Abtech Holdings, Inc. Reports First Quarter 2016 Financial Results

SCOTTSDALE, Ariz., May 16, 2016 /PRNewswire/ -- Abtech Holdings, Inc. (OTC QB: ABHD) ("AbTech" or the "Company"), an environmental technologies firm dedicated to providing innovative solutions to communities, industry and governments addressing issues of water pollution and contamination, today reported financial results for its first quarter ended March 31, 2016.

Key First Quarter 2016 Financial Results Summary

• Revenues decreased year-over-year as the Company redirected its sales efforts toward commercial and industrial markets and completed the hiring of its sales team.  AbTech's opportunity pipeline and planned commercial pilot projects have increased significantly during the first quarter of 2016.
• The monthly cash burn for the first three months of 2016 averaged approximately $322,000 compared to the average monthly cash burn during 2015 of $386,000.
• Operating expenses totaled $1.4 million in first quarter of 2016, an increase of $184,000 over first quarter of 2015, a decrease of $71,000 over fourth quarter 2015. 
• Operating loss for the first quarter of 2016 totaled $(1.5) million, consistent with the operating loss in the fourth quarter of 2015, and approximately 26% greater than the operating loss for the same period of the prior year.
• The planned restructuring of the AbTech sales team with seasoned professionals was completed (April 2016).  
• The Company's Board of Directors was strengthened with the appointment of Dipak P. Jogia, founder of Highmore, an alternative asset manager; and investment advisor to the Hugo Neu Corporation, the owner of approximately 13% of AbTech's outstanding common stock.

"Revenue for the first quarter was significantly below our internal expectations.  This is primarily due to the individual project delays, completion of the manufacture and field testing of the VapTech™ unit, and a couple of significant media reorders that were delayed because the product is still performing satisfactorily, thereby pushing the associated revenue from replacements into subsequent quarters in 2016.  Though not yet reflected in the revenue line, significant progress was made in commercial opportunities as projects progressed from the treatability phase into pilots in several key industries including power generation, pulp and paper, and food and beverage.  This renewed activity is the direct result of a highly experienced sales and marketing team that only recently was completed," commented Jonathan Thatcher, chief operating officer of AbTech.  "We accomplished our corporate overhaul in 2015 by right sizing the Company, restructuring our balance sheet, broadening our treatment capabilities to include heavy metals, and expanding the focus of our business to include industrial and commercial market segments.  Today, AbTech has a strong team of water industry business development and technical sales professionals with long-term, customer relationships. As AbTech is not yet well known within the industrial water filtration systems industry, the focus of the first quarter 2016 was devoted towards educating our target markets and customers about our capabilities to help them meet new regulatory requirements."

An important early revenue contributor that we have opportunistically pursed over the past year is a product we have named VapTech.  VapTech allows oil and gas customers to reduce the volume of produced water to be trucked and reinjected.  This is particularly important in areas where either the cost of reinjection or the geology of reinjection is of concern.  VapTech reduces the volume of water by greater than 85%, returning the water back to the environment in the form of water vapor.  The VapTech unit is now entering field trials with several large oil companies and oil field services companies. The first trial begins next week with additional trials scheduled over the next 90-days.  The addressable market for this equipment is large – processing just 1% of the produced water (U.S. only estimated at approximately 270,988 bbl/day) would generate over $150 million in VapTech unit sales.

A second potential early revenue contributor exists in the international markets.  Our new distributor in Colombia, South America, KLIMA Projects S.A.S. has made tremendous progress educating the oil and gas industry on uses of Smart Sponge media to reduce operating costs and meet new discharge regulations that came into effect in January of this year.  AbTech and KLIMA are moving forward with two product demonstrations for oil and gas customers during second and third quarter this year.

Domestically, AbTech has witnessed a significant growth in opportunity, most constructively in industrial process water.  New regulations around heavy metal wastewater discharge have fueled opportunity in the power industry as well as legislation specifically focused on phosphorus discharge within the pulp and paper and food and beverage industries.  While these are large projects, the Company has already completed treatability testing and is moving to pilot scale systems.  Final purchase decisions are anticipated by year end.

Within the stormwater opportunity, AbTech recently hired a direct sales representative for the West coast and is negotiating several manufacturer representative agreements.  AbTech is also currently field-trialing our new heavy metals media for heavy metal and ortho-phosphate removal in stormwater.  This data will be used for certification with third parties such as NJCAT.  This technology will be particularly relevant in areas with intense regulatory oversight and pressure to reduce sediment and nutrients flowing into key water bodies such as the Chesapeake Bay and the Great Lakes.   

AbTech reported net revenues for the three months ended March 31, 2016 of approximately $43,000 compared to $204,000 for the same period of the previous year and $141,000 in the fourth quarter of 2015.  The Company redirected its sales effort following the difficult events of 2015 related to the suspension in May 2015 of the project in Nassau County.  In April, AbTech completed its planned sales force restructuring with the hiring of a highly seasoned sales team, whose activities in the first quarter were significant but are not expected  to impact revenue until later in the year as projects are won and completed.

The Company reported a net loss attributable to controlling interest of $(1.3) million (less than $0.01 per basic share) for the three months ended March 31, 2016. This compares to the previous year's first quarter net loss attributable to controlling interest of $(1.4) million or $(0.02) per basic share and $(4.7) million or $(0.03) per basic share for the fourth quarter 2015.   AbTech incurred a loss from operations of $(1.5) million for the three months ended March 31, 2016 versus a loss from operations of $(1.2) million in the same period of the prior year and a loss from operations of $(1.5) million in the fourth quarter 2015.

AbTech reported a negative gross profit in the first quarter of 2016 of $(35,000) compared to a gross profit of $82,000 (40% gross margin) during first quarter of 2015 and gross profit of $33,000 (23% gross margin) in the fourth quarter of 2015.  The negative gross margin in the first quarter of 2016 was caused by the cost of excess capacity that resulted from low product sales and corresponding low production levels during the quarter (just 1% of production capacity in the first quarter of 2016 compared to 4% in the prior year's first quarter).

Selling, general and administrative (SG&A) expenses for the three months ended March 31, 2016 totaled $1.1 million, an increase of approximately $119,000 (12%) increase over the prior year first quarter due primarily to legal fees totaling approximately $235,000 associated with the  Company's responses to subpoenas received in 2015 from the U.S. District Court for the Southern District of New York ("USDC") and the Securities and Exchange Commission ("SEC").  Excluding these unusual legal expenses, other SG&A expenses decreased by approximately $116,000 in the first quarter of 2016 compared to the same period in prior year, due largely to reduced consulting fees in 2016.  As compared to fourth quarter 2015, first quarter 2016 SG&A expenses, decreased by $81,000 due to a reduction in legal fees and consulting fees in 2016.

Research and development ("R&D") expenses increased by approximately $65,000 (24%) to $338,000 for the three months ended March 31, 2016 as compared to the same period of the prior year and an increase of approximately $10,000 over the fourth quarter of 2015. The higher R&D expenses in 2016 were primarily attributable to work conducted to develop and test the Company's VapTech technology intended for use in the treatment of produced water at oil and gas drilling sites. 

Interest expense for the three months ended March 31, 2016 totaled approximately $25,000, compared to $400,000 in the same period of 2015 and $256,000 in the fourth quarter of 2015.  The material reduction in interest expense was due to the significant debt conversions that took place in the fourth quarter of 2015.

At March 31, 2016, the Company reported cash and cash equivalents of $103,000, accounts receivable of $21,000 and inventory of $387,000.  The monthly cash burn from operations for the first three months of 2016 averaged approximately $322,000, a reduction of $44,000 from the prior year first quarter and was significantly impacted by a $311,000 increase in accounts payable during the quarter.  At March 31, 2016, AbTech's overall debt, including accrued interest, totaled approximately $1.7 million, an increase of approximately $410,000 from the year-end 2015 balance as the Company made draws of $90,000 of its bank line of credit and received $300,000 in cash advances from a related party stockholder.    

On March 31, 2016, AbTech had approximately 501.7 million shares of common stock outstanding, consistent with year-end 2015. The Company's fully diluted share count decreased by approximately 276,500 shares during first quarter 2016, as compared to year end 2015, to approximately 528.2 million shares (inclusive of all options, warrants and convertible debt) due largely to the expiration in the first quarter of 2016 of 294,000 options to purchase common stock. 

Conference Call:  Given the Company's ongoing cooperation with authorities concerning the USDC and SEC subpoenas, a quarterly conference call will not be held for the first quarter 2016 financial results. 

ABOUT ABTECH HOLDINGS, INC. (OTC QB: ABHD) AND ABTECH INDUSTRIES, INC.

AbTech Industries, Inc. (a subsidiary of Abtech Holdings, Inc.) is an environmental technologies 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. For more information please visit www.abtechindustries.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, our plans and objectives for future operations, assumptions underlying such plans and objectives, and other forward-looking statements included in this news release.  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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