$31.1 Million in Revenue, Up 48% Year/Year
$3.9 Million Cash Flow from Operations
STUART, Fla., March 25, 2013 (GLOBE NEWSWIRE) --Ecosphere Technologies, Inc. (OTCBB:ESPH), a water engineering, technology licensing and innovative U.S. manufacturing company, today announced unaudited financial results for the full year 2012. The Company recorded $31.1 million of revenue, representing a 48% year-over-year increase. Cash flow from operations was $3.9 million, also up 48% year-over-year. Net income attributable to common shareholders was $136 thousand, which compares to a loss of $7.7 million in 2011.
Ecosphere Chief Financial Officer David Brooks stated, "2012 was another successful year for Ecosphere with a 48% increase in both revenue and cash flow from operations over 2011, while achieving net income of approximately $1.1 million. We manufactured and delivered eight more Ozonix® EF80 units to Hydrozonix and were recognized by leading industry consultants such as Frost and Sullivan as leaders in the oil and gas disinfection equipment market. Furthermore, our patented Ozonix® technology was successfully used on approximately 326 oil and natural gas wells in 2012 compared to 182 wells in 2011, representing a 79% year-over-year increase."
Full Year 2012 Financial Details
Revenue for the year ended December 31, 2012 was $31.1 million, an increase of $10.0 million over the year ended December 31, 2011. The increase was primarily due to the sale of eight Ozonix® EF80 units representing 73% of total revenue, or $22.6 million. The remaining portion of revenue was $7.4 million attributable to field services, and $1.1 million attributable to aftermarket parts sales.
Selling, general and administrative expenses were $8.0 million.
Net income for 2012 was $1.1 million.Net income attributable to common shareholders was $136 thousand, or breakeven per share. Net income attributable to common shareholders reflects the net income plus accrued preferred stock dividends, as well as the net income applicable to the non-controlling interest in its consolidated subsidiary, Ecosphere Energy Services, LLC. The Company generated $3.9 million in operating cash flow for the year and Ecosphere Energy Services made a dividend distribution of approximately $6.7 million.
Subsequent Events
The financial results reported here are unaudited. The final presentation of financial results is subject to completion of the annual audit by the Company's auditors, Salberg & Company, P.A. Fully audited results will be presented in the Company's filing on Form 10-K with the US Securities and Exchange Commission.
About Ecosphere Technologies
Ecosphere Technologies, Inc. (OTCBB:ESPH) is a water engineering, technology licensing and innovative U.S. manufacturing company that develops non-chemical water treatment solutions for industrial markets throughout the world. The Company is a leader in emerging advanced oxidation processes and has an extensive portfolio of intellectual property that includes five United States patents for the Ecosphere Ozonix® process. The patented Ecosphere Ozonix® process is a revolutionary advanced oxidation process that is currently being used by energy exploration companies to reduce costs, increase treatment efficiencies and eliminate liquid chemicals from wastewater treatment operations around the United States.
A recipient of Frost & Sullivan's 2012 North American Product Leadership Award in Disinfection Equipment for Shale Oil and Gas Wastewater Treatment and chosen as a 2013 IHS CERAWeek Energy Innovation Pioneer, Ecosphere has enabled oil and gas customers to recycle and reuse over two billion gallons of water on more than 700 oil and natural gas wells in major shale plays around the United States since 2008.
For more information, please visit www.EcosphereTech.com.
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| Ecosphere Technologies, Inc. and Subsidiaries | |||
| Consolidated Statements of Operations | |||
| (Unaudited) | |||
| For the Years Ended December 31, | |||
| 2012 | 2011 | 2010 | |
| Revenues | |||
| Equipment sales and licensing | $ 22,602,408 | $ 11,460,078 | $ -- |
| Field services | 7,405,266 | 9,628,081 | 8,964,484 |
| Aftermarket part sales | 1,124,624 | -- | -- |
| Total revenues | 31,132,298 | 21,088,159 | 8,964,484 |
| Costs and expenses | |||
| Equipment sales and licensing costs (exclusive of depreciation shown below) | 16,430,617 | 8,261,524 | -- |
| Field services costs (exclusive of depreciation shown below) | 2,492,397 | 2,583,911 | 3,394,688 |
| Aftermarket part costs (exclusive of depreciation shown below) | 773,929 | -- | -- |
| Selling, general and administrative | 7,951,540 | 13,407,983 | 12,056,943 |
| Depreciation and amortization | 2,318,605 | 2,174,983 | 1,957,881 |
| Asset impairment | -- | -- | 116,000 |
| Restructuring charge | -- | -- | 50,000 |
| Total costs and expenses | 29,967,088 | 26,428,401 | 17,575,512 |
| Income (loss) from operations | 1,165,210 | (5,340,242) | (8,611,028) |
| Other income (expense) | |||
| Interest expense | (360,031) | (581,392) | (1,176,222) |
| Restructuring charge reversal | 62,000 | -- | -- |
| Gain on sale/disposal of fixed assets, net | 142,457 | -- | -- |
| Loss on settlement, net | -- | -- | (65,756) |
| Loss on conversion, net | -- | (93,762) | (19,604) |
| Gain (loss) on change in fair value of derivative instruments | 41,374 | 152,888 | (12,787,666) |
| Other, net | 3,057 | 909 | 292 |
| Total other expense | (111,143) | (521,357) | (14,048,956) |
| Net income (loss) | 1,054,067 | (5,861,599) | (22,659,984) |
| Preferred stock dividends | (102,813) | (103,000) | (105,500) |
| Net income (loss) applicable to common stock before allocation to non-controlling interest | 951,254 | (5,964,599) | (22,765,484) |
| Less: net (income) loss applicable to non-controlling interest in consolidated subsidiary | (815,054) | (1,690,075) | 528,277 |
| Net income (loss) applicable to Ecosphere Technologies, Inc. common stock | $ 136,200 | $ (7,654,674) | $ (22,237,207) |
| Net income (loss) per common share applicable to common stock | |||
| Basic | $ 0.00 | $ (0.05) | $ (0.17) |
| Diluted | $ 0.00 | $ (0.05) | $ (0.17) |
| Weighted average number of common shares outstanding | |||
| Basic | 148,989,308 | 143,989,520 | 131,502,601 |
| Diluted | 154,568,010 | 143,989,520 | 131,502,601 |
| Ecosphere Technologies, Inc. and Subsidiaries | ||
| Consolidated Balance Sheets | ||
| (Unaudited) | ||
| December 31, | ||
| 2012 | 2011 | |
| Assets | ||
| Current assets | ||
| Cash | $ 2,464,911 | $ 2,043,593 |
| Restricted cash | 60,168 | -- |
| Accounts receivable | 1,150,152 | 873,117 |
| Inventory | 757,682 | 408,747 |
| Prepaid expenses and other current assets | 107,067 | 81,850 |
| Total current assets | 4,539,980 | 3,407,307 |
| Property and equipment, net | 4,264,125 | 6,141,519 |
| Patents, net | 81,691 | 42,164 |
| Deposits | 22,441 | 22,598 |
| Total assets | $ 8,908,237 | $ 9,613,588 |
| Liabilities, Redeemable Convertible Cumulative Preferred Stock and Equity | ||
| Current liabilities | ||
| Accounts payable | $ 845,241 | $ 1,180,723 |
| Accrued liabilities | 1,122,119 | 1,163,504 |
| Customer deposit | 23,196 | -- |
| Convertible notes payable, net of discounts | 1,203,126 | 370,561 |
| Current portion of note payable | 68,100 | -- |
| Related party note payable | -- | 204,776 |
| Warrant derivatives fair value | 197,009 | 347,235 |
| Financing obligations | 96,548 | 49,299 |
| Capital lease obligation | 14,593 | -- |
| Total current liabilities | 3,569,932 | 3,316,098 |
| Convertible notes payable, net of discounts | -- | 1,366,177 |
| Note payable, net of current portion | 136,199 | -- |
| Related party note payable | -- | 204,299 |
| Financing obligations | 106,612 | 168,048 |
| Restructuring reserve | 5,909 | 119,184 |
| Capital lease obligation | 57,276 | -- |
| Total liabilities | 3,875,928 | 5,173,806 |
| Redeemable convertible cumulative preferred stock | ||
| Series A - 11 shares authorized; 6 shares issued and outstanding at December 31, 2012 and 2011; $25,000 per share redemption amount plus dividends in arrears | 1,180,994 | 1,158,494 |
| Series B - 484 shares authorized; 241 and 322 shares issued and outstanding at December 31, 2012 and 2011, respectively; $2,500 per share redemption amount plus dividends in arrears | 2,456,781 | 2,822,302 |
| Total redeemable convertible cumulative preferred stock | 3,637,775 | 3,980,796 |
| Commitments and contingencies (Note 19) | ||
| Equity | ||
| Ecosphere Technologies, Inc. stockholders' deficit | ||
| Common stock, $0.01 par value; 300,000,000 shares authorized; 152,438,179 and 146,262,357 shares issued and outstanding at December 31, 2012 and 2011, respectively | 1,524,381 | 1,462,622 |
| Common stock issuable, $0.01 par value; 1,084,499 and 71,959 issuable at December 31, 2012 and 2011, respectively | 10,845 | 720 |
| Additional paid-in capital | 107,774,131 | 104,804,159 |
| Accumulated deficit | (117,337,883) | (117,576,896) |
| Total Ecosphere Technologies, Inc. stockholders' deficit | (8,028,526) | (11,309,395) |
| Noncontrolling interest in consolidated subsidiary | 9,423,060 | 11,768,381 |
| Total equity | 1,394,534 | 458,986 |
| Total liabilities, redeemable convertible cumulative preferred stock and equity | $ 8,908,237 | $ 9,613,588 |
| Ecosphere Technologies, Inc. and Subsidiaries | |||
| Consolidated Statements of Cash Flows | |||
| (Unaudited) | |||
| For the Years Ended December 31, | |||
| 2012 | 2011 | 2010 | |
| Operating Activities: | |||
| Net income (loss) applicable to Ecosphere Technologies, Inc. common stock | $ 136,200 | $ (7,654,674) | $ (22,237,207) |
| Adjustments to reconcile net income (loss) applicable to Ecosphere Technologies, Inc. common stock to net cash provided by (used in) operating activities: | |||
| Preferred stock dividends | 102,813 | 103,000 | 105,500 |
| Depreciation and amortization | 2,318,605 | 2,174,983 | 1,957,881 |
| Asset impairment charges | -- | -- | 116,000 |
| Amortization of discount on notes payable | 189,604 | 263,767 | 543,551 |
| Restructuring charges (reversal) | (62,000) | -- | 50,000 |
| Loss on conversion of debt and accrued interest to common stock | -- | 93,762 | 19,604 |
| Stock-based compensation expense | 1,480,692 | 6,668,229 | 5,517,992 |
| Non-cash expense to modify warrants | -- | -- | 93,735 |
| Shares issued for settlement | -- | -- | 108,979 |
| Gain on sale/disposal of fixed assets, net | (142,457) | -- | -- |
| Noncontrolling interest in income (loss) of consolidated subsidiary | 815,054 | 1,690,075 | (528,277) |
| (Gain) loss from change in fair value of warrant derivative liability | (41,374) | (152,888) | 8,772,446 |
| Loss from change in fair value of embedded conversion option derivative liability | -- | -- | 4,015,220 |
| Changes in operating assets and liabilities: | |||
| Increase in accounts receivable | (277,035) | (169,642) | (1,476) |
| Decrease in prepaid expenses and other current assets | 102,844 | 115,353 | 159,172 |
| Increase in inventory | (348,935) | (19,189) | -- |
| Decrease (increase) in deposits | 157 | (393) | (12,006) |
| (Decrease) increase in accounts payable | (335,482) | (790,166) | 386,653 |
| (Decrease) increase in accrued liabilities | (41,385) | 350,399 | 374,564 |
| Decrease in restructuring reserve | (51,275) | (61,935) | (37,537) |
| Decrease in deferred revenue | -- | -- | (672,000) |
| Increase in customer deposits | 23,196 | -- | -- |
| Net cash provided by (used in) operating activities | 3,869,222 | 2,610,681 | (1,267,206) |
| Investing Activities: | |||
| Construction in process purchases | -- | -- | (2,007,817) |
| Proceeds from sale of fixed asset | 206,000 | -- | -- |
| Transfers (to) from restricted cash | (60,168) | -- | 425,000 |
| Purchase of property and equipment | (373,386) | (622,240) | (242,443) |
| Net cash used in investing activities | (227,554) | (622,240) | (1,825,260) |
| Financing Activities: | |||
| Proceeds from issuance of notes payable and warrants | -- | -- | 400,000 |
| Proceeds from issuance of notes payable | -- | 1,575,000 | -- |
| Proceeds from issuance of common stock and warrants | -- | -- | 545,000 |
| Proceeds from warrant and option exercises | 278,675 | 849,819 | 1,224,444 |
| Proceeds from warrant modifications | 107,400 | -- | -- |
| Proceeds from warrants exchanged for cash | -- | -- | 756,968 |
| Proceeds from equipment and vehicle financing | 54,287 | 175,744 | 42,000 |
| Distributions from EES subsidiary to noncontrolling members | (3,160,375) | -- | -- |
| Repayments of notes payable and insurance financing | (240,162) | (151,052) | (717,277) |
| Repayments of notes payable to related parties | (136,676) | (2,412,783) | -- |
| Repayments of vehicle and equipment financing | (116,474) | (27,963) | (188,440) |
| Principal payments on capital leases | (7,025) | -- | (13,080) |
| Net cash (used in) provided by financing activities | (3,220,350) | 8,765 | 2,049,615 |
| Net increase (decrease) in cash | 421,318 | 1,997,206 | (1,042,851) |
| Cash at beginning of year | 2,043,593 | 46,387 | 1,089,238 |
| Cash at end of year | $ 2,464,911 | $ 2,043,593 | $ 46,387 |