting and disclosing financial transactions.
Current report
Despite the existence of the material weaknesses above, we believe that the consolidated financial statements contained in this Form 10-Q fairly present our financial position, results of operations and cash flows as of and for the periods presented in all material respects.
Current report
Changes in Internal Control over Financial Reporting
Current report
There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15 (f) under the Exchange Act) during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Reworded paragraphs (21)
Previous wording
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 wording
Unless indicated otherwise, references in this report to the “Company,” “we,” “us,” or “our” refer collectively to Birchtech Corp. (formerly Midwest Energy Emissions Corp.) and its consolidated subsidiaries.
Previous wording
Pursuant to the Debt Restructuring Agreement, on February 27, 2024, we (i) paid AC Midwest $9,040,000 as a reduction in the outstanding principal balance of the Unsecured Note, (ii) issued to AC Midwest a new unsecured replacement note representing the remaining outstanding principal balance of the Unsecured Note in the principal amount of $4,114,931 (the “New Note”), and (iii) paid AC Midwest $275,626 representing the remaining principal balance under the Secured Note of $271,686 plus interest of $3,939. In addition, within 30 days, we would either facilitate the private sale to third parties of certain shares of common stock of the Company held by AC Midwest for a purchase price of no less than $960,000, which amount shall be applied as a credit against the principal balance due on the New Note dollar for dollar, or pay AC Midwest $960,000 toward the principal balance due on the New Note. The private sale of shares for the purchase price of $960,000 was completed on March 11, 2024. Any remaining principal balance on the New Note shall be due August 27, 2024 (the “Maturity Date”), which is six months from February 27, 2024. Until repaid in full, the New Note shall accrue interest at a rate equal to SOFR plus 2.0% per annum. The New Note completely replaces and supersedes the Unsecured Note, which shall be of no further force and effect.
Current wording
Pursuant to the Debt Restructuring Agreement, on February 27, 2024, we (i) paid AC Midwest $9,040,000 as a reduction in the outstanding principal balance of the Unsecured Note, (ii) issued to AC Midwest a new unsecured replacement note representing the remaining outstanding principal balance of the Unsecured Note in the principal amount of $4,114,931 (the “New Note”), and (iii) paid AC Midwest $275,626 representing the remaining principal balance under the Secured Note of $271,686 plus interest of $3,939. In addition, within 30 days, we would either facilitate the private sale to third parties of certain shares of common stock of the Company held by AC Midwest for a purchase price of no less than $960,000, which amount shall be applied as a credit against the principal balance due on the New Note dollar for dollar, or pay AC Midwest $960,000 toward the principal balance due on the New Note. The private sale of shares for the purchase price of $960,000 was completed on March 11, 2024. Any remaining principal balance on the New Note shall be due August 27, 2024 (the “Maturity Date”), which is six months from February 27, 2024. Until repaid in full, the New Note shall accrue interest at a rate equal to SOFR plus 2.0% per annum. The New Note completely replaced and superseded the Unsecured Note, which shall be of no further force and effect.
Previous wording
In addition, pursuant to the Debt Restructuring Agreement, AC Midwest shall be entitled to a profit participation preference equal to $7,900,000 (the “Restructured Profit Share”). The Restructured Profit Share is “non-recourse” and shall only be paid from Net Litigation Proceeds (as defined in the Debt Restructuring Agreement) from claims relating to our intellectual property. Following the receipt of any Net Litigation Proceeds, we shall prepay any remaining principal balance of the New Note and pay the Restructured Profit Share in an amount equal to 75.0% of such Net Litigation Proceeds until the New Note and Restructured Profit Share have been paid in full. The Restructured Profit Share completely replaces and supersedes the terms and conditions of the Profit Share in the amount of $17,654,931 provided for in the Unsecured Note Financing Agreement, which shall be of no further force and effect. The Restructured Profit Share, if not paid in full on or before the Maturity Date, shall remain subject to the terms of the Debt Restructuring Agreement.
Current wording
Pursuant to the Debt Restructuring Agreement, AC Midwest shall be entitled to a profit participation preference equal to $7,900,000 (the “Restructured Profit Share”). The Restructured Profit Share is “non-recourse” and shall only be paid from Net Litigation Proceeds (as defined in the Debt Restructuring Agreement) from claims relating to our intellectual property. Following the receipt of any Net Litigation Proceeds, we shall prepay any remaining principal balance of the New Note and pay the Restructured Profit Share in an amount equal to 75.0% of such Net Litigation Proceeds until the New Note and Restructured Profit Share have been paid in full. The Restructured Profit Share completely replaces and supersedes the terms and conditions of the Profit Share in the amount of $17,654,931 provided for in the Unsecured Note Financing Agreement, which shall be of no further force and effect. The Restructured Profit Share, if not paid in full on or before the Maturity Date, shall remain subject to the terms of the Debt Restructuring Agreement.
Previous 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.
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. In October 2024, we announced the opening of two new laboratories, located in Grand Forks, North Dakota, and in State College, Pennsylvania to support these efforts.
Previous 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.
Current wording
We generated revenues of approximately $5,237,000 and $6,747,000 for the three months ended September 30, 2024 and 2023, respectively, and approximately $12,155,000 and $13,872,000 for the nine months ended September 30, 2024 and 2023, respectively. Such revenues were primarily derived from sorbent product sales which were approximately $5,092,000 and $6,700,000 for the three months ended September 30, 2024 and 2023, respectively and approximately $11,479,000 and $13,104,000 for the nine months ended September 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 nine months ended September 30, 2024.
Previous 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.
Current wording
Licensing revenues were approximately $133,100 and $52,500 for the three months ended September 30, 2024 and 2023, respectively and approximately $588,800 and $671,000 for the nine months ended September 30, 2024 and 2023, respectively. Licensing revenues have decreased in the first nine months of 2024 compared to the prior year period.
Previous 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.
Current wording
Equipment sales and other revenues for the three months ended September 30, 2024 and 2023 were approximately $2,700 and $(4,800), respectively and approximately $60,300 and $15,800 for the nine months ended September 30, 2024 and 2023, respectively. These slightly increased from the prior year but they still only make up an immaterial portion of the Company’s revenues.
Previous 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.
Current wording
Total costs and expenses were approximately $6,001,000 and $7,575,000 during the three months ended September 30, 2024 and 2023, respectively and approximately $21,638,000 and $16,911,000 during the nine months ended September 30, 2024 and 2023, respectively. The decrease in total costs and expenses for three months ended September 30, 2024 is primarily attributable to a gain on change in fair value of profit share offset by an increase in selling, general and administrative expenses. The increase in total costs and expenses for the nine months ended September 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 $2,301,000 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.
Current wording
Cost of sales were approximately $3,642,000 and $4,472,000 for the three months ended September 30, 2024 and 2023, respectively, and approximately $8,056,386 and $9,118,000 during the nine months ended September 30, 2024 and 2023, respectively. This decrease in cost of sales of approximately $1,062,000 for nine months is primarily attributable to a decrease in sales offset by a decrease in the Company’s cost of carbon in the first nine months of 2024 compared to the prior year period.
Previous 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.
Current wording
Selling, general and administrative expenses were approximately $2,702,000 and $2,459,000 for the three months ended September 30, 2024 and 2023, respectively. Selling, general and administrative expenses were approximately $10,863,000 and $6,160,000 for the nine months ended September 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 nine months of 2024 compared to the prior year periods.
Previous 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:
Current wording
Interest expense related to the financing of capital was approximately $7,400 and $344,000 for the three months ended September 30, 2024 and 2023, respectively and $259,000 and $1,019,000 for the nine months ended September 30, 2024 and 2023. The breakdown of interest expense for the three and nine months ended September 30, 2024 and 2023 is as follows:
Previous 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).
Current wording
Gain (Loss) on change in fair value of profit share liability and unsecured note was approximately $282,000 and ($300,000) for the three months ended September 30, 2024 and 2023, respectively and ($2,672,000) and ($613,000) for the nine months ended September 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 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.
Current wording
For the three months ended September 30, 2024, we had a net loss of approximately $470,000 compared to a net loss of approximately $828,000 for the three months ended September 30, 2023. For the nine months ended September 30, 2024, we had a net loss of approximately $9,189,000 compared to a net loss of approximately $3,039,000 for the nine months ended September 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 $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.
Current wording
We had approximately $4,394,000 in cash on our balance sheet at September 30, 2024 compared to approximately $20,940,000 at December 31, 2023. Total current assets were approximately $7,591,000 and total current liabilities were approximately $3,987,000 at September 30, 2024, resulting in working capital of approximately $3,604,000. 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 $72.0 million at September 30, 2024 compared to approximately $62.8 million at December 31, 2023. Additionally, we had a net loss in the amount of approximately $9,189,000 and cash used in operating activities of approximately $3,275,000 for the nine months ended September 30, 2024.
Previous 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.
Current wording
Total assets were approximately $11,655,000 at September 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 $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.
Current wording
Total liabilities were approximately $9,741,000 at September 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 the unsecured note.
Previous 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.
Current wording
Net cash used by operating activities was approximately $3,275,000 for the nine months ended September 30, 2024 compared to net cash provided by operating activities of approximately $786,000 for the nine months ended September 30, 2023.
Previous 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.
Current wording
Net cash used in investing activities for the nine months ended September 30, 2024 was approximately $702,000. During the nine months ended September 30, 2024, we paid $702,000 to purchase a truck and lab equipment. There was $3,000 net cash used in investing activities for the nine months ended September 30, 2023.
Previous 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.
Current wording
Net cash utilized in financing activities was approximately $12,569,000 for the nine months ended September 30, 2024 compared to approximately $210,000 provided by financing activities for the nine months ended September 30, 2023. During the nine months ended September 30, 2024, we repaid $272,000 of the AC Midwest secured note and $12,194,931 of the AC Midwest unsecured note. During the nine months ended September 30, 2024 and 2023, we received approximately $17,500 and $210,000 respectively, 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 six months ended June 30, 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 nine months ended September 30, 2024.
Previous 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:
Current wording
The following table shows our reconciliation of net loss to adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023, respectively: