pfsw-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________

FORM 10-Q

__________________________________________


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

For the Quarterly Period Ended September 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number 000-28275

___________________________________________

PFSweb, Inc.

(Exact name of registrant as specified in its charter)

___________________________________________

Delaware

75-2837058

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

9250 N. Royal Lane, Suite 100,

Irving, Texas

75063

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (972) 881-2900

505 Millennium Drive,

Allen, Texas

75013

(Former address)

Not Applicable

(Former name and former fiscal year, if changed since last report)

__________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	PFSW	Nasdaq	Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller Reporting Company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of November 3, 2022, there were 22,644,199 shares of registrant’s common stock outstanding.

PFSWEB, INC. AND SUBSIDIARIES

Form 10-Q

INDEX


PART I. FINANCIAL INFORMATION		Page Number

Item 1.	Financial Statements:

	Condensed Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021	4

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss ) for the Three and Nine Months Ended September 30, 2022 and 2021	5

	Unaudited Condensed Consolidated Statements of Shareholders' Equity for the Three and Nine Months Ended September 30, 2022 and 2021	6

	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021	8

	Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosure about Market Risk	20

Item 4.	Controls and Procedures	20

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	22

Item 1A.	Risk Factors	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 3.	Defaults Upon Senior Securities	22

Item 4.	Mine Safety Disclosure	22

Item 5.	Other Information	22

Item 6.	Exhibits	23

SIGNATURES		26

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

PFSWEB, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Data)


	(Unaudited) September 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	140,350	$	152,332
Restricted cash	—		214
Accounts receivable, net of allowance for doubtful accounts of $375 and $867 at September 30, 2022 and December 31, 2021, respectively	50,705		78,024

Inventories, net of reserves of $0 and $57 at September 30, 2022 and December 31, 2021, respectively	—		3,133
Other receivables	7,935		7,005
Prepaid expenses and other current assets	6,254		7,244
Total current assets	205,244		247,952
Property and equipment:
Cost	85,378		92,079
Less: accumulated depreciation	(65,124)		(72,764)
	20,254		19,315
Operating lease right-of-use assets, net	32,098		35,371

Goodwill	20,904		22,218
Other assets	1,669		1,610
Total assets	$	280,169	$	326,466
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	24,599	$	36,450
Accrued expenses	22,295		31,643
Current portion of operating lease liabilities	10,581		10,104
Current portion of finance lease obligations	72		222
Deferred revenues	2,039		4,391
Total current liabilities	59,586		82,810
Finance lease obligations, less current portion	34		89
Deferred revenue, less current portion	852		833
Operating lease liabilities, less current portion	26,864		30,393
Other liabilities	2,676		2,565
Total liabilities	90,012		116,690

Commitments and Contingencies

Shareholders' equity:
Preferred stock, $1.00 par value; 1,000,000 shares authorized; none issued or outstanding	—		—
Common stock, $0.001 par value; 35,000,000 shares authorized; 22,677,666 and 22,131,546 issued and 22,644,199 and 22,098,079 outstanding at September 30, 2022 and December 31, 2021, respectively	22		21
Additional paid-in capital	178,643		177,511
Retained earnings	15,642		33,522
Accumulated other comprehensive loss	(4,025)		(1,153)
Treasury stock at cost, 33,467 shares	(125)		(125)
Total shareholders’ equity	190,157		209,776
Total liabilities and shareholders’ equity	$	280,169	$	326,466

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

PFSWEB, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In Thousands, Except Per Share Data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues:
Service fee revenue	$	43,658	$	44,275	$	134,423	$	132,804
Product revenue, net	14		4,096		3,333		12,896
Pass-through revenue	21,813		12,970		58,850		37,444
Total revenues	65,485		61,341		196,606		183,144
Costs of Revenues:
Cost of service fee revenue	33,785		33,383		105,922		98,776
Cost of product revenue	4		3,895		3,059		12,265
Cost of pass-through revenue	21,813		12,970		58,850		37,444
Total costs of revenues	55,602		50,248		167,831		148,485
Gross profit	9,883		11,093		28,775		34,659
Selling, general and administrative expenses	16,341		16,161		46,846		44,768
Loss from operations	(6,458)		(5,068)		(18,071)		(10,109)
Interest (income) expense, net	(554)		165		(699)		873
Loss on extinguishment of debt	—		426		—		426
Loss from continuing operations before income taxes	(5,904)		(5,659)		(17,372)		(11,408)
Income tax expense, net	186		1,152		688		1,276
Net loss from continuing operations	(6,090)		(6,811)		(18,060)		(12,684)

Income from discontinued operations before income taxes	—		197,920		180		196,508
Income tax expense, net	—		33,758		—		36,315
Income from discontinued operations	—		164,162		180		160,193

Net income (loss)	$	(6,090)	$	157,351	$	(17,880)	$	147,509

Basic earnings (loss) per share
Income (loss) from continuing operations per share	$	(0.27)	$	(0.32)	$	(0.80)	$	(0.60)
Income from discontinued operations per share	—		7.71		0.01		7.57
Basic earnings (loss) per share	$	(0.27)	$	7.39	$	(0.79)	$	6.97
Diluted earnings (loss) per share
Income (loss) from continuing operations per share	$	(0.27)	$	(0.32)	$	(0.80)	$	(0.60)
Income from discontinued operations per share	—		7.71		0.01		7.57
Diluted earnings (loss) per share	$	(0.27)	$	7.39	$	(0.79)	$	6.97
Weighted average number of shares outstanding:
Basic	22,644		21,282		22,580		21,164
Diluted	22,644		21,282		22,580		21,164
Comprehensive income (loss):
Net income (loss)	$	(6,090)	$	157,351	$	(17,880)	$	147,509
Foreign currency translation adjustment	(1,098)		(34)		(2,872)		(343)
Reclassifications of foreign currency translation adjustments realized upon disposal of business	$	—	$	(327)	$	—	$	(327)
Total comprehensive income (loss)	$	(7,188)	$	156,990	$	(20,752)	$	146,839

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

PFSWEB, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In Thousands, Except Share Data)


	Three Months Ended September 30, 2022

								Accumulated
				Additional				Other					Total
	Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Shareholders'
	Shares	Amount		Capital		Earnings		Loss		Shares	Amount		Equity
Balance, June 30, 2022	22,676,595	$	22	$	177,008	$	21,732	$	(2,927)	33,467	$	(125)	$	195,710
Net loss	—			—		(6,090)		—		—	—		(6,090)
Stock-based compensation	—	—		1,629		—		—		—	—		1,629
Exercise of stock options	963	—		6		—		—		—	—		6
Issuance of shares under stock-based compensation awards	108	—		—		—		—		—	—		—
Foreign currency translation	—	—		—		—

SEC Form 10-Q filed by PFSweb Inc.