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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                    September 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 Market

 

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, 2024
Common Stock, $.001 Par Value   15,827,977 shares

 

 

 

 
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

 

INDEX

 

  Page No.
PART I FINANCIAL INFORMATION    
       
  Item 1. Condensed Consolidated Financial Statements (Unaudited)   1
         
    Condensed Consolidated Balance Sheets - September 30, 2024, and December 31, 2023   1
         
    Condensed Consolidated Statements of Operations - Three and Nine Months Ended September 30, 2024, and 2023   3
         
    Condensed Consolidated Statements of Comprehensive (Loss) Income - Three and Nine Months Ended September 30, 2024, and 2023   4
         
    Condensed Consolidated Statement of Stockholders’ Equity - Nine Months Ended September 30, 2024, and 2023   5
         
    Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2024, and 2023   7
         
    Notes to Condensed Consolidated Financial Statements   8
         
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   23
         
  Item 3. Quantitative and Qualitative Disclosures About Market Risk   37
         
  Item 4. Controls and Procedures   37
         
PART II OTHER INFORMATION   38
       
  Item 1. Legal Proceedings   38
         
  Item 1A. Risk Factors   38
         
  Item 6. Exhibits   38

 

 
 

 

PART I - FINANCIAL INFORMATION

ITEM 1. – Financial Statements

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Condensed Consolidated Balance Sheets

 

         
   September 30,    
   2024   December 31, 
(Amounts in Thousands, Except for Share and Per Share Amounts)  (Unaudited)   2023 
         
ASSETS          
Current assets:          
Cash  $10,567   $7,500 
Accounts receivable, net of allowance for credit losses of $21 and $30, respectively   8,741    9,722 
Unbilled receivables   7,277    8,432 
Inventories   1,135    1,155 
Prepaid and other assets   4,346    3,738 
Current assets related to discontinued operations   12    13 
Total current assets   32,078    30,560 
           
Property and equipment:          
Buildings and land   24,764    24,311 
Equipment   23,578    22,809 
Vehicles   423    434 
Leasehold improvements   8    8 
Office furniture and equipment   1,139    1,130 
Construction-in-progress   2,170    1,010 
Total property and equipment   52,082    49,702 
Less accumulated depreciation   (31,689)   (30,693)
Net property and equipment   20,393    19,009 
           
Property and equipment related to discontinued operations   130    81 
           
Operating lease right-of-use assets   1,778    1,990 
           
Intangibles and other long term assets:          
Permits   10,453    9,905 
Other intangible assets - net   420    461 
Finite risk sinking fund (restricted cash)   12,525    12,074 
Deferred tax assets       4,299 
Other assets   381    370 
Total assets  $78,158   $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

 

   September 30,    
   2024   December 31, 
(Amounts in Thousands, Except for Share and per Share Amounts)  (Unaudited)   2023 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable  $7,675   $9,582 
Accrued expenses   6,320    6,560 
Disposal/transportation accrual   1,811    1,198 
Deferred revenue   5,398    6,815 
Accrued closure costs - current   40    79 
Current portion of long-term debt   554    773 
Current portion of operating lease liabilities   320    380 
Current portion of finance lease liabilities   285    291 
Current liabilities related to discontinued operations   251    269 
Total current liabilities   22,654    25,947 
           
Accrued closure costs   8,201    8,051 
Long-term debt, less current portion   1,910    1,975 
Long-term operating lease liabilities, less current portion   1,521    1,670 
Long-term finance lease liabilities, less current portion   564    776 
Long-term liabilities related to discontinued operations   942    953 
Total long-term liabilities   13,138    13,425 
           
Total liabilities   35,792    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; 15,817,046 and 13,654,201 shares issued, respectively; 15,809,404 and 13,646,559 shares outstanding, respectively   16    14 
Additional paid-in capital   136,047    116,502 
Accumulated deficit   (93,441)   (76,951)
Accumulated other comprehensive loss   (168)   (100)
Less Common Stock in treasury, at cost; 7,642 shares   (88)   (88)
Total stockholders’ equity   42,366    39,377 
           
Total liabilities and stockholders’ equity  $78,158   $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)

 

                 
   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
(Amounts in Thousands, Except for Per Share Amounts)  2024   2023   2024   2023 
                 
Net revenues  $16,812   $21,877   $44,415   $67,016 
Cost of goods sold   15,478    17,328    45,007    54,942 
Gross profit   1,334    4,549    (592)   12,074 
                     
Selling, general and administrative expenses   3,632    3,933    10,631    10,969 
Research and development   303    120    872    340 
Loss on disposal of property and equipment           1     
(Loss) income from operations   (2,601)   496    (12,096)   765 
                     
Other income (expense):                    
Interest income   292    146    679    445 
Interest expense   (121)   (89)   (346)   (189)
Interest expense-financing fees   (18)   (36)   (47)   (80)
Other   59    (17)   61    (11)
(Loss) income from continuing operations before taxes   (2,389)   500    (11,749)   930 
Income tax expense   6,417    254    4,300    482 
(Loss) income from continuing operations, net of taxes   (8,806   246    (16,049)   448 
                     
(Loss) income from discontinued operations, net of taxes (Note 10)   (173)   95    (441)   (44)
Net (loss) income  $(8,979)  $341   $(16,490)  $404 
                     
Net (loss) income per common share - basic:                    
Continuing operations  $(.56)  $.02   $(1.09)  $.03 
Discontinued operations   (.01)   .01    (.03)     
Net (loss) income per common share  $(.57)  $.03   $(1.12)  $.03 
                     
Net (loss) income per common share - diluted:                    
Continuing operations  $(.56)  $.02   $(1.09)  $.03 
Discontinued operations   (.01)       (.03)    
Net (loss) income per common share  $(.57)  $.02   $(1.12)  $.03 
                     
Number of common shares used in computing net (loss) income per share:                    
Basic   15,803    13,568    14,695    13,468 
Diluted   15,803    13,979    14,695    13,749 

 

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)

 

                 
   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
(Amounts in Thousands)  2024   2023   2024   2023 
                 
Net (loss) income  $(8,979)  $341   $(16,490)  $404 
Other comprehensive income (loss):                    
Foreign currency translation adjustment   19    (57)   (68)   (4)
Total other comprehensive income (loss)   19    (57)   (68)   (4)
                     
Comprehensive (loss) income  $(8,960)  $284   $(16,558)  $400 

 

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)

 

                             
   Common Stock   Additional Paid-In   Common Stock Held In   Accumulated Other Comprehensive   Accumulated   Total Stockholders’ 
   Shares   Amount   Capital   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 
Net loss                       (8,979)   (8,979)
Foreign currency translation                   19        19 
Issuance of Common Stock for services   12,218        123                123 
Issuance of Common Stock upon exercise of options   8,800        46                46 
Adjustment of offering costs from sale of Common Stock (Note 14)           10                10 
Stock-Based Compensation           182                  182 
Balance at September 30, 2024   15,817,046   $16   $136,047   $(88)  $(168)  $(93,441)  $42,366 

 

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

 

5
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC

Condensed Consolidated Statement of Stockholders’ Equity, Continued

(Unaudited)

(Amounts in thousands, except for share amounts)

 

   Common Stock   Additional Paid-In   Common Stock Held In   Accumulated Other
Comprehensive
   Accumulated   Total Stockholders’ 
   Shares   Amount   Capital   Treasury   Loss  

Deficit

   Equity 
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 
Net Income                       341    341 
Foreign currency translation                   (57)       (57)
Issuance of Common Stock for services   10,712        119                119 
Issuance of Common Stock upon exercise of options   15,478        49                49 
Stock-Based Compensation           149                149 
Balance at September 30, 2023   13,588,933   $14   $116,106   $(88)  $(169)  $(77,032)  $38,831 

 

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

 

6
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

         
   Nine Months Ended 
   September 30, 
(Amounts in Thousands)  2024   2023 
Cash flows from operating activities:          
Net (loss) income  $(16,490)  $404 
Less: Loss from discontinued operations, net of taxes (Note 10)   (441)   (44)
           
(Loss) income from continuing operations, net of taxes   (16,049)   448 
Adjustments to reconcile (loss) income from continuing operations to cash used in operating activities:          
Depreciation and amortization   1,295    2,124 
Amortization of debt issuance costs   47    80 
Deferred tax expense   

4,300

    482 
(Recovery of) provision for credit losses on accounts receivable   (9)   56 
Loss on disposal of property and equipment   1     
Issuance of Common Stock for services   361    356 
Stock-based compensation   466    392 
Changes in operating assets and liabilities of continuing operations          
Accounts receivable   990    (6,034)
Unbilled receivables   1,155    (3,274)
Prepaid expenses, inventories and other assets   2,277    3,696 
Accounts payable, accrued expenses and unearned revenue   (5,805)   2,175 
Cash (used in) provided by continuing operations   (10,971)   501 
Cash used in discontinued operations   (468)   (478)
Cash used in operating activities   (11,439)   23 
           
Cash flows from investing activities:          
Purchases of property and equipment   (2,224)   (1,386)
Addition to permits and other intangible assets   (577)   (49)
Proceeds from sale of property and equipment   1     
Cash used in continuing operations   (2,800)   (1,435)
Cash used in discontinued operations   (49)    
Cash used in investing activities   (2,849)   (1,435)
           
Cash flows from financing activities:          
Repayments of revolving credit borrowings   (78,313)   (63,295)
Borrowing on revolving credit   78,313    63,295 
Proceeds from long term debt       2,500 
Proceeds from sale of Common Stock, net of offering costs paid (Note 14)   18,495     
Principal repayments of finance lease liabilities   (218)   (135)
Principal repayments of long term debt   (675)   (450)
Payment of debt issuance costs   (61)   (175)
Proceeds from issuance of Common Stock upon exercise of options/warrant   264    150 
Cash provided by financing activities of continuing operations   17,805    1,890 
           
Effect of exchange rate changes on cash   1     
           
Increase in cash and finite risk sinking fund (restricted cash)   3,518    478 
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  $23,092   $13,914 
           
Supplemental disclosure:          
Interest paid  $349   $172 
Income taxes paid   50     
Non-cash financing activities:          
Equipment/property purchase subject to finance   406    309 

 

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

 

7
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Notes to Condensed Consolidated Financial Statements

September 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 nine months ended September 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.

 

Reclassification

 

Certain amounts in the condensed consolidated statement of cash flows for the prior period have been reclassified to conform with current presentation. The reclassifications had no effect on the condensed consolidated statements of operations, balance sheets and stockholders’ equity.

 

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, 2023, 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.

 

8
 

 

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 result 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:

 

 

                         
Revenue by Contract Type        
(In thousands)  Three Months Ended   Three Months Ended 
   September 30, 2024   September 30, 2023 
   Treatment   Services   Total   Treatment   Services   Total 
Fixed price  $9,064   $6,396   $15,460   $10,795   $10,188   $20,983 
Time and materials       1,352    1,352        894    894 
Total  $9,064   $7,748   $16,812   $10,795   $11,082   $21,877 

 

                         
Revenue by Contract Type        
(In thousands)  Nine Months Ended   Nine Months Ended 
   September 30, 2024   September 30, 2023 
   Treatment   Services   Total   Treatment   Services   Total 
Fixed price  $26,116   $15,405   $41,521   $33,223   $29,995   $63,218 
Time and materials       2,894    2,894        3,798    3,798 
Total  $26,116   $18,299   $44,415   $33,223   $33,793   $67,016 

 

9
 

 

                         
Revenue by generator                        
(In thousands)  Three Months Ended   Three Months Ended 
   September 30, 2024   September 30, 2023 
   Treatment   Services   Total   Treatment   Services   Total 
Domestic government  $6,578   $7,346   $13,924   $7,095   $8,444   $15,539 
Domestic commercial   2,229    312    2,541    3,450    2,170    5,620 
Foreign government       65    65    250    445    695 
Foreign commercial   257    25    282        23    23 
Total  $9,064   $7,748   $16,812   $10,795   $11,082   $21,877 

 

                         
Revenue by generator                        
(In thousands)  Nine Months Ended   Nine Months Ended 
   September 30, 2024   September 30, 2023 
   Treatment   Services   Total   Treatment   Services   Total 
Domestic government  $18,997   $17,129   $36,126   $24,160   $29,603   $53,763 
Domestic commercial   6,045    867    6,912    7,925    3,509    11,434 
Foreign government   1    232    233    1,002    615    1,617 
Foreign commercial   1,073    71    1,144    136    66    202 
Total  $26,116   $18,299   $44,415   $33,223   $33,793   $67,016 

 

Contract Balances

 

The timing of revenue recognition and billings can result in unbilled receivables (contract assets) or deferred revenue (contract liabilities). The following table represents changes in our contract asset and contract liabilities balances for the periods noted: The reduction in deferred revenue from December 31, 2023, to September 30, 2024, was primarily due to the substantial completion of a waste treatment project for a certain customer in which a prepayment was made to the Company by the customer in 2023.

 

 

(In thousands)  September 30, 2024   December 31, 2023   Change ($)   Change (%) 
Contract assets                    
Unbilled receivables - current  $7,277   $8,432   $(1,155)   -14%
                     
Contract liabilities                    
Deferred revenue  $5,398   $6,815   $(1,417)   -20.8%

 

(In thousands)  September 30, 2023   December 31, 2022   Change ($)   Change (%) 
Contract assets                    
Unbilled receivables - current  $9,336   $6,062   $3,274    54.0%
                     
Contract liabilities                    
Deferred revenue  $7,765   $4,813   $2,952    61.3%

 

During the three and nine months ended September 30, 2024, the Company recognized revenue of $677,000 and $5,596,000, respectively, related to untreated waste that was in the Company’s control as of the beginning of the year. During the three and nine months ended September 30, 2023, the Company recognized revenue of $842,000 and $6,289,000, respectively, related to untreated waste that was in the Company’s control as of the beginning of the year. All revenue recognized in each period related to performance obligations satisfied within the respective period.

 

Accounts Receivable

 

The following table represents changes in accounts receivable, net of credit losses, for the periods noted:

Schedule of Changes in Accounts Receivable, Net of Credit Losses

 

(In thousands)  September 30, 2024   December 31, 2023   Change ($)   Change (%) 
                     
Accounts Receivable (net)  $8,741   $9,722   $(981)   -10.1%

 

   September 30, 2023   December 31, 2022   Change ($)   Change (%) 
                     
Accounts Receivable (net)  $15,342   $9,364   $5,978    63.8%

 

The decrease from December 31, 2023, to September 30, 2024, was primarily due to reduced billing from decreased revenues. The decrease in accounts receivable was also attributed to the collection by May 2024 of outstanding accounts receivable for work performed for a certain Canadian project for which a settlement agreement was reached, with collection subject to meeting certain conditions/terms. (see “Note 11 - Perma-Fix Canada Inc. (“PF Canada”)”) for a discussion on the collection of the receivables).

 

Remaining Performance Obligations

 

The Company applies the practical expedient in Accounting Standards Codification (“ASC”) 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

 

Within our Services Segment, there are service contracts which provide that the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of our performance completed to date. For those contracts, the Company has utilized the practical expedient in ASC 606-10-55-18, which allows the Company to recognize revenue in the amount for which we have the right to invoice; accordingly, the Company does not disclose the value of remaining performance obligations for those contracts.

 

The Company’s contracts and subcontracts relating to activities at governmental sites generally allow for termination for convenience at any time at the government’s option without payment of a substantial penalty. The Company does not disclose remaining performance obligations on these contracts.

 

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4. Leases

 

At the inception of an arrangement, the Company determines if an arrangement is, or contains, a lease based on facts and circumstances present in that arrangement. Lease classifications, recognition, and measurement are then determined at the lease commencement date.

 

The Company’s operating lease right-of-use (“ROU”) assets and operating lease liabilities include primarily leases for office and warehouse spaces used to conduct our business. The Company’s operating leases also previously included the lease of a building with land where its Oak Ridge Environmental Waste Operations (“EWOC”) facility conducts its waste treatment operations. In July 2024, the Company completed the purchase of the EWOC property under the lease purchase option (see “Note 8 – Long Term Debt” for a discussion of the purchase of this property by the Company). Finance leases consist primarily of processing equipment and vehicles/trucks used by our facilities’ operations.

 

The components of lease cost for the Company’s leases for the three and nine months ended September 30, 2024, and 2023 were as follows (in thousands):

 

                 
   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
   2024   2023   2024   2023 
                 
Operating Leases:                    
Lease cost  $129   $157   $420   $470 
                     
Finance Leases:                    
Amortization of ROU assets   65    39    196    115 
Interest on lease liability   20    9    63    22 
Finance lease   85    48    259    137 
                     
Short-term lease rent expense   1        3    1 
                     
Total lease cost  $215   $205   $682   $608 

 

The weighted average remaining lease term and the weighted average discount rate for operating and finance leases at September 30, 2024, were:

 

   Operating Leases   Finance Leases 
Weighted average remaining lease terms (years)   4.9    3.9 
           
Weighted average discount rate   7.7%   9.0%

 

The weighted average remaining lease term and the weighted average discount rate for operating and finance leases at September 30, 2023, were:

 

   Operating Leases   Finance Leases 
Weighted average remaining lease terms (years)   5.7    3.2 
           
Weighted average discount rate   7.5%   7.0%

 

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The following table reconciles the undiscounted cash flows for the operating and finance leases at September 30, 2024, to the operating and finance lease liabilities recorded on the balance sheet (in thousands):

 

   Operating Leases   Finance Leases 
2024  $108   $91 
2025   486    345 
2026   479    192 
2027   447    157 
2028   343    134 
2029 and thereafter   407    102 
Total undiscounted lease payments   2,270