Abtech Holdings, Inc. Reports Second Quarter and First Half 2015 Financial Results

Aug 14, 2015, 08:00 ET from Abtech Holdings, Inc.

SCOTTSDALE, Ariz., Aug. 14, 2015 /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, 2015.

Key First Half Year-Over-Year Financial Results Summary

  • Six month 2015 revenues increased 5% over prior year's 6 month revenues to $271,000.
  • Gross profit as a percent of sales fell to 8% in first half of 2015 from prior year's 13%.
  • Operating expenses increased by 2.6% in first half of 2015 over the prior year first half to $2.8 million.  Operating loss in first half of 2015 increased 3% over same period of prior year to $2.8 million.
  • AbTech issued $2.6 million of 7.5% secured promissory notes during first 6 months of 2015.
  • Two executives with commercial success joined AbTech management team: Upen Bharwada transitioned from AbTech Advisory Board to Chief Technology Officer (May 8); Jeffrey Gutierrez joined as VP Sales and Business Development (August 3).

"Despite significant challenges we have endured this year surrounding the circumstances that led to the suspension of the Nassau County contract, we remain unified in the belief that the Smart Sponge technology carries significant commercial and environmental value.  To promote the success of this timely and cost-effective technology, we have implemented a strategy going forward that includes a streamlined organization, an incentive-based sales effort with a newly hired, proven sales leader, and a redirected business development effort to: (1) more aggressively build our stormwater product sales business with commercial customers; (2) advance efforts to treat produced water in the oil and gas industry; (3) target 3rd quarter launch of an integrated stormwater program for commercial customers; and (4) accelerate the time to market for the heavy metal products," commented Jonathan Thatcher, COO of AbTech.

AbTech reported second quarter 2015 revenues of $67,000 compared to $183,000 for the same period of the previous year and $204,000 in the first quarter of 2015.  The decrease in revenue was partly due to the May 12, 2015 suspension of the project in Nassau County - from which AbTech recognized revenues of only $7,000 during the quarter - and the related consequences that impeded the Company's efforts to win new business with other municipal stormwater customers.

The Company reported a net loss attributable to controlling interest of $(1.8) million or $(0.03) per basic share for the second quarter of 2015.  This compares to the previous year's second quarter net loss attributable to controlling interest of $(1.4) million or $(0.02) per basic share and $(1.4) million or $(0.02) per basic share for the first quarter 2015.  During the second quarter of 2015, AbTech reported a loss from operations of $(1.6) million compared to a loss from operations of $(1.4) million during the prior year's second quarter and $(1.2) million during first quarter of 2015. 

For the three months ended June 30, 2015, AbTech's gross profit on revenue was negative $(60,000), yielding a gross margin of negative (89)%, compared to a positive gross margin of 34% for the three months ended June 30, 2014 and 40% for the first quarter of 2015.  This reduction in gross margin in the second quarter of 2015 is the direct result of the low sales volume and the consequent unabsorbed costs of excess manufacturing capacity that resulted from the Company operating at approximately 2% of capacity for the quarter. 

Operating expenses during the second quarter of 2015 totaled $1.6 million compared to $1.4 million in the prior year second quarter and $1.2 million in first quarter 2015.  The increase in expenses was primarily attributed to legal fees totaling $466,000 incurred in response to the Federal investigations regarding a New York State Senator's involvement with the Nassau County project and a related investigation by the SEC.  The Company continues to cooperate with the investigations.  Excluding these legal fees, selling, general and administrative expenses decreased by approximately $189,000 for the three months ended June 30, 2015 as compared to the same period in 2014, reflecting a $58,000 reduction in payroll related costs, a $154,000 reduction in consulting fees and a $38,000 reduction in travel and entertainment expenses, offset by increases of $32,000 for recruiting fees and $22,000 for public relations fees. 

Research and development ("R&D") expenses totaled $284,000 during the second quarter of 2015, roughly consistent with the first quarter of 2015 and approximately $126,000 (31%) less than the second quarter of 2014 due primarily to the completion of oil & gas field validation work in 2014 that did not recur in 2015. These expense reductions were partially offset by an increase of $25,000 for expenses of the Company's ongoing development of a heavy metals technology and $86,000 for the development of an evaporator technology targeted for the treatment of landfill leachate. 

Interest expense for the three months ended June 30, 2015 totaled $381,000 compared to $223,000 during the second quarter of 2014 and $400,000 in the first quarter of 2015.  The increase in year over year interest expense is due to the interest expense accrued on the additional debt of approximately $3 million incurred by the Company in the second half of  2014 and the $2.6 million of additional debt incurred during the first half of 2015.  Interest expense in the second quarter of 2015 includes $193,000 for the stated interest accrued on outstanding notes payable, $135,000 for the amortization of note discounts resulting from warrants and beneficial conversion features issued with the notes and $52,000 for the amortization of deferred finance costs for the debt offerings. 

For the six months ended June 30, 2015, AbTech reported revenues of $271,000, a 5% increase compared to the same period in 2014. The revenue increase is attributed to the initial order of approximately $107,000 from Naylor Industries, the Company's new distributor in the United Kingdom.  Given the low levels of production and the consequent costs of underutilized manufacturing capacity, the Company's gross margin was 8% for the six months ended June 30, 2015 compared to 13% for the same period of 2014 when the gross margin was favorably affected by revenue from a forfeited customer deposit of $39,000 that carried no corresponding cost.

Excluding the legal fee expenses associated with the investigations mentioned above, the Company reduced its selling, general and administrative expenses by $209,000 or 10% for the six-months ended June 30, 2015 compared to the same period in 2014 as it rationalized its operating expenses reducing outside consultant fees by $220,000, travel and entertainment expenses by $61,000 and other expenses for total savings of approximately $303,000 during the 6-month period.  These expense reductions were partially offset by approximately $78,000 of increased spending for recruiting, marketing fees and other expenses.  In 2015, the Company's research and development expenses decreased by 25% to $557,000 due primarily to the substantially concluded field testing work conducted with the Company's mobile, produced water treatment system in Texas during 2014. These expense reductions were partially offset by $86,000 spent on the further development of an evaporator technology targeted for the treatment of landfill leachate and $25,000 of fees for the continued development of the heavy metals technology.  Interest expense during the first half of 2015 doubled over the same period of the prior year to approximately $780,000 due to the additional debt incurred by AbTech during 2014 and 2015.  AbTech reported a net loss attributable to controlling interest for the six months ended June 30, 2015 of $(3.2) million or $(0.05) per basic share compared to $(2.8) million or $(0.04) per basic share for the same period in 2014.

On June 30, 2015, the Company reported a cash balance of approximately $638,000, accounts receivable of approximately $34,000 and inventory of approximately $457,000.  Total assets during the first six months of 2015 decreased by approximately $661,000 to $1.3 million as cash was consumed for operations.  The monthly cash burn from operations during the second quarter of 2015 averaged approximately $344,000.  On June 30, 2015, long term debt totaled approximately $577,000, net of discounts, with short term debt totaling approximately $10.1 million, net of discounts, an increase of approximately $1.9 million from the December 31, 2014 balance.  During the first half of 2015, the Company issued $2.6 million of 7.5% secured short term debt, and repaid approximately $875,000 of debt maturing in April 2015 plus accrued interest on that debt of approximately $71,000.  The Company also has a $2 million equity line of credit it secured on June 25, 2013, and as of June 30, 2015, the Company had made no draws on the equity line of credit.

On June 30, 2015, AbTech had approximately 68.9 million shares of common stock outstanding, an increase of 400,000 shares compared to year-end 2014 due to shares of common stock issued to a consultant for services rendered to the Company during the period.  The Company's fully diluted share count increased by approximately 3.0 million shares during the first half of 2015 to approximately 104.1 million shares (inclusive of all options, warrants and convertible debt) due largely to 1,525,000 performance-based stock options granted to directors and officers of the Company that only vest if certain performance objectives are met during 2015, and warrants for 2.9 million shares issued with debt financings, offset by the expiration of options for approximately 1,076,000 shares during the first six months of 2015. 

Conference Call Details:

Date/Time: 

Monday, August 17, 2015 – 1:00 p.m. (EDT)

Telephone Number: 

866-360-3590

International Dial-In Number: 

412-902-4202

Canada Dial-In Number: 

855-669-9657



InternetAccess: 

https://www.webcaster4.com/Webcast/Page/243/9883 

or


www.abtechindustries.com &  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 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, 2015










(Unaudited)


December 31, 2014

ASSETS




Current assets:




Cash and cash equivalents 

$            638,343


$          1,049,460

Accounts receivable – trade, net

34,307


127,435

Inventories, net

457,440


498,214

Deferred charges, net

86,429


198,090

Prepaid expenses and other current assets

33,619


37,995

Total current assets

1,250,138


1,911,194










Fixed assets, net

44,343


56,830

Security deposits

33,940


33,940

Deferred charges, net

5,792


12,760

Total assets

$            1,334,213


$       2,014,724





LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIENCY)




Current liabilities:




Accounts payable

$               885,067


$         642,910

Accounts payable – related party

18,332


5,545

Loan from stockholders

9,000


9,000

Notes payable, net of discounts

1,363,218


1,572,325

Notes payable – related party, net of discounts

4,637,496


2,680,294

Convertible promissory notes, net of discounts

943,187


935,566

Convertible promissory notes – related party, net of discounts

3,187,593


3,061,841

Capital lease obligation – current portion

703


2,731

Customer deposits

2,242


2,242

Accrued interest payable

749,942


462,356

Accrued expenses

307,157


263,801

Total current liabilities        

12,103,937


9,638,611





Due to related party

81,609


84,669

Convertible promissory notes – related party, net of discounts –noncurrent portion portion, net of discounts portion

577,343


569,491

Total liabilities

12,762,889


10,292,771





Commitments and contingencies








Stockholders' equity (deficiency)




Common stock, $0.001 par value; 300,000,000 authorized shares; 68,943,002 and 68,543,002 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively

 

68,943


 

68,543

Additional paid-in capital

44,776,611


44,359,358

Non-controlling interest

(3,091,611)


(2,768,397)

Accumulated deficit

(53,182,619)


(49,937,551)

Total stockholders' equity (deficiency)

(11,428,676)


(8,278,047)

Total liabilities and stockholders' equity (deficiency)

$            1,334,213


$        2,014,724

 

 

ABTECH HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS




Three Months ended

June 30


Six Months ended

June 30



2015


2014


2015


2014










Net revenues


$       67,405


$     182,570


$    270,912


$  257,828










Cost of revenues


127,256


119,990


248,916


223,204

Gross profit (loss)


(59,851)


62,580


21,996


34,624










Operating expenses









   Selling, general and administrative


1,285,460


1,008,903


2,252,819


1,995,447

   Research and development


284,075


410,035


557,085


743,500

Total operating expenses


1,569,535


1,418,938


2,809,904


2,738,947










Operating loss


(1,629,386)


(1,356,358)


(2,787,908)


(2,704,323)










Other income (expense)









   Interest expense


(380,756)


(222,549)


(780,401)


(389,232)

   Other income 


-


23


27


85

Total other income (expense), net


(380,756)


(222,526)


(780,374)


(389,147)










Loss before income taxes


(2,010,142)


(1,578,884)


(3,568,282)


(3,093,470)










Provision for income taxes


-


-


-


-










Net loss


(2,010,142)


(1,578,884)


(3,568,282)


(3,093,470)










Net loss attributable to non-controlling interest


(204,621)


(155,806)


(323,214)


(316,397)










Net loss attributable to controlling interest


$(1,805,521)


$(1,423,078)


$(3,245,068)


$(2,777,073)



















Basic and diluted loss per common share


$           (0.03)


$           (0.02)


$         (0.05)


$         (0.04)

 

Basic and diluted weighted average number of shares outstanding


 

68,819,925


67,883,879


 

68,682,229


 

67,883,879










 

 

 

SOURCE Abtech Holdings, Inc.