Hudson Technologies, Inc. and Subsidiaries

Three months
ended September 30,

Nine months
ended September 30,

2017 2016 2017 2016

Revenues 24,706 $ 34,930 $ 115,766 $ 97,701
Cost of sales 19,636 22,890 80,811 67,649
Gross profit 5,070 12,040 34,955 30,052

Operating expenses:
Selling, general and administrative 3,473 3,895 9,823 8,507
Amortization 121 127 364 365
Total operating expenses 3,594 4,022 10,187 8,872

Operating income 1,476 8,018 24,768 21,180

Interest expense (24 ) (296 ) (170 ) (919 )

Income before income taxes 1,452 7,722 24,598 20,261

Income tax expense (benefit) (652 ) 2,933 8,236 7,699

Net income $ 2,104 $ 4,789 $ 16,362 $ 12,562

Net income per common share - Basic $ 0.05 $ 0.14 $ 0.39 $ 0.38
Net income per common share - Diluted $ 0.05 $ 0.14 $ 0.38 $ 0.37
Weighted average number of shares outstanding -
Basic
41,869,528 33,873,479 41,648,439 33,265,470
Weighted average number of shares outstanding -
Diluted
43,463,982 35,297,585 43,173,427 34,341,930

Consolidated Statements of Stockholders’ Equity

(unaudited)

(Amounts in thousands, except for share amounts)

Three Months Ended June 30,


						Retained
				Additional		Earnings
	Common Stock			Paid-in		(Accumulated
	Shares	Amount		Capital		Deficit)		Total
Balance at April 1, 2022	44,909,704	$	449	$	116,713	$	(16,266)	$	100,896

Issuance of common stock upon exercise of stock options	110,383		1		51		—		52

Excess tax benefits from exercise of stock options	—		—		(1)		—		(1)

Stock compensation expense	—		—		180		—		180

Net income	—		—		—		39,810		39,810

Balance at June 30, 2022	45,020,087	$	450	$	116,943	$	23,544	$	140,937

Balance at April 1, 2023	45,328,892	$	453	$	117,535	$	73,511	$	191,499

Issuance of common stock upon exercise of stock options	46,706		1		—		—		1

Excess tax benefits from exercise of stock options	—		—		(1)		—		(1)

Stock compensation expense	—		—		762		—		762

Net income	—		—		—		19,189		19,189

Balance at June 30, 2023	45,375,598	$	454	$	118,296	$	92,700	$	211,450

Six Months Ended June 30,


						Retained
				Additional		Earnings
	Common Stock			Paid-in		(Accumulated
	Shares	Amount		Capital		Deficit)		Total
Balance at January 1, 2022	44,758,925	$	448	$	116,312	$	(45,821)	$	70,939

Issuance of common stock upon exercise of stock options	261,162		2		121		—		123

Excess tax benefits from exercise of stock options	—		—		(73)		—		(73)

Stock compensation expense	—		—		583		—		583

Net income	—		—		—		69,365		69,365

Balance at June 30, 2022	45,020,087	$	450	$	116,943	$	23,544	$	140,937

Balance at January 1, 2023	45,287,619	$	453	$	116,442	$	57,980	$	174,875

Issuance of common stock upon exercise of stock options	87,979		1		38		—		39

Excess tax benefits from exercise of stock options	—		—		(3)		—		(3)

Stock compensation expense	—		—		1,819		—		1,819

Net income	—		—		—		34,720		34,720

Balance at June 30, 2023	45,375,598	$	454	$	118,296	$	92,700	$	211,450

See Accompanying Notes to the Consolidated Financial ~~Statements.~~Statements

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Hudson Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

~~(Decrease) Increase in Cash and Cash Equivalents~~

(unaudited)

(Amounts in thousands)

Nine months
ended September 30,
2017 2016

Cash flows from operating activities:
Net income $ 16,362 $ 12,562
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization 1,688 1,723
Allowance for doubtful accounts 90 17
Value of share-based payment arrangements 28 601
Amortization of deferred finance costs 33 113
Deferred tax asset utilization 658 1,584
Adjustment to deferred acquisition payable - 594
Changes in assets and liabilities:
Trade accounts receivable (9,241 ) (4,834 )
Inventories 4,790 (4,687 )
Prepaid and other assets (5,754 ) 741
Income taxes payable 793 1,787
Accounts payable and accrued expenses 2,690 (2,760 )
Cash provided by operating activities 12,137 7,441

Cash flows from investing activities:
Additions to property, plant, and equipment (861 ) (877 )
Cash used in investing activities (861 ) (877 )

Cash flows from financing activities:
Payment of deferred acquisition costs (528 ) (1,038 )
Proceeds from issuance of common stock 722 2,634
Tax payment withholdings related to settlements of stock option awards (1,235 ) -
Repayment of short-term debt – net - (5,205 )
Proceeds from long-term debt – net - 27
Repayment of long-term debt (172 ) (264 )
Cash used in financing activities (1,213 ) (3,846 )

Increase in cash and cash equivalents 10,063 2,718
Cash and cash equivalents at beginning of period 33,931 1,258
Cash and cash equivalents at end of period $ 43,994 $ 3,976

Supplemental Disclosure of Cash Flow Information:
Cash paid during period for interest $ 227 $ 806
Cash paid for income taxes $ 6,785 $ 4,328


	Six months
	ended June 30,
	2023		2022
Cash flows from operating activities:
Net income	$	34,720	$	69,365
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation		1,495		1,726
Amortization of intangible assets		1,397		1,397
Lower of cost or net realizable value reserve		(1,104)		(1,155)
Allowance for doubtful accounts		851		1,207
Stock compensation expense		1,819		583
Amortization of deferred finance costs		538		2,004
Loss on extinguishment of debt		—		4,665
Deferred tax expense (benefit)		2,917		(1,602)
Changes in assets and liabilities:
Trade accounts receivable		(29,037)		(30,727)
Inventories		12,037		(23,366)
Prepaid and other assets		(5,200)		1,677
Lease obligations		2		15
Income taxes receivable		(1,741)		—
Accounts payable and accrued expenses		2,552		8,078
Cash provided by operating activities		21,246		33,867

Cash flows from investing activities:
Additions to property, plant, and equipment		(837)		(820)
Cash used in investing activities		(837)		(820)

Cash flows from financing activities:
Proceeds from issuance of common stock		39		123
Excess tax benefits from exercise of stock options		(3)		(73)
Payment of deferred financing cost		—		(8,512)
Borrowing of short-term debt – net		—		(15,000)
Proceeds from long-term debt		—		100,000
Repayment of long-term debt		(14,325)		(92,395)
Cash used in financing activities		(14,289)		(15,857)

Increase in cash and cash equivalents		6,120		17,190
Cash and cash equivalents at beginning of period		5,295		3,492
Cash and cash equivalents at end of period	$	11,415	$	20,682

Supplemental Disclosure of Cash Flow Information:
Cash paid during period for interest	$	2,952	$	7,911
Cash paid for income taxes – net	$	10,665	$	5,908

See Accompanying Notes to the Consolidated Financial ~~Statements.~~Statements

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Hudson Technologies, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

~~(unaudited)~~

Note 1 - Summary of Significant Accounting Policies

Business

Hudson Technologies, Inc. (“Hudson” or the “Company”), incorporated under the laws of New York on January 11, 1991, is a refrigerant services company providing innovative solutions to recurring problems within the refrigeration industry. Hudson has proven, reliable programs that meet customer refrigerant needs by providing environmentally sustainable solutions from initial sale of refrigerant gas through recovery, reclamation and reuse, peak operating performance of equipment through energy efficiency and emergency air conditioning and refrigeration system repair, to final refrigerant disposal and carbon credit trading.

The Company’s operations consist of one reportable segment. The ~~Company's~~Company’s products and services are primarily used in commercial air conditioning, industrial processing and refrigeration systems, and include refrigerant and industrial gas sales, refrigerant management services consisting primarily of reclamation of refrigerants and RefrigerantSide® Services performed at a ~~customer's site, consisting~~customer’s site. RefrigerantSide® Services consist of system decontamination to remove moisture, oils and other ~~contaminants.~~contaminants intended to restore systems to designed capacity. In addition, the Company’s SmartEnergy ~~OPS~~^TMOPS® service is a web-based real time continuous monitoring service applicable to a facility’s refrigeration systems and other energy systems. The Company’s Chiller Chemistry® and Chill Smart® services are also predictive and diagnostic service offerings. As a component of the Company’s products and services, the Company also participates in the generation of carbon offset projects. The Company operates principally through its wholly-owned subsidiary, Hudson Technologies Company. Unless the context requires otherwise, references to the “Company”, “Hudson”, ~~“we"~~“we”, “us”, “our”, or similar pronouns refer to Hudson Technologies, Inc. and its subsidiaries.

On October 10, 2017, the Company and its wholly-owned subsidiary, Hudson Holdings, Inc. (“Holdings”) completed the acquisition (the “Acquisition”) from Airgas, Inc. (“Airgas”) of all of the outstanding stock of Airgas-Refrigerants, Inc., a Delaware corporation (“ARI”), as more fully described in Note 9. During the third quarter of 2017, the Company changed its presentation of its Consolidated Income Statements to more closely align its results with the acquisition of ARI. Certain balances for the three and nine months ended September 30, 2016, respectively, including $0.9 million and $3.0 million of Selling and Marketing expense and $3.1 million and $5.8 million of General and Administrative expenses, have been reclassified to conform to the current presentation. Since the acquisition did not close until after September 30, 2017, none of the ARI results are included in the Consolidated Income Statements; however, certain pro forma information on a combined basis is included in Note 9.

In preparing the accompanying consolidated financial statements, and in accordance with ~~ASC~~Accounting Standards Codification (“ASC”) 855-10 “Subsequent Events”, the Company’s management has evaluated subsequent events through the date that the financial statements were filed.

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements and with the instructions of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The financial information included in this quarterly report should be read in conjunction with the Company’s audited financial statements and related notes thereto for the year ended December 31, ~~2016.~~2022. Operating results for the ~~nine month~~six-month period ended ~~September~~June 30, ~~2017~~2023 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~

2023.

In the opinion of management, all estimates and adjustments considered necessary for a fair presentation have been included and all such adjustments were normal and recurring.

AIM Act

~~Consolidation~~On September 23, 2021, the United States Environmental Protection Agency (“EPA”) issued the final rule establishing the framework to allocate allowances for virgin production and consumption of hydrofluorocarbon refrigerants (“HFCs”). The EPA is responsible for the administration of the HFC phase down enacted by Congress under the AIM Act.

The AIM Act directs the EPA to address the reduction in virgin HFCs and provides authority to do so in three respects:

phase down the production and consumption of listed HFCs,

manage these HFCs and their substitutes including reclamation of refrigerants, and

facilitate the transition to next-generation technologies.

Congress required that the EPA consider ways to promote reclamation in all phases of its implementation of the AIM Act. The AIM Act introduces a stepdown of 10% from baseline levels in 2022 and 2023, and establishes a cumulative 40% reduction in the baseline for 2024. Hudson received allocation allowances for calendar years 2022 and 2023 equal to approximately 3 million Metric Tons Exchange Value Equivalents per year, or approximately 1% of the total HFC consumption, with allowances for future periods to be determined at a later date. Reclamation will be critical to maintaining necessary HFC supply levels to ensure an orderly phasedown.

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Consolidation

The consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, represent all companies of which Hudson directly or indirectly has majority ownership or otherwise controls. Significant intercompany accounts and transactions have been eliminated. The ~~Company's~~Company’s consolidated financial statements include the accounts of wholly-owned subsidiaries Hudson Holdings, Inc. and Hudson Technologies Company. The Company does not present a statement of comprehensive income as its comprehensive income is the same as its net income.

Fair Value of Financial Instruments

The carrying values of financial instruments including cash, trade accounts receivable and accounts payable approximate fair value at ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, because of the relatively short maturity of these instruments. The carrying value of ~~short and long-term~~ debt approximates fair value, due to the variable rate nature of the debt, as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016. Please see~~2022. See Note 2 for further ~~details on fair value description and hierarchy of the Company’s deferred acquisition cost.~~

details.

Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of temporary cash investments and trade accounts receivable. The Company maintains its temporary cash investments in highly-rated financial institutions and, at times, the balances exceed FDIC insurance coverage. The ~~Company's~~Company’s trade accounts receivable are primarily due from companies throughout the United States. The Company reviews each ~~customer's~~customer’s credit history before extending credit.

The Company establishes an allowance for doubtful accounts based on factors associated with the credit risk of specific accounts, historical trends, and other information. The carrying value of the Company’s accounts receivable is reduced by the established allowance for doubtful accounts. The allowance for doubtful accounts includes any accounts receivable balances that are determined to be uncollectible, along with a general reserve for the remaining accounts receivable balances. The Company adjusts its reserves based on factors that affect the collectability of the accounts receivable balances.

For the ~~nine~~six month period ended ~~September~~June 30, ~~2017, two customers each accounted~~2023 there was one customer accounting for greater than 10% ~~or more~~ of the Company’s revenues and inat June 30, 2023 there were $14.6 million of accounts receivable from this customer. For the ~~aggregate these two customers accounted~~six-month period ended June 30, 2022 there was no customer accounting for ~~37%~~10% of the Company’s revenues. ~~At September 30, 2017, there were $4.3 million in outstanding receivables from these customers.~~

For the nine month period ended September 30, 2016, two customers each accounted for 10% or more of the Company’s revenues and, in the aggregate these two customers accounted for 33% of the Company’s revenues. At September 30, 2016, there were no outstanding receivables from these customers.

The loss of a principal customer or a decline in the economic prospects of and/or a reduction in purchases of the ~~Company's~~Company’s products or services by any such customer could have a material adverse effect on the ~~Company's~~Company’s operating results and financial position.

Cash and Cash Equivalents

Temporary investments with original maturities of ninety days or less are included in cash and cash equivalents.

Inventories

Inventories, consisting primarily of refrigerant products available for sale, are stated at the lower of cost, on a first-in first-out basis, or ~~market.~~net realizable value. Where the market price of inventory is less than the related cost, the Company may be required to write down its inventory through a lower of cost or ~~market~~net realizable value adjustment, the impact of which would be reflected in cost of sales on the Consolidated Statements of Operations. Any such adjustment would be based on management’s judgment regarding future demand and market conditions and analysis of historical experience.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, including internally manufactured equipment. The cost to complete equipment that is under construction is not considered to be material to the ~~Company's~~Company’s financial position. Provision for depreciation is recorded (for financial reporting purposes) using the straight-line method over the useful lives of the respective assets. Leasehold improvements are amortized on a straight-line basis over the shorter of economic life or terms of the respective leases. Costs of maintenance and repairs are charged to expense when incurred.

Due to the specialized nature of the ~~Company's~~Company’s business, it is possible that the ~~Company's~~Company’s estimates of equipment useful life periods may change in the future.

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Goodwill

~~Goodwill~~The Company has made acquisitions that included a significant amount of goodwill and other intangible assets. The Company applies the purchase method of accounting for acquisitions, which among other things, requires the recognition of goodwill (which represents the excess of the purchase price of the acquisition over the fair value of the net assets acquired ~~in business combinations accounted~~and identified intangible assets). The Company tests its goodwill for ~~under~~impairment annually on a qualitative or quantitative basis (on the ~~purchase method~~first day of ~~accounting. For~~ the ~~year ended December 31, 2016,~~fourth quarter) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of an asset below its carrying value. Goodwill is tested for impairment at the reporting unit level. When performing the annual impairment test, the Company ~~performed~~has the ~~annual goodwill impairment assessment using~~option of first performing a qualitative ~~approach~~assessment, which requires management to make assumptions affecting a reporting unit, to determine ~~whether~~the existence of events and circumstances that would lead to a determination that it is more likely than not that the fair value of ~~goodwill~~a reporting unit is less than its carrying amount. If such a conclusion is reached, the Company is then required to perform a quantitative impairment assessment of goodwill. The Company has one reporting unit at June 30, 2023. Other intangible assets that meet certain criteria are amortized over their estimated useful lives.

An impairment charge is recorded based on the excess of a reporting unit’s carrying amount over its fair value. ~~In performing~~An impairment charge would be recognized when the ~~qualitative assessment, we identify and consider~~carrying amount exceeds the ~~significance of relevant key factors, events, and circumstances that affect the~~estimated fair value of ~~our goodwill.~~a reporting unit. These ~~factors include external factors such as macroeconomic, industry,~~impairment evaluations use many assumptions and ~~market conditions, as well as entity-specific factors, such as our actual~~estimates in determining an impairment loss, including certain assumptions and ~~planned financial performance.~~estimates related to future earnings. If the ~~results~~Company does not achieve its earnings objectives, the assumptions and estimates underlying these impairment evaluations could be adversely affected, which could result in an asset impairment charge that would negatively impact operating results. During the fourth quarter of 2022, the Company completed its annual impairment test as of October 1 and determined in its qualitative assessment ~~conclude that~~ it is ~~not~~ more likely than not that the fair value of ~~goodwill exceeds~~the reporting unit is greater than its carrying ~~value, additional quantitative~~amount, resulting in no goodwill impairment. There can be no assurances that future sustained declines in macroeconomic or business conditions affecting our industry will not occur, which could result in goodwill impairment ~~testing is performed.~~ charges in future periods.

There were no ~~indicators of~~goodwill impairment ~~during~~losses recognized in 2022 or the ~~three and nine~~six months ended ~~September~~June 30, ~~2017.~~2023.

Leases

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), as amended, which generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. The Company accounts for operating leases in accordance with ASU 2016-02. The Company’s accounting for finance leases remained substantially unchanged. See Note 5 for further details and current balances.

Cylinder Deposit Liability

The cylinder deposit liability, which is included in accrued expenses and other current liabilities on the Company’s Balance Sheet, represents the amount due to customers for the return of refillable cylinders. The Company’s Aspen Refrigerants division (“ARI”) charges its customers cylinder deposits upon the shipment of refrigerant gases that are contained in refillable cylinders. The amount charged to the customer by ARI approximates the cost of a new cylinder of the same size. Upon return of a cylinder, this liability is reduced. The cylinder deposit liability balance was $15.9 million and $13.6 million at June 30, 2023 and December 31, 2022, respectively.

Revenues and Cost of Sales

~~Revenues~~The Company’s products and services are ~~recorded upon completion~~primarily used in commercial air conditioning, industrial processing and refrigeration systems. Most of ~~service or product shipment~~the Company’s revenues are realized from the sale of refrigerant and ~~passage of title to customers in accordance with contractual terms.~~industrial gases and related products. The Company ~~evaluates each sale~~also generates revenue from refrigerant management services performed at a customer’s site and in-house. The Company conducts its business primarily within the US.

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The Company applies the FASB’s guidance on revenue recognition, which requires the Company to ~~ensure collectability.~~recognize revenue in an amount that reflects the consideration to which the Company expects to be entitled in exchange for goods or services transferred to its customers. In ~~addition, each sale~~most instances, the Company’s contract with a customer is ~~based on an arrangement with~~ the ~~customer~~customer’s purchase order and the sales price to the customer is fixed. For certain customers, the Company may also enter into a sales agreement outlining a framework of terms and conditions applicable to future purchase orders received from that customer. Because the Company’s contracts with customers are typically for a single customer purchase order, the duration of the contract is usually less than one year. The Company’s performance obligations related to product sales are satisfied at a point in time, which may occur upon shipment of the product or receipt by the customer, depending on the terms of the arrangement. The Company’s performance obligations related to reclamation and RefrigerantSide® services are generally satisfied at a point in time when the service is performed. Accordingly, revenues are recorded upon the shipment of the product, or in certain instances upon receipt by the customer, or the completion of the service.

In July 2016 the Company was awarded, as prime contractor, a five-year contract, including a five-year renewal option, which has been exercised through July 2026, by the United States Defense Logistics Agency (“DLA”) for the management, supply, and sale of refrigerants, compressed gases, cylinders, and related ~~items.~~services. Due to the contract containing multiple ~~elements,~~performance obligations, the Company assessed the arrangement in accordance with ~~Accounting Standards Codification (“ASC”) 605-25,~~ ~~Revenue Recognition: Multiple-Element Arrangements~~. ASC ~~605-25 addresses when and how a company that is providing more than one revenue generating activity or deliverable should separate and account for a multiple element arrangement.~~606-10-25-14. The Company determined that the sale of refrigerants and the management services provided under the contract each have stand-alone ~~value, and accordingly revenue~~value. Accordingly, the performance obligation related to the sale of ~~product~~refrigerants is ~~recognized~~satisfied at a point in time, mainly when the customer receives and obtains control of the product. The performance obligation related to management service revenue is satisfied over time ~~of product shipment,~~ and ~~service~~ revenue is recognized on a straight-line basis over the term of the ~~arrangement.~~

arrangement as the management services are provided.

Cost of sales is recorded based on the cost of products shipped or services performed and related direct operating costs of the ~~Company's~~Company’s facilities.In general, the Company performs shipping and handling services for its customers in connection with the delivery of refrigerant and other products. The Company elected to implement ASC 606-10-25-18B, whereby the Company accounts for such shipping and handling as activities to fulfill the promise to transfer the good. To the extent that the Company charges its customers shipping fees, such amounts are included as a component of revenue and the corresponding costs are included as a component of cost of sales.

Income Taxes

The Company is taxed at statutory corporate income tax rates after adjusting income reported for financial statement purposes for certain items. Current income tax expense (benefit) reflects the tax results of revenues and expenses currently taxable or deductible. The Company utilizes the asset and liability method of accounting for ~~recording~~ deferred income taxes, which provides for the ~~establishment~~recognition of deferred tax ~~asset~~assets or ~~liability accounts~~liabilities, based on enacted tax rates and laws, for the ~~difference~~differences between ~~tax~~the financial and ~~financial~~income tax reporting bases of ~~certain~~ assets and liabilities. The tax benefit associated with the ~~Company's~~Company’s net operating loss carry forwards (“NOLs”) is recognized to the extent that the Company ~~is expected~~expects to ~~recognize~~realize future taxable income. ~~The~~

During the year ended December 31, 2022, the Company ~~assesses the recoverability of~~concluded that its deferred tax assets were more likely than not to become realizable. The Company fully reversed its existing valuation allowance of $15.1 million, with $11.6 million reversed during the first and second quarters of 2022, and the remaining $3.5 million through the third and fourth quarters of 2022. The conclusion that a valuation allowance was no longer needed was based on ~~its expectation~~the achievement of three years of cumulative pre-tax income, the utilization of the Company’s $29.3 million federal NOLs, which comprised a majority of the Company’s deferred tax assets, combined with estimates of future years’ pre-tax income that ~~it will recognize future taxable income and adjusts its valuation allowance accordingly.~~ were sufficient to realize the remaining deferred tax assets.

As of ~~September~~June 30, ~~2017, and~~2023, the Company had no federal NOLs, as the Company utilized all of its remaining federal NOLs during the year ended December 31, ~~2016, the net deferred tax asset was $1.9 million and $2.5 million, respectively.~~

~~Certain states either do not allow or limit NOLs and as such~~2022. As of June 30, 2023, the Company ~~will be liable for certain~~had state ~~taxes. To the extent that the Company utilizes its NOLs, it will not pay~~ tax on such income but may be subject to the federal alternative minimum tax. In addition, to the extent that the Company’s net income, if any, exceeds the annual NOL limitation it will pay income taxes based on existing statutory rates. Moreover, as a result of a “change in control”, as defined by the Internal Revenue Service, the Company’s ability to utilize its existing NOLs is subject to certain annual limitations. All the Company’s remaining NOLs of approximately ~~$4.1~~$1.8 million, ~~are subject to annual limitations~~expiring in various years. We review the likelihood that we will realize the benefit of ~~$1.3 million.~~

Asour deferred tax assets on a result of an Internal Revenue Service audit, the 2013 and prior federal tax years have been closed. The Company operates in many states throughout the United States and, as of September 30, 2017, the various states’ statutes of limitations remain open for tax years subsequent to 2009. The Company recognizes interest and penalties, if any, relating to income taxes as a component of the provision for income taxes.

quarterly basis.

The Company evaluates uncertain tax positions, if any, by determining if it is more likely than not to be sustained upon examination by the taxing authorities. As of ~~September~~June 30, ~~2017,~~2023 and December 31, ~~2016,~~2022, the Company believes it had no uncertain tax positions.

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Income per Common and Equivalent Shares

If dilutive, common equivalent shares (common shares assuming exercise of ~~options and warrants)~~options) utilizing the treasury stock method are considered in the presentation of diluted ~~earnings~~income per share. The reconciliation of shares used to determine net income per share is as ~~follows:~~follows (dollars in thousands,unaudited):

	Three Months ended September 30,				Nine Months ended September 30,
	2017		2016		2017		2016


									Three Months				Six Months
									ended June 30,				ended June 30,
									2023		2022		2023		2022
Net income	$	2,104	$	4,789	$	16,362	$	12,562	$	19,189	$	39,810	$	34,720	$	69,365

Weighted average number of shares - basic		41,869,528		33,873,479		41,648,439		33,265,470

Weighted average number of shares – basic										45,339,570		44,960,464		45,319,155		44,870,642
Shares underlying options		1,594,454		1,424,106		1,524,988		1,076,460		1,957,849		2,191,793		1,986,041		2,103,799
Weighted average number of shares outstanding – diluted		43,463,982		35,297,585		43,173,427		34,341,930
Weighted average number of shares – diluted										47,297,419		47,152,257		47,305,196		46,974,441

During the three month periods ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, certain options aggregating 602,321 and ~~warrants aggregating none and 73,034~~752 shares, respectively, have been excluded from the calculation of diluted shares, due to the fact that their effect would be anti-dilutive.

During the ~~nine~~six month periods ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, certain options aggregating 499,857 and ~~warrants aggregating none and 123,034~~1,090 shares, respectively, have been excluded from the calculation of diluted shares, due to the fact that their effect would be anti-dilutive.

Estimates and Risks

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires ~~management to make~~the use of estimates and assumptions that affect the amounts reported in these financial statements and footnotes. The Company considers these accounting estimates to be critical in the preparation of the accompanying consolidated financial statements. The Company uses information available at the time the estimates are made. However, these estimates could change materially if different information or assumptions were used. Additionally, these estimates may not ultimately reflect the actual amounts of ~~certain assets and liabilities,~~ the ~~disclosure of contingent assets and liabilities, and the results of operations during the reporting period. Actual results could differ from these estimates.~~

final transactions that occur. The Company utilizes both internal and external sources to evaluate potential current and future liabilities for various commitments and contingencies. In the event that the assumptions or conditions change in the future, the estimates could differ from the original estimates.

Several of the ~~Company's~~Company’s accounting policies involve significant judgments, uncertainties, and estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. To the extent that actual results differ from ~~management's~~management’s judgments and estimates, there could be a material adverse effect on the Company. On a continuous basis, the Company evaluates its estimates, including, but not limited to, those estimates related to its allowance for doubtful accounts, inventory reserves, ~~and valuation allowance for the deferred tax assets relating to its NOLs~~goodwill and commitments and contingencies. With respect to trade accounts receivable, the Company estimates the necessary allowance for doubtful accounts based on both historical and anticipated trends of payment history and the ability of the customer to fulfill its obligations. For inventory, the Company evaluates both current and anticipated sales prices of its products to determine if a write down of inventory to net realizable value is necessary. ~~In determining the Company’s valuation allowance for its deferred tax assets, the Company assesses its ability to generate taxable income in the future.~~

The Company participates in an industry that is highly regulated, and changes in the regulations affecting ~~our~~its business could affect ~~our~~its operating results. Currently the Company purchases virgin ~~hydrochlorofluorocarbon~~hydrofluorocarbon (“~~HCFC”~~HFC”) and ~~hydrofluorocarbon (“HFC”~~hydrofluroolefin (‘HFO”) refrigerants and reclaimable, primarily ~~HCFC,~~hydrochlorofluorocarbons (“HCFC”), HFC and chlorofluorocarbon (“CFC”), refrigerants from suppliers and its customers. Effective January 1, 1996, the Clean Air Act (the “Act”) prohibited the production of virgin CFC refrigerants and limited the production of virgin HCFC refrigerants. Effective January 2004, the Act further limited the production of virgin HCFC refrigerants and federal regulations were enacted which established production and consumption allowances for HCFC refrigerants which imposed limitations on the importation of certain virgin HCFC refrigerants. Under the Act, production of certain virgin HCFC refrigerants is scheduled to be phased out during the period 2010 through 2020, and production of all virgin HCFC refrigerants is scheduled to be phased out by 2030. In October 2014, the EPA published a final rule providing further reductions in the production and consumption allowances for virgin HCFC refrigerants for the years 2015 through 2019 (the “Final Rule”). In the Final Rule, the EPA has established a linear draw down for the production or importation of virgin HCFC-22 that started at approximately 22 million pounds in 2015 and reduces by approximately 4.5 million pounds each year and ends at zero in 2020. In October 2016, more than 200 countries, including the United States, agreed to amend the Montreal Protocol to phase down production of HFCs by 85% between now and 2047. The amendment establishes timetables for all developed and developing countries to freeze and then reduce production levels and use of HFCs, with the first reductions by developed countries starting in 2019.

To the extent that the Company is unable to source sufficient quantities of refrigerants or is unable to obtain refrigerants on commercially reasonable terms or experiences a decline in demand and/or price for refrigerants sold by the Company, the Company could realize reductions in revenue from refrigerant sales, which could have a material adverse effect on its operating results and its financial position. The process of sourcing refrigerants includes various procurement costs, such as freight, processing, insurance, and other costs, relating to the delivery of refrigerants. As a result of the recently noted global supply chain issues, the Company determined it could be exposed to incremental costs related to these refrigerant purchases. These costs represent the Company’s initial estimate that are possibly subject to finalization in future periods and are recorded in accrued expenses and other current liabilities on the consolidated balance sheet as of June 30, 2023.

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The Company is subject to various legal proceedings. The Company assesses the merit and potential liability associated with each of these proceedings. In addition, the Company estimates potential liability, if any, related to these matters. To the extent that these estimates are not accurate, or circumstances change in the future, the Company could realize liabilities, which could have a material adverse effect on its operating results and its financial position.

Impairment of Long-lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less the cost to sell. ~~The Company noted no impairment indicators during the three and nine months ended September 30, 2017.~~

Recent Accounting Pronouncements

In January 2017, the FASB issued Accounting Standards Update ("ASU") No. 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (ASU 2017-04) which simplifies the accounting for goodwill impairment by eliminating Step 2 of the current goodwill impairment test which requires a hypothetical purchase price allocation to measure goodwill impairment. Under the new standard, a company will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. ASU 2017-04 does not change the guidance on completing Step 1 of the goodwill impairment test and still allows a company to perform the optional qualitative goodwill impairment assessment before determining whether to proceed to Step 1. The standard is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019 with early adoption permitted for any impairment test performed on testing dates after January 1, 2017. The Company adopted this standard on January 1, 2017 and will apply its guidance on future impairment assessments.

business entities for fiscal years beginning after December 15, 2017, and for interim periods therein, with early adoption permitted. We elected to early adopt ASU 2016-15 as of December 31, 2016, and the adoption did not have a material impact on the presentation of the statement of cash flows.

In June 2016, the FASB issued ASU No. 2016-13, ~~"Financial~~Measurement of Credit Losses on Financial Instruments, ~~- Credit Losses." This~~which revises guidance for the accounting for credit losses on financial instruments within its scope, and in November 2018, issued ASU ~~requires~~No. 2018-19 and in April 2019, issued ASU No. 2019-04 and in May 2019, issued ASU No. 2019-05, and in November 2019, issued ASU No. 2019-11, which each amended the standard. The new standard introduces an ~~organization~~approach, based on expected losses, to ~~measure all~~estimate credit losses on certain types of financial instruments and modifies the impairment model for available-for-sale debt securities. The new approach to estimating credit losses (referred to as the current expected credit losses ~~for~~model) applies to most financial assets ~~held~~measured at ~~the reporting date based on historical experience, current conditions,~~amortized cost and ~~reasonable and supportable forecasts. Financial institutions~~certain other instruments, including trade and other ~~organizations will now use forward-looking information to better inform their~~receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance-sheet credit loss estimates. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, and for interim periods therein. The Company does not expect the amended standard to have a material impact on the Company’s results of operations.

In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting.” Excess tax benefits and deficiencies will be recognized in the consolidated statement of earnings rather than capital in excess of par value of stock on a prospective basis. A policy election will be available to account for forfeitures as they occur, with the cumulative effect of the change recognized as an adjustment to retained earnings at the date of adoption. Excess tax benefits within the consolidated statement of cash flows will be presented as an operating activity (prospective or retrospective application) and cash payments to tax authorities in connection with shares withheld for statutory tax withholding requirements will be presented as a financing activity (retrospective application). The guidance is effective beginning in 2017. Adoption of ASU No. 2016-09 did not have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." The new standard establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations.exposures. This ASU is effective for fiscal years beginning after December 15, ~~2018,~~2022, including interim periods within those fiscal years, ~~and~~with early adoption is permitted. ~~A modified retrospective transition approach is~~Entities are required ~~for capital and operating leases existing at, or entered into after,~~to apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. At a minimum, adoption of ASU 2016-02 will require recording a ROU asset and a lease liability on the Company's consolidated balance sheet; however, the Company is still currently evaluating the impact on its consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740) - Balance Sheet Classification of Deferred Taxes”. ASU 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in ASU 2015-17 apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected. For public business entities, the amendments in ASU 2015-17 are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company elected to early adopt ASU 2015-17 prospectively in the fourth quarter of 2016. As a result, all deferred tax assets and liabilities have been presented as noncurrent on the consolidated balance sheet as of December 31, 2016. There was no impact on its results of operations as a result of the adoption of ASU 2015-17.

In September 2015, the FASB issued Accounting Standards Update No. 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments”, or ASU 2015-16. This amendment requires the acquirer in a business combination to recognize in thefirst reporting period in which ~~adjustment amounts are determined, any adjustments to provisional amounts that are identified during~~ the measurement period, calculated as if the accounting had been completed at the acquisition date. Prior to the issuance of ASU 2015-16, an acquirer was required to restate prior period financial statements as of the acquisition date for adjustments to provisional amounts. The amendments in ASU 2015-16 are to be applied prospectively upon adoption.guidance is adopted. The Company adopted ASU ~~2015-16 in the fourth quarter of 2016.~~No. 2016-13 on January 1, 2023. The adoption of ~~the provisions of~~ ASU ~~2015-16~~No. 2016-13 did not have a material impact on its results of operations or financial position.

In ~~May 2014,~~August 2020, the FASB issued ASU 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting ~~Standards Update ("ASU") 2014-09, "Revenue from~~for Convertible Instruments and Contracts with Customers (Topic 606)." The new revenue recognition standard provides a five-step analysis to determine when and how revenue is recognized. The standard requires that a company recognizes revenue to depict the transfer of promised goods or services to customers in an ~~amount that reflects~~Entity’s Own Equity”, which is intended to simplify the ~~consideration to which a company expects to be entitled~~accounting for convertible instruments by removing certain separation models in ~~exchange~~Subtopic 470-20, Debt-Debt with Conversion and Other Options, for ~~those goods or services. This ASU~~convertible instruments. The pronouncement is effective for ~~annual~~fiscal years, and for interim periods within those fiscal years, beginning after December 15, ~~2017 and will be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption.~~

2022, with early adoption permitted. The Company expects to apply the modified retrospective method. As described further in Note 9, the Company acquired ARI in October 2017, and accordingly, the Company is in the process of assessing the revenue practices of the acquired business. Basedadopted ASU 2020-06 on ~~the evaluation performed to date, and excluding ARI, the Company does not expect the impact relating to the~~January 1, 2023. The adoption of ~~this standard to be~~ASU 2020-06 did not have a material ~~to the~~impact on its results of operations or financial statements. It will result in expanded disclosure, including, related to the Company’s revenue streams, identification of performance obligations and significant judgments made to apply the new standard. However, the Company has not finalized its assessment at this time.position.

Note 2 - Fair Value

ASC Subtopic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based upon observable inputs used in the valuation techniques, the Company is required to provide information according to the fair value hierarchy.

The fair value hierarchy ranks the quality and reliability of the information used to determine fair values into three broad levels as follows:

Level 1: Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

Level 3: Valuations for assets and liabilities include certain unobservable inputs in the assumptions and projections used in determining the fair value assigned to such assets or liabilities.

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In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The ~~Company's~~Company’s assessment of the significance of ana particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The valuation methodologies used for the Company's financial instruments measured on a recurring basis at fair value, including the general classification of such instruments pursuant to the valuation hierarchy, is set forth in the tables below.

~~The following is a roll forward of deferred acquisition costs through September 30, 2017.~~

(in thousands, unaudited)
Total Deferred
Acquisition Cost
Payable (1)

Balance at December 31, 2016 $ 789
Payments (789 )
Balance at September 30, 2017 -

~~(1) Represents deferred acquisition costs related to the acquisition of a supplier of refrigerants and compressed gases in January 2015. See Note 8 for further details.~~

(in thousands) As of December 31, 2016 Fair Value Measurements
Carrying Amount Fair Value Level 1 Level 2 Level 3
Liabilities:
Deferred acquisition cost $ 789 $ 789 - - $ 789

Note 3 - Inventories

Inventories ~~net of reserve,~~ consist of the following:

	September 30, 2017		December 31, 2016

					June 30,		December 31,
					2023		2022
					(unaudited)
(in thousands)		(Unaudited)		(Audited)
Refrigerant and cylinders	$	16,491	$	11,168
Packaged refrigerants		47,319		57,433
Refrigerants and cylinders					$	140,631	$	152,840
Less: net realizable value adjustments						(6,187)		(7,463)
Total	$	63,810	$	68,601	$	134,444	$	145,377

Note 4 - Property, plant and equipment

Elements of property, plant and equipment are as follows:

	September 30, 2017		December 31, 2016		Estimated Lives
	(Unaudited)		(Audited)

						June 30,		December 31,		Estimated
						2023		2022		Lives
(in thousands)						(unaudited)
Property, plant and equipment
- Land	$	535	$	535		$	1,255	$	1,255
- Land improvements							319		319	6-10 years
- Buildings		830		830	39 years		1,446		1,446	25-39 years
- Building improvements		873		873	39 years		3,422		3,396	25-39 years
- Cylinders							13,300		13,315	15-30 years
- Equipment		15,473		13,423	3-7years		28,205		27,258	3-10 years
- Equipment under capital lease		180		248	5-7 years		315		315	5-7 years
- Vehicles		1,337		1,360	5 years		1,736		1,773	3-5 years
- Lab and computer equipment, software		2,778		2,652	3-5 years		3,233		3,103	2-8 years
- Furniture & fixtures		288		289	7-8 years		930		840	5-10 years
- Leasehold improvements		119		119	3 years		852		852	3-5 years
- Equipment under construction		371		1,654
- Construction-in-progress							3,192		3,533
Subtotal		22,784		21,983			58,205		57,405
Accumulated depreciation		15,715		14,451
Less: Accumulated depreciation							(38,296)		(36,837)
Total	$	7,069	$	7,532		$	19,909	$	20,568

Depreciation expense for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 was $1.5 million and $1.7 million, respectively.

Note 5 - Leases

The Company has various lease agreements with terms up to 11 years, including leases of buildings and various equipment. Some leases include options to purchase, terminate or extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised.

At inception, the Company determines if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. Some of the Company’s lease arrangements contain lease components (e.g. minimum rent payments) and non-lease components (e.g. common area maintenance, charges, utilities and property taxes). The Company elected the package of practical expedients permitted under the transition guidance, which allows it to carry forward its historical lease classification, its assessment on whether a contract contains a lease, and its initial direct costs for any leases that existed prior to the adoption of the new standard. The Company also elected to combine lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of operations on a straight-line basis over the lease term. The Company’s lease agreements do not contain any material residual value, guarantees or material restrictive covenants.

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Operating leases are included in Right of use asset, Accrued expenses and other current liabilities, and Long-term lease liabilities on the consolidated balance sheets. These assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company’s secured incremental borrowing rates or implicit rates, when readily determinable. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the balance sheet. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred.

Operating lease expense of $1.3 million, for both of the six months ended June 30, 2023 and 2022, is included in Selling, general and administrative expenses on the consolidated statements of operations.

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s operating leases as of June 30, 2023.


	June 30,
Maturity of Lease Payments	2023
(in thousands)	(unaudited)
2023 (remaining)	$	1,597
-2024		2,372
-2025		1,994
-2026		1,374
-Thereafter		1,929
Total undiscounted operating lease payments		9,266
Less imputed interest		(1,684)
Present value of operating lease liabilities	$	7,582

Balance Sheet Classification


	June 30,
	2023
(in thousands)	(unaudited)
Current lease liabilities (recorded in Accrued expenses and other current liabilities)	$	1,809
Long-term lease liabilities		5,773
Total operating lease liabilities	$	7,582

Other Information


	June 30,
	2023
Weighted-average remaining term for operating leases	3.21	years
Weighted-average discount rate for operating leases	8.22	%

Cash Flows

Cash paid for amounts included in the present value of operating lease liabilities was $1.3 million during the six months ended June 30, 2023 and ~~$1.3 million, respectively.~~is included in operating cash flows.

Note ~~5 –~~6 - Goodwill and intangible assets

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in business combinations accounted for under the purchase method of accounting. ~~The Company performed the annual~~

There were no goodwill impairment ~~assessment using a qualitative approach to determine whether it is more likely than not that~~losses recognized for the ~~fair value of goodwill is less than its carrying value. In performing the qualitative assessment, we identify~~six-month period ended June 30, 2023, and consider the significance of relevant key factors, events, and circumstances that affect the fair value of our goodwill. These factors include external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as our actual and planned financial performance. If the results of the qualitative assessment conclude that it is not more likely than not that the fair value of goodwill exceeds its carrying value, additional quantitative impairment testing is performed.

~~The impairment test was performed at the operating segment level as the acquired businesses have been fully integrated into our existing structure.~~year ended December 31, 2022. Based on the results of the impairment ~~assessment~~assessments of goodwill and intangible assets performed, wemanagement concluded ~~that it is more likely than not~~ that the fair value of ~~our~~the Company’s goodwill ~~significantly~~ exceeds the carrying ~~value.~~value and that there are no impairment indicators related to intangible assets.

At June 30, 2023 and December 31, 2022 the Company had $47.8 million of goodwill.

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The Company’s other intangible assets consist of the following:

September 30, 2017 (Unaudited)

December 31, 2016 (Audited)

(in thousands) Amortization Gross Gross
Period Carrying Accumulated Carrying Accumulated
(in years) Amount Amortization Net Amount Amortization Net
Intangible Assets with determinable lives
Patents 5 $ 386 $ 372 $ 14 $ 386 $ 366 $ 20
Covenant Not to Compete 6 – 10 1,270 437 833 1,270 322 948
Customer Relationships 3 – 10 2,000 620 1,380 2,000 452 1,548
Trade Name 2 30 30 - 30 30 -
Licenses 10 1,000 292 708 1,000 217 783
Totals identifiable intangible assets $ 4,686 $ 1,751 $ 2,935 $ 4,686 $ 1,387 $ 3,299


		June 30, 2023						December 31, 2022
		(unaudited)
	Amortization	Gross						Gross
	Period	Carrying		Accumulated				Carrying		Accumulated
(in thousands)	(in years)	Amount		Amortization		Net		Amount		Amortization		Net
Intangible assets with determinable lives
Covenant not to compete	6 – 10		870		754		116		870		710		160
Customer relationships	3 – 12		31,560		15,821		15,739		31,560		14,491		17,069
Above market leases	13		567		255		312		567		232		335
Total identifiable intangible assets		$	32,997	$	16,830	$	16,167	$	32,997	$	15,433	$	17,564

Amortization expense for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 was ~~$0.4~~$1.4 million ~~and $0.4 million, respectively.~~for both periods. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. ~~No impairment charges were recognized for the period ended September 30, 2017 and for the year ended December 31, 2016.~~

Note 67 - Share-based compensation

Share-based compensation represents the cost related to share-based awards, typically stock options or stock grants, granted to employees, non-employees, officers and directors. Share-based compensation is measured at grant date, based on the estimated aggregate fair value of the award on the grant date, and such amount is charged to compensation expense on a straight-line basis (net of estimated forfeitures) over the requisite service period. For the ~~nine~~six month periods ended ~~September~~June 30, ~~2017~~2023 and ~~2016, the~~2022, share-based compensation expense of ~~$28,000~~$1.8 million and ~~$601,000,~~$0.6 million, respectively, is reflected in Selling, general and administrative expenses in the ~~Consolidated Statements of Income.~~

consolidated Income Statements.

Share-based awards have historically been made as stock options, and recently ~~during the third quarter of 2015~~also as stock grants, issued pursuant to the terms of the Company’s stock option and stock incentive plans (collectively, the “Plans”), described below. The Plans may be administered by the Board of Directors or the Compensation Committee of the Board or by another committee appointed by the Board from among its members as provided in the Plans. Presently, the Plans are administered by the Company’s Compensation Committee of the Board of Directors. As of ~~September~~June 30, ~~2017, the Plans authorized the issuance~~2023 there were an aggregate of ~~6,000,000~~4,227,261 shares of the Company’s common stock ~~and, as of September 30, 2017 there were 3,251,340 shares of~~available under the ~~Company’s common stock available~~Plans for issuance for future stock option grants or other stock based awards.

Stock option awards, which allow the recipient to purchase shares of the Company’s common stock at a fixed price, are typically granted at an exercise price equal to the Company’s stock price at the date of grant. Typically, the Company’s stock option awards have vested from immediately to two years from the grant date and have had a contractual term ranging from three to ten years.

Effective September 10, 2004, the Company adopted its 2004 Stock Incentive Plan (“2004 Plan”) pursuant to which 2,500,000 shares of common stock were reserved for issuance (i) upon the exercise of options, designated as either ISOs under the Code or nonqualified options, or (ii) as stock, deferred stock or other stock-based awards. ISOs could be granted under the 2004 Plan to employees and officers of the Company. Non-qualified options, stock, deferred stock or other stock-based awards could be granted to consultants, directors (whether or not they are employees), employees or officers of the Company. Stock appreciation rights could also be issued in tandem with stock options. Effective September 10, 2014, the Company’s ability to grant options or other awards under the 2004 Plan expired.

Effective August 27, 2008, the Company adopted its 2008 Stock Incentive Plan (“2008 Plan”) pursuant to which 3,000,000 shares of common stock were reserved for issuance (i) upon the exercise of options, designated as either ISOs under the Code or nonqualified options, or (ii) as stock, deferred stock or other stock-based awards. ISOs may be granted under the 2008 Plan to employees and officers of the Company. Non-qualified options, stock, deferred stock or other stock-based awards may be granted to consultants, directors (whether or not they are employees), employees or officers of the Company. Stock appreciation rights may also be issued in tandem with stock options. Unless the 2008 Plan is sooner terminated, the ability to grant options or other awards under the 2008 Plan will expire on August 27, 2018.

ISOs granted under the ~~2008 Plan~~Plans may not be granted at a price less than the fair market value of the common stock on the date of grant (or 110% of fair market value in the case of persons holding 10% or more of the voting stock of the Company). Nonqualified options granted under the ~~2008 Plan~~Plans may not be granted at a price less than the fair market value of the common stock. Options granted under the ~~2008 Plan~~Plans expire not more than ten years from the date of grant (five years in the case of ISOs granted to persons holding 10% or more of the voting stock of the Company).

Effective September 17, 2014, the Company adopted its 2014 Stock Incentive Plan (“2014 Plan”) pursuant to which 3,000,000 shares of common stock were reserved for issuance (i) upon the exercise of options, designated as either ISOs under the Code or nonqualified options, or (ii) as stock, deferred stock or other stock-based awards. ISOs may be granted under the 2014 Plan to employees and officers of the Company. Non-qualified options, stock, deferred stock or other stock-based awards may be granted to consultants, directors (whether or not they are employees), employees or officers of the Company. Stock appreciation rights may also be issued in tandem with stock options. Unless the 2014 Plan is sooner terminated, the ability to grant options or other awards under the 2014 Plan will expire on September 17, 2024.

Effective June 7, 2018, the Company adopted its 2018 Stock Incentive Plan (“2018 Plan”) pursuant to which 4,000,000 shares of common stock were reserved for issuance (i) upon the exercise of options, designated as either ISOs under the Code or nonqualified options, or (ii) as stock, deferred stock or other stock-based awards. ISOs may be granted under the ~~2014~~2018 Plan to employees and officers of the Company. Non-qualified options, stock, deferred stock or other stock-based awards may ~~not~~ be granted ~~at a price less than the fair market value~~to consultants, directors (whether or not they are employees), employees or officers of the Company. Stock appreciation rights may also be issued in tandem with stock options. Unless the 2018 Plan is sooner terminated, the ability to grant options or other awards under the 2018 Plan will expire on June 7, 2028.

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Effective June 11, 2020, the Company adopted its 2020 Stock Incentive Plan (“2020 Plan”) pursuant to which 3,000,000 shares of common stock onwere reserved for issuance (i) upon the ~~date~~exercise of ~~grant (or 110% of fair market value in~~options, designated as either ISOs under the ~~case of persons holding 10%~~Code or ~~more of the voting~~nonqualified options, or (ii) as stock, ~~of the Company). Nonqualified options~~deferred stock or other stock-based awards. ISOs may be granted under the ~~2014~~2020 Plan to employees and officers of the Company. Non-qualified options, stock, deferred stock or other stock-based awards may ~~not~~ be granted ~~at a price less than the fair market value~~to consultants, directors (whether or not they are employees), employees or officers of the ~~common stock. Options granted~~Company. Stock appreciation rights may also be issued in tandem with stock options. Unless the 2020 Plan is sooner terminated, the ability to grant options or other awards under the ~~2014~~2020 Plan will expire ~~not more than ten years from the date of grant (five years in the case of ISOs granted to persons holding 10% or more of the voting stock of the Company).~~

on June 11, 2030.

All stock options have been granted to employees and non-employees at exercise prices equal to or in excess of the market value on the date of the grant.

The Company determines the fair value of ~~share based~~share-based awards at the grant date by using the Black-Scholes option-pricing model, and ~~is incorporating~~has utilized the simplified method to compute expected lives of share-based awards. There were ~~no grants~~options to purchase 585,054 and 354,838 shares of common stock granted during the ~~nine~~six month periods ended ~~September~~June 30, ~~2017~~2023 and ~~1,170,534 options granted in the nine months ended September 30, 2016.~~

2022, respectively.

A summary of the activity for stock options issued under the ~~Company's~~Company’s Plans for the indicated periods is presented below:

Stock Option Plan Totals Shares Weighted
Average
Exercise Price
Outstanding at December 31, 2015 2,633,589 $ 2.06
-Exercised (589,725 ) $ 2.43
-Granted 1,170,534 $ 3.95
Outstanding at December 31, 2016 3,214,398 $ 2.68
-Exercised (984,861 ) $ 3.07
Outstanding at September 30, 2017, (unaudited) 2,229,537 $ 2.50

During the nine months ended September 30, 2017, there were 984,861 options exercised, 414,229 shares were withheld to cover the exercise price and income tax withholdings of certain employees; approximately $1.2 million of cash was remitted to the government and recorded as financing activity in the statement of cash flows.


		Weighted
		Average
		Exercise
Stock Option Plan Totals	Shares	Price
Outstanding at December 31, 2021	2,604,023	$	1.03
-Cancelled	(11,781)	$	3.75
-Exercised	(583,273)	$	1.15
-Granted (1)	381,181	$	4.33
Outstanding at December 31, 2022	2,390,150	$	1.51
-Cancelled	(1,450)	$	10.28
-Exercised	(54,751)	$	1.57
-Granted (2)	585,054	$	10.00
Outstanding at June 30, 2023, unaudited	2,919,003	$	3.20

(1)	Options to purchase 381,181 shares were granted in 2022, of which options to purchase 40,588 shares vested immediately in 2022 and the remainder vested 50% immediately and 50% one year after the date of the grants.

(2)

Options to purchase 567,654 shares were granted in 2023, of which options to purchase 334,005 shares vested immediately in 2023 and the remainder vested 50% one year after the date of the grants. In addition, 17,400 stock appreciation rights were granted in January 2023 with a six- month vesting period.

The following is the weighted average contractual life in years and the weighted average exercise price at ~~September~~June 30, ~~2017~~2023 of:

Weighted Average
Remaining Weighted Average
Number of Options Contractual Life Exercise Price
Options outstanding and vested 2,229,537 1.7 years $ 2.50


		Weighted
		Average		Weighted
		Remaining		Average
	Number of	Contractual		Exercise
	Options	Life		Price
Options outstanding and vested	2,667,043	4.63	years	$	2.56

The intrinsic ~~values~~value of options outstanding at ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016 are $11.8~~2022 was $18.7 million and ~~$17.1~~$20.6 million, respectively.

The intrinsic value of options unvested at June 30, 2023 and December 31, 2022 was $0.0 million and $1.1 million, respectively.

The intrinsic value of options exercised during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016 were $5.2~~2022 was $0.4 million and ~~$1.5~~$1.8 million, respectively.

~~Note 7 - Debt~~16

~~Please refer to Note 9 for a description~~Table of ~~the new credit facilities arising from the acquisition of ARI.~~Contents

~~Bank Credit Line~~

On June 22, 2012, a subsidiary of Hudson entered into a Revolving Credit, Term Loan and Security Agreement with PNC Bank, National Association, as agent (“Agent” or “PNC”), and such other lenders as may thereafter become a party to the PNC Facility. The Maximum Loan Amount (as defined in the PNC Facility) at September 30, 2017 was $50,000,000, and the Maximum Revolving Advance Amount (as defined in the PNC Facility) was $46,000,000. In December 2016, the Company repaid all of its debt under the PNC Facility, with approximately $50 million of availability under the revolving line of credit at September 30, 2017. In addition, there is a $130,000 outstanding letter of credit under the PNC Facility at September 30, 2017. The Termination Date of the Facility (as defined in the PNC Facility) was June 30, 2020.

Under the terms of the original PNC Facility, as amended by the First Amendment to the PNC Facility, dated February 15, 2013, Hudson could initially borrow up to a maximum of $40,000,000 consisting of a term loan in the principal amount of $4,000,000 and revolving loans in a maximum amount up to $36,000,000. Amounts borrowed under the PNC Facility could be used by Hudson for working capital needs and to reimburse drawings under letters of credit.

Interest on loans under the PNC Facility was payable in arrears on the first day of each month with respect to loans bearing interest at the domestic rate (as set forth in the PNC Facility) and at the end of each interest period with respect to loans bearing interest at the Eurodollar Rate (as defined in the PNC Facility) or, for Eurodollar Rate Loans (as defined in the PNC Facility) with an interest period in excess of three months, at the earlier of (a) each three months from the commencement of such Eurodollar Rate Loan or (b) the end of the interest period. Interest charges with respect to loans were computed on the actual principal amount of loans outstanding during the month at a rate per annum equal to (A) with respect to Domestic Rate Loans (as defined in the PNC Facility), the sum of the Alternate Base Rate (as defined in the PNC Facility) plus one half of one percent (.50%) and (B) with respect to Eurodollar Rate Loans, the sum of the Eurodollar Rate plus two and one quarter of one percent (2.25%).

Hudson granted to PNC, for itself, and as agent for such other lenders as may thereafter become a lender under the PNC Facility, a security interest in Hudson’s receivables, intellectual property, general intangibles, inventory and certain other assets.

The PNC Facility contained certain financial and non-financial covenants relating to Hudson, including limitations on Hudson’s ability to pay dividends on common stock or preferred stock, and also included certain events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations, events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts, impairments to guarantees and a change of control. The PNC Facility contained a financial covenant to maintain at all times a Fixed Charge Coverage Ratio of not less than 1.10 to 1.00, tested quarterly on a rolling twelve-month basis. Fixed Charge Coverage Ratio was defined in the PNC Facility, with respect to any fiscal period, as the ratio of (a) EBITDA of Hudson for such period, minus unfinanced capital expenditures (as defined in the PNC Facility) made by Hudson during such period, minus the aggregate amount of cash taxes paid by Hudson during such period, minus the aggregate amount of dividends and distributions made by Hudson during such period, minus the aggregate amount of payments made with cash by Hudson to satisfy soil sampling and reclamation related to environmental cleanup at the Company’s former Hillburn, NY facility during such period (to the extent not already included in the calculation of EBITDA as determined by the Agent) to (b) the aggregate amount of all principal payments due and/or made, except principal payments related to outstanding revolving advances with regard to all funded debt (as defined in the PNC Facility) of Hudson during such period, plus the aggregate interest expense of Hudson during such period. EBITDA as defined in the PNC Facility meant for any period the sum of (i) earnings before interest and taxes for such period plus (ii) depreciation expenses for such period, plus (iii) amortization expenses for such period, plus (iv) non-cash charges.

On July 1, 2015, the Company entered into an amendment to the PNC Facility (the “2015 PNC Amendment”). The 2015 PNC Amendment redefined the “Revolving Interest Rate” as well as the “Term Loan Rate” (as defined in the PNC Facility) as follows:

“Revolving Interest Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate (as defined in the PNC Facility) plus one half of one percent (.50%) with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and one quarter of one percent (2.25%) with respect to the Eurodollar Rate Loans.

“Term Loan Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus one half of one percent (.50%) with respect to the Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and one quarter of one percent (2.25%) with respect to Eurodollar Rate Loans.

On April 8, 2016, the Company entered into an amendment to the PNC Facility (the “2016 PNC Amendment”). Pursuant to the 2016 PNC Amendment, the Maximum Loan Amount (as defined in the PNC Facility) increased from $40,000,000 to $50,000,000, and the Maximum Revolving Advance Amount (as defined in the PNC Facility) was increased from $36,000,000 to $46,000,000. Additionally, pursuant to the 2016 PNC Amendment the Termination Date of the Facility (as defined in the PNC Facility) was extended to June 30, 2020.

~~The Company was in compliance with all covenants, under the PNC Facility as of September 30, 2017.~~

The Company’s ability to comply with these covenants in future quarters may be affected by events beyond the Company’s control, including general economic conditions, weather conditions, regulations and refrigerant pricing. Although we expect to remain in compliance with all covenants in the PNC Facility, as amended, depending on our future operating performance and general economic conditions, we cannot make any assurance that we will continue to be in compliance.

Note 8 - ~~Acquisitions~~Short-term and Long-term debt

Elements of short-term and long-term debt are as follows:

~~See Note 9 regarding the closing of the acquisition of ARI.~~


	June 30,		December 31,
	2023		2022
(in thousands)	(unaudited)
Short-term & long-term debt
Short-term debt:
- Term loan facility – current	$	4,250	$	4,250
Subtotal		4,250		4,250
Long-term debt:
- Term loan facility- net of current portion of long-term debt		13,238		27,563
- FILO term loan		15,000		15,000
- Less: deferred financing costs on term loan		(3,153)		(3,578)
Subtotal		25,085		38,985

Total short-term & long-term debt	$	29,335	$	43,235

Revolving Credit Facility

On ~~January 16, 2015, the~~March 2, 2022, Hudson Technologies Company ~~acquired certain assets of a supplier of refrigerants~~(“HTC”) and compressed gases, and also hired three employees associated with the business. The purchase price for this acquisition was $2.4 million cash paid at closing and the assumption of a liability of $20,000, and a maximum of an additional $3.0 million earn-out. The asset allocation was approximately $1.6 million of tangible assets, approximately $1.6 million of intangible assets, and approximately $2.3 million of goodwill.

As of December 31, 2015, the valuation and allocation of the purchase price for this acquisition was finalized. As part of that process it was determined that the deferred acquisition cost payable that had been previously recorded at the maximum earn out of $3.0 million per the purchase agreement was overstated by approximately $1.0 million. This adjustment to the deferred acquisition cost payable resulted in lowering the purchase price from approximately $5.4 million to approximately $4.4 million. The final valuation resulted in a reduction in goodwill by approximately $1.9 million, and increase in intangible assets of approximately $0.8 million and an increase in current assets of approximately $0.1 million. This final valuation, as well as the respective changes in the amortization of intangibles, was reflected in the December 31, 2015 financial statements. Please see table in Note 2 for a roll forward of the deferred acquisition cost. The final earnout payment was made during the first quarter of 2017.

The intangible assets are being amortized over a period ranging from two to ten years. The goodwill recognized as part of the acquisition will be deductible for tax purposes. The transaction also provides for additional employee compensation for years 2017 through 2019, based on certain revenue performance. The total additional employee compensation, if any, cannot exceed $3,000,000.

The results of the acquired business operations are included in the Company’s Consolidated Statements of Operations from the date of acquisition, and are not material to the Company’s financial position or results of operations.

~~Note 9 – Subsequent Event~~

~~On October 10, 2017, the Company and its wholly-owned subsidiary,~~ Hudson Holdings, Inc. (“Holdings”) ~~completed the acquisition (the “Acquisition”) from Airgas, Inc. (“Airgas”) of all of the outstanding stock of Airgas-Refrigerants, Inc., a Delaware corporation (“ARI”).~~

At closing, Holdings paid net cash consideration to Airgas of approximately $209 million, which includes preliminary post-closing adjustments relating to: (i) changes in the net working capital of ARI as of the closing relative to a net working capital target, (ii) the actual amount of specified types of R-22 refrigerant inventory on hand at closing relative to a target amount thereof, and (iii) other consideration pursuant to the Stock Purchase Agreement.

The cash consideration paid by Holdings at closing was financed with available cash balances, plus $80 million of borrowings under an enhanced asset based lending facility of $150 million from PNC Bank and a new term loan of $105 million from funds advised by FS Investments and sub-advised by GSO Capital Partners LP.

The following table provides unaudited pro forma total revenues and results of operations for the nine months ended September 30, 2017 and 2016 as if Hudson and ARI had been acquired on January 1, 2016. The unaudited pro forma results reflect certain adjustments related to the acquisitions, such as a step-up in basis in inventory, amortization expense on intangible assets arising from the acquisition, and interest on the new loan. The pro forma results do not include any anticipated cost synergies or other effects of any planned integration. Accordingly, such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisitions been completed at the beginning of 2016, nor are they indicative of the future operating results of the combined companies.

Nine Months Ended
September 30,

(unaudited, in thousands) 2017 2016
Revenues $ 228,148 $ 205,228
Net income $ 26,317 $ 15,317
Net income per share
Basic $ 0.63 $ 0.46
Diluted $ 0.61 $ 0.45

~~The unaudited pro forma earnings for the nine months ended September 30, 2017 were also adjusted to exclude $2.4 million of acquisition-related expenses incurred in 2017.~~

~~Amendment and Restatement of Revolving Credit Facility~~

~~On October 10, 2017, Hudson Technologies Company (“HTC”), an indirect subsidiary of the Company, and HTC’s affiliates Hudson Holdings, Inc. and Airgas-Refrigerants, Inc.~~, as borrowers (collectively, the “Borrowers”), and ~~the Company~~Hudson Technologies, Inc (the “Company”) as a guarantor, ~~became obligated under~~entered into an Amended and Restated ~~Revolving~~ Credit ~~and Security~~ Agreement (the ~~“PNC~~“Amended Wells Fargo Facility”) with ~~PNC~~Wells Fargo Bank, National Association, as administrative agent ~~collateral agent~~ and lender (“Agent” or ~~“PNC”~~“Wells Fargo”)~~, PNC Capital Markets LLC as lead arranger and sole bookrunner,~~ and such other lenders as have or may thereafter become a party to the ~~PNC~~Amended Wells Fargo Facility. The ~~PNC Facility~~Amended Wells Fargo facility amended and restated ~~HTC’s existing credit facility with PNC.~~

the prior Wells Fargo Facility entered into on December 19, 2019.

Under the terms of the ~~PNC~~Amended Wells Fargo Facility, the Borrowers may borrow up to $90 million consisting of: (i) $15 million immediately borrowed in the form of a “first in last out” term loan (the “FILO Tranche”) and (ii) from time to time, up to ~~$150~~$75 million at any time consisting of revolving loans (the “Revolving Loans”) in a maximum amount up to the lesser of ~~$150~~$75 million and a borrowing base that is calculated based on the outstanding amount of the Borrowers’ eligible receivables and eligible inventory, as described in the ~~PNC~~Amended Wells Fargo Facility. The ~~PNC~~Amended Wells Fargo Facility also contains a sublimit of ~~$15~~$9 million for swing line loans and $5$2 million for letters of credit. The Company currently has a $0.9 million letter of credit outstanding.

Amounts borrowed under the ~~PNC~~Amended Wells Fargo Facility ~~were~~may be used ~~by the Borrowers to consummate the acquisition of Airgas-Refrigerants, Inc. (“ARI”) and~~ for working capital needs, certain permitted ~~future~~ acquisitions, and to reimburse drawings under letters of credit. ~~At October 10, 2017, total borrowings~~

Interest under the ~~PNC Facility were $80 million.~~

~~Interest on loans under the PNC~~Amended Wells Fargo Facility is payable in arrears on the first day of each month with respect to loans bearing interest at the domestic rate (as set forth in the PNC Facility) and at the end of each interest period with respect to loans bearing interest at the Eurodollar rate (as set forth in the PNC Facility) or, for Eurodollar rate loans with an interest period in excess of three months, at the earlier of (a) each three months from the commencement of such Eurodollar rate loan or (b) the end of the interest period.month. Interest charges with respect to ~~loans~~Revolving Loans are computed on the actual principal amount of ~~loans~~Revolving Loans outstanding ~~during the month~~ at a rate per annum equal to (A) with respect to ~~domestic rate~~Base Rate loans, the sum of (i) a rate per annum equal to the higher of (1) 1.0%, (2) the ~~base~~federal funds rate plus 0.5%, (3) one month term SOFR plus 1.0%, and (4) the prime commercial lending rate of ~~PNC, (2) the federal funds open rate plus 0.5% and (3) the daily LIBOR plus 1.0%,~~Wells Fargo, plus (ii) between ~~0.50%~~1.25% and ~~1.00%~~1.75% depending on average ~~quarterly~~monthly undrawn availability and (B) with respect to ~~Eurodollar rate~~SOFR loans, the sum of the ~~Eurodollar~~applicable SOFR rate plus between ~~1.50%~~2.36% and ~~2.00%~~2.86% depending on average quarterly undrawn availability. Interest charges with respect to the FILO Tranche are computed on the actual principal amount of FILO Tranche loans outstanding at a rate per annum equal to (A) with respect to Base Rate FILO Tranche loans, the sum of (i) a rate per annum equal to the higher of (1) 1.0%, (2) the federal funds rate plus 0.5%, (3) one month term SOFR plus 1.0%,and (4) the prime commercial lending rate of Wells Fargo, plus (ii) 6.5% and (B) with respect to SOFR FILO Tranche loans, the sum of the applicable SOFR rate plus 7.50%. The Amended Wells Fargo Facility also includes a monthly unused line fee ranging from 0.35% to 0.75% per annum determined based upon the level of average Revolving Loans outstanding during the immediately preceding month measured against the total Revolving Loans that may be borrowed under the Amended Wells Fargo Facility.

In connection with the closing of the Amended Wells Fargo Facility, the Company also entered into a First Amendment to Guaranty and Security Agreement, dated as of March 2, 2022 (the “Amended Revolver Guaranty and Security Agreement”), pursuant to which the Company and certain subsidiaries are continuing to unconditionally guarantee the payment and performance of all obligations owing by Borrowers ~~granted~~to Wells Fargo, as Agent for the benefit of the revolving lenders. Pursuant to the Amended Revolver Guaranty and Security Agreement, Borrowers, the Company and certain other subsidiaries are continuing to grant to the Agent, for the benefit of the Wells Fargo Facility lenders, a security interest in substantially all of ~~Borrowers’~~their respective assets, including receivables, equipment, general intangibles (including intellectual property), inventory, subsidiary stock, real property, and certain other assets.

Table of Contents

The ~~PNC~~Amended Wells Fargo Facility contains a ~~fixed charge coverage ratio~~financial covenant requiring the Company to maintain at all times minimum liquidity (defined as availability under the Amended Wells Fargo Facility plus unrestricted cash) of at least $5 million, of which at least $3 million must be derived from availability. The Amended Wells Fargo Facility also contains a springing covenant, which takes effect only upon a failure to maintain undrawn availability of at least $11.25 million or upon an election by the Borrowers to increase the inventory component of the borrowing base, requiring the Company to maintain a Fixed Charge Coverage Ratio (FCCR) of not less than 1.00 to 1.00, as of the end of each trailing period of twelve consecutive months commencing with the month prior to the triggering of the covenant. The ~~PNC~~FCCR (as defined in the Wells Fargo Facility) is the ratio of (a) EBITDA for such period, minus unfinanced capital expenditures made during such period, to (b) the aggregate amount of (i) interest expense required to be paid (other than interest paid-in-kind, amortization of financing fees, and other non-cash interest expense) during such period, (ii) scheduled principal payments (but excluding principal payments relating to outstanding Revolving Loans under the Amended Wells Fargo Facility), (iii) all net federal, state, and local income taxes required to be paid during such period (provided, that any tax refunds received shall be applied to the period in which the cash outlay for such taxes was made), (iv) all restricted payments paid (as defined in the Amended Wells Fargo Facility) during such period, and (v) to the extent not otherwise deducted from EBITDA for such period, all payments required to be made during such period in respect of any funding deficiency or funding shortfall with respect to any pension plan. The FCCR covenant ceases after the Borrowers have been in compliance therewith for two consecutive months.

The Amended Wells Fargo Facility also contains customary non-financial covenants relating to the Company and the Borrowers, including limitations on Borrowers’ ability to pay dividends on common stock or preferred stock, and also includes certain events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations, events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts, impairments to guarantees and a change of control.

The Company evaluated the Amended Wells Fargo Facility in accordance with the provisions of ASC 470 to determine if the amendment was a modification or an extinguishment of debt and concluded that the amendment was a modification of the original revolving credit facility for accounting purposes. As a result, the Company capitalized an additional $0.9 million of deferred financing costs in connection with the amendment, which, along with the $0.2 million of remaining deferred financing costs of the original revolving facility, is being amortized over the five year term of the Amended Wells Fargo Facility.

The commitments under the ~~PNC~~Amended Wells Fargo Facility will expire and the full outstanding principal amount of the loans, together with accrued and unpaid interest, are due and payable in full on ~~October 10, 2022,~~March 2, 2027, unless the commitments are terminated and the outstanding principal amount of the loans are accelerated sooner following an event of ~~default.~~default or in the event of certain other cross-defaults.

In connection with the closing of the PNC Facility, the Company also entered into an Amended and Restated Guaranty and Suretyship Agreement, dated as of October 10, 2017 (the “Revolver Guarantee”), pursuant to which the Company affirmed its unconditional guarantee of the payment and performance of all obligations owing by Borrowers to PNC, as Agent for the benefit of the revolving lenders.

~~New~~2022 Term Loan Facility

On ~~October 10, 2017, HTC,~~March 2, 2022, Hudson Technologies Company (“HTC”), an indirect subsidiary of Hudson Technologies, Inc. (the “Company”), and the Company’s subsidiary Hudson Holdings, Inc., as borrowers (collectively, the “Borrowers”), and the Company, as guarantor, became obligated under a ~~Term Loan~~ Credit ~~and Security~~ Agreement (the “Term Loan Facility”) with ~~U.S. Bank National Association,~~TCW Asset Management Company LLC, as administrative ~~agent and collateral~~ agent (“Term Loan Agent”) and ~~funds advised by FS Investments and sub-advised by GSO Capital Partners LP and such other lenders as may thereafter become a party to~~ the ~~Term Loan Facility~~lender parties thereto (the “Term Loan Lenders”).

Under the terms of the Term Loan Facility, the Borrowers ~~have~~ immediately borrowed ~~$105~~$85 million pursuant to a term loan (the ~~“Initial Term~~“Term Loan”) ~~and may borrow up to an additional $25 million for a period of eighteen months after closing to fund additional permitted acquisitions (the “Delayed Draw Commitment”, and together with~~. Amounts borrowed under the ~~Initial~~ Term Loan Facility were used by the ~~“Term Loans”).~~

Borrowers to repay the outstanding principal amount and related fees and expenses under the Prior Term Loan Facility (as defined below) and for other corporate purposes. The Company paid approximately $4.3 million of term loan deferred financing costs.

The Term ~~Loans mature~~Loan matures on ~~October 10, 2023.~~March 2, 2027, or earlier upon certain acceleration or cross default events. Principal payments on the Term ~~Loans~~Loan are required on a quarterly basis, commencing with the quarter ~~ending~~ended March 31, ~~2018,~~2022, in the amount of 1%5% of the original principal amount of the outstanding Term ~~Loans~~Loan per annum. The Term Loan Facility also requires annual payments of ~~up to~~ 50% of Excess Cash Flow (as defined in the Term Loan Facility); provided that commencing with the year ending December 31, 2023 such payments may be reduced depending upon the Company’s ~~Total Leverage Ratio~~leverage ratio (as defined in the Term Loan Facility) for the applicable year. The Term Loan Facility also requires mandatory prepayments of the Term ~~Loans~~Loan in the event of certain asset dispositions, debt issuances, and ~~casualty and condemnation~~other events. The Term ~~Loans~~Loan may be prepaid at the option of the Borrowers ~~at par in an amount up to $30 million. Additional prepayments are permitted after the first anniversary of the closing date~~ subject to a prepayment premium of 3% in year ~~two, 1%~~one, 2% in year two,1% in year three, and zero in year four and thereafter.

Table of Contents

Interest on the Term ~~Loans~~Loan is generally payable monthly, in arrears. Interest charges with respect to the Term Loan are computed on the ~~earlier of the last day of the interest period applicable to such Eurodollar rate loan and the last day~~actual principal amount of the Term Loan ~~Facility, as applicable. Interest is payable~~outstanding at ~~the~~a rate per annum equal to (A) with respect to Base Rate loans, the sum of ~~LIBOR plus 7.25%. The Borrowers have the option of paying 3.00% interest~~(i) a rate per annum ~~in kind by adding such amount~~equal to the ~~principal~~higher of (1) 2.0%, (2) the federal funds rate plus 0.5%, (3) one month term SOFR plus 1.0%, and (4) the prime commercial lending rate quoted by The Wall Street Journal, plus (ii) between 6.0% and 7.0% depending on the applicable leverage ratio and (B) with respect to SOFR loans, the sum of the ~~Term Loans during no more than five fiscal quarters during~~applicable SOFR rate plus between 7.0% and 8.0% depending on the ~~term of the Term Loan Facility.~~

applicable leverage ratio.

Borrowers and the Company granted to the Term Loan Agent, for the benefit of the Term Loan Lenders, a security interest in substantially all of their respective assets, including receivables, equipment, general intangibles (including intellectual property), inventory, subsidiary stock, real property, and certain other assets.

The Term Loan Facility contains a total leverage ratio covenant, tested quarterly. The Term Loan Facility also contains customary non-financial covenants relating to the Company and the Borrowers, including limitations on their ability to pay dividends on common stock or preferred stock, and also includes certain events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations, events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts, impairments to guarantees and a change of control.

In connection with the closing of the Term Loan Facility, the Company also entered into a Guaranty and Suretyship Agreement, dated as of October 10, 2017 (the “Term Loan Guarantee”), pursuant to which the Company affirmed its unconditional guarantee of the payment and performance of all obligations owing by Borrowers to Term Loan Agent, as agent for the benefit of the Term Loan Lenders.

The Term Loan Agent and the Agent have entered into an intercreditor agreement governing the relative priority of their security interests granted by the Borrowers and the Guarantor in the collateral, providing that the Agent shall have a first priority security interest in the accounts receivable, inventory, deposit accounts and certain other assets (the “Revolving Credit Priority Collateral”) and the Term Loan Agent shall have a first priority security interest in the equipment, real property, capital stock of subsidiaries and certain other assets (the “Term Loan Priority Collateral”).

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

Certain statements, contained in this section and elsewhere in this Form 10-Q, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, changes in the laws and regulations affecting the refrigerant industry, changes in the demand and price for refrigerants (including unfavorable market conditions adversely affecting the demand for, and the price of refrigerants), the Company's ability to source refrigerants, regulatory and economic factors, seasonality, competition, litigation, the nature of supplier or customer arrangements that become available to the Company in the future, adverse weather conditions, possible technological obsolescence of existing products and services, possible reduction in the carrying value of long-lived assets, estimates of the useful life of its assets, potential environmental liability, customer concentration, the ability to obtain financing, any delays or interruptions in bringing products and services to market, the timely availability of any requisite permits and authorizations from governmental entities and third parties as well as factors relating to doing business outside the United States, including changes in the laws, regulations, policies, and political, financial and economic conditions, including inflation, interest and currency exchange rates, of countries in which the Company may seek to conduct business, the Company’s ability to successfully integrate ARI and any other assets it acquires from third parties into its operations, and other risks detailed in the Company’s Form 10-K for the year ended December 31, 2016 and in the Company’s other subsequent filings with the Securities and Exchange Commission (“SEC”). The words “believe”, “expect”, “anticipate”, “may”, “plan”, “should” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

~~Critical Accounting Policies~~

The Company's discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Several of the Company's accounting policies involve significant judgments, uncertainties and estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. To the extent that actual results differ from management's judgments and estimates, there could be a material adverse effect on the Company. On a continuous basis, the Company evaluates its estimates, including, but not limited to, those estimates related to its allowance for doubtful accounts, inventory reserves, and valuation allowance for the deferred tax assets relating to its net operating loss carry forwards (“NOLs”) and commitments and contingencies. With respect to accounts receivable, the Company estimates the necessary allowance for doubtful accounts based on both historical and anticipated trends of payment history and the ability of the customer to fulfill its obligations. For inventory, the Company evaluates both current and anticipated sales prices of its products to determine if a write down of inventory to net realizable value is necessary. In determining the Company’s valuation allowance for its deferred tax assets, the Company assesses its ability to generate taxable income in the future. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in business combinations accounted for under the purchase method of accounting. The Company tests for any impairment of goodwill annually unless indicators arise. Intangibles with determinable lives are amortized over the estimated useful lives of the assets currently ranging from 2 to 10 years. The Company reviews these useful lives annually to determine that they reflect future realizable value. The Company utilizes both internal and external sources to evaluate potential current and future liabilities for various commitments and contingencies. In the event that the assumptions or conditions change in the future, the estimates could differ from the original estimates.

~~Overview~~

Sales of refrigerants continue to represent a significant majority of the Company’s revenues. The Company’s refrigerant sales are primarily HCFC and HFC based refrigerants and to a lesser extent CFC based refrigerants that are no longer manufactured. Currently the Company purchases virgin HCFC and HFC refrigerants and reclaimable HCFC, HFC and CFC refrigerants from suppliers and its customers. Effective January 1, 1996, the Clean Air Act (the “Act”) prohibited the production of virgin CFC refrigerants and limited the production of virgin HCFC refrigerants, which production was further limited in January 2004. Federal regulations enacted in January 2004 established production and consumption allowances for HCFCs and imposed limitations on the importation of certain virgin HCFC refrigerants. Under the Act, production of certain virgin HCFC refrigerants is scheduled to be phased out during the period 2010 through 2020, and production of all virgin HCFC refrigerants is scheduled to be phased out by 2030. In October 2014, the EPA published the Final Rule providing further reductions in the production and consumption allowances for virgin HCFC refrigerants for the years 2015 through 2019. In the Final Rule, the EPA has established a linear annual phase down schedule for the production or importation of virgin HCFC-22 that started at approximately 22 million pounds in 2015 and is being reduced by approximately 4.5 million pounds each year and ends at zero in 2020. In October 2016, more than 200 countries, including the United States, agreed to amend the Montreal Protocol to phase down production of HFCs by 85% between now and 2047. The amendment establishes timetables for all developed and developing countries to freeze and then reduce production levels and use of HFCs, with the first reductions by developed countries starting in 2019.

The Company has created and developed a service offering known as RefrigerantSide® Services. RefrigerantSide® Services are sold to contractors and end-users whose refrigeration systems are used in commercial air conditioning and industrial processing. These services are offered in addition to refrigerant sales and the Company's traditional refrigerant management services, which consist primarily of reclamation of refrigerants. The Company has created a network of service depots that provide a full range of the Company's RefrigerantSide® Services to facilitate the growth and development of its service offerings.

The Company focuses its sales and marketing efforts for its RefrigerantSide® Services on customers who the Company believes most readily appreciate and understand the value that is provided by its RefrigerantSide® Services offering. In pursuing its sales and marketing strategy, the Company offers its RefrigerantSide® Services to customers in the following industries: petrochemical, pharmaceutical, industrial power, manufacturing, commercial facility and property management and maritime. The Company may incur additional expenses as it further develops and markets its RefrigerantSide® Services offering.

~~Results of Operations~~

~~Three month period ended September 30, 2017 as compared to the three month period ended September 30, 2016~~

Revenues for the three month period ended September 30, 2017 were $24.7 million, a decrease of $10.2 million or 29% from the $34.9 million reported during the comparable 2016 period primarily due to a decline in refrigerant and related revenues. The decline in refrigerant and related revenues was mainly attributable to a decrease in the selling price per pound of certain refrigerants sold, which accounted for a decrease in revenues of $6.5 million, and a decrease in the number pounds of certain refrigerants sold, which accounted for a decrease in revenues of $3.7 million.

Cost of sales for the three month period ended September 30, 2017 was $19.6 million or 79% of sales. The cost of sales for the three month period ended September 30, 2016 was $22.9 million or 66% of sales. The increase in the cost of sales percentage from 66% for the three month period ended September 30, 2016 to 79% for the three month period ended September 30, 2017 is primarily due to the decrease in the selling price per pound of certain refrigerants sold for the three month period ended September 30, 2017 compared to the same period in 2016.

Operating expenses for the three month period ended September 30, 2017 were $3.6 million, a decrease of $0.4 million from the $4.0 million reported during the comparable 2016 period. The decrease in operating expenses is primarily due to higher stock compensation expense, earnout liability and professional fees in 2016, which was mainly offset by $1.0 million of nonrecurring fees relating to the acquisition of ARI incurred during the third quarter of 2017.

Interest expense, for the three month period ended September 30, 2017 was less than $0.1 million, compared to the $0.3 million reported during the comparable 2016 period. As a result of the paydown of the PNC Facility and December 2016 public offering during the fourth quarter of 2016, the Company incurred lower interest expense in the third quarter of 2017 when compared to the same period in 2016.

Income tax expense (benefit) for the three month period ended September 30, 2017 was a (benefit) of $0.7 million compared to income tax expense for the three-month period ended June 30, 2016 of $3.0 million. The benefit in 2017 arose from $1.2 million of excess tax benefits relating to nonqualified stock option exercises during the third quarter of 2017.

Net income for the three month period ended September 30, 2017 was $2.1 million, a decrease of $2.7 million from the $4.8 million net income reported during the comparable 2016 period, primarily due to the decrease in revenues partially offset by a decrease in operating expenses and income tax expense.

~~Nine month period ended September 30, 2017 as compared to the Nine month period ended September 30, 2016~~

Revenues for the nine month period ended September 30, 2017 were $115.8 million, an increase of $18.1 million or 18% from the $97.7 million reported during the comparable 2016 period. The increase in refrigerant and related revenues was mainly attributable to an increase in the selling price per pound of certain refrigerants sold, which accounted for an increase in revenues of $13.5 million, as well as an increase in the number of pounds of certain refrigerants sold, which accounted for an increase in revenues of $4.6 million.

Cost of sales for the nine month period ended September 30, 2017 was $80.8 million or 70% of sales. The cost of sales for the nine month period ended September 30, 2016 was $67.6 million or 69% of sales. The increase in the cost of sales percentage from 69% for the nine month period ended September 30, 2016 to 70% for the nine month period ended September 30, 2017 is primarily due to the increase in the cost per pound of certain refrigerants sold for the nine month period ended September 30, 2017 compared to the same period in 2016.

Operating expenses for the nine month period ended September 30, 2017 were $10.2 million, an increase of $1.3 million from the $8.9 million during the comparable 2016 period. The increase in operating expenses is primarily due to $2.4 million of nonrecurring acquisition and related fees relating to the acquisition of ARI, which was consummated on October 10, 2017 offset by a decrease in stock compensation expense and earnout liability in 2017 compared to 2016.

Interest expense for the nine month period ended September 30, 2017 was $0.2 million compared to the $0.9 million reported during the comparable 2016 period. As a result of the paydown of the PNC Facility and December 2016 public offering during the fourth quarter of 2016, the Company incurred lower interest expense during the first nine months of 2017 when compared to the same period in 2016.

Income tax expense for the nine month period ended September 30, 2017 was $8.2 million compared to income tax expense for the nine month period ended September 30, 2016 of $7.7 million due to higher income for the period. The benefit in 2017 arose from $1.2 million of excess tax benefits relating to nonqualified stock option exercises during the third quarter of 2017.

Net income for the nine month period ended September 30, 2017 was $16.4 million, an increase of $3.8 million from the $12.6 million net income reported during the comparable 2016 period, primarily due to the increase in revenues partially offset by an increase in operating expenses and income tax expense.

~~Liquidity and Capital Resources~~

At September 30, 2017, the Company had working capital, which represents current assets less current liabilities, of $115.2 million, an increase of $17.3 million from the working capital of $97.9 million at December 31, 2016. The increase in working capital is primarily attributable to increased net income during the period.

Inventory and trade receivables are principal components of current assets. At September 30, 2017, the Company had inventories of $63.8 million, a decrease of $4.8 million from $68.6 million at December 31, 2016. The decrease in the inventory balance is primarily due to the timing and availability of inventory purchases and the sale of refrigerants. The Company's ability to sell and replace its inventory on a timely basis and the prices at which it can be sold are subject, among other things, to current market conditions and the nature of supplier or customer arrangements and the Company's ability to source CFC based refrigerants (which are no longer being produced), HCFC refrigerants (which are currently being phased down leading to a full phase out of virgin production), or non-CFC based refrigerants. At September 30, 2017, the Company had trade receivables, net of allowance for doubtful accounts, of $13.9 million, an increase of $9.1 million from $4.8 million at December 31, 2016. The Company's trade receivables are concentrated with various wholesalers, brokers, contractors and end-users within the refrigeration industry that are primarily located in the continental United States.

~~The Company has historically financed its working capital requirements through cash flows from operations, the issuance of debt and equity securities, and bank borrowings.~~

~~At September 30, 2017, cash and cash equivalents was $44.0 million, or approximately $10.1 million higher than the $33.9 million of cash and cash equivalents at December 31, 2016.~~

Net cash provided by operating activities for the nine month period ended September 30, 2017, was $12.1 million compared with net cash provided by operating activities of $7.4 million for the comparable 2016 period. Net cash provided by operating activities in the 2017 period was primarily attributable to an increase in net income as well as timing in the Company’s accounts receivable and prepaid expenses.

Net cash used in investing activities for the nine month period ended September 30, 2017, was $0.9 million compared with net cash used by investing activities of $0.9 million for the comparable 2016 period. The net cash used by investing activities for the 2017 and 2016 periods was primarily related to investment in general purpose equipment for the Company’s Champaign, Illinois facility.

Net cash used in financing activities for the nine month period ended September 30, 2017, was $1.2 million compared with net cash used in financing activities of $3.8 million for the comparable 2016 period. During the third quarter of 2017, the Company made $1.2 million of tax payments for withholdings related to settlements of stock option awards. During the fourth quarter of 2016, the Company raised capital in a public offering and paid off the PNC Facility resulting in lower interest payments when compared to the same period in 2016. No additional borrowings were drawn during the first three quarters of 2017. During the first half of 2017, the Company also paid its final earnout relating to the 2015 acquisition of a supplier of refrigerants and compressed gases.

~~The Company continues to assess its capital expenditure needs. The Company may, to the extent necessary, continue to utilize its cash balances to purchase equipment primarily for its operations.~~

~~The following is a summary of the Company's significant contractual cash obligations for the periods indicated that existed as of September 30, 2017 (in 000’s)~~:

Twelve Months Ending September 30,
2018 2019 2020 2021 2022 Thereafter Total
Long and short term debt and capital lease obligations:

Principal $ 97 $ 65 $ 13 $ 5 - - $ 180
Estimated interest (1) 7 2 - - - - 9
Operating leases 1,477 802 637 511 239 - 3,666

Total contractual cash obligations $ 1,581 $ 869 $ 650 $ 516 $ 239 $ - $ 3,855

~~(1)~~

~~The estimated future interest payments on all debt other than revolving debt are based on the respective interest rates applied to the declining principal balances on each of the notes.~~

~~Acquisition of ARI~~

~~Amendment and Restatement of Revolving Credit Facility~~

On October 10, 2017, Hudson Technologies Company (“HTC”), an indirect subsidiary of the Company, and HTC’s affiliates Hudson Holdings, Inc. and Airgas-Refrigerants, Inc., as borrowers (collectively, the “Borrowers”), and the Company as a guarantor, became obligated under an Amended and Restated Revolving Credit and Security Agreement (the “PNC Facility”) with PNC Bank, National Association, as administrative agent, collateral agent and lender (“Agent” or “PNC”), PNC Capital Markets LLC as lead arranger and sole bookrunner, and such other lenders as may thereafter become a party to the PNC Facility. The PNC Facility amended and restated HTC’s existing credit facility with PNC.

Under the terms of the PNC Facility, the Borrowers may borrow, from time to time, up to $150 million at any time consisting of revolving loans in a maximum amount up to the lesser of $150 million and a borrowing base that is calculated based on the outstanding amount of the Borrowers’ eligible receivables and eligible inventory, as described in the PNC Facility. The PNC Facility also contains a sublimit of $15 million for swing line loans and $5 million for letters of credit.

Amounts borrowed under the PNC Facility were used by the Borrowers to consummate the acquisition of ARI and for working capital needs, certain permitted future acquisitions, and to reimburse drawings under letters of credit. At October 10, 2017, total borrowings under the PNC Facility were $80 million.

Interest on loans under the PNC Facility is payable in arrears on the first day of each month with respect to loans bearing interest at the domestic rate (as set forth in the PNC Facility) and at the end of each interest period with respect to loans bearing interest at the Eurodollar rate (as set forth in the PNC Facility) or, for Eurodollar rate loans with an interest period in excess of three months, at the earlier of (a) each three months from the commencement of such Eurodollar rate loan or (b) the end of the interest period. Interest charges with respect to loans are computed on the actual principal amount of loans outstanding during the month at a rate per annum equal to (A) with respect to domestic rate loans, the sum of (i) a rate per annum equal to the higher of (1) the base commercial lending rate of PNC, (2) the federal funds open rate plus 0.5% and (3) the daily LIBOR plus 1.0%, plus (ii) between 0.50% and 1.00% depending on average quarterly undrawn availability and (B) with respect to Eurodollar rate loans, the sum of the Eurodollar rate plus between 1.50% and 2.00% depending on average quarterly undrawn availability.

Borrowers granted to the Agent, for the benefit of the lenders, a security interest in substantially all of Borrowers’ assets, including receivables, equipment, general intangibles (including intellectual property), inventory, subsidiary stock, real property, and certain other assets.

~~The PNC~~ Facility contains a fixed charge coverage ratio ~~covenant.~~covenant and a leverage ratio covenant, each tested quarterly. The ~~PNC~~fixed charge coverage ratio (“FCCR”) covenant requires compliance with specified levels of (i) EBITDA minus unfunded capital expenditures to (ii) interest expense, scheduled principal payments, and other specified payments, in each case as specified in the Term Loan Facility, for a trailing four quarter period. For the period ended June 30, 2023, the FCCR was 3.13 to 1.0 against a requirement of at least 1.10 to 1.0. The leverage ratio (“LR”) covenant is tested as of the last day of each fiscal quarter. The LR is the ratio of (i) funded debt as of such date minus the lesser of $15,000,000 or the Company’s unrestricted cash to (b) trailing twelve-month EBITDA, in each case as specified in the Term Loan Facility. As of June 30, 2023, the LR was approximately 0.32 to 1.0, compared to the maximum of 4.00 to 1.0. The Term Loan Facility also contains customary non-financial covenants relating to the Company and the Borrowers, including limitations on Borrowers’ ability to pay dividends on common stock or preferred stock, and also includes certain events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations, events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts, impairments to guarantees and a change of control.

The commitments under the PNC Facility will expire and the full outstanding principal amount of the loans, together with accrued and unpaid interest, are due and payable in full on October 10, 2022, unless the commitments are terminated and the outstanding principal amount of the loans are accelerated sooner following an event of default.

~~New Term Loan Facility~~

On October 10, 2017, HTC, and the Company, as guarantor, became obligated under a Term Loan Credit and Security Agreement (the “Term Loan Facility”) with U.S. Bank National Association, as administrative agent and collateral agent (“Term Loan Agent”) and funds advised by FS Investments and sub-advised by GSO Capital Partners LP and such other lenders as may thereafter become a party to the Term Loan Facility (the “Term Loan Lenders”).

Under the terms of the Term Loan Facility, the Borrowers have immediately borrowed $105 million pursuant to a term loan (the “Initial Term Loan”) and may borrow up to an additional $25 million for a period of eighteen months after closing to fund additional permitted acquisitions (the “Delayed Draw Commitment”, and together with the Initial Term Loan, the “Term Loans”).

The Term Loans mature on October 10, 2023. Principal payments on the Term Loans are required on a quarterly basis, commencing with the quarter ending March 31, 2018, in the amount of 1% of the original principal amount of the outstanding Term Loans per annum. The Term Loan Facility also requires annual payments of up to 50% of Excess Cash Flow (as defined in the Term Loan Facility) depending upon the Company’s Total Leverage Ratio (as defined in the Term Loan Facility) for the applicable year. The Term Loan Facility also requires mandatory prepayments of the Term Loans in the event of certain asset dispositions, debt issuances, and casualty and condemnation events. The Term Loans may be prepaid at the option of the Borrowers at par in an amount up to $30 million. Additional prepayments are permitted after the first anniversary of the closing date subject to a prepayment premium of 3% in year two, 1% in year three and zero in year four and thereafter.

Interest on the Term Loans is generally payable on the earlier of the last day of the interest period applicable to such Eurodollar rate loan and the last day of the Term Loan Facility, as applicable. Interest is payable at the rate per annum of LIBOR plus 7.25%. The Borrowers have the option of paying 3.00% interest per annum in kind by adding such amount to the principal of the Term Loans during no more than five fiscal quarters during the term of the Term Loan Facility.

In connection with the closing of the Term Loan Facility, the Company also entered into a Guaranty and ~~Suretyship~~Security Agreement, dated as of ~~October 10, 2017~~March 2, 2022 (the “Term Loan Guarantee”), pursuant to which the Company affirmed its unconditional guarantee of the payment and performance of all obligations owing by Borrowers to Term Loan Agent, as agent for the benefit of the Term Loan Lenders.

Termination of Prior Term Loan Facility

~~Bank~~In conjunction with entry into the new Term Loan Facility as described above, on March 2, 2022 the Company’s then-existing term loans, as amended (the “Prior Term Loan Facility”), which had a principal balance of approximately $63.9 million after payment of a $16.0 million excess cash flow amount thereunder, were repaid in full, together with associated required lender fees and expenses of $3.3 million, and the Prior Term Loan Facility was terminated. The termination of the Prior Term Loan Facility constituted an extinguishment of debt, which resulted in the Company recording an additional $4.6 million of interest expense during the first quarter of 2022, which included the aforementioned $3.3 million of prior lender fees and expenses and $1.3 million of pre-existing deferred financing costs from the Prior Term Loan Facility.

The Company was in compliance with all covenants, under the Amended Wells Fargo Facility and the Term Loan Facility, as of June 30, 2023.

The Company’s ability to comply with these covenants in future quarters may be affected by events beyond the Company’s control, including general economic conditions, weather conditions, regulations and refrigerant pricing. Therefore, the Company cannot make any assurance that it will continue to be in compliance during future periods.

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The Company believes that it will be able to satisfy its working capital requirements for the foreseeable future from anticipated cash flows from operations and available funds under the Amended Wells Fargo Facility. Any unanticipated expenses, including, but not limited to, an increase in the cost of refrigerants purchased by the Company, an increase in operating expenses or failure to achieve expected revenues from the Company’s RefrigerantSide(R) Services and/or refrigerant sales or additional expansion or acquisition costs that may arise in the future would adversely affect the Company’s future capital needs. There can be no assurance that the Company’s proposed or future plans will be successful, and as such, the Company may require additional capital sooner than anticipated, which capital may not be available on acceptable terms, or at all.

Scheduled maturities of the Company’s long-term debt and capital lease obligations are as follows:


Years ended June 30,	Amount
(in thousands)
-2024	$	4,250
-2025		4,250
-2026		4,250
-2027		19,738
Total	$	32,488

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

Certain statements, contained in this section and elsewhere in this Form 10-Q, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, changes in the laws and regulations affecting the industry, changes in the demand and price for refrigerants (including unfavorable market conditions adversely affecting the demand for, and the price of refrigerants), the Company’s ability to source refrigerants, regulatory and economic factors, seasonality, competition, litigation, the nature of supplier or customer arrangements that become available to the Company in the future, adverse weather conditions, possible technological obsolescence of existing products and services, possible reduction in the carrying value of long-lived assets, estimates of the useful life of its assets, potential environmental liability, customer concentration, the ability to obtain financing, the ability to meet financial covenants under our financing facilities, any delays or interruptions in bringing products and services to market, the timely availability of any requisite permits and authorizations from governmental entities and third parties as well as factors relating to doing business outside the United States, including changes in the laws, regulations, policies, and political, financial and economic conditions, including inflation, interest and currency exchange rates, of countries in which the Company may seek to conduct business, the Company’s ability to successfully integrate any assets it acquires from third parties into its operations, and other risks detailed in the Company’s Form 10-K for the year ended December 31, 2022, and in the Company’s other subsequent filings with the Securities and Exchange Commission (“SEC”). The words “believe”, “expect”, “anticipate”, “may”, “plan”, “should” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

Critical Accounting Estimates

The Company’s discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Several of the Company’s accounting policies involve significant judgments, uncertainties and estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. To the extent that actual results differ from management’s judgments and estimates, there could be a material adverse effect on the Company. On a continuous basis, the Company evaluates its estimates, including, but not limited to, those estimates related to its inventory reserves, and for the deferred tax assets and goodwill and intangible assets.

Inventory

For inventory, the Company evaluates both current and anticipated sales prices of its products to determine if a write down of inventory to net realizable value is necessary. Net realizable value represents the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion and disposal. The determination if a write-down to net realizable value is necessary is primarily affected by the market prices for the refrigerant gases we sell. Commodity prices generally are affected by a wide range of factors beyond our control, including weather, seasonality, the availability and adequacy of supply, government regulation and policies and general political and economic conditions. At any time, our inventory levels may be substantial and fluctuate, which will materially impact our estimates of net realizable value.

Goodwill

The Company has made acquisitions that included a significant amount of goodwill and other intangible assets. The Company applies the purchase method of accounting for acquisitions, which among other things, requires the recognition of goodwill (which represents the excess of the purchase price of the acquisition over the fair value of the net assets acquired and identified intangible assets). We test our goodwill for impairment on an annual basis (on the first day of the fourth quarter) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of an asset below its carrying value. Other intangible assets that meet certain criteria are amortized over their estimated useful lives.

An impairment charge is recorded based on the excess of a reporting unit’s carrying amount over its fair value. An impairment charge would be recognized when the carrying amount exceeds the estimated fair value of a reporting unit. These impairment evaluations use many assumptions and estimates in determining an impairment loss, including certain assumptions and estimates related to future earnings. If the Company does not achieve its earnings objectives, the assumptions and estimates underlying these

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impairment evaluations could be adversely affected, which could result in an asset impairment charge that would negatively impact operating results. During the fourth quarter of 2022, we completed our annual impairment test as of October 1 and determined in our qualitative assessment that it is more likely than not that the fair value of the reporting unit is greater than its carrying amount, resulting in no goodwill impairment. There can be no assurances that future sustained declines in macroeconomic or business conditions affecting our industry will not occur, which could result in goodwill impairment charges in future periods.

There were no goodwill impairment losses recognized in 2022 or the six months ended June 30, 2023.

Other Intangibles

Intangibles with determinable lives are amortized over the estimated useful lives of the assets currently ranging from 6 to 13 years. The Company reviews these useful lives annually to determine that they reflect future realizable value. As described above, due to increased profitability, we believe that these other intangibles are fairly stated.

Income Taxes

The Company is taxed at statutory corporate income tax rates after adjusting income reported for financial statement purposes for certain items. Current income tax expense (benefit) reflects the tax results of revenues and expenses currently taxable or deductible. The Company utilizes the asset and liability method of accounting for deferred income taxes, which provides for the recognition of deferred tax assets or liabilities, based on enacted tax rates and laws, for the differences between the financial and income tax reporting bases of assets and liabilities. The tax benefit associated with the Company’s net operating loss carry forwards (“NOLs”) is recognized to the extent that the Company expects to realize future taxable income.

As of June 30, 2023, the Company had no federal NOLs, as the Company utilized all of its remaining federal NOLs during the year ended December 31, 2022. As of June 30, 2023, the Company had state tax NOLs of approximately $1.8 million, expiring in various years. We review the likelihood that we will realize the benefit of our deferred tax assets on a quarterly basis.

The Company’s provision for income tax for the six months ended June 30, 2023, was $11.8 million. The effective tax rate for the six months ended June 30, 2023, was 25.4%.

The Company evaluates uncertain tax positions, if any, by determining if it is more likely than not to be sustained upon examination by the taxing authorities. As of June 30, 2023 and December 31, 2022, the Company believes it had no uncertain tax positions.

Overview

The Company is a leading provider of sustainable refrigerant products and services to the Heating Ventilation Air Conditioning and Refrigeration (“HVACR”) industry. For nearly three decades, we have demonstrated our commitment to our customers and the environment by becoming one of the United States’ largest refrigerant reclaimers through multimillion dollar investments in the plants and advanced separation technology required to recover a wide variety of refrigerants and restoring them to Air-Conditioning, Heating, and Refrigeration Institute (“AHRI”) standard for reuse as certified EMERALD Refrigerants™.

The Company’s products and services are primarily used in commercial air conditioning, industrial processing and refrigeration systems, and include refrigerant and industrial gas sales, refrigerant management services consisting primarily of reclamation of refrigerants and RefrigerantSide® Services performed at a customer’s site, which include system decontamination to remove moisture, oils and other contaminants.

Sales of refrigerants continue to represent a significant majority of the Company’s revenues.

The Company also sells industrial gases to a variety of industry customers, predominantly to users in, or involved with, the US Military. In July 2016, the Company was awarded, as prime contractor, a five-year fixed price contract, including a five-year renewal option which has been exercised, awarded to it by the United States Defense Logistics Agency (“DLA”) for the management and supply of refrigerants, compressed gases, cylinders and related items to US Military commands and installations, Federal civilian agencies and foreign militaries. Primary users include the US Army, Navy, Air Force, Marine Corps and Coast Guard. Our contract with DLA expires in July 2026.

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Results of Operations

Three-month period ended June 30, 2023 as compared to the three-month period ended June 30, 2022

Revenues for the three-month period ended June 30, 2023 were $90.5 million, a decrease of $13.4 million or 12.9% from the $103.9 million reported during the comparable 2022 period. The decrease was primarily attributable to lower selling prices of certain refrigerants sold.

Cost of sales for the three-month period ended June 30, 2023 was $53.8 million or 59% of sales. The cost of sales for the three-month period ended June 30, 2022 was $46.4 million or 45% of sales. The increase in the cost of sales percentage from 45% to 59% is primarily due to higher cost of sales during the second quarter of 2023 as the purchase price of certain refrigerants increased during 2022, and lower selling prices.

Selling, general and administrative (“SG&A”) expenses for the three-month period ended June 30, 2023 were $8.3 million, an increase of $1.3 million from the $7.0 million reported during the comparable 2022 period. The increase in SG&A was primarily due to increased headcount and stock compensation.

Amortization expense for both of the three-month periods ended June 30, 2023 and 2022 was $0.7 million.

Interest expense for the three-month period ended June 30, 2023 was $1.9 million, compared to the $2.6 million reported during the comparable 2022 period. Interest expense was lower during the second quarter of 2023 due to reduced debt resulting from the Company paying down approximately $68 million of debt between April 2022 and June 2023.

lower due to reduced debt resulting from the Company paying down principal on its term loan debt.

The income tax expense for the three-month period ended June 30, 2023 was $6.6 million compared to income tax expense of $7.4 million for the three month period ended June 30, 2022. The key drivers of increased income tax expense are the reversal of valuation allowance during 2022 on federal NOLs that were fully utilized and can no longer reduce taxable income. Income tax expense for federal and state income tax purposes was determined by applying statutory income tax rates to pre-tax income after adjusting for certain items.

The net income for the three-month period ended June 30, 2023 was $19.2 million, a decrease of $20.6 million from the $39.8 million of net income reported during the comparable 2022 period, primarily due to lower revenues and higher selling costs, as described above.

Six month period ended June 30, 2023 as compared to the six month period ended June 30, 2022

Revenues for the six month period ended June 30, 2023 were $167.7 million, a decrease of $20.6 million or 11% from the $188.3 million reported during the comparable 2022 period. The decrease was attributable to both lower selling prices and volume of certain refrigerants sold.

Cost of sales for the six-month period ended June 30, 2023 was $100.7 million or 60% of sales. The cost of sales for the six-month period ended June 30, 2022 was $85.0 million or 45% of sales. The increase in the cost of sales percentage from 45% to 60% is primarily due to higher cost of sales during the first half of 2023 as the purchase price of certain refrigerants increased during 2022, and also the decrease in selling prices.

Selling, general and administrative (“SG&A”) expenses for the six-month period ended June 30, 2023 were $15.3 million, an increase of $1.5 million from the $13.8 million reported during the comparable 2022 period. The increase in SG&A was primarily due to increased headcount and stock compensation.

Amortization expense for both six-month periods ended June 30, 2023 and 2022 was $1.4 million.

Interest expense for the six-month period ended June 30, 2023 was $3.7 million, compared to the $9.9 million reported during the comparable 2022 period. Interest expense was higher during the first half of 2022 due to the extinguishment of term loan debt, as described in “Liquidity and Capital Resources” below. In addition, interest expense was lower during the first half of 2023 due to reduced debt resulting from the Company paying down approximately $68 million of debt between April 2022 and June 2023.

The income tax expense for the six-month period ended June 30, 2023 was $11.8 million compared to income tax expense of $8.8 million for the six-month period ended June 30, 2022. The key drivers of increased income tax expense are the reversal of valuation

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allowance during 2022 on federal NOLs that were fully utilized and can no longer reduce taxable income. Income tax expense for federal and state income tax purposes was determined by applying statutory income tax rates to pre-tax income after adjusting for certain items.

Net income for the six-month period ended June 30, 2023 was $34.7 million, a decrease of $34.7 million from the $69.4 million of net income reported during the comparable 2022 period, primarily due to lower revenues and higher selling costs, as described above.

Liquidity and Capital Resources

At June 30, 2023, the Company had working capital, which represents current assets less current liabilities, of $151.7 million, an increase of $27.5 million from the working capital of $124.2 million at December 31, 2022. The increase in working capital is primarily attributable to continued profitability and the timing of borrowings, accounts receivable and inventory.

Inventories and trade receivables are principal components of current assets. At June 30, 2023, the Company had inventories of $134.4 million, a decrease of $11.0 million from $145.4 million at December 31, 2022. The Company’s ability to sell and replace its inventory on a timely basis and the prices at which it can be sold are subject, among other things, to current market conditions and the nature of supplier or customer arrangements and the Company’s ability to source CFC and HCFC based refrigerants (which are no longer being produced) and HFC refrigerants (virgin production currently in the process of being phased down) and HFO refrigerants.

At June 30, 2023, the Company had trade receivables, net of allowance for doubtful accounts, of $49.1 million, an increase of $28.2 million from $20.9 million at December 31, 2022, mainly due to increased sales. The Company’s trade receivables are concentrated with various wholesalers, brokers, contractors and end-users within the refrigeration industry that are primarily located in the continental United States. The Company has historically financed its working capital requirements through cash flows from operations, the issuance of debt and equity securities, and bank borrowings.

Net cash provided by operating activities for the six-month period ended June 30, 2023 was $21.2 million, when compared to net cash provided by operating activities of $33.9 million for the comparable 2022 period. As discussed above, selling prices of certain refrigerants declined in 2023. Another contributory factor was the timing of accounts receivable and inventory balances.

Net cash used in investing activities for the six-month period ended June 30, 2023 was $0.8 million compared with net cash used in investing activities of $0.8 million for the comparable 2022 period.

Net cash used in financing activities for the six-month period ended June 30, 2023 was $14.3 million compared with net cash used in financing activities of $15.9 million for the comparable 2022 period. The Company refinanced its term loan debt during the first quarter of 2022, as described below, and also paid down a significant portion of its term loan during 2022 and 2023.

At June 30, 2023, cash and cash equivalents were $11.4 million, or approximately $6.1 million higher than the $5.3 million of cash and cash equivalents at December 31, 2022.

Revolving Credit ~~Line Prior to Acquisition of ARI~~

Facility

On ~~June 22, 2012,~~March 2, 2022, Hudson Technologies Company (“HTC”) and Hudson Holdings, Inc. (“Holdings”), as borrowers (collectively, the “Borrowers”), and Hudson Technologies, Inc. (the “Company”) as a ~~subsidiary of Hudson~~guarantor, entered into ~~a Revolving~~an Amended and Restated Credit ~~Term Loan and Security~~ Agreement (the “Amended Wells Fargo Facility”) with ~~PNC~~Wells Fargo Bank, National Association, as administrative agent and lender (“Agent” or ~~“PNC”~~“Wells Fargo”), and such other lenders as have or may thereafter become a party to the ~~PNC~~Amended Wells Fargo Facility. The ~~Maximum Loan Amount (as defined in~~Amended Wells Fargo facility amended and restated the ~~PNC Facility) at September 30, 2017 was $50,000,000, and the Maximum Revolving Advance Amount (as defined in the PNC Facility) was $46,000,000. In~~prior Wells Fargo Facility entered into on December 2016, the Company repaid all of its debt under the PNC Facility, with approximately $50 million of availability under the revolving line of credit at September 30, 2017. In addition, there is a $130,000 outstanding letter of credit under the PNC Facility at September 30, 2017. The Termination Date of the Facility (as defined in the PNC Facility) was June 30, 2020.

19, 2019.

Under the terms of the ~~original PNC~~Amended Wells Fargo Facility, ~~as amended by~~ the ~~First Amendment to the PNC Facility, dated February 15, 2013, Hudson could initially~~Borrowers may borrow up to $90 million consisting of: (i) $15 million immediately borrowed in the form of a ~~maximum of $40,000,000~~“first in last out” term loan (the “FILO Tranche”) and (ii) from time to time, up to $75 million at any time consisting of ~~a term loan in the principal amount of $4,000,000 and~~ revolving loans (the “Revolving Loans”) in a maximum amount up to ~~$36,000,000.~~ the lesser of $75 million and a borrowing base that is calculated based on the outstanding amount of the Borrowers’ eligible receivables and eligible inventory, as described in the Amended Wells Fargo Facility. The Amended Wells Fargo Facility also contains a sublimit of $9 million for swing line loans and $2 million for letters of credit. The Company currently has a $0.9 million letter of credit outstanding.

Amounts borrowed under the ~~PNC~~Amended Wells Fargo Facility ~~could~~may be used ~~by Hudson~~ for working capital needs, certain permitted acquisitions, and to reimburse drawings under letters of credit.

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Interest ~~on loans~~ under the ~~PNC~~Amended Wells Fargo Facility ~~was~~is payable in arrears on the first day of each month with respect to loans bearing interest at the domestic rate (as set forth in the PNC Facility) and at the end of each interest period with respect to loans bearing interest at the Eurodollar Rate (as defined in the PNC Facility) or, for Eurodollar Rate Loans (as defined in the PNC Facility) with an interest period in excess of three months, at the earlier of (a) each three months from the commencement of such Eurodollar Rate Loan or (b) the end of the interest period.month. Interest charges with respect to ~~loans were~~Revolving Loans are computed on the actual principal amount of ~~loans~~Revolving Loans outstanding ~~during the month~~ at a rate per annum equal to (A) with respect to ~~Domestic~~Base Rate ~~Loans (as defined in the PNC Facility),~~loans, the sum of (i) a rate per annum equal to the ~~Alternate Base Rate (as defined in~~higher of (1) 1.0%, (2) the ~~PNC Facility)~~federal funds rate plus 0.5%, (3) one ~~half~~month term SOFR plus 1.0%, and (4) the prime commercial lending rate of ~~one percent (.50%)~~Wells Fargo, plus (ii) between 1.25% and 1.75% depending on average monthly undrawn availability and (B) with respect to ~~Eurodollar Rate Loans,~~SOFR loans, the sum of the ~~Eurodollar~~applicable SOFR rate plus between 2.36% and 2.86% depending on average quarterly undrawn availability. Interest charges with respect to the FILO Tranche are computed on the actual principal amount of FILO Tranche loans outstanding at a rate per annum equal to (A) with respect to Base Rate FILO Tranche loans, the sum of (i) a rate per annum equal to the higher of (1) 1.0%, (2) the federal funds rate plus ~~two~~0.5%, (3) one month term SOFR plus 1.0%, and ~~one quarter~~(4) the prime commercial lending rate of ~~one percent (2.25%).~~

~~Hudson granted~~Wells Fargo, plus (ii) 6.5% and (B) with respect to ~~PNC, for itself, and as agent for such other lenders as~~SOFR FILO Tranche loans, the sum of the applicable SOFR rate plus 7.50%. The Amended Wells Fargo Facility also includes a monthly unused line fee ranging from 0.35% to 0.75% per annum determined based upon the level of average Revolving Loans outstanding during the immediately preceding month measured against the total Revolving Loans that may ~~thereafter become a lender~~be borrowed under the ~~PNC~~Amended Wells Fargo Facility.

In connection with the closing of the Amended Wells Fargo Facility, the Company also entered into a First Amendment to Guaranty and Security Agreement, dated as of March 2, 2022 (the “Amended Revolver Guaranty and Security Agreement”), pursuant to which the Company and certain subsidiaries are continuing to unconditionally guarantee the payment and performance of all obligations owing by Borrowers to Wells Fargo, as Agent for the benefit of the revolving lenders. Pursuant to the Amended Revolver Guaranty and Security Agreement, Borrowers, the Company and certain other subsidiaries are continuing to grant to the Agent, for the benefit of the Wells Fargo Facility lenders, a security interest in ~~Hudson’s~~substantially all of their respective assets, including receivables, ~~intellectual property,~~equipment, general intangibles (including intellectual property), inventory, subsidiary stock, real property, and certain other assets.

The Amended Wells Fargo Facility contains a financial covenant requiring the Company to maintain at all times minimum liquidity (defined as availability under the Amended Wells Fargo Facility plus unrestricted cash) of at least $5 million, of which at least $3 million must be derived from availability. The Amended Wells Fargo Facility also contains a springing covenant, which takes effect only upon a failure to maintain undrawn availability of at least $11.25 million or upon an election by the Borrowers to increase the inventory component of the borrowing base, requiring the Company to maintain a Fixed Charge Coverage Ratio (FCCR) of not less than 1.00 to 1.00, as of the end of each trailing period of twelve consecutive months commencing with the month prior to the triggering of the covenant. The FCCR (as defined in the Wells Fargo Facility) is the ratio of (a) EBITDA for such period, minus unfinanced capital expenditures made during such period, to (b) the aggregate amount of (i) interest expense required to be paid (other than interest paid-in-kind, amortization of financing fees, and other non-cash interest expense) during such period, (ii) scheduled principal payments (but excluding principal payments relating to outstanding Revolving Loans under the Amended Wells Fargo Facility), (iii) all net federal, state, and local income taxes required to be paid during such period (provided, that any tax refunds received shall be applied to the period in which the cash outlay for such taxes was made), (iv) all restricted payments paid (as defined in the Amended Wells Fargo Facility) during such period, and (v) to the extent not otherwise deducted from EBITDA for such period, all payments required to be made during such period in respect of any funding deficiency or funding shortfall with respect to any pension plan. The FCCR covenant ceases after the Borrowers have been in compliance therewith for two consecutive months.

The ~~PNC~~Amended Wells Fargo Facility ~~contained certain financial and~~also contains customary non-financial covenants relating to ~~Hudson,~~the Company and the Borrowers, including limitations on ~~Hudson’s~~the Borrowers’ ability to pay dividends on common stock or preferred stock, and also ~~included~~includes certain events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations, events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts, impairments to guarantees and a change of control.

The ~~PNC~~Company evaluated the Amended Wells Fargo Facility ~~contained~~in accordance with the provisions of ASC 470-50 to determine if the amendment was a ~~financial covenant~~modification or an extinguishment of debt and concluded that the amendment was a modification of the original revolving credit facility for accounting purposes. As a result, the Company capitalized an additional $0.9 million of deferred financing costs in connection with the amendment, which, along with the $0.2 million of remaining deferred financing costs of the original revolving facility, is being amortized over the five year term of the Amended Wells Fargo Facility.

The commitments under the Amended Wells Fargo Facility will expire and the full outstanding principal amount of the loans, together with accrued and unpaid interest, are due and payable in full on March 2, 2027, unless the commitments are terminated and the outstanding principal amount of the loans are accelerated sooner following an event of default or in the event of certain other cross-defaults.

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2022 Term Loan Facility

On March 2, 2022, Hudson Technologies Company (“HTC”), an indirect subsidiary of Hudson Technologies, Inc. (the “Company”), and the Company’s subsidiary Hudson Holdings, Inc., as borrowers (collectively, the “Borrowers”), and the Company, as guarantor, became obligated under a Credit Agreement (the “Term Loan Facility”) with TCW Asset Management Company LLC, as administrative agent (“Term Loan Agent”) and the lender parties thereto (the “Term Loan Lenders”).

Under the terms of the Term Loan Facility, the Borrowers immediately borrowed $85 million pursuant to ~~maintain at all times~~ a ~~Fixed Charge Coverage Ratio~~term loan (the “Term Loan”). Amounts borrowed under the Term Loan Facility were used by the Borrowers to repay the outstanding principal amount and related fees and expenses under the Prior Term Loan Facility (as defined below) and for other corporate purposes. The Company paid approximately $4.3 million of ~~not less than 1.10 to 1.00, tested quarterly~~term loan deferred financing costs.

The Term Loan matures on March 2, 2027, or earlier upon certain acceleration or cross default events. Principal payments on the Term Loan are required on a ~~rolling twelve-month basis. Fixed Charge Coverage Ratio was defined~~quarterly basis, commencing with the quarter ended March 31, 2022, in the ~~PNC~~amount of 5% of the original principal amount of the outstanding Term Loan per annum. The Term Loan Facility ~~with respect to any fiscal period, as the ratio~~also requires annual payments of ~~(a) EBITDA~~50% of ~~Hudson for such period, minus unfinanced capital expenditures~~Excess Cash Flow (as defined in the ~~PNC~~Term Loan Facility) ~~made by Hudson during~~; provided that commencing with the year ending December 31, 2023 such period, minus the aggregate amount of cash taxes paid by Hudson during such period, minus the aggregate amount of dividends and distributions made by Hudson during such period, minus the aggregate amount of payments ~~made with cash by Hudson to satisfy soil sampling and reclamation related to environmental cleanup at~~may be reduced depending upon the Company’s former Hillburn, NY facility during such period (to the extent not already included in the calculation of EBITDA as determined by the Agent) to (b) the aggregate amount of all principal payments due and/or made, except principal payments related to outstanding revolving advances with regard to all funded debtleverage ratio (as defined in the ~~PNC~~Term Loan Facility) for the applicable year. The Term Loan Facility also requires mandatory prepayments of ~~Hudson during such period, plus~~ the ~~aggregate interest expense of Hudson during such period. EBITDA as defined~~Term Loan in the ~~PNC Facility meant for any period~~event of certain asset dispositions, debt issuances, and other events. The Term Loan may be prepaid at the ~~sum~~option of ~~(i) earnings before interest~~the Borrowers subject to a prepayment premium of 3% in year one, 2% in year two, 1% in year three, and ~~taxes for such period plus (ii) depreciation expenses for such period, plus (iii) amortization expenses for such period, plus (iv) non-cash charges.~~zero in year four and thereafter.

~~On July 1, 2015,~~Interest on the ~~Company entered into an amendment~~Term Loan is generally payable monthly, in arrears. Interest charges with respect to the ~~PNC Facility (the “2015 PNC Amendment”). The 2015 PNC Amendment redefined~~Term Loan are computed on the ~~“Revolving Interest Rate” as well as~~actual principal amount of the ~~“Term~~Term Loan ~~Rate” (as defined in the PNC Facility) as follows:~~

~~“Revolving Interest Rate” shall mean an interest~~outstanding at a rate per annum equal to ~~(a)~~(A) with respect to Base Rate loans, the sum of the Alternate Base Rate (as defined in the PNC Facility) plus one half of one percent (.50%) with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and one quarter of one percent (2.25%) with respect to the Eurodollar Rate Loans.

~~“Term Loan Rate” shall mean an interest~~(i) a rate per annum equal to ~~(a)~~the higher of (1) 2.0%, (2) the federal funds rate plus 0.5%, (3) one month term SOFR plus 1.0%, and (4) the prime commercial lending rate quoted by The Wall Street Journal, plus (ii) between 6.0% and 7.0% depending on the applicable leverage ratio and (B) with respect to SOFR loans, the sum of the ~~Alternate Base Rate~~applicable SOFR rate plus ~~one half of one percent (.50%) with respect~~between 7.0% and 8.0% depending on the applicable leverage ratio.

Borrowers and the Company granted to the ~~Domestic Rate Loans and (b)~~Term Loan Agent, for the ~~sum~~benefit of the ~~Eurodollar Rate plus two~~Term Loan Lenders, a security interest in substantially all of their respective assets, including receivables, equipment, general intangibles (including intellectual property), inventory, subsidiary stock, real property, and ~~one~~certain other assets.

The Term Loan Facility contains a fixed charge coverage ratio covenant and a leverage ratio covenant, each tested quarterly. The fixed charge coverage ratio (“FCCR”) covenant requires compliance with specified levels of (i) EBITDA minus unfunded capital expenditures to (ii) interest expense, scheduled principal payments, and other specified payments, in each case as specified in the Term Loan Facility, for a trailing four quarter period. For the period ended June 30, 2023, the FCCR was 3.13 to 1.0 against a requirement of ~~one percent (2.25%~~at least 1.10 to 1.0. The leverage ratio (“LR”) ~~with respect~~covenant is tested as of the last day of each fiscal quarter. The LR is the ratio of (i) funded debt as of such date minus the lesser of $15,000,000 or the Company’s unrestricted cash to ~~Eurodollar Rate Loans.~~

~~On April 8, 2016,~~(b) trailing twelve-month EBITDA, in each case as specified in the Term Loan Facility. As of June 30, 2023, the LR was approximately 0.32 to 1.0, compared to the maximum of 4.00 to 1.0. The Term Loan Facility also contains customary non-financial covenants relating to the Company and the Borrowers, including limitations on Borrowers’ ability to pay dividends on common stock or preferred stock, and also includes certain events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations, events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts, impairments to guarantees and a change of control.

In connection with the closing of the Term Loan Facility, the Company also entered into a Guaranty and Security Agreement, dated as of March 2, 2022 (the “Term Loan Guarantee”), pursuant to which the Company affirmed its unconditional guarantee of the payment and performance of all obligations owing by Borrowers to Term Loan Agent, as agent for the benefit of the Term Loan Lenders.

The Term Loan Agent and the Agent have entered into an ~~amendment to~~intercreditor agreement governing the ~~PNC Facility (the “2016 PNC Amendment”). Pursuant to~~relative priority of their security interests granted by the ~~2016 PNC Amendment,~~Borrowers and the ~~Maximum Loan Amount (as defined~~Guarantor in the ~~PNC Facility) increased from $40,000,000 to $50,000,000,~~collateral, providing that the Agent shall have a first priority security interest in the accounts receivable, inventory, deposit accounts and certain other assets (the “Revolving Credit Priority Collateral”) and the ~~Maximum Revolving Advance Amount (as defined~~Term Loan Agent shall have a first priority security interest in the ~~PNC Facility)~~equipment, real property, capital stock of subsidiaries and certain other assets (the “Term Loan Priority Collateral”).

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Termination of Prior Term Loan Facility

In conjunction with entry into the new Term Loan Facility as described above, on March 2, 2022 the Company’s then-existing term loans, as amended (the “Prior Term Loan Facility”), which had a principal balance of approximately $63.9 million after payment of a $16.0 million excess cash flow amount thereunder, were repaid in full, together with associated required lender fees and expenses of $3.3 million, and the Prior Term Loan Facility was ~~increased from $36,000,000 to $46,000,000. Additionally, pursuant to the 2016 PNC Amendment the Termination Date~~terminated. The termination of the Prior Term Loan Facility ~~(as defined~~constituted an extinguishment of debt, which resulted in the ~~PNC Facility) was extended to June 30, 2020.~~

Company recording an additional $4.6 million of interest expense during the first quarter of 2022, which included the aforementioned $3.3 million of prior lender fees and expenses and $1.3 million of pre-existing deferred financing costs from the Prior Term Loan Facility.

The Company was in compliance with all covenants, under the ~~PNC~~Amended Wells Fargo Facility and the Term Loan Facility, as of ~~September~~June 30, ~~2017.~~

2023.

The Company’s ability to comply with these covenants in future quarters may be affected by events beyond the Company’s control, including general economic conditions, weather conditions, regulations and refrigerant pricing. ~~Although we expect to remain in compliance with all covenants in the PNC Facility, as amended, depending on our future operating performance and general economic conditions,~~Therefore, we cannot make any assurance that we will continue to be in ~~compliance.~~compliance during future periods.

~~December 2016 Public Offering~~

~~On December 8, 2016~~The Company believes that it will be able to satisfy its working capital requirements for the ~~Company entered into~~foreseeable future from anticipated cash flows from operations and available funds under the Amended Wells Fargo Facility. Any unanticipated expenses, including, but not limited to, an ~~Underwriting Agreement with two investment banking firms for themselves and as representatives for two other investment banking firms (collectively,~~increase in the ~~“Underwriters”), in connection with an underwritten offering (the “Offering”)~~cost of 6,428,571 shares of the Company’s common stock, par value $0.01 per share (the “Firm Shares”). Pursuant to the Underwriting Agreement, the Company agreed to sell to the Underwriters, and the Underwriters agreed to purchase fromrefrigerants purchased by the Company, an ~~aggregate of 6,428,571 shares of common stock and also granted~~increase in operating expenses or failure to achieve expected revenues from the ~~Underwriters a 30 day option to purchase up to 964,285~~Company’s RefrigerantSide® Services and/or refrigerant sales or additional ~~shares of its common stock to cover over-allotments, if any. The Company also agreed to reimburse certain expenses incurred by the Underwriters~~expansion or acquisition costs that may arise in the ~~Offering.~~

~~The closing of~~future would adversely affect the ~~Offering was held on December 14, 2016, at which time~~Company’s future capital needs. There can be no assurance that the Company’s proposed or future plans will be successful, and as such, the Company ~~sold 7,392,856 shares of its common stock to the Underwriters (including 964,285 shares to cover over-allotments)~~may require additional capital sooner than anticipated, which capital may not be available on acceptable terms, or at a price to the public of $7.00 per share, less underwriting discounts and commissions, and received gross proceeds of $51.7 million. The Company incurred approximately $3.3 million of transaction fees in connection with the Offering, resulting in net proceeds of $48.4 million.

~~Inflation~~all.

Inflation

Inflation, historically or the recent rise, has not ~~historically~~ had a material impact on the ~~Company's~~Company’s operations.

Reliance on Suppliers and Customers

The Company participates in an industry that is highly regulated, and changes in the regulations affecting our business could affect our operating results. Currently the Company purchases virgin HCFC and HFC refrigerants and reclaimable, primarily HCFC and CFC, refrigerants from suppliers and its customers. Under the Clean Air Act the phase-down of future production of certain virgin HCFC refrigerants commenced in 2010 and ~~is scheduled to be~~has been fully phased out by the year 2020, and production of all virgin HCFC refrigerants is scheduled to be phased out by the year 2030. To the extent that the Company is unable to source sufficient quantities of refrigerants or is unable to obtain refrigerants on commercially reasonable terms or experiences a decline in demand and/or price for refrigerants sold by it, the Company could realize reductions in revenue from refrigerant sales, which could have a material adverse effect on the Company’s operating results and financial position.

Seasonality and Weather Conditions and Fluctuations in Operating Results

The ~~Company's~~Company’s operating results vary from period to period as a result of weather conditions, requirements of potential customers, non-recurring refrigerant and service sales, availability and price of refrigerant products (virgin or reclaimable), changes in reclamation technology and regulations, timing in introduction and/or retrofit or replacement of refrigeration equipment, the rate of expansion of the ~~Company's~~Company’s operations, and by other factors. The ~~Company's~~Company’s business is seasonal in nature with peak sales of refrigerants occurring in the first ~~half~~nine months of each year. During past years, the seasonal decrease in sales of refrigerants has resulted in losses particularly in the fourth quarter of the year. In addition, to the extent that there is unseasonably cool weather throughout the spring and summer months, which would adversely affect the demand for refrigerants, there would be a corresponding negative impact on the Company. Delays or inability in securing adequate supplies of refrigerants at peak demand periods, lack of refrigerant demand, increased expenses, declining refrigerant prices and a loss of a principal customer could result in significant losses. There can be no assurance that the foregoing factors will not occur and result in a material adverse effect on

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the ~~Company's~~Company’s financial position and significant losses. The Company believes that to a lesser extent there is a similar seasonal element to RefrigerantSide® Service revenues as refrigerant sales.

Recent Accounting Pronouncements

In August 2016, the FASB issued ASU No. 2016-15, "Classification of Certain Cash Receipts and Cash Payments." This ASU addresses eight specific cash flow issues with the objective of eliminating the existing diversity in practice. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017, and for interim periods therein, with early adoption permitted. We elected to early adopt ASU 2016-15 as of December 31, 2016, and the adoption did not have a material impact on the presentation of the statement of cash flows.

2022, with early adoption permitted. The Company expects to apply the modified retrospective method. As described further in Note 9, the Company acquired ARI in October 2017, and accordingly, the Company is in the process of assessing the revenue practices of the acquired business. Basedadopted ASU 2020-06 on ~~the evaluation performed to date, and excluding ARI, the Company does not expect the impact relating to the~~January 1, 2023. The adoption of ~~this standard to be~~ASU 2022-06 did not have a material ~~to the~~impact on our financial statements. It will result in expanded disclosure, including, related to the Company’s revenue streams, identification of performance obligations and significant judgments made to apply the new standard. However, the Company has not finalized its assessment at this time.

Item 3 - Quantitative and Qualitative Disclosures ~~About~~about Market Risk

Interest Rate Sensitivity

We are exposed to market risk from fluctuations in interest rates on the ~~PNC~~Amended Wells Fargo Facility and on the Term Loan Facility. The ~~PNC~~Amended Wells Fargo Facility is a ~~$50,000,000~~$90,000,000 secured ~~facility. Interest on loans under the PNC Facility is payable in arrears on the first day of each month~~facility with respect to loans bearing interest at the domestic rate (as set forth in the PNC Facility) and at the end of each interest period with respect to loans bearing interest at the Eurodollar rate (as set forth in the PNC Facility) or, for Eurodollar rate loans with an interest period in excess of three months, at the earlier of (a) each three months from the commencement of such Eurodollar rate loan or (b) the end of the interest period. Asa $15,000,000 outstanding balance as of June 30, ~~2017, interest charges with respect to loans are computed on the actual principal amount~~2023. The Term Loan Facility has a balance of loans outstanding during the month at a rate per annum equal to (A) with respect to Domestic Rate Loans (as defined in the PNC Facility), the sum of the Alternate Base Rate (as defined in the PNC Facility) plus one half of one percent (.50%) and (B) with respect to Eurodollar Rate Loans, the sum of the Eurodollar Rate plus two and one quarter of one percent (2.25%). The outstanding balance on the PNC Facility$17,488,000 as of ~~September~~June 30, ~~2017 was $0.~~2023. Future interest rate changes on our borrowing under the ~~PNC~~Term Loan Facility and the ~~new term Loan~~Amended Wells Fargo Facility may have an impact on our consolidated results of operations.

If the loan bearing interest rate changed by 1%, the annual effect on interest expense would be approximately $0.3 million as of June 30, 2023.

Refrigerant Market

We are also exposed to market risk from fluctuations in the demand, price and availability of refrigerants. To the extent that the Company is unable to source sufficient quantities of refrigerants or is unable to obtain refrigerants on commercially reasonable terms or experiences a decline in demand and/or price for refrigerants sold by the Company, the Company could realize reductions in revenue from refrigerant sales or write-downs of inventory, ~~write-downs,~~ which could have a material adverse effect on our consolidated results of operations.

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Item 4 - Controls and Procedures

Disclosure Controls and Procedures

The Company, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Because of the inherent limitations in all control systems, any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Furthermore, the Company’s controls and procedures can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control and misstatements due to error or fraud may occur and not be detected on a timely basis.

Changes in Internal Control over Financial Reporting

~~There were no changes in~~As required by Rule 13a-15(d) of the ~~Company’s~~Exchange Act, our management, including our principal executive officer and our principal financial officer, conducted an evaluation of the internal control over financial reporting ~~(as defined in Rule 13a-15(f) of the Exchange Act)~~to determine whether any changes occurred during the quarter ended ~~September~~June 30, ~~2017~~2023 that have materially affected, or are reasonably likely to materially affect, ~~the Company’s~~our internal control over financial reporting. Based on that evaluation, our principal executive officer and principal financial officer concluded there were no such changes.

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PART II – OTHER INFORMATION

Item ~~1 - Legal Proceedings~~1A – Risk Factors

~~For information regarding pending legal matters,~~Please refer to the ~~Legal Proceedings Section~~Risk Factors in Part I, Item 31A of the Company’s Form 10-K for the year ended December 31, ~~2016.~~2022. There have been no material changes to such matters during the quarter ended ~~September~~June 30, ~~2017.~~2023.

Item 5 – Other Information

No director of officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement and/or a non-rule 10b5-1 trading arrangement (as such terms are defined in Item 408(a) of Regulation S-K) during the quarter ended June 30, 2023.

Item 6 - Exhibits
~~Exhibit~~
~~Number~~
~~Description~~
Exhibit
Number
Description
~~31.1~~

31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
~~31.2~~

31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
~~32.1~~

32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
~~32.2~~

32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
~~101~~

101
Interactive Data Files Pursuant to Rule 405 of Regulation S-T

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Table of Contents

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 thereunto duly authorized.

HUDSON TECHNOLOGIES, INC.

By:
/s/ ~~Kevin J. Zugibe~~Brian F. Coleman
~~November 9, 2017~~
August 8, 2023
~~Kevin J. Zugibe~~
Brian F. Coleman
Date
Chairman of the Board, President and
Chief Executive Officer

~~By:~~
By:
/s/ Nat Krishnamurti
~~November 9, 2017~~
August 8, 2023
Nat Krishnamurti
Date
Chief Financial Officer

~~1 Blue Hill Plaza~~ 300 Tice Boulevard
~~P.O. Box 1541~~ ~~Pearl River,~~ Suite 290 Woodcliff Lake, New ~~York~~ Jersey (Address of principal executive offices)	~~10965~~ 07677 (Zip ~~Code~~)Code)

Registrant’s telephone number, including area code		~~(845)~~ (845) 735-6000


Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered

Common stock, $0.01 par value	HDSN	NASDAQ Capital Market


Large accelerated filer	¨ ☐	Accelerated filer	x ☒
	Non-accelerated filer ~~(do not check if a smaller reporting company)~~	¨ ☐	Smaller reporting company	☐
		Emerging growth company	¨ ¨☐

Common stock, $0.01 par value		~~42,039,452~~ 45,395,085 shares
Class		Outstanding at ~~November 7, 2017~~August 8, 2023

Part	Item			Page

Part I.	Financial Information			3

	Item 1	- Financial Statements(unaudited)		3
		- Consolidated Balance Sheets		3
		- Consolidated Statements of Income ~~Statements~~		4
		- Consolidated Statements of Stockholders’ Equity		5
		- Consolidated Statements of Cash Flows		5 6
		- Notes to the Consolidated Financial Statements		6 7
	Item 2	- Management’s Discussion and Analysis of Financial Condition and Results of Operations		18 21
	Item 3	- Quantitative and Qualitative Disclosures About Market Risk		26 28
	Item 4	- Controls and Procedures		26 29

Part II.	Other Information			30

	Item 11A	- ~~Legal Proceedings~~Risk Factors		27 30
	Item 65	~~- Exhibits~~-Other Information		27 30
	Item 6	- Exhibits		30
	~~Signatures~~		28
	Signatures			31

	September 30,		December 31,
	2017		2016
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	43,994	$	33,931
Trade accounts receivable – net		13,948		4,797
Inventories		63,810		68,601
Prepaid expenses and other current assets		6,555		847
Total current assets		128,307		108,176

Property, plant and equipment, less accumulated depreciation		7,069		7,532
Deferred tax asset		1,874		2,532
Intangible assets, less accumulated amortization		2,935		3,299
Goodwill		856		856
Other assets		88		75
Total Assets	$	141,129	$	122,470

Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable	$	8,528	$	5,110
Accrued expenses and other current liabilities		2,589		2,888
Accrued payroll		824		1,782
Income taxes payable		1,115		322
Short-term debt and current maturities of long-term debt		97		199
Total current liabilities		13,153		10,301
Long-term debt, less current maturities		83		152
Total Liabilities		13,236		10,453

Commitments and contingencies

Stockholders' equity:
Preferred stock, shares authorized 5,000,000: Series A Convertible preferred stock, $0.01 par value ($100 liquidation preference value); shares authorized 150,000; none issued or outstanding		-		-
Common stock, $0.01 par value; shares authorized 100,000,000; issued and outstanding 42,039,452 and 41,465,820		420		415
Additional paid-in capital		113,540		114,032
Retained earnings (accumulated deficit)		13,933		(2,430	)
Total Stockholders' Equity		127,893		112,017

Total Liabilities and Stockholders' Equity	$	141,129	$	122,470

(in thousands, unaudited)	Total Deferred Acquisition Cost Payable (1)
Balance at December 31, 2016	$	789
Payments		(789	)
Balance at September 30, 2017		-

(in thousands)	As of December 31, 2016				Fair Value Measurements
	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Liabilities:
Deferred acquisition cost	$	789	$	789		-		-	$	789

			September 30, 2017 (Unaudited)						December 31, 2016 (Audited)
(in thousands)	Amortization		Gross						Gross
	Period		Carrying		Accumulated				Carrying		Accumulated
	(in years)		Amount		Amortization		Net		Amount		Amortization		Net
Intangible Assets with determinable lives
Patents		5	$	386	$	372	$	14	$	386	$	366	$	20
Covenant Not to Compete		6 – 10		1,270		437		833		1,270		322		948
Customer Relationships		3 – 10		2,000		620		1,380		2,000		452		1,548
Trade Name		2		30		30		-		30		30		-
Licenses		10		1,000		292		708		1,000		217		783
Totals identifiable intangible assets			$	4,686	$	1,751	$	2,935	$	4,686	$	1,387	$	3,299

Stock Option Plan Totals	Shares			Weighted Average Exercise Price
Outstanding at December 31, 2015		2,633,589		$	2.06
-Exercised		(589,725	)	$	2.43
-Granted		1,170,534		$	3.95
Outstanding at December 31, 2016		3,214,398		$	2.68
-Exercised		(984,861	)	$	3.07
Outstanding at September 30, 2017, (unaudited)		2,229,537		$	2.50

			Weighted Average Remaining	Weighted Average
	Number of Options		Contractual Life	Exercise Price
Options outstanding and vested		2,229,537	1.7 years	$	2.50

	Nine Months Ended September 30,
(unaudited, in thousands)	2017		2016
Revenues	$	228,148	$	205,228
Net income	$	26,317	$	15,317
Net income per share
Basic	$	0.63	$	0.46
Diluted	$	0.61	$	0.45

	Twelve Months Ending September 30,
	2018		2019		2020		2021		2022		Thereafter		Total
Long and short term debt and capital lease obligations:

Principal	$	97	$	65	$	13	$	5		-		-	$	180
Estimated interest (1)		7		2		-		-		-		-		9
Operating leases		1,477		802		637		511		239		-		3,666

Total contractual cash obligations	$	1,581	$	869	$	650	$	516	$	239	$	-	$	3,855

~~Exhibit~~ ~~Number~~		~~Description~~
Exhibit Number		Description
~~31.1~~
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
~~31.2~~
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
~~32.1~~
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
~~32.2~~
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
~~101~~
101		Interactive Data Files Pursuant to Rule 405 of Regulation S-T

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


	HUDSON TECHNOLOGIES, INC.

By:	/s/ ~~Kevin J. Zugibe~~Brian F. Coleman	~~November 9, 2017~~ August 8, 2023
	~~Kevin J. Zugibe~~ Brian F. Coleman	Date
	Chairman of the Board, President and
	Chief Executive Officer

~~By:~~
By:	/s/ Nat Krishnamurti	~~November 9, 2017~~ August 8, 2023
	Nat Krishnamurti	Date
	Chief Financial Officer