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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: March 31, 2011
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 ABTECH HOLDINGS, INC.
 
  Nevada
    
    14-1994102(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification Number)4110 N. Scottsdale Road, Suite 235Scottsdale, Arizona
    
    85251(Address of Principal Executive Offices)
    
    (Zip Code)
 (480) 874-4000
 
   YES þ NO o
  YES o NO o
  o Large accelerated filer
    
    o Accelerated filer
    
    o Non-accelerated filer
    
    þ Smaller reporting company(Do not check if smaller reporting company)
  YES o NO þ
  Class
    
    Outstanding at May 10, 2011Common stock, $.001 par value
    
    44,329,800




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##### 



ABTECH HOLDINGS, INC.
FORM 10-Q
 March 31, 2011
 INDEX
 PAGEPART IFINANCIAL INFORMATION
    
    
    4Item 1. Financial Statements
    
    
    4Condensed Consolidated Balance Sheets as of March 31, 2011 (Unaudited) and December 31, 2010
    
    
    4Condensed Consolidated Statements of Operations for the three months ended March 31, 2011 and 2010
    
    
    5Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010
    
    
    6Notes to the Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    12Item 4. Controls and Procedures
    
    
    12PART IIOTHER INFORMATION
    
    
    14Item 1. Legal Proceedings
    
    
    14Item 1A. Risk Factors
    
    
    14Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    14Item 3. Defaults Upon Senior Securities
    
    
    15Item 4. Reserved
    
    
    15Item 5. Other Information
    
    
    15Item 6. Exhibits
    
    
    15Signature Page
    
    
    16CertificationsExhibit 31.1Exhibit 31.2Exhibit 32EX-31.1EX-31.2EX-32




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FORWARD-LOOKING STATEMENTS
   YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING STATEMENTS
  Explanatory Note
    2




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3




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PART IFINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements.
 ABTECH HOLDINGS, INC. AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31, 2011
    
    December 31,(Unaudited)
    
    2010ASSETSCurrent assetsCash and cash equivalents
    
    $
    50,484
    
    
    $
    4,123Restricted cash
    
    
    313,624
    
    
    
    Accounts receivable  related party, net
    
    
    4,348
    
    
    
    13,044Accounts receivable  trade, net
    
    
    28,329
    
    
    
    36,642Inventories, net
    
    
    563,882
    
    
    
    569,042Prepaid expenses and other current assets
    
    
    100,613
    
    
    
    96,787Total current assets
    
    
    1,061,280
    
    
    
    719,638Fixed assets, net
    
    
    58,797
    
    
    
    65,514Security deposits
    
    
    17,977
    
    
    
    17,977Deferred charges
    
    
    17,666
    
    
    
    22,673Goodwill
    
    
    10,000
    
    
    
    10,000Total assets
    
    $
    1,165,720
    
    
    $
    835,802LIABILITIES AND STOCKHOLDERS DEFICIENCYCurrent liabilitiesAccounts payable
    
    $
    640,331
    
    
    $
    629,470Accounts payable  related party
    
    
    40,596
    
    
    
    7,736Loans from shareholders
    
    
    139,500
    
    
    
    180,500Notes payable
    
    
    96,000
    
    
    
    21,000Convertible promissory notes  related party
    
    
    1,145,000
    
    
    
    1,156,000Convertible promissory notes
    
    
    
    
    
    
    208,679Customer deposits
    
    
    195,629
    
    
    
    193,180Accrued interest payable
    
    
    28,304
    
    
    
    39,904Accrued expenses
    
    
    148,084
    
    
    
    125,557Total current liabilities
    
    
    2,433,444
    
    
    
    2,562,026Due to related party
    
    
    104,938
    
    
    
    106,601Convertible promissory notes  related party
    
    
    2,581,001
    
    
    
    2,581,001Convertible promissory notes
    
    
    170,000
    
    
    
    1,375,865Total liabilities
    
    
    5,289,383
    
    
    
    6,625,493Commitments and contingenciesStockholders deficiencyCommon stock, $0.001 par value; 300,000,000
authorized shares; issued and outstanding
shares: March 31, 2011  44,204,800;
December 31, 2010  49,249,674
    
    
    44,205
    
    
    
    49,250Additional paid-in capital
    
    
    21,193,327
    
    
    
    18,672,746Non-controlling interest
    
    
    (1,328,793
    )
    
    
    Accumulated deficit
    
    
    (24,032,402
    )
    
    
    (24,511,687
    )Total stockholders deficiency
    
    
    (4,123,663
    )
    
    
    (5,789,691
    )Total liabilities and stockholders deficiency
    
    $
    1,165,720
    
    
    $
    835,802
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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ABTECH HOLDINGS, INC. AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31
 2011
    
    
    2010Net revenues
    
    $
    43,277
    
    
    $
    58,971Net revenues  related party
    
    
    
    
    
    
    12,030Total net revenues
    
    
    43,277
    
    
    
    71,001Cost of revenues
    
    
    80,976
    
    
    
    92,046Gross profit (loss)
    
    
    (37,699
    )
    
    
    (21,045
    )Operating expensesSelling, general and administrative
    
    
    641,546
    
    
    
    417,941Research and development
    
    
    142,087
    
    
    
    118,495Total operating expenses
    
    
    783,633
    
    
    
    536,436Operating loss
    
    
    (821,332
    )
    
    
    (557,481
    )Other income (expense)Interest expense
    
    
    (23,172
    )
    
    
    (26,197
    )Other income (expense)
    
    
    (5,004
    )
    
    
    (5,004
    )Total other income (expense), net
    
    
    (28,176
    )
    
    
    (31,201
    )Net loss before income taxes
    
    
    (849,508
    )
    
    
    (588,682
    )Provision for income taxes
    
    
    
    
    
    
    Net loss
    
    
    (849,508
    )
    
    
    (588,682
    )Net loss attributable to non-controlling interest
    
    
    (144,343
    )
    
    
    Net loss attributable to controlling interest
    
    $
    (705,165
    )
    
    $
    (588,682
    )Basic and diluted loss per common share
    
    $
    (0.02
    )
    
    $
    (0.02
    )Basic and diluted weighted average number of shares outstanding
    
    
    37,319,928
    
    
    
    29,282,549
 The accompanying notes are an integral part of these condensed consolidated financial statements
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ABTECH HOLDINGS, INC. AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
 2011
    
    2010Operating ActivitiesNet loss attributable to controlling interest
    
    $
    (705,165
    )
    
    $
    (588,682
    )Adjustments to reconcile net loss to net cash used in operating activitiesDepreciation and amortization
    
    
    11,724
    
    
    
    12,742Stock-based compensation expense
    
    
    68,164
    
    
    
    60,685Preferred stock issued for interest on notes payable
    
    
    5,507
    
    
    
    17,977Changes in operating assets and liabilities:Accounts receivable, net
    
    
    17,009
    
    
    
    654Inventories, net
    
    
    5,160
    
    
    
    11,198Prepaid expenses and other current assets
    
    
    (3,826
    )
    
    
    (855
    )Accounts payable
    
    
    43,721
    
    
    
    1,223Customer deposits
    
    
    2,449
    
    
    
    (1,269
    )Accrued interest payable
    
    
    (11,600
    )
    
    
    5,817Accrued expenses
    
    
    22,527
    
    
    
    12,664Net loss attributable to non-controlling interest
    
    
    (144,343
    )
    
    
    Net cash used in operating activities
    
    
    (688,673
    )
    
    
    (467,846
    )Investing ActivitiesNet cash provided by (used in) investing activities
    
    
    
    
    
    
    Financing ActivitiesProceeds from issuance of common stock
    
    
    700,000
    
    
    
    Repayment of borrowings
    
    
    (83,679
    )
    
    
    Repayment of borrowings from shareholders
    
    
    (41,000
    )
    
    
    (141,500
    )Proceeds from notes payable
    
    
    475,000
    
    
    
    550,000Proceeds held for restricted use
    
    
    (313,624
    )Net decrease in due to related party
    
    
    (1,663
    )
    
    
    (1,162
    )Net cash provided by financing activities
    
    
    735,034
    
    
    
    407,338Net change in cash and cash equivalents
    
    
    46,361
    
    
    
    (60,508
    )Cash and cash equivalents at beginning of period
    
    
    4,123
    
    
    
    108,910Cash and cash equivalents at end of period
    
    $
    50,484
    
    
    $
    48,402Supplemental cash flow information:Cash paid for interest
    
    $
    20,219
    
    
    
    Cash paid for income taxes
    
    
    
    
    
    
    Noncash investing and financing activities:Preferred stock issued for conversion of debt, including accrued interest
    
    $
    1,347,372
    
    
    $
    17,977Common stock warrants issued for services
    
    
    68,164
    
    
    
    
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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ABTECH HOLDINGS, INC.
 
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 1  ORGANIZATION
    ®
  NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Financial Statement Presentation
  7




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Net Loss Per Share
 Recent Accounting Pronouncements
 NOTE 3  INVENTORIES
  March 31, 2011
    
    December 31, 2010Raw materials
    
    $
    88,117
    
    
    $
    85,711Work in process
    
    
    388,257
    
    
    
    394,540Finished goods
    
    
    220,508
    
    
    
    221,791Reserve for obsolescence
    
    
    (133,000
    )
    
    
    (133,000
    )Total
    
    $
    563,882
    
    
    $
    569,042
 NOTE 4  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 AbTech in exchange for 100% of the issued and
outstanding common stock of AbTech. 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 ($150,000 of the $1,645,000 was received after December 31,
2010). The financier issued a promissory note to ABHD for the $1,355,000 balance of the
financing commitment which was to be funded in cash after the Merger closing. ABHD elected to
hold the note as a funding commitment only and did not record the promissory note or issue any shares in exchange for the promissory note. ABHD intends to issue shares as the funding
commitment is actually funded with cash. From the date of the merger through March 31, 2011,
ABHD received $550,000 of the remaining $1,355,000 commitment and issued 550,000 ABHD common shares to the investors.
 
    
    Conversion of AbTechs Preferred Stock At the effectiveness of the Merger, 1,439,614
shares of Series A Preferred Stock (Preferred Stock) of AbTech outstanding immediately prior
to the Merger
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were converted into 1,439,614 shares of preferred stock of Surviving Corporation (i.e., AbTech,
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 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 AbTech at the date of the Merger (the Merger
Consideration). The preferred stockholders that elected to not convert and exchange their shares for ABHD common shares, represent the non-controlling interest shown on the Consolidated
Balance Sheet as of March 31, 2011.
 
    
    Conversion of AbTechs Warrants At the effectiveness of the Merger, 480,266 warrants
to purchase AbTech common stock 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 AbTech Preferred Stock outstanding immediately prior
to the Merger were converted into warrants to purchase 471,444 shares of preferred stock of
the AbTech 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s Options At the effectiveness of the Merger, options to purchase
992,000 shares of AbTech common stock 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s 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 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.
 NOTE 5  GOING CONCERN
  NOTE 6  DEBT REPAYMENT
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NOTE 7  SUBSEQUENT EVENTS
 Private Placement
  Debt Repayment
  
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Overview
    10




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Results of Operations
 Comparison of the three months ended March 31, 2011 and 2010
    Liquidity and Capital Resources
   11




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Off-Balance Sheet Arrangements
  Contractual Obligations
  
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4.
    
    Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
  12




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
    
    We have not achieved the optimal level of segregation of duties relative to key
financial reporting functions.
    
    There is no system in place to review and monitor internal control over financial
reporting. This is due to our Company maintaining an insufficient complement of
personnel to carry out ongoing monitoring responsibilities and ensure effective
internal control over financial reporting.
    
    We did not perform an entity level risk assessment to evaluate the implication of
relevant risks on financial reporting, including the impact of potential fraud related
risks and the risks related to non-routine transactions, if any, on our internal
control over financial reporting. Lack of an entity-level risk assessment constituted
an internal control design deficiency which resulted in more than a remote likelihood
that a material error would not have been prevented or detected, and constituted a
material weakness.
  Changes in Internal Control over Financial Reporting
  13




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PART II OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings.
  
 Item 1A.
    
    Risk Factors.
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
    14




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Item 3.
    
    Defaults Upon Senior Securities.
  
 Item 4.
    
    Reserved
  
 Item 5.
    
    Other Information
  
 Item 6.
    
    Exhibits.
 Exhibit Number
    
    Name31.1
    
    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
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SIGNATURES
  ABTECH HOLDINGS, INC.
(Registrant)Date: May 16, 2011
    By:
    /s/ Glenn R. RinkGlenn R. RinkChief Executive Officer, President, and DirectorDate: May 16, 2011
    By:
    /s/ Lane J. CastletonLane J. CastletonChief Accounting Officer, Chief Financial
Officer, Vice President and Treasurer 16