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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended December 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 000-52762
 ABTECH HOLDINGS, INC.
  Nevada
    
    14-1994102(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)4110 N. Scottsdale Road, Suite 235Scottsdale, Arizona
    
    85251(Address of principal executive offices)
    
    (Zip Code)
  Registrants telephone number, including area code
 Securities registered pursuant to section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registeredNone
    
    None
 Securities registered pursuant to Section 12(g) of the Act:
 Common Stock, $0.001 par value
  o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



ABTECH HOLDINGS, INC.
ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED DECEMBER 31, 2010
 TABLE OF CONTENTS
 PagePART IITEM 1. Business.
    
    
    1ITEM 1A. Risk Factors.
    
    
    17ITEM 1B. Unresolved Staff Comments.
    
    
    29ITEM 2. Properties.
    
    
    29ITEM 3. Legal Proceedings.
    
    
    29ITEM 4. Reserved.
    
    
    29PART IIITEM 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchase of
Equity Securities.
    
    
    29ITEM 6  Selected Financial Data.
    
    
    30ITEM 7. Managements Discussion and Analysis of Financial Conditions and Results of Operations.
    
    
    30ITEM 7A. Quantitative and Qualitative Disclosure about Market Risk.
    
    
    33ITEM 8. Financial Statements and Supplementary Data.
    
    
    33ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
    
    
    33ITEM 9A  Controls and Procedures.
    
    
    33ITEM 9B. Other Information.
    
    
    33PART IIIITEM 10. Directors, Executive Officers and Corporate Governance.
    
    
    33ITEM 11. Executive Compensation.
    
    
    38ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
    
    
    42ITEM 13. Certain Relationships and Related Transactions, and Director Independence.
    
    
    45ITEM 14 Principal Accountant Fees and Services.
    
    
    47PART IVITEM 15. Exhibits and Financial Statement Schedules.
    
    
    48SIGNATURES
    
    
    50FINANCIAL STATEMENTS Consolidated Financial Statements as of and for the years ended December 31, 2010 and 2009
    
    
    F-1EX-21EX-31.1EX-31.2EX-32




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Statement Regarding Forward-Looking Statements
 The statements contained in this report on Form 10-K that are not purely historical are
forward-looking statements within the meaning of applicable securities laws. Forward-looking
statements include statements regarding our expectations, anticipation, intentions,
beliefs, or strategies regarding the future, whether or not those words are used.
Forward-looking statements also include statements regarding revenue, margins, expenses, and
earnings analysis for fiscal 2010 and thereafter; anticipated levels of future revenues and
earnings from the operations of Abtech Holdings, Inc. (the Company, we, us, or our);
projected costs and expenses related to our operations, liquidity, capital resources, availability
of future equity capital on commercially reasonable terms; and satisfaction of the closing
conditions set forth in the Agreement and Plan of Merger entered into with Abtech Industries, Inc.
All forward-looking statements included in this report are based on information available to us as
of the filing date of this report, and we assume no obligation to update any such forward-looking
statements. Our actual results could differ materially from the forward-looking statements. Among
the factors that could cause actual results to differ materially are the factors discussed in Item
1A. Risk Factors.
 Explanatory Note




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PART I
 
 ITEM 1.
    
    BUSINESS.
 Overview and Recent Events
        1




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Technology
 Smart Sponge
      
    
    absorbing rather than adsorbing water-borne hydrocarbons;
    
    reducing coliform bacteria found in stormwater, industrial wastewater and municipal
wastewater;
    
    locking-up or encapsulating the hydrocarbons;
    
    transforming the encapsulated pollutant into a solid to prevent leaching;
    
    remaining buoyant after the encapsulation in order to permit recovery;
    
    oil-soaked product may be recycled as a waste-to-energy fuel source;
    
    simpler and less expensive disposal due to classification as a solid non-hazardous waste;
    
    easy deployment and retrieval; and
    
    solves gel-blocking problem common among other polymers available only in particulate
form.
 2




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Smart Sponge Plus
 ®
   3




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Smart Sponge versus Commonly Used Polypropylene
  Disposal Options
  Waste-to-Energy Facilities (WTE).
 Cement Kilns.
 Landfills.
 Products
 ®
 4




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Smart Sponge Popcorn
  Ultra-Urban® Filter
       SMART PAK®
  5




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®
 Smart Sponge Vault
   Absorbent Boom and Line Skimmer
  Passive Skimmer
  Bilge Skimmer
  Monitoring Well Skimmer
  Filtration Products
  Product Realignment
  6




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Markets
  Stormwater Market (Public Sector)
  1.
    
    Regulatory Drivers to the Stormwater Market
    7




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2.
    
    Health and Tourism Concerns Driving the Stormwater Market
  3.
    
    Going Green Initiatives
  4.
    
    Stormwater Market Size
 Federal Sector  Federal Facilities and Department of Defense
  
    
    dikes, berms, or retaining walls sufficiently impervious to contain spilled product;
    
    curbing;
    
    culverting, gutters, or other drainage systems;
    
    weirs, booms, or other barriers;
    
    spill diversion ponds;
    
    retention ponds; or
    
    sorbent materials.
   8




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Industrial Wastewater Market
      Produced Water Applications
   9




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Marine Market  Spill Prevention and Control
  Sales, Distribution, and Marketing Support
 Public Sector  Cities and Municipalities
    Federal Sector  Federal Facilities and Department of Defense
  10




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Industrial Wastewater Market
  Produced Water Market
  Marine Market  Spill Prevention and Control
  Collaboration With Consulting Firms, Academic Institutions and Public Advocacy Groups
  1.
    
    Academic Institutions and Consultants
  Alden Labs.
 North America Science Associates (NAMSA).
 Millsaps College.
 11




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HydroQual Inc.
 University of California, Los Angeles (UCLA)
 2.
    
    Active Lobbying
   Competition
 1.
    
    Stormwater Products
  Anti-microbial capability.
 Structural Filter.
 Superior Filtration Media.
 12




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Porous Structure.
  Hydrodynamic Separators.
   Catch Basin Inserts.
 
    
    DrainPac by PacTec
    
    StormBasin by Fabco Industries
    
    Fossil Filter and Flow Guard by Kristar
    
    Grate Inlet Skimmer Box by Suntree Technologies
    
    Aqua Guard by AquaShield
    
    Inceptor by Stormdrain Solutions
    
    Hydrocartridge by Advanced Aquatic Products
    
    Ultra HydroKleen by Ultra Tech International
 Ultra Violet Light (UVL).
 13




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2.
    
    Industrial/Marine Markets
  
    
    its patented and patent-pending technologies to form these polymers in shapes, such as the
propellet, that greatly enhance performance and ease of use;
    
    its unique delivery systems, including in-line filtration cartridges;
    
    the completely hydrophobic nature of its products;
    
    the capability to deal with more than one contaminant (i.e., hydrocarbons and
microorganisms); and
    
    the high saturation capacity.
 Intellectual Property, Research, and Development
 Intellectual Property
 1.
    
    Patents
  2.
    
    Trademarks
  3.
    
    Trade Secrets
  Research and Development
  14




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Expand Data Base/Scientific Background.
 Anti-microbial Smart Sponge.
 End of Pipes and vault applications.
  Sediment.
  
    
    use of Smart Sponge material in secondary treatment of wastewater effluent;
    
    products specially suited to the marina and recreational boating market; and
    
    produced and process water applications.
  15




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Manufacturing and Engineering
  1.
    
    Short term (up to 12 months)
  2.
    
    Long term (12 months or longer)
  Regulatory
  Employees
  Where You Can Find More Information
  16




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http://www.sec.gov
 
 ITEM 1A.
    
    RISK FACTORS.
 You should carefully consider the risks described below together with all of the other
information included in our public filings before making an investment decision with regard to our
securities. The statements contained in or incorporated into this Annual Report on Form 10-K that
are not historic facts are forward-looking statements that are subject to risks and uncertainties
that could cause actual results to differ materially from those set forth in or implied by
forward-looking statements. While the risks described below are the ones we believe are most
important for you to consider, these risks are not the only ones that we face. If any of the
following events described in these risk factors actually occurs, our business, financial
condition, or results of operations could be harmed. In that case, the trading price of our common
stock could decline, and you may lose all or part of your investment.
 The risk factors discussed below relate to our business and operations following the
consummation of the Merger and, accordingly, relate primarily to Abtech Holdings and its
subsidiary, AbTech Industries. As used in this Risk Factors section, the terms Company, we,
our and like words mean Abtech Holdings together with Abtech Industries, unless the context
otherwise requires.
 Risks Relating to Our Business
 Our ability to generate revenue to support our operations is uncertain.
  
    
    unanticipated problems, delays, and expenses relating to the development and implementation
of their business plans;
    
    operational difficulties;
    
    lack of sufficient capital;
    
    competition from more advanced enterprises; and
    
    uncertain revenue generation.
 Our limited operating history may make it difficult for us to forecast accurately our operating
results.
  We have a history of losses that may continue, which may negatively impact our ability to achieve
our business objectives.
 17




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Our success depends on our ability to expand, operate, and manage successfully our operations.
  
    
    signing with strategic partners, dominant in their field
    
    the continued development of our business;
    
    the hiring, training, and retention of additional personnel;
    
    the ability to enhance our operational, financial, and management systems;
    
    the availability of adequate financing;
    
    competitive factors;
    
    general economic and business conditions; and
    
    the ability to implement methods for revenue generation.
 If we are unable to obtain additional capital, our business operations could be harmed.
    You may suffer significant dilution if we raise additional capital.
  18




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If we obtain debt financing, we will face risks associated with financing our operations.
  Our independent auditors have expressed substantial doubt about its ability to continue as a going
concern, which may hinder our ability to obtain future financing.
  We depend on our officers and key employees who would be difficult to replace, and our business
will likely be harmed if we lose their services or cannot hire additional qualified personnel.
  We depend on the recruitment and retention of qualified personnel, and our failure to attract and
retain such personnel could seriously harm our business.
  The expected results from the Merger may vary significantly from our expectations.
  19




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The Merger could be difficult to integrate, disrupt business, dilute stockholder value, and harm
operating results of the combined entity.
  
    
    problems integrating the purchased operations, services, personnel, or technologies;
    
    unanticipated costs associated with the acquisition;
    
    diversion of managements attention from the core businesses;
    
    adverse effects on existing business relationships with suppliers and customers
of purchased organizations;
    
    potential loss of key employees and customers of purchased organizations; and
    
    risk of impairment charges related to potential write-downs of acquired assets.
  The effects of the recent global economic downturn may adversely impact our business, operating
results, or financial condition.
  If we do not achieve broad market acceptance of our clean technology products and services, we may
not be successful.
  Because our clean technology products may be designed to provide a solution which competes with
existing methods, we are likely to face resistance to change, which could impede our ability to
commercialize this business.
  20




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If we experience rapid growth and we are not able to manage this growth successfully, this
inability to manage the growth could adversely affect our business, financial condition, and
results of operations.
  We have no experience in manufacturing or assembling products on a large scale basis, and if we do
not develop adequate manufacturing and assembly processes and capabilities to do so in a timely
manner, we may be unable to achieve our growth and profitability objectives.
  If we fail to continue to develop or acquire new products, adapt to rapid and significant
technological change, and respond to introductions of new products, we will not be competitive.
   The market for our products is highly competitive, and there can be no assurance that competitors
will not emerge in the near to medium term with comparable products or technologies.
  Our business may become substantially dependent on contracts that are awarded through competitive
bidding processes.
 21




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
    
    investment of substantial time and resources by management for the preparation of bids and
proposals with no assurance that a contract will be awarded to us;
    
    the requirement to certify as to compliance with numerous laws (for example, socio-economic,
small business, and domestic preference) for which a false or incorrect certification can lead to
civil and criminal penalties;
    
    the need to estimate accurately the resources and cost structure required to service a
contract; and
    
    the expenses and delays that we might suffer if our competitors protest a contract awarded
to us, including the potential that the contract may be terminated and a new bid competition may be
conducted.
  We will sell products and services to companies in industries which tend to be extremely cyclical;
downturns in those industries would adversely affect our results of operations.
  The industries in which we may sell our products are heavily regulated and costs associated with
such regulation could reduce our profitability.
   If chemical companies engage in predatory pricing, we may lose customers, which could materially
and adversely affect us.
  22




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We are, or in the future may be, subject to substantial regulation related to quality standards
applicable to our manufacturing and quality processes. Our failure to comply with applicable
quality standards could have an adverse effect on our business, financial condition, or results of
operations.
   If a natural or man-made disaster strikes our or a third-partys manufacturing facility that we may
use, we may be unable to manufacture our products for a substantial amount of time and our sales
and profitability will decline.
  We may decide to outsource manufacturing in the future. Dependence on contract manufacturing and
outsourcing other portions of our supply chain may adversely affect our ability to bring products
to market and damage our reputation.
  The success of our businesses will depend on our ability to effectively develop and implement
strategic business initiatives.
  23




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Failure to successfully reduce our current or future production costs may adversely affect our
financial results.
  If we are unable to make necessary capital investments or respond to pricing pressures, our
business may be harmed.
  Failure to obtain sufficient supply of component materials to conduct our business may have an
adverse effect on our production and revenue targets.
  We have limited product distribution experience and we expect to rely on third parties who may not
successfully sell our products.
  We could face significant liabilities in connection with our technology, products, and business
operations, which if incurred beyond any insurance limits, would adversely affect our business and
financial condition.
  24




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Our failure to protect our intellectual property rights may undermine our competitive position, and
litigation to protect our intellectual property rights or defend against third-party allegations of
infringement may be costly.
    Operational and Structural Risks
 We can provide no assurances as to our future financial performance or the investment result of a
purchase of our common stock.
  The compensation we pay to our executive officers and employees will likely increase, which will
affect our future profitability.
 25




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As a public reporting company, we are subject to new corporate governance and internal control
reporting requirements, and our costs related to compliance with, or our failure to comply with
existing and future requirements, could adversely affect our business.
  As a public company, we will have significant operating costs relating to compliance requirements
and our management is required to devote substantial time to compliance initiatives.
   Risks Related to our Common Stock
 A limited public trading market exists for our common stock, which makes it more difficult for our
stockholders to sell their common stock in the public markets.
  26




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Our stock price may be volatile.
  
    
    limited public float in the hands of a small number of persons whose sales (or lack of
sales) could result in positive or negative pricing pressure on the market price for our common
stock;
    
    actual or anticipated variations in our quarterly operating results;
    
    changes in our earnings estimates;
    
    our ability to obtain adequate working capital financing;
    
    changes in market valuations of similar companies;
    
    publication (or lack of publication) of research reports about us;
    
    changes in applicable laws or regulations, court rulings, enforcement and legal actions;
    
    loss of any strategic relationships;
    
    additions or departures of key management personnel;
    
    actions by our stockholders (including transactions in our shares);
    
    speculation in the press or investment community;
    
    increases in market interest rates, which may increase our cost of capital;
    
    changes in our industry;
    
    competitive pricing pressures;
    
    our ability to execute our business plan; and
    
    economic and other external factors.
  Our common stock may be subject to the penny stock rules which may make it more difficult to sell
our common stock.
  27




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FINRA sales practice requirements may also limit a shareholders ability to buy and sell our stock.
  Our common shares are currently traded at low volume, and you may be unable to sell at or near ask
prices or at all if you need to sell or liquidate a substantial number of shares at one time.
   We have historically not paid dividends and do not intend to pay dividends for the foreseeable
future.
  The elimination of monetary liability against our directors, officers, and employees under Nevada
law and the existence of indemnification rights to our directors, officers, and employees may
result in substantial expenditures by our Company and may discourage lawsuits against our
directors, officers, and employees.
 28




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ITEM 1B. UNRESOLVED STAFF COMMENTS.
  
 ITEM 2. PROPERTIES.
  
 ITEM 3. LEGAL PROCEEDINGS.
  
 ITEM 4. RESERVED.
  
 PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF
EQUITY SECURITIES.
 Market Information
  Stockholders
   Dividends
  29




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Purchases of Equity Securities By the Issuer and Affiliated Purchases
  
 ITEM 6. SELECTED FINANCIAL INFORMATION.
  
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.
 Forward-Looking Statements and Factors That May Affect Results
  Overview
     30




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Results of Operations
 Comparison of the years ended December 31, 2010 and 2009
    Liquidity and Capital Resources
     31




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Contractual Obligations
  Off-Balance Sheet Arrangements
  Critical Accounting Policies
     32




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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
  
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
  
 ITEM 9. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 9A. CONTROLS AND PROCEDURES.
  Changes in Internal Control over Financial Reporting
  
 ITEM 9B. OTHER INFORMATION.
  
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
 Directors and Executive Officers  Prior to the February 2011 effective date of the Merger
  Name and Address
    
    Position(s)
    
    AgeMandi Luis
    
    Chief Executive Officer, President,
    
    54and Director (1)Robert MacKay
    
    Chief Financial Officer,
    
    48Chief Accounting Officer,
Secretary, Treasurer, and Director (2)Glenn R. Rink
    
    Director (3)
    
    51
 33




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(1)
    
    Mandi Luis was appointed a director on February 23, 2007 and President and Chief Executive
Officer on February 24, 2007 and served until her resignation on February 10, 2011 pursuant to
the Merger Agreement.(2)
    
    Robert MacKay was appointed a director on February 24, 2007 and Chief Financial Officer,
Chief Accounting Officer, Secretary, and Treasurer on February 24, 2007 and served until his
resignation on February 10, 2011 pursuant to the Merger Agreement.(3)
    
    Glenn R. Rink was elected a director on October 10, 2010, to fill an existing vacancy. At
the time of this election, Mr. Rink was (and he still is) the President, Chief Executive
Officer and a Director of AbTech Industries. Prior to the consummation of the Merger in
February 2011, Mr. Rink was not an employee of Abtech Holdings.  Mandi Luis
 Robert MacKay
   Significant Employees
  Certain Relationships
  Section 16(a) Beneficial Ownership Reporting Compliance
  34




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Directors and Executive Officers Following the Effective Date of the Merger
   Name
    
    Age
    
    PositionGlenn R. Rink
    
    
    51
    
    
    Chief Executive Officer, President, and DirectorLane J. Castleton
    
    
    55
    
    
    Chief Financial Officer, Vice President, and TreasurerOlivia H. Farr
    
    
    49
    
    
    Secretary and DirectorDavid Greenwald
    
    
    55
    
    
    DirectorA. Judson Hill
    
    
    56
    
    
    DirectorJonathan Thatcher
    
    
    41
    
    
    DirectorKarl Seitz
    
    
    60
    
    
    DirectorF. Daniel Gabel
    
    
    72
    
    
    Director
  Glenn R. Rink
 Lane J. Castleton
 35




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Olivia H. Farr
 David Greenwald
 A. Judson Hill
 Karl Seitz
 Jonathan Thatcher
 F. Daniel Gabel, Jr.
 Terms of Office
  36




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Key Employees of AbTech Industries
 Rodolfo B. Manzone, Ph.D.
 Gordon Brown, .
  Code of Ethics
  Nominations to the Board of Directors
   Committees of the Board of Directors
  37




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Audit Committee
    Other Committees
  
 ITEM 11. EXECUTIVE COMPENSATION.
 General Philosophy
  Board Compensation
  Executive Compensation  Former Executive Officers
  Executive Compensation  New Executive Officers
  38




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Summary Compensation Table
 Non-EquityStock
    
    Option
    
    Incentive Plan
    
    All OtherName and Principal
    
    
    
    
    
    Salary
    
    Bonus
    
    Awards
    
    Awards
    
    Compensation
    
    Compensation
    
    TotalPosition
    
    Year
    
    ($)
    
    ($)
    
    ($)
    
    ($)(3)(4)
    
    ($)
    
    ($)(1)
    
    ($)(2)Glenn R. Rink
    
    
    2010
    
    
    
    150,000
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    41,698
    
    
    
    -0-
    
    
    
    7,884
    
    
    
    199,582Chief Executive Officer, President, and Director
    
    
    2009
    
    
    
    150,000
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    20,897
    
    
    
    -0-
    
    
    
    7,611
    
    
    
    178,508Lane J. Castleton
    
    
    2010
    
    
    
    121,154
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    25,542
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    146,696Chief Financial Officer, Vice President, and
Treasurer
    
    
    2009
    
    
    
    120,000
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    13,060
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    133,060Rodolfo Manzone
    
    
    2010
    
    
    
    145,000
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    13,062
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    158,062Exec. Vice President and Chief Technology Officer
    
    
    2009
    
    
    
    145,000
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    13,060
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    158,060
 
 (1)
    
    All Other Compensation consists of the value of a car based on the total lease and operating
cost of the car, less the portion attributable to business use.(2)
    
    The dollar value in this column for each named executive officer or director represents the
sum of all compensation reflected in the previous columns.(3)
    
    Outside or non-employee directors received an annual option award for the purchase of up to
15,000 shares of AbTech Industries common stock with an exercise price equal to the fair
market value of the underlying common stock at the date of grant. Each annual option grant
vests at the end of the applicable year, and expires five years following the date of grant.
Each of the option grants listed in this table has an exercise price of $3.75 per share. The
value of the option award was determined using the Black-Scholes model in accordance with the
provisions of ASC 718.(4)
    
    The options for Mr. Rink and Mr. Castleton were granted by the Board of Directors on December
13, 2007 and October 11, 2010 and expire ten years from the date of Grant. The options granted
on December 13, 2007 vest one-third at the end of each calendar through 2010. The options
granted in 2010 vested immediately at the date of grant. The options for Mr. Manzone were
granted by the Board of Directors on December 13, 2007 and expire on December 13, 2017. The
options vest one-third at the end of each calendar year. The amounts shown in this table
represent the options vesting in the specified year valued using the Black-Scholes model in
accordance with the provisions of ASC 718.  39




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Potential Payments Upon Termination or Change-in-Control
  Employment Agreements
   40




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Outstanding Equity Awards of AbTech Industries as of December 31, 2010.
 Equityincentive planawards:Number of
    
    
    
    
    
    Number ofsecurities
    
    Number of
    
    securitiesunderlying
    
    securities
    
    underlyingunexercised
    
    underlying
    
    unexercisedoptions (#)
    
    unexercised
    
    unearnedexercisable
    
    options (#)
    
    options (#)
    
    Option exercise
    
    OptionName
    
    (1)
    
    unexercisable
    
    (1)
    
    price ($)
    
    expiration dateGlenn R. Rink
    
    
    40,000
    
    
    
    
    
    
    
    
    
    
    
    3.75
    
    
    
    12/13/201720,000
    
    
    
    
    
    
    
    80,000
    (2)
    
    
    3.75
    
    
    
    10/11/2020Lane J. Castleton
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    3.75
    
    
    
    12/13/201712,000
    
    
    
    
    
    
    
    60,000
    (2)
    
    
    3.75
    
    
    
    10/11/2020Rodolfo Manzone
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    3.75
    
    
    
    12/13/201750,000
    (2)
    
    
    3.75
    
    
    
    10/11/2020
 
 (1)
    
    The number of shares in this table refers to shares of AbTech Industries common stock.
Upon exercise, each share of AbTech Industries common stock is convertible into 5.32 shares
of Abtech Holdings.(2)
    
    On October 11, 2010, the Board of Directors of AbTech Industries granted these options
to the designated executive officers who concurrently surrendered and waived their rights
to any previously granted unearned
incentive awards. Each of these options will vest on December 31, 2011 based on a formula
that provides vesting percentages ranging from 0% to 100% depending on the attainment of
financial goals (revenue, gross margin, EBITDA) to be approved by the Board of Directors for
the 2011 calendar year. The fair value of these non-vested options, determined using the
Black-Scholes option pricing model, is $197,600. Outstanding Equity Awards at Fiscal 2010 Year-End
  Option Exercises and Vested Stock in Fiscal 2010
  Risk Management Considerations
  Compensation Committee Interlocks and Insider Participation
  41




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##### Table of Contents



Director Compensation
  Fees Earned or Paid inName
    
    Cash ($)
    
    Option Awards ($)(1)
    
    Total ($)Olivia H. Farr
    
    
    0
    
    
    
    8,006
    
    
    
    8,006F. Daniel Gabel
    
    
    0
    
    
    
    16,514
    
    
    
    16,514David Greenwald
    
    
    0
    
    
    
    8,006
    
    
    
    8,006A. Judson Hill
    
    
    0
    
    
    
    8,006
    
    
    
    8,006Jonathan Thatcher
    
    
    0
    
    
    
    0
    
    
    
    0Karl Seitz
    
    
    0
    
    
    
    8,006
    
    
    
    8,006
 
 (1)
    
    These amounts represent full grant date fair value of these awards, in accordance with
the Financial Accounting Standard Boards (FASB) ASC Topic 718. Assumptions used in the
calculation of dollar amounts of these awards are included in Note 11 of our audited
financial statements for the fiscal year ended December 31, 2010. At December 31, 2010 the
number of stock options outstanding for each non-management director was as follows: Ms.
Farr, 90,000; Mr. Gabel, 45,000; Mr. Greenwald, 90,000, Mr. Hill, 90,000; Mr. Thatcher,
45,000; Mr. Seitz, 60,000. 
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 Security Ownership Prior To Merger
   Name and Address of
    
    Shares Beneficially Owned
    
    PercentageBeneficial Owner
    
    (1)(2)
    
    Beneficially OwnedDirectors and Executive OfficersMandi Luis
    
    
    0
    
    
    
    # 15  1019 North Shore Blvd. E., Burlington,
Ontario, Canada, L7T 1X8
 42




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##### Table of Contents



Name and Address of
    
    Shares Beneficially Owned
    
    PercentageBeneficial Owner
    
    (1)(2)
    
    Beneficially OwnedRobert MacKay
    
    
    0
    
    
    
    403  64 Wellesley Street East
Toronto, Ontario, Canada, M4Y 1G6Glenn R. Rink
    
    
    0
    
    
    
    4110 N. Scottsdale Road, Suite 235
Scottsdale, Arizona 85251All Officers and Directors as a Group (3 persons)
    
    
    0
    
    
    
    5% StockholdersN/A
    
    
    
    
    
    
    
 
 (1)
    
    Beneficial ownership has been determined in accordance with Rule 13d-3 under the
Exchange Act. Pursuant to the rules of the SEC, shares of common stock which an individual
or group has a right to acquire within 60 days pursuant to the exercise of options or
warrants are deemed to be outstanding for the purpose of computing the percentage ownership
of such individual or group, but are not deemed to be beneficially owned and outstanding
for the purpose of computing the percentage ownership of any other person shown in the
table.(2)
    
    Reflects beneficial ownership immediately prior to the consummation of the transactions
contemplated by the Merger Agreement. Immediately prior to the consummation of the
transactions contemplated by the Merger Agreement 41,000,000 shares of common stock were
cancelled, including 20,000,000 shares held by Ms. Luis and 15,000,000 shares held by Mr.
MacKay. Security Ownership After Merger
   Name and Address of
    
    Shares Beneficially Owned
    
    PercentageBeneficial Owner
    
    (1)
    
    Beneficially Owned (1)Directors and Executive OfficersGlenn R. Rink (2)
    
    
    3,782,426
    
    
    
    8.3
    %Lane J. Castleton (3)
    
    
    196,980
    
    
    
    0.4
    %Olivia H. Farr (4)
    
    
    756,824
    
    
    
    1.7
    %David Greenwald (4)
    
    
    1,306,755
    
    
    
    2.9
    %A. Judson Hill (5)
    
    
    424,663
    
    
    
    0.9
    %Jonathan Thatcher (6)
    
    
    239,570
    
    
    
    0.5
    %
 43




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##### Table of Contents



Name and Address of
    
    Shares Beneficially Owned
    
    PercentageBeneficial Owner
    
    (1)
    
    Beneficially Owned (1)Karl Seitz (7)
    
    
    239,570
    
    
    
    0.5
    %F. Daniel Gabel (8)
    
    
    1,046,964
    
    
    
    2.3
    %All Officers and Directors as a Group (8 persons)
    
    
    7,993,752
    
    
    
    16.5
    %5% StockholdersCountry Mutual Insurance Company and
Country Life Insurance Company (9)
1705 N. Towanda Avenue, PO Box 2020
Bloomington, IL 61702-2020
    
    
    4,672,812
    
    
    
    9.4
    %Bernard L. Madoff Investment Securities LLC (10)
c/o Baker & Hostetler LLP
45 Rockefeller Plaza, New York, NY 10111
    
    
    4,493,273
    
    
    
    9.1
    %SLC Clean Water LLC
1200 Union Turnpike, New Hyde Park, NY 11040
    
    
    2,363,201
    
    
    
    5.3
    %
 
 (1)
    
    Beneficial ownership has been determined in accordance with Rule 13d-3 under the
Exchange Act. Pursuant to the rules of the SEC, shares of common stock which an individual
or group has a right to acquire within 60 days pursuant to the exercise of options or
warrants are deemed to be outstanding for the purpose of computing the percentage ownership
of such individual or group, but are not deemed to be beneficially owned and outstanding
for the purpose of computing the percentage ownership of any other person shown in the
table.(2)
    
    Includes options to purchase 319,427 shares of Abtech Holdings common stock and a
warrant to purchase 289,614 shares of Abtech Holdings common stock.(3)
    
    Represents options to purchase 196,980 shares of Abtech Holdings common stock.(4)
    
    Includes options to purchase 399,284 shares of Abtech Holdings common stock and a
warrant to purchase 62,821 shares of Abtech Holdings common stock.(5)
    
    Includes options to purchase 399,284 shares of Abtech Holdings common stock and a
warrant to purchase 11,180 shares of Abtech Holdings common stock.(6)
    
    Represents options to purchase 239,570 shares of Abtech Holdings common stock.(7)
    
    Represents options to purchase 239,570 shares of Abtech Holdings common stock.(8)
    
    Includes options to purchase 159,713 shares of Abtech Holdings common stock and a
warrant to purchase 621,110 shares of Abtech Holding common stock; does not include 283,933
shares of Abtech Holdings common stock reserved for issuance upon conversion of a Senior
Convertible Promissory Note with a principal amount of $200,000 which may become
convertible into 53,333 shares of AbTech Industries Series A Preferred stock.(9)
    
    Includes warrants to purchase 1,409,615 shares of Abtech Holdings common stock and
3,263,197 shares of Abtech Holdings common stock issuable upon conversion of 612,946
unconverted shares of AbTech Industries Series A Preferred stock that may be converted at
the option of the holder, which conversion shall entitle the holder to receive the Merger
Consideration; does not include 3,706,024 shares of Abtech Holdings common stock reserved
for issuance upon conversion of Senior Convertible Promissory Notes 44




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##### Table of Contents



with an aggregate
principal amount of $2,205,000, which were not converted as of the effective date of the
Merger and which are not presently convertible.(10)
    
    Includes warrants to purchase 1,299,003 shares of Abtech Holdings common stock; and
3,194,270 shares of AbTech Holdings common stock reserved for issuance upon conversion of
600,000 shares of AbTech Industries Series A Preferred stock that may be converted at the
option of the holder, which conversion shall entitle the holder to receive the Merger
Consideration; does not include 1,420,343 shares of Abtech Holdings common stock reserved
for issuance upon conversion of Senior Convertible Promissory Notes with an aggregate
principal amount of $795,000, which were not converted as of the effective date of the
Merger and which are not presently convertible. Changes in Control
  Securities Authorized for Issuance Under Equity Compensation Plans
  Number of securitiesremaining available forNumber of securities to be
    
    Weighted-average exercise
    
    future issuance underissued upon exercise of
    
    price of outstanding
    
    equity compensation plansoutstanding options,
    
    options, warrants and
    
    (excluding securitiesPlan Category
    
    warrants and rights
    
    rights
    
    reflected in column (a))(a)
    
    (b)
    
    (c)Equity compensation plans approved by security holders
    
    
    1,001,000
    
    
    $
    3.75
    
    
    
    -0-Equity compensation plans not approved by security holders
    
    
    -0
    -
    
    
    -0
    -
    
    
    -0-Total
    
    
    1,001,000
    
    
    $
    3.75
    
    
    
    N/A-
 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
 Related-Party Transactions
    45




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46




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##### Table of Contents



Review, Approval, or Ratification of Transactions
  Director Independence
   
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  December 31, 2010
    
    May 31, 2010Audit Fees
    
    $
    51,244
    
    
    $
    5,000Audit-Related Fees
    
    
    11,967
    
    
    
    Tax Fees
    
    
    3,350
    
    
    
    
 47




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##### Table of Contents



December 31, 2010
    
    May 31, 2010All Other Fees
    
    
    2,999
    
    
    
    Total
    
    $
    69,560
    
    
    $
    5,000
   
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES.
 (a)
    
    Financial Statements and Financial Statement Schedules
 (1)
    
    Financial Statements are listed in the Index to Financial Statements on page
F-1 of this report.
 (b)
    
    Exhibits
 2.1
    
    Agreement and Plan of Merger, dated July 17, 2010, by and among the Registrant,
Abtech Merger Sub, Inc., and AbTech Industries, Inc. (incorporated by reference
to the Registrants Current Report on Form 8-K as filed with the SEC on July 22,
2010)2.2
    
    Amendment No. 1 to Agreement and Plan of Merger, dated September 17, 2010, by
and among the Registrant, Abtech Merger Sub, Inc., and AbTech Industries, Inc.
(incorporated by reference to the Registrants Current Report on Form 8-K as
filed with the SEC on September 22, 2010).3.1
    
    Certificate of Incorporation (incorporated by reference to the Registrants
Registration Statement on Form SB-2 filed on July 27, 2007, Registration No.
333-144923)3.2
    
    Articles of Incorporation (incorporated by reference to the Registrants
Registration Statement on Form SB-2 filed on July 27, 2007, Registration No.
333-144923)3.3
    
    Bylaws (incorporated by reference to the Registrants Registration Statement on
Form SB-2 filed on July 27, 2007, Registration No. 333-144923)3.4
    
    Amendment to Articles of Incorporation (incorporated by reference to the
Registrants Current Report on Form 8-K as filed with the SEC on June 16, 2010)4
    
    Stock Specimen (incorporated by reference to the Registrants Registration
Statement on Form SB-2 filed on July 27, 2007, Registration No. 333-144923)
 48




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##### Table of Contents



10.1
    
    Transfer Agent and Registrar Agreement (incorporated by reference to the
Registrants Registration Statement on Form SB-2 filed on July 27, 2007,
Registration No. 333-144923)10.2
    
    Employment Agreement dated May 13, 2009, by and between Glenn R. Rink and AbTech
Industries, Inc. (filed as Exhibit 10.2 to our current report on Form 8-K filed
on February 14, 2011 and incorporated herein by reference)10.3
    
    Employment Agreement dated May 13, 2009, by and between Lane J. Castleton and
AbTech Industries, Inc. (filed as Exhibit 10.3 to our current report on Form 8-K
filed on February 14, 2011 and incorporated herein by reference)10.4
    
    Form of Indemnification Agreement between Abtech Holdings, Inc. and each member
of its Board of Directors. (filed as Exhibit 10.4 to our current report on Form
8-K filed on February 14, 2011 and incorporated herein by reference)10.5
    
    Independent Contractor Agreement dated May 1, 2010, by and between Gordon Brown
and AbTech Industries, Inc. (filed as Exhibit 10.5 to our current report on
Form 8-K filed on February 14, 2011 and incorporated herein by reference)10.6
    
    AbTech Industries, Inc. 2007 Stock Plan (filed as Exhibit 10.6 to our current
report on Form 8-K filed on February 14, 2011 and incorporated herein by
reference)10.7
    
    Form of AbTech Industries, Inc. 2007 Incentive Stock Option Agreement (filed
as Exhibit 10.7 to our current report on Form 8-K filed on February 14, 2011 and
incorporated herein by reference)10.8
    
    Form of AbTech Industries, Inc. 2007 Non-qualified Stock Option Agreement
(filed as Exhibit 10.8 to our current report on Form 8-K filed on February 14,
2011 and incorporated herein by reference)10.9
    
    Form of AbTech Industries, Inc. Warrant Agreement (filed as Exhibit 10.9 to
our current report on Form 8-K filed on February 14, 2011 and incorporated
herein by reference)21*
    
    List of Subsidiaries31.1*
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)31.2*
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)32*
    
    Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
 
 *
    
    Filed Herewith 49




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##### Table of Contents



SIGNATURES
  ABTECH HOLDINGS, INC.Date: March 31, 2011
    By:
    /s/ Glenn R. RinkGlenn R. RinkChief Executive Officer,
President and Director POWER OF ATTORNEY
   Date: March 31, 2011
    By:
    /s/ Glenn R. RinkGlenn R. RinkChief Executive Officer,
President and DirectorDate: March 31, 2011
    By:
    /s/ Lane J. CastletonLane J. CastletonChief Accounting Officer, Chief Financial
Officer, Vice President and TreasurerDate: March 31, 2011
    By:
    /s/ Olivia H. FarrOlivia H. Farr, Director andCorporate SecretaryDate: March 31, 2011
    By:
    /s/ David GreenwaldDavid Greenwald, DirectorDate: March 31, 2011
    By:
    /s/ A. Judson HillA. Judson Hill, Director 50




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##### Table of Contents



Date: March 31, 2011
    By:
    /s/ Jonathan ThatcherJonathan Thatcher, DirectorDate: March 31, 2011
    By:
    /s/ KarlSeitzKarl Seitz, DirectorDate: March 31, 2011
    By:
    /s/ F. Daniel GabelF. Daniel Gabel, Director 51




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##### Table of Contents



ABTECH HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
 AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2010 AND 2009
 CONTENTS
 Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets
    
    
    F-3Consolidated Statements of Operations
    
    
    F-4Consolidated Statements of Stockholders Deficiency
    
    
    F-5Consolidated Statements of Cash Flows
    
    
    F-6Notes to the Consolidated Financial Statements
    
    
    F-7  F-21
 F-1




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##### Table of Contents



F-2




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##### Table of Contents



ABTECH HOLDINGS, INC. AND SUBSIDIARY
 
 CONSOLIDATED BALANCE SHEETS
 DECEMBER 31,
 2010
    
    2009ASSETSCurrent assetsCash and cash equivalents
    
    $
    4,123
    
    
    $
    108,910Accounts
receivable  related party, net
    
    
    13,044
    
    
    
    26,413Accounts
receivable  trade, net
    
    
    36,642
    
    
    
    18,564Inventories, net
    
    
    569,042
    
    
    
    581,124Prepaid expenses and other current assets
    
    
    96,787
    
    
    
    98,689Total current assets
    
    
    719,638
    
    
    
    833,700Fixed assets, net
    
    
    65,514
    
    
    
    77,341Security deposits
    
    
    17,977
    
    
    
    17,977Deferred charges
    
    
    22,673
    
    
    
    42,705Goodwill
    
    
    10,000
    
    
    
    10,000Total assets
    
    $
    835,802
    
    
    $
    981,723LIABILITIES AND STOCKHOLDERS DEFICIENCYCurrent liabilitiesAccounts payable
    
    $
    629,470
    
    
    $
    294,862Accounts
payable  related party
    
    
    7,736
    
    
    
    32,839Loans from shareholders
    
    
    180,500
    
    
    
    291,000Notes payable
    
    
    21,000
    
    
    
    250,000Convertible
promissory notes  related party
    
    
    1,156,000
    
    
    
    Convertible promissory notes
    
    
    208,679
    
    
    
    Customer deposits
    
    
    193,180
    
    
    
    197,108Accrued interest payable
    
    
    39,904
    
    
    
    22,705Accrued expenses
    
    
    125,557
    
    
    
    71,143Total current liabilities
    
    
    2,562,026
    
    
    
    1,159,657Due to related party
    
    
    106,601
    
    
    
    111,463Convertible
promissory notes  related party
    
    
    2,581,001
    
    
    
    3,787,001Convertible promissory notes
    
    
    1,375,865
    
    
    
    805,000Total liabilities
    
    
    6,625,493
    
    
    
    5,863,121Commitments and contingenciesStockholders deficiencyCommon stock, $0.001 par value; 300,000,000
authorized shares; issued and outstanding
shares: 2010 49,249,674; 2009  47,307,593
    
    
    49,250
    
    
    
    47,308Additional paid-in capital
    
    
    18,672,746
    
    
    
    16,624,566Accumulated deficit
    
    
    (24,511,687
    )
    
    
    (21,553,272
    )Total stockholders deficiency
    
    
    (5,789,691
    )
    
    
    (4,881,398
    )Total liabilities and stockholders deficiency
    
    $
    835,802
    
    
    $
    981,723
 The accompanying notes are an integral part of these consolidated financial statements.
 F-3




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##### Table of Contents



ABTECH HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
 2010
    
    
    2009Net revenues
    
    $
    381,517
    
    
    $
    237,849Net revenues
 related party
    
    
    52,141
    
    
    
    24,933Total net revenues
    
    
    433,658
    
    
    
    262,782Cost of revenues
    
    
    391,675
    
    
    
    430,045Gross profit (loss)
    
    
    41,983
    
    
    
    (167,263
    )Operating expensesSelling, general and administrative
    
    
    2,353,233
    
    
    
    1,921,680Research and development
    
    
    504,396
    
    
    
    456,845Total operating expenses
    
    
    2,857,629
    
    
    
    2,378,525Operating loss
    
    
    (2,815,646
    )
    
    
    (2,545,788
    )Other income (expense)Interest income
    
    
    9
    
    
    
    41Interest expense
    
    
    (115,568
    )
    
    
    (48,149
    )Other income (expense)
    
    
    (27,210
    )
    
    
    (27,496
    )Total other income (expense), net
    
    
    (142,769
    )
    
    
    (75,604
    )Net loss before income taxes
    
    
    (2,958,415
    )
    
    
    (2,621,392
    )Provision for income taxes
    
    
    
    
    
    
    Net loss
    
    $
    (2,958,415
    )
    
    $
    (2,621,392
    )Basic and diluted loss per common share
    
    $
    (0.06
    )
    
    $
    (0.06
    )Basic and diluted weighted average number of shares outstanding
    
    
    48,099,333
    
    
    
    47,278,557
 The accompanying notes are an integral part of these consolidated financial statements.
 F-4




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##### Table of Contents



ABTECH HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIENCY
 AdditionalCommon Stock
    
    paid-in
    
    AccumulatedShares
    
    Amounts
    
    capital
    
    deficit
    
    TotalBalance at December 31, 2008
    
    
    37,260,344
    
    
    $
    37,260
    
    
    $
    16,354,487
    
    
    $
    (18,931,880
    )
    
    $
    (2,540,133
    )Stock based compensation expense
    
    
    
    
    
    
    
    
    
    
    173,364
    
    
    
    
    
    
    
    173,364Common stock issued for services
    
    
    21,295
    
    
    
    21
    
    
    
    14,979
    
    
    
    
    
    
    
    15,000Common stock issued for cash
    
    
    3,551
    
    
    
    4
    
    
    
    2,496
    
    
    
    
    
    
    
    2,500Interest paid in preferred shares
    
    
    22,403
    
    
    
    23
    
    
    
    15,757
    
    
    
    
    
    
    
    15,780Warrants issued in debt offering
    
    
    
    
    
    
    
    
    
    
    63,483
    
    
    
    
    
    
    
    63,483Effect of retroactive recapitalization
    
    
    10,000,000
    
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    10,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,621,392
    )
    
    
    (2,621,392
    )Balance at December 31, 2009
    
    
    47,307,593
    
    
    
    47,308
    
    
    
    16,624,566
    
    
    
    (21,553,272
    )
    
    
    (4,881,398
    )Stock based compensation expense
    
    
    
    
    
    
    
    
    
    
    239,265
    
    
    
    
    
    
    
    239,265Common stock issued for services
    
    
    27,034
    
    
    
    26
    
    
    
    19,954
    
    
    
    
    
    
    
    19,980Preferred stock issued for debt conversion
    
    
    354,921
    
    
    
    356
    
    
    
    249,644
    
    
    
    
    
    
    
    250,000Interest paid in preferred shares
    
    
    65,126
    
    
    
    65
    
    
    
    45,812
    
    
    
    
    
    
    
    45,877Advances received pre-merger
    
    
    1,495,000
    
    
    
    1,495
    
    
    
    1,493,505
    
    
    
    
    
    
    
    1,495,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,958,415
    )
    
    
    (2,958,415
    )Balance at December 31, 2010
    
    
    49,249,674
    
    
    $
    49,250
    
    
    $
    18,672,746
    
    
    $
    (24,511,687
    )
    
    $
    (5,789,691
    )
 The accompanying notes are an integral part of these consolidated financial statements.
 F-5




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ABTECH HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
 2010
    
    2009Operating ActivitiesNet loss
    
    $
    (2,958,415
    )
    
    $
    (2,621,392
    )Adjustments to reconcile net loss to net cash used in operating activitiesDepreciation and amortization
    
    
    47,452
    
    
    
    70,993Common stock issued for services rendered
    
    
    19,980
    
    
    
    15,000Stock-based compensation expense
    
    
    239,265
    
    
    
    173,364Preferred stock issued for interest on notes payable
    
    
    45,877
    
    
    
    15,780Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (4,709
    )
    
    
    154,687Inventories, net
    
    
    12,082
    
    
    
    (1,643
    )Prepaid expenses and other current assets
    
    
    1,905
    
    
    
    (78,646
    )Accounts payable
    
    
    309,505
    
    
    
    80,698Customer deposits
    
    
    (3,928
    )
    
    
    38,834Accrued interest payable
    
    
    17,199
    
    
    
    22,705Accrued expenses
    
    
    54,414
    
    
    
    (15,507
    )Net cash used in operating activities
    
    
    (2,219,373
    )
    
    
    (2,145,127
    )Investing ActivitiesPurchases of fixed assets
    
    
    (15,596
    )
    
    
    (1,438
    )Net cash used in investing activities
    
    
    (15,596
    )
    
    
    (1,438
    )Financing ActivitiesProceeds from issuance of common stock
    
    
    
    
    
    
    2,500Advances received
    
    
    1,495,000
    
    
    
    Proceeds from borrowings from shareholders, net of debt issuance costs
    
    
    41,000
    
    
    
    1,331,000Repayment of borrowings
    
    
    (551,321
    )
    
    
    Repayment of borrowings from shareholders
    
    
    (141,500
    )
    
    
    (38,000
    )Proceeds from notes payable
    
    
    1,291,865
    
    
    
    880,000Net decrease in due to related party
    
    
    (4,862
    )
    
    
    (4,625
    )Net cash provided by financing activities
    
    
    2,130,182
    
    
    
    2,170,875Net change in cash and cash equivalents
    
    
    (104,787
    )
    
    
    24,310Cash and cash equivalents at beginning of period
    
    
    108,910
    
    
    
    84,600Cash and cash equivalents at end of period
    
    $
    4,123
    
    
    $
    108,910Supplemental cash flow information:Cash paid for interest
    
    $
    43,343
    
    
    
    Cash paid for income taxes
    
    
    
    
    
    
    Noncash investing and financing activities:Preferred stock issued for conversion of debt, including accrued interest
    
    $
    295,877
    
    
    $
    15,780Common stock issued for services
    
    $
    19,980
    
    
    $
    15,000
 The accompanying notes are an integral part of these consolidated financial statements.
 F-6




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##### Table of Contents



ABTECH HOLDINGS, INC. AND SUBSIDIARY
 
 Notes to the Consolidated Financial Statements
  Organization and Description of Business
   ®
  Summary of Significant Accounting Policies
 Basis of Financial Statement Presentation
 Cash and Cash Equivalents
 F-7




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##### Table of Contents



Use of Estimates
  Concentration of Credit Risk
 
    
    Cash and cash equivalents Financial instruments that subject the Company to
credit risk are cash balances maintained in excess of federal depository insurance limits.
At December 31, 2010, the Company did not have any cash or cash equivalent balances which
were not guaranteed by the Federal Deposit Insurance Corporation. To date, the Company has
not experienced any losses in such accounts and believes the exposure is minimal.
    
    Major customers and accounts receivable Major customers represent any customer that
accounts for more than 10% of revenues for the year. During 2010, the Company had one
customer that accounted for 23% of revenues, whose accounts receivable balance (unsecured)
accounted for approximately 12% of accounts receivable at December 31, 2010. During 2009,
the Company had one customer that accounted for 12% of its revenues, whose accounts
receivable balance (unsecured) accounted for approximately 3% of accounts receivable at
December 31, 2009.
    
    Supplier Major suppliers represent any vendor that accounts for more than 10% of
purchases for the year. During 2010, the Company had two vendors that each accounted for
more than 10% of its purchases at 14% and 11%, respectively. Neither of these vendors had
an accounts payable balance at December 31, 2010. During 2009, the Company had one vendor
that accounted for 57% of its purchases and one vendor that accounted for 13% of purchases.
Accounts payable for these vendors accounted for approximately 0% and 5%, respectively, of
accounts payable at December 31, 2009.
 Fair Values of Financial Instruments
 Inventories
 F-8




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##### Table of Contents



Warranty Accrual
 Fixed Assets
 Deferred Charges
 Revenue Recognition
 Allowance for Doubtful Accounts
 Customer Deposits
 Cost Recognition
 Long-Lived Assets
 Income Taxes
 F-9




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##### Table of Contents



Stock-Based Compensation
   Net Loss Per Share
 Conversion Options
 Imputed Interest
 F-10




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##### Table of Contents



Business Combination
 Recent Accounting Pronouncements
   NOTE 2  GOING CONCERN
   Sales and Marketing
 F-11




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##### Table of Contents



Financing.
  NOTE 3  INVENTORIES
  2010
    
    2009Raw materials
    
    $
    85,711
    
    
    $
    77,268Work in process
    
    
    394,540
    
    
    
    562,256Finished goods
    
    
    221,791
    
    
    
    74,600Reserve for obsolescence
    
    
    (133,000
    )
    
    
    (133,000
    )Total
    
    $
    569,042
    
    
    $
    581,124
 NOTE 4  FIXED ASSETS
  2010
    
    2009Furniture and fixtures
    
    $
    128,093
    
    
    $
    128,093Computer equipment
    
    
    58,231
    
    
    
    52,350Machinery and equipment
    
    
    242,980
    
    
    
    233,265Leasehold improvements
    
    
    19,348
    
    
    
    19,348Total
    
    
    448,652
    
    
    
    433,056Less accumulated depreciation
    
    
    (383,138
    )
    
    
    (355,715
    )Net book value
    
    $
    65,514
    
    
    $
    77,341
 F-12




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##### Table of Contents



NOTE 5  COMMITMENTS
 Capital Leases
 Operating Leases
 NOTE 6  LOANS FROM SHAREHOLDERS
  NOTE 7  RELATED PARTY TRANSACTIONS
 Accounts receivable; related party
 Royalty Agreement Prepaids
and other current assets
 Due to related party
 Convertible Promissory Notes
 F-13




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##### Table of Contents



NOTE 8  ACCRUED EXPENSES
  2010
    
    2009Accrued payroll
    
    $
    53,860
    
    
    $
    38,985Deferred rent
    
    
    36,172
    
    
    
    Accrued vacation
    
    
    26,307
    
    
    
    26,307Accrued warranty reserve
    
    
    5,000
    
    
    
    5,000Other accruals
    
    
    4,218
    
    
    
    851$
    125,557
    
    
    $
    71,143
 NOTE 9  INCOME TAXES
   2010
    
    2009Statutory Rate
    
    
    34.0
    %
    
    
    34.0
    %State income taxes, net of federal income tax benefit
    
    
    5.0
    %
    
    
    5.0
    %Reduction in valuation allowance related to net
operating loss carry-forwards and change in
temporary differences
    
    
    -39.0
    %
    
    
    -39.0
    %0.0
    %
    
    
    0.0
    %
  2010
    
    2009Deferred tax assets (liabilities):Net operating loss carryforwards
    
    $
    9,154,000
    
    
    
    8,621,000Accumulated depreciation
    
    
    (13,000
    )
    
    
    Less valuation allowance
    
    
    (9,141,000
    )
    
    
    (8,621000
    )Net deferred tax assets
    
    $
    
    
    
    
    
  F-14




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##### Table of Contents



NOTE 10  CONVERTIBLE PROMISSORY NOTES
  Principal
    
    
    Interest
    
    
    ConversionType of Financing
    
    Amount
    
    
    Rate
    
    
    Rate
    
    
    Maturity DateRelated PartyJunior Convertible Notes
    
    $
    1,156,000
    
    
    
    0
    %
    
    $
    2.65
    
    
    
    9/30/2011Senior Convertible Notes
    
    
    750,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    3/31/2013Senior Convertible Notes
    
    
    400,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    7/7/2013Senior Convertible Notes
    
    
    200,001
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    8/27/2013Senior Convertible Notes
    
    
    200,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    12/19/2013Senior Convertible Notes
    
    
    325,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    2/3/2014Senior Convertible Notes
    
    
    200,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    4/16/2014Senior Convertible Notes
    
    
    6,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    5/11/2014Senior Convertible Notes
    
    
    500,000
    
    
    
    12
    %
    
    $
    3.75
    
    
    
    6/26/2014Subtotal  related party
    
    
    3,737,001Non-related partySenior Convertible Notes
    
    
    100,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    10/3/2013Senior Convertible Notes
    
    
    100,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    1/8/2014Senior Convertible Notes
    
    
    50,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    10/3/2013Senior Convertible Note
    
    
    55,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    4/8/2014Senior Convertible Note
    
    
    100,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    5/8/2014Senior Convertible Notes
    
    
    50,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    6/12/2014Senior Convertible Notes
    
    
    50,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    11/5/2014Senior Convertible Notes
    
    
    100,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    11/25/2014Senior Convertible Note
    
    
    100,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    2/5/2015Senior Convertible Notes
    
    
    185,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    2/9/2015Senior Convertible Note
    
    
    25,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    2/12/15Senior Convertible Note
    
    
    300,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    4/13/15Senior Convertible Note
    
    
    125,865
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    7/15/15Senior Convertible Note
    
    
    35,000
    
    
    
    0
    %
    
    $
    3.75
    
    
    
    9/10/15Promissory Note
    
    
    83,679
    
    
    
    12
    %
    
    $
    3.75
    
    
    
    8/2/10Promissory Note
    
    
    100,000
    
    
    
    12
    %
    
    $
    3.75
    
    
    
    8/26/10Promissory Note
    
    
    25,000
    
    
    
    12
    %
    
    $
    3.75
    
    
    
    5/2/11Subtotal  non-related party
    
    
    1,584,544Total
    
    $
    5,321,545
  F-15




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##### Table of Contents



NOTE 11  STOCKHOLDERS EQUITY AND SHARE BASED COMPENSATION
  Stock Options
  Selling, general and
administrative
  2010
    
    2009Weighted average of fair value for options granted
    
    $
    0.90
    
    
    $
    1.21Weighted average assumptions used:Expected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Expected volatility
    
    
    13.0-15.0
    %
    
    
    15.0
    %Risk-free interest rate
    
    
    2.1
    %
    
    
    3.0
    %Expected life (in years)
    
    
    8.7
    
    
    
    10.0
 F-16




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##### Table of Contents



Weighted-
    
    
    Weighted-Number of Shares
    
    
    average Exercise
    
    
    averageUnder Option
    
    
    Price
    
    
    Remaining TermBalance at December 31, 2008
    
    
    1,209,000
    
    
    $
    4.04Granted
    
    
    120,000
    
    
    
    3.75Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    (549,000
    )
    
    
    3.75Outstanding at December 31, 2009
    
    
    780,000
    
    
    
    3.74
    
    
    
    4.97Granted
    
    
    621,000
    
    
    
    3.75Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    (400,000
    )
    
    
    3.72Outstanding at December 31, 2010
    
    
    1,001,000
    
    
    $
    3.75
    
    
    
    6.56Vested or expected to vest at end of period
    
    
    531,000
    
    
    $
    3.75
    
    
    
    4.40Exercisable at end of period
    
    
    531,000
    
    
    $
    3.75
    
    
    
    4.40
   Weighted-averageShares
    
    
    grant date fair valueNot-vested at December 31, 2008
    
    
    721,001
    
    
    $
    1.47Granted
    
    
    120,000
    
    
    
    1.20Vested
    
    
    (145,002
    )
    
    
    1.19Forfeited or expired
    
    
    (428,000
    )
    
    
    1.48Non-vested at December 31, 2009
    
    
    267,999
    
    
    
    1.49Granted
    
    
    621,000
    
    
    
    0.90Vested
    
    
    (185,999
    )
    
    
    0.88Forfeited or expired
    
    
    (233,000
    )
    
    
    1.45Non-vested at December 31, 2010
    
    
    470,000
    
    
    $
    0.96
 F-17




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##### Table of Contents



Common stock
  Warrants
  
    
    Four individuals received warrants to purchase 130,000 shares of AbTech common stock as
compensation for consulting services provided to the Company. Warrants for 120,000 shares
have an exercise price of $4.25 per share and are exercisable at any time prior to January
11, 2015. Warrants for 10,000 shares have an exercise price of $3.75 per share and are
exercisable at any time prior to April 17, 2015. Compensation expense related to these
warrants of $68,024 was included in Selling, general and administrativeexpense in the
consolidated statements of operations.
    
    One individual received a warrant to purchase 10,933 shares of AbTech common stock with
an exercise price of $3.75 per share as a finders fee in conjunction with raising capital.
The warrants are exercisable at any time prior to April 7, 2015 and April 30, 2015,
respectively. Compensation expense related to this warrant of $7,821 was included in Other
income (expense)in the consolidated statements of operations.
  
    
    An individual received warrants to purchase 1,333 shares of AbTech common stock with an
exercise price of $3.75 per share as a finders fee in conjunction with raising capital.
Under these warrants, 500 shares are exercisable at any time prior to March 27, 2012 and
833 shares are exercisable at any time prior to May 29, 2012. Compensation expense of $618
for these warrants is accounted for under ASC 718 and included in Selling, general and
administrative expense in the consolidated statements of operations.
    
    In conjunction with the issuance of short-term promissory notes, the Company issued
warrants to purchase 104,000 shares of AbTech common stock at $3.75 per share. The fair
value of these warrants of $12,865 was recorded as a deferred financing cost and was fully
amortized in 2009.
    
    In conjunction with the issuance of a Senior Convertible Promissory Note the Company
issued a warrant to purchase 44,444 shares of AbTech Series A Preferred Stock at $3.75 per
share. The fair value of these warrants of $50,618 was recorded as a deferred financing
cost, of which, $5,214 was amortized in 2009.
  Number of
    
    Weighted-averageWarrants
    
    Exercise PriceOutstanding at December 31, 2008
    
    
    681,000
    
    
    $
    4.29Granted
    
    
    149,777
    
    
    
    3.75Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    
    
    
    
    Outstanding at December 31, 2009
    
    
    830,777
    
    
    
    4.19Granted
    
    
    140,933
    
    
    
    4.18Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    (20,000
    )
    
    
    3.75Outstanding at December 31, 2010
    
    
    951,710
    
    
    $
    4.20
 F-18




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##### Table of Contents



Series A Convertible Preferred Stock
   rds
 Common shares reserved for future issuance
  Conversion of convertible preferred stock
    
    
    1,589,775Shares issuable upon conversion of debt
    
    
    1,547,039Stock options outstanding
    
    
    1,001,000Warrants to purchase common stock
    
    
    951,7105,089,524
 NOTE 12  LITIGATION, CLAIMS AND ASSESSMENTS
  F-19




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NOTE 13  SUBSEQUENT EVENTS
 Reverse Acquisition Transaction
  
    
    Issuance of Common Stock At the closing of the Merger, ABHD issued 32,009,801 shares of
its common stock to the stockholders of the Company in exchange for 100% of the issued and
outstanding common stock of the Company. Immediately prior to the Merger, ABHD had 10,000,000
shares of common stock issued and outstanding, excluding the shares issued as part of a $3
million funding required by the Merger Agreement. $1,645,000 of the $3 million funding was
received by ABHD prior to closing of the merger and the balance was received at closing of the
Merger in the form of a promissory note in the principal amount of $1,355,000 and due April
15, 2011. Immediately after the merger, ABHD had 45,009,801 shares of common stock issued and
outstanding, including the 3 million shares issued, or to be issued, in connection with the $3
million capital funding completed at closing.
 
    
    Conversion of AbTech Industries Preferred Stock  At the effectiveness of the Merger,
1,439,614 shares of Series A Preferred Stock (Preferred Stock) of the Company outstanding
immediately prior to the Merger were converted into 1,439,614 shares of preferred stock of
Surviving Corporation (i.e., AbTech Industries, post-Merger). The privileges, rights, and
preferences of the Preferred Stock were not affected or altered by such conversion.
Accordingly, the Preferred Stock may be converted at any time into common shares of Abtech
Industries as the Surviving Corporation and subsequently such common shares of the Surviving
Corporation will be exchanged for shares of the common stock of ABHD at the same exchange rate
in effect for common shares of the Company at the date of the Merger (the Merger
Consideration).
 
    
    Conversion of AbTech Industries Warrants At the effectiveness of the Merger, 480,266
warrants to purchase common stock of the Company outstanding immediately prior to the Merger
were converted into warrants to purchase 2,557,153 shares of common stock of ABHD. At the
effective time of the Merger, 471,444 warrants to purchase Company Preferred Stock outstanding
immediately prior to the Merger were converted into warrants to purchase 471,444 shares of
preferred stock of the Company as the Surviving Corporation. The aggregate exercise price and
other terms of such warrants were not affected or altered by such conversion and, upon
exercise of any such warrants, the shares of preferred stock received upon such exercise would
be convertible at any time for common shares of the Company, whereupon such common shares
would be exchanged for the Merger Consideration.
 
    
    Conversion of AbTech Industries Options At the effectiveness of the Merger, options to
purchase 992,000 shares of common stock of the Company outstanding immediately prior to the
Merger were converted into options to purchase 5,281,855 shares of common stock of ABHD. The
aggregate exercise price and other terms of such options were not affected or altered by such
conversion.
 
    
    Conversion of AbTech Industries Convertible Debt  As of the closing of the Merger,
$3,980,666 of outstanding notes of the Company that were convertible into Preferred Stock of
Abtech Industries prior to the Merger were retained by the holders and $1,347,372 of such
notes were converted into 1,919,315 shares of common stock of ABHD.
 F-20




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Notice of Default and Acceleration of Note
  Consulting Agreement
  F-21