On September 17, 2018, the Securities and Exchange Commission (the “SEC”) agreed to settle administrative charges against Abtech Holdings, Inc. (the “Company”) and its Chief Executive Officer, Glenn Rink (“Rink”), and Chief Financial Officer, Lane Castleton (“Castleton”). The SEC alleged that Rink and Castleton caused the Company to file a third quarter 2014 Form 10-Q and a 2014 Form 10-K that contained misleading statements about the status of and contingencies affecting a material contract between the Company and Nassau County, New York. The SEC issued an Order Instituting Cease-and-Desist Proceedings pursuant to Section 8(a) of the Securities Act of 1933 (the “Securities Act”) and Section 21(c) of the Securities Exchange Act of 1934 (the “Exchange Act”), Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (the “Settlement Order”) on terms proposed by the Company to the SEC on August 20, 2018 in an Offer of Settlement.

Without admitting or denying the SEC’s findings, the Company consented to the entry of the Settlement Order requiring it to cease and desist from committing or causing any violations or any future violations of Section 17(a)(2) of the Securities Act, Section 13(a) of the Exchange Act and certain related rules thereunder, and agreed to pay $33,414 in disgorgement and pre-judgment interest as well as a civil penalty of $100,000. Payment to the SEC is required to be made by the Company in two installments: the first installment of $66,707 was paid in September 2018, after the entry into the Settlement Order and the remaining $66,707, which is payable within 360 days after the entry into the Settlement Order. Both Rink and Castleton, also without admitting or denying the findings, agreed to the entry of SEC orders requiring them to cease and desist from committing or causing any violations or any future violations of the same provisions, and to pay civil penalties of $60,000 and $35,000, respectively.

In May 2016, the Company, AEWS and AbTech received letters from the New York State Joint Commission on Public Ethics (“JCOPE”) asking for a written response to allegations constituting potential violations of lobbying laws in the state of New York. The Company’s legal counsel provided a written response to JCOPE on May 31, 2016, wherein they presented the Company’s position that it has consistently complied with all applicable lobbying laws. On August 15, 2016, JCOPE issued notices to the Company, AbTech and AEWS that JCOPE had decided to commence an investigation to determine whether a substantial basis exists to conclude that the Company violated lobbying laws in the state of New York. The Company intends to defend its position that it has consistently complied with all applicable lobbying laws and is working with JCOPE to resolve this matter. However, it is not clear at this time how the matter will ultimately be resolved.

In accordance with the stockholder proposal approved by the Company’s stockholders at the May 13, 2016

Annual Meeting of Stockholders (the “Stockholder Proposal”), the Company engaged legal counsel to assess whether the Company should pursue legal action to recover financial losses and damages pertaining to the United States vs. Dean Skelos and Adam Skelos case. The Company, is currently evaluating with legal counsel, its options regarding this matter and it cannot be determined at this time how this matter will ultimately be resolved

As of September 30, 2018, the Company had incurred approximately $4,437,000 in legal fees and other costs related to the matters described above, including approximately $955,000 incurred during the first nine months of 2018. The Company cannot estimate at this time the cost of additional legal representation in resolving the JCOPE investigation or pursuing legal action pursuant to the Stockholder Proposal.

The Company has filed a claim for coverage for some of these legal fees under a liability insurance policy. The insurer denied the claim and the Company engaged legal counsel to dispute the insurer’s denial of the claim. After an unsuccessful attempt to resolve the dispute through mediation, the Company filed a formal complaint against the insurer on July 11, 2016, in the United States District Court for the Southern District of New York. In December 2016, the insurer remitted a payment to the Company of $465,187 for a portion of the claim that the insurer determined to be covered by the policy. During 2018 and 2017, the insurer remitted additional payments totaling $576,568 and $1,138,984, respectively, to the Company, or directly to the

Company’s

applicable law firms, for legal fees related to these matters. The payments made by the insurer were offset against other selling, general and administrative operating expenses in the periods in which such payments were received. The ultimate outcome of the litigation with the insurer cannot be determined at this time.