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BioHiTech Global Reports Second Quarter 2018 Financial Results

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BioHiTech Global Reports Second Quarter 2018 Financial Results

Q2 2018 revenues increase by 65.5% with gross profit increasing by 185.4%

PR Newswire

CHESTNUT RIDGE, N.Y., Aug. 15, 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 second quarter ended June 30, 2018. 

BioHiTech Global, Inc. (PRNewsfoto/BioHiTech Global, Inc.)

Business Highlights

  • Launched a New Bundled Sustainable Disposal Services Offering with Gold Medal Group Driven by BioHiTech Technology - The Company and Gold Medal, Group, LLC, a market leader in municipal, commercial, and industrial solid waste collection in the Philadelphia, Southern New Jersey,  Maryland and West Virginia markets, teamed up to provide Temple University with Gold Medal's traditional disposal services in combination with BioHiTech's food waste digesters and supply chain data analytics platform designed to help reduce waste generation for one all-inclusive monthly service charge. Gold Medal has begun marketing the bundled monthly services offering to customers as a way to help its customers reduce disposal costs while having a positive impact on the environment.  Both companies see a significant opportunity in this new technology driven sustainable services offering.
  • Received Patent for Networked Weight Tracking System - The Company received a patent from the U.S. Patent and Trademark Office for its food waste weight tracking system and method using a waste disposal machine with data network connectivity to transmit weight tracking system information over a computer network, or cloud, for storage, tracking aggregation and sharing by a centralized computer system. The Company sees this patent as a major competitive advantage for BioHiTech by making it the only company to have an integrated solution to measure food waste volumes directly from any PLC controlled food waste disposal device, and share that data for analysis immediately via any network or the cloud.
  • Selected as a Pre-Approved Supplier of Food Waste Digesters for a Major International Hotel Chain - Upon being selected as a pre-approved supplier, the Company has begun its initial marketing efforts for its Revolution Series and Eco-Safe Digesters equipped with its proprietary supply chain data analytics software to the more than 150 individual hotel properties located throughout the UK. BioHiTech received orders from several UK properties for a total of six digesters for delivery in Q2 2018 and expects to deliver a minimum of 20 units in 2018.
  • Completed Uplisting of Its Common Stock to the Nasdaq Capital Market and Added to the Russell Microcap® Index – BioHiTech's common stock commenced trading on The Nasdaq Capital Market in April 2018 and was added to the Russell Microcap Index in June. The Company sees both events helping to increase corporate visibility in the financial marketplace and broaden its shareholder base.

Frank E. Celli, CEO of BioHiTech, commented, "We continue to make progress in numerous aspects of our strategic plan to build value for our stockholders.  As our Revolution Series Digesters gain traction in the marketplace, we achieved significant quarter over quarter revenue growth in our digester business as well as a further expansion of our sales pipeline.  We also made significant progress in our HEBioT development plans in New York State where we are currently in the permitting process."

Mr. Celli continued, "Our business partnership with Gold Medal Group has added a significant management services revenue stream while enabling us to begin to demonstrate the true value of our technology to the traditional waste management industry.  We believe that as we rollout this new bundled services platform with Gold Medal it will clearly show how a combination of traditional services and BioHiTech technology will enhance waste management profitability while reducing customer costs and environmental impact.  When our first co-owned HEBioT facility is commissioned in West Virginia later this year, we can combine those technologies with traditional service to cost-effectively divert more than 90% of mixed waste from landfills in certain market with a roadmap to expand that footprint throughout the Northeastern US in the coming years.  As we move through the second half of 2018, we will continue to execute on our plan to grow revenue and expand our business for the benefit of our stockholders while effecting positive change in the waste management industry that is good for the customer and beneficial for the environment."

Q2 Financial Highlights

Revenue: Revenues in Q2 2018 were $909,000, a 65.5% increase compared to revenues of $549,000 in Q2 2017. Recurring revenue from rental, services and maintenance grew by 25.1% to reach $458,000 or 50.5% of total revenue. The increase in rental, service and maintenance is primarily the result of a larger overall number of deployed units. Revenue from equipment sales grew by 9.4% to $200,000.  The Company continues to focus more of its resources on its rental model and therefore expects equipment sales to vary based upon reseller activity predominantly in overseas markets.  Recurring revenue from management advisory fees related to its new management services contract with Gold Medal in 2018 totaled $251,000.  The Company expects that revenue stream to increase over time as Gold Medal expands its business in the coming years.

Gross Profit: Q2 2018 gross profit increased by 185.4% to $485,000 compared to $170,000 in Q2 2017. Gross profit margin increased by 23.4 percentage points to reach 53.3%. 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 11.4 percentage points to 37.0%, primarily as the Company achieved improved economies of scale. The aforementioned improvements in gross margin were partially offset by a 9.4 percentage point decline in gross margin from equipment sales.

Operating Expenses: Q2 2018 operating expenses increased by $49,000 or 2.9% to $1.72 million compared to $1.67 million in Q2 2017.  The increase in operating expenses was mainly due to a $84,000 foreign exchange expense in Q2 2018 compared to a foreign currency gain of $35,000 in Q2 2017 as well as increases in sales and marketing expenses, personnel costs, and fees associated with the Nasdaq uplisting in April. The increase in these expenses was largely offset by a $195,000 decrease in professional fees primarily related to marketing and investor relations and a $22,000 decrease in R&D expense.   

Operating Loss: Q2 2018 operating loss narrowed to $(1.2) million compared to $(1.5) million in Q2 2017. The improvement in the operating result was due to a $315,000 increase gross profit partially offset by a $49,000 increase in operating expenses in the comparable periods.

Net Loss: The Company recorded a Q2 2018 net loss of $(5.5) million or $(0.39) on 14.2 million shares versus a net loss of ($1.9) million or $(0.23) on 8.3 million shares in Q2 2017.  The increase in net loss was attributable to a $3.5 million non-cash interest expense recorded in Q2 2018 related to the valuation of certain warrants outstanding upon the conversion of associated debt into common stock, a $237,000 increase in interest expense, and $141,000 loss related to the accounting treatment of its investment in the acquisition of Gold Medal Group. 

Select Balance Sheet Items: The Company had cash and cash equivalents of $1.1 million with shareholder equity of $4.2 million as of June 30, 2018 compared to cash and cash equivalents of $901,000 and a shareholder deficit of ($11.0) million as of December 31, 2017. 

Brian C. Essman, CFO commented, "During the quarter we completed a significant transformation of our balance sheet through our move to the Nasdaq Capital Market. Upon that event, the majority of our then outstanding debt automatically converted into equity.  When coupled with debt conversions and equity transactions that took place in Q1 2018, we achieved a $15.3 million improvement in shareholder equity compared to December 31, 2017.  We also continued to build recurring revenue from our digester business and our high margin management services agreement with Gold Medal.  With a much stronger balance sheet and growing momentum in our industry for sustainable waste disposal solutions, we are now well positioned to achieve continued growth in our cost-effective food waste disposal business and lay the foundation for the near term commercialization of our HEBioT MBT business.  We are committed to the execution of our long-term growth plans as we work diligently to build significant value for the benefit of our stockholders for years to come."

Additional information can be found in the Company's Form 10-Q filed with the United States Securities and Exchange Commission on August 14, 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 June 30,


Six Months Ended June 30,



2018


2017


2018


2017

Revenue













Rental, service and maintenance


$

458,843


$

366,812


$

899,336


$

725,348

Equipment sales



199,638



182,405



265,488



414,549

Management advisory and other fees



250,656



-



390,039



-

Total revenue



909,137



549,217



1,554,863



1,139,897

Cost of revenue













Rental, service and maintenance



289,015



272,757



587,584



531,697

Equipment sales



135,564



106,664



199,504



239,154

Total Cost of revenue



424,579



379,421



787,088



770,851

Gross profit



484,558



169,796



767,775



369,046

Operating expenses













Selling, general and administrative



1,323,194



1,057,223



2,414,766



2,121,852

Research and development



195,130



216,822



396,686



404,324

Professional fees



169,154



364,227



456,016



1,013,850

Depreciation and amortization



28,148



28,335



58,864



58,107

Total operating expenses



1,715,626



1,666,607



3,326,332



3,598,133

Loss from operations



(1,231,068)



(1,496,811)



(2,558,557)



(3,229,087)

Other expense (income)













Equity loss in affiliate



147,077



5,916



192,490



5,916

Interest expense



611,801



374,175



1,166,077



670,432

Interest expense incurred in warrant valuation and conversions



3,506,027



1,999



6,799,640



1,999

Total other expense



4,264,905



382,090



8,158,207



678,347

Net loss



(5,495,973)



(1,878,901)



(10,716,764)



(3,907,434)














Other comprehensive (loss) income













Foreign currency translation adjustment



57,362



(21,340)



23,920



(28,504)

Comprehensive loss


$

(5,438,611)


$

(1,900,241)


$

(10,692,844)


$

(3,935,938)














Net loss per common share - basic and diluted


$

(0.39)


$

(0.23)


$

(0.85)


$

(0.47)

Weighted average number of common shares outstanding - basic and diluted


14,216,404



8,322,086



12,587,344



8,276,154

 

 

BioHiTech Global, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)






June 30,


December 31,


2018


2017




(Revised)

Assets






Current Assets






Cash

$

1,053,028


$

901,112

Accounts receivable, net


393,835



274,405

Inventory


708,138



332,101

Prepaid expenses and other current assets


138,038



79,686

Total Current Assets


2,293,039



1,587,304

Equipment on operating leases, net


1,614,627



1,451,144

Equipment, fixtures and vehicles, net


55,730



63,509

Intangible assets, net


129,032



174,133

Investment in unconsolidated affiliates


3,073,773



1,016,263

MBT facility development and license costs


6,457,180



6,223,766

Other assets


13,500



23,500

Total Assets

$

13,636,881


$

10,539,619

Liabilities and Stockholders' Equity (Deficit)






Current Liabilities:






Line of credit

$

976,112


$

1,000,000

Accounts payable


1,110,039



1,287,740

Accrued interest payable


114,925



29,431

Accrued expenses


445,731



892,136

Deferred revenue


114,779



84,686

Customer deposits


7,134



39,498

Long-term debt, current portion


9,018



8,874

Total Current Liabilities


2,777,738



3,342,365

Notes payable


100,000



375,000

Line of credit


-



1,463,736

Junior note due to related party, net of discounts of $128,850 as of June 30, 2018


915,627



4,500,000

Advance from related party


-



544,777

Accrued interest


1,151,668



1,860,591

Convertible unsecured note


-



103,885

Convertible subordinated secured notes


-



1,021,916

Unsecured subordinated mandatorily convertible series notes


-



7,698,819

Senior Secured Note Payable, net of financing costs of $182,075 and discounts
of $1,112,510


3,705,415



-

Long-term debt, net of current portion


17,425



21,971

Total Liabilities


8,667,873



20,933,060

Series A redeemable convertible preferred stock, 333,401 shares designated
and issued, and 230,001 and 333,401 outstanding as of June 30, 2018 and
December 31, 2017


722,216



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 designated, 1,189,234 and 493,401 issued, and 657,501 and
493,401 outstanding as of June 30, 2018 and December 31, 2017, respectively:






Series B Convertible preferred stock, 1,111,200 shares designated: 428,333
and 160,000 shares issued, and 0 and 160,000 outstanding as of June 30, 2018
and December 31, 2017, respectively


-



699,332

Series C Convertible preferred stock, 1,000,000 shares designated, 427,500
shares issued and outstanding


3,050,142



-

Common stock, $0.0001 par value, 50,000,000 shares authorized, 14,531,152
and 9,598,208 shares issued and outstanding as of June 30, 2018 and
December 31, 2017, respectively, at par


1,453



960

Additional paid in capital


41,593,223



17,752,990

Accumulated deficit


(40,383,356)



(29,431,416)

Accumulated other comprehensive (loss)


(14,670)



(38,590)

Total Stockholders' Equity (Deficit)


4,246,792



(11,016,724)

Total Liabilities and Stockholders' Equity (Deficit)

$

13,636,881


$

10,539,619

 

 

BioHiTech Global, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)




Six Months Ended June 30,


2018


2017

Cash flows from operating activities:






Net loss:

$

(10,716,764)


$

(3,907,434)

Adjustments to reconcile net loss to net cash used in operations:






Depreciation and amortization


231,120



202,064

Provision for bad debts


21,355



29,212

Stock based employee compensation


154,913



230,981

Fees paid in stock and warrants


-



518,267

Interest resulting from amortization of financing costs and discounts


911,456



71,903

Equity loss in affiliate


192,490



5,916

Change in fair value of warrant liability


-



1,999

Interest resulting from warrants valued upon conversion of host debt instruments


6,424,970



-

Changes in operating assets and liabilities


(969,679)



693,725

Net cash used in operations


(3,750,139)



(2,153,367)







Cash flow from investing activities:






Sale of used machinery and equipment


-



13,352

Investment in Entsorga West Virginia, LLC


-



(1,034,027)

MBT facility development costs incurred


(233,413)



(74,966)

Purchases of equipment, fixtures and vehicles


(6,059)



(4,040)

Net cash used in investing activities


(239,472)



(1,099,681)







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 features


-



620,000

Deferred financing costs incurred


(237,187)



(16,000)

Repayments of long-term debt


(4,402)



(4,228)

Proceeds from the issuance of Series B convertible preferred stock and warrants






Redemption of Series A preferred stock


(317,000)



-

Related party:


1,125,000




Net increases of advances


-



1,169,527

Proceeds from promissory notes


-



786,973

Proceeds from convertible notes


-



500,000

Net cash provided by financing activities


4,102,675



3,056,272

Effect of exchange rate on cash


38,852



21,246

Net change in cash


151,916



(175,530)

Cash - beginning of period


901,112



325,987

Cash - end of period

$

1,053,028


$

150,457

 

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SOURCE BioHiTech Global, Inc.

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