5 unchanged sentences
Consolidated Financial Statements
−Removed: Report of Independent Registered Public Accounting Firm – Marcum LLP (PCAOB ID 688)
−Removed: Report of Independent Registered Public Accounting Firm – Rotenberg Meril Solomon Bertiger & Guttilla, P.C.
+Added: Report of Independent Registered Public Accounting Firm – Rosenberg Rich Baker Berman, P.A.
(PCAOB ID 89 )
+Added: Report of Independent Registered Public Accounting Firm – Marcum LLP (PCAOB ID 688)
Consolidated Balance Sheets
3 unchanged sentences
Notes to Consolidated Financial Statements
−Removed: To the Stockholders and Board of Directors of
+Added: To the Board of Directors and Stockholders of
Midwest Energy Emissions Corp.
−Removed: Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheet of Midwest Energy Emissions Corp.
−Removed: and Subsidiary (the “Company”) as of December 31, 2022, the related consolidated statements of operations, stockholders’ deficit and cash flows for year ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).
−Removed: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
−Removed: Basis for Opinion
+Added: O pinion on the Financial Statements
+Added: We have audited the accompanying consolidated balance sheet of Midwest Energy Emissions Corp (the Company) as of December 31, 2023, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the financial statements).
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
+Added: The consolidated financial statements as of and for the year ended December 31, 2022, were audited by another auditor.
+Added: Their auditor’s report, dated May 12, 2023, contained an unqualified opinion on those financial statements.
+Added: B asis for Opinion
These financial statements are the responsibility of the Company’s management.
2 unchanged sentences
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audi t in accordance with the standards of the PCAOB.
+Added: We conducted our audit in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
6 unchanged sentences
We believe that our audit provides a reasonable basis for our opinion.
−Removed: Critical Audit Matters
+Added: C ritical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:
1 unchanged sentence
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
−Removed: Valuation of Profit Share Liability – Refer to Notes 2 and 9 to the financial statements
−Removed: Critical Audit Matter Description
−Removed: In connection with the Unsecured Note disclosed in Note 9 to the financial statements, the Company shall pay the principal outstanding, as well as a profit participation preference (the “profit share liability”).
−Removed: The Company calculates the fair value of the profit share liability every quarter utilizing management estimates.
+Added: V aluation of Profit Share Liability
+Added: D escription of the Matter
+Added: As of December 31, 2023, the Company recorded a profit share liability of $13.8 million.
+Added: As discussed in Note 7 to the financial statements, the Company entered into a profit participation preference (the “profit share liability”) with AC Midwest Energy LLC as part of its Unsecured Note Financing Agreement.
+Added: The Company calculates the fair value of the profit share liability on a quarterly basis utilizing management estimates.
The fair value of the profit share liability is calculated using a discounted cash flow model based on estimated future cash payments.
The fair value of the profit share liability is determined on a Level 3 measurement.
−Removed: The fair value of the profit share liability fluctuates over time based on management estimates.
−Removed: As of December 31, 2022, the fair value of the profit share liability was approximately $3.6 million.
Inherent in the valuation of Level 3 financial instruments are certain significant judgments and estimates related to forecasted cash flows.
−Removed: Changes in these assumptions can significantly impact the valuation of the profit share liability, and the gain or loss on the change in fair value that is recorded.
+Added: Changes in these assumptions can significantly impact the valuation of the profit share liability and the gain or loss on change in fair value that is recorded.
This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s forecasted cash flows.
−Removed: Accordingly, we believe that auditing the fair value of the profit share liability is a critical audit matter.
−Removed: How the Critical Audit Matter Was Addressed in the Audit
−Removed: The primary procedures we performed to address this critical audit matter included:
−Removed: Obtaining an understanding of the Company’s process to determine the fair value of the profit share liability;
−Removed: Obtaining and reading the Unsecured Note Agreement and evaluated management’s assessment of the terms which included an analysis of valuation of the profit share liability;
−Removed: Evaluating the reasonableness of management’s sales, costs and expenses forecast by comparing the forecast to historical sales and cost and expense data, historical profit margins and trends;
−Removed: Utilizing our valuation professionals to assist in (i) assessing the appropriateness of the valuation methodology and (ii) evaluating the reasonableness of the discount rate;
−Removed: Performing sensitivity analyses to evaluate the impact that changes in the significant assumptions would have on the fair value of the profit share liability;
−Removed: Testing the mathematical accuracy of the profit share liability calculation.
−Removed: The outcome of the audit procedures resulted in determining that the fair value of the profit share liability recorded by management is reasonable.
−Removed: /s/ Marcum LLP
−Removed: We have served as the Company’s auditor since 2018 (such date takes into account the acquisition Rotenberg Meril Solomon Bertiger & Guttilla, P.C.
−Removed: by Marcum LLP effective February 1, 2022).
−Removed: Saddle Brook, NJ
+Added: H ow We Addressed the Critical Audit Matter in Our Audit
+Added: To test the profit share liability calculation as of December 31, 2023, we performed the following procedures among others, by which we:
+Added: Obtained an understanding of the Company’s internal controls and the process to determine the fair value of the profit share liability.
+Added: Obtained and reviewed the Unsecured Note Agreement and evaluated management’s assessment of the terms of the agreement.
+Added: Evaluated the reasonableness of management’s cash flow forecast by comparing the forecast to historical data and trends and current events influencing expected future cash flows, including the timing of expected cash flows.
+Added: Utilized our internal valuation specialist to assist in the assessment of the appropriateness of the valuation methodology and the reasonableness of the discount rate applied, including consideration of conditions affecting market rates.
+Added: Performed sensitivity analyses to evaluate the potential impact of fluctuations in the underlying assumptions of the fair value of the profit share liability.
+Added: Tested the clerical accuracy of the profit share liability calculation.
+Added: /s/ Rosenberg Rich Baker Berman, P.A.
+Added: We have served as the Company’s auditor since 2023.
+Added: Somerset, New Jersey
+Added: April 16, 2024
Report of Independent Registered Public Accounting Firm
−Removed: To the Board of Directors and Stockholders of
+Added: To the Stockholders and Board of Directors of
Midwest Energy Emissions Corp.
1 unchanged sentence
We have audited the accompanying consolidated balance sheet of Midwest Energy Emissions Corp.
−Removed: and Subsidiary (the “Company”) as of December 31, 2021, and the related consolidated statements of operations, stockholders’ deficit and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”).
+Added: (the “Company”) as of December 31, 2022, and the related consolidated statements of operations, stockholders’ deficit and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
1 unchanged sentence
These financial statements are the responsibility of the Company's management.
−Removed: Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
+Added: Our responsibility is to express an opinion on the Company's financial statements based on our audit.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
+Added: We conducted our audi t in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
4 unchanged sentences
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
−Removed: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audits provide a reasonable basis for our opinion.
−Removed: Critical Audit Matter
−Removed: The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:
−Removed: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements.
−Removed: The communication of critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.
−Removed: Valuation of Profit Share Liability – Refer to Notes 2 and 9 to the financial statements
−Removed: Critical Audit Matter Description
−Removed: In connection with the Unsecured Note disclosed in Note 9 to the financial statements, the Company shall pay the principal outstanding, as well as a profit participation preference (the “profit share liability”).
−Removed: The Company calculates the fair value of the profit share liability every quarter utilizing management estimates.
−Removed: The fair value of the profit share liability is calculated using a discounted cash flow model based on estimated future cash payments.
−Removed: The fair value of the profit share liability is determined on a Level 3 measurement.
−Removed: The fair value of the profit share liability fluctuates over time based on management estimates.
−Removed: As of December 31, 2021, the fair value of the profit share liability was approximately $2.8 million.
−Removed: Inherent in the valuation of Level 3 financial instruments are certain significant judgments and estimates related to forecasted cash flows.
−Removed: Changes in these assumptions can significantly impact the valuation of the profit share liability, and the gain or loss on the change in fair value that is recorded.
−Removed: This required a high degree of auditor judgment and an increased extent of effort, when performing audit procedures to evaluate the reasonableness of management’s forecasted cash flows.
−Removed: Accordingly, we believe that auditing the fair value of the profit share liability is a critical audit matter.
−Removed: How the Critical Audit Matter Was Addressed in the Audit
−Removed: The primary procedures we performed to address this critical audit matter included:
−Removed: Obtaining an understanding of the Company’s process to determine the fair value of the profit share liability;
−Removed: Obtaining and reading the Unsecured Note Agreement and evaluated management’s assessment of the terms which included an analysis of valuation of the profit share liability;
−Removed: Evaluating the reasonableness of management’s sales, costs and expenses forecast by comparing the forecast to historical sales and cost and expense data, historical profit margins and trends;
−Removed: Utilizing our valuation professionals to assist in (i) assessing the appropriateness of the valuation methodology and (ii) evaluating the reasonableness of the discount rate;
−Removed: Performing sensitivity analyses to evaluate the impact that changes in the significant assumptions would have on the fair value of the profit share liability;
−Removed: Testing the mathematical accuracy of the profit share liability calculation.
−Removed: The outcome of the audit procedures resulted in determining that the fair value of the profit share liability recorded by management is reasonable.
−Removed: /s/ Rotenberg Meril Solomon Bertiger & Guttilla, P.C.
−Removed: We have served as the Company's auditor from 2020 to 2022.
−Removed: Saddle Brook, New Jersey
−Removed: April 5, 2022
+Added: Our audi t also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
+Added: We believe that our audit provide s a reasonable basis for our opinion.
+Added: /s/ Marcum LLP
+Added: We have served as the Company’s auditor from 2018 (such date takes into account the acquisition Rotenberg Meril Solomon Bertiger & Guttilla, P.C.
+Added: by Marcum LLP effective February 1, 2022) to September 11, 2023.
+Added: Saddle Brook, NJ
MIDWEST ENERGY EMISSIONS CORP.
3 unchanged sentences
Accounts receivable
−Removed: Prepaid expenses and other current assets (related party of $ 0 and $ 70,000 )
+Added: Prepaid expenses and other assets
Total current assets
3 unchanged sentences
Intellectual property, net
−Removed: LIABILITIES AND STOCKHOLDERS’ DEFICIT
+Added: LIABILITIES AND STOCKHOLDERS’ EQUITY ( DEFICIT)
Current liabilities
−Removed: Accounts payable and accrued expenses (related party of $ 25,000 and $ 206,554 )
−Removed: Current portion of equipment notes payable
+Added: Accounts payable and accrued expenses (related party $ 107,454 and $ 25,000 at December 31, 2023 and December 31, 2022, respectively)
+Added: Income tax payable
Current portion of operating lease liability
1 unchanged sentence
Accrued salaries
−Removed: Secured note payable – related party
−Removed: Unsecured note payable, net of discount and issuance costs – related party
Total current liabilities
8 unchanged sentences
2,000,000 shares authorized, no shares issued
−Removed: Common stock;
−Removed: $ 0.001 par value;
−Removed: 150,000,000 shares authorized;
−Removed: and 93,087,796 and 89,115,951 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively
+Added: Common stock, $ 0.001 par value;
+Added: 150,000,000 shares authorized 94,360,107 and 93,087,796 shares issued and outstanding as of December 31, 2023 and December 31, 2022 respectively.
Additional paid-in capital
4 unchanged sentences
( 7,416,859 )
−Removed: ( 10,239,476 )
Total liabilities and stockholders’ deficit
1 unchanged sentence
MIDWEST ENERGY EMISSIONS CORP.
−Removed: AND SUBSIDIARY
+Added: AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
−Removed: FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
−Removed: Costs and expenses:
Cost of sales
+Added: Operating expenses:
+Added: Impairment loss
Selling, general and administrative expenses (related party of $554,410 and $300,000)
+Added: Total operating expenses
+Added: Operating (loss) income
+Added: ( 8,658,472 )
+Added: Other income (expense)
+Added: Income from legal claims
Interest expense (related party of $1,360,623 and $1,570,446)
−Removed: Loss on investment
−Removed: Gain on extinguishment of debt
+Added: ( 1,362,401 )
+Added: ( 1,570,446 )
Loss on change in fair value of profit share
−Removed: Total costs and expenses
−Removed: Loss before provision for income taxes
( 11,209,677 )
+Added: Loss on investment
+Added: Total other income (expense)
( 2,467,463 )
−Removed: Provision for income taxes
+Added: Income (loss) before provision for income taxes
( 1,563,476 )
+Added: Provision for income taxes
+Added: Net income (loss)
$ ( 1,581,476 )
−Removed: Net income (loss) per common share - basic and diluted:
−Removed: Weighted average common shares outstanding – basic and diluted
+Added: Basic & Diluted income (loss) per share:
+Added: Basic net income (loss) per share
+Added: Diluted net income (loss) per share
+Added: Weighted average common shares outstanding:
See accompanying notes to these consolidated financial statements.
1 unchanged sentence
AND SUBSIDIARIES
−Removed: CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
−Removed: FOR THE YEAR ENDED DECEMBER 31, 2022 AND 2021
+Added: CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
Year Ended December 31, 2023
4 unchanged sentences
Stock issued for cashless exercise of options
−Removed: Stock issued for consulting services
−Removed: Issuance of stock for compensation
−Removed: Capital contribution for gain on extinguishment of secured note payable – related party
−Removed: Capital contribution for gain on extinguishment of unsecured note payable – related party
−Removed: Issuance of stock for exercise of options
−Removed: ( 1,581,476 )
−Removed: ( 1,581,476 )
+Added: Stock issued for cash exercise of options
Balance December 31, 2023
1 unchanged sentence
$ ( 782,897 )
+Added: MIDWEST ENERGY EMISSIONS CORP.
+Added: AND SUBSIDIARIES
+Added: CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
Year Ended December 31, 2022
2 unchanged sentences
$ ( 10,239,476 )
−Removed: Stock issued for interest payable on convertible notes
−Removed: Stock issued for conversion of convertible notes
−Removed: Exercise of warrants
−Removed: Stock issued for consulting services
−Removed: Exercise of stock options
Share based compensation expense
−Removed: Cashless exercise of stock options
+Added: Stock issued for cashless exercise of options
+Added: Stock issued for consulting services
+Added: Issuance of stock for compensation
+Added: Capital contribution for gain on extinguishment of secured note payable – related party
+Added: Capital contribution for gain on extinguishment of unsecured note payable – related party
+Added: Issuance of stock for exercise of options
( 1,581,476 )
7 unchanged sentences
CONSOLIDATED STATEMENTS OF CASH FLOWS
−Removed: FOR THE YEAR ENDED DECEMBER 31, 2022 AND 2021
For the year Ended
1 unchanged sentence
Cash flows from operating activities
−Removed: $ ( 1,581,476 )
+Added: Net income (loss)
$ ( 1,581,476 )
−Removed: Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
+Added: Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation – amortization of prepaid services
−Removed: Stock issued for interest expense
Stock-based compensation
−Removed: Stock issued for consulting services
Amortization of discount of notes payable
3 unchanged sentences
Depreciation expense
−Removed: Gain on forgiveness of debt
+Added: Impairment loss
Loss on change in fair value of profit share
Changes in operating assets and liabilities
−Removed: (Decrease) Increase in accounts receivable
+Added: Accounts receivable
( 1,762,554 )
−Removed: Decrease (Increase) in inventory
−Removed: Increase in prepaid expenses and other assets
−Removed: Decrease in security deposits
−Removed: Decrease in accrued salaries
−Removed: Increase in accounts payable and accrued liabilities
−Removed: Decrease in operating lease liability
+Added: Prepaid expenses and other assets
+Added: Accrued salaries
+Added: Accounts payable and accrued liabilities
+Added: Operating lease liability
Net cash provided by operating activities
3 unchanged sentences
Cash flows from financing activities
−Removed: Payment of convertible note
−Removed: Payments of notes payable
−Removed: Payments of equipment notes payable
−Removed: Proceeds from exercise of warrants
Proceeds from exercise of stock options
−Removed: Proceeds from the issuance of notes payable
+Added: Payments of equipment notes payable
Net cash provided by financing activities
6 unchanged sentences
Common stock issued for prepaid services
−Removed: Common stock issued for conversion of convertible notes
−Removed: Common stock issued for interest payable
Common stock issued for consulting services
3 unchanged sentences
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: December 31, 2023
Note 1 - Organization
10 unchanged sentences
As such, as of December 31, 2022, the Company wrote off the assets for these entities and recorded a $ 95,500 loss.
−Removed: Note 2 - Summary of Significant Accounting Policies
+Added: Note 2 - Liquidity and Financial Condition
+Added: Under ASC 205-40, Presentation of Financial Statements—Going Concern , the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued.
+Added: As required by ASC 205-40, this evaluation shall initially not take into consideration the potential mitigating effects of plans that have not been fully implemented as of the date the financial statements are issued.
+Added: The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern and realization of assets and satisfaction of liabilities in the normal course of business and do not include any adjustments that might result from the outcome of any uncertainties related to our going concern assessment.
+Added: As reflected in the consolidated financial statements, the Company had approximately $ 21 million in cash at December 31, 2023.
+Added: In addition, the Company had cash provided by operating activities of $ 19 million for the year ended December 31, 2023, had working capital of $ 22 million and an accumulated deficit of $ 63 million at December 31, 2023.
+Added: The accompanying consolidated financial statements as of December 31, 2023 have been prepared assuming the Company will continue as a going concern.
+Added: On October 28, 2022, the Company’s principal lender agreed to extend the maturity date of all of its existing secured and unsecured debt in the principal amount of $ 13.4 million from October 31, 2022 to August 25, 2025 (see Note 7 - Related Party ).
+Added: As a result, such liabilities have been classified as long-term liabilities in the accompanying consolidated financial statements as of December 31, 2023.
+Added: Based upon such extension of the maturity date of such secured and unsecured debt, the Company’s current cash position and revenues from operations, management believes substantial doubt regarding the Company’s ability to continue as a going concern has been mitigated.
+Added: The Company believes it will have sufficient working capital to fund operations for at least the next twelve months from the date of issuance of these financial statements.
+Added: Note 3 - Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
10 unchanged sentences
Actual results could differ from those estimates.
+Added: Property and Equipment
+Added: Property and equipment are stated at cost.
+Added: When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings.
+Added: For consolidated financial statement purposes, equipment is recorded at cost and depreciated using the straight-line method over their estimated useful lives of 2 to 5 years.
+Added: Leasehold improvements are recorded at cost and depreciated using the straight-line method over the life of the lease.
+Added: Expenditures for repairs and maintenance which do not materially extend the useful lives of property and equipment are charged to operations.
+Added: Management reviews the carrying value of our property and equipment for impairment on an annual basis.
+Added: Intellectual Property
+Added: Intellectual property is recorded at cost and amortized over its estimated useful life of 15 years.
+Added: Management reviews intellectual property for impairment when events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable.
+Added: In the event that impairment indicators exist, a further analysis is performed and if the sum of the expected undiscounted future cash flows resulting from the use of the asset or asset group is less than the carrying amount of the asset or asset group, an impairment loss equal to the excess of the asset or asset group’s carrying value over its fair value is recorded.
+Added: Management considers historical experience and all available information at the time the estimates of future cash flows are made, however, the actual cash values that could be realized may differ from those that are estimated.
Recoverability of Long-Lived and Intangible Assets
2 unchanged sentences
The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows.
−Removed: Should impairment in value be indicated, the carrying value of the long-lived and/or intangible assets would be adjusted, based on estimates of future discounted cash flows.
−Removed: The Company evaluated the recoverability of the carrying value of the Company’s property and equipment, right of use asset and intellectual property.
−Removed: No impairment charges were recognized for the year ended December 31, 2022 and 2021.
+Added: Should impairment in value be indicated, the carrying value of the long-lived and/or intangible assets would be adjusted, based on estimates of future undiscounted cash flows.
+Added: The Company has evaluated the recoverability of the carrying value of the Company’s property and equipment, right of use asset and intellectual property.
+Added: After completing the assessment of property and equipment for impairment as of December 31, 2023, the Company recorded an impairment expense related to property and equipment of $ 219,707 which is included in Impairment loss in the Company’s consolidated statements of operations and comprehensive income (loss).
+Added: The expense was primarily related to the impairment of construction in process costs where management determined that the undiscounted future cash flows were not sufficient to recover the carrying value of these assets over the estimated useful life.
+Added: No impairment charges were recognized for the year ended December 31, 2022.
+Added: Stock-Based Compensation
+Added: We account for stock-based compensation awards in accordance with the provisions of ASC 718, Compensation-Stock Compensation, which requires equity-based compensation, be reflected in the consolidated financial statements over the period of service which is typically the vesting period based on the estimated fair value of the awards.
Fair Value of Financial Instruments
7 unchanged sentences
The Company’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.
−Removed: Cash and profit share liability were the only asset and liability measured at fair value on a recurring basis by the Company at December 31, 2022 and December 31, 2021.
−Removed: Cash is considered to be Level 1 and profit share liability is considered to be Level 3.
+Added: Profit share liability was the only item measured at fair value on a recurring basis by the Company at December 31, 2023 and December 31, 2022.
+Added: Profit share liability is considered to be Level 3.
Financial instruments include cash, accounts receivable, accounts payable, and short-term debt.
The carrying amounts of these financial instruments approximated fair value at December 31, 2023 and December 31, 2022 due to their short-term maturities.
−Removed: The fair value of the promissory notes payable at December 31, 2022 and December 31, 2021 approximated the carrying amount as the notes were recently issued at interest rates prevailing in the market and interest rates as of December 31, 2022 and December 31, 2021.
−Removed: The fair value of the promissory notes payable was determined on a Level 2 measurement.
−Removed: Discounts on issued debt, as well as debt issuance costs, are amortized over the term of the individual promissory notes.
+Added: The fair value of the notes payable at December 31, 2023 and December 31, 2022 approximated the carrying amount as the notes were recently issued at interest rates prevailing in the market and interest rates as of December 31, 2023 and December 31, 2022.
+Added: The fair value of the notes payable was determined on a Level 2 measurement.
+Added: Discounts on issued debt, as well as debt issuance costs, are amortized over the term of the individual notes.
The fair value of the profit share liability at December 31, 2023 and December 31, 2022 was calculated using a discounted cash flow model based on estimated future cash payments.
28 unchanged sentences
Disaggregation of Revenue
−Removed: The Company generated revenue for the year ended December 31, 2022 and 2021 by (i) delivering product to its commercial customers, (ii) completing and commissioning equipment projects at commercial customer sites and (iii) performing demonstrations of its technology at customers with the intent of entering into long term supply agreements based on the performance of the Company’s products during the demonstrations and (iv) licensing its technology to customers.
+Added: The Company generated revenue for the years ended December 31, 2023 and 2022 by (i) delivering product to its commercial customers, (ii) completing and commissioning equipment projects at commercial customer sites and (iii) performing demonstrations of its technology at customers with the intent of entering into long term supply agreements based on the performance of the Company’s products during the demonstrations and (iv) licensing its technology to customers.
Revenue for product sales is recognized at the point of time in which the customer obtains control of the product, at the time title passes to the customer upon shipment or delivery of the product based on the applicable shipping terms.
1 unchanged sentence
Revenue for demonstrations and consulting services is recognized when performance obligations contained in the contract have been completed, typically the completion of necessary field work and the delivery of any required analysis per the terms of the agreement.
−Removed: The following table presents sales by operating segment disaggregated based on the type of product for the year ended December 31, 2022 and 2021.
+Added: The following table presents sales by operating segment disaggregated based on the type of product for the years ended December 31, 2023 and 2022.
All sales were in the United States.
3 unchanged sentences
Equipment revenue
−Removed: Accounts receivable and allowance for doubtful accounts
−Removed: Accounts receivable are presented net of an allowance for doubtful accounts.
−Removed: The Company maintains allowances for doubtful accounts for estimated losses.
+Added: Accounts receivable and allowance for credit losses
+Added: Accounts receivable are presented net of an allowance for credit losses.
+Added: The Company maintains allowances for credit losses.
The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances.
1 unchanged sentence
Accounts are written off after exhaustive efforts at collection.
−Removed: Management believed that the accounts receivable were fully collectable and no allowance for doubtful accounts was deemed to be required on its accounts receivable at December 31, 2022.
+Added: Management believed that the accounts receivable were fully collectable and no allowance for credit losses was deemed to be required on its accounts receivable at December 31, 2023.
The Company historically has not experienced significant uncollectible accounts receivable.
−Removed: As of December 31, 2022 and 2021, the Company’s allowance for doubtful accounts was $ 0 .
+Added: As of December 31, 2023 and December 31, 2022, the Company’s allowance for doubtful accounts was $ 0 .
The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, Income Taxes .
5 unchanged sentences
For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.
−Removed: There were no unrecognized tax benefits as of December 31, 2022 and December 31, 2021.
+Added: There were no unrecognized tax benefits as of December 31, 2023 and 2022.
The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
3 unchanged sentences
Management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
−Removed: Basic and Diluted Loss Per Common Share
−Removed: Basic net loss per common share is computed using the weighted average number of common shares outstanding.
−Removed: There were no dilutive potential common shares as of December 31, 2022 and 2021, because the Company incurred a net loss and basic and diluted losses per common share are the same.
+Added: Basic and Diluted Income (Loss) Per Common Share
+Added: Income per share – basic is calculated by dividing net income by the weighted average number of shares of stock outstanding during the year, including shares issuable without additional consideration.
+Added: Income per share – assuming dilution is calculated by dividing net income by the weighted average number of shares outstanding during the year adjusted for the effect of dilutive potential shares from options and warrants calculated using the treasury stock method and the if-converted method for preferred stock.
+Added: There are 3,280,702 dilutive stock options and no dilutive warrants for the year ended December 31, 2023 as the Company reported net income for the period.
+Added: There were no dilutive potential common shares for year ended December 31, 2022, because the Company incurred a net loss and basic and diluted losses per common share are the same.
+Added: We calculate basic earnings per share by dividing net income by the weighted-average number of $5,904,013 common shares outstanding during the reporting period.
+Added: Diluted earnings per share reflects the effects of potentially dilutive securities.
+Added: The summary of the basic and diluted earnings per share calculations for the years ended December 31, 2023 and 2022:
+Added: Net Income (Loss)
+Added: $ ( 1,581,476 )
+Added: Weighted-average shares outstanding
+Added: Net Income (Loss)
+Added: $ ( 1,581,476 )
+Added: Weighted-average shares outstanding
+Added: Effect of diluted securities – stock options
+Added: Weighted-average shares used in the calculation of diluted earnings per share
+Added: Diluted earnings (loss) per share
+Added: Total common stock equivalents excluded from dilutive loss per share are as follows:
Stock Options
−Removed: Total common stock equivalents excluded from basic and dilutive loss per share
+Added: Total common stock equivalents excluded from dilutive loss per share
Concentration of Credit Risk
Financial instruments that subject the Company to credit risk consist of cash and equivalents on deposit with financial institutions and accounts receivable.
−Removed: The Company’s cash as of December 31, 2022 and December 31, 2021 is maintained at high-quality financial institutions and has not incurred any losses to date.
+Added: The Company’s cash as of December 31, 2023 and 2022 is maintained at high-quality financial institutions and has not incurred any losses to date.
Customer and Supplier Concentration
−Removed: For the year ended December 31, 2022, four customers represented 21 %, 16 %, 13 % and 11 % of the Company’s revenues, and for the year ended December 31, 2021, four customers represented 15 %, 13 %, 12 % and 12 % of the Company’s revenues.
+Added: For the year ended December 31, 2023, three customers represented 28 %, 23 %, and 11 % of the Company’s revenues, and for the year ended December 31, 2022, four customers represented 21 %, 16 %, 13 % and 11 % of the Company’s revenues.
At December 31, 2023, four customers represented 43 %, 13 %, 11 % and 10 % of the Company’s accounts receivable, and at December 31, 2022, four customers represented 24 %, 18 %, 16 % and 10 % of the Company’s accounts receivable.
For the year ended December 31, 2023, 91 % of the Company’s purchases related to three suppliers.
−Removed: For the year ended December 31, 2021, 86 % of the Company’s purchases related to two suppliers.
+Added: For the year ended December 31, 2022, 84 % of the Company’s purchases related to three suppliers.
At December 31, 2023 and 2022, 68 % and 81 % of the Company’s accounts payable and accrued expenses related to two vendors, respectively.
13 unchanged sentences
Early application of the amendments is permitted.
−Removed: Management does not believe that any recently issued, but not yet effective accounting standards, when adopted, will have a material effect on the accompanying consolidated financial statements.
−Removed: Note 3 – Liquidity and Financial Condition
−Removed: Under ASC 205-40, Presentation of Financial Statements—Going Concern , the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued.
−Removed: As required by ASC 205-40, this evaluation shall initially not take into consideration the potential mitigating effects of plans that have not been fully implemented as of the date the financial statements are issued.
−Removed: Management has assessed the Company’s ability to continue as a going concern in accordance with the requirement of ASC 205-40.
−Removed: As reflected in the consolidated financial statements, the Company had approximately $ 1.5 million in cash at December 31, 2022.
−Removed: In addition, the Company had cash provided by operating activities of $ 0.1 million for the year ended December 31, 2022, had working capital of $ 2.3 million and an accumulated deficit of $ 68.7 million at December 31, 2022.
−Removed: The accompanying consolidated financial statements as of December 31, 2022 have been prepared assuming the Company will continue as a going concern.
−Removed: On October 28, 2022, the Company’s principal lender agreed to extend the maturity date of all of its existing secured and unsecured debt in the principal amount of $ 13.4 million from October 31, 2022 to August 25, 2025 (see Note 9 - Related Party ).
−Removed: A s a result, such liabilities have been classified as long-term liabilities in the accompanying consolidated financial statements as of December 31, 2022.
−Removed: Based upon such extension of the maturity date of such secured and unsecured debt, the Company’s current cash position and the Company’s recent revenue growth, management believes substantial doubt regarding the Company’s ability to continue as a going concern has been mitigated.
−Removed: The Company believes it will have sufficient working capital to fund operations for at least the next twelve months from the date of issuance of these financial statements.
+Added: Effective January 1, 2023, the Company adopted ASU No.
+Added: The adoption of ASU No.
+Added: 2016-13 did not have a material effect on the accompanying consolidated financial statements.
Note 4 - Inventory
5 unchanged sentences
Equipment & installation
+Added: Leasehold improvements
Trucking equipment
8 unchanged sentences
During the year ended December 31, 2023 and 2022 depreciation expense was $ 12,927 , and $ 11,679 , respectively.
+Added: At December 31, 2023, the Company concluded that Company’s plant construction in process asset had become impaired based on the existing and anticipated future economic outlook.
+Added: As a result, the Company impaired the asset to reduce the carrying value to fair value.
+Added: Estimated fair value of the impaired long-lived asset is based on the estimated cost to replace the asset.
+Added: As a result of the uncertain cash flows related to the Company’s capitalized construction costs, the Company has recorded an impairment charge of $219,707.
+Added: No impairment losses were recorded during the year ended December 31, 2022.
Note 6 - Intellectual Property
9 unchanged sentences
( 1,364,932 )
+Added: ( 1,159,398 )
Intellectual property, net
Amortization expense for the year ended December 31, 2023 and 2022 was $ 205,534 and $ 204,600 , respectively.
−Removed: Estimated annual amortization for each of the next five years is $ 204,600 .
−Removed: Note 7 - Notes Payable
−Removed: On February 25, 2020, and pursuant to a Business Loan Agreement entered into with a banking institution, the Company’s wholly owned subsidiary, MES, Inc.
−Removed: closed on a one-year secured loan in the principal amount of $ 200,000 bearing interest at 8.75 % per annum.
−Removed: Principal and interest is to be paid in equal monthly installments until the loan was paid in full on February 26, 2021 .
−Removed: The note was secured by substantially all of the assets of MES, Inc.
−Removed: On April 14, 2020, the Company received loan proceeds in the amount of $ 299,300 from First International Bank & Trust pursuant to the Paycheck Protection Program (the “PPP Loan”) under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020.
−Removed: In January 2021, the PPP Loan was forgiven, and the Company recorded a gain in the first quarter of 2021 on extinguishment of debt of $ 299,300 .
−Removed: In February 2021, the Company received second draw loan proceeds in the amount of $ 299,380 from First International Bank & Trust pursuant to the Paycheck Protection Program (the “Second PPP Loan”) under the CARES Act.
−Removed: In October 2021, the Second PPP Loan was forgiven and the Company recorded a gain on extinguishment of debt of $ 301,377 .
−Removed: Note 8 - Convertible Notes Payable
−Removed: From July 30, 2013 through December 24, 2013, the Company sold convertible notes and warrants to unaffiliated accredited investors totaling $ 1,902,500 (the “2013 Notes”).
−Removed: From February 8, 2021 to February 15, 2021, the Company issued 1,880,000 shares of common stock to certain holders of the 2013 Notes for the conversion of the outstanding principal of such notes in the aggregate amount of $ 940,000 , based upon a conversion rate of $ 0.50 per share.
−Removed: On April 9, 2021, the Company issued 60,000 shares of common stock to another holder of such notes for the conversion of outstanding principal in the amount of $ 30,000 , and on August 18, 2021, the Company issued 20,000 shares of common stock to another holder of such notes for the conversion of outstanding principal in the amount of $ 10,000 , each based upon a conversion rate of $ 0.50 per share.
−Removed: On August 24, 2021, the Company prepaid the outstanding principal balance of another of such notes in the principal amount of $ 10,000 .
−Removed: As of December 31, 2022 and December 31, 2021, total principal of $ 0 , was outstanding on the 2013 Notes.
−Removed: On June 15, 2018, the Company issued 2018 Unsecured Convertible Notes (the “2018 Unsecured Notes”) totaling $ 560,000 and warrants to certain then holders of the 2013 Notes in exchange for their secured 2013 Notes, and from August 31, 2018 through October 30, 2018, the Company issued additional 2018 Unsecured Notes totaling $ 300,000 and warrants to unaffiliated investors.
−Removed: Pursuant to the terms of the 2018 Unsecured Notes, if at any time after six months from the issuance of the 2018 Notes, the closing price of the Company’s common stock exceeds $ 1.00 per share for 10 consecutive trading days, the Company shall have the right to force conversion of all of the outstanding principal of such Notes.
−Removed: Pursuant to notice dated February 17, 2021, the Company notified all such holders that as a result closing price of the Company’s common stock having exceeded $ 1.00 per share for 10 consecutive trading days, the Company was electing to force conversion of all such outstanding principal.
−Removed: Between February 26, 2021 and March 8, 2021, the Company issued 690,000 shares of common stock to certain holders of the 2018 Unsecured Notes for conversion of the outstanding principal of such Notes in the aggregate amount of $ 345,000 , and on March 17, 2021, the Company issued 1,030,000 shares of common stock to the remaining holders of the 2018 Unsecured Notes for the conversion of the remaining outstanding principal in the aggregate amount of $ 515,000 , all based upon a conversion rate of $ 0.50 per share.
−Removed: As of December 31, 2022 and December 31, 2021, total principal of $0, was outstanding on the 2018 Unsecured Notes.
−Removed: From June 18, 2019 through October 23, 2019, the Company sold 2019 Unsecured Convertible Notes (the “2019 Unsecured Notes”) totaling $ 2,600,000 and warrants to unaffiliated accredited investors.
−Removed: On February 26, 2021, the Company issued 100,000 shares of common stock to a certain holder of the 2019 Unsecured Notes for the conversion of outstanding principal in the amount of $ 50,000 , based upon a conversion rate of $ 0.50 per share.
−Removed: Pursuant to a letter dated June 14, 2021, the Company offered each of the holders of the 2019 Unsecured Notes the opportunity to voluntarily convert the outstanding principal into shares of common stock at conversion ratio of 0.50 per share and, if converted prior to June 30, 2021, still be paid interest through September 30, 2021.
−Removed: With such offer, all accrued and unpaid interest, and additional interest through September 30, 2021, would be paid in shares of common stock at a rate of $ 1.00 per share, in lieu of payment in cash.
−Removed: As a result thereof, and between June 17, 2021 and June 23, 2021, (i) the outstanding principal totaling $ 2,550,000 was voluntarily converted by the holders thereof into an aggregate of 5,100,000 shares of common stock of the Company at a conversion price of $ 0.50 per share, and (ii) all accrued and unpaid interest thereon, together with additional interest through September 30, 2021, which together totaled $ 229,500 , was converted into an aggregate of 229,500 shares of common stock of the Company.
−Removed: The Company recognized a conversion inducement cost of $ 98,515 related to the conversion.
−Removed: As of December 31, 2022 and December 31, 2021, total principal of $0, was outstanding on the 2019 Unsecured Notes.
−Removed: There is no further liability related to the profit share due to the voluntary conversion of all of the 2019 Unsecured Notes.
+Added: Estimated annual amortization for each of the next 9 years is as follows:
+Added: Annual amortization for the years ended:
+Added: December 31, 2024
+Added: December 31, 2025
+Added: December 31, 2026
+Added: December 31, 2027
+Added: December 31, 2028
Note 7 - Related Party
Secured Note Payable
−Removed: On November 29, 2016, pursuant to a new restated financing agreement entered with AC Midwest Energy, LLC (“AC Midwest”) on November 1, 2016, the Company closed on a new secured note with AC Midwest (the “AC Midwest Secured Note”) in the original principal amount of $ 9,646,686 , which was to mature on December 15, 2018.
+Added: On November 29, 2016, pursuant to a restated financing agreement entered with AC Midwest Energy, LLC (“AC Midwest”) on November 1, 2016, the Company closed on a secured note with AC Midwest (the “AC Midwest Secured Note”), which was to mature on December 15, 2018 .
AC Midwest is wholly-owned by a stockholder of the Company.
The AC Midwest Secured Note is guaranteed by MES, is non-convertible and bears interest at a rate of 15 .0% per annum, payable quarterly in arrears on or before the last day of each fiscal quarter.
−Removed: Interest expense for the years ended December 31, 2022 and 2021 was $ 38,557 and $ 41,319 respectively.
On February 25, 2019, per Amendment No.
−Removed: 3 to the Amended and Restated Financing Agreement, AC Midwest agreed to waive compliance with a certain financial covenant of the Restated Financing Agreement and strike this covenant in its entirety as of the effective date of the amendment.
−Removed: Also, pursuant to Amendment No.
−Removed: 3, the parties agreed that the maturity date for the remaining principal balance due under the AC Midwest Secured Note would be extended from December 15, 2018 to August 25, 2022.
−Removed: The amendment was accounted for as an extinguishment in accordance with ASC 470-50 with no gain or loss recorded.
+Added: 3 to the Amended and Restated Financing Agreement, AC Midwest extended the maturity date from December 15, 2018 to August 25, 2022.
On October 28, 2022, the Company, along with MES, and AC Midwest, executed Amendment No.
2 unchanged sentences
The Company has accounted for the extension as debt extinguishment with a related party.
−Removed: As such the Company recorded a capital contribution of $ 54,983 on this exchange which is related to the difference in fair value of the note on the date of the exchange.
+Added: As such the Company recorded a capital contribution of $ 54,983 for the year ended December 31, 2022 on this exchange which is related to the difference in fair value of the note on the date of the exchange.
As of both December 31, 2023 and December 31, 2022, total principal of $ 271,686 was outstanding on this note.
+Added: Interest expense for the years ended December 31, 2023 and 2022 was $ 43,955 and $ 38,557 respectively.
Amortized discount recorded as interest expense for the year ended December 31, 2023 and 2022 was $ 19,504 and $ 3,259 , respectively.
−Removed: As of December 31, 2022, the unamortized balance of the discount was $ 51,724 , which is being expensed over the life of the loan.
+Added: As of December 31, 2023 and 2022, the unamortized balance of the discount was $ 32,220 and $ 51,724 respectively, which is being expensed over the life of the loan.
Unsecured Note Payable
1 unchanged sentence
Unsecured note payable
−Removed: Less fair value adjustment on extinguishment, net of amortized discount of $230,868
+Added: Less fair value adjustment on extinguishment, net of amortized discount of $1,547,536 and $230,868, respectively
( 2,175,208 )
−Removed: Less discounts and debt issuance costs
( 3,491,875 )
1 unchanged sentence
Less current portion
−Removed: ( 11,871,254 )
Unsecured note payable, net of current portion
−Removed: On November 29, 2016, pursuant to a new restated financing agreement entered with AC Midwest on November 1, 2016, the Company closed on an unsecured note with AC Midwest (the “AC Midwest Subordinated Note”) in the principal amount of $ 13,000,000 , which was to mature on December 15, 2020.
+Added: On November 29, 2016, pursuant to a restated financing agreement entered with AC Midwest on November 1, 2016, the Company closed on an unsecured note with AC Midwest (the “AC Midwest Subordinated Note, which was to mature on December 15, 2020 .
On February 25, 2019, the Company, entered into an Unsecured Note Financing Agreement (the “Unsecured Note Financing Agreement”) with AC Midwest, pursuant to which AC Midwest issued an unsecured note in the principal amount of $ 13,154,931 (the “AC Midwest Unsecured Note”), which represented the outstanding principal and accrued and unpaid interest at closing.
−Removed: In accordance with ASC 470-60-15-5, since the present value of the cash flows under the new debt instrument was at least ten percent different from the present value of the remaining cash flows under the terms of the original debt instrument, the Company accounted for the amendment to note as a debt extinguishment.
−Removed: Accordingly, the Company wrote off the remaining debt discount on the original debentures of $ 1,070,819 .
−Removed: Since the amendment was with a related party defined in ASC 470-50-40-2 the Company recorded a Capital contribution of $ 3,412,204 on this exchange which is primarily related to the difference in fair value of the note on the date of the exchange.
The Company determined that the rate of interest on the AC Midwest Subordinated Note was a below market rate of interest and determined that a discount of $ 6,916,687 should be recorded.
−Removed: This discount is based on an applicable market rate for unsecured debt for the Company of 21 % and will be amortized as interested expense over the life of the loan.
−Removed: Amortized discount recorded as interest expense for the year ended December 30, 2022 and 2021 was $ 1,204,488 and $ 1,855,000 , respectively.
−Removed: As of December 31, 2022, the unamortized balance of the discount was $ 0 and the unamortized balance of the debt issuance costs was $0.
−Removed: The AC Midwest Unsecured Note, which has been issued in exchange for the AC Midwest Subordinated Note which has now been cancelled, was to mature on August 25, 2022.
−Removed: It bears a zero cash interest rate.
+Added: This discount was based on an applicable market rate for unsecured debt for the Company of 21 % and is being amortized as interest expense over the life of the loan.
In accordance with the Unsecured Note Financing Agreement, AC Midwest shall be entitled to a profit participation preference equal to 1.0 times the original principal amount (the “Profit Share”).
−Removed: If the original principal amount had been paid in full on or prior to August 25, 2020, AC Midwest would have been entitled to a profit participation preference equal to 0.5 times the original principal amount.
The Profit Share is “non-recourse” and shall only be derived from and computed on the basis of, and paid from, Net Litigation Proceeds from claims relating to the Company’s intellectual property, Net Revenue Share and Adjusted Free Cash Flow (as such terms are defined in the Unsecured Note Financing Agreement), and Equity Offering Net Proceeds as described below.
10 unchanged sentences
As such the Company recorded a capital contribution of $ 3,234,469 on this exchange which is related to the difference in fair value of the note on the date of the exchange.
−Removed: Amortized discount recorded as interest expense post Amendment No.
−Removed: 1 for the year ended December 31, 2022 and 2021 was $ 230,868 and $ 0 , respectively.
−Removed: As of December 31, 2022, the unamortized balance of the discount was $ 3,491,875 , which is being expensed over the life of the loan.
+Added: Amortized discount recorded as interest expense for the years ended December 31, 2023 and 2022 was $ 1,316,667 and $ 230,868 , respectively.
+Added: As of December 31, 2023 and 2022, the unamortized balance of the discount was $ 2,175,208 and $ 3,491,875 respectively, which is being expensed over the life of the loan.
Principal Payments and the Profit Share
−Removed: In connection with the New AC Midwest Unsecured Note the Company shall pay the principal outstanding, as well as the Profit Share, in an amount equal to 60.0% of Net Litigation Proceeds until such time as any litigation funder has been paid in full and, thereafter, in an amount equal to 75.0% of such Net Litigation Proceeds until the Unsecured Note and Profit Share have been paid in full.
+Added: In connection with the AC Midwest Unsecured Note the Company shall pay the principal outstanding, as well as the Profit Share, in an amount equal to 60.0% of Net Litigation Proceeds until such time as any litigation funder has been paid in full and, thereafter, in an amount equal to 75.0% of such Net Litigation Proceeds until the Unsecured Note and Profit Share have been paid in full .
In addition, and within 30 days following the end of each fiscal quarter, the Company shall pay the principal outstanding and Profit Share in an aggregate amount equal to the Net Revenue Share (which means 60.0% of Net Licensing Revenue (as defined) from licensing the Company’s intellectual property) plus Adjusted Free Cash Flow until the Unsecured Note and Profit Share have been paid in full, provided, however, that such payments shall exclude the first $ 3,500,000 of Net Licensing Revenue and Adjusted Free Cash Flow achieved commencing with the fiscal quarter ending March 31, 2019.
7 unchanged sentences
The discounted cash flow model assumptions used at December 31, 2023 to calculate the Profit Share liability included:
−Removed: quarterly cash flows ranging from $100,000 to $350,000 from early 2024 to late 2041 and an annual market interest rate of 21 %.
+Added: the projected full repayment of the profit share liability of $ 17,654,931 upon the receipt of Net Litigation Proceeds in 2025, and an annual market interest rate of 14.55 %.
The profit share liability will be marked to market every quarter utilizing management’s estimates.
8 unchanged sentences
On June 1, 2021, the Company, along with MES, entered into a Debt Repayment and Exchange Agreement with AC Midwest, which was expected to repay all existing secured and unsecured debt obligations presently held by AC Midwest (the “Debt Repayment Agreement”).
−Removed: Pursuant to the Debt Repayment Agreement, the Company was at closing to repay the principal balance outstanding on the AC Midwest Secured Note in cash, together with any other amounts due and owing under such note and repay the outstanding debt under the New AC Midwest Unsecured Note by paying and issuing a combination of cash and shares of common stock which AC Midwest had agreed to accept in full and complete repayment of the obligations thereunder.
−Removed: At closing, and with regard to the New AC Midwest Unsecured Note, the Company was to pay AC Midwest $ 6,577,465 in cash representing 50 .0% of the aggregate outstanding principal balance of such note, and issue shares of common stock to AC Midwest in exchange for the remaining 50 .0% of the aggregate outstanding principal balance at an exchange price equal to 100% of the offering price of common stock in the Qualifying Offering (as defined below).
+Added: Pursuant to the Debt Repayment Agreement, the Company was at closing to repay the principal balance outstanding on the AC Midwest Secured Note in cash, together with any other amounts due and owing under such note and repay the outstanding debt under the AC Midwest Unsecured Note by paying and issuing a combination of cash and shares of common stock which AC Midwest had agreed to accept in full and complete repayment of the obligations thereunder.
+Added: At closing, and with regard to the AC Midwest Unsecured Note, the Company was to pay AC Midwest $ 6,577,465 in cash representing 50 .0% of the aggregate outstanding principal balance of such note, and issue shares of common stock to AC Midwest in exchange for the remaining 50 .0% of the aggregate outstanding principal balance at an exchange price equal to 100% of the offering price of common stock in the Qualifying Offering (as defined below).
With regard to the Profit Share, at closing the Company was to pay AC Midwest $ 2,305,308 in cash representing the Profit Share Valuation, and issue shares of common stock for $ 4,026,568 representing the Adjusted Profit Share Valuation (as such terms are defined in the Debt Repayment Agreement) at the same exchange price indicated above.
3 unchanged sentences
On October 28, 2022, the parties entered into a Termination Agreement pursuant to which the parties agreed to terminate the Debt Repayment Agreement with immediate effect and that none of the parties shall have any further responsibility or liability thereunder.
+Added: On February 27, 2024, the Company entered into an Unsecured Debt Restructuring Agreement with AC Midwest which replaced and superseded the Unsecured Note Financing Agreement as described in Note 13.
Short term debt
4 unchanged sentences
Related Party Transactions
−Removed: Kaye Cooper Kay & Rosenberg, LLP provides certain legal services to the Company and was paid $ 481,250 and $ 287,500 for the year ended December 31, 2022 and 2021, respectively, for legal services rendered and disbursement incurred.
−Removed: Kaye, a Director and Secretary of the Company, is a partner of the law firm.
+Added: Kaye Cooper Kay & Rosenberg, LLP provides certain legal services to the Company and was paid $ 393,111 and $ 481,250 for the years ended December 31, 2023 and 2022, respectively, for legal services rendered and disbursement incurred.
+Added: Kaye, a Director of the Company, is a partner of the law firm.
At December 31, 2023 and December 31, 2022, $ 33,333 and $ 25,000 , respectively, was owed to the firm for services rendered.
−Removed: In September 2022, the Company acquired a pickup truck from the Company’s Chief Financial Officer for the purchase price of $ 10,727 which the parties determined to be its fair market value.
+Added: In September 2022, the Company acquired a pickup truck from the Company’s then Chief Financial Officer for the purchase price of $ 10,727 which the parties determined to be its fair market value.
+Added: On January 31, 2023, the Company entered into a License and Supply Agreement with Dakin Holdings Ltd., a company incorporated in Barbados (“Dakin”), effective as of January 1, 2023, pursuant to which Dakin has granted to the Company (i) a limited license to manufacture and produce for Dakin products comprising certain intellectual property owned by Dakin (the “Dakin IP”), and (ii) an exclusive license to commercialize the Dakin IP in the United States.
+Added: In addition, the Company shall pay Dakin a license fee of $ 12,500 per month for a three-year period commencing as of the effective date and pay Dakin a royalty on all sales in the United States of the products comprising the Dakin IP made by the Company.
+Added: Dakin is a company owned and controlled by the Company’s Chief Executive Officer and President.
+Added: Dakin charged $ 150,000 for license fees for the year ended December 31, 2023.
+Added: As of December 31, 2023, license fees of $ 25,000 were owed to Dakin.
Note 8 - Operating Leases
−Removed: In 2016, the Company entered into a six-year agreement to lease trailers used in the delivery of its products.
−Removed: Monthly payments currently total $ 24,760 .
On July 1, 2015, the Company entered into a five-year lease for warehouse space in Corsicana, Texas.
5 unchanged sentences
This amount represents the difference between the value from the remaining lease and the extended lease.
−Removed: For the twelve months ended December 31, 2022 and 2021, the Company recorded an operating lease right of use asset and liabilities as follows:
+Added: For the years ended December 31, 2023 and 2022, the Company recorded an operating lease right of use asset and liabilities as follows:
Right of use asset - operating lease
8 unchanged sentences
The weighted average remaining lease term for operating leases is 0.25 years and the weighted average discount rate used in calculating the operating lease asset and liability is 5 .0%.
−Removed: For the year ended December 31, 2022, payments on lease obligations were $ 260,360 and amortization on the right of use assets was $ 338,535 .
−Removed: For the year ended December 31, 2022 and 2021, the Company’s lease cost consists of the following components, each of which is included in costs and expenses within the Company’s consolidated statements of operations:
+Added: For the year ended December 31, 2023 and 2022, payments on lease obligations were $ 45,000 and $ 260,360 respectively, and amortization on the right of use assets was $ 40,924 and $ 338,535 respectively.
+Added: For the years ended December 31, 2023 and 2022, the Company’s lease cost consists of the following components, each of which is included in costs and expenses within the Company’s consolidated statements of operations:
Operating lease costs
7 unchanged sentences
These patents relate to the Company’s two-part Sorbent Enhancement Additive (SEA ® ) process for mercury removal from coal-fired power plants.
−Removed: Named as defendants in the lawsuit are (i) Vistra Energy Corp., AEP Generation Resources Inc., NRG Energy, Inc., Talen Energy Corporation, and certain of their respective affiliated entities, all of which are owners and/or operators of coal-fired power plants in the United States, and (ii) Arthur J.
+Added: Named as defendants in the lawsuit were (i) Vistra Energy Corp., AEP Generation Resources Inc., NRG Energy, Inc., Talen Energy Corporation, and certain of their respective affiliated entities, all of which are owners and/or operators of coal-fired power plants in the United States, and (ii) Arthur J.
Gallagher & Co., DTE REF Holdings, LLC, CERT Coal Holdings LLC, Chem-Mod LLC, and certain of their respective affiliated entities, and additional named and unnamed defendants, all of which operate or are involved in operations of coal facilities in the United States.
3 unchanged sentences
Such agreements entered into with such parties provide each of them and their affiliates with a non-exclusive license to certain Company patents (related to the Company’s two-part Sorbent Enhancement Additive (SEA®) process) for use in connection with such parties’ coal-fired power plants.
−Removed: The above described proceedings are continuing with respect to the other parties involved.
−Removed: On May 20, 2021, a U.S.
−Removed: District Court Magistrate Judge issued a report and recommendation that the above action should be permitted to proceed against 16 refined coal defendants named in the action directly involved in the refined coal program and operations, and be dismissed against 12 other defendants, primarily affiliated entities of the refined coal operators.
−Removed: Such report was issued in connection with certain motions to dismiss filed by the refined coal defendants.
−Removed: In September 2021, the Company received approval from the District Judge of the U.S.
−Removed: District Court in Delaware of the adoption of this report and recommendation of the Magistrate Judge to allow the Company to proceed with litigation claims against certain refined coal entities.
−Removed: As a result of an application made by the Company to the Court in March 2022 to add additional parties to the action (all affiliated entities of the already named defendants), there are now 24 refined coal defendants named in the action.
−Removed: In connection with such application, the District Court Magistrate Judge ruled in April 2022 that certain parties could be added but denied the application with respect to certain others.
−Removed: The fact discovery portion of the litigation has concluded.
−Removed: A jury trial date has been scheduled for November 2023.
+Added: Subsequently, and as a result of certain rulings by the Court, certain defendants were dismissed in the action, certain defendants were added and certain originally named defendants remained in the action.
+Added: A jury trial was scheduled for November 13, 2023.
+Added: On November 9, 2023, the Company entered into a confidential binding term sheet with Arthur J.
+Added: Gallagher & Co., and various of its affiliated entities (collectively “AJG”), and DTE Energy Resources LLC and various of its affiliated entities (collectively “DTE”), to resolve the patent litigation.
+Added: Pursuant to the term sheet, all claims and counterclaims asserted by the parties in such patent litigation have been dismissed with prejudice, although such term sheet does not affect any other claim brought against the remaining CERT defendants.
+Added: The financial aspects of the term sheet remain confidential pursuant to its terms.
+Added: In addition, effective November 9, 2023, Alistar Enterprises, LLC (“Alistar”), one of the remaining CERT defendants, entered into a settlement agreement with the Company which provided that all claims and counterclaims asserted in the action between the Company and Alistar be dismissed with prejudice.
+Added: The financial terms of such settlement remain confidential.
+Added: Effective as of December 28, 2023, and in connection with the term sheet described above, the Company, along with its wholly-owned subsidiary, MES, Inc., and (a) Chem-Mod LLC (“Chem-Mod”), (b) Arthur J.
+Added: Gallagher & Co.
+Added: and AJG Coal, LLC, and (c) DTE Energy Co.
+Added: and DTE Energy Resources, LLC, entered into a paid license of U.S.
+Added: 8,168,147, U.S.
+Added: 10,343,114, U.S.
+Added: 10,589,225, U.S.
+Added: 10,596,517 and U.S.
+Added: 10,668,430 and their foreign equivalents and related patent applications and patents, which licenses the use of refined coal or the Chem-Mod Solution in conjunction with activated carbon.
+Added: This license applies to Chem-Mod and certain of its licensees, sub-licensees, and their customers, for the remaining term of such patents.
+Added: By its terms, the license does not cover the use of activated carbon with coal that is not either refined coal or coal made by or for use with the Chem-Mod Solution in a manner authorized by the license.
+Added: The parties to the license have mutually released all claims that any past use of the Chem-Mod Solution in connection with the production or use of refined coal with activated carbon by entities other than the CERT defendants and their customers infringes the asserted patents and related intellectual property, and all claims that could have been brought challenging the validity of such patents.
+Added: The remaining CERT defendants and their customers (for activities relating to the CERT defendants) are not included within the scope of the license.
+Added: The Court has rescheduled the trial as to the claims against the remaining CERT defendants to begin on February 26, 2024.
Except for the foregoing disclosures, the Company is not presently aware of any other material pending legal proceedings to which the Company is a party or of which any of its property is the subject.
3 unchanged sentences
Stock Based Compensation
+Added: The Company accounts for stock-based compensation awards in accordance with the provisions of ASC 718, which addresses the accounting for employee stock options which requires that the cost of all employee stock options, as well as other equity-based compensation arrangements, be reflected in the consolidated financial statements over the vesting period based on the estimated fair value of the awards.
Stock based compensation consists of the amortization of common stock, stock options and warrants issued to employees, directors and consultants.
−Removed: For the year ended December 31, 2022 and 2021, stock based compensation expense amounted to $ 671,681 and $ 1,011,488 , respectively.
+Added: For the years ended December 31, 2023 and 2022, stock-based compensation expense amounted to $ 520,449 and $ 671,681 , respectively.
Such expense is classified in selling, general and administrative expenses.
−Removed: On March 23, 2021, and pursuant to a consulting agreement dated November 1, 2020, as amended on March 19, 2021, with a nonaffiliated third party, the Company issued 500,000 shares of common stock to such party as part of its compensation thereunder.
−Removed: These shares of common stock were valued at $ 615,000 in accordance with FASB ASC Topic 718.
−Removed: The fair value of the shares is being amortized to selling, general and administrative expenses within the Company’s consolidated statements of operations over ten months.
−Removed: Pursuant to an amendment dated March 15, 2022 and effective as of December 31, 2021, the nonaffiliated party agreed to forfeit all of such shares which shares were cancelled effective as of December 31, 2021.
−Removed: As such, the previously recorded expense of $ 615,000 was reversed in December 2021.
−Removed: On March 30, 2021, and pursuant to a business development agreement dated March 30, 2021 with a nonaffiliated third party, the Company issued 25,000 shares of common stock to such party for its compensation thereunder.
−Removed: These shares of common stock were valued at $ 29,250 in accordance with FASB ASC Topic 718.
−Removed: The fair value of the shares is being amortized to selling, general and administrative expenses within the Company’s consolidated statements of operations over three months.
−Removed: On December 1, 2021, and pursuant to a consulting agreement dated December 1, 2021 with a nonaffiliated third party, the Company issued 250,000 shares of common stock to such party as part of its compensation thereunder.
−Removed: These shares of common stock were valued at $ 171,250 in accordance with FASB ASC Topic 718.
−Removed: The fair value of the shares is being amortized to selling, general and administrative expenses within the Company’s consolidated statements of operations over 12 months.
On May 31, 2022, and pursuant to a consulting agreement dated May 31, 2022 with a nonaffiliated third party, the Company issued 500,000 shares of common stock to such party as part of its compensation thereunder.
4 unchanged sentences
The fair value of the shares was expensed in full on the issuance date.
−Removed: On May 31, 2022, the Company issued a total of 3,000,000 shares of common stock to the Chief Executive Officer.
+Added: On November 8, 2022, the Company issued a total of 3,000,000 shares of common stock to the Chief Executive Officer.
These shares of common stock were valued at $ 960,000 in accordance with FASB ASC Topic 718.
−Removed: The fair value of the shares will be amortized as expense over the vesting period.
−Removed: The expense for the year ended December 31, 2022 was $ 70,667 .
+Added: The fair value of the shares will be amortized as an expense over the vesting period.
+Added: The expense for the years ended December 31, 2023 and 2022 was $ 486,667 and $ 70,667 , respectively.
Stock Options
−Removed: The Company accounts for stock-based compensation awards in accordance with the provisions of ASC 718, which addresses the accounting for employee stock options which requires that the cost of all employee stock options, as well as other equity-based compensation arrangements, be reflected in the consolidated financial statements over the vesting period based on the estimated fair value of the awards.
−Removed: On May 1, 2021, the Company issued 15,869 shares of common stock to a certain option holder upon the cashless exercise of an option to purchase 25,000 shares of common stock at an exercise price off $ 0.42 based upon a market price of $ 1.15 per share as determined under the terms of the option.
−Removed: On June 30, 2021, the Company issued 125,000 shares of common stock to a certain option holder upon a cash exercise of an option to purchase 125,000 shares of common stock at an exercise price of $ 0.81 or $ 101,250 in the aggregate.
−Removed: On January 24, 2022, the Company extended the expiration dates of certain fully expensed previously granted nonqualified stock options (which were due to expire in February 2022) which were granted to five individuals to acquire an aggregate of 700,000 shares of the Company’s common stock under the Company’s 2014 Equity Incentive Plan and the 2017 Equity Incentive Plan (the “2017 Plan”).
+Added: References herein to the “2014 Plan” mean the Company’s 2014 Equity Incentive Plan, as amended, and references herein to the “2017 Plan” mean the Company’s 2017 Equity Incentive Plan, as amended.
+Added: On January 24, 2022, the Company extended the expiration dates of certain fully expensed previously granted nonqualified stock options (which were due to expire in February 2022) which were granted to five individuals to acquire an aggregate of 700,000 shares of the Company’s common stock under the 2014 Plan and 2017 Plan.
Such extended options are exercisable at prices ranging from $1.15 to $1.20 per share , representing the original fair market value of the common stock on the dates of grant as determined under the applicable Equity Plan.
The options are fully vested and exercisable and will now expire five years from their original expiration dates.
−Removed: Based on a Black-Scholes valuation model, these modified options were valued at $ 138,623 , in accordance with FASB ASC Topic 718, which was expensed on the amendment date in selling, general and administrative expenses within the Company’s condensed consolidated statements of operations.
+Added: Based on a Black-Scholes valuation model, these modified options were valued at $ 138,623 , in accordance with FASB ASC Topic 718, which was expensed on the amendment date in selling, general and administrative expenses within the Company’s consolidated statements of operations.
On February 2, 2022, the Company issued 5,181 shares of common stock to a certain option holder upon the cashless exercise of options to purchase an aggregate of 9,750 shares of common stock at exercise prices ranging from $ 0.20 to $ 0.33 per share based upon a market price of $ 0.54 per share as determined under the terms of the options.
−Removed: On May 31, 2022, the Company granted nonqualified stock options to the following executive officers:
−Removed: John Pavlish (Senior Vice President and Chief Technology Officer) and James Trettel (Vice President of Operations) – nonqualified stock options to each acquire 500,000 shares of the Company’s common stock;
−Removed: and Jami Satterthwaite (Chief Financial Officer) – nonqualified stock options to acquire 100,000 shares of the Company’s common stock.
+Added: On May 31, 2022, the Company granted nonqualified stock options to the Company’s Senior Vice President and Chief Technology Officer, and to the Company’s Vice President of Operations – nonqualified stock options to each acquire 500,000 shares of the Company’s common stock;
+Added: and to its then Chief Financial Officer – nonqualified stock options to acquire 100,000 shares of the Company’s common stock.
On such date, two other employees were also granted nonqualified stock options to each acquire 50,000 shares of the Company’s common stock.
3 unchanged sentences
The valuation assumptions included an expected duration of 2.5 years, volatility of 96.83 %, discount rate of 2.62 % and dividends of $0.
+Added: On February 1, 2023, the Company issued (i) 850,000 shares of common stock to the Company’s Chairman of the Board upon a cash exercise of options to purchase an aggregate of 850,000 shares of common stock at exercise prices ranging from $ 0.19 to $ 0.27 per share or $ 209,500 in the aggregate, (ii) 110,000 shares of common stock to the Company’s Chief Executive Officer upon a cashless exercise of an option to purchase 250,000 shares of common stock at an exercise price of $ 0.28 per share based upon a market price of $ 0.50 per share as determined under the terms of the option, and (iii) 155,000 shares of common stock to a director of the Company upon a cashless exercise of an option to purchase 250,000 shares of common stock at an exercise price of $ 0.19 per share based upon a market price of $ 0.50 per share as determined under the terms of the option.
+Added: On February 20, 2023, the Company issued 17,858 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 50,000 shares of common stock at an exercise price of $ 0.27 per share based upon a market price of $ 0.42 per share as determined under the terms of the option.
+Added: Between February 21, 2023 and February 23, 2023, the Company issued an aggregate of 29,022 shares of common stock to three employees and one former employee upon a cashless exercise of options to purchase an aggregate of 80,000 shares of common stock at an exercise price of $0.27 per share based upon market prices ranging from $ 0.42 to $ 0.43 per share as determined under the terms of the options.
+Added: On March 8, 2023, and pursuant to an advisor agreement dated March 1, 2023 with a nonaffiliated third party, the Company granted a nonqualified stock option under the 2017 Equity Incentive Plan to such third party to acquire 125,000 shares of the Company’s common stock at an exercise price of $ 0.40 per share, representing the fair market value of the common stock on the date of grant as determined under the 2017 Equity Incentive Plan.
+Added: Fifty percent of the option shall vest and become exercisable on September 1, 2023 and the remaining fifty percent shall vest and become exercisable on March 1, 2024.
+Added: The option will expire five years after the date of grant.
+Added: Based on a Black-Scholes valuation model, these options were valued at $ 30,933 , in accordance with FASB ASC Topic 718.
+Added: The fair value of the shares was being amortized to selling, general and administrative expenses within the Company’s consolidated statements of operations over twelve months.
+Added: The valuation assumptions included an expected duration of 2.9 years, volatility of 98 %, discount rate of 4.71 % and dividends of $ 0 .
+Added: On September 30, 2023, the advisor agreement was terminated resulting in 50.0% of the option remaining unvested and unexercisable.
+Added: On April 4, 2023, and pursuant to a consulting agreement effective April 1, 2023 with a nonaffiliated third party, the Company granted a nonqualified stock option under the 2017 Plan to such third party to acquire 250,000 shares of the Company’s common stock at an exercise price of $ 0.39 per share, representing the fair market value of the common stock on the date of grant as determined under the 2017 Plan.
+Added: Fifty percent of the option shall vest and become exercisable on October 1, 2023 and the remaining fifty percent shall vest and become exercisable on April 1, 2024.
+Added: The option will expire five years after the date of grant.
+Added: Based on a Black-Scholes valuation model, these options were valued at $ 59,690 , in accordance with FASB ASC Topic 718.
+Added: The fair value of the shares was being amortized to selling, general and administrative expenses within the Company’s consolidated statements of operations over twelve months.
+Added: The valuation assumptions included an expected duration of 2.9 years, volatility of 98 %, discount rate of 3.60 % and dividends of $ 0 .
+Added: On August 28, 2023, the consulting agreement was terminated resulting in the option remaining unvested and being deemed terminated.
+Added: On May 26, 2023, a new director was appointed to the Board of Directors and was granted a nonqualified stock option to acquire 125,000 shares of the Company’s common stock exercisable at $ 0.41 per share.
+Added: Fifty percent of the option shall vest and become exercisable on November 26, 2023 and the remaining fifty percent shall vest and become exercisable on May 26, 2024.
+Added: The option will expire five years after the date of grant.
+Added: Based on a Black-Scholes valuation model, these options were valued at $ 30,527 , in accordance with FASB ASC Topic 718.
+Added: The fair value of the shares is being amortized to selling, general and administrative expenses within the Company’s consolidated statements of operations over twelve months.
+Added: The valuation assumptions included an expected duration of 2.88 years, volatility of 97 %, discount rate of 4.23 % and dividends of $ 0 .
+Added: On June 5, 2023, the Company issued 1,629 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 6,875 shares of common stock at an exercise price of $ 0.29 per share based upon a market price of $ 0.38 per share as determined under the terms of the options.
+Added: On June 6, 2023, the Company issued an aggregate of 3,426 shares of common stock to an employee upon a cashless exercise of options to purchase an aggregate of 7,655 shares of common stock at exercise prices ranging from $ 0.17 to $ 0.29 per share based upon a market price of $ 0.38 per share as determined under the terms of the options.
+Added: On June 7, 2023, the Company issued 1,352 shares of common stock to a director upon a cashless exercise of an option to purchase 6,250 shares of common stock at an exercise price of $ 0.29 per share based upon a market price of $ 0.37 per share as determined under the terms of the options.
+Added: On June 28, 2023, the Company issued (i) 5,213 shares of common stock to the Company’s Chief Executive Officer upon a cashless exercise of options to purchase an aggregate of 24,687 shares of common stock at exercise prices ranging from $ 0.21 to $ 0.29 per share based upon a market price of $ 0.30 per shares as determined under the terms of the options, (ii) 4,125 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 13,750 shares of common stock at an exercise price of $ 0.21 per share based upon a market price of $ 0.30 per share as determined under the terms of the option, and (iii) 1,875 shares of common stock to a director upon a cashless exercise of an option to purchase 6,250 shares of common stock at an exercise price of $ 0.21 per share based upon a market price of $ 0.30 per share as determined under the terms of the options.
+Added: On July 3, 2023, the Board of Directors of the Company approved and adopted the Company’s Amended and Restated 2014 Equity Incentive Plan and the Company’s Amended and Restated 2017 Equity Incentive Plan which amended the Company’s previously adopted 2014 Plan and 2017 Plans.
+Added: Such amendments were made in accordance with the requirements of the TSX Venture Exchange.
+Added: The 2014 Plan was first approved by the Board on January 10, 2014.
+Added: The 2017 Plan replaced the 2014 Plan, which was terminated by the Board on April 28, 2017.
+Added: As a result of such termination, no additional awards may be granted under the 2014 Plan but previously granted awards shall remain outstanding in accordance with their terms and conditions.
+Added: There are 4,775,000 options and no other types of award outstanding under the 2014 Plan.
+Added: The 2017 Plan was adopted by the Board on February 9, 2017.
+Added: As amended by the Board on July 3, 2023, the maximum number of shares of common stock that may be issued under the 2017 Plan after July 3, 2023 is 14,078,459 , and to the extent any award (or portion thereof) outstanding under the 2014 Plan expires, terminates or is cancelled, surrendered or forfeited for any reason on or after July 3, 2023, the shares of common stock subject to such award (or portion thereof) shall be added to and increase the foregoing limit, to a maximum of 4,775,000 additional shares of common stock.
+Added: On July 28, 2023, the Company issued (i) 8,007 shares of common stock to the Company’s Chief Executive Officer upon a cashless exercise of an option to purchase 16,458 shares of common stock, (ii) 6,690 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 13,750 shares of common stock, and (iii) 3,041 shares of common stock to a director upon a cashless exercise of an option to purchase 6,250 shares of common stock.
+Added: All of such options had an exercise price of $ 0.17 per share and such share issuances were based upon a volume weighted average price (“VWAP”) of $ 0.3311 per share as determined under the terms of the options.
+Added: On September 29, 2023, the Company issued (i) 5,555 shares of common stock to the Company’s Chief Executive Officer upon a cashless exercise of an option to purchase 16,458 shares of common stock, (ii) 4,641 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 13,750 shares of common stock, (iii) 2,109 shares of common stock to a director upon a cashless exercise of an option to purchase 6,250 shares of common stock, and (iv) 1,033 shares of common stock to an employee upon a cashless exercise of an option to purchase 3,062 shares of common stock.
+Added: All of such options had an exercise price of $ 0.26 per share and such share issuances were based upon a VWAP of $ 0.3925 per share as determined under the terms of the options.
+Added: On October 30, 2023, the Company issued 1,450 shares of common stock to an employee upon a cashless exercise of an option to purchase 3,062 shares of common stock at any exercise price of $ 0.20 per share based upon a VWAP of $ 0.3799 per share as determined under the term of the options.
+Added: On October 31, 2023, the Company issued (i) 8,346 shares of common stock to the Company’s Chief Executive Officer upon a cashless exercise of an option to purchase 16,458 shares of common stock, (ii) 6,973 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 13,750 shares of common stock, and (iii) 3,169 shares of common stock to a director upon a cashless exercise of an option to purchase 6,250 shares of common stock.
+Added: All of such options had an exercise price of $ 0.20 per share and such share issuances were based upon a VWAP of $ 0.4058 per share as determined under the terms of the options.
+Added: On November 29, 2023, the Company issued 2,001 shares of common stock to an employee upon a cashless exercise of an option to purchase 3,062 shares of common stock at an exercise price of $ 0.33 per share based upon a VWAP of $ 0.9527 per share as determined under the term of the options.
+Added: On November 30, 2023, the Company issued (i) 9,104 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 13,750 shares of common stock at an exercise price of $ 0.33 per share, (ii) 4,138 shares of common stock to a director upon a cashless exercise of an option to purchase 6,250 shares of common stock at an exercise price of $ 0.33 per share, and (iii) 9,400 shares of common stock to a former employee upon a cashless exercise of options to purchase a total of 18,750 shares of common stock, with exercises prices of ranging from $ 0.25 to $ 0.33 per share.
+Added: All of such share issuances were based upon a VWAP of $ 0.9768 per share as determined under the terms of the options.
+Added: On December 11, 2023, the Company issued (i) 10,278 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 13,750 shares of common stock, and (ii) 4,672 shares of common stock to a director upon a cashless exercise of an option to purchase 6,250 shares of common stock.
+Added: All of such options had an exercise price of $ 0.25 per share and such share issuances were based upon a VWAP of $ 0.9902 per share as determined under the terms of the options.
+Added: On December 13, 2023, the Company issued 2,204 shares of common stock to an employee upon a cashless exercise of an option to purchase 3,062 shares of common stock at an exercise price of $ 0.25 per share based upon a VWAP of $ 0.8931 per share as determined under the term of the options.
A summary of stock option activity is presented below:
−Removed: Remaining Contractual
December 31, 2022
+Added: ( 1,725,839 )
December 31, 2023
1 unchanged sentence
December 31, 2023
−Removed: The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company’s closing stock price of $ 0.2641 as of December 31, 2022, which would have been received by the option holders had all option holders exercised their options as of that date.
−Removed: Stock options exercised during 2022 include 216,664 that were exercised for cash and 9,750 which were a cashless exercise
+Added: The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company’s closing stock price of $ 0.92 as of December 29, 2023 (the last trading day of the month of December 2023), which would have been received by the option holders had all option holders exercised their options as of that date.
+Added: Stock options exercised during the year ended December 31, 2023 include 850,000 that were exercised for cash and 875,839 which were a cashless exercise.
Note 11 - Warrants
2 unchanged sentences
When calculating the value of warrants issued, the Company uses a volatility factor, a risk-free interest rate and the life of the warrant for the exercise period.
−Removed: From January 23, 2021 to February 16, 2021, the Company issued 705,166 shares of common stock to certain warrant holders upon the cash exercise of warrants to purchase an aggregate of 705,166 shares of common stock at an exercise price of $ 0.35 per share or $ 246,808 in the aggregate.
−Removed: On February 17, 2021, the Company issued 97,675 shares of common stock to a certain warrant holder upon the cashless exercise of a warrant to purchase 150,000 shares of common stock at an exercise price of $ 0.45 per share based upon a market value of $ 1.29 per share as determined under the terms of the warrant.
−Removed: On March 8, 2021, the Company issued an aggregate of 97,015 shares of common stock to certain warrant holders upon the cashless exercise of warrants to purchase an aggregate of 175,000 shares of common stock at an exercise price of $ 0.70 per share based upon market values from $ 1.44 to $ 1.63 per share as determined under the terms of the warrants.
+Added: No warrants were issued or exercised during the years ended December 31, 2023 and 2022.
The following is a summary of the Company’s warrant activity:
−Removed: Remaining Contractual
December 31, 2022
−Removed: ( 1,000,000 )
December 31, 2023
6 unchanged sentences
Weighted Average
+Added: Contractual Life
Weighted Average
2 unchanged sentences
Below is breakdown of the income tax provisions for the years ended December 31:
−Removed: 2021 (as adjusted)
State and local
1 unchanged sentence
The expected tax expense (benefit) based on the statutory rate is reconciled with actual tax expense (benefit) as follows:
−Removed: 2021, (as adjusted)
federal statutory rate
1 unchanged sentence
Non-deductible amortization of debt discount
+Added: Other non-deductible items
Non-taxable change in profit share liability
2 unchanged sentences
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
−Removed: The deferred tax asset related to the net operating loss carryforward was adjusted to agree with income tax filings through the tax period ended December 31, 2021.
Significant components of the Company’s deferred tax assets and liabilities are as follows at December 31:
−Removed: 2021 (as adjusted)
Deferred tax assets:
30 unchanged sentences
The Company does not expect any significant changes in its unrecognized tax benefits in the next year.
−Removed: Note 15 – Disclosure of Prior Period Financial Statement Error
−Removed: The Company revised certain previously issued disclosures related to the components of its deferred tax assets and liabilities and valuation allowance as of December 31, 2021.
−Removed: Additionally, the Company has revised the reconciliation of its income tax rate computed using the federal statutory rate for the year ended December 31, 2021.
−Removed: Since the Company provided a full valuation allowance on its net deferred tax assets, there was no impact to the Balance Sheet, Statement of Operations, Statement of Cash Flows or Statement of Stockholders’ Equity as of and for the year ended December 31, 2021.
−Removed: The Company corrected its net operating loss carryforward and other deferred tax assets as of December 31, 2021, based on further analysis.
−Removed: The Company further reviewed its disclosure of the rate reconciliation and valuation allowance of its deferred tax assets.
−Removed: The below table summarizes the revisions to the reconciliation of the Company’s income tax rate computed using the federal statutory rate compared with the Company’s actual income tax rate for the year ended December 31, 2021:
−Removed: 2021, Adjusted
−Removed: federal statutory rate
−Removed: Deferred tax asset adjustments
−Removed: Non-deductible amortization of debt discount
−Removed: Non-taxable change in profit share liability
−Removed: Change in valuation allowance
−Removed: Income tax provision
−Removed: The below table summarizes the revisions to the deferred tax assets and liabilities as of December 31, 2021:
−Removed: Deferred tax assets:
−Removed: Net operating loss carryforwards
−Removed: $ ( 2,623,000 )
−Removed: Stock based compensation
−Removed: Total deferred tax assets
−Removed: ( 2,526,000 )
−Removed: Deferred tax liabilities:
−Removed: Property and equipment
−Removed: Intangible assets
−Removed: Total deferred tax liabilities
−Removed: Valuation allowance
−Removed: ( 11,100,000 )
−Removed: ( 8,615,000 )
−Removed: Net deferred tax asset
Note 13 - Subsequent Events
−Removed: The Company has evaluated subsequent events through the date of the filing of this Annual Report on Form 10-K and determined that there have been no events that have occurred that would require adjustments to our disclosures in the consolidated financial statements except for the transactions described below.
−Removed: On January 31, 2023, the Company entered into a License and Supply Agreement with Dakin Holdings Ltd., a company incorporated in Barbados (“Dakin”), effective as of January 1, 2023, pursuant to which Dakin has granted to the Company (i) a limited license to manufacture and produce for Dakin products comprising certain intellectual property owned by Dakin (the “Dakin IP”), and (ii) an exclusive license to commercialize the Dakin IP in the United States.
−Removed: Dakin is a company owned and controlled by the Company’s Chief Executive Officer and President.
−Removed: The Dakin IP consists of a proprietary compound of materials engineered to treat a boiler to improve the combustion process and thereby reduce overall emissions, while improving boiler efficiency during the combustion of all types of fuels at power plants.
−Removed: On February 1, 2023, the Company issued (i) 850,000 shares of common stock to the Company’s Chairman of the Board upon a cash exercise of options to purchase an aggregate of 850,000 shares of common stock at exercise prices ranging from $ 0.19 to $ 0.27 per share or $ 209,500 in the aggregate, (ii) 110,000 shares of common stock to the Company’s Chief Executive Officer upon a cashless exercise of an option to purchase 250,000 shares of common stock at an exercise price of $ 0.28 per share based upon a market price of $ 0.50 per share as determined under the terms of the option, and (iii) 155,000 shares of common stock to a director of the Company upon a cashless exercise of an option to purchase 250,000 shares of common stock at an exercise price of $ 0.19 per share based upon a market price of $ 0.50 per share as determined under the terms of the option.
−Removed: On February 20, 2023, the Company issued 17,858 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 50,000 shares of common stock at an exercise price of $ 0.27 per share based upon a market price of $ 0.42 per share as determined under the terms of the option.
−Removed: Between February 21, 2023 and February 23, 2023, the Company issued an aggregate of 29,022 shares of common stock to three employees and one former employee upon a cashless exercise of options to purchase an aggregate of 80,000 shares of common stock at an exercise price of $ 0.27 per share based upon market prices ranging from $ 0.42 to $ 0.43 per share as determined under the terms of the options.
−Removed: On March 8, 2023, and pursuant to an advisor agreement dated March 1, 2023 with a nonaffiliated third party, the Company granted a nonqualified stock option under the 2017 Plan to such third party to acquire 125,000 shares of the Company’s common stock at an exercise price of $ 0.40 per share, representing the fair market value of the common stock on the date of grant as determined under the 2017 Plan.
−Removed: Fifty percent of the option and shall vest and become exercisable on September 1, 2023 and the remaining fifty percent shall vest and become exercisable on March 1, 2024.
−Removed: The option will expire five years after the date of grant.
−Removed: On April 4, 2023, and pursuant to a consulting agreement effective April 1, 2023 with a nonaffiliated third party, the Company granted a nonqualified stock option under the 2017 Plan to such third party to acquire 250,000 shares of the Company’s common stock at an exercise price of $ 0.39 per share, representing the fair market value of the common stock on the date of grant as determined under the 2017 Plan.
−Removed: Fifty percent of the option and shall vest and become exercisable on October 1, 2023 and the remaining fifty percent shall vest and become exercisable on April 1, 2024.
−Removed: The option will expire five years after the date of grant.
−Removed: On April 20, 2023, the Company received conditional approval to list its shares of common stock on the TSX Venture Exchange (the "TSX-V").
−Removed: The listing is subject to the Company’s fulfilling certain requirements of the TSX-V in accordance with the terms of the conditional approval letter.
−Removed: Upon completion of the final listing requirements, the Company expects to be listed on the TSX-V as a Tier 1 Industrial, Technology, or Life Sciences Issuer under the symbol "MEEC".
+Added: On February 27, 2024, the Company entered into an Unsecured Debt Restructuring Agreement (the “Debt Restructuring Agreement”) with AC Midwest which replaced and superseded the Unsecured Note Financing Agreement.
+Added: See Note 7 – Related Party.
+Added: Pursuant to the Debt Restructuring Agreement, on February 27, 2024, the Company (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 $275,625 representing the remaining principal balance under the Secured Note of $ 271,686 plus interest of $ 3,939 .
+Added: In addition, within 30 days, the Company 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 .
+Added: The private sale of shares for the purchase price of $ 960,000 was completed on March 11, 2024.
+Added: 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.
+Added: Until repaid in full, the New Note shall accrue interest at a rate equal to SOFR plus 2.0 % per annum.
+Added: The New Note completely replaces and supersedes the Unsecured Note, which shall be of no further force and effect.
+Added: 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”).
+Added: 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.
+Added: 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 .
+Added: 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.
+Added: 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.
+Added: 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.
+Added: As a result of the repayment of the remaining principal balance under the Secured Debt, the Company and AC Midwest executed a Satisfaction and Discharge of Secured Debt confirming the cancellation of the Secured Note and that all of the obligations under the Restated Financing Agreement have been fully satisfied and discharged.
+Added: Patent Litigation
+Added: See “Note 10 – Commitments and Contingencies” for information on the patent litigation initiated by the Company in 2019.
+Added: Following a five-day trial, on March 1, 2024, a federal jury in the U.S.
+Added: District Court for the District of Delaware awarded a $ 57.1 million patent infringement verdict in favor of the Company against the remaining group of CERT defendants.
+Added: Such group of affiliated defendants included multiple limited liability companies with refined coal industry operations, including CERT Operations II LLC, CERT Operations IV LLC, CERT Operations V LLC, and CERT Operations RCB LLC.
+Added: The jury determined that these defendants infringed our patented technologies for mercury emissions and were liable for willful infringement, along with inducing and contributory infringement.
+Added: Other Subsequent Events
+Added: On January 15, 2024, the Company granted nonqualified stock options to certain directors, executive officers and employees to acquire an aggregate of 1,000,000 shares of the Company’s common stock under the Company’s 2017 Plan.
+Added: The options granted are exercisable at $ 0.88 per share, representing the fair market value of the common stock on the date of grant as determined under the 2017 Plan.
+Added: The options are fully vested and exercisable as of the date of grant and will expire five years thereafter.
+Added: In addition, on such date, the Company granted 50,000 restricted share units (“RSUs”) to another director pursuant to the 2017 Plan.
+Added: The RSUs will vest one year from the date of grant on January 15, 2025.
+Added: Once vested, each RSU represents the right to receive one share of the Company’s common stock.
+Added: On February 27, 2024, the Company issued 9,285 shares of common stock to a former employee upon a cashless exercise of an option to purchase 18,750 shares of common stock covered by an option to purchase a total of 100,000 shares of common stock, with an exercise price of $ 0.27 per share.
+Added: Such share issuance was based upon a VWAP of $ 0.9230 per share as determined under the terms of the option.
+Added: On March 28, 2024, the lease for the Company’s warehouse space in Corsicana, Texas was extended for an additional five years from March 31, 2024 to March 31, 2029.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.