EX-99.1 2 esph_ex99z1.htm PRESS RELEASE Press Release



EXHIBIT 99.1

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Ecosphere Technologies Reports Third Quarter 2012 Results


$24.3 Million Revenues thru Q3 2012 Compared to $12.8 Million Revenues thru Q3 2011


Key Highlights


·

Year-to-date 2012 revenues up 90% over same period 2011

·

Year-to-date IP licensing and manufacturing revenue up 212%

·

Year-to-date operating cash flow over $3 million versus $99 thousand in same period 2011

·

Third consecutive profitable quarter

·

Revenue guidance for 2012 increased by 11% from $28 million to $31 million

·

Operating income guidance for 2012 increased to over $2 million


STUART, Fla., November 8, 2012 -- Ecosphere Technologies, Inc. (OTCBB: ESPH), a water engineering, technology licensing and innovative manufacturing company, today announced financial results for the third quarter of 2012.


“We are pleased with our overall performance this quarter, and our year is tracking ahead of our original plans,” stated Charles Vinick, Chairman and CEO of Ecosphere Technologies.  “Year-to-date, our licensing and manufacturing revenue is up 212% over the same nine month period in 2011, total revenues over the same period in 2011 are up 90% from $12.8M in 2011 versus $24.3M in 2012.  Our equipment margins are up, we sustained high profitability in field services, we controlled SG&A, we posted yet another quarter of net earnings, we generated over $3M of operating cash flow, we increased our cash balance substantially, and we reduced debt yet again.”


2012 Year-to-Date Financial Results


For the nine months ending September 30, 2012, equipment and licensing sales of $17.6M grew 212% when compared to the comparable period of 2011.  Field services revenue of $6.7M was down by 7% for the first nine months of 2012 when compared to the year-earlier period in 2011.  Gross profit for the first nine months of 2012 grew 53% to $9.3M when compared to the 2011 period.  Year-to-date operating income of $2.4M is $7.3M higher than the comparable period of 2011.  Net income applicable to common shareholders was $1.2M, or $0.01 per common share.  Operating cash flow for the period was $3.0M, which compares to $0.1M in the comparable period in the prior year.


As of September 30, 2012, the Company’s cash balance was $3.6M, 77% higher than the cash balance at the start of the year.  Ecosphere reduced its debt to $1.8M as of the close of the quarter, compared to $2.4M at the start of 2012.  


Third Quarter 2012 Financial Details


The Company generated revenue of $7.3M in the third quarter of 2012, consisting of $6.2M of equipment sales and licensing and $1.1M of field service revenue.  Equipment gross profit was $1.9M, and field services gross profit was $0.6M.  Selling, general and administrative expenses were $2.3M.  Operating income was $0.4M.  Net income applicable to common shareholders was $0.3M.  Operating cash flow was $2.3M.







Significant Recent Events and Achievements


·

For the third year in a row, Ecosphere was selected for recognition as a Top 50 Water Company by The Artemis Project.  The panel of judges included experts from industry leaders such as Intel, Archer Daniels Midland, IBM, Ecolab, Syngenta, McKinsey, CH2M Hill, Carollo Engineers and the Singapore Public Utilities Board.


·

The Company completed its search for a new CFO, and is in the final phase of the transition.  Ecosphere expects the new CFO candidate to start before the end of the quarter.


·

Ecosphere has now deployed 38 Ozonix units, which are serving major oil and gas operators conducting hydraulic fracturing ("fracking") operations around the United States.  Ten Ozonix EF80 units are deployed by Hydrozonix, with the balance being operated by Ecosphere Energy Services, LLC (“EES”).  Since initial deployment in 2008, the Ozonix technology has treated over two billion gallons of water at over 600 oil and natural gas well sites in the US.


2012 Financial Guidance


Based on results through Q3 2012, the Company expects to exceed its original guidance for the year.  The Company now expects full year 2012 revenue of approximately $31M, gross profit around $12M, operating expenses under $10M, operating cash flow over $3M and income from operations over $2M.

 

The Company anticipates that initial royalty revenue from Hydrozonix will contribute to 2013 revenue and earnings.


“Ecosphere is well-positioned to extend its leadership position in advanced oxidation process technologies for the water treatment industry,” continued Vinick.  “We control a valuable, patented technology with multiple applications in large markets.  We have an innovative business model that is IP-heavy, capital-light.  We have proven the model with an exceptionally strong partner that we believe will build a large business using our patented Ozonix technology.  We expect to initiate partnerships with a number of strong partners in new markets in the years ahead.”


Third Quarter 2012 Conference Call Details


Ecosphere will host a conference call to discuss third quarter 2012 results at 4:30 p.m. Eastern Standard Time today. Investors in the U.S. interested in participating in the live call should dial +1 (800) 946-0712 and enter passcode: 8837459. Those calling from outside the U.S. should dial +1 (719) 325-4814 and use the same passcode: 8837459. A telephone replay will be available approximately two hours after the call concludes through November 22, 2012 by dialing from the U.S. +1 (877) 870-5176, or from international locations +1 (858) 384-5517, and entering passcode: 8837459.


A simultaneous, audio-only webcast of the conference call, together with supplemental financial information and a slide presentation will be available on the Investor Relations section of the Company's website at http://ir.stockpr.com/ecospheretech/. The webcast will be archived on the website for one year.


About Ecosphere Technologies


Ecosphere Technologies, Inc. (OTCBB:ESPH) is a water engineering, technology licensing and innovative 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 four United States (“U.S.”) patents for the Ecosphere Ozonix process. The patented Ecosphere Ozonix process is a revolutionary ozone-based 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, Ecosphere has enabled oil and gas customers to recycle and reuse over two billion gallons of water on approximately 600 oil and natural gas wells in major shale plays around the United States since 2008.


Cautionary Note Regarding Forward-Looking Statements

 

This press release contains forward-looking statements including 2012 guidance, business growth, 2013 royalties, and partnerships in new markets.  Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods.


Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include a decline in the price of natural gas, the ability of Ecosphere or a partner to expand the Ozonix technology outside of the United States, the ability to locate new partners to finance the use of our technology in other markets and our ability to reach definitive agreements with new partners, reluctance of businesses to change to new technologies, international regulations which affect hydraulic fracturing, federal or state regulations which affect hydraulic fracturing, problems that arise from the manufacturing of the Ozonix units and delays in receipt of parts from component manufacturers.


Further information on our risk factors is contained in our filings with the SEC including the Form 10-K for the year ended December 31, 2011.  Any forward-looking statement made by us in this press release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.


Contacts

Investor Relations:

Gary Dvorchak, CFA

Senior Vice President

ICR, Inc.

+1 (310) 954-1123

gary.dvorchak@icrinc.com


Press and Media Relations:

Brian Ruby

Vice President

ICR, Inc.

+1 (203) 682-8268

brian.ruby@icrinc.com


Company:

Corey McGuire

Director of Marketing

Ecosphere Technologies, Inc.

+1 (772) 287-4846

cmcguire@ecospheretech.com


Source:  Ecosphere Technologies, Inc.

Released November 8, 2012







ECOSPHERE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


 

 

September 30,

 

 

December 31,

 

 

 

2012

 

 

2011

 

Assets

 

(Unaudited)

 

 

 

 

Current assets

 

 

 

 

 

 

Cash

 

$

3,616,407

 

 

$

2,043,593

 

Restricted cash

 

 

66,083

 

 

 

 

Accounts receivable

 

 

2,286,150

 

 

 

873,117

 

Inventory

 

 

524,591

 

 

 

408,747

 

Prepaid expenses and other current assets

 

 

389,489

 

 

 

81,850

 

Costs and estimated earnings in excess of billings on uncompleted contracts

 

 

89,140

 

 

 

 

Total current assets

 

 

6,971,860

 

 

 

3,407,307

 

Property and equipment, net

 

 

4,667,022

 

 

 

6,141,519

 

Patents, net

 

 

39,178

 

 

 

42,164

 

Deposits

 

 

22,153

 

 

 

22,598

 

Total assets

 

$

11,700,213

 

 

$

9,613,588

 

 

 

 

 

 

 

 

 

 

Liabilities, Redeemable Convertible Cumulative Preferred Stock and Equity (Deficit)

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,085,323

 

 

$

1,180,723

 

Accrued liabilities

 

 

1,013,400

 

 

 

1,163,504

 

Customer deposits

 

 

218,968

 

 

 

 

Convertible notes payable, net of discounts

 

 

1,166,499

 

 

 

370,561

 

Other notes payable

 

 

68,100

 

 

 

 

Related party notes payable

 

 

136,676

 

 

 

204,776

 

Warrant derivatives fair value

 

 

239,282

 

 

 

347,235

 

Financing and capital lease obligations

 

 

136,674

 

 

 

49,299

 

Total current liabilities

 

 

4,064,922

 

 

 

3,316,098

 

Convertible notes payable, net of discounts

 

 

 

 

 

1,366,177

 

Related party notes payable

 

 

 

 

 

204,299

 

Other notes payable

 

 

153,224

 

 

 

 

Financing and capital lease obligations

 

 

178,306

 

 

 

168,048

 

Restructuring reserve

 

 

19,342

 

 

 

119,184

 

Total liabilities

 

 

4,415,794

 

 

 

5,173,806

 

Redeemable convertible cumulative preferred stock

 

 

 

 

 

 

 

 

Series A - 11 shares authorized; 6 shares issued and outstanding at September 30, 2012 and December 31, 2011; $25,000 per share redemption amount plus accrued dividends

 

 

1,175,369

 

 

 

1,158,494

 

Series B - 484 shares authorized; 321 and 322 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively; $2,500 per share redemption amount plus accrued dividends

 

 

2,880,052

 

 

 

2,822,302

 

Total redeemable convertible cumulative preferred stock

 

 

4,055,421

 

 

 

3,980,796

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Equity (deficit)

 

 

 

 

 

 

 

 

Ecosphere Technologies, Inc. stockholders' deficit

 

 

 

 

 

 

 

 

Common stock, $0.01 par value; 300,000,000 shares authorized; 149,480,741 and 146,262,357shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively

 

 

1,494,806

 

 

 

1,462,622

 

Common stock issuable, $0.01 par value; 204,173 issuable at September 30, 2012 and December 31, 2011, respectively

 

 

2,042

 

 

 

720

 

Additional paid-in capital

 

 

107,086,143

 

 

 

104,804,159

 

Accumulated deficit

 

 

(116,313,140

)

 

 

(117,576,896

)

Total Ecosphere Technologies, Inc. stockholders' deficit

 

 

(7,730,149

)

 

 

(11,309,395

)

Noncontrolling interest in consolidated subsidiary

 

 

10,959,147

 

 

 

11,768,381

 

Total equity

 

 

3,228,998

 

 

 

458,986

 

Total liabilities, redeemable convertible cumulative preferred stock and equity (deficit)

 

$

11,700,213

 

 

$

9,613,588

 







ECOSPHERE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

For the Three Months Ended

September 30,

 

 

For the Nine Months Ended

September 30,

 

 

 

2012

 

 

2011

 

 

2012

 

 

2011

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Equipment sales and licensing

 

$

6,193,362

 

 

$

5,645,052

 

 

$

17,620,069

 

 

$

5,645,052

 

Field services

 

 

1,133,021

 

 

 

2,562,279

 

 

 

6,692,213

 

 

 

7,157,463

 

Total revenues

 

 

7,326,383

 

 

 

8,207,331

 

 

 

24,312,282

 

 

 

12,802,515

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment sales and licensing

 

 

4,272,243

 

 

 

4,538,627

 

 

 

12,942,666

 

 

 

4,728,466

 

Field services

 

 

576,670

 

 

 

758,887

 

 

 

2,092,252

 

 

 

1,993,305

 

Total cost of revenues

 

 

4,848,913

 

 

 

5,297,514

 

 

 

15,034,918

 

 

 

6,721,771

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

2,477,470

 

 

 

2,909,817

 

 

 

9,277,364

 

 

 

6,080,744

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

2,250,929

 

 

 

3,033,268

 

 

 

7,127,399

 

 

 

11,069,467

 

Gain on sale/disposal of fixed assets, net

 

 

(142,457

)

 

 

 

 

 

(142,457

)

 

 

 

Restructuring charge reversal

 

 

(62,000

)

 

 

 

 

 

(62,000

)

 

 

 

Total operating expenses

 

 

2,046,472

 

 

 

3,033,268

 

 

 

6,922,942

 

 

 

11,069,467

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

430,998

 

 

 

(123,451

)

 

 

2,354,422

 

 

 

(4,988,723

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(111,261

)

 

 

(148,851

)

 

 

(286,602

)

 

 

(460,347

)

Loss on conversion, net

 

 

 

 

 

(164

)

 

 

 

 

 

(94,826

)

Gain from change in fair value of derivative instruments

 

 

87,724

 

 

 

29,421

 

 

 

1,729

 

 

 

5,533

 

Other, net

 

 

 

 

 

53

 

 

 

4,627

 

 

 

484

 

Total other expense

 

 

(23,537

)

 

 

(119,541

)

 

 

(280,246

)

 

 

(549,156

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

407,461

 

 

 

(242,992

)

 

 

2,074,176

 

 

 

(5,537,879

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock dividends

 

 

(25,687

)

 

 

(25,750

)

 

 

(77,125

)

 

 

(77,250

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) applicable to common stock before allocation to noncontrolling interest

 

 

381,774

 

 

 

(268,742

)

 

 

1,997,051

 

 

 

(5,615,129

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: net income applicable to noncontrolling interest in consolidated subsidiary

 

 

(65,789

)

 

 

(1,040,156

)

 

 

(810,420

)

 

 

(1,353,954

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) applicable to Ecosphere Technologies, Inc. common stock

 

$

315,985

 

 

$

(1,308,898

)

 

$

1,186,631

 

 

$

(6,969,083

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share applicable to common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.00

 

 

$

(0.01

)

 

$

0.01

 

 

$

(0.05

)

Diluted

 

$

0.00

 

 

$

(0.01

)

 

$

0.01

 

 

$

(0.05

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

149,475,178

 

 

 

145,112,621

 

 

 

148,583,314

 

 

 

143,431,951

 

Diluted

 

 

156,785,475

 

 

 

145,112,621

 

 

 

160,710,823

 

 

 

143,431,951

 







ECOSPHERE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

For the Nine Months Ended

September 30,

 

 

 

2012

 

 

2011

 

Operating Activities:

 

 

 

 

 

 

Net income (loss) applicable to Ecosphere Technologies, Inc. common stock

 

$

1,186,631

 

 

$

(6,969,083

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Preferred stock dividends

 

 

77,125

 

 

 

77,250

 

Depreciation and amortization

 

 

1,657,323

 

 

 

1,615,951

 

Gain on sale/disposal of fixed assets, net

 

 

(142,457

)

 

 

 

Accretion of discount on notes payable

 

 

152,977

 

 

 

191,034

 

Loss on conversion of debt and accrued interest to common stock

 

 

 

 

 

93,732

 

Stock-based compensation expense

 

 

1,203,975

 

 

 

4,635,170

 

Restructuring charge reversal

 

 

(62,000

)

 

 

 

Noncontrolling interest in income of consolidated subsidiary

 

 

810,420

 

 

 

1,353,954

 

Gain from change in fair value of warrant derivative liability

 

 

(1,729

)

 

 

(5,533

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Increase in accounts receivable

 

 

(1,413,033

)

 

 

(695,540

)

(Increase) decrease in prepaid expenses and other current assets

 

 

(136,641

)

 

 

94,225

 

Increase in costs and estimated earnings in excess of billings on uncompleted contracts

 

 

(89,140

)

 

 

 

(Increase) decrease in inventory

 

 

(115,844

)

 

 

199,607

 

Decrease (increase) in deposits

 

 

445

 

 

 

(5,739

)

Increase in restricted cash

 

 

(41,083

)

 

 

 

Decrease in accounts payable

 

 

(95,400

)

 

 

(388,110

)

Decrease in accrued liabilities

 

 

(150,104

)

 

 

(49,675

)

Decrease in restructuring reserve

 

 

(37,842

)

 

 

(48,502

)

Increase in customer deposits

 

 

218,968

 

 

 

 

Net cash provided by operating activities

 

 

3,022,591

 

 

 

98,741

 

Investing Activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(116,487

)

 

 

(581,704

)

Proceeds from sale of fixed asset

 

 

206,000

 

 

 

 

Transfer to restricted cash

 

 

(25,000

)

 

 

 

Net cash provided by (used in) investing activities

 

 

64,513

 

 

 

(581,704

)

Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of convertible notes payable and warrants

 

 

 

 

 

1,575,000

 

Proceeds from issuance of common stock and warrants

 

 

 

 

 

 

Proceeds from warrant and option exercises

 

 

249,300

 

 

 

673,664

 

Proceeds from warrant modifications

 

 

107,400

 

 

 

 

Proceeds from equipment financing

 

 

 

 

 

189,504

 

Distributions from EES subsidiary to noncontrolling members

 

 

(1,619,654

)

 

 

 

Repayments of notes payable and insurance financing

 

 

(183,398

)

 

 

(116,724

)

Repayments of notes payable to related parties

 

 

 

 

 

(828,832

)

Repayments of vehicle and equipment financing

 

 

(67,938

)

 

 

(18,802

)

Net cash (used in) provided by financing activities

 

 

(1,514,290

)

 

 

1,473,810

 

Net increase in cash

 

 

1,572,814

 

 

 

990,847

 

Cash at beginning of year

 

 

2,043,593

 

 

 

46,387

 

Cash at end of period

 

$

3,616,407

 

 

$

1,037,234