Good day. Welcome to the ME2C Environmental 2nd quarter earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. This conference is being recorded today, April 17, 2023. The earnings press release accompanying this conference call was issued prior to this call today. 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 earnings press release. During today's call, management will make certain predictive statements that reflect its current views about future performance and financial results. The company bases these statements on 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. Please also note that this conference call makes reference to Adjusted EBITDA, a non-GAAP financial measure. The company views Adjusted EBITDA as an operating performance measure, and as such, the company believes that the GAAP financial measure most directly comparable to its net income or loss. For further information, please refer to the company's periodic filings with the SEC. 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, Paul, and thank you all for joining us today for ME2C Environmental's 2022 fourth quarter and full year earnings call. As we begin today's call, I'd like to express how well-positioned we are currently moving into 2023. Our financial position is stronger than it's ever been, and we're making progress on a number of strategic endeavors, several of which we'll cover today. We began a gradual ramp-up of our growth in 2020 that has continued to increase and we expect will significantly increase this year. For a second consecutive year, ME2C showed an increase of more than 60% in year-over-year revenue growth. In 2022, our revenues increased by 66% from the previous year of 2021.
The fact that this continued upswing is based on the strength of our core business, our reoccurring revenue base is significant in the area of mercury emission technologies and sets a solid foundation for future growth in North America and abroad. The ramp in our core business that is reflected in our impressive year-over-year growth is due to several factors, which include strong energy demands from a stable coal-fired market in the U.S. and growth amongst our existing customer base. In 2022, we added 2 new utilities under our licensing arrangements, plus 2 new supply contracts as well. Since late 2020, we've entered into partnerships with 8 major utilities, and we are currently supplying to multiple licensed utilities.
We expect our current growth rate of approximately 50% in annual revenues to endure from continued growth in a stable market and from strategic efforts that we now have underway. Much of 2022 was in transition with strategic focus on reinforcing our solid financial position, our lawsuit with certain refined coal defendants, and continuing the development of new environmental technologies to address critical concerns. Moving into this year, we're building on our progress in each of these areas, as well as expanding into new markets, both in the U.S. and abroad. A bit of a lawsuit update. Many of you are interested in the progress of our lawsuit that began in 2019 based on perceived infringement, and it continues through to our trial date, which is scheduled for mid-November this year.
Much of 2022's IP efforts were spent in the discovery phase, which spanned 12 months and concluded on September 2022. During this time, the defendants filed multiple motions to minimize the validity of our claims. Each of these motions were denied by the federal court in Delaware, where our case will be tried in November. During these court proceedings, we acquired 2 new technology-licensed utilities to continue operation of our patented mercury emission technologies. These new licenses are the result of IP protection efforts managed by our IP team at Caldwell Cassady & Curry in Dallas. As we head into trial this fall, we expect to reach additional agreements with other utilities. The additional direct supply partnerships received in 2022 were obtained after the utilities' existing supply contracts ended. We expect more of that to occur.
Due to the proven additional efficiencies that working with ME2C directly provides and buoyed by the validity of our IP, we expect to see utilities transition from their current supplier to ME2C's patent technology supplies directly. We currently have the infrastructure in place at our new facilities in Texarkana, Texas, completely paid for to support up to $100 million annual in product sales. The Refined Coal Program, which ended in 2021, will provide us, and we expect to see many of these utilities that were in the programs transition to our patented technology, using us as their suppliers. We're confident in our position. Our success and growth as a company is not based on the success of our trial or any potential settlements. Our core business is growing nicely outside of whatever results come from the litigation that we're now involved in.
Our expected continued ramp in growth is fully based on this core business. I'd like to talk more about the other area of endeavor that we've engaged in these past few years, that of rare earth. During our third quarter conference call, we updated the market on our pivotal new processing technology for extracting rare earth materials from their original source. As we stated then, it became apparent during the last couple of years of R&D efforts with other facilities that an efficient extraction technology was lacking here in the US. Led by our CTO, John Pavlish, a vetted expert in chemisorption, our recent test, which we began in earnest on our own, provided impressive results, showing consistently high capture rates through the University of North Dakota in their facilities.
We continue to work toward introducing a commercially viable technology to the market in 2023. We're very pleased with the most recent round of results, which place us way ahead of where we ended up after farming out the testing to other facilities across the country. A domestic solution for REE extraction is imperative in support of critical infrastructure needs and national security. As experts in chemisorption or sorbent technologies, we are uniquely positioned to develop a solution and look forward to moving into commercial field trials this year, especially since the last round of results that we've experienced. The rare earth is something that we're very excited about looking at bringing more material results to you in the coming months. Let's move on to remediation, both water treatment and wastewater remediation.
In tandem with our efforts in rare earth, we've been focused on remediation technologies for wastewater from coal-fired power plants, as well as potable water treatment across the nation. The US EPA has recently announced new regulations to remove PFOSs and PFOAs, which are referred to as forever chemicals. Special activated carbons produced from coal or other organic materials have proven to be highly effective in water treatment. We expect to expand our core business into this water treatment business during 2023. We expect to become a producer of activated carbons rather than just a consumer.
One of the by-products of the production of the activated carbons for both the potable water that's used in municipalities all across the nation and for the wastewater treatment for these coal-fired plants is that we will be able to use the by-products of that process for our air business that we're now involved in. The market for water treatment is large and significantly growing both in the US and abroad for the next few years. We very much expect that this business is going to treble or quadruple over the next two to three years as these new regulations take hold, and we are on the cutting edge of being able to bring new technologies into this market and look forward to doing so.
This expansion into potable water treatment and wastewater remediation will allow ME2C to support the growing needs of both the energy sector, as well as provide vital technologies for considerable environmental concerns across the country. The production of activated carbons can further improve the profitability, of course, of our core business, which is another reason why we're moving in that direction. Let me also bring you up to speed on our international expansion, which has been going on for months now. The next area of development that we find will be very attractive to us and provide added value to the company is expansion overseas. We've contracted a significant consulting firm, Jubilant Dragon, based out of Hong Kong, and are actively engaged in discussions with several countries at this time in the Asian Pacific region.
We think that the Asia Pac region will be very accepting of our technologies and know-how given the situation that we have apprised there, especially with the relationship building that we've been able to create thus far and what we expect to be able to bring to bear on that market. This overseas engagement will utilize our complete knowledge of pollution control and coal and oil fired utilities across the region. We anticipate being actively involved on the ground in the Asia Pac region this year. I look forward to keeping the market apprised of these endeavors as they turn from developmental into real material situations that we can report on. This year especially as well is an exciting time in the growth of our company.
We expect that this ramp in revenue that we're seeing is going to continue to build momentum as we expand into these new markets with these new technologies. Folks, let me have a run through the financials. I must say, we expected to have the audited financials for you today, but because of a couple of non-cash items that the auditors needed to treble check. We unfortunately won't have them until the latter part of this week, and so we'll be bringing the audited version with the EBITDA and the net earnings to bear on the market later this week. We expect that the market should be very pleased with those results.
During the fourth quarter of 2022, we negotiated a mutually beneficial agreement with our primary lender, Alterna Capital, to defer all major debt through August of 2025. This debt extension agreement included an unsecured note of $13 million and a secured note of $270,000. Further, the agreement allows ME2C the option to buy back a considerable amount of their stock, roughly 7 to 7.5 million shares at $0.50 a share. We expect to move forward with this option at an appropriate time in the future. Our financial position was further enhanced by our significant increase in sales revenues, and we look forward to giving you the audited results for that on the latter part of this week.
In 2022, Q4 revenue increased to $5.7 million from $2.7 million same time last year, an increase of approximately $3 million or 110% over that quarter. ME2C's full year revenue for 2022 increased significantly to $21.6 million from $13 million in 2021, an increase of approximately $8.6 million, or as I mentioned, 66% growth year-over-year. I must remind you folks, it is reoccurring revenue base that we're talking about as we go forward. We started into 2023 in very strong position. This revenue growth is largely attributed to an increase in product sales of nearly $10 million incremental dollars in 2022.
As of December 31, 2022, the company had approximately a million and a half cash on its balance sheet, compared to $1.4 million same time, 2021. At December 31, the company had a positive working capital of $2.3 million. The company expects to file its complete Form 10-K on or before this April 24, the financial information presented in this call is unaudited, as I mentioned, subject to final, upon finalization of the year-end audit. We don't expect any changes in any of the cash items presented here today. When the audited financial statements are released, we expect Adjusted EBITDA to show a substantial improvement from last year. I look forward to bringing that to market later this week. The company is in strong financial position. We expect continued financial improvements as we go forward.
Folks, in closing, I reiterate the strong transition that occurred in 2022 from the company. We made progress in many areas. The bolstering of our financial profile and headway made in our patent protection has solidified our current strong position to engage in other efforts that will provide significant growth opportunities. The coming year will show our expansion into both other markets and other technologies. We look forward to growing our shareholder base in Canada, in particular, and abroad. The Asian Pacific region offers a tremendous opportunity for expansion with our technologies and know-how in overall pollution control. The strategic partnership with Jubilant Dragon is the cornerstone of our anticipated growth in that region, and we are actively involved at this time with several countries looking forward to bring tangible news to the market in the near future.
The move into the potable and wastewater filtration and remediation business, both domestically and abroad, will be a game-changing expansion of our firm's continued growth. We look forward to bringing material news of these efforts in the coming months, including expansion into new technologies that are primarily focused on enhancing our core business internationally. For the strong positive results gained in 2022, I'd like to acknowledge our management team, especially our Senior VP and Technical Officer, John Pavlish, and our Vice President of Operations, Jim Trettel, in their relentless and highly effective contributions. We are able to keep our costs down and move into a very strong operating position, mostly because of the work of these two gentlemen and their ability to move things forward at a fast pace of growth without a huge amount of increase in our operating costs.
We further recognize the committed support of our long-term shareholders and are excited to provide tangible shareholder value in the near term. I want to thank you all for listening today, for your continued interest in the company, I look forward to filing that audited report later this week so that we'll be able to talk more at length about earnings and EBITDA. With that, I'll turn it back over to the operator to begin the question and answer session. Paul?
Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please while we poll for questions. Thank you. Our first question is from Steven Lawson with DAX. Please proceed with your question.
Good afternoon. With your anticipation of additional contracts, being signed, both licensing agreements and product sales over the next year. You mentioned that it appears that a linchpin in the decision-making for the signing one of these agreements is the timetable of when these utilities have their supply contracts expiring. Can you give us some sort of feel for that timetable?
Sure. Steven, thanks for the question. Typically, these utilities buy product for a 1-year period with extensions built into that purchase. Some of them have 3-5-year contracts with a cancellation option at the end of the year. It varies with the cycles that we're involved in with folks that already have licenses in multiple outlets. A number of the folks that both have licenses with us now and supply contracts, we may be in a situation where we're supplying 1 plant just waiting for the 2nd or 3rd or 4th or all of them to come up for renewal on the supply side. In, in some instances going forward, we will be adding more plants to a licensed client's supply chain. And that will become more and more evident as we go through the year.
I see. Thank you. In your effort in the Asian Pacific region, basically, is it the same technology that you're expanding here in North America?
It's a combination of technologies, both the technology, of course, our core business in the mercury, but we've also got a new technology that was recently licensed from a third party, which we are moving forward there, looks to be successfully. As well, our team have been involved in pollution control in general terms for these past 20+ years. There's a great deal of know-how in order to be able to improve overall emissions, especially at a plant that has very little, if any, pollution control in place. We are working through the IEA group, an international group, which is working directly with a number of different countries to try to get some of their boilers that have 0 pollution control up to speed, at least to the 1st level.
Our ability to do that is inherent, we're working through both the country and the utilities and this group to provide not only direction, but options for them to move forward on a gradual basis to enhance their pollution control. Initial responses have been very strong. As I mentioned in the call, we very much expect to be moving forward tangibly in the coming months in this area, especially because of the relationships that the contractor that we have in place has with these facilities and the major players in these countries overseas.
As a reminder, we ask the participants limit themselves to two questions. Our next question is from Ara Sorasian, Private investor. Please proceed with your question.
Hi, Rick. You mentioned, or you've outlined several new areas of opportunities, rare earth, the remediation, and the licensing of technologies in other countries, et cetera. Is there one you think would come first, and is there any dollar figure that you can attach to it?
Thanks for the question. Yeah. We've been working on the rare earth, as you folks know, for the past few years. We ran into not a bit. We ran into a real brick wall because the core technologies that we were led to believe that were in place in some of these major research facilities was not. When we took our sorbent material to them and tested over and over again for years, we still came back with the situation where the core extraction ability wasn't there. They couldn't provide us with a medium to work with to use our sorbent technology.
We basically felt that we had to back up and put something in place that would allow us to take these rare earth minerals and put them in solution so that we would be able to use our sorbent technology effectively. I'm pleased to say at this point, we've overcome that hurdle. We're back at it with a great first round of results, looking now to move forward into the sorbent side of things. Things look very good. We're where we had hoped to be three, four months ago. How this translates into a commercially viable field test is yet to be seen, but we're only weeks, not months away from that now.
As they continue to move this forward over the next month or so in the lab, I think we're going to get to where we need to be to take it into the field. That's very exciting. The field of water treatment and wastewater remediation is also very, very opportunistic and exciting. This recent round of regulations that are coming into effect for these, what they call forever chemicals, is something that we have been looking at and not making much noise about for these past 6 months or so. We've engaged actively with folks who have been involved in that business.
We've hired consultants, and we've done a great deal of work and are ready to move forward at this point to engage and put together what we think will be one of the best specific, targeted technologies to go after these forever chemicals. We have some great ideas. We've got some great experience and know-how in hand now and are moving forward actively with some partnership arrangements that we have developed over these past 4 or 5 months. I very much expect that these will come to fruition over the next few months and will allow us to move into the actual production of and development of, these activated carbons but in a very specialized field that will put us in play to be able to capture these forever chemicals and provide that technology to municipalities across the country.
It's estimated that that market, which is now a multibillion-dollar market, will at least treble if not quadruple over these next 2-3 years. We expect that we'll be in position to take advantage of that in 2024, if we can get everything up and running in the next 3-4 months, which is what we are anticipating we'll be able to do. Those are the two real key areas that I think our efforts are going to be highly valuable. With regards to our core business, it continues to grow. We expect it to continue to grow. We're not making any promises with regards to the litigation, but so far so good. Everything is going our way.
We have a very significant court date on the 17th of May, where my team and I will be presenting along with the defendants, of course, in court in Delaware. Once that is done, we will have a very good, clear understanding of the opportunities that that lawsuit has with regards to impacting the enterprise value of the company. I think other than waiting for some material press releases on this stuff, Ara, well, we should probably leave it at that.
Well, wonderful. Switching gears to uplisting, Rick, I know you guys have hired a new IR firm in Canada. I'm assuming that is to help with that and probably, you know, promoting the stock and marketing, et cetera. Where do we stand on the uplisting, as it relates to Canada, at least?
I expect to make a material announcement on that, one way or another, within the week.
Okay. Thank you.
Thank you.
Thank you. Our next question is from Jeff Feinberg with Feinberg Investments. Please proceed with your question.
Thank you very much. The majority of my questions were answered. Congratulations and great job, Rick. If you could just flush out to the extent you're comfortable, size of market or size of potential revenue opportunity for the water remediation and rare earths, I'd be grateful.
Sure. Thank you, Jeff, for joining and for your questions. We anticipate putting a plant in place to provide materials for these forever chemicals and general potable water and waste remediation opportunities that would generate about $50 million a year in revenue. Margins will be much better than where we are right now in the core company. As we put that plant in place and establish the business, which we expect we'll be able to do, then we would be looking to add to that capacity on an ongoing basis. We very much see the transition into water as being a very solid long-term initiative on our part, which has unlimited potential.
I think if we are successful in creating a unique product, which we feel very good about, we're actually quite excited about it, and are moving forward in that we will have the ability to compete against the larger companies in the space very successfully. The water treatment side is very exciting. The rare earth stuff, you know, we struggled with that because Penn State and the large group that we hired and worked with for months and months in Florida just couldn't get us the rare earths suspended in solution that we needed to work with.
After about 90 days of work at the University of North Dakota, our guys, along with their scientists, of course, fully validated by third party, were able to generate in solution 90% of the rare earths that were originally in the ore bodies that were being tested. We're in a position now where we feel we've got what we need to move forward, and we'll do so quickly. you know, the value of that, Jeff, is just astronomical. If we can put this in place, it will make a big difference to the industry in the U.S. in general.
We think that it would be adopted quite rapidly. But the key to that is to get it into field testing, which we're hoping to do, if not in the next quarter, the third quarter for sure, and then see what the results are. We would hope to have commercial projections on that, given those results in the last quarter of this year.
That's wonderful. Thank you so much. Very exciting.
Thank you very much.
Thank you. There are no further questions at this time. I'd like to hand the floor back over to Richard MacPherson for any closing comments.
Folks, thanks so much for taking the time today. We're looking forward to getting the final numbers to you at the end of the week. I wish I had them today. It just wasn't possible. No fault of our own. No cash items involved in that. The net earnings and whatnot will be presented in full later this week. I look forward to bringing you up to speed on these new initiatives from a tangible point of view as we further develop. There's a lot of work that's been done. Most of the heavy lifting to get these things underway has been already accomplished. We've yet now just to start announcing our results, and we look forward to doing that. I think the transition, while the air business that we're in continues to grow.
I think moving into this water side, which has great synergies for us and allows us to produce our own core materials as well, really bodes for a well-rounded company going forward. The expansion overseas, along with a potential listing on a full-fledged exchange, should make a terrific difference in the enterprise value of the firm. Like I said, the lawsuit is the lawsuit. It can go whatever way it goes according to the lawyers and the judge, but we feel very good about our position there and the situation that it could provide for us in the not-too-distant future. With that, thank you very much, and look forward to bringing you news as it occurs over the next few weeks.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.