Save The World Air, Inc., d/b/a STWA, a developer of patent-protected industrial equipment designed to deliver measurable performance improvements to crude oil pipelines, yesterday announced its financial results for the fiscal year ended December 31, 2014.
“2014 marked a turning point in our Company’s evolution as we successfully demonstrated the effectiveness of Applied Oil Technology (“AOT™”), after many years of product development, and realized our first revenues,” stated Greggory Bigger, STWA’s Chief Executive Officer and Chairman. “We are now engaged with the largest energy infrastructure company in North America, conducting additional field tests to measure the effectiveness of viscosity reduction and believe 2015 will hold great promise for our Company. Additionally, we made significant progress in the development of our Joule Heat solution and see opportunities to expand our offering beyond the pipelines and with other potential industry partners. While we are still engaged heavily in R&D, this year’s focus is on the continued optimization of our offerings and commercialization. Following a series of tests with customers around the world in the first half of this year, we should emerge in a stronger position operationally, and I would expect, with additional revenue streams. This has been one of my primary goals since becoming CEO. Every member of our team remains focused on enhancing shareholder value and while it has taken us longer than anticipated to get to this stage, I believe we are at the cusp of unlocking value.”
Notably, STWA achieved significant improvements in its bottom-line performance because of the revenues generated and lower expense levels in fiscal 2014. A pre-tax net loss of $4.0 million for the period ended December 31, 2014 was reported, which is a significant improvement to the $10.7 million recorded in the comparable year-ago period. Fiscal 2014 includes, among other items, a $3.4 million gain on the extinguishment of derivative liabilities and there were no similar gains in fiscal 2014. Net loss and net loss per basic and diluted share were $4.0 million and ($0.02), respectively, for the period ended December 31, 2014 as compared to a net loss of $10.7 million or a loss per basic and diluted share of (0.07) for the comparable fiscal 2013 period.
Mr. Bigger further commented, “In 2015, we intend to continue the commercialization of our technologies, while working with industry and academia to further build out our solutions. Today, our product portfolio is dedicated to the crude oil production and transportation marketplace, with a specific-focus on enhancing flow-assurance parameters of new and existing pipeline gathering and transmission systems. Through both AOT and Joule Heat, we have solutions that can help reduce viscosity, increase the number of barrels of oil able to be transported, have a meaningful impact of reducing emissions, while helping operators become more efficient and profitable. This year, we intend to continue commercialization efforts in the midstream market for AOT and bring Joule Heat to market for upstream and gathering applications. The next few months will be critical in compiling data and we look forward to providing the market with further updates on our progress.”
Milestones of Fiscal 2014
– In the second quarter of the prior year, STWA began generating revenues from its AOT technology for the first time. The revenues were derived from one of the company’s customers and relate to an Equipment Lease Agreement, which has subsequently ended in the fourth quarter of 2014. STWA installed and tested four AOT Midstream vessels with a cumulative maximum flow capacity of 20,000 gallons per minute. The company received a report from ATS RheoSystems, an independent third-party, validating the efficacy of the AOT technology in reducing viscosity of crude oil in high-flow, high-pressure, turbulent environments. The results of this test have also been used to improve the solution.
– In the following quarter, STWA entered into a new Equipment Lease/Option Purchase Agreement with the largest energy infrastructure company in North America. Equipment provided includes a single AOT Midstream pressure vessel with a maximum flow capacity of 5,000 gallons per minute. Equipment was delivered to this customer towards the end of the 2014 fourth quarter and AOT will be used on a primary crude and condensate pipeline serving the Eagle Ford in South Texas (known as the most active shale play in the world; currently producing over 870,000 barrels of crude oil and 220,000 barrels of condensate daily). As previously announced, the companies are scheduled to begin testing the effectiveness of AOT shortly, with updates anticipated in the second half of 2015.
– Throughout last year, STWA began commercial development of a suite of products based around the new electrical heat system which reduces oil viscosity through a process known as Joule Heat. The company is designing and optimizing this technology for the upstream oil transportation market, and entered a field deployment agreement with an upstream operator to test its efficacy. Updates are anticipated in the next couple months.
– In the final quarter of 2014, STWA began trading on the OTCQX, the highest-tier marketplace for established global and growth companies operated by OTC Markets Group Inc.
Liquidity and Capital Resources
STWA had cash on hand of $2.2 million at the end of last year as compared to $2.4 million a year earlier. As shown by the numbers reported, management has been aggressively moving forward with initiatives to lower its fixed expenses and R&D costs, and the team plans on continuing to establish strict cost control measures as STWA moves from the development stage to commercialization. According to yesterday’s press release, the company anticipates pursuing some form(s) of strategic alternatives this year as management aims to improve the STWA’s balance sheet and generate cash for further investments in its business.
In conclusion, Mr. Bigger stated, “We’ve invested significant resources over the past several years and believe these investments will soon result in successful customer deployments, increased revenues and cash flow for our Company. With that said we are still developing our portfolio and looking to expand applications beyond the Midstream, while highlighting the clean tech benefits of our solutions. Additionally, with Joule Heat, I believe we have something unique in the marketplace with massive potential. However, additional resources will be needed this year to fund R&D initiatives and to be opportunistic in the market, whether in the form of partnerships and/or acquisitions and improving our working capital is one of our top priorities. I am fully committed to this Company and look forward to providing our investors with meaningful updates, most of which will be in the 2nd half of the year.”
For further information about STWA, Inc., visit www.stwa.com
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