BOSTON, Aug. 17, 2010 (GLOBE NEWSWIRE) -- Converted Organics Inc. (Nasdaq:COIN) ("Converted Organics" or "the Company") today files a current report on Form 8-K with the U.S. Securities and Exchange Commission, which includes the pro-forma consolidated operating results for the Company and TerraSphere Systems, LLC ("TerraSphere") for the six months ended June 30, 2010. On July 6, 2010, the Company entered into an agreement to acquire TerraSphere in a stock transaction valued at up to $25.8 million. Converted Organics expects the acquisition to close in September 2010, subject to the approval of the Company's shareholders and other closing conditions.
The following pro-forma consolidated results represent the combined results of Converted Organics and TerraSphere for the six months ended June 30, 2010, had the acquisition of TerraSphere closed on January 1, 2010. These pro-forma results have not been prepared in accordance with U.S. GAAP, although they are based on GAAP, and are being provided for informational purposes only. A copy of the current report on Form 8-K is available on the Converted Organics website at http://ir.convertedorganics.com/sec.cfm.
Pro-forma consolidated results of operations of Converted Organics Inc. and TerraSphere Systems, LLC for the six months ended June 30, 2010
For the six-month period ended June 30, 2010, pro-forma consolidated revenue totaled $7.2 million. Pro-forma consolidated gross profit for the period was $1.3 million, or 17.7% of revenue.
On a pro-forma consolidated basis, general and administrative expenses totaled $7.4 million. Pro-forma consolidated operating loss for the six months ended June 30, 2010 was $(6.8) million.
Pro-forma consolidated net loss for the period was $(7.0) million, or $(0.13) per share, based on 52.6 million weighted average shares outstanding.
Results of operations of TerraSphere Systems, LLC for the six months ended June 30, 2010
For the six-month period ended June 30, 2010, TerraSphere reported revenue of $4.5 million. Revenue for the period was derived primarily from licensing and marketing fees related to the TerraSphere's patented vertical farming technology. Gross profit for the period totaled $3.8 million, or 85% of revenue.
General and administrative expenses for the period totaled $0.8 million, related primarily to expenses associated with marketing the Company's technology. Operating income for the period totaled $2.9 million.
For the six months ended June 30, 2010, TerraSphere reported net income of $1.9 million.
"The results TerraSphere achieved during the first half of 2010 speak to the quality of their technology and the enthusiastic market reception for their products," said Edward J. Gildea, President of Converted Organics. "We believe the license-based model TerraSphere employs lends itself to a profitable business which will significantly bolster Converted Organics' operating performance upon completion of the transaction."
Mr. Gildea added, "Our core organic fertilizer and industrial wastewater businesses have achieved solid top-line growth to date, and we believe the acquisition of TerraSphere would significantly enhance our business, both in terms of operational performance and market potential. The vertical farming space presents a large and compelling growth opportunity for Converted Organics and we are confident in our ability to grow this segment of our business upon completion of the proposed acquisition of TerraSphere."
About Converted Organics Inc.
Converted Organics (Nasdaq:COIN) (www.convertedorganics.com), based in Boston, MA, is dedicated to producing high-quality, all-natural, organic soil amendment and fertilizer products through food waste recycling. The Company uses its proprietary High Temperature Liquid Composting (HTLC) system, a proven, state-of-the-art microbial digestion technology, to process various biodegradable food wastes into dry pellet and liquid concentrate organic fertilizers that help grow healthier food and improve environmental quality. Converted Organics sells and distributes its environmentally-friendly fertilizer products in the retail, professional turf management, and agribusiness markets.
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Additional Information
Shareholders of Converted Organics and other interested persons are advised to read Converted Organics' definitive proxy statement in connection with the solicitation of proxies for the special meeting to approve the TerraSphere acquisition because such proxy statement contains important information.
The definitive proxy statement was mailed to shareholders as of July 21, 2010, the record date established for voting on the proposed acquisition. Shareholders may also obtain a copy of the definitive proxy statement, without charge at the SEC's website, http://www.sec.gov, or by directing a request to Converted Organics at 137A Lewis Wharf, Boston, MA 02110.
Converted Organics and its officers and directors may be deemed to have participated in the solicitation of proxies from Converted Organics' shareholders in favor of the approval of the acquisition. Information concerning Converted Organics' directors and executive officers, including descriptions of their security holdings, is set forth in the publicly filed documents of Converted Organics. Shareholders may obtain more detailed information regarding the direct and indirect interests of Converted Organics' directors and executive officers in the transaction by reading the definitive proxy statement regarding the transaction.
Forward-Looking Statements
This press release contains forward-looking statements that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. In some cases, you may identify forward-looking statements by words such as "may," "should," "plan," "intend," "potential," "continue," "believe," "expect," "predict," "anticipate" and "estimate," the negative of these words or other comparable words. Forward-looking statements include the ability of TerraSphere to continue to operate profitably, whether the acquisition of TerraSphere will enhance the Company's operational performance and market potential, and the Company's ability to grow the TerraSphere segment if the acquisition is completed . These statements are only predictions. One should not place undue reliance on these forward-looking statements. The forward-looking statements are qualified by their terms and/or important factors, many of which are outside the Company's control, involve a number of risks, uncertainties and other factors that could cause actual results and events to differ materially from the statements made. The forward-looking statements are based on the Company's beliefs, assumptions and expectations of our future performance, taking into account information currently available to the Company. These beliefs, assumptions and expectations can change as a result of many possible events or factors, including those events and factors described in the "Risk Factors" section in the Company's most recently filed annual report on Form 10-K, as updated in the Company's quarterly reports on Form 10-Q filed since the annual report, not all of which are known to the Company. Neither the Company nor any other person assumes responsibility for the accuracy or completeness of these statements. The Company will update the information in this press release only to the extent required under applicable securities laws. If a change occurs, the Company's business, financial condition, liquidity and results of operations may vary materially from those expressed in the aforementioned forward-looking statements.
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