Midwest Energy Emissions Corp. Reports Third Quarter 2018 Financial Results
Management to Discuss Recent Corporate Updates as Well as Recently Announced Strategic Licensing and Patent Program on Earnings Call Today at 5:00 p.m. EST
LEWIS CENTER, Ohio, Nov. 13, 2018 (GLOBE NEWSWIRE) -- Midwest Energy Emissions Corp. (OTCQB: MEEC) ("ME2C" or the "Company"), a global leader in mercury emissions control for the power industry, has provided its financial results for the third quarter ended September 30, 2018.
Corporate Update
In November, ME2C® engaged Caldwell Cassady & Curry P.C., an IP law firm based in Dallas, Texas, to lead the efforts to license the Company’s SEA® technologies across the USA coal fleet (www.caldwellcc.com). SEA® technologies, the enhancing of a sorbent with a halide-based substance, have been adopted by a significant number of utility operations throughout the USA. ME2C is offering licenses and other commercial options to the users of these patented technologies, including the Company’s specialized know how.
In October, ME2C announced that they secured a three-year, multi-million dollar per year supply contract extension with their largest customer. ME2C also announced that they expanded into two additional coal-fired boilers for this same customer, which is expected to generate multi-million dollar annual revenue over the course of three years. In both instances, ME2C will supply its proprietary Sorbent Enhancement Additive SEA® technologies; however, due to confidentiality, the exact terms and customer name cannot be disclosed.
Also, in October, ME2C added Frederick G. Van Zijl to the board of directors. Mr. Van Zijl has held key business development, leadership, and underwriting roles over his 28 years as a banker and investor, including Managing Director with the Fortress Special Opportunity Fund, Head of U.S. Leveraged Finance at Barclays Capital and Managing Director in Investment Banking with Goldman Sachs & Co.
In August, ME2C presented at the Major U.S. Technical Symposium in Baltimore, MD, which is the United States’ leading technical conference for particulate matter and mercury control, which is produced by four major policy contributors to the energy sector: the Air & Waste Management Association, the Institute of Clean Air Companies, the U.S. Environmental Protection Agency, and U.S. Department of Energy.
Management Commentary
“Following our successful European licensing agreement with Cabot Corporation in the first half of the year, we’ve continued to make significant progress in the second half, which was highlighted by a supply contract extension with a long-term customer—one of the largest utilities in North America—as well as the expansion into two additional coal-fired boilers within their fleet. This is significant, as both the extension and expansion are expected to generate multi-million dollars in annual revenue over the next three years,” said Richard MacPherson, President and CEO of ME2C. “Our work with this customer speaks to the value of our SEA® technologies, which is what we believe to be the ‘Best Available Control Technology’ (BACT) for mercury capture in the industry. Given our unique ability to bring boilers into emissions compliance with the most efficient, cost effective system, we expect to continue capturing new business in the coming months and years, both with current and new customers.”
MacPherson continued: “Over the course of the last several years, we’ve made significant strides to analyze and validate the strength of our extensive patent portfolio. We are now moving forward with our newly announced licensing and patent program throughout the USA as a result of these efforts, whereby we will offer licenses and other commercial opportunities to utility operations throughout the USA - who have adopted our patented SEA® technologies or should be using them. With the support of Caldwell Cassady & Curry, a leading IP law firm, we are leveraging our suite of technologies for the benefit of the utility industry and ME2C shareholders alike.”
Third Quarter 2018 Financial Results
Total revenue in the third quarter of 2018 was $4.2 million, compared to $8.4 million in the same year-ago quarter.
Costs and expenses were $4.4 million and $7.4 million during the three months ended September 30, 2018 and 2017, respectively.
Operating loss in the third quarter of 2018 was $0.2 million, compared to operating income of $1.0 million in the third quarter of 2017.
Net loss in the third quarter of 2018 was $0.6 million, or $(0.1) per diluted share, compared to net income of $0.8 million, or $0.01 per diluted share, in the third quarter of 2017.
On September 30, 2018, ME2C had cash and cash equivalents of $0.4 million compared to $0.5 million on June 30, 2018 and $0.6 million on March 31, 2018.
Adjusted EBITDA in the third quarter of 2018 was $97,000, compared to adjusted EBITDA of $1.5 million in the same year-ago quarter.
Conference Call and Webcast
Management will host a conference call today, November 13, 2018 at 5:00 p.m. Eastern time to discuss ME2C's third quarter 2018 results, provide a corporate update, and conclude with a Q&A from participants. To participate, please use the following information:
Q3 2018 Conference Call and Webcast
Date: Tuesday, November 13, 2018
Time: 5:00 p.m. Eastern time
U.S. Dial-in: 1-800-289-0438
International Dial-in: 1-323-794-2423
Conference ID: 3592048
Webcast: http://public.viavid.com/index.php?id=132127
Please dial in at least 10 minutes before the start of the call to ensure timely participation.
A playback of the call will be available through December 13, 2018. To listen, call 1-844-512-2921 within the United States or 1-412-317-6671 when calling internationally. Please use the replay pin number 3592048.
About Midwest Energy Emissions Corp. (ME2C®)
Midwest Energy Emissions Corp. (OTCQB: MEEC) delivers patented and proprietary solutions to the global coal-power industry to remove mercury from power plant emissions, providing performance guarantees and leading-edge emissions services. ME2C’s broad ranging patented technologies and proprietary products have been shown to achieve mercury removal at low cost and with less operational impact than other methods, while preserving the marketability of fly-ash for commercial use. For more information, please visit www.midwestemissions.com.
Use of Non-GAAP Financial Measures
To provide investors with additional information regarding our financial results, this press release includes references to Adjusted EBITDA, a Non-GAAP financial measure. We view Adjusted EBITDA as an operating performance measure and, as such, we believe that the GAAP financial measure most directly comparable to it is net income (loss). We define Adjusted EBITDA as net income adjusted for income taxes, depreciation, amortization, stock-based compensation, and other non-cash income and expenses. We believe that Adjusted EBITDA provides us an important measure of operating performance because it allows management, investors, debtholders and others to evaluate and compare ongoing operating results from period to period by removing the impact of our asset base, any asset disposals or impairments, stock based compensation and other non-cash income and expense items associated with our reliance on issuing equity-linked debt securities to fund our working capital.
Our use of Adjusted EBITDA has limitations as an analytical tool, and this measure should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP, as the excluded items may have significant effects on our operating results and financial condition. Additionally, our measure of Adjusted EBITDA may differ from other companies' measure of Adjusted EBITDA. When evaluating our performance, Adjusted EBITDA should be considered with other financial performance measures, including various cash flow metrics, net income and other GAAP results. In the future, we may disclose different non-GAAP financial measures in order to help our investors and others more meaningfully evaluate and compare our future results of operations to our previously reported results of operations.
Safe Harbor Statement
With the exception of historical information contained in this press release, content herein may contain "forward-looking statements" that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identified by using words such as "anticipate," "believe," "plan," "expect," "intend," "will," and similar expressions, but these words are not the exclusive means of identifying forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Investors are cautioned that forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the statements made. Matters that may cause actual results to differ materially from those in the forward-looking statements include, among other factors, the gain or loss of a major customer, change in environmental regulations, disruption in supply of materials, capacity factor fluctuations of power plant operations and power demands, a significant change in general economic conditions in any of the regions where our customer utilities might experience significant changes in electric demand, a significant disruption in the supply of coal to our customer units, the loss of key management personnel, availability of capital and any major litigation regarding the Company. In addition, this release contains time-sensitive information that reflects management's best analysis only as of the date of this release. The Company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release. Further information concerning issues that could materially affect financial performance related to forward-looking statements contained in this release can be found in the Company's periodic filings with the Securities and Exchange Commission.
Company Contact:
Richard MacPherson
Chief Executive Officer
Midwest Energy Emissions Corp.
Main: 614-505-6115
rmacpherson@midwestemissions.com
Investor Relations Contact:
Greg Falesnik
Managing Director
MZ Group - MZ North America
Main: 949-385-6449
greg.falesnik@mzgroup.us
www.mzgroup.us
| MIDWEST ENERGY EMISSIONS CORP AND SUBSIDIARIES | |||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
| SEPTEMBER 30, 2018 AND DECEMBER 31, 2017 | |||||||||
| (UNAUDITED) | |||||||||
| September 30, 2018 (Unaudited) | December 31, 2017 | ||||||||
| ASSETS | |||||||||
| Current assets | |||||||||
| Cash and cash equivalents | $ | 449,546 | $ | 2,418,427 | |||||
| Accounts receivable | 1,776,867 | 2,931,353 | |||||||
| Inventory | 468,328 | 659,579 | |||||||
| Prepaid expenses and other assets | 418,242 | 210,535 | |||||||
| Total current assets | 3,112,983 | 6,219,894 | |||||||
| Property and equipment, net | 2,513,096 | 2,728,993 | |||||||
| Intellectual Property/Patents, net | 2,783,962 | 2,934,862 | |||||||
| Customer acquisition costs, net | 68,933 | 172,333 | |||||||
| Total assets | $ | 8,478,974 | $ | 12,056,082 | |||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||||||
| Current liabilities | |||||||||
| Accounts payable and accrued expenses | $ | 2,638,475 | $ | 1,795,703 | |||||
| Current portion of notes payable | 2,875,000 | 2,500,000 | |||||||
| Current portion convertible notes payable, net | 907,322 | 1,461,417 | |||||||
| Current portion of equipment notes payable | 63,359 | 61,177 | |||||||
| Customer credits | 167,000 | 167,000 | |||||||
| Accrued interest | 42,597 | 77,500 | |||||||
| Deferred revenue | - | 517,060 | |||||||
| Total current liabilities | 6,693,753 | 6,579,857 | |||||||
| Notes payable, net of discount and issuance costs | 9,021,256 | 9,733,361 | |||||||
| Convertible notes payable, net of discount and issuance costs | 760,000 | - | |||||||
| Equipment notes payable | 120,361 | 167,650 | |||||||
| Total liabilities | 16,595,370 | 16,480,868 | |||||||
| Stockholders' deficit | |||||||||
| Preferred stock, $.001 par value: 2,000,000 shares authorized | - | - | |||||||
| Common stock; $.001 par value; 150,000,000 shares authorized; | |||||||||
| 76,246,113 shares issued and outstanding as of September 30, 2018 | |||||||||
| 76,246,113 shares issued and outstanding as of December 31, 2017 | 76,246 | 76,246 | |||||||
| Additional paid-in capital | 42,721,987 | 42,165,620 | |||||||
| Accumulated deficit | (50,914,629 | ) | (46,666,652 | ) | |||||
| Total stockholders' deficit | (8,116,396 | ) | (4,424,786 | ) | |||||
| Total liabilities and stockholders' deficit | $ | 8,478,974 | $ | 12,056,082 | |||||
| The accompanying notes are an integral part of these condensed consolidated financial statements. | |||||||||
| MIDWEST ENERGY EMISSIONS CORP AND SUBSIDIARIES | |||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
| FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 | |||||||||||||||||
| (UNAUDITED) | |||||||||||||||||
| For the Three Months Ended September 30, 2018 | For the Three Months Ended September 30, 2017 | For the Nine Months Ended September 30, 2018 | For the Nine Months Ended September 30, 2017 | ||||||||||||||
| Revenues | |||||||||||||||||
| Product sales | 4,113,890 | 8,075,510 | 8,615,260 | 20,472,465 | |||||||||||||
| Equipment sales | 28,252 | 2,975 | 37,398 | 787,081 | |||||||||||||
| Demonstrations and consulting services | 66,950 | 369,482 | 129,096 | 546,982 | |||||||||||||
| Total revenues: | 4,209,092 | 8,447,967 | 8,781,754 | 21,806,528 | |||||||||||||
| Costs and expenses: | |||||||||||||||||
| Cost of sales | 3,009,656 | 5,509,204 | 6,600,582 | 14,290,902 | |||||||||||||
| Selling, general and administrative expenses | 1,364,312 | 1,910,020 | 4,855,442 | 6,856,558 | |||||||||||||
| Total costs and expenses | 4,373,968 | 7,419,224 | 11,456,024 | 21,147,460 | |||||||||||||
| Operating (loss) income | (164,876 | ) | 1,028,743 | (2,674,270 | ) | 659,068 | |||||||||||
| Other (expense) income | |||||||||||||||||
| Interest expense | (471,086 | ) | (541,855 | ) | (1,500,670 | ) | (1,627,248 | ) | |||||||||
| Letter of credit fees | - | (52,667 | ) | (29,000 | ) | (173,333 | ) | ||||||||||
| Loss on debt exchange | - | - | (44,036 | ) | - | ||||||||||||
| Gain on legal settlements | - | 379,000 | - | 317,900 | |||||||||||||
| Total other (expense) | (471,086 | ) | (215,522 | ) | (1,573,706 | ) | (1,482,681 | ) | |||||||||
| Net (loss) income | $ | (635,962 | ) | $ | 813,221 | $ | (4,247,976 | ) | $ | (823,613 | ) | ||||||
| Net income (loss) per common share - basic and diluted: | $ | (0.01 | ) | $ | 0.01 | $ | (0.06 | ) | $ | (0.01 | ) | ||||||
| Weighted average common shares outstanding | 76,246,113 | 75,865,678 | 76,246,113 | 74,662,691 | |||||||||||||
| The accompanying notes are an integral part of these condensed consolidated financial statements. | |||||||||||||||||
|
MIDWEST ENERGY EMISSIONS CORP AND SUBSIDIARIES | ||||||||||||||||||
| RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA | ||||||||||||||||||
| FOR THREE MONTHS ENDED September 30, 2018 AND 2017 | ||||||||||||||||||
| (UNAUDITED) | ||||||||||||||||||
| Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||
| (In thousands) | (In thousands) | |||||||||||||||||
| Net income (loss) | $ | (636 | ) | $ | 813 | $ | (4,248 | ) | $ | (824 | ) | |||||||
| Non-GAAP adjustments: | ||||||||||||||||||
| Depreciation and amortization | 205 | 327 | 602 | 951 | ||||||||||||||
| Interest and letter of credit fees | 471 | 595 | 1,530 | 1,801 | ||||||||||||||
| Income taxes | 4 | 15 | 12 | 21 | ||||||||||||||
| Stock based compensation | 53 | 201 | 438 | 1,438 | ||||||||||||||
| Settlement gains and losses | - | (379 | ) | 44 | (318 | ) | ||||||||||||
| Adjusted EBITDA | $ | 97 | $ | 1,572 | $ | (1,622 | ) | $ | 3,069 | |||||||||
Released November 13, 2018