Abtech Holdings, Inc. Reports Third Quarter and Nine Months 2014 Financial Results

SCOTTSDALE, Ariz., Nov. 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 its third quarter and nine month period ended September 30, 2014.  Since the beginning of the second half of 2014, AbTech has:

• Completed the first phase of its marquee Nassau County project – up to $11.8 million remaining to be billed under the contract;
• Signed an agreement through its engineering subsidiary, AEWS, with Corvias Solutions, a large national developer, program manager and facility owner/operator, to establish a framework for development of large, national stormwater infrastructure projects with an immediate focus on Northeastern municipalities;
• 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 in the stormwater and mining industries, including removal of selenium VI, a highly toxic heavy metal;
• AbTech has developed a method that we believe is patentable to recycle spent 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 and generating a new revenue stream.  This closed loop process reduces the media cost associated with using Smart Sponge^® by approximately 10%; and
• Subsequent to third quarter end, the Company secured additional debt financing totaling $700,000, which brings the total funding from this offering to $1.6 million.

"While the revenue numbers for this quarter do not reflect the progress that is being made in the field, we have begun to experience an increase in product orders over the past several weeks, including replacement orders for Smart Sponge media, that is becoming meaningful even without the contribution from the large installations.  Progress is occurring in larger projects, with the delays in Nassau beginning to abate, and growth in standard product sales is accelerating.    We are even installing our Ultra Urban Filters at fast food restaurant parking lots, airports, military facilities and at national monuments," commented Glenn Rink, CEO of AbTech.  

AbTech reported third quarter 2014 revenues of $114,000 compared to revenue of $72,000 for the comparable three month period of 2013 and $183,000 for the second quarter of 2014.  Approximately $42,000 of revenue recognized in the third quarter of 2014 was related to the project in Nassau County. To date, only the pre-construction engineering services, focused on planning and site selection, have been performed under the Nassau contract.    Approximately $11.8 million remains to be billed under this contract.  In addition, AbTech continues to focus its efforts on large projects that could have a significant impact on revenue and is pursuing contracts with several targeted municipalities that are currently planning similar major stormwater treatment projects. 

AbTech reported a net loss attributable to controlling interest of $(1.6) million or $(0.02) per basic share for the third quarter of 2014, compared to the previous year's third quarter net loss attributable to controlling interest of $(1.3) million or $(0.02) per basic share and the second quarter 2014 net loss attributable to controlling interest of $(1.4) million or $(0.02) per basic share.  During the third quarter 2014, AbTech reported a loss from operations of $(1.5) million, which is about the same as the loss from operations reported for the prior year's third quarter and is comparable to the $(1.4) million loss from operations reported for the second quarter of 2014.

For the three months ended September 30, 2014, AbTech generated a negative gross margin of 5%, compared to a negative gross margin of 25% for the same period of the prior year. This is the result of low levels of production – 2% of production capacity – and the resulting costs of underutilized manufacturing capacity. 

Selling, general and administrative expenses during the third quarter of 2014 totaled $1.0 million, consistent with the prior second quarter 2014 and represent a decrease of approximately $248,000 or 20% from the third quarter of 2013, due largely to a decrease in payroll, consulting and travel expenses as well as a decrease in auditing and legal fees associated with multiple SEC registration filings that occurred in 2013.  Offsetting these cost reductions was a material increase in research and development ("R&D") expenses of approximately $217,000 or 101% for the three months ended September 30, 2014 as compared to the same period of the prior year and a $24,000 or 6% increase over the prior second quarter 2014. The increase in R&D is attributed to field testing work conducted with the Company's mobile, produced water treatment system in Texas and development work with other new technologies.

Interest expense for the three months ended September 30, 2014 totaled $278,000, an increase of $244,000 as compared to the same period of the prior year and an increase of $55,000 compared to interest expense in the second quarter of 2014. The increase in interest expense for the current year third quarter was due to interest accruing on the $3.5 million of 6.5% Secured Convertible Promissory Notes issued in December 2013, the $2 million of 7.5% Secured Promissory Notes issued in the second quarter of 2014 and the $917,000 of 7.5% Secured Promissory Notes issued in the third quarter of 2014.  Interest expense includes the stated interest accrued on the notes of $116,000 during third quarter 2014 plus the amortization of the note discounts created by the bifurcation of the value of the warrants issued with the notes totaling approximately $119,000 and deferred finance costs of $42,000 related to these notes.

For the nine months ended September 30, 2014, AbTech reported revenues of $372,000, a $66,000 or 22% increase compared to the same period in 2013.  The current year revenue includes approximately $63,000 generated from the Nassau County project, a small fraction of the up to $12 million in revenue that is expected to eventually be recognized on the contract.  Activities on the Nassau project through September 2014 were limited to the first phase of the project that included planning and site selection services.  During the first 9 months of 2014, AbTech reduced its selling, general and administrative expenses by 771,000 or 20% compared to the same period in 2013 by reducing headcount, outside consultant fees and travel expenses.  In 2014, the Company allocated more of its resources towards R&D, which increased $570,000 or 94% for the nine 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.  The operating loss for the nine month period in 2014 totaled $(4.2) million compared to a loss of $(4.4) million for the same period in the prior year.  Interest expense increased by $608,000 to $667,000 for the nine-months ended September 30, 2014 compared to the same period of the prior year due to an increase in total debt outstanding of $6.4 million from September 30, 2013 to September 30, 2014.   For the nine months ended September 30, 2014, the Company incurred a net loss attributable to controlling interest of $(4.3) million or $(0.06) per basic share, compared to $(3.9) million or $(0.06) per basic share for the same period in 2013.

At September 30, 2014, the Company reported a cash and cash equivalents balance of $208,000, accounts receivable of $83,000 and inventory of $500,000.  Total assets during the first nine months of 2014 decreased by 50% to approximately $1.1 million as of September 30, 2014 as cash was consumed for operations and the field validation deployment of AbTech's first oil & gas mobile unit.  The monthly cash burn from operations during the third quarter of 2014 averaged approximately $476,000.  On September 30, 2014, the Company had eleven secured promissory notes outstanding aggregating $2.9 million.  These non-convertible notes, issued in private placements in March through September 2014 mature on the 12 month anniversary of their issuance date, have an interest rate of 7.5% per annum and 20% warrant coverage.  The issuance of these notes caused the Company's short term debt to increase during 2014 to approximately $3.6 million, net of discounts, as of September 30, 2014.  Subsequent to September 30, 2014, the Company has issued an additional $700,000 of the junior secured notes, which brings the total funding from this offering to $1.6 million.  The Company's long term debt (convertible notes yielding 6.5% interest issued in December 2013) remained consistent at approximately $3.2 million fluctuating only slightly due to the amortization of the respective note discount.  On June 25, 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.  

As of September 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 866,000 shares during the first three quarters of 2014 to approximately 100.4 million shares (inclusive of all options, warrants and convertible debt) due largely to warrant shares issued with the secured promissory notes during the year.  As of September 30, 2014, the Company had federal tax loss carry forwards of approximately $43.5 million and state tax loss carry forwards of approximately $21.2 million, which expire through 2034.

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 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 ***

SOURCE Abtech Holdings, Inc.

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