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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
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.
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.
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 | |
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.
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.
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 | |
Net
income (loss) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 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.
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.
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.
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:
Schedule
of Disaggregation of Revenue
| |
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 | | |
| |