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Abtech Holdings, Inc. Reports Third Quarter and Nine Month 2013 Financial Results

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SCOTTSDALE, Ariz., Nov. 13, 2013 /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 third quarter ended September 30, 2013.  Since the beginning of the second half of 2013, AbTech has:

  • Most significantly, received a signed contract from Nassau County totaling up to $12 million for its first major stormwater design-build-operate system installation for ten outfall pipes, for which work began on October 10, 2013;
  • Entered into an agreement with DieselPure Inc. to incorporate AbTech's Smart Sponge® technology into all of DieselPure's™ filtration systems, a sub-micron coalescing filter technology that removes free and emulsified water and other contaminants from ultra-low sulfur diesel and bio-diesel blends in order to prevent engine failure; sales by DieselPure of the filtration system with Smart Sponge have commenced;
  • Signed a distribution agreement giving AbTech the exclusive right to market DieselPure Inc.'s filtration system in the Western region of the United States, inclusive of Arizona, California, Washington, Oregon, Montana, Idaho, Wyoming, Utah, Nevada, Colorado, New Mexico, and Texas. Initial market focus is targeted towards first responders, hospitals, banks and federal and state government facilities;
  • The Company anticipates 2014 will be a banner year with over $10 million in contracted order backlog from the Nassau County contract alone expected as the year begins;
  • Strengthened its Board of Directors with seasoned water industry and financial expert, William C. McCartney, recently retired CFO of Watts Water Technologies;
  • Secured lower cost debt financing of approximately $1.8 million between June and September to support business development initiatives and working capital.
  • Formed a new subsidiary, AbTech UK intended to handle operations related to various projects the Company is pursuing in the United Kingdom and, potentially, other European countries.

"Our long anticipated first marquee contract may have taken more time to materialize than we had planned, but it has placed AbTech in a strategically and very important position in addressing stormwater contamination.  The EPA has noted that 40% to 60% of the pollution in our waterways comes from stormwater contamination, and government agencies around the world are establishing regulations, time-lines and fines to address this problem that is now gaining increased awareness and attention.  AbTech uniquely offers a comprehensive solution and has been awarded the first design-build-operate contract in the United States specifically addressing stormwater contamination.  The stormwater market is a multi-billion dollar global opportunity.  We have paved the way with a process that can be replicated in many locations worldwide, is scalable and generates  recurring revenues from the replacement of the Smart Sponge media," commented Glenn Rink, CEO of AbTech.  "The growing trend of safely and effectively addressing contaminated water is gaining momentum across all our business segments.  Recycling produced water is vital to conserving fresh water, which is becoming increasingly precious.   We anticipate delivering additional marquee contracts in stormwater and other market segments in the coming months."

AbTech reported third quarter 2013 revenues of $72,000 compared to revenue of $81,000 for the comparable three month period of 2012 and $134,000 for the second quarter of 2013.  The decrease in revenue reflects the lull caused by the Company's strategy to direct its business development and engineering resources to focus on large volume opportunities with strategic distributors and customers.  The Company believes that the events that occurred in the third quarter 2013 demonstrate that this strategy can be successful and bode well for further success going into 2014.  Most notably, the $12 million Nassau County stormwater systems project, which is projected to be substantially completed over the next twelve months, is the first-of-its-kind for a stormwater management contract in the United States.  Work on this marquee contract began on October 10, 2013 and is expected to materially contribute to fourth quarter revenues, with the bulk of revenue expected to be recognized during 2014.  In addition, sales efforts have begun pursuant to the DieselPure agreement to incorporate the AbTech Smart Sponge® in all DieselPure filtration systems and for AbTech to act as a DieselPure distributor throughout the western half of the U.S.   AbTech believes that it is gaining traction in all its business verticals. Significant effort has been expended to date to move a number of projects ahead in municipal stormwater and AbTech has also submitted various proposals for produced water applications in the oil & gas and mining industries.   The Company anticipates 2014 will be a banner year starting with over $10 million in contracted order backlog from the Nassau County contract alone.

The Company reported a net loss attributable to controlling interest of $(1.3) million or $(0.02) per basic share for the third quarter of 2013, compared to the previous year's third quarter net loss attributable to controlling interest of $(3.0) million or $(0.06) per basic share and the second quarter 2013 net loss attributable to controlling interest of $(1.3) million or $(0.02) per basic share.  During the third quarter 2013, AbTech reported a loss from operations of $(1.5) million compared to $(1.2) million during the prior year's third quarter and a loss from operations of $(1.5) million during second quarter of 2013.  

For the three months ended September 30, 2013, AbTech reported a negative gross profit of $(18,000) (-25%), compared to a gross profit of $12,000 (15%) in the three months ended September 30, 2012 and $42,000 (32%) for the three months ended June 30, 2013.  During the current year third quarter, the Company's production facility operated at only 2% of operating capacity and the fixed costs of operating the facility, which are included in costs of goods sold, coupled with the standard cost of the products sold, were greater than the revenue recognized during the quarter resulting in a negative gross margin.  At full capacity, the Company anticipates gross margins in excess of 50% on its product sales.  However, it is important to note, over the past year AbTech has strategically evolved its business model to also offer a comprehensive system solutions to its customer base.  As a result, AbTech may also generate revenue from ancillary and complimentary products and services to its customers, which may have varying margins, depending on the product or service and the market segment.  While this strategy expands the Company's addressable market to include larger infrastructure, engineering and technology opportunities and also affords AbTech greater control of the quality and timing of the project, it might cause the Company's aggregate gross margin to differ from the projected range of the Smart Sponge® product sales alone.

Operating expenses during the third quarter of 2013 totaled $1.5 million, an increase of approximately $261,000 or 21% over the third quarter of 2012 and a slight decrease of $18,000 (1.2%) from the second quarter of 2013. The year-over-year increase in operating expenses was primarily attributed to rising selling, general and administrative ("SG&A") expenses due to new operations of AEWS payroll costs, legal fees and consulting costs.  AbTech is dedicated to closely managing operating costs and tying any increase in such costs to revenue opportunities that are gaining traction and showing verified growth potential.

Interest expense for the three months ended September 30, 2013 totaled $34,000 compared to $1.5 million during the third quarter of 2012 and $13,000 in the second quarter of 2013.  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 debt outstanding at December 31, 2012 remained outstanding through the first nine months of 2013 although at an interest rate that was reduced from 12% to 6% effective January 1, 2013.  In June 2013, AbTech entered into a 6.5% bridge loan promissory note totaling $500,000. In August 2013, AbTech issued a $600,000 6.5% secured convertible promissory note with a conversion price of $0.70 per share (later adjusted to $0.53 per share) and on September 30, 2013 issued an additional $420,000 secured convertible promissory note on the same terms including a conversion price of $0.53 per share. 

For the nine months ended September 30, 2013, AbTech reported revenues of $306,000, a $255,000 decrease compared to the same period in 2012, reflecting the Company's strategy to focus its resources on targeted larger opportunities that have a higher possibility of success.  For the nine months ended September 30, 2013, the Company incurred a net loss attributable to controlling interest of $(3.9) million or $ (0.06) per basic share, compared to $(8.2) million or $(0.17) per basic share for the same period in 2012, which included a loss of $1.2 million on the valuation of the warrant liability.  A similar valuation did not occur in 2013 because the warrant liability was subsequently reclassified to additional paid-in capital when certain factors that had originally qualified the warrants as derivatives changed.  The Company's gross margin on sales decreased from 32% for the nine months ended September 30, 2012 to 8% for the same period of 2013.  Operating loss for the first nine months of 2013 totaled $(4.4) million versus $(3.7) million for the first nine months of 2012.

At September 30, 2013, the Company reported a cash and cash equivalents balance of $621,000, accounts receivable of $149,000 and inventory of $432,000.  Total assets during the first nine months of 2013 decreased approximately $1.8 million to $1.3 million as of September 30, 2013.  On September 30, 2013, the Company's short-term debt totaled approximately $2.28 million and long-term debt totaled approximately $92,000 representing approximately $70,000 less in total debt at September 30, 2013 than at December 31, 2012.  To address the Company's working capital needs in light of its recently heightened business activity, AbTech secured a bank line of credit with a credit limit of $100,000 of which $20,000 was outstanding at September 30, 2013.  The line of credit has an annual initial interest rate of prime plus 6.75% with a current promotional rate of 4.25%.  In addition, on June 25, 2013 AbTech entered into an agreement for a $2 million equity line of credit.  As of September 30, 2013, the Company had made no draws on the equity line of credit.   

As of September 30, 2013, AbTech had approximately 67.8 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 of the Company's subsidiary, AbTech Industries, into common stock of the Company. The Company's fully diluted shares totaled approximately 93.7 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 would generate approximately $10.3 million in additional capital to the Company.

Conference Call Details:




Date/Time:                    

Thursday, November 14, 2013 – 11:30 a.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=96942   

or

 www.abtechindustries.com 

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



September 30, 2013




(Unaudited)


December 31, 2012

ASSETS




Current assets:




   Cash and cash equivalents                       

$        620,568


$           2,543,898

   Accounts receivable – trade, net

149,111


74,180

   Inventories, net

431,994


397,804

   Deferred charges, net

7,424


10,128

   Prepaid expenses and other current assets

27,675


14,077

Total current assets

1,236,772


3,040,087





Fixed assets, net

67,819


72,981

Security deposits

33,940


33,940

Deferred charges, net

-


4,892

Total assets

$          1,338,531


$          3,151,900





LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIENCY)




Current liabilities:




    Accounts payable

$            583,788


$            263,379

    Accounts payable – related party

53,771


52,636

    Loans from shareholders

9,000


9,000

    Bank line of credit

20,000


-

    Convertible promissory notes, net of discounts

1,750,000


620,000

    Convertible promissory notes – related party

-


1,185,000

    Promissory notes, net of discounts

500,000


-

    Capital lease obligation – current portion

3,832


3,739

    Customer deposits

42,849


41,584

    Accrued interest payable

27,975


28,676

    Accrued expenses

194,648


190,782

Total current liabilities        

3,185,863


2,394,796





Due to related party

92,015


96,181

Convertible promissory notes – noncurrent portion

-


6,000

Convertible promissory notes – related party – non-current portion

-


525,000

Capital lease obligation – non-current portion

3,774


6.654

  Total liabilities

3,281,652


3,028,631





Commitments and contingencies








Stockholders' equity (deficiency)




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

        67,843,879 and 64,638,372  shares issued and outstanding at

        September 30, 2013 and December 31, 2012, respectively

67,844


64,638

   Additional paid-in capital

42,721,319


40,372,764

   Non-controlling interest

(2,052,816)


(1,814,388)

   Accumulated deficit

(42,679,468)


(38,499,745)

Total stockholders' equity (deficiency)

(1,943,121)


123,269

Total liabilities and stockholders' equity (deficiency)

$          1,338,531


$           3,151,900

 

ABTECH HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS




Three Months ended

September 30


Nine Months ended

September 30



2013


2012


2013


2012










Net revenues


$   72,476


$  81,208


$    306,079


$     561,000










Cost of revenues


90,326


69,327


280,643


379,606

Gross profit (loss)


(17,850)


11,881


25,436


181,394










Operating expenses









   Selling, general and administrative


1,259,351


1,038,372


3,778,169


3,268,476

   Research and development


216,129


176,559


607,208


600,249

Total operating expenses


1,475,480


1,214,931


4,385,377


3,868,725










Operating loss


(1,493,330)


(1,203,050)


(4,359,941)


(3,687,331)










Other income (expense)









   Interest expense


(33,857)


(1,480,123)


(58,979)


(3,706,958)

   Loss on valuation of warrant liability


-


(553,536)


-


(1,232,291)

   Other income 


1


25,421


769


26,521

Total other income (expense), net


(33,856)


(2,008,238)


(58,210)


(4,912,728)










Net loss before income taxes


(1,527,186)


(3,211,288)


(4,418,151)


(8,600,059)










Provision for income taxes


-


-


-


-










Net loss


(1,527,186)


(3,211,288)


(4,418,151)


(8,600,059)










Net loss attributable to non-controlling interest


(178,395)


(172,289)


(549,044)


(437,125)










Net loss attributable to controlling interest


$(1,348,791)


$(3,038,999)


$(3,869,107)


$(8,162,934)



















Basic and diluted loss per common share


$           (0.02)


$           (0.06)


$         (0.06)


$       (0.17)

Basic and diluted weighted average number of shares outstanding


67,765,628


51,481,822


66,571,873


49,381,008










SOURCE Abtech Holdings, Inc.



RELATED LINKS
http://www.abtechindustries.com

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