ADA-ES, Inc. (NASDAQ:ADES) (“ADA” or “Company”) today announced that on
June 20, 2012, management, in consultation with the Company’s Board of
Directors and Audit Committee, concluded that it will restate the
presentation of its consolidated balance sheets, consolidated statements
of changes in stockholders’ equity and consolidated statements of cash
flows for the year ended December 31, 2011 and for the quarterly periods
ended June 30, 2011, September 30, 2011 and March 31, 2012. This
determination was made following an assessment of the accounting
treatment of the equity in our joint venture, Clean Coal Solutions, LLC
(“CCS”), that has been held by an affiliate of The Goldman Sachs Group,
Inc. (“GS”) since May 2011.
The Company classified GS’s interest in CCS as “non-controlling
interest” in stockholders’ equity as of the end of the above-mentioned
periods. After completion of a recent review and evaluation of the
applicable agreement and authoritative accounting literature, management
determined that GS’s interest is more appropriately classified as
“temporary equity” because of a provision in the agreement that permits
GS to require redemption of its interest under certain limited
circumstances.
The anticipated restatement will not impact ADA’s statements of
operations for the above-referenced periods, including historical
revenues, net (loss) income, and earnings (loss) per share, nor will it
affect items such as cash and cash equivalents, or liquidity. Moreover,
these adjustments will have no effect on ADA’s operations or its
previously disclosed projections of revenues and pre-tax income.
After ADA completes its analysis and the Company’s independent auditor
completes its review procedures and audit work with respect to the
financial statements, ADA will file amendments to its annual report on
Form 10-K and quarterly reports on Form 10-Q for the above-mentioned
periods.
In addition, ADA is having discussions with the staff of the Securities
and Exchange Commission (“SEC”) regarding the reporting of deferred tax
assets (“DTAs”) that are included on the Company’s balance sheets. The
Company has received comments from the SEC staff questioning whether,
due to the Company’s losses in 2008, 2009, and 2010, the Company should
have recognized valuation allowances against its DTAs as of December 31,
2010 and subsequent periods. The Company’s management believed as of
December 31, 2010, and continues to believe, that it was and is more
likely than not that the DTAs will be fully realized in future periods
and we therefore have not recognized allowances to date.
If our discussions with the SEC staff result in the Company concluding
that it should recognize valuation allowances with respect to our DTAs,
we expect that this will result in reporting a significant increase in
our net loss for the fiscal years ended December 31, 2010 and 2011,
quarters within 2011 and the first quarter of 2012. It should be noted
that while such a determination would impact the reporting of the DTAs
and our net losses for the above-mentioned periods, the availability of
the cumulative net operating losses and tax credits for offsetting
future net income in profitable years would not be impacted. If in a
subsequent fiscal period we reduce such allowances, our net income for
such period would increase to the extent of such reduction.
About ADA-ES
ADA-ES is a leader in clean coal technology and the associated specialty
chemicals, serving the coal-fueled power plant industry. Our proprietary
environmental technologies and specialty chemicals enable power plants
to enhance existing air pollution control equipment, minimize mercury,
CO2 and other emissions, maximize capacity, and improve operating
efficiencies, to meet the challenges of existing and pending emission
control regulations.
With respect to mercury emissions:
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We supply activated carbon (“AC”) injection and Dry Sorbent Injection
(“DSI”) systems, mercury measurement instrumentation, and related
services.
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Under an exclusive development and licensing agreement with Arch Coal,
we are developing and commercializing an enhanced Powder River Basin
(“PRB”) coal with reduced emissions of mercury and other metals.
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Through our consolidated subsidiary, Clean Coal Solutions, LLC
(“CCS”), we provide our patented Refined Coal (“RC”) CyCleanTM
technology to enhance combustion of and reduce emissions from burning
PRB coals in cyclone boilers and our patent pending M-45TM technology
for other types of coal and boilers. Both technologies reduce
emissions of NOx and mercury in coal fired boilers.
In addition, we are developing CO2 emissions technologies under projects
funded by the U.S. Department of Energy (“DOE”) and industry
participants.
This press release contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, which
provides a "safe harbor" for such statements in certain circumstances.
The forward-looking statements include, but will not be limited to,
statements or expectations regarding whether the Company’s deferred tax
assets will be realized in future periods; the impact on the
Company’s past net losses if it recognizes a valuation allowance or
reduces such allowance in the future; and related matters. These
statements are based on current expectations, estimates, projections,
beliefs and assumptions of our management. Such statements
involve significant risks and uncertainties. Actual events or
results could differ materially from those discussed in the
forward-looking statements as a result of various factors, including but
not limited to, results of further discussions with the SEC with respect
to the Company’s deferred tax assets; changes in laws and regulations,
accounting rules, government funding, prices, economic conditions and
market demand; timing of regulations and any legal challenges to them;
impact of competition; availability, cost of and demand for alternative
energy sources and other technologies; technical, start-up and
operational difficulties; inability to commercialize our technologies on
favorable terms; our inability to ramp up operations to effectively
address expected growth in our target markets; additional risks related
to CCS including failure of its leased facilities to continue to produce
coal which qualifies for IRS Section 45 tax credits, termination of the
leases for such facilities, decreases in the production of refined coal
by the lessees, seasonality and failure to monetize new CyClean and M-45
facilities; our inability to negotiate, execute and close on definitive
agreements related to the M-45 technology license; availability of raw
materials and equipment for our businesses; loss of key personnel;
intellectual property infringement claims from third parties; and other
factors discussed in greater detail in our filings with the Securities
and Exchange Commission (“SEC”). You are cautioned not to place
undue reliance on such statements and to consult our SEC filings for
additional risks and uncertainties that may apply to our business and
the ownership of our securities. Our forward-looking statements
are presented as of the date made, and we disclaim any duty to update
such statements unless required by law to do so.
