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, 2022

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

For the transition period from _______________to_______________

Commission File No. 001-11596

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction

of incorporation or organization)

58-1954497

(IRS Employer

Identification Number)

8302 Dunwoody Place, Suite 250, Atlanta, GA

(Address of principal executive offices)

30350

(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 1, 2022
Common Stock, $.001 Par Value		13,324,756 shares

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

INDEX

			Page No.
PART I FINANCIAL INFORMATION

	Item 1.	Consolidated Financial Statements	1

		Consolidated Balance Sheets -September 30, 2022 and December 31, 2021	1

		Consolidated Statements of Operations - Three and Nine Months Ended September 30, 2022 and 2021	3

		Consolidated Statements of Comprehensive Income (Loss) - Three and Nine Months Ended September 30, 2022 and 2021	4

		Consolidated Statement of Stockholders’ Equity - Nine Months Ended September 30, 2022 and 2021	5

		Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2022 and 2021	7

		Notes to Consolidated Financial Statements	8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40

	Item 4.	Controls and Procedures	41

PART II OTHER INFORMATION

	Item 1.	Legal Proceedings	42

	Item 1A.	Risk Factors	42

	Item 6.	Exhibits	42

PART I - FINANCIAL INFORMATION

ITEM 1. – Financial Statements

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Consolidated Balance Sheets

	September 30,			December 31,
	2022			2021
(Amounts in Thousands, Except for Share and Per Share Amounts)	(Unaudited)			(Audited)

ASSETS
Current assets:
Cash	$	1,858		$	4,440
Accounts receivable, net of allowance for doubtful accounts of $31 and $85, respectively		9,993			11,372
Unbilled receivables		6,306			8,995
Inventories		1,057			680
Prepaid and other assets		6,209			4,472
Current assets related to discontinued operations		17			15
Total current assets		25,440			29,974

Property and equipment:
Buildings and land		24,048			20,631
Equipment		22,956			22,131
Vehicles		439			443
Leasehold improvements		23			23
Office furniture and equipment		1,320			1,316
Construction-in-progress		600			2,997
Total property and equipment		49,386			47,541
Less accumulated depreciation		(29,871	)		(28,932	)
Net property and equipment		19,515			18,609

Property and equipment related to discontinued operations		81			81

Operating lease right-of-use assets		2,087			2,460

Intangibles and other long term assets:
Permits		9,558			9,476
Other intangible assets - net		719			894
Finite risk sinking fund (restricted cash)		11,540			11,471
Deferred tax assets		3,801			3,527
Other assets		448			809
Total assets	$	73,189		$	77,301

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
	2022			2021
(Amounts in Thousands, Except for Share and per Share Amounts)	(Unaudited)			(Audited)

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	10,370		$	11,975
Accrued expenses		6,436			5,078
Disposal/transportation accrual		1,291			1,065
Deferred revenue		3,145			5,580
Accrued closure costs - current		712			578
Current portion of long-term debt		469			393
Current portion of operating lease liabilities		431			406
Current portion of finance lease liabilities		154			333
Current liabilities related to discontinued operations		927			506
Total current liabilities		23,935			25,914

Accrued closure costs		7,306			6,613
Long-term debt, less current portion		681			600
Long-term operating lease liabilities, less current portion		1,673			2,029
Long-term finance lease liabilities, less current portion		357			884
Long-term liabilities related to discontinued operations		267			677
Total long-term liabilities		10,284			10,803

Total liabilities		34,219			36,717

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; 13,305,750 and 13,222,552 shares issued, respectively;13,298,108 and 13,214,910 shares outstanding, respectively		13			13
Additional paid-in capital		114,993			114,307
Accumulated deficit		(75,744	)		(73,620	)
Accumulated other comprehensive loss		(204	)		(28	)
Less Common Stock in treasury, at cost; 7,642 shares		(88	)		(88	)
Total stockholders’ equity		38,970			40,584

Total liabilities and stockholders’ equity	$	73,189		$	77,301

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Consolidated Statements of Operations

(Unaudited)

(Amounts in Thousands, Except for Per Share Amounts)	2022			2021			2022			2021
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Amounts in Thousands, Except for Per Share Amounts)	2022			2021			2022			2021

Net revenues	$	18,472		$	15,797		$	53,842		$	55,075
Cost of goods sold		15,402			13,573			46,252			49,529
Gross profit		3,070			2,224			7,590			5,546

Selling, general and administrative expenses		3,929			3,348			11,035			9,550
Research and development		69			243			245			538
Loss on disposal of property and equipment		—			1			1			1
Loss from operations		(928	)		(1,368	)		(3,691	)		(4,543	)

Other income (expense):
Interest income		29			2			69			23
Interest expense		(47	)		(77	)		(123	)		(209	)
Interest expense-financing fees		(16	)		(11	)		(44	)		(28	)
Other (Note 13)		1,965			(1	)		1,960			—
Gain on extinguishment of debt		—			—			—			5,381
Income (loss) from continuing operations before taxes		1,003			(1,455	)		(1,829	)		624
Income tax expense (benefit)		179			(2,836	)		(147	)		(2,840	)
Income (loss) from continuing operations, net of taxes		824			1,381			(1,682	)		3,464

Loss from discontinued operations, net of taxes (Note 10)		(160	)		(43	)		(442	)		(285	)
Net income (loss)		664			1,338			(2,124	)		3,179

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

Net income (loss) attributable to Perma-Fix Environmental Services, Inc. common stockholders	$	664		$	1,402		$	(2,124	)	$	3,302

Net income (loss) per common share attributable to Perma-Fix Environmental Services, Inc. stockholders - basic:
Continuing operations	$	.06		$	.12		$	(.13	)	$	.29
Discontinued operations		(.01	)		(.01	)		(.03	)		(.02	)
Net income (loss) per common share	$	.05		$	.11		$	(.16	)	$	.27

Net income (loss) per common share attributable to Perma-Fix Environmental Services, Inc. stockholders - diluted:
Continuing operations	$	.06		$	.12		$	(.13	)	$	.29
Discontinued operations		(.01	)		(.01	)		(.03	)		(.02	)
Net income (loss) per common share	$	.05		$	.11		$	(.16	)	$	.27

Number of common shares used in computing net income (loss) per share:
Basic		13,297			12,198			13,265			12,181
Diluted		13,447			12,406			13,265			12,416

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(Amounts in Thousands)	2022			2021			2022			2021
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Amounts in Thousands)	2022			2021			2022			2021

Net income (loss)	$	664		$	1,338		$	(2,124	)	$	3,179
Other comprehensive (loss) income:
Foreign currency translation adjustment		(135	)		(22	)		(176	)		18

Comprehensive income (loss)		529			1,316			(2,300	)		3,197
Comprehensive loss attributable to non-controlling interest		—			(64	)		—			(123	)
Comprehensive income (loss) attributable to Perma-Fix Environmental Services, Inc. stockholders	$	529		$	1,380		$	(2,300	)	$	3,320
Comprehensive income (loss) attributable to Perma-Fix Environmental Services, Inc. stockholders	$	529		$	1,380		$	(2,300	)	$	3,320

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				Loss			Subsidiary			Deficit			Equity
					Additional		Common Stock				Accumulated Other			Non-controlling						Total
	Common Stock				Paid-In		Held In				Comprehensive			Interest in			Accumulated			Stockholders’
	Shares		Amount		Capital		Treasury				Loss			Subsidiary			Deficit			Equity
Balance at December 31, 2021		13,222,552	$	13	$	114,307	$	(88	)	-	$	(28	)		$	—	$	(73,620	)	$	40,584
Net loss		—		—		—		—				—				—		(1,343	)		(1,343	)
Foreign currency translation		—		—		—		—		-		26				—		—			26
Issuance of Common Stock for services		19,520		—		123		—		-		—				—		—			123
Stock-Based Compensation		—		—		102		—		-		—				—		—			102
Balance at March 31, 2022		13,242,072	$	13	$	114,532	$	(88	)	-	$	(2	)		$	—	$	(74,963	)	$	39,492
Net loss		—		—		—		—		-		—				—		(1,445	)		(1,445	)
Foreign currency translation		—		—		—		—		-		(67	)			—		—			(67	)
Issuance of Common Stock upon exercise of options (cashless)		16,526		—		—		—		-		—				—		—			—
Issuance of Common Stock for services		21,667		—		120		—		-		—				—		—			120
Stock-Based Compensation		—		—		103		—		-		—				—		—			103
Balance at June 30, 2022		13,280,265	$	13	$	114,755	$	(88	)	-	$	(69	)		$	—	$	(76,408	)	$	38,203
Net income		—		—		—		—		-		—				—		664			664
Foreign currency translation		—		—		—		—		-		(135	)			—		—			(135	)
Issuance of Common Stock upon exercise of options		2,400		—		13		—		-		—				—		—			13
Issuance of Common Stock for services		23,085		—		120		—		-		—				—		—			120
Stock-Based Compensation		—		—		105		—		-		—				—		—			105
Balance at September 30, 2022		13,305,750	$	13	$	114,993	$	(88	)	-	$	(204	)		$	—	$	(75,744	)	$	38,970

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC

Consolidated Statement of Stockholders’ Equity, Continued

(Unaudited)

(Amounts in thousands, except for share amounts)

	Shares		Amount		Capital			Treasury			scriptions			Loss			Subsidiary			Deficit			Equity
	Common Stock				Additional Paid-In			Common Stock Held In			Stock Sub-			Accumulated Other Comprehensive			Non-controlling Interest in			Accumulated			Total 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 for services		11,837		—		79			—			—			—			—			—			79
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 (loss) income		—		—		—			—			—			—			(29	)		3,023			2,994
Foreign currency translation		—		—		—			—			—			20			—			—			20
Issuance of Common Stock upon exercise of options		290		—		—			—			—			—			—			—			—
Issuance of Common Stock upon exercise of options (cashless)		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 (loss) income		—		—		—			—			—			—			(64	)		1,402			1,338
Foreign currency translation		—		—		—			—			—			(22	)		—			—			(22	)
Issuance of Common Stock for services		16,009		—		116			—			—			—			—			—			116
Sale of Common Stock		100,000		—		570	⁽¹⁾		—			—			—			—			—			570
Stock Subscriptions		—		—		—			—			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

(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)

(Amounts in Thousands)	2022			2021
	Nine Months Ended
	September 30,
(Amounts in Thousands)	2022			2021
Cash flows from operating activities:
Net (loss) income	$	(2,124	)	$	3,179
Less: loss from discontinued operations, net of taxes (Note 10)		(442	)		(285	)

(Loss) income from continuing operations, net of taxes		(1,682	)		3,464
Adjustments to reconcile (loss) income from continuing operations to cash used in operating activities:
Depreciation and amortization		1,433			1,208
Interest on finance lease with purchase option		—			7
Gain on extinguishment of debt		—			(5,381	)
Amortization of debt issuance costs		44			28
Deferred tax benefit		(147	)		(2,931	)
(Recovery of) provision for bad debt reserves		(47	)		1
Loss on disposal of property and equipment		1			1
Issuance of common stock for services		363			304
Stock-based compensation		310			149
Changes in operating assets and liabilities of continuing operations
Accounts receivable		1,426			(2,158	)
Unbilled receivables		2,689			8,757
Prepaid expenses, inventories and other assets		829			1,700
Accounts payable, accrued expenses and unearned revenue		(5,553	)		(9,180	)
Cash used in continuing operations		(334	)		(4,031	)
Cash used in discontinued operations		(559	)		(296	)
Cash used in operating activities		(893	)		(4,327	)

Cash flows from investing activities:
Purchases of property and equipment		(947	)		(1,132	)
Proceeds from sale of property and equipment		25			1
Cash used in investing activities of continuing operations		(922	)		(1,131	)

Cash flows from financing activities:
Repayments of revolving credit borrowings		(54,414	)		(59,900	)
Borrowing on revolving credit		54,414			59,900
Proceeds from capital line		524			—
Principal repayments of finance lease liabilities		(821	)		(281	)
Principal repayments of long term debt		(375	)		(330	)
Payment of debt issuance costs		(35	)		(40	)
Proceeds from sale of Common Stock, net of Offering costs paid		—			618
Proceeds from stock subscription, net of Offering costs paid		—			4,816
Proceeds from issuance of common stock upon exercise of options		13			—
Cash (used in) provided by financing activities of continuing operations		(694	)		4,783

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

Decrease in cash and finite risk sinking fund (restricted cash)		(2,513	)		(679	)
Cash and finite risk sinking fund (restricted cash) at beginning of period		15,911			19,370
Cash and finite risk sinking fund (restricted cash) at end of period	$	13,398		$	18,691

Supplemental disclosure:
Interest paid	$	125		$	163
Income taxes paid