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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good day, and welcome to the ME2C Environmental Fourth Quarter and Full Year 2023 Earnings Conference Call.
[Operator Instructions]
This conference is being recorded today, April 15, 2024. A press release was issued prior to this call today on April 11, 2024, which provided the conference call and webcast information for today's call.
On the call is ME2C Environmental's President and Chief Executive Officer, Richard MacPherson. Before we begin, we want to note that you should read the forward-looking statements in the company's press release issued on April 11, 2024.
During today's call, management will make certain predictive statements that reflect its current views about future performances and financial results. The company bases these statements and certain assumptions and expectations on future events that are subject to risks and uncertainties. The company's periodic filings with the Securities and Exchange Commission list some of the most important risk factors that could cause actual results to differ from its predictions.
At this time, I would like to turn the call over to Richard MacPherson, Chief Executive Officer of ME2C Environmental. Sir, please go ahead.
Thank you, operator, and thank you all for joining us today for ME2C Environmental's 2023 Fourth Quarter and Full Year Earnings Call. I'd like to begin today's call with a look back at our accomplishments from this last year and especially the last quarter, which marked a significant action in several key areas.
Following our year-end review, we'll conclude today's presentation with an overview of how we're developing new initiatives that either began in earnest or grew during 2023. Keeping in mind our first quarter results and earnings call will happen next month with a full update. Let's dive into several critical areas of improvements that were achieved last year. We entered with a very 2023 strong revenue position and gained new 3-year supply is from an existing licensee in our Mercury business estimated in the value of about $3 million annually. This new business was gained through our outreach across the industry, a continued effort that has seen progress and ramp up post trial.
An exciting achievement in 2023 was our stock listing on the TSX Venture Exchange in Canada. We began trading on the TSXV in early July and are seeing continued growth and interest across the Canadian market. Our TSXV listing also allows investors outside of the United States to purchase our stock on the open market, providing ME2C a much wider reach to new investors focused on long-term growth in our environmental technologies. Perhaps our most newsworthy accomplishment in 2023 was our win on the steps of the courthouse prior to our trial date in early November. After nearly 5 years in effort, we negotiated a settlement with A.J. Gallagher, Detroit Edison and [ assert defendant ] and a value of $1 per ton of coal of refined coal burn was established as a baseline of our patent technologies.
Although the terms of this settlement remain confidential, the results of these agreements assure our strong foundation to underwrite new initiatives of growth. This element has also increased our visibility with power producers across the industry and became the first of 2 significant successes in our patent litigation, the second being the jury verdict reached, of course, March 1, 2024. Our financial profile was another focus of last year and an area that gained multiple improvements. in preparation for significant revenue growth in the coming years, we strengthened our financial operations with the appointment of a new CFO, a new financial consulting firm and a new auditing firm. So we completely revamped our financial management. We're confident that these new additions to our operations will assist -- to move our company into a successful future that will yield long-term financial results.
Now today, I'll be going through the details of our last year's efforts. However, our actual filing, the 10-K filing will be filed tomorrow rather than change the date of the call and confuse the market, I figured I would go ahead with the call today and give unaudited results to the group with the full financial -- audited financials being filed tomorrow due to a late noncash item that the auditors needed to look at a couple of times. So as I proceed, we're pleased with our financial leading into 2024. Our revenue remained consistently strong in our mercury emissions business through 2023. We had a loss in revenue in 2023 compared to the prior year ending 2022 and which was caused by a combination of things, very low natural gas prices, but mostly the closure of a major plant of one of our major customers.
Revenues from our core business, were approximately $18 million for 2023 compared to a little over $21 million in 2022. Our cash on hand during 2023 remained higher throughout the year then compared to cash on hand as of December 31, 2022, and of course, significantly higher at the end of 2023, in which we show cash on hand of well over $20 million primarily due to a settlement reach in the patent litigation. More detailed financial information will be reported when we release our Form 10-K for the year-end December 31, '23 which we'll be filing tomorrow. We additionally expect to report significant net cash improvement provided by operating activities compared to net cash used in operating activities reported in 2022, which at that time was a negative $3.68.
We look forward to releasing our 10-K annual report, which, as stated earlier, is expected to be filed tomorrow. So moving from last year, I'd like to provide an update for several key areas and further outline additional growth and exciting developments within the company. So to further boost our financial profile, we crafted a new restructured debt agreement with our primary financial partner Alterna, which will reduce their positions, allowing ME2C more independence. It reduces our debt while ensuring our financial upside for our partner that provides positive results for ME2C. The new debt agreement announced earlier this year required an initial lump sum payment of $960,000 or purchase of shares equal to this event. ME2C was able to facilitate the sale of these restricted shares to Irwin third parties that included long-term investors.
The shares are restricted for a 6-month period. The purchase price was $960,000 and was directly applied to our debt balance. The new arrangement also replaced the previous nonrecourse profit share of $17.6 million with a new nonrecourse profit share of 7.9%, which, of course, provides approximately $10 million of savings to our company. The new debt agreement also allows ME2C to facilitate the sale of the remaining 9.3 million shares owned by [ alternatives, ] and we have the option, of course, to either take those back into the company or oversee and manage the sale of them. And we assure our shareholders that any action in which ME2C is involved in will be constructed in the mutual interest of our company's strategic growth and shareholder value. First, discuss our patent protection efforts briefly. A main part of the company's efforts these days. As a follow-on to our original trial date in early November, the trial with the remaining defendants was rescheduled to February of 2024. After that 5-day trial, ME2C was awarded a jury verdict on March 1 of $57 million for willful infringement, along with induced and contributor infringement of our patents. In addition to customary post-trial motions and applications, including our motions for enhancement of the jury verdict, attorney's fees and interest, a 1-day bench trial scheduled for late May to address Defendant's equitable defense of an implied license. After which time, the federal judge will issue his final ruling which could vary from the initial award at trust. But of equal importance is our ability to now go forward in the market and make sure that our mercury emission supply business grows. Additional annual supply contracts or license agreements have the potential to significantly grow our mercury emissions business. And as we've said since 2018, we're ready to take on this extra business. We have the operational capacity and industry partnerships to support the U.S. coal industry for years to come. And we know that doing so will provide efficiency many efficiencies to these power producers.
Our visibility across the market continues to increase among coal producers post trial and some who delayed responding to our claims last year pre trial have now entered into renewed discussions. We look forward to announcing new supply or license agreements as the year progresses. Let's now look at some other areas of growth and progress in new technologies. Since last year, we've been steadfast in our development of new technologies for water treatment targeting PFAS or [ ForeboChemicals. ] as an extension of our unique expertise in Sorbet technologies and activated carbons, we're using our skill set to develop new technologies that will significantly reduce the amount of coal-based activated carbon. Activated carbons are widely used to remove these forever chemicals and are considered BACT, the best available control technology. As we have done with there, we're now planning to do the same with water, take a successful BACT technology and make it better, more efficient, more affordable and environmentally friendly. In support of this technology initiative, we're excited to announce new team members and the creation of a new division called WE2C environmental. Working closely with John Pavlish, and Dr. Nick Lenz, an expert in PFAS. We brought on as well, Dr. David Matic an expert in activated carbon engineering operations as well as Dennis Beranek to assist in the develop and offer new technologies, applications and business opportunities. Our new division is an outgrowth of our core business, ME2C environment. Under WE2C Environmental, we expect to build our market position swiftly with the construction of 2 new lab facilities, strong industry partners, a strategic acquisition and several joint ventures. We're already in discussions with strategic partners for our feedstock needs and look forward to providing updates in the near term.
Now in the meantime, folks, you could get a look at how this is all going to come together by visiting our website and clicking on the new water division's details. And it will give a much more detailed story of our strategy and our path forward in this water division's growth. Now following our water technology, our rare earth element technology continues. We're back now working with the lab at University of North Dakota, academic experts in [indiscernible] we've made some very positive progress in our lab testing there. We're considering partnerships to move this important technology forward commercially. As we make further progress, we'll update the market accordingly.
Folks in summary, we're extremely well positioned better than we ever have to execute on exciting new growth opportunities and realize significant business growth. We're in the process of reshaping the company, built on the expertise and success of ME2C Environmental into a major game player in the environmental technologies. As we increase our stock value in the U.S. and Canada, we have expectations to move to a larger exchange, such as the NASDAQ or the NYSE and we'll be making efforts post the quarter that we're now in to move forward in that area. For the strong positive results gained during 2023, I'd like to acknowledge our management team especially our Senior VP and Chief Technical Officer, John Pavlish, and our Vice President of Operations, Jim Trettel, in the relentless and highly effective confident contributions as well as our partners are called [ Caldwell Cassidy & Curry ] whose success has allowed us to create a truly transformative company. We further recognize the committed support of our long-term shareholders and are excited to provide significant shareholder value.
Thank you all for listening today and your continued interest in our company. I very much look forward to the first quarter results that we will be able to summarize more where the company is going for 2024 now that we've discussed the 2023.
And with that, I'll turn the call back over to the operator to begin the question-and-answer session.
[Operator Instructions] In the interest of time, we ask that you please limit to one question and one follow-up.
Our first question comes from the line of Michael Galantino the private investor.
Rick Mike Ganti from J.P. Davids Hawaii, sir. A question and a follow-up, if I could. If this penetrates the way we think it's going to go in and you're awarded, say, $50 million or maybe more hopefully. What has management decided as to their use of that windfall. Would it be stock buybacks? Would it be developing more technologies? Would it be building out the business?
And the second question I have is listing on Nasdaq and NASDAQ Pink Sheets. You said earlier in your call that that's the goal, right? I mean, to get more visibility and more distribution that way. What would it take for you to make that move to NASDAQ?
Okay. Well, thanks for the question. First off, Use of proceeds, a number of different -- those 3 actual 3 items that you mentioned are all considerations. First and foremost, however, we'd like to remove all of our debt. And I think we're positioned to do that somewhere around the end of June. We should be able to clean the debt off the books.
Secondly, we have a number of initiatives underway I'll be bringing material news to the market as we go forward in the next few weeks. And so as we build out and acquire the assets necessary to enter the water treatment business, we, of course, will utilize some funds to do that. With regards to stock buyback, as I mentioned earlier in the call, we do have an option to acquire some of our bankers stock, and we'll be considering that as we go through the year as well.
And last but not least, with regards to dividends. We're in a situation where we need to clear off the debt before I can speak to that. But that's certainly not off the table and will be a reflection of the actual award from the court and when we look to actually receive those that reward. And so that would, of course, indicate the timing on any dividend that would be issued.
With regards to the NASDAQ, it is -- we do want to grow organically from a shareholder position from a valuation position we need to get to and maintain a $2 share price. And once we accomplish that, most, if not all of the other requirements are in line with what it is that we'd be able to meet. So I very much would like to see us finishing up the year on a main board. And so we would make that effort happen as soon as we hit the $2 range and maintain it for a few weeks, we would be moving forward on that front. And I hope that answers your questions.
[Operator Instructions]
Our next question comes from the line of Chris Tuttle with Microcap Research.
And I apologize. I'm relatively new to researching the story, pending the positive ruling that you all had -- my question is a little bit on the operational side. So you do have this additional hearing in May. And my question is, are you already in discussions with the targets that would be in a position to actually sign license agreements and pay you guys for your technology?
Have you started those discussions so that there essentially awaiting the final ruling and would be prepared to move pretty quickly? Or is it going to be -- once the ruling is done, that's when the outreach program and all that is going to start up.
Well, again, thanks very much. Good question. And to answer it as best I can. We have a number of utilities that we are in the midst of working out a solution that they have reached out to us, would like to come to a business solution. So we are progressing with those. And they will take more than likely a few weeks to bring together sometimes a month or more because it involves actual testing at the site. But we have a number of them that have come forward post trial and are engaged. And we have another number of folks that we have reached out to that we've yet to hear from.
Keep in mind, they've acknowledged that we have reached them. But these things tend to move somewhat slower than we'd like because of the nature of it being patent driven, it typically involves the legal department of these major corporations and none of those move quickly. With regards to the folks that we have reached out to that have not gotten back to us. We do have some other options that will be managed by [indiscernible] , and we'll be moving forward on that front in the very near future, having it been a month now since the trial and initial notifications were sent out.
So it will be a cross section of effort and timing to bring all this stuff in. I think we have a very reasonable strong position. And I think that over the next 3 to 6 months, in particular, this will resolve itself in one fashion or another. I don't believe that anybody is waiting to see what the court decides on the bench trial, we feel very confident of our position at this time that the verdicts that have been handed down will stand. And hence, we are moving forward and we'll expect to resolve the outstanding issues with the power plants that are using our technology still.
Okay. Yes. That's helpful. One last question is just your -- you talked about -- I pronounced it PFAS, I don't know if that's right or not, but we actually research and follow some of the PFAS remediation companies. And so I was not prepared for your discussion about it. Can you expand a little bit on what your role and technology? And how do you play in that PFAS remediation space?
Well, I'll be quite frank, we think that we can play a major role in that developing technology or field. The strength of our small group is in being able to extract more performance from carbon-based technologies. That's what we did in the air business, and we did it better than anybody else. And the patents stood that we developed were defended and they feel fit and the know-how and the knowledge that we have, especially since we have added these to key individuals that have worked in the development of water-based technologies for the past few decades at the highest levels will, I think, position us to be able to create new approaches, new technologies that will be very useful in the ability for municipalities to be able to capture these forever chemicals, most importantly, as an economical and an environmentally sound approach.
And so with the announcement today of WE2C and as you can see on our website, we are moving quickly into the field. It was announced last week that the EPA regulations are going into effect in 2027. We plan to be up and running very shortly with our labs moving out from a position of having firmed out all of our lab work up till now to building out our own labs to continue that work, both in the water treatment and in the rare earth side of things. So we'll be making material announcements about that in the coming weeks.
And also being able to build out more information with regards to the strategic planning and the partnerships, in particular with the feedstock partnerships that we've been working on this past year. So a lot's gone on leading up to where we are now. And as we make formal announcements going forward, we'll be able to expand more on when and how and how big we expect to be in the field.
Okay. Terrific. We look forward to hearing more about that. Thanks again, and we'll talk to you again soon. Thank you, sir.
Thank you. We have reached the end of our question-and-answer session. And with that, I'd like to turn the call back over to Rick MacPherson for any closing comments.
Well, folks, thank you very much for participating in today's call. I'm looking forward to moving on to the call mid to late May. I'm expecting lots will develop between now and then, and I will be able to give a very detailed update as to the changes that we're going through.
The last year was very transformative. If I look up until the end of March, basically, the end of 5 years, of efforts to improve our validity in the space. We came through it with very significant rewards and awards, and that's going to give us the base to move forward as we had been planning for some time. And so you'll see the execution of that as we go through 2024. Thank you very much.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.