| SEGMENT REPORTING |
NOTE
19 SEGMENT REPORTING
In
accordance with ASC 280, “Segment Reporting”, we define an operating segment as a business activity:
| |
● |
from which we may earn revenue and incur expenses; |
| |
● |
whose operating results are regularly reviewed by the
CODM to make decisions about resources to be allocated to the segment and assess its performance; and |
| |
● |
for which discrete financial information is available. |
We
have two reporting segments, consisting of the Treatment and Services Segments, which are based on a service offering approach. The Company’s
segment in 2021 also included the Medical Segment which primary purpose was the R&D of a medical isotope production technology. The
Medical Segment had not generated any revenues. During December 2021, the Company made the strategic decision to cease all R&D activities
under the Medical Segment which resulted in the sale of 100% of its interest of PFM Poland (see “Note 15 – PF Medical”
for a discussion of this transaction). Our reporting segments exclude our corporate headquarter, business center and our discontinued
operations (see “Note 9 – Discontinued Operations”) which do not generate revenues.
The
table below shows certain financial information of our reporting segments as of and for the years ended December 31, 2022 and 2021 (in
thousands).
SCHEDULE OF SEGMENT REPORTING INFORMATION
Segment
Reporting as of and for the year ended December 31, 2022
| |
|
Treatment |
|
|
Services |
|
|
Segments
Total |
|
|
|
Corporate (2) |
|
|
Consolidated
Total |
|
| Revenue from external customers |
|
$ |
33,358 |
|
|
$ |
37,241 |
|
|
$ |
70,599 |
(3)(4) |
|
|
$ |
— |
|
|
$ |
70,599 |
|
| Intercompany revenues |
|
|
56 |
|
|
|
213 |
|
|
|
269 |
|
|
|
|
— |
|
|
|
— |
|
| Gross profit |
|
|
5,243 |
|
|
|
4,366 |
|
|
|
9,609 |
|
|
|
|
— |
|
|
|
9,609 |
|
| Research and development |
|
|
246 |
|
|
|
23 |
|
|
|
269 |
|
|
|
|
67 |
|
|
|
336 |
|
| Interest income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
99 |
|
|
|
99 |
|
| Interest expense |
|
|
(74 |
) |
|
|
(3 |
) |
|
|
(77 |
) |
|
|
|
(98 |
) |
|
|
(175 |
) |
| Interest expense-financing fees |
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
|
|
|
(60 |
) |
|
|
(61 |
) |
| Depreciation and amortization |
|
|
1,710 |
|
|
|
334 |
|
|
|
2,044 |
|
|
|
|
65 |
|
|
|
2,109 |
|
| Segment income (loss) before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
(6,685 |
) |
|
|
)(13) |
| Income tax benefit |
|
|
(236 |
) |
|
|
(133 |
) |
|
|
(369 |
) |
|
|
|
(9 |
) |
|
|
(378 |
) |
| Segment income (loss) |
|
|
1,767 |
|
|
|
1,698 |
|
|
|
3,465 |
|
|
|
|
(6,676 |
) |
|
|
(3,211 |
) |
| Segment assets (1) |
|
|
37,918 |
|
|
|
8,473 |
(8) |
|
|
46,391 |
|
|
|
|
24,507 |
(5) |
|
|
70,898 |
|
| Expenditures for segment assets (net) |
|
|
866 |
|
|
|
157 |
|
|
|
1,023 |
|
|
|
|
— |
|
|
|
1,023 |
(7) |
| Total debt |
|
|
482 |
|
|
|
5 |
|
|
|
487 |
|
|
|
|
552 |
|
|
|
1,039 |
(6) |
Segment Reporting as of and for the year ended
December 31, 2021
| |
|
Treatment |
|
|
Services |
|
|
Medical |
|
|
Segments
Total |
|
|
Corporate (2) |
|
|
Consolidated
Total |
|
| Revenue from external customers |
|
$ |
32,992 |
|
|
$ |
39,199 |
|
|
|
— |
|
|
$ |
72,191 |
(3)(4) |
|
$ |
— |
|
|
$ |
72,191 |
|
| Intercompany revenues |
|
|
1,265 |
|
|
|
47 |
|
|
|
— |
|
|
|
1,312 |
|
|
|
— |
|
|
|
— |
|
| Gross profit |
|
|
6,718 |
|
|
|
106 |
|
|
|
— |
|
|
|
6,824 |
|
|
|
— |
|
|
|
6,824 |
|
| Research and development |
|
|
221 |
|
|
|
71 |
|
|
|
414 |
|
|
|
706 |
|
|
|
40 |
|
|
|
746 |
|
| Interest income |
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
25 |
|
|
|
26 |
|
| Interest expense |
|
|
(100 |
) |
|
|
(10 |
) |
|
|
— |
|
|
|
(110 |
) |
|
|
(137 |
) |
|
|
(247 |
) |
| Interest expense-financing fees |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
(40 |
) |
|
|
(41 |
) |
| Depreciation and amortization |
|
|
1,306 |
|
|
|
353 |
|
|
|
— |
|
|
|
1,659 |
|
|
|
28 |
|
|
|
1,687 |
|
| Segment income (loss) before income taxes |
|
|
|
|
|
) |
|
|
)(11)(12)
|
|
|
) |
|
|
(561 |
)(9)(11)
|
|
|
) |
| Income tax (benefit) expense |
|
|
(150 |
) |
|
|
(962 |
) |
|
|
26 |
|
|
|
(1,086 |
) |
|
|
(2,804 |
) |
|
|
(3,890 |
)(10)
|
| Segment income (loss) |
|
|
2,433 |
|
|
|
(2,082 |
) |
|
|
(1,502 |
) |
|
|
(1,151 |
) |
|
|
2,243 |
|
|
|
1,092 |
|
| Segment assets(1) |
|
|
37,050 |
|
|
|
15,244 |
(8) |
|
|
48 |
|
|
|
52,342 |
|
|
|
24,959 |
(5) |
|
|
77,301 |
|
| Expenditures for segment assets (net) |
|
|
1,363 |
|
|
|
205 |
|
|
|
— |
|
|
|
1,568 |
|
|
|
9 |
|
|
|
1,577 |
(7) |
| Total debt |
|
|
25 |
|
|
|
14 |
|
|
|
— |
|
|
|
39 |
|
|
|
954 |
|
|
|
993 |
(6) |
| (1) |
Segment assets have been adjusted for intercompany accounts
to reflect actual assets for each segment. |
| |
|
| (2) |
Amounts reflect the activity for corporate headquarters not
included in the segment information. |
| |
|
| (3) |
The Company performed services relating to waste generated
by government clients (domestic and foreign (primarily Canadian)), either directly as a prime contractor or indirectly for others as
a subcontractor to government entities, representing approximately 60,030,000 or 85.0% of total revenue for 2022 and 60,812,000 or 84.2%
of total revenue for 2021. The following reflects such revenue generated by our two segments: |
| (4) |
The
following table reflects revenue based on customer location: |
| (5) |
Amount
includes assets from our discontinued operations of $96,000 and $96,000 at December 31, 2022
and 2021, respectively. |
| (6) |
Net
of debt issuance costs of ($88,000) and ($112,000) for 2022 and 2021, respectively (see “Note
10 – “Long-Term Debt” for additional information). |
| (7) |
Net
of financed amount of $114,000 and $585,000 for the year ended December 31, 2022 and 2021,
respectively. |
| (8) |
Includes
long-lived asset (net) for our PF Canada, Inc. subsidiary of $0 and $25,000 for the year
ended December 31, 2022 and 2021, respectively. |
| (9) |
Amount
includes approximately $5,381,000 of “Gain on extinguishment of debt” recorded
in connection with the Company’s PPP Loan which was forgiven by the SBA effective June
15, 2021 (see “Note 11 – Coronavirus Aid, Relief and Economic Securities Act
(“CARES ACT”) – Paycheck Protection Program (“PPP”) Loan”
for information of this loan forgiveness). |
| (10) |
Includes
tax benefit recorded in amount of approximately $2,351,000 resulting from release of valuation
allowance on the Company’s deferred tax assets. |
| (11) |
Includes
elimination of gain/loss of $2,537,000 in debt forgiveness between PFM Poland and the Company
(see “Note 15 – PF Medical” for a discussion of this debt forgiveness). |
| (12) |
Amount
includes a “Loss on deconsolidation of subsidiary” recorded in the amount of
approximately $1,062,000 resulting from the sale of PFM Poland (see “Note 15 –
PF Medical” for a discussion of this loss). |
| (13) |
Includes
approximately $1,975,000 recorded as other income under the Employee Retention Credit program
under the CARES Act, as amended (see “Note 11 – Coronavirus Aid, Relief and Economic
Securities Act (“CARES ACT”) – Employee Retention Credit (“ERC”)”
for a discussion of this expected refund amount). |
SCHEDULE OF REVENUE BY MAJOR CUSTOMERS BY REPORTING SEGMENTS
| |
|
2022 |
|
|
2021 |
|
| |
|
Treatment |
|
|
Services |
|
|
Total |
|
|
Treatment |
|
|
Services |
|
|
Total |
|
| Domestic government |
|
$ |
23,752 |
|
|
$ |
35,906 |
|
|
$ |
59,658 |
|
|
$ |
22,538 |
|
|
$ |
29,013 |
|
|
$ |
51,551 |
|
| Foreign government |
|
|
574 |
|
|
|
(202 |
) |
|
|
372 |
|
|
|
577 |
|
|
|
8,684 |
|
|
|
9,261 |
|
| Total |
|
$ |
24,326 |
|
|
$ |
35,704 |
|
|
$ |
60,030 |
|
|
$ |
23,115 |
|
|
$ |
37,697 |
|
|
$ |
60,812 |
|
| (4) |
The
following table reflects revenue based on customer location: |
SCHEDULE
OF REVENUE BASED ON CUSTOMER LOCATION
| |
|
2022 |
|
|
2021 |
|
| United States |
|
$ |
69,373 |
|
|
$ |
62,257 |
|
| Canada |
|
|
406 |
|
|
|
9,277 |
|
| Germany |
|
|
678 |
|
|
|
567 |
|
| Italy |
|
|
14 |
|
|
|
— |
|
| United Kingdom |
|
|
128 |
|
|
|
90 |
|
| Total |
|
$ |
70,599 |
|
|
$ |
72,191 |
|
| (5) |
Amount
includes assets from our discontinued operations of $96,000 and $96,000 at December 31, 2022
and 2021, respectively. |
| (6) |
Net
of debt issuance costs of ($88,000) and ($112,000) for 2022 and 2021, respectively (see “Note
10 – “Long-Term Debt” for additional information). |
| (7) |
Net
of financed amount of $114,000 and $585,000 for the year ended December 31, 2022 and 2021,
respectively. |
| (8) |
Includes
long-lived asset (net) for our PF Canada, Inc. subsidiary of $0 and $25,000 for the year
ended December 31, 2022 and 2021, respectively. |
| (9) |
Amount
includes approximately $5,381,000 of “Gain on extinguishment of debt” recorded
in connection with the Company’s PPP Loan which was forgiven by the SBA effective June
15, 2021 (see “Note 11 – Coronavirus Aid, Relief and Economic Securities Act
(“CARES ACT”) – Paycheck Protection Program (“PPP”) Loan”
for information of this loan forgiveness). |
| (10) |
Includes
tax benefit recorded in amount of approximately $2,351,000 resulting from release of valuation
allowance on the Company’s deferred tax assets. |
| (11) |
Includes
elimination of gain/loss of $2,537,000 in debt forgiveness between PFM Poland and the Company
(see “Note 15 – PF Medical” for a discussion of this debt forgiveness). |
| (12) |
Amount
includes a “Loss on deconsolidation of subsidiary” recorded in the amount of
approximately $1,062,000 resulting from the sale of PFM Poland (see “Note 15 –
PF Medical” for a discussion of this loss). |
| (13) |
Includes
approximately $1,975,000 recorded as other income under the Employee Retention Credit program
under the CARES Act, as amended (see “Note 11 – Coronavirus Aid, Relief and Economic
Securities Act (“CARES ACT”) – Employee Retention Credit (“ERC”)”
for a discussion of this expected refund amount). |
|