8-K - PMDI - Equibles

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________

Form 8-K _____________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): August 10, 2021

PSYCHEMEDICS CORPORATION (Exact Name of Registrant as Specified in Charter)

Deleware	1-13738	58-1701987
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)
289 Great Road, Acton, Massachusetts 01720
---
(Address of Principal Executive Offices) (Zip Code)

(978) 206-8220 (Registrant's telephone number, including area code)

N/A (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
	[ ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	[ ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	[ ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	[ ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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, $0.005 par value	PMD	The Nasdaq Stock Market, LLC.

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). 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. [ ]

Item 2.02. Results of Operations and Financial Condition.

On August 10, 2021, Psychemedics Corporation (the “Company”) issued a press release announcing its results for the quarter ended June 30, 2021. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference.

Limitation on Incorporation by Reference. The information furnished in this Item 2.02, including the press release attached hereto as Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Cautionary Note Regarding Forward-Looking Statements. Except for historical information contained in the press release attached as an exhibit hereto, the press release contains forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

The following exhibits are filed herewith:

99.1	Press Release of Psychemedics Corporation dated August 10, 2021, announcing its results for the quarter ended June 30, 2021.

SIGNATURE

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.

	PSYCHEMEDICS CORPORATION
Date: August 10, 2021	By:	/s/ Andrew Limbek
		Andrew Limbek
		Vice President, Controller

EdgarFiling

EXHIBIT 99.1

Psychemedics Corporation Reports Stronger Second Quarter 2021 Financial Results

ACTON, Mass., Aug. 10, 2021 (GLOBE NEWSWIRE) -- Psychemedics Corporation (NASDAQ:PMD), the world’s largest provider of hair testing for drugs of abuse, today announced financial results for the second quarter ended June 30, 2021.

The Company’s revenue for the quarter ended June 30, 2021, was $6.1 million versus $3.3 million for the quarter ended June 30, 2020, an increase of 85%. Net income for the quarter ended June 30, 2021, was $0.1 million or $0.02 per diluted share, versus net loss of $2.1 million or ($0.37) per diluted share, for the comparable period last year, an increase of $0.39 per diluted share. The Company’s revenue for the six months ended June 30, 2021, was $11.8 million versus $10.9 million for the comparable period in 2020, an increase of 8%. Net income for the six months ended June 30, 2021, was $0.2 million or $0.04 per diluted share, versus net loss of $2.2 million or ($0.40) per diluted share, for the comparable period last year.

Raymond C. Kubacki, Chairman and Chief Executive Officer, stated:

“We continued to show improvement in our total revenues from our base business including continued quarter-to-quarter growth since the beginning of the COVID-19 pandemic. The driving force in this revenue performance is the growth in our domestic business, largely attributable to our Oil & Gas, Manufacturing and Transportation market segments. We do recognize that we are comparing to last year’s second quarter, which was the first quarter to feel the full impact of the COVID-19 shutdown. Nonetheless, the 80% increase in our domestic revenues was very solid. International revenues, primarily Brazil, increased 153% but on a much smaller base. Brazil volumes continue to be unpredictable, and our focus is still on our domestic business as we mentioned in our last press release. On the earnings front, we had a number of factors that positively impacted our margins, as well as a number of factors that negatively impacted our margins. Our second quarter earnings were positively impacted by the Employee Retention Credit (“ERC”) provisions of the Consolidated Appropriations Act (“CAA”). Accordingly, we recorded a $0.8 million employee retention tax credit during the three months ended June 30, 2021. We have already determined we are eligible for the employee retention tax credit in third quarter of 2021 and expect to be for the fourth quarter of 2021 as well. In addition, we benefited from a significant reduction in legal expenses from what was recorded in last year’s second quarter. At the same time, however, margins were negatively impacted by a number of one-time expenses primarily from a dramatic increase in shipping costs; expenses associated with the transition of our new financial team (recruiting fees and temporary help); and an inordinate increase in lab supplies purchased for reserve. The dislocation in shipping costs has been rectified, the financial team is now in place, and the lab supply reserve is in place. The net impact of all these factors and our continuing cost reduction (including continuation of salary cuts for management and high-level teammates) and cost control initiatives, enabled us to record a profit for the three months ended June 30^th^, 2021. While there continues to be an uncertain economic outlook in view of the COVID-19 variants, we believe we are well-positioned to continue our momentum as we serve a number of key essential industries. As an update on our PPP Loan, in July 2021, the Company received confirmation that the United States Small Business Administration (“SBA”) approved the forgiveness application for the Company’s PPP loan (the “PPP Loan”) in the amount of $2.2 million (including accrued interest). The balance on this PPP Loan is now zero. The Company had $2.7 million of cash ($7.1 million of working capital) as of June 30, 2021. The total equipment financing outstanding was $1.6 million as of June 30, 2021, compared to a total amount borrowed of $12.2 million reflecting repayments of $10.6 million since May 2014. The PPP Loan outstanding was $2.2 million as of June 30, 2021. As noted above, the PPP Loan was 100% forgiven by the SBA in July 2021. The Company paid 94 consecutive dividends (23 ½ years) through the first quarter of 2020, even during the financial crisis in 2008. However, because of the current COVID-19 pandemic, the dividend was suspended during 2020 and first half 2021 as we prioritized our liquidity and balance sheet. We have consistently been committed to paying a dividend and it took a pandemic for us to break our long history of consecutive quarterly dividend payments. Our Board of Directors share our confidence in the future of Psychemedics and remain committed to rewarding shareholders and sharing the financial success of the Company with them as we grow. We evaluate the dividend each quarter and will continue to do so as we move forward.”

Psychemedics Corporation is the world’s largest provider of hair testing for the detection of drugs of abuse. The Company’s patented process is used by thousands of U.S. and international clients, including over 10% of the Fortune 500 companies, for pre-employment and random drug testing. Major police departments, Federal Reserve Banks, schools, and other public entities also rely on our unique patented drug testing process. We strongly believe our drug testing method to be superior to any other product currently in use, including traditional urine testing and other hair testing methods.

Cautionary Statement for purposes of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995: From time to time, information provided by Psychemedics may contain forward-looking information that involves risks and uncertainties. In particular, statements contained in this release that are not historical facts (including but not limited to statements concerning earnings, earnings per share, revenues, cash flows, receivables collection dates, dividends, future business, growth opportunities, profitability, pricing, new accounts, customer base, market share, test volume, customer anticipated testing volume following the COVID-19 pandemic, sales and marketing strategies, market demand for drug testing services in Brazil, U.S. and foreign drug testing laws and regulations, including, without limitation, Brazilian professional driver drug testing requirements, required investments in plant, equipment and people and new test development, the effect of COVID-19 on our business, including its effects on our business, and profitability, and on the well-being and availability of our employees and the continued operation of our testing facilities) may be “forward looking” statements. Actual results may differ from those stated in any forward-looking statements. Factors that may cause such differences include but are not limited to risks associated with the severity of the COVID-19 pandemic, and its impact on the Company’s markets, including its impact on the Company’s customers, suppliers and employees, as well as its risk on the United States and worldwide economies, the timing, scope and effectiveness of further governmental, regulatory, fiscal monetary and public health responses to the COVID-19 pandemic, Internal Revenue Service refund processing timeframes, changes in U.S. and foreign government regulations, including but not limited to FDA regulations, changes in Brazilian laws and regulations and proposed laws and regulations and the implementation of such laws and regulations, currency risks, R&D spending, competition (including, without limitation, competition from other companies pursuing the same growth opportunities), the Company’s ability to maintain its reputation and brand image, the ability of the Company to achieve its business plans, cost controls, leveraging of its global operating platform, risks of information technology system failures and data security breaches, the uncertain global economy, the Company’s ability to attract, develop and retain executives and other qualified employees and independent contractors, including distributors, the Company’s ability to obtain and protect intellectual property rights, litigation risks, general economic conditions and other factors disclosed in the Company's filings with the Securities and Exchange Commission. With respect to the continued payment of cash dividends, factors include, but are not limited to, all of the factors listed above with respect to the impact of the COVID-19 pandemic on our business generally, plus cash flows, available surplus, capital expenditure reserves required, debt service obligations, regulatory requirements, requirements under our bank loan agreements and other factors that the Board of Directors of the Company may take into account. The forward-looking statements contained herein speak only of the Company's expectations as of the date of this press release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in the Company's expectations or any change in events, conditions, or circumstances on which any such statement is based.

The Psychemedics Corporation web site is www.psychemedics.com

Andrew Limbek Vice President, Controller (978) 206-8220 AndrewL@psychemedics.com

Psychemedics Corporation Consolidated Statements of Operations (in thousands, except per share amounts) (UNAUDITED)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
		2021		2020			2021			2020
Revenues	$	6,087	$	3,314		$	11,800		$	10,851
Cost of revenues		3,651		3,566			6,796			8,375
Gross profit (loss)		2,436		(252	)		5,004			2,476
Operating Expenses:
General & administrative		1,280		1,853			2,809			3,386
Marketing & selling		656		856			1,298			1,962
Research & development		293		345			573			676
Total Operating Expenses		2,229		3,054			4,680			6,024
Operating income (loss)		207		(3,306	)		324			(3,548	)
Other expense				(39	)		(14	)		(112	)
Income (loss) before provision for (benefit from) income taxes		207		(3,345	)		310			(3,660	)
Provision for (benefit from) income taxes		73		(1,295	)		93			(1,451	)
Net income (loss)	$	134	$	(2,050	)	$	217		$	(2,209	)
Diluted net income (loss) per share	$	0.02	$	(0.37	)	$	0.04		$	(0.40	)
Dividends declared per share	$	-	$	-		$	-		$	0.18

Psychemedics Corporation Consolidated Balance Sheets (in thousands, except par value) (UNAUDITED)

			December 31,
			2020
ASSETS
Current Assets:
Cash	2,651		$	2,833
Accounts receivable, net of allowance for doubtful accounts	3,971			3,356
Prepaid expenses and other current assets	2,575			914
Income tax receivable	2,539			2,495
Total Current Assets	11,736			9,598
Fixed assets, net of accumulated amortization and depreciation	7,993			9,231
Other assets	849			888
Operating lease right-of-use assets	4,009			4,286
Total Assets	24,587		$	24,003
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable	1,100		$	577
Accrued expenses	1,890			1,801
Current portion of long-term debt	693			688
Current portion of operating lease liabilities	965			875
Total Current Liabilities	4,648			3,941
Long-term debt	3,096			3,444
Deferred tax liabilities, long-term	238			211
Long-term portion of operating lease liabilities	3,490			3,895
Total Liabilities	11,472			11,491
Shareholders' Equity:
Common stock, 0.005 par value; 50,000 shares authorized 6,205 shares issued at June 30, 2021, and December 31, 2020, respectively, and 5,541 shares outstanding and 5,537 shares outstanding at June 30, 2021, and December 31, 2020, respectively	31			31
Additional paid-in capital	33,189			32,803
Less - Treasury stock, at cost, 668 shares	(10,082	)		(10,082	)
Accumulated deficit	(8,389	)		(8,606	)
Accumulated other comprehensive loss	(1,634	)		(1,634	)
Total Shareholders' Equity	13,115			12,512
Total Liabilities and Shareholders' Equity	24,587			24,003

All values are in US Dollars.