Abtech Holdings, Inc. Reports Second Quarter and First Half 2014 Financial Results

SCOTTSDALE, Ariz., Aug. 13, 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 the three and six month periods ended June 30, 2014.

Milestones thus far in 2014:

  • Completed the first phase of its marquee Nassau County project and received approval to proceed with design and installation of the first 14 sites (up to $11.9 million remaining to be billed under the contract). In addition, AbTech executed a $67,000 sale of Smart Sponge® products to be used in a stormwater project in the Eastern Shore of Maryland targeted to help prevent pollution in the Choptank River and Chesapeake Bay;
  • Deployed and validated onsite its first mobile water pre-treatment system, focused on oil recovery and hydrocarbon removal for the treatment of flowback and produced water for the on-shore Oil & Gas industry. This pretreatment system incorporates AbTech's Smart Sponge® technology and is designed to operate in advance of other treatment systems, increasing overall efficiency and lowering treatment cost. Results have been reviewed by independent experts and third party laboratories over a five week onsite field test, which indicate hydrocarbon removal rates as high as 90%, with oil and grease levels as low as 58 ppm while overcoming many atypical site conditions;
  • Expanded its 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; Dr. Francis J. Harvey, 19th Secretary of the Army (2004-2007) and 28-year Westinghouse Electric Corporation Executive; 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 (previously a member of the Company's board of directors); Upen Bharwada, filtration and media expert, formerly with DOW (V.P. R&D), GE Water, and current EVP & CTO of Hydration Technology Innovations; and Alexander Mouldovan, social media expert and founder of Crowd Factory (acquired by Marketo), Tribe Networks (acquired by Cisco), InterTrust (acquired by SONY);
  • Added William S. Brennan, a seasoned 20-year Wall Street veteran focused on water strategies investment, to its Board of Directors. Mr. Brennan previously served on the AbTech Advisory Board since September 2012;
  • Secured $2 million of funding between March and May 2014 through a 7 1/2% multi-advance credit facility (debt); and
  • Subsequent to second quarter end, signed an exclusive license agreement for a highly effective heavy metals removal media that can be used in combination with Smart Sponge® filtration capabilities to target heavy metal contamination issues in the stormwater and mining industries, including removal of selenium VI, a highly toxic heavy metal; and
  • AbTech developed a method for recycling used Smart Sponge® and its solidified hydrocarbons that will allow, under most conditions, 100% recycling of the spent-media on site. The relatively simple process involves converting the solid Smart Sponge® into a liquid hydrocarbon that can be sold back to a standard refinery, thereby eliminating the costs for disposing of the spent-media while generating a new revenue stream. This closed loop process reduces the media cost associated with using Smart Sponge® by approximately 10%

"The first half of 2014 has been a period of high productivity focus.  Our business development effort has been focused on large projects that could have a significant impact on revenue going forward.  The Company is pursuing contracts with several targeted municipalities that are currently planning major stormwater treatment projects, one of which has recently issued its RFP similar in size to our contract with Nassau County.  We anticipate exiting 2014 with more contracts in hand than we had when we entered the year," commented Glenn Rink, CEO of AbTech.  

Rink continued, "Our productivity focus also necessitated a review of our general and administrative costs which we rationalized in order to shift greater resources towards research, development and testing of products and enhanced capabilities to further leverage our sales and marketing efforts.  Our mobile trailer mounted system for treating produced water has now been proven in the field with strong data results recently validated by a third party.  Additionally, and highly critical in the oil patch, we are currently completing field testing and engineering specifications for a process to recycle 100% of the spent Smart Sponge media on site, thereby eliminating associated disposal costs.  This development represents a material benefit to operators in the fracking industry and represents a competitive advantage over other media.  We anticipate that this discovery will facilitate revenue opportunities in the near future.  Most recently, our research efforts, long directed by heightening regulatory requirements on an increasing number of contaminants regarded as unacceptable, have led us to a highly effective solution for most heavy metals of concern, including phosphorous in stormwater and selenium IV and VI in produced water.  This capability will allow us to offer a full range of services to address pollutants that plague our current and future customer base in our key market sectors of stormwater, produced water and industrial water."

AbTech reported second quarter 2014 revenues of $183,000 compared to $134,000 for the same period of the previous year and $75,000 in the first quarter of 2014.  In 2013, the Company entered into a stormwater contract with Nassau County whereby AbTech earns revenue for multiple deliverables including, engineering services, installation of storm water treatment systems and maintenance activities. To date, only the pre-construction engineering services focused on planning, and site selection have been performed under the contract which accounted for approximately $10,000 of revenue during the second quarter 2014.  AbTech expects work on the Nassau County contract to significantly impact its revenue during the remainder of 2014.  At June 30, 2014, approximately $11.9 million remains to be billed under this contract. 

The Company reported a net loss attributable to controlling interest of $(1.4) million or $(0.02) per basic share for the second quarter of 2014.  This compares to the previous year's second quarter net loss attributable to controlling interest of $(1.3) million or $(0.02) per basic share and $(1.4) million or $(0.02) per basic share for the first quarter 2014.  During the second quarter 2014, AbTech reported a loss from operations of $(1.4) million compared to a loss from operations of $(1.5) million during the prior year's second quarter and $(1.3) million during first quarter of 2014.  

For the three months ended June 30, 2014, AbTech's gross profit on revenue totaled $63,000, yielding a gross margin of 34%, compared to a gross margin of 32% for the three months ended June 30, 2013 and negative 37% for the first quarter of 2014 when the Company operated at less than one percent of operating capacity.  The Company continues to anticipate improved gross margins as its volume of Smart Sponge® product sales increase and its engineering design work expands during the second half of 2014.

Operating expenses during the second quarter of 2014 totaled $1.4 million, a decrease of approximately $75,000 or 5.0% over the second quarter of 2013.  Operating expenses in the second quarter of 2014 increased when compared to the first quarter 2014 by approximately $99,000 or 7.5% due largely to increased R&D costs related to field testing of products for the  oil & gas industry and laboratory testing with other technologies.  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, 2014 totaled $223,000 compared to $13,000 during the second quarter of 2013 and $167,000 in the first quarter of 2014.  The year over year increase in interest expense is due to the $4.25 million, 6.5% convertible promissory notes, $3.5 million of which was issued in December 2013 ($1.5 million was used to repay other higher interest short-term outstanding debt) and the $2 million 7.5 % secured promissory notes issued during first half of 2014, of which $875,000 was issued in the first quarter.  Interest expense includes the stated interest accrued on the notes plus the amortization of the note discounts and deferred finance costs related to these notes.

For the six months ended June 30, 2014, AbTech reported revenues of $258,000, a 10% increase compared to the same period in 2013, reflecting the work completed during 2014 on the Nassau County project and the $39,000 benefit of a forfeited customer deposit.

During the first half of 2014, AbTech reduced its selling, general and administrative expenses by 21% compared to the same period in 2013 as it rationalized its operations, resulting in reduced headcount, outside consultant fees and travel expenses, which collectively totaled savings of $421,000 during the 6-month period.  In addition, the Company's auditing and legal fees decreased in the first half of 2014 by approximately $32,000 and $65,000, respectively, due to the elimination of the costs associated with multiple SEC registration filings that occurred in 2013.  In 2014, the Company allocated more of its resources towards research and development, which increased $352,000 or 90% for the six month period, as it focused on field testing work conducted with the Company's mobile, produced water treatment system in Texas as well as research and testing on heavy metals and other new technologies.  AbTech reported a net loss attributable to controlling interest for the six months ended June 30, 2014 of $(2.8) million or $(0.04) per basic share compared to $(2.5) million or $(0.04) per basic share for the same period in 2013.

On June 30, 2014, the Company reported a cash and cash equivalents balance of $632,000, accounts receivable of $58,000 and inventory of $521,000.  Total assets during the first 6 months decreased by approximately $582,000 to $1.6 million as cash was consumed for operations and the field validation deployment of AbTech's first oil & gas mobile unit.  The monthly cash burn for operations in the first half of 2014 averaged approximately $419,000.  On June 30, 2014, the Company had seven secured promissory notes outstanding aggregating $2,000,000.  These non-convertible notes, issued in a private placement in March through May 2014 mature on the 12 month anniversary of their issuance date, have an interest rate of 7.5% per annum and an accompanying 20% warrant coverage.  The issuance of these notes caused the Company's short term debt to increase during the second quarter of 2014 to approximately $2.6 million, net of discounts.  The Company's long term debt remained consistent at approximately $3.2 million fluctuating only slightly due to the amortization of the respective note discount.  In June 2013, AbTech entered into an agreement for a $2 million equity line of credit and as of today, the Company has made no draws on the equity line.  

On June 30, 2014, AbTech had approximately 67.9 million shares of common stock outstanding, consistent with the number of shares outstanding at December 31, 2013. The Company's fully diluted share count increased by approximately 1.3 million shares during the first two quarters of 2014 to approximately 99.8 million shares (inclusive of all options, warrants and convertible debt) due largely to 1.0 million warrant shares issued with the secured promissory notes in a private placement in the first half of 2014, the addition of a conversion right to a $500,000 note issued in 2013 representing 781,250 shares if converted, and an increase in director and consultant options totaling 444,000, offset by 1.7 million shares for options and warrants that expired since year-end 2013.  If all remaining outstanding options and warrants were exercised for cash, the Company would receive approximately $10.7 million in additional capital. As of June 30, 2014, the Company had federal tax loss carry forwards of approximately $40.2 million and state tax loss carry forwards of approximately $20.2 million, which expire through 2034.

Conference Call Details:


Date/Time:

Thursday, August 14, 2014 — 1:00 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=100219


or


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

It is recommended that participants phone-in at least 15 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.

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




June 30, 2014





(Unaudited)


December 31, 2013

ASSETS




Current assets:





     Cash and cash equivalents

$              631,900


$          1,212,984


     Accounts receivable – trade, net

58,448


178,307


     Inventories, net

521,279


403,439


     Deferred charges, net

156,305


109,721


     Prepaid expenses and other current assets

34,706


33,194

Total current assets

1,402,638


1,937,645






 Fixed assets, net

69,616


60,423

Security deposits

33,940


33,940

Deferred charges, net

49,162


105,389

Total assets

$            1,555,356


$         2,137,397





LIABILITIES & STOCKHOLDERS' DEFICIENCY




Current liabilities:





Accounts payable

$               657,599


$            688,469


Accounts payable – related party

5,963


5,911


Loan from stockholders

9,000


9,000


Notes payable, net of discounts

1,846,639


500,000


Convertible promissory notes

750,000


250,000


Capital lease obligation – current portion

3,696


3,927


Customer deposits

2,242


43,192


Accrued interest payable

200,605


36,062


Accrued expenses

387,936


315,724

Total current liabilities        

3,863,680


1,852,285





Due to related party

87,653


90,564

Convertible promissory notes – noncurrent portion, net of discounts

3,119,295


2,996,237

Capital lease obligation – noncurrent portion

694


2,727

 Total liabilities

7,071,322


4,941,813





Commitments and contingencies








Stockholders' deficiency





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

67,883,879 shares issued and outstanding at June 30, 2014 and

December 31, 2013, respectively

 

67,883


 

67,883


Additional paid-in capital

43,754,312


43,372,392


Non-controlling interest

(2,468,024)


(2,151,627)


Accumulated deficit

(46,870,137)


(44,093,064)

Total stockholders' deficiency

(5,515,966)


(2,804,416)

Total liabilities and stockholders' deficiency

$            1,555,356


$        2,137,397

 

ABTECH HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS




Three Months ended

June 30


Six Months ended

June 30



2014


2013


2014


2013










Net revenues


$   182,570


$   134,066


$    257,828


$  233,603










Cost of revenues


119,990


91,597


223,204


190,317

Gross profit


62,580


42,469


34,624


43,286










Operating expenses









   Selling, general and administrative


1,008,903


1,272,057


1,995,447


2,518,818

   Research and development


410,035


221,683


743,500


391,079

Total operating expenses


1,418,938


1,493,740


2,738,947


2,909,897










Operating loss


(1,356,358)


(1, 451,271)


(2,704,323)


(2,866,611)










Other income (expense)









   Interest expense


(222,549)


(13,260)


(389,232)


(25,122)

   Other income 


23


161


85


768

Total other income (expense), net


(222,526)


(13,099)


(389,147)


(24,354)










Net loss before income taxes


(1,578,884)


(1,464,370)


(3,093,470)


(2,890,965)










Provision for income taxes


-


-


-


-










Net loss


(1,578,884)


(1,464,370)


(3,093,470)


(2,890,965)










Net loss attributable to non-controlling interest


(155,806)


(182,133)


(316,397)


(370,648)










Net loss attributable to controlling interest


$(1,423,078)


$(1,282,237)


$(2,777,073)


$(2,520,317)



















Basic and diluted loss per common share


$        (0.02)


$        (0.02)


$        (0.04)


$        (0.04)

 

Basic and diluted weighted average number of shares outstanding


 

67,883,879


67,198,990


 

67,883,879


 

63,965,103










SOURCE Abtech Holdings, Inc.



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