Abtech Holdings, Inc. Reports First Quarter 2015 Financial Results

May 15, 2015, 08:00 ET from Abtech Holdings, Inc.

SCOTTSDALE, Ariz., May 15, 2015 /PRNewswire/ -- Abtech Holdings, Inc. (OTC QB: ABHD) ("AbTech" or the "Company"), a full-service environmental technologies and engineering firm providing innovative water pollution and contamination solutions to communities, industry and governments, today reported financial results for its first quarter ended March 31, 2015. 

"The Company has been confronted with a tremendous setback as a result of the work suspension on the Nassau County contract and the recent termination of the Corvias Teaming Agreement.  The Company's Board of Directors and management are engaged in prioritizing the segments of the business that have growth prospects in light of these recent events.  AbTech's Board of Directors stand united behind the Company through focused strategic planning, financing participation and, in the case of one of our esteemed advisors, assuming the position of Chief Technology Officer," commented Glenn Rink, founder and CEO of AbTech. 

Mr. Rink also stated: "While our strategy to attract large partnerships, distributorships and public private partnerships makes business sense, clearly the results have been disappointing.  In tandem, we have maintained a small direct sales team focused on commercial product sales.  Over the past 6 months, as the market has begun to embrace water recycling and reuse, as well as a heightened sensitivity to stormwater contamination, our products have been gaining increased interest.  We are not only poised to benefit from replacement cycle business, but also an expansion of existing installations and new projects.  Our core patented technology, Smart Sponge®, which has been publically endorsed to work extremely well, is highly cost effective and can be rapidly deployed, improving water quality in existing and new infrastructure.  We are now revising our strategy to focus our resources on what has worked in the past – product sales into the commercial stormwater and industrial markets and those new opportunities that show the best potential to generate revenue in the near term."

AbTech reported net revenues for the three months ended March 31, 2015 of approximately $204,000 compared to $75,000 for the same period of the previous year and $235,000 in the fourth quarter of 2014.  The increase in revenue was largely due to the fulfillment of the initial order of approximately $107,000 from Naylor Industries, the Company's new distributor in the United Kingdom for product sales.  The Company also recognized approximately $14,500 of revenue from the stormwater contract with Nassau County that has since been suspended as of May 12, 2015.    

The Company reported a net loss attributable to controlling interest of $(1.4) million or $(0.02) per basic share for the three months ended March 31, 2015, consistent with the prior year's first quarter. This compares to a net loss attributable to controlling interest of $(1.5) million or $(0.02) per basic share for the fourth quarter 2014.   AbTech incurred a loss from operations of $(1.2) million for the three months ended March 31, 2015 versus a loss from operations of $(1.3) million in the same period of the prior year and a loss from operations of $(1.3) million in the fourth quarter 2014.

AbTech's gross profit on revenue in the first quarter of 2015 totaled $82,000, yielding a gross margin of approximately 40.2%, compared to a negative gross profit of $(28,000) during first quarter of 2014 and gross profit of $96,000 generating a gross margin of 40.9% in the fourth quarter of 2014. The improved gross margin over the recent two quarters is the direct result of the increased sales and the resultant increase in production activities that reduced the costs of excess capacity experienced in the first quarter of 2014.  The Company's manufacturing facility operated at approximately 4% capacity utilization during the first quarter 2015 compared to 1% in the same quarter of the prior year.  The significant increase seen in gross margin percentages over the past two quarters, with a relatively small increase in capacity utilization, supports the Company's expectation that gross margins for its Smart Sponge® products can reach over 50% as product manufacturing levels increase.  However, it should be noted that ancillary and complimentary products and services offered to our customers would likely produce varying margins depending on the product or service and the market segment.

Operating expenses for the three months ended March 31, 2015 totaled $1.2 million, a decrease of approximately $80,000 over the same period of 2014 and a decrease of approximately $139,000 compared to the fourth quarter of 2014.  The lower operating expenses were primarily attributed to decreases in research and development expenses given the completion of oil & gas field validation work in 2014. 

Interest expense for the three months ended March 31, 2015 totaled approximately $400,000, compared to $167,000 in the same period of 2014 and $356,000 in the fourth quarter of 2014.  The increase in interest expense is due to a total of $5 million of 7.5% Secured Promissory Notes issued during 2014.  Interest expense includes the stated interest accrued on notes payable of $178,000 plus imputed interest for the amortization of note discounts for beneficial conversion features of $41,000, note discounts for the value of warrants issued with debt of $114,000 and deferred finance costs for debt offerings of $67,000.  Actual cash used for the payment of interest in the first three months of 2015 totaled $11,171.

At March 31, 2015, the Company reported cash and cash equivalents of $979,000, accounts receivable of $252,000 and inventory of $480,000.  The monthly cash burn for the first three months of 2015 averaged approximately $366,000, a reduction of $109,000 from the prior year first quarter.  At March 31, 2015, long term debt totaled approximately $657,000, net of discounts.  On March 31, 2015, the Company's short term debt totaled approximately $9.3 million, net of discounts, an increase of approximately $1.0 million from year-end 2014 balance.  During March 2015, AbTech issued a 7.5% Secured Promissory Note to a related party investor for $950,000 and used the proceeds in April 2015 to repay $875,000 of debt maturing plus accrued interest.  In addition, AbTech exercised the first extension option of a $1,025,000 Secured Note issued by the Company in May 2014, the interest rate of which increased from 7.5% to 9.5% effective March 10, 2015.  In addition, during the first quarter, AbTech accessed its 6.75% $100,000 bank line of credit, ending the quarter with an outstanding balance due of $80,000

Subsequent to first quarter-end, on April 13, 2015, the Company issued a 7.5% junior secured promissory note for $250,000 that includes a 5-year warrant to purchase 55,000 shares of the company's common stock at $0.298 per share. This note matures on July 13, 2015, but may be extended up to 180 days on similar terms to prior March 2015 financing.  The Company also has a $2 million equity line of credit it secured on June 25, 2013, and as of March 31, 2015, the Company had made no draws on the equity line of credit.   

On March 31, 2015, AbTech had approximately 68.5 million shares of common stock outstanding, consistent with year-end 2014.  The Company's fully diluted share count increased by approximately 1.5 million shares during first quarter 2015 to approximately 102.5 million shares (inclusive of all options, warrants and convertible debt) due largely to performance-based options granted to directors and officers of the Company that only vest if certain performance objectives are met during 2015, and warrants for 526,250 shares issued with debt financings, offset by the expiration of warrants for approximately 639,000 shares during the quarter.  As of March 31, 2015, the Company had federal tax loss carry forwards of approximately $45 million and state tax loss carry forwards of approximately $23 million, which expire through 2034.

Conference Call Details:


Date/Time:

Monday, May 18, 2015 – 11:00 a.m. (ET)

Telephone Number:

866-360-3590

International Dial-In Number:

412-902-4202

Canada Dial-In Number:

855-669-9657



Internet Access:

http://www.videonewswire.com/event.asp?id=102322




    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.

Annual Shareholder Meeting Details:




Date/Time:

Thursday, May 28, 2015—10:00 a.m. (PT) – RSVP REQUIRED

Place:

4110 N. Scottsdale Road, Suite 235, Scottsdale, Arizona

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









March 31, 2015


December 31, 2014








(Unaudited)



ASSETS




Current assets:





    Cash and cash equivalents                    

$      978,921


$    1,049,460


    Accounts receivable – trade, net

252,349


127,435


    Inventories, net

479,766


498,214


    Deferred charges, net

134,977


198,090


    Prepaid expenses and other current assets

22,494


37,995


        Total current assets





1,868,507


1,911,194











    Fixed assets, net

50,523


56,830


    Security deposits

33,940


33,940


    Deferred charges, net

9,286


12,760


         Total assets





$   1,962,256


$   2,014,724





LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIENCY)




Current liabilities:





    Accounts payable                 

$     690,700


$     642,910


    Accounts payable – related party

18,085


5,545


    Loan from stockholders

9,000


9,000


    Bank line of credit

80,000


-


    Notes payable, net of discounts

1,606,090


1,572,325


    Notes payable – related party, net of discounts

3,632,549


2,680,294


    Convertible promissory notes, net of discounts

939,338


935,566


    Convertible promissory notes – related party, net of discounts

3,124,084


3,061,841


    Capital lease obligation – current portion

1,723


2,731


    Customer deposits

2,242


2,242


    Accrued interest payable

628,786


462,356


    Accrued expenses

262,620


263,801

Total current liabilities        

10,995,217


9,638,611





Due to related party

83,171


84,669

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

573,404


569,491


Total liabilities





11,651,792


10,292,771





Commitments and contingencies








Stockholders' equity (deficiency)





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





        68,543,002  shares issued and outstanding 





        at March 31, 2015 and December 31, 2014

68,543


68,543


Additional paid-in capital

44,506,009


44,359,358


Non-controlling interest

(2,886,990)


(2,768,397)


Accumulated deficit

(51,377,098)


(49,937,551)


Total stockholders' equity (deficiency)

(9,689,536)


(8,278,047)


Total liabilities and stockholders' equity (deficiency)    

$    1,962,256


$    2,014,724

 

ABTECH HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



Three Months ended
    March 31,


2015


2014





Net revenues


$      203,507



$      75,258

Cost of  revenues


121,660



103,214

Gross profit (loss)


81,847



(27,956)







Operating expenses






     Selling, general and administrative


967,359



986,544

     Research and development


273,010



333,465

Total operating expenses


1,240,369



1,320,009







Operating loss


(1,158,522)



(1,347,965)







Other income (expense)






     Interest expense


(399,645)



(166,683)

     Other income


27



62

Total other income (expense), net


(399,618)



(166,621)







Loss before income taxes


(1,558,140)



(1,514,586)

Provision for income taxes


-



-

Net loss


(1,558,140)



(1,514,586)

Net loss attributable to non-controlling interest


(118,593)



(160,591)

Net loss attributable to controlling interest


$  (1,439,547)



$  (1,353,995)







Basic and diluted loss per common share


$           (0.02)



$           (0.02)

Basic and diluted weighted average number of shares outstanding


68,543,002



67,883,879

 

 

 

SOURCE Abtech Holdings, Inc.



RELATED LINKS

http://www.abtechindustries.com