BOSTON – Converted Organics Inc. (Nasdaq: COIN), the food-waste to fertilizer startup that made its first sales early this year and is now preparing to build a factory at the R.I. Central Landfill in Johnston, posted third-quarter revenue of $428,516.
Its third-quarter loss widened to $3.05 million, a 234-percent increase from its year-ago loss of $913,126, while its net loss per diluted share widened to 48 cents from the year-ago 21 cents, the company said in a regulatory filing late yesterday with the U.S. Securities and Exchange Commission (SEC).
General and administrative expenses for the July through September period doubled to $1.47 million from $702,481 a year ago, before the company began production. But research and development costs declined to $102,528 from $178,592 a year ago.
“Converted Organics continues to be pleased with the progress of the company thus far this year,” President Edward J. Gildea said in a statement accompanying the after-market release. “We look forward to updating shareholders about plans for the remainder of 2008 and the company’s opportunities for 2009.”
Also yesterday, the company announced it had raised more than $5.55 million in capital through the redemption of more than 673,068 Class A warrants exercised since Sept. 16.
“Converted Organics is pleased to have raised capital through the warrant call that will support and accelerate our continued growth and expansion, and we are optimistic about the future of our company,” Gildea said. “We will use the funds raised to continue construction on our Woodbridge, N.J., manufacturing facility … to fulfill the demand for 2009.”
The company says its fertilizers help “restore the soil by replenishing … micronutrients. This reduces the amount of nitrogen required, in a virtuous cycle that benefits from long-term use. As a result, use of the product will reduce chemical run-off to streams, ponds and rivers.” Moreover, it says, “the disease-suppression characteristics of the product … reduce or eliminate the need for other costly, often toxic, crop-protection applications.” Its proprietary High Temperature Liquid Composting (HTLC) includes microbial digestion and high-tech filtration processes.
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Third-quarter highlights for Converted Organics included:
• In Rhode Island, the selection last month of J.M. Coull Inc., a full-service construction company based in Maynard, Mass., to serve as construction manager for Converted Organics’ plant in Johnston, which will be the company’s third production facility.
In early August, the manufacturer received approval from the R.I. Industrial Facilities Corporation (RIIFC) to issue up to $15 million in bonds to finance the project. (READ MORE) Four days later, the company was granted final approval by the R.I. Resource Recovery Corporation – operator of the Central Landfill – for a 20-year lease on nine acres in Johnston’s new Lakeside Commerce Industrial Park, where the factory will be constructed. Under the lease, “which we are obligated to pay [RIRRC] $9,167 per month, plus $8 per ton of fertilizer (liquid or solid) sold from the facility,” Converted Organics said in its SEC filing.
• The Oct. 24 expansion of production at its flagship facility in Woodbridge, to include the processing of solid as well as liquid organic waste. (The company Web site now features a video tour of the Woodbridge facility, including a solid-waste delivery last month by Premier Food Waste of New Jersey.) The company also announced expansion plans for its second plant, in Gonzales, Calif., which it acquired earlier this year.
• Sales and distribution agreements with Baltimore-based East Coast Organics, which ordered a variety of products for distribution to retailers across the Mid-Atlantic region; Home Depot, which agreed to carry the company’s organic lawn fertilizer next spring in its stores in Massachusetts, New Hampshire, Connecticut and New York state; Matosantos Commercial Corp., which agreed to carry a variety of Converted Organics products this spring in Puerto Rico; and Idaho-based Simplot Partners, the agricultural division of J.R. Simplot Co., which agreed to distribute liquid and dry fertilizers and soil amendments to the professional turf market in the Western states.
• Research reports from field trials at Lazy A Cranberries in East Freetown and Cape Cod Country Club, showing that the company’s fertilizer increased crop yield and reduced fungus problems.
• A $711,900 clean-energy award from the N.J. Board of Public Utilities’ Combined Heat and Power (CHP) Program, to help the company obtain a CHP generator that will use waste heat to boost energy efficiency.
• Design honors from lawn and garden distributor Arett Sales, for the company’s innovative “Smartcube” packaging.
More recently, the company has announced a distribution agreement with Gro Group Inc., a distribution co-operative serving hundreds of independent garden centers and specialty stores nationwide; a turfgrass product-development agreement with agriculture giant Archer Daniels Midland; and a food-waste disposal agreement with the Asilomar Conference Center in Pacific Grove, Calif.
For the first nine months of the year, Converted Organics posted a net loss of $11.59 million, a 281-percent increase from the year-ago loss of $3.03 million, and a loss per diluted share of $1.92 compared with the year-ago 80 cents. Year-to-date revenue amounted to $1.18 million, including $492,864 in the second quarter and $260,043 in the first quarter, when the company recorded its first sales.
Going forward, the company expects to realize additional revenue from the sale of greenhouse gas emission credits, via a deal inked this February with global environmental finance firm RNK Capital LLC. It also “expects to benefit from increased regulatory focus on organic waste processing and on environmentally-friendly growing practices,” Converted Organics said.
Converted Organics Inc. (Nasdaq: COIN) is a development-stage company dedicated to producing environmentally-friendly soil amendments or fertilizers – for the retail, turf and agribusiness markets – through the recycling of food waste. For more information, go to ConvertedOrganics.com.
