SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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September 30, 2013
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Or
o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
|
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to
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Commission File No.
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111596
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PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware
|
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58-1954497
|
(State or other jurisdiction of incorporation or organization)
|
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(IRS Employer Identification Number)
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8302 Dunwoody Place, Suite 250, Atlanta, GA
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30350
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(Address of principal executive offices)
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(Zip Code)
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(770) 587-9898
(Registrant's telephone number)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).
Yes x No o
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 definition of "large accelerated filer,” “accelerated filer" and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o
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Accelerated Filer x
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Non-accelerated Filer o
|
Smaller reporting company x
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the close of the latest practical date.
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Class
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Outstanding at December 9, 2013
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|
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Common Stock, $.001 Par Value
|
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11,398,931
|
|
|
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shares of registrant’s
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Common Stock
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PERMA-FIX ENVIRONMENTAL SERVICES, INC.
PART I
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FINANCIAL INFORMATION
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Page No.
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Item 1.
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Condensed Consolidated Financial Statements (Unaudited)
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1
|
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|
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|
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3
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|
|
|
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4
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5
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6
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7
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Item 2.
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23
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Item 3.
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41
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Item 4.
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41
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PART II
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OTHER INFORMATION
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Item 1.
|
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42
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Item 1A.
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42
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Item 6.
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43
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PART I - FINANCIAL INFORMATION
ITEM 1. – Financial Statements
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
Consolidated
Balance Sheets
(Unaudited)
|
|
September 30,
|
|
|
December 31,
|
|
(Amounts in Thousands, Except for Share and per Share Amounts)
|
|
2013
|
|
|
2012
|
|
|
|
|
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(Restated)
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ASSETS
|
|
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|
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Current assets:
|
|
|
|
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Cash
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$
|
92
|
|
|
$
|
4,368
|
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Restricted cash
|
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35
|
|
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|
35
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Accounts receivable, net of allowance for doubtful accounts of $1,955 and $2,507, respectively
|
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12,240
|
|
|
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11,395
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Unbilled receivables - current
|
|
|
6,770
|
|
|
|
8,530
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Retainage receivable
|
|
|
565
|
|
|
|
312
|
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Inventories
|
|
|
456
|
|
|
|
473
|
|
Prepaid and other assets
|
|
|
3,208
|
|
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|
3,282
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Deferred tax assets - current
|
|
|
3,590
|
|
|
|
1,316
|
|
Current assets related to discontinued operations
|
|
|
3,794
|
|
|
|
499
|
|
Total current assets
|
|
|
30,750
|
|
|
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30,210
|
|
|
|
|
|
|
|
|
|
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Property and equipment:
|
|
|
|
|
|
|
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Buildings and land
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26,323
|
|
|
|
26,297
|
|
Equipment
|
|
|
34,839
|
|
|
|
34,657
|
|
Vehicles
|
|
|
661
|
|
|
|
661
|
|
Leasehold improvements
|
|
|
11,625
|
|
|
|
11,625
|
|
Office furniture and equipment
|
|
|
2,107
|
|
|
|
2,116
|
|
Construction-in-progress
|
|
|
484
|
|
|
|
334
|
|
|
|
|
76,039
|
|
|
|
75,690
|
|
Less accumulated depreciation and amortization
|
|
|
(43,669
|
)
|
|
|
(40,376
|
)
|
Net property and equipment
|
|
|
32,370
|
|
|
|
35,314
|
|
|
|
|
|
|
|
|
|
|
Property and equipment related to discontinued operations
|
|
|
1,493
|
|
|
|
1,614
|
|
|
|
|
|
|
|
|
|
|
Intangibles and other long term assets:
|
|
|
|
|
|
|
|
|
Permits
|
|
|
16,759
|
|
|
|
16,799
|
|
Goodwill
|
|
|
28,037
|
|
|
|
29,186
|
|
Other intangible assets – net
|
|
|
3,166
|
|
|
|
3,610
|
|
Unbilled receivables – non-current
|
|
|
65
|
|
|
|
137
|
|
Finite risk sinking fund
|
|
|
21,299
|
|
|
|
21,272
|
|
Other assets
|
|
|
1,437
|
|
|
|
1,549
|
|
Total assets
|
|
$
|
135,376
|
|
|
$
|
139,691
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
Consolidated Balance Sheets, Continued
(Unaudited)
|
|
September 30,
|
|
|
December 31,
|
|
(Amounts in Thousands, Except for Share and per Share Amounts)
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
(Restated)
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
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Current liabilities:
|
|
|
|
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|
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Accounts payable
|
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$
|
5,319
|
|
|
$
|
8,657
|
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Accrued expenses
|
|
|
6,214
|
|
|
|
6,672
|
|
Disposal/transportation accrual
|
|
|
1,350
|
|
|
|
2,294
|
|
Unearned revenue
|
|
|
5,393
|
|
|
|
3,695
|
|
Billings in excess of costs and estimated earnings
|
|
|
510
|
|
|
|
1,934
|
|
Current liabilities related to discontinued operations
|
|
|
4,999
|
|
|
|
1,512
|
|
Current portion of long-term debt
|
|
|
2,486
|
|
|
|
2,794
|
|
Total current liabilities
|
|
|
26,271
|
|
|
|
27,558
|
|
|
|
|
|
|
|
|
|
|
Accrued closure costs
|
|
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11,463
|
|
|
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11,349
|
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Other long-term liabilities
|
|
|
723
|
|
|
|
674
|
|
Deferred tax liabilities
|
|
|
1,430
|
|
|
|
1,340
|
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Long-term liabilities related to discontinued operations
|
|
|
1,494
|
|
|
|
1,829
|
|
Long-term debt, less current portion
|
|
|
13,135
|
|
|
|
11,402
|
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Total long-term liabilities
|
|
|
28,245
|
|
|
|
26,594
|
|
|
|
|
|
|
|
|
|
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Total liabilities
|
|
|
54,516
|
|
|
|
54,152
|
|
|
|
|
|
|
|
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Commitments and Contingencies
|
|
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Preferred Stock of subsidiary, $1.00 par value; 1,467,396 shares authorized, 1,284,730 shares issued and outstanding, liquidation value $1.00 per share plus accrued and unpaid dividends of $723 and $674, respectively
|
|
|
1,285
|
|
|
|
1,285
|
|
|
|
|
|
|
|
|
|
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Stockholders' Equity:
|
|
|
|
|
|
|
|
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Preferred Stock, $.001 par value; 2,000,000 shares authorized, no shares issued and outstanding
|
|
|
¾
|
|
|
|
¾
|
|
Common Stock, $.001 par value; 75,000,000 shares authorized, 11,392,132 and 11,247,642 shares issued, respectively; 11,384,490 and 11,240,000 shares outstanding, respectively
|
|
|
11
|
|
|
|
11
|
|
Additional paid-in capital
|
|
|
103,353
|
|
|
|
102,864
|
|
Accumulated deficit
|
|
|
(23,699
|
)
|
|
|
(19,103
|
)
|
Accumulated other comprehensive loss
|
|
|
(2
|
)
|
|
|
(2
|
)
|
Less Common Stock in treasury, at cost; 7,642 shares
|
|
|
(88
|
)
|
|
|
(88
|
)
|
Total Perma-Fix Environmental Services, Inc. stockholders' equity
|
|
|
79,575
|
|
|
|
83,682
|
|
Non-controlling interest
|
|
|
¾
|
|
|
|
572
|
|
Total stockholders' equity
|
|
|
79,575
|
|
|
|
84,254
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
135,376
|
|
|
$
|
139,691
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
(Amounts in Thousands, Except for Per Share Amounts)
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
19,072
|
|
|
$
|
29,190
|
|
|
$
|
61,685
|
|
|
$
|
100,824
|
|
Cost of goods sold
|
|
|
15,943
|
|
|
|
24,964
|
|
|
|
53,995
|
|
|
|
88,299
|
|
Gross profit
|
|
|
3,129
|
|
|
|
4,226
|
|
|
|
7,690
|
|
|
|
12,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
3,276
|
|
|
|
4,198
|
|
|
|
10,833
|
|
|
|
13,825
|
|
Research and development
|
|
|
520
|
|
|
|
502
|
|
|
|
1,420
|
|
|
|
1,390
|
|
Impairment loss on goodwill
|
|
|
¾
|
|
|
|
¾
|
|
|
|
1,149
|
|
|
|
¾
|
|
Loss on disposal of property and equipment
|
|
|
¾
|
|
|
|
18
|
|
|
|
2
|
|
|
|
15
|
|
Loss from operations
|
|
|
(667
|
)
|
|
|
(492
|
)
|
|
|
(5,714
|
)
|
|
|
(2,705
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
8
|
|
|
|
10
|
|
|
|
27
|
|
|
|
31
|
|
Interest expense
|
|
|
(187
|
)
|
|
|
(223
|
)
|
|
|
(532
|
)
|
|
|
(642
|
)
|
Interest expense-financing fees
|
|
|
(40
|
)
|
|
|
(23
|
)
|
|
|
(87
|
)
|
|
|
(84
|
)
|
Loss on debt modification
|
|
|
(65
|
)
|
|
|
¾
|
|
|
|
(65
|
)
|
|
|
¾
|
|
Other
|
|
|
¾
|
|
|
|
9
|
|
|
|
(8
|
)
|
|
|
10
|
|
Loss from continuing operations before taxes
|
|
|
(951
|
)
|
|
|
(719
|
)
|
|
|
(6,379
|
)
|
|
|
(3,390
|
)
|
Income tax benefit
|
|
|
(383
|
)
|
|
|
(247
|
)
|
|
|
(1,943
|
)
|
|
|
(1,102
|
)
|
Loss from continuing operations, net of taxes
|
|
|
(568
|
)
|
|
|
(472
|
)
|
|
|
(4,436
|
)
|
|
|
(2,288
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of taxes
|
|
|
(240
|
)
|
|
|
(61
|
)
|
|
|
(224
|
)
|
|
|
(259
|
)
|
Net loss
|
|
|
(808
|
)
|
|
|
(533
|
)
|
|
|
(4,660
|
)
|
|
|
(2,547
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to non-controlling interest
|
|
|
¾
|
|
|
|
21
|
|
|
|
(64
|
)
|
|
|
179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Perma-Fix Environmental Services, Inc. common stockholders
|
|
$
|
(808
|
)
|
|
$
|
(554
|
)
|
|
$
|
(4,596
|
)
|
|
$
|
(2,726
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share attributable to Perma-Fix Environmental Services, Inc. stockholders - basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(.05
|
)
|
|
$
|
(.04
|
)
|
|
$
|
(.39
|
)
|
|
$
|
(.22
|
)
|
Discontinued operations
|
|
$
|
(.02
|
)
|
|
$
|
(.01
|
)
|
|
$
|
(.02
|
)
|
|
$
|
(.02
|
)
|
Net loss per common share
|
|
$
|
(.07
|
)
|
|
$
|
(.05
|
)
|
|
$
|
(.41
|
)
|
|
$
|
(.24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share attributable to Perma-Fix Environmental Services, Inc. stockholders - diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(.05
|
)
|
|
$
|
(.04
|
)
|
|
$
|
(.39
|
)
|
|
$
|
(.22
|
)
|
Discontinued operations
|
|
$
|
(.02
|
)
|
|
$
|
(.01
|
)
|
|
$
|
(.02
|
)
|
|
$
|
(.02
|
)
|
Net loss per common share
|
|
$
|
(.07
|
)
|
|
$
|
(.05
|
)
|
|
$
|
(.41
|
)
|
|
$
|
(.24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of common shares used in computing net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
11,353
|
|
|
|
11,228
|
|
|
|
11,292
|
|
|
|
11,220
|
|
Diluted
|
|
|
11,353
|
|
|
|
11,228
|
|
|
|
11,292
|
|
|
|
11,220
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
Consolidated
Statements of Comprehensive Loss
(Unaudited)
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
(Amounts in Thousands)
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(808
|
)
|
|
$
|
(533
|
)
|
|
$
|
(4,660
|
)
|
|
$
|
(2,547
|
)
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gain
|
|
|
2
|
|
|
|
1
|
|
|
|
¾
|
|
|
|
3
|
|
Total other comprehensive income
|
|
|
2
|
|
|
|
1
|
|
|
|
¾
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
(806
|
)
|
|
|
(532
|
)
|
|
|
(4,660
|
)
|
|
|
(2,544
|
)
|
Comprehensive income (loss) attributable to non-controlling interest
|
|
|
¾
|
|
|
|
21
|
|
|
|
(64
|
)
|
|
|
179
|
|
Comprehensive loss attributable to Perma-Fix Environmental Services, Inc. stockholders
|
|
$
|
(806
|
)
|
|
$
|
(553
|
)
|
|
$
|
(4,596
|
)
|
|
$
|
(2,723
|
)
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENT OF
STOCKHOLDERS' EQUITY
For the nine months ended September 30, 2013
(Unaudited)
|
|
|
|
|
|
|
|
Common
|
|
|
Accumulated |
|
|
Non-
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Additional
|
|
|
Stock |
|
|
Other |
|
|
controlling |
|
|
|
|
|
Total |
|
(Amounts in thounsands, except for
share amounts)
|
|
Shares
|
|
|
Amount
|
|
|
Paid-In
Capital
|
|
|
|
|
|
Comprehensive
Loss
|
|
|
Interest in
Subsidiary
|
|
|
Accumulated
Deficit
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
Balance at December 31, 2012
|
|
|
11,247,642
|
|
|
|
11
|
|
|
$
|
102,864
|
|
|
$
|
(88
|
)
|
|
$
|
(2
|
)
|
|
$
|
572
|
|
|
$
|
(19,103
|
)
|
|
$
|
84,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
(64
|
)
|
|
|
(4,596
|
)
|
|
|
(4,660
|
)
|
Distribution to non-controlling interest
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
(490
|
)
|
|
|
¾
|
|
|
|
(490
|
)
|
Redemption of non-controlling interest
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
(18
|
)
|
|
|
¾
|
|
|
|
(18
|
)
|
Issuance of common stock for debt
|
|
|
90,000
|
|
|
|
¾
|
|
|
|
200
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
200
|
|
Issuance of warrants for debt
|
|
|
¾
|
|
|
|
¾
|
|
|
|
59
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
|
|
|
|
|
|
|
|
59
|
|
Issuance of common stock for services
|
|
|
54,490
|
|
|
|
¾
|
|
|
|
151
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
151
|
|
Stock-based compensation
|
|
|
¾
|
|
|
|
¾
|
|
|
|
79
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
79
|
|
Balance at September 30, 2013
|
|
|
11,392,132
|
|
|
$
|
11
|
|
|
$
|
103,353
|
|
|
$
|
(88
|
)
|
|
$
|
(2
|
)
|
|
$
|
¾
|
|
|
$
|
(23,699
|
)
|
|
$
|
79,575
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
(Amounts in Thousands)
|
|
2013
|
|
|
2012
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(4,660
|
)
|
|
$
|
(2,547
|
)
|
Loss on discontinued operations
|
|
|
(224
|
)
|
|
|
(259
|
)
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
|
(4,436
|
)
|
|
|
(2,288
|
)
|
Adjustments to reconcile net income to cash provided by operations:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
3,843
|
|
|
|
4,102
|
|
Amortization of debt discount
|
|
|
14
|
|
|
|
12
|
|
Amortization of fair value of customer contracts
|
|
|
(1,298
|
)
|
|
|
(3,156
|
)
|
Deferred tax benefit
|
|
|
(2,068
|
)
|
|
|
(1,237
|
)
|
(Benefit) provision for bad debt and other reserves
|
|
|
(315
|
)
|
|
|
50
|
|
Impairment loss on goodwill
|
|
|
1,149
|
|
|
|
―
|
|
Loss on disposal of plant, property and equipment
|
|
|
2
|
|
|
|
15
|
|
Foreign exchange gain
|
|
|
―
|
|
|
|
3
|
|
Issuance of common stock for services
|
|
|
151
|
|
|
|
164
|
|
Stock-based compensation
|
|
|
79
|
|
|
|
135
|
|
Changes in operating assets and liabilities of continuing operations, net of effect from business acquisitions:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(783
|
)
|
|
|
4,061
|
|
Unbilled receivables
|
|
|
1,832
|
|
|
|
1,000
|
|
Prepaid expenses, inventories and other assets
|
|
|
1,552
|
|
|
|
3,327
|
|
Accounts payable, accrued expenses and unearned revenue
|
|
|
(4,396
|
)
|
|
|
(11,599
|
)
|
Cash used in continuing operations
|
|
|
(4,674
|
)
|
|
|
(5,411
|
)
|
Cash used in discontinued operations
|
|
|
(336
|
)
|
|
|
(458
|
)
|
Cash used in operating activities
|
|
|
(5,010
|
)
|
|
|
(5,869
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(373
|
)
|
|
|
(412
|
)
|
Change in restricted cash, net
|
|
|
―
|
|
|
|
1,500
|
|
Proceeds from sale of plant, property and equipment
|
|
|
―
|
|
|
|
121
|
|
Non-controlling distribution/redemption
|
|
|
(508
|
)
|
|
|
―
|
|
Payment to finite risk sinking fund
|
|
|
(27
|
)
|
|
|
(1,908
|
)
|
Cash used in investing activities of continuing operations
|
|
|
(908
|
)
|
|
|
(699
|
)
|
Cash used in investing activities of discontinued operations
|
|
|
―
|
|
|
|
(2
|
)
|
Cash used in investing activities
|
|
|
(908
|
)
|
|
|
(701
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Net borrowing of revolving credit
|
|
|
851
|
|
|
|
―
|
|
Principal repayments of long term debt
|
|
|
(2,182
|
)
|
|
|
(2,831
|
)
|
Proceeds from issuance of long-term debt
|
|
|
3,000
|
|
|
|
―
|
|
Proceeds from finite risk financing
|
|
|
―
|
|
|
|
565
|
|
Payment of finite risk financing
|
|
|
―
|
|
|
|
(440
|
)
|
Cash provided by (used in) financing activities of continuing operations
|
|
|
1,669
|
|
|
|
(2,706
|
)
|
Principal repayments of long term debt for discontinued operations
|
|
|
(27
|
)
|
|
|
(26
|
)
|
Cash provided by (used in) financing activities
|
|
|
1,642
|
|
|
|
(2,732
|
)
|
|
|
|
|
|
|
|
|
|
Decrease in cash
|
|
|
(4,276
|
)
|
|
|
(9,302
|
)
|
Cash at beginning of period
|
|
|
4,368
|
|
|
|
12,055
|
|
Cash at end of period
|
|
$
|
92
|
|
|
$
|
2,753
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure:
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
540
|
|
|
$
|
717
|
|
Income taxes paid
|
|
|
110
|
|
|
|
470
|
|
Issuance of Common Stock for debt
|
|
|
200
|
|
|
|
―
|
|
Issuance of Warrants for debt
|
|
|
59
|
|
|
|
―
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
September 30, 2013
(Unaudited)
Reference is made herein to the notes to consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012.
The condensed consolidated financial statements included herein have been prepared by the Company (which may be referred to as we, us or our), without an audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“the Commission”). Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures which are made are adequate to make the information presented not misleading. Further, the condensed consolidated financial statements reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position and results of operations as of and for the periods indicated. The results of operations for the nine months ended September 30, 2013 are not necessarily indicative of results to be expected for the fiscal year ending December 31, 2013. The condensed consolidated balance sheet as of December 31, 2012 is unaudited; however, it has been derived from the audited consolidated financial statements included in our Annual Report on Form 10-K/A for the year ended December 31, 2012. The restatement as included in our Form 10-K/A did not impact our condensed consolidated statement of operations for the three and nine months ended September 30, 2012.
We suggest that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for year ended December 31, 2012, as amended, filed on December 12, 2013 with the Commission.
Reverse Stock Split
The Company effected a reverse stock split at a ratio of 1-for-5 of the Company’s Common Stock (“Common Stock”), effective as of 12:01 a.m. on October 15, 2013. As a result of the reverse stock split, each five shares of the outstanding Common Stock and shares held in treasury were combined into one share of Common Stock without any change to the par value per share. The reverse stock split did not affect the number of authorized shares of Common Stock which remains at 75,000,000. As a result of this reverse stock split, all references in the financial statements and notes thereto to the number of shares outstanding, per share amounts, and outstanding stock option and warrant data of the Company’s Common Stock have been restated to reflect the effect of the stock split for all periods presented (See “Note 12 – Subsequent Event – Reverse Stock Split” for further information).
Current Financial Position and Liquidity
During the nine months ended September 30, 2013 and for the year ended December 31, 2012, the Company incurred net losses of $4,660,000 and $3,179,000, respectively. In the first, second and third quarters of fiscal 2013, revenues were $19,829,000, $22,784,000, and $19,072,000, respectively. The revenue for the first nine months of 2013 and our fiscal 2012 revenue were below our expectations and internal forecasts as a result, in large part, to the government sequestration, federal governmental clients operating under reduced budgets, ending of contracts, and general adverse economic conditions. Our revenue during the first nine months of fiscal 2013 has been insufficient to attain profitable operations and has generated negative operating cash flow from operations; however, our backlog increased as large number of waste shipments were received late in the third quarter, which we believe should increase our revenue and benefit our operating cash flow in the fourth quarter of 2013. Our borrowing availability under our credit facility as of September 30, 2013 remains strong at $10,045,000 based on eligible collateral.
The Company’s cash flow requirements during 2013 have been financed by cash on hand, operations, and our credit facility (Note 7). The Company is continually reviewing operating costs and is committed to further reducing operating costs to bring them in line with revenue levels. If we are unable to improve our revenue and working capital during the remainder of 2013, such could result in a material adverse impact on our results and liquidity, including potential impairment of our goodwill and long-lived assets balances. Continued adverse financial conditions could result in our independent auditors expressing substantial doubt about the Company’s ability to continue as a going concern.
The Company continues to focus on expansion into both commercial and international markets to help offset the uncertainties of government spending in the USA. This includes new services, new customers and increased market share in our current markets. Although no assurances can be given, we believe we will be able to successfully implement this plan.
Reclassifications
Certain prior period amounts have been reclassified to conform with the current period presentation.
2. |
Summary of Significant Accounting Policies |
Our accounting policies are as set forth in the notes to consolidated financial statements referred to above and in the Form 10-Q for the quarter ended June 30, 2013.
Recently Adopted Accounting Standards
In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02 (“ASU 2013-02”), "Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” This ASU requires entities to disclose the effect of items reclassified out of accumulated other comprehensive income on each affected net income line item. For accumulated other comprehensive income reclassification items that are not reclassified in their entirety into net income, entities are required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail on these amounts. This information may be provided either in the notes or parenthetically on the face of the financials. For public entities, the guidance is effective for annual reporting periods beginning after December 15, 2012 and interim periods within those years. The adoption of ASU 2013-02 did not have a material impact on the Company's financial condition or results of operations.
Recently Issued Accounting Standards
In February 2013, the FASB issued ASU 2013-04, “Obligations Resulting From Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date,” an amendment to FASB ASC Topic 405, “Liabilities.” The update requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed as of the reporting date as the sum of the obligation the entity agreed to pay among its co-obligors and any additional amount the entity expects to pay on behalf of its co-obligors. This ASU is effective for annual and interim periods beginning after December 15, 2013 and is required to be applied retrospectively to all prior periods presented for those obligations that existed upon adoption of the ASU. The Company is still assessing the potential impact of adopting this guidance.
In July 2013, the FASB issued ASU No. 2013-11 “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” ASU No. 2013-11 is a new accounting standard on the financial statement presentation of unrecognized tax benefits. The new guidance requires an entity to present an unrecognized tax benefit and an net operating loss carryforward, a similar tax loss, or a tax credit carryforward on a net basis as part of a deferred tax asset, unless the unrecognized tax benefit is not available to reduce the deferred tax asset component or would not be utilized for that purpose, then a liability would be recognized. This ASU is effective for annual and interim periods beginning after December 15, 2013. The Company is still assessing the potential impact of adopting this guidance on our financial statements.
3. |
Stock Based Compensation |
We follow FASB ASC 718, “Compensation – Stock Compensation” (“ASC 718”) to account for stock-based compensation. ASC 718 requires all stock-based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on their fair values.
The Company has certain stock option plans under which it awards incentive and non-qualified stock options to employees, officers, and outside directors. Stock options granted to employees have either a ten year contractual term with one-fifth yearly vesting over a five year period or a six year contractual term with one-third yearly vesting over a three year period. Stock options granted to outside directors have a ten year contractual term with vesting period of six months.
On September 12, 2013, we granted an aggregate of 18,000 options from the Company’s 2003 Outside Directors Stock Plan to our five re-elected directors and one new director at our Annual Meeting of Stockholders. The options granted were for a contractual term of ten years with vesting period of six months. The exercise price of the options was $2.79 per share, which was equal to our closing stock price the day preceding the grant date, pursuant to the 2003 Outside Directors Stock Plan.
The Company estimates fair value of stock options using the Black-Scholes valuation model. Assumptions used to estimate the fair value of stock options granted include the exercise price of the award, the expected term, the expected volatility of the Company’s stock over the option’s expected term, the risk-free interest rate over the option’s expected term, and the expected annual dividend yield. The fair value of the options granted during the nine months ended September 30, 2013 and 2012 and the related assumptions used in the Black-Scholes option model used to value the options granted were as follows:
|
|
Outside Director Stock Options Granted
|
|
|
|
September 30, 2013
|
|
|
September 30, 2012
|
|
Weighted-average fair value per share
|
|
$
|
1.96
|
|
|
$
|
3.55
|
|
Risk -free interest rate (1)
|
|
|
2.92
|
%
|
|
|
1.75
|
%
|
Expected volatility of stock (2)
|
|
|
58.88
|
%
|
|
|
56.74
|
%
|
Dividend yield
|
|
None
|
|
|
None
|
|
Expected option life (3)
|
|
10.0 years
|
|
|
10.0 years
|
|
|
(1)
|
The risk-free interest rate is based on the U.S. Treasury yield in effect at the grant date over the expected term of the option.
|
|
(2)
|
The expected volatility is based on historical volatility from our traded Common Stock over the expected term of the option.
|
|
(3)
|
The expected option life is based on historical exercises and post-vesting data.
|
As of September 30, 2013, we had an aggregate of 227,600 employee stock options outstanding (from the 2004 and 2010 Stock Option Plans), of which 207,600 are vested. The weighted average exercise price of the 207,600 outstanding and fully vested employee stock options is $10.03 with a remaining weighted contractual life of 1.5 years. Additionally, we had an aggregate of 163,200 outstanding director stock options (from the 2003 Outside Directors Stock Plans), of which 145,200 are vested. The weighted average exercise price of the 145,200 outstanding and fully vested director stock options is $10.22 with a remaining weighted contractual life of 4.8 years. Pursuant to the reverse stock split effective October 15, 2013, the number of shares and exercise prices for all options outstanding as of September 30, 2013, have been restated to reflect the reverse stock split.
The following table summarizes stock-based compensation recognized for the three and nine months ended September 30, 2013 and 2012 for our employee and director stock options:
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
Stock Options
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
Employee Stock Options
|
|
$
|
22,000
|
|
|
$
|
34,000
|
|
|
$
|
58,000
|
|
|
$
|
106,000
|
|
Director Stock Options
|
|
|
4,000
|
|
|
|
4,000
|
|
|
|
21,000
|
|
|
|
29,000
|
|
Total
|
|
$
|
26,000
|
|
|
$
|
38,000
|
|
|
$
|
79,000
|
|
|
$
|
135,000
|
|
We recognized stock-based compensation expense using a straight-line amortization method over the requisite period, which is the vesting period of the stock option grant. ASC 718 requires that stock based compensation expense be based on options that are ultimately expected to vest. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We have generally estimated forfeiture rates based on historical trends of actual forfeitures. When actual forfeitures vary from our estimates, we recognize the difference in stock-based compensation expense in the period the actual forfeitures occur or when options vest. As of September 30, 2013, we have approximately $104,000 of total unrecognized compensation cost related to unvested options, of which $40,000 is expected to be recognized in 2013, with the remaining $64,000 in 2014.
4.
|
Stock Plans and Non-Qualified Option Agreement
|
The summary of the Company’s total Stock Plans and a Non-Qualified Stock Option Agreement (which was forfeited during the second quarter of 2013) as of September 30, 2013, as compared to September 30, 2012, and changes during the periods then ended, are presented below. Pursuant to the reverse stock split effective October 15, 2013, the number of shares and exercise prices for all options for the periods presented below have been restated to reflect the reverse stock split. The current year Company’s Plans consist of the 2004 and 2010 Stock Option Plans, and the 2003 Outside Directors Stock Plans:
|
|
|
|
|
Weighted Average
|
|
|
Weighted Average
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
|
Remaining
|
|
|
Intrinsic
|
|
|
|
Shares
|
|
|
Price
|
|
|
Contractual Term
|
|
|
Value
|
|
Options outstanding Janury 1, 2013
|
|
|
528,800
|
|
|
$
|
9.82
|
|
|
|
|
|
|
|
Granted
|
|
|
18,000
|
|
|
|
2.79
|
|
|
|
|
|
|
|
Exercised
|
|
─
|
|
|
─
|
|
|
|
|
|
$
|
─
|
|
Forfeited
|
|
|
(156,000
|
)
|
|
|
8.28
|
|
|
|
|
|
|
|
|
Options outstanding End of Period (1)
|
|
|
390,800
|
|
|
|
9.66
|
|
|
|
3.2
|
|
|
$
|
15,900
|
|
Options Exercisable at September 30, 2013(1)
|
|
|
352,800
|
|
|
$
|
10.11
|
|
|
|
2.9
|
|
|
$
|
─
|
|
Options Vested and expected to be vested at September 30, 2013
|
|
|
390,800
|
|
|
$
|
9.66
|
|
|
|
3.2
|
|
|
$
|
15,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
Aggregate
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
Remaining
|
|
|
Intrinsic
|
|
|
|
Shares
|
|
|
Exercise Price
|
|
|
Contractual Term
|
|
|
Value
|
|
Options outstanding Janury 1, 2012
|
|
|
607,967
|
|
|
$
|
9.89
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
12,000
|
|
|
|
5.50
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
─
|
|
|
─
|
|
|
|
|
|
|
$
|
─
|
|
Forfeited
|
|
|
(85,067
|
)
|
|
|
9.52
|
|
|
|
|
|
|
|
|
|
Options outstanding End of Period (1)
|
|
|
534,900
|
|
|
|
9.85
|
|
|
|
3.7
|
|
|
$
|
─
|
|
Options Exercisable at September 30, 2012(2)
|
|
|
432,900
|
|
|
$
|
10.52
|
|
|
|
2.8
|
|
|
$
|
─
|
|
Options Vested and expected to be vested at September 30, 2012
|
|
|
534,900
|
|
|
$
|
9.85
|
|
|
|
3.7
|
|
|
$
|
─
|
|
(1)
|
Options with exercise prices ranging from $5.50 to $14.75
|
(2)
|
Options with exercise prices ranging from $7.05 to $14.75
|
Basic loss per share excludes any dilutive effects of stock options, warrants, and convertible preferred stock. In periods where they are anti-dilutive, such amounts are excluded from the calculations of dilutive earnings per share. Net income (loss) attributable to non-controlling interests are excluded from loss from continuing operations in the below calculation in accordance with ASC 260, “Earnings Per Share.”
The following is a reconciliation of basic loss per share to diluted net loss per share for the three and nine months ended September 30, 2013 and 2012:
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
(Amounts in Thousands, Except for Per Share Amounts)
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
Loss per share from continuing operations attributable to Perma-Fix Environmental Services, Inc. common stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(568
|
)
|
|
$
|
(493
|
)
|
|
$
|
(4,372
|
)
|
|
$
|
(2,467
|
)
|
Basic loss per share
|
|
$
|
(.05
|
)
|
|
$
|
(.04
|
)
|
|
$
|
(.39
|
)
|
|
$
|
(.22
|
)
|
Diluted loss per share
|
|
$
|
(.05
|
)
|
|
$
|
(.04
|
)
|
|
$
|
(.39
|
)
|
|
$
|
(.22
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share from discontinued operations attributable to Perma-Fix Environemental Services, Inc. common stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations
|
|
$
|
(240
|
)
|
|
$
|
(61
|
)
|
|
$
|
(224
|
)
|
|
$
|
(259
|
)
|
Basic loss per share
|
|
$
|
(.02
|
)
|
|
$
|
(.01
|
)
|
|
$
|
(.02
|
)
|
|
$
|
(.02
|
)
|
Diluted loss per share
|
|
$
|
(.02
|
)
|
|
$
|
(.01
|
)
|
|
$
|
(.02
|
)
|
|
$
|
(.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding – basic
|
|
|
11,353
|
|
|
|
11,228
|
|
|
|
11,292
|
|
|
|
11,220
|
|
Potential shares exercisable under stock option plans
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
Potential shares upon exercise of Warrants
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
Weighted average shares outstanding – diluted
|
|
|
11,353
|
|
|
|
11,228
|
|
|
|
11,292
|
|
|
|
11,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential shares excluded from above weighted average share calculations due to their anti-dilutive effect include:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Upon exercise of stock options
|
|
|
391
|
|
|
|
535
|
|
|
|
373
|
|
|
|
523
|
|
Upon exercise of Warrants
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
6. |
Goodwill and Other Intangible Assets |
Goodwill impairment
Our East Tennessee Materials & Energy Corporation (“M&EC”) subsidiary was awarded the CH Plateau Remediation Company (“CHPRC”) subcontract by CH2M Hill Plateau Remediation Company (“CH2M Hill”), effective June 19, 2008, in connection with CH2M Hill’s prime contract with the U.S. Department of Energy (“DOE”), relating to waste management and facility operations at the DOE’s Hanford, Washington site. The CHPRC subcontract provided for a base contract period from October 1, 2008 through September 30, 2013, with an option of renewal for an additional five years. During the second quarter of 2013, our M&EC subsidiary was notified by CH2M Hill that the subcontract will expire on September 30, 2013 and will not be renewed. As permitted by ASC Topic 350 “Intangibles – Goodwill and Other,” when an impairment indicator arises toward the end of an interim reporting period, the Company may recognize its best estimate of that impairment loss; accordingly, based on the Company’s analysis prepared as of June 30, 2013, we recorded a goodwill impairment charge of $1,149,000 during the three months ended June 30, 2013. This amount represented the total goodwill for our CHPRC reporting unit – our operations under the CHPRC subcontract. The goodwill impairment charge is noncash in nature and did not affect the Company’s liquidity or cash flows from operating activities. Additionally, the goodwill impairment had no effect on the Company’s borrowing availability or covenants under its credit facility agreement. The CHPRC subcontract expired on September 30, 2013.
The Company’s goodwill balances at September 30, 2013 are as follows: $13,690,000 for the Treatment reporting unit, $1,330,000 for the SYA reporting unit and $13,017,000 for the Safety and Ecology Corporation reporting unit. The Company performed a preliminary internal step 1 analysis as of September 30, 2013 that indicated that the Treatment reporting unit passed step 1 by approximately 23.0%, that the SYA reporting unit passed step 1 by approximately 224.0% and the Safety and Ecology Corporation reporting unit passed step 1 by approximately 18.0%. As part of this Step 1 analysis, the Company estimated the fair values of each reporting unit based solely on the income approach, specifically the discounted cash flow (“DCF”) method, which estimates the fair value of each reporting unit. The revenue assumptions were based on projected growth rates varying from 2.0% to 85.0% over the next four years. To achieve these projections, the model assumes a recovery from the government sequestration downturn over the next four years, beginning in the fourth quarter of 2013.
The DCF model was prepared using revenue and expense projections based on the Company’s current operating plan. Management considered the current experience of lower than expected levels of revenues and operating income. As such, a number of significant assumptions and estimates are involved in the application of the DCF model to forecast revenue growth, price changes, gross profits, operating expenses and operating cash flows. The cash flows were discounted using a weighted average cost of capital of 15%, which was management’s best estimate based on the capital structure of the Company and external industry data. The Company used a terminal growth rate of four percent. Management also considered that the Company’s total stockholders’ equity at September 30, 2013 was significantly greater than the Company’s market capitalization, which was approximately $41,775,000 based on 11,384,490 shares of common stock outstanding at September 30, 2013. While the market capitalization of approximately $41,775,000 is significantly below the Company’s stockholders’ equity, the market capitalization metric is only one indicator of fair value. In the Company’s opinion, the market capitalization approach, by itself, is not a reliable indicator of the value for the Company. The analysis prepared as of September 30, 2013 is preliminary and subject to the completion of the Company’s annual impairment test as of October 1, 2013. The completion of this analysis may result in an impairment loss being recorded in the fourth quarter of 2013.
We believe demand for our services will continue to be subject to fluctuations due to a variety of factors beyond our control, including without limitation, the current economic conditions that drive both commercial and government clients to reduce spending, adverse federal governmental clients operating under reduced budgets due to Continuing Resolutions (“CR”) and government sequestration. We believe that this has negatively impacted the amount of waste shipped to our treatment facilities, as well as jobs available in our Services Segment. Significant uncertainty exists regarding how sequestration cuts are being implemented and the challenges it is having for our industry. While members of Congress and the Administration continue to discuss various options to address sequestration and the U.S. Government’s overall fiscal challenges, we cannot predict the outcome of these efforts. This continued financial uncertainty makes it difficult to determine the full impact on our 2013 results of operations and cash flows, including the potential impact on our goodwill balances.
Other Intangible Assets
The following table summarizes information relating to the Company’s other intangible assets:
|
|
|
|
|
September 30, 2013
|
|
|
December 31, 2012
|
|
|
|
Useful
|
|
|
Gross
|
|
|
|
|
|
Net
|
|
|
Gross
|
|
|
|
|
|
Net
|
|
|
|
Lives
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
|
|
(Years)
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
Intangibles (amount in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patent
|
|
|
8-18
|
|
|
$
|
499
|
|
|
$
|
(143
|
)
|
|
$
|
356
|
|
|
$
|
453
|
|
|
$
|
(105
|
)
|
|
$
|
348
|
|
Software
|
|
|
3
|
|
|
|
380
|
|
|
|
(235
|
)
|
|
|
145
|
|
|
|
380
|
|
|
|
(145
|
)
|
|
|
235
|
|
Non-compete agreement
|
|
|
1.2
|
|
|
|
265
|
|
|
|
(135
|
)
|
|
|
130
|
|
|
|
265
|
|
|
|
(62
|
)
|
|
|
203
|
|
Customer contracts
|
|
|
0.5
|
|
|
|
790
|
|
|
|
(790
|
)
|
|
|
¾
|
|
|
|
790
|
|
|
|
(790
|
)
|
|
|
¾
|
|
Customer relationships
|
|
|
12
|
|
|
|
3,370
|
|
|
|
(835
|
)
|
|
|
2,535
|
|
|
|
3,370
|
|
|
|
(546
|
)
|
|
|
2,824
|
|
Total
|
|
|
|
|
|
$
|
5,304
|
|
|
$
|
(2,138
|
)
|
|
$
|
3,166
|
|
|
$
|
5,258
|
|
|
$
|
(1,648
|
)
|
|
$
|
3,610
|
|
The intangible assets are amortized on a straight-line basis over their useful lives with the exception of customer relationships which are being amortized using an accelerated method.
The following table summarizes the expected amortization over the next five years for our definite-lived intangible assets noted above and also includes the only definite-lived permit, which is at our Diversified Scientific Services, Inc. (“DSSI”) subsidiary:
|
|
Amount
|
|
Year
|
|
(In thousands)
|
|
|
|
|
|
2013 (remaining)
|
|
$
|
496
|
|
2014
|
|
|
585
|
|
2015
|
|
|
470
|
|
2016
|
|
|
369
|
|
2017
|
|
|
355
|
|
|
|
$
|
2,275
|
|
Amortization expense relating to intangible assets noted above and our one definite-lived permit for the Company was $185,000 and $528,000 for the three and nine months ended September 30, 2013, respectively, and $159,000 and $480,000 for the three and nine months ended September 30, 2012, respectively.
Long-term debt consists of the following at September 30, 2013 and December 31, 2012:
(Amounts in Thousands)
|
|
September 30,
2013
|
|
|
December 31,
2012
|
|
Revolving Credit facility dated October 31, 2011, borrowings based upon eligible accounts receivable, subject to monthly borrowing base calculation, variable interest paid monthly at our option of prime rate (3.25% at September 30, 2013) plus 2.0% or London Interbank Offer Rate ("LIBOR") plus 3.0%, balance due October 31, 2016. Effective interest rate for first nine months of 2013 was 3.66%. (1)
|
|
$
|
851
|
|
|
$
|
—
|
|
Term Loan dated October 31, 2011, payable in equal monthly installments of principal of $190, balance due in October 31, 2016, variable interest paid monthly at option of prime rate plus 2.5% or LIBOR plus 3.5%. Effective interest rate for first nine months of 2013 was 4.05%. (1)
|
|
|
11,810
|
|
|
|
13,524
|
|
Promissory Note dated September 28, 2010, payable in 36 monthly equal installments of $40, which includes interest and principal, beginning October 15, 2010, interest accrues at annual rate of 6.0%. (2)
|
|
|
—
|
|
|
|
352
|
|
Promissory Note dated February 12, 2013, payable in monthly installments of $10, which includes interest and principal, starting February 28, 2013, interest accrues at annual rate of 6.0%, balance due January 31, 2015. (2)
|
|
|
156
|
|
|
|
—
|
|
Promissory Note dated August 2, 2013, payable in twelve monthly installments of interest only, starting September 1, 2013 and twenty-four monthly installments of $125 in principal plus accrued interest. Interest accrues at annual rate of 2.99%. (2) (3)
|
|
|
2,755
|
|
|
|
—
|
|
Various capital lease and promissory note obligations, payable 2013 to 2014, interest at rates ranging from 5.2% to 8.0%.
|
|
|
93
|
|
|
|
391
|
|
|
|
|
15,665
|
|
|
|
14,267
|
|
Less current portion of long-term debt
|
|
|
2,486
|
|
|
|
2,794
|
|
Less long-term debt related to assets held for sale
|
|
|
44
|
|
|
|
71
|
|
|
|
$
|
13,135
|
|
|
$
|
11,402
|
|
(1)
|
Our Revolving Credit facility is collateralized by our accounts receivable and our Term Loan is collateralized by our property, plant, and equipment.
|
(2)
|
Uncollateralized note.
|
(3)
|
Net of debt discount of ($245,000) for September 31, 2013. See “Promissory Note and Installment Agreement” below for additional information.
|
Revolving Credit and Term Loan Agreement
The Company entered into an Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated October 31, 2011 (“Amended Loan Agreement”), with PNC Bank, National Association (“PNC”), acting as agent and lender, replacing our previous Loan Agreement with PNC. The Amended Loan Agreement provides us with the following credit facilities:
|
· |
up to $25,000,000 revolving credit facility (“Revolving Credit”), subject to the amount of borrowings based on a percentage of eligible receivables. The revolving credit advances are subject to limitations of an amount up to the sum of (a) up to 85% of Commercial Receivables aged 90 days or less from invoice date, (b) up to 85% of Commercial Broker Receivables aged up to 120 days from invoice date, (c) up to 85% of acceptable Government Agency Receivables aged up to 150 days from invoice date, and (d) up to 50% of acceptable unbilled amounts aged up to 60 days, less (e) reserves the Agent reasonably deems proper and necessary; |
|
· |
a term loan (“Term Loan”) of $16,000,000, which requires monthly installments of approximately $190,000 (based on a seven-year amortization); and |
|
· |
equipment line of credit up to $2,500,000, subject to certain limitations. |
The Amended Loan Agreement terminates as of October 31, 2016, unless sooner terminated. We may terminate the Amended Loan Agreement upon 90 days’ prior written notice and upon payment in full of our obligations under the Amended Loan Agreement. We agreed to pay PNC 0.5% of the total financing if we pay off our obligations after October 31, 2012, but prior to or on October 31, 2013. No early termination fee shall apply if we pay off our obligations under the Amended Loan Agreement after October 31, 2013. We did not pay off this loan as of October 31, 2013.
We have the option of paying an annual rate of interest due on the revolving credit facility at prime plus 2% or LIBOR plus 3% and the term loan and equipment credit facilities at prime plus 2.5% or LIBOR plus 3.5%.
In connection with the Amended Loan Agreement, we paid PNC a fee of $217,500 and incurred other direct costs of approximately $298,000, all of which are being amortized over the term of the Amended Loan Agreement as interest expense – financing fees. As of September 30, 2013, the excess availability under our revolving credit was $10,045,000, based on our eligible receivables.
On May 9, 2013, we entered into an amendment to our Amended Loan Agreement. This amendment waived our fixed charge coverage ratio non-compliance for the first quarter of 2013. This amendment also changed the methodology in calculating the fixed charge coverage ratio in each subsequent quarter of 2013. The minimum fixed charge coverage ratio requirement of 1:25 to 1:00 for each subsequent quarter of 2013 remains unchanged. As a condition of this amendment, we paid PNC a fee of $20,000, which is being amortized over the term of the Amended Loan Agreement. All other terms of the Amended Loan Agreement remain principally unchanged. We met our fixed charge coverage ratio covenant for the second and third quarters of 2013.
On August 2, 2013, the Company entered into another amendment to our Amended Loan Agreement. This amendment reduced our Revolving Credit facility from $25,000,000 to $18,000,000 and removed the equipment line credit of up to $2,500,000. All other terms of the Amended Loan Agreement remain principally unchanged. As a result of this amendment, we recorded approximately $65,000 in loss on debt modification in accordance with ASC 470-50, “Debt – Modification and Extinguishment.”
Promissory Notes and Installment Agreements
On February 12, 2013, the Company entered into an unsecured promissory note (“New Note”) with Timios National Corporation (“TNC” and formerly known as Homeland Capital Security Corporation) in the principal amount of approximately $230,000 as a result of a settlement with TNC in connection with certain claims that we asserted against TNC for breach of certain representations and covenant subsequent to our acquisition of Safety & Ecology Holdings Corporation and its subsidiaries (collectively known as Safety and Ecology Corporation or “SEC”) from TNC on October 31, 2011. In connection with the acquisition of SEC on October 31, 2011, as partial consideration of the purchase price, we entered into a $2,500,000 unsecured, non-negotiable promissory note (the “October Note”), bearing an annual rate of interest of 6%, payable in 36 monthly installments, with TNC. As part of the settlement with TNC regarding the aforementioned claims, the October Note, with balance of approximately $1,460,000, was cancelled and terminated and the New Note was issued in replacement of the October Note. The New Note bears an annual interest rate of 6%, payable in 24 monthly installments of principal and interest of approximately $10,000, with the first payment due February 28, 2013, as agreed by us and TNC after entering into the promissory note, with subsequent payments due on the last day of each month thereafter. The New Note provides us the right to prepay such at any time without interest or penalty.
The new Note payable to TNC included an embedded conversion option (“Conversion Option”) that can be exercised upon default, whereby TNC has the option to convert the unpaid portion of the Note into a number of whole shares of our restricted Common Stock. The number of shares of our restricted Common Stock to be issuable under the Conversion Option is determined by the principal amount owing under the new Note at the time of default plus all accrued and unpaid interest and expenses (as defined) divided by the average of the closing price per share of our Common Stock as reported by the primary national securities exchange on which our Common Stock is traded during the 30 consecutive trading day period ending on the trading day immediately prior to receipt by us of TNC’s written notice of its election to receive our restricted Common Stock as a result of the event of default by us, with the number of shares of our Common Stock issuable upon such default subject to certain limitations. We concluded that the Conversion Option had and continues to have nominal value as of September 30, 2013. We will continue to monitor the fair value of the Conversion Option on a regular basis.
On September 28, 2010, the Company entered into a promissory note in the principal amount of $1,322,000, with the former shareholders of Nuvotec (now known as Perma-Fix Northwest, Inc. or “PFNW”) in connection with an earn-out amount that we are required to pay upon meeting certain conditions for each earn-out measurement year ended June 30, 2008 to June 30, 2011, as a result of our acquisition of PFNW and Perma-Fix Northwest Richland, Inc. (“PFNWR”) in June 2007. Interest is accrued at an annual interest rate of 6%. The promissory note provides for 36 equal monthly payments of approximately $40,000, consisting of interest and principal, starting October 15, 2010. The promissory note was paid in full in September 2013. See further details of the earn-out amount in Note 8 – “Commitments and Contingencies - Earn-Out Amount.”
On August 2, 2013, the Company completed a lending transaction with Messrs. Robert Ferguson and William Lampson (“collectively, the “Lenders”), whereby the Company borrowed from the Lenders the sum of $3,000,000 pursuant to the terms of a Loan and Security Purchase Agreement and promissory note (the “Loan”). The Lenders were formerly shareholders of PFNW prior to our acquisition of PFNW and PFNWR and are also stockholders of the Company, having received shares of our Common Stock in connection with the acquisition of PFNW and PFNWR in June 2007. Mr. Ferguson also served as a Company Board member from August 2007 to February 2010 and from August 2011 to September 2012. The proceeds from the Loan were used for general working capital purposes. The promissory note is unsecured, with a term of three years with interest payable at a fixed interest rate of 2.99% per annum. The promissory note provides for monthly payments of accrued interest only during the first year of the Loan with the first interest payment due September 1, 2013 and monthly payments of $125,000 in principal plus accrued interest for the second and third year of the Loan. In connection with the above Loan, the Lenders entered into a Subordination Agreement dated August 2, 2013, with the Company’s credit facility lender, whereby the Lenders agreed to subordinate payment under the Loan, and agreed that the Loan will be junior in right of payment to the credit facility in the event of default or bankruptcy or other insolvency proceeding by the Company. As consideration for the Company receiving the Loan, we issued a Warrant to each Lender to purchase up to 35,000 shares of the Company’s Common Stock at an exercise price based on the closing price of the Company’s Common Stock at the closing of the transaction which was determined to be $2.25. The Warrants are exercisable six months from August 2, 2013 and expire on August 2, 2016. We estimated the fair value of the Warrants to be approximately $59,000 using the Black-Scholes option pricing model with the following assumption: 55.54% volatility, risk free interest rate of .59%, an expected life of three years and no dividends. As further consideration for the Loan, the Company issued an aggregate 90,000 shares of the Company’s Common Stock, with each Lender receiving 45,000 shares. The 90,000 shares of Common Stock and 70,000 Common Stock purchase warrants were issued in a private placement and bear a restrictive legend against resale except in a transaction registered under the Securities Act or in a transaction exempt from registration thereunder. We determined the fair value of the 90,000 shares of Common Stock to be approximately $200,000 which was based on the closing price of the stock of $2.25 per share on August 2, 2013. The fair value of the Warrants and Common Stock and the related closing fees incurred from the transaction (approximately $13,000) were recorded as a debt discount, which is being amortized over the term of the loan as interest expense – financing fees. The number of shares of Common Stock issued to the Lenders has been adjusted to reflect the reverse stock split. The number of shares subject to the Warrants and the exercise price under the Warrants were also adjusted to reflect the reverse stock split.
The promissory note includes an embedded Put Option (“Put”) that can be exercised upon default, whereby the lender has the option to receive a cash payment equal to the amount of the unpaid principal balance plus all accrued and unpaid interest (“Payoff Amount”), or the number of whole shares of our Common Stock equal to the Payoff Amount divided by the closing bid price of our Common Stock on the date immediately prior to the date of default of the promissory note, as reported by the primary national securities exchange on which our Common Stock is traded. The maximum number of payoff shares is restricted to less than 20% of the outstanding equity. We concluded that the Put should have been bifurcated at inception; however, the Put Option had and continues to have nominal value as of September 30, 2013. We will continue to monitor the fair value of the Put on a regular basis.
|
8. |
Commitments and Contingencies |
Hazardous Waste
In connection with our waste management services, we handle both hazardous and non-hazardous waste, which we transport to our own, or other, facilities for destruction or disposal. As a result of disposing of hazardous substances, in the event any cleanup is required, we could be a potentially responsible party for the costs of the cleanup notwithstanding any absence of fault on our part.
Earn-Out Amount – Perma-Fix Northwest, Inc. (“PFNW”) and Perma-Fix Northwest Richland, Inc. (“PFNWR”)
In connection with the acquisition of PFNW and PFNWR in June 2007, we were required to pay to those former shareholders of Nuvotec an earn-out amount upon meeting certain conditions for each measurement year ended June 30, 2008 to June 30, 2011, with the aggregate of the full earn-out amount not to exceed $4,552,000, pursuant to the Merger Agreement, as amended (“Agreement”). As of September 30, 2013, an aggregate earn-out amount of $3,896,000 has been paid as follows: (i) $2,574,000 in cash; and (ii) we issued a promissory note, dated September 28, 2010, in the principal amount of $1,322,000, which was paid in thirty six equal monthly payments of approximately $40,000 consisting of interest and principal, starting October 15, 2010 (the note was paid in full in September 2013). The total $3,896,000 in earn-out amount paid to date excludes approximately an aggregate $656,000 in Offset Amount, which represents an indemnification obligation (as defined by the Merger Agreement) which is payable or may be payable to the Company by the former shareholders of Nuvotec. Pursuant to the Merger Agreement, the aggregate amount of any Offset Amount may total up to $1,000,000, except an Offset Amount is unlimited as to indemnification relating to liabilities for taxes, misrepresentation or inaccuracies with respect to the capitalization of Nuvotec or PEcoS (now known as “PFNWR”) or for willful or reckless misrepresentation of any representation, warranty or covenant. The $656,000 Offset Amount (which was recorded as part of the purchase price allocation of PFNWR) represents approximately $93,000 relating to an excise tax issue and a refund request from a PEcoS customer in connection with services for waste treatment prior to our acquisition of PFNWR and PFNW and an anticipated Offset Amount of $563,000 in connection with the receipt of nonconforming waste at the PFNWR facility prior to our acquisition of PFNWR and PFNW. We are currently involved in litigation with the party that delivered the nonconforming waste to the facility prior to our acquisition of PFNWR and PFNW.
Insurance
The Company has a 25-year finite risk insurance policy entered into in June 2003 with Chartis, a subsidiary of American International Group, Inc. (“AIG”), which provides financial assurance to the applicable states for our permitted facilities in the event of unforeseen closure. The policy, as amended, provides for a maximum allowable coverage of $39,000,000 and has available capacity to allow for annual inflation and other performance and surety bond requirements. We have made all of the required payments totaling $18,305,000, for this finite risk insurance policy, as amended, of which $14,472,000 has been deposited into a sinking fund account which represents a restricted cash account; $2,883,000 represented full/terrorism premium; and $950,000 represented fee payable to Chartis. As of September 30, 2013, our financial assurance coverage amount under this policy totaled approximately $38,161,000. We have recorded $15,403,000 in our sinking fund related to the policy noted above in other long term assets on the accompanying balance sheets, which includes interest earned of $931,000 on the sinking fund as of September 30, 2013. Interest income for three and nine months ended September 30, 2013, was approximately $7,000 and $20,000, respectively. On the fourth and subsequent anniversaries of the contract inception, we may elect to terminate this contract. If we so elect, Chartis is obligated to pay us an amount equal to 100% of the sinking fund account balance in return for complete releases of liability from both us and any applicable regulatory agency using this policy as an instrument to comply with financial assurance requirements.
In August 2007, we entered into a second finite risk insurance policy for our PFNWR facility with Chartis. The policy provided an initial $7,800,000 of financial assurance coverage with an annual growth rate of 1.5%, which at the end of the four year term policy, provides maximum coverage of $8,200,000. We have made all of the required payments on this policy, totaling $7,158,000, of which $5,700,000 has been deposited into a sinking fund account and $1,458,000 represented premium. As of September 30, 2013, we have recorded $5,896,000 in our sinking fund related to this policy in other long term assets on the accompanying balance sheets, which includes interest earned of $196,000 on the sinking fund as of September 30, 2013. Interest income for the three and nine months ended September 30, 2013 totaled approximately $2,000 and $7,000, respectively. This policy is renewed annually at the end of the four year term with a nominal fee for the variance between the policy and coverage requirement. We have renewed this policy annually from 2011 to 2013 with an annual fee of $46,000. All other terms of the policy remain substantially unchanged.
9.
|
Discontinued Operations and Divestitures
|
Our discontinued operations consist of our Perma-Fix of South Georgia, Inc. (“PFSG”) facility which met the held for sale criteria under ASC 360, “Property, Plant, and Equipment” on October 6, 2010. Our discontinued operations also encompass our Perma-Fix of Fort Lauderdale, Inc. (“PFFL”), Perma-Fix of Orlando, Inc. (“PFO”), Perma-Fix of Maryland, Inc. (“PFMD”), Perma-Fix of Dayton, Inc. (“PFD”), and Perma-Fix Treatment Services, Inc. (“PFTS”) facilities, which were divested on August 12, 2011, October 14, 2011, January 8, 2008, March 14, 2008, and May 30, 2008, respectively. Our discontinued operations also include two previously shut down locations, Perma-Fix of Michigan, Inc. (“PFMI”), and Perma-Fix of Memphis, Inc. (“PFM”).
On August 14, 2013, our PFSG facility incurred fire damage which has left it currently non-operational. Certain equipment and portions of the building structures were damaged requiring further assessment which is currently underway. We carry general liability, pollution, property and business interruption, and workers compensation insurance with a maximum deductible of approximately $300,000 (consisting of $100,000 deductible for each workers compensation, pollution, and property insurance policy), which was accrued and included within our “loss from discontinued operations” during the three months ended September 30, 2013. As of September 30, 2013, we have recorded $123,000 for impairment of fixed assets related to the fire, and have incurred approximately $3,608,000 of other costs related to the fire. As of September 30, 2013, we have determined that the receipt of reimbursement of these expenses from our insurer is probable in accordance with our insurance policies and have therefore, recorded a receivable for these items. The table below details the nature of expense as well as insurance receivables related to the fire:
Clean up costs
|
|
$
|
3,472,000
|
|
Impairment of fixed assets
|
|
|
123,000
|
|
Incremental payroll costs
|
|
|
56,000
|
|
Other incremental costs
|
|
|
80,000
|
|
Total incurred costs through September 30, 2013
|
|
$
|
3,731,000
|
|
|
|
|
|
|
Insurance recovery receivable
|
|
$
|
3,531,000
|
|
Insurance recoveries already received
|
|
$
|
¾
|
|
The insurance receivable recorded is net of $200,000 of deductible on our property and pollution insurance policies. The receivables and the related payables in connection with this claim are included within our current assets and current liabilities related to discontinued operations in our consolidated condensed balance sheet.
Subsequent to September 30, 2013, during October 2013, we received approximately $1,800,000 of insurance recoveries from our insurer related to this fire. We continue to gather information related to insurance claims on this fire.
We are currently evaluating options regarding the future operation of this facility. We continue to market our PFSG facility for sale. As required by ASC 360, based on our internal financial valuations, we concluded that no tangible asset impairments existed for PFSG as of September 30, 2013, other than the write-off of the equipment damaged in the fire as discussed above. No intangible assets exist at PFSG.
The following table summarizes the results of discontinued operations for the three and nine months ended September 30, 2013 and 2012. The operating results of discontinued operations are included in our Consolidated Statements of Operations as part of our “Loss from discontinued operations, net of taxes.”
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
(Amounts in Thousands)
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
311
|
|
|
$
|
533
|
|
|
$
|
1,784
|
|
|
$
|
1,749
|
|
Interest expense
|
|
$
|
(7
|
)
|
|
$
|
(8
|
)
|
|
$
|
(20
|
)
|
|
$
|
(26
|
)
|
Operating loss from discontinued operations
|
|
$
|
(369
|
)
|
|
$
|
(98
|
)
|
|
$
|
(342
|
)
|
|
$
|
(392
|
)
|
Income tax benefit
|
|
$
|
(129
|
)
|
|
$
|
(37
|
)
|
|
$
|
(118
|
)
|
|
$
|
(133
|
)
|
Loss from discontinued operations
|
|
$
|
(240
|
)
|
|
$
|
(61
|
)
|
|
$
|
(224
|
)
|
|
$
|
(259
|
)
|
In accordance with ASC 280, “Segment Reporting”, we define an operating segment as a business activity:
|
·
|
from which we may earn revenue and incur expenses;
|
|
·
|
whose operating results are regularly reviewed by the Chief Operating Officer to make decisions about resources to be allocated to the segment and assess its performance; and
|
|
·
|
for which discrete financial information is available.
|
We currently have two reporting segments, which are based on a service offering approach. This, however, excludes corporate headquarters, which does not generate revenue, and our discontinued operations, which includes all facilities as discussed in Note 9 – “Discontinued Operations and Divestitures.”
Our reporting segments are defined as follows:
TREATMENT SEGMENT, which includes:
|
- |
nuclear, low-level radioactive, mixed waste (containing both hazardous and low-level radioactive constituents), hazardous and non-hazardous waste treatment, processing and disposal services primarily through four uniquely licensed and permitted treatment and storage facilities; and, |
|
- |
research and development activities to identify, develop and implement innovative waste processing techniques for problematic waste streams. |
SERVICES SEGMENT, which includes:
|
- |
On-site waste management services to commercial and governmental customers; |
|
- |
Technical services, which include: |
|
o |
professional radiological measurement and site survey of large government and commercial installations using advance methods, technology and engineering; |
|
o |
integrated Occupational Safety and Health services including industrial hygiene (“IH”) assessments; hazardous materials surveys, e.g., exposure monitoring; lead and asbestos management/abatement oversight; indoor air quality evaluations; health risk and exposure assessments; health & safety plan/program development, compliance auditing and training services; and Occupational Safety and Health Administration (“OSHA”) citation assistance; |
|
o |
global technical services providing consulting, engineering, project management, waste management, environmental, and decontamination and decommissioning field, technical, and management personnel and services to commercial and government customers; and, |
|
o |
augmented engineering services (through our Schreiber, Yonley & Associates subsidiary – “SYA”) providing consulting environmental services to industrial and government customers: |
|
§ |
including air, water, and hazardous waste permitting, air, soil and water sampling, compliance reporting, emission reduction strategies, compliance auditing, and various compliance and training activities; and, |
|
§ |
engineering and compliance support to other segments; |
|
- |
Nuclear services, which include: |
|
o |
technology-based services including engineering, decontamination and decommissioning (“D&D”), specialty services and construction, logistics, transportation, processing and disposal; |
|
o |
remediation of nuclear licensed and federal facilities and the remediation cleanup of nuclear legacy sites. Such services capability includes: project investigation; radiological engineering; partial and total plant D&D; facility decontamination, dismantling, demolition, and planning; site restoration; site construction; logistics; transportation; and emergency response; and |
|
- |
A company owned equipment calibration and maintenance laboratory that services, maintains, calibrates, and sources (i.e., rental) of health physics, IH and customized nuclear, environmental, and occupational safety and health (“NEOSH”) instrumentation. |
The table below presents certain financial information of our operating segments as of and for the three and nine months ended September 30, 2013 and 2012 (in thousands).
Segment Reporting for the Quarter Ended September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treatment
|
|
|
Services
|
|
|
Segments
Total
|
|
|
|
Corporate (1)
|
|
|
Consolidated
Total
|
|
Revenue from external customers
|
|
$
|
8,929
|
|
|
$
|
10,143
|
|
|
$
|
19,072
|
|
(2)
|
|
$
|
¾
|
|
|
$
|
19,072
|
|
Intercompany revenues
|
|
|
82
|
|
|
|
11
|
|
|
|
93
|
|
|
|
|
¾
|
|
|
|
¾
|
|
Gross profit
|
|
|
1,801
|
|
|
|
1,328
|
|
|
|
3,129
|
|
|
|
|
¾
|
|
|
|
3,129
|
|
Interest income
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
|
8
|
|
|
|
8
|
|
Interest expense
|
|
|
10
|
|
|
|
1
|
|
|
|
11
|
|
|
|
|
176
|
|
|
|
187
|
|
Interest expense-financing fees
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
|
40
|
|
|
|
40
|
|
Depreciation and amortization
|
|
|
999
|
|
|
|
248
|
|
|
|
1,247
|
|
|
|
|
20
|
|
|
|
1,267
|
|
Segment profit (loss)
|
|
|
616
|
|
|
|
387
|
|
|
|
1,003
|
|
|
|
|
(1,571
|
)
|
|
|
(568
|
)
|
Expenditures for segment assets
|
|
|
192
|
|
|
|
6
|
|
|
|
198
|
|
|
|
|
¾
|
|
|
|
198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Reporting for the Quarter Ended September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treatment
|
|
|
Services
|
|
|
Segments
Total
|
|
|
|
Corporate (1)
|
|
|
Consolidated
Total
|
|
Revenue from external customers
|
|
$
|
11,405
|
|
|
$
|
17,785
|
|
|
$
|
29,190
|
|
(2)
|
|
$
|
¾
|
|
|
$
|
29,190
|
|
Intercompany revenues
|
|
|
265
|
|
|
|
50
|
|
|
|
315
|
|
|
|
|
¾
|
|
|
|
¾
|
|
Gross profit
|
|
|
3,097
|
|
|
|
1,129
|
|
|
|
4,226
|
|
|
|
|
¾
|
|
|
|
4,226
|
|
Interest income
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
|
10
|
|
|
|
10
|
|
Interest expense
|
|
|
2
|
|
|
|
4
|
|
|
|
6
|
|
|
|
|
217
|
|
|
|
223
|
|
Interest expense-financing fees
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
|
23
|
|
|
|
23
|
|
Depreciation and amortization
|
|
|
1,104
|
|
|
|
226
|
|
|
|
1,330
|
|
|
|
|
19
|
|
|
|
1,349
|
|
Segment profit (loss)
|
|
|
1,352
|
|
|
|
(47
|
)
|
|
|
1,305
|
|
|
|
|
(1,777
|
)
|
|
|
(472
|
)
|
Expenditures for segment assets
|
|
|
24
|
|
|
|
1
|
|
|
|
25
|
|
|
|
|
¾
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Reporting for the Nine Months Ended September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treatment
|
|
|
Services
|
|
|
Segments
Total
|
|
|
|
Corporate (1)
|
|
|
Consolidated
Total
|
|
Revenue from external customers
|
|
$
|
26,379
|
|
|
$
|
35,306
|
|
|
$
|
61,685
|
|
(2)
|
|
$
|
¾
|
|
|
$
|
61,685
|
|
Intercompany revenues
|
|
|
1,149
|
|
|
|
66
|
|
|
|
1,215
|
|
|
|
|
¾
|
|
|
|
¾
|
|
Gross profit
|
|
|
3,968
|
|
|
|
3,722
|
|
|
|
7,690
|
|
|
|
|
¾
|
|
|
|
7,690
|
|
Interest income
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
|
27
|
|
|
|
27
|
|
Interest expense
|
|
|
38
|
|
|
|
(3
|
)
|
|
|
35
|
|
|
|
|
497
|
|
|
|
532
|
|
Interest expense-financing fees
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
|
87
|
|
|
|
87
|
|
Depreciation and amortization
|
|
|
3,063
|
|
|
|
708
|
|
|
|
3,771
|
|
|
|
|
72
|
|
|
|
3,843
|
|
Segment profit (loss)
|
|
|
524
|
|
|
|
(432
|
)
|
|
|
92
|
|
|
|
|
(4,528
|
)
|
|
|
(4,436
|
)
|
Expenditures for segment assets
|
|
|
367
|
|
|
|
6
|
|
|
|
373
|
|
|
|
|
¾
|
|
|
|
373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Reporting for the Nine Months Ended September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treatment
|
|
|
Services
|
|
|
Segments
Total
|
|
|
|
Corporate (1)
|
|
|
Consolidated
Total
|
|
Revenue from external customers
|
|
$
|
34,284
|
|
|
$
|
66,540
|
|
|
$
|
100,824
|
|
(2)
|
|
$
|
¾
|
|
|
$
|
100,824
|
|
Intercompany revenues
|
|
|
1,423
|
|
|
|
167
|
|
|
|
1,590
|
|
|
|
|
¾
|
|
|
|
¾
|
|
Gross profit
|
|
|
6,904
|
|
|
|
5,621
|
|
|
|
12,525
|
|
|
|
|
¾
|
|
|
|
12,525
|
|
Interest income
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
|
31
|
|
|
|
31
|
|
Interest expense
|
|
|
7
|
|
|
|
9
|
|
|
|
16
|
|
|
|
|
626
|
|
|
|
642
|
|
Interest expense-financing fees
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
|
84
|
|
|
|
84
|
|
Depreciation and amortization
|
|
|
3,359
|
|
|
|
688
|
|
|
|
4,047
|
|
|
|
|
55
|
|
|
|
4,102
|
|
Segment profit (loss)
|
|
|
2,517
|
|
|
|
1,047
|
|
|
|
3,564
|
|
|
|
|
(5,852
|
)
|
|
|
(2,288
|
)
|
Expenditures for segment assets
|
|
|
266
|
|
|
|
142
|
|
|
|
408
|
|
|
|
|
4
|
|
|
|
412
|
|
(1)
|
Amounts reflect the activity for corporate headquarters not included in the segment information.
|
(2) |
Includes revenues generated from CH Plateau Remediation Company (“CHPRC”) of $6,082,000 or 31.9% and $18,522,000 or 30.0% for the three and nine months ended September 30, 2013, respectively and $6,036,000 or 20.7% and $18,669,000 or 18.6% for the corresponding period of 2012, respectively. |
The Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes.
We had income tax benefits of $383,000 and $247,000 from continuing operations for the three months ended September 30, 2013 and the corresponding period of 2012, respectively, and income tax benefits of $1,943,000 and $1,102,000 for the nine months ended September 30, 2013 and the corresponding period of 2012, respectively. The Company’s effective tax rates were approximately 40.3% and 33.4% for the three months ended September 30, 2013 and 2012, respectively, and 37.6% and 30.9% for the nine months ended September 30, 2013 and 2012, respectively. We have treated the goodwill impairment loss of approximately $1,149,000 recorded for our CHPRC reporting unit recorded during the second quarter of 2013 as a discrete item and have not included the impact of the impairment in our estimated effective tax rates for the nine months ended September 30, 2013, in accordance with ASC 740-270-30-8 (see Note 6 – “Other Intangible Assets and Goodwill” for further information regarding this goodwill impairment).
The provision for income taxes is determined in accordance with ASC 740, “Income Taxes”. Deferred income tax assets and liabilities are recognized for future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred income tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company regularly assesses the likelihood that the deferred tax asset will be recovered from future taxable income. The Company considers projected future taxable income and ongoing tax planning strategies, then records a valuation allowance to reduce the carrying value of the net deferred income tax assets to an amount that is more likely than not to be realized.
Reverse Stock Split
At the 2013 Annual Meeting of Stockholders (the “Meeting”) held on September 12, 2013, the Company’s stockholders approved a reverse stock split at a ratio within the range of 1-for-2 to 1-for-7 and authorized the Board of Directors, without further action of the stock holders, to amend the Company’s Restated Certificate of Incorporation, as amended, to effect a reverse stock split of the issued and outstanding shares of the Company’s Common Stock and outstanding stock options and warrants at a ratio within the range of 1-for-2 to 1-for-7 at any time prior to November 8, 2013, with the exact ratio and effective date of the reverse stock split to be determined by the Board of Directors. Subsequent to the Meeting, our Board of Directors approved the ratio of the reverse stock split to be a 1-for-5 reverse stock split, with such reverse stock split to be effective October 15, 2013, upon filing of the certificate of amendment to our Restated Certificate of Incorporation, as amended.
The Company filed a certificate of amendment to the Company’s Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect a reverse stock split ratio of 1-for 5 of the Company’s Common Stock (“Common Stock”). The reverse stock split became effective as of 12:01 a.m. on October 15, 2013. As a result of the reverse stock split, each five shares of the outstanding Common Stock and shares held in treasury was combined into one share of Common Stock without any change to the par value per share of $.001. In addition, the number of shares covered by each outstanding stock option and warrant as of October 15, 2013, and the exercise price thereof were adjusted to reflect the reverse stock split. The reverse stock split did not affect the number of authorized shares of Common Stock which remains at 75,000,000. No fractional shares of Common Stock will be issued as a result of the reverse stock split. Instead, stockholders who otherwise would be entitled to receive a fractional share of Common Stock as a consequence of the reverse stock split will be entitled to receive cash in lieu of all such fractional shares.
The primary reason for implementing this reverse stock split was to increase the market price per share of our Common Stock in order to regain compliance with the NASDAQ’s continued listing criteria related to Minimum Bid Price Rule. On October 29, 2013, we received a letter from the NASDAQ Stock Market indicating that we had regained compliance with the minimum bid price requirement under NASDAQ Listing Rule 5550(a)(2) for continued listing on the NASDAQ Capital Market. The Company’s Common Stock continues to be listed on the NASDAQ Capital Market.
As a result of this reverse stock split, all references in the financial statements and notes thereto to the number of shares outstanding, per share amounts, and outstanding stock option and warrant data of the Company’s Common Stock have been restated to reflect the effect of the stock split for all periods presented.
Non-Compliance with NASDAQ Listing Rule 5250(c)(1)
By letter dated November 14, 2013, the NASDAQ advised the Company that since it had failed to file its Form 10-Q for the period ended September 30, 2013 (“Form 10-Q”) in a timely manner, it no longer complies with the NASDAQ Listing Rule 5250(c)(1) for continued listing, and that the Company has 60 calendar days to submit a plan to the NASDAQ to regain compliance. If the NASDAQ accepts such plan, the NASDAQ can grant an exception to the Company for up to 180 calendar days from the due date for filing the Form 10-Q, or until May 12, 2014, to regain compliance. Although the Company has filed its Form 10-K/A for year ended 2012 and Form 10-Q for the period ended September 30, 2013 and, if required, intends to submit a plan to NASDAQ prior to January 13, 2014 to regain compliance within the Listing Rules of the NASDAQ, acceptance of such plan is discretionary with the NASDAQ. This notification has no immediate effect on the listing of the Company’s common stock on the NASDAQ. There can be no assurance, however, that the Company will be able to regain compliance with the listing requirement discussed above or otherwise satisfy the other NASDAQ listing criteria.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Forward-looking Statements
Certain statements contained within this report may be deemed "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (collectively, the "Private Securities Litigation Reform Act of 1995"). All statements in this report other than a statement of historical fact are forward-looking statements that are subject to known and unknown risks, uncertainties and other factors, which could cause actual results and performance of the Company to differ materially from such statements. The words "believe," "expect," "anticipate," "intend," "will," and similar expressions identify forward-looking statements. Forward-looking statements contained herein relate to, among other things,
·
|
demand for our services subject to fluctuations due to variety of factors;
|
·
|
increase in revenue and cash flow in the fourth quarter 2013;
|
·
|
ability to improve revenue and working capital during balance of 2013;
|
·
|
the effect of continued adverse financial results;
|
·
|
uncertainty with the federal budget and the availability of funding and sequestration;
|
·
|
significant reduction in the level of governmental funding could have a material adverse impact to our business, financial position, results of operations and cash flows in the current year and in the future;
|
·
|
expect to meet our financial covenants in fourth quarter of 2013;
|
·
|
ability to improve operations and liquidity;
|
·
|
ability to continue under existing contracts with the federal government (directly or indirectly as a subcontractor;
|
·
|
successful implementation of a plan to expand into commercial and international markets;
|
·
|
potential large fluctuations in revenue in each of our quarters in the near future;
|
·
|
ability to fund expenses to remediate sites from funds generated internally;
|
·
|
potential effect on our operations with the adoption of programs by federal or state government mandating a substantial reduction in greenhouse gas emissions;
|
·
|
amounts budgeted for capital expenditures during 2013;
|
·
|
our cash flows from operations and our available liquidity from our amended and restated line of credit are sufficient to service the Company’s current obligations;
|
·
|
ability to obtain similar insurance in future years, or that the cost of such insurance will not increase materially;
|
·
|
receipt of insurance proceeds as a result of fire damage at PFSG;
|
·
|
we could be subject to fines, penalties or other liabilities or could be adversely affected by existing or subsequently enacted laws or regulations;
|
·
|
successfully implement expansion into both commercial and international markets to help offset the uncertainties of government spending in the USA;
|
·
|
economic conditions and environmental clean-up budgets improve;
|
·
|
being potentially responsible party at a remedial action site, which could have a material adverse effect;
|
·
|
we could be deemed responsible for part for the cleanup of certain properties and be subject to fines and civil penalties in connection with violations of regulatory requirements;
|
·
|
plans to increase the level of review and validation of the Company’s accounting of its deferred tax accounts in preparation of our provision for income taxes;
|
·
|
compliance with environmental regulations;
|
·
|
potential impairment loss recorded in fourth quarter of 2013;
|
·
|
demand for our services;
|
·
|
effects of sequestration costs; and
|
·
|
2013 results of operation, cash flow and goodwill balances.
|
While the Company believes the expectations reflected in such forward-looking statements are reasonable, it can give no assurance such expectations will prove to have been correct. There are a variety of factors, which could cause future outcomes to differ materially from those described in this report, including, but not limited to:
·
|
general economic conditions; |
·
|
material reduction in revenues; |
·
|
ability to meet PNC covenant requirements; |
·
|
inability to collect in a timely manner a material amount of receivables; |
·
|
increased competitive pressures; |
·
|
inability to maintain and obtain required permits and approvals to conduct operations; |
·
|
public not accepting our new technology; |
·
|
inability to develop new and existing technologies in the conduct of operations; |
·
|
inability to maintain and obtain closure and operating insurance requirements; |
·
|
inability to retain or renew certain required permits; |
·
|
discovery of additional contamination or expanded contamination at any of the sites or facilities leased or owned by us or our subsidiaries which would result in a material increase in remediation expenditures; |
·
|
delays at our third party disposal site can extend collection of our receivables greater than twelve months; |
·
|
refusal of third party disposal sites to accept our waste; |
·
|
changes in federal, state and local laws and regulations, especially environmental laws and regulations, or in interpretation of such; |
·
|
potential increases in equipment, maintenance, operating or labor costs; |
·
|
management retention and development; |
·
|
financial valuation of intangible assets is substantially more/less than expected; |
·
|
the requirement to use internally generated funds for purposes not presently anticipated; |
·
|
inability to continue to be profitable on an annualized basis; |
·
|
inability of the Company to maintain the listing of its Common Stock on the NASDAQ; |
·
|
terminations of contracts with federal agencies or subcontracts involving federal agencies, or reduction in amount of waste delivered to the Company under the contracts or subcontracts; |
·
|
renegotiation of contracts involving the federal government; |
·
|
federal government’s inability or failure to provide necessary funding to remediate contaminated federal sites; |
·
|
disposal expense accrual could prove to be inadequate in the event the waste requires re-treatment; |
·
|
Risk Factors set forth in our Form 10-K/A for year 2012 and Form 10-Qs for quarters ended March 31, 2013, June 30, 2013 and September 30, 2013; and |
·
|
Factors set forth in “Special Note Regarding Forward-Looking Statements” contained in our 2012 Form 10-K/A and Form 10-Q for quarters ended March 31, 2013 and June 30, 2013. |
The Company undertakes no obligations to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise.
Overview
Revenue decreased $10,118,000 or 34.7% to $19,072,000 for the three months ended September 30, 2013 from $29,190,000 for the corresponding period of 2012 primarily due to reduced revenue within our Services Segment of approximately $7,642,000 resulting from completion/near completion of certain large contracts with the U.S. Department of Energy (“DOE”) within the nuclear services area and a large contract in the technical services area. Revenue from our Treatment Segment was lower by $2,476,000 primarily due to lower waste volume. Gross profit decreased $1,097,000 or 26.0%, primarily due to reduced revenue. Selling, General, and Administrative (SG&A) expenses decreased $922,000 or 22.0% for the three months ended September 30, 2013 as compared to the corresponding period of 2012. We had a net loss of $808,000 for the three months ended September 30, 2013 as compared to a net loss of $533,000 for the corresponding period of 2012.
Business Environment, Outlook and Liquidity
During the nine months ended September 30, 2013 and for the year ended December 31, 2012, the Company incurred net losses of $4,660,000 and $3,179,000, respectively. In the first, second and third quarters of fiscal 2013, revenues were $19,829,000, $22,784,000, and $19,072,000, respectively. The revenue for the first nine months of 2013 and our fiscal 2012 revenue were below our expectations and internal forecasts as a result, in large part, to the government sequestration, federal governmental clients operating under reduced budgets, ending of contracts, and general adverse economic conditions. Our revenue during the first nine months of fiscal 2013 has been insufficient to attain profitable operations and has generated negative operating cash flow from operations; however, our backlog increased as large number of waste shipments were received late in the third quarter, which we believe should increase our revenue and benefit our operating cash flow in the fourth quarter of 2013. Our borrowing availability under our credit facility as of September 30, 2013 remains strong at $10,045,000 based on eligible collateral.
The Company’s cash flow requirements during 2013 have been financed by cash on hand, operations, and our credit facility. The Company is continually reviewing operating costs and is committed to further reducing operating costs to bring them in line with revenue levels. If we are unable to improve our revenue and working capital during the remainder of 2013, such could result in a material adverse impact on our results and liquidity, including potential impairment of our goodwill and long-lived assets balances. Continued adverse financial conditions could result in our independent auditors expressing substantial doubt about the Company’s ability to continue as a going concern.
The Company continues to focus on expansion into both commercial and international markets to help offset the uncertainties of government spending in the USA. This includes new services, new customers and increased market share in our current markets. Although no assurances can be given, we believe we will be able to successfully implement this plan.
Reverse Stock Split
At the 2013 Annual Meeting of Stockholders (the “Meeting”) held on September 12, 2013, our stockholders approved a reverse stock split at a ratio within the range of 1-for-2 to 1-for-7 and authorized the Board of Directors, without further action of the stock holders, to amend the Company’s Restated Certificate of Incorporation, as amended, to effect a reverse stock split of the issued and outstanding shares of the Company’s Common Stock and outstanding stock options and warrants at a ratio within the range of 1-for-2 to 1-for-7 at any time prior to November 8, 2013, with the exact ratio and effective date of the reverse stock split to be determined by the Board of Directors. Subsequent to the Meeting, our Board of Directors approved the ratio of the reverse stock split to be a 1-for-5 reverse stock split, with such reverse stock split to be effective October 15, 2013, upon filing of the certificate of amendment to our Restated Certificate of Incorporation, as amended.
We filed a certificate of amendment to our Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect the reverse stock split ratio of 1-for-5 of the Company’s Common Stock (“Common Stock”). The reverse stock split became effective as of 12:01 a.m. on October 15, 2013. As a result of the reverse stock split, each five shares of the outstanding Common Stock and shares held in treasury were combined into one share of Common Stock without any change to the par value per share of $.001. In addition, the number of shares covered by each outstanding stock option and warrant as of October 15, 2013, and the exercise price thereof were adjusted to reflect the reverse stock split. The reverse stock split did not affect the number of authorized shares of Common Stock which remains at 75,000,000. No fractional shares of Common Stock will be issued as a result of the reverse stock split. Instead, stockholders who otherwise would be entitled to receive a fractional share of Common Stock as a consequence of the reverse stock split will be entitled to receive cash in lieu of all such fractional shares. The primary reason for implementing this reverse stock split is to increase the market price per share of our Common Stock in order to regain compliance with the NASDAQ’s continued listing criteria related to Minimum Bid Price Rule. On October 29, 2013, we received a letter from the NASDAQ Stock Market indicating that we had regained compliance with the minimum bid price requirement under NASDAQ Listing Rule 5550(a)(2) for continued listing on the NASDAQ Capital Market. The Company’s Common Stock continues to be listed on the NASDAQ Capital Market.
As a result of this reverse stock split, all references in the financial statements and notes thereto to the number of shares outstanding, per share amounts, and stock option and warrant data of the Company’s Common Stock have been restated to reflect the effect of the stock split for all periods presented.
Results of Operations
The reporting of financial results and pertinent discussions are tailored to two reportable segments: The Treatment and Services Segments.
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
Consolidated (amounts in thousands)
|
|
2013
|
|
|
%
|
|
|
2012
|
|
|
%
|
|
|
2013
|
|
|
%
|
|
|
2012
|
|
|
%
|
|
Net revenues
|
|
$
|
19,072
|
|
|
|
100.0
|
|
|
$
|
29,190
|
|
|
|
100.0
|
|
|
$
|
61,685
|
|
|
|
100.0
|
|
|
$
|
100,824
|
|
|
|
100.0
|
|
Cost of goods sold
|
|
|
15,943
|
|
|
|
83.6
|
|
|
|
24,964
|
|
|
|
85.5
|
|
|
|
53,995
|
|
|
|
87.5
|
|
|
|
88,299
|
|
|
|
87.6
|
|
Gross profit
|
|
|
3,129
|
|
|
|
16.4
|
|
|
|
4,226
|
|
|
|
14.5
|
|
|
|
7,690
|
|
|
|
12.5
|
|
|
|
12,525
|
|
|
|
12.4
|
|
Selling, general and administrative
|
|
|
3,276
|
|
|
|
17.2
|
|
|
|
4,198
|
|
|
|
14.4
|
|
|
|
10,833
|
|
|
|
17.6
|
|
|
|
13,825
|
|
|
|
13.7
|
|
Impairment loss on goodwill
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
|
|
1,149
|
|
|
|
1.9
|
|
|
|
―
|
|
|
|
―
|
|
Research and development
|
|
|
520
|
|
|
|
2.7
|
|
|
|
502
|
|
|
|
1.7
|
|
|
|
1,420
|
|
|
|
2.3
|
|
|
|
1,390
|
|
|
|
1.4
|
|
Loss on disposal of property and equipment
|
|
|
―
|
|
|
|
―
|
|
|
|
18
|
|
|
|
―
|
|
|
|
2
|
|
|
|
―
|
|
|
|
15
|
|
|
|
―
|
|
Loss from operations
|
|
|
(667
|
)
|
|
|
(3.5
|
)
|
|
|
(492
|
)
|
|
|
(1.6
|
)
|
|
|
(5,714
|
)
|
|
|
(9.3
|
)
|
|
|
(2,705
|
)
|
|
|
(2.7
|
)
|
Interest income
|
|
|
8
|
|
|
|
―
|
|
|
|
10
|
|
|
|
―
|
|
|
|
27
|
|
|
|
―
|
|
|
|
31
|
|
|
|
―
|
|
Interest expense
|
|
|
(187
|
)
|
|
|
(1.0
|
)
|
|
|
(223
|
)
|
|
|
(.8
|
)
|
|
|
(532
|
)
|
|
|
(.8
|
)
|
|
|
(642
|
)
|
|
|
(.6
|
)
|
Interest expense-financing fees
|
|
|
(40
|
)
|
|
|
(.2
|
)
|
|
|
(23
|
)
|
|
|
(.1
|
)
|
|
|
(87
|
)
|
|
|
(.1
|
)
|
|
|
(84
|
)
|
|
|
(.1
|
)
|
Loss on debt modification
|
|
|
(65
|
)
|
|
|
(.3
|
)
|
|
|
―
|
|
|
|
―
|
|
|
|
(65
|
)
|
|
|
(.1
|
)
|
|
|
―
|
|
|
|
―
|
|
Other
|
|
|
―
|
|
|
|
―
|
|
|
|
9
|
|
|
|
―
|
|
|
|
(8
|
)
|
|
|
―
|
|
|
|
10
|
|
|
|
―
|
|
Loss from continuing operations before taxes
|
|
|
(951
|
)
|
|
|
(5.0
|
)
|
|
|
(719
|
)
|
|
|
(2.5
|
)
|
|
|
(6,379
|
)
|
|
|
(10.3
|
)
|
|
|
(3,390
|
)
|
|
|
(3.4
|
)
|
Income tax benefit
|
|
|
(383
|
)
|
|
|
(2.0
|
)
|
|
|
(247
|
)
|
|
|
(.9
|
)
|
|
|
(1,943
|
)
|
|
|
(3.1
|
)
|
|
|
(1,102
|
)
|
|
|
(1.1
|
)
|
Loss from continuing operations
|
|
$
|
(568
|
)
|
|
|
(3.0
|
)
|
|
$
|
(472
|
)
|
|
|
(1.6
|
)
|
|
$
|
(4,436
|
)
|
|
|
(7.2
|
)
|
|
$
|
(2,288
|
)
|
|
|
(2.3
|
)
|
Summary – Three and Nine Months Ended September 30, 2013 and 2012
Consolidated revenues decreased $10,118,000 for the three months ended September 30, 2013, compared to the three months ended September 30, 2012, as follows:
(In thousands)
|
|
2013
|
|
|
%
Revenue
|
|
|
2012
|
|
|
%
Revenue
|
|
|
Change
|
|
|
%
Change
|
|
Treatment
|
|
|