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Share Name | Share Symbol | Market | Type |
---|---|---|---|
(MM) | NASDAQ:MEIL | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.135 | 0 | 01:00:00 |
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
NEVADA
|
71-1035154
|
|
(State of other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
Large accelerated filer
|
¨
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
|
Smaller reporting company
|
þ
|
Page No.
|
|||||
PART I FINANCIAL INFORMATION
|
|||||
ITEM 1. |
Condensed Consolidated Financial Statements - Unaudited
|
1 | |||
Condensed Consolidated Balance Sheets as of November 30, 2011 and August 31, 2012
|
1 | ||||
Condensed Consolidated Statements of Operations for the Three and Nine Months ended August 31, 2011 and 2012
|
2 | ||||
Condensed Consolidated Statements of Stockholders’ Equity for the Nine Months ended August 31, 2011
and 2012
|
3 | ||||
Condensed Consolidated Statements of Cash Flows for the Nine Months ended August 31, 2011 and 2012
|
4 | ||||
Notes to Condensed Consolidated Financial Statements
|
5 | ||||
ITEM 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
15 | |||
ITEM 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
24 | |||
ITEM 4.
|
Controls and Procedures
|
24 | |||
PART II OTHER INFORMATION | |||||
ITEM 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
25 | |||
ITEM 6.
|
Exhibits
|
25 |
ITEM 1.
|
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
November 30,
|
August 31,
|
|||||||
2011
|
2012
|
|||||||
ASSETS
|
(Unaudited) | |||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 1,693,301 | $ | 200,170 | ||||
Accounts receivable, net (note 11)
|
1,122,323 | 414,724 | ||||||
Inventories (note 3)
|
1,187,442 | 1,142,908 | ||||||
Prepaid expenses and deposits
|
13,163 | 26,857 | ||||||
Deferred financing fees
|
- | 430,296 | ||||||
Total current assets
|
4,016,229 | 2,214,955 | ||||||
Deposits
|
860,923 | 29,685 | ||||||
Property, plant and equipment, net (note 4)
|
2,968,699 | 8,140,368 | ||||||
Intangible assets, net
|
400,358 | 387,574 | ||||||
Total assets
|
$ | 8,246,209 | $ | 10,772,582 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities
|
||||||||
Accounts payable and accrued liabilities (note 9)
|
$ | 2,441,493 | $ | 2,483,583 | ||||
Payable to related parties (note 5)
|
520,881 | 1,586,999 | ||||||
Short-term loan (note 6)
|
- | 1,521,750 | ||||||
Total liabilities
|
2,962,374 | 5,592,332 | ||||||
Stockholders’ equity
|
||||||||
Common stock, $0.001 par value, 75,000,000 shares authorized;
|
||||||||
5,734,447 and 5,993,169 shares issued and outstanding at
|
||||||||
November 30, 2011 and August 31, 2012, respectively (note 7)
|
5,734 | 5,993 | ||||||
Additional paid-in capital
|
11,598,421 | 14,177,125 | ||||||
Subscription receivable
|
(46,056 | ) | - | |||||
Accumulated deficit
|
(6,274,264 | ) | (9,002,868 | ) | ||||
Total stockholders’ equity
|
5,283,835 | 5,180,250 | ||||||
Total liabilities and stockholders' equity
|
$ | 8,246,209 | $ | 10,772,582 | ||||
Commitments
(note 10)
|
Three Months Ended August 31, 2011
|
Three Months Ended August 31, 2012
|
Nine Months Ended August 31, 2011
|
Nine Months Ended August 31, 2012
|
|||||||||||||
Revenue
|
||||||||||||||||
Biodiesel sales
|
$ | 3,112,352 | $ | 852,660 | $ | 5,959,739 | $ | 5,167,649 | ||||||||
Feedstock sales
|
165,080 | 70,450 | 539,917 | 354,411 | ||||||||||||
Glycerin sales
|
41,581 | 127 | 95,221 | 49,894 | ||||||||||||
Government incentives (note 11)
|
149,207 | 8,257 | 322,899 | 252,713 | ||||||||||||
Equipment sales
|
4,346 | (257,842 | ) | 261,842 | (241,342 | ) | ||||||||||
Royalties
|
28,359 | 13,743 | 73,934 | 58,022 | ||||||||||||
Others
|
7,482 | 54,280 | 36,736 | 164,728 | ||||||||||||
3,508,407 | 741,675 | 7,290,288 | 5,806,075 | |||||||||||||
Cost of goods sold
|
3,050,448 | 746,305 | 6,032,550 | 5,184,357 | ||||||||||||
Gross profit (loss)
|
457,959 | (4,630 | ) | 1,257,738 | 621,718 | |||||||||||
Operating expenses
|
||||||||||||||||
Selling, general and administrative expenses (notes 4, 7 and 8)
|
521,503 | 1,415,376 | 1,675,336 | 3,222,811 | ||||||||||||
Loss before interest and taxes
|
(63,544 | ) | (1,420,006 | ) | (417,598 | ) | (2,601,093 | ) | ||||||||
Other income (expenses)
|
||||||||||||||||
Interest expense (notes 5 and 6)
|
(11,890 | ) | (98,387 | ) | (30,802 | ) | (130,480 | ) | ||||||||
Interest income
|
18 | 2,324 | 50 | 2,969 | ||||||||||||
Loss before income taxes
|
(75,416 | ) | (1,516,069 | ) | (448,350 | ) | (2,728,604 | ) | ||||||||
Income taxes
|
- | - | - | - | ||||||||||||
Net loss for the period
|
$ | (75,416 | ) | $ | (1,516,069 | ) | $ | (448,350 | ) | $ | (2,728,604 | ) | ||||
Net Loss Per Common Share - Basic and Diluted
|
$ | (0.01 | ) | $ | (0.25 | ) | $ | (0.09 | ) | $ | (0.46 | ) | ||||
Weighted average number of common shares - Basic and Diluted
|
5,244,132 | 5,990,563 | 5,207,448 | 5,868,094 |
Additional Paid-in
|
Subscription
|
Accumulated
|
||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Receivable
|
Deficit
|
Total
|
|||||||||||||||||||
Balance at November 30, 2010
|
5,189,005 | $ | 5,189 | $ | 7,526,193 | $ | (186,056 | ) | $ | (5,463,314 | ) | $ | 1,882,012 | |||||||||||
Common stock to be issued
|
320,000 | 320,000 | ||||||||||||||||||||||
Issuance of common stock for cash
|
93,220 | 93 | 714,907 | 715,000 | ||||||||||||||||||||
Issuance of common stock options to employees and officers | 83,524 | 83,524 | ||||||||||||||||||||||
Stock subscription
|
30,000 | 30,000 | ||||||||||||||||||||||
Net loss for the period
|
(448,350 | ) | (448,350 | ) | ||||||||||||||||||||
Balance at August 31, 2011
|
5,282,225 | $ | 5,282 | $ | 8,644,624 | $ | (156,056 | ) | $ | (5,911,664 | ) | $ | 2,582,186 | |||||||||||
Balance at November 30, 2011
|
5,734,447 | $ | 5,734 | $ | 11,598,421 | $ | (46,056 | ) | $ | (6,274,264 | ) | $ | 5,283,835 | |||||||||||
Issuance of common stock for cash
|
258,722 | 259 | 1,984,792 | 1,985,051 | ||||||||||||||||||||
Issuance of common stock options to employees and officers | 193,914 | 193,914 | ||||||||||||||||||||||
Penalty shares (note 7)
|
399,998 | 399,998 | ||||||||||||||||||||||
Stock subscription
|
46,056 | 46,056 | ||||||||||||||||||||||
Net loss for the period
|
(2,728,604 | ) | (2,728,604 | ) | ||||||||||||||||||||
Balance at August 31, 2012
|
5,993,169 | $ | 5,993 | $ | 14,177,125 | $ | - | $ | (9,002,868 | ) | $ | 5,180,250 |
Nine Months Ended August 31, 2011
|
Nine Months Ended August 31, 2012
|
|||||||
Cash flow from operating activities:
|
||||||||
Net loss for the period
|
$ | (448,350 | ) | $ | (2,728,604 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operations
|
||||||||
Depreciation and amortization
|
126,421 | 168,568 | ||||||
Non-cash stock compensation
|
83,524 | 193,914 | ||||||
Penalty share expense
|
- | 399,998 | ||||||
Unrealized foreign exchange loss
|
- | 56,850 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(849,297 | ) | 707,599 | |||||
Inventories
|
(619,499 | ) | 44,534 | |||||
Prepaid expenses and deposits
|
(2,062 | ) | (13,694 | ) | ||||
Accounts payable and accrued liabilities
|
957,679 | 42,090 | ||||||
Customer deposits
|
(119,854 | ) | - | |||||
Deferred revenue
|
490,565 | - | ||||||
Net cash used in operating activities
|
(380,873 | ) | (1,128,745 | ) | ||||
Cash flows from investing activities:
|
||||||||
Additions to property, plant and equipment
|
(121,625 | ) | (4,496,215 | ) | ||||
Purchase of intangibles
|
(63,120 | ) | - | |||||
Net cash used in investing activities
|
(184,745 | ) | (4,496,215 | ) | ||||
Cash flows from financing activities:
|
||||||||
Payable to related parties
|
177,972 | 1,066,118 | ||||||
Short term loan
|
- | 1,464,900 | ||||||
Deferred financing fees
|
- | (430,296 | ) | |||||
Issuance of common stock
|
1,065,000 | 2,031,107 | ||||||
Net cash provided by financing activities
|
1,242,972 | 4,131,829 | ||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
677,354 | (1,493,131 | ) | |||||
Cash and cash equivalents, beginning of period
|
198,076 | 1,693,301 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$ | 875,430 | $ | 200,170 | ||||
Supplemental disclosures of cash flow information
|
||||||||
Cash paid during period for:
|
||||||||
Interest
|
2,830 | 64,388 |
For the Three
Months Ended
August 31, 2011
|
For the Three
Months Ended
August 31, 2012
|
For the Nine
Months Ended
August 31, 2011
|
For the Nine
Months Ended
August 31, 2012
|
|||||||||||||
Numerator for basic and diluted EPS
|
||||||||||||||||
Net loss for the period
|
$ | (75,416 | ) | $ | (1,516,069 | ) | $ | (448,350 | ) | $ | (2,728,604 | ) | ||||
Denominator for basic and
diluted EPS
|
||||||||||||||||
Weighted average shares of common stock outstanding
|
5,244,132 | 5,990,563 | 5,207,448 | 5,868,094 | ||||||||||||
Net loss per common share -
basic and diluted
|
(0.01 | ) | (0.25 | ) | (0.09 | ) | (0.46 | ) |
As at
November 30,
2011
|
As at
August 31,
2012
|
|||||||
Raw materials
|
$ | 382,736 | $ | 123,652 | ||||
Finished goods
|
804,706 | 892,290 | ||||||
Equipment
|
— | 126,966 | ||||||
$ | 1,187,442 | $ | 1,142,908 |
As at August 31, 2012 |
As at
November 30,
2011
|
|||||||||||||||
Cost |
Accumulated
Depreciation
|
Net Book
Value
|
Net Book
Value
|
|||||||||||||
Sombra site
:
|
||||||||||||||||
Land
|
$ | 409,134 | $ | — | $ | 409,134 | $ | 409,134 | ||||||||
Building
|
2,724,606 | 155,354 | 2,569,252 | 1,265,016 | ||||||||||||
Equipment
|
717,683 | 232,949 | 484,734 | 109,287 | ||||||||||||
Equipment - Denami 3000 (under construction)
|
3,904,141 | — | 3,904,141 | 467,904 | ||||||||||||
Mississauga site
:
|
||||||||||||||||
Computer equipment
|
26,692 | 17,969 | 8,723 | 9,812 | ||||||||||||
Leasehold improvements
|
102,201 | 42,620 | 59,581 | 67,546 | ||||||||||||
Equipment and fixtures
|
247,209 | 136,774 | 110,435 | 37,232 | ||||||||||||
Equipment - Denami 600
|
720,042 | 125,674 | 594,368 | 602,768 | ||||||||||||
$ | 8,851,708 | $ | 711,340 | $ | 8,140,368 | $ | 2,968,699 |
As at
November 30,
2011
|
As at
August 31,
2012
|
|||||||
Softdiffusion SA (shareholder)
|
$ | 46,133 | $ | 48,533 | ||||
Michel G. Laporte (shareholder and Director)
|
160,389 | 169,389 | ||||||
World Asset Management Inc. (shareholder)
|
314,359 | 1,369,077 | ||||||
$ | 520,881 | $ | 1,586,999 |
Annual Minimum
Rent
|
||||
2012
|
$
|
38,132
|
||
2013
|
$
|
116,906
|
||
2014
|
$
|
138,892
|
||
2015
|
$
|
138,892
|
||
2016
|
$
|
138,892
|
||
2017
|
$
|
138,892
|
||
2018
|
$
|
11,574
|
Start Date
|
End Date
|
Term
|
||||
Eight railcars at $3,500 per month
|
Aug 1, 2010
|
July 31, 2013
|
36 months
|
|||
Four railcars at $2,000 per month
|
Aug 1, 2010
|
July 31, 2013
|
36 months
|
|||
Four railcars at $3,140 per month
|
Dec. 1, 2011
|
Nov. 30, 2016
|
60 months
|
|||
One railcar at $575 per month
|
Jan 1, 2012
|
Dec 31, 2016
|
60 months
|
|||
One railcar at $575 per month
|
May 1, 2012
|
June 30, 2015
|
36 months
|
|||
Ten railcars at $8,700 per month
|
May 1, 2013
|
Jun 30, 2018
|
60 months
|
|||
Four railcars at $3,600 per month
|
Mar 5, 2012
|
Oct 5, 2012
|
8 months
|
Annual Minimum
Rent
|
||||
2012
|
$ | 36,570 | ||
2013
|
$ | 156,380 | ||
2014
|
$ | 155,880 | ||
2015
|
$ | 153,005 | ||
2016
|
$ | 148,980 | ||
2017
|
$ | 104,975 | ||
2018
|
$ | 104,400 |
Three
Months Ended
August 31,
2011
|
Three Months
Ended
August 31,
2012
|
Nine
Months
Ended
August 31,
2011
|
Nine
Months
Ended
August 31,
2012
|
|||||||||||||
Revenue
|
||||||||||||||||
United States
|
$ | 2,721,425 | $ | 673,542 | $ | 5,844,579 | $ | 5,107,647 | ||||||||
Canada
|
786,982 | 68,133 | 1,445,709 | 698,428 | ||||||||||||
$ | 3,508,407 | $ | 741,675 | $ | 7,290,288 | $ | 5,806,075 |
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Three Months Ended August 31, 2011 |
Three Months
Ended
August 31, 2012
|
Nine Months Ended
August 31, 2011
|
Nine Months Ended August 31, 2012 |
|
||||||||||||
Revenue
|
||||||||||||||||
Biodiesel sales
|
||||||||||||||||
Resales
|
$ | 1,695,443 | $ | 449,379 | $ | 3,369,471 | $ | 2,978,177 | ||||||||
Internal production
|
1,416,909 | 403,281 | 2,590,268 | 2,189,472 | ||||||||||||
Feedstock sales
|
165,080 | 70,450 | 539,917 | 354,411 | ||||||||||||
Glycerin sales
|
41,581 | 127 | 95,221 | 49,894 | ||||||||||||
Government incentive
|
149,207 | 8,257 | 322,899 | 252,713 | ||||||||||||
Equipment sales
|
4,346 | (257,842 | ) | 261,842 | (241,342 | ) | ||||||||||
Royalties
|
28,359 | 13,743 | 73,934 | 58,022 | ||||||||||||
Other
|
7,482 | 54,280 | 36,736 | 164,728 | ||||||||||||
3,508,407 | 741,675 | 7,290,288 | 5,806,075 | |||||||||||||
Cost of goods sold
|
3,050,448 | 746,305 | 6,032,550 | 5,184,357 | ||||||||||||
Gross profit (loss)
|
457,959 | (4,630 | ) | 1,257,738 | 621,718 | |||||||||||
Operating expenses
|
||||||||||||||||
Selling, general and administrative expenses
|
521,503 | 1,415,376 | 1,675,336 | 3,222,811 | ||||||||||||
Loss before interest and taxes
|
(63,544 | ) | (1,420,006 | ) | (417,598 | ) | (2,601,093 | ) | ||||||||
Other income (expenses)
|
||||||||||||||||
Interest expense
|
(11,890 | ) | (98,387 | ) | (30,802 | ) | (130,480 | ) | ||||||||
Interest income
|
18 | 2,324 | 51 | 2,969 | ||||||||||||
Loss before income taxes
|
(75,416 | ) | (1,516,069 | ) | (448,350 | ) | (2,728,604 | ) | ||||||||
Income taxes
|
— | — | — | — | ||||||||||||
Net loss for the period
|
$ | (75,416 | ) | $ | (1,516,069 | ) | $ | (448,350 | ) | $ | (2,728,604 | ) |
(Amounts rounded to nearest thousands)
Nine Months Ended
August 31,
|
||||||||
2011
|
2012
|
|||||||
Net cash flows used in operating activities
|
$
|
(381
|
)
|
$
|
(1,129
|
)
|
||
Net cash flows from investing activities
|
(185
|
)
|
(4,496
|
)
|
||||
Net cash flows from financing activities
|
1,243
|
4,132
|
||||||
Net change in cash and cash equivalents
|
677
|
(1,493
|
)
|
|||||
Cash and cash equivalents, end of period
|
$
|
875
|
$
|
200
|
(a)
|
Evaluation of Disclosure Controls and Procedures
|
(b)
|
Changes in Internal Control over Financial Reporting
|
ITEM 6.
|
EXHIBITS
|
Exhibit No. | Description | |
31.1 |
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2 |
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1 |
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
101.INS**
|
XBRL Instance Document.
|
|
101.SCH**
|
XBRL Taxonomy Extension Schema Document.
|
|
101.CAL**
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.LAB**
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
101.PRE**
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
101.DEF**
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
METHES ENERGIES INTERNATIONAL LTD.
|
|||
Dated: November 24, 2012
|
By:
|
/s/ Michel G. Laporte
|
|
Michel G. Laporte
|
|||
Chief Executive Officer (Principal Executive Officer)
|
Dated: November 24, 2012
|
By:
|
/s/ Edward A. Stoltenberg
|
|
Edward A. Stoltenberg
|
|||
Chief Financial Officer (Principal Financial Officer
|
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