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16.05.2018 14:31:00
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BioHiTech Global Reports First Quarter 2018 Results
CHESTNUT RIDGE, N.Y., May 16, 2018 /PRNewswire/ -- BioHiTech Global, Inc. ("BioHiTech" or the "Company") (NASDAQ: BHTG), a technology and services company that provides cost-effective and sustainable waste management solutions, reported financial results for the first quarter ended March 31, 2018.
Business Highlights
- Completed $5M Non-Convertible Senior Secured Debt Financing to Fuel Growth - The Company completed a $5M non-convertible senior secured debt financing with Michaelson Capital Special Finance Fund II, L.P. that matures in 2023 and bears an annual interest rate of 10.25%. In conjunction with the financing, the Company's CEO exchanged $5M in debt and advances for $4M in a newly issued preferred stock convertible into the Company's common stock at $4.75 per share and a $1M junior note. The combined transactions increased shareholder equity by approximately $5 million.
- Partnered with Kinderhook Industries to Create a "Next Generation" Environmental Services Platform Company - Through a series of transactions, the Company and Kinderhook Industries, LLC, a private investment firm that manages over $2 billion of committed capital, completed the acquisition of Gold Medal, Group, LLC, a market leader in municipal, commercial, and industrial solid waste collection in the Philadelphia and Southern New Jersey. For its part of the transaction, the Company acquired a 9.2% interest in the acquired business in exchange for 500,000 shares of common stock with a one year option to invest an additional $5M.
- Developed Additional Recurring Revenue Stream through Management Services Contract - As part of its partnership with Kinderhook, the Company will receive an annual management advisory fee to oversee Gold Medal's operations. The annual fee is set at the greater of $750,000 or 10% of Gold Medal's adjusted EBITDA for the prior year.
- Secured a New $1M Credit Facility with Comerica Bank - The Company secured a new credit facility with Comerica bank in February 2018 to provide additional financial flexibility to fuel the growth of recurring rental, service and maintenance revenue from its on-site food waste digester products.
- Completed the Uplisting of Its Common Stock to the Nasdaq Capital Market - Subsequent to the end of the quarter, the Company's common stock commenced trading on The Nasdaq Capital Market on April 9, 2018.
Frank E. Celli, CEO of BioHiTech, commented, "During the first quarter, we completed a significant financial transformation that has enabled our Company to achieve a Nasdaq listing and also places us on much sounder financial footing to implement our comprehensive plan to build lasting value for our stockholders. Through our new partnership with Kinderhook Industries, we have created a significant new recurring revenue stream that is poised for growth as well as a unique distribution platform for the deployment of our cost-effective and sustainable waste disposal solutions that we believe will serve as a model to the industry. Our significantly improved working capital position will now enable us to step up our efforts to drive recurring revenue growth from our digester business while we move forward with the development plans for our HEBioT facilities. As we move through 2018, we believe BioHiTech has never been in a better position to deliver business success for our stockholders while effecting positive change in the waste management industry that is good for the customer and beneficial for the environment."
Q1 Financial Highlights
Revenue: Revenues in Q1 2018 were $646,000, a 9.3% increase compared to revenues of $591,000 in Q1 2017. Recurring revenue from rental, services and maintenance grew by 22.9% to reach $440,000 or 68.2% of total revenue. The increase in rental, service and maintenance is primarily the result of a larger overall number of deployed units that led to a 42.1% increase in pure rental revenues. Recurring revenue from management advisory fees related to its new management services contract with Gold Medal in 2018 totaled $139,000. These increases in revenue were partially offset by a 71.6% decline in revenue from equipment sales which totaled $66,000 compared to $232,000 in Q1 2017. This decline in equipment sales was a reflection of the Company's focus on its rental model and to a lesser extent, a decrease in retailer activity from certain international markets in the quarter. The Company expects a significant sequential increase in equipment sales as reseller orders have increased thus far in the second quarter.
Gross Profit: Q1 2018 gross profit was $283,000, a 42.1% increase compared to gross profit of $199,000 in Q1 2017. Gross profit margin increased by 10.2 percentage points to reach 43.9%. The increase in gross margin was driven by 100% margin from management advisory fees as the Company is providing the services with its existing management team without incurring any additional variable costs as part its mission to cost effectively reduce the environmental impact of waste management services. Rental, service and maintenance gross margin increased by 4.4 percentage points to 32.2%, primarily as the Company achieved improved economies of scale. The aforementioned improvements in gross margin were partially offset by a 40.0 percentage point decline in gross margin from equipment sales gross margin due to the sale of older inventory and previously used equipment at very low margin.
Operating Expenses: Q1 2018 operating expenses decreased by $321,000 or 16.7% to $1.6 million compared to $1.9 million in Q1 2017. The decrease in operating expenses was mainly due to a $363,000 decrease in professional fees related to marketing and investor relations. Total expenses for SG&A and R&D remained fairly consistent year over year.
Operating Loss: Q1 2018 operating loss narrowed to $(1.3) million compared to $(1.7) million in Q1 2017. The improvement in the operating result was due to the reduction in operating expenses coupled with an increase in gross profit.
Net Loss: The Company recorded a Q1 2018 net loss of $(5.2) million or $(0.49) on 10.9 million shares versus a net loss of ($2.0) million or $(0.25) on 8.2 million shares in Q1 2017. The increase in net loss was attributable to a $3.3 million non-cash interest expense recorded in Q1 2018 related to the valuation of certain warrants outstanding.
Select Balance Sheet Items: The Company had cash and cash equivalents of $3.2 million with total assets of $15.5 million as of March 31, 2018 compared to $901,000 and $10.5 million as of December 31, 2017. Total liabilities as of March 31, 2018$14.2 million compared to $21.0 million as of December 31, 2017.
Brian C. Essman, CFO commented, "We made significant progress during the quarter on several fronts including the strengthening of our balance sheet and improvement in our operating results. We added a high margin revenue stream through our Gold Medal relationship and continued to grow recurring revenue from digester rentals, service and maintenance. Our new senior secured debt and Comerica credit facility, coupled with several other financial transactions in the quarter, have greatly improved working capital and stockholder's equity. We are now in a much stronger position to grow our cost-effective food waste disposal business, prudently invest in our data analytics technology, and move forward with the commercialization efforts for our HEBioT MBT business. We look forward to continued progress over the course of 2018 as we continue to execute on our long-term growth plans to create significant value for the benefit of our stockholders."
Additional information can be found in the Company's Form 10-Q filed with the United States Securities and Exchange Commission on May 15, 2018.
About BioHiTech Global
BioHiTech Global, Inc. (NASDAQ: BHTG), is changing the way we think about managing waste. Our innovative waste management services combined with our disruptive technologies provide sustainable waste disposal and supply chain management solutions for businesses and municipalities of all sizes. Our technology platform, including the on and off-site biological treatment of waste, is designed to reduce overall waste generation and virtually eliminate landfill usage while creating a valuable renewable fuel. For more information, please visit www.biohitech.com.
Forward Looking Statements
Statements in this document contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on many assumptions and estimates and are not guarantees of future performance. These statements may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of BioHiTech Global, Inc. to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. BioHiTech Global, Inc. assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Our actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation those set forth as "Risk Factors" in our filings with the Securities and Exchange Commission ("SEC"). There may be other factors not mentioned above or included in the BioHiTech's SEC filings that may cause actual results to differ materially from those projected in any forward-looking statement. BioHiTech Global, Inc. assumes no obligation to update any forward-looking statements as a result of new information, future events or developments, except as required by securities laws.
Company Contact:
BioHiTech Global, Inc.
Rich Galterio
Executive Vice President
Direct: 845.367.0603
rgalterio@biohitech.com
www.biohitech.com
BioHiTech Global, Inc. and Subsidiaries | ||||||||
Condensed Consolidated Statements of | ||||||||
Operations and Comprehensive Loss | ||||||||
(Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Revenue | ||||||||
Rental, service and maintenance | $ | 440,493 | $ | 358,537 | ||||
Equipment sales | 65,850 | 232,143 | ||||||
Management advisory fees | 139,383 | - | ||||||
Total revenue | 645,726 | 590,680 | ||||||
Cost of revenue | ||||||||
Rental, service and maintenance | 298,569 | 258,939 | ||||||
Equipment sales | 63,940 | 132,491 | ||||||
Total Cost of revenue | 362,509 | 391,430 | ||||||
Gross profit | 283,217 | 199,250 | ||||||
Operating expenses | ||||||||
Selling, general and administrative | 1,091,572 | 1,064,629 | ||||||
Research and development | 201,556 | 187,501 | ||||||
Professional fees | 286,862 | 649,623 | ||||||
Depreciation and amortization | 30,716 | 29,774 | ||||||
Total operating expenses | 1,610,706 | 1,931,527 | ||||||
Loss from operations | (1,327,489) | (1,732,277) | ||||||
Other (expense) income | ||||||||
Equity loss in affiliate | (45,413) | - | ||||||
Interest income | - | - | ||||||
Interest expense | (554,276) | (296,256) | ||||||
Interest expense incurred in warrant valuation | (3,293,613) | - | ||||||
Total other expense, net | (3,893,302) | (296,256) | ||||||
Net loss | (5,220,791) | (2,028,533) | ||||||
Other comprehensive loss | ||||||||
Foreign currency translation adjustment | (33,442) | (7,164) | ||||||
Comprehensive loss | $ | (5,254,233) | $ | (2,035,697) | ||||
Net loss per common share - basic and diluted | $ | (0.49) | $ | (0.25) | ||||
Weighted average number of common shares outstanding - basic and diluted | 10,940,183 | 8,229,712 | ||||||
BioHiTech Global, Inc. and Subsidiaries | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(Unaudited) | ||||||||
March 31, | December 31, | |||||||
2018 | 2017 | |||||||
Assets | (Revised) | |||||||
Current Assets | ||||||||
Cash | $ | 3,223,447 | $ | 901,112 | ||||
Accounts receivable, net | 309,232 | 274,405 | ||||||
Inventory | 522,980 | 332,101 | ||||||
Prepaid expenses and other current assets | 86,834 | 79,686 | ||||||
Total Current Assets | 4,142,493 | 1,587,304 | ||||||
Equipment on operating leases, net | 1,548,176 | 1,451,144 | ||||||
Equipment, fixtures and vehicles, net | 57,068 | 63,509 | ||||||
Intangible assets, net | 151,583 | 174,133 | ||||||
Investment in unconsolidated affiliates | 3,220,850 | 1,016,263 | ||||||
MBT facility development and license costs | 6,316,530 | 6,223,766 | ||||||
Other assets | 13,500 | 23,500 | ||||||
Total Assets | $ | 15,450,200 | $ | 10,539,619 | ||||
Liabilities and Stockholders' Equity (Deficit) | ||||||||
Current Liabilities: | ||||||||
Line of credit | $ | 974,844 | $ | 1,000,000 | ||||
Accounts payable | 1,210,263 | 1,287,740 | ||||||
Accrued interest payable | 110,112 | 29,431 | ||||||
Accrued expenses | 432,190 | 892,136 | ||||||
Deferred revenue | 89,092 | 84,686 | ||||||
Customer deposits | 9,760 | 39,498 | ||||||
Long-term debt, current portion | 8,946 | 8,874 | ||||||
Total Current Liabilities | 2,835,207 | 3,342,365 | ||||||
Notes payable (related party of $275,000 at December 31, 2017) | 100,000 | 375,000 | ||||||
Line of credit | - | 1,463,736 | ||||||
Junior note due to related party, net of discounts of $136,123 as of March 31, 2018 | 908,654 | 4,500,000 | ||||||
Advance from related party | - | 544,777 | ||||||
Accrued interest due at maturities | 1,442,831 | 1,860,591 | ||||||
Convertible unsecured note, net of financing costs of $2,965 and discounts of $3,150 | - | 103,885 | ||||||
Convertible subordinated secured notes (related party of $450,000), net of discounts of | 1,116,762 | 1,021,916 | ||||||
Unsecured subordinated mandatorily convertible notes, (related parties of $2,375,000 and | 4,114,786 | 7,698,819 | ||||||
Senior Secured Note Payable, net of financing costs of $201,570 and discounts of $1,171,321 | 3,627,109 | - | ||||||
Long-term debt, net of current portion | 19,705 | 21,971 | ||||||
Total Liabilities | 14,165,054 | 20,933,060 | ||||||
Series A redeemable convertible preferred stock, 333,401 shares designated, issued and | 742,908 | 623,283 | ||||||
Commitments and Contingencies | - | - | ||||||
Stockholders' Equity (Deficit) | ||||||||
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; 2,444,601 and 1,444,601 | ||||||||
Series B Convertible preferred stock, 1,111,200 shares designated: 428,333 and 160,000 | 1,767,371 | 699,332 | ||||||
Series C Convertible preferred stock, 1,000,000 shares designated, 427,500 shares issued and | 3,050,142 | - | ||||||
Common stock, $0.0001 par value, 50,000,000 shares authorized, 11,925,917 and 9,598,208 | 1,192 | 960 | ||||||
Additional paid in capital | 30,538,811 | 17,752,990 | ||||||
Accumulated deficit | (34,743,246) | (29,431,416) | ||||||
Accumulated other comprehensive (loss) | (72,032) | (38,590) | ||||||
Total Stockholders' Equity (Deficit) | 542,238 | (11,016,724) | ||||||
Total Liabilities and Stockholders' Equity (Deficit) | $ | 15,450,200 | $ | 10,539,619 | ||||
BioHiTech Global, Inc. and Subsidiaries | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net loss: | $ | (5,220,791) | $ | (2,028,533) | ||||
Adjustments to reconcile net loss to net cash used in operations: | ||||||||
Depreciation and amortization | 115,752 | 104,354 | ||||||
Provision for bad debts | 11,734 | 22,962 | ||||||
Stock based employee compensation | 77,640 | 88,025 | ||||||
Fees paid in stock and warrants | - | 380,335 | ||||||
Interest resulting from amortization of financing costs and discounts | 287,512 | 24,484 | ||||||
Equity loss in affiliate | 45,413 | - | ||||||
Interest resulting from warrants valued upon conversion of host debt instruments | 3,293,613 | - | ||||||
Changes in operating assets and liabilities | (611,400) | 471,960 | ||||||
Net cash used in operations | (2,000,527) | (936,413) | ||||||
Cash flow from investing activities: | ||||||||
Sale of used machinery and equipment | - | 13,149 | ||||||
Investment in Entsorga West Virginia, LLC | - | (1,034,028) | ||||||
MBT facility development costs incurred | (92,764) | (36,512) | ||||||
Purchases of equipment, fixtures and vehicles | (1,602) | (1,597) | ||||||
Net cash used in investing activities | (94,366) | (1,058,988) | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of senior secured credit facility and common stock | 5,000,000 | - | ||||||
Repayment of line of credit facility | (2,463,736) | - | ||||||
Proceeds from new line of credit facility | 1,000,000 | - | ||||||
Proceeds from convertible notes, including warrants and beneficial conversion | - | 250,000 | ||||||
Deferred financing costs incurred | (237,187) | (8,000) | ||||||
Repayments of long-term debt | (2,192) | (2,107) | ||||||
Proceeds from the issuance of Series B convertible preferred stock and warrants | 1,125,000 | |||||||
Related party: | ||||||||
Net increases of advances | - | 463,027 | ||||||
Proceeds from promissory notes | - | 786,973 | ||||||
Proceeds from convertible notes | - | 500,000 | ||||||
Net cash provided by financing activities | 4,421,885 | 1,989,893 | ||||||
Effect of exchange rate on cash | (4,657) | 297 | ||||||
Net change in cash | 2,322,335 | (5,211) | ||||||
Cash - beginning of period | 901,112 | 325,987 | ||||||
Cash - end of period | $ | 3,223,447 | $ | 320,776 | ||||
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SOURCE BioHiTech Global, Inc.
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