Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2021 | May 17, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | Midwest Energy Emissions Corp. | |
Entity Central Index Key | 0000728385 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Mar. 31, 2021 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 | |
Entity Common Stock Shares Outstanding | 83,791,451 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash | $ 1,982,159 | $ 591,019 |
Accounts receivable | 847,780 | 1,116,082 |
Inventory | 452,433 | 560,127 |
Prepaid expenses and other assets | 722,724 | 107,443 |
Total current assets | 4,005,096 | 2,374,671 |
Property and equipment, net | 1,863,228 | 1,887,029 |
Right of use asset | 696,302 | 795,869 |
Intellectual property, net | 2,267,646 | 2,318,796 |
Total assets | 8,832,272 | 7,376,365 |
Current liabilities | ||
Accounts payable and accrued expenses (related party of $181,250 and $168,750) | 2,014,978 | 1,611,956 |
Current portion of equipment notes payable | 21,460 | 29,255 |
Current portion of operating lease liability | 413,096 | 407,975 |
Note payable | 6,134 | 34,661 |
Accrued interest | 88,412 | 259,230 |
Customer credits | 167,000 | 167,000 |
Accrued salaries | 809,772 | 848,706 |
Total current liabilities | 3,520,852 | 3,358,783 |
Equipment notes payable, less current portion | 0 | 789 |
Operating lease liability | 289,420 | 394,625 |
Note payable | 293,246 | 299,300 |
Convertible notes payable, net of discount and issuance costs | 2,276,280 | 4,055,122 |
Profit share liability - related party | 2,426,362 | 2,305,308 |
Secured note payable - related party | 271,686 | 271,686 |
Unsecured note payable, net of discount and issuance costs - related party | 10,381,756 | 9,894,284 |
Total liabilities | 19,459,602 | 20,579,897 |
COMMITMENTS AND CONTINGENCIES (Note 11) | 0 | |
Stockholders' deficit | ||
Preferred stock, $0.001 par value: 2,000,000 shares authorized | 0 | 0 |
Common stock; $0.001 par value; 150,000,000 shares authorized; 83,715,582 and 78,096,326 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively | 83,715 | 78,096 |
Additional paid-in capital | 53,190,995 | 50,202,478 |
Accumulated deficit | (63,902,040) | (63,484,106) |
Total stockholders' deficit | (10,627,330) | (13,203,532) |
Total liabilities and stockholders' deficit | $ 8,832,272 | $ 7,376,365 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts payable and accrued expenses related party | $ 181,250 | $ 168,750 |
Stockholders' deficit | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 83,715,582 | 78,096,326 |
Common stock, shares outstanding | 83,715,582 | 78,096,326 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||
Revenues | $ 3,026,638 | $ 1,116,676 |
Costs and expenses: | ||
Cost of sales | 1,490,733 | 930,534 |
Selling, general and administrative expenses (related party of $100,000 and $62,500) | 1,453,225 | 1,171,975 |
Interest expense & letter of credit fees (related party of $497,660 and $502,825) | 675,620 | 664,388 |
Loss on change in fair value of profit share | 121,054 | 123,650 |
Gain on extinguishment of debt | (299,300) | 0 |
Total costs and expenses | 3,441,332 | 2,890,547 |
Loss before provision for income taxes | (414,694) | (1,773,871) |
Provision for income taxes | (3,240) | 0 |
Net loss | $ (417,934) | $ (1,773,871) |
Net loss per common share-basic and diluted: | $ (0.01) | $ (0.02) |
Weighted average common shares outstanding - basic and diluted | 80,409,603 | 77,736,639 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (UNAUDITED) - USD ($) | Total | Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) |
Balance, shares at Dec. 31, 2019 | 76,747,750 | |||
Balance, amount at Dec. 31, 2019 | $ (8,873,651) | $ 76,748 | $ 48,708,085 | $ (57,658,484) |
Stock issued for prepaid services, shares | 1,000,000 | |||
Stock issued for prepaid services, amount | 200,000 | $ 1,000 | 199,000 | 0 |
Net loss | (1,773,871) | $ 0 | 0 | (1,773,871) |
Balance, shares at Mar. 31, 2020 | 77,747,750 | |||
Balance, amount at Mar. 31, 2020 | (10,447,522) | $ 77,748 | 48,907,085 | (59,432,355) |
Balance, shares at Dec. 31, 2020 | 78,096,326 | |||
Balance, amount at Dec. 31, 2020 | (13,203,532) | $ 78,096 | 50,202,478 | (63,484,106) |
Net loss | (417,934) | $ 0 | 0 | (417,934) |
Stock issued for interest payable on convertible notes, shares | 494,400 | |||
Stock issued for interest payable on convertible notes, amount | 247,200 | $ 494 | 246,706 | 0 |
Stock issued for conversion of convertible notes, shares | 3,700,000 | |||
Stock issued for conversion of convertible notes, amount | 1,850,000 | $ 3,700 | 1,846,300 | |
Stock issued for exercise of warrants, shares | 705,166 | |||
Stock issued for exercise of warrants, amount | $ 246,808 | $ 705 | 246,103 | 0 |
Stock issued for cashless exercise of warrants, shares | 16,093,326 | 194,690 | ||
Stock issued for cashless exercise of warrants, amount | $ 0 | $ 195 | (195) | 0 |
Stock issued for services, shares | 525,000 | |||
Stock issued for services, amount | 644,250 | $ 525 | 643,725 | 0 |
Share based compensation expense | 5,878 | $ 0 | 5,878 | 0 |
Balance, shares at Mar. 31, 2021 | 83,715,582 | |||
Balance, amount at Mar. 31, 2021 | $ (10,627,330) | $ 83,715 | $ 53,190,995 | $ (63,902,040) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities | ||
Net loss | $ (417,934) | $ (1,773,871) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Stock-based compensation - amortization of prepaid services | 26,032 | 114,640 |
Share-based compensation expense | 5,878 | 0 |
Amortization of discount of notes payable | 528,558 | 490,988 |
Amortization of debt issuance costs | 30,072 | 30,406 |
Amortization of right to use assets | 99,567 | 94,710 |
Amortization of patent rights | 51,150 | 50,300 |
Depreciation expense | 23,804 | 66,589 |
Gain on forgiveness of debt | (299,300) | 0 |
Loss on change in fair value of profit share | 121,054 | 123,650 |
Changes in operating assets and liabilities | ||
Decrease in accounts receivable | 268,302 | 723,314 |
Decrease in inventory | 107,693 | 48,686 |
Increase in prepaid expenses and other assets | 2,937 | 8,764 |
Increase (Decrease) in accounts payable and accrued liabilities | 440,468 | (1,093,709) |
Decrease in operating lease liability | (100,084) | (95,222) |
Net cash provided by (used in) operating activities | 888,197 | (1,210,755) |
Cash flows from financing activities | ||
Payments of notes payable | (34,661) | (16,018) |
Payments of equipment notes payable | (8,584) | (11,214) |
Proceeds from exercise of warrants | 246,808 | 0 |
Proceeds from the issuance of notes payable | 299,380 | 200,000 |
Net cash provided by financing activities | 502,943 | 172,768 |
Net increase (decrease) in cash and cash equivalents | 1,391,140 | (1,037,987) |
Cash and cash equivalents - beginning of period | 591,019 | 1,499,287 |
Cash and cash equivalents - end of period | $ 1,982,159 | $ 461,300 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid during the period for: | ||
Interest | $ 41,082 | $ 228,458 |
Taxes | 3,240 | 0 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS | ||
Stock issued for conversion of convertible notes | 1,850,000 | 0 |
Stock issued for prepaid services | 644,250 | 200,000 |
Stock issued for interest payable | $ 247,200 | $ 0 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2021 | |
Organization | |
Note 1 - Organization | Midwest Energy Emissions Corp. Midwest Energy Emissions Corp. (the “Company”) is organized under the laws of the State of Delaware with 150,000,000 authorized shares of common stock, par value $0.001 per share and 2,000,000 authorized shares of preferred stock, par value $0.001 per share. MES, Inc. MES, Inc. is incorporated in the State of North Dakota. MES, Inc. is a wholly owned subsidiary of Midwest Energy Emissions Corp. and is engaged in the business of developing and commercializing state of the art control technologies relating to the capture and control of mercury emissions from coal fired boilers in the United States and Canada. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Summary of Significant Accounting Policies | |
Note 2 - Summary of Significant Accounting Policies | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of Rule 8-03 of Regulation S-X promulgated by the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, these financial statements do not include all of the information and footnotes required for complete financial statements and should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed on April 5, 2021, from which the accompanying condensed consolidated balance sheet dated December 31, 2020 was derived. In management’s opinion, the unaudited condensed consolidated financial statements reflect all adjustments necessary to present fairly the financial position as of March 31, 2021, and results of operations, changes in stockholders’ deficit and cash flows for all periods presented. The interim results presented are not necessarily indicative of results that can be expected for a full year. Principles of Consolidation The condensed consolidated financial statements include the accounts of Midwest Energy Emissions Corp. and its wholly-owned subsidiary, MES, Inc. Intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, valuation of equity issuances and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The Company uses estimates in accounting for, among other items, profit share liability, revenue recognition, allowance for doubtful accounts, stock-based compensation, income tax provisions, excess and obsolete inventory reserve and impairment of intellectual property. Actual results could differ from those estimates. Recoverability of Long-Lived and Intangible Assets Long-lived assets and certain identifiable intangibles held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of the long-lived intangible assets would be adjusted, based on estimates of future discounted cash flows. The Company evaluated the recoverability of the carrying value of the Company’s property and equipment, right of use asset and intellectual property. No impairment charges were recognized for both of the three months ended March 31, 2021 and 2020. Fair Value of Financial Instruments The fair value hierarchy has three levels based on the inputs used to determine fair value, which are as follows: ☐ Level 1 ☐ Level 2 ☐ Level 3 — The fair value hierarchy requires the use of observable market data when available. In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input significant to the fair value measurement in its entirety. 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. Cash was the only asset measured at fair value on a recurring basis by the Company at March 31, 2021 and December 31, 2020 and is considered to be Level 1. Financial instruments include cash, accounts receivable, accounts payable, customer credits and short-term debt. The carrying amounts of these financial instruments approximated fair value at March 31, 2021 and December 31, 2020 due to their short-term maturities. The fair value of the promissory notes payable at March 31, 2021 and December 31, 2020 approximated the carrying amount as the notes were recently issued at interest rates prevailing in the market and interest rates have not significantly changed as of March 31, 2021 and December 31, 2020. The fair value of the promissory notes payable was determined on a Level 2 measurement. Discounts on issued debt, as well as debt issuance costs, are amortized over the term of the individual promissory notes. The fair value of the profit share liability at March 31, 2021 and December 31, 2020 was calculated using a discounted cash flow model based on estimated future cash payments. The fair value of the profit share liability was determined on a Level 3 measurement. These values are determined using pricing models for which the assumptions utilized management’s estimates. The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. Fair Value Measurement as of March 31, 2021 Total Level 1 Level 2 Level 3 Assets: Cash $ 1,982,159 $ 1,982,159 $ - $ - Total Assets $ 1,982,159 $ 1,982,159 $ - $ - Liabilities: Promissory notes $ 13,250,562 $ - $ 13,250,562 $ - Profit share liability – related party 2,426,362 - - 2,426,362 Total Liabilities $ 15,676,924 $ - $ 13,250,562 $ 2,426,362 Fair Value Measurement as of December 31, 2020 Total Level 1 Level 2 Level 3 Assets: Cash $ 591,019 $ - $ - $ - Total Assets $ 591,019 $ - $ - $ - Liabilities: Promissory notes $ 14,585,097 $ - $ 14,585,097 $ - Profit share liability 2,305,308 - - 2,305,308 Total Liabilities $ 16,890,405 $ - $ 14,585,097 $ 2,305,308 Foreign Currency Translation The Company’s functional currency is the United States Dollar (the “U.S. Dollar”). The Company engages in foreign currency denominated transactions with customers that operate in functional currencies other than the U.S. Dollar. Assets and liabilities denominated in foreign currencies are translated into U.S. Dollar amounts at the period-end exchange rates. Sales and purchases and income and expense transactions that are denominated in foreign currencies are translated into U.S. Dollar amounts at the prevailing rates of exchange on the transaction date. Adjustments arising from foreign currency transactions are reflected in the statement of operations. For the three months ended March 31, 2021 and 2020, there were no material foreign exchange gains or losses recognized by the Company in its statements of operations. Revenue Recognition The Company records revenue in accordance with ASC 606, Revenue from Contracts with Customers Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. Revenue is recognized when the Company satisfies its performance obligation under the contract by transferring the promised product to its customer that obtains control of the product. A performance obligation is a promise in a contract to transfer a distinct product to a customer. Most of the Company’s contracts have a single performance obligation, as the promise to transfer products or services is not separately identifiable from other promises in the contract and, therefore, not distinct. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products. As such, revenue is recorded net of returns, allowances, customer discounts, and incentives. Sales and other taxes are excluded from revenues. Invoiced shipping and handling costs are included in revenue. The adoption of this standard did not have a material impact on the Company’s financial statements. Disaggregation of Revenue The Company generated revenue for the three months ended March 31, 2021, and 2020 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. Revenue for equipment sales is recognized upon commissioning and customer acceptance of the installed equipment per the terms of the purchase contract. 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. Revenue for licensing is recognized at the point of time in which the customer obtains the license. Lump sum payments made pursuant to agreements in which the primary consideration is a license to the company’s technology is accounted for as license revenue. Certain arrangements provide for repayment of license fees in the event the company enters into a supply agreement that results in a specified amount of sales. Nothing is recognized for this contingency. The following table presents sales by operating segment disaggregated based on the type of product and geographic region for the three months ended March 31, 2021, and 2020. Three months ended March 31, 2021 Three months ended March 31, 2020 United States International Total United States International Total Product revenue $ 2,031,101 $ - $ 2,031,101 $ 984,160 $ 85,200 $ 1,069,360 License revenue 945,547 - 945,547 - - - Demonstrations & Consulting revenue 34,310 - 34,310 42,767 - 42,767 Equipment revenue 15,680 - 15,680 4,549 - 4,549 $ 3,026,638 $ - $ 3,026,638 $ 1,031,476 $ 85,200 $ 1,116,676 Income Taxes The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, Income Taxes FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of March 31, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“ CARES Act 2017 Tax Act NOLs In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any material adjustments to our income tax provision. Basic and Diluted Loss Per Common Share Basic net loss per common share is computed using the weighted average number of common shares outstanding. Diluted loss per share reflects the potential dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. There were no dilutive potential common shares as of March 31, 2021 and 2020, because the Company incurred net losses and basic and diluted losses per common share are the same. The following common stock equivalents were excluded from the computation of diluted net loss per share of common stock because they were anti-dilutive. The exercise of these common stock equivalents would dilute earnings per share if the Company becomes profitable in the future. March 31, March 31, 2021 2020 Stock Options 16,093,326 12,553,326 Warrants 4,285,000 5,690,378 Convertible debt 5,355,500 9,157,100 Total common stock equivalents excluded from diluted net loss per share 25,733,826 27,400,804 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. The Company’s cash as of March 31, 2021 and December 31, 2020 is maintained at high-quality financial institutions and has not incurred any losses to date. Customer and Supplier Concentration For each of the three months ended March 31, 2021 and 2020, 100% of the Company’s revenue related to fourteen and nine customers respectively. At March 31, 2021 and December 31, 2020, 100% of the Company’s accounts receivable related to eight and seven customers, respectively. For each of the three months ended March 31, 2021 and 2020, 93% and 86% of the Company’s purchases related to two suppliers, respectively. At March 31, 2021 and December 31, 2020, 38% and 47% of the Company’s accounts payable and accrued expenses related to two vendors, respectively. The Company believes there are numerous other suppliers that could be substituted should the supplier become unavailable or non-competitive. Contingencies Certain conditions may exist which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company, or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they arise from guarantees, in which case the guarantees would be disclosed. Recently Adopted Accounting Standards Effective January 1, 2020, the Company adopted ASU No. 2018-07, Compensation — Stock Compensation (Topic 718) Effective January 1, 2020, the Company adopted ASU No. 2018-13, Fair Value Measurement (Topic 820) Recently Issued Accounting Standards In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes (ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”). This guidance eliminates certain exceptions to the general approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes. This guidance is effective for annual periods after December 15, 2020, including interim periods within those annual periods (beginning with the quarter ended March 31, 2021 for the Company). The Company is currently evaluating the potential impact of this guidance on its condensed consolidated financial statements. Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying condensed consolidated financial statements. |
Going Concern and Financial Con
Going Concern and Financial Condition | 3 Months Ended |
Mar. 31, 2021 | |
Going Concern and Financial Condition | |
Note 3 - Going Concern and Financial Condition | Under ASC 205-40, Presentation of Financial Statements—Going Concern The accompanying condensed consolidated financial statements as of March 31, 2021 have been prepared assuming the Company will continue as a going concern. As reflected in the condensed consolidated financial statements, the Company had an accumulated deficit of $63.9 million and working capital of $484,244 at March 31, 2021. Additionally, the Company had a net loss of $417,934 for the three months ended March 31, 2021. These factors raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the issuance of these condensed consolidated financial statements within the Company’s Quarterly Report on Form 10-Q. Although we anticipate continued significant revenues for products being used in MATS compliance activities, no assurances can be given that the Company can obtain sufficient working capital through these activities and additional financing may be needed to meet its obligations. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern. |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2021 | |
Inventory | |
Note 4 - Inventory | Inventory was comprised of the following at March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 Raw Materials $ 124,527 $ 169,803 Spare Parts 23,432 23,432 Finished goods 304,474 366,892 $ 452,433 $ 560,127 |
Property And Equipment Net
Property And Equipment Net | 3 Months Ended |
Mar. 31, 2021 | |
Property And Equipment Net | |
Note 5 - Property and Equipment, Net | Property and equipment at March 31, 2021 and December 31, 2020 are as follows: March 31, December 31, 2021 2020 Equipment & installation $ 1,965,659 $ 1,965,659 Trucking equipment 834,375 834,375 Computer equipment and software 14,768 67,126 Office equipment 5,528 27,155 Total property and equipment 2,820,330 2,894,315 Less: accumulated depreciation (2,764,809 ) (2,814,993 ) Construction in process 1,807,707 1,807,707 Property and equipment, net $ 1,863,228 $ 1,887,029 The Company uses the straight-line method of depreciation over 2 to 5 years. During the three months ended March 31, 2021 and 2020 depreciation expense was $23,804, and $66,589 respectively. |
Intellectual Property
Intellectual Property | 3 Months Ended |
Mar. 31, 2021 | |
Intellectual Property | |
Note 6 - Intellectual Property | On January 15, 2009, the Company entered into an “Exclusive Patent and Know-How License Agreement Including Transfer of Ownership” with the Energy and Environmental Research Center Foundation, a non-profit entity (“EERCF”). Under the terms of the Agreement, the Company has been granted an exclusive license by EERCF for the technology to develop, make, have made, use, sell, offer to sell, lease, and import the technology in any coal-fired combustion systems (power plant) worldwide and to develop and perform the technology in any coal-fired power plant in the world. On April 24, 2017, the Company closed on the acquisition of all patent rights from EERCF including all patents and patents pending, domestic and foreign, relating to the foregoing technology. A total of 42 domestic and foreign patents and patent applications were included in the acquisition. In accordance with the terms of the License Agreement, the patent rights were acquired for the purchase price of (i) $2,500,000 in cash, and (ii) 925,000 shares of common stock of which 628,998 shares were issued to EERCF and 296,002 were issued to the inventors who had been designated by EERCF. The shares issued were valued at $518,000 ($0.56 per share), representing the value as of the closing date. License and patent costs capitalized as of March 31, 2021 and December 31, 2020 are as follows: March 31, December 31, 2021 2020 Patents $ 3,068,995 $ 3,068,995 Less: Accumulated amortization (801,349 ) (750,199 ) Intellectual property, net $ 2,267,646 $ 2,318,796 Amortization expense for the three months ended March 31, 2021 and 2020 was $51,150 and $50,300, respectively. Estimated annual amortization for each of the next five years is $204,600. |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2021 | |
Notes Payable | |
Note 7 - Notes Payable | 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. closed on a one-year secured loan in the principal amount of $200,000 bearing interest at 8.75% per annum. Principal and interest is to be paid in equal monthly installments until the loan is paid in full on February 26, 2021. The note is secured by substantially all of the assets of MES, Inc. In February 2021, the loan was repaid in full. 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. The loan, which is in the form of a Note dated April 14, 2020, matures on April 14, 2022 and bears interest at a rate of 1.0% per annum, with one interest payment on April 14, 2021 and one principal and interest payment on maturity. The principal and accrued interest under the PPP Loan is forgivable after eight or twenty-four weeks if the Company uses the PPP Loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and otherwise complies with the PPP requirements. In order to obtain forgiveness of the PPP Loan, the Company must submit a request and provide satisfactory documentation regarding its compliance with applicable requirements. In January 2021, the PPP Loan was forgiven, and the Company recorded a gain on extinguishment of debt of $299,300. 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. The Second PPP Loan is in the form of a Note dated February 2, 2021, matures on April 14, 2026 and bears interest at a rate of 1.0% per annum, with one interest payment on February 2, 2022, 47 monthly consecutive principal and interest payments of $6,366.89 each, beginning March 2, 2022, and one final principal and interest payment of $6,366.92 on February 2, 2026. The principal and accrued interest under the Second PPP Loan is forgivable after eight or twenty-four weeks if the Company uses the Second PPP Loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and otherwise complies with the PPP requirements. |
Convertible Notes Payable
Convertible Notes Payable | 3 Months Ended |
Mar. 31, 2021 | |
Convertible Notes Payable | |
Note 8 - Convertible Notes Payable | The Company has the following convertible notes payable outstanding as of March 31, 2021 and December 31, 2020: March 31, December 31, 2021 2020 Secured convertible promissory notes which mature upon the retirement of the New AC Midwest Secured Debt (see Note 9) bear interest at 10% per annum, and are convertible into shares of common stock at $0.50 per share, and are secured by the assets of the Company. $ 50,000 $ 990,000 Unsecured convertible promissory notes which mature beginning on June 15, 2023 through October 31, 2023, bear interest at 12% per annum, and are convertible into shares of common stock at $0.50 per share. - 860,000 Unsecured convertible promissory notes which mature beginning on June 18, 2024 through October 23, 2024, bear interest at 12% per annum, and are convertible into shares of common stock at $0.50 per share. 2,550,000 2,600,000 Total convertible notes payable before discount 2,600,000 4,450,000 Less discounts and debt issuance costs (323,720 ) (394,878 ) Total convertible notes payable 2,276,280 4,055,122 Less current portion - - Convertible notes payable, net of current portion $ 2,276,280 $ 4,055,122 From July 30, 2013 through December 24, 2013, the Company sold convertible notes and warrants to unaffiliated accredited investors totaling $1,902,500. The notes bear interest at 10% per annum, are secured by the Company’s assets, and are convertible into one share of common stock, par value $0.001 per share, with the initial conversion ratio equal to $0.50 per share. The notes had an initial term of three years, but the maturity of the notes was extended during 2014 to match the retirement of the New AC Midwest Secured Debt. From February 8, 2021 to February 15, 2021, the Company issued 1,880,000 shares of common stock to certain holders of such convertible promissory notes issued in 2013 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. As of March 31, 2021 and December 31, 2020, total principal of $50,000 and $990,000, respectively, was outstanding on these notes. On June 15, 2018, the Company issued 2018 Unsecured Convertible Notes (the “2018 Unsecured Notes”) totaling $560,000 and warrants to certain holders of the 2013 Notes in exchange for their secured 2013 Notes. The 2018 Unsecured Notes have a term of five years, bear interest at 12% per annum, and are convertible into one share of common stock, par value $0.001 per share, with the initial conversion ratio equal to $0.50 per share. For each dollar exchanged, the investor received a warrant to purchase one share of common stock of the Company at an exercise price of $0.70 per share. The 2018 Unsecured Notes may be converted at any time and from time to time in whole or in part prior to the maturity date thereof. From August 31, 2018 through October 30, 2018, the Company issued additional 2018 Unsecured Notes totaling $300,000 and warrants to unaffiliated investors. 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 convert all of the outstanding principal of such Notes. 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 convert all such outstanding principal. 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. As of March 31, 2021 and December 31, 2020, total principal of $0 and $860,000, respectively, was outstanding on the 2018 Unsecured Notes. 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. The 2019 Unsecured Notes bear interest at 12% per annum, and are convertible into one share of common stock, par value $0.001 per share, with the initial conversion ratio equal to $0.50 per share. The 2019 Unsecured Notes have a term of five years. On February 26, 2021, the Company issued 100,000 share 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. As of March 31, 2021 and December 31, 2020, total principal of $2,550,000 and $2,600,000, respectively, was outstanding on the 2019 Unsecured Notes. As of March 31, 2021, remaining scheduled principal payments due on convertible notes payable are as follows: Twelve months ended March 31, 2022 $ - 2023 50,000 2024 - 2025 2,550,000 $ 2,600,000 As of March 31, 2021, the remaining future amortization of discounts are as follows: Twelve months ended March 31, Discounts 2022 $ 96,023 2023 96,023 2024 96,286 2025 35,388 $ 323,720 |
Related Party
Related Party | 3 Months Ended |
Mar. 31, 2021 | |
Related Party | |
Note 9 - Related Party | Secured Note Payable 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 “New AC Midwest Secured Note”) in the original principal amount of $9,646,686, which was to mature on December 15, 2018. AC Midwest is wholly-owned by a stockholder of the Company. The New 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. Interest expense for the three months ended March 31, 2021 and 2020 was $10,188 and $9,937 respectively. On February 25, 2019, per Amendment No. 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. Also, pursuant to Amendment No. 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. The amendment was accounted for as an extinguishment in accordance with ASC 470-50 with no gain or loss recorded. As of both March 31, 2021 and December 31, 2020, total principal of $271,686 was outstanding on this note. Unsecured Note Payable The Company has the following unsecured note payable - related party outstanding as of March 31, 2021 and December 31, 2020: March 31, December 31, 2021 2020 Unsecured note payable $ 13,154,931 $ 13,154,931 Less discounts and debt issuance costs (2,773,175 ) (3,260,647 ) Total unsecured note payable 10,381,756 9,894,284 Less current portion - - Unsecured note payable, net of current portion $ 10,381,756 $ 9,894,284 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. 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 “New AC Midwest Unsecured Note”), which represented the outstanding principal and accrued and unpaid interest at closing. 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. Accordingly, the Company wrote off the remaining debt discount on the original debentures of $1,070,819. 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. 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. Amortized discount recorded as interest expense for the three months ended March 31, 2021 and 2020 was $487,472 and $462,483, respectively. As of March 31, 2021, the unamortized balance of the discount was $2,602,100. The New AC Midwest Unsecured Note, which has been issued in exchange for the AC Midwest Subordinated Note which has now been cancelled, will mature on August 25, 2022 (the “Maturity Date”). It bears a zero cash interest rate. AC Midwest shall be entitled to a profit participation preference equal to 1.0 times the original principal amount (the “Profit Share”). 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). The Profit Share 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. 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. 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 Unsecured Note Financing Agreement until full and final payment. The Company is utilizing the methodology behind the ASC 815, Derivatives and Hedging Distinguishing Liabilities from Equity The following are the changes in the profit share liabilities during the three months ended March 31, 2021 and 2020. Profit Share as of January 1, 2021 $ 2,305,308 Addition - Loss on change in fair value of profit share 121,054 Profit Share as of March 31, 2021 $ 2,426,362 Profit Share as of January 1, 2020 $ 2,328,845 Addition - Loss on change in fair value of profit share 123,650 Profit Share as of March 31, 2020 $ 2,452,495 Kaye Cooper Kay & Rosenberg, LLP provides certain legal services to the Company and was paid $62,500 in the three months ended 2021 for legal services rendered and disbursement incurred. David M. Kaye, a Director and Secretary of the Company, is a partner of the law firm. At March 31, 2021 and December 31, 2020, $181,250 and $168,750, respectively, was owed to the firm for services rendered. |
Operating Leases
Operating Leases | 3 Months Ended |
Mar. 31, 2021 | |
Operating Leases | |
Note 10 - Operating Leases | In 2016, the Company entered into a six-year agreement to lease trailers used in the delivery of its products. Monthly payments currently total $32,820. On January 27, 2015, the Company entered into a lease for office space in Lewis Center, Ohio, commencing February 1, 2015 which lease as amended expired in February 2020. The lease provides for the option to extend the lease for up to five additional years. Monthly rent is $1,575 through February 2020. The Company did not renew this lease. On July 1, 2015, the Company entered into a five-year lease for warehouse space in Corsicana, Texas. Rent is $3,750 monthly throughout the term of the lease. The Company is also responsible for the pro rata share of the projected monthly expenses for the property taxes. The current pro rata share is $882. The lease was extended on June 1, 2019 for five years. The Company recorded a right of use asset and an operating lease liability of $145,267. This amount represents the difference between the value from the remaining lease and the extended lease. On September 1, 2019, the Company entered into a one-year lease for office space in Grand Forks, North Dakota. Monthly rent was $590 a month through August 2020. The lease was not renewed and the Company vacated the space. Future remaining minimum lease payments under these non-cancelable leases are as follows: For the twelve months ended March 31, 2022 $ 438,840 2023 252,640 2024 45,000 Total 736,480 Less discount (33,964 ) Total lease liabilities 702,516 Less current portion (413,096 ) Operating lease obligation, net of current portion $ 289,420 The weighted average remaining lease term for operating leases is 1.82 years and the weighted average discount rate used in calculating the operating lease asset and liability is 5.0%. For the three months ended March 31, 2021, payments on lease obligations were $109,710 and amortization on the right of use assets was $99,567. For the three months ended March 31, 2021 and 2020, 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: Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 Operating lease cost $ 99,567 $ 95,222 Short-term lease cost (1) 1,770 1,770 Total lease cost $ 101,337 $ 96,992 _____________ (1) Short-term lease costs include any lease with a term of less than 12 months |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies | |
Note 11 - Commitments and Contingencies | Fixed Price Contract The Company’s multi-year contracts with its commercial customers contain fixed prices for product. These contracts expire through 2020 and 2025 and expose the Company to the potential risks associated with rising material costs during that same period. Revenue reported during interim periods were recorded based on the facts and circumstances at the time and any differences noted when the final revenue is determined is considered to be a change in estimate for the period. Legal proceedings On July 17, 2019, the Company initiated patent litigation against certain defendants in the U.S. District Court for the District of Delaware for infringement of United States Patent Nos. 10,343,114 (the “‘114 Patent”) and 8,168,147 (the “‘147 Patent”) owned by the Company. These patents relate to the Company’s two-part Sorbent Enhancement Additive (SEA ® During 2020, each of the four major utility defendants in the above action filed petitions for Inter Partes Review (IPR) with the United States Patent and Trademark Office (USPTO), seeking to invalidate certain claims to the patents which are subject to the litigation. Between July 2020 and January 2021, we entered into agreements with each of the four major utility defendants in such action which included certain monetary arrangements and pursuant to which we have dismissed all claims brought against each of them and their affiliates, and such parties have withdrawn from petitions for IPR with the USPTO. 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. The above described proceedings will continue with respect to the other parties involved. 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. Litigation, including patent litigation, is inherently subject to uncertainties. As such, there can be no assurance that the Company will be successful in litigating and/or settling any of these claims. |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Mar. 31, 2021 | |
Stock Based Compensation | |
Note 12 - Stock Based Compensation | Stock Based Compensation Stock based compensation consists of the amortization of common stock, stock options and warrants issued for prepaid services. For the three months ended March 31, 2021 and 2020, stock based compensation amounted to $31,910 and $114,640, respectively. Such expense is classified in selling, general and administrative expenses. Common Stock As of January 1, 2020, and pursuant to an advisory agreement dated as of November 20, 2019 and effective as of January 1, 2020 for a term of one year with a nonaffiliated third party, the Company issued 1,000,000 shares of common stock of the Company to such third party as and for the entire compensation to be paid for all services to be rendered during the term. These shares of common stock were valued at $200,000 in accordance with FASB ASC Topic 718. The fair value of the shares is being amortized to selling, general and administrative expenses within the Company’s condensed consolidated statements of operations over one year and was fully amortized in 2020. 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. These shares of common stock were valued at $615,000 in accordance with FASB ASC Topic 718. The fair value of the shares is being amortized to selling, general and administrative expenses within the Company’s condensed consolidated statements of operations over ten months. 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. These shares of common stock were valued at $29,250 in accordance with FASB ASC Topic 718. The fair value of the shares is being amortized to selling, general and administrative expenses within the Company’s condensed consolidated statements of operations over three months. Stock Options 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 condensed consolidated financial statements over the vesting period based on the estimated fair value of the awards. A summary of stock option activity for the three months ended March 31, 2021 is presented below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value January 1, 2021 16,218,326 $ 0.50 3.57 $ 3,588,631 Grants - - - - Expirations - - - - March 31, 2021 16,218,326 $ 0.50 3.32 $ 10,965,344 Options exercisable at: March 31, 2021 16,093,326 $ 0.50 3.31 $ 10,842,844 The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company’s closing stock price of $1.17 as of March 31, 2021, which would have been received by the option holders had all option holders exercised their options as of that date. |
Warrants
Warrants | 3 Months Ended |
Mar. 31, 2021 | |
Warrants | |
Note 13 - Warrants | Sold and issued warrants are subject to the provisions of FASB ASC 815-10, the Company utilized a Black-Scholes options pricing model to value the warrants sold and issued. This model requires the input of highly subjective assumptions such as the expected stock price volatility and the expected period until the warrants are exercised. 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. 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. 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. 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. The following is a summary of the Company’s warrant activity: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value January 1, 2021 5,595,378 $ 0.63 2.85 $ 314,260 Grants - Exercises (1,030,166 ) $ 0.42 - - Expirations (280,212 ) $ 0.35 - - March 31, 2021 4,285,000 $ 0.70 3.23 $ 2,013,950 Warrants exercisable at: March 31, 2021 4,285,000 $ 0.70 3.23 $ 2,013,950 The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company’s closing stock price of $1.17 as of March 31, 2021, which would have been received by the option holders had all option holders exercised their options as of that date. The following table summarizes information about common stock warrants outstanding at March 31, 2021: Outstanding and Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price $ 0.70 4,285,000 3.23 $ 0.70 $ 0.70 4,285,000 3.23 $ 0.70 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events | |
Note 14 - Subsequent Events | On April 9, 2021, the Company issued 60,000 shares of common stock to a certain holder of a convertible promissory note issued in 2013 for the conversion of the outstanding principal of such note in the amount of $30,000, based upon a conversion rate of $0.50 per share. On May 10, 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 of $0.42 based upon a market price of $1.15 per share as determined under the terms of the option. |
Summary Of Significant Accoun_2
Summary Of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of Rule 8-03 of Regulation S-X promulgated by the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, these financial statements do not include all of the information and footnotes required for complete financial statements and should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed on April 5, 2021, from which the accompanying condensed consolidated balance sheet dated December 31, 2020 was derived. In management’s opinion, the unaudited condensed consolidated financial statements reflect all adjustments necessary to present fairly the financial position as of March 31, 2021, and results of operations, changes in stockholders’ deficit and cash flows for all periods presented. The interim results presented are not necessarily indicative of results that can be expected for a full year. |
Principles of Consolidation | The condensed consolidated financial statements include the accounts of Midwest Energy Emissions Corp. and its wholly-owned subsidiary, MES, Inc. Intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, valuation of equity issuances and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The Company uses estimates in accounting for, among other items, profit share liability, revenue recognition, allowance for doubtful accounts, stock-based compensation, income tax provisions, excess and obsolete inventory reserve and impairment of intellectual property. Actual results could differ from those estimates. |
Recoverability of Long-Lived and Intangible Assets | Long-lived assets and certain identifiable intangibles held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of the long-lived intangible assets would be adjusted, based on estimates of future discounted cash flows. The Company evaluated the recoverability of the carrying value of the Company’s property and equipment, right of use asset and intellectual property. No impairment charges were recognized for both of the three months ended March 31, 2021 and 2020. |
Fair Value of Financial Instruments | The fair value hierarchy has three levels based on the inputs used to determine fair value, which are as follows: ☐ Level 1 ☐ Level 2 ☐ Level 3 — The fair value hierarchy requires the use of observable market data when available. In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input significant to the fair value measurement in its entirety. 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. Cash was the only asset measured at fair value on a recurring basis by the Company at March 31, 2021 and December 31, 2020 and is considered to be Level 1. Financial instruments include cash, accounts receivable, accounts payable, customer credits and short-term debt. The carrying amounts of these financial instruments approximated fair value at March 31, 2021 and December 31, 2020 due to their short-term maturities. The fair value of the promissory notes payable at March 31, 2021 and December 31, 2020 approximated the carrying amount as the notes were recently issued at interest rates prevailing in the market and interest rates have not significantly changed as of March 31, 2021 and December 31, 2020. The fair value of the promissory notes payable was determined on a Level 2 measurement. Discounts on issued debt, as well as debt issuance costs, are amortized over the term of the individual promissory notes. The fair value of the profit share liability at March 31, 2021 and December 31, 2020 was calculated using a discounted cash flow model based on estimated future cash payments. The fair value of the profit share liability was determined on a Level 3 measurement. These values are determined using pricing models for which the assumptions utilized management’s estimates. The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. Fair Value Measurement as of March 31, 2021 Total Level 1 Level 2 Level 3 Assets: Cash $ 1,982,159 $ 1,982,159 $ - $ - Total Assets $ 1,982,159 $ 1,982,159 $ - $ - Liabilities: Promissory notes $ 13,250,562 $ - $ 13,250,562 $ - Profit share liability – related party 2,426,362 - - 2,426,362 Total Liabilities $ 15,676,924 $ - $ 13,250,562 $ 2,426,362 Fair Value Measurement as of December 31, 2020 Total Level 1 Level 2 Level 3 Assets: Cash $ 591,019 $ - $ - $ - Total Assets $ 591,019 $ - $ - $ - Liabilities: Promissory notes $ 14,585,097 $ - $ 14,585,097 $ - Profit share liability 2,305,308 - - 2,305,308 Total Liabilities $ 16,890,405 $ - $ 14,585,097 $ 2,305,308 |
Foreign Currency Transactions | The Company’s functional currency is the United States Dollar (the “U.S. Dollar”). The Company engages in foreign currency denominated transactions with customers that operate in functional currencies other than the U.S. Dollar. Assets and liabilities denominated in foreign currencies are translated into U.S. Dollar amounts at the period-end exchange rates. Sales and purchases and income and expense transactions that are denominated in foreign currencies are translated into U.S. Dollar amounts at the prevailing rates of exchange on the transaction date. Adjustments arising from foreign currency transactions are reflected in the statement of operations. For the three months ended March 31, 2021 and 2020, there were no material foreign exchange gains or losses recognized by the Company in its statements of operations. |
Revenue Recognition | The Company records revenue in accordance with ASC 606, Revenue from Contracts with Customers Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. Revenue is recognized when the Company satisfies its performance obligation under the contract by transferring the promised product to its customer that obtains control of the product. A performance obligation is a promise in a contract to transfer a distinct product to a customer. Most of the Company’s contracts have a single performance obligation, as the promise to transfer products or services is not separately identifiable from other promises in the contract and, therefore, not distinct. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products. As such, revenue is recorded net of returns, allowances, customer discounts, and incentives. Sales and other taxes are excluded from revenues. Invoiced shipping and handling costs are included in revenue. The adoption of this standard did not have a material impact on the Company’s financial statements. |
Disaggregation of Revenue | The Company generated revenue for the three months ended March 31, 2021, and 2020 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. Revenue for equipment sales is recognized upon commissioning and customer acceptance of the installed equipment per the terms of the purchase contract. 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. Revenue for licensing is recognized at the point of time in which the customer obtains the license. Lump sum payments made pursuant to agreements in which the primary consideration is a license to the company’s technology is accounted for as license revenue. Certain arrangements provide for repayment of license fees in the event the company enters into a supply agreement that results in a specified amount of sales. Nothing is recognized for this contingency. The following table presents sales by operating segment disaggregated based on the type of product and geographic region for the three months ended March 31, 2021, and 2020. Three months ended March 31, 2021 Three months ended March 31, 2020 United States International Total United States International Total Product revenue $ 2,031,101 $ - $ 2,031,101 $ 984,160 $ 85,200 $ 1,069,360 License revenue 945,547 - 945,547 - - - Demonstrations & Consulting revenue 34,310 - 34,310 42,767 - 42,767 Equipment revenue 15,680 - 15,680 4,549 - 4,549 $ 3,026,638 $ - $ 3,026,638 $ 1,031,476 $ 85,200 $ 1,116,676 |
Income Taxes | The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, Income Taxes FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of March 31, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“ CARES Act 2017 Tax Act NOLs In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any material adjustments to our income tax provision. |
Basic and Diluted Loss Per Common Share | Basic net loss per common share is computed using the weighted average number of common shares outstanding. Diluted loss per share reflects the potential dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. There were no dilutive potential common shares as of March 31, 2021 and 2020, because the Company incurred net losses and basic and diluted losses per common share are the same. The following common stock equivalents were excluded from the computation of diluted net loss per share of common stock because they were anti-dilutive. The exercise of these common stock equivalents would dilute earnings per share if the Company becomes profitable in the future. March 31, March 31, 2021 2020 Stock Options 16,093,326 12,553,326 Warrants 4,285,000 5,690,378 Convertible debt 5,355,500 9,157,100 Total common stock equivalents excluded from diluted net loss per share 25,733,826 27,400,804 |
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. The Company’s cash as of March 31, 2021 and December 31, 2020 is maintained at high-quality financial institutions and has not incurred any losses to date. |
Customer and Supplier Concentration | For each of the three months ended March 31, 2021 and 2020, 100% of the Company’s revenue related to fourteen and nine customers respectively. At March 31, 2021 and December 31, 2020, 100% of the Company’s accounts receivable related to eight and seven customers, respectively. For each of the three months ended March 31, 2021 and 2020, 93% and 86% of the Company’s purchases related to two suppliers, respectively. At March 31, 2021 and December 31, 2020, 38% and 47% of the Company’s accounts payable and accrued expenses related to two vendors, respectively. The Company believes there are numerous other suppliers that could be substituted should the supplier become unavailable or non-competitive. |
Contingencies | Certain conditions may exist which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company, or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they arise from guarantees, in which case the guarantees would be disclosed. |
Recently Adopted Accounting Standards | Effective January 1, 2020, the Company adopted ASU No. 2018-07, Compensation — Stock Compensation (Topic 718) Effective January 1, 2020, the Company adopted ASU No. 2018-13, Fair Value Measurement (Topic 820) |
Recently Issued Accounting Standards | In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes (ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”). This guidance eliminates certain exceptions to the general approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes. This guidance is effective for annual periods after December 15, 2020, including interim periods within those annual periods (beginning with the quarter ended March 31, 2021 for the Company). The Company is currently evaluating the potential impact of this guidance on its condensed consolidated financial statements. Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying condensed consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Summary of Significant Accounting Policies | |
Schedule of fair value assets and liabilities measured on recurring basis | Fair Value Measurement as of March 31, 2021 Total Level 1 Level 2 Level 3 Assets: Cash $ 1,982,159 $ 1,982,159 $ - $ - Total Assets $ 1,982,159 $ 1,982,159 $ - $ - Liabilities: Promissory notes $ 13,250,562 $ - $ 13,250,562 $ - Profit share liability – related party 2,426,362 - - 2,426,362 Total Liabilities $ 15,676,924 $ - $ 13,250,562 $ 2,426,362 Fair Value Measurement as of December 31, 2020 Total Level 1 Level 2 Level 3 Assets: Cash $ 591,019 $ - $ - $ - Total Assets $ 591,019 $ - $ - $ - Liabilities: Promissory notes $ 14,585,097 $ - $ 14,585,097 $ - Profit share liability 2,305,308 - - 2,305,308 Total Liabilities $ 16,890,405 $ - $ 14,585,097 $ 2,305,308 |
Schedule of sales by operating segment | Three months ended March 31, 2021 Three months ended March 31, 2020 United States International Total United States International Total Product revenue $ 2,031,101 $ - $ 2,031,101 $ 984,160 $ 85,200 $ 1,069,360 License revenue 945,547 - 945,547 - - - Demonstrations & Consulting revenue 34,310 - 34,310 42,767 - 42,767 Equipment revenue 15,680 - 15,680 4,549 - 4,549 $ 3,026,638 $ - $ 3,026,638 $ 1,031,476 $ 85,200 $ 1,116,676 |
Schedule of earnings per share basic and diluted | March 31, March 31, 2021 2020 Stock Options 16,093,326 12,553,326 Warrants 4,285,000 5,690,378 Convertible debt 5,355,500 9,157,100 Total common stock equivalents excluded from diluted net loss per share 25,733,826 27,400,804 |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Inventory | |
Schedule of Inventory | March 31, 2021 December 31, 2020 Raw Materials $ 124,527 $ 169,803 Spare Parts 23,432 23,432 Finished goods 304,474 366,892 $ 452,433 $ 560,127 |
Property And Equipment Net (Tab
Property And Equipment Net (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Property And Equipment Net | |
Schedule of property and equipment | March 31, December 31, 2021 2020 Equipment & installation $ 1,965,659 $ 1,965,659 Trucking equipment 834,375 834,375 Computer equipment and software 14,768 67,126 Office equipment 5,528 27,155 Total property and equipment 2,820,330 2,894,315 Less: accumulated depreciation (2,764,809 ) (2,814,993 ) Construction in process 1,807,707 1,807,707 Property and equipment, net $ 1,863,228 $ 1,887,029 |
Intellectual Property (Tables)
Intellectual Property (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Property And Equipment Net | |
Schedule of patent costs capitalized | March 31, December 31, 2021 2020 Patents $ 3,068,995 $ 3,068,995 Less: Accumulated amortization (801,349 ) (750,199 ) Intellectual property, net $ 2,267,646 $ 2,318,796 |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Convertible Notes Payable (Tables) | |
scheduled of principal payments due on convertible notes payable | March 31, December 31, 2021 2020 Secured convertible promissory notes which mature upon the retirement of the New AC Midwest Secured Debt (see Note 9) bear interest at 10% per annum, and are convertible into shares of common stock at $0.50 per share, and are secured by the assets of the Company. $ 50,000 $ 990,000 Unsecured convertible promissory notes which mature beginning on June 15, 2023 through October 31, 2023, bear interest at 12% per annum, and are convertible into shares of common stock at $0.50 per share. - 860,000 Unsecured convertible promissory notes which mature beginning on June 18, 2024 through October 23, 2024, bear interest at 12% per annum, and are convertible into shares of common stock at $0.50 per share. 2,550,000 2,600,000 Total convertible notes payable before discount 2,600,000 4,450,000 Less discounts and debt issuance costs (323,720 ) (394,878 ) Total convertible notes payable 2,276,280 4,055,122 Less current portion - - Convertible notes payable, net of current portion $ 2,276,280 $ 4,055,122 |
Schedule of payments due on convertible notes payable | Twelve months ended March 31, 2022 $ - 2023 50,000 2024 - 2025 2,550,000 $ 2,600,000 |
Schedule of future amortization of discounts | Twelve months ended March 31, Discounts 2022 $ 96,023 2023 96,023 2024 96,286 2025 35,388 $ 323,720 |
Related Party (Tables)
Related Party (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Related Party (Tables) | |
Schedule of Unsecured notes payable | March 31, December 31, 2021 2020 Unsecured note payable $ 13,154,931 $ 13,154,931 Less discounts and debt issuance costs (2,773,175 ) (3,260,647 ) Total unsecured note payable 10,381,756 9,894,284 Less current portion - - Unsecured note payable, net of current portion $ 10,381,756 $ 9,894,284 |
Schedule of profit share liabilities | Profit Share as of January 1, 2021 $ 2,305,308 Addition - Loss on change in fair value of profit share 121,054 Profit Share as of March 31, 2021 $ 2,426,362 Profit Share as of January 1, 2020 $ 2,328,845 Addition - Loss on change in fair value of profit share 123,650 Profit Share as of March 31, 2020 $ 2,452,495 |
Operating Leases (Tables)
Operating Leases (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Operating Leases | |
Schedule of future minimum lease payments | For the twelve months ended March 31, 2022 $ 438,840 2023 252,640 2024 45,000 Total 736,480 Less discount (33,964 ) Total lease liabilities 702,516 Less current portion (413,096 ) Operating lease obligation, net of current portion $ 289,420 |
Schedule of lease cost | Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 Operating lease cost $ 99,567 $ 95,222 Short-term lease cost (1) 1,770 1,770 Total lease cost $ 101,337 $ 96,992 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Stock Based Compensation | |
Schedule of stock option activity | Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value January 1, 2021 16,218,326 $ 0.50 3.57 $ 3,588,631 Grants - - - - Expirations - - - - March 31, 2021 16,218,326 $ 0.50 3.32 $ 10,965,344 Options exercisable at: March 31, 2021 16,093,326 $ 0.50 3.31 $ 10,842,844 |
Warrants (Tables)
Warrants (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Convertible Notes Payable | |
Schedule of warrant | Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value January 1, 2021 5,595,378 $ 0.63 2.85 $ 314,260 Grants - Exercises (1,030,166 ) $ 0.42 - - Expirations (280,212 ) $ 0.35 - - March 31, 2021 4,285,000 $ 0.70 3.23 $ 2,013,950 Warrants exercisable at: March 31, 2021 4,285,000 $ 0.70 3.23 $ 2,013,950 |
Summary of common stock warrants outstanding | Outstanding and Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price $ 0.70 4,285,000 3.23 $ 0.70 $ 0.70 4,285,000 3.23 $ 0.70 |
Organization (Details Narrative
Organization (Details Narrative) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
Organization | ||
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Total Assets | $ 8,832,272 | $ 7,376,365 |
Total Liabilities | 19,459,602 | 20,579,897 |
Total [Member] | ||
Cash | 1,982,159 | 591,019 |
Total Assets | 1,982,159 | 591,019 |
Promissory notes | 13,250,562 | 14,585,097 |
Profit share liability | 2,426,362 | 2,305,308 |
Total Liabilities | 15,676,924 | 16,890,405 |
Level 1 [Member] | ||
Cash | 1,982,159 | 591,019 |
Total Assets | 1,982,159 | 591,019 |
Promissory notes | 0 | 0 |
Profit share liability | 0 | 0 |
Total Liabilities | 0 | 0 |
Level 2 [Member] | ||
Cash | 0 | 0 |
Total Assets | 0 | 0 |
Promissory notes | 13,250,562 | 14,585,097 |
Profit share liability | 0 | 0 |
Total Liabilities | 13,250,562 | 14,585,097 |
Level 3 [Member] | ||
Cash | 0 | 0 |
Total Assets | 0 | 0 |
Promissory notes | 0 | 0 |
Profit share liability | 2,426,362 | 2,305,308 |
Total Liabilities | $ 2,426,362 | $ 2,305,308 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Total [Member] | ||
Product revenue | $ 2,031,101 | $ 1,069,360 |
License revenue | 945,547 | 0 |
Demonstrations & Consulting revenue | 34,310 | 42,767 |
Equipment revenue | 15,680 | 4,549 |
Total | 3,026,638 | 1,116,676 |
United States [Member] | ||
Product revenue | 2,031,101 | 984,160 |
License revenue | 945,547 | 0 |
Demonstrations & Consulting revenue | 34,310 | 42,767 |
Equipment revenue | 15,680 | 4,549 |
Total | $ 3,026,638 | 1,031,476 |
International [Member] | ||
License revenue | 85,200 | |
Total | $ 85,200 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Total common stock equivalents excluded from diluted net loss per share | 25,733,826 | 27,400,804 |
Stock Options [Member] | ||
Total common stock equivalents excluded from diluted net loss per share | 16,093,326 | 12,553,326 |
Warrant [Member] | ||
Total common stock equivalents excluded from diluted net loss per share | 4,285,000 | 5,690,378 |
Convertible Debt [Member] | ||
Total common stock equivalents excluded from diluted net loss per share | 5,355,500 | 9,157,100 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details Narrative) - integer | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Taxable income descriptions | Corporate taxpayers may carryback net operating losses (“NOLs”) originating between 2018 and 2020 for up to five years, which was not previously allowed under the 2017 Tax Act. The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 or 2020. Taxpayers may generally deduct interest up to the sum of 50% of adjusted taxable income plus business interest income (30% limit under the 2017 Tax Act) for 2019 and 2020 | |
Two Suppliers [Member] | Purchase [Member] | ||
Concentration risk percentage | 93.00% | 86.00% |
Revenue [Member] | Customers [Member] | ||
Concentration risk percentage | 100.00% | 100.00% |
Number of Customers | 14 | 9 |
Accounts Payable And Accrued Expenses [Member] | Two Vendors [Member] | ||
Concentration risk percentage | 38.00% | 47.00% |
Going Concern and Financial C_2
Going Concern and Financial Condition (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Accumulated deficit | $ (63,902,040) | $ (63,484,106) |
Going Concern [Member] | ||
Accumulated deficit | (63,900,000) | |
Net loss | (417,934) | |
Working capital | $ (484,244) |
Inventory (Details)
Inventory (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Inventory | ||
Raw materials | $ 124,527 | $ 169,803 |
Spare parts | 23,432 | 23,432 |
Finished goods | 304,474 | 366,892 |
Inventory | $ 452,433 | $ 560,127 |
Property And Equipment Net (Det
Property And Equipment Net (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Total Equipment | $ 2,820,330 | $ 2,894,315 |
Less: accumulated depreciation | (2,764,809) | (2,814,993) |
Construction in process | 1,807,707 | 1,807,707 |
Property and equipment, net | 1,863,228 | 1,887,029 |
Trucking Equipment [Member] | ||
Total Equipment | 834,375 | 834,375 |
Computer Equipment and Software [Member] | ||
Total Equipment | 14,768 | 67,126 |
Office Equipment [Member] | ||
Total Equipment | 5,528 | 27,155 |
Equipment & Installation [Member] | ||
Total Equipment | $ 1,965,659 | $ 1,965,659 |
Property And Equipment Net (D_2
Property And Equipment Net (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Property And Equipment Net | ||
Depreciation expense | $ 23,804 | $ 66,589 |
Straight-line method description | The Company uses the straight-line method of depreciation over 2 to 5 years. |
Intellectual Property (Details)
Intellectual Property (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Intellectual Property | ||
Patents | $ 3,068,995 | $ 3,068,995 |
Less: accumulated amortization | (801,349) | (750,199) |
Intellectual property, net | $ 2,267,646 | $ 2,318,796 |
Intellectual Property (Details
Intellectual Property (Details Narrative) | 3 Months Ended | ||
Mar. 31, 2021USD ($)integer$ / sharesshares | Mar. 31, 2020USD ($) | Dec. 31, 2020shares | |
Amortization expense charged to cost and expenses | $ 51,150 | $ 50,300 | |
Estimated amortization cost for 2021 | 204,600 | ||
Estimated amortization cost for 2022 | 204,600 | ||
Estimated amortization cost for 2023 | 204,600 | ||
Estimated amortization cost for 2024 | 204,600 | ||
Estimated amortization cost for 2025 | $ 204,600 | ||
Shares issued | shares | 83,715,582 | 78,096,326 | |
On April 24, 2017 [Member] | |||
Purchase price of intellectual property | $ 2,500,000 | ||
Shares issued | shares | 925,000 | ||
Shares issued, value | $ 518,000 | ||
Shares issued, price per share | $ / shares | $ 0.56 | ||
On April 24, 2017 [Member] | EERCF [Member] | |||
Shares issued | shares | 628,998 | ||
Number of patent applications | integer | 42 | ||
On April 24, 2017 [Member] | Inventors designated by EERCF [Member] | |||
Shares issued | shares | 296,002 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Apr. 14, 2020 | Feb. 28, 2021 | Jan. 31, 2021 | Feb. 25, 2020 |
Paycheck Protection Program [Member] | ||||
Secured loan, principal amount | $ 299,300 | |||
Rate of interest | 1.00% | |||
Maturity date | Apr. 14, 2022 | |||
Extinguishment of debt | $ 299,300 | |||
First International Bank & Trust [Member] | ||||
Rate of interest | 1.00% | |||
Proceeds from loan | $ 299,380 | |||
Descriptions of interest payment | With one interest payment on February 2, 2022, 47 monthly consecutive principal and interest payments of $6,366.89 each, beginning March 2, 2022, and one final principal and interest payment of $6,366.92 on February 2, 2026. | |||
Business Loan Agreement [Member] | MES, Inc. [Member] | ||||
Secured loan, principal amount | $ 200,000 | |||
Term of loan | 1 year | |||
Rate of interest | 8.75% | |||
Maturity date | Feb. 26, 2021 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Total convertible notes payable before discount | $ 2,600,000 | $ 4,450,000 |
Less unamortized discounts and debt issuance costs | (323,720) | (394,878) |
Total convertible notes payable | 2,276,280 | 4,055,122 |
Less current portion | 0 | 0 |
Convertible notes payable, net of current portion | 2,276,280 | 4,055,122 |
Secured Convertible Promissory Notes [Member] | ||
Total convertible notes payable before discount | 50,000 | 990,000 |
Unsecured Convertible Promissory Notes [Member] | ||
Total convertible notes payable before discount | 0 | 860,000 |
Unsecured Convertible Promissory Notes One [Member] | ||
Total convertible notes payable before discount | $ 2,550,000 | $ 2,600,000 |
Convertible Notes Payable (De_2
Convertible Notes Payable (Details 1) | Mar. 31, 2021USD ($) |
Convertible Notes Payable | |
2022 | $ 0 |
2023 | 50,000 |
2024 | 0 |
2025 | 2,550,000 |
Total | $ 2,600,000 |
Convertible Notes Payable (De_3
Convertible Notes Payable (Details 2) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
2025 [Member] | |
Amortization of discounts | $ 35,388 |
2022 [Member] | |
Amortization of discounts | 96,023 |
2023 [Member] | |
Amortization of discounts | 96,023 |
2024 [Member] | |
Amortization of discounts | 96,286 |
Total [Member] | |
Amortization of discounts | $ 323,720 |
Convertible Notes Payable (De_4
Convertible Notes Payable (Details Narrative) - USD ($) | Mar. 07, 2021 | Jun. 15, 2018 | Mar. 31, 2021 | Mar. 08, 2021 | Feb. 17, 2021 | Feb. 16, 2021 | Dec. 31, 2020 |
Common stock, par value | $ 0.001 | $ 0.001 | |||||
Unsecured convertible notes and warrants | $ 10,381,756 | $ 9,894,284 | |||||
Exercise price | $ 0.70 | $ 0.45 | $ 0.35 | ||||
June 18, 2019 through October 23, 2019 [Member] | |||||||
Common stock, par value | $ 0.001 | ||||||
Conversion ratio | Equal to $0.50 per share. | ||||||
Unsecured convertible notes and warrants | $ 2,600,000 | ||||||
Interest rate | 12.00% | ||||||
Debt term | 5 years | ||||||
February 26, 2021 and March 8, 2021 [Member] | |||||||
Common stock shares issued, amount | $ 515,000 | $ 345,000 | |||||
Common stock shares issued | 103,000 | 690,000 | |||||
Principal outstanding on notes | $ 0 | 860,000 | |||||
Common stock, par value | $ 0.50 | ||||||
February 26, 2021 [Member] | |||||||
Common stock shares issued, amount | $ 50,000 | ||||||
Common stock shares issued | 100,000 | ||||||
Principal outstanding on notes | $ 2,550,000 | 2,600,000 | |||||
Common stock, par value | $ 0.50 | ||||||
February 8, 2021 to February 15, 2021 [Member] | |||||||
Common stock shares issued, amount | $ 940,000 | ||||||
Common stock shares issued | 1,880,000 | ||||||
Principal outstanding on notes | $ 50,000 | $ 990,000 | |||||
Common stock, par value | $ 0.50 | ||||||
Notes 2013 [Member] | |||||||
Common stock, par value | $ 0.001 | ||||||
Conversion ratio | Equal to $0.50 per share | ||||||
Unsecured convertible notes and warrants | $ 560,000 | ||||||
Interest rate | 12.00% | ||||||
Debt term | 5 years | ||||||
Exercise price | $ 0.70 | ||||||
July 30, 2013 through December 24, 2013 [Member] | |||||||
Common stock, par value | $ 0.001 | ||||||
Conversion ratio | Equal to $0.50 per share | ||||||
Interest rate | 10.00% | ||||||
Debt term | 5 years | ||||||
Convertible note | $ 1,902,500 | ||||||
August 31, 2018 through October 30, 2018 [Member] | |||||||
Unsecured convertible notes and warrants | $ 300,000 |
Related party (Details)
Related party (Details) - Note Payable Related Party [Member] - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Unsecured Note Payable | $ 13,154,931 | $ 13,154,931 |
Less discounts and debt issuance costs | (2,773,175) | (3,260,647) |
Total unsecured note payable | 10,381,756 | 9,894,284 |
Less current portion | 0 | 0 |
Unsecured note payable, net of current portion | $ 10,381,756 | $ 9,894,284 |
Related party (Details 1)
Related party (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Related Party | ||
Profit Share, Beginning balance | $ 2,305,308 | $ 2,328,845 |
Addition | 0 | 0 |
Loss on change in fair value of profit share | 121,054 | 123,650 |
Profit Share, Ending balance | $ 2,426,362 | $ 2,452,495 |
Related party (Details Narrativ
Related party (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||||
Feb. 25, 2019 | Nov. 29, 2016 | Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2020 | |
Interest expenses | $ 10,188 | $ 9,937 | ||||
Unamortized balance of discount | 2,602,100 | |||||
Remaining debt discount | 528,558 | 490,988 | ||||
AC Midwest Subordinated Note [Member] | ||||||
Interest expenses | 487,472 | $ 462,483 | ||||
Discount on debentures | 6,916,687 | $ 6,916,687 | ||||
Related party debt restructuring resulting in capital contribution | 3,412,204 | |||||
Remaining debt discount | $ 1,070,819 | |||||
Market rate of interest | 21.00% | |||||
AC Midwest Unsecured Note [Member] | ||||||
Principal outstanding on notes | $ 13,154,931 | $ 13,000,000 | ||||
Maturity Date | Aug. 25, 2022 | Dec. 15, 2020 | ||||
Net licensing revenue | $ 3,500,000 | |||||
Repayment of debt description | 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. In addition, and within 30 days following the end of each fiscal quarter | |||||
Secured Note [Member] | ||||||
Interest rate | 15.00% | |||||
Principal outstanding on notes | $ 9,646,686 | $ 271,686 | 271,686 | |||
Maturity Date | Dec. 15, 2018 | Aug. 25, 2022 | ||||
David M. Kaye [Member] | ||||||
Related party debt | $ 181,250 | $ 168,750 | ||||
MEEC [Member] | ||||||
Interest rate | 21.00% | |||||
Fair Value of sharing profit | $ 1,954,383 | |||||
Estimated time of profit sharing | 16 years | |||||
Yearly payment description | Between $100,000 to $350,000 paid quarterly after the first three years | |||||
Kaye Cooper Kay & Rosenberg, LLP [Member] | ||||||
Legal services expense | $ 62,500 |
Operating Leases (Details)
Operating Leases (Details) | Mar. 31, 2021USD ($) |
Operating Leases | |
2022 | $ 438,840 |
2023 | 252,640 |
2024 | 45,000 |
Total | 736,480 |
Less discount | (33,964) |
Total lease liabilities | 702,516 |
Less current portion | (413,096) |
Operating lease obligation, net of current portion | $ 289,420 |
Operating Leases (Details 1)
Operating Leases (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Operating Leases | ||
Operating lease cost | $ 99,567 | $ 95,222 |
Short-term lease cost (1) | 1,770 | 1,770 |
Total lease cost | $ 101,337 | $ 96,992 |
Operating Leases (Details Narra
Operating Leases (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Weighted average discount rate | 5.00% | |
Weighted average remaining lease term | 1 year 9 months 26 days | |
Lease obligations | $ 109,710 | |
Right-of-use asset, amortization | $ 99,567 | |
Short Term Lease | 12 months | |
Operating lease liability | $ 289,420 | $ 394,625 |
Grand Forks Office [Member] | September 1, 2019 [Member] | ||
Monthly rent expenses | 590 | |
Corsicana Warehouse [Member] | July 1, 2015 [Member] | ||
Monthly rent expenses | $ 3,750 | |
Lease term | 5 years | |
Operating lease liability | $ 145,267 | |
Monthly expenses pro rata basis | 882 | |
Lewis Center Office [Member] | ||
Monthly rent expenses | $ 1,575 | |
Lease commencement date | Feb. 1, 2015 | |
Lease expiry date | February 2020 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 1 Months Ended | 3 Months Ended |
Jul. 17, 2019 | Mar. 31, 2021 | |
Commercial Customers [Member] | ||
Contracts expiry date, description | The Company initiated patent litigation against certain defendants in the U.S. District Court for the District of Delaware for infringement of United States Patent Nos. 10,343,114 (the “‘114 Patent”) and 8,168,147 (the “‘147 Patent”) owned by the Company | These contracts expire through 2020 and 2025 and expose the Company to the potential risks associated with rising material costs during that same period |
Stock Based Compensation (Detai
Stock Based Compensation (Details) | 3 Months Ended |
Mar. 31, 2021USD ($)$ / sharesshares | |
Number of shares | |
Number of shares, Beginning balance | 16,218,326 |
Number of shares, Grants | 0 |
Number of shares, Expiration | 0 |
Number of shares, Ending balance | 16,218,326 |
Options exercisable, Ending balance | 16,093,326 |
Weighted Average Exercise Price | |
Weighted Average Exercise Price, Beginning balance | $ / shares | $ 0.50 |
Weighted Average Exercise Price, Ending balance | $ / shares | 0.50 |
Options exercisable, Ending balance | $ / shares | $ 0.50 |
Weighted Average Remaining Contractual Life (years) | |
Weighted Average Remaining Contractual Life (years), Beginning balance | 3 years 6 months 26 days |
Weighted Average Remaining Contractual Life (years), Ending balance | 3 years 3 months 26 days |
Options exercisable, Ending balance | 3 years 3 months 22 days |
Aggregate Intrinsic Value | |
Aggregate Intrinsic Value, Beginning balance | $ | $ 3,588,631 |
Aggregate Intrinsic Value, Ending balance | $ | 10,965,344 |
Options exercisable, Ending balance, Intrinsic value | $ | $ 10,842,844 |
Stock Based Compensation (Det_2
Stock Based Compensation (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Mar. 30, 2021 | Mar. 31, 2021 | Mar. 23, 2021 | Mar. 31, 2020 | |
Stock based compensation | $ 31,910 | $ 114,640 | ||
Stock Issued During Period, Value | $ 644,250 | |||
Intrinsic Value[Member] | ||||
Closing stock price | $ 1.17 | |||
Consulting Agreement [Member] | ||||
Common stock, shares granted | 500,000 | |||
Stock Issued During Period, Value | $ 615,000 | |||
January 1, 2020 [Member] | Advisory Areement [Member] | ||||
Common stock, shares granted | 1,000,000 | |||
Stock Issued During Period, Value | $ 200,000 | |||
March 30, 2021 [Member] | Business Development Agreement [Member] | ||||
Common stock, shares granted | 25,000 | |||
Stock Issued During Period, Value | $ 29,250 |
Warrants (Details)
Warrants (Details) | 3 Months Ended |
Mar. 31, 2021USD ($)$ / sharesshares | |
Weighted Average Remaining Contractual Life years, Beginning Balance | 3 years 6 months 26 days |
Weighted Average Remaining Contractual Life years, Ending Balance | 3 years 3 months 26 days |
Aggregate Intrinsic Value, Beginning balance | $ | $ 3,588,631 |
Warrant [Member] | |
Number of warrants, Beginning balance | 5,595,378 |
Number of warrants, grants | 0 |
Number of warrants, Exercises | (1,030,166) |
Number of warrants, Expiration | (280,212) |
Number of warrants, Ending balance | 4,285,000 |
Warrants Exercisable, Ending balance | 4,285,000 |
Weighted Average Exercise Price, Beginning balance | $ / shares | $ 0.63 |
Weighted Average Exercise Price, Exercises | $ / shares | 0.42 |
Weighted Average Exercise Price, Expirations | $ / shares | 0.35 |
Weighted Average Exercise Price, Ending balance | $ / shares | 0.70 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 0.70 |
Weighted Average Remaining Contractual Life years, Beginning Balance | 2 years 10 months 6 days |
Weighted Average Remaining Contractual Life years, exercisable | 3 years 2 months 23 days |
Weighted Average Remaining Contractual Life years, Ending Balance | 3 years 2 months 23 days |
Aggregate Intrinsic Value, exercisable | $ | $ 2,013,950 |
Aggregate Intrinsic Value, Beginning balance | $ | 314,260 |
Aggregate Intrinsic Value, Ending balance | $ | $ 2,013,950 |
Warrants (Details 1)
Warrants (Details 1) | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Warrant [Member] | |
Number outstanding | shares | 4,285,000 |
Weighted Average Remaining Contractual Life (years) | 3 years 2 months 23 days |
Weighted Average Exercise Price Outstanding | $ 0.70 |
Exercise Price | $ 0.70 |
Number Exercisable | shares | 4,285,000 |
Weighted Average Exercise Price Exercisable | $ 0.70 |
Warrant One [Member] | |
Number outstanding | shares | 4,285,000 |
Weighted Average Remaining Contractual Life (years) | 3 years 2 months 23 days |
Weighted Average Exercise Price Outstanding | $ 0.70 |
Exercise Price | $ 0.70 |
Number Exercisable | shares | 4,285,000 |
Weighted Average Exercise Price Exercisable | $ 0.70 |
Warrants (Details Narrative)
Warrants (Details Narrative) - USD ($) | Mar. 08, 2021 | Feb. 17, 2021 | Feb. 16, 2021 | Mar. 31, 2021 |
Warrants issued upon cashless exercise of warrants | 97,015 | 97,675 | 705,166 | |
Warrants purchase upon common stock shares | 175,000 | 150,000 | 705,166 | |
Warrants exercise price | $ 0.70 | $ 0.45 | $ 0.35 | |
Fair value of warrants | $ 246,808 | $ 246,808 | ||
Warrants, market value | $ 1.29 | |||
Minimum [Member] | ||||
Warrants, market value | 1.44 | |||
Maximum [Member] | ||||
Warrants, market value | $ 1.63 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - USD ($) | May 10, 2021 | Apr. 09, 2021 |
Convertible promissory note issued, value | $ 30,000 | |
Conversion rate | $ 0.50 | |
Convertible promissory note issued | 60,000 | |
Common shares issued | 15,869 | |
Exercise price | $ 0.42 | |
Market price | $ 1.15 | |
Option purchase | 25,000 |