EarthShell Corporation (Nasdaq: ERTH), innovators of environmentally preferable foodservice packaging, today reported financial and operating results for the second quarter ended June 30, 2000.

Net loss for the second quarter was $10.9 million, or $0.11 per diluted share, compared to a net loss of $12.2 million, or $0.12 per diluted share, for the 1999 second quarter. Operating expenses in the second quarter 2000 were $11.2 million, versus operating expenses of $13.3 million in the same period of 1999. Weighted average shares outstanding were 100 million for both the second quarters ended June 30, 2000 and 1999.

As of June 30, 2000 EarthShell had $16.3 million in unrestricted cash and short-term investments. During the second quarter 2000 EarthShell entered an agreement with Acqua Wellington North American Equities LTD to fund EarthShell with up to $60 million over a twelve-month period. To date, EarthShell has exercised one draw down and received $4.3 million from this financing.

“Results for the second quarter were in line with our expectations,” said Scott Houston, EarthShell Chief Financial Officer. “We have increased spending for manufacturing operations at Sweetheart Cup Company as we have begun to supply more restaurants with EarthShell containers at the current level of product testing. Likewise, spending on Generation II activities has increased as the installation of the bowl line is underway.

“We have the ability and capacity to produce EarthShell clamshells at commercial levels and it is our intention to maximize this opportunity,” stated Houston. “EarthShell is confident it will achieve its goal to prove the economic and performance benefits of an expanded range of EarthShell products in real commercial settings.”

EarthShell Packaging® is made from a new-to-the-world composite material, which consists primarily of abundant limestone, starch, water and protective coatings. The manufacturing process is clean and energy efficient. It uses less total energy and results in low greenhouse gas emissions when compared to traditional packaging. EarthShell products are designed to perform equal to or better than conventional materials – they are rigid, strong and provide good insulation. EarthShell Packaging disintegrates in water, is biodegradable and recyclable through composting.

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By GlobalData

EarthShell Corporation is engaged in the licensing and commercialization of proprietary composite material technology for the manufacture of disposable foodservice packaging, such as cups, plates, bowls, and hinged-lid containers. EarthShell Packaging is designed to be cost and performance competitive compared to other foodservice packaging materials, and also to provide important environmental advantages. Information can also be found via the Internet at

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties of other factors which may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s most recent Form 10-K and other documents filed by the Company with the Securities and Exchange Commission.

                  - Summary Financial Tables Follow -

(A Development Stage Enterprise)

June 30, December 31,
----------- ------------
2000 1999
----------- ------------
Cash and cash equivalents $16,332,920 $26,412,553
Restricted cash 3,500,000 3,500,000
Short-term investments - 8,970,638
Other assets 673,250 514,662
----------- ------------
Total current assets 20,506,170 39,397,853

PROPERTY AND EQUIPMENT, NET 48,056,763 47,355,382


----------- ------------
TOTAL $68,886,385 $87,198,553
=========== ============

Accounts payable and accrued
expenses $4,187,884 $5,165,900
Trade payable to majority
stockholder 509,855 1,385,737
----------- ------------
Total current liabilities 4,697,739 6,551,637
----------- ------------


Common stock, $.01 par value,
200,000,000 shares authorized;
101,099,997 issued and outstanding
as of June 30, 2000 and 100,045,166
as of December 31,1999 1,011,000 1,000,451
Additional paid-in common capital 228,320,635 224,715,255
Deficit accumulated during the
development stage (165,085,411) (145,029,480)
------------ --------------
Accumulated other comprehensive
income (loss) (57,578) (39,310)
Total stockholders' equity 64,188,646 80,646,916
------------ --------------
TOTAL $68,886,385 $87,198,553
============ ==============

(A Development Stage Enterprise)

For the November 1, 1992
Three Months (inception)
Ended June 30 through June 30,
2000 1999 2000
Related party research and
development $2,486,429 $2,957,725 $62,741,828
Other research and
development 4,908,675 4,026,548 43,560,259

Related party general and
administrative expenses 36,134 96,188 2,163,344
Other general and
administrative expenses 2,238,128 4,696,307 40,690,794
Depreciation and
amortization 1,427,842 1,464,293 10,634,384
Related party patent expenses 126,383 26,273 8,600,634
---------- ---------------------------
Total expenses 11,223,591 13,267,334 168,391,243

Interest income (333,228) (1,065,004) (9,875,572)
Related party interest
expense - - 4,770,731
Other interest expense - - 1,788,738
---------- ---------------------------
Loss Before Income Taxes 10,890,363 12,202,330 165,075,140

Income Taxes - - 10,271
---------- ---------------------------
Net Loss 10,890,363 12,202,330 165,085,411
Preferred Dividends - - 9,926,703
---------- ---------------------------
Net Loss Available To
Common Stockholders $10,890,363 $12,202,330 $175,012,114
========== ===========================
Basic And Diluted Loss Per
Common Share $0.11 $0.12 $2.03
Weighted Average Number Of
Common Shares 100,381,321 100,045,166 86,421,042