UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

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

For the quarterly period ended

September 30, 2021

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

For the transition period from

Commission File No.

001-111596

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

(Exact name of registrant as specified in its charter)

Delaware		58-1954497
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

8302 Dunwoody Place, Suite 250, Atlanta, GA		30350
(Address of principal executive offices)		(Zip Code)

(770) 587-9898

(Registrant’s telephone number)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, $.001 Par Value		PESI		NASDAQ Capital Markets

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

Yes ☒ No ☐

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

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth 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 ☐ Accelerated Filer ☐ Non-accelerated Filer ☒ Smaller reporting company☒ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the close of the latest practical date.

Class		Outstanding at November 4, 2021
Common Stock, $.001 Par Value		13,214,910 shares

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

INDEX

			Page No.
PART I		FINANCIAL INFORMATION
	Item 1.	Consolidated Financial Statements
		Consolidated Balance Sheets - September 30, 2021 and December 31, 2020	1
		Consolidated Statements of Operations - Three and Nine Months Ended September 30, 2021 and 2020	3
		Consolidated Statements of Comprehensive Income - Three and Nine Months Ended September 30, 2021 and 2020	4
		Consolidated Statement of Stockholders’ Equity - Nine Months Ended September 30, 2021 and 2020	5
		Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2021 and 2020	6
		Notes to Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
	Item 4.	Controls and Procedures	39

PART II		OTHER INFORMATION
	Item 1.	Legal Proceedings	40
	Item 1A.	Risk Factors	40
	Item 6.	Exhibits	40

PART I - FINANCIAL INFORMATION

ITEM 1. – Financial Statements

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Consolidated Balance Sheets

	September 30,			December 31,
	2021			2020
(Amounts in Thousands, Except for Share and Per Share Amounts)	(Unaudited)			(Audited)

ASSETS
Current assets:
Cash	$	7,222		$	7,924
Accounts receivable, net of allowance for doubtful accounts of $60 and $404, respectively		11,816			9,659
Unbilled receivables		5,696			14,453
Inventories		543			610
Prepaid and other assets		4,132			3,967
Current assets related to discontinued operations		18			22
Total current assets		29,427			36,635

Property and equipment:
Buildings and land		20,622			20,139
Equipment		22,104			22,090
Vehicles		454			457
Leasehold improvements		23			23
Office furniture and equipment		1,423			1,413
Construction-in-progress		2,643			1,569
Total property and equipment		47,269			45,691
Less accumulated depreciation		(28,906	)		(27,908	)
Net property and equipment		18,363			17,783

Property and equipment related to discontinued operations		81			81

Operating lease right-of-use assets		2,570			2,287

Intangibles and other long term assets:
Permits		9,270			8,922
Other intangible assets - net		935			875
Finite risk sinking fund (restricted cash)		11,469			11,446
Deferred tax assets		2,460			—
Other assets		829			890
Total assets	$	75,404		$	78,919

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Consolidated Balance Sheets, Continued

	September 30,			December 31,
	2021			2020
(Amounts in Thousands, Except for Share and per Share Amounts)	(Unaudited)			(Audited)

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	9,717		$	15,382
Accrued expenses		6,654			6,381
Disposal/transportation accrual		1,028			1,220
Deferred revenue		3,435			4,614
Accrued closure costs - current		74			75
Current portion of long-term debt		396			3,595
Current portion of operating lease liabilities		387			273
Current portion of finance lease liabilities		257			525
Current liabilities related to discontinued operations		332			898
Total current liabilities		22,280			32,963

Accrued closure costs		7,026			6,290
Deferred tax liabilities		—			471
Long-term debt, less current portion		702			3,134
Long-term operating lease liabilities, less current portion		2,134			2,070
Long-term finance lease liabilities, less current portion		776			662
Other long-term liabilities		626			626
Long-term liabilities related to discontinued operations		802			252
Total long-term liabilities		12,066			13,505

Total liabilities		34,346			46,468

Commitments and Contingencies (Note 9)

Stockholders’ Equity:
Preferred Stock, $.001 par value; 2,000,000 shares authorized, no shares issued and outstanding		—			—
Common Stock, $.001 par value; 30,000,000 shares authorized; 12,304,265 ⁽¹⁾ and 12,161,539 shares issued, respectively; 12,296,623 ⁽¹⁾ and 12,153,897 shares outstanding, respectively		12			12
Additional paid-in capital		109,954			108,931
Common Stock subscriptions		4,387			—
Accumulated deficit		(71,153	)		(74,455	)
Accumulated other comprehensive loss		(189	)		(207	)
Less Common Stock in treasury, at cost; 7,642 shares		(88	)		(88	)
Total Perma-Fix Environmental Services, Inc. stockholders’ equity		42,923			34,193
Non-controlling interest		(1,865	)		(1,742	)
Total stockholders’ equity		41,058			32,451

Total liabilities and stockholders’ equity	$	75,404		$	78,919

(1)	See Note 15

The accompanying notes are an integral part of these 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)	2021			2020			2021			2020

Net revenues	$	15,797		$	30,172		$	55,075		$	77,079
Cost of goods sold		13,573			25,422			49,529			64,379
Gross profit		2,224			4,750			5,546			12,700

Selling, general and administrative expenses		3,348			3,308			9,550			8,935
Research and development		243			157			538			598
Loss on disposal of property and equipment		1			—			1			27
(Loss) income from operations		(1,368	)		1,285			(4,543	)		3,140

Other income (expense):
Interest income		2			28			23			112
Interest expense		(77	)		(87	)		(209	)		(306	)
Interest expense-financing fees		(11	)		(58	)		(28	)		(187	)
Other		(1	)		180			—			189
Gain (loss) on extinguishment of debt		—			—			5,381			(27	)
(Loss) income from continuing operations before taxes		(1,455	)		1,348			624			2,921
Income tax benefit		(2,836	)		(133	)		(2,840	)		(128	)
Income from continuing operations, net of taxes		1,381			1,481			3,464			3,049

Loss from discontinued operations, net of taxes (Note 10)		(43	)		(67	)		(285	)		(266	)
Net income		1,338			1,414			3,179			2,783

Net loss attributable to non-controlling interest		(64	)		(32	)		(123	)		(87	)

Net income attributable to Perma-Fix Environmental Services, Inc. common stockholders	$	1,402		$	1,446		$	3,302		$	2,870

Net income (loss) per common share attributable to Perma-Fix Environmental Services, Inc. stockholders - basic:
Continuing operations	$	.12		$	.13		$	.29		$	.26
Discontinued operations		(.01	)		(.01	)		(.02	)		(.02	)
Net income per common share	$	.11		$	.12		$	.27		$	.24

Net income (loss) per common share attributable to Perma-Fix Environmental Services, Inc. stockholders - diluted:
Continuing operations	$	.12		$	.13		$	.29		$	.25
Discontinued operations		(.01	)		(.01	)		(.02	)		(.02	)
Net income per common share	$	.11		$	.12		$	.27		$	.23

Number of common shares used in computing net income (loss) per share:
Basic		12,198			12,145			12,181			12,134
Diluted		12,406			12,371			12,416			12,337

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Amounts in Thousands)	2021			2020			2021			2020

Net income	$	1,338		$	1,414		$	3,179		$	2,783
Other comprehensive (loss) income:
Foreign currency translation adjustment		(22	)		11			18			(40	)

Comprehensive income		1,316			1,425			3,197			2,743
Comprehensive loss attributable to non-controlling interest		(64	)		(32	)		(123	)		(87	)
Comprehensive income attributable to Perma-Fix Environmental Services, Inc. stockholders	$	1,380		$	1,457		$	3,320		$	2,830

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC

Consolidated Statement of Stockholders’ Equity

(Unaudited)

(Amounts in thousands, except for share amounts)

	Shares		Amount		Capital			Treasury			scriptions			Loss			Subsidiary			Deficit			Equity
								Common						Accumulated			Non-
					Additional			Stock			Stock			Other			controlling						Total
	Common Stock				Paid-In			Held In			Sub-			Comprehensive			Interest in			Accumulated			Stockholders’
	Shares		Amount		Capital			Treasury			scriptions			Loss			Subsidiary			Deficit			Equity
Balance at December 31, 2020		12,161,539	$	12	$	108,931		$	(88	)	$	—		$	(207	)	$	(1,742	)	$	(74,455	)	$	32,451
Net loss		—		—		—			—			—			—			(30	)		(1,123	)		(1,153	)
Foreign currency translation		—		—		—			—			—			20			—			—			20
Issuance of Common Stock upon exercise of options
Issuance of Common Stock upon exercise of options, shares
Issuance of Common Stock for services		11,837		—		79			—			—			—			—			—			79
Sale of Common Stock (Note 15
Sale of Common Stock (Note 15, shares
Stock Subscriptions (Note 15)
Stock-Based Compensation		—		—		45			—			—			—			—			—			45
Balance at March 31, 2021		12,173,376	$	12	$	109,055		$	(88	)	$	—		$	(187	)	$	(1,772	)	$	(75,578	)	$	31,442
Net Income (loss)		—		—		—			—			—			—			(29	)		3,023			2,994
Foreign currency translation		—		—		—			—			—			20			—			—			20
Issuance of Common Stock upon exercise of options		290		—		—			—			—			—			—			—			—
Issuance of Common Stock for services		14,590		—		109			—			—			—			—			—			109
Stock-Based Compensation		—		—		42			—			—			—			—			—			42
Balance at June 30, 2021		12,188,256	$	12	$	109,206		$	(88	)	$	—		$	(167	)	$	(1,801	)	$	(72,555	)	$	34,607
Net Income (loss)		—		—		—			—			—			—			(64	)		1,402			1,338
Foreign currency translation		—		—		—			—			—			(22	)		—			—			(22	)
Issuance of Common Stock for services		16,009		—		116			—			—			—			—			—			116
Sale of Common Stock (Note 15)		100,000		—		570	⁽¹⁾		—			—			—			—			—			570
Stock Subscriptions (Note 15)		—		—		—			—			4,387	⁽²⁾		—			—			—			4,387
Stock-Based Compensation		—		—		62			—			—			—			—			—			62
Balance at September 30, 2021		12,304,265	$	12	$	109,954		$	(88	)	$	4,387		$	(189	)	$	(1,865	)	$	(71,153	)	$	41,058

Balance at December 31, 2019		12,123,520	$	12	$	108,457		$	(88	)	$	—		$	(211	)	$	(1,619	)	$	(77,315	)	$	29,236
Net Income (loss)		—		—		—			—			—			—			(26	)		1,220			1,194
Foreign currency translation		—		—		—			—			—			(79	)		—			—			(79	)
Issuance of Common Stock upon exercise of options		3,643		—		6			—			—			—			—			—			6
Issuance of Common Stock for services		5,128		—		48			—			—			—			—			—			48
Stock-Based Compensation		—		—		44			—			—			—			—			—			44
Balance at March 31, 2020		12,132,291	$	12	$	108,555		$	(88	)	$	—		$	(290	)	$	(1,645	)	$	(76,095	)	$	30,449
Net Income (loss)		—		—		—			—			—			—			(29	)		204			175
Foreign currency translation		—		—		—			—			—			28			—			—			28
Issuance of Common Stock upon exercise of options		241		—		—			—			—			—			—			—			—
Issuance of Common Stock for services		10,239		—		56			—			—			—			—			—			56
Stock-Based Compensation		—		—		48			—			—			—			—			—			48
Balance at June 30, 2020		12,142,771	$	12	$	108,659		$	(88	)	$	—		$	(262	)	$	(1,674	)	$	(75,891	)	$	30,756
Net Income (loss)		—		—		—			—			—			—			(32	)		1,446			1,414
Foreign currency translation		—		—		—			—			—			11			—			—			11
Issuance of Common Stock for services		9,592		—		62			—			—			—			—			—			62
Stock-Based Compensation		—		—		69			—			—			—			—			—			69
Balance at September 30, 2020		12,152,363	$	12	$	108,790		$	(88	)	$	—		$	(251	)	$	(1,706	)	$	(74,445	)	$	32,312

(1)	Net of Offering costs incurred of approximately $50.
(2)	Net of stock subscription receivables of $744 and Offering costs incurred of approximately $449.

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended
	September 30,
(Amounts in Thousands)	2021			2020
Cash flows from operating activities:
Net income	$	3,179		$	2,783
Less: loss from discontinued operations, net of taxes (Note 10)		(285	)		(266	)

Income from continuing operations, net of taxes		3,464			3,049
Adjustments to reconcile income from continuing operations to cash (used in) provided by operating activities:
Depreciation and amortization		1,208			1,189
Interest on finance lease with purchase option		7			6
(Gain) loss on extinguishment of debt		(5,381	)		27
Amortization of debt issuance/debt discount costs		28			187
Deferred tax benefit		(2,931	)		(2	)
Provision for (recovery of) bad debt reserves		1			(94	)
Loss on disposal of property and equipment		1			27
Issuance of common stock for services		304			166
Stock-based compensation		149			161
Changes in operating assets and liabilities of continuing operations
Accounts receivable		(2,158	)		(170	)
Unbilled receivables		8,757			(6,382	)
Prepaid expenses, inventories and other assets		1,700			1,284
Accounts payable, accrued expenses and unearned revenue		(9,180	)		4,055
Cash (used in) provided by continuing operations		(4,031	)		3,503
Cash used in discontinued operations		(296	)		(329	)
Cash (used in) provided by operating activities		(4,327	)		3,174

Cash flows from investing activities:
Purchases of property and equipment		(1,132	)		(1,488	)
Proceeds from sale of property and equipment		1			4
Cash used in investing activities of continuing operations		(1,131	)		(1,484	)
Cash provided by investing activities of discontinued operations		—			118
Cash used in investing activities		(1,131	)		(1,366	)

Cash flows from financing activities:
Repayments of revolving credit borrowings		(59,900	)		(72,601	)
Borrowing on revolving credit		59,900			72,280
Proceeds from issuance of long-term debt		—			5,666
Principal repayments of finance lease liabilities		(281	)		(411	)
Principal repayments of long term debt		(330	)		(2,127	)
Payment of debt issuance costs		(40	)		(85	)
Proceeds from sale of Common Stock, net of Offering costs paid (Note 15)		618			—
Proceeds from stock subscription, net of Offering costs paid (Note 15)		4,816			—
Proceeds from issuance of common stock upon exercise of options		—			6
Cash provided by financing activities of continuing operations		4,783			2,728

Effect of exchange rate changes on cash		(4	)		(4	)

(Decrease) increase in cash and finite risk sinking fund (restricted cash)		(679	)		4,532
Cash and finite risk sinking fund (restricted cash) at beginning of period		19,370			11,697
Cash and finite risk sinking fund (restricted cash) at end of period