What changed in this filing

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Item 9A. Controls and Procedures

2024-04-16 compared with 2023-05-15 · 188 added, 184 removed, 399 unchanged (48% of the section changed)

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However, management believes that the lack of these items results in ineffective internal controls, which could result in a material misstatement in our financial statements in future periods.

Certain actions have been taken in recent years to address certain aspects of the material weaknesses disclosed above.

During the fourth quarter of 2019 we hired a new full-time Controller (who became our Chief Financial Officer in June 2021), closed our Lewis Center, Ohio office and moved our corporate headquarters to our Corsicana, Texas address which has allowed us to consolidate our manufacturing and distribution activities, [bookkeeping and accounting] at one location.

Also, in the fourth quarter of 2019, we hired a financial consulting firm to assist us in bookkeeping and preparing financial statements for our SEC filings, assist us in evaluating our internal controls over financial reporting and assist us in other related matters, which firm continues to provide service to us.

Beginning in January 2020, we replaced our previous accounting software with a more efficient software package to manage our business activities and accounting needs.

Effective as of December 30, 2022, our Chief Financial Officer resigned but continues to provide financial, accounting and bookkeeping services to us.

In addition, effective as of March 1, 2023, we retained another certified public accountant to perform bookkeeping and accounting services and retained a new Chief Financial Officer, through a company which provides part-time CFOs to various business entities.

We believe the foregoing will assist in strengthening our overall control environment including the need for segregation of duties.

Although we believe that these efforts effectively strengthen our disclosure controls and procedures as well as our internal control over financial reporting, our management team intends to continue to actively plan for and implement additional control procedures to improve our overall control environment and expect these efforts to continue throughout 2023 and beyond.

Due to the nature of the remediation process, the need to have sufficient resources (cash or otherwise) to devote to such efforts, and the need to allow adequate time after implementation to evaluate and test the effectiveness of the controls, no assurance can be given as to the timing of achievement of remediation.

During 2023, certain actions were taken to address certain aspects of the material weaknesses disclosed above.

Effective as of March 1, 2023, we retained a certified public accountant to assist with bookkeeping and accounting services, and as of September 1, 2023, we hired a new financial consulting firm to assist us in bookkeeping and preparing financial statements for our SEC filings, assist us in evaluating our internal controls over financial reporting and assist us in other related matters.

Such new firm has replaced the financial consulting firm which had been provided service to the Company since the fourth quarter of 2019 and such new firm has taken on additional responsibilities.

In addition, as of November 1, 2023, we appointed a new Chief Financial Officer with over 15 years of experience in accounting and financial control for both private and publicly listed companies to provide fractional Chief Financial Officer services.

We also have made efforts to strengthen our overall control environment by improving our documented internal control policies and staff training.

Although we believe that these efforts effectively strengthen our disclosure control processes and procedures, our management team intends to continue to actively plan for and implement additional control procedures to improve our overall control environment and expect these efforts to continue throughout 2024 and beyond.

Due to the nature of the remediation process, the need to have sufficient resources to retain additional staff to devote to such efforts and further segregate duties, and the need to allow adequate time after implementation to evaluate and test the effectiveness of the controls, no assurance can be given as to the timing of achievement of remediation.

Other Information.

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The following table sets forth certain information as of the date of this report about our executive officers and members of our board of directors.

Positions and Offices Held with the Company

Richard MacPherson

President and Chief Executive Officer, Director

President, Chief Executive Officer, Secretary, Director

Christopher Greenberg

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Vice President of Operations

Secretary, Director

Fiona Fitzmaurice

Chief Financial Officer

Executive Officers

Richard MacPherson has been a Director of the Company since June 2011 and has served as President and Chief Executive Officer of the Company since March 2015.

Richard MacPherson has been a Director of the Company since June 2011, has served as President and Chief Executive Officer of the Company since March 2015 and was appointed as Secretary of the Company in June 2023.

MacPherson is the founder of MES, Inc.

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degree in Mechanical Engineering.

Powell was appointed as Chief Financial Officer on February 10, 2023, to be effective March 1, 2023.

Powell has over 15 years of experience as a senior financial professional with both large and small-scale international operations in multiple sectors.

Since June 2020, he has been a principal of The CFO Centre which provides part-time CFOs to various business entities.

In addition to his role with the Company, Mr.

Powell has served as Chief Financial Officer of Multi-Metal Development Ltd.

MLY) since January 2021.

Prior to that, he acted as Chief Financial Officer of IntelliPharmaCeutics International Inc.

IPCI) from February 2019 to March 2020, Director of Finance for Wave Financial Inc.

from August 2018 to January 2019, and Director of Finance for Pixelworks Canada and its predecessor ViXS Systems Inc.

VXS) from August 2013 to August 2018.

Powell is a Chartered Professional Accountant - Certified General Accountant and a Certified Fraud Examiner, and in 2012 was awarded Fellowship in the Association of Chartered Certified Accountants.

Fiona Fitzmaurice was appointed as Chief Financial Officer on November 1, 2023.

She is a chartered accountant with over 15 years of experience in accounting and financial control for both private and publicly listed companies.

She has significant experience as CFO for exploration companies and has been involved in numerous private placements, prospectus filings, flow-through financings and corporate audits.

Fitzmaurice currently serves as CFO of the following companies:

Exploits Discovery Corp.

(CSE:NFLD) since December 2022;

Digicann Ventures Inc.

(CSE:DCNN) since October 2021;

Provenance Gold Corp.

(CSE:PAU) since May 2021;

Pedro Resources Ltd.

(TSXV:PED.H) since August 2020;

and MacDonald Mines Exploration Ltd.

(TSXV:BMK) since December 2019.

She has also served as Controller of Noront Resources Ltd.

(TSXV:NOT) from May 2015 to December 2022;

CFO of Honey Badger Exploration Inc.

(TSXV:TUF) from December 2019 to November 2020;

CFO of Pasofino Gold Limited (TSXV:VEIN) from July 2017 to March 2020;

and CFO of Mojave Jane Brands (CSE:JANE) from October 2017 to July 2019.

Fitzmaurice currently holds a charted certified qualification from ACCA (Association of Chartered Certified Accountants) having received her certification in Ireland in 2008.

She holds a bachelor’s degree in accounting and finance from Athlone Institute of Technology, Ireland.

Please see the information regarding Richard MacPherson under “Executive Officers” above.

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Greenberg’s deep experience in business, along his strong entrepreneurial and executive management background, qualifies him to serve on our board.

Kaye has been a director of the Company since June 2019 and Secretary since December 2019.

Kaye has been a director of the Company since June 2019 and acted as Secretary from December 2019 to June 2023.

Kaye is an attorney and has been a partner in the law firm of Kaye Cooper Kay & Rosenberg, LLP, located in Roseland, New Jersey, since the firm’s inception in February 1996.

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Kaye’s deep experience in business and transactional matters and working with public companies qualifies him to serve on our board.

Troy Grant has been a director of the Company since May 2023.

Grant, a graduate from St.

Francis Xavier University with a Bachelor of Commerce degree, has extensive experience in investment financing, predominantly focusing on raising significant funding across global platforms and management of strategic operations.

For the past 10 years, his career has been dedicated to his role as Chief Executive Officer (CEO) with Elcora Advanced Materials Corp.

Elcora was founded in 2011 and has been successfully structured as a vertically integrated battery material company with mining assets in Sri Lanka and Morocco.

As CEO, in addition to responsibility for the overall strategic operations, including exploration, business development and implementation of the company vision, Mr.

Grant works diligently to raise equity and advance assets.

Grant also currently serves as a director and member of the Audit Committee of several publicly listed companies, including Elcora Advanced Materials Corp., i3 Interactive Inc.

BETS), Auxly Cannabis Group Inc.

XLY), and Cleantech Power Corp.

(formerly, Alkaline Fuel Cell Power Corp.) (NEO:

We believe Mr.

Grant’s deep public company experience in Canada and his strong background in business and investment financing qualifies him to serve on our board.

There are no family relationships between any of the directors and executive officers of the Company.

Board of Directors

The Board of Directors has a stewardship responsibility to supervise the management of and oversee the conduct of the business of the Company, provide leadership and direction to management, evaluate management, set policies appropriate for the business of the Company and approve corporate strategies and goals.

The day-to-day management of the business and affairs of the Company is delegated by the Board of Directors to the executive officers of the Company.

The Board of Directors gives direction and guidance through the CEO to management and keeps management informed of its evaluation of the executive officers in achieving and complying with goals and policies established by the Board of Directors.

The Board of Directors exercises its independent supervision over management by its policies that (a) periodic meetings of the Board of Directors be held to obtain an update on significant corporate activities and plans;

and (b) all material transactions of the Company are subject to prior approval of the Board of Directors.

To facilitate open and candid discussion among its independent directors, such directors are encouraged to communicate with each other directly to discuss ongoing issues pertaining to the Company.

Composition of Our Board of Directors

Our Board currently consists of three members.

Our Board currently consists of four members.

There are no contractual obligations regarding the election of our directors.

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Audit Committee

Due to the resignation of certain independent directors in recent years, and due to the current small size of the board, the Board as a whole now acts and shall continue to act as the audit committee until such time, if any, that the number of authorized and elected directors is increased or the committees are otherwise reconfigured.

The Audit Committee is comprised of Christopher Greenberg, David M.

Kaye, and Troy Grant.

The Audit Committee’s charter requires that such committee shall consist of no fewer than three directors.

Each member of the Audit Committee shall be an independent director of the Company if required to satisfy the independence requirements of any exchange on which the Company’s securities may be listed and any other applicable regulatory requirements.

If the Company’s securities are listed on the TSXV, a majority of the members of the Audit Committee must be individuals who are not officers, employees, or control persons of the Company, or any of its associates or affiliates.

The Audit Committee is appointed by the Board of Directors to assist the Board in fulfilling its oversight responsibility by reviewing the accounting and financial reporting processes of the Company and its subsidiaries, our internal control and disclosure control system, and the audits of our financial statements.

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We do not incorporate the information contained on, or accessible through, our corporate website into this report, and you should not consider it a part of this report.

Other Committees

The Board of Directors has no committees at the present time other than the Audit Committee.

Corporate Governance

Separation of CEO and Chairman Roles

The Board does not have a formal policy regarding the separation of the roles of CEO and Chairman of the Board as the Board believes it is in the best interest of the Company and our stockholders to make that determination based on the position and direction of the Company and the membership of the Board.

At this time, the Board has determined that separating the role of Chairman from the role of CEO is in the best interest of the Company and our stockholders.

This structure permits our President and CEO to devote more time to focus on the strategic direction and management of our day-to-day operations.

Risk Oversight

It is management’s responsibility to manage risk and bring to the Board’s attention the most material risks to the Company.

The Board has oversight responsibility of the processes established to report and monitor systems for material risks applicable to the Company.

The full Board, or the committees, if any, appointed by the Board, shall regularly review enterprise-wide risk management, which includes treasury risks, financial and accounting risks, legal and compliance risks, and other risk management functions.

Ethical Business Conduct

Directors of Delaware corporations are subject to the fiduciary duties of care and loyalty which includes the subsidiary duties of good faith, oversight and disclosure.

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Financial Experts

The Board of Directors has not appointed any directors as “audit committee financial experts” as defined under Item 407 of Regulation S-K promulgated pursuant to the Securities Exchange Act of 1934, as amended, insofar that our common stock is not presently a listed security.

Delinquent Section 16(a) Reports

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MacPherson’s annual base salary was $395,000.

Since November 1, 2022, Mr.

From November 1, 2022 to December 31, 2023, Mr.

MacPherson’s annual base salary was $495,000.

Since January 1, 2024, Mr.

MacPherson’s annual base salary has been $745,000.

MacPherson is currently employed pursuant to a three-year employment letter agreement which was entered into on January 29, 2019, and effective January 1, 2019, which after such three-year term will automatically renew for successive one-year periods unless otherwise terminated by either party prior to the next applicable renewal period.

MacPherson’s base salary may be increased from time to time at the discretion of the Board, and Mr.

MacPherson shall also be entitled to participate in all corporate 401(k) programs and health benefit plans instituted by the Company and be eligible to receive bonus compensation, if any, as the Company shall from time to time determine.

On January 14, 2024, the Board awarded Mr.

MacPherson bonus compensation of $250,000.

MacPherson shall also be entitled to participate in any stock option and incentive plans adopted by the Company.

During 2022, Mr.

MacPherson was granted a five-year nonqualified stock option to acquire 750,000 shares of common stock exercisable at $0.78 per share.

During 2022, Mr.

MacPherson was granted a retention stock bonus award in the amount of 3,000,000 shares of common stock.

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Pavlish’s annual base salary was $330,000.

From January 1, 2023 to December 31, 2023, Mr.

Pavlish’s annual base salary was $415,000.

Since January 1, 2024, Mr.

Pavlish’s annual base salary has been $480,000.

As of December 31, 2022, $29,063 of Mr.

Pavlish’s 2021 salary remained unpaid.

Pavlish’s base salary may be increased from time to time at the discretion of the Board, and Mr.

Pavlish shall also be entitled to participate in all corporate 401(k) programs and health benefit plans instituted by the Company and be eligible to receive bonus compensation, if any, as the Company shall from time to time determine.

On January 14, 2024, the Board awarded Mr.

Pavlish bonus compensation of $50,000.

Pavlish shall also be entitled to participate in any stock option and incentive plans adopted by the Company.

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Pavlish was granted a five-year nonqualified stock option to acquire 500,000 shares of common stock exercisable at $0.21 per share.

During 2022, Mr.

Pavlish was granted a five-year nonqualified stock option to acquire 500,000 shares of common stock exercisable at $0.21 per share.

Trettel was appointed Vice President of Operations in January 2014.

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Trettel’s annual base salary was $300,000.

Since November 1, 2022, Mr.

From November 1, 2022 to December 31, 2023, Mr.

Trettel’s annual based salary was $400,000.

Since January 1, 2024, Mr.

Trettel’s annual base salary has been $500,000.

On January 14, 2024, the Board awarded Mr.

Trettel bonus compensation of $100,000.

Trettel’s base salary may be increased from time to time at the discretion of the Board, and Mr.

Trettel is also entitled to participate in any stock option and incentive plans adopted by the Company.

1 unchanged sentence

Trettel was granted a five-year nonqualified stock option to acquire 500,000 shares of common stock exercisable at $0.21 per share.

During 2022, Mr.

Trettel was granted a five-year nonqualified stock option to acquire 500,000 shares of common stock exercisable at $0.21 per share.

Represents the dollar amount recognized for consolidated financial statement reporting purposes of restricted stock awards and stock option awards granted to the executive officers computed in accordance with FASB ASC Topic 718.

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The dollar amount shown in the “Stock Awards” column for Mr.

MacPherson reflects the grant date fair value recognized in 2022 only for the retention stock award granted in November 2022 which is subject to a vesting schedule.

MacPherson reflects the grant date fair values recognized in 2022 and 2023 for the retention stock award granted in November 2022 which is subject to a vesting schedule.

The full amount for the entire grant is reflected in the table below.

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401k Match ($)

Life Insurance

Allowance and Other Benefits

Life Insurance Premiums ($)

Auto Allowance ($)

Perquisites and Other Benefits ($) (1)

Richard MacPherson

James Trettel

The amount for each of Messrs.

MacPherson, Pavlish and Trettel includes $6,000 for a home office allowance in 2023 and $4,800 for a home office allowance in 2022.

The amount for each of Messrs.

MacPherson and Pavlish in 2023 also includes $14,809 and $5,075, respectively, for medical expense reimbursement in 2023 and $8,752 and $2,100, respectively, for medical expense reimbursement in 2022.

In addition, the amount for Mr.

Pavlish in 2023 includes a gross up for taxes of $14,140 in connection with the exercise of stock options.

Outstanding Equity Awards as of December 31, 2023

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There were no stock options exercised during fiscal 2023 by such executives.

Option Awards

Number of securities underlying unexercised options (#) exercisable

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Expiration Date

Richard MacPherson

June 28, 2024

Richard MacPherson

June 28, 2024

Richard MacPherson

February 5, 2023

Richard MacPherson

July 31, 2023

Richard MacPherson

August 31, 2023

Richard MacPherson

September 30, 2023

Richard MacPherson

October 31, 2023

Richard MacPherson

June 28, 2024

Richard MacPherson

December 14, 2025

Number of shares or units of stock that have not vested (#)

Market value of shares of units or stock that have not vested ($) (1)

Richard MacPherson

November 22, 2026

June 28, 2024

February 10, 2027

February 23, 2023

June 30, 2023

July 31, 2023

August 31, 2023

September 30, 2023

October 31, 2023

November 30, 2023

December 31, 2023

June 28, 2024

December 14, 2025

November 22, 2026

James Trettel

June 28, 2024

James Trettel

February 10, 2027

James Trettel

February 23, 2023

James Trettel

June 30, 2023

James Trettel

July 31, 2023

James Trettel

August 31, 2023

James Trettel

September 30, 2023

James Trettel

October 31, 2023

James Trettel

November 30, 2023

James Trettel

December 31, 2023

James Trettel

June 28, 2024

James Trettel

December 14, 2025

James Trettel

November 22, 2026

James Trettel

The market value of the stock awards that have not vested is calculated using the closing price of $0.92 of our common stock on December 29, 2023, the last trading day of 2023.

Other Benefits

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We also provide vacation and other paid holidays to all employees, including our executive officers, which are comparable to those provided at peer companies.

At this time, we do not provide special benefits or other perquisites to our executive officers.

Certain other perquisites and benefits are provided to our executive officers as reflected in the tables above.

Policies Regarding Recovery of Awards

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While the board of directors considers deductibility factors when making compensation decisions, the board also looks at other considerations, such as providing our executive officers with competitive and adequate incentives to remain with us and increase our business operations, financial performance, and prospects, as well as rewarding extraordinary contributions.

No compensation to named executive officers exceeded this threshold in 2022.

We account for equity compensation paid to our employees under the rules of FASB ASC Topic 718, which requires us to estimate and record an expense for each award of equity compensation over the service period of the award.

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Stockholder Advisory Vote on Executive Compensation

Our Company held an advisory vote on executive compensation in 2021 and intends to take such action annually in the future.

Our Company held an advisory vote on executive compensation in 2023 and intends to take such action annually.

The Board intends to periodically reevaluate our executive compensation philosophy and practices in light of our performance, needs and developments, including the outcome of future non-binding advisory votes by our stockholders.

Director Compensation

Director Compensation Table for Year Ended December 31, 2023

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For a discussion of valuation assumptions, see Note 10 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

The dollar amount shown in the “Options Awards” column for Mr.

Greenberg reflects the compensation expense associated with the extension of the expiration date of a stock option which extension was authorized in January 2022.

There can be no assurance the amounts determined in accordance with FASB ASC Topic 718 will ever be realized.

The following table provides information concerning the stock awards and stock options granted to the Directors for 2022:

FASB ASC Topic 718 Value

Extension of Stock Options (#)

The following table provides information concerning the stock options granted to the Directors for 2023:

FASB ASC Topic 718 Value

Christopher Greenberg

Greenberg is paid $100,000 per year for serving as Chairman of the Board.

As of December 31, 2022, Mr.

On May 26, 2023, Mr.

Grant was granted a non-qualified stock option to acquire 125,000 shares of the Company’s common stock exercisable at $0.41 per share, representing the fair market value of the common stock as of the date of grant.

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.

The option will expire five years after the date of grant.

For 2023, Mr.

Greenberg’s compensation for serving as Chairman of the Board was $100,000.

As of December 31, 2023, $50,000 of Mr.

Greenberg’s cash compensation remained unpaid.

Kaye was not paid any cash compensation for service on the Board in 2023.

Troy Grant, who was appointed to the Board on May 26, 2023, was paid $37,500 for his service on the Board during 2023.

All directors are reimbursed for their reasonable out-of-pocket expenses incurred in connection with their duties to the Company.

Effective as of January 1, 2024, Mr.

Greenberg shall be paid $150,000 per year for serving as Chairman of the Board, and each of Mr.

Grant shall be paid $75,000 annually for serving on the Board.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth certain information known to us regarding beneficial ownership of our common stock as May 12, 2023 by:

The following table sets forth certain information known to us regarding beneficial ownership of our common stock as April 16, 2024 by:

each person or group of affiliated persons known by us to be the beneficial owner of more than five percent of our capital stock;

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all of our executive officers and directors as a group.

The column entitled “Percentage of Shares Beneficially Owned” is calculated based on 94,249,676 shares of common stock outstanding as of May 12, 2023.

The column entitled “Percentage of Shares Beneficially Owned” is calculated based on 94,369,392 shares of common stock outstanding as of April 16, 2024.

We have determined beneficial ownership in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose.

These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities as well as any shares of common stock that the person has the right to acquire within 60 days of May 12, 2023 through the exercise of stock options or other rights.

These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities as well as any shares of common stock that the person has the right to acquire within 60 days of April 16, 2024 through the exercise of stock options or other rights.

These shares are deemed to be outstanding and beneficially owned by the person holding those options for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

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Richard MacPherson

16,367,947 (1)

Christopher Greenberg

6,230,533 (2)

6,847,243 (3)

James Trettel

4,286,935 (4)

Alterna Core Capital Assets Fund II, L.P., et al

9,300,000 (7)

All current directors and executive officers as a group (7 persons)

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Kaye has the right to acquire upon exercise of options.

Includes 150,000 shares owned by Mr.

Grant and 125,000 shares which Mr.

Grant has the right to acquire upon exercise of options.

Does not include 50,000 shares underlying 50,000 restricted share units (“RSUs”) which will vest one year from the date of grant on January 15, 2025.

Represents 9,300,000 shares owned and based solely upon and according to information reported in filings made to the SEC, jointly filed by and on behalf of certain reporting persons identified below (the “Reporting Persons”).

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The address for the Reporting Persons is 10 Corporate Drive, Suite 2204, Bedford, NH 03110.

Applicable percentage ownership for each stockholder is based on 94,249,676 shares of common stock outstanding as of May 12, 2023 plus any securities that stockholder has the right to acquire within 60 days of May 12, 2023 pursuant to options, warrants, conversion privileges, or other rights.

Applicable percentage ownership for each stockholder is based on 94,369,392 shares of common stock outstanding as of April 16, 2024 plus any securities that stockholder has the right to acquire within 60 days of April 16, 2024 pursuant to options, warrants, conversion privileges, or other rights.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities.

Shares of common stock that a person has the right to acquire beneficial ownership of upon the exercise or conversion of options, convertible stock, warrants, or other securities that are currently exercisable or convertible or that will become exercisable or convertible within 60 days of May 12 2023 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

Shares of common stock that a person has the right to acquire beneficial ownership of upon the exercise or conversion of options, convertible stock, warrants, or other securities that are currently exercisable or convertible or that will become exercisable or convertible within 60 days of April 16, 2024 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

Certain Relationships and Related Transactions, and Director Independence.

Other than the compensation agreements and other arrangements described under Item 11 Executive Compensation and the transactions described below, since January 1, 2022, there has not been and there is not currently proposed, any transaction or series of similar transactions to which we were, or will be, a party in which the amount involved exceeded, or will exceed, the lesser of (i) $120,000 or (ii) one percent of the average of our total assets for the last two completed fiscal years, and in which any director, executive officer, holder of five percent or more of any class of our capital stock, or any member of the immediate family of, or entities affiliated with, any of the foregoing persons, had, or will have, a direct or indirect material interest.

On June 1, 2021, we entered into a Debt Repayment and Exchange Agreement with AC Midwest which at closing was expected to repay all existing secured and unsecured debt obligations then held by AC Midwest (the "Debt Repayment Agreement").

The closing was subject to various conditions including but not limited to the completion of an offering of equity securities resulting in net proceeds of at least $12.0 million by December 31, 2021, which was extended to June 30, 2022.

Such closing conditions were not met by June 30, 2022.

On October 28, 2022, and in connection with the amendments to the financing documents executed on October 28, 2022 as described below, the parties agreed to terminate the Debt Repayment Agreement with immediate effect pursuant to which none of the parties shall have any further responsibility or liability thereunder.

AC Midwest is the holder of an unsecured note with a principal amount outstanding of $13,154,930.60 which was issued on February 25, 2019 pursuant to an Unsecured Note Financing Agreement (the "Unsecured Note Financing Agreement") entered into on such date with AC Midwest, pursuant to which AC Midwest exchanged a previously issued subordinated unsecured note in the principal amount of $13,000,000, together with all accrued and unpaid interest thereon, for a new unsecured note in the principal amount of $13,154,930.60 (the "Unsecured Note").

Other than the compensation agreements and other arrangements described under Item 11.

Executive Compensation and the transactions described below, since January 1, 2023, there has not been and there is not currently proposed, any transaction or series of similar transactions to which we were, or will be, a party in which the amount involved exceeded, or will exceed, the lesser of (i) $120,000 or (ii) one percent of the average of our total assets for the last two completed fiscal years, and in which any director, executive officer, holder of five percent or more of any class of our capital stock, or any member of the immediate family of, or entities affiliated with, any of the foregoing persons, had, or will have, a direct or indirect material interest.

On February 27, 2024, we entered into an Unsecured Debt Restructuring Agreement (the “Debt Restructuring Agreement”) with AC Midwest Energy LLC (“AC Midwest”) which replaced and superseded the Unsecured Note Financing Agreement and Reaffirmation of Guaranty entered into with AC Midwest on February 25, 2019, as amended on October 28, 2022 (the “Unsecured Note Financing Agreement”).

Pursuant to the Unsecured Note Financing Agreement, prior to February 27, 2024, AC Midwest was the holder of an unsecured note with a principal amount outstanding of $13,154,930.61 which was issued on February 25, 2019 (the “Unsecured Note”).

The Unsecured Note was scheduled to mature on August 25, 2025 and bears a zero cash interest rate.

Pursuant to the Unsecured Note Financing Agreement, AC Midwest shall also be entitled to a profit participation preference equal to 1.0 times the original principal amount (the "Profit Share").

Prior to maturity, the outstanding principal, as well as the Profit Share, are to be paid from Net Litigation Proceeds from claims relating to our intellectual property, Net Revenue Share and Adjusted Free Cash Flow (as such terms are defined in the Unsecured Note Financing Agreement, and to the extent set forth therein).

Any remaining principal balance due on the Unsecured Note shall be due and payable in full on the maturity date.

The Profit Share, however, if not paid in full on or before the maturity date shall remain subject to the Unsecured Note Financing Agreement until full and final payment.

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 our intellectual property, Net Revenue Share and Adjusted Free Cash Flow.

On August 30, 2022, AC Midwest agreed to a short-term extension of the maturity date of the Unsecured Note from August 25, 2022 to September 30, 2022, and on September 28, 2022, AC Midwest agreed to an additional short-term extension of such maturity date from September 30, 2022 to October 31, 2022 in order to provide the Company sufficient time in which to conclude the process of negotiating certain changes and modifications to such financing arrangements with AC Midwest.

On October 28, 2022, we executed Amendment No.

1 to the Unsecured Note Financing Agreement with AC Midwest pursuant to which the maturity date of the Unsecured Note was extended to August 25, 2025 and the Profit Share was increased by $4,500,000 from $13,154,931 (representing 1.0 times the original principal amount) to $17,654,931.

In addition, the parties agreed that a portion any Equity Offering Net Proceeds (as defined in Amendment No.

1) received by us shall also be used to pay the outstanding principal due on the Unsecured Note and Profit Share.

In addition, there remains outstanding to AC Midwest a principal balance of $271,686 due under a secured note issued on November 29, 2016, in the original principal amount of $9,646,686, which also was scheduled to mature on August 25, 2022 (the "Secured Note").

Similar to the maturity date of the Unsecured Note, the two short-term extensions described above also extended the maturity date of the Secured Note to October 31, 2022.

On October 28, 2022, we executed Amendment No.

4 to the amended and restated financing agreement with AC Midwest dated November 1, 2016 (“Amended and Restated Financing Agreement”) pursuant to which the maturity date of the Secured Note was extended to August 25, 2025 and the interest rate on the remaining principal balance was reduced from 15.0% to 9.0% per annum.

On October 28, 2022, the Company and AC Midwest also entered into a repurchase option agreement (“Repurchase Option Agreement”) pursuant to which we shall have the option to repurchase a portion of the Common Shares owned by AC Midwest at a purchase price of $0.50 per share until the earlier of (i) the date AC Midwest’s beneficial ownership reaches 5.0% of the Company’s issued and outstanding common stock, or (ii) August 25, 2025.

AC Midwest beneficially owns, or controls or directs, directly or indirectly, 10% or more of the outstanding shares of our common stock.

Pursuant to the Unsecured Note Financing Agreement, AC Midwest was also entitled to a “non-recourse” profit participation preference equal to $17,654,930.60 (the “Profit Share”).

Prior to maturity, the outstanding principal, as well as the Profit Share, were to be paid from Net Litigation Proceeds from claims relating to the Company’s intellectual property, Net Revenue Share, Adjusted Free Cash Flow and Equity Offering Net Proceeds (as such terms are defined in the Unsecured Note Financing Agreement).

Any remaining principal balance due on the Unsecured Note would be due and payable in full on the maturity date.

The Profit Share, however, if not paid in full on or before the maturity date would remain subject to the Unsecured Note Financing Agreement until full and final payment.

Prior to February 27, 2024, there also remained outstanding to AC Midwest a principal balance of $271,686.10 due under a secured noted of the Company issued on November 29, 2016 in the original principal amount of $9,646,686, which had a maturity date of August 25, 2025 (the “Secured Note”).

The Secured Note had been issued pursuant to an Amended and Restated Financing Agreement and Reaffirmation of Guaranty, dated as of November 1, 2016, as amended on June 14, 2018, September 12, 2019, February 25, 2019 and October 28, 2022 (the “Restated Financing Agreement”).

Pursuant to the Debt Restructuring Agreement, on February 27, 2024, we (i) paid AC Midwest $9,040,000 as a reduction in the outstanding principal balance of the Unsecured Note, (ii) issued to AC Midwest a new unsecured replacement note representing the remaining outstanding principal balance of the Unsecured Note in the principal amount of $4,114,930.60 (the “New Note”), and (iii) paid AC Midwest $275,625.55 representing the remaining principal balance under the Secured Note of $271,686.10 plus interest of $3,939.45.

In addition, within 30 days, we would either facilitate the private sale to third parties of certain shares of common stock of the Company held by AC Midwest for a purchase price of no less than $960,000, which amount shall be applied as a credit against the principal balance due on the New Note dollar for dollar, or pay AC Midwest $960,000 toward the principal balance due on the New Note.

The private sale of shares for the purchase price of $960,000 was completed on March 11, 2024.

Any remaining principal balance on the New Note shall be due August 27, 2024 (the “Maturity Date”), which is six months from February 27, 2024.

Until repaid in full, the New Note shall accrue interest at a rate equal to SOFR plus 2.0% per annum.

The New Note completely replaces and supersedes the Unsecured Note, which shall be of no further force and effect.

In addition, pursuant to the Debt Restructuring Agreement, AC Midwest shall be entitled to a profit participation preference equal to $7,900,000 (the “Restructured Profit Share”).

The Restructured Profit Share is “non-recourse” and shall only be paid from Net Litigation Proceeds (as defined in the Debt Restructuring Agreement) from claims relating to our intellectual property.

Following the receipt of any Net Litigation Proceeds, we shall prepay any remaining principal balance of the New Note and pay the Restructured Profit Share in an amount equal to 75.0% of such Net Litigation Proceeds until the New Note and Restructured Profit Share have been paid in full.

The Restructured Profit Share completely replaces and supersedes the terms and conditions of the Profit Share in the amount of $17,654,930.60 provided for in the Unsecured Note Financing Agreement, which shall be of no further force and effect.

The Restructured Profit Share, if not paid in full on or before the Maturity Date, shall remain subject to the terms of the Debt Restructuring Agreement.

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.

As a result of the repayment of the remaining principal balance under the Secured Debt, we 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.

AC Midwest beneficially owns, or controls or directs, directly or indirectly, 9.86% of the outstanding shares of our common stock.

Kaye Cooper Kay & Rosenberg, LLP provides certain legal services to the Company and was paid $393,111 for the year ended December 31, 2023 for legal services rendered.

Kaye, a Director and Secretary of the Company, is a partner of the law firm.

On June 13, 2022, the Company entered into a promissory note in the amount of $250,000 with the Company’s Chairman of the Board of Directors.

The note bore interest at 6% and was due on the earlier of 90 days or the Company having cash of $1,200,000.

On October 11, 2022, such loan together with all accrued interest was repaid in full by the Company.

Kaye, a Director of the Company, is a partner of the law firm.

On January 31, 2023, we entered into a License and Supply Agreement with Dakin Holdings Ltd., a company incorporated in Barbados (“Dakin”), effective as of January 1, 2023 (the “Dakin Agreement”), pursuant to which Dakin has granted to the Company (i) a limited license to manufacture and produce for Dakin products (the “Dakin Products”) comprising certain intellectual property owned by Dakin as described below (the “Dakin IP”), and (ii) an exclusive license to commercialize the Dakin IP in the United States.

6 unchanged sentences

Director Independence

For purposes of this Annual Report on Form 10-K, the independence of our directors has been determined under the listing standards of the The Nasdaq Stock Market.

The Board has determined that currently one of our directors, Christopher Greenberg, qualifies as an independent director.

In making that determination, the Board considered the relationships that each director has with us and all other facts and circumstances the Board deemed relevant in determining independence, including the potential deemed beneficial ownership of our capital stock by each director, including non-employee directors that are affiliated with certain of our major stockholders.

The Board consists of four members, three of whom are viewed as being independent within the meaning of Canadian National Instrument 58-101 – Disclosure of Corporate Governance Practices (“NI 58-101”).

For this purpose, a director is independent if he or she has no direct or indirect “material relationship” with the Company, as defined in NI 58-101.

A “material relationship” is a relationship which could, in the view of the Board, be reasonably expected to interfere with the exercise of the director’s independent judgment.

An individual who has been an employee or executive officer of the Company within the last three years is considered to have a material relationship with the Company.

Christopher Greenberg, David M.

Kaye and Troy Grant are independent for the purposes of NI 58-101.

Richard MacPherson is not independent for the purposes of NI 58-101 as he is also an executive officer of the Company.

In addition, although our securities are not listed on any U.S.

national securities exchange, the Board has also determined that Christopher Greenberg, David M.

Kaye and Troy Grant qualify as independent within the meaning of Section 303A.02 of the NYSE Listed Company Manual.

Principal Accounting Fees and Services.

Independent Registered Public Accounting Firm’s Fees

The following table sets forth the fees billed or billable by Marcum LLP and its predecessor Rotenberg Meril Solomon Bertiger & Guttilla, P.C., our independent registered public accounting firm, for audit and non-audit services rendered to us relating to 2022 and 2021.

The following table sets forth the fees billed or billable by Rosenberg Rich Baker Berman, P.A., our principal accountants effective as of September 11, 2023, and Marcum LLP, our former principal accountants, for audit and non-audit services rendered to us relating to 2023 and 2022.

These fees are categorized as audit fees, audit-related fees, tax fees, and all other fees.

6 unchanged sentences

Total aggregate fees

The aggregate audit fees billed or expected to be billed for professional services rendered by our principal accountants for the audit of our consolidated financial statements included in our annual report on Form 10-K and review of our interim consolidated financial statements included in quarterly reports, and other services normally provided in connection with statutory and regulatory filings was $178,870 and $144,192 for the years ended December 31, 2022 and 2021, respectively.

The aggregate fees billed for Audit-related professional services rendered by our principal accountants consisted of work performed in connection with proposed registration statements was $0 and $23,508 for the years ended December 31, 2022 and 2021, respectively.

_______________________

The aggregate audit fees billed or expected to be billed for professional services rendered by Rosenberg Rich Baker Berman, P.A., our principal accountants effective as of September 11, 2023, for the audit of our consolidated financial statements included in our annual report on Form 10-K and review of our interim consolidated financial statements included in quarterly reports, and other services normally provided in connection with statutory and regulatory filings was $131,000 for the year ended December 31, 2023.

The aggregate audit fees billed for professional services rendered by Marcum LLP, our former principal accountants, for the audit of our consolidated financial statements included in our annual report on Form 10-K and review of our interim consolidated financial statements included in quarterly reports, and other services normally provided in connection with statutory and regulatory filings was $102,151 and $178,870 for the years ended December 31, 2023 and 2022, respectively.

The aggregate fees billed for audit-related professional services rendered by Marcum LLP consisting of work performed in connection with transitioning of auditors and review of workpapers was $12,875 for the year ended December 31, 2023.

All fees described above were pre-approved by the Board.

4 unchanged sentences

(1) Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firms

Consolidated Balance Sheet as of December 31, 2023 and 2022

Consolidated Statements of Operations for Years Ended December 31, 2023 and 2022

Consolidated Statements of Stockholders’ Deficit for Years Ended December 31, 2022 and 2021

Consolidated Statements of Stockholders’ Equity (Deficit) for Years Ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for Years Ended December 31, 2023 and 2022

15 unchanged sentences

dated November 16, 2014

Midwest Energy Emissions Corp.

2014 Equity Incentive Plan as amended

Form of Option Award Agreement (2014 Equity Incentive Plan)

Security Agreement by and between Midwest Energy Emissions Corp., MES, Inc.

and AC Midwest Energy, LLC dated as of August 14, 2014

Amended and Restated Financing Agreement among Midwest Energy Emissions Corp., MES, Inc.

and AC Midwest Energy LLC dated as of November 1, 2016

Amendment No.

1 to Amended and Restated Financing Agreement among Midwest Energy Emissions Corp., MES, Inc.

and AC Midwest Energy LLC dated as of June 14, 2018

Amendment No.

2 to Amended and Restated Financing Agreement among Midwest Energy Emissions Corp., MES, Inc.

and AC Midwest Energy LLC dated as of September 12, 2018

Amendment No.

3 to Amended and Restated Financing Agreement among Midwest Energy Emissions Corp., MES, Inc.

and AC Midwest Energy LLC dated as of February 25, 2019

Amendment No.

4 to Amended and Restated Financing Agreement among Midwest Energy Emissions Corp., MES, Inc.

and AC Midwest Energy LLC dated as of October 28, 2022

Secured Note dated November 29, 2016

Unsecured Note Financing Agreement among Midwest Energy Emissions Corp., MES, Inc.

and AC Midwest Energy LLC dated as of February 25, 2019

1 to Unsecured Note Financing Agreement among Midwest Energy Emissions Corp., MES, Inc.

and AC Midwest Energy LLC dated as of October 28, 2022

Unsecured Note dated February 25, 2019

Repurchase Option Agreement between Midwest Energy Emissions Corp.

4 unchanged sentences

Midwest Energy Emissions Corp.

2017 Equity Incentive Plan as amended

Amended and Restated 2014 Equity Incentive Plan

Midwest Energy Emissions Corp.

Amended and Restated 2017 Equity Incentive Plan

Form of Option Award Agreement (2017 Equity Incentive Plan)

Unsecured Debt Restructuring Agreement among Midwest Energy Emissions Corp., MES, Inc.

and AC Midwest Energy LLC dated as of February 27, 2024

Unsecured Replacement Note dated February 27, 2024

Satisfaction and Discharge of Secured Debt among Midwest Energy Emissions Corp., MES, Inc.

and AC Midwest Energy LLC dated as of February 27, 2024

Code of Ethics

14 unchanged sentences

MIDWEST ENERGY EMISSIONS CORP.

April 16, 2024

/s/ Richard MacPherson

4 unchanged sentences

President, Chief Executive Officer

April 16, 2024

Richard MacPherson

and Director (Principal Executive Officer)

/s/ Gregory R.

/s/ Fiona Fitzmaurice

Chief Financial Officer

April 16, 2024

Fiona Fitzmaurice

(Principal Financial Officer and Principal Accounting Officer)

1 unchanged sentence

Chairman of the Board and Director

April 16, 2024

Christopher Greenberg

Secretary and Director

April 16, 2024

/s/ Troy Grant

April 16, 2024

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.

What changed 10-K

Item 9A. Controls and Procedures