Abtech Holdings, Inc. Reports First Quarter 2012 Financial Results
SCOTTSDALE, Ariz., May 15, 2012 /PRNewswire/ -- Abtech Holdings, Inc. (OTCBB: ABHD) ("AbTech" or the "Company"), a developer and manufacturer of patented innovative environmental technologies addressing issues of water pollution and contamination, today reported financial results for its first quarter ended March 31, 2012. During the first quarter, AbTech continued a pilot storm water treatment rollout with its distribution partner, Waste Management, Inc., in California, Canada and the Southeastern US and; began to market its treatment solutions for produced and frac water and treatment for hazardous contaminated industrial waste water resulting in a number of pending contract proposals. In addition, the Company has completed preliminary treatability tests of a technology that can be used in conjunction with Smart Sponge to treat additional contaminants such as heavy metals, PCBs and radionuclides, and is planning more rigorous field testing of this technology in the next several months. On February 10, 2012, the Company raised $2.6 million to close a $6.6 million debt financing that began in the second half of 2011, a portion of which was used to expand the Company's business development staff and launch a multi-tiered market awareness effort.
"Since the beginning of the year, we worked to establish the dynamics to achieve our revenue objectives for the second half of the year. As a result, interest in our product applications is growing rapidly in all three of our target market segments, positioning AbTech for accelerated top-line growth and anticipated operating profitability within the fourth quarter as projected," commented Glenn Rink, founder and CEO of AbTech. "Specifically, within our stormwater division we have a pipeline of over 20 near-term significant municipal and federal opportunities, several of which we believe are in final stages of approval. Our opportunity within the fracking industry has picked up tangible momentum, as we are already embedded in proposals of at least four significant frac water service providers. Finally, our opportunity in industrial wastewater has gained considerable traction in Asia with a Letter of Intent already signed and contract negotiations in progress. Business continues to move forward in a positive direction and consequently, we continue to be comfortable with our previously stated guidance."
AbTech reported revenues for the first quarter 2012 of $240,000 compared to $43,000 for the same period of the previous year and compared to revenues of $268,000 in the fourth quarter of 2011. AbTech anticipates acceleration in its revenue growth to materialize in the second half of 2012 as the market for its stormwater products expands led by joint efforts with Waste Management, additional strategic alliances with market dominant strategic partners are completed and commercialization of the Company's produced water and industrial applications of the Smart Sponge technology commences into international markets.
The Company reported a net loss attributable to controlling interest of $(2.7) million or $(0.06) per basic share for the first quarter of 2012, which includes a non-cash warrant liability valuation loss of approximately $(917,000). This compares to a net loss attributable to controlling interest of $(705,000) or $(0.02) per basic share for the first quarter 2011 and a net loss attributable to controlling interest of $(1.1) million or $(0.02) per basic share for the prior fourth quarter 2011, which included a non cash warrant liability valuation gain of $242,000. AbTech reported a loss from operations of $(995,000) during the first quarter 2012 versus a loss from operations of $(821,000) during the prior year first quarter and a loss from operations of $(1.1) million in the fourth quarter 2011. Assuming AbTech is successful with its revenue growth strategies and gains traction into the summer months, the Company believes operating profitability and positive cash flow will be achievable during the second half of 2012.
For the three months ended March 31, 2012, AbTech's gross profit on revenue totaled $82,000, yielding a gross margin of 34 percent, compared to a negative gross margin in the three months ended March 31, 2011, reflecting improved manufacturing efficiencies associated with a higher utilization of the Company's manufacturing capacity. The gross margin for the fourth quarter of 2011 was 45 percent, which included the benefit of certain customer prepayment forfeitures that had a favorable impact on gross margins for that quarter. The Company expects gross margins to improve as production utilization increases to satisfy growing product sales. AbTech targets 50 percent gross margins in the second half of 2012 as anticipated contract volume levels are realized.
Operating expenses during the first quarter of 2012 totaled $1.1 million, an increase of approximately $294,000 over the first quarter of 2011 and a decrease of approximately $129,000 over the fourth quarter of 2011. A significant portion of the year over year increase was attributed to SG&A costs related to an expanded business development effort that involved the addition of several new employees positioning the company for the anticipated higher growth curve, as well as higher costs associated with being a public company. Research and development costs in the first quarter of 2012 were consistent with such costs in the fourth quarter 2011 but increased approximately 26% compared to the first quarter of 2011 due to product development activities associated with lab and field testing of new applications and testing of new product designs. While AbTech anticipates a continued increase in operating expenses going forward, the Company believes it will be able to leverage its general, selling and administrative expenses to achieve operating profitability as it begins shipment of products under its anticipated marquee contracts.
The Company incurred interest expense for the first quarter of 2012 of $884,000, compared to $382,000 in the prior quarter and $23,000 in the same quarter of the prior year. The increase in interest expense in the first quarter of 2012 is attributable to $186,000 of interest accrued on the convertible promissory notes issued by AbTech from July 2011 through February 15, 2012; $438,000 of interest related to the amortization of the note discount created by the bifurcation of the warrant liability at the times these notes were issued; and $259,000 for the amortization of the deferred financing cost related to the private offerings in which the convertible promissory notes were sold. The convertible promissory notes have staggered maturity dates during 2012 and allow for extension periods beyond the original maturity dates at increased interest rates.
At March 31, 2012, the Company reported a cash and cash equivalents balance of $2.6 million, accounts receivable of $168,000 and inventory of $486,000. On March 31, 2012, the Company's short term debt totaled approximately $5.2 million, net of discounts, and long term debt of approximately $2.0 million. During the quarter ended March 31, 2012, AbTech had approximately $10,500 of capital expenditures. Looking forward, if the Company is successful in achieving significant sales growth in 2012, it may need to increase capital expenditures to expand its manufacturing capacity unless it determines outsourcing some of its manufacturing is more beneficial. The Company is currently considering both options. AbTech estimates that it could double its current manufacturing capacity in less than 10 weeks for approximately $250,000 to support a blended annual sales rate of over $30 million.
On March 31, 2012, AbTech common stock outstanding totaled approximately 48.5 million shares, with a fully diluted share count of approximately 84.4 million (inclusive of all options, warrants and convertible debt). If all outstanding options and warrants were exercised, the Company would receive approximately $9 million in additional capital.
Annual Shareholder Meeting Details:
|
Thursday, May 17, 2012—10:00 a.m. (ET) – RSVP REQUIRED |
Place: |
1120 Avenue of the Americas, 4th Floor (Grannus Financial Offices) |
A copy of the power point used during the presentation will be available beginning on May 18, 2012 at www.abtechindustries.com.
Investor Contact:
Yvonne L. Zappulla
Managing Director
Grannus Financial Advisors, Inc.
212-681-4108
[email protected]
or
Lane J. Castleton
Chief Financial Officer
Abtech Holdings, Inc.
480-874-4000
[email protected]
ABOUT ABTECH HOLDINGS, INC. (OTCBB: 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 storm water 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. AbTech's Smart Sponge technology is installed in more than 15,000 locations across America and in 8 countries worldwide. For more information please visit: www.abtechindustries.com.
This news release contains "forward-looking statements" as that term is defined in Section 27A of the United States Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Statements in this press release which are not purely historical are forward-looking statements 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.
AbTech Company Contact: [email protected]
*** Financial Statements Follow ***
ABTECH HOLDINGS, INC. AND SUBSIDIARY |
|||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||||
March 21, 2012 |
December 31, 2011 |
||||||||
(Unaudited) |
|||||||||
ASSETS |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents $ |
2,616,731 |
$ |
1,386,502 |
||||||
Accounts receivable – trade, net |
168,379 |
108,170 |
|||||||
Accounts receivable – related party, net |
- |
2,032 |
|||||||
Inventories, net |
486,270 |
528,009 |
|||||||
Deferred charges, net |
680,905 |
439,203 |
|||||||
Prepaid expenses and other current assets |
31,429 |
37,988 |
|||||||
Total current assets |
3,983,714 |
2,501,904 |
|||||||
Fixed assets, net |
53,079 |
49,485 |
|||||||
Security deposits |
17,977 |
17,977 |
|||||||
Deferred charges, net |
12,488 |
15,020 |
|||||||
Goodwill |
10,000 |
10,000 |
|||||||
Total assets |
$ |
4,077,258 |
$ |
2,594,386 |
|||||
LIABILITIES & STOCKHOLDERS' DEFICIENCY |
|||||||||
Current liabilities: |
|||||||||
Accounts payable $ |
336,317 |
$ |
483,879 |
||||||
Accounts payable – related party |
24,688 |
29,703 |
|||||||
Loan from shareholders |
9,000 |
9,000 |
|||||||
Convertible promissory notes, net of discounts |
4,737,387 |
3,758,082 |
|||||||
Convertible promissory notes – related party, net of discounts |
495,901 |
578,681 |
|||||||
Customer deposits |
15,329 |
38,505 |
|||||||
Accrued interest payable |
312,421 |
126,232 |
|||||||
Accrued expenses |
116,860 |
122,790 |
|||||||
Total current liabilities |
6,047,903 |
5,146,872 |
|||||||
Due to related party |
100,238 |
101,524 |
|||||||
Convertible promissory notes |
276,000 |
155,000 |
|||||||
Convertible promissory notes – related party |
1,710,000 |
1,881,000 |
|||||||
Warrant liability |
2,521,883 |
498,976 |
|||||||
Total Liabilities |
10,656,024 |
7,783,372 |
|||||||
Commitments and contingencies |
|||||||||
Stockholders' deficiency |
|||||||||
Common stock, $0.001 par value; 300,000,000 authorized shares; |
|||||||||
48,482,344 and 47,160,435 shares issued and outstanding |
|||||||||
at March 31, 2012 and December 31, 2011, respectively |
48,482 |
47,160 |
|||||||
Additional paid-in capital |
26,066,918 |
24,661,344 |
|||||||
Non-controlling interest |
(1,794,888) |
(1,674,105) |
|||||||
Accumulated deficit |
(30,899,278) |
(28,223,385) |
|||||||
Total stockholders' deficiency |
(6,578,766) |
(5,188,986) |
|||||||
Total liabilities and stockholders' deficiency |
$ |
4,077,258 |
$ |
2,594,386 |
ABTECH HOLDINGS, INC. AND SUBSIDIARY |
||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||
Three Months ended March 31 |
||||||
2012 |
2011 |
|||||
Net revenues |
$ |
239,507 |
$ |
43,277 |
||
Cost of revenues |
157,279 |
80,976 |
||||
Gross profit (loss) |
82,228 |
(37,699) |
||||
Operating expenses |
||||||
Selling, general and administrative |
898,576 |
641,546 |
||||
Research and development |
179,197 |
142,087 |
||||
Total operating expenses |
1,077,773 |
783,633 |
||||
Operating loss |
(995,545) |
(821,332) |
||||
Other income (expense) |
||||||
Interest expense |
(884,421) |
(23,172) |
||||
Loss on valuation of warrant liability |
(916,908) |
- |
||||
Other income (expense) |
198 |
(5,004) |
||||
Total other income (expense), net |
(1,801,131) |
(28,176) |
||||
Net loss before income taxes |
(2,796,676) |
(849,508) |
||||
Provision for income taxes |
- |
- |
||||
Net loss |
(2,796,676) |
(849,508) |
||||
Net loss attributable to non-controlling interest |
(120,783) |
(144,343) |
||||
Net loss attributable to controlling interest |
$ |
(2,675,893) |
$ |
(705,165) |
||
Basic and diluted loss per common share |
$ |
(0.06) |
$ |
(0.02) |
||
Basic and diluted weighted average number of shares outstanding |
47,930,338 |
37,319,928 |
SOURCE Abtech Holdings, Inc.
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