Abtech Holdings, Inc. Reports Second Quarter and First Half 2012 Financial Results

SCOTTSDALE, Ariz., Aug. 14, 2012 /PRNewswire/ -- Abtech Holdings, Inc. (OTCBB: ABHD) ("AbTech" or the "Company"), a developer and manufacturer of patented innovative environmental technologies addressing issues of water pollution and contamination, today reported financial results for its second quarter ended June 30, 2012.  The Company has entered full commercialization marked by three recent events: the joint nationwide rollout with Waste Management to offer a total storm water management program for U.S. and Canadian municipalities (announcement on June 6, 2012); the successful first installation for the Department of Defense of a stormwater treatment vault, which can be replicated at military bases and similar facilities across the U.S. for hydrocarbon stormwater and spill control; and the soon to be released conclusion of an independent, five-year "end of pipe" study by a municipality, that we expect will further verify the effectiveness of the AbTech Smart Sponge® filtration technology and support sales efforts with other municipalities considering similar Smart Sponge filtration solutions.  To further support the Company's commercialization effort, during the second quarter, AbTech increased its engineering team and arranged for capacity expansion.  In addition, AbTech's research and development team is near completion of several months of rigorous testing to expand its platform capabilities to treat additional contaminants such as heavy metals, PCBs and radionuclides.  In further support of this phase, the Company is in the process of expanding its advisory board with preeminent senior industry and strategic experts and, to that end, recently appointed Governor Edward G. Rendell, a leading political advocate for the environment to its advisory board.

"We have made huge progress over the past eight months," commented Glenn Rink, founder and CEO of AbTech. "At the end of 2011, our first marquee distribution opportunity with Waste Management was in pilot phase with early stage interest from approximately a dozen municipalities.  At that time, we had just announced the field trial data, which launched our produced water capability, and identified the nuclear application for industrial use, our third vertical, and we began working with an industry leading distributor." Mr. Rink continued, "Today we have completed the pilot phase and are in commercial roll-out with Waste Management for municipal stormwater treatment.  We have a defined business model with interest from over 50 municipalities, several of which are in final stages.  In addition, within the stormwater vertical we have identified several significant opportunities within the Department of Defense and other federal installations; major metropolitan areas, in which we are in active negotiations and early design work; and significant commercial entities with immediate need to address stormwater regulations.   Importantly, we are working with a Fortune 500 Company with over 1,000 of its own facilities to address their own stormwater needs.  AbTech has begun working with the company on several of their facilities, with its intent to complete assessment design and receive orders on the first group within the next 90 days.  Our produced water vertical has developed a solid go-to-market strategy, is nearing the close on its first project bid proposal and we have begun recruiting top industry sales talent for this effort. Additionally, we have several opportunities in our industrial vertical as a result of our recently developed systems integrator strategy."  

Mr. Rink concluded, "The progress we are now experiencing has been meticulously nurtured for a very long time.  Admittedly, it has taken longer than we would have liked but it was extremely critical we handle these game changing opportunities with proper care and consideration and not focus only on short term benefits.  The activity we have generated and the traction we are gaining is excellent.  We eagerly look forward to these next few months, as we work to deliver on the much anticipated increase in order flow."

AbTech reported second quarter 2012 revenues of $240,000, a 139 percent increase from the prior year second quarter revenues of $101,000 and slightly ahead of first quarter 2012 revenues of $239,000.  The Company's revenue growth reflected the initial impact of an expanded business development effort that AbTech believes will generate a material acceleration in purchase orders and contracts during the second half of 2012 as new projects actively being pursued in stormwater, industrial and produced water markets are secured.

The Company reported a net loss attributable to controlling interest of $(2.4) million or $(0.05) per basic share for the second quarter of 2012, compared to the previous year's second quarter net loss attributable to controlling interest of $(2.2) million or $(0.05) per basic share and $(2.7) million or $(0.06) per basic share for the first quarter 2012.  During the second quarter 2012, AbTech reported a loss from operations of $(1.5) million compared to $(850,000) during the prior year's second quarter and a loss from operations of $(996,000) during first quarter of 2012.  The Company believes that it is gaining traction with its sales growth strategies and that, depending on the timing of new orders expected to be received in the second half of the year, positive cash flow and operating profitability can be achieved by year-end.

For the three months ended June 30, 2012, AbTech's gross profit on revenue totaled $87,000, yielding a gross margin of 36 percent, compared to a gross margin of negative (20) percent in the three months ended June 30, 2011 and 34 percent for the first quarter of 2012.  The improving gross margins were the result of improved manufacturing efficiencies associated with a higher utilization of the Company's manufacturing capacity. The Company expects gross margins to improve as production utilization increases to satisfy growing product sales. AbTech projects initial gross margins of 50 percent will be achievable as anticipated contract volume levels are realized.

Operating expenses during the second quarter of 2012 totaled $1.6 million, an increase of approximately $745,000 or 90 percent over the second quarter of 2011 and an increase of approximately $498,000 or 46 percent over the first quarter of 2012.  A significant portion of that increase was attributed to selling general and administrative (SG&A) costs related to the addition of several professionals to expand the Company's business development effort, as well as higher costs associated with being a publicly traded company.  In addition, research and development costs increased approximately 106 percent for the three months ended June 30, 2012 as compared to the same period of the prior year and increased 36 percent over first quarter 2012 due to product development activities associated with lab and field testing of products in new applications and testing of new product designs.  While AbTech anticipates a continued increase in operating expenses going forward, such increases will be closely managed and timed to revenue growth.

Interest expense for the three months ended June 30, 2012 totaled $1.3 million compared to $1.6 million during the second quarter of 2011, almost all of which was attributable to a non-recurring charge for imputed interest on promissory notes that were converted to common stock on beneficial conversion terms during the second quarter of 2011.  This compares to interest expense of $884,000 in the first quarter of 2012.  The increase in interest expense in the second quarter of 2012 is attributable to $226,000 of interest accrued on the convertible promissory notes issued by AbTech from July 2011 through February 15, 2012; $453,000 of interest related to the amortization of the note discount created by the bifurcation of the warrant liability at the times these notes were issued; $312,000 for interest expense resulting from the amortization of the note discount created by the bifurcation of the beneficial conversion feature inherent in the convertible promissory notes issued in February 2012; and $339,000 for the amortization of the deferred financing costs related to the private offerings in which the convertible promissory notes were sold.

For the six months ended June 30, 2012, AbTech reported revenues of $480,000, a 233 percent increase compared to the same period in 2011. Net loss attributable to controlling interest totaled $(5.1) million or $ (0.11) per basic share compared to $(2.9) million or $(0.07) per basic share for the same period in 2011.

At June 30, 2012, the Company reported a cash and cash equivalents balance of $1.63 million, accounts receivable of $222,000 and inventory of $435,000.  Total assets during the first six months of 2012 increased approximately $166,000 to $2.75 million.  On June 30, 2012, the Company's short term debt totaled approximately $5.7 million, net of discounts, and long term debt totaled approximately $2.0 million.   During the second quarter, outstanding convertible promissory notes (the "Notes") issued by the Company in the amount of $2,025,000 reached maturity.  The Company exercised its right to extend for 90 days the maturity date for $275,000 of these Notes, of which $100,000 were subsequently converted by their holders into common stock of the Company.  Notes totaling $200,000 were converted by their holders into shares of the Company's common stock prior to their maturity dates.  The original maturity dates of the remaining $1,550,000 of maturing Notes was extended by 90 days by mutual agreement of the Company and the note holders.

As of June 30, 2012, AbTech had approximately 49.0 million shares of common stock outstanding, an increase of 1.8 million shares from year end 2011, predominantly due to the conversion of Series A preferred stock of the Company's subsidiary, AbTech Industries, into common stock of the Company and the conversion of various convertible notes issued by the Company and its subsidiary. The Company's fully diluted shares totaled approximately 84.7 million (inclusive of all options, some of which are performance based, warrants, convertible preferred stock of subsidiary and convertible debt), which upon the conversion of all options and warrants, the Company would receive approximately an additional $9 million.

Conference Call Details:

 


Date/Time:                  

Wednesday, August 15, 2012—11:00 a.m. (EDT)

Telephone Number:       

888-679-8034

International Dial-In Number:  

617-213-4847

Participant Pass code:       

38298307



Internet Access:           

www.abtechindustries.com or www.earnings.com

It is recommended that participants phone-in at least 10 minutes before the call is scheduled to begin. Participants may pre-register for the call at:
https://www.theconferencingservice.com/prereg/key.process?key=PWTH3KMNR

Pre-registrants will be issued a pin number to use when dialing into the live call which will provide quick access to the conference by bypassing the operator upon connection. A replay of the conference call in its entirety will be available approximately one hour after its completion by dialing 888-286-8010 (U.S.), 617-801-6888 (International) and entering the pass code 88507261 and on the Internet at www.earnings.com.

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. (OTCBB: 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

 

ASSETS





June 30, 2012

(Unaudited)


December 31, 2011

Current assets:




   Cash and cash equivalents                       

$         1,634,405


$           1,386,502

   Accounts receivable – trade, net

222,192


108,170

   Accounts receivable – related party, net

-


2,032

   Inventories, net

435,168


528,009

   Deferred charges, net

342,194


439,203

   Prepaid expenses and other current assets

16,642


37,988

Total current assets

2,650,601


2,501,904





Fixed assets, net

61,883


49,485

Security deposits

28,402


17,977

Deferred charges, net

9,956


15,020

Total assets

$          2,750,842


$       2,584,386





LIABILITIES & STOCKHOLDERS' DEFICIENCY




Current liabilities:




   Accounts payable

$             417,291


$          483,879

   Accounts payable – related party

20,365


29,703

   Loan from shareholders

9,000


9,000

   Convertible promissory notes, net of discounts

5,198,365


3,758,082

   Convertible promissory notes – related party, net of discounts

500,000


578,681

   Customer deposits

43,302


38,505

   Accrued interest payable

507,579


126,232

   Accrued expenses

403,727


122,790

Total current liabilities        

7,099,629


5,146,872





Due to related party

98,890


101,524

Convertible promissory notes

276,000


155,000

Convertible promissory notes – related party

1,710,000


1,881,000

Warrant liability

2,292,170


498,976

  Total liabilities

11,476,689


7,783,372





Commitments and contingencies








Stockholders' deficiency




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




     49,008,115 and 47,160,435  shares issued and outstanding at




     June 30, 2012 and December 31, 2011, respectively

49,008


47,160

   Additional paid-in capital

26,511,406


24,651,344

   Non-controlling interest

(1,938,941)


(1,674,105)

   Accumulated deficit

(33,347,320)


(28,223,385)

Total stockholders' deficiency

(8,725,847)


(5,198,986)

Total liabilities and stockholders' deficiency

$         2,750,842


$        2,584,386


 

ABTECH HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 



Three Months ended

June 30


Six Months ended

June 30



2012


2011


2012


2011










Net revenues


$   240,285


$   100,734


$    479,792


$     144,011










Cost of revenues


153,000


120,483


310,279


201,459

Gross profit (loss)


87,285


(19,749)


169,513


(57,448)










Operating expenses









   Selling, general and administrative


1,331,528


711,733


2,230,104


1,353,279

   Research and development


244,493


118,916


423,690


261,003

Total operating expenses


1,576,021


830,649


2,653,794


1,614,282










Operating loss


(1,488,736)


(850,398)


(2,484,281)


(1,671,730)










Other income (expense)









   Interest expense


(1,342,414)


(1,621,651)


(2,226,835)


(1,654,837)

   Gain (loss) on valuation of warrant liability


238,153


-


(678,755)


-

   Other income (expense)


902


(4,922)


1,100


88

Total other income (expense), net


(1,103,359)


(1,626,573)


(2,904,490)


(1,654,749)










Net loss before income taxes


(2,592,095)


(2,476,971)


(5,388,771)


(3,326,479)










Provision for income taxes


-


-


-


-










Net loss


(2,592,095)


(2,476,971)


(5,388,771)


(3,326,479)










Net loss attributable to non-controlling interest


(144,053)


(248,704)


(264,836)


(380,435)










Net loss attributable to controlling interest


$(2,448,042)


$(2,228,267)


$(5,123,935)


$(2,946,044)



















Basic and diluted loss per common share


$           (0.05)


$           (0.05)


$         (0.11)


$       (0.07)

 

Basic and diluted weighted average number of

shares outstanding


 

48,707,777


 

45,084,344


 

48,319,058


 

41,997,592










 

SOURCE Abtech Holdings, Inc.



RELATED LINKS
http://www.abtechindustries.com

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