UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

Form 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

 

  For the quarterly period ended June 30, 2020  

 

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. 111596  

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

(State or other jurisdiction

of incorporation or organization)

58-1954497

(IRS Employer Identification Number)

 

   

8302 Dunwoody Place, Suite 250, Atlanta, GA

(Address of principal executive offices)

30350

(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
Preferred Stock Purchase Rights   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 [X] 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 [X] 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 [X] 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 [X]

 

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, 2020
Common Stock, $.001 Par Value   12,144,721 shares

 

 

 

   
   

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

 

INDEX

 

    Page No.
PART I FINANCIAL INFORMATION  
     
  Item 1. Consolidated Financial Statements  
       
    Consolidated Balance Sheets - June 30, 2020 and December 31, 2019 1
       
    Consolidated Statements of Operations - Three and Six Months Ended June 30, 2020 and 2019 3
       
    Consolidated Statements of Comprehensive Income (Loss) - Three and Six Months Ended June 30, 2020 and 2019 4
       
    Consolidated Statements of Stockholders’ Equity -Six Months Ended June 30, 2020 and 2019 5
       
    Consolidated Statements of Cash Flows -Six Months Ended June 30, 2020 and 2019 6
       
    Notes to Consolidated Financial Statements 7
       
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27
       
  Item 3. Quantitative and Qualitative Disclosures About Market Risk 40
       
  Item 4. Controls and Procedures 41
       
PART II OTHER INFORMATION  
       
  Item 1. Legal Proceedings 41
       
  Item 1A. Risk Factors 41
       
  Item 6. Exhibits 42

 

   
   

 

PART I - FINANCIAL INFORMATION

ITEM 1. – Financial Statements

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Consolidated Balance Sheets

 

   June 30,   December 31, 
   2020   2019 
(Amounts in Thousands, Except for Share and Per Share Amounts)  (Unaudited)   (Audited) 
         
ASSETS          
Current assets:          
Cash  $5,630   $390 
Accounts receivable, net of allowance for doubtful accounts of $426 and $487, respectively   10,806    13,178 
Unbilled receivables   11,069    7,984 
Inventories   548    487 
Prepaid and other assets   2,761    2,983 
Current assets related to discontinued operations   124    104 
Total current assets   30,938    25,126 
           
Property and equipment:          
Buildings and land   20,045    19,967 
Equipment   21,463    20,068 
Vehicles   457    410 
Leasehold improvements   23    23 
Office furniture and equipment   1,431    1,418 
Construction-in-progress   1,524    1,609 
Total property and equipment   44,943    43,495 
Less accumulated depreciation   (27,501)   (26,919)
Net property and equipment   17,442    16,576 
           
Property and equipment related to discontinued operations   81    81 
           
Operating lease right-of-use assets   2,419    2,545 
           
Intangibles and other long term assets:          
Permits   8,850    8,790 
Other intangible assets - net   999    1,065 
Finite risk sinking fund (restricted cash)   11,390    11,307 
Other assets   753    989 
Other assets related to discontinued operations   —    36 
Total assets  $72,872   $66,515 

 

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

 

 1 
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Consolidated Balance Sheets, Continued

 

   June 30,   December 31, 
   2020   2019 
(Amounts in Thousands, Except for Share and Per Share Amounts)  (Unaudited)   (Audited) 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable  $11,560   $9,277 
Accrued expenses   5,794    6,118 
Disposal/transportation accrual   1,129    1,156 
Deferred revenue   3,699    5,456 
Accrued closure costs - current   82    84 
Current portion of long-term debt   1,730    1,300 
Current portion of operating lease liabilities   258    244 
Current portion of finance lease liabilities   444    471 
Current liabilities related to discontinued operations   928    994 
Total current liabilities   25,624    25,100 
           
Accrued closure costs   6,125    5,957 
Deferred tax liabilities   595    590 
Long-term debt, less current portion   6,547    2,580 
Long-term operating lease liabilities, less current portion   2,209    2,342 
Long-term finance lease liabilities, less current portion   375    466 
Long-term liabilities related to discontinued operations   248    244 
Other long-term liabilities   393    — 
Total long-term liabilities   16,492    12,179 
           
Total liabilities   42,116    37,279 
           
Commitments and Contingencies (Note 10)          
           
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; 12,142,771 and 12,123,520 shares issued, respectively; 12,135,129 and 12,115,878 shares outstanding, respectively   12    12 
Additional paid-in capital   108,659    108,457 
Accumulated deficit   (75,891)   (77,315)
Accumulated other comprehensive loss   (262)   (211)
Less Common Stock in treasury, at cost; 7,642 shares   (88)   (88)
Total Perma-Fix Environmental Services, Inc. stockholders’ equity   32,430    30,855 
Non-controlling interest   (1,674)   (1,619)
Total stockholders’ equity   30,756    29,236 
           
Total liabilities and stockholders’ equity  $72,872   $66,515 

 

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

 

 2 
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Consolidated Statements of Operations

(Unaudited)

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
(Amounts in Thousands, Except for Per Share Amounts)  2020   2019   2020   2019 
                 
Net revenues  $22,047   $17,135   $46,907   $28,843 
Cost of goods sold   18,737    13,864    38,957    23,071 
Gross profit   3,310    3,271    7,950    5,772 
                     
Selling, general and administrative expenses   2,700    2,705    5,627    5,603 
Research and development   209    223    441    450 
(Gain) loss on disposal of property and equipment   (4)   (1)   27    (1)
Income (loss) from operations   405    344    1,855    (280)
                     
Other income (expense):                    
Interest income   28    107    84    188 
Interest expense   (99)   (107)   (219)   (194)
Interest expense-financing fees   (60)   (60)   (129)   (70)
Other   4    95    9    224 
Loss on extinguishment of debt   (27)   —    (27)   — 
Income (loss) from continuing operations before taxes   251    379    1,573    (132)
Income tax (benefit) expense   (9)   6    5    45 
Income (loss) from continuing operations, net of taxes   260    373    1,568    (177)
                     
Loss from discontinued operations (net of taxes of $0)   (85)   (115)   (199)   (267)
Net income (loss)   175    258    1,369    (444)
                     
Net loss attributable to non-controlling interest   (29)   (31)   (55)   (61)
                     
Net income (loss) attributable to Perma-Fix Environmental Services, Inc. common stockholders  $204   $289   $1,424   $(383)
                     
Net income (loss) per common share attributable to Perma-Fix Environmental Services, Inc. stockholders - basic and diluted:                    
Continuing operations  $.02   $.03   $.13   $(.01)
Discontinued operations   —    (.01)   (.01)   (.02)
Net income (loss) per common share  $.02   $.02   $.12   $(.03)
                     
Number of common shares used in computing net income (loss) per share:                    
Basic   12,135    12,054    12,129    12,008 
Diluted   12,286    12,122    12,320    12,008 

 

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

 

 3 
 

 

. PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
(Amounts in Thousands)  2020   2019   2020   2019 
                 
Net income (loss)  $175   $258   $1,369   $(444)
Other comprehensive income (loss):                    
Foreign currency translation gain (loss)   28    (4)   (51)   8 
                     
Comprehensive income (loss)   203    254    1,318    (436)
Comprehensive loss attributable to non-controlling interest   (29)   (31)   (55)   (61)
Comprehensive income (loss) attributable to Perma-Fix                    
Environmental Services, Inc. stockholders  $232   $285   $1,373   $(375)

 

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

 

 4 
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC

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   Non-controlling Interest in   Accumulated   Total Stockholders' 
   Shares   Amount   Capital   Treasury   Loss   Subsidiary   Deficit   Equity 
Balance at December 31, 2019   12,123,520   $12   $108,457   $(88)  $(211)  $(1,619)  $(77,315)  $29,236 
Net Income (loss)   —     —     —     —     —     (26)   1,220    1,194 
Foreign currency translation   —     —     —     —     (79)   —      —     (79)
Issuance of Common Stock upon exercise of options   3,643    —     6    —     —     —      —     6 
Issuance of Common Stock for services   5,128    —     48    —     —     —      —     48 
Stock-Based Compensation   —     —     44    —     —     —     —     44 
Balance at March 31, 2020   12,132,291   $12   $108,555   $(88)  $(290)  $(1,645)  $(76,095)  $30,449 
Net Income (loss)   —     —     —      —     —     (29)   204    175 
Foreign currency translation   —     —     —      —     28    —     —     28 
Issuance of Common Stock upon exercise of options   241    —     —      —     —     —     —     —  
Issuance of Common Stock for services   10,239    —     56    —     —     —     —     56 
Stock-Based Compensation   —     —     48    —     —     —     —     48 
Balance at June 30, 2020   12,142,771   $12   $108,659   $(88)  $(262)  $(1,674)  $(75,891)  $30,756 
                                         
Balance at December 31, 2018   11,944,215   $12   $107,548   $(88)  $(214)  $(1,495)  $(79,630)  $26,133 
Net loss   —     —     —      —     —     (30)   (672)   (702)
Foreign currency translation   —     —     —      —     12    —     —     12 
Issuance of Common Stock for services   24,964    —     60    —     —     —     —     60 
Stock-Based Compensation   —     —     48    —     —     —     —      48 
Balance at March 31, 2019   11,969,179   $12   $107,656   $(88)  $(202)  $(1,525)  $(80,302)  $25,551 
Net income (loss)   —     —     —      —     —     (31)   289    258 
Foreign currency translation   —     —     —      —     (4)   —     —     (4)
Issuance of Common Stock for services   17,902    —     62    —     —     —     —     62 
Stock-Based Compensation   —     —     36    —     —     —     —     36 
Issuance of Common Stock with debt   75,000    —     263    —     —     —     —     263 
Issuance of warrant with debt   —     —     93    —     —     —     —     93 
Balance at June 30, 2019   12,062,081   $12    $108,110   $(88)  $(206)  $(1,556)  $(80,013)  $26,259 

 

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

 

 5 
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Consolidated Statements of Cash Flows

(Unaudited)

 

   Six Months Ended 
   June 30, 
(Amounts in Thousands)  2020   2019 
Cash flows from operating activities:          
Net income (loss)  $1,369   $(444)
Less: loss from discontinued operations, net of taxes of $0   (199)   (267)
           
Income (loss) from continuing operations, net of taxes   1,568    (177)
Adjustments to reconcile income (loss) from continuing operations to cash provided by (used in) operating activities:          
Depreciation and amortization   711    641 
Interest on finance lease with purchase option   4    — 
Loss on extinguishment of debt   27    — 
Amortization of debt discount/debt issuance costs   129    67 
Deferred tax expense   5    7 
(Recovery of) provision for bad debt reserves   (107)   37 
Loss (gain) on disposal of property and equipment   27    (1)
Issuance of common stock for services   104    122 
Stock-based compensation   92    84 
Changes in operating assets and liabilities of continuing operations          
Accounts receivable   2,479    (49)
Unbilled receivables   (3,085)   (3,053)
Prepaid expenses, inventories and other assets   714    281 
Accounts payable, accrued expenses and unearned revenue   289    1,178 
Cash provided by (used in) continuing operations   2,957    (863)
Cash used in discontinued operations   (259)   (334)
Cash provided by (used in) operating activities   2,698    (1,197)
           
Cash flows from investing activities:          
Purchases of property and equipment   (1,366)   (312)
Proceeds from sale of property and equipment   4    32 
Cash used in investing activities of continuing operations   (1,362)   (280)
Cash provided by investing activities of dicontinued operations   13    44 
Cash used in investing activities   (1,349)   (236)
           
Cash flows from financing activities:          
Repayments of revolving credit borrowings   (47,058)   (23,816)
Borrowing on revolving credit   46,737    23,177 
Proceeds from issuance of long-term debt   5,666    2,500 
Proceeds from finance leases   —    120 
Principal repayments of finance lease liabilities   (229)   (101)
Principal repayments of long term debt   (1,045)   (610)
Payment of debt issuance costs   (85)   (90)
Proceeds from issuance of common stock upon exercise of options   6    — 
Cash provided by financing activities of continuing operations   3,992    1,180 
           
Effect of exchange rate changes on cash   (18)   15 
           
Increase (decrease) in cash and finite risk sinking fund (restricted cash)   5,323    (238)
Cash and finite risk sinking fund (restricted cash) at beginning of period   11,697    16,781 
Cash and finite risk sinking fund (restricted cash) at end of period  $17,020   $16,543 
           
Supplemental disclosure:          
Interest paid  $207   $184 
Income taxes paid   30    121 
Equipment purchase subject to finance lease   132    22 
Issuance of Common Stock with debt   —    263 
Issuance of Warrant with debt   —    93 

 

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

 

 6 
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Notes to Consolidated Financial Statements

June 30, 2020

(Unaudited)

 

Reference is made herein to the notes to consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019.

 

1. Basis of Presentation

 

The 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 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, 2020 are not necessarily indicative of results to be expected for the fiscal year ending December 31, 2020.

 

The Company suggests that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

 

The consolidated financial statements include our accounts, those of our wholly-owned subsidiaries, and our majority-owned Polish subsidiary, Perma-Fix Medical. Additionally, the Company’s financial statements include the account of a variable interest entity (“VIE”), Perma-Fix ERRG for which we are the primary beneficiary (See “Note 14 - VIE” for a discussion of this VIE).

 

2. Summary of Significant Accounting Policies

 

Our accounting policies are as set forth in the notes to the December 31, 2019 consolidated financial statements referred to above.

 

Recently Adopted Accounting Standards

 

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 improves the disclosure requirements on fair value measurements. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of ASU No. 2018-13 by the Company effective January 1, 2020 did not have a material impact on the Company’s financial statements or disclosures.

 

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (“ASU 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference London Interbank Offered Rate (“LIBOR”) or another rate that is expected to be discontinued. The amendments in the ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The adoption of ASU 2020-04 on March 12, 2020 by the Company did not have a material impact on the Company’s financial statements. The Company will continue to assess the potential impact of this ASU through the effective period.

 

 7 
 

 

Recently Issued Accounting Standards – Not Yet Adopted

 

In June 2016, the FASB issued ASU No. 2016-13, “Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance: ASU 2018-19 “Codification Improvements to Topic 326, Financial Instruments - Credit Losses,” ASU 2019-04 “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” ASU 2019-05 “Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief,” ASU 2019-11 “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” and ASU 2020-02, “Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842)” (collectively, “Topic 326”). Topic 326 introduces an approach, based on expected losses, to estimate credit losses on certain types of financial instruments and modifies the impairment model for available-for-sale debt securities. The new approach to estimating credit losses (referred to as the current expected credit losses model) applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables and loans. Entities are required to apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. These ASUs are effective January 1, 2023 for the Company as a smaller reporting company. The Company had expected to early adopt theses ASUs effective January 1, 2020; however, due to the need for reallocation of the Company’s resources to manage COVID-19 related matters, the Company has deferred adoption of theses ASUs effective January 1, 2020 and expect to adopt these ASUs by January 1, 2023.

 

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its financial statements and related disclosures.

 

In January 2020, the FASB issued ASU 2020-01, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” This guidance addresses accounting for the transition into and out of the equity method and provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

 

3. COVID-19 Impact

 

The spread of COVID-19 continues to result in significant volatility in the U.S. and international markets. The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business. As previously reported, the COVID-19 pandemic did not result in a material impact to the Company’s first quarter 2020 results of operations; however, the Company’s second quarter results of operations were impacted by the shutdown of a number of projects and the delays of certain waste shipments which began in late March 2020 that continued into the second quarter of 2020. As states began to lift stay-at-home orders, along with certain other restrictions since the start of the pandemic, in the latter part of the second quarter of 2020, the Company was able to restart on a number, but not all, of the projects that were previously shutdown. Despite these project shutdowns, revenues within our Services Segment in the second quarter of 2020 exceeded the corresponding period of 2019 by approximately $7,166,000. The Company continues to experience some delays in waste shipments from certain customers within our Treatment Segment due to the planning time that is required by these customers to restart waste shipments as they return to work on-site. These continued project shutdowns and waste shipment delays may impact the Company’s results of operations for the third quarter of 2020 and potentially the remainder of fiscal year 2020.

 

 8 
 

 

At this time, the Company believes it has sufficient liquidity on hand to continue business operations during the next twelve months. At June 30, 2020, the Company had cash on hand of approximately $5,630,000 and borrowing availability under our revolving credit facility of $12,330,000 based on a percentage of eligible receivables and subject to certain reserves. The Company’s cash at June 30, 2020 included proceeds received from a loan in the amount of approximately $5,666,000 (“PPP Loan”) in April 2020 under the Paycheck Protection Program (“PPP”) that was established under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). On June 5, 2020, the Paycheck Protection Program Flexibility Act of 2020 (the “Flexibility Act”) was signed into law, amending the CARES Act (see “Note 9 – Long Term Debt –PPP Loan” for further detail of this loan. Additionally, see “Note 16 – Subsequent Event – PPP Loan” for the discussion of the repayment of approximately $327,000 of the PPP Loan the Company made on July 9, 2020). The Company continues to assess reducing operating costs during this volatile time, which include curtailing capital expenditures, eliminating non-essential expenditures and implementing a hiring freeze as needed.

 

The Company is closely monitoring our customers’ payment performance. However, as a significant portion of our revenues is derived from government related contracts, the Company does not expect its accounts receivable collections to be materially impacted due to COVID-19.

 

The situation surrounding COVID-19 continues to remain fluid. The potential for a material impact on the Company’s business increases the longer COVID-19 impacts the level of economic activities in the United States and globally as our customers may continue to delay waste shipments and project work may shut down again. For this reason, we cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on our results of operations, financial position, and liquidity which may impact our ability to meet our financial covenant requirements under our credit facility. Given the current economic environment and the market volatility from COVID-19, the Company considered whether these events or changes in circumstances triggered the need for an interim impairment analysis of our long-lived assets and intangible assets. Based on the Company’s assessment of the impact of these conditions on our business, the Company determined there was no triggering event as of June 30, 2020. However, as the effects of the COVID-19 pandemic continue to evolve, the Company will continue to assess the need to perform interim impairment tests of our long-lived assets and intangible assets.

 

The CARES Act, as amended, among other things, includes modifications to net operating loss carryforwards, corporate alternative minimum tax (“AMT”) provisions, net interest expense deduction, and deferment of social security tax payments. The Company elected to defer payment of its shares of social security taxes starting in April 2020 (see “Note 15 – Deferral of Employment Tax Deposits”). The Company continues to evaluate the provisions of the CARES Act, as amended, and how certain other elections may impact our financial position, results of operations, and disclosures, if elected.

 

4. 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 
   June 30, 2020   June 30, 2019 
   Treatment   Services   Total   Treatment   Services   Total 
Fixed price  $7,840   $5,751   $13,591   $10,094   $2,709   $12,803 
Time and materials    ―    8,456    8,456     ―    4,332    4,332 
Total  $7,840   $14,207   $22,047   $10,094   $7,041   $17,135 

 

 9 
 

 

Revenue by Contract Type                        
(In thousands)  Six Months Ended   Six Months Ended 
   June 30, 2020   June 30, 2019 
   Treatment   Services   Total   Treatment   Services   Total 
Fixed price  $17,403   $8,698   $26,101   $19,999   $3,137   $23,136 
Time and materials    ―    20,806    20,806     ―    5,707    5,707 
Total  $17,403   $29,504   $46,907   $19,999   $8,844   $28,843 

 

Revenue by generator                        
(In thousands)  Three Months Ended   Three Months Ended 
   June 30, 2020   June 30, 2019 
   Treatment   Services   Total   Treatment   Services   Total 
Domestic government  $6,055   $12,791   $18,846   $6,537   $4,842   $11,379 
Domestic commercial   1,785    431    2,216    3,395    855    4,250 
Foreign government    ―    965    965    162    1,323    1,485 
Foreign commercial    ―    20    20     ―    21    21 
Total  $7,840   $14,207   $22,047   $10,094   $7,041   $17,135 

 

Revenue by generator                        
(In thousands)  Six Months Ended   Six Months Ended 
   June 30, 2020   June 30, 2019 
   Treatment   Services   Total   Treatment   Services   Total 
Domestic government  $13,745   $26,589   $40,334   $14,449   $5,529   $19,978 
Domestic commercial   3,658    893    4,551    5,274    1,613    6,887 
Foreign government    ―    1,979    1,979    220    1,659    1,879 
Foreign commercial    ―    43    43    56    43    99 
Total  $17,403   $29,504   $46,907   $19,999   $8,844   $28,843 

 

Contract Balances

 

The timing of revenue recognition, billings, and cash collections results in accounts receivable and unbilled receivables (contract assets). The Company’s contract liabilities consist of deferred revenues which represents advance payment from customers in advance of the completion of our performance obligation.

 

The following table represents changes in our contract assets and contract liabilities balances:

 

           Year-to-date   Year-to-date 
(In thousands)  June 30, 2020   December 31, 2019   Change ($)   Change (%) 
Contract assets                    
Account receivables, net of allowance  $10,806   $13,178   $(2,372)   (18.0)%
Unbilled receivables - current   11,069    7,984    3,085    38.6%
                     
Contract liabilities                    
Deferred revenue  $3,699   $5,456   $(1,757)   (32.2)%

 

During the three and six months ended June 30, 2020, the Company recognized revenue of $2,516,000 and $6,539,000, respectively, related to untreated waste that was in the Company’s control as of the beginning of each respective year. During the three and six months ended June 30, 2019, the Company recognized revenue of $2,865,000 and $7,442,000, respectively, related to untreated waste that was in the Company’s control as of the beginning of each respective year. Revenue recognized in each period related to performance obligations satisfied within the respective period.

 

Remaining Performance Obligations

 

The Company applies the practical expedient in FASB 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.

 

 10 
 

 

5. Leases

 

The Company’s operating lease right-of-use (“ROU”) assets and operating lease liabilities represent primarily leases for office spaces used to conduct our business. These leases have remaining terms of approximately 4 to 10 years which include one or more options to renew, with renewal terms from 3 years to 8 years (which are included in valuing our ROU assets and liabilities). As most of our operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate as the discount rate when determining the present value of the lease payments. The incremental borrowing rate is determined based on the Company’s secured borrowing rate, lease terms and current economic environment. Some of our operating leases include both lease (rent payments) and non-lease components (maintenance costs such as cleaning and landscaping services). The Company has elected the practical expedient to account for lease component and non-lease component as a single component for all leases. Lease expense for operating leases is recognized on a straight-line basis over the lease term.

 

Finance leases primarily consist of processing and transport equipment used by our facilities’ operations. Our finance leases also includes a building with land for our waste treatment operations. The Company’s finance leases generally have terms between one to three years and most of the leases include options to purchase the underlying assets at fair market value at the conclusion of the lease term. The lease for the building and land has a term of two year with option to buy at the end of the lease term which the Company is reasonably certain exercise.

 

The Company adopted the policy to not recognize ROU assets and liabilities for short term leases.

 

The components of lease cost for the Company’s leases for the three and six months ended June 30, 2020 and 2019 were as follows (in thousands):

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2020   2019   2020   2019 
                 
Operating Leases:                    
Lease cost  $114   $124   $228   $228 
                     
Finance Leases:                    
Amortization of ROU assets   26    10    52    19 
Interest on lease liability   29    13    50    25 
    55    23    102    44 
                     
Short-term lease rent expense   1    23    4    72 
                     
Total lease cost   170    170    334    344 

 

The weighted average remaining lease term and the weighted average discount rate for operating and finance leases at June 30, 2020 were:

 

   Operating Leases   Finance Leases 
Weighted average remaining lease terms (years)   8.4    1.5 
           
Weighted average discount rate   8.0%   11.0%

 

 11 
 

 

The following table reconciles the undiscounted cash flows for the operating and finance leases at June 30, 2020 to the operating and finance lease liabilities recorded on the balance sheet (in thousands):

 

   Operating Leases   Finance Leases 
2020 Remainder  $222   $365 
2021   450    405 
2022   458    123 
2023   466    2 
2024   342   ― 
2025 and thereafter   1,457   ― 
Total undiscounted lease payments   3,395    895 
Less: Imputed interest   (928)   (76)
Present value of lease payments  $2,467   $819 
          
Current portion of operating lease obligations  $258   $― 
Long-term operating lease obligations, less current portion  $2,209   $― 
Current portion of finance lease obligations  $―   $444 
Long-term finance lease obligations, less current portion  $―   $375 

 

Supplemental cash flow and other information related to our leases were as follows for the three and six months ended June 30, 2020 and 2019 (in thousands):

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2020   2019   2020   2019 
Cash paid for amounts included in the measurement                    
of lease liabilities:                    
Operating cash flow used in operating leases  $110   $119   $220   $217 
Operating cash flow used in finance leases  $29   $13   $50   $25 
Financing cash flow used in finance leases  $128   $57   $229   $101 
                     
ROU assets obtained in exchange for lease obligations for:                    
Finance liabilities  $41   $―      $123   $138 
Operating liabilities  $ ―       182    ―      182 

 

6. Intangible Assets

 

The following table summarizes information relating to the Company’s definite-lived intangible assets:

 

   Weighted Average   June 30, 2020   December 31, 2019 
   Amortization   Gross       Net   Gross       Net 
   Period   Carrying   Accumulated   Carrying   Carrying   Accumulated   Carrying 
   (Years)   Amount   Amortization   Amount   Amount   Amortization   Amount 
Intangibles (amount in thousands)                            
Patent   11   $797   $(368)  $429   $760   $(358)  $402 
Software   3    420    (409)   11    414    (408)   6 
Customer relationships   10    3,370    (2,811)   559    3,370    (2,713)   657 
Total       $4,587   $(3,588)  $999   $4,544   $(3,479)  $1,065 

 

The intangible assets noted above are amortized on a straight-line basis over their useful lives with the exception of customer relationships which are being amortized using an accelerated method.

 

 12 
 

 

The following table summarizes the expected amortization over the next five years for our definite-lived intangible assets:

 

Year 

Amount

(In thousands)

 
     
2020(remaining)  $    112 
2021   202 
2022   175 
2023   132 
2024   10 

 

Amortization expenses relating to the definite-lived intangible assets as discussed above were $55,000 and $109,000 for the three and six months ended June 30, 2020, respectively, and $61,000 and $134,000 for the three and six months ended June 30, 2019, respectively.

 

7. Capital Stock, Stock Plans and Stock Based Compensation

 

The Company has certain stock option plans under which it may award incentive stock options (“ISOs”) and/or non-qualified stock options (“NQSOs”) to employees, officers, outside directors, and outside consultants.

 

On February 4, 2020, the Company granted 6,000 NQSOs from the Company’s 2003 Outside Directors Stock Plan (“2003 Plan”) to a new director elected by the Company’s Board of Directors (“Board”) to fill a vacancy on the Board. The options granted were for a contractual term of ten years with a vesting period of six months. The exercise price of the options was $7.00 per share, which was equal to the Company’s closing stock price per share the day preceding the grant date, pursuant to the 2003 Plan.

 

On January 17, 2019 the Company granted 105,000 ISOs from the 2017 Stock Option Plan (“2017 Plan”) to certain employees, which included our executive officers as follows: 25,000 ISOs to our Chief Executive Officer (“CEO”); 15,000 ISOs to our Chief Financial Officer (“CFO”); and 15,000 ISOs to our Executive Vice President (“EVP”) of Strategic Initiatives. The ISOs granted were for a contractual term of six years with one-fifth vesting annually over a five year period. The exercise price of the ISO was $3.15 per share, which was equal to the fair market value of the Company’s Common Stock per share on the date of grant.

 

The Company granted a NQSO to Robert Ferguson on July 27, 2017 from the Company’s 2017 Plan for the purchase of up to 100,000 shares of the Company’s Common Stock (“Ferguson Stock Option”) in connection with his work as a consultant to the Company’s Test Bed Initiative (“TBI”) at our Perma-Fix Northwest Richland, Inc. (“PFNWR”) facility at an exercise price of $3.65 per share, which was the fair market value of the Company’s Common Stock on the date of grant. The term of the Ferguson Stock Option is seven years from the grant date. The vesting of the Ferguson Stock Option is subject to the achievement of three separate milestones by certain dates. On January 17, 2019, the Company’s Compensation and Stock Option Committee (“Compensation Committee”) and Board approved an amendment to the Ferguson Stock Option whereby the vesting date for the second milestone for the purchase of up to 30,000 shares of the Company’s Common Stock was extended to March 31, 2020 from January 27, 2019. On March 27, 2020, the Compensation Committee and the Board approved another amendment to the Ferguson Stock Option whereby the vesting date for the second milestone was further extended to December 31, 2021 from March 31, 2020 and the vesting date for the third milestone for the purchase of up to 60,000 shares of the Company’s Common Stock was extended to December 31, 2022 from January 27, 2021. The 10,000 options under the first milestone were exercised by Robert Ferguson in May 2018. The Company has not recognized compensation costs (fair value of approximately $334,000 at June 30, 2020) for the remaining 90,000 Ferguson Stock Option under the remaining two milestones since achievement of the performance obligation under each of the two remaining milestones is uncertain at June 30, 2020. All other terms of the Ferguson Stock Option remain unchanged.

 

 13 
 

 

The Company estimates fair value of stock options using the Black-Scholes valuation model. Assumptions used to estimate the fair value of stock options granted include the exercise price of the award, the expected term, the expected volatility of the Company’s stock over the option’s expected term, the risk-free interest rate over the option’s expected term, and the expected annual dividend yield. The fair value of the options granted on February 4, 2020 and January 17, 2019 as discussed above and the related assumptions used in the Black-Scholes option model used to value the options granted were as follows:

 

   Outside Director Stock Options Granted   Employee Stock Option Granted 
   February 4, 2020   January 17, 2019 
Weighted-average fair value per option  $4.89   $1.42 
Risk -free interest rate (1)   1.61%   2.58%
Expected volatility of stock (2)   55.83%   48.67%
Dividend yield   None    None 
Expected option life (3)   10.0 years    5.0 years 

 

(1) The risk-free interest rate is based on the U.S. Treasury yield in effect at the grant date over the expected term of the option.

 

(2) The expected volatility is based on historical volatility from our traded Common Stock over the expected term of the option.

 

(3) The expected option life is based on historical exercises and post-vesting data.

 

The following table summarizes stock-based compensation recognized for the three and six months ended June 30, 2020 and 2019 for our employee and director stock options.

 

   Three Months Ended   Six Months Ended 
Stock Options  June 30,   June 30, 
   2020   2019   2020   2019 
Employee Stock Options  $33,000   $36,000   $65,000   $79,000 
Director Stock Options   15,000     ―    27,000    5,000 
Total  $48,000   $36,000   $92,000   $84,000 

 

At June 30, 2020, the Company has approximately $335,000 of total unrecognized compensation costs related to unvested options for employee and directors. The weighted average period over which the unrecognized compensation costs are expected to be recognized is approximately 2.6 years.

 

The summary of the Company’s total Stock Option Plans as of June 30, 2020 and June 30, 2019, and changes during the periods then ended, are presented below. The Company’s Plans consist of the 2010 Stock Option Plan, the 2017 Plans and the 2003 Plan:

 

   Shares   Weighted Average Exercise Price   Weighted Average Remaining Contractual Term (years)   Aggregate Intrinsic Value (3) 
Options outstanding January 1, 2020   681,300   $3.84           
Granted   6,000   $7.00          
Exercised   (12,500)  $3.47        $16,060 
Forfeited/expired   (20,000)  $3.45          
Options outstanding end of period (1)   654,800   $3.88    3.7   $1,685,031 
Options exercisable at June 30, 2020(1)   306,800   $4.20    3.6   $711,306 

 

 14 
 

 

   Shares   Weighted Average Exercise Price   Weighted Average Remaining Contractual Term (years)   Aggregate Intrinsic Value (3) 
Options outstanding January 1, 2019   616,000   $4.23           
Granted   105,000   $3.15           
Exercised     ─   $   ─              
Forfeited/expired   (13,000)  $3.43           
Options outstanding end of period (2)   708,000   $4.08    4.4   $209,318 
Options exercisable as of June 30, 2019(2)   430,000   $4.94    4.1   $43,518 

 

(1) Options with exercise prices ranging from $2.79 to $8.40

 

(2) Options with exercise prices ranging from $2.79 to $13.35

 

(3) The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price.

 

During the six months ended June 30, 2020, the Company issued a total of 15,367 shares of its Common Stock under the 2003 Plan to its outside directors as compensation for serving on our Board. The Company has recorded approximately $115,000 in compensation expenses (included in selling, general and administration (“SG&A”) expenses) in connection with the issuance of shares of its Common Stock to outside directors.

 

During the six months ended June 30, 2020, the Company issued 2,000 shares of its Common Stock resulting from the exercise of options from the Company’s 2017 Plan for total proceeds of $6,300. Additionally, the Company issued 1,884 shares of its Common Stock from cashless exercises of 8,000 and 2,500 options at $3.60 per share and $3.15 per share, respectively.

 

 15 
 

 

8. Income (Loss) Per Share

 

Basic income (loss) per share is calculated based on the weighted-average number of outstanding common shares during the applicable period. Diluted income (loss) per share is based on the weighted-average number of outstanding common shares plus the weighted-average number of potential outstanding common shares. In periods where they are anti-dilutive, such amounts are excluded from the calculations of dilutive earnings per share. The following table reconciles the income (loss) and average share amounts used to compute both basic and diluted income (loss) per share:

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   (Unaudited)   (Unaudited) 
(Amounts in Thousands, Except for Per Share Amounts)  2020   2019   2020   2019 
Net income (loss) attributable to Perma-Fix Environmental Services, Inc., common stockholders:                    
Income (loss) from continuing operations, net of taxes  $260   $373   $1,568   $(177)
Net loss attributable to non-controlling interest   (29)   (31)   (55)   (61)
Income (loss) from continuing operations attributable to Perma-Fix Environmental Services, Inc. common stockholders   289    404    1,623    (116)
Loss from discontinuing operations attributable to Perma-Fix Environmental Services, Inc. common stockholders   (85)   (115)   (199)   (267)
Net income (loss) attributable to Perma-Fix Environmental Services, Inc. common stockholders  $204   $289   $1,424   $(383)
                     
Basic income (loss) per share attributable to Perma-Fix Environmental Services, Inc. common stockholders  $.02   $.02   $.12   $(.03)
                     
Diluted income (loss) per share attributable to Perma-Fix Environmental Services, Inc. common stockholders  $.02   $.02   $.12   $(.03)
                     
Weighted average shares outstanding:                    
Basic weighted average shares outstanding   12,135    12,054    12,129    12,008 
Add: dilutive effect of stock options   134    68    171     ─ 
Add: dilutive effect of warrants   17     ─    20     ─ 
Diluted weighted average shares outstanding   12,286    12,122    12,320    12,008 
                     
Potential shares excluded from above weighted average share calcualtions due to their anti-dilutive effect include:                    
Stock options   38    113    38    186 
Warrant   ―    ―    ―    ― 

 


9. Long Term Debt

 

Long-term debt consists of the following at June 30, 2020 and December 31, 2019:

 

(Amounts in Thousands)  June 30, 2020   December 31, 2019 
Revolving Credit facility dated May 8, 2020, borrowings based upon eligible accounts receivable, subject to monthly borrowing base calculation, balance due on May 15, 2024, Effective interest rate for the first six months of 2020 was 6.1%. (1)  $―  $321 
Term Loan dated May 8, 2020, payable in equal monthly installments of principal, balance due on May 15, 2024. Effective interest rate for the first six months of 2020 was 6.0%. (1)   1,586(2)   1,827(2)
Promissory Note dated April 1, 2019, payable in twelve monthly installments of interest only, starting May 1, 2019 followed with twelve monthly installments of approximately $208 in principal plus accrued interest. Interest accrues at annual rate of 4.0%. (3)   999(4)   1,732(4)
Promissory Note dated April 14, 2020, subject to loan forgiveness, balance due April 14, 2022. Interest accrues at annual rate of 1.0%. (3)   5,666(5)   ―
Note Payable dated June 10, 2020, payable in 36 monthly installments, starting in July 2020 at annual interest rate of $5.64%.   26    ―
Total debt   8,277    3,880 
Less current portion of long-term debt   1,730(4)   1,300(4)
Long-term debt  $6,547   $2,580 

 

(1) Our revolving credit facility is collateralized by our accounts receivable and our term loan is collateralized by our property, plant, and equipment. Effective July 1, 2019, monthly installment principal payment on the Term Loan was amended to approximately $35,500 from approximately $101,600. See “Revolving Credit and Term Loan Agreement” below for terms of the Company’s credit facility prior to the New Loan Agreement dated May 8, 2020.

 

 16 
 

 

(2) Net of debt issuance costs of ($120,000) and ($92,000) at June 30, 2020 and December 31, 2019, respectively.

 

(3) Uncollateralized note.

 

(4) Net of debt discount/debt issuance costs of ($149,000) and ($248,000) at June 30, 2020 and December 31, 2019, respectively.

The Promissory Note provides for prepayment of principal over the term of the Note without penalty. In 2019, the Company made total prepayment of principal of $520,000 which was reflected in the current portion of the debt. During the first six months of 2020, the Company made total principal repayment of $832,000 of which $416,000 was prepaid. At June 30, 2020, outstanding balance of the loan are current.

 

(5) Entered into with the Company’s credit facility lender under the Paycheck Protection Program (see “PPP Loan” below for further information on this loan).

 

Revolving Credit and Term Loan Agreement

 

The Company entered into an Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated October 31, 2011 (“Amended Loan Agreement”), with PNC National Association (“PNC”), acting as agent and lender. The Amended Loan Agreement had been amended from time to time since the execution of the Amended Loan Agreement. The Amended Loan Agreement, as subsequently amended (“Revised Loan Agreement”), provided the Company with the following credit facility with a maturity date of March 24, 2021: (a) up to $12,000,000 revolving credit (“revolving credit”) and (b) a term loan (“term loan”) of approximately $6,100,000. The maximum that the Company can borrow under the revolving credit was based on a percentage of eligible receivables (as defined) at any one time reduced by outstanding standby letters of credit and borrowing reductions that our lender may impose from time to time.

 

Payment of annual rate of interest due on the revolving credit under the Revised Loan Agreement was at prime (3.25% at June 30, 2020) plus 2% and the term loan at prime plus 2.5%.

 

On May 8, 2020, the Company entered into a Second Amended and Restated Revolving Credit, Term Loan and Security Agreement (the “New Loan Agreement”) with PNC, replacing our previous Revised Loan Agreement with PNC. The New Loan Agreement provides the Company with the following credit facility:

 

  ● up to $18,000,000 revolving credit facility, subject to the amount of borrowings based on a percentage of eligible receivables and subject to certain reserves; and
     
  ● a term loan of $1,741,818, which requires monthly installments of $35,547.

 

The New Loan Agreement terminates as of May 15, 2024, unless sooner terminated.

 

Similar to our Revised Loan Agreement, the New Loan Agreement requires the Company to meet certain customary financial covenants, including, among other things, a minimum Tangible Adjusted Net Worth requirement of $27,000,000 at all times; maximum capital spending of $6,000,000 annually; and a minimum fixed charge coverage ratio (“FCCR”) requirement of 1.15:1.

 

Under the New Loan agreement, payment of annual rate of interest due on the credit facility is as follows:

 

● revolving credit at prime plus 2.50% or London InterBank Offer Rate (“LIBOR”) plus 3.50% and the term loan at prime plus 3.00% or LIBOR plus 4.00%. The Company can only elect to use the LIBOR interest payment option after it becomes compliant with meeting the minimum FCCR of 1.15:1; and

 

 17 
 

 

● Upon the achievement of a FCCR of greater than 1.25:1, the Company will have the option of paying an annual rate of interest due on the revolving credit at prime plus 2.00% or LIBOR plus 3.00% and the term loan at prime plus 2.50% or LIBOR plus 3.50%. The Company met this FCCR in the first and second quarters of 2020. Upon meeting the FCCR of 1.25:1, this interest payment option will remain in place in the event that the Company’s future FCCR falls below 1.25:1.

 

Under the LIBOR option of interest payment noted above, a LIBOR floor of 0.75% shall apply in the event that LIBOR falls below 0.75% at any point in time.

 

Pursuant to the New Loan Agreement, the Company may terminate the New Loan Agreement upon 90 days’ prior written notice upon payment in full of our obligations under the New Loan Agreement. The Company has agreed to pay PNC 1.0% of the total financing in the event we pay off our obligations on or before May 7, 2021 and 0.5% of the total financing if we pay off our obligations after May 7, 2021 but prior to or on May 7, 2022. No early termination fee shall apply if we pay off our obligations under the New Loan Agreement after May 7, 2022.

 

In connection with New Loan Agreement, the Company paid its lender a fee of $50,000 and incurred other direct costs of approximately $35,000, which are being amortized over the term of the New Loan Agreement as interest expense-financing fees. As a result of the termination of the Revised Loan Agreement, the Company recorded approximately $27,000 in loss on extinguishment of debt in accordance with ASC 470-50, “Debt – Modifications and Extinguishment.”

 

At June 30, 2020, the borrowing availability under our revolving credit was approximately $12,330,000, based on our eligible receivables and includes a reduction an in borrowing availability of approximately $3,126,000 from outstanding standby letters of credit.

 

The Company’s credit facility under its Revised and New Loan Agreement with PNC contains certain financial covenants, along with customary representations and warranties. A breach of any of these financial covenants, unless waived by PNC, could result in a default under our credit facility allowing our lender to immediately require the repayment of all outstanding debt under our credit facility and terminate all commitments to extend further credit. The Company met its FCCR requirement in the first and second quarters of 2020. Additionally, the Company met its remaining financial covenant requirements in the first and second quarters of 2020.

 

Loan and Securities Purchase Agreement, Promissory Note and Subordination Agreement

 

On April 1, 2019, the Company completed a lending transaction with Robert Ferguson (the “Lender”), whereby the Company borrowed from the Lender the sum of $2,500,000 pursuant to the terms of a Loan and Security Purchase Agreement and promissory note (the “Loan”). The Lender is a shareholder of the Company and also serves as a consultant to the Company in connection with the Company’s TBI at its PFNWR subsidiary. The proceeds from the Loan were used for general working capital purposes. The Loan is unsecured, with a term of two years with interest payable at a fixed interest rate of 4.00% per annum. The Loan provides for monthly payments of accrued interest only during the first year of the Loan, with the first interest payment due May 1, 2019 and monthly payments of approximately $208,333 in principal plus accrued interest starting in the second year of the Loan. The Loan also allows for prepayment of principal payments over the term of the Loan without penalty with such prepayment of principal payments to be applied to the second year of the loan payments at the Company’s discretion. Since inception of the loan, the Company has made total prepayments in principal of $936,000, of which $416,000 was made in the first six months of 2020. In connection with the above Loan, the Lender agreed under the terms of the Loan and a Subordination Agreement with our credit facility lender, to subordinate payment under the Loan, and agreed that the Loan will be junior in right of payment to the credit facility in the event of default or bankruptcy or other insolvency proceeding by us. In connection with this capital raise transaction described above and consideration for us receiving the Loan, the Company issued a Warrant (the “Warrant”) to the Lender to purchase up to 60,000 shares of our Common Stock at an exercise price of $3.51 per share, which was the closing bid price for a share of our Common Stock on NASDAQ.com immediately preceding the execution of the Loan and Warrant. The Warrant expires on April 1, 2024 and remains outstanding at June 30, 2020. As further consideration for this capital raise transaction relating to the Loan, the Company also issued 75,000 shares of its Common Stock to the Lender. The fair value of the Warrant and Common Stock and the related closing fees incurred from the transaction totaled approximately $398,000 and was recorded as debt discount/debt issuance costs, which is being amortized over the term of the loan as interest expense – financing fees. The 75,000 shares of Common Stock, the Warrant and the 60,000 shares of Common Stock that may be purchased under the Warrant were and will be issued in a private placement that was and will be exempt from registration under Rule 506 and/or Sections 4(a)(2) and 4(a)(5) of the Securities Act of 1933, as amended (the “Act”) and bear a restrictive legend against resale except in a transaction registered under the Act or in a transaction exempt from registration thereunder.

 

 18 
 

 

Upon default, the Lender will have the right to elect to receive in full and complete satisfaction of the Company’s obligations under the Loan either: (a) the cash amount equal to the sum of the unpaid principal balance owing under the loan and all accrued and unpaid interest thereon (the “Payoff Amount”) or (b) upon meeting certain conditions, the number of whole shares of the Company’s Common Stock (the “Payoff Shares”) determined by dividing the Payoff Amount by the dollar amount equal to the closing bid price of our Common Stock on the date immediately prior to the date of default, as reported or quoted on the primary nationally recognized exchange or automated quotation system on which our Common Stock is listed; provided however, that the dollar amount of such closing bid price shall not be less than $3.51, the closing bid price for our Common Stock as disclosed on NASDAQ.com immediately preceding the signing of this loan agreement.

 

If issued, the Payoff Shares will not be registered and the Lender will not be entitled to registration rights with respect to the Payoff Shares. The aggregate number of shares, warrant shares, and Payoff Shares that are or will be issued to the Lender pursuant to the Loan, together with the aggregate shares of the Company’s Common Stock and other voting securities of the Company owned by the Lender or which may be acquired by the Lender as of the date of issuance of the Payoff Shares, shall not exceed the number of shares of the Company’s Common Stock equal to 14.9% of the number of shares of the Company’s Common Stock issued and outstanding as of the date immediately prior to the default, less the number of shares of the Company’s Common Stock owned by the Lender immediately prior to the date of such default plus the number of shares of our Common Stock that may be acquired by the Lender under warrants and/or options outstanding immediately prior to the date of such default.

 

PPP Loan

 

On April 14, 2020, the Company entered into a promissory note with PNC, our credit facility lender, in the amount of $5,666,300 under the PPP (the “PPP Loan”). The PPP was established under the recently enacted CARES Act and is administered by the U.S. Small Business Administration (“SBA”). On June 5, 2020, the Flexibility Act was signed into law which amended the CARES Act. The note evidencing the PPP Loan contains events of default relating to, among other things, payment defaults, breach of representations and warranties, and provisions of the promissory note. (See “Note 16 – Subsequent Event – PPP Loan” for a discussion of a repayment of approximately $327,000 of the PPP Loan to PNC on July 9, 2020 which amount has been included in “current portion of long-term debt” in the Company’s Consolidated Balance Sheet at June 30, 2020).

 

Under the terms of the Flexibility Act, the Company can apply for and be granted forgiveness for all or a portion of the PPP Loan. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds by the Company for eligible payroll costs, mortgage interest, rent and utility costs and the maintenance of employee and compensation levels for the covered period (which is defined as a 24 week period, beginning April 14, 2020, the date in which proceeds from the PPP Loan was disbursed to the Company by PNC). At least 60% of such forgiven amount must be used for eligible payroll costs. The Company expects to apply for forgiveness on repayment of the loan as permitted under the program, which is subject to the approval of our lender. If all or a portion of the PPP Loan is not forgiven, all or the remaining portion will be for a term of two years but can be prepaid at any time prior to maturity without any prepayment penalties. The annual interest rate on the PPP Loan is 1.0% and no payments of principal or interest are due until the date that the SBA remits the loan forgiveness amount to our lender, provided that the Company submits its loan forgiveness application to our lender within ten months following the last day of the applicable covered period. While the Company’s PPP Loan currently has a two year maturity, the Flexibility Act permits the Company to request a five year maturity with our lender which the Company does not expect to request at this time.

 

 19 
 

 

10. Commitments and Contingencies

 

Hazardous Waste

 

In connection with our waste management services, we process both hazardous and non-hazardous waste, which we transport to our own, or other, facilities for destruction or disposal. As a result of disposing of hazardous substances, in the event any cleanup is required, we could be a potentially responsible party for the costs of the cleanup notwithstanding any absence of fault on our part.

 

Legal Matters

 

In the normal course of conducting our business, we are involved in various litigation. We are not a party to any litigation or governmental proceeding which our management believes could result in any judgments or fines against us that would have a material adverse effect on our financial position, liquidity or results of future operations.

 

Insurance

 

The Company has a 25-year finite risk insurance policy entered into in June 2003 (“2003 Closure Policy”) with AIG Specialty Insurance Company (“AIG”), which provides financial assurance to the applicable states for our permitted facilities in the event of unforeseen closure. The 2003 Closure Policy, as amended, provides for a maximum allowable coverage of $28,177,000 which includes available capacity to allow for annual inflation and other performance and surety bond requirements. Total coverage under the 2003 Closure Policy, as amended, was $19,651,000 at June 30, 2020. At June 30, 2020 and December 31, 2019, finite risk sinking funds contributed by the Company related to the 2003 Closure Policy which is included in other long term assets on the accompanying Consolidated Balance Sheets totaled $11,390,000 and $11,307,000, respectively, which included interest earned of $1,919,000 and $1,836,000 on the finite risk sinking funds as of June 30, 2020 and December 31, 2019, respectively. Interest income for the three and six months ended June 30, 2020 was approximately $27,000 and $83,000, respectively. Interest income for the three and six months ended June 30, 2019 was approximately $107,000 and $188,000, respectively. If we so elect, AIG is obligated to pay the Company an amount equal to 100% of the finite risk sinking fund account balance in return for complete release of liability from both the Company and any applicable regulatory agency using this policy as an instrument to comply with financial assurance requirements.

 

Letter of Credits and Bonding Requirements

 

From time to time, the Company is required to post standby letters of credit and various bonds to support contractual obligations to customers and other obligations, including facility closures. At June 30, 2020, the total amount of standby letters of credit outstanding was approximately $3,126,000 and the total amount of bonds outstanding was approximately $52,519,000.

 

11. Discontinued Operations

 

The Company’s discontinued operations consist of all our subsidiaries included in our Industrial Segment which encompasses subsidiaries divested in 2011 and prior and three previously closed locations.

 

The Company’s discontinued operations had net losses of $85,000 and $115,000 for the three months ended June 30, 2020 and 2019, respectively (net of taxes of $0 for each period) and net losses of $199,000 and $267,000 for the six months ended June 30, 2020 and 2019, respectively, (net of taxes of $0 for each period). The losses were primarily due to costs incurred in the administration and continued monitoring of our discontinued operations. The Company’s discontinued operations had no revenues for each of the periods noted above.

 

 20 
 

 

The following table presents the major class of assets of discontinued operations as of June 30, 2020 and December 31, 2019. No assets and liabilities were held for sale at each of the periods noted.

 

   June 30,   December 31, 
(Amounts in Thousands)  2020   2019 
Current assets          
Other assets  $124   $104 
Total current assets   124    104 
Long-term assets          
Property, plant and equipment, net (1)   81    81 
Other assets   —    36 
Total long-term assets   81    117 
Total assets  $205   $221 
Current liabilities          
Accounts payable  $5   $8 
Accrued expenses and other liabilities   167    169 
Environmental liabilities   756    817 
Total current liabilities   928    994 
Long-term liabilities          
Closure liabilities   138    134 
Environmental liabilities   110    110 
Total long-term liabilities   248    244 
Total liabilities  $1,176   $1,238 

 

(1) net of accumulated depreciation of $10,000 for each period presented.

 

The Company’s discontinued operations included a note receivable in the original amount of approximately $375,000 recorded in May 2016 resulting from the sale of property at our Perma-Fix of Michigan, Inc. (“PFMI”) subsidiary. This note requires 60 equal monthly installment payments by the buyer of approximately $7,250 (which includes interest). At June 30, 2020, the outstanding amount on this note receivable totaled approximately $105,000, which are all current and is included in “Current assets related to discontinued operations” in the accompanying Consolidated Balance Sheets.

 


12. Operating Segments

 

In accordance with ASC 280, “Segment Reporting”, the Company defines an operating segment as a business activity: (1) from which we may earn revenue and incur expenses; (2) whose operating results are regularly reviewed by the chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance; and (3) for which discrete financial information is available.

 

Our reporting segments are defined as below:

 

TREATMENT SEGMENT, which includes:

 

-nuclear, low-level radioactive, mixed waste (containing both hazardous and low-level radioactive constituents), hazardous and non-hazardous waste treatment, processing and disposal services primarily through four uniquely licensed and permitted treatment and storage facilities; and
   
-Research and Development (“R&D”) activities to identify, develop and implement innovative waste processing techniques for problematic waste streams.

 

 21 
 

 

SERVICES SEGMENT, which includes:

 

  - Technical services, which include:

 

  ○ professional radiological measurement and site survey of large government and commercial installations using advanced methods, technology and engineering;
  ○ integrated Occupational Safety and Health services including IH assessments; hazardous materials surveys, e.g., exposure monitoring; lead and asbestos management/abatement oversight; indoor air quality evaluations; health risk and exposure assessments; health & safety plan/program development, compliance auditing and training services; and OSHA citation assistance;
  ○ global technical services providing consulting, engineering, project management, waste management, environmental, and decontamination and decommissioning field, technical, and management personnel and services to commercial and government customers; and
  ○ on-site waste management services to commercial and governmental customers.

 

  - Nuclear services, which include:

 

  ○ technology-based services including engineering, decontamination and decommissioning (“D&D”), specialty services and construction, logistics, transportation, processing and disposal;
  ○ remediation of nuclear licensed and federal facilities and the remediation cleanup of nuclear legacy sites. Such services capability includes: project investigation; radiological engineering; partial and total plant D&D; facility decontamination, dismantling, demolition, and planning; site restoration; logistics; transportation; and emergency response; and

 

  - A company owned equipment calibration and maintenance laboratory that services, maintains, calibrates, and sources (i.e., rental) health physics, IH and customized NIOSH instrumentation.
  - A company owned gamma spectroscopy laboratory for the analysis of oil and gas industry solids and liquids.

 

MEDICAL SEGMENT, which includes: R&D of the Company’s medical isotope production technology by our majority-owned Polish subsidiary, Perma-Fix of Medical or the Medical Segment. The Medical Segment has not generated any revenues and all costs incurred are reflected within R&D in the accompanying consolidated financial statements. As previously disclosed, the Medical Segment has substantially reduced its R&D costs and activities due to the need for capital to fund these activities. The Company anticipates that the Medical Segment will not resume full R&D activities until the necessary capital is obtained through its own credit facility or additional equity raise, or obtains partners willing to provide funding for its R&D.

 

Our reporting segments exclude our corporate headquarters and our discontinued operations (see “Note 11 – Discontinued Operations”) which do not generate revenues.

 

 22 
 

 

The table below presents certain financial information of our operating segments for the three and six months ended June 30, 2020 and 2019 (in thousands):

 

Segment Reporting for the Quarter Ended June 30, 2020

 

   Treatment   Services   Medical   Segments
Total		   Corporate (1)   Consolidated
Total		 
Revenue from external customers  $7,840   $14,207    —   $22,047   $—   $22,047 
Intercompany revenues   446    5    —    451    —    — 
Gross profit   1,695    1,615    —    3,310    —    3,310 
Research and development   52    46    74    172    37    209 
Interest income   1    —    —    1    27    28 
Interest expense   (28)   (4)   —    (32)   (67)   (99)
Interest expense-financing fees   —    —    —    —    (60)   (60)
Depreciation and amortization   275    84    —    359    5    364 
Segment income (loss) before income taxes   750    1,031    (74)   1,707    (1,456)   251 
Income tax benefit   (9)   —    —    (9)   —    (9)
Segment income (loss)   759    1,031    (74)   1,716    (1,456)   260 
Expenditures for segment assets   320    146    —    466    2    468(3)

 

Segment Reporting for the Quarter Ended June 30, 2019

 

   Treatment   Services   Medical   Segments
Total		   Corporate (1)  

Consolidated

Total

 
Revenue from external customers  $10,094   $7,041    —   $17,135   $—   $17,135 
Intercompany revenues   7    42    —    49    —    — 
Gross profit   2,627    644    —    3,271    —    3,271 
Research and development   136    —    80    216    7    223 
Interest income   —    —    —    —    107    107 
Interest expense   (30)   (4)   —    (34)   (73)   (107)
Interest expense-financing fees   —    —    —    —    (60)   (60)
Depreciation and amortization   233    79    —    312    5    317 
Segment income (loss) before income taxes   1,611    137    (80)   1,668    (1,289)   379 
Income tax expense   6    —    —    6    —    6 
Segment income (loss)   1,605    137    (80)   1,662    (1,289)   373 
Expenditures for segment assets   73    15    —    88    —    88(2)

 

Segment Reporting for the Six Months Ended June 30, 2020

 

   Treatment   Services   Medical   Segments
Total		   Corporate (1)   Consolidated
Total		 
Revenue from external customers  $17,403   $29,504    —   $46,907   $—   $46,907 
Intercompany revenues   653    13    —    666    —    — 
Gross profit   4,440    3,510    —    7,950    —    7,950 
Research and development   145    112    140    397    44    441 
Interest income   1    —    —    1    83    84 
Interest expense   (46)   (10)   —    (56)   (163)   (219)
Interest expense-financing fees   —    —    —    —    (129)   (129)
Depreciation and amortization   539    162    —    701    10    711 
Segment income (loss) before income taxes   2,297    2,349    (140)   4,506    (2,933)   1,573 
Income tax expense   5    —    —    5    —    5 
Segment income (loss)   2,292    2,349    (140)   4,501    (2,933)   1,568 
Expenditures for segment assets   1,000    361    —    1,361    5    1,366(3)

 

Segment Reporting for the Six Months Ended June 30, 2019

 

   Treatment   Services   Medical   Segments
Total		   Corporate (1)   Consolidated
Total		 
Revenue from external customers  $19,999   $8,844    —   $28,843   $—   $28,843 
Intercompany revenues   9    63    —    72    —    — 
Gross profit   5,584    188    —    5,772    —    5,772 
Research and development   283    —    154    437    13    450 
Interest income   —    —    —    —    188    188 
Interest expense   (47)   (13)   —    (60)   (134)   (194)
Interest expense-financing fees   —    —    —    —    (70)   (70)
Depreciation and amortization   470    157    —    627    14    641 
Segment income (loss) before income taxes   3,487    (875)   (154)   2,458    (2,590)   (132)
Income tax expense   45    —    —    45    —    45 
Segment income (loss)   3,442    (875)   (154)   2,413    (2,590)   (177)
Expenditures for segment assets   294    18    —    312    —    312(2)

 

 23 
 

 

(1) Amounts reflect the activity for corporate headquarters not included in the segment information.

 

(2) Net of financed amount of $18,000 and $22,000 for the three and six months ended June 30, 2019, respectively.

 

(3) Net of financed amount of $51,000 and $132,000 for the three and six months ended June 30, 2020, respectively.

 

13. Income Taxes

 

The Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes.

 

The Company had income tax benefit of $9,000 and income tax expense of $5,000 for continuing operations for the three and six months ended June 30, 2020, respectively, and income tax expenses of $6,000 and $45,000 for continuing operations for the three and six months ended June 30, 2019, respectively. The Company’s effective tax rates were approximately 3.6% and 0.3% for the three and six months ended June 30, 2020, respectively, and 1.6% and 34.1% for the three and six months ended June 30, 2019, respectively. The tax benefit and expense for the periods above were comprised of state tax benefit and expense for separate company filing states. The Company’s tax rate for each of the periods discussed above was impacted by the Company’s full valuation on its net deferred tax assets.

 

The CARES Act, among other things, includes modifications to net operating loss carryforwards and AMT provisions. At this time, the Company is not expecting any effects to its tax provisions from the CARES Act. However, the Company will continue to monitor for any potential impact to its tax provisions from the CARES Act.

 

14. Variable Interest Entities (“VIE”)

 

On May 24, 2019, the Company and Engineering/Remediation Resources Group, Inc. (“ERRG”) entered into an unpopulated joint venture agreement for project work bids within the Company’s Services Segment. The joint venture is doing business as Perma-Fix ERRG, a general partnership. The Company has a 51% partnership interest in the joint venture and ERRG has a 49% partnership interest in the joint venture. Activities under Perma-Fix ERRG did not commence until the first quarter of 2020.

 

The Company determines whether joint ventures in which it has invested meet the criteria of a VIE at the start of each new venture and when a reconsideration event has occurred. A VIE is a legal entity that satisfies any of the following characteristics: (a) the legal entity does not have sufficient equity investment at risk; (b) the equity investors at risk as a group, lack the characteristics of a controlling financial interest; or (c) the legal entity is structured with disproportionate voting rights.

 

The Company consolidates a VIE if it is determined to be the primary beneficiary of the VIE. The primary beneficiary has both the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

 

Based on the Company’s evaluation of Perma-Fix ERRG and related agreements with Perma-Fix ERRG, the Company determined that Perma-Fix ERRG is a VIE in which we are the primary beneficiary. At June 30, 2020, Perma-Fix ERRG had total assets of $2,523,000 and total liabilities of $2,523,000 which are all recorded as current.

 

 24 
 

 

15. Deferral of Employment Tax Deposits

 

The CARES Act, as amended by the Flexibility Act which was signed into law on June 5, 2020, provides employers the option to defer the payment of an employer’s share of social security taxes beginning on March 27, 2020 through December 31, 2020, among other things, 50% of the amount of social security taxes deferred will become due on December 31, 2021 with the remaining 50% due on December 31, 2022. The Company elected to defer such taxes starting in mid-April 2020. The Company estimates the remaining payment of approximately $790,000 of social security taxes otherwise due in 2020 will be deferred with 50% due by December 31, 2021 and the remaining 50% due by December 31, 2022. At June 30, 2020, the Company has deferred payment of approximately $393,000 in its share of social security taxes, which amount has been included in “other long-term liabilities” in the Company’s Consolidated Balance Sheet at June 30, 2020.

 

16. Subsequent Events

 

PPP Loan

 

As discussed in “Note 9 – Long Term Debt – PPP Loan,” the Company entered into a promissory note with PNC, our credit facility lender, in the amount of $5,666,300 (“PPP Loan”) under the PPP. The PPP was established under the recently enacted CARES Act (as amended by the Flexibility Act signed into law on June 5, 2020) and is administered by the SBA. On July 9, 2020, the Company repaid approximately $327,000 of the PPP Loan to PNC resulting from an error made in the loan calculation at the time of the loan origination.

 

Employment Agreements

 

On July 22, 2020, the Company’s Board appointed Richard Grondin to the position of EVP of Waste Treatment Operations and an executive officer of the Company. Mr. Grondin previously held the position of Vice President of Western Operations within our Treatment Segment. Immediately after the appointment of Richard Grondin to the position of EVP of Waste Treatment Operations and an executive officer of the Company, the Company’s Compensation Committee and the Board approved, and the Company entered into, an employment agreement with each of Mark Duff, CEO (the “CEO Employment Agreement”), Dr. Louis Centofanti, EVP of Strategic Initiatives (the “EVP of Strategic Initiatives Employment Agreement”), Ben Naccarato, CFO (the “CFO Employment Agreement”), Andrew Lombardo, EVP of Nuclear and Technical Services (the “EVP of Nuclear and Technical Services Employment Agreement”), and Richard Grondin, EVP of Waste Treatment Operations (the “EVP of Waste Treatment Operations Employment Agreement”), collectively with the CEO Employment Agreement, the EVP of Strategic Initiative Employment Agreement, the CFO Employment Agreement, the EVP of Nuclear and Technical Services Employment Agreement and the EVP of Waste Treatment Operations Employment Agreement, the “New Employment Agreements” and each individually the “New Employment Agreement”. The Company had previously entered into an employment agreement with each of Mark Duff, Dr. Louis Centofanti and Ben Naccarato on September 8, 2017, all three of which were due to expire on September 8, 2020. These three employment agreements dated September 8, 2017 were terminated effective July, 22, 2020.

 

Pursuant to New Employment Agreements, which are effective July 22, 2020, each of these executive officers is provided an annual salary, which annual salary may be increased, but not reduced, from time to time as determined by the Compensation Committee. As a result of Richard Grondin’s promotion to EVP of Waste Treatment and an executive officer of the Company, his annual salary was increased from $208,000 as Vice President of Western Operations within our Treatment Segment to $240,000, effective July 22, 2020. No change was made to the salary of the remaining executive officers for fiscal year 2020. In addition, each of these executive officers is entitled to participate in the Company’s broad-based benefits plans and to certain performance compensation payable under separate Management Incentive Plans (“MIP”) as approved by the Company’s Compensation Committee and the Company’s Board. The Company’s Compensation Committee and the Board approved individual 2020 MIP on January 16, 2020 (which are effective January 1, 2020) for each Mark Duff, Dr. Louis Centofanti, Ben Naccarato and Andrew Lombardo which remains effective for fiscal year 2020. See “MIP” below for the MIP approved by the Compensation Committee and the Board for Richard Grondin.

 

Each of the New Employment Agreements is effective for three years from July 22, 2020 (the “Initial Term”) unless earlier terminated by the Company or by the executive officer. At the end of the Initial Term of each New Employment Agreement, each New Employment Agreement will automatically be extended for one additional year, unless at least six months prior to the expiration of the Initial Term, the Company or the executive officer provides written notice not to extend the terms of the New Employment Agreement.

 

 25 
 

 

Pursuant to the New Employment Agreements, if the executive officer’s employment is terminated due to death/disability or for cause (as defined in the agreements), the Company will pay to the executive officer or to his estate an amount equal to the sum of any unpaid base salary and accrued unused vacation time through the date of termination and any benefits due to the executive officer under any employee benefit plan (the “Accrued Amounts”) plus any performance compensation payable pursuant to the MIP with respect to the fiscal year immediately preceding the date of termination.

 

If the executive officer terminates his employment for “good reason” (as defined in the agreements) or is terminated by the Company without cause (including any such termination for “good reason” or without cause within 24 months after a Change in Control (as defined in the agreement)), the Company will pay the executive officer the Accrued Amounts, two years of full base salary, and two times the performance compensation (under the MIP) earned with respect to the fiscal year immediately preceding the date of termination provided the performance compensation earned with respect to the fiscal year immediately preceding the date of termination has not been paid. If performance compensation earned with respect to the fiscal year immediately preceding the date of termination has been made to the executive officer, the executive officer will be paid an additional year of the performance compensation earned with respect to the fiscal year immediately preceding the date of termination. If the executive terminates his employment for a reason other than for good reason, the Company will pay to the executive an amount equal to the Accrued Amounts plus any performance compensation payable pursuant to the MIP with respect to the fiscal year immediately preceding the date of termination.

 

If there is a Change in Control (as defined in the agreements), all outstanding stock options to purchase common stock held by the executive officer will immediately become exercisable in full commencing on the date of termination through the original term of the options. In the event of the death of an executive officer, all outstanding stock options to purchase common stock held by the executive officer will immediately become exercisable in full commencing on the date of death, with such options exercisable for the lesser of the original option term or twelve months from the date of the executive officer’s death. In the event an executive officer terminates his employment for “good reason” or is terminated by the Company without cause, all outstanding stock options to purchase common stock held by the executive officer will immediately become exercisable in full commencing on the date of termination, with such options exercisable for the lesser of the original option term or within 60 days from the date of the executive’s date of termination. Severance benefits payable with respect to a termination (other than Accrued Amounts) shall not be payable until the termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h)).

 

MIP

 

On July 22, 2020, upon the approval of the EVP of Waste Treatment Operations Employment Agreement as discussed above, the Company’s Board and the Company’s Compensation Committee approved a MIP for Richard Grondin effective January 1, 2020, applicable for fiscal 2020. The MIP provides guidelines for the calculation of annual cash incentive-based compensation, subject to Compensation Committee oversight and modification. The MIP awards cash compensation based on achievement of performance thresholds, with the amount of such compensation established as a percentage of the Mr. Grondin’s 2020 annual base salary as the EVP of Waste Treatment Operations. The potential target performance compensation ranges from 5% to 100% ($12,000 to $240,000) of the base salary for the EVP of Waste Treatment Operations, which became effective on July 22, 2020.

 

PFMI

 

As discussed in “Note 11- Discontinued Operations,” the Company’s discontinued operations included a note receivable in the original amount of approximately $375,000 recorded in May 2016 resulting from the sale of property at its PFMI subsidiary. On July 24, 2020, the purchaser of the property paid off the outstanding note receivable balance of approximately $105,000.

 

Legal Matter

 

During July 2020, Tetra Tech EC, Inc. (“Tetra Tech”) filed a complaint in the United States District Court for the Northern District of California against CH2M Hill, Inc. (“CH2M”) and four subcontractors of CH2M, including the Company (“defendants”). The complaint alleges claims for negligence, negligent misrepresentation and equitable indemnification against all defendants related to alleged damages suffered by Tetra Tech in respect of certain draft reports prepared by defendants at the request of the U.S. Navy as part of an investigation and review of certain whistleblower complaints about Tetra Tech’s environmental restoration at the Hunter’s Point Naval Shipyard in San Francisco.

 

CH2M was hired by the Navy in 2016 to review Tetra Tech’s work. CH2M subcontracted with environmental consulting and cleanup firms Battelle Memorial Institute, Cabrera Services, Inc., SC&A, Inc. and the Company to assist with the review, according to the complaint.

 

The complaint alleges that the subject draft reports were prepared negligently and in a biased manner, made public, and caused damage to Tetra Tech’s reputation; triggering related lawsuits and costing it opportunities for both government and commercial contracts.

 

At this time, the Company does not believe it has any liability to Tetra Tech, and has provided notice of the claim to its insurance carrier. The Company intends to vigorously defend the claims.

 

 26 
 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-looking Statements

 

Certain statements contained within this report may be deemed “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (collectively, the “Private Securities Litigation Reform Act of 1995”). All statements in this report other than a statement of historical fact are forward-looking statements that are subject to known and unknown risks, uncertainties and other factors, which could cause actual results and performance of the Company to differ materially from such statements. The words “believe,” “expect,” “anticipate,” “intend,” “will,” and similar expressions identify forward-looking statements. Forward-looking statements contained herein relate to, among other things,

 

● demand for our services;
● contract bids, including international markets;
● reductions in the level of government funding in future years;
● R&D activity of our Medical Segment;
● reducing operating costs;
● expect to meet our loan covenant requirements in the next twelve months;
● cash flow requirements;
● sufficient liquidity to continue business;
● apply for forgiveness on PPP Loan subject to approval by our lender;
● request maturity extension on PPP Loan;
● furlough or layoff eligible employees;
● curtail capital expenditures;
● government funding for our services;
● may not have liquidity to repay debt if our lender accelerates payment of our borrowings;
● manner in which the applicable government will be required to spend funding to remediate various sites;
● funding operations;
● fund capital expenditures from cash from operations and/or financing;
● impact from COVID-19;
● fund remediation expenditures for sites from funds generated internally;
● compliance with environmental regulations;
● potential effect of being a PRP;
● potential sites for violations of environmental laws and remediation of our facilities;
● continuation of contracts with federal government;
● meeting financial covenants in our loan agreement;
● loss of contracts;
● third quarter and fourth quarter financial results due to impact of COVID-19;
● partial or full shutdown of any of our facilities;
● liability from Tetra Tech claims;
● recurrence/continued shutdown of projects and continued waste shipments delays by clients; and
● necessary capital for Medical Segment.

 

While the Company believes the expectations reflected in such forward-looking statements are reasonable, it can give no assurance such expectations will prove to be correct. There are a variety of factors, which could cause future outcomes to differ materially from those described in this report, including, but not limited to:

 

● general economic conditions;
● material reduction in revenues;
● inability to meet PNC covenant requirements;
● inability to collect in a timely manner a material amount of receivables;
● increased competitive pressures;
● inability to maintain and obtain required permits and approvals to conduct operations;
● public not accepting our new technology;
● inability to develop new and existing technologies in the conduct of operations;
● inability to maintain and obtain closure and operating insurance requirements;
● inability to retain or renew certain required permits;
● discovery of additional contamination or expanded contamination at any of the sites or facilities leased or owned by us or our subsidiaries which would result in a material increase in remediation expenditures;
● delays at our third-party disposal site can extend collection of our receivables greater than twelve months;
● refusal of third-party disposal sites to accept our waste;
● changes in federal, state and local laws and regulations, especially environmental laws and regulations, or in interpretation of such;
● requirements to obtain permits for TSD activities or licensing requirements to handle low level radioactive materials are limited or lessened;
● potential increases in equipment, maintenance, operating or labor costs;
● management retention and development;
● financial valuation of intangible assets is substantially more/less than expected;
● the requirement to use internally generated funds for purposes not presently anticipated;
● inability to continue to be profitable on an annualized basis;
● inability of the Company to maintain the listing of its Common Stock on the NASDAQ;
● terminations of contracts with government agencies (domestic and foreign) or subcontracts involving government agencies (domestic or foreign), or reduction in amount of waste delivered to the Company under the contracts or subcontracts;
● renegotiation of contracts involving government agencies (domestic and foreign);
● federal government’s inability or failure to provide necessary funding to remediate contaminated federal sites;
● disposal expense accrual could prove to be inadequate in the event the waste requires re-treatment;

 

 27 
 

 

● inability to raise capital on commercially reasonable terms;
● inability to increase profitable revenue;
● impact of the COVID-19;
● audit of our PPP Loan (as discussed below);
● new governmental regulations;
● lender refuses to waive non-compliance or revise our covenant so that we are in compliance; and
● risk factors and other factors set forth in “Special Note Regarding Forward-Looking Statements” contained in the Company’s 2019 Form 10-K and the “Forward-Looking Statements” contained in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) of the first quarter 2020 Form 10-Q and this second quarter 2020 Form 10-Q.

 

COVID-19 Impact

 

Since the outbreak of COVID-19, we have remained focused on keeping our employees working and, at the same time, focusing on protecting the health and wellbeing of our employees and the communities in which we operate while assuring the continuity of our business operations.

 

Our management team has proactively implemented our business continuity and safety plans and has taken a variety of measures to ensure the ongoing availability of our waste treatment and remediation services, while taking health and safety measures, including separating employee and customer contact, social distancing between employees, implementing enhanced cleaning and hygiene protocols in all of our facilities, and implementing remote work policies, when necessary.

 

The COVID-19 pandemic presents potential new risks to our business. We continue to closely monitor the impact of the COVID-19 pandemic on all aspects of our business. As previously reported, the COVID-19 pandemic did not result in a material impact to our first quarter 2020 results of operations; however, our second quarter results of operations were impacted by the shutdown of a number of projects and the delays of certain waste shipments which began in late March 2020 that continued into the second quarter of 2020. As states began to lift stay-at-home orders, along with certain other restrictions since the start of the pandemic, in the latter part of the second quarter of 2020, we were able to restart on a number, but not all, of the projects that were previously shutdown. Despite these project shutdowns, revenues within our Services Segment in the second quarter of 2020 exceeded the corresponding period of 2019 by approximately $7,166,000. We continue to experience some delays in waste shipments from certain customers within our Treatment Segment due to the planning time that is required by these customers to restart waste shipments as they return to work on-site. These continued project shutdowns and waste shipment delays may impact our results of operations for the third quarter of 2020 and potentially the remainder of fiscal year 2020.

 

At this time, we believe we have sufficient liquidity on hand to continue business operations during the next twelve months. At June 30, 2020, we had cash on hand of approximately $5,630,000 and borrowing availability under our revolving credit facility of $12,330,000 based on a percentage of eligible receivables and subject to certain reserves. Our cash at June 30, 2020 included proceeds received from a loan in the amount of approximately $5,666,000 (“PPP Loan”) in April 2020 under the Paycheck Protection Program (“PPP”) that was established under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). On June 5, 2020, the Paycheck Protection Program Flexibility Act of 2020 (the “Flexibility Act”) was signed into law, amending the CARES Act (see “CARES Act – PPP Loan” under “Liquidity and Capital Resources” below for a discussion of the PPP Loan and the repayment of approximately $327,000 of the PPP Loan we made to our lender on July 9, 2020). We expect to apply for forgiveness on all or a portion of the loan as permitted under the program, which is subject to the approval of our lender. Proceeds from the PPP Loan have allowed us to avoid having to furlough or layoff certain eligible employees as a result of the COVID-19 pandemic, although there are no assurances that such will not be required. We continue to assess reducing operating costs during this volatile time, which include curtailing capital expenditures, eliminating non-essential expenditures and implementing a hiring freeze as needed. We have elected to defer payment of our share of social security taxes as permitted under the CARES Act, as amended (see “CARES Act – Deferral of Employment Tax Deposits” within this MD&A for a discussion of this deferral).

 

 28 
 

 

We are closely monitoring our customers’ payment performance. However, since a significant portion of our revenues is derived from government related contracts, we do not expect our accounts receivable collections to be materially impacted due to COVID-19.

 

The situation surrounding COVID-19 continues to remain fluid. The potential for a material impact on the Company’s business increases the longer COVID-19 impacts the level of economic activities in the United States and globally as our customers may continue to delay waste shipments and project work may shut down again. For this reason, we cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on our results of operations, financial position, and liquidity during the next twelve months. As of the date of this report, we believe that our cash on hand and our credit facility should provide sufficient liquidity to continue business operations during the next twelve months. Based on our current projection, we believe that we will be able to meet the current covenant requirements under our loan agreement for the next twelve months despite the impact of COVID-19.

 

Overview

 

Revenue increased $4,912,000 or 28.7% to $22,047,000 for the three months ended June 30, 2020 from $17,135,000 for the corresponding period of 2019. The increase was entirely within our Services Segment where revenue increased $7,166,000 or 101.8% from increased projects. Our Services Segment experienced this increase in revenue despite a number of our projects being shut down during part of the second quarter 2020 and certain projects not restarting until the latter part of the second quarter 2020. Our Treatment Services revenue decreased by $2,254,000 or 22.3% primarily due to delays in waste shipments from certain customers that started in the latter part of the first quarter of 2020 and has continued through the second quarter of 2020, resulting from the impact of COVID-19. Gross profit increased $39,000 or 1.2% primarily due to the increase in revenues in the Services Segment. Selling, General, and Administrative (“SG&A”) expenses decreased $5,000 or 0.2% for the three months ended June 30, 2020 as compared to the corresponding period of 2019.

 

Revenue increased $18,064,000 or 62.6% to $46,907,000 for the six months ended June 30, 2020 from $28,843,000 for the corresponding period of 2019. The increase was entirely within our Services Segment where revenue increased $20,660,000 or 233.6% from increased projects. Our Services Segment experienced this increase in revenue despite a number of our projects being shut down during part of the second quarter 2020 and certain projects not restarting until the latter part of the second quarter 2020. Our Treatment Services revenue decreased by $2,596,000 or 13.0% primarily due to delays in waste resulting from the impact of COVID-19 as discussed above. Total gross profit increased $2,178,000 or 37.7% for the six months ended June 30, 2020 as compared to the corresponding period of 2019. Total SG&A expenses increased $24,000 or 0.4% for the six months ended June 30, 2020 as compared to the corresponding period of 2019.

 

Our working capital was $5,314,000 at June 30, 2020 as compared to working capital of $26,000 at December 31, 2019.

 

Business Environment and Outlook

 

Our Treatment and Services Segments’ business continues to be heavily dependent on services that we provide to governmental clients directly as the contractor or indirectly as a subcontractor. We believe demand for our services will continue to be subject to fluctuations due to a variety of factors beyond our control, including, without limitation, the economic conditions, the manner in which the applicable government will be required to spend funding to remediate various sites, and/or the impact resulting from COVID-19 as discussed above. In addition, our governmental contracts and subcontracts relating to activities at governmental sites in the United States are generally subject to termination or renegotiation on 30 days’ notice at the government’s option, and our governmental contracts/task orders with the Canadian government authorities allow the authorities to terminate the contract/task orders at any time for convenience. Significant reductions in the level of governmental funding or specifically mandated levels for different programs that are important to our business could have a material adverse impact on our business, financial position, results of operations and cash flows. As previously disclosed, our Medical Segment continues to evaluate strategic options to commercialize its medical isotope production technology. These options generally require substantial capital to fund R&D requirements, in addition to start-up and production costs. Our Medical Segment has substantially reduced its R&D costs and activities due to the need for capital to fund such activities. We anticipate that our Medical Segment will not resume full R&D activities until it obtains the necessary funding through obtaining its own credit facility or additional equity raise or obtaining new partners willing to fund its R&D activities. If the Medical Segment is unable to raise the necessary capital, the Medical Segment could be required to further reduce, delay or eliminate its R&D program.

 

 29 
 

 

We are continually reviewing methods to raise additional capital to supplement our liquidity requirements, when needed, and reducing our operating costs. We continue to aggressively bid on various contracts, including potential contracts within the international markets.

 

Results of Operations

 

The reporting of financial results and pertinent discussions are tailored to our three reportable segments: The Treatment, Services, and Medical Segments. Our Medical Segment has not generated any revenue and all costs incurred are included within R&D. Our results of operations for the balance of 2020 could be subject to the impact of COVID-19 as discussed above under “COVID-19 Impact.”

 

Summary – Three and Six Months Ended June 30, 2020 and 2019

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
Consolidated (amounts in thousands)  2020   %   2019   %   2020   %   2019   % 
Net revenues  $22,047    100.0   $17,135    100.0   $46,907    100.0   $28,843    100.0 
Cost of goods sold   18,737    85.0    13,864    80.9    38,957    83.1    23,071    80.0 
Gross profit   3,310    15.0    3,271    19.1    7,950    16.9    5,772    20.0 
Selling, general and administrative   2,700    12.2    2,705    15.8    5,627    12.0    5,603    19.4 
Research and development   209    .9    223    1.3    441    .9    450    1.6 
(Gain) loss on disposal of property and equipment   (4)    ―    (1)    ―    27     ―    (1)    ― 
Income (loss) from operations   405    1.9    344    2.0    1,855    4.0    (280)   (1.0)
Interest income   28    .1    107    .6    84    .2    188    .7 
Interest expense   (100)   (.5)   (107)   (.6)   (219)   (.5)   (194)   (.7)
Interest expense-financing fees   (59)   (.3)   (60)   (.4)   (129)   (.3)   (70)   (.3)
Other   4     ―    95    .6    9     ―    224    .8 
Loss on extinuishment of debt   (27)   (.1)    ―     ―    (27)    ―     ―     ― 
Income (loss) from continuing operations before taxes   251    1.1    379    2.2    1,573    3.4    (132)   (.5)
Income tax (benefit) expense   (9)   (.1)   6     ―    5     ―    45    .1 
Income (loss) from continuing operations  $260    1.2   $373    2.2   $1,568    3.4   $(177)   (.6)

 

Revenues

 

Consolidated revenues increased $4,912,000 for the three months ended June 30, 2020, compared to the three months ended June 30, 2019, as follows:

 

(In thousands)  2020   %
Revenue		   2019   %
Revenue		   Change   %
Change		 
Treatment                              
Government waste  $5,559    25.2   $6,042    35.3   $(483)   (8.0)
Hazardous/non-hazardous (1)   938    4.3    1,686    9.8    (748)   (44.4)
Other nuclear waste   1,343    6.1    2,366    13.8    (1,023)   (43.2)
Total   7,840    35.6    10,094    58.9    (2,254)   (22.3)
                               
Services                              
Nuclear services   13,776    62.5    6,186    36.1    7,590    122.7 
Technical services   431    1.9    855    5.0    (424)   (49.6)
Total   14,207    64.4    7,041    41.1    7,166    101.8 
                               
Total  $22,047    100.0   $17,135    100.0   $4,912    28.7 

 

1) Includes wastes generated by government clients of $496,000 and $657,000 for the three month ended June 30, 2020 and the corresponding period of 2019, respectively.

 

 30 
 

 

Treatment Segment revenue decreased $2,254,000 or 22.3 % for the three months ended June 30, 2020 over the same period in 2019. The decrease in Treatment Segment revenue in all categories was attributed primarily to lower waste volume as a number of our customers delayed waste shipments starting in late March 2020 due to the impact of COVID-19. These delays has continued through the second quarter of 2020. Services Segment revenue increased by $7,166,000 or 101.8% in the three months ended June 30, 2020 from the corresponding period of 2019. The increase in our Services Segment revenue of $7,166,000 or 101.8% was primarily due to the increase in number of projects. Our Services Segment experienced this increase in revenue despite a number of our projects being shut down during part of the second quarter 2020 and certain projects not restarting until the latter part of the second quarter 2020. Additionally, our Services Segment revenues are project based; as such, the scope, duration and completion of each project vary. As a result, our Services Segment revenues are subject to differences relating to timing and project value.

 

Consolidated revenues increased $18,064,000 for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, as follows:

 

(In thousands)  2020   %
Revenue		   2019   %
Revenue		   Change   %
Change		 
Treatment                              
Government waste  $12,626    26.9   $13,401    46.5   $(775)   (5.8)
Hazardous/non-hazardous (1)   2,462    5.3    3,308    11.5    (846)   (25.6)
Other nuclear waste   2,315    4.9    3,290    11.4    (975)   (29.6)
Total   17,403    37.1    19,999    69.3    (2,596)   (13.0)
                               
Services                              
Nuclear services   28,611    61.0    7,231    25.1    21,380    295.7 
Technical services   893    1.9    1,613    5.6    (720)   (44.6)
Total   29,504    62.9    8,844    30.7    20,660    233.6 
                               
Total  $46,907    100.0   $28,843    100.0   $18,064    62.6 

 

1) Includes wastes generated by government clients of $1,119,000 and $1,268,000 for the six month ended June 30, 2020 and the corresponding period of 2019, respectively.

 

Treatment Segment revenue decreased $2,596,000 or 13.0 % for the six months ended June 30, 2020 over the same period in 2019. The revenue decrease was primarily due to lower revenue generated in the second quarter of 2020 resulting from waste shipment delays due to the impact of COVID-19 as discussed above. Our Services Segment revenue increased $20,660,000 or 233.6% due to the increase in number of projects. Our Services Segment experienced this increase in revenue despite a number of our projects being shut down during part of the second quarter 2020 and certain projects not restarting until the latter part of the second quarter 2020. Additionally, our Services Segment revenues are project based; as such, the scope, duration and completion of each project vary. As a result, our Services Segment revenues are subject to differences relating to timing and project value.

 

Cost of Goods Sold

 

Cost of goods sold increased $4,873,000 for the quarter ended June 30, 2020, as compared to the quarter ended June 30, 2019, as follows:

 

       %       %     
(In thousands)  2020   Revenue   2019   Revenue   Change 
Treatment  $6,145    78.4   $7,467    74.0   $(1,322)
Services   12,592    88.6    6,397    90.9    6,195 
Total  $18,737    85.0   $13,864    80.9   $4,873 

 

Cost of goods sold for the Treatment Segment decreased approximately $1,322,000 or 17.7%. Treatment Segment costs of goods sold for the three months ended June 30, 2019 included additional closure costs recorded in the amount of $165,000 for our East Tennessee Materials and Energy Corporation (“M&EC”) facility due to finalization of closure requirements in connection with the closure of the facility. Excluding the closure costs recorded in the second quarter of 2019, Treatment Segment cost of goods sold decreased $1,157,000 or 15.8% primarily due to the decrease in revenue. Excluding the closure costs recorded in the second quarter of 2019, Treatment Segment variable costs decreased by approximately $1,401,000 primarily in disposal, transportation, material and supplies and outside services due to lower revenues. Our overall fixed costs were higher by approximately $244,000 resulting from the following: salaries and payroll related expenses were higher by approximately $62,000; regulatory expenses were higher by approximately $20,000; maintenance expenses were higher by $116,000; and depreciation expenses were higher by approximately $46,000 primarily due to financed leases that we did not have in the second quarter of 2019. Services Segment cost of goods sold increased $6,195,000 or 96.8% primarily due to increased revenue as discussed above. The increase in cost of goods sold was primarily due to higher salaries and payroll costs, travel, and outside services expenses totaling approximately $5,556,000, higher material and supplies and disposal costs totaling approximately $416,000, and higher general expenses of $223,000 in various categories. Included within cost of goods sold is depreciation and amortization expense of $358,000 and $307,000 for the three months ended June 30, 2020, and 2019, respectively.

 

 31 
 

 

Cost of goods sold increased $15,886,000 for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, as follows:

 

       %       %     
(In thousands)  2020   Revenue   2019   Revenue   Change 
Treatment  $12,963    74.5   $14,415    72.1   $(1,452)
Services   25,994    88.1    8,656    97.9    17,338 
Total  $38,957    83.1   $23,071    80.0   $15,886 

 

Cost of goods sold for the Treatment Segment decreased approximately $1,452,000 or 10.1%. Treatment Segment costs of goods sold for the six months ended June 30, 2019 included additional closure costs recorded in the amount of $330,000 for our M&EC facility due to finalization of closure requirements in connection with the closure of the facility. Excluding the closure costs recorded in the six months of 2019, Treatment Segment cost of goods sold decreased $1,122,000 or 8.0% primarily due to the decrease in revenue. Excluding the closure costs recorded in the six months ended June 30, 2019, Treatment Segment variable costs decreased by approximately $1,285,000 primarily due to lower disposal, transportation, and outside services costs totaling approximately $1,516,000 which was partially offset by higher material and supplies costs of $231,000. Our overall fixed costs were higher by approximately $163,000 resulting from the following: salaries and payroll related expenses were higher by approximately $28,000; regulatory expenses were higher by approximately $51,000; maintenance expenses were higher by $229,000; travel expenses were higher by approximately $8,000; deprecation expenses were higher by approximately $78,000 primarily due to financed leases that we did not have in the first six months of 2019; and general expenses were lower by approximately $231,000 in various categories. Services Segment cost of goods sold increased $17,338,000 or 200.3% primarily due to the increase in revenue. The increase in cost of goods sold within our Services Segment was primarily due to higher salaries and payroll related costs, travel, and outside services expenses totaling approximately $15,452,000, higher material and supplies and disposal costs totaling approximately $1,392,000, and higher general expenses of $494,000 in various categories. Included within cost of goods sold is depreciation and amortization expense of $699,000 and $617,000 for the six months ended June 30, 2020, and 2019, respectively.

 

Gross Profit

 

Gross profit for the quarter ended June 30, 2020 increased $39,000 over the same period in 2019, as follows:

 

       %       %     
(In thousands)  2020   Revenue   2019   Revenue   Change 
Treatment  $1,695    21.6   $2,627    26.0   $(932)
Services   1,615    11.4    644    9.1    971 
Total  $3,310    15.0   $3,271    19.1   $39 

 

Excluding the additional $165,000 in closure costs recorded in the second quarter of 2019 as discussed above within our Treatment Segment’s cost of goods sold, our Treatment Segment gross profit decreased by $1,097,000 and gross margin decreased to 21.6% from 27.7% primarily due to lower revenue from lower waste volume. The increases in gross profit in the Services Segment of $971,000 or 150.8% and gross margin from 9.1% to 11.4% was primarily due to the increase in revenue as discussed above. Additionally, our overall Services Segment gross margin is impacted by our current projects which are competitively bid on and will therefore, have varying margin structures.

 

Gross profit for the six months ended June 30, 2020 increased $2,178,000 over 2019, as follows:

 

       %       %     
(In thousands)  2020   Revenue   2019   Revenue   Change 
Treatment  $4,440    25.5   $5,584    27.9   $(1,144)
Services   3,510    11.9    188    2.1    3,322 
Total  $7,950    16.9   $5,772    20.0   $2,178 

 

Treatment Segment gross profit decreased $1,144,000 or 20.5% and gross margin decreased to 25.5% from 27.9%. Excluding the additional closure costs of $330,000 recorded in connection with the closure of our M&EC facility as discussed previously, gross profit decreased 1,474,000 or 24.9% and gross margin decreased to 25.5% from 29.6% primarily due lower revenue from lower waste volume. In the Services Segment, gross profit increased $3,322,000 or 1,767.0% and gross margin increased from 2.1% to 11.9%. The increase in gross profit for the six month ended June 30, 2020 was attributed to the increase in revenue. Our overall Services Segment gross margin is impacted by our current projects which are competitively bid on and will therefore, have varying margin structures.

 

 32 
 

 

Selling, General and Administrative (“SG&A”)

 

SG&A expenses decreased $5,000 for the three months ended June 30, 2020, as compared to the corresponding period for 2019, as follows:

 

(In thousands)  2020   %
Revenue		   2019   %
Revenue		   Change 
Administrative  $1,296    —   $1,261    —   $35 
Treatment   867    11.1    940    9.3    (73)
Services   537    3.8    504    7.2    33 
Total  $2,700    12.2   $2,705    15.8   $(5)

 

Our Administrative SG&A was higher primarily due to the following: salaries and payroll related expenses were higher by approximately $39,000; general expenses were higher by approximately $22,000 in various categories; travel expense was lower by approximately $19,000 due to restrictions implemented resulting from the impact of COVID-19; and outside services expense was lower by approximately $7,000 resulting from less consulting/subcontract matters. Our Treatment Segment SG&A was lower due to the following: travel expense were lower by approximately $45,000 due to restrictions implemented resulting from the impact of COVID-19; general expenses were lower by $20,000 in various categories; bad debt expenses were lower by approximately $58,000; and salaries and payroll related expenses were higher by approximately $50,000. The higher SG&A costs within our Services Segment was primarily due to the following: salaries/payroll related expenses were higher by approximately $64,000; general expenses were higher by approximately $24,000 in various categories; travel expense was lower by approximately $40,000 due to restrictions implemented resulting from the impact of COVID-19; and outside services expenses were lower by approximately $15,000 due to fewer consulting matters. Included in SG&A expenses is depreciation and amortization expense of $6,000 and $10,000 for the three months ended June 30, 2020, and 2019, respectively.

 

SG&A expenses increased $24,000 for the six months ended June 30, 2020, as compared to the corresponding period for 2019, as follows:

 

(In thousands)  2020   %
Revenue		   2019   %
Revenue		   Change 
Administrative  $2,655    —   $2,564    —   $91 
Treatment   1,928    11.1    1,978    9.9    (50)
Services   1,044    3.5    1,061    12.0    (17)
Total  $5,627    12.0   $5,603    19.4   $24 

 

The increase in Administrative SG&A was primarily due to the following: salaries and payroll related costs were higher by approximately $40,000; general expenses were higher by $39,000 in various categories; outside services were higher by approximately $26,000 resulting from more consulting/business matters; and travel expense was lower by approximately 14,000 due to restrictions implemented resulting from the impact of COVID-19. Treatment SG&A was lower primarily due to the following: travel expense were lower by approximately $24,000 due to restrictions implemented resulting from the impact of COVID-19; bad debt expenses were lower by approximately $55,000; general expenses were higher by $13,000 in various categories; and salaries and payroll related expenses were higher by approximately $16,000. Services Segment SG&A decreased by $17,000 primarily due to the following: bad debt expenses were lower by approximately $89,000 as certain customer accounts which we had previously reserved for were collected in the first six months of 2020; travel expense was lower by approximately $64,000 due to restrictions implemented resulting from the impact of COVID-19; outside services expenses were lower by approximately $10,000 due to fewer consulting matters; salaries/payroll related expenses were higher by a total of approximately $124,000; and general expenses were higher by approximately $22,000 in various categories. Included in SG&A expenses is depreciation and amortization expense of $12,000 and $24,000 for the six months ended June 30, 2020 and 2019, respectively.

 

 33 
 

 

R&D

 

R&D expenses decreased $14,000 and $9,000 for the three and six months ended June 30, 2020, respectively, as compared to the corresponding period of 2019.

 

   Three Months Ended June 30,   Six Months Ended June 30, 
(In thousands)  2020   2019   Change   2020   2019   Change 
Administrative  $37   $7   $30   $44   $13   $31 
Treatment   52    136    (84)   145    283    (138)
Services   46    —    46    112    —    112 
PF Medical   74    80    (6)   140    154    (14)
Total  $209   $223   $(14)  $441   $450   $(9)

 

R&D costs consist primarily of employee salaries and benefits, laboratory costs, third party fees, and other related costs associated with the development of new technologies and technological enhancement of new potential waste treatment processes.

 

Interest Income

 

Interest income decreased by approximately $79,000 and $104,000 for the three and six months ended June 30, 2020, respectively, as compared to the corresponding period of 2019 primarily due to lower interest earned from lower finite risk sinking fund balance resulting from the release of $5,000,000 in finite risk sinking funds by AIG Specialty Insurance Company (“AIG”) to us in July 2019 in connection with the closure of our M&EC facility. The $5,000,000 in finite sinking funds represented a partial release of the total collateral held under our finite risk insurance policy. The lower interest income for each period discussed above was also partially attributed to a lower interest rate earned on the finite risk sinking funds.

 

Interest Expense

 

Interest expense decreased by approximately $8,000 and increased by approximately $25,000 for the three and six months ended June 30, 2020, respectively, as compared to the corresponding period of 2019. The decrease in interest expense in the second quarter of 2020 as compared to the corresponding period of 2019 was primarily due to lower interest expense from our declining term loan balance outstanding and lower interest rate. Also, interest expense was lower from declining loan balance outstanding on the $2,500,000 loan that we entered into with Robert Ferguson on April 1, 2019. The overall decrease in interest expense was partially offset by higher interest expense from higher averaged revolver loan balance and higher interest due to additional finance leases which we did not have in the second quarter of 2019. The increase in interest expense for the six months ended June 30, 2020 as compared to the corresponding period of 2019 was primarily due to higher interest expense incurred from the Robert Ferguson loan as discussed above, higher interest expense from higher averaged revolver loan balance and higher interest due to additional finance leases which we did not have in the first six months of 2019. The overall higher interest expense was reduced by lower interest expense from our declining term loan balance outstanding and lower interest rate.

 

Interest Expense- Financing Fees

 

No change was noted in interest expense-financing fees for the second quarter of 2020 as compared to the corresponding period of 2019. The increase in interest expense-financing fees of approximately $59,000 for the six months ended June 30, 2020 as compared to the corresponding period of 2019 was primarily due to debt discount/debt issuance costs amortized as financing fees in connection with the issuance of our Common Stock and a purchase Warrant as consideration for the Company receiving the $2,500,000 loan from Robert Ferguson on April 1, 2020 (See “Liquidity and Capital Resources – Financing Activities” for further information of this debt discount).

 

Discontinued Operations and Divestitures

 

The Company’s discontinued operations consist of all our subsidiaries included in our Industrial Segment which encompasses subsidiaries divested in 2011 and prior and three previously closed locations.

 

 34 
 

 

We had net losses of $85,000 and $199,000 for our discontinued operations for the three and six months ended June 30, 2020, respectively (net of taxes of $0 for each period). We had net losses of $115,000 and $267,000 for our discontinued operations for the three and six months ended June 30, 2019, respectively (net of taxes of $0 for each period).

 

The “Current assets related to discontinued operations” on our Consolidated Balance Sheet at June 30, 2020, included an outstanding note receivable in the amount of approximately $105,000 from the sale of property at our Perma-Fix of Michigan, Inc. (“PFMI”) subsidiary in May 2016. On July 24, 2020, the purchaser of the property paid off the outstanding note receivable balance.

 

Liquidity and Capital Resources

 

Our cash flow requirements during the six months ended June 30, 2020 were primarily financed by our operations, credit facility availability, and the PPP Loan that we received under the CARES Act as discussed below (see “CARES Act – PPP Loan”). We generated approximately $2,957,000 cash from our continuing operations. Subject to the impact of COVID-19 as discussed above, our cash flow requirements for the next twelve months will consist primarily of general working capital needs, scheduled principal payments on our debt obligations, remediation projects, and planned capital expenditures. We plan to fund these requirements from our operations, credit facility availability, and cash on hand (which includes the proceeds received under the PPP Loan that we received under the Paycheck Protection Program established under the CARES Act, as amended). We continue to explore all sources of increasing our capital to supplement our liquidity requirements, when needed, and to improve our revenue and working capital. We are continually reviewing operating costs and reviewing the possibility of further reducing operating costs and non-essential expenditures to bring them in line with revenue levels, when necessary. At this time, we believe that our cash flows from operations, our available liquidity from our credit facility, and our cash on hand should be sufficient to fund our operations for the next twelve months. However, due to the uncertainty of COVID-19, there are no assurances such will be the case in the events that certain of our customers continue to delay waste shipments or the restart of projects and/or, elect to, shut down projects again due to governmental and societal responses from continuation or potential second-wave outbreak of COVID-19. As previously disclosed, our Medical Segment substantially reduced its R&D costs and activities due to the need for capital to fund such activities. We continue to seek various sources of potential funding for our Medical Segment. We anticipate that our Medical Segment will not resume full R&D activities until it obtains the necessary funding through obtaining its own credit facility or additional equity raise or obtaining new partners willing to fund its R&D activities. If the Medical Segment is unable to raise the necessary capital, the Medical Segment could be required to further reduce, delay or eliminate its R&D program.

 

We are aware that PPP loans in excess of $2,000,000 may be subject to being audited by the appropriate governmental authority. If our PPP Loan is audited, it is currently unknown how our PPP Loan could be affected by an audit. An audit could result, among other things, in us being required to return all or a portion of our PPP Loan (see discussion below as to the PPP Loan under “The CARES Act – PPP Loan”).

 

The following table reflects the cash flow activities during the first six months of 2020:

 

(In thousands)    
Cash provided by operating activities of continuing operations  $2,957 
Cash used in operating activities of discontinued operations   (259)
Cash used in investing activities of continuing operations   (1,362)
Cash provided by investing activities of discontinued operations   13 
Cash provided by financing activities of continuing operations   3,992 
Effect of exchange rate changes in cash   (18)
Increase in cash and finite risk sinking fund (restricted cash)  $5,323 

 

At June 30, 2020, we were in a positive cash position with no revolving credit balance. At June 30, 2020, we had cash on hand of approximately $5,630,000, which includes account balances of our foreign subsidiaries totaling approximately $795,000.

 

 35 
 

 

Operating Activities

 

Accounts receivable, net of allowances for doubtful accounts, totaled $10,806,000 at June 30, 2020, a decrease of $2,372,000 from the December 31, 2019 balance of $13,178,000. The decrease was primarily due to timing of invoicing which was reflective of the increase in our unbilled receivables and timing of our accounts receivable collection. We provide a variety of payment terms to our customers; therefore, our accounts receivable are impacted by these terms and the related timing of accounts receivable collections. The amount of our accounts receivables and collection could be materially impacted the longer COVID-19 persists.

 

Accounts payable, totaled $11,560,000 at June 30, 2020, an increase of $2,283,000 from the December 31, 2019 balance of $9,277,000. The increase in accounts payable was attributed to an increase in costs within our Services Segment resulting from the significant increase in revenue. Additionally, our accounts payable are impacted by the timing of payments as we are continually managing payment terms with our vendors to maximize our cash position throughout all segments.

 

We had working capital of $5,314,000 (which included working capital of our discontinued operations) at June 30, 2020, as compared to working capital of $26,000 at December 31, 2019. The improvement in our working capital was primarily due to the proceeds that we received from the PPP Loan under the Paycheck Protection Program (see “PPP Loan” under “CARES Act” below for a discussion of this loan). The positive impact was partially offset by the increase in our accounts payable.

 

Investing Activities

 

For the six months ended June 30, 2020, our purchases of capital equipment totaled approximately $1,498,000, of which $132,000 was subject to finance leases, with the remaining funded from cash from operations and our credit facility. We have budgeted approximately $2,000,000 for 2020 capital expenditures for our Treatment and Services Segments to maintain operations and regulatory compliance requirements and support revenue growth. Certain of these budgeted projects may either be delayed until later years or deferred altogether. We plan to fund our capital expenditures from cash from operations and/or financing. The initiation and timing of projects are also determined by financing alternatives or funds available for such capital projects, especially in light of the uncertainties that COVID-19 may impact the economy which may have an adverse impact to our results of operations and liquidity.

 

Financing Activities

 

We entered into an Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated October 31, 2011 (“Amended Loan Agreement”), with PNC National Association (“PNC”), acting as agent and lender. The Amended Loan Agreement had been amended from time to time since the execution of the Amended Loan Agreement. The Amended Loan Agreement, as subsequently amended (“Revised Loan Agreement”), provided us with the following credit facility with a maturity date of March 24, 2021: (a) up to $12,000,000 revolving credit (“revolving credit”) and (b) a term loan (“term loan”) of approximately $6,100,000. The maximum that we can borrow under the revolving credit was based on a percentage of eligible receivables (as defined) at any one time reduced by outstanding standby letters of credit and borrowing reductions that our lender may impose from time to time.

 

Payment of annual rate of interest due on the revolving credit under the Revised Loan Agreement was at prime (3.25% at June 30, 2020) plus 2% and the term loan at prime plus 2.5%.

 

On May 8, 2020, we entered into a Second Amended and Restated Revolving Credit, Term Loan and Security Agreement (the “New Loan Agreement”) with PNC, replacing our previous Revised Loan Agreement with PNC. The New Loan Agreement provides us with the following credit facility:

 

  ● up to $18,000,000 revolving credit facility, subject to the amount of borrowings based on a percentage of eligible receivables and subject to certain reserves; and
     
  ● a term loan of $1,741,818, which requires monthly installments of $35,547.

 

 36 
 

 

The New Loan Agreement terminates as of May 15, 2024, unless sooner terminated.

 

Similar to our Revised Loan Agreement, the New Loan Agreement requires us to meet certain customary financial covenants, including, among other things, a minimum Tangible Adjusted Net Worth requirement of $27,000,000 at all times; maximum capital spending of $6,000,000 annually; and a minimum fixed charge coverage ratio (“FCCR”) requirement of 1.15:1.

 

Under the New Loan agreement, payment of annual rate of interest due on the credit facility is as follows:

 

● revolving credit at prime plus 2.50% or LIBOR plus 3.50% and the term loan at prime plus 3.00% or LIBOR plus 4.00%. We can only elect to use the LIBOR interest payment option after we become compliant with meeting the minimum FCCR of 1.15:1; and

 

● Upon the achievement of a FCCR of greater than 1.25:1, we will have the option of paying an annual rate of interest due on the revolving credit at prime plus 2.00% or LIBOR plus 3.00% and the term loan at prime plus 2.50% or LIBOR plus 3.50%. We met this FCCR in the first and second quarters of 2020. Upon meeting the FCCR of 1.25:1, this interest payment option will remain in place in the event that our future FCCR falls below 1.25:1.

 

Under the LIBOR option of interest payment noted above, a LIBOR floor of 0.75% shall apply in the event that LIBOR falls below 0.75% at any point in time.

 

Pursuant to the New Loan Agreement, we may terminate the New Loan Agreement upon 90 days’ prior written notice upon payment in full of our obligations under the New Loan Agreement. We have agreed to pay PNC 1.0% of the total financing in the event we pay off our obligations on or before May 7, 2021 and 0.5% of the total financing if we pays off our obligations after May 7, 2021 but prior to or on May 7, 2022. No early termination fee shall apply if we pay off our obligations under the New Loan Agreement after May 7, 2022.

 

In connection with New Loan Agreement, we paid our lender a fee of $50,000 and incurred other direct costs of approximately $35,000, which are being amortized over the term of the New Loan Agreement as interest expense-financing fees. As a result of the termination of the Revised Loan Agreement, the Company recorded approximately $27,000 in loss on extinguishment of debt in accordance with ASC 470-50, “Debt – Modifications and Extinguishment.”

 

At June 30, 2020, the borrowing availability under our revolving credit was approximately $12,330,000, based on our eligible receivables and includes a reduction an in borrowing availability of approximately $3,126,000 from outstanding standby letters of credit.

 

Our credit facility under our Revised and New Loan Agreement with PNC contains certain financial covenants, along with customary representations and warranties. A breach of any of these financial covenants, unless waived by PNC, could result in a default under our credit facility allowing our lender to immediately require the repayment of all outstanding debt under our credit facility and terminate all commitments to extend further credit. We met our FCCR requirement in the first and second quarters of 2020. Additionally, we met our remaining financial covenant requirements in the first and second quarters of 2020. We expect to meet our financial covenant requirements in the next twelve months; however, if we fail to meet any of our financial covenant requirements and our lender does not further waive the non-compliance or revise our covenant so that we are in compliance, our lender could accelerate the repayment of borrowings under our credit facility. In the event that our lender accelerates the payment of our borrowings, we may not have sufficient liquidity to repay our debt under our credit facility and other indebtedness.

 

 37 
 

 

As previously disclosed, on April 1, 2019, the Company completed a lending transaction with Robert Ferguson (the “Lender”), whereby the Company borrowed from the Lender the sum of $2,500,000 pursuant to the terms of a Loan and Security Purchase Agreement and promissory note (the “Loan”). The Lender is a shareholder of the Company and also serves as a consultant to the Company in connection with the Company’s TBI at its PFNWR subsidiary. The proceeds from the Loan were used for general working capital purposes. The Loan is unsecured, with a term of two years with interest payable at a fixed interest rate of 4.00% per annum. The Loan provides for monthly payments of accrued interest only during the first year of the Loan, with the first interest payment due May 1, 2019 and monthly payments of approximately $208,333 in principal plus accrued interest starting in the second year of the Loan. The Loan also allows for prepayment of principal payments over the term of the Loan without penalty with such prepayment of principal payments to be applied to the second year of the loan payments at our discretion. Since inception of the loan, we have made total prepayments in principal of $936,000, of which $416,000 was made in the first six months of 2020. In connection with this capital raise transaction described above and consideration for us receiving the Loan, we issued a Warrant (the “Warrant”) to the Lender to purchase up to 60,000 shares of our Common Stock at an exercise price of $3.51 per share, which was the closing bid price for a share of our Common Stock on NASDAQ.com immediately preceding the execution of the Loan and Warrant. The Warrant expires on April 1, 2024 and remains outstanding at June 30, 2020. As further consideration for this capital raise transaction relating to the Loan, we also issued 75,000 shares of its Common Stock to the Lender. The fair value of the Warrant and Common Stock and the related closing fees incurred from the transaction totaled approximately $398,000 and was recorded as debt discount/debt issuance costs, which is being amortized over the term of the loan as interest expense – financing fees. The 75,000 shares of Common Stock, the Warrant and the 60,000 shares of Common Stock that may be purchased under the Warrant were and will be issued in a private placement that was and will be exempt from registration under Rule 506 and/or Sections 4(a)(2) and 4(a)(5) of the Securities Act of 1933, as amended (the “Act”) and bear a restrictive legend against resale except in a transaction registered under the Act or in a transaction exempt from registration thereunder.

 

The CARES Act

 

PPP Loan

 

On April 14, 2020, we entered into a promissory note with PNC, our credit facility lender, in the amount of $5,666,300 under the PPP (the “PPP Loan”). The PPP was established under the recently enacted CARES Act and is administered by the U.S. Small Business Administration (“SBA”). On June 5, 2020, the Paycheck Protection Program Flexibility Act of 2020 (“Flexibility Act”) was signed into law which amended the CARES Act. The note evidencing the PPP Loan contains events of default relating to, among other things, payment defaults, breach of representations and warranties, and provisions of the promissory note. On July 9, 2020, we repaid approximately $327,000 of the PPP Loan to PNC resulting from an error made in the loan calculation at the time of the loan origination. This amount has been included the “current portion of long-term debt” on our Consolidated Balance Sheet as of June 30, 2020.

 

Under the terms of the Flexibility Act, we can apply for and be granted forgiveness for all or a portion of the PPP Loan. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds by us for eligible payroll costs, mortgage interest, rent and utility costs and the maintenance of employee and compensation levels for the covered period (which is defined as a 24 week period, beginning April 14, 2020, the date in which proceeds from the PPP Loan was disbursed to us by PNC). At least 60% of such forgiven amount must be used for eligible payroll costs. We expect to apply for forgiveness on repayment of the loan as permitted under the program, which is subject to the approval of our lender. If all or a portion of the PPP Loan is not forgiven, all or the remaining portion will be for a term of two years but can be prepaid at any time prior to maturity without any prepayment penalties. The annual interest rate on the PPP Loan is 1.0% and no payments of principal or interest are due until the date that the SBA remits the loan forgiveness amount to our lender, provided that we submit our loan forgiveness application to our lender within ten months following the last day of the applicable covered period. While our PPP Loan currently has a two year maturity, the Flexibility Act permits us to request a five year maturity with our lender which we do not expect to request at this time.

 

 38 
 

 

Deferral of Employment Tax Deposits

 

The CARES Act, as amended by the Flexibility Act, provides employers the option to defer the payment of an employer’s share of social security taxes beginning on March 27, 2020 through December 31, 2020, among other things. 50% of the amount of social security taxes deferred will become due on December 31, 2021 with the remaining 50% due on December 31, 2022. We elected to defer such taxes starting in mid-April 2020. We estimate the remaining payment of approximately $790,000 of social security taxes otherwise due in 2020 will be deferred with 50% due by December 31, 2021 and the remaining 50% due by December 31, 2022. At June 30, 2020, the Company has deferred payment of $393,000 in its share of social security taxes, which amount has been included in “other long-term liabilities” in the Company’s Consolidated Balance Sheet at June 30, 2020.

 

The CARES Act, as amended, among other things, includes modifications to net operating loss carryforwards, corporate alternative minimum tax (“AMT”) provisions, net interest expense deduction, and deferment of social security tax payments. We elected to defer payment of our shares of social security taxes as discussed above. We continue to evaluate the provisions of the CARES Act, as amended, and how certain other elections may impact our financial position, results of operations, and disclosures, if elected.

 

Off Balance Sheet Arrangements

 

From time to time, we are required to post standby letters of credit and various bonds to support contractual obligations to customers and other obligations, including facility closures. At June 30, 2020, the total amount of standby letters of credit outstanding totaled approximately $3,126,000 and the total amount of bonds outstanding totaled approximately $52,519,000. We also provide closure and post-closure requirements through a financial assurance policy for certain of our Treatment Segment facilities through AIG. At June 30, 2020, the closure and post-closure requirements for these facilities were approximately $19,651,000.

 

Critical Accounting Policies and Estimates

 

There were no significant changes in our accounting policies or critical accounting estimates that are discussed in our Annual Report on Form 10-K for the year ended December 31, 2019.

 

Recent Accounting Pronouncements

 

See “Note 2 – Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” for the recent accounting pronouncements that have been adopted during the first six months of 2020, or will be adopted in future periods.

 

Known Trends and Uncertainties

 

Significant Customers. Our Treatment and Services Segments have significant relationships with the U.S and Canadian governmental authorities, and continue to enter into contracts, directly as the prime contractor or indirectly for others as a subcontractor to government authorities. Our inability to continue under existing contracts that we have with the U.S federal government and Canadian government authorities (directly or indirectly as a subcontractor) or significant reductions in the level of governmental funding in any given year could have a material adverse impact on our operations and financial condition. In addition, our U.S. governmental contracts and subcontracts relating to activities at governmental sites are generally subject to termination or renegotiation on 30 days notice at the government’s option. The Task Order Agreements (“TOAs”) with the Canadian government generally provide that the government may terminate a TOA at any time for convenience.

 

We 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 $19,811,000 or 89.9% and $42,313,000 or 90.2% of our total revenues generated during the three and six months ended June 30, 2020, respectively, as compared to $12,864,000 or 75.1% and $21,857,000 or 75.8% of our total revenues generated during the three and six months ended June 30, 2019.

 

 39 
 

 

Coronavirus Impact. The extent of the impact of the COVID-19 pandemic on our business is uncertain and difficult to predict, as the responses to the pandemic continue to evolve rapidly, especially in light of the recent surge in COVID-19 cases around the country. In the latter part of the second quarter of 2020, we were able to restart on a number of projects that were previously shutdown as states lifted stay-at-home orders, along with certain other restrictions since the start of the pandemic. At this time, we continue to experience delays in the restart of some projects and some delays in waste shipment from certain customers due to the planning time that is required by these customers to restart waste shipment as they return to work on-site. Furthermore, capital markets and economies worldwide continue to be negatively impacted by the COVID-19 pandemic. Such economic disruption could have a material adverse effect on our business as our customers could curtail and reduce capital and overall spending.

 

The severity of the impact the COVID-19 pandemic on our business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic, the extent and severity of the impact on our customers, the impact on governmental programs and budgets, the development of treatments or vaccines, and how quickly and to what extent normal economic and operating conditions resume, all of which are uncertain and cannot be predicted with any accuracy or confidence at this time. Our future results of operations and liquidity could be adversely impacted by continued delays in waste shipments and restart of projects and/or the recurrence of project work shut downs as well as potential partial/full shutdown of any of our facilities due to COVID-19.

 

Environmental Contingencies

 

We are engaged in the waste management services segment of the pollution control industry. As a participant in the on-site treatment, storage and disposal market and the off-site treatment and services market, we are subject to rigorous federal, state and local regulations. These regulations mandate strict compliance and therefore are a cost and concern to us. Because of their integral role in providing quality environmental services, we make every reasonable attempt to maintain complete compliance with these regulations; however, even with a diligent commitment, we, along with many of our competitors, may be required to pay fines for violations or investigate and potentially remediate our waste management facilities.

 

We routinely use third party disposal companies, who ultimately destroy or secure landfill residual materials generated at our facilities or at a client’s site. In the past, numerous third party disposal sites have improperly managed waste and consequently require remedial action; consequently, any party utilizing these sites may be liable for some or all of the remedial costs. Despite our aggressive compliance and auditing procedures for disposal of wastes, we could further be notified, in the future, that we are a potentially responsible party (“PRP”) at a remedial action site, which could have a material adverse effect.

 

Our subsidiaries where remediation expenditures will be made are at three sites within our discontinued operations. While no assurances can be made that we will be able to do so, we expect to fund the expenses to remediate these sites from funds generated from operations.

 

At June 30, 2020, we had total accrued environmental remediation liabilities of $866,000, a decrease of $61,000 from the December 31, 2019 balance of $927,000. The increase represents payments made on remediation projects for our Perma-Fix of South Georgia, Inc. and Perma-Fix of Dayton, Inc. subsidiaries. At June 30, 2020, $756,000 of the total accrued environmental liabilities was recorded as current.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risks

 

Not applicable

 

 40 
 

 

Item 4. Controls and Procedures
   
(a) Evaluation of disclosure controls and procedures.  
   
  We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports filed with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to our management. As of the end of the period covered by this report, we carried out an evaluation with the participation of our Principal Executive Officer and Principal Financial Officer. Based on this recent assessment, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) were effective as of June 30, 2020.    
   
(b) Changes in internal control over financial reporting.  
   
  There was no other change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

There are no material legal proceedings pending against us and/or our subsidiaries not previously reported by us in Item 3 of our Form 10-K for the year ended December 31, 2019 and Part II – Other Information – Item 1 of our Form 10-Q for the quarter ended March 31, 2020, which is incorporated herein by reference, except as follows:

 

During July 2020, Tetra Tech EC, Inc. (“Tetra Tech”) filed a complaint in the United States District Court for the Northern District of California against CH2M Hill, Inc. (“CH2M”) and four subcontractors of CH2M, including the Company (“defendants”). The complaint alleges claims for negligence, negligent misrepresentation and equitable indemnification against all defendants related to alleged damages suffered by Tetra Tech in respect of certain draft reports prepared by defendants at the request of the U.S. Navy as part of an investigation and review of certain whistleblower complaints about Tetra Tech’s environmental restoration at the Hunter’s Point Naval Shipyard in San Francisco.

 

CH2M was hired by the Navy in 2016 to review Tetra Tech’s work. CH2M subcontracted with environmental consulting and cleanup firms Battelle Memorial Institute, Cabrera Services, Inc., SC&A, Inc. and the Company to assist with the review, according to the complaint.

 

The complaint alleges that the subject draft reports were prepared negligently and in a biased manner, made public, and caused damage to Tetra Tech’s reputation; triggering related lawsuits and costing it opportunities for both government and commercial contracts.

 

At this time, the Company does not believe it has any liability to Tetra Tech, and has provided notice of the claim to its insurance carrier. The Company intends to vigorously defend the claims.

 

Item 1A. Risk Factors

 

There has been no other material change from the risk factors previously disclosed in our Form 10-K for the year ended December 31, 2019 and Form 10-Q for the quarter ended March 31, 2020 except the following, which amends the additional risk factor contained in Part II - Other Information of our Form 10-Q for the quarter ended March 31, 2020:

 

COVID-19 could result in material adverse effects on our business, financial position, results of operations and cash flows.

 

The extent of the impact of the COVID-19 pandemic on our business is uncertain and difficult to predict, as the responses to the pandemic continue to evolve rapidly, especially in light of the recent surge in COVID-19 cases around the country. In the latter part of the second quarter of 2020, we were able to restart on a number of projects that were previously shutdown as states lifted stay-at-home orders, along with certain other restrictions since the start of the pandemic. At this time, we continue to experience delays in the restart of some projects and some delays in waste shipment from certain customers due to the planning time that is required by these customers to restart waste shipment as they return to work on-site. Furthermore, capital markets and economies worldwide continue to be negatively impacted by the COVID-19 pandemic. Such economic disruption could have a material adverse effect on our business as our customers could curtail and reduce capital and overall spending.

 

 41 
 

 

The severity of the impact the COVID-19 pandemic on our business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic, the extent and severity of the impact on our customers, the impact on governmental programs and budgets, the development of treatments or vaccines, and how quickly and to what extent normal economic and operating conditions resume, all of which are uncertain and cannot be predicted with any accuracy or confidence at this time. Our future results of operations and liquidity could be adversely impacted by continued delays in waste shipments and restart of projects and/or the recurrence of project work shut downs as well as potential partial/full shutdown of any of our facilities due to COVID-19.

 

Item 6.   Exhibits
     
(a)   Exhibits
     
4.1   Second Amended and Restated Revolving Credit, Term Loan and Security Agreement between Perma-Fix Environmental Services, Inc. and PNC Bank, National Association (as Lender and as Agent), as incorporated by reference from Exhibit 4.1 to the Company’s Form 10-Q filed on May 12, 2020.
4.2   Payment Protection Program Term Note dated April 11, 2020, by and between Perma-Fix Environmental Services, Inc. and PNC Bank, National Association, as incorporated by reference from Exhibit 99.1 to the Company’s Form 8-K filed on April 15, 2020.
10.1   Employment Agreement dated July 22, 2020 between Mark Duff, Chief Executive Officer, and Perma-Fix Environmental Services, Inc., which is incorporated by reference from Exhibit 99.1 to the Company’s Form 8-K filed on July 27, 2020.
10.2   Employment Agreement dated July 22, 2020 between Louis Centofanti, EVP of Strategic Initiatives, and Perma-Fix Environmental Services, Inc., which is incorporated by reference from Exhibit 99.2 to the Company’s Form 8-K filed on July 27, 2020.
10.3   Employment Agreement dated July 22, 2020 between Ben Naccarato, Chief Financial Officer, and Perma-Fix Environmental Services, Inc., which is incorporated by reference from Exhibit 99.3 to the Company’s Form 8-K filed on July 27, 2020.
10.4   Employment Agreement dated July 22, 2020 between Andrew Lombardo, EVP of Nuclear and Technical Services, and Perma-Fix Environmental Services, Inc., which is incorporated by reference from Exhibit 99.4 to the Company’s Form 8-K filed on July 27, 2020.
10.5   Employment Agreement dated July 22, 2020 between Richard Grondin, EVP of Waste Treatment Operations, and Perma-Fix Environmental Services, Inc., which is incorporated by reference from Exhibit 99.5 to the Company’s Form 8-K filed on July 27, 2020.
10.6   2020 Incentive Compensation Plan for Richard Grondin, our new EVP of Treatment Waste Operations, effective January 1, 2020, as incorporated by reference from Exhibit 99.6 to the Company’s Form 8-K filed on July 27, 2020.
10.7   2020 Incentive Compensation Plan for Chief Executive Officer, effective January 1, 2020, as incorporated by reference from Exhibit 99.1 to the Company’s Form 8-K filed on January 22, 2020.
10.8   2020 Incentive Compensation Plan for Chief Financial Officer, effective January 1, 2020, as incorporated by reference from Exhibit 99.2 to the Company’s Form 8-K filed on January 22, 2020.

 

 42 
 

 

10.9   2020 Incentive Compensation Plan for Executive Vice President of Strategic Initiatives, effective January 1, 2020, as incorporated by reference from Exhibit 99.3 to the Company’s Form 8-K filed on January 22, 2020.
10.10   2020 Incentive Compensation Plan for Executive Vice President of Nuclear and Technical Services, effective January 1, 2020, as incorporated by reference from Exhibit 99.4 to the Company’s Form 8-K filed on January 22, 2020.
10.11   Incentive Stock Option Agreement, dated October 19, 2017, between Perma-Fix Environmental Services, Inc. and Richard Grondin, as incorporated by reference from Exhibit 99.11 to the Company’s Form 8-K filed on July 27, 2020.
10.12   Incentive Stock Option Agreement, dated January 17, 2019, between Perma-Fix Environmental Services, Inc. and Richard Grondin, as incorporated by reference from Exhibit 99.11 to the Company’s Form 8-K filed on July 27, 2020.
31.1   Certification by Mark Duff, Chief Executive Officer of the Company pursuant to Rule 13a-14(a) or 15d-14(a).
31.2   Certification by Ben Naccarato, Chief Financial Officer of the Company pursuant to Rule 13a-14(a) or 15d-14(a).
32.1   Certification by Mark Duff, Chief Executive Officer of the Company furnished pursuant to 18 U.S.C. Section 1350.
32.2   Certification by Ben Naccarato, Chief Financial Officer of the Company furnished pursuant to 18 U.S.C. Section 1350.
101.INS   XBRL Instance Document*
101.SCH   XBRL Taxonomy Extension Schema Document*
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB   XBRL Taxonomy Extension Labels Linkbase Document*
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document*
     
    * Pursuant to Rule 406T of Regulation S-T, the Interactive Data File in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purpose of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

 

 43 
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

  PERMA-FIX ENVIRONMENTAL SERVICES  
     
 Date: August 7, 2020 By: /s/ Mark Duff
   

Mark Duff

President and Chief (Principal) Executive Officer

     
Date: August 7, 2020 By: /s/ Ben Naccarato
    Ben Naccarato
    Chief (Principal) Financial Officer

 

 44 

 

 

EXHIBIT 31.1

 

CERTIFICATIONS

 

I, Mark Duff, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Perma-Fix Environmental Services, Inc.;

   

2.

 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   

3.

 Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   

4.

 The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

 

 a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     

 

 

 b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     

 

 

 c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     

 

 

 d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

 

 

 

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

     

 

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date:

August 7, 2020

 

     
/s/ Mark Duff  
Mark Duff  
President and Chief Executive Officer  

 

   

 

 

EXHIBIT 31.2

 

CERTIFICATIONS

 

I, Ben Naccarato, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Perma-Fix Environmental Services, Inc.;

   

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

   

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

   

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     

 

 

 b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     

 

 

 c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     

 

 

 d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

 

 

 

 a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

     

 

 

 b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date: August 7, 2020

     
/s/ Ben Naccarato  
Ben Naccarato  
Executive Vice President and Chief Financial Officer  

 

   

 

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

 

 

In connection with the Quarterly Report of Perma-Fix Environmental Services, Inc. (“PESI”) on Form 10-Q for the quarter ended June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I, Mark Duff, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o(d)); and

 

(2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: August 7, 2020

 

/s/ Mark Duff  
Mark Duff  

President and Chief Executive Officer

  

 

This certification is furnished to the Securities and Exchange Commission solely for purpose of 18 U.S.C. §1350 subject to the knowledge standard contained therein, and not for any other purpose.

 

   

 

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Annual Report of Perma-Fix Environmental Services, Inc. (“PESI”) on Form 10-Q for the quarter ended June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I, Ben Naccarato, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o(d)); and

 

(2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: August 7, 2020

 

/s/ Ben Naccarato  
Ben Naccarato  
Executive Vice President and Chief Financial Officer  

 

This certification is furnished to the Securities and Exchange Commission solely for purpose of 18 U.S.C. §1350 subject to the knowledge standard contained therein, and not for any other purpose.

 

   

 

v3.20.2
Document and Entity Information - shares
 6 Months Ended
Jun. 30, 2020
Jul. 30, 2020
Document And Entity Information    
Entity Registrant Name PERMA FIX ENVIRONMENTAL SERVICES INC  
Entity Central Index Key 0000891532  
Document Type 10-Q  
Document Period End Date Jun. 30, 2020  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business Flag true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   12,144,721
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2020  
v3.20.2
Consolidated Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Current assets:    
Cash $ 5,630 $ 390
Accounts receivable, net of allowance for doubtful accounts of $426 and $487, respectively 10,806 13,178
Unbilled receivables 11,069 7,984
Inventories 548 487
Prepaid and other assets 2,761 2,983
Current assets related to discontinued operations 124 104
Total current assets 30,938 25,126
Property and equipment:    
Buildings and land 20,045 19,967
Equipment 21,463 20,068
Vehicles 457 410
Leasehold improvements 23 23
Office furniture and equipment 1,431 1,418
Construction-in-progress 1,524 1,609
Total property and equipment 44,943 43,495
Less accumulated depreciation (27,501) (26,919)
Net property and equipment 17,442 16,576
Property and equipment related to discontinued operations 81 81
Operating lease right-of-use assets 2,419 2,545
Intangibles and other long term assets:    
Permits 8,850 8,790
Other intangible assets - net 999 1,065
Finite risk sinking fund (restricted cash) 11,390 11,307
Other assets 753 989
Other assets related to discontinued operations 36
Total assets 72,872 66,515
Current liabilities:    
Accounts payable 11,560 9,277
Accrued expenses 5,794 6,118
Disposal/transportation accrual 1,129 1,156
Deferred revenue 3,699 5,456
Accrued closure costs - current 82 84
Current portion of long-term debt 1,730 1,300
Current portion of operating lease liabilities 258 244
Current portion of finance lease liabilities 444 471
Current liabilities related to discontinued operations 928 994
Total current liabilities 25,624 25,100
Accrued closure costs 6,125 5,957
Deferred tax liabilities 595 590
Long-term debt, less current portion 6,547 2,580
Long-term operating lease liabilities, less current portion 2,209 2,342
Long-term finance lease liabilities, less current portion 375 466
Long-term liabilities related to discontinued operations 248 244
Other long-term liabilities 393
Total long-term liabilities 16,492 12,179
Total liabilities 42,116 37,279
Commitments and Contingencies (Note 10)
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; 12,142,771 and 12,123,520 shares issued, respectively; 12,135,129 and 12,115,878 shares outstanding, respectively 12 12
Additional paid-in capital 108,659 108,457
Accumulated deficit (75,891) (77,315)
Accumulated other comprehensive loss (262) (211)
Less Common Stock in treasury, at cost; 7,642 shares (88) (88)
Total Perma-Fix Environmental Services, Inc. stockholders' equity 32,430 30,855
Non-controlling interest (1,674) (1,619)
Total stockholders' equity 30,756 29,236
Total liabilities and stockholders' equity $ 72,872 $ 66,515
v3.20.2
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Statement of Financial Position [Abstract]    
Accounts receivable, allowance for doubtful accounts $ 426 $ 487
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 2,000,000 2,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value $ 0.001 $ .001
Common stock, shares authorized 30,000,000 30,000,000
Common stock, shares issued 12,142,771 12,123,520
Common stock, shares outstanding 12,135,129 12,115,878
Treasury stock, shares 7,642 7,642
v3.20.2
Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Income Statement [Abstract]        
Net revenues $ 22,047 $ 17,135 $ 46,907 $ 28,843
Cost of goods sold 18,737 13,864 38,957 23,071
Gross profit 3,310 3,271 7,950 5,772
Selling, general and administrative expenses 2,700 2,705 5,627 5,603
Research and development 209 223 441 450
(Gain) loss on disposal of property and equipment (4) (1) 27 (1)
Income (loss) from operations 405 344 1,855 (280)
Other income (expense):        
Interest income 28 107 84 188
Interest expense (99) (107) (219) (194)
Interest expense-financing fees (60) (60) (129) (70)
Other 4 95 9 224
Loss on extinguishment of debt (27) (27)
Income (loss) from continuing operations before taxes 251 379 1,573 (132)
Income tax (benefit) expense (9) 6 5 45
Income (loss) from continuing operations, net of taxes 260 373 1,568 (177)
Loss from discontinued operations (net of taxes of $0) (85) (115) (199) (267)
Net income (loss) 175 258 1,369 (444)
Net loss attributable to non-controlling interest (29) (31) (55) (61)
Net income (loss) attributable to Perma-Fix Environmental Services, Inc. common stockholders $ 204 $ 289 $ 1,424 $ (383)
Net income (loss) per common share attributable to Perma-Fix Environmental Services, Inc. stockholders - basic and diluted:        
Continuing operations $ 0.02 $ 0.03 $ 0.13 $ (0.01)
Discontinued operations (0.01) (0.01) (0.02)
Net income (loss) per common share $ 0.02 $ 0.02 $ 0.12 $ (0.03)
Number of common shares used in computing net income (loss) per share:        
Basic 12,135 12,054 12,129 12,008
Diluted 12,286 12,122 12,320 12,008
v3.20.2
Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Income Statement [Abstract]        
Loss from discontinued operations, tax $ 0 $ 0 $ 0 $ 0
v3.20.2
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement of Comprehensive Income [Abstract]        
Net income (loss) $ 175 $ 258 $ 1,369 $ (444)
Other comprehensive income (loss):        
Foreign currency translation gain (loss) 28 (4) (51) 8
Comprehensive income (loss) 203 254 1,318 (436)
Comprehensive loss attributable to non-controlling interest (29) (31) (55) (61)
Comprehensive income (loss) attributable to Perma-Fix Environmental Services, Inc. stockholders $ 232 $ 285 $ 1,373 $ (375)
v3.20.2
Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($)
$ in Thousands
Common Stock [Member]
Additional Paid-In Capital [Member]
Common Stock Held In Treasury [Member]
Accumulated Other Comprehensive Loss [Member]
Non-controlling Interest in Subsidiary [Member]
Accumulated Deficit [Member]
Total
Balance at Dec. 31, 2018 $ 12 $ 107,548 $ (88) $ (214) $ (1,495) $ (79,630) $ 26,133
Balance, shares at Dec. 31, 2018 11,944,215            
Net Income (loss) (30) (672) (702)
Foreign currency translation 12 12
Issuance of Common Stock for services 60 60
Issuance of Common Stock for services, shares 24,964            
Stock-Based Compensation 48 48
Balance at Mar. 31, 2019 $ 12 107,656 (88) (202) (1,525) (80,302) 25,551
Balance, shares at Mar. 31, 2019 11,969,179            
Balance at Dec. 31, 2018 $ 12 107,548 (88) (214) (1,495) (79,630) 26,133
Balance, shares at Dec. 31, 2018 11,944,215            
Net Income (loss)             (444)
Foreign currency translation             8
Balance at Jun. 30, 2019 $ 12 108,110 (88) (206) (1,556) (80,013) 26,259
Balance, shares at Jun. 30, 2019 12,062,081            
Balance at Mar. 31, 2019 $ 12 107,656 (88) (202) (1,525) (80,302) 25,551
Balance, shares at Mar. 31, 2019 11,969,179            
Net Income (loss) (31) 289 258
Foreign currency translation (4) (4)
Issuance of Common Stock for services 62 62
Issuance of Common Stock for services, shares 17,902            
Stock-Based Compensation 36 36
Issuance of Common Stock with debt 263 263
Issuance of Common Stock with debt, shares 75,000            
Issuance of warrant with debt 93 93
Balance at Jun. 30, 2019 $ 12 108,110 (88) (206) (1,556) (80,013) 26,259
Balance, shares at Jun. 30, 2019 12,062,081            
Balance at Dec. 31, 2019 $ 12 108,457 (88) (211) (1,619) (77,315) 29,236
Balance, shares at Dec. 31, 2019 12,123,520            
Net Income (loss) (26) 1,220 1,194
Foreign currency translation (79) (79)
Issuance of Common Stock for services 48 48
Issuance of Common Stock for services, shares 5,128            
Issuance of Common Stock upon exercise of options 6 6
Issuance of Common Stock upon exercise of options, shares 3,643            
Stock-Based Compensation 44 44
Balance at Mar. 31, 2020 $ 12 108,555 (88) (290) (1,645) (76,095) 30,449
Balance, shares at Mar. 31, 2020 12,132,291            
Balance at Dec. 31, 2019 $ 12 108,457 (88) (211) (1,619) (77,315) 29,236
Balance, shares at Dec. 31, 2019 12,123,520            
Net Income (loss)             1,369
Foreign currency translation             (51)
Balance at Jun. 30, 2020 $ 12 108,659 (88) (262) (1,674) (75,891) 30,756
Balance, shares at Jun. 30, 2020 12,142,771            
Balance at Mar. 31, 2020 $ 12 108,555 (88) (290) (1,645) (76,095) 30,449
Balance, shares at Mar. 31, 2020 12,132,291            
Net Income (loss) (29) 204 175
Foreign currency translation 28 28
Issuance of Common Stock for services 56 56
Issuance of Common Stock for services, shares 10,239            
Issuance of Common Stock upon exercise of options
Issuance of Common Stock upon exercise of options, shares 241            
Stock-Based Compensation 48 48
Balance at Jun. 30, 2020 $ 12 $ 108,659 $ (88) $ (262) $ (1,674) $ (75,891) $ 30,756
Balance, shares at Jun. 30, 2020 12,142,771            
v3.20.2
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Cash flows from operating activities:    
Net income (loss) $ 1,369 $ (444)
Less: loss from discontinued operations, net of taxes of $0 (199) (267)
Income (loss) from continuing operations, net of taxes 1,568 (177)
Adjustments to reconcile income (loss) from continuing operations to cash provided by (used in) operating activities:    
Depreciation and amortization 711 641
Interest on finance lease with purchase option 4
Loss on extinguishment of debt 27
Amortization of debt discount/debt issuance costs 129 67
Deferred tax expense 5 7
(Recovery of) provision for bad debt reserves (107) 37
Loss (gain) on disposal of property and equipment 27 (1)
Issuance of common stock for services 104 122
Stock-based compensation 92 84
Changes in operating assets and liabilities of continuing operations    
Accounts receivable 2,479 (49)
Unbilled receivables (3,085) (3,053)
Prepaid expenses, inventories and other assets 714 281
Accounts payable, accrued expenses and unearned revenue 289 1,178
Cash provided by (used in) continuing operations 2,957 (863)
Cash used in discontinued operations (259) (334)
Cash provided by (used in) operating activities 2,698 (1,197)
Cash flows from investing activities:    
Purchases of property and equipment (1,366) [1] (312) [2]
Proceeds from sale of property and equipment 4 32
Cash used in investing activities of continuing operations (1,362) (280)
Cash provided by investing activities of discontinued operations 13 44
Cash used in investing activities (1,349) (236)
Cash flows from financing activities:    
Repayments of revolving credit borrowings (47,058) (23,816)
Borrowing on revolving credit 46,737 23,177
Proceeds from issuance of long-term debt 5,666 2,500
Proceeds from finance leases 120
Principal repayments of finance lease liabilities (229) (101)
Principal repayments of long term debt (1,045) (610)
Payment of debt issuance costs (85) (90)
Proceeds from issuance of common stock upon exercise of options 6
Cash provided by financing activities of continuing operations 3,992 1,180
Effect of exchange rate changes on cash (18) 15
Increase (decrease) in cash and finite risk sinking fund (restricted cash) 5,323 (238)
Cash and finite risk sinking fund (restricted cash) at beginning of period 11,697 16,781
Cash and finite risk sinking fund (restricted cash) at end of period 17,020 16,543
Supplemental disclosure:    
Interest paid 207 184
Income taxes paid 30 121
Equipment purchase subject to finance lease 132 22
Issuance of Common Stock with debt 263
Issuance of Warrant with debt $ 93
[1] Net of financed amount of $51,000 and $132,000 for the three and six months ended June 30, 2020, respectively.
[2] Net of financed amount of $18,000 and $22,000 for the three and six months ended June 30, 2019, respectively.
v3.20.2
Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement of Cash Flows [Abstract]        
Loss from discontinued operations, tax $ 0 $ 0 $ 0 $ 0
v3.20.2
Basis of Presentation
 6 Months Ended
Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation

1. Basis of Presentation

 

The 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 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, 2020 are not necessarily indicative of results to be expected for the fiscal year ending December 31, 2020.

 

The Company suggests that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

 

The consolidated financial statements include our accounts, those of our wholly-owned subsidiaries, and our majority-owned Polish subsidiary, Perma-Fix Medical. Additionally, the Company’s financial statements include the account of a variable interest entity (“VIE”), Perma-Fix ERRG for which we are the primary beneficiary (See “Note 14 - VIE” for a discussion of this VIE).
v3.20.2
Summary of Significant Accounting Policies
 6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

 

Our accounting policies are as set forth in the notes to the December 31, 2019 consolidated financial statements referred to above.

 

Recently Adopted Accounting Standards

 

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 improves the disclosure requirements on fair value measurements. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of ASU No. 2018-13 by the Company effective January 1, 2020 did not have a material impact on the Company’s financial statements or disclosures.

 

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (“ASU 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference London Interbank Offered Rate (“LIBOR”) or another rate that is expected to be discontinued. The amendments in the ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The adoption of ASU 2020-04 on March 12, 2020 by the Company did not have a material impact on the Company’s financial statements. The Company will continue to assess the potential impact of this ASU through the effective period.

 

Recently Issued Accounting Standards – Not Yet Adopted

 

In June 2016, the FASB issued ASU No. 2016-13, “Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance: ASU 2018-19 “Codification Improvements to Topic 326, Financial Instruments - Credit Losses,” ASU 2019-04 “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” ASU 2019-05 “Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief,” ASU 2019-11 “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” and ASU 2020-02, “Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842)” (collectively, “Topic 326”). Topic 326 introduces an approach, based on expected losses, to estimate credit losses on certain types of financial instruments and modifies the impairment model for available-for-sale debt securities. The new approach to estimating credit losses (referred to as the current expected credit losses model) applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables and loans. Entities are required to apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. These ASUs are effective January 1, 2023 for the Company as a smaller reporting company. The Company had expected to early adopt theses ASUs effective January 1, 2020; however, due to the need for reallocation of the Company’s resources to manage COVID-19 related matters, the Company has deferred adoption of theses ASUs effective January 1, 2020 and expect to adopt these ASUs by January 1, 2023.

 

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its financial statements and related disclosures.

 

In January 2020, the FASB issued ASU 2020-01, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” This guidance addresses accounting for the transition into and out of the equity method and provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
v3.20.2
COVID-19 Impact
 6 Months Ended
Jun. 30, 2020
Covid-19 Impact  
COVID-19 Impact

3. COVID-19 Impact

 

The spread of COVID-19 continues to result in significant volatility in the U.S. and international markets. The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business. As previously reported, the COVID-19 pandemic did not result in a material impact to the Company’s first quarter 2020 results of operations; however, the Company’s second quarter results of operations were impacted by the shutdown of a number of projects and the delays of certain waste shipments which began in late March 2020 that continued into the second quarter of 2020. As states began to lift stay-at-home orders, along with certain other restrictions since the start of the pandemic, in the latter part of the second quarter of 2020, the Company was able to restart on a number, but not all, of the projects that were previously shutdown. Despite these project shutdowns, revenues within our Services Segment in the second quarter of 2020 exceeded the corresponding period of 2019 by approximately $7,166,000. The Company continues to experience some delays in waste shipments from certain customers within our Treatment Segment due to the planning time that is required by these customers to restart waste shipments as they return to work on-site. These continued project shutdowns and waste shipment delays may impact the Company’s results of operations for the third quarter of 2020 and potentially the remainder of fiscal year 2020.

 

At this time, the Company believes it has sufficient liquidity on hand to continue business operations during the next twelve months. At June 30, 2020, the Company had cash on hand of approximately $5,630,000 and borrowing availability under our revolving credit facility of $12,330,000 based on a percentage of eligible receivables and subject to certain reserves. The Company’s cash at June 30, 2020 included proceeds received from a loan in the amount of approximately $5,666,000 (“PPP Loan”) in April 2020 under the Paycheck Protection Program (“PPP”) that was established under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). On June 5, 2020, the Paycheck Protection Program Flexibility Act of 2020 (the “Flexibility Act”) was signed into law, amending the CARES Act (see “Note 9 – Long Term Debt –PPP Loan” for further detail of this loan. Additionally, see “Note 16 – Subsequent Event – PPP Loan” for the discussion of the repayment of approximately $327,000 of the PPP Loan the Company made on July 9, 2020). The Company continues to assess reducing operating costs during this volatile time, which include curtailing capital expenditures, eliminating non-essential expenditures and implementing a hiring freeze as needed.

 

The Company is closely monitoring our customers’ payment performance. However, as a significant portion of our revenues is derived from government related contracts, the Company does not expect its accounts receivable collections to be materially impacted due to COVID-19.

 

The situation surrounding COVID-19 continues to remain fluid. The potential for a material impact on the Company’s business increases the longer COVID-19 impacts the level of economic activities in the United States and globally as our customers may continue to delay waste shipments and project work may shut down again. For this reason, we cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on our results of operations, financial position, and liquidity which may impact our ability to meet our financial covenant requirements under our credit facility. Given the current economic environment and the market volatility from COVID-19, the Company considered whether these events or changes in circumstances triggered the need for an interim impairment analysis of our long-lived assets and intangible assets. Based on the Company’s assessment of the impact of these conditions on our business, the Company determined there was no triggering event as of June 30, 2020. However, as the effects of the COVID-19 pandemic continue to evolve, the Company will continue to assess the need to perform interim impairment tests of our long-lived assets and intangible assets.

 

The CARES Act, as amended, among other things, includes modifications to net operating loss carryforwards, corporate alternative minimum tax (“AMT”) provisions, net interest expense deduction, and deferment of social security tax payments. The Company elected to defer payment of its shares of social security taxes starting in April 2020 (see “Note 15 – Deferral of Employment Tax Deposits”). The Company continues to evaluate the provisions of the CARES Act, as amended, and how certain other elections may impact our financial position, results of operations, and disclosures, if elected.
v3.20.2
Revenue
 6 Months Ended
Jun. 30, 2020
Revenue from Contract with Customer [Abstract]  
Revenue

4. 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  
    June 30, 2020     June 30, 2019  
    Treatment     Services     Total     Treatment     Services     Total  
Fixed price   $ 7,840     $ 5,751     $ 13,591     $ 10,094     $ 2,709     $ 12,803  
Time and materials      ―       8,456       8,456        ―       4,332       4,332  
Total   $ 7,840     $ 14,207     $ 22,047     $ 10,094     $ 7,041     $ 17,135  

 

Revenue by Contract Type                                    
(In thousands)   Six Months Ended     Six Months Ended  
    June 30, 2020     June 30, 2019  
    Treatment     Services     Total     Treatment     Services     Total  
Fixed price   $ 17,403     $ 8,698     $ 26,101     $ 19,999     $ 3,137     $ 23,136  
Time and materials      ―       20,806       20,806        ―       5,707       5,707  
Total   $ 17,403     $ 29,504     $ 46,907     $ 19,999     $ 8,844     $ 28,843  

 

Revenue by generator                                    
(In thousands)   Three Months Ended     Three Months Ended  
    June 30, 2020     June 30, 2019  
    Treatment     Services     Total     Treatment     Services     Total  
Domestic government   $ 6,055     $ 12,791     $ 18,846     $ 6,537     $ 4,842     $ 11,379  
Domestic commercial     1,785       431       2,216       3,395       855       4,250  
Foreign government      ―       965       965       162       1,323       1,485  
Foreign commercial      ―       20       20        ―       21       21  
Total   $ 7,840     $ 14,207     $ 22,047     $ 10,094     $ 7,041     $ 17,135  

 

Revenue by generator                                    
(In thousands)   Six Months Ended     Six Months Ended  
    June 30, 2020     June 30, 2019  
    Treatment     Services     Total     Treatment     Services     Total  
Domestic government   $ 13,745     $ 26,589     $ 40,334     $ 14,449     $ 5,529     $ 19,978  
Domestic commercial     3,658       893       4,551       5,274       1,613       6,887  
Foreign government      ―       1,979       1,979       220       1,659       1,879  
Foreign commercial      ―       43       43       56       43       99  
Total   $ 17,403     $ 29,504     $ 46,907     $ 19,999     $ 8,844     $ 28,843  

 

Contract Balances

 

The timing of revenue recognition, billings, and cash collections results in accounts receivable and unbilled receivables (contract assets). The Company’s contract liabilities consist of deferred revenues which represents advance payment from customers in advance of the completion of our performance obligation.

 

The following table represents changes in our contract assets and contract liabilities balances:

 

                Year-to-date     Year-to-date  
(In thousands)   June 30, 2020     December 31, 2019     Change ($)     Change (%)  
Contract assets                                
Account receivables, net of allowance   $ 10,806     $ 13,178     $ (2,372 )     (18.0 )%
Unbilled receivables - current     11,069       7,984       3,085       38.6 %
                                 
Contract liabilities                                
Deferred revenue   $ 3,699     $ 5,456     $ (1,757 )     (32.2 )%

 

During the three and six months ended June 30, 2020, the Company recognized revenue of $2,516,000 and $6,539,000, respectively, related to untreated waste that was in the Company’s control as of the beginning of each respective year. During the three and six months ended June 30, 2019, the Company recognized revenue of $2,865,000 and $7,442,000, respectively, related to untreated waste that was in the Company’s control as of the beginning of each respective year. Revenue recognized in each period related to performance obligations satisfied within the respective period.

 

Remaining Performance Obligations

 

The Company applies the practical expedient in FASB 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.
v3.20.2
Leases
 6 Months Ended
Jun. 30, 2020
Leases [Abstract]  
Leases

5. Leases

 

The Company’s operating lease right-of-use (“ROU”) assets and operating lease liabilities represent primarily leases for office spaces used to conduct our business. These leases have remaining terms of approximately 4 to 10 years which include one or more options to renew, with renewal terms from 3 years to 8 years (which are included in valuing our ROU assets and liabilities). As most of our operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate as the discount rate when determining the present value of the lease payments. The incremental borrowing rate is determined based on the Company’s secured borrowing rate, lease terms and current economic environment. Some of our operating leases include both lease (rent payments) and non-lease components (maintenance costs such as cleaning and landscaping services). The Company has elected the practical expedient to account for lease component and non-lease component as a single component for all leases. Lease expense for operating leases is recognized on a straight-line basis over the lease term.

 

Finance leases primarily consist of processing and transport equipment used by our facilities’ operations. Our finance leases also includes a building with land for our waste treatment operations. The Company’s finance leases generally have terms between one to three years and most of the leases include options to purchase the underlying assets at fair market value at the conclusion of the lease term. The lease for the building and land has a term of two year with option to buy at the end of the lease term which the Company is reasonably certain exercise.

 

The Company adopted the policy to not recognize ROU assets and liabilities for short term leases.

 

The components of lease cost for the Company’s leases for the three and six months ended June 30, 2020 and 2019 were as follows (in thousands):

 

    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2020     2019     2020     2019  
                         
Operating Leases:                                
Lease cost   $ 114     $ 124     $ 228     $ 228  
                                 
Finance Leases:                                
Amortization of ROU assets     26       10       52       19  
Interest on lease liability     29       13       50       25  
      55       23       102       44  
                                 
Short-term lease rent expense     1       23       4       72  
                                 
Total lease cost     170       170       334       344  

 

The weighted average remaining lease term and the weighted average discount rate for operating and finance leases at June 30, 2020 were:

 

    Operating Leases     Finance Leases  
Weighted average remaining lease terms (years)     8.4       1.5  
                 
Weighted average discount rate     8.0 %     11.0 %

 

The following table reconciles the undiscounted cash flows for the operating and finance leases at June 30, 2020 to the operating and finance lease liabilities recorded on the balance sheet (in thousands):

 

    Operating Leases     Finance Leases  
2020 Remainder   $ 222     $ 365  
2021     450       405  
2022     458       123  
2023     466       2  
2024     342       ―  
2025 and thereafter     1,457       ―  
Total undiscounted lease payments     3,395       895  
Less: Imputed interest     (928 )     (76 )
Present value of lease payments   $ 2,467     $ 819  
                 
Current portion of operating lease obligations   $ 258     $ ―  
Long-term operating lease obligations, less current portion   $ 2,209     $ ―  
Current portion of finance lease obligations   $ ―     $ 444  
Long-term finance lease obligations, less current portion   $ ―     $ 375  

 

Supplemental cash flow and other information related to our leases were as follows for the three and six months ended June 30, 2020 and 2019 (in thousands):

 

    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2020     2019     2020     2019  
Cash paid for amounts included in the measurement                                
of lease liabilities:                                
Operating cash flow used in operating leases   $ 110     $ 119     $ 220     $ 217  
Operating cash flow used in finance leases   $ 29     $ 13     $ 50     $ 25  
Financing cash flow used in finance leases   $ 128     $ 57     $ 229     $ 101  
                                 
ROU assets obtained in exchange for lease obligations for:                                
Finance liabilities   $ 41     $ ―        $ 123     $ 138  
Operating liabilities   $  ―          182       ―         182  
v3.20.2
Intangible Assets
 6 Months Ended
Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets

6. Intangible Assets

 

The following table summarizes information relating to the Company’s definite-lived intangible assets:

 

    Weighted Average     June 30, 2020     December 31, 2019  
    Amortization     Gross           Net     Gross           Net  
    Period     Carrying     Accumulated     Carrying     Carrying     Accumulated     Carrying  
    (Years)     Amount     Amortization     Amount     Amount     Amortization     Amount  
Intangibles (amount in thousands)                                          
Patent     11     $ 797     $ (368 )   $ 429     $ 760     $ (358 )   $ 402  
Software     3       420       (409 )     11       414       (408 )     6  
Customer relationships     10       3,370       (2,811 )     559       3,370       (2,713 )     657  
Total           $ 4,587     $ (3,588 )   $ 999     $ 4,544     $ (3,479 )   $ 1,065  

 

The intangible assets noted above are amortized on a straight-line basis over their useful lives with the exception of customer relationships which are being amortized using an accelerated method.

 

The following table summarizes the expected amortization over the next five years for our definite-lived intangible assets:

 

Year  

Amount

(In thousands)

  
       
2020(remaining)   $     112  
2021     202  
2022     175  
2023     132  
2024     10  

 

Amortization expenses relating to the definite-lived intangible assets as discussed above were $55,000 and $109,000 for the three and six months ended June 30, 2020, respectively, and $61,000 and $134,000 for the three and six months ended June 30, 2019, respectively.
v3.20.2
Capital Stock, Stock Plans and Stock Based Compensation
 6 Months Ended
Jun. 30, 2020
Share-based Payment Arrangement [Abstract]  
Capital Stock, Stock Plans and Stock Based Compensation

7. Capital Stock, Stock Plans and Stock Based Compensation

 

The Company has certain stock option plans under which it may award incentive stock options (“ISOs”) and/or non-qualified stock options (“NQSOs”) to employees, officers, outside directors, and outside consultants.

 

On February 4, 2020, the Company granted 6,000 NQSOs from the Company’s 2003 Outside Directors Stock Plan (“2003 Plan”) to a new director elected by the Company’s Board of Directors (“Board”) to fill a vacancy on the Board. The options granted were for a contractual term of ten years with a vesting period of six months. The exercise price of the options was $7.00 per share, which was equal to the Company’s closing stock price per share the day preceding the grant date, pursuant to the 2003 Plan.

 

On January 17, 2019 the Company granted 105,000 ISOs from the 2017 Stock Option Plan (“2017 Plan”) to certain employees, which included our executive officers as follows: 25,000 ISOs to our Chief Executive Officer (“CEO”); 15,000 ISOs to our Chief Financial Officer (“CFO”); and 15,000 ISOs to our Executive Vice President (“EVP”) of Strategic Initiatives. The ISOs granted were for a contractual term of six years with one-fifth vesting annually over a five year period. The exercise price of the ISO was $3.15 per share, which was equal to the fair market value of the Company’s Common Stock per share on the date of grant.

 

The Company granted a NQSO to Robert Ferguson on July 27, 2017 from the Company’s 2017 Plan for the purchase of up to 100,000 shares of the Company’s Common Stock (“Ferguson Stock Option”) in connection with his work as a consultant to the Company’s Test Bed Initiative (“TBI”) at our Perma-Fix Northwest Richland, Inc. (“PFNWR”) facility at an exercise price of $3.65 per share, which was the fair market value of the Company’s Common Stock on the date of grant. The term of the Ferguson Stock Option is seven years from the grant date. The vesting of the Ferguson Stock Option is subject to the achievement of three separate milestones by certain dates. On January 17, 2019, the Company’s Compensation and Stock Option Committee (“Compensation Committee”) and Board approved an amendment to the Ferguson Stock Option whereby the vesting date for the second milestone for the purchase of up to 30,000 shares of the Company’s Common Stock was extended to March 31, 2020 from January 27, 2019. On March 27, 2020, the Compensation Committee and the Board approved another amendment to the Ferguson Stock Option whereby the vesting date for the second milestone was further extended to December 31, 2021 from March 31, 2020 and the vesting date for the third milestone for the purchase of up to 60,000 shares of the Company’s Common Stock was extended to December 31, 2022 from January 27, 2021. The 10,000 options under the first milestone were exercised by Robert Ferguson in May 2018. The Company has not recognized compensation costs (fair value of approximately $334,000 at June 30, 2020) for the remaining 90,000 Ferguson Stock Option under the remaining two milestones since achievement of the performance obligation under each of the two remaining milestones is uncertain at June 30, 2020. All other terms of the Ferguson Stock Option remain unchanged.

 

The Company estimates fair value of stock options using the Black-Scholes valuation model. Assumptions used to estimate the fair value of stock options granted include the exercise price of the award, the expected term, the expected volatility of the Company’s stock over the option’s expected term, the risk-free interest rate over the option’s expected term, and the expected annual dividend yield. The fair value of the options granted on February 4, 2020 and January 17, 2019 as discussed above and the related assumptions used in the Black-Scholes option model used to value the options granted were as follows:

 

    Outside Director Stock Options Granted     Employee Stock Option Granted  
    February 4, 2020     January 17, 2019  
Weighted-average fair value per option   $ 4.89     $ 1.42  
Risk -free interest rate (1)     1.61 %     2.58 %
Expected volatility of stock (2)     55.83 %     48.67 %
Dividend yield     None       None  
Expected option life (3)     10.0 years       5.0 years  

 

(1) The risk-free interest rate is based on the U.S. Treasury yield in effect at the grant date over the expected term of the option.

 

(2) The expected volatility is based on historical volatility from our traded Common Stock over the expected term of the option.

 

(3) The expected option life is based on historical exercises and post-vesting data.

 

The following table summarizes stock-based compensation recognized for the three and six months ended June 30, 2020 and 2019 for our employee and director stock options.

 

    Three Months Ended     Six Months Ended  
Stock Options   June 30,     June 30,  
    2020     2019     2020     2019  
Employee Stock Options   $ 33,000     $ 36,000     $ 65,000     $ 79,000  
Director Stock Options     15,000        ―       27,000       5,000  
Total   $ 48,000     $ 36,000     $ 92,000     $ 84,000  

 

At June 30, 2020, the Company has approximately $335,000 of total unrecognized compensation costs related to unvested options for employee and directors. The weighted average period over which the unrecognized compensation costs are expected to be recognized is approximately 2.6 years.

 

The summary of the Company’s total Stock Option Plans as of June 30, 2020 and June 30, 2019, and changes during the periods then ended, are presented below. The Company’s Plans consist of the 2010 Stock Option Plan, the 2017 Plans and the 2003 Plan:

 

    Shares     Weighted Average Exercise Price     Weighted Average Remaining Contractual Term (years)     Aggregate Intrinsic Value (3)  
Options outstanding January 1, 2020     681,300     $ 3.84                  
Granted     6,000     $ 7.00                  
Exercised     (12,500 )   $ 3.47             $ 16,060  
Forfeited/expired     (20,000 )   $ 3.45                  
Options outstanding end of period (1)     654,800     $ 3.88       3.7     $ 1,685,031  
Options exercisable at June 30, 2020(1)     306,800     $ 4.20       3.6     $ 711,306  

 

    Shares     Weighted Average Exercise Price     Weighted Average Remaining Contractual Term (years)     Aggregate Intrinsic Value (3)  
Options outstanding January 1, 2019     616,000     $ 4.23                  
Granted     105,000     $ 3.15                  
Exercised       ─     $    ─                     
Forfeited/expired     (13,000 )   $ 3.43                  
Options outstanding end of period (2)     708,000     $ 4.08       4.4     $ 209,318  
Options exercisable as of June 30, 2019(2)     430,000     $ 4.94       4.1     $ 43,518  

 

(1) Options with exercise prices ranging from $2.79 to $8.40

 

(2) Options with exercise prices ranging from $2.79 to $13.35

 

(3) The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price.

 

During the six months ended June 30, 2020, the Company issued a total of 15,367 shares of its Common Stock under the 2003 Plan to its outside directors as compensation for serving on our Board. The Company has recorded approximately $115,000 in compensation expenses (included in selling, general and administration (“SG&A”) expenses) in connection with the issuance of shares of its Common Stock to outside directors.

 

During the six months ended June 30, 2020, the Company issued 2,000 shares of its Common Stock resulting from the exercise of options from the Company’s 2017 Plan for total proceeds of $6,300. Additionally, the Company issued 1,884 shares of its Common Stock from cashless exercises of 8,000 and 2,500 options at $3.60 per share and $3.15 per share, respectively.
v3.20.2
Income (Loss) Per Share
 6 Months Ended
Jun. 30, 2020
Earnings Per Share [Abstract]  
Income (Loss) Per Share

8. Income (Loss) Per Share

 

Basic income (loss) per share is calculated based on the weighted-average number of outstanding common shares during the applicable period. Diluted income (loss) per share is based on the weighted-average number of outstanding common shares plus the weighted-average number of potential outstanding common shares. In periods where they are anti-dilutive, such amounts are excluded from the calculations of dilutive earnings per share. The following table reconciles the income (loss) and average share amounts used to compute both basic and diluted income (loss) per share:

 

    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    (Unaudited)     (Unaudited)  
(Amounts in Thousands, Except for Per Share Amounts)   2020     2019     2020     2019  
Net income (loss) attributable to Perma-Fix Environmental Services, Inc., common stockholders:                                
Income (loss) from continuing operations, net of taxes   $ 260     $ 373     $ 1,568     $ (177 )
Net loss attributable to non-controlling interest     (29 )     (31 )     (55 )     (61 )
Income (loss) from continuing operations attributable to Perma-Fix Environmental Services, Inc. common stockholders     289       404       1,623       (116 )
Loss from discontinuing operations attributable to Perma-Fix Environmental Services, Inc. common stockholders     (85 )     (115 )     (199 )     (267 )
Net income (loss) attributable to Perma-Fix Environmental Services, Inc. common stockholders   $ 204     $ 289     $ 1,424     $ (383 )
                                 
Basic income (loss) per share attributable to Perma-Fix Environmental Services, Inc. common stockholders   $ .02     $ .02     $ .12     $ (.03 )
                                 
Diluted income (loss) per share attributable to Perma-Fix Environmental Services, Inc. common stockholders   $ .02     $ .02     $ .12     $ (.03 )
                                 
Weighted average shares outstanding:                                
Basic weighted average shares outstanding     12,135       12,054       12,129       12,008  
Add: dilutive effect of stock options     134       68       171        ─  
Add: dilutive effect of warrants     17        ─       20        ─  
Diluted weighted average shares outstanding     12,286       12,122       12,320       12,008  
                                 
Potential shares excluded from above weighted average share calcualtions due to their anti-dilutive effect include:                                
Stock options     38       113       38       186  
Warrant     ―       ―       ―       ―  
v3.20.2
Long-Term Debt
 6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Long-Term Debt

9. Long Term Debt

 

Long-term debt consists of the following at June 30, 2020 and December 31, 2019:

 

(Amounts in Thousands)   June 30, 2020     December 31, 2019  
Revolving Credit facility dated May 8, 2020, borrowings based upon eligible accounts receivable, subject to monthly borrowing base calculation, balance due on May 15, 2024, Effective interest rate for the first six months of 2020 was 6.1%. (1)   $ ―     $ 321  
Term Loan dated May 8, 2020, payable in equal monthly installments of principal, balance due on May 15, 2024. Effective interest rate for the first six months of 2020 was 6.0%. (1)     1,586 (2)     1,827 (2)
Promissory Note dated April 1, 2019, payable in twelve monthly installments of interest only, starting May 1, 2019 followed with twelve monthly installments of approximately $208 in principal plus accrued interest. Interest accrues at annual rate of 4.0%. (3)     999 (4)     1,732 (4)
Promissory Note dated April 14, 2020, subject to loan forgiveness, balance due April 14, 2022. Interest accrues at annual rate of 1.0%. (3)     5,666 (5)     ―  
Note Payable dated June 10, 2020, payable in 36 monthly installments, starting in July 2020 at annual interest rate of $5.64%.     26       ―  
Total debt     8,277       3,880  
Less current portion of long-term debt     1,730 (4)     1,300 (4)
Long-term debt   $ 6,547     $ 2,580  

 

(1) Our revolving credit facility is collateralized by our accounts receivable and our term loan is collateralized by our property, plant, and equipment. Effective July 1, 2019, monthly installment principal payment on the Term Loan was amended to approximately $35,500 from approximately $101,600. See “Revolving Credit and Term Loan Agreement” below for terms of the Company’s credit facility prior to the New Loan Agreement dated May 8, 2020.

 

(2) Net of debt issuance costs of ($120,000) and ($92,000) at June 30, 2020 and December 31, 2019, respectively.

 

(3) Uncollateralized note.

 

(4) Net of debt discount/debt issuance costs of ($149,000) and ($248,000) at June 30, 2020 and December 31, 2019, respectively.

The Promissory Note provides for prepayment of principal over the term of the Note without penalty. In 2019, the Company made total prepayment of principal of $520,000 which was reflected in the current portion of the debt. During the first six months of 2020, the Company made total principal repayment of $832,000 of which $416,000 was prepaid. At June 30, 2020, outstanding balance of the loan are current.

 

(5) Entered into with the Company’s credit facility lender under the Paycheck Protection Program (see “PPP Loan” below for further information on this loan).

 

Revolving Credit and Term Loan Agreement

 

The Company entered into an Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated October 31, 2011 (“Amended Loan Agreement”), with PNC National Association (“PNC”), acting as agent and lender. The Amended Loan Agreement had been amended from time to time since the execution of the Amended Loan Agreement. The Amended Loan Agreement, as subsequently amended (“Revised Loan Agreement”), provided the Company with the following credit facility with a maturity date of March 24, 2021: (a) up to $12,000,000 revolving credit (“revolving credit”) and (b) a term loan (“term loan”) of approximately $6,100,000. The maximum that the Company can borrow under the revolving credit was based on a percentage of eligible receivables (as defined) at any one time reduced by outstanding standby letters of credit and borrowing reductions that our lender may impose from time to time.

 

Payment of annual rate of interest due on the revolving credit under the Revised Loan Agreement was at prime (3.25% at June 30, 2020) plus 2% and the term loan at prime plus 2.5%.

 

On May 8, 2020, the Company entered into a Second Amended and Restated Revolving Credit, Term Loan and Security Agreement (the “New Loan Agreement”) with PNC, replacing our previous Revised Loan Agreement with PNC. The New Loan Agreement provides the Company with the following credit facility:

 

  ● up to $18,000,000 revolving credit facility, subject to the amount of borrowings based on a percentage of eligible receivables and subject to certain reserves; and
     
  ● a term loan of $1,741,818, which requires monthly installments of $35,547.

 

The New Loan Agreement terminates as of May 15, 2024, unless sooner terminated.

 

Similar to our Revised Loan Agreement, the New Loan Agreement requires the Company to meet certain customary financial covenants, including, among other things, a minimum Tangible Adjusted Net Worth requirement of $27,000,000 at all times; maximum capital spending of $6,000,000 annually; and a minimum fixed charge coverage ratio (“FCCR”) requirement of 1.15:1.

 

Under the New Loan agreement, payment of annual rate of interest due on the credit facility is as follows:

 

● revolving credit at prime plus 2.50% or London InterBank Offer Rate (“LIBOR”) plus 3.50% and the term loan at prime plus 3.00% or LIBOR plus 4.00%. The Company can only elect to use the LIBOR interest payment option after it becomes compliant with meeting the minimum FCCR of 1.15:1; and

 

● Upon the achievement of a FCCR of greater than 1.25:1, the Company will have the option of paying an annual rate of interest due on the revolving credit at prime plus 2.00% or LIBOR plus 3.00% and the term loan at prime plus 2.50% or LIBOR plus 3.50%. The Company met this FCCR in the first and second quarters of 2020. Upon meeting the FCCR of 1.25:1, this interest payment option will remain in place in the event that the Company’s future FCCR falls below 1.25:1.

 

Under the LIBOR option of interest payment noted above, a LIBOR floor of 0.75% shall apply in the event that LIBOR falls below 0.75% at any point in time.

 

Pursuant to the New Loan Agreement, the Company may terminate the New Loan Agreement upon 90 days’ prior written notice upon payment in full of our obligations under the New Loan Agreement. The Company has agreed to pay PNC 1.0% of the total financing in the event we pay off our obligations on or before May 7, 2021 and 0.5% of the total financing if we pay off our obligations after May 7, 2021 but prior to or on May 7, 2022. No early termination fee shall apply if we pay off our obligations under the New Loan Agreement after May 7, 2022.

 

In connection with New Loan Agreement, the Company paid its lender a fee of $50,000 and incurred other direct costs of approximately $35,000, which are being amortized over the term of the New Loan Agreement as interest expense-financing fees. As a result of the termination of the Revised Loan Agreement, the Company recorded approximately $27,000 in loss on extinguishment of debt in accordance with ASC 470-50, “Debt – Modifications and Extinguishment.”

 

At June 30, 2020, the borrowing availability under our revolving credit was approximately $12,330,000, based on our eligible receivables and includes a reduction an in borrowing availability of approximately $3,126,000 from outstanding standby letters of credit.

 

The Company’s credit facility under its Revised and New Loan Agreement with PNC contains certain financial covenants, along with customary representations and warranties. A breach of any of these financial covenants, unless waived by PNC, could result in a default under our credit facility allowing our lender to immediately require the repayment of all outstanding debt under our credit facility and terminate all commitments to extend further credit. The Company met its FCCR requirement in the first and second quarters of 2020. Additionally, the Company met its remaining financial covenant requirements in the first and second quarters of 2020.

 

Loan and Securities Purchase Agreement, Promissory Note and Subordination Agreement

 

On April 1, 2019, the Company completed a lending transaction with Robert Ferguson (the “Lender”), whereby the Company borrowed from the Lender the sum of $2,500,000 pursuant to the terms of a Loan and Security Purchase Agreement and promissory note (the “Loan”). The Lender is a shareholder of the Company and also serves as a consultant to the Company in connection with the Company’s TBI at its PFNWR subsidiary. The proceeds from the Loan were used for general working capital purposes. The Loan is unsecured, with a term of two years with interest payable at a fixed interest rate of 4.00% per annum. The Loan provides for monthly payments of accrued interest only during the first year of the Loan, with the first interest payment due May 1, 2019 and monthly payments of approximately $208,333 in principal plus accrued interest starting in the second year of the Loan. The Loan also allows for prepayment of principal payments over the term of the Loan without penalty with such prepayment of principal payments to be applied to the second year of the loan payments at the Company’s discretion. Since inception of the loan, the Company has made total prepayments in principal of $936,000, of which $416,000 was made in the first six months of 2020. In connection with the above Loan, the Lender agreed under the terms of the Loan and a Subordination Agreement with our credit facility lender, to subordinate payment under the Loan, and agreed that the Loan will be junior in right of payment to the credit facility in the event of default or bankruptcy or other insolvency proceeding by us. In connection with this capital raise transaction described above and consideration for us receiving the Loan, the Company issued a Warrant (the “Warrant”) to the Lender to purchase up to 60,000 shares of our Common Stock at an exercise price of $3.51 per share, which was the closing bid price for a share of our Common Stock on NASDAQ.com immediately preceding the execution of the Loan and Warrant. The Warrant expires on April 1, 2024 and remains outstanding at June 30, 2020. As further consideration for this capital raise transaction relating to the Loan, the Company also issued 75,000 shares of its Common Stock to the Lender. The fair value of the Warrant and Common Stock and the related closing fees incurred from the transaction totaled approximately $398,000 and was recorded as debt discount/debt issuance costs, which is being amortized over the term of the loan as interest expense – financing fees. The 75,000 shares of Common Stock, the Warrant and the 60,000 shares of Common Stock that may be purchased under the Warrant were and will be issued in a private placement that was and will be exempt from registration under Rule 506 and/or Sections 4(a)(2) and 4(a)(5) of the Securities Act of 1933, as amended (the “Act”) and bear a restrictive legend against resale except in a transaction registered under the Act or in a transaction exempt from registration thereunder.

 

Upon default, the Lender will have the right to elect to receive in full and complete satisfaction of the Company’s obligations under the Loan either: (a) the cash amount equal to the sum of the unpaid principal balance owing under the loan and all accrued and unpaid interest thereon (the “Payoff Amount”) or (b) upon meeting certain conditions, the number of whole shares of the Company’s Common Stock (the “Payoff Shares”) determined by dividing the Payoff Amount by the dollar amount equal to the closing bid price of our Common Stock on the date immediately prior to the date of default, as reported or quoted on the primary nationally recognized exchange or automated quotation system on which our Common Stock is listed; provided however, that the dollar amount of such closing bid price shall not be less than $3.51, the closing bid price for our Common Stock as disclosed on NASDAQ.com immediately preceding the signing of this loan agreement.

 

If issued, the Payoff Shares will not be registered and the Lender will not be entitled to registration rights with respect to the Payoff Shares. The aggregate number of shares, warrant shares, and Payoff Shares that are or will be issued to the Lender pursuant to the Loan, together with the aggregate shares of the Company’s Common Stock and other voting securities of the Company owned by the Lender or which may be acquired by the Lender as of the date of issuance of the Payoff Shares, shall not exceed the number of shares of the Company’s Common Stock equal to 14.9% of the number of shares of the Company’s Common Stock issued and outstanding as of the date immediately prior to the default, less the number of shares of the Company’s Common Stock owned by the Lender immediately prior to the date of such default plus the number of shares of our Common Stock that may be acquired by the Lender under warrants and/or options outstanding immediately prior to the date of such default.

 

PPP Loan

 

On April 14, 2020, the Company entered into a promissory note with PNC, our credit facility lender, in the amount of $5,666,300 under the PPP (the “PPP Loan”). The PPP was established under the recently enacted CARES Act and is administered by the U.S. Small Business Administration (“SBA”). On June 5, 2020, the Flexibility Act was signed into law which amended the CARES Act. The note evidencing the PPP Loan contains events of default relating to, among other things, payment defaults, breach of representations and warranties, and provisions of the promissory note. (See “Note 16 – Subsequent Event – PPP Loan” for a discussion of a repayment of approximately $327,000 of the PPP Loan to PNC on July 9, 2020 which amount has been included in “current portion of long-term debt” in the Company’s Consolidated Balance Sheet at June 30, 2020).

 

Under the terms of the Flexibility Act, the Company can apply for and be granted forgiveness for all or a portion of the PPP Loan. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds by the Company for eligible payroll costs, mortgage interest, rent and utility costs and the maintenance of employee and compensation levels for the covered period (which is defined as a 24 week period, beginning April 14, 2020, the date in which proceeds from the PPP Loan was disbursed to the Company by PNC). At least 60% of such forgiven amount must be used for eligible payroll costs. The Company expects to apply for forgiveness on repayment of the loan as permitted under the program, which is subject to the approval of our lender. If all or a portion of the PPP Loan is not forgiven, all or the remaining portion will be for a term of two years but can be prepaid at any time prior to maturity without any prepayment penalties. The annual interest rate on the PPP Loan is 1.0% and no payments of principal or interest are due until the date that the SBA remits the loan forgiveness amount to our lender, provided that the Company submits its loan forgiveness application to our lender within ten months following the last day of the applicable covered period. While the Company’s PPP Loan currently has a two year maturity, the Flexibility Act permits the Company to request a five year maturity with our lender which the Company does not expect to request at this time.
v3.20.2
Commitments and Contingencies
 6 Months Ended
Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

10. Commitments and Contingencies

 

Hazardous Waste

 

In connection with our waste management services, we process both hazardous and non-hazardous waste, which we transport to our own, or other, facilities for destruction or disposal. As a result of disposing of hazardous substances, in the event any cleanup is required, we could be a potentially responsible party for the costs of the cleanup notwithstanding any absence of fault on our part.

 

Legal Matters

 

In the normal course of conducting our business, we are involved in various litigation. We are not a party to any litigation or governmental proceeding which our management believes could result in any judgments or fines against us that would have a material adverse effect on our financial position, liquidity or results of future operations.

 

Insurance

 

The Company has a 25-year finite risk insurance policy entered into in June 2003 (“2003 Closure Policy”) with AIG Specialty Insurance Company (“AIG”), which provides financial assurance to the applicable states for our permitted facilities in the event of unforeseen closure. The 2003 Closure Policy, as amended, provides for a maximum allowable coverage of $28,177,000 which includes available capacity to allow for annual inflation and other performance and surety bond requirements. Total coverage under the 2003 Closure Policy, as amended, was $19,651,000 at June 30, 2020. At June 30, 2020 and December 31, 2019, finite risk sinking funds contributed by the Company related to the 2003 Closure Policy which is included in other long term assets on the accompanying Consolidated Balance Sheets totaled $11,390,000 and $11,307,000, respectively, which included interest earned of $1,919,000 and $1,836,000 on the finite risk sinking funds as of June 30, 2020 and December 31, 2019, respectively. Interest income for the three and six months ended June 30, 2020 was approximately $27,000 and $83,000, respectively. Interest income for the three and six months ended June 30, 2019 was approximately $107,000 and $188,000, respectively. If we so elect, AIG is obligated to pay the Company an amount equal to 100% of the finite risk sinking fund account balance in return for complete release of liability from both the Company and any applicable regulatory agency using this policy as an instrument to comply with financial assurance requirements.

 

Letter of Credits and Bonding Requirements

 

From time to time, the Company is required to post standby letters of credit and various bonds to support contractual obligations to customers and other obligations, including facility closures. At June 30, 2020, the total amount of standby letters of credit outstanding was approximately $3,126,000 and the total amount of bonds outstanding was approximately $52,519,000.
v3.20.2
Discontinued Operations
 6 Months Ended
Jun. 30, 2020
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations

11. Discontinued Operations

 

The Company’s discontinued operations consist of all our subsidiaries included in our Industrial Segment which encompasses subsidiaries divested in 2011 and prior and three previously closed locations.

 

The Company’s discontinued operations had net losses of $85,000 and $115,000 for the three months ended June 30, 2020 and 2019, respectively (net of taxes of $0 for each period) and net losses of $199,000 and $267,000 for the six months ended June 30, 2020 and 2019, respectively, (net of taxes of $0 for each period). The losses were primarily due to costs incurred in the administration and continued monitoring of our discontinued operations. The Company’s discontinued operations had no revenues for each of the periods noted above.

 

The following table presents the major class of assets of discontinued operations as of June 30, 2020 and December 31, 2019. No assets and liabilities were held for sale at each of the periods noted.

 

    June 30,     December 31,  
(Amounts in Thousands)   2020     2019  
Current assets                
Other assets   $ 124     $ 104  
Total current assets     124       104  
Long-term assets                
Property, plant and equipment, net (1)     81       81  
Other assets     —       36  
Total long-term assets     81       117  
Total assets   $ 205     $ 221  
Current liabilities                
Accounts payable   $ 5     $ 8  
Accrued expenses and other liabilities     167       169  
Environmental liabilities     756       817  
Total current liabilities     928       994  
Long-term liabilities                
Closure liabilities     138       134  
Environmental liabilities     110       110  
Total long-term liabilities     248       244  
Total liabilities   $ 1,176     $ 1,238  

 

(1) net of accumulated depreciation of $10,000 for each period presented.

 

The Company’s discontinued operations included a note receivable in the original amount of approximately $375,000 recorded in May 2016 resulting from the sale of property at our Perma-Fix of Michigan, Inc. (“PFMI”) subsidiary. This note requires 60 equal monthly installment payments by the buyer of approximately $7,250 (which includes interest). At June 30, 2020, the outstanding amount on this note receivable totaled approximately $105,000, which are all current and is included in “Current assets related to discontinued operations” in the accompanying Consolidated Balance Sheets.
v3.20.2
Operating Segments
 6 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
Operating Segments

12. Operating Segments

 

In accordance with ASC 280, “Segment Reporting”, the Company defines an operating segment as a business activity: (1) from which we may earn revenue and incur expenses; (2) whose operating results are regularly reviewed by the chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance; and (3) for which discrete financial information is available.

 

Our reporting segments are defined as below:

 

TREATMENT SEGMENT, which includes:

 

  - nuclear, low-level radioactive, mixed waste (containing both hazardous and low-level radioactive constituents), hazardous and non-hazardous waste treatment, processing and disposal services primarily through four uniquely licensed and permitted treatment and storage facilities; and
     
  - Research and Development (“R&D”) activities to identify, develop and implement innovative waste processing techniques for problematic waste streams.

 

SERVICES SEGMENT, which includes:

 

  - Technical services, which include:

 

  ○ professional radiological measurement and site survey of large government and commercial installations using advanced methods, technology and engineering;
  ○ integrated Occupational Safety and Health services including IH assessments; hazardous materials surveys, e.g., exposure monitoring; lead and asbestos management/abatement oversight; indoor air quality evaluations; health risk and exposure assessments; health & safety plan/program development, compliance auditing and training services; and OSHA citation assistance;
  ○ global technical services providing consulting, engineering, project management, waste management, environmental, and decontamination and decommissioning field, technical, and management personnel and services to commercial and government customers; and
  ○ on-site waste management services to commercial and governmental customers.

 

  - Nuclear services, which include:

 

  ○ technology-based services including engineering, decontamination and decommissioning (“D&D”), specialty services and construction, logistics, transportation, processing and disposal;
  ○ remediation of nuclear licensed and federal facilities and the remediation cleanup of nuclear legacy sites. Such services capability includes: project investigation; radiological engineering; partial and total plant D&D; facility decontamination, dismantling, demolition, and planning; site restoration; logistics; transportation; and emergency response; and

 

  - A company owned equipment calibration and maintenance laboratory that services, maintains, calibrates, and sources (i.e., rental) health physics, IH and customized NIOSH instrumentation.
  - A company owned gamma spectroscopy laboratory for the analysis of oil and gas industry solids and liquids.

 

MEDICAL SEGMENT, which includes: R&D of the Company’s medical isotope production technology by our majority-owned Polish subsidiary, Perma-Fix of Medical or the Medical Segment. The Medical Segment has not generated any revenues and all costs incurred are reflected within R&D in the accompanying consolidated financial statements. As previously disclosed, the Medical Segment has substantially reduced its R&D costs and activities due to the need for capital to fund these activities. The Company anticipates that the Medical Segment will not resume full R&D activities until the necessary capital is obtained through its own credit facility or additional equity raise, or obtains partners willing to provide funding for its R&D.

 

Our reporting segments exclude our corporate headquarters and our discontinued operations (see “Note 11 – Discontinued Operations”) which do not generate revenues.

 

The table below presents certain financial information of our operating segments for the three and six months ended June 30, 2020 and 2019 (in thousands):

 

Segment Reporting for the Quarter Ended June 30, 2020

 

    Treatment     Services     Medical     Segments
Total		     Corporate (1)     Consolidated
Total		  
Revenue from external customers   $ 7,840     $ 14,207       —     $ 22,047     $ —     $ 22,047  
Intercompany revenues     446       5       —       451       —       —  
Gross profit     1,695       1,615       —       3,310       —       3,310  
Research and development     52       46       74       172       37       209  
Interest income     1       —       —       1       27       28  
Interest expense     (28 )     (4 )     —       (32 )     (67 )     (99 )
Interest expense-financing fees     —       —       —       —       (60 )     (60 )
Depreciation and amortization     275       84       —       359       5       364  
Segment income (loss) before income taxes     750       1,031       (74 )     1,707       (1,456 )     251  
Income tax benefit     (9 )     —       —       (9 )     —       (9 )
Segment income (loss)     759       1,031       (74 )     1,716       (1,456 )     260  
Expenditures for segment assets     320       146       —       466       2       468 (3)

 

Segment Reporting for the Quarter Ended June 30, 2019

 

    Treatment     Services     Medical     Segments
Total		     Corporate (1)    

Consolidated

Total

  
Revenue from external customers   $ 10,094     $ 7,041       —     $ 17,135     $ —     $ 17,135  
Intercompany revenues     7       42       —       49       —       —  
Gross profit     2,627       644       —       3,271       —       3,271  
Research and development     136       —       80       216       7       223  
Interest income     —       —       —       —       107       107  
Interest expense     (30 )     (4 )     —       (34 )     (73 )     (107 )
Interest expense-financing fees     —       —       —       —       (60 )     (60 )
Depreciation and amortization     233       79       —       312       5       317  
Segment income (loss) before income taxes     1,611       137       (80 )     1,668       (1,289 )     379  
Income tax expense     6       —       —       6       —       6  
Segment income (loss)     1,605       137       (80 )     1,662       (1,289 )     373  
Expenditures for segment assets     73       15       —       88       —       88 (2)

 

Segment Reporting for the Six Months Ended June 30, 2020

 

    Treatment     Services     Medical     Segments
Total		     Corporate (1)     Consolidated
Total		  
Revenue from external customers   $ 17,403     $ 29,504       —     $ 46,907     $ —     $ 46,907  
Intercompany revenues     653       13       —       666       —       —  
Gross profit     4,440       3,510       —       7,950       —       7,950  
Research and development     145       112       140       397       44       441  
Interest income     1       —       —       1       83       84  
Interest expense     (46 )     (10 )     —       (56 )     (163 )     (219 )
Interest expense-financing fees     —       —       —       —       (129 )     (129 )
Depreciation and amortization     539       162       —       701       10       711  
Segment income (loss) before income taxes     2,297       2,349       (140 )     4,506       (2,933 )     1,573  
Income tax expense     5       —       —       5       —       5  
Segment income (loss)     2,292       2,349       (140 )     4,501       (2,933 )     1,568  
Expenditures for segment assets     1,000       361       —       1,361       5       1,366 (3)

 

Segment Reporting for the Six Months Ended June 30, 2019

 

    Treatment     Services     Medical     Segments
Total		     Corporate (1)     Consolidated
Total		  
Revenue from external customers   $ 19,999     $ 8,844       —     $ 28,843     $ —     $ 28,843  
Intercompany revenues     9       63       —       72       —       —  
Gross profit     5,584       188       —       5,772       —       5,772  
Research and development     283       —       154       437       13       450  
Interest income     —       —       —       —       188       188  
Interest expense     (47 )     (13 )     —       (60 )     (134 )     (194 )
Interest expense-financing fees     —       —       —       —       (70 )     (70 )
Depreciation and amortization     470       157       —       627       14       641  
Segment income (loss) before income taxes     3,487       (875 )     (154 )     2,458       (2,590 )     (132 )
Income tax expense     45       —       —       45       —       45  
Segment income (loss)     3,442       (875 )     (154 )     2,413       (2,590 )     (177 )
Expenditures for segment assets     294       18       —       312       —       312 (2)

 

(1) Amounts reflect the activity for corporate headquarters not included in the segment information.

 

(2) Net of financed amount of $18,000 and $22,000 for the three and six months ended June 30, 2019, respectively.

 

(3) Net of financed amount of $51,000 and $132,000 for the three and six months ended June 30, 2020, respectively.
v3.20.2
Income Taxes
 6 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
Income Taxes

13. Income Taxes

 

The Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes.

 

The Company had income tax benefit of $9,000 and income tax expense of $5,000 for continuing operations for the three and six months ended June 30, 2020, respectively, and income tax expenses of $6,000 and $45,000 for continuing operations for the three and six months ended June 30, 2019, respectively. The Company’s effective tax rates were approximately 3.6% and 0.3% for the three and six months ended June 30, 2020, respectively, and 1.6% and 34.1% for the three and six months ended June 30, 2019, respectively. The tax benefit and expense for the periods above were comprised of state tax benefit and expense for separate company filing states. The Company’s tax rate for each of the periods discussed above was impacted by the Company’s full valuation on its net deferred tax assets.

 

The CARES Act, among other things, includes modifications to net operating loss carryforwards and AMT provisions. At this time, the Company is not expecting any effects to its tax provisions from the CARES Act. However, the Company will continue to monitor for any potential impact to its tax provisions from the CARES Act.
v3.20.2
Variable Interest Entities (VIE)
 6 Months Ended
Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Variable Interest Entities ("VIE")

14. Variable Interest Entities (“VIE”)

 

On May 24, 2019, the Company and Engineering/Remediation Resources Group, Inc. (“ERRG”) entered into an unpopulated joint venture agreement for project work bids within the Company’s Services Segment. The joint venture is doing business as Perma-Fix ERRG, a general partnership. The Company has a 51% partnership interest in the joint venture and ERRG has a 49% partnership interest in the joint venture. Activities under Perma-Fix ERRG did not commence until the first quarter of 2020.

 

The Company determines whether joint ventures in which it has invested meet the criteria of a VIE at the start of each new venture and when a reconsideration event has occurred. A VIE is a legal entity that satisfies any of the following characteristics: (a) the legal entity does not have sufficient equity investment at risk; (b) the equity investors at risk as a group, lack the characteristics of a controlling financial interest; or (c) the legal entity is structured with disproportionate voting rights.

 

The Company consolidates a VIE if it is determined to be the primary beneficiary of the VIE. The primary beneficiary has both the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

 

Based on the Company’s evaluation of Perma-Fix ERRG and related agreements with Perma-Fix ERRG, the Company determined that Perma-Fix ERRG is a VIE in which we are the primary beneficiary. At June 30, 2020, Perma-Fix ERRG had total assets of $2,523,000 and total liabilities of $2,523,000 which are all recorded as current.

v3.20.2
Deferral of Employment Tax Deposits
 6 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
Deferral of Employment Tax Deposits

15. Deferral of Employment Tax Deposits

 

The CARES Act, as amended by the Flexibility Act which was signed into law on June 5, 2020, provides employers the option to defer the payment of an employer’s share of social security taxes beginning on March 27, 2020 through December 31, 2020, among other things, 50% of the amount of social security taxes deferred will become due on December 31, 2021 with the remaining 50% due on December 31, 2022. The Company elected to defer such taxes starting in mid-April 2020. The Company estimates the remaining payment of approximately $790,000 of social security taxes otherwise due in 2020 will be deferred with 50% due by December 31, 2021 and the remaining 50% due by December 31, 2022. At June 30, 2020, the Company has deferred payment of approximately $393,000 in its share of social security taxes, which amount has been included in “other long-term liabilities” in the Company’s Consolidated Balance Sheet at June 30, 2020.
v3.20.2
Subsequent Events
 6 Months Ended
Jun. 30, 2020
Subsequent Events [Abstract]  
Subsequent Events

16. Subsequent Events

 

PPP Loan

 

As discussed in “Note 9 – Long Term Debt – PPP Loan,” the Company entered into a promissory note with PNC, our credit facility lender, in the amount of $5,666,300 (“PPP Loan”) under the PPP. The PPP was established under the recently enacted CARES Act (as amended by the Flexibility Act signed into law on June 5, 2020) and is administered by the SBA. On July 9, 2020, the Company repaid approximately $327,000 of the PPP Loan to PNC resulting from an error made in the loan calculation at the time of the loan origination.

 

Employment Agreements

 

On July 22, 2020, the Company’s Board appointed Richard Grondin to the position of EVP of Waste Treatment Operations and an executive officer of the Company. Mr. Grondin previously held the position of Vice President of Western Operations within our Treatment Segment. Immediately after the appointment of Richard Grondin to the position of EVP of Waste Treatment Operations and an executive officer of the Company, the Company’s Compensation Committee and the Board approved, and the Company entered into, an employment agreement with each of Mark Duff, CEO (the “CEO Employment Agreement”), Dr. Louis Centofanti, EVP of Strategic Initiatives (the “EVP of Strategic Initiatives Employment Agreement”), Ben Naccarato, CFO (the “CFO Employment Agreement”), Andrew Lombardo, EVP of Nuclear and Technical Services (the “EVP of Nuclear and Technical Services Employment Agreement”), and Richard Grondin, EVP of Waste Treatment Operations (the “EVP of Waste Treatment Operations Employment Agreement”), collectively with the CEO Employment Agreement, the EVP of Strategic Initiative Employment Agreement, the CFO Employment Agreement, the EVP of Nuclear and Technical Services Employment Agreement and the EVP of Waste Treatment Operations Employment Agreement, the “New Employment Agreements” and each individually the “New Employment Agreement”. The Company had previously entered into an employment agreement with each of Mark Duff, Dr. Louis Centofanti and Ben Naccarato on September 8, 2017, all three of which were due to expire on September 8, 2020. These three employment agreements dated September 8, 2017 were terminated effective July, 22, 2020.

 

Pursuant to New Employment Agreements, which are effective July 22, 2020, each of these executive officers is provided an annual salary, which annual salary may be increased, but not reduced, from time to time as determined by the Compensation Committee. As a result of Richard Grondin’s promotion to EVP of Waste Treatment and an executive officer of the Company, his annual salary was increased from $208,000 as Vice President of Western Operations within our Treatment Segment to $240,000, effective July 22, 2020. No change was made to the salary of the remaining executive officers for fiscal year 2020. In addition, each of these executive officers is entitled to participate in the Company’s broad-based benefits plans and to certain performance compensation payable under separate Management Incentive Plans (“MIP”) as approved by the Company’s Compensation Committee and the Company’s Board. The Company’s Compensation Committee and the Board approved individual 2020 MIP on January 16, 2020 (which are effective January 1, 2020) for each Mark Duff, Dr. Louis Centofanti, Ben Naccarato and Andrew Lombardo which remains effective for fiscal year 2020. See “MIP” below for the MIP approved by the Compensation Committee and the Board for Richard Grondin.

 

Each of the New Employment Agreements is effective for three years from July 22, 2020 (the “Initial Term”) unless earlier terminated by the Company or by the executive officer. At the end of the Initial Term of each New Employment Agreement, each New Employment Agreement will automatically be extended for one additional year, unless at least six months prior to the expiration of the Initial Term, the Company or the executive officer provides written notice not to extend the terms of the New Employment Agreement.

 

Pursuant to the New Employment Agreements, if the executive officer’s employment is terminated due to death/disability or for cause (as defined in the agreements), the Company will pay to the executive officer or to his estate an amount equal to the sum of any unpaid base salary and accrued unused vacation time through the date of termination and any benefits due to the executive officer under any employee benefit plan (the “Accrued Amounts”) plus any performance compensation payable pursuant to the MIP with respect to the fiscal year immediately preceding the date of termination.

 

If the executive officer terminates his employment for “good reason” (as defined in the agreements) or is terminated by the Company without cause (including any such termination for “good reason” or without cause within 24 months after a Change in Control (as defined in the agreement)), the Company will pay the executive officer the Accrued Amounts, two years of full base salary, and two times the performance compensation (under the MIP) earned with respect to the fiscal year immediately preceding the date of termination provided the performance compensation earned with respect to the fiscal year immediately preceding the date of termination has not been paid. If performance compensation earned with respect to the fiscal year immediately preceding the date of termination has been made to the executive officer, the executive officer will be paid an additional year of the performance compensation earned with respect to the fiscal year immediately preceding the date of termination. If the executive terminates his employment for a reason other than for good reason, the Company will pay to the executive an amount equal to the Accrued Amounts plus any performance compensation payable pursuant to the MIP with respect to the fiscal year immediately preceding the date of termination.

 

If there is a Change in Control (as defined in the agreements), all outstanding stock options to purchase common stock held by the executive officer will immediately become exercisable in full commencing on the date of termination through the original term of the options. In the event of the death of an executive officer, all outstanding stock options to purchase common stock held by the executive officer will immediately become exercisable in full commencing on the date of death, with such options exercisable for the lesser of the original option term or twelve months from the date of the executive officer’s death. In the event an executive officer terminates his employment for “good reason” or is terminated by the Company without cause, all outstanding stock options to purchase common stock held by the executive officer will immediately become exercisable in full commencing on the date of termination, with such options exercisable for the lesser of the original option term or within 60 days from the date of the executive’s date of termination. Severance benefits payable with respect to a termination (other than Accrued Amounts) shall not be payable until the termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h)).

 

MIP

 

On July 22, 2020, upon the approval of the EVP of Waste Treatment Operations Employment Agreement as discussed above, the Company’s Board and the Company’s Compensation Committee approved a MIP for Richard Grondin effective January 1, 2020, applicable for fiscal 2020. The MIP provides guidelines for the calculation of annual cash incentive-based compensation, subject to Compensation Committee oversight and modification. The MIP awards cash compensation based on achievement of performance thresholds, with the amount of such compensation established as a percentage of the Mr. Grondin’s 2020 annual base salary as the EVP of Waste Treatment Operations. The potential target performance compensation ranges from 5% to 100% ($12,000 to $240,000) of the base salary for the EVP of Waste Treatment Operations, which became effective on July 22, 2020.

 

PFMI

 

As discussed in “Note 11- Discontinued Operations,” the Company’s discontinued operations included a note receivable in the original amount of approximately $375,000 recorded in May 2016 resulting from the sale of property at its PFMI subsidiary. On July 24, 2020, the purchaser of the property paid off the outstanding note receivable balance of approximately $105,000.

 

Legal Matter

 

During July 2020, Tetra Tech EC, Inc. (“Tetra Tech”) filed a complaint in the United States District Court for the Northern District of California against CH2M Hill, Inc. (“CH2M”) and four subcontractors of CH2M, including the Company (“defendants”). The complaint alleges claims for negligence, negligent misrepresentation and equitable indemnification against all defendants related to alleged damages suffered by Tetra Tech in respect of certain draft reports prepared by defendants at the request of the U.S. Navy as part of an investigation and review of certain whistleblower complaints about Tetra Tech’s environmental restoration at the Hunter’s Point Naval Shipyard in San Francisco.

 

CH2M was hired by the Navy in 2016 to review Tetra Tech’s work. CH2M subcontracted with environmental consulting and cleanup firms Battelle Memorial Institute, Cabrera Services, Inc., SC&A, Inc. and the Company to assist with the review, according to the complaint.

 

The complaint alleges that the subject draft reports were prepared negligently and in a biased manner, made public, and caused damage to Tetra Tech’s reputation; triggering related lawsuits and costing it opportunities for both government and commercial contracts.

 

At this time, the Company does not believe it has any liability to Tetra Tech, and has provided notice of the claim to its insurance carrier. The Company intends to vigorously defend the claims.
v3.20.2
Summary of Significant Accounting Policies (Policies)
 6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

 

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 improves the disclosure requirements on fair value measurements. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of ASU No. 2018-13 by the Company effective January 1, 2020 did not have a material impact on the Company’s financial statements or disclosures.

 

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (“ASU 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference London Interbank Offered Rate (“LIBOR”) or another rate that is expected to be discontinued. The amendments in the ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The adoption of ASU 2020-04 on March 12, 2020 by the Company did not have a material impact on the Company’s financial statements. The Company will continue to assess the potential impact of this ASU through the effective period.
Recently Issued Accounting Standards - Not Yet Adopted

Recently Issued Accounting Standards – Not Yet Adopted

 

In June 2016, the FASB issued ASU No. 2016-13, “Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance: ASU 2018-19 “Codification Improvements to Topic 326, Financial Instruments - Credit Losses,” ASU 2019-04 “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” ASU 2019-05 “Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief,” ASU 2019-11 “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” and ASU 2020-02, “Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842)” (collectively, “Topic 326”). Topic 326 introduces an approach, based on expected losses, to estimate credit losses on certain types of financial instruments and modifies the impairment model for available-for-sale debt securities. The new approach to estimating credit losses (referred to as the current expected credit losses model) applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables and loans. Entities are required to apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. These ASUs are effective January 1, 2023 for the Company as a smaller reporting company. The Company had expected to early adopt theses ASUs effective January 1, 2020; however, due to the need for reallocation of the Company’s resources to manage COVID-19 related matters, the Company has deferred adoption of theses ASUs effective January 1, 2020 and expect to adopt these ASUs by January 1, 2023.

 

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its financial statements and related disclosures.

 

In January 2020, the FASB issued ASU 2020-01, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” This guidance addresses accounting for the transition into and out of the equity method and provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
v3.20.2
Revenue (Tables)
 6 Months Ended
Jun. 30, 2020
Revenue from Contract with Customer [Abstract]  
Schedule of Disaggregation of Revenue

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  
    June 30, 2020     June 30, 2019  
    Treatment     Services     Total     Treatment     Services     Total  
Fixed price   $ 7,840     $ 5,751     $ 13,591     $ 10,094     $ 2,709     $ 12,803  
Time and materials      ―       8,456       8,456        ―       4,332       4,332  
Total   $ 7,840     $ 14,207     $ 22,047     $ 10,094     $ 7,041     $ 17,135  

 

Revenue by Contract Type                                    
(In thousands)   Six Months Ended     Six Months Ended  
    June 30, 2020     June 30, 2019  
    Treatment     Services     Total     Treatment     Services     Total  
Fixed price   $ 17,403     $ 8,698     $ 26,101     $ 19,999     $ 3,137     $ 23,136  
Time and materials      ―       20,806       20,806        ―       5,707       5,707  
Total   $ 17,403     $ 29,504     $ 46,907     $ 19,999     $ 8,844     $ 28,843  

 

Revenue by generator                                    
(In thousands)   Three Months Ended     Three Months Ended  
    June 30, 2020     June 30, 2019  
    Treatment     Services     Total     Treatment     Services     Total  
Domestic government   $ 6,055     $ 12,791     $ 18,846     $ 6,537     $ 4,842     $ 11,379  
Domestic commercial     1,785       431       2,216       3,395       855       4,250  
Foreign government      ―       965       965       162       1,323       1,485  
Foreign commercial      ―       20       20        ―       21       21  
Total   $ 7,840     $ 14,207     $ 22,047     $ 10,094     $ 7,041     $ 17,135  

 

Revenue by generator                                    
(In thousands)   Six Months Ended     Six Months Ended  
    June 30, 2020     June 30, 2019  
    Treatment     Services     Total     Treatment     Services     Total  
Domestic government   $ 13,745     $ 26,589     $ 40,334     $ 14,449     $ 5,529     $ 19,978  
Domestic commercial     3,658       893       4,551       5,274       1,613       6,887  
Foreign government      ―       1,979       1,979       220       1,659       1,879  
Foreign commercial      ―       43       43       56       43       99  
Total   $ 17,403     $ 29,504     $ 46,907     $ 19,999     $ 8,844     $ 28,843  
Schedule of Contract Assets and Liabilities

The following table represents changes in our contract assets and contract liabilities balances:

 

                Year-to-date     Year-to-date  
(In thousands)   June 30, 2020     December 31, 2019     Change ($)     Change (%)  
Contract assets                                
Account receivables, net of allowance   $ 10,806     $ 13,178     $ (2,372 )     (18.0 )%
Unbilled receivables - current     11,069       7,984       3,085       38.6 %
                                 
Contract liabilities                                
Deferred revenue   $ 3,699     $ 5,456     $ (1,757 )     (32.2 )%
v3.20.2
Leases (Tables)
 6 Months Ended
Jun. 30, 2020
Leases [Abstract]  
Schedule of Components of Lease Cost

The components of lease cost for the Company’s leases for the three and six months ended June 30, 2020 and 2019 were as follows (in thousands):

 

    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2020     2019     2020     2019  
                         
Operating Leases:                                
Lease cost   $ 114     $ 124     $ 228     $ 228  
                                 
Finance Leases:                                
Amortization of ROU assets     26       10       52       19  
Interest on lease liability     29       13       50       25  
      55       23       102       44  
                                 
Short-term lease rent expense     1       23       4       72  
                                 
Total lease cost     170       170       334       344  
Schedule of Weighted Average Lease

The weighted average remaining lease term and the weighted average discount rate for operating and finance leases at June 30, 2020 were:

 

    Operating Leases     Finance Leases  
Weighted average remaining lease terms (years)     8.4       1.5  
                 
Weighted average discount rate     8.0 %     11.0 %
Schedule of Operating Lease Liability Maturity

The following table reconciles the undiscounted cash flows for the operating and finance leases at June 30, 2020 to the operating and finance lease liabilities recorded on the balance sheet (in thousands):

 

    Operating Leases     Finance Leases  
2020 Remainder   $ 222     $ 365  
2021     450       405  
2022     458       123  
2023     466       2  
2024     342       ―  
2025 and thereafter     1,457       ―  
Total undiscounted lease payments     3,395       895  
Less: Imputed interest     (928 )     (76 )
Present value of lease payments   $ 2,467     $ 819  
                 
Current portion of operating lease obligations   $ 258     $ ―  
Long-term operating lease obligations, less current portion   $ 2,209     $ ―  
Current portion of finance lease obligations   $ ―     $ 444  
Long-term finance lease obligations, less current portion   $ ―     $ 375  
Schedule of Finance Lease Liability Maturity

The following table reconciles the undiscounted cash flows for the operating and finance leases at June 30, 2020 to the operating and finance lease liabilities recorded on the balance sheet (in thousands):

 

    Operating Leases     Finance Leases  
2020 Remainder   $ 222     $ 365  
2021     450       405  
2022     458       123  
2023     466       2  
2024     342       ―  
2025 and thereafter     1,457       ―  
Total undiscounted lease payments     3,395       895  
Less: Imputed interest     (928 )     (76 )
Present value of lease payments   $ 2,467     $ 819  
                 
Current portion of operating lease obligations   $ 258     $ ―  
Long-term operating lease obligations, less current portion   $ 2,209     $ ―  
Current portion of finance lease obligations   $ ―     $ 444  
Long-term finance lease obligations, less current portion   $ ―     $ 375  
Schedule of Supplemental Cash Flow and Other Information Related to Leases

Supplemental cash flow and other information related to our leases were as follows for the three and six months ended June 30, 2020 and 2019 (in thousands):

 

    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2020     2019     2020     2019  
Cash paid for amounts included in the measurement                                
of lease liabilities:                                
Operating cash flow used in operating leases   $ 110     $ 119     $ 220     $ 217  
Operating cash flow used in finance leases   $ 29     $ 13     $ 50     $ 25  
Financing cash flow used in finance leases   $ 128     $ 57     $ 229     $ 101  
                                 
ROU assets obtained in exchange for lease obligations for:                                
Finance liabilities   $ 41     $ ―        $ 123     $ 138  
Operating liabilities   $  ―          182       ―         182  
v3.20.2
Intangible Assets (Tables)
 6 Months Ended
Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Finite-Lived Intangible Assets

The following table summarizes information relating to the Company’s definite-lived intangible assets:

 

    Weighted Average     June 30, 2020     December 31, 2019  
    Amortization     Gross           Net     Gross           Net  
    Period     Carrying     Accumulated     Carrying     Carrying     Accumulated     Carrying  
    (Years)     Amount     Amortization     Amount     Amount     Amortization     Amount  
Intangibles (amount in thousands)                                          
Patent     11     $ 797     $ (368 )   $ 429     $ 760     $ (358 )   $ 402  
Software     3       420       (409 )     11       414       (408 )     6  
Customer relationships     10       3,370       (2,811 )     559       3,370       (2,713 )     657  
Total           $ 4,587     $ (3,588 )   $ 999     $ 4,544     $ (3,479 )   $ 1,065  
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The following table summarizes the expected amortization over the next five years for our definite-lived intangible assets:

 

Year  

Amount

(In thousands)

  
       
2020(remaining)   $     112  
2021     202  
2022     175  
2023     132  
2024     10  
v3.20.2
Capital Stock, Stock Plans and Stock Based Compensation (Tables)
 6 Months Ended
Jun. 30, 2020
Share-based Payment Arrangement [Abstract]  
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The fair value of the options granted on February 4, 2020 and January 17, 2019 as discussed above and the related assumptions used in the Black-Scholes option model used to value the options granted were as follows:

 

    Outside Director Stock Options Granted     Employee Stock Option Granted  
    February 4, 2020     January 17, 2019  
Weighted-average fair value per option   $ 4.89     $ 1.42  
Risk -free interest rate (1)     1.61 %     2.58 %
Expected volatility of stock (2)     55.83 %     48.67 %
Dividend yield     None       None  
Expected option life (3)     10.0 years       5.0 years  

 

(1) The risk-free interest rate is based on the U.S. Treasury yield in effect at the grant date over the expected term of the option.

 

(2) The expected volatility is based on historical volatility from our traded Common Stock over the expected term of the option.

 

(3) The expected option life is based on historical exercises and post-vesting data.
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs

The following table summarizes stock-based compensation recognized for the three and six months ended June 30, 2020 and 2019 for our employee and director stock options.

 

    Three Months Ended     Six Months Ended  
Stock Options   June 30,     June 30,  
    2020     2019     2020     2019  
Employee Stock Options   $ 33,000     $ 36,000     $ 65,000     $ 79,000  
Director Stock Options     15,000        ―       27,000       5,000  
Total   $ 48,000     $ 36,000     $ 92,000     $ 84,000  
Schedule of Stock Options Roll Forward

The summary of the Company’s total Stock Option Plans as of June 30, 2020 and June 30, 2019, and changes during the periods then ended, are presented below. The Company’s Plans consist of the 2010 Stock Option Plan, the 2017 Plans and the 2003 Plan:

 

    Shares     Weighted Average Exercise Price     Weighted Average Remaining Contractual Term (years)     Aggregate Intrinsic Value (3)  
Options outstanding January 1, 2020     681,300     $ 3.84                  
Granted     6,000     $ 7.00                  
Exercised     (12,500 )   $ 3.47             $ 16,060  
Forfeited/expired     (20,000 )   $ 3.45                  
Options outstanding end of period (1)     654,800     $ 3.88       3.7     $ 1,685,031  
Options exercisable at June 30, 2020(1)     306,800     $ 4.20       3.6     $ 711,306  

 

    Shares     Weighted Average Exercise Price     Weighted Average Remaining Contractual Term (years)     Aggregate Intrinsic Value (3)  
Options outstanding January 1, 2019     616,000     $ 4.23                  
Granted     105,000     $ 3.15                  
Exercised       ─     $    ─                     
Forfeited/expired     (13,000 )   $ 3.43                  
Options outstanding end of period (2)     708,000     $ 4.08       4.4     $ 209,318  
Options exercisable as of June 30, 2019(2)     430,000     $ 4.94       4.1     $ 43,518  

 

(1) Options with exercise prices ranging from $2.79 to $8.40

 

(2) Options with exercise prices ranging from $2.79 to $13.35

 

(3) The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price.
v3.20.2
Income (Loss) Per Share (Tables)
 6 Months Ended
Jun. 30, 2020
Earnings Per Share [Abstract]  
Schedule of Earnings Per Share, Basic and Diluted

The following table reconciles the income (loss) and average share amounts used to compute both basic and diluted income (loss) per share:

 

    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    (Unaudited)     (Unaudited)  
(Amounts in Thousands, Except for Per Share Amounts)   2020     2019     2020     2019  
Net income (loss) attributable to Perma-Fix Environmental Services, Inc., common stockholders:                                
Income (loss) from continuing operations, net of taxes   $ 260     $ 373     $ 1,568     $ (177 )
Net loss attributable to non-controlling interest     (29 )     (31 )     (55 )     (61 )
Income (loss) from continuing operations attributable to Perma-Fix Environmental Services, Inc. common stockholders     289       404       1,623       (116 )
Loss from discontinuing operations attributable to Perma-Fix Environmental Services, Inc. common stockholders     (85 )     (115 )     (199 )     (267 )
Net income (loss) attributable to Perma-Fix Environmental Services, Inc. common stockholders   $ 204     $ 289     $ 1,424     $ (383 )
                                 
Basic income (loss) per share attributable to Perma-Fix Environmental Services, Inc. common stockholders   $ .02     $ .02     $ .12     $ (.03 )
                                 
Diluted income (loss) per share attributable to Perma-Fix Environmental Services, Inc. common stockholders   $ .02     $ .02     $ .12     $ (.03 )
                                 
Weighted average shares outstanding:                                
Basic weighted average shares outstanding     12,135       12,054       12,129       12,008  
Add: dilutive effect of stock options     134       68       171        ─  
Add: dilutive effect of warrants     17        ─       20        ─  
Diluted weighted average shares outstanding     12,286       12,122       12,320       12,008  
                                 
Potential shares excluded from above weighted average share calcualtions due to their anti-dilutive effect include:                                
Stock options     38       113       38       186  
Warrant     ―       ―       ―       ―  
v3.20.2
Long-Term Debt (Tables)
 6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Schedule of Long-term Debt

Long-term debt consists of the following at June 30, 2020 and December 31, 2019:

 

(Amounts in Thousands)   June 30, 2020     December 31, 2019  
Revolving Credit facility dated May 8, 2020, borrowings based upon eligible accounts receivable, subject to monthly borrowing base calculation, balance due on May 15, 2024, Effective interest rate for the first six months of 2020 was 6.1%. (1)   $ ―     $ 321  
Term Loan dated May 8, 2020, payable in equal monthly installments of principal, balance due on May 15, 2024. Effective interest rate for the first six months of 2020 was 6.0%. (1)     1,586 (2)     1,827 (2)
Promissory Note dated April 1, 2019, payable in twelve monthly installments of interest only, starting May 1, 2019 followed with twelve monthly installments of approximately $208 in principal plus accrued interest. Interest accrues at annual rate of 4.0%. (3)     999 (4)     1,732 (4)
Promissory Note dated April 14, 2020, subject to loan forgiveness, balance due April 14, 2022. Interest accrues at annual rate of 1.0%. (3)     5,666 (5)     ―  
Note Payable dated June 10, 2020, payable in 36 monthly installments, starting in July 2020 at annual interest rate of $5.64%.     26       ―  
Total debt     8,277       3,880  
Less current portion of long-term debt     1,730 (4)     1,300 (4)
Long-term debt   $ 6,547     $ 2,580  

 

(1) Our revolving credit facility is collateralized by our accounts receivable and our term loan is collateralized by our property, plant, and equipment. Effective July 1, 2019, monthly installment principal payment on the Term Loan was amended to approximately $35,500 from approximately $101,600. See “Revolving Credit and Term Loan Agreement” below for terms of the Company’s credit facility prior to the New Loan Agreement dated May 8, 2020.

 

(2) Net of debt issuance costs of ($120,000) and ($92,000) at June 30, 2020 and December 31, 2019, respectively.

 

(3) Uncollateralized note.

 

(4) Net of debt discount/debt issuance costs of ($149,000) and ($248,000) at June 30, 2020 and December 31, 2019, respectively.

The Promissory Note provides for prepayment of principal over the term of the Note without penalty. In 2019, the Company made total prepayment of principal of $520,000 which was reflected in the current portion of the debt. During the first six months of 2020, the Company made total principal repayment of $832,000 of which $416,000 was prepaid. At June 30, 2020, outstanding balance of the loan are current.

 

(5) Entered into with the Company’s credit facility lender under the Paycheck Protection Program (see “PPP Loan” below for further information on this loan).
v3.20.2
Discontinued Operations (Tables)
 6 Months Ended
Jun. 30, 2020
Discontinued Operations and Disposal Groups [Abstract]  
Schedule of Disposal Groups, Including Discontinued Operation Balance Sheet

The following table presents the major class of assets of discontinued operations as of June 30, 2020 and December 31, 2019. No assets and liabilities were held for sale at each of the periods noted.

 

    June 30,     December 31,  
(Amounts in Thousands)   2020     2019  
Current assets                
Other assets   $ 124     $ 104  
Total current assets     124       104  
Long-term assets                
Property, plant and equipment, net (1)     81       81  
Other assets     —       36  
Total long-term assets     81       117  
Total assets   $ 205     $ 221  
Current liabilities                
Accounts payable   $ 5     $ 8  
Accrued expenses and other liabilities     167       169  
Environmental liabilities     756       817  
Total current liabilities     928       994  
Long-term liabilities                
Closure liabilities     138       134  
Environmental liabilities     110       110  
Total long-term liabilities     248       244  
Total liabilities   $ 1,176     $ 1,238  

 

(1) net of accumulated depreciation of $10,000 for each period presented.
v3.20.2
Operating Segments (Tables)
 6 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information

The table below presents certain financial information of our operating segments for the three and six months ended June 30, 2020 and 2019 (in thousands):

 

Segment Reporting for the Quarter Ended June 30, 2020

 

    Treatment     Services     Medical     Segments
Total		     Corporate (1)     Consolidated
Total		  
Revenue from external customers   $ 7,840     $ 14,207       —     $ 22,047     $ —     $ 22,047  
Intercompany revenues     446       5       —       451       —       —  
Gross profit     1,695       1,615       —       3,310       —       3,310  
Research and development     52       46       74       172       37       209  
Interest income     1       —       —       1       27       28  
Interest expense     (28 )     (4 )     —       (32 )     (67 )     (99 )
Interest expense-financing fees     —       —       —       —       (60 )     (60 )
Depreciation and amortization     275       84       —       359       5       364  
Segment income (loss) before income taxes     750       1,031       (74 )     1,707       (1,456 )     251  
Income tax benefit     (9 )     —       —       (9 )     —       (9 )
Segment income (loss)     759       1,031       (74 )     1,716       (1,456 )     260  
Expenditures for segment assets     320       146       —       466       2       468 (3)

 

Segment Reporting for the Quarter Ended June 30, 2019

 

    Treatment     Services     Medical     Segments
Total		     Corporate (1)    

Consolidated

Total

  
Revenue from external customers   $ 10,094     $ 7,041       —     $ 17,135     $ —     $ 17,135  
Intercompany revenues     7       42       —       49       —       —  
Gross profit     2,627       644       —       3,271       —       3,271  
Research and development     136       —       80       216       7       223  
Interest income     —       —       —       —       107       107  
Interest expense     (30 )     (4 )     —       (34 )     (73 )     (107 )
Interest expense-financing fees     —       —       —       —       (60 )     (60 )
Depreciation and amortization     233       79       —       312       5       317  
Segment income (loss) before income taxes     1,611       137       (80 )     1,668       (1,289 )     379  
Income tax expense     6       —       —       6       —       6  
Segment income (loss)     1,605       137       (80 )     1,662       (1,289 )     373  
Expenditures for segment assets     73       15       —       88       —       88 (2)

 

Segment Reporting for the Six Months Ended June 30, 2020

 

    Treatment     Services     Medical     Segments
Total		     Corporate (1)     Consolidated
Total		  
Revenue from external customers   $ 17,403     $ 29,504       —     $ 46,907     $ —     $ 46,907  
Intercompany revenues     653       13       —       666       —       —  
Gross profit     4,440       3,510       —       7,950       —       7,950  
Research and development     145       112       140       397       44       441  
Interest income     1       —       —       1       83       84  
Interest expense     (46 )     (10 )     —       (56 )     (163 )     (219 )
Interest expense-financing fees     —       —       —       —       (129 )     (129 )
Depreciation and amortization     539       162       —       701       10       711  
Segment income (loss) before income taxes     2,297       2,349       (140 )     4,506       (2,933 )     1,573  
Income tax expense     5       —       —       5       —       5  
Segment income (loss)     2,292       2,349       (140 )     4,501       (2,933 )     1,568  
Expenditures for segment assets     1,000       361       —       1,361       5       1,366 (3)

 

Segment Reporting for the Six Months Ended June 30, 2019

 

    Treatment     Services     Medical     Segments
Total		     Corporate (1)     Consolidated
Total		  
Revenue from external customers   $ 19,999     $ 8,844       —     $ 28,843     $ —     $ 28,843  
Intercompany revenues     9       63       —       72       —       —  
Gross profit     5,584       188       —       5,772       —       5,772  
Research and development     283       —       154       437       13       450  
Interest income     —       —       —       —       188       188  
Interest expense     (47 )     (13 )     —       (60 )     (134 )     (194 )
Interest expense-financing fees     —       —       —       —       (70 )     (70 )
Depreciation and amortization     470       157       —       627       14       641  
Segment income (loss) before income taxes     3,487       (875 )     (154 )     2,458       (2,590 )     (132 )
Income tax expense     45       —       —       45       —       45  
Segment income (loss)     3,442       (875 )     (154 )     2,413       (2,590 )     (177 )
Expenditures for segment assets     294       18       —       312       —       312 (2)

 

(1) Amounts reflect the activity for corporate headquarters not included in the segment information.

 

(2) Net of financed amount of $18,000 and $22,000 for the three and six months ended June 30, 2019, respectively.

 

(3) Net of financed amount of $51,000 and $132,000 for the three and six months ended June 30, 2020, respectively.
v3.20.2
COVID-19 Impact (Details Narrative) - USD ($)
 3 Months Ended 6 Months Ended
Jul. 09, 2020
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Apr. 30, 2020
Dec. 31, 2019
Net revenues   $ 22,047,000 $ 17,135,000 $ 46,907,000 $ 28,843,000    
Cash on hand   5,630,000   5,630,000     $ 390,000
Borrowing availability of credit facility   $ 12,330,000   12,330,000      
Repayment of loan       832,000      
Paycheck Protection Program Loan [Member]              
Loan amount           $ 5,666,000  
Paycheck Protection Program Loan [Member] | Subsequent Event [Member]              
Repayment of loan $ 327,000            
Service Segment [Member]              
Net revenues       $ 7,166,000      
v3.20.2
Revenue (Details Narrative) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Revenue from Contract with Customer [Abstract]        
Revenue recognized $ 2,516 $ 2,865 $ 6,539 $ 7,442
v3.20.2
Revenue - Schedule of Disaggregation of Revenue (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Net revenues $ 22,047 $ 17,135 $ 46,907 $ 28,843
Fixed Price [Member]        
Net revenues 13,591 12,803 26,101 23,136
Time and Materials [Member]        
Net revenues 8,456 4,332 20,806 5,707
Treatment [Member]        
Net revenues 7,840 10,094 17,403 19,999
Treatment [Member] | Fixed Price [Member]        
Net revenues 7,840 10,094 17,403 19,999
Treatment [Member] | Time and Materials [Member]        
Net revenues
Services [Member]        
Net revenues 14,207 7,041 29,504 8,844
Services [Member] | Fixed Price [Member]        
Net revenues 5,751 2,709 8,698 3,137
Services [Member] | Time and Materials [Member]        
Net revenues 8,456 4,332 20,806 5,707
Domestic Government [Member]        
Net revenues 18,846 11,379 40,334 19,978
Domestic Government [Member] | Treatment [Member]        
Net revenues 6,055 6,537 13,745 14,449
Domestic Government [Member] | Services [Member]        
Net revenues 12,791 4,842 26,589 5,529
Domestic Commercial [Member]        
Net revenues 2,216 4,250 4,551 6,887
Domestic Commercial [Member] | Treatment [Member]        
Net revenues 1,785 3,395 3,658 5,274
Domestic Commercial [Member] | Services [Member]        
Net revenues 431 855 893 1,613
Foreign Government [Member]        
Net revenues 965 1,485 1,979 1,879
Foreign Government [Member] | Treatment [Member]        
Net revenues 162 220
Foreign Government [Member] | Services [Member]        
Net revenues 965 1,323 1,979 1,659
Foreign Commercial [Member]        
Net revenues 20 21 43 99
Foreign Commercial [Member] | Treatment [Member]        
Net revenues 56
Foreign Commercial [Member] | Services [Member]        
Net revenues $ 20 $ 21 $ 43 $ 43
v3.20.2
Revenue - Schedule of Contract Assets and Liabilities (Details) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Account receivables, net of allowance $ 10,806 $ 13,178
Unbilled receivables - current 11,069 7,984
Deferred revenue 3,699 $ 5,456
Year-to-date Change [Member]    
Account receivables, net of allowance (2,372)  
Unbilled receivables - current 3,085  
Deferred revenue $ (1,757)  
Changes in Account receivables, net of allowance, percentage (18.00%)  
Changes in Unbilled receivables - current, percentage 38.60%  
Changes in Deferred revenue, percentage (32.20%)  
v3.20.2
Leases (Details Narrative)
Jun. 30, 2020
Minimum [Member]  
Operating leases remaining term 4 years
Operating lease renewal terms 3 years
Maximum [Member]  
Operating leases remaining term 10 years
Operating lease renewal terms 8 years
v3.20.2
Leases - Schedule of Components of Lease Cost (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Leases [Abstract]        
Operating Lease cost $ 114 $ 124 $ 228 $ 228
Finance Leases: Amortization of ROU assets 26 10 52 19
Finance Leases: Interest on lease liability 29 13 50 25
Finance Leases 55 23 102 44
Short-term lease rent expense 1 23 4 72
Total lease cost $ 170 $ 170 $ 334 $ 344
v3.20.2
Leases - Schedule of Weighted Average Lease (Details)
Jun. 30, 2020
Leases [Abstract]  
Operating Leases, Weighted average remaining lease terms (years) 8 years 4 months 24 days
Operating Leases, Weighted average discount rate 8.00%
Finance Leases, Weighted average remaining lease terms (years) 1 year 6 months
Finance Leases, Weighted average discount rate 11.00%
v3.20.2
Leases - Schedule of Operating Lease Liability Maturity (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Leases [Abstract]    
Operating Leases 2020 Remainder $ 222  
Operating Leases 2021 450  
Operating Leases 2022 458  
Operating Leases 2023 466  
Operating Leases 2024 342  
Operating Leases 2025 and thereafter 1,457  
Operating Leases Total undiscounted lease payments 3,395  
Operating Leases Less: Imputed interest (928)  
Operating Leases Present value of lease payments 2,467  
Current portion of operating lease obligations 258 $ 244
Long-term operating lease obligations, less current portion $ 2,209 $ 2,342
v3.20.2
Leases - Schedule of Finance Lease Liability Maturity (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Leases [Abstract]    
Finance Leases 2020 Remainder $ 365  
Finance Leases 2021 405  
Finance Leases 2022 123  
Finance Leases 2023 2  
Finance Leases 2024  
Finance Leases 2025 and thereafter  
Finance Leases Total undiscounted lease payments 895  
Finance Leases Less: Imputed interest (76)  
Finance Leases Present value of lease payments 819  
Current portion of finance lease obligations 444 $ 471
Long-term finance lease obligations, less current portion $ 375 $ 466
v3.20.2
Leases - Schedule of Supplemental Cash Flow and Other Information Related to Leases (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Leases [Abstract]        
Operating cash flow used in operating leases $ 110 $ 119 $ 220 $ 217
Operating cash flow used in finance leases 29 13 50 25
Financing cash flow used in finance leases 128 57 229 101
ROU assets obtained in exchange for lease obligations for finance liabilities 41 123 138
ROU assets obtained in exchange for lease obligations for operating liabilities $ 182 $ 182
v3.20.2
Intangible Assets (Details Narrative) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]        
Amortization expense of intangible asset $ 55 $ 61 $ 109 $ 134
v3.20.2
Intangible Assets - Schedule of Finite-Lived Intangible Assets (Details) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Gross Carrying Amount $ 4,587 $ 4,544
Accumulated Amortization (3,588) (3,479)
Finite-Lived Intangible Assets, Net $ 999 1,065
Patent [Member]    
Weighted Average Amortization Period (Years) 11 years  
Gross Carrying Amount $ 797 760
Accumulated Amortization (368) (358)
Finite-Lived Intangible Assets, Net $ 429 402
Software [Member]    
Weighted Average Amortization Period (Years) 3 years  
Gross Carrying Amount $ 420 414
Accumulated Amortization (409) (408)
Finite-Lived Intangible Assets, Net $ 11 6
Customer Relationships [Member]    
Weighted Average Amortization Period (Years) 10 years  
Gross Carrying Amount $ 3,370 3,370
Accumulated Amortization (2,811) (2,713)
Finite-Lived Intangible Assets, Net $ 559 $ 657
v3.20.2
Intangible Assets - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) - Intangible Assets [Member]
$ in Thousands
Jun. 30, 2020
USD ($)
2020 (remaining) $ 112
2021 202
2022 175
2023 132
2024 $ 10
v3.20.2
Capital Stock, Stock Plans and Stock Based Compensation (Details Narrative) - USD ($)
 1 Months Ended 6 Months Ended
Mar. 27, 2020
Feb. 04, 2020
Jan. 17, 2019
Jul. 27, 2017
May 31, 2018
Jun. 30, 2020
Jun. 30, 2019
Unrecognized compensation cost related to unvested options consultant           $ 335,000  
Unrecognized compensation expected term           2 years 7 months 6 days  
Proceeds from exercise of stock options           $ 6,000
Ferguson Stock Option [Member]              
Options to purchase shares of common stock 60,000   30,000        
Options extended date description The Compensation Committee and the Board approved another amendment to the Ferguson Stock Option whereby the vesting date for the second milestone was further extended to December 31, 2021 from March 31, 2020 and the vesting date for the third milestone for the purchase of up to 60,000 shares of the Company's Common Stock was extended to December 31, 2022 from January 27, 2021.   The Company's Common Stock was extended to March 31, 2020 from January 27, 2019        
Robert Ferguson [Member]              
Number of options exercised         10,000    
Unrecognized compensation cost related to unvested options consultant           $ 334,000  
Remaining stock option           90,000  
2003 Outside Directors Stock Plan [Member]              
Number of stock option shares granted   6,000          
Stock options granted contractual term   10 years          
Stock options granted vesting period   6 months          
Stock options, exercise price   $ 7.00          
2017 Stock Option Plan [Member]              
Number of stock option shares granted     105,000        
Stock options granted contractual term     6 years        
Stock options, exercise price     $ 3.15        
2017 Stock Option Plan [Member] | One-Fifth Vesting [Member]              
Stock options granted vesting period     5 years        
2017 Stock Option Plan [Member] | CEO [Member]              
Number of stock option shares granted     25,000        
2017 Stock Option Plan [Member] | CFO [Member]              
Number of stock option shares granted     15,000        
2017 Stock Option Plan [Member] | EVP of Strategic Initiatives [Member]              
Number of stock option shares granted     15,000        
2017 Stock Option Plan [Member] | Consultant [Member]              
Number of stock option shares granted       100,000      
Stock options, exercise price       $ 3.65      
2003 Outside Directors Stock Plan [Member]              
Stock issued during period for services, shares           15,367  
Allocated share-based compensation expense           $ 115,000  
2017 Stock Option Plan [Member] | Employee [Member]              
Number of options exercised           2,000  
Proceeds from exercise of stock options           $ 6,300  
2017 Stock Option Plan [Member] | Former Employee [Member]              
Number of shares issued from option exercise (cashless)           1,884  
2017 Stock Option Plan [Member] | Former Employee [Member] | First Separate Options [Member]              
Stock options, exercise price           $ 3.60  
Number of options exercised           8,000  
2017 Stock Option Plan [Member] | Former Employee [Member] | Second Separate Options [Member]              
Stock options, exercise price           $ 3.15  
Number of options exercised           2,500  
v3.20.2
Capital Stock, Stock Plans and Stock Based Compensation - Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details) - $ / shares
Feb. 04, 2020
Jan. 17, 2019
Outside Director Stock Options Granted [Member]    
Weighted-average fair value per option $ 4.89  
Risk -free interest rate [1] 1.61%  
Expected volatility of stock [2] 55.83%  
Dividend yield 0.00%  
Expected option life [3] 10 years  
Employee Stock Option Granted [Member]    
Weighted-average fair value per option   $ 1.42
Risk -free interest rate [1]   2.58%
Expected volatility of stock [2]   48.67%
Dividend yield   0.00%
Expected option life [3]   5 years
[1] The risk-free interest rate is based on the U.S. Treasury yield in effect at the grant date over the expected term of the option.
[2] The expected volatility is based on historical volatility from our traded Common Stock over the expected term of the option.
[3] The expected option life is based on historical exercises and post-vesting data.
v3.20.2
Capital Stock, Stock Plans and Stock Based Compensation - Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Stock-based compensation $ 48 $ 36 $ 92 $ 84
Employee Stock Options [Member]        
Stock-based compensation 33 36 65 79
Director Stock Options [Member]        
Stock-based compensation $ 15 $ 27 $ 5
v3.20.2
Capital Stock, Stock Plans and Stock Based Compensation - Schedule of Stock Options Roll Forward (Details) - Stock Option [Member] - USD ($)
 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Shares Options Outstanding Beginning 681,300 616,000
Shares Options Granted 6,000 105,000
Shares Options Exercised (12,500)
Shares Options Forfeited/expired (20,000) (13,000)
Shares Options Outstanding Ending 654,800 [1] 708,000 [2]
Shares Options Exercisable 306,800 [1] 430,000 [2]
Weighted Average Exercise Price Options Outstanding Beginning $ 3.84 $ 4.23
Weighted Average Exercise Price Options Granted 7.00 3.15
Weighted Average Exercise Price Options Exercised 3.47
Weighted Average Exercise Price Options Forfeited/expired 3.45 3.43
Weighted Average Exercise Price Options Outstanding Ending 3.88 [1] 4.08 [2]
Weighted Average Exercise Price Options Exercisable $ 4.20 [1] $ 4.94 [2]
Weighted Average Remaining Contractual Term Outstanding 3 years 8 months 12 days [1] 4 years 4 months 24 days [2]
Weighted Average Remaining Contractual Term Exercisable 3 years 7 months 6 days [1] 4 years 1 month 6 days [2]
Aggregate Intrinsic Value Options Exercised [3] $ 16,060  
Aggregate Intrinsic Value Options Outstanding [3] 1,685,031 [1] $ 209,318 [2]
Aggregate Intrinsic Value Options Exercisable [3] $ 711,306 [1] $ 43,518 [2]
[1] Options with exercise prices ranging from $2.79 to $8.40
[2] Options with exercise prices ranging from $2.79 to $13.35
[3] The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option.
v3.20.2
Capital Stock, Stock Plans and Stock Based Compensation - Schedule of Stock Options Roll Forward (Details) (Parenthetical) - Stock Option [Member] - $ / shares
 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Stock option exercise price per share lower limit $ 2.79 $ 2.79
Stock option exercise price per share upper limit $ 8.40 $ 13.35
v3.20.2
Income (Loss) Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Earnings Per Share [Abstract]        
Income (loss) income from continuing operations, net of taxes $ 260 $ 373 $ 1,568 $ (177)
Net loss attributable to non-controlling interest (29) (31) (55) (61)
Income (loss) from continuing operations attributable to Perma-Fix Environmental Services, Inc. common stockholders 289 404 1,623 (116)
Loss from discontinuing operations attributable to Perma-Fix Environmental Services, Inc. common stockholders (85) (115) (199) (267)
Net income (loss) attributable to Perma-Fix Environmental Services, Inc. common stockholders $ 204 $ 289 $ 1,424 $ (383)
Basic income (loss) per share attributable to Perma-Fix Environmental Services, Inc. common stockholders $ 0.02 $ 0.02 $ 0.12 $ (0.03)
Diluted income (loss) per share attributable to Perma-Fix Environmental Services, Inc. common stockholders $ 0.02 $ 0.02 $ 0.12 $ (0.03)
Basic weighted average shares outstanding 12,135 12,054 12,129 12,008
Add: dilutive effect of stock options 134,000 68,000 171,000
Add: dilutive effect of warrants 17,000 20,000
Diluted weighted average shares outstanding 12,286 12,122 12,320 12,008
Potential shares excluded from above weighted average share calculations due to their anti-dilutive effect include: Stock options 38,000 113,000 38,000 186,000
Potential shares excluded from above weighted average share calculations due to their anti-dilutive effect include: Warrant
v3.20.2
Long-Term Debt (Details Narrative) - USD ($)
 3 Months Ended 6 Months Ended 12 Months Ended
May 08, 2020
Apr. 14, 2020
Apr. 02, 2019
Oct. 31, 2011
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
Fixed charge coverage ratio Upon the achievement of a FCCR of greater than 1.25:1                
Loss on extinguishment of debt         $ (27,000) $ (27,000)  
Line of credit facility, remaining borrowing capacity         12,330,000   12,330,000    
Letters of credit outstanding, amount         3,126,000   3,126,000    
Prepayments in principal amount             416,000   $ 520,000
Debt discount and debt issuance costs         (149,000)   (149,000)   (248,000)
Repayments of loan debt             832,000    
New Loan Agreement [Member]                  
Debt instrument maturity date May 15, 2024                
Minimum tangible adjusted net worth requirement $ 27,000,000                
Fixed charge coverage ratio Minimum FCCR requirement of 1.15:1                
Indirect cost including legal fees $ 35,000                
Loss on extinguishment of debt 27,000                
New Loan Agreement [Member] | Lender [Member]                  
Debt instrument fees 50,000                
New Loan Agreement [Member] | Maximum [Member]                  
Capital spending maximum $ 6,000,000                
Loan and Securities Purchase Agreement, Promissory Note and Subordination Agreement [Member]                  
Debt outstanding     $ 2,500,000            
Debt instrument, interest rate, stated percentage     4.00%            
Debt instrument, first required interest payment     May 01, 2019            
Debt instrument, periodic payment, principal     $ 208,333            
Prepayments in principal amount     $ 936,000            
Warrants to purchase share of common stock     60,000            
Warrants exercise price     $ 3.51            
Debt discount and debt issuance costs     $ 398,000            
Common stock, minimum closing bid price per share     $ 3.51            
Common stock issued percentage     14.90%            
Loan and Securities Purchase Agreement, Promissory Note and Subordination Agreement [Member] | Private Placement [Member]                  
Warrants to purchase share of common stock     60,000            
Shares issued to lender     75,000            
London Interbank Offered Rate (LIBOR) [Member]                  
Debt Instrument, basis spread on variable rate 0.75%                
Term Loan [Member]                  
Monthly installments $ 35,547                
Debt outstanding [1],[2]         1,586,000   $ 1,586,000   $ 1,827,000
Term Loan [Member] | Prime [Member] | New Loan Agreement [Member]                  
Debt Instrument, basis spread on variable rate 3.00%                
Term Loan [Member] | Prime [Member] | Upon the achievement of a FCCR of greater than 1.25:1 [Member]                  
Debt Instrument, basis spread on variable rate 2.50%                
Term Loan [Member] | London Interbank Offered Rate (LIBOR) [Member] | New Loan Agreement [Member]                  
Debt Instrument, basis spread on variable rate 4.00%                
Term Loan [Member] | London Interbank Offered Rate (LIBOR) [Member] | Upon the achievement of a FCCR of greater than 1.25:1 [Member]                  
Debt Instrument, basis spread on variable rate 3.50%                
PNC Bank [Member] | New Loan Agreement [Member] | On or Before May 7, 2021 [Member]                  
Financing fee percentage 1.00%                
PNC Bank [Member] | New Loan Agreement [Member] | After May 7, 2021 But Prior to or On May 7, 2022 [Member]                  
Financing fee percentage 0.50%                
Revised Loan Agreement [Member] | PNC Bank [Member] | Term Loan [Member]                  
Long-term debt       $ 6,100,000          
Term Loan Agreement [Member] | Prime [Member]                  
Debt Instrument, basis spread on variable rate             2.50%    
Paycheck Protection Program Loan [Member] | Lender [Member]                  
Debt instrument, interest rate, stated percentage   1.00%              
Loan amount   $ 5,666,300              
Repayments of loan debt   $ 327,000              
Revolving Credit Facility [Member]                  
Line of credit facility, maximum borrowing capacity $ 18,000,000                
Line of credit facility, remaining borrowing capacity         12,330,000   $ 12,330,000    
Letters of credit outstanding, amount         3,126,000   $ 3,126,000    
Revolving Credit Facility [Member] | Prime [Member]                  
Debt Instrument, basis spread on variable rate             3.25%    
Revolving Credit Facility [Member] | Prime [Member] | New Loan Agreement [Member]                  
Debt Instrument, basis spread on variable rate 2.50%                
Revolving Credit Facility [Member] | Prime [Member] | Upon the achievement of a FCCR of greater than 1.25:1 [Member]                  
Debt Instrument, basis spread on variable rate 2.00%                
Revolving Credit Facility [Member] | Plus [Member]                  
Debt Instrument, basis spread on variable rate             2.00%    
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]                  
Debt Instrument, basis spread on variable rate             3.50%    
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | New Loan Agreement [Member]                  
Debt Instrument, basis spread on variable rate 3.50%                
Fixed charge coverage ratio The Company can only elect to use the LIBOR interest payment option after it becomes compliant with meeting the minimum FCCR of 1.15:1                
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Upon the achievement of a FCCR of greater than 1.25:1 [Member]                  
Debt Instrument, basis spread on variable rate 3.00%                
Revolving Credit Facility [Member] | Revised Loan Agreement [Member] | PNC Bank [Member]                  
Line of credit facility, maximum borrowing capacity       $ 12,000,000          
Debt instrument maturity date       Mar. 24, 2021          
Revolving Credit Facility [Member] | Term Loan Agreement [Member]                  
Long-term debt         $ 1,741,818   $ 1,741,818    
Annual rate of interest description             Payment of annual rate of interest due on the revolving credit under the Revised Loan Agreement was at prime (3.25% at June 30, 2020) plus 2% and the term loan at prime plus 2.5%.    
[1] Net of debt issuance costs of ($120,000) and ($92,000) at June 30, 2020 and December 31, 2019, respectively.
[2] Our revolving credit facility is collateralized by our accounts receivable and our term loan is collateralized by our property, plant, and equipment. Effective July 1, 2019, monthly installment principal payment on the Term Loan was amended to approximately $35,500 from approximately $101,600. See "Revolving Credit and Term Loan Agreement" below for terms of the Company's credit facility prior to the New Loan Agreement dated May 8, 2020.
v3.20.2
Long-Term Debt - Schedule of Long-term Debt (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Less current portion of long-term debt $ 1,730 $ 1,300
Long Term Debt [Member]    
Total debt 8,277 3,880
Less current portion of long-term debt [1] 1,730 1,300
Long-term debt 6,547 2,580
Revolving Credit [Member]    
Total debt [2] 321
Term Loan [Member]    
Total debt [2],[3] 1,586 1,827
Promissory Note [Member]    
Total debt [1],[4] 999 1,732
Promissory Note [Member]    
Total debt [4] 5,666 [5]
Note Payable [Member]    
Total debt $ 26
[1] Net of debt discount/debt issuance costs of ($149,000) and ($248,000) at June 30, 2020 and December 31, 2019, respectively. The Promissory Note provides for prepayment of principal over the term of the Note without penalty. In 2019, the Company made total prepayment of principal of $520,000 which was reflected in the current portion of the debt. During the first six months of 2020, the Company made total principal repayment of $832,000 of which $416,000 was prepaid. At June 30, 2020, outstanding balance of the loan are current.
[2] Our revolving credit facility is collateralized by our accounts receivable and our term loan is collateralized by our property, plant, and equipment. Effective July 1, 2019, monthly installment principal payment on the Term Loan was amended to approximately $35,500 from approximately $101,600. See "Revolving Credit and Term Loan Agreement" below for terms of the Company's credit facility prior to the New Loan Agreement dated May 8, 2020.
[3] Net of debt issuance costs of ($120,000) and ($92,000) at June 30, 2020 and December 31, 2019, respectively.
[4] Uncollateralized note.
[5] Entered into with the Company's credit facility lender under the Paycheck Protection Program (see "PPP Loan" below for further information on this loan).
v3.20.2
Long-Term Debt - Schedule of Long-term Debt (Details) (Parenthetical) - USD ($)
 6 Months Ended 12 Months Ended
May 08, 2020
Apr. 14, 2020
Apr. 02, 2020
Jul. 02, 2019
Jun. 30, 2020
Dec. 31, 2019
Jun. 10, 2020
Debt issuance costs net         $ (120,000) $ (92,000)  
Debt discount including debt issuance         (149,000) (248,000)  
Prepayments in principal amount         416,000 $ 520,000  
Repayments of loan debt         $ 832,000    
Promissory Note [Member]              
Effective interest rate     4.00%        
Principal amount     $ 208,000        
Promissory Note [Member]              
Debt due date   Apr. 14, 2022          
Effective interest rate   1.00%          
Note Payable [Member]              
Effective interest rate             5.64%
Revolving Credit [Member]              
Debt due date May 15, 2024            
Effective interest rate 6.10%            
Term Loan [Member]              
Debt due date May 15, 2024            
Effective interest rate 6.00%            
Principal amount       $ 101,600      
Amended Term Loan [Member]              
Principal amount       $ 35,500      
v3.20.2
Commitments and Contingencies (Details Narrative) - USD ($)
$ in Thousands
 1 Months Ended 3 Months Ended 6 Months Ended
Jun. 30, 2003
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
Finite risk sinking fund (restricted cash)   $ 11,390   $ 11,390   $ 11,307
Interest income, other   28 $ 107 84 $ 188  
Letters of credit outstanding, amount   3,126   3,126    
Bond outstanding   52,519   52,519    
American International Group, Inc [Member]            
Period of finite risk insurance policy 25 years          
Maximum allowable coverage of insurance policy $ 28,177          
Coverage amount under the policy   19,651   19,651    
Interest earned on sinking fund   1,919   1,919   $ 1,836
Interest income, other   $ 27 $ 107 $ 83 $ 188  
Insurers obligation to entity on termination of contract   100.00%   100.00%    
v3.20.2
Discontinued Operations (Details Narrative) - USD ($)
 1 Months Ended 3 Months Ended 6 Months Ended
May 31, 2016
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Loss from discontinued operations (net of taxes of $0)   $ (85,000) $ (115,000) $ (199,000) $ (267,000)
Tax effect of discontinued operation   0 $ 0 0 $ 0
Perma-Fix of Michigan, Inc. [Member]          
Disposal group, including discontinued operation, consideration, after closing $ 375,000        
Disposal group, including discontinued operation, consideration, installment payment $ 7,250        
Disposal group, including discontinued operation, consideration, remaining balance   $ 105,000   $ 105,000  
v3.20.2
Discontinued Operations - Schedule of Disposal Groups, Including Discontinued Operation Balance Sheet (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Discontinued Operations and Disposal Groups [Abstract]    
Other assets $ 124 $ 104
Total current assets 124 104
Property, plant and equipment, net [1] 81 81
Other assets 36
Total long-term assets 81 117
Total assets 205 221
Accounts payable 5 8
Accrued expenses and other liabilities 167 169
Environmental liabilities 756 817
Total current liabilities 928 994
Closure liabilities 138 134
Environmental liabilities 110 110
Total long-term liabilities 248 244
Total liabilities $ 1,176 $ 1,238
[1] Net of accumulated depreciation of $10,000 for each period presented.
v3.20.2
Discontinued Operations - Schedule of Disposal Groups, Including Discontinued Operation Balance Sheet (Details) (Parenthetical) - USD ($)
$ in Thousands
 6 Months Ended 12 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Discontinued Operations and Disposal Groups [Abstract]    
Accumulated depreciation $ 10 $ 10
v3.20.2
Operating Segments (Details Narrative)
 6 Months Ended
Jun. 30, 2020
Integer
Segment Reporting [Abstract]  
Number of reportable segments 3
v3.20.2
Operating Segments - Schedule of Segment Reporting Information (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Revenue from external customers $ 22,047 $ 17,135 $ 46,907 $ 28,843
Intercompany revenues
Gross profit 3,310 3,271 7,950 5,772
Research and development 209 223 441 450
Interest income 28 107 84 188
Interest expense (99) (107) (219) (194)
Interest expense-financing fees (60) (60) (129) (70)
Depreciation and amortization 364 317 711 641
Segment income (loss) before income taxes 251 379 1,573 (132)
Income tax (benefit) expense (9) 6 5 45
Segment income (loss) 260 373 1,568 (177)
Expenditures for segment assets 468 [1] 88 [2] 1,366 [1] 312 [2]
Treatment [Member]        
Revenue from external customers 7,840 10,094 17,403 19,999
Intercompany revenues 446 7 653 9
Gross profit 1,695 2,627 4,440 5,584
Research and development 52 136 145 283
Interest income 1 1
Interest expense (28) (30) (46) (47)
Interest expense-financing fees
Depreciation and amortization 275 233 539 470
Segment income (loss) before income taxes 750 1,611 2,297 3,487
Income tax (benefit) expense (9) 6 5 45
Segment income (loss) 759 1,605 2,292 3,442
Expenditures for segment assets 320 73 1,000 294
Services [Member]        
Revenue from external customers 14,207 7,041 29,504 8,844
Intercompany revenues 5 42 13 63
Gross profit 1,615 644 3,510 188
Research and development 46 112
Interest income
Interest expense (4) (4) (10) (13)
Interest expense-financing fees
Depreciation and amortization 84 79 162 157
Segment income (loss) before income taxes 1,031 137 2,349 (875)
Income tax (benefit) expense
Segment income (loss) 1,031 137 2,349 (875)
Expenditures for segment assets 146 15 361 18
Medical [Member]        
Revenue from external customers
Intercompany revenues
Gross profit
Research and development 74 80 140 154
Interest income
Interest expense
Interest expense-financing fees
Depreciation and amortization
Segment income (loss) before income taxes (74) (80) (140) (154)
Income tax (benefit) expense
Segment income (loss) (74) (80) (140) (154)
Expenditures for segment assets
Segments Total [Member]        
Revenue from external customers 22,047 17,135 46,907 28,843
Intercompany revenues 451 49 666 72
Gross profit 3,310 3,271 7,950 5,772
Research and development 172 216 397 437
Interest income 1 1
Interest expense (32) (34) (56) (60)
Interest expense-financing fees
Depreciation and amortization 359 312 701 627
Segment income (loss) before income taxes 1,707 1,668 4,506 2,458
Income tax (benefit) expense (9) 6 5 45
Segment income (loss) 1,716 1,662 4,501 2,413
Expenditures for segment assets 466 88 1,361 312
Corporate [Member]        
Revenue from external customers [3]
Intercompany revenues [3]
Gross profit [3]
Research and development [3] 37 7 44 13
Interest income [3] 27 107 83 188
Interest expense [3] (67) (73) (163) (134)
Interest expense-financing fees [3] (60) (60) (129) (70)
Depreciation and amortization [3] 5 5 10 14
Segment income (loss) before income taxes [3] (1,456) (1,289) (2,933) (2,590)
Income tax (benefit) expense [3]
Segment income (loss) [3] (1,456) (1,289) (2,933) (2,590)
Expenditures for segment assets [3] $ 2 $ 5
[1] Net of financed amount of $51,000 and $132,000 for the three and six months ended June 30, 2020, respectively.
[2] Net of financed amount of $18,000 and $22,000 for the three and six months ended June 30, 2019, respectively.
[3] Amounts reflect the activity for corporate headquarters not included in the segment information.
v3.20.2
Operating Segments - Schedule of Segment Reporting Information (Details) (Parenthetical) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Segment Reporting [Abstract]        
Net of financed amount $ 51 $ 18 $ 132 $ 22
v3.20.2
Income Taxes (Details Narrative) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Income Tax Disclosure [Abstract]        
Income tax (benefit) expense $ (9) $ 6 $ 5 $ 45
Effective income tax rate reconciliation, percent 3.60% 1.60% 0.30% 34.10%
v3.20.2
Variable Interest Entities (VIE) (Details Narrative) - USD ($)
$ in Thousands
May 24, 2019
Jun. 30, 2020
Dec. 31, 2019
Partnership interest rate 51.00%    
Total assets   $ 72,872 $ 66,515
Total liabilities   42,116 $ 37,279
Engineering/Remediation Resources Group, Inc [Member]      
Partnership interest rate 49.00%    
Perma-Fix ERRG [Member]      
Total assets   2,523  
Total liabilities   $ 2,523  
v3.20.2
Deferral of Employment Tax Deposits (Details Narrative) - USD ($)
 1 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Other long-term liabilities $ 393,000
Deferral of Employment Tax Deposits [Member]    
Remaining payment of social security taxes amount $ 790,000  
Social security taxes deferred prior to loan forgiveness, description The CARES Act, as amended by the Flexibility Act which was signed into law on June 5, 2020, provides employers the option to defer the payment of an employer's share of social security taxes beginning on March 27, 2020 through December 31, 2020, among other things, 50% of the amount of social security taxes deferred will become due on December 31, 2021 with the remaining 50% due on December 31, 2022. The Company elected to defer such taxes starting in mid-April 2020. The Company estimates the remaining payment of approximately $790,000 of social security taxes otherwise due in 2020 will be deferred with 50% due by December 31, 2021 and the remaining 50% due by December 31, 2022.  
Deferral of Employment Tax Deposits [Member] | December 31, 2021 [Member]    
Percentage for social security taxes deferred 50.00%  
Deferral of Employment Tax Deposits [Member] | December 31, 2022 [Member]    
Percentage for social security taxes deferred 50.00%  
v3.20.2
Subsequent Events (Details Narrative) - USD ($)
 6 Months Ended
Jul. 22, 2020
Jul. 21, 2020
Jul. 09, 2020
Apr. 14, 2020
Jun. 30, 2020
Jul. 24, 2020
May 31, 2016
Repayments of loan amount         $ 832,000    
Perma-Fix of Michigan, Inc. [Member]              
Disposal group, including discontinued operation, consideration, after closing             $ 375,000
Subsequent Event [Member] | Perma-Fix of Michigan, Inc. [Member]              
Disposal group, including discontinued operation, note receivable payoff           $ 105,000  
Lender [Member] | Subsequent Event [Member] | Paycheck Protection Program [Member]              
Repayments of loan amount     $ 327,000        
Richard Grondin [Member] | Subsequent Event [Member]              
Annual salary   $ 208,000          
Richard Grondin [Member] | Subsequent Event [Member] | New Employment Agreements [Member]              
Annual salary $ 240,000            
Richard Grondin [Member] | Subsequent Event [Member] | Waste Treatment Operations Employment Agreement [Member] | Minimum [Member]              
Potential target performance compensation of base salary, percentage 5.00%            
Base salary of performance compensation $ 12,000            
Richard Grondin [Member] | Subsequent Event [Member] | Waste Treatment Operations Employment Agreement [Member] | Maximum [Member]              
Potential target performance compensation of base salary, percentage 100.00%            
Base salary of performance compensation $ 240,000            
Paycheck Protection Program Loan [Member] | Lender [Member]              
Loan amount       $ 5,666,300      
Repayments of loan amount       $ 327,000