Abtech Holdings, Inc. - FORM 10-Q

Attached files

file	filename
EX-32 - Abtech Holdings, Inc.	v208419_ex32.htm
EX-31.1 - Abtech Holdings, Inc.	v208419_ex31-1.htm
EX-31.2 - Abtech Holdings, Inc.	v208419_ex31-2.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: November 30, 2010

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

ABTECH HOLDINGS, INC.

(Name of registrant as specified in its charter)

Nevada		14-1994102
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification Number)

1223 Burrowhill Lane Mississauga, Ontario, Canada		L5H 4M7
(Address of Principal Executive Offices)		(Zip Code)

(905) 274-5231

(Registrant’s telephone number, including area code)

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

YES ¨

NO ¨

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

YES ¨

NO ¨

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

(Do not check if smaller reporting

company)

Smaller reporting company

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

YES ¨

NO ¨

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

Class		Outstanding at January 18, 2010
Common stock, $.001 par value		51,885,700

ABTECH HOLDINGS, INC.

FORM 10-Q

November 30, 2010

INDEX

		PAGE
PART I—FINANCIAL INFORMATION		2

Item 1. Consolidated Financial Statements		2

Condensed Balance Sheets as of November 30, 2010 (Unaudited) and May 31, 2010 (Audited)		2

Condensed Statements of Operations for the three- and six-month periods ended November 30, 2010 and 2009 and for the period from June 1, 2010 (inception of development stage) to November 30, 2010 (Unaudited)		3

Condensed Statements of Cash Flows for the six-month periods ended November 30, 2010 and 2009 and for the period from June 1, 2010 (inception of development stage) to November 30, 2010 (Unaudited)		4

Notes to Consolidated Financial Statements		5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		9

Item 3. Quantitative and Qualitative Disclosures About Market Risk		12

Item 4. Controls and Procedures		12

PART II—OTHER INFORMATION		14

Item 1. Legal Proceedings		14

Item 1A. Risk Factors		14

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		14

Item 3. Defaults Upon Senior Securities		14

Item 4. Reserved		14

Item 5. Other Information		14

Item 6. Exhibits		14

Signature Page		15

Certifications
Exhibit 31.1
Exhibit 31.2
Exhibit 32

FORWARD-LOOKING STATEMENTS

This Report on Form 10-Q contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Reference is made in particular to the description of our plans and objectives for future operations, assumptions underlying such plans and objectives, and other forward-looking statements included in this report. Such statements may be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue,” or similar terms, variations of such terms or the negative of such terms. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. Such statements address future events and conditions concerning, among others, capital expenditures, earnings, litigation, regulatory matters, liquidity and capital resources, and accounting matters. Actual results in each case could differ materially from those anticipated in such statements by reason of factors such as future economic conditions, changes in consumer demand, legislative, regulatory and competitive developments in markets in which we operate, results of litigation, and other circumstances affecting anticipated revenues and costs, and the risk factors set forth under the heading “Risk Factors” in our Annual report on Form 10-K for the fiscal year ended May 31, 2010, filed on August 16, 2010.

As used in this Form 10-Q, “we,” “us,” and “our” refer to Abtech Holdings, Inc., which is also sometimes referred to as the “Company.”

YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING STATEMENTS

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

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ABTECH HOLDINGS, INC.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

	November 30, 2010 (Unaudited)			May 31, 2010 (Audited)

ASSETS

CURRENT ASSETS

Cash	$	-		$	-
Advances		1,295,000
Total Current Assets	$	1,295,000		$	-

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY

CURRENT LIABILITIES

Accounts payable and accrued expenses	$	151,278		$	27,065
Accounts payable – related parties		70,173			70,173
Notes Payable		480,029			-

Total Current Liabilities	$	701,480		$	97,238

STOCKHOLDERS’ DEFICIENCY

Common stock
300,000,000 shares authorized, at $0.001 par value;
51,885,700 shares issued and outstanding (2009 - 51,000,000 shares issued and outstanding)		51,886			51,000
Capital in excess of par value		875,564			(9,250	)
Deficit accumulated during the pre-exploration stage		(138,988	)		(138,988	)
Deficit accumulated during the development stage		(194,942	)		-

Total Stockholders’ Deficiency		593,520			(97,238	)

	$	1,295,000		$	-

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

ABTECH HOLDINGS, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For three months ended November 30, 2010			For three months ended November 30, 2009			For six months ended November 30, 2010			For six months ended November 30, 2009			From June 1, 2010 (Inception of Development Stage) to November 30, 2010
REVENUE	$	-		$	-		$	-		$	-		$	-

EXPENSES

Accounting and audit		580			-			3,080			-			3,080
Consulting fees		9,167			-			9,167			-			9,167
Filing fees		1,485			-			3,671			-			3,671
Investor relations		545			-			3,775			-			3,775
Legal		99,323			-			154,113			-			154,113
Management fees		-			-			-			-			-
Marketing		-			-			20,342			-			20,342
Office		-			-			74			-			74
Transfer agent fees		105			-			720			-			720
		111,205			-			194,942			-			194,942

NET LOSS FROM CONTINUING OPERATIONS	$	(111,205	)	$	-		$	(194,942	)	$	-		$	(194,942	)
DISCONTINUED OPERATIONS		-			(6,738	)		-			(13,177	)		-
NET LOSS		(111,205	)		(6,738	)		(194,942	)		(13,177	)		(194,942	)

NET LOSS PER SHARE FROM CONTINUING OPERATIONS - Basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

NET LOSS PER SHARE FROM DISCONTINUED OPERATIONS - Basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

WEIGHTED AVERAGE OUTSTANDING SHARES

Basic and Diluted		51,525,580			51,000,000			51,261,354			51,000,000

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

ABTECH HOLDINGS, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	For six months ended November 30, 2010			For six months ended November 30, 2009			From June 1, 2010 (Inception of Development Stage) to November 30, 2010

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss	$	(194,942	)	$	(13,177	)	$	(194,942	)

Adjustments to reconcile net loss to net cash provided by operating activities:
Stock issued for services		40,700			-			40,700
Notes issued for expenses		2,964			-			2,964

Changes in operating assets and liabilities:
Changes in accounts payable		151,278						151,278
Changes in accounts payable from discontinued operations		-			1,098			27,065
Net Cash Provided (Used) in Operations		-			(12,079	)		-

CASH FLOWS FROM INVESTING ACTIVITIES:		-			-			-

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from loan from related party related to discontinued operations		-			9,529			-
		-			9,529			-

Net Increase (Decrease) in Cash		-			(2,550	)		-

Cash at Beginning of Period		-			4,814			-

CASH AT END OF PERIOD	$	-		$	2,264		$	-

SUPPLEMENTAL DISCLOSURE OF NONCASH
FINANCING ACTIVITIES:

Stock issued for advances	$	845,000	$	845,000
Stock issued for services		40,700		40,700
Notes issued for advances		450,000		450,000
Notes issued for expenses		2,964		2,964

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

ABTECH HOLDINGS, INC.

(Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2010

(UNAUDITED)

1.	ORGANIZATION

The Company, Abtech Holdings Inc. (formerly Laural Resources Inc.), was incorporated under the laws of the State of Nevada on February 13, 2007, with authorized capital stock of 300,000,000 shares at $0.001 par value. The Company’s current year end is May 31 but on October 21, 2010 the Company approved a change in year end to December 31.

These consolidated financial statements include the accounts of the Company, and its wholly-owned subsidiary, Abtech Merger Sub, Inc. All significant inter-Company balances and transactions have been eliminated.

The Company was organized for the purpose of acquiring and developing mineral properties. As of June 1, 2010, the Company has decided to abandon the Waibau Gold Claim located in the Republic of Fiji without any further work being performed on the Waibau Gold Claim since the Company is to become an environmental technological firm dedicated to providing innovative solutions to communities and industry by addressing issues of water pollutants and contamination. In furtherance of the Company’s business objectives, effective June 14, 2010, the Company merged with its wholly-owned subsidiary, Abtech Holdings, Inc., and amended its Articles of Incorporation for the purpose of effecting its name change to “Abtech Holdings, Inc.” Accordingly, the Company is no longer a pre-exploration stage company but is now considered a development stage company.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Methods

The Company recognizes income and expenses based on the accrual method of accounting.

Dividend Policy

The Company has not yet adopted a policy regarding payment of dividends.

Basic and Diluted Net Income (loss) Per Share

Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common and common equivalent shares outstanding as if shares had been issued on the exercise of the common share rights unless the exercise becomes anti-dilutive and then only the basic per share amounts are shown in the report.

Income Taxes

The Company utilizes the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.

On November 30, 2010, the Company had a net operating loss carry forward of $333,930 for income tax purposes. The tax benefit of approximately $100,000 from the loss carry forward has been fully offset by a valuation reserve because the future tax benefit is undeterminable since the Company is unable to establish a predictable projection of operating profits for future years. Losses will expire on 2030.

ABTECH HOLDINGS, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2010

(UNAUDITED)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Foreign Currency Translations

Part of the transactions of the Company were completed in Canadian dollars and have been translated to US dollars as incurred, at the exchange rate in effect at the time and, therefore, no gain or loss from the translation is recognized. The functional currency is considered to be US dollars.

Revenue Recognition

Revenue is recognized on the sale and delivery of a product or the completion of a service provided.

Advertising and Market Development

The company expenses advertising and market development costs as incurred.

Financial Instruments

The carrying amounts of financial instruments are considered by management to be their fair value due to their short term maturities.

Estimates and Assumptions

Management uses estimates and assumptions in preparing consolidated financial statements in accordance with general accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these consolidated financial statements.

Statement of Cash Flows

For the purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.

Reclassifications

Certain prior period amounts have been reclassified to conform with current period presentation.

Recent Accounting Pronouncements

The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its consolidated financial statements.

3.	ACQUISITION OF MINERAL CLAIM

On March 1, 2007, the Company acquired the Waibau Gold Claim located in the Republic of Fiji from Siti Ventures Inc., an unrelated company, for the consideration of $5,000. The Company has decided to abandon the Waibau Gold Claim, which will result in it having no interest in the minerals on the Waibau Gold Claim and no future commitments.

4.	SIGNIFICANT TRANSACTIONS WITH RELATED PARTY

Officers-directors and their families have acquired 69% of the common stock issued and have made advances to the Company of $70,173.

The President of Abtech Industries (see Footnote 9) was made a Director of Abtech Holdings, Inc. on October 4, 2010.

ABTECH HOLDINGS, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2010

5.	NOTES PAYABLE

At November 30, 2010, the Company had unrelated third party loans payable totaling $480,029 (November 30, 2009 - $nil). The loans bear no interest and are due on demand.

6.	DISCONTINUED OPERATIONS

Subsequent to the fiscal year ended May 31, 2010, the Company changed its focus from exploration of mineral properties to clean technology products and services, specifically in the water clean-up sector. The Company had the following losses from discontinued operations.

Discontinued Operations

	Six months ended November 30, 2010		Six months ended November 30,2009
Accounting and audit	$	-	$	4,745
Bank charges		-		50
Management fees		-		6,000
Office		-		430
Rent		-		1,800
Transfer agent’s fees		-		152

Discontinued operations	$	-	$	13,177

7.	CAPITAL STOCK

On April 10, 2007, the Company completed a private placement consisting of 35,000,000 post split common shares sold to directors and officers for a total consideration of $1,750. On August 31, 2007, the Company completed a private placement of 16,000,000 post split common shares for a total consideration of $40,000.

On February 12, 2008, the directors of the Company approved a resolution to forward split the common shares of the Company on the basis of the issuance of 20 new shares for one existing share of common stock presently held (the “Forward Split”). As a result of the Forward Split, every one outstanding share of common stock was increased to 20 shares of common stock. As of November 30, 2010, there were 51,000,000 post split common shares issued and outstanding. The 51,000,000 post split common shares are shown as split from the date of inception.

On October 7, 2010, the Company issued 885,700 common shares for $885,700 of debt to an unrelated third party.

Share Options

On November 9, 2010, the Company granted 640,000 non-qualified stock options to various consultants for advisory services to the Board of Directors. The options have a fair value of $262,140. 12.5% of the options will vest and become exercisable on January 31, 2011 and thereafter of the last day of each quarter, and will expire five years from the date of grant.

8.	GOING CONCERN

The Company will need additional working capital to service its debt and to develop its new business, which raises substantial doubt about its ability to continue as a going concern. Continuation of the Company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective through additional equity funding, and long term financing, which will enable the Company to operate for the coming year.

ABTECH HOLDINGS, INC.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2010

ADVANCES

Agreement and Plan of Merger

As previously disclosed, on July 17, 2010, the Company entered into a merger transaction (the “Merger”) with AbTech Industries, Inc., a Delaware corporation (“AbTech”), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Abtech Merger Sub, Inc., a Nevada corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and AbTech.

On September 17, 2010, the Company entered into Amendment No. 1 to the Merger Agreement (the “Amendment”) with Merger Sub and AbTech. Pursuant to the Merger Agreement, the Company agreed that each issued and outstanding share of AbTech’s common stock, immediately prior to the effective time of the merger transaction, including any shares issued upon the conversion of AbTech’s preferred stock, but excluding (i) shares held by AbTech, and (ii) shares held by the Company and Merger Sub, if any, and (iii) dissenting shares, if any, will be converted automatically into 5.259 shares of common stock of the Company. Pursuant to the Amendment, the Company has agreed that the conversion ratio will be 5.3 instead of 5.259. Additionally, pursuant to the Merger Agreement, the Company agreed that immediately prior to the closing of the merger transaction, the authorized capital stock of Merger Sub will consist of 1,000 shares of Merger Sub common stock, $0.001 par value, of which no more than 100 shares of Merger Sub common stock will be issued and outstanding. Pursuant to the Amendment, the Company has agreed that the authorized capital stock of Merger Sub will instead consist of 12,000,000 shares of Merger Sub common stock, $0.001 par value, of which no more than 6,724,558 shares of Merger Sub common stock will be issued and outstanding.

The closing of the Merger shall occur at the date and time on or before thirty (30) days which the conditions to the closing of the Merger, as set forth in Article 9 of the Merger Agreement, shall have been satisfied or waived by the appropriate party or at such time as the parties hereto agree, including, but not limited to, AbTech receiving no less than an aggregate of $3,000,000 in advances from the Company, which shall include the amounts previously advanced and the remainder upon the closing date of the Merger.

Upon closing of the Merger, the Board of Directors of the Company shall be comprised of seven (7) directors. On or prior to the closing, the Board of Directors of the Company shall appoint seven (7) directors of Abtech onto the Board of Directors of the Company, and at closing, the management of AbTech shall be appointed as the management of the Company.

As of November 30, 2010, the Company advanced $1,295,000 to AbTech, pursuant to the Merger Agreement noted above.

10.	COMMITMENTS

On November, 9, 2010, the Company has entered into a two year agreement with three consultants to serve as members of its advisory board for fees of $27,500 per quarter. For the six month period ending November 30, 2010, the Company has accrued of $9,167in fees (2009 - $nil).

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

The following discussion should be read in conjunction with our financial statements and notes thereto included elsewhere in this quarterly report. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. We disclaim any obligation to update forward-looking statements.

Overview

Abtech Holdings, Inc. (“Abtech,” the “Company,” or “we”) was incorporated in the state of Nevada on February 13, 2007 under the name “Laural Resources, Inc.” We were engaged in the business of acquiring and developing mineral properties. Subsequent to our fiscal year ended May 31, 2010, we decided to change our business focus to clean technology products and services, specifically in the water clean-up sector. In furtherance of our business objectives, effective June 14, 2010, we merged with our wholly-owned subsidiary, Abtech Holdings, Inc., for the purpose of effecting our name change to “Abtech Holdings, Inc.”

As previously disclosed, we entered into a merger transaction with AbTech Industries, pursuant to an Agreement and Plan of Merger, dated July 17, 2010, by and among us, Merger Sub, and AbTech , which we amended on September 17, 2010 Industries (the “Merger Agreement”). Subject to the satisfaction of the closing conditions set forth in the Merger Agreement and upon the closing of the transactions contemplated by the Merger Agreement, we will acquire all of the issued and outstanding capital stock of AbTech Industries in exchange for the stockholders of AbTech Industries acquiring a controlling ownership interest in our Company, AbTech Industries will become a wholly-owned subsidiary of us, and we will acquire the business and operations of AbTech Industries.

Abtech Industries is an environmental technologies firm dedicated to providing innovative solutions to communities and industry addressing issues of water pollutants and contamination. Its products are based on polymer technologies capable of removing hydrocarbons, sediment, and other foreign elements from still (ponds, lakes, and marinas) or flowing water (curbside drains, pipe outflows, rivers, and oceans).

In connection with the merger transaction, on September 22, 2010, we completed a private placement and issued 885,700 shares of common stock of the Company at a price of $1.00 per share for gross proceeds of $885,700, of which $40,700 of these proceeds were used to pay accounts payable and $845,000 was advanced directly to Abtech Industries in accordance with the Merger Agreement.

On October 21, 2010, the Company changed its fiscal year end from May 31 to December 31.

During the three months ended November 30, 2010, the Company sold convertible promissory notes in the principal amount of $450,000 in unregistered sales to foreign institutional investors.

Subsequent to the three months ended November 30, 2010, the Company sold convertible promissory notes in the principal amount of $200,000 in unregistered sales to foreign institutional investors.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations, including the discussion on liquidity and capital resources, are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management re-evaluates its estimates and judgments.

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

Critical Accounting Policies (cont’d)

The methods, estimates, interpretations, and judgments we use in applying our most critical accounting policies can have a significant impact on the results that we report in our consolidated financial statements. The Securities and Exchange Commission (the “SEC”) considers an entity’s most critical accounting policies to be those policies that are both most important to the portrayal of the entity’s financial condition and results of operations and those that require the entity’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about matters that are inherently uncertain when estimated. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Accounting Methods. We recognize income and expenses based on the accrual method of accounting.

Basic and Diluted Net Income (loss) Per Share. Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common and common equivalent shares outstanding as if shares had been issued on the exercise of the common share rights unless the exercise becomes anti-dilutive and then only the basic per share amounts are shown in the report.

Income Taxes. We utilize the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.

Revenue Recognition. We recognize revenue on the sale and delivery of a product or the completion of a service provided.

Advertising and Market Development. We expense advertising and market development costs as incurred.

Financial Instruments. The carrying amounts of financial instruments are considered by management to be their fair value due to their short term maturities.

Estimates and Assumptions. Management uses estimates and assumptions in preparing financial statements in accordance with general accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.

Statement of Cash Flows. For the purposes of the statement of cash flows, we consider all highly liquid investments with a maturity of six months or less to be cash equivalents.

Recent Accounting Pronouncements. We do not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.

Results of Operations

The following discussion of the financial condition, results of operations, cash flows and changes in our financial position should be read in conjunction with our audited consolidated financial statements and notes thereto for the fiscal year ended May 31, 2010 included in our Annual Report on Form 10-K filed with the SEC on August 16, 2010.

Comparison of the three- and six-month periods ended November 30, 2010 compared with the three- and six-month period ended November 30, 2009

Revenues.

During the three- and six-month periods ended November 30, 2010 and November 30, 2009, we earned no revenues.

Operating Expenses.

Total expenses for the three months ended November 30, 2010 increased to $111,205 from $0 (zero) for the three months ended November 30, 2009, due largely to an increase in legal fees from $0 (zero) for the three months ended November 30, 2009 to $99,323 for the three months ended November 30, 2010 and an increase in consulting fees from $0 (zero) for the three months ended November 30, 2009 to $9,167 for the three months ended November 30, 2010, which increases are primarily attributed to an increase in professional costs and fees associated with the shift in our business focus and our fundraising efforts..

Total expenses for the six months ended November 30, 2010 increased to $194,942 from $0 (zero) for the six months ended November 30, 2009, due largely to an increase in legal fees from $0 (zero) for the six months ended November 30, 2009 to $154,113 for the six months ended November 30, 2010 and an increase in marketing expenses from $0 (zero) for the six months ended November 30, 2009 to $20,342 for the six months ended November 30, 2010, which increases are primarily attributed to an increase in professional costs and fees associated with the shift in our business focus and our fundraising efforts.

Period from inception of development stage, June 1, 2010 to November 30, 2010

We had an accumulated deficit during this period of $333,930. Deficit accumulated during the pre-exploration stage was $138,988 and accumulated during the development stage was $194,942.

As a development stage company, we currently have limited operations, principally directed at potential acquisition targets and revenue-generating opportunities.

Liquidity and Capital Resources

As of November 30, 2010, we had no cash and our current assets were $1,295,000. We currently have no revenue from operations. During the six-month period ended November 30, 2010, we funded our operations from accounts payable. We plan to continue further financings, and we believe that this will provide sufficient working capital to fund our operations for at least the next nine months. In order to meet our more aggressive plans to enter and expand our operations in the environmental technological field, we will need to raise a significant amount of capital through equity or debt financings. There can be no assurance that we will be successful in raising additional funds and, if unsuccessful, our plans for expanding operations and business activities may have to be curtailed. Any attempt to raise funds, through debt or equity financing, would likely result in dilution to existing shareholders.

For the six-month period ended November 30, 2010, we had no cash provided by operating activities.

We continue to operate with very limited administrative support, and our current officers and directors continue to be responsible for many duties to preserve our working capital.

Off-Balance Sheet Transactions

The Company has no off-balance sheet transactions.

Contractual Obligations

As a smaller reporting company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are not required to provide the information required by this item.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

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

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Principal Executive Officer, and our Principal Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of November 30, 2010 (the “Evaluation Date”). Based upon that evaluation, our Principal Executive Officer along with our Principal Financial Officer concluded that our disclosure controls and procedures are not effective as of the Evaluation Date in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. This conclusion is based on findings that constituted material weaknesses. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our interim financial statements will not be prevented or detected on a timely basis. These material weaknesses include the following:

As of November 30, 2010, we did not have an audit committee which complies to the requirements of an audit committee since it did not have an independent “financial expert” on the committee. Even though we have a Code of Ethics, we do not emphasize fraud and methods to avoid it.

We lack personnel with the experience to properly analyze and record complex transactions in accordance with U.S. GAAP.

We have not achieved the optimal level of segregation of duties relative to key financial reporting functions.

Due to a significant number and magnitude of out-of-period adjustments identified during the period-end closing process, management concluded that the controls over the period-end financial reporting process were not operating effectively. A material weakness in the period-end financial reporting process could result in our Company not been able to meet its regulatory filing deadlines and, if not remedied, has the potential to cause a material misstatement or to miss a filing deadline in the future. Management override of existing controls is possible given the small size of the organization and lack of personnel.

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.

We are currently reviewing our disclosure controls and procedures related to these material weaknesses and expect to implement changes in the near term, including identifying specific areas within our governance, accounting and financial reporting processes to add adequate resources and personnel to potentially mitigate these material weaknesses.

Changes in Internal Control over Financial Reporting

We have had very limited operations and there were no changes in our internal controls over financial reporting that occurred during the fiscal quarter ended November 30, 2010 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

Not applicable.

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

On September 22, 2010, the Company completed the sale of 885,700 shares of its common stock for $1.00 per share in a private placement to foreign institutional investors. The Company received aggregate proceeds of $885,700 from the financing. The Company offered and sold the shares in reliance on Regulation S of the Securities Act of 1933, as amended.

During the three months ended November 30, 2010, the Company sold convertible promissory notes in the principal amount of $450,000 in unregistered sales to foreign institutional investors. The Company offered and sold the securities in reliance on Regulation S of the Securities Act of 1933, as amended.

Subsequent to the three months ended November 30, 2010, the Company sold convertible promissory notes in the principal amount of $200,000 in unregistered sales to foreign institutional investors. The Company offered and sold the securities in reliance on Regulation S of the Securities Act of 1933, as amended.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Reserved.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit Number		Name

2.1		Amendment No. 1 to Agreement and Plan of Merger, dated September 17, 2010, by and among Abtech Holdings, Inc., Abtech Merger Sub, Inc., and AbTech Industries, Inc. (1)

10.1		Board Advisory Agreement, dated November 9, 2010, by and between Abtech Holdings, Inc. and James Saxton, LLC (2)

31.1		Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer)

31.2		Rule 13a-14(d)/15d-14(d) Certification (Principal Financial Officer)

32		Section 1350 Certifications

(1)

Incorporated by reference to the registrant’s Form 8-K as filed with the SEC on September 22, 2010.

(2)

Incorporated by reference to the registrant’s Form 8-K as filed with the SEC on November 12, 2010.

SIGNATURES

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

	ABTECH HOLDINGS, INC.
	(Registrant)

Date: January 19, 2010	By:	/s/ Mandi Luis
		Mandi Luis
		Chief Executive Officer, President, and Director

Date: January 19, 2010	By:	/s/ Robert MacKay
		Robert MacKay
		Chief Accounting Officer, Chief Financial Officer, Treasurer, Secretary, and Director

Attached files

Abtech Holdings, Inc. Reports

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