SOURCE: Midwest Energy Emissions Corp.

Midwest Energy Emissions Corp. Logo

April 05, 2016 08:00 ET

Midwest Energy Emissions Corp. Reports Significant Increase in Revenues

Company Announces Strong Close to 2015

LEWIS CENTER, OH--(Marketwired - April 05, 2016) - Midwest Energy Emissions Corp. (OTCQB: MEEC) ("ME2C" or the "Company"), an emerging leader in mercury emissions control technology for the global coal-power industry, today announced results for the year ending December 31, 2015.

 2015 Financial Highlights

  • Revenues of $12,632,000 compared to $2,794,000 in 2014 -- Increase of 352%
  • Operating loss of $3,689,000 compared to $6,478,000 in 2014 -- Improvement of 43%
  • Adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) of $(1,175,000) compared to $(2,781,000) in 2014 -- Improvement of 58%

Results Overview

Consolidated revenues for 2015 were more than $12.6 million including revenues of over $6.9 million generated by the completed installation and commissioning of four equipment projects at various customer sites in order to execute on several multi-million dollar supply contracts. Also in 2015, the Company achieved product sales of more than $2.7 million to customers under contract to meet present mercury regulations.

The increased revenues, and the operating margins earned on those revenues, were the primary reason for the significant improvements in both operating loss and Adjusted EBITDA. The Adjusted EBITDA for the first quarter of 2015 was $(1,055,000). With product revenues for Mercury and Air Toxics Standards (MATS) compliance beginning on four of the now 19 electric generating units currently under contract, added to successfully completed equipment and testing projects, the Adjusted EBITDA was $(120,000) over the last nine months of 2015.

Richard MacPherson, CEO, stated "The Company is very well positioned to capitalize in 2016 on the successes of 2015 as the remainder of our customers begin to comply with MATS. The Company's revenues will continue to grow at a rapid pace."

MacPherson continued, "We expect to continue to grow our customer base this year and believe our ongoing technological developments will have a significant impact on our ability to secure new clients across the industry."

"We anticipate significant cash flow and operating profit growth quarter over quarter in 2016 as we implement our technologies to our growing fleet of customers. This is the year we expect to see the financial results that have been years in the making," MacPherson said.

About Midwest Energy Emissions Corp. (ME2C )

Midwest Energy Emissions Corp. 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. The U.S. Environmental Protection Agency (EPA) MATS rule requires that all coal- and oil-fired power plants in the U.S., larger than 25 mega-watts, must remove roughly 90% of mercury from their emissions starting April 15, 2015. In June 2015, the U.S. Supreme Court remanded MATS back to the U.S. Court of Appeals for the D.C. Circuit for further review, but left the rule in place. The D.C. Circuit has since remanded the rule to the EPA for further consideration, but without vacatur, allowing MATS to remain in effect until the EPA issues a final finding. The EPA has represented that it is on track to issue a final finding by April 15, 2016. ME2C has developed patented technology and proprietary products that have been shown to achieve mercury removal levels compliant with MATS at a significantly lower cost and with less operational impact than currently used methods, while preserving the marketability of fly-ash for beneficial use.

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. 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. 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, additional or new EPA regulations affecting coal-burning utilities, disruption in supply of materials, 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, failure to obtain adequate working capital to execute the business plan 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.

                         
Reconciliation of Net Loss to Adjusted EBITDA
                         
    Year Ended December 31,              
    2015     2014              
                         
    (in thousands)              
Net loss   $ (14,262 )   $ (5,008 )                
                                 
Non-GAAP adjustments:                                
  Depreciation and amortization     391       387                  
  Interest     6,214       2,725                  
  State income taxes     41       -                  
  Stock based compensation     789       3,319                  
  Change in warrant liability     3,194       (4,204 )                
  Settlement charges     1,335       -                  
  Debt conversion costs     1,123       -                  
                                 
Adjusted EBITDA   $ (1,175 )   $ (2,781 )                
                                 
                                 
                                 
Reconciliation of Net Income to Adjusted EBITDA
                                 
      Quarter Ended (Unaudited)  
      12/31/2015       9/30/2015       6/30/2015       3/31/2015  
                                 
      (in thousands)  
Net income (loss)   $ (7,138 )   $ (1,155 )   $ 599     $ (6,568 )
                                 
Non-GAAP adjustments:                                
  Depreciation and amortization     123       103       99       66  
  Interest     950       906       936       3,422  
  State income taxes     5       8       8       20  
  Stock based compensation     177       280       206       126  
  Change in warrant liability     4,655       (145 )     (3,195 )     1,879  
  Settlement charges     1,335       -       -       -  
  Debt conversion costs     -       161       962       -  
                                 
Adjusted EBITDA   $ 107     $ 158     $ (385 )   $ (1,055 )
                                 
   
MIDWEST ENERGY EMISSIONS CORP. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
DECEMBER 31, 2015 AND 2014  
             
    December 31,
 2015
    December 31,
 2014
 
ASSETS            
Current assets            
  Cash and cash equivalents   $ 1,083,280     $ 7,212,114  
  Accounts receivable     1,150,602       410,950  
  Inventory     2,715,913       5,784,905  
  Prepaid expenses and other assets     161,813       140,559  
Total current assets     5,111,608       13,548,528  
                 
Property and equipment, net     1,243,450       255,330  
License, net     58,825       64,707  
Prepaid expenses and other assets     4,058       13,799  
Customer acquisition costs, net     897,428       1,156,521  
Total assets   $ 7,315,369     $ 15,038,885  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
                 
Current liabilities                
  Accounts payable and accrued expenses   $ 1,235,162     $ 1,174,521  
  Deferred revenue     2,281,760       5,808,301  
  Convertible notes payable     2,497,114       3,080,376  
  Customer credits     936,500       936,500  
  Other current liabilites     -       250,000  
Total current liabilities     6,950,536       11,249,698  
                 
Convertible notes payable, net of discount and issuance costs     3,175,085       2,438,902  
Warrant liability     9,854,400       5,597,011  
Accrued interest     169,202       337,999  
Equipment notes payable     111,144       -  
Total liabilities     20,260,367       19,623,610  
                 
Stockholders' deficit                
  Preferred stock, $.001 par value: 2,000,000 shares authorized     -       -  
  Common stock; $.001 par value; 150,000,000 shares authorized;                
    47,194,118 shares issued and outstanding as of December 31, 2015                
    40,228,123 shares issued and outstanding as of December 31, 2014     47,194       40,228  
  Additional paid-in capital     25,008,016       19,113,724  
  Accumulated deficit     (38,000,208 )     (23,738,677 )
                 
Total stockholders' deficit     (12,944,998 )     (4,584,725 )
                 
Total liabilities and stockholders' deficit   $ 7,315,369     $ 15,038,885  
                 
   
MIDWEST ENERGY EMISSIONS CORP. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS  
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014  
             
    For the Year
Ended
December 31,
2015
    For the Year
Ended
December 31,
2014
 
             
Revenues            
  Product sales   $ 5,028,184     $ 2,451,051  
  Equipment sales     6,939,412       -  
  Demonstrations and consulting services     664,323       343,155  
                 
  Total revenues:     12,631,919       2,794,206  
                 
Costs and expenses:                
  Cost of goods sold     8,629,570       1,483,379  
  Operating expenses     1,812,355       904,914  
  License maintenance fees     300,000       300,000  
  Selling, general and administrative expenses     3,180,419       5,518,032  
  Settlement charges     1,335,394       -  
  Depreciation and amortization     390,828       387,123  
  Professional fees     672,269       678,725  
                   
  Total costs and expenses     16,320,835       9,272,173  
                   
  Operating loss     (3,688,916 )     (6,477,967 )
                 
Other income (expense)                
  Interest expense     (6,213,897 )     (2,724,506 )
  Change in value of warrant liability     (3,194,189 )     4,204,189  
  Debt conversion inducement expense     (1,123,380 )     -  
  State income taxes     (41,149 )     (9,273 )
                   
  Total other income (expense)     (10,572,615 )     1,470,410  
                 
Net loss   $ (14,261,531 )   $ (5,007,557 )

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