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 September 30, 2000
___________________________________
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. 1-11596
______________
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 58-1954497
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
1940 N.W. 67th Place, Gainesville, FL 32653
(Address of principal executive offices) (Zip Code)
N/A
____________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
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 the number of shares outstanding of each of the issuer's
classes of Common Stock, as of the close of the latest practical date.
Class Outstanding at November 17, 2000
_____ ________________________________
Common Stock, $.001 Par Value 21,833,649
(excluding 988,000 shares
held as treasury stock)
<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
INDEX
PART I FINANCIAL INFORMATION Page No.
_________
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 2000
and December 31, 1999 . . . . . . . . . . . . . . . . . .2
Consolidated Statements of Operations -
Three and Nine Months Ended September 30, 2000 and
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 2000 and 1999 . . . . . .5
Consolidated Statements of Stockholder's Equity -
Nine Months Ended September 30, 2000. . . . . . . . . . .6
Notes to Consolidated Financial Statements . . . . . . . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . 17
Item 3. Quantitative and Qualitative Disclosures
about Market Risk . . . . . . . . . . . . . . .28
PART II OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . .29
Item 2. Changes in Securities and Use of Proceeds. . . . .29
Item 5. Other Information. . . . . . . . . . . . . . . . .29
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . 32
<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
PART I, ITEM 1
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. Certain information and
note disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles 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, results of operations and cash flows as of and for the
periods indicated.
It is suggested 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, 1999.
The results of operations for the nine months ended September 30,
2000, are not necessarily indicative of results to be expected
for the fiscal year ending December 31, 2000.
1
<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
September 30,
2000 December 31,
(Amounts in Thousands, Except for Share Amounts) (Unaudited) 1999
_________________________________________________________________________________
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 524 $ 771
Restricted cash equivalents and investments 20 73
Accounts receivable, net of allowance for doubtful
accounts of $886 and $952, respectively 15,990 13,027
Inventories 616 229
Prepaid expenses 1,379 486
Other receivables 739 62
Assets of discontinued operations 47 377
_______ _______
Total current assets 19,315 15,025
Property and equipment:
Buildings and land 14,015 12,555
Equipment 18,310 13,682
Vehicles 2,406 2,274
Leasehold improvements 16 16
Office furniture and equipment 1,495 1,223
Construction in progress 3,555 1,210
_______ _______
39,797 30,960
Less accumulated depreciation (9,321) (7,690)
_______ _______
Net property and equipment 30,476 23,270
Intangibles and other assets:
Permits, net of accumulated amortization of $1,923
and $1,504, respectively 13,552 8,544
Goodwill, net of accumulated amortization of $1,244
and $1,009, respectively 6,918 7,154
Other assets 605 651
_______ _______
Total assets $70,866 $54,644
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS, CONTINUED
September 30,
2000 December 31,
(Amounts in Thousands, Except for Share Amounts) (Unaudited) 1999
___________________________________________________________________________________________________
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,671 $ 7,587
Accrued expenses 8,288 5,885
Revolving loan and term note facility 938 938
Current portion of long term debt 7,864 1,427
Current liabilities of discontinued operations 220 588
________ ________
Total current liabilities 23,981 16,425
Environmental accruals 3,653 3,847
Accrued closure costs 5,091 962
Long term debt, less current portion 16,190 12,937
Long term liabilities of discontinued operations 654 654
________ ________
Total long term liabilities 25,588 18,400
________ ________
Total liabilities 49,569 34,825
Commitments and Contingencies (see Note 7) - -
Stockholders' equity:
Preferred stock, $.001 par value; 2,000,000 shares authorized,
4,187 and 4,537 shares issued and outstanding, respectively - -
Common Stock, $.001 par value; 50,000,000 shares authorized,
22,821,649 and 21,501,776 shares issued, including 988,000
shares held as treasury stock 23 21
Additional paid-in capital 43,466 42,367
Accumulated deficit (20,330) (20,707)
__________ ________
23,159 21,681
Less Common Stock in treasury at cost; 988,000 (1,862) (1,862)
shares issued and outstanding __________ ________
Total stockholders' equity 21,297 19,819
__________ _________
Total liabilities and stockholders' equity $ 70,866 $ 54,644
========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
(Amounts in Thousands, _______________ _________________
Except for Share Amounts) 2000 1999 2000 1999
______________________________________________________________________________________
<S> <C> <C> <C> <C>
Net revenues $15,360 $13,858 $43,441 $32,243
Cost of goods sold 10,190 9,223 29,739 21,332
_______ _______ _______ _______
Gross profit 5,170 4,635 13,702 10,911
Selling, general and administrative expenses 3,138 3,014 9,318 7,147
Depreciation and amortization 903 771 2,617 1,887
________ _______ _______ _______
Income from operations 1,129 850 1,767 1,877
Other income (expense):
Interest income 10 16 31 34
Interest expense (556) (257) (1,407) (375)
Other 74 (11) 141 (31)
_______ _______ _______ _______
Net income 657 598 532 1,505
Preferred Stock dividends (51) (57) (155) (247)
Gain on Preferred Stock redemption - 188 - 188
_______ _______ _______ _______
Net income applicable
to Common Stock $ 606 $ 729 $ 377 $ 1,446
======= ======= ======= =======
_______________________________________________________________________________________
Net income per share:
Basic $ .03 $ .04 $ .02 $ .09
======== ======= ======= =======
Diluted $ .03 $ .03 $ .02 $ .08
======== ======= ======= ========
Number of shares and Common stock
equivalents used in computing net
income per share:
Basic: 21,720 20,386 21,427 16,472
======= ======= ======= =======
Diluted 26,208 24,183 25,717 20,104
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
_________________
(Amounts in Thousands, Except for Share Amounts) 2000 1999
_____________________________________________________________________________________
<S> <C> <C>
Cash flows from operating activities:
Net income from continuing operations $ 532 $ 1,505
Adjustments to reconcile net income
to cash provided by (used in) operations:
Depreciation and amortization 2,617 1,887
Provision for bad debt and other reserves 53 25
Gain on sale of plant, property and equipment (107) (19)
Changes in assets and liabilities, net of effects from
business acquisitions:
Accounts receivable (753) (1,968)
Prepaid expenses, inventories and other assets (1,214) (390)
Accounts payable and accrued expenses (748) (1,101)
________ _______
Net cash provided by (used in) continuing operations 380 (61)
Net cash used by discontinued operations (343) (789)
Cash flows from investing activities:
Purchases of property and equipment, net (2,280) (1,357)
Proceeds from sale of plant, property and equipment 191 65
Change in restricted cash, net 36 1,060
Cash used for acquisition consideration (2,500) (1,000)
Net cash used for acquisition settlements - (1,616)
Net cash provided by (used in) discontinued operations 265 (42)
________ ________
Net cash used in investing activities (4,288) (2,890)
Cash flows from financing activities:
Borrowings of revolving loan and term note facility 445 4,668
Principal repayments of long term debt (1,062) (450)
Proceeds from issuance of long term debt 3,750 250
Redemption of Preferred Stock - (750)
Purchase of treasury stock - (49)
Proceeds from issuance of stock 830 142
Net cash used by discontinued operations (4) (21)
_________ ________
Net cash provided by financing activities 3,959 3,790
Increase (decrease) in cash and cash equivalents (292) 50
Cash and cash equivalents at beginning of period,
including discontinued operations of $45, and $0, respectively 816 776
________ ________
Cash and cash equivalents at end of period,
including discontinued operations of $0, and $43, respectively $ 524 $ 826
========= ========
______________________________________________________________________________________
Supplemental disclosure:
Interest and dividends paid $ 1,301 $ 755
Non cash investing and financing activities:
Issuance of Common Stock for services - 15
Issuance of Common Stock for payment of dividends 214 221
Long term debt incurred for purchase of property and equipment 556 577
Long term debt incurred for acquisitions 6,000 4,700
Issuance of stock and warrants for acquisitions 57 3,000
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited, for the Nine Months Ended September 30, 2000)
Common
Preferred Stock Common Stock Additional Stock
(Amounts in Thousands ________________ ____________________ Paid-In Accumulated Held in
Except for Share Amounts) Shares Amount Shares Amount Capital Deficit Treasury
__________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999 4,537 $ - 21,501,776 $ 21 $ 42,367 $ (20,707) $ (1,862)
Net Income - - - - - 532 -
Preferred Stock dividend - - - - - (155) -
Issuance of Common Stock for
Preferred Stock dividend - - 168,825 - 214 - -
Conversion of Preferred Stock
to Common Stock (350) - 322,351 1 (1) - -
Issuance of stock under
Employee Stock Purchase Plan - - 101,697 - 103 - -
Issuance of warrants in
conjunction with acquisition - - - - 57 - -
Exercise of warrants - - 727,000 1 726 - -
________ ______ _________ _______ _______ _______ ________
Balance at September 30, 2000 4,187 $ - 22,821,649 $ 23 $ 43,466 $(20,330) $ (1,862)
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
6
<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(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, 1999.
1. Summary of Significant Accounting Policies
__________________________________________
Our accounting policies are as set forth in the notes to consolidated
financial statements referred to above.
2. Earnings Per Share
__________________
Basic EPS is based on the weighted average number of shares of Common
Stock outstanding during the period. Diluted EPS includes the dilutive
effect of potential common shares.
<TABLE>
<CAPTION>
The following is a reconciliation of basic net income per share to
diluted net income per share for the three months and nine months ended
September 30, 2000 and 1999:
Three Months Ended Nine Months Ended
September 30, September 30,
(Amounts in Thousands, ___________________ _________________
Except for Share Amounts 2000 1999 2000 1999
_______________________________________________________________________________________
<S> <C> <C> <C> <C>
Net income applicable to
Common Stock - basic $ 606 $ 729 $ 377 $ 1,446
Effect of dilutive securities -
Preferred Stock dividends 51 57 155 247
Gain on Preferred Stock dividends - (188) - (188)
_______ _______ ______ _______
Net income applicable to
Common Stock - diluted $ 657 $ 598 $ 532 $ 1,505
====== ======= ====== ========
Basic net income per sha re $ .03 $ .04 $ .02 $ .09
====== ======= ====== =======
Diluted net income per share $ .03 $ .03 $ .02 $ .08
====== ======= ====== =======
Weighted average shares outstanding-basic 21,720 20,386 21,427 16,472
Potential shares exercisable under stock
option plans 1,132 712 1,015 519
Potential shares upon exercise of warrants 565 - 484 -
Potential shares upon conversion of
Preferred Stock 2,791 3,085 2,791 3,113
_______ _______ _______ ______
Weighted average shares outstanding-diluted 26,208 24,183 25,717 20,104
======== ======= ======= =======
</TABLE>
3. Discontinued Operations
_______________________
On January 27, 1997, an explosion and resulting tank fire
occurred at the Perma-Fix of Memphis, Inc. ("PFM") facility, a
hazardous waste storage, processing and blending facility, which
resulted in damage to certain hazardous waste storage tanks located
on the facility and caused certain limited contamination at the
facility. As a result of the significant disruption and the cost to
rebuild and operate this segment, the Company made a strategic
decision, in February 1998, to discontinue its fuel blending
7
<PAGE>
operations at PFM. The fuel blending operations represented the
principal line of business for PFM prior to this event, which
included a separate class of customers and its discontinuance has
required PFM to attempt to develop new markets and customers,
through the utilization of the facility as a storage facility under
its RCRA permit and as a transfer
facility.
The accrued environmental and closure costs related to PFM total
$841,000 as of September 30, 2000, a decrease of $334,000 from the
December 31, 1999, accrual balance. This reduction was principally
a result of the specific costs related to general closure and
remedial activities, including groundwater remediation, agency and
investigative activities ($192,000) and the general operating
losses, including indirect labor, materials and supplies, incurred
in conjunction with the above actions ($142,000). The general
operating losses do not reflect management fees charged by the
Company. The remaining environmental and closure liability
represents the best estimate of the cost to complete the
groundwater remediation at the site of approximately $580,000, the
costs to complete the facility closure activities over the next
five (5) year period (including agency and investigative
activities, and future operating losses during such closure period)
totaling approximately $261,000.
4. Acquisition
___________
On May 16, 2000, Perma-Fix Environmental Services, Inc. (the
"Company"), and Waste Management Holdings, Inc., a Delaware
corporation ("Waste Management Holdings") entered into a Stock
Purchase Agreement which was subsequently amended on August 31,
2000 (together, the "Stock Purchase Agreement"), wherein the
Company agreed to purchase all of the outstanding capital stock of
Diversified Scientific Services, Inc. ("DSSI") from Waste
Management Holdings, Inc. pursuant to the terms of the Stock
Purchase Agreement. On August 31, 2000, the conditions precedent
to closing of the Stock Purchase Agreement were completed and the
Stock Purchase Agreement was consummated.
Under the terms of the Stock Purchase Agreement, the purchase
price paid by the Company in connection with the DSSI acquisition
was $8,500,000, consisting of (i) $2,500,000 in cash at closing,
(ii) a guaranteed promissory note (the "Guaranteed Note"),
guaranteed by DSSI, with the DSSI guarantee secured by certain
assets of DSSI (except for accounts, accounts receivable, general
intangibles, contract rights, cash, real property and proceeds
thereof), executed by the Company in favor of Waste Management
Holdings in the aggregate principal amount of $2,500,000 and
bearing interest at a rate equal to the prime rate charged on
August 30, 2000, as published in the Wall Street Journal plus 1.75%
per annum and having a term of the lesser of 120 days from August
31, 2000, or the business day that the Company acquires any entity
or substantially all of the assets of an entity (the "Guaranteed
Note Maturity Date"), with interest and principal due in a lump sum
at the end of the Guaranteed Note Maturity Date, and (iii) an
unsecured promissory note (the "Unsecured Promissory Note"),
executed by the Company in favor of Waste Management Holdings in
the aggregate principal amount of $3,500,000, and bearing interest
at a rate of 7% per annum and having a five-year term with interest
to be paid annually and principal due at the end of the term of the
Unsecured Promissory Note.
The cash portion of the purchase price for DSSI was obtained
pursuant to the terms of a short term bridge loan agreement (the
"$3,000,000 RBB Loan Agreement") with RBB Bank Aktiengesellschaft,
a bank organized under the laws of Austria ("RBB Bank"), whereby
RBB Bank loaned (the "$3,000,000 RBB Loan") the Company the
aggregate principal amount of $3,000,000, as evidenced by a
Promissory Note (the "$3,000,000 RBB Promissory Note") in the face
amount of $3,000,000, having a maturity date of November 29, 2000,
and bearing an annual interest rate of 12%.
The principal business of DSSI, conducted at its facility in
Kingston, Tennessee, is the permitted transportation, storage and
treatment of hazardous waste and mixed waste (waste containing both
low level radioactive and hazardous waste) and the disposal of or
recycling of mixed waste in DSSI's treatment unit located at DSSI's
facility. The Company intends to continue using the DSSI facility
for substantially the same purposes as such was being used prior to
the acquisition by the Company.
8
<PAGE>
The acquisition was accounted for using the purchase method
effective August 31, 2000, and accordingly, the assets and
liabilities as of this date are included in the accompanying
consolidated financial statements. As of September 1, 2000, the
Company has performed a preliminary purchase price allocation based
upon information available as of this date. Accordingly, the
purchase price has been preliminarily allocated to the net assets
acquired and net liabilities assumed based on their estimated fair
values. Included in this preliminary allocation were acquired
assets of approximately $9,165,000 and assumed liabilities of
approximately $6,007,000, against total consideration of
$8,500,000. This preliminary allocation has resulted in an excess
purchase price over the fair value of the net assets acquired of
$5,400,000 which was assigned to intangible permits. The intangible
permits are being amortized on a straight line basis over 20 years.
The preliminary purchase price allocation is subject to completing
the valuation of certain assets and liabilities, which have not
been finalized, and may or may not result in a change to the
estimated fair market values assigned. The results of the acquired
business have been included in the consolidated financial
statements since the date of acquisition. The audited financial
statements of DSSI for the fiscal year ended December 31, 1999,
reflected net revenues of $10,129,000, net income of $2,590,000 and
an EBITDA of $2,754,000.
We accrued for the estimated closure costs, determined pursuant
to RCRA and BIF guidelines, for the regulated facility acquired.
This accrual, recorded at $4,106,000, represents the potential
future liability to close and remediate such facilities, should
such a cessation of operations ever occur. No insurance or third
party recovery was taken into account in determining our cost
estimates or reserve, nor do our cost estimates or reserve reflect
any discount for present value purposes.
The following unaudited pro forma information presents the
consolidated statement of operations of the company as if the
acquisition had taken place on January 1, 1999. DSSI had a
December 31 fiscal year end and therefore, their results for the
year ended December 31, 1999, have been consolidated with our
results for the year ended December 31, 1999. DSSI's results for
the nine months ended September 30, 2000 and 1999, have been
consolidated with our results for the nine months ended September 30,
2000 (excluding the DSSI results for September 2000, included
therein) and 1999.
Nine Months Ended
Year Ended September 30,
(Amounts in thousands, December 31, ___________________
except per share amounts) 1999 2000 1999
______________________________________________________________________________
Net revenues $ 56,593 $46,822 $39,016
Net income (loss) applicable to Common Share 2,899 (492) 1,767
Net Income (loss) per share:
Basic .17 (.02) .11
Diluted .14 (.02) .09
Weighted average number of common
shares outstanding
Basic 17,488 21,427 16,472
Diluted 21,224 21,427 20,104
These unaudited pro forma results have been prepared for
comparative purposes only and include certain adjustments, such as
additional amortization expense as a result of intangible permits
and increased interest expense on acquisition related debt. They
do not purport to be indicative of the results of operations that
actually would have resulted on the date indicated, or which may
result in the future.
5. Proposed Acquisition
____________________
During July 2000, the Company signed a letter of intent to
acquire 80% of the voting stock of East Tennessee Materials and
Energy Corporation ("M&EC"). Subsequently, the Company and M&EC
orally modified their negotiations to address a proposed acquisition by
the Company of 100% of the voting stock of M&EC. M&EC is licensed
to operate a low level radioactive and hazardous ("Mixed Waste")
9
<PAGE>
treatment facility at the U.S. Department of Energy's ("DOE") site
in Oak Ridge, Tennessee. The two-acre M&EC facility, which is
intended for the treatment of government and commercial mixed
waste, is the only non-government operated mixed waste treatment
facility that is located within the government's Oak Ridge,
Tennessee, site. M&EC will process mixed waste under three Broad
Spectrum contracts granted to M&EC. As of the date of this report,
M&EC is in the process of constructing its treatment facility and
has no material revenue generating activities. If this transaction
is completed, the Company anticipates it will pay consideration of
approximately $1,350,000 which shall be payable at closing, as
follows: (i) $338,000 in cash, and (ii) $1,012,000 in the form of
Perma-Fix Common Stock, with the number of shares determined at the
date of closing, but not to exceed 675,000 shares. In addition,
M&EC would issue, prior to the closing of this transaction, M&EC
preferred stock to the current M&EC Owners. As of November 15, 2000,
the Company has loaned M&EC $930,000. The Company has evidenced such
loan by the execution by M&EC of a promissory note in favor of the
Company, which is secured by the assets of M&EC. The acquisition
of M&EC is subject to, among other things, negotiation and
execution of a definitive agreement, completion of due diligence,
regulatory approval, the Company obtaining appropriate financing
for the acquisition, and the Company obtaining the settlement of
certain of M&EC's tax liabilities and obligations relating to
M&EC's 401(k), all of which must be to the satisfaction of the
Company.
6. Long term Debt
--------------
<TABLE>
<CAPTION>
Long term debt consists of the following at September 30, 2000,
and December 31, 1999 (in thousands):
September 30,
2000 December 31,
(Unaudited) 1999
_____________ ____________
<S> <C> <C>
Revolving loan facility dated January 15, 1998, as
amended May 27, 1999 and August 31, 2000,
borrowings based upon eligible accounts receivable,
subject to monthly borrowings base calculation,
variable interest paid monthly at prime rate plus
1 3/4 (11.25% at September 30, 2000). $ 7,040 $ 5,891
Term loan agreement dated January 15, 1998, as amended
May 27, 1999, payable in monthly principal install-
ments of $78, balance due in June 2002, variable
interest paid monthly at prime rate plus 1 3/4
(11.25% at September 30, 2000). 2,500 3,203
Three promissory notes dated May 27, 1999, payable in
equal monthly installments of principal and interest
of $90 over 60 months, due June 2004, interest at
5.5% for first three years and 7% for remaining two years. 3,635 4,283
Promissory note dated July 14, 2000, payable in lump sum
of principal and interest on the earlier of December 31,
2000, or ten business days after $3,000,000 in securities
raised, interest paid at annual rate of 10%. 750 -
Promissory note dated August 29, 2000, payable in lump sum of
principal and interest on November 29, 2000, interest
paid at annual rate of 12%. 3,000 -
Promissory note dated August 31, 2000, payable in lump sum on
December 31, 2000, interest paid annually at 11.25%. 2,500 -
Promissory note dated August 31, 2000, payable in lump sum in
August 2005, interest paid annually at 7%. 3,500 -
Various capital lease and promissory note obligations, payable
2000 to 2005, interest at rates ranging from 7.5% to 13.0%. 2,067 1,925
________ ________
24,992 15,302
Less current portion of revolving loan and term note facility 938 938
Less current portion of long term debt 7,864 1,427
________ _________
$ 16,190 $ 12,937
======== =========
</TABLE>
On January 15, 1998, the Company, as parent and guarantor, and
all direct and indirect subsidiaries of the Company, as co-
borrowers and cross-guarantors, entered into a Loan and Security
10
<PAGE>
Agreement ("Agreement") with Congress as lender. The Agreement
initially provided for a term loan in the amount of $2,500,000,
which required principal repayments based on a four-year level
principal amortization over a term of 36 months, with monthly
principal payments of $52,000. Payments commenced on February 1,
1998, with a final balloon payment in the amount of approximately
$573,000 due on January 14, 2001. The Agreement also provided for
a revolving loan facility in the amount of $4,500,000. At any
point in time the aggregate available borrowings under the facility
are subject to the maximum credit availability as determined
through a monthly borrowing base calculation, as updated for
certain information on a weekly basis, equal to 80% of eligible
accounts receivable accounts of the Company as defined in the
Agreement. The termination date on the revolving loan facility was
also the third anniversary of the closing date. The Company
incurred approximately $230,000 in financing fees relative to the
solicitation and closing of this original loan agreement
(principally commitment, legal and closing fees) which are being
amortized over the term of the Agreement.
Pursuant to the Agreement, the term loan and revolving loan both
bear interest at a floating rate equal to the prime rate plus 1
3/4%. The loans also contain certain closing, management and unused
line fees payable throughout the term. The loans are subject to a
3.0% prepayment fee in the first year, 1.5% in the second and 1.0%
in the third year of the original Agreement dated January 15, 1998.
In connection with the acquisition of Chemical Conservation
Corporation (CCC), Chemical Conservation of Georgia, Inc. (CCG) and
Chem-Met Services, Inc. (CM) on May 27, 1999, Congress, the
Company, and the Company's subsidiaries, including CCC, CCG and CM
entered into an Amendment and Joinder to Loan and Security
Agreement (the "Loan Amendment") dated May 27, 1999, pursuant to
which the Loan and Security Agreement ("Original Loan Agreement")
among Congress, the Company and the Company's subsidiaries were
amended to provide, among other things, (i) the credit line being
increased from $7,000,000 to $11,000,000, with the revolving line
of credit portion being determined as the maximum credit of
$11,000,000, less the term loan balance, with the exact amount that
can be borrowed under the revolving line of credit not to exceed
eighty percent (80%) of the Net Amount of Eligible Accounts (as
defined in the Original Loan Agreement) less certain reserves, (ii)
the term loan portion of the Original Loan Agreement being
increased from its current balance of approximately $1,600,000 to
$3,750,000 and it shall be subject to a four-year amortization
schedule payable over three years at an interest rate of 1.75% over
prime, (iii) the term of the Original Loan Agreement, as amended,
was extended for three years from the date of the acquisition,
subject to earlier termination pursuant to the terms of the
Original Loan Agreement, as amended, (iv) CCC, CCG and CM being
added as co-borrowers under the Original Loan Agreement, as
amended, (v) the interest rate on the revolving line of credit will
continue at 1.75% over prime, with a rate adjustment to 1.5% if net
income applicable to Common Stock of the Company is equal to or
greater than $1,500,000 for fiscal year ended December 31, 2000,
(vi) the monthly service fee shall increase from $1,700 to $2,000;
(vii) government receivables will be limited to 20% of eligible
accounts receivable, and (viii) certain obligations of CM shall be
paid at closing of the acquisition of CCC, CCG and CM. The Loan
Amendment became effective on June 1, 1999, when the Stock Purchase
Agreements were consummated. Payments under the term loan
commenced on June 1, 1999, with monthly principal payments of
approximately $78,000 and a final balloon payment in the amount of
$938,000 due on June 1, 2002. The Company incurred approximately
$40,000 in additional financing fees relating to the closing of
this amendment, which is being amortized over the remaining term of
the agreement.
In connection with the acquisition of DSSI on August 31, 2000,
Congress, the Company and the Company's subsidiaries, including
DSSI entered into a Second Amendment and Joinder to Loan and
Security Agreement (the "Second Amendment") dated August 31, 2000,
pursuant to which the Original Loan Agreement among Congress, the
Company and the Company's subsidiaries were amended to provide,
among other things, (i) the credit line being increased from
$11,000,000 to $12,000,000, with the revolving line of credit
portion being determined as the maximum credit of $12,000,000, less
the term loan balance, with the exact amount that can be borrowed
under the revolving line of credit not to exceed eighty percent
(80%) of the Net Amount of Eligible Accounts (as defined in the
Original Loan Agreement) less certain reserves, and (ii) DSSI being
added as a co-borrower under the terms of the original loan
11
<PAGE>
agreement, as amended. The Second Amendment became effective on
August 31, 2000, when the acquisition of DSSI was consummated. The
Company incurred approximately $35,000 in amendment fees associated
with the Second Amendment, as required pursuant to the acquisition
of DSSI. The interest rate on the revolving loan and term loan was
11.25% at September 30, 2000.
Under the terms of the Original Loan Agreement, as amended, the
Company had agreed to maintain an Adjusted Net Worth (as defined in
the Original Loan Agreement) of not less than $3,000,000 throughout
the term of the Original Loan Agreement, which was amended,
pursuant to the above noted CCC, CCG and CM acquisition. The
adjusted net worth covenant requirement ranged from a low of
$1,200,000 at June 1, 1999, to a high of $3,000,000 from July 1,
2000, through the remaining term of the Loan Agreement. However,
pursuant to the DSSI acquisition and Second Amendment, the covenant
requirements were amended as follows: (i) the Company agreed to
maintain a net worth in accordance with GAAP on a consolidated
basis of not less than $19,500,000 from the date of the acquisition
until December 31, 2001, and (ii) effective December 31, 2001,
through the remaining term of the Original Loan Agreement, the
Company agreed to maintain an adjusted net worth of not less than
$3,000,000. The Company has agreed that it will not pay any
dividends on any shares of capital stock of the Company, except
that dividends may be paid on the Company's shares of Preferred
Stock outstanding as of the date of the Loan Amendment
(collectively, "Excepted Preferred Stock") under the terms of the
applicable Excepted Preferred Stock and if and when declared by the
Board of Directors of the Company pursuant to Delaware General
Corporation Law. As security for the payment and performance of
the Original Loan Agreement, as amended, the Company and its
subsidiaries (including CCC, CCG, CM and DSSI) have granted a first
security interest in all accounts receivable, inventory, general
intangibles, equipment and certain of their other assets, as well
as the mortgage on two facilities owned by subsidiaries of the
Company, except for certain real property owned by CM, for which a
first security interest is held by the TPS Trust and the ALS Trust
as security for CM's non-recourse guaranty of the payment of the
Promissory Notes. All other terms and conditions of the original
loan remain unchanged.
As of September 30, 2000, borrowings under the revolving loan
agreement were approximately $7,040,000, an increase of $1,149,000
over the December 31, 1999, balance of $5,891,000. The balance
under the term loan at September 30, 2000, was $2,500,000, a
decrease of $703,000 from the December 31, 1999, balance of
$3,203,000. As of September 30, 2000, the Company's borrowing
availability under the Congress credit facility, based on its then
outstanding eligible accounts receivable, was approximately
$2,237,000, including $1.0 million of additional borrowing
availability extended to the Company by Congress. The additional
borrowing availability was provided to the Company to assist with
the acquisition of DSSI and M&EC (see Note 4 and Note 5) and to
fund certain facility expansions and capital improvements, in
anticipation of the Company raising additional funds. During the
first quarter of 2000, the Company engaged Ryan, Beck & Co. and
Larkspur Capital Corporation (collectively, the "Financial
Advisors") as financial advisors to the Company in the private
placement of new debt and possible equity.
Pursuant to the terms of the Stock Purchase Agreements in
connection with the acquisition of CCC, CCG and CM, a portion of
the consideration was paid in the form of the Promissory Notes, in
the aggregate amount of $4,700,000 payable to the former owners of
CCC, CCG and CM. The Promissory Notes are paid in equal monthly
installments of principal and interest of approximately $90,000
over five years with the first installment due on July 1, 1999, and
having an interest rate of 5.5% for the first three years and 7%
for the remaining two years. The aggregate outstanding balance of
the Promissory Notes total $3,635,000 at September 30, 2000, of
which $906,000 is in the current portion. Payments of such
Promissory Notes are guaranteed by CM under a non-recourse
guaranty, which non-recourse guaranty is secured by certain real
estate owned by CM.
On July 14, 2000, the Company entered into a letter agreement
("$750,000 RBB Loan Agreement") with RBB Bank Aktiengesellschaft
("RBB Bank"), pursuant to which RBB Bank, acting as agent for
certain investors who provided the funds, loaned (the "$750,000 RBB
Loan") the Company the aggregate principal amount of $750,000, as
evidenced by an unsecured promissory note (the "$750,000 RBB
12
<PAGE>
Promissory Note") in the face amount of $750,000, bearing an annual
interest rate of 10.0% per annum. The purpose of the $750,000 RBB
Loan is to provide interim financing to facilitate the acquisition
of DSSI and M&EC (see Note 4 and Note 5) and to fund certain
capital expansions at the Company's existing facilities. The
principal amount of this Note and accrued interest thereon is
payable in full upon the earlier of (i) December 31, 2000, or (ii)
ten business days after the Company raises $3,000,000 or more
through a private placement of capital securities. As previously
discussed in Note 6, during the first quarter, the Company engaged
Ryan, Beck & Co. and Larkspur Capital Corporation as financial
advisors to the Company in the private placement of new debt and
possible equity.
On August 29, 2000, the Company entered into a short term bridge
loan agreement with RBB Bank in connection with the Company's acquisition
of DSSI. This loan agreement (the "$3,000,000 RBB Loan Agreement")
was between the Company and RBB Bank, pursuant to which RBB Bank,
acting as agent for certain investors who provided the funds,
loaned (the "$3,000,000 RBB Loan") the Company the aggregate
principal amount of $3,000,000, as evidenced by a Promissory Note
(the "$3,000,000 RBB Promissory Note") in the face amount of
$3,000,000, having a maturity date of November 29, 2000 and bearing
an annual interest rate of 12%.
In connection with the $3,000,000 RBB Loan, the Company paid RBB
Bank a fee of $15,000 and issued RBB Bank, as agent for the
investors who loaned the money to the Company, certain warrants
(the "Initial RBB Loan Warrants"), having a term of three (3)
years, allowing the purchase of up to 150,000 shares of the
Company's Common Stock, par value $.001 per share (the "Common
Stock"), at an exercise price of $1.50 per share, with these
warrants containing a cashless exercise provision. The Black
Scholes valuation of these warrants was $57,000 and such amount was
recorded as acquisition costs. Pursuant to the terms of the
$3,000,000 RBB Loan Agreement, if all principal and accrued and
unpaid interest under the $3,000,000 RBB Promissory Note is not
paid in full by 5:00 p.m. New York time, (i) on October 30, 2000,
then the Company shall issue to RBB Bank, as agent for the
investors who loaned the money to the Company, certain additional
warrants, having a term of three (3) years, allowing the purchase
of up to an additional 5,000 shares of Common Stock for each
$100,000 of unpaid principal remaining under the Promissory Note on
such date, at an exercise price equal to the closing market price
of the Common Stock on the NASDAQ on October 30, 2000, with such
warrants containing a cashless exercise provision, (ii) on November
29, 2000, then the Company shall issue to RBB Bank, as agent for
the investors who loaned the money to the Company, a certain number
of shares of Common Stock, with the number of shares determined by
dividing $300,000 by the closing market price of the Common Stock
on the NASDAQ on such date, if shares of Common Stock have been
traded on the NASDAQ on such date, or on the most recent trading
date, if shares of Common Stock have not been traded on the NASDAQ
on such date, and (iii) on the 29th day of each month after
November 2000, then the Company shall issue to RBB Bank, as agent
for the investors who loaned the money to the Company, a certain
additional number of shares of Common Stock, with the number of
shares determined by dividing $300,000 by the closing market price
of the Common Stock on the NASDAQ on such date, if shares of Common
Stock have been traded on the NASDAQ on such date, or on the most
recent trading date, if shares of Common Stock have not been traded
on the NASDAQ on such date. As of October 30, 2000, RBB Bank is
the beneficial owner of approximately 12,830,363 shares of Common
Stock or approximately 45.9% of the issued and outstanding Common
Stock. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations RBB Loan," and "Part II
Other Information, Item 5."
On August 31, 2000, the Company issued to Waste Management a
certain short term note as part of the consideration for the
purchase of DSSI. This note was a guaranteed promissory note (the
"Guaranteed Note"), guaranteed by DSSI, with the DSSI guarantee
secured by certain assets of DSSI (except for accounts, accounts
receivable, general intangibles, contract rights, cash, real
property, and proceeds thereof), executed by the Company in favor
of Waste Management Holdings in the aggregate principal amount of
$2,500,000, and bearing interest at a rate equal to the prime rate
charged on August 30, 2000, as published in the Wall Street Journal
plus 1.75% per annum and having a term of the lesser of 120 days
from August 31, 2000, or the business day that the Company acquires
any entity or substantially all of the assets of an entity (the
13
<PAGE>
"Guaranteed Note Maturity Date"), with interest and principal due
in a lump sum at the end of the Guaranteed Note Maturity Date.
In addition, as part of the consideration for the purchase of
DSSI, the Company issued to Waste Management Holdings a long term
unsecured promissory note (the "Unsecured Promissory Note") in the
aggregate principal amount of $3,500,000, bearing interest at a
rate of 7% per annum and having a five-year term with interest to
be paid annually and principal due at the end of the term of the
Unsecured Promissory Note.
7. Commitments and Contingencies
_____________________________
Hazardous Waste
In connection with our waste management services, we handle 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
In the normal course of conducting our business, we are involved
in various litigation. There has been no material change in legal
proceedings from those disclosed previously in the Company's Form
10-K for year ended December 31, 1999. We are not a party to any
litigation or governmental proceeding which our management believes
could result in any judgements or fines against us that would have
a material adverse affect on the Company's financial position,
liquidity or results of operations.
Permits
We are subject to various regulatory requirements, including the
procurement of requisite licenses and permits at our facilities.
These licenses and permits are subject to periodic renewal without
which our operations would be adversely affected. We anticipate
that, once a license or permit is issued with respect
to a facility, the license or permit will be renewed at the end of
its term if the facility's operations are in compliance with the
applicable regulatory requirements.
Accrued Closure Costs and Environmental Liabilities
We maintain closure cost funds to insure the proper
decommissioning of our RCRA facilities upon cessation of
operations. Additionally, in the course of owning and operating
on-site treatment, storage and disposal facilities, we are subject
to corrective action proceedings to restore soil and/or groundwater
to its original state. These activities are governed by federal,
state and local regulations and we maintain the appropriate
accruals for restoration. We have recorded accrued liabilities for
estimated closure costs and identified environmental remediation
costs.
Insurance
We believe we maintain insurance coverage adequate for our needs
and which is similar to, or greater than, the coverage maintained
by other companies of our size in the industry. There can be no
assurances, however, that liabilities which may be incurred by us
will be covered by our insurance or that the dollar amount of such
liabilities which are covered will not exceed our policy limits.
Under our insurance contracts, we usually accept self-insured
retentions which we believe appropriate for our specific business
risks. We are required by EPA regulations to carry environmental
impairment liability insurance providing coverage for damages on a
claims-made basis in amounts of at least $1 million per occurrence
and $2 million per year in the aggregate. To meet the requirements
of customers, we have exceeded these coverage amounts.
8. Business Segment Information
____________________________
Pursuant to FAS 131, we define an operating segment as:
14
<PAGE>
* A business activity from which we may earn revenue and
incur expenses;
* Whose operating results are regularly reviewed by our
chief operating decision maker to make decisions about
resources to be allocated to the segment and assess its
performance; and
* For which discrete financial information is available.
We have twelve operating segments which are defined as each
separate facility or location that we operate. We clearly view
each facility as a separate segment and make decisions based on the
activity and profitability of that particular location. These
segments however, exclude the Corporate headquarters which does not
generate revenue and Perma-Fix of Memphis, Inc. which is reported
elsewhere as a discontinued operation. See Note 3 regarding
discontinued operations.
Pursuant to FAS 131 we have aggregated two or more operating
segments into two reportable segments to ease in the presentation
and understanding of our business. We used the following criteria
to aggregate our segments:
* The nature of our products and services;
* The nature of the production processes;
* The type or class of customer for our products and
services;
* The methods used to distribute our products or provide
our services; and
* The nature of the regulatory environment.
Our reportable segments are defined as follows:
The Waste Management Services segment, which provides on-and-off
site treatment, storage, processing and disposal of hazardous and
non-hazardous industrial and commercial, mixed waste, radioactive
waste, and wastewater through our eight TSD facilities; Perma-Fix
Treatment Services, Inc., Perma-Fix of Dayton, Inc., Perma-Fix of
Ft. Lauderdale, Inc., Perma-Fix of Florida, Inc., Chemical
Conservation Corporation, Chemical Conservation of Georgia, Inc.,
Chem-Met Services, Inc., and Diversified Scientific Services, Inc.
We provide through Perma-Fix Inc. and Perma-Fix of New Mexico, Inc.
on-site waste treatment services to convert certain types of
characteristic hazardous and mixed wastes into non-hazardous waste
and various waste management services to certain governmental
agencies through Chem-Met Government Services.
The Consulting Engineering Services segment provides
environmental engineering and regulatory compliance services
through Schreiber, Yonley & Associates, Inc. ("SYA") which includes
oversight management of environmental restoration projects, air and
soil sampling and compliance and training activities, as well as
engineering support as needed by our other segment. During 1999,
the business and operations of Mintech, Inc., our second
engineering company, located in Tulsa, Oklahoma, was merged into
and consolidated with the SYA operations.
The following table shows certain financial information by
business segment for the quarter ended September 30, 2000, and
quarter ended September 30, 1999, and excludes the results of
operations of the discontinued operations.
15
<PAGE>
<TABLE>
<CAPTION>
Segment Reporting for the Quarter Ended September 30, 2000
Waste Segments Consolidated
Services Engineering Total Corp.(2) Memphis(3) Total
________ ___________ _______ ________ __________ ___________
<S> <C> <C> <C> <C> <C> <C>
Revenue from external customers $14,640 $ 720 $15,360 $ - $ - $15,360
Intercompany revenues 1,879 35 1,914 - - 1,914
Interest income 6 - 6 4 - 10
Interest expense 428 15 443 113 - 556
Depreciation and amortization 863 22 885 18 - 903
Segment profit (loss) 1,215 54 1,269 (663) - 606
Segment assets(1) 66,464 2,312 68,776 2,043 47 70,866
Expenditures for segment assets 1,046 2 1,048 2 - 1,050
</TABLE>
<TABLE>
<CAPTION>
Segment Reporting for the Quarter Ended September 30, 1999
Waste Segments Consolidated
Services Engineering Total Corp(2) Memphis(3) Total
________ ___________ _________ _______ __________ ____________
<S> <C> <C> <C> <C> <C> <C>
Revenue from external customers $ 12,457 $ 1,401 $13,858 $ - $ - $ 13,858
Intercompany revenues 606 105 711 - - 711
Interest income 16 - 16 - - 16
Interest expense 249 (10) 239 18 - 257
Depreciation and amortization 738 28 766 5 - 771
Segment profit (loss) 1,084 (45) 1,039 (310) - 729
Segment assets(1) 49,840 2,560 52,400 798 511 53,709
Expenditures for segment assets 771 1 772 45 - 817
<FN>
(1) Segment assets have been adjusted for intercompany accounts to
reflect actual assets for each segment.
(2) Amounts reflect the activity for corporate headquarters.
(3) Amounts reflect the activity for Perma-Fix of Memphis, Inc., which
is a discontinued operation, not included in the segment information
(See Note 3).
</FN>
</TABLE>
<TABLE>
<CAPTION>
The table below shows certain financial information by business
segment for the nine months ended September 30, 2000, and nine months
ended September 30, 1999, and excludes the results of operations of the
discontinued operations.
Segment Reporting for the Nine Months Ended September 30, 2000
Waste Segments Consolidated
Services Engineering Total Corp(2) Memphis(3) Total
________ ___________ ________ ________ __________ ____________
<S> <C> <C> <C> <C> <C> <C>
Revenue from external customers $40,898 $ 2,543 $43,441 $ - $ - $ 43,441
Intercompany revenues 4,207 113 4,320 - - 4,320
Interest income 20 - 20 11 - 31
Interest expense 1,105 43 1,148 259 - 1,407
Depreciation and amortization 2,503 62 2,565 52 - 2,617
Segment profit (loss) 1,928 273 2,201 (1,824) - 377
Segment assets(1) 66,464 2,312 68,776 2,043 47 70,866
Expenditures for segment assets 2,739 51 2,790 46 - 2,836
</TABLE>
<TABLE>
<CAPTION>
Segment Reporting for the Nine Months Ended September 30, 1999
Waste Segment Consolidated
Services Engineering Total Corp(2) Memphis(3) Total
________ ___________ ________ ________ __________ ____________
<S> <C> <C> <C> <C> <C> <C>
Revenue from external customers $ 28,698 $ 3,545 $ 32,243 $ - $ - $ 32,243
Intercompany revenues 1,889 296 2,185 - - 2,185
Interest income 32 - 32 2 - 34
Interest expense 382 33 415 (40) - 375
Depreciation and amortization 1,805 68 1,873 14 - 1,887
Segment profit (loss) 2,524 51 2,575 (1,129) - 1,446
Segment assets(1) 49,840 2,560 52,400 798 511 53,709
Expenditures for segment assets 1,780 16 1,796 138 - 1,934
<FN>
(1) Segment assets have been adjusted for intercompany accounts to
reflect actual assets for each segment.
(2) Amounts reflect the activity for corporate headquarters.
(3) Amounts reflect the activity for Perma-Fix of Memphis, Inc.,
which is a discontinued operation, not included in the segment
information (See Note 3).
</FN>
</TABLE>
16
<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART I, ITEM 2
Forward-looking Statements
Certain statements contained with 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, (i) ability or inability to continue and
improve operations and remain profitable on an annualized basis,
(ii) the Company's ability to develop or adopt new and existing
technologies in the conduct of its operations, (iii) anticipated
financial performance, (iv) ability to comply with the Company's
general working capital requirements, (v) ability to retain or
receive certain permits or patents, (vi) ability to be able to
continue to borrow under the Company's revolving line of credit,
(vii) ability to generate sufficient cash flow from operations to
fund all costs of operations and remediation of certain formerly
leased property in Dayton, Ohio, and the Company's facilities in
Memphis, Tennessee; Valdosta, Georgia and Detroit Michigan, (viii)
ability to remediate certain contaminated sites for projected
amounts, (ix) completion of the acquisition of M&EC, (x) ability to
obtain new sources of financing, and (xi) all other statements
which are not statements of historical fact. While the Company
believes the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance such
expectations will prove to have been 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,
(i) general economic conditions, (ii) material reduction in
revenues, (iii) inability to collect in a timely manner a material
amount of receivables, (iv) increased competitive pressures, (v)
the ability to maintain and obtain required permits and approvals
to conduct operations, (vi) the ability to develop new and existing
technologies in the conduct of operations, (vii) ability to receive
or retain certain required permits or to obtain regulatory
approvals to modify the permits held by M&EC to complete the
acquisition of M&EC, (viii) discovery of additional contamination
or expanded Contamination at a certain Dayton, Ohio, property
formerly leased by the Company or the Company's facilities at
Memphis, Tennessee; Valdosta, Georgia and Detroit Michigan, which
would result in a material increase in remediation expenditures,
(ix) determination that PFM is the source of chlorinated compounds
at the Allen Well Field, (x) changes in federal, state and local
laws and regulations, especially environmental regulations, or in
interpretation of such, (xi) potential increases in equipment,
maintenance, operating or labor costs, (xii) management retention
and development, (xiii) the requirement to use internally generated
funds for purposes not presently anticipated, (xiv) inability to
remain profitable, (xv) the inability to secure additional
liquidity in the form of additional equity or debt, (xvi) the
commercial viability of our on-site treatment process, (xvii) the
inability of the Company to obtain under certain circumstances
shareholder approval of the transaction in which the Series 10
Preferred and certain warrants were issued, (xviii) the inability
of the Company to maintain the listing of its Common Stock on the
NASDAQ, (xix) the determination that CM or CCC was responsible for
a material amount of remediation at certain Superfund sites, (xx)
inability to obtain additional financing, (xxi) inability to
finalize the acquisition of M&EC, (xxii) inability of the Company
to obtain a new term and revolving credit facility, (xxiii)
inability of the Company to pay the balance due under the $750,000
RBB Promissory Note, the $3,000,000 RBB Promissory Note, and the
Guaranteed Note. The Company undertakes no obligations to update
publicly any forward-looking statement, whether as a result of new
information, future events or otherwise.
17
<PAGE>
<TABLE>
<CAPTION>
Results of Operations
The table below should be used when reviewing management's
discussion and analysis for the three and nine months ended
September 30, 2000, and 1999:
Three Months Ended Nine Months Ended
September 30, September 30,
______________________________ _______________________________
Consolidated 2000 % 1999 % 2000 % 1999 %
____________ _______ _____ _______ _____ ________ ______ _______ _____
(amounts in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net $15,360 100.0 $13,858 100.0 $43,441 100.0 $32,243 100.0
Cost of Goods Sold 10,190 66.3 9,223 66.6 29,739 68.5 21,332 66.2
_______ _____ ______ _____ _______ _____ _______ ______
Gross Profit 5,170 33.7 4,635 33.4 13,702 31.5 10,911 33.8
Selling, General &
Administrative 3,138 20.4 3,014 21.7 9,318 21.4 7,147 22.2
Depreciation/Amortization 903 5.9 771 5.6 2,617 6.0 1,887 5.9
_______ _____ _______ ____ _______ _____ ________ _____
Income from
Operations $ 1,129 7.4 $ 850 6.1 $ 1,767 4.1 $ 1,877 5.8
======= ===== ====== ===== ======= ====== ======== =====
Interest Expense (556) (3.6) (257) (1.9) (1,407) (3.2) (375) (1.2)
Preferred Stock Dividends (51) (0.3) (57) (0.4) (155) (0.4) (247) (0.8)
Gain on Preferred
Stock Redemption - - 188 1.4 - - 188 0.6
</TABLE>
Summary -- Three and Nine Months Ended September 30, 2000, and 1999
___________________________________________________________________
We provide services through two reportable operating segments.
The Waste Management Services segment is engaged in on-and off-site
treatment, storage, disposal and processing of a wide variety of
by-products and industrial, hazardous and mixed wastes (waste
containing both hazardous and low level radioactive material).
This segment competes for materials and services with numerous
regional and national competitors to provide comprehensive and
cost-effective Waste Management Services to a wide variety of
customers in the Midwest, Southeast and Southwest regions of the
country. We operate and maintain facilities and businesses in the
waste by-product brokerage, on-site treatment and stabilization,
and off-site blending, treatment and disposal industries. Our
Consulting Engineering segment provides a wide variety of
environmental related consulting and engineering services to
industry and government. The Consulting Engineering segment
provides oversight management of environmental restoration
projects, air and soil sampling, compliance reporting, surface and
subsurface water treatment design for removal of pollutants, and
various compliance and training activities.
Consolidated net revenues increased to $15,360,000 from
$13,858,000 for the quarter ended September 30, 2000, as compared
to the same quarter in 1999. This increase of $1,502,000 or 10.8%
is principally attributable to the additional revenues resulting
from the acquisition of Diversified Scientific Services, Inc.
(DSSI), effective August 31, 2000, which contributed approximately
$1,088,000 to this increase. Also contributing to this increase,
were increases within the Waste Management Services segment
totaling approximately $1,095,000, partially from an increase in
mixed waste revenues due to the significant expansion of the North
Florida mixed waste facility, in conjunction with the expanded
permit as received during the second quarter of 2000. Offsetting
these increases, were decreases within the Consulting Engineering
segment totaling approximately $681,000 principally from the
Mintech, Inc. engineering company whose operations were reduced and
merged with Schreiber, Yonley and Associates, Inc. during the 2nd
half of 1999. Consolidated net revenues increased to $43,441,000
from $32,243,000 for the nine-month period ended September 30,
2000. This increase of $11,198,000 or 34.7% is attributable to the
Waste Management Services segment which experienced an increase in
revenues of $12,200,000. The additional revenues resulting from
the acquisition of CCC, CCG and CM in the aggregate contributed
18
<PAGE>
approximately $10,868,000 to this increase along with additional
revenues resulting from the acquisition of DSSI of approximately
$1,088,000. Other Waste Management Services facilities contributed
$244,000 to this increase. Partially offsetting this increase,
were decreases within the consulting engineering segment totaling
approximately $1,002,000, principally from the Mintech, Inc.
engineering company whose operations were reduced and merged with
Schreiber, Yonley and Associates, Inc. during the second half of
1999.
Cost of goods sold for the Company increased $967,000 or 10.5%
for the quarter ended September 30, 2000, as compared to the
quarter ended September 30, 1999. This consolidated increase in
cost of goods sold reflects principally the increased operating,
disposal and transportation costs, corresponding to the increased
revenues from the acquisition of DSSI, as discussed above, which
totaled $392,000. Increased operating costs were also recognized
across most of the Waste Management Services facilities, as we
increased certain fixed costs and began preparation for the
processing of new wastewater streams at several industrial
facilities and the expanded mixed waste processing capabilities at
the North Florida mixed waste facility. The resulting gross profit
for the quarter ended September 30, 2000, increased $535,000 to
$5,170,000 which as a percentage of revenue is 33.7%, reflecting an
increase over the corresponding quarter in 1999 percentage of
revenue of 33.4%. This increase in gross profit as a percentage of
revenue was principally recognized through an increase in the
Consulting Engineering segment from 19.7% in 1999 to 29.9% in 2000,
reflecting the effect of Mintech, Inc. being reduced and merged
into Schreiber, Yonley and Associates, Inc. in the second half of
1999. This was offset by the Waste Management Services segment
which experienced a decrease from 34.5% in 1999 to 33.8% in 2000
reflecting the expansion and startup activities discussed above.
Cost of goods sold also increased $8,407,000 or 39.4% for the nine-
month period ended September 30, 2000, as compared to the nine-
month period ended September 30, 1999. This increase is a direct
result of the increased operating, disposal and transportation
costs, corresponding to the increased revenues from the acquisition
of CCC, CCG, CM and DSSI. The resulting gross profit for the nine
months of 2000 increased $2,791,000 to $13,702,000, which as a
percentage of revenue is 31.5%, reflecting a decrease over the
corresponding nine months in 1999 percentage of revenue of 33.8%.
This decrease in gross profit as a percentage of revenue was
principally recognized throughout the waste management services
segment which experienced a decrease from 34.8% in 1999 to 31.5% in
2000 reflecting the expansion and startup activities discussed
above. Offsetting this decrease, however, was an increase in the
Consulting Engineering segment from 26.3% in 1999 to 31.4% in 2000,
reflecting the benefits from the restructuring and consolidation of
our engineering businesses.
Selling, general and administrative expenses increased $124,000
or 4.1% for the quarter ended September 30, 2000, as compared to
the quarter ended September 30, 1999. This increase is principally
attributable to the additional expenses resulting from the
acquisition of DSSI which totaled approximately $80,000. However,
as a percentage of revenue, selling, general and administrative
expense decreased to 20.4% for the quarter ended September 30,
2000, compared to 21.7% for the same period in 1999. Selling,
general and administrative expenses also increased for the nine-
month period of 2000, as compared to 1999, by $2,171,000 or 30.4%.
This increase reflects the expenses directly related to the
acquisition of CCC, CCG, CM and DSSI which total's $2,359,000 and
is offset by the efficiencies and benefits that came from the
restructuring and consolidation of our engineering businesses. As
a percentage of revenue, selling, general and administrative
expense reflected a slight decrease to 21.4% for the nine-month
period ended September 30, 2000, compared to 22.2% for the same
period of 1999.
Depreciation and amortization expense for the quarter ended
September 30, 2000, reflects an increase of $132,000 as compared to
the quarter ended September 30, 1999. This increase is
attributable to a depreciation expense increase of $120,000 which
is a result of the depreciation in 2000 from the DSSI facility
acquired effective September 1, 2000, totaling $39,000 and the
additional depreciation related to the expanded facilities totaling
$81,000, and an amortization expense increase of $12,000 for the
quarter ended September 30, 2000, as compared to the quarter ended
September 30, 1999. This increase in amortization expense is a
result of the permit amortization from the DSSI facility acquired
in September 2000. Depreciation and amortization expense for the
nine-month period ended September 30, 2000, reflects an increase of
$730,000 as compared to the same period of 1999. This increase is
19
<PAGE>
attributable to the acquisition of CCC, CCG and CM, effective June
1, 1999, which reflected depreciation totaling $608,000, an
increase of $433,000 and amortization which increased by $143,000
and the acquisition of DSSI, effective August 31, 2000, totaling
$61,000, for which depreciation increased by $39,000 and
amortization increased by $22,000 for the nine-month period ended
September 30, 2000. The additional depreciation of $93,000 is
related to expanded facilities.
Interest expense increased $299,000 for the quarter ended
September 30, 2000, as compared to the corresponding period of
1999. This increase principally reflects the additional interest
expense incurred in conjunction with the DSSI acquisition financing
for the period August 31, 2000, through September 30, 2000
($72,000) and the additional borrowing levels maintained throughout
the quarter pursuant to the facility expansions and acquisition
efforts. Interest expense also increased by $1,032,000 for the
nine-month period ended September 30, 2000, as compared to the
corresponding period of 1999. This increase principally reflects
the impact of the above discussed DSSI acquisition financing and
increased borrowing levels, as well as the full nine-month impact
on 2000, verses the four-month impact on 1999, of the CCC, CCG and
CM debt assumption and acquisition financing, which totals
approximately $587,000.
Preferred Stock dividends decreased $6,000 during the quarter
ended September 30, 2000, as compared to the corresponding period
of 1999. This decrease is due to the redemption of $750,000 (750
preferred shares) of the Preferred Stock on July 15, 1999, and the
conversion of $350,000 (350 preferred shares) of the Preferred
Stock into Common Stock throughout the first quarter of 2000.
Additionally, Preferred Stock dividends decreased $92,000 for the
nine-month period ended September 30, 2000, as compared to the
corresponding period of 1999. This decrease is due to the
conversion of Preferred Stock into Common Stock as stated above and
the conversion of $4,563,000 (4,563 preferred shares) of the
Preferred Stock into Common Stock on April 20, 1999.
Discontinued Operations
On January 27, 1997, an explosion and resulting tank fire
occurred at the Perma-Fix of Memphis, Inc. ("PFM") facility, a
hazardous waste storage, processing and blending facility, which
resulted in damage to certain hazardous waste storage tanks located
on the facility and caused certain limited contamination at the
facility. As a result of the significant disruption and the cost to
rebuild and operate this segment, the Company made a strategic
decision, in February 1998, to discontinue its fuel blending
operations at PFM. The fuel blending operations represented the
principal line of business for PFM prior to this event, which
included a separate class of customers, and its discontinuance has
required PFM to attempt to develop new markets and customers,
through the utilization of the facility as a storage facility under
its RCRA permit and as a transfer facility.
Acquisitions
As provided in Note 4 to Notes to Consolidated Financial
Statements, the Company has entered into a Stock Purchase Agreement
dated May 16, 2000, which was subsequently amended on August 31,
2000 (together, the "Stock Purchase Agreement"), pursuant to which
the Company purchased all of the outstanding capital stock of
Diversified Scientific Services, Inc. ("DSSI") from Waste
Management Holdings, Inc. ("Waste Management Holdings") pursuant to
the terms of the Stock Purchase Agreement. On August 31, 2000, the
conditions precedent to closing of the Stock Purchase Agreement
were completed and the Stock Purchase Agreement was consummated.
Under the terms of the Stock Purchase Agreement, the purchase
price paid by the Company in connection with the DSSI acquisition
was $8,500,000, consisting of (i) $2,500,000 in cash paid at
closing, (ii) a guaranteed promissory note (the "Guaranteed Note"),
guaranteed by DSSI, with the DSSI guarantee secured by certain
assets of DSSI (except for accounts, accounts receivables, general
intangibles, contract rights, cash, real property, and proceeds
thereof), executed by the Company in favor of Waste Management
Holdings in the aggregate principal amount of $2,500,000, and
bearing interest at a rate equal to the prime rate charged on
August 30, 2000, as published in the Wall Street Journal plus 1.75%
per annum and having a term of the lesser of 120 days from August
31, 2000, or the business day that the Company acquires any entity
20
<PAGE
or substantially all of the assets of an entity (the "Guaranteed
Note Maturity Date"), with interest and principal due in a lump sum
at the end of the Guaranteed Note Maturity Date, and (iii) an
unsecured promissory note (the "Unsecured Promissory Note"),
executed by the Company in favor of Waste Management Holdings in
the aggregate principal amount of $3,500,000, and bearing interest
at a rate of 7% per annum and having a five-year term with interest
to be paid annually and principal due at the end of the term of the
Unsecured Promissory Note. The Company's ability to pay the
balance due under the Guaranteed Note is subject to the Company
obtaining new financing.
The cash portion of the purchase price for DSSI was obtained
pursuant to the terms of a short term bridge loan agreement (the
"$3,000,000 RBB Loan Agreement") with RBB Bank Aktiengesellschaft,
a bank organized under the laws of Austria ("RBB Bank"), whereby
RBB Bank loaned (the "$3,000,000 RBB Loan") the Company the
aggregate principal amount of $3,000,000, as evidenced by a
Promissory Note (the "$3,000,000 RBB Promissory Note") in the face
amount of $3,000,000, having a maturity date of November 29, 2000,
and bearing an annual interest rate of 12%. See below for a
discussion of warrants for the purchase of, or issuance of, the
Company's common stock issued or which may be issued to RBB Bank as
a result of the $3,000,000 RBB Loan.
Proposed Acquisition
As provided in Note 5 to Notes to Consolidated Financial
Statements, the Company signed a letter of intent to acquire 80% of
the voting stock of East Tennessee Materials and Energy Corporation
("M&EC"). Subsequently, the Company and M&EC orally modified their
negotiations to address a proposed acquisition by the Company of
100% of the voting stock of M&EC. M&EC is licensed to operate a
low level radioactive and hazardous ("Mixed Waste") treatment
facility at the U.S. Department of Energy's ("DOE") site in Oak
Ridge, Tennessee. The two-acre M&EC facility, which is intended
for the treatment of government and commercial mixed waste, is the
only non-government operated mixed waste treatment facility that is
located within the government's Oak Ridge, Tennessee, site. M&EC
will process mixed waste under three Broad Spectrum contracts
granted to M&EC. As of the date of this report, M&EC is in the
process of constructing its treatment facility and has no material
revenue generating activities. If this transaction is completed,
the Company anticipates it will pay consideration of approximately
$1,350,000 which shall be payable at closing, as follows: (i)
$338,000 in cash, (ii) $1,012,000 in the form of Perma-Fix Common
Stock, with the number of shares determined at the date of closing,
but not to exceed 675,000 shares. In addition, M&EC would issue,
prior to the closing of this transaction, M&EC preferred stock to
the M&EC Owners. As of November 15, 2000, the Company has loaned
M&EC $930,000. The Company has evidenced such loan by the
execution by M&EC of a promissory note in favor of the Company,
which is secured by the assets of M&EC. The acquisition of M&EC is
subject to, among other things, negotiation and execution of a
definitive agreement, completion of due diligence, regulatory
approval, the Company obtaining appropriate financing for the
acquisition, and the Company obtaining the settlement of certain of
M&EC's tax liabilities and obligations relating to M&EC's 401(k),
all of which must be to the satisfaction of the Company.
Liquidity and Capital Resources of the Company
At September 30, 2000, the Company had cash and cash equivalents
of $524,000. This cash and cash equivalent's total reflects a
decrease of $292,000 from December 31, 1999, as a result of net
cash provided by continuing operations of $380,000, offset by cash
used by discontinued operations of $343,000, cash used in investing
activities of $4,288,000 (principally purchases of equipment, net
totaling $2,280,000 and acquisition consideration of $2,500,000)
partially offset by proceeds from the sale of equipment and cash
provided by discontinued operations resulting from the release of
restricted cash, and by cash provided by financing activities of
$3,959,000 (net borrowings of the revolving loan and term note
facility, proceeds from the issuance of long term debt, proceeds
from the issuance of stock, partially offset by principal
repayments of long term debt). Accounts receivable, net of
allowances for continuing operations, totaled $15,990,000, an
increase of $2,963,000 over the December 31, 1999, balance of
$13,027,000. The receivable balance increased during this nine-
month period of 2000, due in large part to the acquisition of DSSI
which had a balance of $2,413,000 as of September 30, 2000, and as
21
<PAGE>
a result of the increased mixed waste revenues during the latter
part of the quarter.
The Company, as parent and guarantor, and all direct and
indirect subsidiaries of the Company are co-borrowers and cross-
guarantors under a Loan and Security Agreement ("Agreement") with
Congress as lender. The Agreement initially provided for a term
loan in the amount of $2,500,000, which required principal
repayments based on a four-year level principal amortization over
a term of 36 months, with monthly principal payments of $52,000.
Payments commenced on February 1, 1998, with a final balloon
payment in the amount of approximately $573,000 due on January 14,
2001. The Agreement also provided for a revolving loan facility in
the amount of $4,500,000. At any point in time the aggregate
available borrowings under the facility are subject to the maximum
credit availability as determined through a monthly borrowing base
calculation, as updated for certain information on a weekly basis,
equal to 80% of eligible accounts receivable accounts of the
Company as defined in the Agreement. The termination date on the
revolving loan facility was also the third anniversary of the
closing date. The Company incurred approximately $230,000 in
financing fees relative to the solicitation and closing of this
original loan agreement (principally commitment, legal and closing
fees) which are being amortized over the term of the Agreement.
Pursuant to the Agreement, the term loan and revolving loan both
bear interest at a floating rate equal to the prime rate plus 1
3/4%. The loans also contain certain closing, management and unused
line fees payable throughout the term. The loans are subject to a
3.0% prepayment fee in the first year, 1.5% in the second year and
1.0% in the third year of the original Agreement dated January 15,
1998.
In connection with the acquisition of CCC, CCG and CM on May 27,
1999, Congress, the Company, and the Company's subsidiaries,
including CCC, CCG and CM entered into an Amendment and Joinder to
Loan and Security Agreement (the "Loan Amendment") dated May 27,
1999, pursuant to which the Loan and Security Agreement ("Original
Loan Agreement") among Congress, the Company and the Company's
subsidiaries was amended to provide, among other things, (i) the
credit line being increased from $7,000,000 to $11,000,000, with
the revolving line of credit portion being determined as the
maximum credit of $11,000,000, less the term loan balance, with the
exact amount that can be borrowed under the revolving line of
credit not to exceed eighty percent (80%) of the Net Amount of
Eligible Accounts (as defined in the Original Loan Agreement) less
certain reserves; (ii) the term loan portion of the Original Loan
Agreement being increased from its current balance of approximately
$1,600,000 to $3,750,000 and it shall be subject to a four-year
amortization schedule payable over three years at an interest rate
of 1.75% over prime; (iii) the term of the Original Loan Agreement,
as amended, was extended for three years from the date of the
acquisition, subject to earlier termination pursuant to the terms
of the Original Loan Agreement, as amended; (iv) CCC, CCG and CM
being added as co-borrowers under the Original Loan Agreement, as
amended; (v) the interest rate on the revolving line of credit will
continue at 1.75% over prime, with a rate adjustment to 1.5% if net
income applicable to Common Stock of the Company is equal to or
greater than $1,500,000 for fiscal year ended December 31, 2000;
(vi) the monthly service fee shall increase from $1,700 to $2,000;
(vii) government receivables will be limited to 20% of eligible
accounts receivable; and (viii) certain obligations of CM shall be
paid at closing of the acquisition of CCC, CCG and CM. The Loan
Amendment became effective on June 1, 1999, when the Stock Purchase
Agreements were consummated. Payments under the term loan
commenced on June 1, 1999, with monthly principal payments of
approximately $78,000 and a final balloon payment in the amount of
$938,000 due on June 1, 2002. The Company incurred approximately
$40,000 in additional financing fees relating to the closing of
this amendment, which is being amortized over the remaining term of
the agreement.
In connection with the acquisition of Diversified Scientific
Services, Inc. (DSSI) on August 31, 2000, Congress, the Company and
the Company's subsidiaries, including DSSI entered into a Second
Amendment and Joinder to Loan and Security Agreement (the "Second
Amendment") dated August 31, 2000, pursuant to which the Original
Loan Agreement among Congress, the Company and the Company's
subsidiaries were amended to provide, among other things, (i) the
credit line being increased from $11,000,000 to $12,000,000, with
the revolving line of credit portion being determined as the
22
<PAGE>
maximum credit of $12,000,000, less the term loan balance, with the
exact amount that can be borrowed under the revolving line of
credit not to exceed eighty percent (80%) of the Net Amount of
Eligible Accounts (as defined in the Original Loan Agreement) less
certain reserves, and (ii) DSSI being added as a co-borrower under
the terms of the original loan agreement, as amended. The Second
Amendment became effective on August 31, 2000, when the acquisition
of DSSI was consummated. The Company incurred approximately
$35,000 in amendment fees associated with the Second Amendment, as
required pursuant to the acquisition of DSSI. The interest rate on
the revolving loan and term loan was 11.25% at September 30, 2000.
Under the terms of the Original Loan Agreement, as amended, the
Company had agreed to maintain an Adjusted Net Worth (as defined in
the Original Loan Agreement) of not less than $3,000,000 throughout
the term of the Original Loan Agreement, which was amended,
pursuant to the above noted CCC, CCG and CM acquisition. The
adjusted net worth covenant requirement ranged from a low of
$1,200,000 at June 1, 1999, to a high of $3,000,000 from July 1,
2000, through the remaining term of the Loan Agreement. However,
pursuant to the DSSI acquisition and Second Amendment, the covenant
requirements were amended as follows: (i) the Company agreed to
maintain a net worth in accordance with GAAP on a consolidated
basis of not less than $19,500,000 from the date of the acquisition
until December 31, 2001, and (ii) effective December 31, 2001,
through the remaining term of the Original Loan Agreement, the
Company agreed to maintain an adjusted net worth of not less than
$3,000,000. The Company has agreed that it will not pay any
dividends on any shares of capital stock of the Company, except
that dividends may be paid on the Company's shares of Preferred
Stock outstanding as of the date of the Loan Amendment
(collectively, "Excepted Preferred Stock") under the terms of the
applicable Excepted Preferred Stock and if and when declared by the
Board of Directors of the Company pursuant to Delaware General
Corporation Law. As security for the payment and performance of
the Original Loan Agreement, as amended, the Company and its
subsidiaries (including CCC, CCG, CM and DSSI) have granted a first
security interest in all accounts receivable, inventory, general
intangibles, equipment and certain of their other assets, as well
as the mortgage on two facilities owned by subsidiaries of the
Company, except for certain real property owned by CM, for which a
first security interest is held by the TPS Trust and the ALS Trust
as security for CM's non-recourse guaranty of the payment of the
Promissory Notes. All other terms and conditions of the original
loan remain unchanged.
As of September 30, 2000, borrowings under the revolving loan
agreement were approximately $7,040,000, an increase of $1,149,000
over the December 31, 1999, balance of $5,891,000. The balance
under the term loan at September 30, 2000, was $2,500,000, a
decrease of $703,000 from the December 31, 1999, balance of
$3,203,000. As of September 30, 2000, the Company's borrowing
availability under the Congress credit facility, based on its then
outstanding eligible accounts receivable, was approximately
$2,237,000, including $1.0 million of additional borrowing
availability extended to the Company by Congress. The additional
borrowing availability was provided to the Company to assist with
the acquisition of DSSI and M&EC (see Note 4 and Note 5 to Notes to
Consolidated Financial Statements) and to fund certain facility
expansions and capital improvements, in anticipation of the Company
raising additional funds. During the first quarter of 2000, the
Company engaged Ryan, Beck & Co. and Larkspur Capital Corporation
(collectively, the "Financial Advisors") as financial advisors to
the Company in the private placement of new debt and possible
equity.
Pursuant to the terms of the Stock Purchase Agreements in
connection with the acquisition of CCC, CCG and CM, a portion of
the consideration was paid in the form of the Promissory Notes, in
the aggregate amount of $4,700,000 payable to the former owners of
CCC, CCG and CM. The Promissory Notes are paid in equal monthly
installments of principal and interest of approximately $90,000
over five years with the first installment due on July 1, 1999, and
having an interest rate of 5.5% for the first three years and 7%
for the remaining two years. The aggregate outstanding balance of
the Promissory Notes total $3,635,000 at September 30, 2000, of
which $906,000 is in the current portion. Payments of such
Promissory Notes are guaranteed by CM under a non-recourse
guaranty, which non-recourse guaranty is secured by certain real
estate owned by CM.
23
<PAGE>
On July 14, 2000, the Company entered into a letter agreement
("$750,000 RBB Loan Agreement") which provided for an unsecured
promissory note ("Note") with RBB Bank Aktiengesellschaft ("RBB
Bank") in the principal amount of $750,000, at an annual interest
rate of 10.0% per annum. The purpose of this Note is to provide
interim financing to facilitate the acquisition of DSSI and M&EC
(see Note 4 and Note 5 to Notes to Consolidated Financial
Statements) and to fund certain capital expansions at the Company's
existing facilities. The principal amount of this Note and accrued
interest thereon shall be payable in full upon the earlier of (i)
December 31, 2000, or (ii) ten business days after the Company
raises $3,000,000 or more through a private placement of capital
securities. As previously discussed, during the first quarter, the
Company engaged Ryan, Beck & Co. and Larkspur Capital Corporation
as financial advisors to the Company in the private placement of
new debt and possible equity.
On August 29, 2000, the Company entered into a short term bridge
loan agreement in connection with the Company's acquisition of
Diversified Scientific Services, Inc. ("DSSI"). This loan
agreement (the "$3,000,000 RBB Loan Agreement") was between the
Company and RBB Bank, pursuant to which RBB Bank, acting as agent
for certain investors who provided the funds, loaned (the
"$3,000,000 RBB Loan") the Company the aggregate principal amount
of $3,000,000, as evidenced by a Promissory Note (the "$3,000,000
RBB Promissory Note") in the face amount of $3,000,000, having a
maturity date of November 29, 2000 and bearing an annual interest
rate of 12%.
In connection with the $3,000,000 RBB Loan, the Company paid RBB
Bank a fee of $15,000 and issued RBB Bank, as agent for the
investors who loaned the money to the Company, certain warrants
(the "Initial RBB Loan Warrants"), having a term of three (3)
years, allowing the purchase of up to 150,000 shares of the
Company's Common Stock, par value $.001 per share (the "Common
Stock"), at an exercise price of $1.50 per share, with these
warrants containing a cashless exercise provision. Pursuant to the
terms of the $3,000,000 RBB Loan Agreement, if all principal and
accrued and unpaid interest under the $3,000,000 RBB Promissory
Note is not paid in full by 5:00 p.m. New York time, (i) on October
30, 2000, then the Company shall issue to RBB Bank, as agent for
the investors who loaned the money to the Company, certain
additional warrants, having a term of three (3) years, allowing the
purchase of up to an additional 5,000 shares of Common Stock for
each $100,000 of unpaid principal remaining under the Promissory
Note on such date, at an exercise price equal to the closing market
price of the Common Stock on the NASDAQ on October 30, 2000, with
such warrants containing a cashless exercise provision, (ii) on
November 29, 2000, then the Company shall issue to RBB Bank, as
agent for the investors who loaned the money to the Company, a
certain number of shares of Common Stock, with the number of shares
determined by dividing $300,000 by the closing market price of the
Common Stock on the NASDAQ on such date, if shares of Common Stock
have been traded on the NASDAQ on such date, or on the most recent
trading date, if shares of Common Stock have not been traded on the
NASDAQ on such date, and (iii) on the 29th day of each month after
November 2000, then the Company shall issue to RBB Bank, as agent
for the investors who loaned the money to the Company, a certain
additional number of shares of Common Stock, with the number of
shares determined by dividing $300,000 by the closing market price
of the Common Stock on the NASDAQ on such date, if shares of Common
Stock have been traded on the NASDAQ on such date, or on the most
recent trading date, if shares of Common Stock have not been traded
on the NASDAQ on such date. As of October 30, 2000, RBB Bank is
the beneficial owner of approximately 12,830,363 shares of Common
Stock or approximately 45.9% of the issued and outstanding Common
Stock. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations RBB Loan," and "Part II
Other Information, Item 5."
On August 31, 2000, the Company issued to Waste Management a
certain short term note as part of the consideration for the
purchase of DSSI. This note was a guaranteed promissory note (the
"Guaranteed Note"), guaranteed by DSSI, with the DSSI guarantee
secured by certain assets of DSSI (except for accounts, accounts
receivable, general intangibles, contract rights, cash, real
property, and proceeds thereof), executed by the Company in favor
of Waste Management Holdings in the aggregate principal amount of
$2,500,000, and bearing interest at a rate equal to the prime rate
charged on August 30, 2000, as published in the Wall Street Journal
plus 1.75% per annum and having a term of the lesser of 120 days
24
<PAGE>
from August 31, 2000, or the business day that the Company acquires
any entity or substantially all of the assets of an entity (the
"Guaranteed Note Maturity Date"), with interest and principal due
in a lump sum at the end of the Guaranteed Note Maturity Date.
In addition, as part of the consideration for the purchase of
DSSI, the Company issued to Waste Management Holdings a long term
unsecured promissory note (the "Unsecured Promissory Note") in the
aggregate principal amount of $3,500,000, bearing interest at a
rate of 7% per annum and having a five-year term with interest to
be paid annually and principal due at the end of the term of the
Unsecured Promissory Note.
As of September 30, 2000, total consolidated accounts payable
for continuing operations was $6,671,000, a decrease of $916,000
from the December 31, 1999, balance of $7,587,000. This decrease
in accounts payable is partially reflective of the increased
borrowing level under the revolving loan agreement, which funds
were utilized to reduce certain payables. Included in the
September 30, 2000, accounts payable total is $226,000 related to
DSSI, which was acquired effective August 31, 2000.
Our net purchases of new capital equipment for continuing
operations for the nine-month period ended September 30, 2000,
totaled approximately $2,836,000. These expenditures were for
expansion and improvements to the operations, principally within
the Waste Management Services segment. These capital expenditures
were principally funded by the cash provided by continuing
operations, a portion of the $750,000 RBB Bank unsecured promissory
note and $556,000 through various other lease financing sources.
We have budgeted capital expenditures of approximately $4,000,000
for 2000, which includes completion of certain current projects,
as well as other identified capital and permit compliance
purchases. We anticipate funding these capital expenditures by a
combination of lease financing with lenders other than the
equipment financing arrangement discussed above, and/or internally
generated funds.
The working capital deficit position at September 30, 2000, was
$4,666,000, as compared to a deficit position of $1,400,000 at
December 31, 1999. This increase in the deficit position of
$3,266,000 is a direct result of three promissory notes entered
into during July and August of 2000. Pursuant to the closing of
the DSSI acquisition, the Company entered into a guaranteed
promissory note with Waste Management Holding, Inc. for $2,500,000,
due on December 29, 2000, and a short term bridge loan agreement in
the amount of $3,000,000 with RBB Bank due on November 29, 2000.
Both of these debt obligations are classified as a current
liability and represents interim financing which the Company
intends to replace with permanent financing. Additionally,
pursuant to this acquisition and the capital expansions to several
facilities, the Company also entered into a $750,000 short term
promissory note with RBB Bank, which is also intended to be
replaced with permanent financing. As discussed above, the Company
has retained Financial Advisors to assist in the private placement
of new debt and possibly equity. Excluding this short term
financing of $6,250,000, the Company would have reflected a
$1,584,000 working capital position.
The accrued dividends on the outstanding Preferred Stock for the
period January 1, 2000, through June 30, 2000, total $104,000, of
which $3,000 was paid in conjunction with the first quarter 2000
conversions and $101,000 was paid in August 2000, in the form of
70,789 shares of Common Stock. The accrued dividends for the
period July 1, 2000, through September 30, 2000, total $51,000 and
will be paid in January 2001.
In order to fund the cash portion of the purchase price relating
to the proposed acquisition of DSSI and M&EC, as discussed above,
and to provide the Company additional liquidity to fund other
capital expenditures and the continuing growth of the Company, the
Company has retained Ryan, Beck & Co. and Larkspur Capital
Corporation (collectively, the "Financial Advisors") as its
financial advisors in the private placement of new debt and
possible equity. Through the efforts of the Financial Advisors,
the Company is negotiating with certain parties the possibility of
providing debt financing or equity to the Company. In addition,
the Company is discussing with others, including certain
shareholders, the possibility of providing additional financing to
the Company. There are no assurances that the Company will be
25
<PAGE>
successful in arranging lenders to participate in the private
placement, or if participants are available, that the private
placement can be completed on terms satisfactory to the Company.
In connection with the retention of the Financial Advisors as
financial advisors to the Company, the Company has granted the
Financial Advisors or their permitted designees a five-year warrant
to purchase up to 150,000 shares of the Company's Common Stock
("Retainer Warrants"). If the Company is successful in finalizing
the private placement prior to termination of the agreement with
the Financial Advisors or within twelve months following
termination of the agreement with the Financial Advisors and the
placement involves a party contacted by the Financial Advisors
prior to the termination, the Company has agreed to pay the
Financial Advisors certain cash fees and additional warrants. The
Company has the right to cancel 50% of the retainer warrants if the
private placement is not completed by January 25, 2001.
The Company is currently negotiating with new lenders to
provide the Company with new financings to replace the Company's
existing term and working capital lines of credit and provide the
Company with the additional funds necessary to repay the bridge
loans of $3,750,000 due to RBB Bank, as agent for its investors,
the Guaranteed Note in the principal sum of $2,500,000 due to
Waste Management Holdings and to provide the Company with
additional working capital. There are no assurances that the
Company will be able to finalize any of these new financings. If
the Company is unable to complete the new financing arrangement
as discussed above in this paragraph in a timely manner, it may
not be able to pay the bridge loans due to RBB Bank and the
Guaranteed Note when due.
In summary, we have continued to take steps to improve our
operations and liquidity as discussed above. However, with the
acquisition in August 2000, we incurred and assumed certain debt
obligations and long term liabilities, which had a short term
impact on liquidity. If we are unable to continue to improve our
operations, raise the additional financing required to repay the
short term promissory notes and to continue profitability in the
foreseeable future, such would have a material adverse effect on
our liquidity position.
Environmental Contingencies
The Company is 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, the Company is subject to rigorous federal,
state and local regulations. These regulations mandate strict
compliance and therefore are a cost and concern to the Company.
The Company makes every reasonable attempt to maintain complete
compliance with these regulations; however, even with a diligent
commitment, the Company, as with many of its competitors, may be
required to pay fines for violations or investigate and potentially
remediate its waste management facilities.
The Company routinely uses third party disposal companies, who
ultimately destroy or secure landfill residual materials generated
at its facilities or at a client's site. The Company, compared to
its competitors, disposes of significantly less hazardous or
industrial by-products from its operations due to rendering
material non-hazardous, discharging treated wastewaters to
publicly-owned treatment works and/or processing wastes into
saleable products. In the past, numerous third party disposal
sites have improperly managed wastes and consequently require
remedial action; consequently, any party utilizing these sites may
be liable for some or all of the remedial costs. Despite the
Company's aggressive compliance and auditing procedures for
disposal of wastes, the Company could, in the future, be notified
that it is a PRP at a remedial action site, which could have a
material adverse effect on the Company.
In addition to budgeted capital expenditures of $4,000,000 for
2000 at the TSD facilities, which are necessary to maintain permit
compliance and improve operations, as discussed above in this
Management's Discussion and Analysis, we have also budgeted for
2000 an additional $1,656,000 in environmental expenditures to
comply with federal, state and local regulations in connection with
remediation of certain contaminates at four locations. The four
locations where these expenditures will be made are a parcel of
property leased by a predecessor to PFD in Dayton, Ohio (EPS), a
former RCRA storage facility as operated by the former owners of
PFD, PFM's facility in Memphis, Tennessee, CCG's facility in
Valdosta Georgia and CM's facility in Detroit, Michigan. We have
estimated the expenditures for 2000 to be approximately $254,000 at
the EPS site, $265,000 at the PFM location, $499,000 at the CCG
26
<PAGE>
site and $638,000 at the CM site, of which $137,000, $192,000,
$45,000 and $369,000 were spent during the first nine months of
2000, respectively. Additional funds will be required for the next
five to ten years to properly investigate and remediate these
sites. We expect to fund these expenses to remediate these four
sites from funds generated internally, however, no assurances can
be made that we will be able to do so.
Recent Accounting Pronouncements
In September 1998 the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
("FAS 133"). FAS 133 requires companies to recognize all derivative
contracts as either assets or liabilities in the balance sheet and
to measure them at fair value. FAS 133 as amended by FAS 137 is
effective for periods beginning after September 15, 2000.
Historically, we have not entered into derivative contracts.
Accordingly, FAS 133 is not expected to affect our financial
statements.
In March 2000, the Financial Accounting Standards Board issued
Interpretation No. 44 ("Fin 44"), Accounting for Certain
Transactions Involving Stock Compensation, an interpretation of APB
Opinion No. 25. FIN 44 clarifies the application of Opinion No. 25
for (a) the definition of employee for purposes of applying Opinion
No. 25, (b) the criteria for determining whether a plan qualifies
as a non-compensatory plan, (c) the accounting consequences of
various modifications to the previously fixed stock option or
award, and (d) the accounting for an exchange of stock compensation
awards in a business combination. FIN 44 is effective July 2,
2000, but certain conclusions cover specific events that occur
after either December 15, 1998, or January 12, 2000. The impact
of FIN 44 did not have a material effect on the Company's financial
position or results of operations.
27
<PAGE>
<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART I, ITEM 3
The Company is exposed to certain market risks arising from
adverse changes in interest rates, primarily due to the potential
effect of such changes on the Company's variable rate loan
arrangements with Congress, as described under Note 5 to Notes to
Consolidated Financial Statements. The Company does not use
interest rate derivative instruments to manage exposure to interest
rate changes.
28
<PAGE>
<PAGE>
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
PART II - Other Information
Item 1. Legal Proceedings
_________________
There are no additional material legal proceedings pending
against the Company and/or its subsidiaries not previously reported
by the Company in Item 3 of its Form 10-K for the year ended
December 31, 1999, which Item 3 is incorporated herein by
reference.
Item 2. Changes in Securities and Use of Proceeds
_________________________________________
(c) During the quarter ended September 30, 2000, the Company
sold or entered into an agreement to sell, equity securities that
were not registered under the Securities Act of 1933, as amended
(the "Securities Act"), other than as previously reported, as such
term is defined under Rule 12b-2 of the Exchange Act of 1934, as
amended (the "Exchange Act"), as follows:
During August 2000, in connection with the $3,000,000 RBB Loan,
the Company issued RBB Bank certain warrants (the "Initial RBB Loan
Warrants"), having a term of three (3) years, allowing the purchase
of up to 150,000 shares of the Company's Common Stock, par value
$.001 per share (the "Common Stock"), at an exercise price of $1.50
per share, with these warrants containing a cashless exercise
provision.
During September 2000, the Company issued to RBB Bank 70,984
shares of the Company's Common Stock in payment of $101,000 in
accrued and unpaid dividends from January 1, 2000, to June 30,
2000, relating to certain outstanding series of the Company's
Preferred Stock in accordance with the terms of such Preferred
Stock. The issuance of the above described shares of Common Stock
in payment of accrued and unpaid dividends in connection the
Company's Preferred Stock were issued pursuant to an exemption from
registration under Section 4(2) of the Act and/or Rule 506 of
Regulation D as promulgated under the Act.
Item 5. Other Information
_________________
RBB Loan
On or about July 14, 2000, the Company and CM entered into the
$750,000 RBB Loan Agreement, pursuant to which RBB Bank agreed to
loan $750,000 to CM, as evidenced by the RBB Note, having a term
until December 31, 2000, in the aggregate principal amount of
$750,000, at an annual rate of 10% interest thereon with accrued
interest and principal due in full upon the earlier of (i) December
31, 2000 and (ii) the Company entering into a private placement of
its securities yielding in excess of $3,000,000 to the Company. The
$750,000 RBB Loan Agreement provided that if all principal and accrued and
unpaid interest under the $750,000 RBB Note is not paid in full by
certain dates, then the Company was to issue to RBB Bank certain
warrants. The Company has subsequently been orally informed by RBB
Bank that RBB Bank will not require any of such warrants to be issued.
On August 29, 2000, the Company entered into a short term bridge loan
agreement in connection with the Company's acquisition of Diversified
Scientific Services, Inc. ("DSSI"). This loan agreement (the "$3,000,000
RBB Loan Agreement") was between the Company and RBB Bank, pursuant to
which RBB Bank, acting as agent for certain investors who provided the
funds, loaned (the "$3,000,000 RBB Loan") the Company the aggregate
principal amount of $3,000,000, as evidenced by a Promissory Note (the
"$3,000,000 RBB Promissory Note") in the face amount of $3,000,000, having a
maturity date of November 29, 2000 and bearing an annual interest rate of 12%.
29
<PAGE>
Pursuant to the terms of the $3,000,000 RBB Loan Agreement, if
all principal and accrued and unpaid interest under the $3,000,000
RBB Promissory Note is not paid in full by 5:00 p.m. New York time,
(i) on October 30, 2000, then the Company shall issue to RBB Bank,
as agent for the investors who loaned the money to the Company,
certain additional warrants, having a term of three (3) years,
allowing the purchase of up to an additional 5,000 shares of Common
Stock for each $100,000 of unpaid principal remaining under the
Promissory Note on such date, at an exercise price equal to the
closing market price of the Common Stock on the NASDAQ on October
30, 2000, with such warrants containing a cashless exercise
provision, (ii) on November 29, 2000, then the Company shall issue
to RBB Bank, as agent for the investors who loaned the money to the
Company, a certain number of shares of Common Stock, with the
number of shares determined by dividing $300,000 by the closing
market price of the Common Stock on the NASDAQ on such date, if
shares of Common Stock have been traded on the NASDAQ on such date,
or on the most recent trading date, if shares of Common Stock have
not been traded on the NASDAQ on such date, and (iii) on the 29th
day of each month after November 2000, then the Company shall issue
to RBB Bank, as agent for the investors who loaned the money to the
Company, a certain additional number of shares of Common Stock,
with the number of shares determined by dividing $300,000 by the
closing market price of the Common Stock on the NASDAQ on such
date, if shares of Common Stock have been traded on the NASDAQ on
such date, or on the most recent trading date, if shares of Common
Stock have not been traded on the NASDAQ on such date.
As of October 20, 2000, RBB Bank holds approximately 12,830,363
shares, including 6,732,780 shares that RBB Bank holds of record or
approximately 30.8% of the Company's Common Stock and 3,306,250
shares that RBB Bank has the right to acquire as of September 30,
2000, under certain warrants and 2,791,333 shares that RBB Bank has
the right to acquire upon conversion of three (3) series of the
Company's outstanding preferred stock consisting of 1,769 shares of
Series 14 Class N Convertible Preferred Stock ("Series 14
Preferred"), 616 shares of Series 15 Class O Convertible Preferred
Stock ("Series 15 Preferred") and 1,802 shares of Series 16 Class
P Convertible Preferred Stock ("Series 16 Preferred")
(collectively, the "RBB Preferred"). If the conversion of the
currently outstanding RBB Preferred occurs between April 20, 2000
and April 20, 2001, then the (i) Series 14 Preferred, which during
this period has a set conversion price of $1.50 per share of Common
Stock, is convertible into 1,179,333 shares of Common Stock, (ii)
Series 15 Preferred, which during this period has a minimum
conversion price of $1.50 per share of Common Stock, is convertible
into 410,667 shares of Common Stock, assuming the conversion is at
$1.50 per share of Common Stock, and (iii) Series 16 Preferred,
which during this period has a minimum conversion price of $1.50
per share of Common Stock, is convertible into 1,201,333 shares of
Common Stock, assuming the conversion is at $1.50 per share of
Common Stock. If RBB Bank were to acquire an aggregate of 2,791,333
shares of Common Stock upon conversion of the outstanding shares of
the RBB Preferred based on a conversion price of $1.50 per share of
Common Stock and were to exercise all of the outstanding warrants
to acquire Common Stock which are held by RBB Bank, RBB Bank would
own approximately 45.9% of the outstanding Common Stock, assuming
that the Company does not issue any other shares of Common Stock or
acquire any of the RBB Preferred or the Common Stock and RBB Bank
does not sell or otherwise dispose of any shares of Common Stock.
This does not include the shares of Common Stock which may be
issuable for payment of dividends on the RBB Preferred or which may
be issued in the event warrants are issued in connection with the
RBB Loan. RBB Bank has advised the Company that it is holding the
shares of Common Stock, the RBB Preferred and the warrants
exercisable into Common Stock on behalf of numerous clients. As a
result, RBB Bank may share voting and investment power over such
shares.
M&EC Letter of Intent
During July, 2000, the Company signed a letter of intent
("Letter of Intent") to acquire M&EC. M&EC is licensed to operate
a low-level radioactive and hazardous waste ("Mixed Waste")
treatment facility at the U.S. Department of Energy's ("DOE")
storage site in Oak Ridge, Tennessee. M&EC has previously been
awarded contracts, each with a three-year term, subject to renewal,
to process mixed waste under three Broad Spectrum Contracts awarded
by Bechtel-Jacobs Company, LLC, which manages the DOE Oak Ridge
site. As of the date of this report, M&EC is in the process of
constructing its treatment facility and it does not have revenue
generating activities.
30
<PAGE>
The Letter of Intent anticipates that in connection with the
acquisition of M&EC, (i) the Company will deliver to the M&EC
Owners $338,000 in cash, (ii) the Company will deliver to the M&EC
Owners $1,012,000 in the form of Perma-Fix Common Stock, with the
number of shares determined at the date of closing, but not to
exceed 675,000 shares. In addition, M&EC would issue, prior to the
closing of this transaction, M&EC preferred stock to the M&EC
Owners. As of November 15, 2000, the Company has loaned M&EC
$930,000. The Company has evidenced such loan by the execution by
M&EC of a promissory note in favor of the Company, which is secured
by the assets of M&EC. The acquisition of M&EC is subject to,
among other things, negotiation and execution of a definitive
agreement, completion of due diligence, regulatory approval, the
Company obtaining appropriate financing for the acquisition, and
the Company obtaining the settlement of certain of M&EC's tax
liabilities and obligations relating to M&EC's 401(k), all of which
must be to the satisfaction of the Company. See Note 5 to Notes to
Consolidated Financial Statements and the "Management's Discussion
and Analysis of Financial Condition and Results of Operations -
Proposed Acquisition" and " Liquidity and Capital Resources of the
Company."
31
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
________________________________
(a) Exhibits
2.1 Stock Purchase Agreement dated May 16, 2000, between
the Company and Waste Management, Inc. as
incorporated by reference from Exhibit 2.1 to the
Company's quarterly report on Form 10-Q for the
quarter ended March 31, 2000.
2.2 Letter of Intent dated June 27, 2000, between the
Company and East Tennessee Materials and Energy
Corporation, Hillis Enterprises, and Performance
Development Corporation as incorporated by reference
from Exhibit 2.2 to the Company's quarterly report
on Form 10-Q for the quarter ended June 30, 2000.
4.1 Congress Letter of Consent dated July 25, 2000,
relative to the RBB loan as incorporated by
reference from Exhibit 4.1 to the Company's
quarterly report on Form 10-Q for the quarter ended
June 30, 2000.
4.2 Congress Letter dated November 15, 2000, amending
the Loan and Security Agreement dated January 25, 1998
among the Company, its subsidiaries and Congress.
4.3 Second Amendment and Joinder to Loan and Security
Agreement dated August 31, 2000 among the Company, its
subsidiaries and Congress.
10.1 Letter Agreement with RBB Bank Aktiengesellschaft
regarding $750,000 loan as incorporated by reference
from Exhibit 10.1 to the Company's quarterly report
on Form 10-Q for the quarter ended June 30, 2000.
10.2 Form of Warrant Agreement between the Company, Ryan,
Beck & Co., Inc. ("Ryan Beck") and Larkspur Capital
Corporation ("Larkspur") as incorporated by
reference from Exhibit 10.1 to the Company's
quarterly report on Form 10-Q for the quarter ended
March 31, 2000. The Company entered into
substantially similar warrant agreements with
certain officers and directors of Ryan Beck and
Larkspur, except for the parties and the number of
shares addressed thereunder, and the Company agrees
to file copies of such omitted documents with the
Commission upon the Commission's request.
10.3 Unsecured Promissory Note for $750,000 to RBB Bank
Aktiengesellschaft as incorporated by reference from
Exhibit 10.3 to the Company's quarterly report on
Form 10-Q for the quarter ended June 30, 2000.
10.4 Letter Agreement with RBB Bank Aktiengesellschaft
regarding $3,000,000 loan as incorporated by
reference from Exhibit 4.1 to the Company's current
report on Form 8-K, as filed September 15, 2000.
10.5 Unsecured Promissory Note for $3,000,000 to RBB Bank
Aktiengesellschaft as incorporated by reference from
Exhibit 4.2 to the Company's current report on Form
8-K, as filed September 15, 2000.
10.6 Warrant for 150,000 shares of Common Stock issued to
RBB Bank Aktiengesellschaft as incorporated by
reference from Exhibit 4.3 to the Company's current
report on Form 8-K, as filed September 15, 2000.
32
<PAGE>
10.7 Guaranteed Promissory Note, dated August 31, 2000, for
$2,500,000 issued to Waste Management Holdings, Inc. as
incorporated by reference from Exhibit 4.4 to the Company's
current report on Form 8-K, as filed September 15, 2000.
10.8 Promissory Note, dated August 31, 2000, for $3,500,000 issued
to Waste Management Holdings, Inc. as incorporated by reference
from Exhibit 4.5 to the Company's current report on Form
8-K, as filed September 15, 2000.
10.9 Non-recourse Guaranty dated August 31, 2000, between Diversified
Scientific Services, Inc. and Waste Management Holdings, Inc. as
incorporated by reference from Exhibit 10.1 to the Company's
current report on Form 8-K, as filed September 15, 2000.
27 Financial Data Schedule.
(b) Reports on Form 8-K
____________________
A current report on Form 8-K (Item 5 - Other Events), dated
August 31, 2000, was filed by the Company reporting the Company's entry
into a Stock Purchase Agreement with Diversified Scientific Services, Inc.
("DSSI"), a wholly owned subsidiary of Waste Management, Inc. wherein the
Company agreed to purchase all of the outstanding capital stock of DSSI
from Waste Management, Inc. pursuant to the terms of the DSSI Purchase
Agreement.
A current report on Form 8-K/A (Item 5 - Other Events), dated
August 31, 2000, was filed on November 14, 2000, by the Company reporting
(i) the audited financial statements of DSSI and the unaudited interim
financial statements of DSSI required by Rule 3.05(b) of Regulation S-X,
as promulgated pursuant to the Securities Act and the Securities Exchange
Act of 1934,as amended (the "Exchange Act") and (ii) the unaudited pro
forma financial information required by Article 11 of Regulation S-X, as
promulgated pursuant to the Securities Act and the Exchange Act.
33
<PAGE>
<PAGE>
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, INC.
November 17, 2000 By: /s/ Louis F. Centofanti
____________________________________
Dr. Louis F. Centofanti
Chairman of the Board
Chief Executive Officer
By: /s/ Richard T. Kelecy
___________________________________
Richard T. Kelecy
Chief Financial Officer
34
<PAGE>
EXHIBIT INDEX
______________
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NO.
___________ _____________ _________
2.1 Stock Purchase Agreement, dated May 16, 2000,
between the Company and Waste Management, Inc.
as incorporated by reference from Exhibit 2.1
to the Company's quarterly report on Form 10-Q
for the quarter ended March 31, 2000.
2.2 Letter of Intent dated June 27, 2000, between
the Company and East Tennessee Materials and
Energy Corporlation, Hillis Enterprises, and
Performance Development Corporation as incor-
porated by reference from Exhibit 2.2 to the
Company's quarterly report on Form 10-Q for
the quarter ended June 30, 2000.
4.1 Congress Letter of Consent dated July 25, 2000,
relative to the RBB loan as incorporated by
reference from Exhibit 4.1 to the Company's
quarterly report on Form 10-Q for the quarter
ended June 30, 2000.
4.2 Congress Letter dated November 15, 2000, amending
the Loan and Security Agreement dated January 25,
1998 among the Company, its subsidiaries and Congress. 37
4.3 Second Amendment and Joinder to Loan and Security
Agreement dated August 31, 2000 among the Company,
its subsidiaries and Congress. 41
10.1 Letter Agreement with RBB Bank Aktiengesellschaft
regarding $750,000 loan as incorporated by reference
from Exhibit 10.1 to the Company's quarterly report
on Form 10-Q for the quarter ended June 30, 2000.
10.2 Form of Warrant Agreement between the Company, Ryan,
Beck & Co., Inc. ("Ryan Beck") and Larkspur Capital
Corporation ("Larkspur") as incorporated by reference
from Exhibit 10.1 to the Company's quarterly report
on Form 10-Q for the quarter ended March 31, 2000.
The Company entered into substantially similar warrant
agreements with certain officers and directors of Ryan
Beck and Larkspur, except for the parties and the number
of shares addressed thereunder, and the Company agrees
to file copies of such omitted documents with the
Commission upon the Commission's request.
10.3 Unsecured Promissory Note for $750,000 to RBB Bank
Aktiengesellschaft as incorporated by reference from
Exhibit 10.3 to the Company's quarterly report on
Form 10-Q for the quarter ended June 30, 2000.
10.4 Letter Agreement with RBB Bank Aktiengesellschaft
regarding $3,000,000 loan as incorporated by reference
from Exhibit 4.1 to the Company's current report on
Form 8-K, as filed September 15, 2000.
10.5 Unsecured Promissory Note for $3,000,000 to RBB Bank
Aktiengesellschaft as incorporated by reference from
Exhibit 4.2 to the Company's current report on Form 8-K,
as filed September 15, 2000.
10.6 Warrant for 150,000 shares of Common Stock issued to
RBB Bank Aktiengesellschaft as incorporated by reference
from Exhibit 4.3 to the Company's current report on Form
8-K, as filed September 15, 2000.
<PAGE>
10.7 Guaranteed Promissory Note, dated August 31, 2000, for
$2,500,000 issued to Waste Management Holdings, Inc. as
incorporated by reference from Exhibit 4.4 to the Company's
current report on Form 8-K, as filed September 15, 2000.
10.8 Promissory Note, dated August 31, 2000, for $3,500,000
issued to Wste Management Holdings, Inc. as incorporated
by reference from Exhibit 4.5 to the Company's current report
on Form 8-K, as filed September 15, 2000.
10.9 Non-recourse Guaranty dated August 31, 2000, between
Diversified Scientific Services, Inc. and Waste Management
Holdings, Inc. as incorporated by reference from Exhibit
10.1 to the Company's current report on Form 8-K as
filed September 15, 2000.
27 Financial Data Schedule. 59
