EX-99.1 2 exhibit99-1.htm exhibit99-1.htm - Generated by SEC Publisher for SEC Filing

 

 

ESW Group® Reports Q3 2014 Results

 

 

MONTGOMERYVILLE, PA — November 14, 2014 —Environmental Solutions Worldwide, Inc. (“ESW”) (OTCQB: ESWW) today reported financial results for the nine and three month periods ended September 30, 2014.

 

THIRD QUARTER 2014 RESULTS

 

Revenues for the nine month periods ended September 30, 2014 increased 98% to $20.28 million compared to $10.24 million for the nine month periods ended September 30, 2013.

 

Revenues for the three month periods ended September 30, 2014 were $5.24 million compared to $5.49 million for the three month periods ended September 30, 2013.  


EBITDA(1) for the nine month period ended September 30, 2014 was $5.20 million compared to a negative EBITDA(1) of $59 thousand for the nine month period ended September 30, 2013.

 

ESW ended the third quarter with approximately $8.61 million in cash.

 

Key financial results for Q3 2014 versus Q3 2013 are set forth in the following table. Reconciliations of EBITDA(1) to their nearest comparable GAAP financial measures are attached to this Press Release.

 

 

NINE MONTH PERIOD ENDED SEPTEMBER 30,

  

 

2014

2013

% Change

Revenues

$20,276,171

$10,242,470

98%

EBITDA(1) 

$5,201,847

$(59,166)

NM(2)

Net Cash Generated from (Used in) Operating Activities

$5,018,717

$(1,688,815)

NM(2)

 

Notes: 

 

(1)

 

EBITDA is defined as earnings before interest on promissory notes payable, interest on loan payable, income tax expense, depreciation and the items used to reconcile GAAP to adjusted non-GAAP financial measures, including (1) change in fair value of conversion option derivative liability, (2) amortization of discount on promissory notes payable, (3) accruals for Board Stock-based compensation, (4) stock-based compensation - (vested restricted common stock), (5) allowance for doubtful accounts, (6) warranty provision, (7) recovery on disposal of inventory, (8) gain on sale of property, plant and equipment and (9) loss on write down of inventory. EBITDA amounts are not meant as a substitute for GAAP, but are solely for informational purposes.

(2)

 

Not meaningful, as, the prior year period amount was negative.

 

About Environmental Solutions Worldwide, Inc.

Headquartered in Montgomeryville, PA, Environmental Solutions Worldwide, Inc., through its wholly owned subsidiaries ESW America, Inc., Technology Fabricators Inc., ESW Technologies Inc., ESW CleanTech, Inc., and ESW Canada, Inc. (together, “ESW Group®” ), is engaged in the design, development, manufacturing and sales of diesel emission control technologies focused on the medium and heavy duty diesel market. ESW also provides emissions testing and environmental certification services with its primary focus on the North American on-road and off-road diesel engine, chassis and after-treatment market. For updated information, please visit ESW’s websites at:

 

 

 

www.eswgroup.com

http://eswamerica.com/

Or follow us on:

 

Forward-Looking Statements

This press release and any related calls or discussions may contain forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly release any modifications or revisions to these forward-looking statements to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, we caution investors that actual financial and operating results may differ materially from those projected in forward-looking statements made by, or on behalf of, us. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements, as described in more detail in the Company’s SEC reports and filings.

The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should,” “may,” “plan,” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended, or planned. We assume no obligation to and do not intend to update these forward-looking statements.

FOR MORE INFORMATION CONTACT: Environmental Solutions Worldwide, Inc.

Email: Investor-relations@cleanerfuture.com or visit www.eswgroup.com

 

 

 

 

ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS
           
     

SEPTEMBER 30,

  

DECEMBER 31,
     

2014

  

2013
     

(Unaudited)

    

ASSETS

      
           

Current Assets

      
 

Cash and cash equivalents (Note 4)

$ 8,614,516

  

$ 4,077,096
 

Accounts receivable (Note 16), net of allowance

      
   

for doubtful accounts of $111,559 (2013 - $250,862) (Note 2)

1,176,639

  

1,888,511
 

Inventory, net of reserve of $221,357 (2013 - $246,509) (Note 5)

4,381,424

  

3,693,367
 

Prepaid expenses and other assets (Note 13)

692,096

  

750,835
           
   

Total current assets

14,864,675

  

10,409,809
           

Equipment under construction (Note 6)

444,968

  

431,022
           

Property, plant and equipment, net of accumulated

     
 

depreciation of $3,604,906 (2013 - $3,294,168) (Note 6)

1,829,714

  

1,574,181
           
     

$ 17,139,357

  

$ 12,415,012

 

 

  

 

LIABILITIES AND STOCKHOLDERS' EQUITY

      
           

Current Liabilities

      
 

Accounts payable (Notes 12 and 16)

$ 1,502,120

  

$ 1,656,379
 

Accrued liabilities (Notes 8 and 12)

1,211,636

  

1,007,920
 

Warranty provision (Note 13)

1,741,314

  

1,723,769
 

Customer deposits

140,931

  

124,645
 

Current portion of loan payable (Note 7)

72,094

  

71,022
   

Total current liabilities

4,668,095

  

4,583,735
           

Long-term Liabilities

      
 

Senior secured convertible promissory notes payable (Notes 8 and 12)

2,525,159

  

2,146,780
 

Conversion option derivative liability (Note 9)

4,309,832

  

1,131,745
 

Loan payable (Note 7)

279,047

  

333,185
           
   

Total long-term liabilities

7,114,038

  

3,611,710
           
   

Total liabilities

11,782,133

  

8,195,445
           

Commitments and Contingencies (Note 13)

      
           

Stockholders' Equity (Note 11)

      
 

Common stock, $0.001 par value, 250,000,000

      
   

shares authorized; 131,526 (2013 - 125,742)

     
   

shares issued and outstanding

131

  

125
 

Additional paid-in capital

57,815,327

  

57,541,924
 

Shares to be issued

85,746

  

-
 

Accumulated other comprehensive income

344,183

  

344,183
 

Accumulated deficit

(52,888,163)

  

(53,666,665)
           
   

Total stockholders' equity

5,357,224

  

4,219,567
           
     

$ 17,139,357

  

$ 12,415,012

           

Subsequent Event (Note 17)

      

 

 

 

 

 

ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME / (LOSS)

FOR THE NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30,

(Unaudited)

 
   

NINE MONTH PERIOD
ENDED SEPTEMBER 30,

  

THREE MONTH PERIOD

ENDED SEPTEMBER 30,
   

2014

  

2013

  

2014

  

2013
                 

Revenue (Notes 2 and 16)

$ 20,276,171

  

$ 10,242,470

  

$ 5,240,626

  

$ 5,497,125
                 

Cost of revenue (Notes 2, 5, 6 and 13)

10,431,380

  

7,734,451

  

2,801,392

  

2,780,826
                 

Gross profit

9,844,791

  

2,508,019

  

2,439,234

  

2,716,299
                 

Operating expenses

              
 

Marketing, office and general expenses

3,540,530

  

3,348,934

  

1,211,291

  

1,218,292
 

Officers' compensation and directors' fees (Notes 11 and 12)

751,338

  

605,658

  

321,266

  

169,951
 

Research and development costs (Notes 2 and 6)

540,836

  

455,235

  

187,770

  

214,624
 

Consulting and professional fees (Note 12)

301,777

  

401,132

  

93,998

  

121,633
 

Depreciation (Note 6)

41,335

  

177,944

  

12,354

  

65,366
 

Foreign exchange loss / (gain)

351

  

(18,030)

  

5,163

  

(29,210)
                 
   

5,176,167

  

4,970,873

 

1,831,842

  

1,760,656
                 

Income / (loss) from operations

4,668,624

  

(2,462,854)

  

607,392

  

955,643
                 

Interest on convertible promissory notes payable (Notes 8 and 12)

(391,542)

  

(200,000)

  

(132,817)

  

(127,689)

Interest on loan payable (Note 7)

(8,566)

  

(10,133)

  

(2,723)

  

(3,249)

Accretion of discount on convertible promissory notes payable (Note 8)

(312,532)

  

(133,563)

  

(112,966)

  

(87,126)

Change in fair value of conversion option derivative liability (Note 9)

(3,121,448)

  

1,953,328

  

(1,388,281)

  

2,991,651
                 

Net income / (loss) before provision for income taxes

834,536

  

(853,222)

  

(1,029,395)

  

3,729,230
 

Income taxes (Note 10)

56,034

  

-

  

(56,156)

  

-
                 

Net income / (loss) and comprehensive income / (loss)

$ 778,502

  

$ (853,222)

  

$ (973,239)

  

$ 3,729,230

                 

Net earnings / (loss) per share (Note 15)

              
 

Basic

$6.02

  

$(7.55)

  

$ (7.40)

  

$32.87
 

Fully diluted

$5.68

  

$(7.55)

  

$ (7.40)

  

$32.82
   

 

  

 

  

 

  

 

Weighted average number of shares outstanding (Note 15)

              
 

Basic

129,381

  

112,948

  

131,526

  

113,464
 

Fully diluted

137,079

  

112,948

  

131,526

  

113,639
                 

 

 

 

 

 

ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30,

(Unaudited)
   

2014

  

2013
         

Net income / (loss)

$ 778,502

 

$ (853,222)
         

Adjustments to reconcile net income / (loss) to net cash

      
 

used in operating activities:

      
 

Depreciation (Note 6)

310,738

  

461,351
 

Interest on promissory notes payable

391,542

  

200,000
 

Amortization of discount on promissory notes payable

312,532

  

133,563
 

Change in fair value of conversion option derivative liability

3,121,448

  

(1,953,328)
 

Stock-based compensation

102,855

  

172,953
 

Allowance for doubtful accounts

32,820

  

-
 

Warranty provision

17,545

  

1,573,455
 

Loss on write down of inventory

-

  

195,929
 

Recovery on disposal of inventory

(15,235)

  

-
 

Gain on sale of property, plant and equipment

(29,500)

  

-
         
   

4,244,745

  

783,923
         

Increase / (decrease) in cash flows from operating activities resulting from changes in:

      
 

activities resulting from changes in:

      
 

Accounts receivable

679,052

  

(102,661)
 

Inventory

(672,822)

  

(1,570,688)
 

Prepaid expenses and other assets

58,739

  

(340,329)
 

Accounts payable and accrued liabilities

(85,785)

  

354,030
 

Customer deposits

16,286

  

40,132
         
   

(4,530)

  

(1,619,516)
         

Net cash generated from / (used in) operating activities

5,018,717

 

(1,688,815)
         

Investing activities:

      
 

Proceeds from sale of property, plant and equipment

29,500

  

-
 

Acquisition of patent and trademarks

-

  

(42,000)
 

Acquisition of property, plant and equipment

(142,829)

  

(349,176)
 

Additions to property, plant and equipment under construction

(437,387)

  

(288,231)
         

Net cash used in investing activities

(550,716)

  

(679,407)
         

Financing activities:

      
 

Proceeds from notes payable

122,486

  

5,000,000
 

Payment for fractional shares

-

  

(51,516)
 

Repayment of loan payable

(53,067)

  

(51,501)
         

Net cash provided by financing activities

69,419

  

4,896,983
         

Net change in cash and equivalents

4,537,420

  

2,528,761
         

Cash and cash equivalents, beginning of period

4,077,096

  

253,998
         

Cash and cash equivalents, end of period

$ 8,614,516

  

$ 2,782,759

         

Supplemental disclosures:

      
         
 

Cash interest paid

$ 8,566

  

$ 10,133
 

Property, plant and equipment included in accounts payable

$ -

  

$ 42,550
 

Interest paid in common stock

$ 256,300

  

$ -
 

Transfer from equipment under construction to property, plant and equipment

$ 423,442

  

$ -
         

 

 

 

 

 

ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.

NET INCOME TO EBITDA RECONCILIATION

NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

(UNAUDITED)
           

The following table sets forth a reconciliation of EBITDA to net income, the most directly comparable GAAP financial measure.
           

 

NINE MONTHS ENDED SEPTEMBER 30,

  

 

2014

2013

  

 

     

Net income

$

778,502

$

(853,222)

  

Plus:

          

Interest on promissory notes payable

  

391,542

 

200,000

 

Interest on loan payable

 

8,566

 

10,133

 

Income tax expense

  

56,034

 

-

 

Depreciation

  

310,738

 

461,351

 

Reconciliation of GAAP to adjusted non-GAAP financial measures:

          

Change in fair value of conversion option derivative liability

 

3,121,448

 

(1,953,328)

  

Amortization of discount on promissory notes payable

 

312,532

 

133,563

  

Accruals for board stock-based compensation

  

114,000

 

-

 

Stock-based compensation - (Vested restricted common stock)

  

102,855

 

172,953

 

Allowance for doubtful accounts

  

32,820

 

-

 

Warranty provision

  

17,545

 

1,573,455

 

Recovery on disposal of inventory

  

(15,235)

  

-

 

Gain on sale of property, plant and equipment

 

(29,500)

  

-

 

Loss on write down of inventory

 

-

 

195,929

 

EBITDA

$

5,201,847

$

(59,166)

  

 

EBITDA is defined as earnings before interest on promissory notes payable, interest on loan payable, income tax expense, depreciation and the items used to reconcile GAAP to adjusted non-GAAP financial measures, including (1) change in fair value of conversion option derivative liability,  (2) amortization of discount on promissory notes payable, (3) accruals for Board Stock-based compensation, (4) stock-based compensation - (vested restricted common stock), (5) allowance for doubtful accounts, (6) warranty provision, (7) recovery on disposal of inventory, (8) gain on sale of property, plant and equipment and (9) loss on write down of inventory. We disclose EBITDA as a supplemental non-GAAP financial performance measure as we believe it is a useful metric by which to compare the performance of our business from period to period. We understand that measures similar to EBITDA are broadly used by analysts, rating agencies and investors in assessing our performance. Accordingly, we believe that the presentation of EBITDA provides useful information to investors.

 

EBITDA is not in accordance with, or an alternative to, net income, and may be different from non-GAAP measures used by other companies. In addition, EBITDA is not based on any comprehensive set of accounting rules or principles. This adjusted non-GAAP measure has limitations in that it does not reflect all of the amounts associated our results of operations determined in accordance with GAAP. EBITDA should not be considered in isolation of, as a substitute for, or superior to, any financial information prepared in accordance with GAAP. EBITDA as defined herein may differ from similarly titled measures presented by other companies. EBITDA, as well as other information in this press release, should be read in conjunction with our financial statements filed with the SEC.