pfsw-20220630

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 June 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)

505 Millennium Drive,

Allen, Texas

75013

(Address of principal executive offices)

(Zip Code)

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

Not Applicable

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

__________________________________________

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


Title of each class	Trading Symbol(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 August 1, 2022, there were 22,642,865 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 June 30 , 2022 (Unaudited) and December 31, 2021	4

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30 , 2022 and 2021	5

	Unaudited Condensed Consolidated Statements of Shareholders' Equity for the Three and Six Months Ended June 3 0 , 2022 and 2021	6

	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 3 0 , 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	14

Item 3.	Quantitative and Qualitative Disclosure about Market Risk	19

Item 4.	Controls and Procedures	19

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	21

Item 1A.	Risk Factors	21

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21

Item 3.	Defaults Upon Senior Securities	21

Item 4.	Mine Safety Disclosure	21

Item 5.	Other Information	21

Item 6.	Exhibits	22

SIGNATURES		25

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

PFSWEB, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Data)


	(Unaudited) June 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	148,171	$	152,332
Restricted cash	—		214
Accounts receivable, net of allowance for doubtful accounts of $507 and $867 at June 30, 2022 and December 31, 2021, respectively	49,550		78,024

Inventories, net of reserves of $0 and $57 at June 30, 2022 and December 31, 2021, respectively	—		3,133
Other receivables	7,849		7,005
Prepaid expenses and other current assets	6,930		7,244
Total current assets	212,500		247,952
Property and equipment:
Cost	94,643		92,079
Less: accumulated depreciation	(75,209)		(72,764)
	19,434		19,315
Operating lease right-of-use assets, net	31,133		35,371

Goodwill	21,438		22,218
Other assets	1,666		1,610
Total assets	$	286,171	$	326,466
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	27,257	$	36,450
Accrued expenses	21,571		31,643
Current portion of operating lease liabilities	9,584		10,104
Current portion of finance lease obligations	98		222
Deferred revenues	2,949		4,391
Total current liabilities	61,459		82,810
Finance lease obligations, less current portion	54		89
Deferred revenue, less current portion	571		833
Operating lease liabilities, less current portion	25,714		30,393
Other liabilities	2,663		2,565
Total liabilities	90,461		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; 22,676,595 and 22,131,546 issued and 22,643,128 and 22,098,079 outstanding at June 30, 2022 and December 31, 2021, respectively	22		21
Additional paid-in capital	177,008		177,511
Retained earnings	21,732		33,522
Accumulated other comprehensive loss	(2,927)		(1,153)
Treasury stock at cost, 33,467 shares	(125)		(125)
Total shareholders’ equity	195,710		209,776
Total liabilities and shareholders’ equity	$	286,171	$	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 LOSS

(In Thousands, Except Per Share Data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenues:
Service fee revenue	$	45,234	$	43,009	$	90,765	$	88,529
Product revenue, net	122		4,492		3,319		8,800
Pass-through revenue	19,278		13,598		37,037		24,474
Total revenues	64,634		61,099		131,121		121,803
Costs of Revenues:
Cost of service fee revenue	35,645		31,863		72,137		65,393
Cost of product revenue	104		4,284		3,055		8,370
Cost of pass-through revenue	19,278		13,598		37,037		24,474
Total costs of revenues	55,027		49,745		112,229		98,237
Gross profit	9,607		11,354		18,892		23,566
Selling, general and administrative expenses	14,077		15,678		30,505		28,609
Loss from operations	(4,470)		(4,324)		(11,613)		(5,043)
Interest (income) expense, net	(151)		333		(145)		708
Loss from continuing operations before income taxes	(4,319)		(4,657)		(11,468)		(5,751)
Income tax expense (benefit), net	184		(155)		502		124
Net loss from continuing operations	(4,503)		(4,502)		(11,970)		(5,875)

Income (loss) from discontinued operations before income taxes	180		(590)		180		(1,410)
Income tax expense, net	—		2,528		—		2,557
Income (loss) from discontinued operations	180		(3,118)		180		(3,967)

Net loss	$	(4,323)	$	(7,620)	$	(11,790)	$	(9,842)

Basic loss per share
Loss from continuing operations per share	$	(0.20)	$	(0.21)	$	(0.53)	$	(0.28)
Income (loss) from discontinued operations per share	0.01		(0.15)		0.01		(0.19)
Basic loss per share	$	(0.19)	$	(0.36)	$	(0.52)	$	(0.47)
Diluted loss per share
Loss from continuing operations per share	$	(0.20)	$	(0.21)	$	(0.53)	$	(0.28)
Income (loss) from discontinued operations per share	0.01		(0.15)		0.01		(0.19)
Diluted loss per share	$	(0.19)	$	(0.36)	$	(0.52)	$	(0.47)
Weighted average number of shares outstanding:
Basic	22,650		21,166		22,547		21,221
Diluted	22,650		21,166		22,547		21,221
Comprehensive loss:
Net loss	$	(4,323)	$	(7,620)	$	(11,790)	$	(9,842)
Foreign currency translation adjustment	(1,267)		46		(1,774)		(309)
Total comprehensive loss	$	(5,590)	$	(7,574)	$	(13,564)	$	(10,151)

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 June 30, 2022

								Accumulated
				Additional				Other					Total
	Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Shareholders'
	Shares	Amount		Capital		Earnings		Loss		Shares	Amount		Equity
Balance, March 31, 2022	22,474,862	$	21	$	177,250	$	26,055	$	(1,660)	33,467	$	(125)	$	201,541
Net loss	—			—		(4,323)		—		—	—		(4,323)
Stock-based compensation	—	—		577		—		—		—	—		577
Exercise of stock options	32,875	—		134		—		—		—	—		134
Issuance of shares under stock-based compensation awards	168,858	1		—		—		—		—	—		1
Tax withholding on shares issued under stock-based compensation awards	—	—		(953)		—		—		—	—		(953)
Foreign currency translation	—	—		—		—		(1,267)		—	—		(1,267)
Balance, June 30, 2022	22,676,595	$	22	$	177,008	$	21,732	$	(2,927)	33,467	$	(125)	$	195,710


	Six Months Ended June 30, 2022

								Accumulated
				Additional				Other					Total
	Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Shareholders'
	Shares	Amount		Capital		Earnings		Loss		Shares	Amount		Equity
Balance, December 31, 2021	22,131,546	$	21	$	177,511	$	33,522	$	(1,153)	33,467	$	(125)	$	209,776
Net loss	—	—		—		(11,790)		—		—	—		(11,790)
Stock-based compensation	—	—		1,316		—		—		—	—		1,316
Exercise of stock options	88,874	—		436		—		—		—	—		436
Issuance of shares under stock-based compensation awards	456,175	1		—		—		—		—	—		1
Tax withholding on shares issued under stock-based compensation awards	—	—		(2,255)		—		—		—	—		(2,255)
Foreign currency translation	—	—		—		—		(1,774)		—	—		(1,774)
Balance, June 30, 2022	22,676,595	$	22	$	177,008	$	21,732	$	(2,927)	33,467	$	(125)	$	195,710

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 (cont.)

(In Thousands, Except Share Data)

Three Months Ended June 30, 2021

SEC Form 10-Q filed by PFSweb Inc.