Nevada
|
001-11476
|
94-3439569
|
(State or other jurisdiction
of incorporation)
|
(Commission File
Number)
|
(I.R.S. Employer
Identification No.)
|
[__]
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
[__]
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
[__]
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
[__]
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Exhibit No.
|
Description
|
|
99.1*
|
Press Release of Vertex Energy, Inc., dated November 9, 2015
|
VERTEX ENERGY, INC.
|
|
Date: November 9, 2015
|
By: /s/ Chris Carlson
|
Chris Carlson
|
|
Chief Financial Officer
|
Exhibit No.
|
Description
|
|
99.1*
|
Press Release of Vertex Energy, Inc., dated November 9, 2015
|
![]() |
Investor Relations Contact
Marlon Nurse, DM
Senior VP – Investor Relations
212-564-4700
|
Vertex Energy, Inc.
|
|
·
|
Revenue for the third quarter of 2015 versus third quarter of 2014 was down 48.9% to $39.3 million.
|
|
·
|
Gross Profit increased 64% year over year, while gross margins were 13%.
|
|
·
|
EBITDA of $291,796.
|
|
·
|
Street collections volume increased 51% year over year.
|
|
·
|
Per barrel margin was up 59% year over year.
|
|
·
|
Revenue for the nine months ended September 30, 2015 was $126.1 million.
|
|
·
|
Overall volumes of product sold rose 16% for the first nine months of 2015, compared to the same period in 2014.
|
|
·
|
Gross profit declined 37% to $10.3 million
|
|
·
|
Market share at the Black Oil division grew as volumes increased 19% year over year.
|
VERTEX ENERGY, INC.
|
||||||||
RECONCILIATION OF NET INCOME (LOSS) TO EARNINGS BEFORE INTEREST TAXES
|
||||||||
DEPRECIATION AND AMORTIZATION (EBITDA)*
|
||||||||
For the Three Months Ended
|
||||||||
September 30, 2015
|
September 30, 2014
|
|||||||
Net (loss) income
|
$ | (2,069,876 | ) | $ | (1,929,370 | ) | ||
Add (deduct):
|
||||||||
Interest expense
|
763,791 | 947,325 | ||||||
Depreciation and amortization
|
1,597,881 | 1,180,443 | ||||||
Tax (expense) benefit
|
- | 57,975 | ||||||
EBITDA*
|
$ | 291,796 | $ | 256,373 |
·
|
EBITDA does not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments;
|
·
|
EBITDA does not reflect changes in, or cash requirements for, working capital needs;
|
·
|
EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments;
|
·
|
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
|
·
|
Other companies in this industry may calculate EBITDA differently than Vertex Energy does, limiting its usefulness as a comparative measure.
|
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
||||||||
September 30,
2015
|
December 31,
2014
|
|||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
4,020,161
|
$
|
6,017,076
|
||||
Accounts receivable, net
|
7,897,650
|
9,936,948
|
||||||
Current portion of notes receivable, net
|
1,000,000
|
3,150,000
|
||||||
Inventory
|
3,847,157
|
12,620,616
|
||||||
Prepaid expenses
|
2,169,524
|
1,245,307
|
||||||
Costs in excess of billings
|
—
|
779,285
|
||||||
Total current assets
|
18,934,492
|
33,749,232
|
||||||
Noncurrent assets
|
||||||||
Fixed assets, at cost
|
61,560,190
|
59,919,721
|
||||||
Less accumulated depreciation
|
(6,742,217
|
)
|
(3,758,373
|
)
|
||||
Net fixed assets
|
54,817,973
|
56,161,348
|
||||||
Notes receivable
|
8,308,000
|
8,308,000
|
||||||
Intangible assets, net
|
17,687,897
|
18,512,960
|
||||||
Goodwill
|
4,922,353
|
4,922,353
|
||||||
Deferred financing cost, net
|
1,818,376
|
2,191,888
|
||||||
Deferred federal income tax
|
—
|
9,495,000
|
||||||
Other assets
|
481,450
|
481,450
|
||||||
Total noncurrent assets
|
88,036,049
|
100,072,999
|
||||||
TOTAL ASSETS
|
$
|
106,970,541
|
$
|
133,822,231
|
||||
LIABILITIES, TEMPORARY EQUITY, AND EQUITY
|
||||||||
Current liabilities
|
||||||||
Accounts payable and accrued expenses
|
$
|
12,893,323
|
$
|
21,984,136
|
||||
Dividends payable
|
401,951
|
—
|
||||||
Capital leases
|
364,561
|
492,755
|
||||||
Current portion of long-term debt
|
4,773,042
|
40,136,584
|
||||||
Revolving note
|
659,893
|
—
|
||||||
Deferred revenue
|
—
|
463,210
|
||||||
Total current liabilities
|
19,092,770
|
63,076,685
|
||||||
Long-term liabilities
|
||||||||
Long-term debt
|
21,644,605
|
1,867,574
|
||||||
Derivative liability
|
4,393,034
|
—
|
||||||
Contingent consideration
|
6,069,000
|
6,069,000
|
||||||
Deferred federal income tax
|
—
|
4,189,000
|
||||||
Total liabilities
|
51,199,409
|
75,202,259
|
||||||
COMMITMENTS AND CONTINGENCIES
|
||||||||
TEMPORARY EQUITY
|
||||||||
Series B Preferred shares, $.001 par value per share:
|
||||||||
10,000,000 shares authorized, 8,032,274 and 0 shares issued and outstanding at September 30, 2015 and December 31, 2014,
|
||||||||
respectively with liquidation preference of $24,900,050 at
|
||||||||
September 30, 2015
|
11,191,623
|
—
|
||||||
EQUITY
|
||||||||
Preferred stock, $0.001 par value per share:
|
||||||||
50,000,000 shares authorized
|
||||||||
Series A Convertible Preferred stock, $0.001 par value,
|
||||||||
5,000,000 authorized and 612,943 and 630,419 issued
|
||||||||
and outstanding with a liquidation preference of $913,285 and $939,324 at September 30, 2015 and December 31,
|
||||||||
2014, respectively
|
613
|
630
|
||||||
Common stock, $0.001 par value per share;
|
||||||||
750,000,000 shares authorized; 28,214,276 and 28,108,105
|
||||||||
issued and outstanding at September 30, 2015 and
|
||||||||
December 31, 2014, respectively
|
28,214
|
28,109
|
||||||
Additional paid-in capital
|
52,884,086
|
46,595,472
|
||||||
Retained earnings (accumulated deficit)
|
(8,333,404
|
)
|
11,995,761
|
|||||
Total Equity
|
$
|
44,579,509
|
$
|
58,619,972
|
||||
TOTAL LIABILITIES, TEMPORARY EQUITY, AND EQUITY
|
$
|
106,970,541
|
$
|
133,822,231
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
|
||||||||||||||||
(UNAUDITED)
|
||||||||||||||||
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Revenues
|
$
|
39,262,584
|
$
|
76,903,516
|
$
|
126,066,634
|
$
|
196,332,796
|
||||||||
Cost of revenues
|
34,104,949
|
73,761,171
|
115,748,581
|
179,949,373
|
||||||||||||
Gross profit
|
5,157,635
|
3,142,345
|
10,318,053
|
16,383,423
|
||||||||||||
Reduction of contingent consideration
|
—
|
(1,876,752
|
)
|
—
|
(1,876,752
|
)
|
||||||||||
Operating expenses:
|
||||||||||||||||
Selling, general and administrative expenses
(exclusive of acquisition related expenses)
|
6,052,764
|
4,706,104
|
17,064,043
|
11,786,070
|
||||||||||||
Depreciation and amortization expense
|
1,597,881
|
1,180,443
|
4,716,177
|
2,981,393
|
||||||||||||
Acquisition related expenses
|
5,910
|
259,235
|
163,588
|
2,819,065
|
||||||||||||
Total operating expenses
|
7,656,555
|
6,145,782
|
21,943,808
|
17,586,528
|
||||||||||||
Income (loss) from operations
|
(2,498,920
|
)
|
(1,126,685
|
)
|
(11,625,755
|
)
|
673,647
|
|||||||||
Other income (expense):
|
||||||||||||||||
Provision for doubtful accounts
|
—
|
—
|
(2,650,000
|
)
|
—
|
|||||||||||
Other income
|
11
|
109,980
|
29
|
110,357
|
||||||||||||
Gain on bargain purchase
|
—
|
92,635
|
—
|
6,573,686
|
||||||||||||
Other income (expense)
|
(20,657
|
)
|
—
|
(78,316
|
)
|
(10,866
|
)
|
|||||||||
Gain on change in value of derivative liability
|
818,051
|
—
|
2,635,033
|
—
|
||||||||||||
Gain on futures contracts
|
395,430
|
—
|
395,430
|
—
|
||||||||||||
Interest expense
|
(763,791
|
)
|
(947,325
|
)
|
(2,851,947
|
)
|
(1,680,371
|
)
|
||||||||
Total other income (expense)
|
429,044
|
(744,710
|
)
|
(2,549,771
|
)
|
4,992,806
|
||||||||||
Income (loss) before income tax
|
(2,069,876
|
)
|
(1,871,395
|
)
|
(14,175,526
|
)
|
5,666,453
|
|||||||||
Income tax expense
|
—
|
(57,975
|
)
|
(5,306,000
|
)
|
(57,975
|
)
|
|||||||||
Net income (loss)
|
$
|
(2,069,876
|
)
|
$
|
(1,929,370
|
)
|
$
|
(19,481,526
|
)
|
$
|
5,608,478
|
|||||
Net income (loss) attributable to non-controlling interest
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
325,399
|
||||||||
Net income (loss) attributable to Vertex Energy, Inc.
|
$
|
(2,069,876
|
)
|
$
|
(1,929,370
|
)
|
$
|
(19,481,526
|
)
|
$
|
5,933,877
|
|||||
Less: accretion of discount on series B
|
$
|
(444,899
|
)
|
$
|
—
|
$
|
(444,899
|
)
|
$
|
—
|
||||||
Less: accrual of dividend on series B
|
(402,740
|
)
|
—
|
(402,740
|
)
|
—
|
||||||||||
Less: other
|
(55,056
|
)
|
—
|
(55,056
|
)
|
—
|
||||||||||
Net income (loss) available to common shareholders
|
$
|
(2,972,571
|
)
|
$
|
(1,929,370
|
)
|
$
|
(20,384,221
|
)
|
$
|
5,933,877
|
|||||
Earnings (loss) per common share
|
||||||||||||||||
Basic
|
$
|
(0.11
|
)
|
$
|
(0.08
|
)
|
$
|
(0.72
|
)
|
$
|
0.26
|
|||||
Diluted
|
$
|
(0.11
|
)
|
$
|
(0.08
|
)
|
$
|
(0.72
|
)
|
$
|
0.24
|
|||||
Shares used in computing earnings per share
|
||||||||||||||||
Basic
|
28,198,701
|
25,151,660
|
28,165,427
|
23,077,914
|
||||||||||||
Diluted
|
28,198,701
|
25,151,660
|
28,165,427
|
24,825,326
|
CONSOLIDATED STATEMENTS OF EQUITY
|
||||||||||||||||||||||||||
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
|
||||||||||||||||||||||||||
Common Stock Shares
|
Common Stock $.001 Par
|
Series A Preferred Stock Shares
|
Series A Preferred Stock $.001 Par
|
Additional Paid-in Capital
|
Retained Earnings
|
Total Equity
|
||||||||||||||||||||
Balance on January 1, 2015
|
28,108,105
|
$
|
28,108
|
630,419
|
$
|
630
|
$
|
46,595,472
|
$
|
11,995,761
|
$
|
58,619,971
|
||||||||||||||
Share based compensation expense, total
|
—
|
—
|
—
|
—
|
305,153
|
—
|
305,153
|
|||||||||||||||||||
Issuance of restricted common stock
|
56,180
|
56
|
—
|
—
|
199,958
|
—
|
200,014
|
|||||||||||||||||||
Conversion of preferred A stock to common
|
17,476
|
17
|
(17,476
|
)
|
(17
|
)
|
—
|
—
|
—
|
|||||||||||||||||
Conversion of Preferred B stock to common
|
32,515
|
33
|
100,763
|
100,796
|
||||||||||||||||||||||
Beneficial conversion feature on Preferred stock (APIC)
|
—
|
—
|
—
|
—
|
5,682,740
|
—
|
5,682,740
|
|||||||||||||||||||
Dividends declared, Preferred B shares, stock
|
(402,740
|
)
|
(402,740
|
)
|
||||||||||||||||||||||
Accretion of redemption discount, Preferred series B
|
—
|
(444,899
|
)
|
(444,899
|
)
|
|||||||||||||||||||||
Net income (loss)
|
—
|
—
|
—
|
—
|
—
|
(19,481,526
|
)
|
(19,481,526
|
)
|
|||||||||||||||||
Balance on September 30, 2015
|
28,214,276
|
$
|
28,214
|
612,943
|
$
|
613
|
$
|
52,884,086
|
$
|
(8,333,404
|
)
|
$
|
44,579,509
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
|
||||||||
(UNAUDITED)
|
||||||||
Nine Months Ended
|
||||||||
September 30,
2015
|
September 30,
2014
|
|||||||
Cash flows from operating activities
|
||||||||
Net income (loss)
|
$
|
(19,481,526
|
)
|
$
|
5,608,478
|
|||
Adjustments to reconcile net income to cash
provided by (used in) operating activities
|
||||||||
Stock based compensation expense
|
305,153
|
173,979
|
||||||
Depreciation and amortization
|
4,716,177
|
2,981,393
|
||||||
Gain on acquisition
|
—
|
(6,573,686
|
)
|
|||||
Loss on asset sale
|
63,410
|
—
|
||||||
Gain on change in fair value of derivative liability
|
(2,635,033
|
)
|
—
|
|||||
Deferred federal income tax
|
5,306,000
|
—
|
||||||
Reduction of contingent liability
|
—
|
(1,876,752
|
)
|
|||||
Changes in operating assets and liabilities
|
||||||||
Accounts receivable
|
1,879,150
|
(9,731,011
|
)
|
|||||
Allowance for doubtful accounts
|
2,810,146
|
(230,000
|
)
|
|||||
Notes receivable-related party
|
—
|
(3,150,000
|
)
|
|||||
Inventory
|
8,773,459
|
(6,269,253
|
)
|
|||||
Prepaid expenses
|
(924,216
|
)
|
(1,348,935
|
)
|
||||
Costs in excess of billings
|
779,285
|
—
|
||||||
Accounts payable
|
(8,858,058
|
)
|
8,962,991
|
|||||
Deferred revenue
|
(495,965
|
)
|
—
|
|||||
Other assets
|
—
|
(81,450
|
)
|
|||||
Net cash provided by (used in) operating activities
|
(7,762,018
|
)
|
(11,534,246
|
)
|
||||
Cash flows from investing activities
|
||||||||
Acquisitions
|
(1,082,649
|
)
|
(30,164,464
|
)
|
||||
Purchase of fixed assets
|
(1,159,488
|
)
|
(4,227,056
|
)
|
||||
Proceeds from asset sales
|
4,500
|
—
|
||||||
Notes receivable
|
(500,000
|
)
|
—
|
|||||
Net cash used in investing activities
|
(2,737,637
|
)
|
(34,391,520
|
)
|
||||
Cash flows from financing activities
|
||||||||
Proceeds from sale of stock
|
23,557,553
|
15,803,000
|
||||||
Payments on contingent consideration
|
—
|
(136,662
|
)
|
|||||
Payments on notes payable
|
(18,019,983
|
)
|
(10,469,474
|
)
|
||||
Proceeds from note payable
|
2,305,277
|
41,372,315
|
||||||
Proceeds from revolving note
|
74,801,900
|
—
|
||||||
Payments on revolving note
|
(74,142,007
|
)
|
—
|
|||||
Debt issue cost
|
—
|
(2,452,157
|
)
|
|||||
Proceeds from exercise of common stock options and warrants
|
—
|
359,862
|
||||||
Net cash provided by (used in) financing activities
|
8,502,740
|
44,476,884
|
||||||
Net change in cash and cash equivalents
|
(1,996,915
|
)
|
(1,448,882
|
)
|
||||
Cash and cash equivalents at beginning of the period
|
6,017,076
|
2,678,628
|
||||||
Cash and cash equivalents at end of period
|
$
|
4,020,161
|
$
|
1,229,746
|
||||
SUPPLEMENTAL INFORMATION
|
||||||||
Cash paid for interest
|
$
|
2,835,681
|
$
|
1,600,117
|
||||
Cash paid for income taxes
|
$
|
—
|
$
|
80,158
|
||||
NON-CASH INVESTING AND FINANCING TRANSACTIONS
|
||||||||
Conversion of Series A Preferred Stock into common stock
|
$
|
17
|
$
|
689
|
||||
Dividends declared but not yet paid
|
$
|
401,951
|
$
|
—
|
||||
Note payable for acquisition of E-Source interest
|
$
|
—
|
$
|
854,050
|
||||
Additional paid in capital for acquisition of E-Source interest
|
$
|
—
|
$
|
1,790,745
|
||||
Shares issued as payment
|
$
|
200,000
|
$
|
—
|
||||
Beneficial conversion feature for Series B Preferred stock
|
$
|
5,737,796
|
$
|
—
|
||||
Fair value of warrants issued with series B Preferred stock
|
$
|
7,028,067
|
$
|
—
|