Ecosphere Technologies, Inc.

Regulation G - Non-GAAP Financial Measure

The Company uses a financial measure which is not calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”) in evaluating its financial and operational decision making and as a means to evaluate period-to period comparison. The Company presents this non-GAAP financial measure because it believes it to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.
 
The Company defines Adjusted EBITDA as earnings (or loss) before interest expense, income taxes, depreciation and amortization, and amortization of non-cash stock-based compensation. The Company excludes stock-based compensation because it is non-cash in nature.  Other companies (including the Company’s competitors) may define Adjusted EBITDA differently.
 
Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternative to net income, operating income, cash flow from operating activities, as a measure of the Company’s liquidity or any other financial measures.  It may not be indicative of the historical operating results of the Company nor is it intended to be predictive of potential future results.  Investors should not consider Adjusted EBITDA in isolation or as a substitute for performance measures calculated in accordance with GAAP.

 

ECOSPHERE TECHNOLOGIES, INC. AND SUBSIDIARIES

       

RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME

     

(Unaudited)

             
                   
         

 Current Quarter

 

 Trailing Quarter

 

 Same Quarter, Prior Year

         

 For the Three Months Ended

         

June 30, 2012

 

March 31, 2012

 

 June 30, 2011

                   

 Adjusted EBITDA

 

 $      1,587,096

 

 $      1,455,734

 

 $         109,783

 

 Add back:

             
   

 Depreciation and amortization

 

          (549,570)

 

           (551,600)

 

          (534,097)

   

Stock-based compensation

 

          (453,805)

 

           (441,867)

 

       (1,247,123)

   

Interest expense

 

            (77,861)

 

             (97,481)

 

          (189,084)

                   
   

Net income (loss)

 

 $  505,860

 

 $   364,786

 

 $ (1,860,521)

                   

 

 

 

 

 

 

 

 

 

 

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