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EarthFirst Technologies Reports Financial Results for Second Quarter 2005; Management Details Series of Expansion Initiatives

Posted on: Monday, 15 August 2005, 12:00 CDT

EarthFirst Technologies, Incorporated (OTCBB:EFTI) today announced the Company's results for the three and six month periods ended June 30, 2005.

Financial Highlights for the Three Months Ended June 30, 2005 Compared to the Three Months Ended June 30, 2004:

-- Revenue increased to $9,753,062 from $115,000. The increase is

attributed to the Company's acquisition of Electric Machinery

Enterprises, Inc. (EME), in August 2004. Revenue on a

quarter-over-quarter basis increased 19.4% from $8,168,099,

for the three months ended March 31, 2005.

-- Income from operations before reorganization items, income

taxes and majority interest was $1,212,641 compared to a loss

from operations of $382,287 in the same quarter in the prior

year. Income from operations on a quarter-over-quarter basis

increased 131% from $524,234.

-- Net income was $1,001,609, or $0.002 earnings per fully

diluted share, compared to a net loss of $436,844, or $0.002

loss per fully diluted share. On a subsequent

quarter-over-quarter basis, net income in the second quarter

was markedly higher than the net loss of $4,553,637 posted for

the first quarter. The loss in the first quarter of 2005 was

largely due to non-cash charges associated with an $8 million

convertible debt financing completed in the first quarter of

this year.

Financial Highlights for the Six Months Ended June 30, 2005 Compared to the Six Months Ended June 30, 2004:

-- Revenue was $17,921,161, a considerable increase over revenue

of $130,000. The growth in sales is attributed to the

Company's acquisition of Electric Machinery Enterprises, Inc.

(EME), which occurred in August 2004.

-- Income from operations before reorganization items, income

taxes and majority interest was $1,736,875 compared to a loss

from operations of $2,413,748 for the same period in the prior

year.

-- Net loss was $3,552,028, or $0.001 loss per fully diluted

share, compared to a net loss of $2,519,703, or $0.002 loss

per fully diluted share due to non cash charges associated

with convertible debt financing completed in the first quarter

of this year.

-- As of June 30, 2005, the Company had approximately

$10.3 million in cash and receivables, and working capital

of $2.6 million.

-- Stockholders equity, as of June 30, 2005, increased to

$18,514,457 compared to $5,567,328 reported as of December 31,

2004 and $16,817,848 reported as of March 31, 2005.

Leon Toups, Chief Executive Officer of EarthFirst, stated, "We are pleased with the growth we are experiencing in our operations, as reflected in our strong subsequent quarter-over-quarter results. With our EME subsidiary now serving as a solid fundamental growth platform, our management team has been focused on advancing a number of strategic growth initiatives.

"Prime Power of Tampa, Inc., our exciting new subsidiary representing a venture between EME and Triad Consulting Engineers, Inc., has gotten off to a very strong start. We are currently in negotiations on a number of design/build projects that we hope to conclude soon.

"Our WESCO subsidiary has also enjoyed success in progressing discussions with a number of strategic partners and potential customers for our solid waste remediation plants in both the rubber tire and carpet recycling markets. Over the course of the next several weeks, we hope to start a series of projects implementing this technology.

"We have determined that the time is right for us to begin exploring expansion of EME's electrical contracting services into the residential marketplace. Given EME's depth of industry expertise and logistical resources, providing home builders with quality electrical contracting services is a logical extension of our business, and one that we believe holds great promise for dynamic growth and enhanced profitability. We are planning for EME to begin offering its residential contracting services on a small scale this month to prove the economic viability of this endeavor.

"On another front, we have identified an opportunity for the utilization of our CAVD technology in the harvesting and production of African Palm Oil. Preliminary analysis has revealed that palm fruit treated by our CAVD process may result in a higher yield of palm oil with significant and productive byproducts. To capitalize on this opportunity, we have recently formed a new wholly owned subsidiary named EarthFirst Americas, Incorporated. If proven applicable to economically producing palm oil, our CAVD reactor could become a significant and necessary export to palm oil producing nations," concluded Toups.

EarthFirst will also host a teleconference Thursday morning, August 18, 2005 beginning at 10:15 AM Eastern, and invites all interested parties to join management in a discussion regarding the Company's financial results, corporate progression and other meaningful developments. The conference call can be accessed via telephone by dialing toll free 1-800-257-1836. For those unable to participate at that time, a replay of the teleconference can be accessed by dialing 1-800-405-2236 and entering the pass code 11037097#. The replay will be available for 30 days.

About EarthFirst Technologies, Incorporated

EarthFirst Technologies, http://www.earthfirsttech.com, is a specialized holding company engaged in researching, developing and commercializing technologies for the production of alternative fuel sources and the destruction and/or remediation of liquid and solid wastes, and in supplying electrical contracting services to commercial and government customers internationally. Through its subsidiary World Environmental Solutions Company (WESCO), EarthFirst markets solid waste remediation plants utilizing a proprietary Catalytic Activated Distillation (CAVD) process, which is a superior technology developed by EarthFirst to recycle rubber tires and other waste by heating the material without burning it. Through its subsidiary Electric Machinery Enterprises, Inc., http://www.e-m-e.com, the Company provides electrical contracting services both as a prime contractor and as a subcontractor, electrical support for industrial and commercial buildings, power generation stations, and water and sewage plants in the US and abroad. EARTHFIRST TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS June 30, 2005 December 31, (Unaudited) 2004 ------------ ------------ Current assets: Cash $ 2,278,015 $ 1,482,383 Accounts receivable - net 8,015,866 8,511,692 Cost and estimated earnings in excess of billings on uncompleted contracts 582,196 986,269 Inventory 1,351,835 1,400,635 Prepaid expenses and other current assets 55,975 75,034 ------------ ------------ Total current assets 12,283,887 12,456,013 Property and equipment, net 4,436,241 4,340,490 Investment in unconsolidated affiliates 919,914 Intangible assets 15,323,152 15,323,152 Loan costs and discounts 729,202 Other assets 456,846 571,603 ------------ ------------ $ 34,149,242 $ 32,691,258 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long term debt $ 57,338 $ 151,898 Secured revolving note payable 3,973,038 Secured convertible term note payable 900,000 Plan of reorganization obligations, current 97,614 2,350,000 Accounts payable and accrued expenses 3,463,433 6,111,140 Billings in excess of cost and estimated earnings on uncompleted contracts 1,128,327 1,047,565 Current maturities of notes payable, related parties 715,122 ------------ ------------ Total current liabilities 9,619,750 10,375,725 ------------ ------------ Secured revolving note payable, non current 1,000,000 Secured convertible term note payable, non current 2,100,000 Plan of reorganization obligations, non current 7,594,074 Other liabilities 952,502 1,081,802 Notes payable, related parties, less current maturities 6,697,519 Long term debt, less current maturities 120,785 ------------ ------------ Total liabilities 13,672,252 25,869,905 Majority interest 1,962,533 1,254,025 Commitments and contingencies - - Stockholders' equity: Common stock, par value $.0001, 750,000,000 shares authorized, 496,046,693 shares and 301,770,150 shares issued and outstanding at June 30, 2005 and December 31, 2004 49,604 30,177 Additional paid-in capital 73,274,913 56,795,183 Accumulated deficit (53,542,000) (49,989,972) ------------ ------------ 19,782,517 (6,835,388) Less treasury stock (1,950,000 shares at cost) (1,268,060) (1,268,060) ------------ ------------ Total stockholders' equity: 18,514,457 5,567,328 ------------ ------------ $ 34,149,242 $ 32,691,258 ============ ============

EARTHFIRST TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS AND THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004 (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, ------------------------- --------------------------- 2005 2004 2005 2004 ------------ ------------ ------------- ------------- Revenue $ 9,753,062 $ 115,000 $ 17,921,161 $ 130,000 Cost of sales 6,377,002 12,624,453 ------------ ------------ ------------- ------------- Gross profit 3,376,060 115,000 5,296,708 130,000 Selling, general and admini- strative expenses 2,036,095 263,890 3,239,182 401,804 Research and development expenses 127,324 233,397 320,651 2,141,944 ------------ ------------ ------------- ------------- Income (loss) from operations before reorgani- zation item, income taxes and majority interest 1,212,641 (382,287) 1,736,875 (2,413,748) ------------ ------------ ------------- ------------- Other income (expense): Gain on extin- guishment of debt, bankruptcy 1,804,739 3,983,307 Loss on disposal of assets 9,700 (6,669) Miscella- neous income 135,017 168,311 Interest expense (108,852) (54,557) (188,282) (105,955) Interest expense - beneficial conversion (6,600,000) Equity in loss of uncon- solidated affiliates (130,086) (130,086) ------------ ------------ ------------- ------------- Income (loss) before reorgani- zation item, income taxes and majority interest 2,923,159 (436,844) (1,023,206) (2,519,703) Reorgani- zation item, professional fees related to bankruptcy and pursuit of claims (1,109,017) (1,432,678) ------------ ------------ ------------- ------------- Income (loss) before income taxes and majority interest 1,814,142 (436,844) (2,455,884) (2,519,703) Income tax benefit ------------ ------------ ------------- ------------- Income (loss) before majority interest 1,814,142 (436,844) (2,455,884) (2,519,703) Majority interest (812,533) (958,508) ------------ ------------ ------------- ------------- Income (loss) from continuing operations 1,001,609 (436,844) (3,414,392) (2,519,703) Loss on disposal of discontinued operations (137,636) ------------ ------------ ------------- ------------- Net Income (loss) 1,001,609 (436,844) ($3,552,028) ($2,519,703) ============ ============ ============= ============= Net Income (loss) per common share $ .002 ($ .002) ($ .001) ($ .002) ============ ============ ============= ============= Weighted average shares outstanding 491,922,517 251,770,149 436,138,461 242,230,977 ============ ============ ============= =============

Investors are cautioned that certain statements contained in this document as well as some statements in periodic press releases and some oral statement of EFTI officials are "Forward-Looking Statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, which include words such as "believes,""anticipates,""intends,""plans,""expects," and similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future EFTI actions, which may be provided by management, are also forward-looking statements as defined by the Act. Forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to materially differ from any future results, performance, or achievements expressed or implied by such forward-looking statements and to vary significantly from reporting period to reporting period. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual future results will not be different from the expectations expressed in this report. These statements are not guarantees of future performance and EFTI has no specific intention to update these statements.

Source: Business Wire

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