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Midwest Energy Emissions (MEEC)

Participants
Richard MacPherson President and Chief Executive Officer
Jami Satterthwaite Chief Financial Officer
John Nobile Taglich Brothers
Tim Quinlisk Colrain Capital
John Jay Private Investor
Call transcript
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Operator

Good day and welcome to the ME2C Environmental Second Quarter 2021 Earnings Call. [Operator Instructions] This conference is being recorded today, August 16, 2021 and the earnings press release accompanying this conference call was issued before this call today.

On the call today is Richard MacPherson, President and CEO of ME2C and Jami Satterthwaite, CFO of ME2C.

Before we get started, I will read the disclaimer about forward-looking statements. The conference call may contain in addition to historical information, forward-looking statements within the meanings of the federal securities laws regarding ME2C Environmental.

about underlying goals, that assumptions than facts. statements or future are include historical and performance and statements plans, strategies, objectives, events different Forward-looking other statements

anticipate, identified expressions, risks and uncertainty the management’s customer, and similar the that the involve in these in include, current supply and power in to economic a materials, of or gain environmental may and the customer’s changes key supply electric based the experience subject general significant forward-looking in results forward-looking words exclusive are to among words may regulations, actual Forward-looking statements. will our those plant Investors the loss other but demand, litigation demands, our of major of by not change utilities significant fluctuations expectations disruption change in a of of are expect, in in intend, coal statements and generally results availability capital statements materially differ that units, from personnel, that such cautioned are statements changes factors, change loss on disruption uncertainties operations capacity factor to management and as to means circumstances. believe, customer’s Matters company. cause of materially of any significant power any are major regarding These of where conditions cause regions actual plan, forward-looking from could and are statements differ made. using identifying statements

any to events, the reflect financial statements this date after does as that any call. revise time-sensitive concerning analysis periodical conference company’s in Further publicly turn conference company’s for of issues of this arise this Securities circumstances update over information Exchange ahead. materially date information presentation to to this information that obligation contains or Sir, website could undertake that call in MEXC reflects only In company also current Executive affect addition, call. not MacPherson, of filings The future or Commission best can conference the more of call and be Chief would forward-looking information. to to please Officer and the the forward-looking this industry contained statements to related like we the At with would supporting performance Environmental. found the go you Richard I time, management’s refer

Richard MacPherson

Danielle everyone for to you, joining on you Thank year in a up shaping be of monetization across momentum MEXC continue strategic and quarter patented our as for We thank make to XXXX environmental priorities. technology. operational second worked our call. with today’s to us we the Environmental diligently and is breakout advancements experience to the

Over and control emissions. value technologies the of toxic by years, the improving emissions industry diminishing amount provided power a U.S. plant to have efficiencies our significant

Our an are that the best solutions update second efficiencies as the increasingly are in will progressed meaningfully importantly, cost global for on a industry significant an the the as these I as in are they in recognized leading critical with climate we Most clean-tech role being benefits a multi-pronged enterprise, to play addressing which community. pleased as we begin operational as issues important strategy, well provide. our litigation related quarter. facing the

to strategy that new this on background the me our Before those it for are this brief that achieved why I discuss progress to take allow a story. with to necessary provide have today, approach we was

control. for mercury SEA additive, a emissions revolutionary in sorbent The So, XXXXs to technologies early an our patented the incredible enhancing response had industry process. innovation were our created as proprietary or

improve technologies, today U.S. most making the of technology our adopted emissions work widely America systems plants these coal-fired environment. In have the fact, believe capture the adopted to package, about at currently of that SEA we our XX% across in one North

of were However, technologies the process that that largely and commercial removed invented these we the suppliers technologies. used against ourselves materials with from utilities very adoption and found we the of competing were the in

a in XXXX defend litigation for order intellectual a the initiate patent strategy our of property value late with we shareholders. in approach business pivoted to robust So our to portfolio, our

sales as And recommendation issued so not lawsuit that U.S. with is major Delaware District XXXX that use program, in against our this without the number the refined applied to against the including to we four refined a utilities named initiated to been report certain technology. of being coal refined May, litigation prior in the country XXXX coal and treated refined indeed coal coal solution be entities would utilities, that proceed pending in key defendants go that boiler belief allowed chemical a coal coal also refined many in across lawsuit. that a In in forward Court we exist our our should patented has and

are of our impact legal of patented considerable efforts. extensive billion a the Caldwell the Curry, And side annual have the we the with which utility pursuing than the in realizing legal on patent Cassady a are significantly So, Under litigation. exceptional for court’s tax have their taken customers, engagement, securing on to infringing with a litigation firm supply which long-term recommendation means technologies, value approach guidance, working upside increases counsel, $X parties, refined true rather team coal had experience program. potential with the focused our we & agreements just they business-first with

us up excess few years. $XXX facilities handle of production to are existing that able are approach believe revenue to production and we in of scale next will we our the products in annual that this over million Our following allow

that emissions major last our signed we using X allow these to utilities utilities mercury successfully continue to agreements coal-fired would agreements process the with provide patented for year, license Over capture.

we these To multiyear to is we grow that our recently end, that customers. one into to Our side with had in of contact those are supply goal with other we last with And business the secured utilities convert months. entered – in licensees more supply a will license many that and and a contract we to us with utilities settled entered the coming continue agreement supply major believe year.

our Let new technologies me about efforts. think

Our core to continues our foundation business. of emissions business mercury be capture the

the we development electric private Earlier we growth these provide have U.S. applications, public on capitalized the not believe rare REEs Drummond sectors evaluated of $XX other EURs, the market the earth our including our EUFs, America. in potential in can and demand on to annual the has from focused of for in areas. North that earth or among MEXC XX% on hyper improve processing and growth. billion skill coal in used mining Dr. elements many is all Environmental a earth set hindered value available vehicles, technologies from such substantial power This in high U.S.’s the global China, However, industries, of others. Scott rare of imported elements the the consumed new both year, coming are have verticals earth yet segment the U.S. pursuing with in due industries which we work as for that Notably, other to elements, rare elements coal-fired countries, rare from are economic announced

stock plants, present then the called soil also many leach critical more forthcoming ash In in be country cases, President abandoned. rich ash which coal regulations are There from either the water is the sector. the coal are over coal-fired the and very on stricter concerns both X,XXX on our the We in some mining both environmental our we the mines, with started from Our those have sites coal contaminated is and runoff, Director, the coal developing active found economic the help U.S. minerals ash, while We the processing because technologies perspective, REEs, into or from the to materials announced aim rather that removing mining mined wastewater. raw water. and wastewater in with harmful leaning ponds, decision And states of materials in extracted believe and ash that and but ash believed administration are in in than and cleanup of is new surrounding the will rare recently importing of support Under wastewater. challenges. the to currently energy an reversing than new of REEs coal Presently, challenging, U.S. ago will technologies. new that in XX is remediation. facing XXX across and these we Regan EPA ponds one that minerals to the contaminants U.S. and Biden, largest Michael environmental years address can earths

to is as be. have of State to promising administration, our and efforts participated is This global the stage notable the Penn need these retained we year, prove results testing for new of opportunity have confirmation year, given perform vehicle will incredibly aid today. these a will we ability USA’s that of effective next after in this they stages the leader field the environmental have a had technologies. In these forward we which the testing significantly end technologies. increasing further economically enhance positioned by technologies. of through to University, And we in State environmental The earlier this the development Under of to for an uniquely commercialize scale, firm we seek to are creation minerals think testing technologies, today Eleclear the as of while to September advance clean these Now, Eleclear the compete MEXC, Drummond, to these with infrastructure. U.S. as Technologies. our and we will a Penn reliance to Dr. for run vertical infield the Biden we, advances be its will development across collaboration on should results impacting we look technologies confirmation of technologies the critical new an tech our this in

Finally, a quick update market capital initiatives. on our

graduation remains or a such exchange, the to anticipated major NYSE as on NASDAQ Our track.

sheet capital ahead than have quarter, uplisting. more our with an than and second in million agreement of plant balance debt our more partners We convertible and fortify work our million the $XX this simplify to one $X eliminate of place eliminated we in During in long-term to structure debt.

This completed step reaching a in company’s to our all exposure generate fair of the is increased addition, structure through promissory In liquidity, have our our major of debt to convertible strong of XXXX notes. our goal next while this sheet for the last The uplisting phase growth. we a key analyst valuation and on so broaden and of capital the tranche institutional conversion coverage. market positioning was investors doing company’s balance outstanding in

as to We Officer, to make where the topic Chief this appointed process she growth served previously like Satterthwaite, recently to we our excited second leadership since now joining XXXX. Accounting Jami as company’s as financials. her be Jami instrumental oversee early announcements will on I over who of further of relatively to Officer. contributions to She turn materializes our are will our anticipated our Chief in significant strategy. an quarter our in overview Jami? Jami Financial the call uplisting. financial will on we have in this our I’d made now MEXC introduce near-term. business the And for team

Jami Satterthwaite

you hello address of Financial and to It’s everyone. today pleasure Rick as you, Chief Thank a Officer MEXC.

second factor XX% third in second due compared to making the year expenses experienced secured $X.X is and of quarter million, mainly expense compared expenses the as $X.XX in net we The on along cost million of value $X which agreements. Cost increase was The and last or together $XXX,XXX the quarter second increase is incentives anticipate the experienced of Revenue last interest, and to a related with $XXX,XXX fair in was holders property to million, XXXX sales to last quarter cost increase by a The $XX,XXX the to quarter significant to were minus which expense in in $X.X of loss due the an provided XXXX same the in we $XXX,XXX net patents. diluted the liability, attributed are capacity conversion in XXXX basic year. and accelerated a in growth certain of the our interest to interest the the quarter EGUs. increased and by the to a loss note substantially of one-time in totaled increase Adjusted of stock primarily of profit increase further in quarter change the compared the share value was expense and customers’ fourth described. same our loss of increase increases positive XXXX in the prior progress million Revenue quarter same supply I share primarily a negative fair EBITDA We diluted of change share primarily year. last million was this the due quarter in of second additional quarter to share liability year. in per we during basic to coal-fired in change loss same and of returning initiating second $X.X sales, $XXX,XXX. in $X.X year. and driven and quarter $X.XX in The increase or from per

As balance conversion Also flow in $X.X principal balance the convertible to of from of elimination convertible million, increase the of had company’s cash XX, a during current $X.XX June agreement on trends, company our of XXXX, consideration has $XXX,XXX the a believes entered Taking been ability into position the $X.X concern which XXXX, into regarding the is mitigated, of shares. lender with eliminated the that June through debt recent the substantial of the in XXXX. management and debt quarter continue of the debt million company’s XX, second announced amount cash going this positive company December to an quarterly. million as of XXXX, cash doubt evaluated principal year, the repayment previously

While our to improvements, of and efforts this are very second the will half revenue our continue in of with value technologies the patented year. growth we the pleased realize

phase call forward, move remarks. I operating we we back are the well manage for his Rick for to As costs of over we ensure will will concluding next Rick? closely continue the positioned hand that, With to growth. our to

Richard MacPherson

protected value securing our monetizing our are long-term the reoccurring technologies we technologies extent are solutions U.S. our our realizing licenses. the The way Jami. contracts supply conclusion, possible. Thanks, we and by toward substantial In being proprietary on monetary patented of of value is to folks, used the well farthest across to working and diligently fleet

shareholders, of is roadmap vertical. earth extraction progress and leading communities operator accomplish path to of work Q&A remediation for providing made ash the the growth And forward updates we year we create the Our that, detailed I of from the extremely environmental promising them. wastewater begin value company I will latter call technology long-term. as further on our and the proud to I clear objectives our sustainable to turn in element have a our focused to as market with to half the customers session. new technologies how the this coal rare strategic position have their look over to the we and an am of the in over a competitive and

Operator

[Operator go comes Instructions] The Nobile John first question from ahead. of Please Taglich Brothers.

John Nobile

call. some Good wins you and regard the specifically to Rick to quarter past business. quarter first litigation quarter out thrown million a to know know great afternoon, Jami the the $X to I thank I’d I came like the get given is be off questions for and sequentially greater you expecting this that What and in It’s to quarter, was over compared year. the

specifically second half your this sequential little and decline year? So, could a for the expectations of I talk you that was hoping about the

Richard MacPherson

is you, Thank Good Rick. This John. question. Sure.

we total that terms left some last play of revenue was previous and of we keeping has the in contract kick upcoming in dollar was to year’s are the in this forward. multimillion actual as in, more having. last we continue come the than it that yet the over we see quarter they that’s XX% have which settlements growth multiyear results in with the quarter The the those that go time will of into quarter, is we quarter, actual that announced to win, nature have growth example, of for this second Although and clients

those seasonality the have got are the of mercy base still of client we somewhat that at the and operations. So we

going our I go we into you and as increased that see be tied again, the forward substantially revenue quarter-over-quarter. changes until we it’s But will to base think get to base revenues. billable that turn wins actual

on searching what The announced contracts for So, an we have step that to start we expectation announcements significantly I year-over-year for quarter-over-quarter are growing and significantly supply grow. we is that the as fundamental are with and to short-term working continue today will positive numbers in place us as this settlements we a with see to the the forward the growth as making as in overall have well. and add continuing

John Nobile

could for with as stat litigation And to the an was claims I made you or a hoping there if thank how as add bit recent was if companies. coal to that you you a or to that’s wanted I in far anything was see progressing? little as to I actually, that. refined recent new there as the so being Okay, you if could to proceed approval report see progress of processing was against give far win that know in just regard back anything court patent update May, any us the

Richard MacPherson

Sure. John. Thank you,

discovery. So in We a issued XX, entities to move think of we allow key number defendants’ our we course creating forward was a actually, are different better will XX and in today for explanation claims. And provide of now will significant individuals significant move the individuals, subpoenas that that forward litigators us of which understanding of a the today for position effort.

difference subpoenas expect So, think acted issued as that delivered, our do today. unfold in I very make will much that and will the that we so. these we proposition And of received to expect upon, story the claims a are value significant

in diligence of John. of a moving we as respond of course those and discovery the discussions back would and subpoenas actively we discovery process process prior are we that to will course, of due settlement full the to wide underway, due we permitted following to public things do continues forward, are in any So and like to phase to on be of up today number on ranging amount issued significant firms the as

John Nobile

subpoenas today, these the first before very hear. XX issued were And there this? or good were That’s actually that is to any issued this

Richard MacPherson

No, got then to we this that to persons until to that or entities what from would the worthy us first papers is succumb. the other discovery wait information defendants providing see had were had ourselves for accordingly govern to round. and enough We felt regards with we they be now

So to having hand in will moving of forward issued forward. useful that think discovery we now be going subpoenas documents information and with in the case we search are

John Nobile

question guess to litigation. same settled I hear. refined And already actually companies good to settled have was that coal yet That’s utility mean question already. have about, your what that you them you’ve a of the settle. I believe regarding about, I not have remaining I processing so with X for

that I any new companies, at believe to report still there leaves So progress? least on remaining pending? XX those Is anything

Richard MacPherson

Sure. a coal A entities program. in give I the refined involved general overview. of those actually can you lot are

the So, those And hand that utilities. on are doing the going two rest coal with things out impact the hand. will as the of discovery plays in the program, work refined are it infringing we

have will those said, And with we bearing most We X goes stages the the other where feel at discussions X have refined negotiations any contacted of with we completion forward, as coal of are to discussions at are not time. have full as major We program recent significant this those this and utilities discussions have then in well. of time are very results mention good But in a various with. discussion. at do in it I we as the and those on that contacted entities about

or and any that discussions will I very really fall that we of discuss material can’t this the two those point. will discussions We become with will over at we And much bringing next forward. public very the results or be into results they material. move So on and achieving be expect hypothesize going further I month expect those much things as forward

John Nobile

These utilities great. am sure in this. right the That’s want settled X with. just you make to clear I now, that’s have that already addition to I on X

just So that sounds like…

Richard MacPherson

correct. That’s

John Nobile

one coal Okay, And you might rare the this being know okay, about earth that a the to you processing. talk And call, I talked final gas working if hoping with been estimate on the be other great. was commercialization? include just on, provide also just emissions element ready wastewater I that that Thank these environmental made you. able progress the have be little question, when us might the maybe methane new that technologies believe you remediation cleanup, ash an you can for you the with and for

Richard MacPherson

Sure.

do are a where run methane the So, an in could a we out have to that that into on create an to We get It’s point environmentally economic technology there readdressing. a works fashion. order in create to one it roll now that’s economically it’s to tweaking testing, some mitigation we it we thing economic to technology viable. challenge another that need

we the forward so earth we research we are nicely With to-date And the rare wastewater – that are area, one. research results extraction with evaluating the now up to processes with Penn and regards our confirming that on backed into State and other remediation moving in side element that entities.

we back move Penn earth the what mining be you commercial license what’s a play full are the in to will then doing are the things challenges will is a have across in handle them have on Should to be able State to that real, we extraction, of we as a environmentally or those folks to interesting working position be doing involved we rare and would ready actually where of that. technology better a or much in whatever is the environmental pilot expected, ourselves be earths rare if in mining to So minerals that Biden a that companies to really would we economic stage, really are could in administration find think are testing. then from And the actual this economics. actual on claimed for And of that sound are that situation is needed we major say, commercialization industries. have which think the scale wide here elements next are both of extract testing based earth John, fashion to for those we now that that are that quickly rare companies that where extract end, on site source and allow late two scale entities technologies commercial they come the fashion the year agree some out really trying we able we into a either to be an which being behind able range get

So, technologies we that’s they in look are a where and incredibly And successful entire mining in be industry. those us it. across that will technology are remediation role those, focused with that efforts. And company to And technologies on. our involved be valuable as the license would if we to folks will our the those

allow We and are involved sound, are a providing not looking economically viable. our the the extraction more we to at technologies company would into environmentally actually much industry be REE to in as successful, That’s get technology that business, looking approach. those

John Nobile

Thank Jami, this good hear. thanks progress for you. year. to am that’s again Rick, I That’s into or made, looking next taking year, to I the Thank forward even this be call. have. And later you. that could maybe all

Richard MacPherson

you. Thank

Operator

The next [indiscernible] John from question comes ahead. Please go from Oppenheimer.

Unidentified Analyst

I the just question, much Thank needed. the what whether on company. and or the Rick. was for next we which earth? appreciate much are you update your really it the rare to Hello today. looking steps pretty I for And license And My time answered, was you very that – actually

finally. So, for thank so answering you it

Richard MacPherson

Yes.

And Biden’s now here us mind overseas, your rare the position USA. China, of of see material we We focused that’s think the just are be huge ponds, So, what’s going forward. in technologies don’t be for as coal you, this on the to today. especially itself, clear has a coal real on, that this as to have in the side our that. here. probably earth on that the U.S., And in John before could technology ash for real, attending generate a processing and a actual And raw to actual here approach of industry and miners given secure, are be yes, necessary the to in utilized supply of is and mentioned aimed I should a revolutionize call in here at approach that amount ocean. underpin all thanks to the what side the really viable we expanded have and chance John, in that elements been doing

we be are successful, will a win everybody. it So, tremendous think if I for

Unidentified Analyst

you Sounds great. much. so Thank

Richard MacPherson

Thank you.

Operator

Instructions] Tim Capital. next Colrain ahead. comes go Please question The [Operator from of Quinlisk

Tim Quinlisk

call. you, Thank you. my Thank taking Rick, for

question converting quick lawsuit. large you with are a in Can revenue as question trends back along supply those impacting the a Thank part next far year, a for settled those and RGUs that the in of to give through of for of specifically utilities to see agreements? And utilities you. you first you the you, half progressing how you sort us the Just sense how the to into year?

Richard MacPherson

along, of with agreement thanks multi-million question. for And Well, goes Tim. Sure, course multi-year conversion a as dollar supply the being for. license the side. we Well, the first that paid that that we had, is just recently announced

get operation further for settled of and settling able very revenue these add those potential I but well a that. side which millions those from we settled updated and that with taken dollars could But bear coming to units expect both have give the exactly some by And license are to for agreements it our So, to to once business it’s the planning at contracts as for in year. supply be side upside and I say a I potential. gain for supply settlements, have in to can’t response active through add much their incremental dealing I our but have this we us. testing an better will only we base, the are of guidance, or with license settled am present active, other of half we agreements that settled be And in not how utilities have get last we from further utilities the significant. will to expect folks, as that settlements with. that of will are with to customer. have ongoing that field much feel will give a in settled I And operated sorry further There we that – also literally an are supply you guest from that already

very much continue patent the I will increase, to able benefits be of on, but positively. not speculate, reporting on following So, we expect year been curve only the the we goes using. as growth forward up have our the to of show the to And that fundamentals strategy and folks move

Tim Quinlisk

little to in was conversion you I where – are process at just we halfway on – you a are me give supply just I that? in, a that XX% trying sense, you of to or of there, and can agreements, are you XX% early sense get Okay, are Rick, how

Richard MacPherson

Great no it’s like, thing but is negotiations Tim, as a today, little such there pregnant. almost

So, difference got work a a discussions as great something have make great. will going how our say going can’t these they And we the from in basis, everything technologies knowledge developers got announce it’s for effective we significant on. signed. really I to The until will and those of technology would have continue percentage are. we inherent utilities,

and until secure about good will happens, brush I the new we that it the business. very change releasing when projection are documents. But feel we fact sign the I And we immediately. if So, be going can’t that to

Tim Quinlisk

Okay, great. you, Appreciate it. Rick. Thank

Richard MacPherson

Tim. you, Thank

Operator

comes question Jay, Investor. next Your Private from ahead. John go Please

John Jay

Jami, future looking and I some curious capitalization. was are making progress. But about Rick the Hi, for you

done, if the conversion try to going many sounded then? to to how which XXX moment, the line? lifting, about I the higher probably it are you is bottom have try full And on black as a though at to reverse figure you there. will would to you think requires to shares a you And do secondly, million try you I do get prior have what wondered when a would getting it split.

Richard MacPherson

so have thanks John, Well, would correct on you that things. heard much. of you it a XXX I million to couple I that we wrong, is had thought shares, correct? Unless

John Jay

so… thought I

Richard MacPherson

am I sorry?

John Jay

so, I that thought is incorrect?

Richard MacPherson

outstanding But be am Jami. range. The me don’t. I we believe million share now, no, if count Yes, would the in wrong, I it correct XX

Jami Satterthwaite

XX it’s XX yes million, million.

Richard MacPherson

through that to settlements we cash are the with million, continue and and to year, the to the of value you $XXX,XXX. at balance John. reverse. new our XX million, we if of the that second the increase year-to-date, look good contracts, to company supply avoid under okay The And we so objective that’s Yes. of adding company’s for regards a the able mention cash reverse, first at the just have an of half of press just end issued in the $X.X release half is the

shape in we capital. So, a need company. as We good are don’t

We with moving way, forward positive quarter-over-quarter, in growth. are year-over-year a

expecting businesses announcing are more business. and We are new new we

to refined would be that And reverse. value the are we head keep as end, that to So, will uplift. to to do organically. a uplift and need we enterprise increase down that when to the My the coal forward, point to of are able increase need enterprise things the where going we without preference able we focusing reverse so do I are our we to program, to and on keep move if side, order especially be won’t company the a successful think in the to things on discovery we a value

a debt. We And pile our new we have business. are increasing eliminated of

in with I of before a effect able position, are it’s the be order in of to matter all we checked, So, boxes uplifting. just to time, that think

John Jay

That’s Thanks, good appreciate good. Rick. progress. I to Really your hear.

Richard MacPherson

you. Thank

Operator

concludes this Richard to for this session. time, the like back answer question remarks. turn would call At to our I and MacPherson Mr. over closing

Richard MacPherson

joining us today. Folks, for again, thanks

$X part last items, without month it a growth, with material, cash a we of of as We happening, the much and numbers becomes have as Alterna include quarter million market. had as be company. will structured The which will of about the be of it the with settlement the non-cash what’s impacting soon bringing to of and dealt solid

third we we think and this months coming I coming in this this us. good quarter for a element be with. – of are outstanding really so utilities will quarter on in three, of been real we working will effort rare game months, are a we nine our strides market changer that also much think will going. top few all a And have better earth where that, field. that in very significant I I shape coal entering approach culmination quarter, think expect have understanding last the who significant I this of refined I with the think make is four And of much we discussions So, very are have the that a the

findings move are we today, incredibly that commercial valuable and we if the Penn think and could to confirms something able on pilot to State to industry shareholders I forward that’s sitting our testing, be both alike.

overseeing So And call. with for operator, thank thank much the time again, today. to that, everybody I you Cheers. would like for their so

Operator

for your concludes call. Thank Thank you. today’s participation. you This