SOURCE: Ecosphere Technologies, Inc.

April 16, 2008 08:00 ET

Ecosphere Technologies Reports Record Revenues of $6.0 Million for the Year-Ended 2007 Representing an Increase of 149% Over 2006

Gross Profit for the Year-Ended December 31, 2007 Was $5.1 Million, Up 468% From $900 Thousand for the Year-Ended December 31, 2006

STUART, FL--(Marketwire - April 16, 2008) - Ecosphere Technologies, Inc. (OTCBB: ESPH), a diversified clean technology and water engineering services company, today announces its financial results for year-end 2007.

Dennis McGuire, the Company's founder and CEO, stated, "I am very pleased with our 2007 results and I look forward to further progress in 2008 as we continue to sell and license our clean technologies and roll out our Ecosphere Ozonix™ technology to treat waste water streams from oil and gas production. Over the last few months, we have been collecting information and perfecting our technology for various high volume waste water streams. We are also making every effort to secure a significant contracts with industry leading energy exploration and production companies in the Barnett Shale. We are confident these efforts will lead to our initial Ecosphere Ozonix™ systems working in the Barnett Shale area of Texas filtering frac flowback and produced water from natural gas exploration and production in the near future."

2007 Highlights

The most significant material development during 2007 was the sale of the intellectual property and related assets and inventory of the Company's robotic coating removal technology, with applications for the marine industry and above ground storage tanks, to Chariot Robotics LLC (Chariot). The sale of intellectual property resulted in net revenue of approximately $5.2 million and a reduction of approximately $5.5 million of debt and trade payables. Additionally, the purchaser entered into employment agreements with former Ecosphere senior management, as well as, hiring other employees whose time had been focused on the ship stripping business. Ecosphere still holds the rights to the robotic 3D scanning and coating removal on all other non-marine assets such as military and commercial vehicles, and military and commercial aircraft.

Outlook for 2008

The Company is now moving into the next stage of its long range strategy. Over the next 12-months, the Company plans to develop, manufacture and market solutions for the growing issues surrounding the cleansing and recycling of industrial waste waters. Specifically, the Company will focus on the energy production industry within specific geographic locations that will allow the Company to balance its investment requirements with income potential to develop a sustainable business. The initial focus will be to select a specific application of the Company's technology and seek revenue opportunities that are readily available in an identified market.

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About Ecosphere Technologies

Ecosphere Technologies, Inc. (OTCBB: ESPH), is a diversified clean technology and services company dedicated to creating products that make life better. Ecosphere's mission is to identify, create and incubate clean technologies that solve a significant industry challenge, improve the quality of life and the environment, and are economically viable. Ecosphere has an extensive portfolio of patented clean technologies that can be purchased and licensed for use in large-scale and sustainable applications across industries, nations and ecosystems. For more information, please visit: www.ecospheretech.com.

Safe Harbor

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act") including the roll-out of its Ozonix™ technology, securing a significant contract with industry leading energy companies in the Barnett Shale, the Company's results over the next 12 months a nd its development of a sustainable business. Additionally, words such as "seek," "intend," "believe," "plan," "estimate," "expect," "anticipate" and other similar expressions are forward-looking statements within the meaning of the Act. Some or all of the events or results anticipated by these forward-looking statements may not occur. Factors that could cause or contribute to such differences include the performance of initial units in the field and obtaining the necessary financing. Further information on Ecosphere's risk factors is contained in its filings with the Securities and Exchange Commission, including the Form 10-KSB for the year ended December 31, 2007. Ecosphere does not undertake any duty nor does it intend to update the results of these forward-looking statements.

ECOSPHERE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

                                            For The Year Ended
                                            December 31,
                                            -----------------------------
                                            2007             2006
                                            ------------     ------------
Revenues from sale of
 intellectual property, net                 $  5,259,370     $         --
Revenues from other operations                   750,007        2,414,155
                                            ------------     ------------
Total Revenues                                 6,009,377        2,414,155

Cost of revenues                                 888,302        1,513,448
                                            ------------     ------------

Gross profit                                   5,121,075          900,707

Operating expenses
  Selling, general and administrative
  (including stock based compensation
   of $1,297,796 and $520,692 in 2007
   and 2006, respectively)                     5,849,673        5,075,244
  Impairment of assets                            15,000           50,000
  Impairment of investment                         5,000           38,592

  Gain on settlement of accrued expenses              --         (130,073)
                                            ------------     ------------
                                               5,869,673        5,033,763
                                            ------------     ------------

Loss from operations                            (748,598)      (4,133,056)

Other income (expense):
  Other income                                    11,664            6,164
  Loss on conversion                             (74,189)              --
  Loss on extinguishment of debt              (2,757,534)              --

  Interest expense                            (2,992,663)      (2,060,368)
                                            ------------     ------------
Total other income (expense)                  (5,812,722)      (2,066,532)
                                            ------------     ------------

Minority Interest in net
 income of affiliates                                 --          (40,951)

Net loss                                      (6,561,320)      (6,158,637)

Preferred stock dividends                       (141,802)        (198,369)
                                            ------------     ------------

Net loss applicable to common stock         $ (6,703,122)    $ (6,357,006)
                                            ============     ============

Net loss per common share applicable
 to common stock                            $      (0.11)    $      (0.12)
                                            ============     ============
 (basic and diluted)
Weighted average number of
 common shares outstanding                    60,596,054       54,533,670
                                            ============     ============


ECSOPHERE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                                            December 31,     December 31,
                                            2007             2006
                                            ------------     ------------
Current Assets
  Cash and equivalents                      $    329,848     $  1,989,758
  Accounts receivable                              3,800           20,923
  Inventories                                    162,601          187,910
  Prepaid expenses and other
   current assets                                117,685           66,880
                                            ------------     ------------
Total current assets                             613,934        2,265,471
Property and equipment, net                      548,118        1,244,086
Patents, net                                      23,290           69,118
Debt acquisition costs, net                           --          232,156
Investment                                       250,000            5,000
                                            ------------     ------------
Total assets                                $  1,435,342     $  3,815,831
                                            ============     ============
Liabilities, Redeemable Convertible
 Cumulative Preferred Stock and
 Stockholders' Deficit
Current Liabilities
  Accounts payable                          $    956,815     $    330,733
  Accounts payable - related parties              32,994           28,380
  Accrued liabilities                          1,182,798          748,548
  Capital lease obligations                       34,238               --
  Due to affiliate                                 2,000               --
  Deferred revenue - related party               156,000               --
Notes payable - related parties -
 current portion                                 476,000          259,072
Notes payable - third parties
(net of discount) - current portion            1,842,555        2,069,614
                                            ------------     ------------
Total current liabilities                      4,683,400        3,436,347
Capital lease obligations
 - less current portion                           51,970               --
Notes payable to related parties
 - less current portion                               --          558,310
Notes payable to third parties
(net of discount) - less current portion         285,983        3,429,536
                                            ------------     ------------
Total Liabilities                              5,021,353        7,424,193
                                            ------------     ------------
Redeemable convertible cumulative
 preferred stock series A

  11 shares authorized; 9 and 9 shares
   issued and outstanding, respectively,
   $25,000 per share redemption amount
   plus dividends in arrears ($1,129,431
   at December 31, 2007)                       1,129,431        1,095,681
                                            ------------     ------------
Redeemable convertible cumulative
 preferred stock series B

  484 shares authorized; 429 and 464 shares
   issued and outstanding, respectively,
   $2,500 per share redemption amount plus
   dividends in arrears ($2,728,364 at
   December 31, 2007)                          2,728,364        2,707,811
                                            ------------     ------------
Commitments and Contingencies
Stockholders' Deficit
  Common stock, $0.01 par value; 150,000,000
   shares authorized; 63,927,180 and
   56,487,639 shares issued and outstanding,
   respectively                                  639,266          564,877
  Common stock issuable, $0.01 par value,
   297,763 shares issuable                         2,978               --
  Additional paid-in capital                  45,214,073       38,762,072
  Accumulated deficit                        (53,300,123)     (46,738,803)
                                            ------------     ------------
Total stockholders' deficit                   (7,443,806)      (7,411,854)
                                            ------------     ------------
Total liabilities, redeemable convertible
 cumulative preferred stock, and
 stockholders' deficit                      $  1,435,342     $  3,815,831
                                            ============     ============



ECOSPHERE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS


  SUPPLEMENTAL CASH FLOW INFORMATION

                                            For The Year Ended
                                            December 31,
                                            -----------------------------
                                            2007             2006
                                            -----------      ------------
Cash paid for interest                      $   310,997      $    441,429
Cash paid for income taxes                  $        --      $         --

Non-cash investing and
 financing activities:
Accrued preferred stock dividends           $   141,802      $    198,369

Beneficial conversion features of
 convertible notes and debentures           $ 1,325,807      $  1,762,935

Warrants issued in connection
 with financing                             $ 1,413,294      $  1,685,245
Common stock issued as
 inducement for loans                       $   233,966      $    435,000
Common stock issued to
 settle debt obligations                    $   564,706      $  1,128,000
Common stock issued as payment
 of accrued interest                        $   400,059      $      5,781
Series A Redeemable Convertible
 Cumulative Preferred Stock converted
 to common Stock                            $    75,000      $    475,000
Series B Redeemable Convertible
 Cumulative Preferred Stock converted
 to common Stock                            $    12,500      $  1,475,000

Purchase of equipment financed with
 capital lease and common stock             $ 1,998,015      $         --
Purchase of equipment financed through
 long term debt                             $        --      $    203,952
Conversion of accounts payable and
 accrued expenses to debt                   $    14,000      $    615,109
Cashless exercise of warrants
 into common stock                          $        --      $      3,950
Warrants issued as payment of liabilites    $        --      $     50,000
Reclassification of related party notes
 to third party notes                       $   489,892      $         --

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