Abtech Holdings, Inc. Reports Fiscal Year 2013 Financial Results AbTech Begins 2014 With Approximately $12 Million Contracted Backlog

SCOTTSDALE, Ariz., March 31, 2014 /PRNewswire/ -- Abtech Holdings, Inc. (OTC QB: ABHD) ("AbTech" or the "Company"), a full-service environmental technologies and engineering firm dedicated to providing innovative solutions to communities, industry and governments addressing issues of water pollution and contamination, today reported financial results for its year ended December 31, 2013.  These results reflect the Company's efforts to specifically target business development initiatives with specific customers, for large projects that the Company believes provide the best opportunity for success.

During the year, the Company accomplished the following:

  • Most significantly, received a signed contract from Nassau County for a not-to-exceed  $12 million project to design, build and operate a stormwater treatment system for ten outfall pipes, for which work began on October 10, 2013;
  • Designed, developed and readied its first commercial mobile water treatment system for the Oil & Gas industry, focused on hydrocarbon removal and recovery for the treatment of produced water.  This pretreatment system incorporating the Company's Smart Sponge® technology is designed to complement other treatment systems by increasing their efficiency.  AbTech has deployed its first on-site field test of this technology which began in March 2014 and is currently underway;
  • Validated its core treatment technology for the Oil & Gas industry in laboratory tests using produced waters of ten different shale plays in the United States, including the Permian, Fayetteville, Bakken, Cana Woodford, Marcellus, Eagleford, Piceance, Frenchie Draw, and Utica locations and signed teaming agreements with four oil field services companies;
  • Named Water Management Company of the Year at the Gulf Coast Oil & Gas Awards in Houston, Texas, being recognized for advancements made in the key areas of the environment, efficiency, innovation, corporate social responsibility and health & safety within the industry;
  • Entered into an agreement with DieselPure, Inc. to incorporate AbTech's Smart Sponge® technology into their DieselPure™ filtration systems that use a sub-micron coalescing filter technology to remove free and emulsified water and other contaminants from ultra-low sulfur diesel and bio-diesel blends in order to prevent engine failure;
  • Signed a distribution agreement giving AbTech the right to market the DieselPure filtration system in the Western region of the United States.  Initial market focus is targeted towards first responders, hospitals, banks and federal and state government facilities;
  • Strengthened its Board of Directors with seasoned water industry and financial expert, William C. McCartney, recently retired CFO of Watts Water Technologies; William S. Brennan, a 20-year Wall Street veteran focused on water strategies investment, has stepped up to the Board of Directors after contributing to the AbTech Advisory Board since September 2012;
  • Expanded AbTech's Advisory Board with notable talent: Governor Parris N. Glendening, two-term governor of Maryland (1995-2003) and three-term County Executive of Prince George's County; and Dr. Francis J. Harvey, 19th Secretary of the Army (2004-2007) and 28-year Westinghouse Electric Corporation Executive (Chief Operating Officer of the Industries and Technology Group and President of Government and Environmental Services). In March 2014, Steven W. Kohlhagen, author and leading financial expert serving as advisor to the Federal Reserve Board, the United States Treasury and the Council of Economic Advisors joined the AbTech Advisory Board after serving on AbTech's  Board of Directors from August 2012 to March 2014;
  • Completed the conversion of $1.9 million of promissory notes into common stock;
  • Secured 6.5% debt financing of approximately $1.8 million between June and September to support business development initiatives and working capital; in December received $3.5 million for the issuance of 6.5% convertible promissory notes using the proceeds to eliminate $1.5 million of then-existing short-term debt; and fund operations including the fulfillment of the design, build, operate contract for storm water systems in Nassau County, New York.

"As we move ahead with our first marquee contract award for not-to-exceed $12 million we intend to leverage this project's solutions approach in other counties, regions and municipalities.  The global shift towards stormwater treatment mandates to protect and preserve water sources and water recycling and reuse is gaining momentum," commented Glenn Rink, founder and CEO of AbTech.  "As we review our business verticals, we see accelerated market acceptance across the board especially as it relates to funding for such projects.  The number of RFPs and actual contract awards for stormwater treatment projects are increasing, and we believe we are well positioned to win significant business.  Over the past month, we have signed Letters of Intent with two municipalities in the Hurricane "Sandy" effected areas in the Northeast and are in discussions with a number of additional municipalities inside and outside the "Sandy" affected region.  In oil and gas, the trend toward water recycling/reuse is clearly gaining traction in three large oil formations within Texas and Colorado.  We have dispatched our first mobile pre-treatment unit containing Smart Sponge® into the Eagleford region for an on-site pilot test.  A successful completion, of this project would be very important to the Company and we believe could lead to immediate revenue generating deployments of the technology and additional customer pilot projects.  Internationally, the EU Water Framework Directive ("WFD"), which requires that all inland and coastal waters within defined river basin districts reach at least "good status" by 2015, is fast approaching and has created a $3 million opportunity pipeline."

For the full year 2013, AbTech reported revenues of $461,000, a decrease of approximately 35% compared to revenues of $717,000 in 2012.  The Company cited municipal funding issues resulting from the continued slow economy, which stalled many projects, caused unexpected delays with new product developments and impeded the setup of public private partnerships ("P3s") for large municipal projects, as the main causes for slower than expected sales growth in 2013. AbTech was, nonetheless, successful in securing one of the first-of-its-kind (Design-Build-Operate) stormwater management contracts in the United States.  Work on the Nassau County New York project, valued at up to $12 million, began in October 2013 generating approximately $55,000 of revenue for the Company in 2013.  The Company expects to recognize revenue of approximately $11 million from this contract in 2014. The remaining revenue from this contract for ongoing systems maintenance and monitoring will be earned in 2015 and 2016.  Going forward, AbTech anticipates significant sales growth in 2014 as economic conditions improve, programs for public-private partnerships move forward and are further expanded, and opportunities to enter into new markets for produced water and other industrial applications of the Smart Sponge technology achieve success in current testing and pilot stages. 

The Company reported a net loss attributable to controlling interest of $(5.3) million or $(0.08) per basic share for the full year 2013, which included interest expense of $144,000. This compares to a net loss attributable to controlling interest of $(10.4) million or $(0.19) per basic share for the full year 2012, which included interest expense of $4.2 million and a loss of $944,000 attributed to the valuation of the warrant liability (in 2013 there was no similar valuation of the warrant liability because it was reclassified to additional paid-in capital at the end of 2012).

AbTech's gross profit on revenue totaled $54,000 in 2013, yielding a gross margin of 12 percent, compared to a gross profit of $228,000 or 32 percent in the prior year.  Current gross margins reflect low production levels as fixed overhead costs are absorbed over a relatively small production base.  The Company operated at approximately 2 percent of capacity in 2013.  In light of the business opportunities expected to commence in 2014, the Company has explored alternative manufacturing procedures that could significantly increase the production capacity of its existing facility.  It is also important to note that AbTech's business model has strategically evolved to offer comprehensive system solutions to its customer base.  Therefore while AbTech will likely generate greater revenue and gross margin dollars, its overall gross margin percentage will be lower than with traditional product sales.

Operating expenses during 2013 totaled $5.8 million, an increase of approximately $302,000, a 6% increase over the prior year.  The year-over-year increase in operating expenses was primarily attributed to a 4% increase in selling, general and administrative ("SG&A") expenses due to full-year staffing at AEWS Engineering, increased personnel at AbTech Industries, and added consulting costs.  These increases were partially offset by decreases in stock-based compensation, public relations and government affairs expenses.  In addition, research and development expenses increased $126,000 in 2013 compared to 2012, to fund the stormwater research project conducted through North Carolina State University and the design and development of a water treatment unit for use in the oil & gas industry.  AbTech is dedicated to closely managing operating costs and tying any increase in costs to revenue opportunities that are gaining traction and showing verifiable growth potential.

The Company incurred interest expense in 2013 of $144,000 compared to $4.2 million in 2012.  Interest expense decreased substantially during 2013 as the Company eliminated approximately $1.9 million of convertible debt in April 2013 and $6.8 million of 12% convertible promissory notes during the second half of 2012.  In addition, $480,000 of the 12% debt outstanding at December 31, 2012 continued during 2013 at a 6% interest rate, effective January 1, 2013.  In June 2013, AbTech issued a $500,000 6.5% promissory note.  During August and September 2013, AbTech issued several 6.5% secured convertible promissory notes totaling $1.2 million.  In December 2013, the Company issued additional 6.5% secured convertible promissory notes for $3.5 million and used $1.5 million of the proceeds to repay other outstanding debt.

In the fourth quarter ended December 31, 2013, AbTech's revenues totaled $155,000, including $55,000 of early engineering and design work on the $12 million Nassau contract.  As 2014 progresses, the Company expects to not only earn $11 million of revenue on the Nassau project but to be awarded other projects that are nearing the completion of their proposal cycles. 

For the fourth quarter ended December 31, 2013, the Company incurred a net loss attributable to controlling interest of $(1.4) million or $ (0.02) per basic share.  This compares to a net loss attributable to controlling interest of $(1.3) and $(0.02) per basic share for the third quarter of 2013.  The operating loss for the fourth quarter of 2013 totaled $(1.4) million versus $(4.4) million for the first nine months of 2013.  Fourth quarter 2013 operating expenses were in line with the third quarter 2013 at $1.5 million.  Interest expense in the fourth quarter 2013 totaled $85,000 compared to $34,000 in the third quarter of 2013.

At December 31, 2013, the Company had cash and cash equivalents of $1.2 million, accounts receivable of $178,000 and inventory of $403,000.  Total assets during 2013 decreased approximately $1.0 million to $2.1 million as cash was consumed for operations and working capital.  During 2013, net cash provided by financing activities totaled $3.8 million including new financings, which raised $5.3 million, and debt repayments of $1.5 million plus accrued interest of approximately $43,000.

On December 31, 2013, the Company's short-term debt totaled approximately $759,000, a decrease of approximately $1.1 million from the prior year end balances. Long-term debt totaled approximately $3.0 million, an increase of $2.5 million during the year. In June 2013, AbTech entered into an agreement for a $2 million equity line of credit.  As of December 31, 2013, the Company had made no draws on the equity line of credit.   In March 2014, the Company initiated a private offering of up to $2 million of short-term secured promissory notes (non-convertible).  As of March 28, 2014, the Company had received $875,000 in proceeds from the issuance of short-term secured promissory notes pursuant to this offering.

As of December 31, 2013, AbTech had approximately 67.9 million shares of common stock outstanding, an increase of 3.2 million shares from year-end 2012, primarily due to the conversion of approximately $1.9 million of debt into common stock of the Company. AbTech's fully diluted shares totaled approximately 99.5 million (inclusive of all options, some of which are performance based; warrants; convertible preferred stock of subsidiary and convertible debt).  If all options and warrants were exercised it would generate approximately $11.2 million in additional capital to the Company.  As of December 31, 2013, the Company had federal tax loss carry forwards of approximately $38.7 million and state tax loss carry forwards of approximately $18.6 million, which expire through 2033.

Conference Call Details: 




Date/Time:                         

Monday, March 31, 2014 – 4:30 p.m. (ET)

Telephone Number:            

877-870-4263

International Dial-In Number: 

412-317-0790

Canada Dial-In Number:          

855-669-9657

Internet Access:                        

http://www.videonewswire.com/event.asp?id=98524 


or   


www.abtechindustries.com  and  https://twitter.com/AbTech_Ind

It is recommended that participants phone-in at least 10 minutes before the call is scheduled to begin. A replay of the conference call in its entirety will be available approximately one hour after its completion via the Internet Access link above.

Investor Contact:
Yvonne L. Zappulla
Managing Director
Grannus Financial Advisors, Inc.
212-681-4108
Yvonne@GrannusFinancial.com

or

Lane J. Castleton
Chief Financial Officer
Abtech Holdings, Inc.
480-874-4000
lcastleton@abtechindustries.com

ABOUT ABTECH HOLDINGS, INC. (OTC QB: ABHD) AND ABTECH INDUSTRIES, INC.

AbTech Industries, Inc. (a subsidiary of Abtech Holdings Inc.) is a full-service environmental technologies and engineering firm dedicated to providing innovative solutions to communities, industry and governments addressing issues of water pollution and contamination. Its products are based on polymer technologies capable of removing hydrocarbons, sediment and other foreign elements in stormwater runoff (ponds, lakes and marinas), flowing water (curbside drains, pipe outflows, rivers and oceans), and industrial process and wastewater. AbTech's offerings include the ground-breaking new antimicrobial technology called Smart Sponge® Plus. This technology is effective in reducing coliform bacteria found in stormwater, industrial wastewater, and municipal wastewater. Smart Sponge® Plus is registered with the Environmental Protection Agency (Registration #86256-1). AbTech's teams of water treatment technology experts, civil and environmental engineers, and field operations specialists develop solutions to improve the quality of our limited water resources. AEWS Engineering (a subsidiary of Abtech Holdings, Inc.), is an independent engineering civil and environmental engineering firm partnered with top research and engineering universities. By focusing on bringing new engineering and technology innovation to the water infrastructure sector, AEWS is positioned to be at the forefront of stormwater Best Management Practices development and to deliver the latest in design excellence to its customers. For more information please visit www.abtechindustries.com. More information on AEWS Engineering can be found at www.aewsengineering.com.

This news release contains "forward-looking statements" which are not purely historical and include any statements regarding beliefs, plans, expectations or intentions regarding the future. Such forward-looking statements include, among other things, the development, costs and results of new business opportunities. Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others, the inherent uncertainties associated with new projects. These forward-looking statements are made as of the date of this news release, and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Although we believe that any beliefs, plans, expectations and intentions contained in this press release are reasonable, there can be no assurance that any such beliefs, plans, expectations or intentions will prove to be accurate. Investors should consult all of the information set forth herein and should also refer to the risk factors disclosure outlined in our annual report on Form 10-K for the most recent fiscal year, our quarterly reports on Form 10-Q and other periodic reports filed from time-to-time with the Securities and Exchange Commission.

*** Financial Statements Follow ***

 

ABTECH HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS



December 31, 2013


December 31, 2012

ASSETS




Current assets:





Cash and cash equivalents

$        1,212,984


$           2,543,898


Accounts receivable – trade, net

178,307


74,180


Inventories, net

403,439


397,804


Deferred charges, net

109,721


10,128


Prepaid expenses and other current assets

33,194


14,077

Total current assets

1,937,645


3,040,087






Fixed assets, net

60,423


72,981

Security deposits

33,940


33,940

Deferred charges, net

105,389


4,892

Total assets

$          2,137,397


$      3,151,900





LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIENCY)




Current liabilities:





Accounts payable

$            688,469


$          263,379


Accounts payable – related party

5,911


10,136


Loans from shareholders

9,000


9,000


Notes payable

500,000


-


Convertible promissory notes, net of discounts

250,000


620,000


Convertible promissory notes – related party, net of discounts

-


1,185,000


Capital lease obligation – current portion

3,927


3,739


Customer deposits

43,192


41,584


Accrued interest payable

36,062


28,676


Accrued expenses

315,724


233,282

Total current liabilities        

1,852,285


2,394,796





Due to related party

90,564


96,181

Convertible promissory notes – noncurrent portion, net of discounts

2,996,237


6,000

Convertible promissory notes – related party – noncurrent portion

-


525,000

Capital lease obligation – noncurrent portion

2,727


6,654


Total liabilities

4,941,813


3,028,631





Commitments and contingencies








Stockholders' equity (deficiency)





     Common stock, $0.001 par value; 300,000,000 authorized shares;

       67,883,879 and 64,638,372 shares issued and outstanding at 

       December  31, 2013 and December 31, 2012, respectively

67,883


64,638


    Additional paid-in capital

43,372,392


40,372,764


    Non-controlling interest

(2,151,627)


(1,814,388)


    Accumulated deficit

(44,093,064)


(38,499,745)


Total stockholders' equity (deficiency)

(2,804,416)


123,269


Total liabilities and stockholders' equity (deficiency)

$        2,137,397


$        3,151,900

 

ABTECH HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS




Twelve Months ended

December 31



2013


2012






Net revenues


$    461,296


$     716,691






Cost of revenues


407,230


488,281

Gross profit


54,066


228,410






Operating expenses:





   Selling, general and administrative


4,863,003


4,687,011

   Research and development


978,214


851,999

Total operating expenses


5,841,217


5,539,010






Operating loss


(5,787,151)


(5,310,600)






Other income (expense):





   Interest expense


(144,195)


(4,189,707)

   Gain (loss) on valuation of warrant liability


-


(944,291)

   Other income (expense) 


788


27,955

Total other income (expense), net


(143,407)


(5,106,043)






Net loss before income taxes


(5,930,558)


(10,416,643)






Provision for income taxes


-


-






Net loss


(5,930,558)


(10,416,643)






Net loss attributable to non-controlling interest


(668,554)


(596,315)






Net loss attributable to controlling interest


$(5,262,004)


$(9,820,328)











Basic and diluted loss per common share


$         (0.08)


$       (0.19)

 

Basic and diluted weighted average number of shares outstanding


 

66,894,023


 

52,567,978






SOURCE Abtech Holdings, Inc.



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