Brisben Water Technologies Announces Q2 2013 Record Net Income of $27.3 Million and EPS of $0.17 an Increase of $26.4 Million and $0.17 Over Q2 2012
STUART, Fla., Aug. 14, 2013 (GLOBE NEWSWIRE) -- Brisben Water (OTCBB:ESPH), a water engineering, technology licensing and innovative U.S. manufacturing company, today announced results for the quarter ended June 30, 2013 in its quarterly report on Form 10-Q, reflecting record Net Income for the second quarter of $27.3 million, compared to $0.9 million in the same period in 2012. The Company announced Basic and Fully Diluted EPS of $0.17, an increase of $0.17 versus the same period in 2012.
Net Income of $27.3 million for the quarter was primarily the result of a $29.5 million gain on the deconsolidation of EES, attributed from the sale of an additional 12% interest in its energy subsidiary, Brisben Water Energy Services, LLC ("EES") to Fidelity National Financial ("FNF") in May 2013. The accounting for the sale of 12% of the Company's interest in EES allowed the Company to recognize the fair value of its remaining interest in EES on its balance sheet, increasing its total recognized assets by more than $25 million and shareholders equity to approximately $18.4 million. FNF and Brisben Water Technologies now own 39% and 31% of EES, respectively.
David Brooks, CFO of Brisben Water Technologies, stated, "For the first time in the Company's history, our balance sheet reflects the value of one of our seven core verticals in which the Company's patented, revolutionary Ozonix® technology can be applied. In 2009, the Company granted EES the exclusive rights to Brisben Water's patented Ozonix® technology for use in the global energy field of use. The Company retains 100% of the global rights to monetize its patented Ozonix® technology in all other non-energy related water treatment industries and plans to realize similar value as recently realized from the development and sale of its ownership interest in EES."
Brooks continued, "The true and complete value of the patented Ozonix® technology can be realized through the sale of a portion or all of the global intellectual property rights for Brisben Water's patented Ozonix® process in non-energy related verticals. The true value we have created for our shareholders is not reflected in our financial statements, as these verticals have not been monetized yet. The sale of our interests in EES confirms our belief that the value of each of these additional verticals is significant. The Company is successfully implementing its long-term strategy of patenting, commercializing, and licensing our environmental technologies and that strategy continues throughout the development of the energy sector and beyond."
Dennis McGuire, Chairman and CEO of Brisben Water Technologies, stated, "Brisben Water's management plans to replicate our strategy across a wide variety of industries where liquid chemicals are currently being used to treat water including, but not limited to Agriculture, Environmental, Food and Beverage, Industrial, Mining, Metals and Minerals, Marine, Municipal and Sewage." McGuire further stated, "As Brisben Water Technologies commercializes each new vertical, it will also retain the exclusive manufacturing rights to supply our originally designed and manufactured Ozonix® equipment for each application. The same bacteria and their food source that we eliminate in the oil and gas industry find their way into every industrial application where water is being used. Our technology treats and eliminates them just the same across all of the verticals where Ozonix® can be applied."
The Company utilized the $6 million of gross proceeds from the sale to solidify its balance sheet, which reflected working capital of $2.1 million as of June 30, 2013. As stated above, the Company's net income of $27.3 million for the quarter was primarily the result of a $29.5 million gain on the deconsolidation of EES and trumpeted the transition of the Company's activities within the energy sector to the next phase of its business model in that sector. As a result of the sale, the Company no longer holds a controlling interest in EES. Its financial statements will no longer reflect the activity of EES; rather, the Company's financial statements will reflect its share of the profits or losses of EES as a single line item on its statement of operations going forward. As previously reported, the Company also received the exclusive rights to manufacture equipment for sale to EES to be used in the energy sector for two years. After June 30th, the Company announced the sale of one (1) of two (2) Ozonix® EF80s it completed in Q1 of 2013 to EES and expects to realize additional liquidity from the sale of the remaining Ozonix® EF80 system that is currently in inventory.
Financial Statement Highlights
- The Company's working capital increased from $0.9 million as of December 31, 2012 to $2.1 million as of June 30, 2013.
- Total assets increased from $8.9 million as of December 31, 2012 to $25.0 million as of June 30, 2013, and total liabilities decreased from $3.9 million to $2.9 million over the same period.
- The Company generated net income of $27.3 million for the quarter ended June 30, 2013 compared to $0.9 million in for the quarter ended June 30, 2012.
About Brisben Water Technologies
Brisben Water (OTCBB:ESPH) is a water engineering, technology licensing and innovative U.S. manufacturing company that develops environmental 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 Brisben Water Ozonix® process. The patented Brisben Water 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 in the United States.
Since 2008, Brisben Water has enabled oil and gas customers to treat, recycle and reuse over 3 billion gallons of water on more than 750 oil and natural gas wells in major shale plays around the United States.
Brisben Water was chosen by Bloomberg as a 2013 New Energy Pioneer and selected by IHS CERAWeek as a 2013 Energy Innovation Pioneer. Brisben Water is also a recipient of the 2013 American Technology Award - "Clean Tech/Green Tech" category and the 2012 Frost & Sullivan North American Product Leadership Award in Disinfection Equipment for Shale Oil and Gas Wastewater Treatment. In addition, Brisben Water has been chosen for the Artemis "Top 50 Water Tech" Listing for the last three years.
For more information, please visit Brisben WaterTech.com.
To receive timely information on Brisben Water Technologies, sign up for Brisben Water's email news alert system at http://www.ESPH-IR.com.
Cautionary Note Regarding Forward-Looking Statements.
This press release contains forward-looking statements including plans for non-energy related industries and expected sale of the Ozonix® EF80 system that is currently in inventory. 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 ability to find a purchaser for our Ozonix® unit, the ability to locate partners to finance the use of our technology in other markets and general reluctance of businesses to utilize new technology.
Further information on our risk factors is contained in our filings with the SEC, including our Form 10-K for the year ended December 31, 2012. 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.
| Brisben Water AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| June 30, | December 31, | |
| 2013 | 2012 | |
| (Unaudited) | ||
| Assets | ||
| Current assets | ||
| Cash | $ 221,811 | $ 2,464,911 |
| Restricted cash | 25,000 | 60,168 |
| Accounts receivable | 102,250 | 1,150,152 |
| Inventory | 3,821,330 | 757,682 |
| Prepaid expenses and other current assets | 261,261 | 107,067 |
| Total current assets | 4,431,652 | 4,539,980 |
| Investment in unconsolidated investee | 19,500,596 | — |
| Property and equipment, net | 966,077 | 4,264,125 |
| Debt issuance costs, net | 53,193 | — |
| Patents, net | 78,720 | 81,691 |
| Deposits | 18,241 | 22,441 |
| Total assets | $ 25,048,479 | $ 8,908,237 |
| Liabilities, Redeemable Convertible Cumulative Preferred Stock and Equity | ||
| Current liabilities | ||
| Accounts payable | $ 869,138 | $ 845,241 |
| Accrued liabilities | 830,611 | 1,122,119 |
| Customer deposit | 135,439 | 23,196 |
| Convertible notes payable, net of discounts | 209,770 | 1,203,126 |
| Current portion of note payable | 85,125 | 68,100 |
| Warrant derivatives fair value | 5,523 | 197,009 |
| Current portion of financing obligations | 126,389 | 96,548 |
| Current portion of capital lease obligation | 14,965 | 14,593 |
| Total current liabilities | 2,276,960 | 3,569,932 |
| Convertible note payable, net of discounts, net of current portion | 428,526 | — |
| Note payable, net of current portion | 102,149 | 136,199 |
| Financing obligations, net of current portion | 79,227 | 106,612 |
| Restructuring reserve | — | 5,909 |
| Capital lease obligation, net of current portion | 49,699 | 57,276 |
| Total liabilities | 2,936,561 | 3,875,928 |
| Redeemable convertible cumulative preferred stock | ||
| Series A - 11 shares authorized; 6 shares issued and outstanding at June 30, 2013 and December 31, 2012; $25,000 per share redemption amount plus dividends in arrears | 1,192,244 | 1,180,994 |
| Series B - 484 shares authorized; 241 shares issued and outstanding at June 30, 2013 and December 31, 2012; $2,500 per share redemption amount plus dividends in arrears | 2,486,907 | 2,456,781 |
| Total redeemable convertible cumulative preferred stock | 3,679,151 | 3,637,775 |
| Commitments and contingencies | ||
| Equity | ||
| Brisben Water stockholders' equity (deficit) | ||
| Common stock, $0.01 par value; 300,000,000 shares authorized; 163,535,714 and 160,060,088 shares issued and outstanding at June 30, 2013, and December 31, 2012, respectively | 1,635,357 | 1,600,601 |
| Common stock issuable, $0.01 par value; 52,500 and 1,138,724 issuable at June 30, 2013, and December 31, 2012, respectively | 525 | 11,387 |
| Additional paid-in capital | 109,158,623 | 107,697,369 |
| Accumulated deficit | (92,361,738) | (117,337,883) |
| Total Brisben Water stockholders' equity (deficit) | 18,432,767 | (8,028,526) |
| Noncontrolling interest in consolidated subsidiary | — | 9,423,060 |
| Total equity | 18,432,767 | 1,394,534 |
| Total liabilities, redeemable convertible cumulative preferred stock and equity | $ 25,048,479 | $ 8,908,237 |
| Brisben Water AND SUBSIDIARIES | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (Unaudited) | ||||
| For the Three Months Ended | For the Six Months Ended | |||
| June 30, | June 30, | |||
| 2013 | 2012 | 2013 | 2012 | |
| Revenues | ||||
| Equipment sales and licensing | $ — | $ 5,778,614 | $ — | $ 11,426,707 |
| Field services | 796,102 | 2,846,490 | 1,547,786 | 5,559,192 |
| Aftermarket part sales | 180,016 | — | 289,951 | — |
| Total revenues | 976,118 | 8,625,104 | 1,837,737 | 16,985,899 |
| Costs and expenses | ||||
| Equipment sales and licensing costs (exclusive of depreciation shown below) | — | 4,562,761 | — | 8,670,423 |
| Field services costs (exclusive of depreciation shown below) | 274,618 | 713,865 | 721,214 | 1,515,582 |
| Aftermarket part costs (exclusive of depreciation shown below) | 116,930 | — | 226,473 | — |
| Selling, general and administrative | 2,429,232 | 1,914,144 | 4,507,685 | 3,775,300 |
| Restructuring charge | (9,661) | — | (3,170) | — |
| Depreciation and amortization | 331,240 | 549,570 | 876,251 | 1,101,170 |
| Total costs and expenses | 3,142,359 | 7,740,340 | 6,328,453 | 15,062,475 |
| Income (loss) from operations | (2,166,241) | 884,764 | (4,490,716) | 1,923,424 |
| Loss on investment in unconsolidated investee | (46,004) | — | (46,004) | — |
| Other income (expense) | ||||
| Gain on deconsolidation | 29,474,609 | — | 29,474,609 | — |
| Interest expense | (145,724) | (77,861) | (238,229) | (175,342) |
| Gain (loss) on change in fair value of derivative instruments | 174,647 | 112,167 | 88,679 | (85,995) |
| Other, net | — | 864 | — | 4,628 |
| Total other income (expense), net | 29,503,532 | 35,170 | 29,325,059 | (256,709) |
| Net income | 27,291,287 | 919,934 | 24,788,339 | 1,666,715 |
| Preferred stock dividends | (20,688) | (25,688) | (41,376) | (51,438) |
| Net income applicable to common stock before allocation to non controlling interest | 27,270,599 | 894,246 | 24,746,963 | 1,615,277 |
| Less: net (income) loss applicable to non-controlling interest in consolidated subsidiary | 17,310 | (388,386) | 187,806 | (744,631) |
| Net income applicable to Brisben Water common stock | $ 27,287,909 | $ 505,860 | $ 24,934,769 | $ 870,646 |
| Net income per common share applicable to common stock | ||||
| Basic | $ 0.17 | $0.00 | $ 0.15 | $ 0.01 |
| Diluted | $ 0.17 | $0.00 | $ 0.15 | $ 0.01 |
| Weighted average number of common shares outstanding | ||||
| Basic | 163,299,184 | 156,293,765 | 162,413,593 | 155,539,106 |
| Diluted | 163,730,359 | 166,681,301 | 164,728,122 | 168,960,240 |
| Brisben Water AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (Unaudited) | ||
| For the Six Months Ended | ||
| June 30, | ||
| 2013 | 2012 | |
| Operating Activities: | ||
| Net income applicable to Brisben Water common stock | $ 24,934,769 | $ 870,646 |
| Adjustments to reconcile net income applicable to Brisben Water common stock to net cash provided by (used in) operating activities: | ||
| Gain on deconsolidation | (29,474,609) | — |
| Preferred stock dividends | 41,376 | 51,438 |
| Depreciation and amortization | 876,251 | 1,101,170 |
| Non-controlling interest in (loss) income of consolidated subsidiary | (187,806) | 744,631 |
| Amortization of debt issue costs | 11,550 | — |
| Accretion of discount on notes payable | 118,679 | 115,178 |
| Stock-based compensation expense | 759,809 | 895,672 |
| (Income) loss from change in fair value of warrant derivative liability | (88,679) | 85,995 |
| Loss on unconsolidated investee | 46,004 | — |
| Changes in operating assets and liabilities: | ||
| Decrease (increase) in accounts receivable | 587,615 | (2,849,765) |
| (Increase) decrease in prepaid expenses and other current assets | (95,338) | 46,517 |
| Increase in inventory | (3,299,401) | (38,989) |
| Decrease in deposits | — | 563 |
| Increase in restricted cash | — | (378,809) |
| Increase in accounts payable | 158,602 | 31,493 |
| Decrease in accrued liabilities | (273,879) | (221,593) |
| Increase in billings in excess of costs and estimated earnings on uncompleted contracts | — | 188,679 |
| Decrease in restructuring reserve | (5,909) | (24,925) |
| Decrease in customer deposits | 113,404 | 100,000 |
| Net cash (used in) provided by operating activities | (5,777,562) | 717,901 |
| Investing Activities: | ||
| Net proceeds from sale of interest in subsidiary | 5,850,000 | — |
| Repayment of amounts due to unconsolidated investee | (1,385,139) | — |
| Cash held by deconsolidated subsidiary | (247,636) | — |
| Purchase of property and equipment | (545,254) | (47,845) |
| Transfer from (to) restricted cash | 35,168 | (25,000) |
| Net cash provided by (used in) investing activities | 3,707,139 | (72,845) |
| Financing Activities: | ||
| Proceeds from issuance of convertible notes payable and warrants, net of debt issue costs | 706,647 | — |
| Proceeds from warrant and option exercises | — | 249,299 |
| Proceeds from warrant modifications | 133,188 | 107,400 |
| Distributions from subsidiary to noncontrolling members | — | (908,551) |
| Repayments of notes payable and insurance financing | (947,205) | (109,862) |
| Repayments of capital lease obligations | (7,204) | — |
| Repayments of vehicle and equipment financing | (58,103) | (49,139) |
| Net cash used in financing activities | (172,677) | (710,853) |
| Net decrease in cash | (2,243,100) | (65,797) |
| Cash at beginning of period | 2,464,911 | 2,043,593 |
| Cash at end of period | $ 221,811 | $ 1,977,796 |
CONTACT: 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
Brisben Water
+1 (772) 287-4846
cmcguire@Brisben Watertech.com
