Abtech Holdings, Inc. Reports Fiscal Year 2014 Financial Results

SCOTTSDALE, Ariz., March 31, 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 its full year ended December 31, 2014.  During the year, the Company continued a significant expansion of its business development efforts to capitalize on building growth in the stormwater, produced water and industrial waste water markets.

AbTech 2014 Milestones:

Revenue

• Nassau County stormwater management contract (Number S8201002D) – First phase completed in 2014.  In Q1 2015, AbTech was granted a notice to proceed with completion of the engineering design services for the first county-owned site to be outfitted with a stormwater treatment device.  Engineering design has commenced on the site located beneath Marjorie Lane, East Rockaway in Bay Park Long Island, New York.  Up to $11.8 million remains to be completed and billed under this contract;
• Collaboration agreement with Corvias Solutions, a large national developer, program manager and facility owner/operator, to establish a framework for development of large stormwater infrastructure projects with immediate focus on Northeastern municipalities - most notable contract: initial $100 million Prince George's County, Maryland expected to commence work in 2015;
• $67,000 of Smart Sponge^® products were sold for a stormwater project in the Eastern Shore of Maryland targeted to help prevent pollution in the Choptank River and the Chesapeake Bay;
• Signed a renewable four-year (scaling minimum performance) agreement with Naylor Industries, Plc for the marketing and distribution of AbTech products into the European Union. Naylor Industries, a privately-held U.K.-based building and construction products manufacturer generating £75 million in annual revenue, initiated the agreement with an opening order for $107,000 of AbTech products. This first order was shipped during first quarter 2015;
• Deployed and validated onsite first mobile water pre-treatment system for oil recovery and hydrocarbon removal in the treatment of flowback and produced water for the on-shore Oil & Gas industry.  Results reviewed by independent experts and third party laboratories over a five week onsite field test indicate hydrocarbon removal rates as high as 90%, with oil and grease levels as low as 58 ppm while overcoming many atypical site conditions.

Financial

• Completed private offerings for $5 million of 7½% secured debt.
• Gross profit as a percent of sales rose to 41% in Q4 2014 compared to 18% in Q4 2013. 

Product Development and Infrastructure

• Signed 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;
• Developed and filed a patent on a method to recycle 100% of the spent Smart Sponge® media on site at oil drilling and production locations by converting the solid Smart Sponge^® into a liquid hydrocarbon that can be sold to a standard refinery, thereby reducing cost while generating a new revenue stream;
• Received EPA Updated Notice of Registration for Smart Sponge® Plus removing the annual time limitation as described in the EPA registration #86256-1; and
• Expanded Advisory Board: Governor Parris N. Glendening, two-term governor of Maryland (1995-2003), three-term County Executive of Prince George's County;  Dr. Francis J. Harvey, 19^th Secretary of the Army (2004-2007) and 28-year Westinghouse Electric Corporation Executive; Steven W. Kohlhagen, financial expert advisor to the Federal Reserve Board, the United States Treasury and the Council of Economic Advisors; Upen Bharwada, filtration and media expert formerly with DOW (V.P. R&D), GE Water, and Hydration Technology Innovations (EVP & CTO); and Alexander Mouldovan, social media expert and founder of Crowd Factory (acquired by Marketo), Tribe Networks (acquired by Cisco), InterTrust (acquired by SONY); also added to its Board of Directors, William S. Brennan, a seasoned 20-year Wall Street veteran focused on water strategies investment.

For the full year 2014, AbTech reported revenues of $607,000, an increase of approximately 32% compared to 2013 revenues of $461,000.  Sales growth during 2014 is attributed primarily to product sales for a variety of small stormwater projects. The Company also continued work on the Nassau County New York project, valued at approximately $12 million from which AbTech generated engineering service revenue of approximately $90,000 in 2014 ($55,000 in 2013).  The Company expects actual installation of the stormwater systems, which generates the majority of the contract revenue, to begin in 2015, subject to the installation schedules determined by the county. 

Going forward, AbTech anticipates significant sales growth in 2015 as it launches its teaming relationship with Corvias Solutions to provide engineering and design services to support Corvias' $100 million project in Prince George's County, Maryland.  AbTech also anticipates other similar Design/Build/Operate (DBO) type projects which are already under discussion, and opportunities to enter into new markets for produced water and other industrial applications as the Smart Sponge technology achieves success in current testing and pilot stages.

The Company reported a net loss attributable to controlling interest of $(5.8) million or $(0.09) per basic share for the full year 2014, which included interest expense of $1,023,000. This compares to a net loss attributable to controlling interest of $(5.3) million or $(0.08) per basic share for the full year 2013, which included interest expense of $144,000.  AbTech reported a loss from operations of $(5.4) million in 2014 versus a loss from operations of $(5.8) million during the prior year.

AbTech's gross profit on revenue totaled $125,000 in 2014, yielding a gross margin of 21%, compared to a gross margin of 12% in the prior year.  While gross margin has improved, it still reflects low production levels of approximately 2% of manufacturing capacity.  During 2015, AbTech anticipates continually increasing margins for its product sales as it expands its volume to realize economies of scale. AbTech's comprehensive storm water program offering, which includes the Nassau County project, is expected to realize blended gross margin rates that vary from, at the low end, that of a typical Engineering, Procurement, and Construction Management contractor, to at the high end, margins that can exceed 50% on sales of products that incorporate AbTech technologies. 

Operating expenses during 2014 totaled $5.6 million, a decrease of approximately $277,000 compared to 2013.  This 5% year-over-year reduction in operating expenses was primarily attributed to a 17% decrease in selling, general and administrative ("SG&A") expenses which were lower in 2014 due to a reduced average number of employees and related payroll costs, lower legal and auditing fees following the completion of the S-1 registration statement filings in 2013 as well as more cost effective marketing and promotional activities.  These expense reductions were partially offset by a $567,000 increase in research and development expenses including $309,000 in produced water field tests and $252,000 related to technology development for the treatment of landfill leachate.

The Company incurred interest expense in 2014 of $1,023,000 as compared to $144,000 in 2013.  This increase during 2014 reflects interest accruing on the $3.5 million of 6.5% Secured Convertible Promissory Notes issued by the Company in December 2013 and 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 $433,000 plus imputed interest for the amortization of note discounts for beneficial conversion features ($157,000), note discounts for the value of warrants issued with debt ($270,000) and deferred finance costs for debt offerings ($163,000).

For the fourth quarter ended December 31, 2014, AbTech reported revenues of $235,000 compared to revenue of $155,000 for the comparable three month period of 2013 and $114,000 for the third quarter of 2014.  The Company reported improved gross margin on sales of 41% for the final quarter of 2014 reflecting the higher margin mix of engineering services and product sales.  With greater utilization of the Company's manufacturing capacity, gross margins are expected to continue to improve.  During the fourth quarter 2014, AbTech reduced its operating expenses to approximately $1.4 million, a $76,000 reduction over the fourth quarter of 2013 and a $65,000 reduction over the third quarter of 2014, as it rationalized its operations, resulting in reduced headcount, outside consultant fees and travel expenses.  Loss from operations for the fourth quarter 2014 totaled $(1.3) million compared to $(1.4) million during the prior year's fourth quarter and a loss from operations of $(1.5) million during the third quarter of 2014. Interest expense increased materially during the fourth quarter of 2014 to $356,000 as compared to $85,000 during the prior year's fourth quarter and $278,000 in the third quarter of 2014 due to total debt increase of $5.0 million over the course of 2014.  For the three months ended December 31, 2014, the Company incurred a net loss attributable to controlling interest of $(1.5) million or $(0.02) per basic share, compared to $(1.4) million or $(0.02) per basic share for the same period in 2013, and $(1.6) million or $(0.02) for the third quarter of 2014.

At December 31, 2014, the Company had cash and cash equivalents of $1,049,000, accounts receivable of $127,000 and inventory of $498,000.  Total assets during 2014 decreased approximately $123,000 to $2.0 million as cash consumed for operations exceeded the cash received from financing activities.  At December 31, 2014, the Company's short-term debt totaled approximately $8.3 million, net of discounts, an increase of approximately $7.5 million from the prior year-end balance. At December 31, 2014, long-term debt totaled approximately $654,000. The Company entered into an agreement for a $2 million equity line of credit on June 25, 2013 and as of December 31, 2014, the Company had made no draws on the equity line of credit.  Subsequent to year end, in March 2015, AbTech issued a 7.5% Secured Promissory Note to a related party investor for $950,000 and will use the proceeds to repay $875,000 of debt maturing in March 2015 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 increases from 7.5% to 9.5% effective March 10, 2015.

As of December 31, 2014, AbTech had approximately 68.5 million shares of common stock outstanding, an increase of approximately 659,000 shares from year-end 2013, primarily due to approximately 568,000 shares of common stock issued to Directors of the Company as payment in lieu of cash compensation for their services as Directors during 2013 and 2014 and approximately 91,000 shares issued upon the exercise of warrants and options for which the company received $29,000.  The Company's fully diluted share count increased by approximately 1.5 million shares during 2014 to approximately 101 million shares (inclusive of all options, warrants and convertible debt) due largely to warrant shares issued with the secured promissory notes during the year, the additional $600,000 convertible promissory note issued in 2014 and performance-based options granted to consultants of the Company, offset by the expiration of 3.4 million options ($0.69 weighted average exercise price) and 1.3 million warrants ($0.63 weighted average exercise price).  If all remaining outstanding options and warrants were exercised for cash, the Company would receive approximately $9.4 million in additional capital. As of December 31, 2014, the Company had federal tax loss carry forwards of approximately $43.7 million and state tax loss carry forwards of approximately $21.3 million, which expire through 2034.

"The projects we have secured are moving ahead, making 2015 an exciting year with expected material revenue growth for AbTech.  Our objective for 2015 is to generate, from the last several years of business development efforts, operational performance that will build shareholder value," commented Glenn Rink, founder and CEO of AbTech.  "Global mandates for stormwater treatment have clearly gained sponsorship and now traction.  Looking forward, we intend to build on our first contracts to create a firm revenue base in the maturing markets we are pursuing. "

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.

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 ***

SOURCE Abtech Holdings, Inc.

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