STUART, Fla., Aug. 10, 2011 (GLOBE NEWSWIRE) -- Ecosphere Technologies, Inc. (OTCBB:ESPH), a diversified water engineering, technology licensing and environmental services company showed financial improvements in its Form 10-Q filed yesterday. The Company reported revenues of $2.4 million for the second quarter of 2011 compared with $2.2 million during the trailing quarter. Operating expenses for the second quarter were $3.1 million, $1.8 million lower than the trailing quarter.
Most notably, net cash provided by operating activities during the second quarter was $0.5 million versus cash used in operations of $1.2 million during the trailing quarter. In addition, the Company repaid $0.3 million in outstanding debt during the second quarter.
Adrian Goldfarb, Chief Financial Officer of Ecosphere Technologies, stated, "We continue to execute against our financial plan for 2011 and believe that we are now well-positioned to further improve our financial stability in Q3 and beyond. Completing the first Ozonix EF80, without adding additional debt or equity, highlights the ongoing benefits of the Hydrozonix agreement. Our majority owned subsidiary, Ecosphere Energy Services, also recorded net income for Q2 and was cash flow positive for the quarter."
See images of the completed Ozonix EF80:
www.EcosphereTech.com/media/photo-gallery/hydrozonix
For more details on Ecosphere's Ozonix EF80, please visit:
www.EcosphereTech.com/technology/products/ozonix-ef80
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About Ecosphere Technologies:
Ecosphere Technologies, Inc. (OTCBB:ESPH) is a diversified water engineering, technology licensing and environmental services company that designs, develops and manufactures wastewater treatment solutions for industrial markets. The Company provides environmental services and technologies for use in large-scale and sustainable applications across industries, nations and ecosystems. Ecosphere is driving clean water innovation with its patented Ozonix advanced oxidation technologies and its mobile, low maintenance water treatment systems. Ecosphere's patented Ozonix Technology is a high volume, advanced oxidation process designed to recycle water while reducing liquid chemicals used during water treatment applications. For more information, please visit: www.EcosphereTech.com
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements including continuing to execute our financial plan for 2011 and our belief regarding our position and ability to improve our financial stability.
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 the condition of the credit and financial markets, the effects of the global recession, the future price of natural gas, future legislation, markets for smaller public companies, general reluctance of businesses to utilize new technology, continued positive results in the field, Hydrozonix acceptance of the initial two units, and Hydrozonix placing additional orders.
Further information on our risk factors are contained in filings with the Securities and Exchange Commission including those in Part II, Item 1A of our Form 10-Q and those in our Form 10-K for the year ended December 31, 2010. Any forward-looking statement made by us 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.
| ECOSPHERE TECHNOLOGIES, INC. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| June 30, | December 31, | |
| 2011 | 2010 | |
| (Unaudited) | ||
| Current Assets | ||
| Cash | $439,453 | $46,387 |
| Restricted cash | 323,125 | -- |
| Accounts receivable | 757,028 | 703,475 |
| Prepaid expenses and other current assets | 151,363 | 46,151 |
| Total current assets | 1,670,969 | 796,013 |
| Property and equipment, net | 7,208,777 | 7,729,721 |
| Construction in progress | 4,074,353 | 389,558 |
| Patents, net | 44,154 | 46,145 |
| Deposits | 27,645 | 22,205 |
| Total assets | $13,025,898 | $8,983,642 |
| Liabilities, Redeemable Convertible Cumulative Preferred Stock and | ||
| Stockholders' Deficit | ||
| Current Liabilities | ||
| Accounts payable | $1,377,111 | $1,953,798 |
| Accounts payable - related parties | -- | 15,093 |
| Accrued liabilities | 612,462 | 917,872 |
| Vehicle financing | 62,629 | 69,566 |
| Insurance premium financing contract | 67,861 | -- |
| Equipment financing - current portion | 32,957 | -- |
| Due to affiliate | 2,000 | 2,000 |
| Customer deposit | 4,300,000 | -- |
| Notes payable – related parties (net of discount) – current portion | 2,073,375 | 2,636,093 |
| Notes payable – third parties (net of discount) – current portion | -- | 50,000 |
| Fair value of liability for warrant derivative instruments | 607,490 | 610,642 |
| Total current liabilities | 9,135,885 | 6,255,064 |
| Restructuring reserve | 145,534 | 181,119 |
| Equipment financing - less current portion | 156,547 | -- |
| Notes payable - related parties - less current portion | 136,676 | 136,676 |
| Notes payable - third parties – less current portion | 1,591,578 | 313,722 |
| Total Liabilities | 11,166,220 | 6,886,581 |
|
Redeemable convertible cumulative preferred stock series A |
||
|
11 shares authorized; 6 shares issued and outstanding at June 30, 2011 and December 31, 2010, $25,000 per share redemption amount plus dividends in arrears ($1,147,244 at June 30, 2011) |
1,147,244 | 1,135,994 |
| Redeemable convertible cumulative preferred stock series B | ||
|
484 shares authorized; 322 shares issued and outstanding at June 30, 2011 and December 31, 2010, $2,500 per share redemption amount plus dividends in arrears ($2,782,052 at June 30, 2011) |
2,782,052 | 2,741,802 |
| Commitments and Contingencies (Note 13) | ||
| Ecosphere Technologies, Inc. Stockholders' Deficit | ||
|
Common stock, $0.01 par value; 300,000,000 shares authorized; 144,506,497 and 137,430,786 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively |
1,445,065 | 1,374,307 |
|
Common stock issuable, $0.01 par value, 407,320 and 1,347,915 issuable at June 30, 2011 and December 31, 2010, respectively |
4,073 | 13,480 |
| Additional paid-in capital | 101,723,045 | 96,778,394 |
| Accumulated deficit | (115,633,905) | (110,025,222) |
| Total Ecosphere Technologies, Inc. stockholders' deficit | (12,461,722) | (11,859,041) |
| Noncontrolling interest in consolidated subsidiary | 10,392,104 | 10,078,306 |
| Total stockholders' deficit | (2,069,618) | (1,780,735) |
|
Total liabilities, redeemable convertible cumulative preferred stock, and stockholders' deficit |
$13,025,898 | $8,983,642 |
| ECOSPHERE TECHNOLOGIES, INC. AND SUBSIDIARIES | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (Unaudited) | ||||
| For The Three Months Ended | For The Six Months Ended | |||
| June 30, | June 30, | |||
| 2011 | 2010 | 2011 | 2010 | |
| Revenues | $2,367,543 | $2,138,386 | $4,595,184 | $4,239,253 |
| Cost of revenues | 802,558 | 792,236 | 1,424,257 | 1,538,770 |
| Gross profit | 1,564,985 | 1,346,150 | 3,170,927 | 2,700,483 |
| Operating expenses | ||||
| Selling, general and administrative | 3,100,049 | 3,082,364 | 8,036,199 | 5,887,410 |
| Total operating expenses | 3,100,049 | 3,082,364 | 8,036,199 | 5,887,410 |
| Loss from operations | (1,535,064) | (1,736,214) | (4,865,272) | (3,186,927) |
| Other income (expense): | ||||
| Other income | 290 | 152 | 433 | 242 |
| Gain (loss) on conversion, net | -- | (115,505) | (94,662) | (133,604) |
| Interest expense | (189,084) | (327,394) | (311,496) | (845,330) |
| Change in fair value of derivative instruments | 174,873 | 7,009,612 | (23,888) | (14,035,239) |
| Total other income (expense) | (13,921) | 6,566,865 | (429,613) | (15,013,931) |
| Net income (loss) | (1,548,985) | 4,830,651 | (5,294,885) | (18,200,858) |
| Preferred stock dividends | (25,750) | (26,250) | (51,500) | (53,750) |
| Net income (loss) applicable to common stock | (1,574,735) | 4,804,401 | (5,346,385) | (18,254,608) |
|
Less: Net (income) loss applicable to non-controlling interest in consolidated subsidiary |
(285,786) | (83,315) | (313,798) | (192,710) |
|
Net income (loss) applicable to Ecosphere Technologies, Inc. common stock |
$(1,860,521) | $4,721,086 | $(5,660,183) | $(18,447,318) |
|
Net income (loss) per common share applicable to Ecosphere Technologies, Inc. common stock |
||||
| Basic | $(0.01) | $0.04 | $(0.04) | $(0.15) |
| Diluted | $(0.01) | $0.03 | $(0.04) | $(0.15) |
| Weighted average number of common shares outstanding | ||||
| Basic | 143,472,955 | 130,212,522 | 142,577,732 | 124,907,969 |
| Diluted | 143,472,955 | 170,733,321 | 142,577,732 | 124,907,969 |
| ECOSPHERE TECHNOLOGIES, INC. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (UNAUDITED) | ||
| For the Six Months Ended June 30, | ||
| 2011 | 2010 | |
| OPERATING ACTIVITIES: | ||
| Net (loss) applicable to Ecosphere Technologies, Inc. common stock | $(5,660,183) | $(18,447,318) |
| Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities: | ||
| Accrued preferred stock dividends | 51,500 | 53,750 |
| Depreciation and amortization | 1,062,142 | 922,345 |
| Accretion of discount on notes payable | 118,607 | 538,712 |
| Loss on settlement of note and accrued interest for common stock | 93,762 | 19,604 |
| Shares issued for settlement | -- | 114,000 |
| Stock-based compensation expense | 3,645,597 | 1,896,553 |
| Stock options issued for services | 97,450 | -- |
| Expense of warrant modification | -- | 93,735 |
| Increase in fair value of warrant derivative liability | 23,888 | 10,020,019 |
| Increase in fair value of embedded conversion option derivative liability | -- | 4,015,220 |
| Restricted stock vesting | 107,500 | -- |
| Changes in operating assets and liabilities | -- | -- |
| (Increase) decrease in accounts receivable | (53,553) | 27,624 |
| Decrease in prepaid expenses and other current assets | 45,840 | 43,355 |
| (Increase) in deposits | (5,440) | (12,006) |
| (Increase) in restricted cash | (323,125) | -- |
| (Increase) in construction in progress | (3,684,795) | -- |
| Increase in accounts payable | (576,687) | 80,687 |
| Increase (decrease) in accounts payable - related parties | (15,093) | 32,082 |
| (Decrease) in restructuring reserve | (35,585) | (44,337) |
| Increase in customer deposits | 4,300,000 | -- |
| Increase (decrease) in deferred revenue | -- | (576,000) |
| Increase (decrease) in accrued liabilities | (240,083) | 45,782 |
| Noncontrolling interest in income (loss) of consolidated subsidiary | 313,798 | 192,710 |
| Net cash (used in) operating activities | (734,460) | (983,483) |
| INVESTING ACTIVITIES: | ||
| Redemption of restricted cash | -- | 425,000 |
| Construction in process purchases | -- | (100,128) |
| Purchase of property and equipment | (539,207) | (1,800,828) |
| Net cash (used in) investing activities | (539,207) | (1,475,956) |
| FINANCING ACTIVITIES: | ||
| Proceeds from issuance of convertible notes payable and warrants | 1,575,000 | -- |
| Proceeds from modifications of warrants for cash | -- | 756,968 |
| Proceeds from warrant and option exercises | 604,164 | 1,020,321 |
| Proceeds from vehicle financing | -- | 42,000 |
| Proceeds from equipment financing | 189,504 | -- |
| Repayments of notes payable and insurance financing | (83,191) | (96,882) |
| Repayments of notes payable to related parties | (611,807) | (286,258) |
| Repayments of vehicle financing | (6,937) | (5,697) |
| Principal payments on capital leases | -- | (13,080) |
| Net cash provided by financing activities | 1,666,733 | 1,417,372 |
| Net increase (decrease) in cash | 393,066 | (1,042,067) |
| Cash, beginning of period | 46,387 | 1,089,238 |
| Cash, end of period | $439,453 | $47,171 |