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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                       June 30, 2024                 

 

Or

 

  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

 

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 July 30, 2024

Common Stock, $.001 Par Value

 

15,800,604 shares

 

 

 

 
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

 

INDEX

 

    Page No.
PART I FINANCIAL INFORMATION
 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

 
 

 

Condensed Consolidated Balance Sheets -June 30, 2024 and December 31, 2023 1
 

 

Condensed Consolidated Statements of Operations -Three and Six Months Ended June 30, 2024 and 2023 3
 

 

Condensed Consolidated Statements of Comprehensive (Loss) Income -Three and Six Months Ended June 30, 2024 and 2023 4
 

 

Condensed Consolidated Statements of Stockholders’ Equity -Six Months Ended June 30, 2024 and 2023 5
 

 

Condensed Consolidated Statements of Cash Flows -Six Months Ended June 30, 2024 and 2023 6
 

 

Notes to Condensed Consolidated Financial Statements 7
  Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21
  Item 3.

Quantitative and Qualitative Disclosures About Market Risk

34
  Item 4. Controls and Procedures 34
       
PART II OTHER INFORMATION  
  Item 1. Legal Proceedings 34
  Item 1A. Risk Factors 34
  Item 6. Exhibits 35

 

 
 

 

PART I - FINANCIAL INFORMATION

Item 1. – Financial Statements

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Condensed Consolidated Balance Sheets

 

         
   June 30,    
   2024   December 31, 
(Amounts in Thousands, Except for Share and Per Share Amounts)  (Unaudited)   2023 
         
ASSETS          
Current assets:          
Cash  $18,122   $7,500 
Accounts receivable, net of allowance for credit losses of $19 and $30, respectively   6,423    9,722 
Unbilled receivables   7,076    8,432 
Inventories   965    1,155 
Prepaid and other assets   2,860    3,738 
Current assets related to discontinued operations   5    13 
Total current assets   35,451    30,560 
           
Property and equipment:          
Buildings and land   24,319    24,311 
Equipment   23,293    22,809 
Vehicles   434    434 
Leasehold improvements   8    8 
Office furniture and equipment   1,138    1,130 
Construction-in-progress   1,201    1,010 
Total property and equipment   50,393    49,702 
Less accumulated depreciation   (31,314)   (30,693)
Net property and equipment   19,079    19,009 
           
Property and equipment related to discontinued operations   130    81 
           
Operating lease right-of-use assets   2,278    1,990 
           
Intangibles and other long term assets:          
Permits   10,391    9,905 
Other intangible assets - net   436    461 
Finite risk sinking fund (restricted cash)   12,372    12,074 
Deferred tax assets   6,495    4,299 
Other assets   339    370 
Total assets  $86,971   $78,749 

 

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

 

1
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Condensed Consolidated Balance Sheets, Continued

 

   June 30,    
   2024   December 31, 
(Amounts in Thousands, Except for Share and per Share Amounts)  (Unaudited)   2023 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable  $9,111   $9,582 
Accrued expenses   4,207    6,560 
Disposal/transportation accrual   1,926    1,198 
Deferred revenue   5,818    6,815 
Accrued closure costs - current   20    79 
Current portion of long-term debt   546    773 
Current portion of operating lease liabilities   378    380 
Current portion of finance lease liabilities   286    291 
Current liabilities related to discontinued operations   376    269 
Total current liabilities   22,668    25,947 
           
Accrued closure costs   8,111    8,051 
Long-term debt, less current portion   1,695    1,975 
Long-term operating lease liabilities, less current portion   1,956    1,670 
Long-term finance lease liabilities, less current portion   636    776 
Long-term liabilities related to discontinued operations   940    953 
Total long-term liabilities   13,338    13,425 
           
Total liabilities   36,006    39,372 
           
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; 15,796,028 and 13,654,201 shares issued, respectively; 15,788,386 and 13,646,559 shares outstanding, respectively   16    14 
Additional paid-in capital   135,686    116,502 
Accumulated deficit   (84,462)   (76,951)
Accumulated other comprehensive loss   (187)   (100)
Less Common Stock in treasury, at cost; 7,642 shares   (88)   (88)
Total stockholders’ equity   50,965    39,377 
           
Total liabilities and stockholders’ equity  $86,971   $78,749 

 

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

 

2
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

 

(Amounts in Thousands, Except for Per Share Amounts)  2024   2023   2024   2023 
   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
(Amounts in Thousands, Except for Per Share Amounts)  2024   2023   2024   2023 
                 
Net revenues  $13,986   $25,032   $27,603   $45,139 
Cost of goods sold   15,292    20,516    29,529    37,614 
Gross (loss) profit   (1,306)   4,516    (1,926)   7,525 
                     
Selling, general and administrative expenses   3,455    3,551    6,999    7,036 
Research and development   273    121    569    220 
Loss on disposal of property and equipment   1          1       
(Loss) income from operations   (5,035)   844    (9,495)   269 
                     
Other income (expense):                    
Interest income   213    172    387    298 
Interest expense   (109)   (47)   (225)   (100)
Interest expense-financing fees   (16)   (24)   (29)   (44)
Other   1    6    2    7 
(Loss) income from continuing operations before taxes   (4,946)   951    (9,360)   430 
Income tax (benefit) expense   (1,161)   432    (2,117)   228 
(Loss) income from continuing operations, net of taxes   (3,785)   519    (7,243)   202 
                     
Loss from discontinued operations, net of taxes (Note 10)   (166)   (45)   (268)   (139)
Net (loss) income  $(3,951)  $474   $(7,511)  $63 
                     
Net (loss) income per common share - basic:                    
Continuing operations  $(.26)  $.04   $(.51)  $.01 
Discontinued operations   (.01)         (.02)   (.01)
Net (loss) income per common share  $(.27)  $.04   $(.53)  $   
                     
Net (loss) income per common share - diluted:                    
Continuing operations  $(.26)  $.03   $(.51)  $.01 
Discontinued operations   (.01)         (.02)   (.01)
Net (loss) income per common share  $(.27)  $.03   $(.53)  $   
                     
Number of common shares used in computing net (loss) income per share:                    
Basic   14,593    13,474    14,134    13,417 
Diluted   14,593    13,848    14,134    13,657 

 

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

 

3
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(Unaudited)

 

(Amounts in Thousands)  2024   2023   2024   2023 
   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
(Amounts in Thousands)  2024   2023   2024   2023 
                 
Net (loss) income  $(3,951)  $474   $(7,511)  $63 
Other comprehensive (loss) income:                    
Foreign currency translation (loss) gain   (31)   46    (87)   53 
Total other comprehensive (loss) income   (31)   46    (87)   53 
                     
Comprehensive (loss) income  $(3,982)  $520   $(7,598)  $116 

 

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

 

4
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC

Condensed Consolidated Statement of Stockholders’ Equity

(Unaudited)

(Amounts in thousands, except for share amounts)

 

   Shares   Amount   Capital   In Treasury   Loss   Deficit   Equity 
   Common Stock   Additional
Paid-In
   Common
Stock Held
   Accumulated Other Comprehensive   Accumulated   Total Stockholders’ 
   Shares   Amount   Capital   In Treasury   Loss   Deficit   Equity 
Balance at December 31, 2023   13,654,201   $14   $116,502   $(88)  $(100)  $(76,951)  $39,377 
Net loss   —                              (3,560)   (3,560)
Foreign currency translation   —                                     (56)         (56)
Issuance of Common Stock for services   14,963          118                      118 
Issuance of Common Stock upon exercise of options   31,416          104                      104 
Issuance of Common Stock upon exercise of warrant   30,000          105                      105 
Stock-Based Compensation   —            152                      152 
Balance at March 31, 2024   13,730,580   $14   $116,981   $(88)  $(156)  $(80,511)  $36,240 
Net loss   —                              (3,951)   (3,951)
Foreign currency translation   —                        (31)         (31)
Issuance of Common Stock for services   9,965          120                      120 
Issuance of Common Stock upon exercise of options   4,201          9                      9 
Sale of Common Stock, net of offering costs (Note 14)   2,051,282    2    18,113                      18,115 
Issuance of warrants from sale of Common Stock (Note 14)   —            331                      331 
Stock-Based Compensation   —            132                    132 
Balance at June 30, 2024   15,796,028   $16   $135,686   $(88)  $(187)  $(84,462)  $50,965 
                                    
Balance at December 31, 2022   13,332,398   $13   $115,209   $(88)  $(165)  $(77,436)  $37,533 
Net loss   —                              (411)   (411)
Foreign currency translation   —                        7          7 
Issuance of Common Stock for services   33,319          118                      118 
Issuance of Common Stock upon exercise of options        31,719                        7                                                  7   
Stock-Based Compensation   —            118                      118 
Balance at March 31, 2023   13,397,436   $13   $115,452   $(88)  $(158)  $(77,847)  $37,372 
Net income   —                              474    474 
Foreign currency translation   —                        46          46 
Issuance of Common Stock for services   10,171          119                      119 
Issuance of Common Stock upon exercise of options        155,136           1           93                                                  94   
Stock-Based Compensation   —            125                      125 
Balance at June 30, 2023   13,562,743   $14   $115,789   $(88)  $(112)  $(77,373)  $38,230 

 

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

 

5
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

(Amounts in Thousands)  2024   2023 
   Six Months Ended 
   June 30, 
(Amounts in Thousands)  2024   2023 
Cash flows from operating activities:          
Net (loss) income  $(7,511)  $63 
Less: loss from discontinued operations, net of taxes (Note 10)   (268)   (139)
           
(Loss) income from continuing operations, net of taxes   (7,243)   202 
Adjustments to reconcile (loss) income from continuing operations to cash (used in) provided by operating activities:          
Depreciation and amortization   862    1,439 
Amortization of debt issuance costs   29    43 
Deferred tax (benefit) expense   (2,117)   228 
(Recovery of) provision for credit losses on accounts receivable   (12)   24 
Loss on disposal of property and equipment   1       
Issuance of common stock for services   238    237 
Stock-based compensation   284    243 
Changes in operating assets and liabilities of continuing operations          
Accounts receivable   3,311    (2,590)
Unbilled receivables   1,356    (1,059)
Prepaid expenses, inventories and other assets   1,168    3,160 
Accounts payable, accrued expenses and unearned revenue   (3,949)   2,835 
Cash (used in) provided by continuing operations   (6,072)   4,762 
Cash used in discontinued operations   (245)   (336)
Cash (used in) provided by operating activities   (6,317)   4,426 
           
Cash flows from investing activities:          
Purchases of property and equipment, net of financed amount   (841)   (1,047)
Proceeds from sale of property and equipment   1       
Cash used in continuing operations   (840)   (1,047)
Cash used in discontinued operations   (49)      
Cash used in investing activities   (889)   (1,047)
           
Cash flows from financing activities:          
Repayments of revolving credit borrowings   (56,393)   (44,130)
Borrowing on revolving credit   56,393    44,130 
Proceeds from issuance of Common Stock upon exercise of options/warrant   218    101 
Proceeds from sale of Common Stock, net of offering costs paid (Note 14)   18,636       
Principal repayments of finance lease liabilities   (146)   (81)
Principal repayments of long term debt   (520)   (273)
Payment of debt issuance costs   (61)   (37)
Cash provided by (used in) financing activities of continuing operations   18,127    (290)
           
Effect of exchange rate changes on cash   (1)   5 
           
Increase in cash and finite risk sinking fund (restricted cash)   10,920    3,094 
Cash and finite risk sinking fund (restricted cash) at beginning of period   19,574    13,436 
Cash and finite risk sinking fund (restricted cash) at end of period  $30,494   $16,530 
           
Supplemental disclosure:          
Interest paid  $227   $103 
Income taxes paid   50       
Non-cash financing activities:          
Equipment purchase subject to finance   44    157 

 

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

 

6
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Notes to Condensed Consolidated Financial Statements

June 30, 2024

(Unaudited)

 

1. Basis of Presentation

 

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 six months ended June 30, 2024, are not necessarily indicative of results to be expected for the fiscal year ending December 31, 2024.

 

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2023.

 

The condensed consolidated financial statements include the accounts of our wholly-owned subsidiaries.

 

2. Summary of Significant Accounting Policies

 

Our accounting policies are as set forth in the notes to the December 31, 2023, consolidated financial statements referred to above.

 

Recently Issued Accounting Standards – Not Yet Adopted

 

In August 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-05, “Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement.” ASU 2023-05 applies to the formation of a “joint venture” or a “corporate joint venture” and requires a joint venture to initially measure all contributions received upon its formation at fair value. The guidance does not impact accounting by the venturers. The new guidance is applicable to joint venture entities with a formation date on or after January 1, 2025, on a prospective basis. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

 

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which expands reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of a segment’s profit or loss. The ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. Additionally, ASU 2023-07 requires all segment profit or loss and assets disclosures to be provided on an annual and interim basis. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2024 with early adoption permitted, and should be applied on a retrospective basis. ASU 2023-07 will be effective for the Company’s financial statements for the year ended December 31, 2024. This ASU will not have impact on the Company’s consolidated financial condition or results of operations. The Company is evaluating the impact to the related segment reporting disclosures.

 

7
 

 

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. This ASU will not have impact on the Company’s consolidated financial condition or results of operations. The Company is evaluating the impact to its income taxes reporting disclosures.

 

3. Revenue

 

Disaggregation of Revenue

 

In general, the Company’s business segmentation is aligned according to the nature and economic characteristics of our services and provides meaningful disaggregation of each business segment’s results of operations. The nature of the Company’s performance obligations within our Treatment and Services Segments results in the recognition of our revenue primarily over time. The following tables present further disaggregation of our revenues by different categories for our Services and Treatment Segments:

 

   Treatment   Services   Total   Treatment   Services   Total 
Revenue by Contract Type        
(In thousands)  Three Months Ended   Three Months Ended 
   June 30, 2024   June 30, 2023 
   Treatment   Services   Total   Treatment   Services   Total 
Fixed price  $8,343   $4,755   $13,098   $12,834   $11,161   $23,995 
Time and materials       888    888        1,037    1,037 
Total  $8,343   $5,643   $13,986   $12,834   $12,198   $25,032 

 

   Treatment   Services   Total   Treatment   Services   Total 
Revenue by Contract Type        
(In thousands)  Six Months Ended   Six Months Ended 
   June 30, 2024   June 30, 2023 
   Treatment   Services   Total   Treatment   Services   Total 
Fixed price  $17,052   $9,069   $26,121   $22,428   $19,808   $42,236 
Time and materials       1,482    1,482        2,903    2,903 
Total  $17,052   $10,551   $27,603   $22,428   $22,711   $45,139 

 

   Treatment   Services   Total   Treatment   Services   Total 
Revenue by generator        
(In thousands)  Three Months Ended   Three Months Ended 
   June 30, 2024   June 30, 2023 
   Treatment   Services   Total   Treatment   Services   Total 
Domestic government  $6,252   $4,168   $10,420   $9,808   $11,441   $21,249 
Domestic commercial   1,721    1,363    3,084    2,269    742    3,011 
Foreign government   1    88    89    657    (7)   650 
Foreign commercial   369    24    393    100    22    122 
Total  $8,343   $5,643   $13,986   $12,834   $12,198   $25,032 

 

   Treatment   Services   Total   Treatment   Services   Total 
Revenue by generator        
(In thousands)  Six Months Ended   Six Months Ended 
   June 30, 2024   June 30, 2023 
   Treatment   Services   Total   Treatment   Services   Total 
Domestic government  $12,013   $8,471   $20,484   $17,065   $21,159   $38,224 
Domestic commercial   4,222    1,867    6,089