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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.
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.
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 | ) |
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.
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.
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.
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 | |
Balance | |
| 13,562,743 | | |
$ | 14 | | |
$ | 115,789 | | |
$ | (88 | ) | |
$ | (112 | ) | |
$ | (77,373 | ) | |
$ | 38,230 | |
Net Income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 341 | | |
| 341 | |
Net Income (loss) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 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 | |
Balance | |
| 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.
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.
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.
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:
Schedule
of Disaggregation of Revenue
| |
| | |
| | |
| | |
| | |
| | |
| |
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 | |
| |
| | |
| | |
| | |
| | |
| | |
| |
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.
Schedule
of Contract Balances
(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.
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):
Schedule
of Components of Lease Cost
| |
| | |
| | |
| | |
| |
| |
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:
Schedule
of Weighted Average Lease
| |
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 | % |
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):
Schedule
of Operating and Finance Lease Liability Maturity
| |
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 | | |
| |