Note 14 - Restatement of previously issued financial statements (unaudited) |
On April 13, 2020, the Company concluded that a gain on debt restructuring recognized during the first quarter of 2019 (relating to the New AC Midwest Unsecured Note) should have been accounted for as a capital transaction. Since the New AC Midwest Unsecured Note was held by a related party, the gain should have been recorded as a capital transaction under ASC 470-50-40. The profit-sharing portion also should have been bifurcated from the loan and shown separately on the Consolidated Balance Sheets of the financial statements. See Note 8. The following tables summarize the effects of the restatements on the specific items presented in the Company’s historical unaudited interim consolidated financial statements previously included in the Company’s Quarterly Reports on Form 10-Q as of and for the three month period ended March 31, 2019: CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
| MARCH 31, 2019
|
|
|
| As previously reported
|
|
| Adjustment
|
|
| As restated
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
Profit Share liability
|
| $ | - |
|
| $ | 1,991,940 |
|
| $ | 1,991,940 |
|
Unsecured note payable, net of discount and issuance costs
|
|
| 8,403,968 |
|
|
| (1,981,568 | ) |
|
| 6,422,400 |
|
Total liabilities
|
|
| 14,801,425 |
|
|
| 10,372 |
|
|
| 14,811,797 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
| 42,785,990 |
|
|
| 3,412,204 |
|
|
| 46,198,194 |
|
Accumulated deficit
|
|
| (49,197,401 | ) |
|
| (3,422,576 | ) |
|
| (52,619,977 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ deficit
|
|
| (6,335,165 | ) |
|
| (10,372 | ) |
|
| (6,345,537 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ deficit
|
| $ | 8,466,260 |
|
| $ | - |
|
| $ | 8,466,260 |
|
MIDWEST ENERGY EMISSIONS CORP. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
| FOR THE THREE MONTHS ENDED MARCH 31, 2019
|
|
|
| As previously reported
|
|
| Adjustment
|
|
| As restated
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense & letter of credit fees
|
| $ | 529,193 |
|
| $ | (27,185 | ) |
| $ | 502,008 |
|
Loss on change in fair value of profit share
|
|
| - |
|
|
| 37,557 |
|
|
| 37,557 |
|
Gain on debt restructuring
|
|
| (3,412,204 | ) |
|
| 3,412,204 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses
|
|
| 423,524 |
|
|
| 3,422,576 |
|
|
| 3,846,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
| $ | 2,363,797 |
|
| $ | (3,422,576 | ) |
| $ | (1,058,779 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share - basic and diluted:
|
| $ | 0.03 |
|
| $ | (0.04 | ) |
| $ | (0.01 | ) |
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
| FOR THE THREE MONTHS ENDED MARCH 31, 2019
|
|
|
| As previously reported
|
|
| Adjustment
|
|
| As restated
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
| $ | 2,363,797 |
|
| $
| (3,422,576 | ) |
| $ | (1,058,779 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of discount of notes payable
|
|
| 303,697 |
|
|
| (27,185 | ) |
|
| 276,512 |
|
Loss on change in fair value of profit share
|
|
| - |
|
|
| 37,557 |
|
|
| 37,557 |
|
Gain on debt restructuring
|
|
| (3,412,204 | ) |
|
| 3,412,204 |
|
|
| - |
|
Net cash provided by (used in) operating activities
|
| $ | 68,245 |
|
| $
| - |
|
| $ | 68,245 |
|
The following tables summarize the effects of the restatements on the specific items presented in the Company’s historical unaudited interim consolidated financial statements previously included in the Company’s Quarterly Reports on Form 10-Q as of and for the three and six month periods ended June 30, 2019: CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
| JUNE 30, 2019
|
|
|
| As previously reported
|
|
| Adjustment
|
|
| As restated
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
Profit Share liability
|
| $ | - |
|
| $ | 2,097,655 |
|
| $ | 2,097,655 |
|
Secured note payable
|
|
| 271,686 |
|
|
| - |
|
|
| 271,686 |
|
Unsecured note payable, net of discount and issuance costs
|
|
| 9,095,119 |
|
|
| (2,179,831 | ) |
|
| 6,915,288 |
|
Total liabilities
|
|
| 16,654,136 |
|
|
| (82,176 | ) |
|
| 16,571,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
| 44,745,926 |
|
|
| 3,412,204 |
|
|
| 48,158,130 |
|
Accumulated deficit
|
|
| (52,036,522 | ) |
|
| (3,330,028 | ) |
|
| (55,366,550 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ deficit
|
|
| (7,213,886 | ) |
|
| 82,176 |
|
|
| (7,131,710 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ deficit
|
| $ | 9,440,250 |
|
| $ | - |
|
| $ | 9,440,250 |
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
| FOR THE THREE MONTHS ENDED JUNE 30, 2019
|
|
| FOR THE SIX MONTHS ENDED JUNE 30, 2019
|
|
|
| As previously reported
|
|
| Adjustment
|
|
| As restated
|
|
| As previously reported
|
|
| Adjustment
|
|
| As restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense & letter of credit fees
|
| $ | 763,873 |
|
| $ | (198,263 | ) |
| $ | 565,610 |
|
| $ | 1,293,067 |
|
| $ | (225,448 | ) |
| $ | 1,067,619 |
|
Loss on change in fair value of profit share
|
|
| - |
|
|
| 105,715 |
|
|
| 105,715 |
|
|
| - |
|
|
| 143,272 |
|
|
| 143,272 |
|
(Gain)/Loss on debt restructuring
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,412,204 | ) |
|
| 3,412,204 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses
|
|
| 5,348,871 |
|
|
| (92,548 | ) |
|
| 5,256,323 |
|
|
| 5,772,394 |
|
|
| 3,330,028 |
|
|
| 9,102,422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
| $ | (2,839,121 | ) |
| $ | 92,548 |
|
| $ | (2,746,573 | ) |
| $ | (475,324 | ) |
| $ | (3,330,028 | ) |
| $ | (3,805,352 | ) |
Net loss per common share - basic and diluted:
|
| $ | (0.04 | ) |
| $ | (0.00 | ) |
| $ | (0.04 | ) |
| $ | (0.01 | ) |
| $ | (0.04 | ) |
| $ | (0.05 | ) |
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
| FOR THE SIX MONTHS ENDED JUNE 30, 2019
|
|
|
| As previously reported
|
|
| Adjustment
|
|
| As restated
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
Net loss
|
| $ | (475,324 | ) |
| $ | (3,330,028 | ) |
| $ | (3,805,352 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of discount of notes payable
|
|
| 938,532 |
|
|
| (225,448 | ) |
|
| 713,084 |
|
Loss on change in fair value of profit share
|
|
| - |
|
|
| 143,272 |
|
|
| 143,272 |
|
Gain on debt restructuring
|
|
| (3,412,204 | ) |
|
| 3,412,204 |
|
|
| - |
|
Net cash used in operating activities
|
| $ | (506,674 | ) |
| $ | - |
|
| $ | (506,674 | ) |
The following tables summarize the effects of the restatements on the specific items presented in the Company’s historical unaudited interim consolidated financial statements previously included in the Company’s Quarterly Reports on Form 10-Q as of and for the three and nine month periods ended September 30, 2019: CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
| SEPTEMBER 30, 2019
|
|
|
| As previously reported
|
|
| Adjustment
|
|
| As restated
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Profit Share liability
|
| $ | - |
|
| $ | 2,210,230 |
|
| $ | 2,210,230 |
|
Unsecured note payable, net of discount and issuance costs
|
|
| 9,752,882 |
|
|
| (2,339,289 | ) |
|
| 7,413,593 |
|
Total liabilities
|
|
| 17,177,693 |
|
|
| (129,059 | ) |
|
| 17,048,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
| 44,882,209 |
|
|
| 3,412,204 |
|
|
| 48,294,413 |
|
Accumulated deficit
|
|
| (52,887,063 | ) |
|
| (3,283,145 | ) |
|
| (56,170,208 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ deficit
|
|
| (7,928,107 | ) |
|
| 129,059 |
|
|
| (7,799,048 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ deficit
|
| $ | 9,249,586 |
|
| $ | - |
|
| $ | 9,249,586 |
|
CONSOLIDATED STATEMENT OF OPERATIONS
|
|
|
| FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019
|
|
| FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019
|
|
|
| As previously reported
|
|
| Adjustment
|
|
| As restated
|
|
| As previously reported
|
|
| Adjustment
|
|
| As restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense & letter of credit fees
|
| $ | 782,695 |
|
| $ | (159,458 | ) |
| $ | 623,237 |
|
| $ | 2,075,761 |
|
| $ | (529,918 | ) |
| $ | 1,690,855 |
|
Loss on change in fair value of profit share
|
|
| - |
|
|
| 112,575 |
|
|
| 112,575 |
|
|
| - |
|
|
| 255,847 |
|
|
| 255,847 |
|
(Gain)/Loss on debt restructuring
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,412,204.00 | ) |
|
| 3,412,204.00 |
|
|
| - |
|
Total costs and expenses
|
|
| 4,446,648 |
|
|
| (46,883 | ) |
|
| 4,399,765 |
|
|
| 10,219,042 |
|
|
| 3,138,133 |
|
|
| 13,502,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
| $ | (850,541 | ) |
| $ | 46,883 |
|
| $ | (803,658 | ) |
| $ | (1,325,865 | ) |
| $ | (3,138,133 | ) |
| $ | (4,609,010 | ) |
Net loss per common share-basic and diluted:
|
| $ | (0.01 | ) |
| $ | - |
|
| $ | (0.01 | ) |
| $ | (0.02 | ) |
| $ | (0.04 | ) |
| $ | (0.06 | ) |
CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
| FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019
|
|
|
| As previously reported
|
|
| Adjustment
|
|
| As restated
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
Net loss
|
| $ | (1,325,865 | ) |
| $ | (3,283,145 | ) |
| $ | (4,609,010 | ) |
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of discount of notes payable
|
|
| 1,585,686 |
|
|
| (384,906 | ) |
|
| 1,200,780 |
|
Loss on change in fair value of profit share
|
|
|
|
|
|
| 255,847 |
|
|
| 255,847 |
|
Gain on debt restructuring
|
|
| (3,412,204 | ) |
|
| 3,412,204 |
|
|
| - |
|
Net cash used in operating activities
|
| $ | (1,304,626 | ) |
| $ | - |
|
| $ | (1,304,626 | ) |
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
|
FOR THE MONTHS ENDED MARCH 31, 2019, THE SIX MONTHS ENDED JUNE 30, 2019 AND THE NINE MONTHS ENDED SEPTEMBER 30, 2019
|
(Restated)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| Common Stock
|
|
| Additional
|
|
| Accumulated
|
|
| |
|
|
| Shares
|
|
| Par Value
|
|
| Paid-in Capital
|
|
| (Deficit)
|
|
| Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - January 1, 2019
|
|
| 76,246,113 |
|
| $ | 76,246 |
|
| $ | 42,785,990 |
|
| $ | (51,483,332 | ) |
| $ | (8,621,096 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative effect of change in accounting principle related to accounting for leases
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (77,866 | ) |
|
| (77,866 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital contribution
|
|
| - |
|
|
| - |
|
|
| 3,412,204 |
|
|
| - |
|
|
| 3,412,204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,058,779 | ) |
|
| (1,058,779 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - March 31, 2019
|
|
| 76,246,113 |
|
| $ | 76,246 |
|
| $ | 46,198,194 |
|
| $ | (52,619,977 | ) |
| $ | (6,345,537 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued per resignation agreements
|
|
| 464,517 |
|
|
| 464 |
|
|
| 118,076 |
|
|
| - |
|
|
| 118,540 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock options
|
|
| - |
|
|
| - |
|
|
| 898,207 |
|
|
| - |
|
|
| 898,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extension of certain stock option expiration
|
|
| - |
|
|
| - |
|
|
| 745,989 |
|
|
| - |
|
|
| 745,989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of warrants, recorded as discount on convertible notes payable
|
|
| - |
|
|
| - |
|
|
| 197,664 |
|
|
| - |
|
|
| 197,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,746,573 | ) |
|
| (2,746,573 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - June 30, 2019
|
|
| 76,710,630 |
|
| $ | 76,710 |
|
| $ | 48,158,130 |
|
| $ | (55,366,550 | ) |
| $ | (7,131,710 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued upon cashless warrant exercise
|
|
| 37,120 |
|
|
| 37 |
|
|
| (37 | ) |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of warrants, recorded as discount on convertible notes payable
|
|
| - |
|
|
| - |
|
|
| 136,320 |
|
|
| - |
|
|
| 136,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (803,658 | ) |
|
| (803,658 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - September 30, 2019
|
|
| 76,747,750 |
|
| $ | 76,747 |
|
| $ | 48,294,413 |
|
| $ | (56,170,208 | ) |
| $ | (7,799,048 | ) |
|