Attached files

file filename
EX-32 - EXHIBIT 32 - Abtech Holdings, Inc.v423555_ex32.htm
EX-31.1 - EXHIBIT 31.1 - Abtech Holdings, Inc.v423555_ex31-1.htm
EX-31.2 - EXHIBIT 31.2 - Abtech Holdings, Inc.v423555_ex31-2.htm

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

  

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2015

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

ABTECH HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   14-1994102  
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)
     

4110 N. Scottsdale Road, Suite 235

Scottsdale, Arizona

  85251
(Address of principal executive offices)   (Zip Code)

 

  (480) 874-4000  
(Registrant’s telephone number, including area code)

  

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

  YES  x   NO  ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

  YES  x   NO  ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

¨ Large accelerated filer ¨ Accelerated filer ¨

Non-accelerated filer

(Do not check if smaller reporting company)

x Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

  YES  ¨   NO  x

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class   Outstanding at November 12, 2015
Common stock, $.001 par value   200,445,738

 

 

 

 

ABTECH HOLDINGS, INC.

FORM 10-Q

 

September 30, 2015

 

INDEX

    PAGE
PART I—FINANCIAL INFORMATION   4
     
Item 1.  Financial Statements   4
     
Condensed Consolidated Balance Sheets as of September 30, 2015 (Unaudited) and December 31, 2014   4
     

Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2015 and 2014

  5
     

Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014

  6
     
Notes to the Unaudited Condensed Consolidated Financial Statements   7
     
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations   15
     
Item 3.  Quantitative and Qualitative Disclosures About Market Risk   22
     
Item 4.  Controls and Procedures   22
     
PART II—OTHER INFORMATION   23
     
Item 1.  Legal Proceedings   23
     
Item 1A.  Risk Factors   23
     
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds   23
     
Item 3.  Defaults Upon Senior Securities   24
     
Item 4.  Mine Safety Disclosures   24
     
Item 5.  Other Information   24
     
Item 6.  Exhibits   24
     
Signature Page   25
     
Certifications    
Exhibit 31.1    
Exhibit 31.2    
Exhibit 32    

 

2 

 

 

FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements regarding the Company. Reference is made in particular to the description of our plans and objectives for future operations, assumptions underlying such plans and objectives, and other forward-looking statements included in this report. Such statements may be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “would,” “could,” “confident,” “forecast,” “hope,” “likely,” “plan,” “possible,” “potential,” “predict,” “project,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue,” or similar terms, variations of such terms or the negative of such terms. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. Such statements address future events and conditions concerning, among others, capital expenditures, earnings, litigation, regulatory matters, liquidity and capital resources, and accounting matters. Actual results in each case could differ materially from those anticipated in such statements by reason of factors such as future economic conditions, changes in consumer demand, legislative, regulatory and competitive developments in markets in which we operate, results of litigation, and other circumstances affecting anticipated revenues, costs and expenses, and the risk factors set forth under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed on March 31, 2015 and the additional risk factors set forth under PART II – OTHER INFORMATION, Item 1A “Risk Factors” in this report on Form 10-Q.

 

YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING STATEMENTS

 

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events or information as of the date on which the statements are made in this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this report and the documents that we reference in this report, including documents referenced by incorporation, completely and with the understanding that our actual future results may be materially different from what we expect or hope.

 

Explanatory Note

 

As used in this Quarterly Report on Form 10-Q, “we,” “us,” “our,” “ABHD” and the “Company” refer to Abtech Holdings, Inc.

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The December 31, 2014 consolidated balance sheet included in this Quarterly Report on Form 10-Q was derived from audited financial statements but does not include all disclosures required by GAAP. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the nine-month and three-month periods ended September 30, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015. For further information, refer to the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

 

3 

 

 

PART I—FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

ABTECH HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

   

September 30, 2015

(Unaudited)

    December 31, 2014  
ASSETS                
Current assets                
Cash and cash equivalents   $ 4,784     $ 1,049,460  
Accounts receivable – trade, net     66,292       127,435  
Inventories, net     441,307       498,214  
Deferred charges, net     40,569       198,090  
Prepaid expenses and other current assets     28,528       37,995  
Total current assets     581,480       1,911,194  
                 
Fixed assets, net     44,145       56,830  
Security deposits     33,940       33,940  
Deferred charges, net     2,276       12,760  
Total assets   $ 661,841     $ 2,014,724  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)                
Current liabilities                
Accounts payable   $ 1,431,123     $ 642,910  
Accounts payable – related party     24,522       5,545  
Loans from stockholders     9,000       9,000  
Notes payable, net of discounts     348,082       1,572,325  
Bank line of credit     96,237       -  
Notes payable - related party, net of discounts     -       2,680,294  
Convertible promissory notes, net of discounts     750,000       935,566  
Convertible promissory notes – related party, net of discounts     -       3,061,841  
Due to investors     300,000       -  
Capital lease obligation – current portion     -       2,731  
Customer deposits     2,242       2,242  
Accrued interest payable     966,515       462,356  
Accrued expenses     310,058       263,801  
Total current liabilities     4,237,779       9,638,611  
                 
Due to related party     80,075       84,669  
Convertible promissory notes – related party, net of discounts – non-current portion     581,310       569,491  
Short term obligations classified as long term due to subsequent conversion                
Notes payable, net of discounts     1,032,546       -  
Notes payable - related party, net of discounts     4,682,964       -  
Convertible promissory notes, net of discount     197,115       -  
Convertible promissory notes – related party, net of discounts     3,252,393       -  
Total liabilities     14,064,182       10,292,771  
                 
Commitments and contingencies                
                 
Stockholders’ equity (deficiency)                
Common stock, $0.001 par value; 300,000,000 authorized shares; 68,943,002 and 68,543,002 shares issued and outstanding at
September 30, 2015 and December 31, 2014, respectively
    68,943       68,543  
Additional paid-in capital     44,847,335       44,359,358  
Non-controlling interest     (3,305,558 )     (2,768,397 )
Accumulated deficit     (55,013,061 )     (49,937,551 )
Total stockholders’ equity (deficiency)     (13,402,341 )     (8,278,047 )
Total liabilities and stockholders’ equity (deficiency)   $ 661,841     $ 2,014,724  

  

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4 

 

 

 

ABTECH HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

   

Three Months ended

September 30

   

Nine Months ended

September 30

 
    2015     2014     2015     2014  
                         
Net revenues   $ 101,165     $ 114,072     $ 372,077     $ 371,900  
                                 
Cost of revenues     94,269       119,841       343,185       343,045  
Gross profit (loss)     6,896       (5,769 )     28,892       28,855  
                                 
Operating expenses                                
Selling, general and administrative     1,402,520       1,011,636       3,655,339       3,007,083  
Research and development     245,518       433,550       802,603       1,177,050  
Total operating expenses     1,648,038       1,445,186       4,457,942       4,184,133  
                                 
Operating loss     (1,641,142 )     (1,450,955 )     (4,429,050 )     (4,155,278 )
                                 
Other income (expense)                                
Interest expense     (403,247 )     (277,688 )     (1,183,648 )     (666,920 )
Other income     -       12       27       97  
Total other income (expense), net     (403,247 )     (277,676 )     (1,183,621 )     (666,823 )
                                 
Loss before income taxes     (2,044,389 )     (1,728,631 )     (5,612,671 )     (4,822,101 )
                                 
Provision for income taxes     -       -       -       -  
                                 
Net loss     (2,044,389 )     (1,728,631 )     (5,612,671 )     (4,822,101 )
                                 
Net loss attributable to non-controlling interest     (213,947 )     (169,646 )     (537,161 )     (486,043 )
                                 
Net loss attributable to controlling interest   $ (1,830,442 )   $ (1,558,985 )   $ (5,075,510 )   $ (4,336,058 )
                                 
                                 
Basic and diluted loss per common share   $ (0.03 )   $ (0.02 )   $ (0.07 )   $ (0.06 )
Basic and diluted weighted average number of shares outstanding     68,943,002       67,888,227       68,770,108       67,885,344  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

5 

 

 

ABTECH HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30,

 

 

    2015     2014  
Operating Activities                
Net loss   $ (5,612,671 )   $ (4,822,101 )
Adjustments to reconcile net loss to net cash used in operating activities                
Depreciation     17,564       21,201  
Common stock issued for services rendered     120,000       -  
Stock-based compensation expense     242,459       276,803  
Note discount amortized as interest     425,811       281,226  
Deferred charges expensed as interest     168,005       101,738  
Changes in operating assets and liabilities:                
Accounts receivable     61,143       94,813  
Inventories     56,907       (96,468 )
Prepaid expenses and other current assets     9,467       6,513  
Accounts payable     807,190       (108,547 )
Customer deposits     -       (30,950 )
Accrued interest payable     504,159       279,201  
Accrued expenses     46,257       58,207  
Net cash used in operating activities     (3,153,709 )     (3,938,364 )
                 
Investing Activities                
Purchases of fixed assets     (4,879 )     (24,557 )
Net cash used in investing activities     (4,879 )     (24,557 )
                 
Financing Activities                
Proceeds from notes payable – related party     1,950,000       1,737,978  
Proceeds from notes payable     650,000       1,179,000  
Proceeds from bank line of credit     186,237       74,486  
Proceeds from due to investors     300,000       -  
Proceeds from warrant exercise     -       15,000  
Payment of loan issuance costs     -       (41,000 )
Repayment of borrowings     (875,000 )     -  
Repayment of bank line of credit     (90,000 )     -  
Repayments under capital lease obligation     (2,731 )     (2,927 )
Decrease in due to related party     (4,594 )     (4,371 )
Net cash provided by financing activities     2,113,912       2,958,166  
                 
Net change in cash and cash equivalents     (1,044,676 )     (1,004,755 )
Cash and cash equivalents at beginning of period     1,049,460       1,212,984  
Cash and cash equivalents at end of period   $ 4,784     $ 208,229  
                 
Supplemental cash flow information:                
Cash paid for interest   $ 85,673     $ 4,500  
Cash paid for income taxes     -       -  
Non-cash investing and financing activities:                
Unamortized portion of debt discount   $ 147,569     $ 477,833  
Warrants issued with debt   $ 122,863     $ 255,295  
Warrants issued with debt extension   $ 3,055       -  
Warrants issued to placement agent recorded as deferred charges   $ -     $ 8,797  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

6 

 

 


ABTECH HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 1 – ORGANIZATION

 

Abtech Holdings, Inc. (“ABHD” or the “Company”) (formerly Laural Resources, Inc.), was incorporated under the laws of the State of Nevada on February 13, 2007, with authorized capital stock of 300,000,000 shares at $0.001 par value. See NOTE 11 SUBSEQUENT EVENTS.

 

AbTech Industries, Inc. (“AbTech”), a Delaware corporation with an authorized capital of 15,000,000 shares of $0.01 par value common stock and 5,000,000 shares of $0.01 par value preferred stock, was acquired by ABHD in a reverse acquisition transaction on February 10, 2011. The preferred stockholders of AbTech that elected not to convert and exchange their shares for ABHD common shares, represent the non-controlling interest shown on the Condensed Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014 and Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2015 and 2014.

 

AbTech is an environmental technologies firm that provides innovative solutions to address issues of water pollution. AbTech has developed and patented the Smart Sponge® polymer technology. This technology’s oil absorbing capabilities make it highly effective as a filtration media to remove hydrocarbons and other pollutants from flowing or pooled water. AbTech is headquartered in Scottsdale, Arizona and has a manufacturing facility located in Phoenix, Arizona.

 

In 2012, the Company formed a subsidiary, AEWS Engineering, LLC (“AEWS”), an independent civil and environmental engineering firm, established to provide engineering and technology innovation to the water infrastructure sector. AEWS was initially owned 80% by the Company and 20% by an executive officer of AEWS. In May 2015, AEWS became a wholly owned subsidiary of the Company upon the relinquishment of the 20% interest previously held by the executive officer. Accordingly, the operations of AEWS for the periods reflected in these condensed consolidated financial statements are allocated 100% to the Company. AEWS has an office located in Raleigh, North Carolina and its operations since inception have been focused on setting up the business and pursuing new business opportunities.

 

In 2013, the Company formed a wholly-owned subsidiary in the United Kingdom, AbTech Industries (UK) Limited (“AbTech UK”). The Company may use this subsidiary to conduct operations in the UK and potentially other European countries. However, as of September 30, 2015, AbTech UK had not initiated operations and had no financial transactions.

 

AbTech’s wholly-owned subsidiary, Environmental Security Corporation (“ESC”), was formed in 2003 to develop a sensor array technology designed to detect impurities in water flows. ESC owns a U.S. patent on this technology and has acquired rights to another monitoring technology, but otherwise had no operations during 2015 or 2014.

 

The Company operates in one business segment which is the filtration and treatment of polluted water.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Financial Statement PresentationThe condensed consolidated financial statements include the accounts of ABHD, AbTech, AEWS and ESC. Intercompany accounts and transactions have been eliminated in consolidation. The shares of AbTech preferred stock that have not converted to shares of ABHD common stock represent the non-controlling interest shown on the Condensed Consolidated Balance Sheets.

 

The condensed consolidated financial statements as of September 30, 2015 and for the three and nine month periods ended September 30, 2015 and 2014 are unaudited and, in the opinion of the Company’s management, include all adjustments necessary for a fair presentation of such condensed consolidated financial statements. Such adjustments are of a normal recurring nature.

 

Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

 

7 

 

 

Revenue Recognition – The Company generally recognizes revenue only when all of the following criteria have been met:

 

Persuasive Evidence of an Arrangement – The Company documents all terms of an arrangement in a quote signed or confirmed by the customer prior to recognizing revenue.

 

Delivery Has Occurred or Services Have Been Performed – The Company performs all services or delivers all products prior to recognizing revenue. Services are considered to be performed when the services are complete.

 

The Fee for the Arrangement is Fixed or Determinable – Prior to recognizing revenue, a customer’s fee is either fixed or determinable under the terms of the quote or accepted customer purchase order.

 

Collectability Is Reasonably Assured – Collectability is assessed on a customer by customer basis based on criteria outlined by management.

 

In 2015 and 2014, the Company recognized revenue from the sale of its Smart Sponge® and Smart Sponge Plus products, including Ultra-Urban® Filters, Line Skimmers, Passive Skimmers and Smart Paks®. The Smart Paks are usually sold as a component of an engineered system such as an end-of-pipe vault or other larger multi-product treatment train. The Company provides engineering design services on some engineered solutions. Revenue from design services are recognized at the time the engineering services are completed.

 

In 2013, the Company entered into a contract arrangement whereby it earns revenue from multiple deliverables including, engineering services, installation of storm water treatment systems and maintenance activities. The Company accounts for the contract deliverables related to installation and construction using the percentage-of-completion method and makes estimates of the completion percentages based on the costs and hours actually incurred to complete each project task. The contract deliverables related to pre-construction engineering services and post-construction maintenance services are handled as separate units of accounting with the revenue allocated by the contract to each separate unit of accounting recognized as the respective services are actually performed. Only pre-construction engineering services have been performed under the contract, which was suspended on May 12, 2015.

 

The Company recognizes shipping and handling fees as revenue and the related expenses as a component of cost of sales. All internal handling charges are charged to selling, general and administrative expenses.

 

The payment terms for sales made to customers vary based on the credit worthiness of the particular customer and the size of the order. Some orders require prepayment of up to 50% at the time the order is received, others require payment in full before shipping and others are made on terms requiring payment within 30 days of the date of shipment. Customers do not have a right of return for products purchased from the Company. The Company may on occasion allow a return under appropriate conditions to promote good business practices; however, such returns have been and are expected to be minimal. Regardless of when payment is received from the customer, revenues are recognized in accordance with the criteria for revenue recognition described above.

 

Net Loss Per ShareBasic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. The Company has other potentially dilutive securities outstanding that are not shown in a diluted net loss per share calculation because their effect in both 2015 and 2014 would be anti-dilutive. The following chart lists the securities as of September 30, 2015 and 2014 that were not included in the computation of diluted net loss per share because their effect would have been antidilutive:

 

   Common Shares 
   September 30, 2015
Unaudited
   September 30, 2014
Unaudited
 
Options to purchase common stock   7,385,664    9,278,863 
Warrants to purchase common stock   11,707,311    8,825,290 
Convertible promissory notes   9,529,895    7,856,722 
Convertible preferred stock in AbTech   6,457,467    6,457,467 
    35,080,337    32,418,342 

 

Recent Accounting Pronouncements – In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers,” which provides guidance for revenue recognition. The guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance. In August 2015, the FASB issued ASU 2015-14 “Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date,” which deferred the guidance effective date for the Company until the first quarter of fiscal 2018. The Company is currently evaluating ASU 2014-09 and its potential impact on the Company’s consolidated financial statements.

 

8 

 

 

In June 2014, the FASB issued ASU No. 2014-12, "Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period" ("ASU 2014-12"). ASU 2014-12 provides explicit guidance on whether to treat a performance target that could be achieved after the requisite service period as a performance condition that affects vesting, or as a non-vesting condition that affects the grant-date fair value of an award. The update requires that compensation costs are recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. This update is effective for the annual periods and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the effect that the updated standard will have on the consolidated financial statements and related disclosures.

 

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements—Going Concern, Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” which provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The guidance is effective for the Company beginning for the annual period ending December 31, 2016, and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating this ASU and its potential impact on the Company’s consolidated financial statement footnote disclosures.

 

In April 2015, the FASB issued ASU No. 2015-3, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” which provides that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. Currently, the Company recognizes such debt issuance costs as separate assets under the caption “deferred charges.” Upon adoption of this new standard, the Company will reclassify the deferred charges as direct deductions from the carrying amounts of the corresponding debt liabilities. The standard takes effect for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. Early adoption is permitted.

 

In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory,” which requires entities to measure most inventory “at the lower of cost and net realizable value.” Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The standard takes effect for public entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The new guidance should be applied prospectively, and earlier application is permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the new standard and does not expect that it will have a material effect on the Company’s measurement of inventory.

 

NOTE 3 – INVENTORIES

 

The Company uses a perpetual inventory system and periodic physical test counts to determine inventory amounts at interim balance sheet dates. Inventories are stated at the lower of cost or market, with cost computed on an average cost method which approximates the first-in, first-out basis.

 

   September 30, 2015
(Unaudited)
   December 31, 2014 
Raw materials  $96,690   $94,817 
Work in process   395,790    478,145 
Finished goods   28,827    35,252 
Reserve for obsolescence   (80,000)   (110,000)
Total  $441,307   $498,214 

 

9 

 

 

NOTE 4 – GOING CONCERN

 

These unaudited condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplates continuation of the Company as a going concern. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs, expenses and debt repayments, which raises doubts about the ability of the Company to continue as a going concern. In order to continue as a going concern, the Company will need to generate additional revenue and obtain additional capital to fund its operating losses and service its debt, including accounts payable, of which a substantial portion is presently past due. Management of the Company has developed a strategy, which it believes will accomplish this objective through revenue growth and additional funding, which will enable the Company to operate for the coming year. However, there can be no assurance that the Company’s overall efforts will be successful. If the Company is unable to generate significant sales growth in the near term and raise additional capital, there is a risk that the Company could default on debt maturing during 2015, and could be required to significantly reduce the scope or cease its operations if no other means of financing its operations are available. As a result, the Company’s independent registered public accounting firm has included an emphasis-of-matter paragraph regarding the Company’s ability to continue as a going concern in their opinion attached to the Company’s audited consolidated financial statements for the year ended December 31, 2014. These condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

NOTE 5 – RELATED PARTY TRANSACTIONS

 

Accounts payable, related party – At September 30, 2015 and December 31, 2014, “Accounts payable – related party” represents advertising fees due to a non-profit organization of which the president of the Company is a director and nominal amounts due to officers and directors of the Company for travel expenses.

 

Accrued expenses – At September 30, 2015, accrued expenses included $97,500 for fees due to directors of the Company for their services as directors during 2015.

 

Stock Options – The Company granted 1,525,000 stock options to directors and officers of the Company in February 2015, and 240,000 stock options to a new director of the Company in March 2014 (see NOTE 8 – STOCKHOLDERS’ DEFICIENCY).

 

Private Placements –An investor, considered to be a related party because it has beneficial ownership interest in the Company of greater than 5%, purchased from the Company a $950,000 secured promissory note in March 2015, a $250,000 secured promissory note in April 2015 and a $650,000 secured promissory note in May 2015 (see NOTE 9 – PRIVATE PLACEMENTS). The amount shown as “Due to investors” at September 30, 2015, includes $200,000 due to this related party investor and $100,000 due to an officer of the Company. The same related party investor purchased a $1,025,000 secured promissory note in May 2014.

 

An executive of the Company purchased a $100,000 secured promissory note in May 2015.

 

NOTE 6 – PROMISSORY NOTES AND OTHER DEBT

 

Information regarding the various promissory notes that were outstanding as of September 30, 2015, is set forth in the table below:

 

   Principal Amount   Discount   Net
Amount
   Interest Rate   Maturity Date  Conversion Rate
Notes payable                          
Secured note (senior) (5)  $100,000   $-   $100,000    11.5%  11/30/2015(2)  N/A
Secured note(5)   100,000    -    100,000    9.5%  12/22/2015(1)  N/A
Secured note(5)   104,000    -    104,000    7.5%  9/30/2015(3)  N/A
Secured note   100,000    206    99,794    7.5%  10/14/2015(3)  N/A
Secured note(5)   100,000    464    99,536    7.5%  10/29/2015(3)  N/A
Secured note   250,000    1,712    248,288    7.5%  11/13/2015(3)  N/A
Secured note (junior) (5)   650,000    20,990    629,010    7.5%  5/28/2016(3)  N/A
Subtotal   1,404,000    23,372    1,380,628            
                           
Notes payable - related party                          
Secured note (junior) (5)   1,025,000    -    1,025,000    11.5%  9/10/2015(2)  N/A
Secured note (junior) (5)   500,000    -    500,000    9.5%  11/18/2015(1)  N/A
Secured note (junior) (5)   212,979    -    212,979    9.5%  12/18/2015(1)  N/A
Secured note (junior) (5)   500,000    2,241    497,759    7.5%  10/28/2015(3)  N/A
Secured note (junior) (5)   550,000    4,666    545,334    7.5%  11/26/2015(3)  N/A
Secured note (junior) (5)   950,000    22,484    927,516    7.5%  3/23/2016(3)  N/A
Secured note (junior) (5)   250,000    -    250,000    9.5%  10/13/2015(1)  N/A
Secured note (junior) (5)   100,000    3,756    96,244    7.5%  5/19/2016(3)  N/A
Secured note (junior) (5)   650,000    21,868    628,132    7.5%  5/21/2016(3)  N/A
Subtotal   4,737,979    55,015    4,682,964            
                           
Convertible promissory notes                          
Unsecured note   250,000    -    250,000    6.5%  6/2/2015(4)  $0.53
Unsecured note   500,000    -    500,000    6.5%  6/2/2015(4)  0.64
Secured note(5)   200,000    2,885    197,115    6.5%  12/6/2015  0.53
Subtotal   950,000    2,885    947,115            
                           
Convertible promissory notes - related party                          
Secured note (junior) (5)   3,300,000    47,607    3,252,393    6.5%  12/6/2015  $0.53
Subtotal   3,300,000    47,607    3,252,393            
                           
Convertible promissory notes - related party – noncurrent                          
Secured note (junior) (5)   600,000    18,690    581,310    7.5%  11/26/2016  $0.3586
Subtotal   600,000    18,690    581,310            
Total promissory notes  $10,991,979   $147,569   $10,844,410            

  

(1) – The first extension option for these notes was exercised by the Company on their original maturity date. The maturity dates shown are the extended maturity dates and the interest rate shown is the new interest rate in effect for the 90-day period ending on the new maturity date. As a result of the exercise of the extension options on these notes, the number of warrant shares issued with these notes was increased by 46,149 shares.

 

(2) – The first and second extension options for these notes were exercised by the Company on their original maturity dates. The maturity dates shown are the extended maturity dates and the interest rates shown are the new interest rate in effect for the 90-day period ending on the new maturity date. As a result of the exercise of the first and second extension options on these notes, the number of warrant shares issued with these notes was increased by 112,500 shares. The $1,025,000 secured note with an extended maturity date of September 10, 2015 was in technical default at September 30, 2015, however, the note holder allowed the note to be extended until, subsequent to September 30, 2015, it was converted to common stock in the transaction described in NOTE 11 – SUBSEQUENT EVENTS.

 

10 

 

 

(3) - The maturity date of these notes may be extended up to two times by 90 days each. If the first extension option is exercised, the interest rate will increase to 9.5% per annum. If the second extension option is exercised, the interest rate will increase to 11.5% per annum. Use of the extension of the due dates for these notes was deemed unlikely by management as of September 30, 2015.

 

(4) The Company is currently negotiating to extend the maturity date of these notes. Interest on these notes was calculated through September 30, 2015 at the stated interest rate of 6.5%. If these notes are not extended, the 8.5% default interest rate would apply from the original maturity date of June 2, 2015, and require a de minimis amount of additional interest to be accrued as of September 30, 2015.

 

(5) Subsequent to September 30, 2015, the Company and the holders of these notes executed debt conversion agreements converting these notes to common stock (see NOTE 11 – SUBSEQUENT EVENTS). Consequently, these notes were excluded from short-term liabilities and classified as long-term liabilities in the Company’s Condensed Consolidated Balance Sheet as of September 30, 2015.

 

The convertible promissory notes are convertible into shares of the Company’s common stock at the indicated conversion rate.

 

The note discounts result from warrants issued with the notes and any beneficial conversion features inherent in the convertible notes. The note discounts are amortized under the effective interest method over the term of the promissory notes. Interest expense related to the amortization of the discount on the promissory notes for the nine months ended September 30, 2015 and 2014, was $425,811 and $281,226, respectively.

 

The secured notes have a security interest in all of the personal property and other assets of the Company. The security interest of the secured notes (senior) (the “Senior Notes”) is senior to the security interest of the other secured notes. The security interest of the secured notes (junior) (the “Junior Notes”) is junior to the security interest of the Senior Notes and other secured notes. All secured notes that are not Senior Notes or Junior Notes are referred to herein as “Secured Notes.”

 

Bank Line of Credit

 

The Company has a bank line of credit with a credit limit of $100,000. This line of credit has an annual interest rate of prime plus 6.75% (current promotional rate is 2.99%) and requires monthly payment of any interest due plus approximately 1% of the outstanding balance. At September 30, 2015 and December 31, 2014, the outstanding balance due on the bank line of credit was $96,237 and $0, respectively.

 

Due to investors

 

In September 2015, the Company received $100,000 from a related party as a cash advance with unspecified repayment terms and $200,000 from another related party as prefunding for a potential private offering transaction. Under the terms of the prefunding, if the potential private offering does not occur, the Company will, at its option, either (i) refund the prefunded amounts to the investors; or (ii) give the investors the option to either (a) receive common stock for the prefunded amount at a purchase price equal to the average closing price of the Company’s common stock for the five trading days prior to the date that such amount was provided to the Company; or (b) receive a junior secured promissory note from the Company for the prefunded amount with such note having an interest rate of 7.5% and a term of one (1) year. In addition, at closing the investors will receive a three-year warrant for the purchase of one (1) share of the Company’s common stock for each dollar of the prefunded amount with such warrant having an exercise price equal to two times the average closing price of the Company’s common stock for the 5 trading days.

 

NOTE 7 – FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, customer deposits, capital lease obligation, bank line of credit, notes payable and convertible notes payable. It is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values, using level 3 inputs, based on their short maturities, or for long term debt, based on borrowing rates currently available to the Company for loans with similar terms and maturities. Gains and losses recognized on changes in fair value of financial instruments, if any, are reported in other income (expense) as gain (loss) on change in fair value. At September 30, 2015 and December 31, 2014, the Company had no financial instruments outstanding that were estimated using level 1or level 2 inputs.

 

11 

 

 

NOTE 8 – STOCKHOLDERS’ DEFICIENCY

 

The $488,377 increase in common stock and additional paid-in capital for the nine-months ended September 30, 2015 is attributable to stock based compensation of $242,459 for stock options vesting during the period, $122,863 for the value of warrants issued with secured promissory notes during the period, $3,055 for the value of 158,649 additional warrant shares issued upon the Company’s exercise of extension options on two secured notes during the period, and $120,000 for 400,000 shares of common stock issued to a consultant for services rendered to the Company during the period.

 

During the nine-months ended September 30, 2015, the Company granted 1,325,000 performance-based stock options to officers and directors of the Company. These options will only vest if certain performance objectives are met during 2015. Compensation expense for these options will be recognized ratably during 2015 only when it becomes likely that the performance objective will be met. The Company also granted an executive stock option for 200,000 common shares, which expired prior to September 30, 2015. In addition, the Company granted 70,000 stock options to two consultants during the period, which vested immediately upon grant. The compensation expense for the options granted will be recognized as the options vest based on the estimated fair value of the options granted as determined by the Black-Scholes option pricing model. The following table summarizes the significant assumptions used in applying the Black-Scholes model for the options granted during the nine-months ended September 30, 2015.

 

Weighted average fair value per share of options granted  $0.18
Weighted average assumptions used:   
Expected dividend yield  0.0%
Expected volatility  64.7%
Risk-free interest rate  1.27%
Expected term in years  4.85
Exercise price  $0.34

 

The Company used the following assumptions to estimate the fair value of the warrants that were issued in conjunction with secured promissory notes during the nine months ended September 30, 2015:

 

Expected volatility  48.63% - 85.31%
Expected dividend yield  0%
Expected term  2.0 – 4.8 years
Risk-free interest rate  0.61% - 1.71%
Market price of common stock  $0.03 - $0.32

 

The assumptions for expected dividend yield, expected volatility and expected term reflect management’s judgment and include consideration of historical experience. Expected volatility is based on historical volatility of the Company’s common stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option or warrant.

 

NOTE 9 – PRIVATE PLACEMENTS

 

In March 2015, the Company issued a secured promissory note to a related party investor for $950,000 (the “March Note”). The proceeds from the March Note were used in April 2015 to repay $875,000 of mature debt plus accrued interest of approximately $71,000. The March Note matures on March 23, 2016, has an interest rate of 7.5% per annum and has a security interest in the assets of the Company that is junior to the Senior Notes and the Secured Notes. The purchaser of the March Note also received a warrant for the purchase of 475,000 shares of the Company’s common stock. The warrant has an exercise price of $0.315 per share and expires five (5) years from the date of grant. The Company may extend the maturity date of the March Note up to two times by 90 days each. If the first extension option is exercised, the interest rate will increase to 9.5% per annum. If the second extension option is exercised, the interest rate will increase to 11.5% per annum. The number of warrant shares that the March Note holder will be entitled to under the terms of the warrant issued by the Company with the March Note will be increased by 10% for each extension option exercised by the Company.

 

12 

 

 

In April 2015, the Company issued a secured promissory note to a related party investor for $250,000 (the “April Note”). The proceeds from the April Note were used for operations and working capital. The April Note which matured on July 13, 2015 and was then extended to November 13, 2015 after the Company exercised both 90 day extension options, has an interest rate of 7.5% per annum and has a security interest in the assets of the Company that is junior to the Senior Notes and the Secured Notes. The purchaser of the April Note also received a warrant for the purchase of 55,000 shares of the Company’s common stock. The warrant has an exercise price of $0.298 per share and expires five (5) years from the date of grant. Under the terms of the April Note, the Company may extend the maturity date up to two times by 90 days each. Upon exercise of the first extension option, the interest rate increased to 9.5% per annum. Upon exercise of the second extension option, the interest rate increased to 11.5% per annum. The number of warrant shares that the April Note holder is be entitled to under the terms of the warrant issued by the Company with the April Note was by increased by 10% for each extension option exercised by the Company.

 

In May 2015, the Company issued three secured promissory notes to two related parties and one other investor for an aggregate principal amount of $1,400,000 (the “May Notes”). The proceeds from the May Notes were used for operations and working capital. The May Notes mature between May 19, 2016 and May 28, 2016, have an interest rate of 7.5% per annum and have a security interest in the assets of the Company that is junior to the Senior Notes and the Secured Notes. The purchasers of the May Notes also received warrants for the purchase of 2,240,000 shares of the Company’s common stock. The warrants have a weighted average exercise price of $0.082 per share and expire five (5) years from the date of grant. The Company may extend the maturity dates of the May Notes up to two times by 90 days each. If the first extension option is exercised, the interest rate will increase to 9.5% per annum. If the second extension option is exercised, the interest rate will increase to 11.5% per annum. The number of warrant shares that the May Note holders will be entitled to under the terms of the warrant issued by the Company with the May Notes will be increased by 10% for each extension option exercised by the Company.

 

NOTE 10 – LITIGATION AND CONTINGENCIES

 

On May 28, 2015, the Company received a subpoena from the SEC that stated that the staff of the SEC is conducting an investigation In the Matter of Abtech Holdings, Inc. (NY-9262).  Generally, the SEC’s subpoena has asked for all documents, agreements, and communications concerning (i) the Company’s Contract for Services with Nassau County, New York, dated October 8, 2013; (ii) Adam Skelos, Dean Skelos, and their related entities; (iii) SLC Clean Water, LLC, Axiom, Glenwood Management, and a number of other listed individuals and entities; (iv) certain Board and Board committee minutes and related materials; (v) certain policies, procedures, and internal controls in effect at the Company; (vi) certain communications with the Company’s independent registered public accounting firm, transfer agent, potential and current investors, broker-dealers, investment advisors, and finders; and (vii) certain other organizational and financial account information of the Company.  The Company has contacted the SEC’s staff regarding the subpoena and the Company is cooperating with the SEC.  The Company believes the SEC’s subpoena is a result of the complaint announced on May 4, 2015 that was filed by Federal authorities against Dean and Adam Skelos.  The Company is not a target of the Skelos’ criminal proceedings and has fully cooperated with federal investigators in that matter.  Please see the Company’s Current Report on Form 8-K dated May 15, 2015 and its Quarterly Report on Form 10-Q dated May 15, 2015, for more information on the Skelos’ criminal proceedings. As of September 30, 2015, the Company had incurred approximately $1,044,000 in legal fees and other costs related to these matters. The Company cannot estimate at this time the cost of additional legal representation in resolving this matter.

 

13 

 

 

NOTE 11 – SUBSEQUENT EVENTS

 

On November 4, 2015, the Company executed documents with note holders and investors to proceed with the initial closing of a financing transaction (the “Transaction”), involving the aggregate conversion of $10,796,344 of outstanding debt issued by the Company, including interest accrued thereon, into 359,878,140 shares of the Company’s common stock (“Common Stock”) and the purchase of 71,428,571 shares of Common Stock for $2.5 million in cash, for a total transaction value of approximately $13.3 million. Each participant in the Transaction (the “Participant(s)”) signed a Financing Agreement, as amended, specifying the terms, conditions and procedures to be followed in completing the Transaction and describing the Participants’ specific commitments in the Transaction. Each Participant converting debt as part of the Transaction signed a Debt Conversion Agreement, and each Participant purchasing Common Stock as part of the Transaction signed a Securities Purchase Agreement.

 

The closing of the Transaction will occur in two stages. In stage one, which took place on November 10, 2015 (the “Stage One Closing”), $3,945,082 of convertible promissory notes issued by the Company, including interest accrued thereon, will be converted at $0.03 per share into 131,502,735 shares of Common Stock. Following this conversion, the Company’s Board of Directors has approved, subject to the approval of a majority of the Company’s stockholders, as adjusted for the debt conversions taking place on the Stage One Closing, an increase in the shares of Common Stock that the Company is authorized to issue from 300,000,000 to 800,000,000 (the “Consent”), and will prepare and file an information statement (the “Information Statement”) with the Securities and Exchange Commission disclosing the Consent.

 

The stage two closing will occur as promptly as practicable after (i) a twenty (20) calendar day period from the filing of a definitive information statement (or such other period of time as the Securities and Exchange Commission may require) and (ii) the filing of a Certificate of Change with the Nevada Secretary of State. At that time, the remaining debt of $6,851,262, including accrued interest, will be converted at $0.03 per share into 228,375,405 shares of Common Stock, and the Company will issue 71,428,581 shares of Common Stock at $0.035 per share pursuant to the $2.5 million of Securities Purchase Agreements executed and funded by the Participants.

 

As of November 10, 2015, the Company had received $1,900,000 (the “Pre-Closing Funds”) from purchasers (the “Purchasers”) as prefunding of the $2.5 million committed for purchase of Common Stock in the Securities Purchase Agreements. The Purchasers providing the Pre-Closing Funds did so pursuant to the terms of a Prefunding Agreement which provided for the handling of the Pre-Closing Funds in the event that the Transaction had not proceeded to the Stage One Closing. Further, for Pre-Closing Funds received more than five (5) business days before the Stage One Closing, the Company will issue to the Purchasers a three (3) -year warrant for the purchase of one (1) share of the Company’s Common Stock for each dollar of the Pre-Closing Funds, with such warrant having an exercise price equal to two (2) times the average closing price of the Company’s Common Stock for the five (5) trading days prior to the date such amount was provided to the Company. Accordingly, the Company will issue to the Purchasers warrants for 1,900,000 shares of Common Stock on these terms.

 

The Common Stock issued in this transaction was unregistered. The issuances of Common Stock in this transaction may cause further limitation in the Company’s ability to utilize its net operating losses under Internal Revenue Code Section 382.

 

14 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This discussion includes forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and the timing of events may differ materially from those anticipated in these forward-looking statements as a result of a variety of business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change.

 

Overview

 

Management is focused on establishing ABHD and its subsidiaries as a reliable provider of water treatment solutions in the emerging markets for the treatment of stormwater runoff, produced water from oil and gas extraction and mining operations, and other industrial water applications. ABHD is the parent holding company. Its subsidiary, AbTech, is the operating company that manufactures and sells water treatment products, many of which incorporate its patented Smart Sponge® technology. ABHD’s other operating subsidiary, AEWS, provides engineering services to assist government and industry in developing effective solutions to their specific water treatment needs. ESC is a dormant subsidiary that holds a patent regarding a sensor array technology designed to detect impurities in water flows. This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based on the consolidated operations of ABHD and its subsidiaries.

 

The Company is incurring significant costs and expenses as it seeks to gain traction in its targeted water treatment markets and position itself with validated treatment solutions that, if accepted and adopted by the market, can generate significant revenues in the future. The Company’s operations reflect limited historical sales revenue as the Company attempts to engage in those business development activities that management believes have the greatest opportunity to generate future revenues. Key factors affecting ABHD’s results of operations during the periods covered in this section include revenues, cost of revenues, operating expenses and interest expense.

 

Results of Operations

 

Comparison of the nine months ended September 30, 2015 and 2014

 

Revenues

 

Revenues for the nine months ended September 30, 2015 were $372,077, approximately equal to revenues in the same period of the prior year. Prior year revenues included approximately $63,000 for the stormwater project in Nassau County, but due to the suspension of the Nassau County contract in May of 2015, revenues for this contract amounted to only $21,787 in the nine months ended September 30, 2015. The contract with Nassau County had been an important component of AbTech’s expected future revenues. However, early in the 2nd quarter of 2015, AbTech and the contract were mentioned in reports of a grand jury investigation and a federal complaint filed against a New York State Senator and his son alleging that, among other things, the Senator and his son engaged in unlawful practices in connection with the award of the Contract to AbTech. AbTech is not a target of the criminal proceedings, and has been cooperating with federal investigator’s requests for information. On May 12, 2015, AbTech received a notice from the County of Nassau Department of Public Works suspending all work under the Contract until such time, if at all, as the County of Nassau notifies AbTech in writing that the County has lifted the work suspension. If the County of Nassau does not lift the suspension, AbTech will be materially adversely affected. These and other challenges faced in moving other municipal stormwater projects forward in the face of continued funding constraints for new municipal and federal facility stormwater projects, have led the Company to redirect its efforts to more aggressively build its stormwater product sales business with commercial customers, move forward with its efforts to sell its technologies for treating produced water in the oil and gas industry, develop an integrated stormwater program for commercial customers and accelerate the time to market for new products that the Company is developing, including products to treat water contaminated with heavy metals. Approximately 30% of revenues for the nine months ended September 30, 2015 are attributable to orders totaling $110,532 from Naylor Industries, the Company’s new distributor in the United Kingdom.

 

Gross Margin

 

The Company’s gross margin on sales was 8% for both the nine months ended September 30, 2015 and 2014. This relatively low gross margin continues to reflect the low levels of production and the consequent costs of underutilized manufacturing capacity. The Company operated at approximately 2% of operating capacity for both the nine months ended September 30, 2015 and 2014. Excess production capacity is expected to continue to adversely affect gross margins until product sales increase with a corresponding increase in product manufacturing. The gross margin in 2014 was favorably affected by revenue from forfeited customer deposits of $39,000 that carried no corresponding cost. The gross margin in 2015 benefited from a larger portion of sales coming from high margin product sales as opposed to the lower margin revenue related to the Nassau County contract that accounted for 6% of revenue in 2015 compared to 17% of revenue in 2014.

 

15 

 

 

Selling, general and administrative expenses

 

Selling, general and administrative expenses increased by approximately $648,000 or 22% in the nine months ended September 30, 2015, compared to the same period in 2014. These increases were due primarily to legal fees incurred by the Company in responding to the Federal investigation regarding the complaint filed against New York State Senator Dean Skelos and his son, Adam Skelos, and the subpoena received by the Company from the SEC regarding its investigation In the Matter of Abtech Holdings, Inc. (NY-9262) (for further information regarding these matters see PART II – OTHER INFORMATION, Item 1. Legal Proceedings). Legal fees for these matters totaled approximately $1,044,000 for the nine months ended September 30, 2015. Excluding these expenses, other selling general and administrative expenses were $396,000 less in the first nine months of 2015 compared to the same period of the prior year. This expense reduction was the result of a $367,000 reduction in consulting fees, a $67,000 reduction in travel and entertainment expenses, a $27,000 reduction in investor relations expenses and a $22,000 reduction in government affairs expenses. These reductions were offset by increases of $78,000 for recruiting fees, $20,000 for liability insurance and $21,000 for public relations fees.

 

Research and development expenses

 

Research and development (“R&D”) expenses decreased by approximately $374,000 (32%) for the nine month period ended September 30, 2015 as compared to the same period of the prior year. R&D expenses in 2014 included approximately $304,000 for field testing work conducted with the Company’s mobile produced water treatment system in Texas. Field testing expenses in the nine months ended September 30, 2015 were only $15,000. The Company also reduced its expenses in the nine months ended September 30, 2015 by approximately $49,000 for university sponsored research projects and $18,000 for outside testing services. These expense reductions were partially offset by an increase of approximately $69,000 for consulting expenses in the first nine months of 2015, which included $62,500 of expenses related to the Company’s development of a heavy metals technology, and $161,000 for the development of an evaporator technology targeted for the treatment of landfill leachate. The Company intends to continue its work with the heavy metals technology but in an effort to reduce costs and focus on a few key initiatives, during the third quarter of 2015 it suspended all activities related to the development of technologies to treat landfill leachate.

 

Other income (expense)

 

Interest expense increased substantially for the nine months ended September 30, 2015, as compared to the same period of 2014, due to interest expense related to the additional debt incurred by the Company during 2014 and 2015. The various components of interest expense that accounted for the increase are summarized in the table below:

 

     Nine months ended September 30, 
  Interest Components  2015   2014 
1. Interest accrued on notes outstanding and other finance charges  $589,832   $283,956 
2. Amortization of the note discount created by the bifurcation of the value of the warrants issued with promissory notes   299,118    164,332 
3. Interest imputed on promissory notes issued with beneficial conversion terms   126,693    116,894 
4. Amortization of deferred financing costs related to private offerings of debt   168,005    101,738 
  TOTAL INTEREST EXPENSE  $1,183,648   $666,920 

 

16 

 

 

Comparison of the three months ended September 30, 2015 and 2014

 

Revenues

 

Revenues for the three months ended September 30, 2015 decreased by approximately $13,000 (11%) compared to revenues in the same period of the prior year. The decrease in revenue was due in part to the suspension of the project in Nassau County and the related disruption in the Company’s efforts to win new business with other municipal stormwater customers. The Company earned no revenue on the Nassau County project in the 3rd quarter of 2015 compared to approximately $41,800 in the same quarter of the prior year. As a consequence of these events, the Company decided to redirect its efforts to more aggressively build its stormwater product sales business with commercial customers, move forward with its efforts to sell its technologies for treating produced water in the oil and gas industry, work to promote an integrated stormwater program for commercial customers and accelerate the time to market for new product technologies the Company is developing, including a product to treat water contaminated by heavy metals.

 

Gross Margin

 

The Company’s gross margin on sales was $6,896 (7%) for the three months ended September 30, 2015 compared to a negative gross margin of ($5,769) (negative 5%) reported for the same period of the prior year. These low gross margins are primarily the result of the low sales volume and the consequent unabsorbed costs of excess manufacturing capacity included in the cost of revenues. In the third quarter of 2015, the Company operated at approximately 1.4% of capacity. The gross margin in 2015 benefited from a larger portion of sales coming from high margin product sales as opposed to the lower margin revenue related to the Nassau County contract, which accounted for 0% of revenue in the third quarter of 2015 compared to 37% of revenue in the third quarter of 2014.

 

Selling, general and administrative expenses

 

Selling, general and administrative expenses increased by approximately $391,000 or 39% for the three months ended September 30, 2015 as compared to the same period in 2014. These increases were due primarily to legal fees incurred by the Company in responding to the Federal investigation regarding the complaint filed against New York State Senator Dean Skelos and his son, Adam Skelos, and the subpoena received by the Company from the SEC regarding its investigation In the Matter of Abtech Holdings, Inc. (NY-9262) (for further information regarding these matters see PART II – OTHER INFORMATION, Item 1. Legal Proceedings). Legal fees for these matters totaled approximately $578,000 in the third quarter of 2015. Excluding these expenses, other selling general and administrative expenses were $187,000 less in the third quarter of 2015 compared to the same period of the prior year reflecting the Company’s efforts to reduce operating costs and redirect its efforts on a few key initiatives. This expense reduction was primarily the result of a $147,000 reduction in consulting fees and a $21,000 reduction in investor relations expenses. These reductions were partially offset by an increase of $49,000 for recruiting fees.

 

Research and development

 

Research and development (“R&D”) expenses decreased by approximately $188,000 (43%) for the three month period ended September 30, 2015 as compared to the same period of the prior year. R&D expenses in 2014 included approximately $57,000 for field testing work conducted with the Company’s mobile produced water treatment system in Texas. Field testing costs in the third quarter of 2015 were only $5,000. The Company also reduced its expenses in the third quarter of 2015 by approximately $19,000 for university sponsored research projects and $82,000 for consulting expenses. Consulting expenses in the third quarter of 2014 included $130,000 for the development of the evaporator technology targeted for the treatment of landfill leachate. This work was suspended in 2015 and no corresponding costs were incurred in the third quarter of 2015. Consulting expenses in the third quarter of 2015 totaled approximately $48,000 and were primarily attributable to the Company’s work in developing products for the treatment of water contaminated by heavy metals. These expense reductions were partially offset by an increase of approximately $12,000 for payroll expenses in the third quarter of 2015 due to staffing changes including the hiring of a new Chief Technology Officer.

 

17 

 

 

Other income (expense)

 

Interest expense increased substantially for the three months ended September 30, 2015, as compared to the same period of 2014 due to interest expense related to the additional debt incurred by the Company subsequent to September 30, 2014. The various components of interest expense that accounted for the increase are summarized in the table below:

 

     Three months ended September 30, 
  Interest Components  2015   2014 
1. Interest accrued on notes outstanding and other finance charges  $218,303   $116,205 
2. Amortization of the note discount created by the bifurcation of the value of warrants issued with promissory notes   92,488    79,434 
3. Interest imputed on promissory notes issued with beneficial conversion terms   43,084    39,751 
4. Amortization of deferred financing costs related to private offerings of debt   49,372    42,298 
  TOTAL INTEREST EXPENSE  $403,247   $277,688 

 

Liquidity and Capital Resources

 

Liquidity

 

As of September 30, 2015, the Company had a working capital deficiency of approximately $3,656,000 compared to a working capital deficiency of approximately $7,727,000 at December 31, 2014. The reclassification as long term debt of the current debt that converted to common stock after September 30, 2015, was the cause of this increase in working capital. Without this reclassification, the capital deficiency would have increased by approximately $5,094,000 due primarily to the use of cash for operations during the nine months ended September 30, 2015 and the $2,600,000 of short term debt taken on by the Company during the same period. Approximately $946,000 of the $2,600,000 new debt incurred in 2015 was used to repay promissory notes and accrued interest maturing in April 2015. The Company’s cash balance decreased from $1,049,460 at December 31, 2014 to $4,784 at September 30, 2015. Based on the Company’s historical use of cash, this September 30, 2015 cash balance is insufficient to meet even the immediate cash requirements for the Company and evidences the Company’s need to raise additional capital in the immediate short-term. Subsequent to September 30, 2015, the Company announced a significant financing transaction that will result in the conversion of approximately $10.8 million of debt into common stock and the receipt of proceeds by the Company of $2.5 million from the issuance of common stock (see NOTE 11 – SUBSEQUENT EVENTS to the accompanying condensed consolidated financial statements).

 

To date, the Company has not generated sufficient revenue to cover its operating costs, expenses and debt service, and continues to operate with negative cash flow. While we hope to achieve significant sales growth to cover operating costs and expenses over the long-term, continued negative cash flow from operations is expected in the short-term. The Company will require additional capital to maintain current operations until the Company achieves the sales growth necessary to cover operating costs, expenses and debt repayments. In addition, rapid sales growth may require the Company to enter into working capital financing arrangements.

 

Operations for the nine months ended September 30, 2015 were funded by the cash on hand at the beginning of the period, the funds received from the issuance of $2.6 million of secured promissory notes during the first half of 2015 and $300,000 received from investors in the third quarter of 2015 as prefunding for a contemplated private offering transaction.

 

The Company has a bank line of credit with a credit limit of $100,000. At September 30, 2015 the outstanding balance due on the bank line of credit was $96,237. This line of credit requires monthly payment of any interest due plus approximately 1% of the outstanding balance.

 

18 

 

 

The Company has a $2,000,000 equity line of credit (“ELOC”) available pursuant to an agreement it entered into in June 2013 with Dutchess Opportunity Fund, II, LP (“Dutchess”), whereby Dutchess is irrevocably committed to purchase up to $2 million of ABHD common stock from the Company over the course of 36 months. The aggregate number of shares issuable by the Company and purchasable by Dutchess under the ELOC is limited by the dollar amount sold, in this instance no more than $2 million, and will depend upon the trading price of the Company’s shares. The purchase price will be set at ninety-seven percent (97%) of the lowest daily volume weighted average price of the Company’s common stock during the five consecutive trading days beginning on the date of the applicable put. The Company may draw on the ELOC from time to time, as and when it determines appropriate in accordance with the terms and conditions of the Investment Agreement. The Company has no obligation to utilize the full amount available under the ELOC. As of September 30, 2015, the Company had made no draws on the ELOC.

 

Comparison of cash flows for the nine months ended September 30, 2015 and 2014

 

Operating Activities

 

The Company had negative cash flows from operations for the nine months ended September 30, 2015 of approximately $3,154,000 compared to $3,938,000 for the same period of 2014. Although the Company’s net loss for the nine months ended September 30, 2015 was approximately $791,000 greater than the net loss for the same period in the prior year, the cash used in operations was $785,000 less, reflecting an increase in accounts payable of $807,000 and increases in other noncash expenses in 2015 for items such as services paid with common stock ($120,000) accrued interest ($504,000) and the amortization of note discounts and deferred financing charges ($594,000). Cash flows from operations were also favorably affected in the first nine months of 2015 by a $61,000 reduction in accounts receivable, and a $57,000 decrease in inventories.

 

Investing Activities

 

The Company had capital expenditures for the nine months ended September 30, 2015 and 2014, of approximately $5,000 and $25,000, respectively. As of September 30, 2015, the Company had no commitments for any material future capital expenditures.

 

Financing Activities

 

Net cash provided by financing activities for the nine months ended September 30, 2015 amounted to approximately $2,114,000 compared to cash provided by financing activities of approximately $2,958,000 in the same period of 2014. The primary financing source of cash in the nine months ended September 30, 2015 was the issuance of $2,600,000 of secured promissory notes and $300,000 of cash advances provided by investors. The Company also made various draws and repayments on its bank line of credit during the period resulting in a net increase in the balance due on the bank line of credit during the period of approximately $96,000. During the first three quarters of 2014, the Company raised approximately $2,900,000 from the issuance of secured promissory notes.

 

Going Concern and Management’s Plans

 

The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities and commitments in the normal course of business. As discussed in Note 4 to the accompanying condensed consolidated financial statements, we have not achieved a sufficient level of revenues to support our business and have suffered substantial recurring losses from operations since our inception. These factors raise substantial doubt about the Company’s ability to continue operations as a going concern. As such, the Company’s independent registered public accounting firm has expressed an uncertainty about the Company’s ability to continue as a going concern in their opinion attached to the Company’s audited financial statements for the year ended December 31, 2014. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities or any other adjustment that might be necessary should the Company be unable to continue as a going concern. Management believes that the Company’s ability to continue as a going concern will be dependent on its ability to generate sales and raise capital sufficient to cover all of its costs and operational expenses and service its debt. The Company’s ability to achieve these objectives cannot be determined at this time. Management’s plans in regard to these matters are described in Note 4 and Note 11 to the accompanying condensed consolidated financial statements. If the Company is unable to generate significant sales growth in the near term and raise additional capital, there is a risk that the Company could default on debt maturing during 2015, and could be required to significantly reduce the scope or cease its operations if no other means of financing its operations are available.

 

19 

 

 

Off-Balance Sheet Arrangements

 

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Contractual Obligations

 

As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this item.

 

Critical Accounting Policies and Estimates

 

The methods, estimates, interpretations and judgments we use in applying our most critical accounting policies can have a significant impact on the results that we report in our condensed consolidated financial statements. An entity’s most critical accounting policies are those policies that are both most important to the portrayal of the entity’s financial condition and results of operations and those that require the entity’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about matters that are inherently uncertain when estimated.

 

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on ABHD’s condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported net sales and expenses during the reporting periods. On an ongoing basis, management evaluates these estimates and assumptions. Management bases the estimates on historical experience and on various other factors that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

The going concern basis of presentation assumes we will continue in operation throughout the next fiscal year and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business. As discussed above, certain conditions currently exist, which raise substantial doubt upon the validity of this assumption. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

The following discussion provides supplemental information regarding the significant estimates, judgments and assumptions made in implementing the Company’s critical accounting policies.

 

Fair value of warrants and note discount

 

The Company bifurcates the value of warrants sold with promissory notes. This bifurcation results in the establishment of a note discount with a corresponding increase in equity unless the terms of the warrant require it to be classified as a liability. The warrants and corresponding discount are valued using the Black-Scholes valuation model because there is no market price available for the warrants. This model uses estimates of volatility, risk free interest rate and the expected term of the warrants, along with the current market price of the Company’s common stock, to estimate the value of the outstanding warrants. The assumptions for expected dividend yield, expected volatility and expected term reflect management’s judgment and include consideration of historical experience. Expected volatility is based on historical volatility of the Company’s common stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the warrant.

 

20 

 

 

The Company used the following assumptions to estimate the fair value of the warrants that were issued during the nine months ended September 30, 2015:

 

Expected volatility  48.63% - 85.31%
Expected dividend yield  0%
Expected term  2.0 – 4.8 years
Risk-free interest rate  0.61% - 1.71%
Market price of common stock  $0.03 - $0.32

 

Inventory valuation

 

The Company’s inventory is stated at the lesser of cost or market, with cost computed on an average cost method which approximates the first-in, first-out basis. Provision is made for obsolete, slow moving or defective items where appropriate. This estimated valuation requires that management make certain judgments about the likelihood that specific inventory items may have minimal or no realizable value in the future. These judgments are based on the current quantity of the item on hand compared to historical sales volumes, potential alternative uses of the products and the age of the inventory item.

 

Revenue recognition and allowance for doubtful accounts

 

There are four factors that the Company uses to determine the appropriate timing of the recognition of revenue. Three of these factors (evidence of arrangement exists, delivery occurs and fee is fixed or determinable) are generally factual considerations that are not subject to material estimates or assumptions. With regard to projects where revenue is earned for a variety of tasks including design, installation and maintenance activities, the Company accounts for the project using the percentage-of-completion method and makes estimates of the completion percentages based on the cost actually incurred to complete each project task. The fourth factor involves judgment regarding the collectability of the sales price. The Company only ships product when it has reasonable assurance that it will receive payment from the customer. When such assurance is not available, the Company will require payment in advance. The assessment of a customer’s credit-worthiness is reliant on management’s judgment regarding such factors as previous payment history, credit rating, credit references and market reputation. If any sales are made that ultimately become uncollectible, the Company charges the uncollected amount against a reserve for uncollectible accounts. This reserve is established and adjusted from time to time based on management’s assessment of each outstanding receivable and the likelihood of it being collected.

 

Stock-based compensation

 

The Company uses the Black-Scholes model to estimate the value of options and warrants issued to employees and consultants as compensation for services rendered to the Company. This model uses estimates of volatility, risk free interest rate and the expected term of the options or warrants, along with the current market price of the underlying stock, to estimate the value of the options and warrants on the date of grant. In addition, the calculation of compensation costs requires that the Company estimate the number of awards that will be forfeited during the vesting period. The fair value of the stock-based awards is amortized over the vesting period of the awards. For stock-based awards that vest based on performance conditions, expense is recognized when it is probable that the conditions will be met.

 

The following table summarizes the weighted average of fair value and the significant assumptions used in applying the Black-Scholes model for options granted during the nine months ended September 30, 2015:

 

Weighted average fair value per share of options granted  $0.18 
Weighted average assumptions used:     
Expected dividend yield   0.0%
Expected volatility   64.7%
Risk-free interest rate   1.27%
Expected life (in years)   4.85 
Exercise Price  $0.34 

 

21 

 

 

The assumptions for expected dividend yield, expected volatility and expected term reflect management’s judgment and include consideration of historical experience. Expected volatility is based on historical volatility of the Company’s shares. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option.

 

Accounting for conversion options and imputed interest

 

The convertible promissory notes issued by the Company provide the note holders an option to convert the notes into the Company’s common stock at a set price. The value of these options has not been bifurcated from the value of the related notes because management has determined that such bifurcation is not required under generally accepted accounting principles due to the specific terms of the conversion option and management’s estimate that the underlying shares would not be readily convertible into cash. However, whenever such conversion options represent a right to convert at a price that is less than the market price at the date of issuance, the Company imputes the value of such beneficial conversion feature and charges it to interest expense over the term of the notes.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this item.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) of the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal controls over financial reporting that occurred during the quarter ended September 30, 2015, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected.

 

22 

 

 

PART IIOTHER INFORMATION

 

Item 1. Legal Proceedings.

 

On May 28, 2015, the Company received a subpoena from the SEC that stated that the staff of the SEC is conducting an investigation In the Matter of Abtech Holdings, Inc. (NY-9262).  Generally, the SEC’s subpoena has asked for all documents, agreements, and communications concerning (i) the Company’s Contract for Services with Nassau County, New York, dated October 8, 2013; (ii) Adam Skelos, Dean Skelos, and their related entities; (iii) SLC Clean Water, LLC, Axiom, Glenwood Management, and a number of other listed individuals and entities; (iv) certain Board and Board committee minutes and related materials; (v) certain policies, procedures, and internal controls in effect at the Company; (vi) certain communications with the Company’s independent registered public accounting firm, transfer agent, potential and current investors, broker-dealers, investment advisors, and finders; and (vii) certain other organizational and financial account information of the Company.  The Company has contacted the SEC’s staff regarding the subpoena and the Company is cooperating with the SEC.  The Company believes the SEC’s subpoena is a result of the complaint announced on May 4, 2015 that was filed by Federal authorities against Dean and Adam Skelos.  The Company is not a target of the Skelos’ criminal proceedings and has fully cooperated with federal investigators in that matter.  Please see the Company’s Current Report on Form 8-K dated May 15, 2015 and its Quarterly Report on Form 10-Q dated May 15, 2015, for more information on the Skelos’ criminal proceedings.

 

Item 1A. Risk Factors.

 

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this item. Notwithstanding the foregoing, the Company is providing the following risk factors to supplement the Risk Factors disclosed in the Company’s Report on Form 10-K for the year ended December 31, 2014.

 

A party to one of our material contracts is under criminal investigation in New York, the announcement of the investigation and the outcome of that investigation, could materially adversely impact our business.

 

On May 4, 2015, it was announced that Federal authorities had filed a complaint against New York Senator Dean Skelos and his son, Adam Skelos. The complaint alleges, among other things, that the Skelos’ engaged in unlawful practices in connection with the award of a $12 million storm water drainage contract (the “Contract”) between Nassau County and the Company. The Company is not a target of the Skelos’ criminal proceedings and intends to continue to fully cooperate with federal investigator’s request for information. On May 12, 2015, the Company received notice from the County of Nassau Department of Public Works suspending all work under the Contract until such time, if at all, as the County notifies AbTech in writing that the County has lifted the work suspension. If the County of Nassau does not lift the suspension, AbTech will be materially adversely affected.

 

On May 6, 2015, AbTech received notice that its previously announced teaming agreement with Corvias Solutions (“Corvias”) for the joint development of large stormwater infrastructure projects was being terminated. The collaboration between AbTech and Corvias had not produced any significant projects or revenues. We cannot estimate the full impact that this criminal investigation and any results may have on the Company’s financial position, operating results or cash flows. In addition to significant monetary costs, there may be adverse publicity associated with these matters that could result in reputational harm to us that may adversely affect our business. We have not yet recorded a liability related to these matters. No estimate of the possible loss or range of loss can be made.

 

The SEC is conducting an investigation involving the Company.

 

On May 28, 2015, the Company received a subpoena that stated that the staff of the SEC is conducting an investigation In the Matter of Abtech Holdings, Inc. (NY-9262) (see Item 1. Legal Proceedings, above). We cannot estimate the full impact that this investigation and any results may have on the Company’s financial position, operating results or cash flows. In addition to significant monetary costs and the impact on our business as a result of the subpoena and investigation, there may be adverse publicity associated with these matters that could result in reputational harm to us that may adversely affect our business. We have not yet recorded a liability related to these matters. At this time, no estimate of the possible loss or range of loss can be made.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

The information required by this item was previously provided in Current Reports on Form 8-K dated April 20, 2015 and June 2, 2015 and is therefore not required to be furnished in this report on Form 10-Q.

 

23 

 

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None. 

 

Item 6. Exhibits.

 

Exhibit Number   Name
31.1 *   Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer)
31.2 *   Rule 13a-14(d)/15d-14(d) Certification (Principal Financial Officer)
32 **   Section 1350 Certifications
101.INS *   XBRL Instance Document
101.SCH *   XBRL Taxonomy Extension Schema Document
101.CAL *   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF *   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB *   XBRL Taxonomy Extension Label Linkbase Document
101.PRE *   XBRL Taxonomy Extension Presentation Linkbase Document

 

* Filed herewith

** Furnished herewith

 

24 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  ABTECH HOLDINGS, INC.
  (Registrant)
     
Date: November 16, 2015 By: /s/ Glenn R. Rink
  Glenn R. Rink
  Chief Executive Officer, President, and Director

 

Date: November 16, 2015 By: /s/ Lane J. Castleton
  Lane J. Castleton
  Chief Accounting Officer, Chief Financial Officer, Vice President and Treasurer

 

25