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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the period ended April 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 0-13667
 
 PDG Environmental, Inc.
  
 Delaware
    
    22-2677298(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 1386 Beulah Road, Building 801Pittsburgh, Pennsylvania
    
    15235(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code 412) 243-3200
 
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
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PDG Environmental, Inc. and Subsidiaries
 INDEX
 PagePart I. Financial InformationItem 1. Consolidated Financial Statements and Notes to Consolidated Financial Statements(a) Condensed Consolidated Balance Sheets as of April 30, 2009 (unaudited) and
January 31, 2009
    
    
    3(b) Consolidated Statements of Operations for the Three Months Ended April 30,
2009 and 2008 (unaudited)
    
    
    4(c) Consolidated Statements of Cash Flows for the Three Months Ended April 30,
2009 and 2008 (unaudited)
    
    
    5(d) Notes to Consolidated Financial Statements (unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    16Item 4. Controls and Procedures
    
    
    16Part II. Other InformationItem 1. Legal Proceedings
    
    
    17Item 6. Exhibits
    
    
    17Signatures
    
    
    18Exhibit Index
    
    
    19EX-31.1EX-31.2EX-32
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PART I  FINANCIAL INFORMATION
 
 ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 PDG ENVIRONMENTAL, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 April 30,
    
    
    January 31,2009
    
    
    2009(unaudited)ASSETSCurrent AssetsCash and Cash Equivalents
    
    $
    30,000
    
    
    $
    314,000Contracts Receivable, Net
    
    
    14,892,000
    
    
    
    20,677,000Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts
    
    
    2,209,000
    
    
    
    3,180,000Inventories
    
    
    634,000
    
    
    
    616,000Income Taxes Receivable
    
    
    3,000
    
    
    
    355,000Deferred Income Tax Asset
    
    
    983,000
    
    
    
    983,000Other Current Assets
    
    
    2,119,000
    
    
    
    344,000Total Current Assets
    
    
    20,870,000
    
    
    
    26,469,000Property, Plant and Equipment
    
    
    12,420,000
    
    
    
    12,431,000Less: Accumulated Depreciation
    
    
    (10,990,000
    )
    
    
    (10,786,000
    )1,430,000
    
    
    
    1,645,000Intangible Assets, Net
    
    
    3,824,000
    
    
    
    4,026,000Goodwill
    
    
    2,489,000
    
    
    
    2,489,000Deferred Income Tax Asset
    
    
    2,948,000
    
    
    
    2,948,000Contracts Receivable, Non Current
    
    
    1,820,000
    
    
    
    1,820,000Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts, Non Current
    
    
    1,630,000
    
    
    
    1,630,000Other Assets
    
    
    326,000
    
    
    
    345,000Total Assets
    
    $
    35,337,000
    
    
    $
    41,372,000LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesAccounts Payable
    
    $
    8,232,000
    
    
    $
    9,411,000Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts
    
    
    982,000
    
    
    
    1,125,000Accrued Income Taxes
    
    
    
    
    
    
    44,000Accrued Liabilities
    
    
    4,530,000
    
    
    
    2,742,000Current Portion of Long-Term Debt
    
    
    250,000
    
    
    
    303,000Mandatorily Redeemable Cumulative Convertible Series C Preferred Stock
    
    
    190,000
    
    
    
    137,000Total Current Liabilities
    
    
    14,184,000
    
    
    
    13,762,000Long-Term Debt
    
    
    9,748,000
    
    
    
    15,045,000Mandatorily Redeemable Cumulative Convertible Series C Preferred Stock
    
    
    4,616,000
    
    
    
    4,372,000Total Liabilities
    
    
    28,548,000
    
    
    
    33,179,000Stockholders EquityCommon Stock
    
    
    418,000
    
    
    
    418,000Common Stock Warrants
    
    
    1,628,000
    
    
    
    1,628,000Paid-In Capital
    
    
    20,168,000
    
    
    
    20,111,000Accumulated Deficit
    
    
    (15,387,000
    )
    
    
    (13,926,000
    )Treasury Stock, at Cost
    
    
    (38,000
    )
    
    
    (38,000
    )Total Stockholders Equity
    
    
    6,789,000
    
    
    
    8,193,000Total Liabilities and Stockholders Equity
    
    $
    35,337,000
    
    
    $
    41,372,000
 See accompanying notes to consolidated financial statements.
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PDG ENVIRONMENTAL, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)
 For the Three Months Ended April 30,2009
    
    
    2008Contract Revenues
    
    $
    12,630,000
    
    
    $
    17,715,000Contract Costs
    
    
    10,777,000
    
    
    
    15,482,000Gross Margin
    
    
    1,853,000
    
    
    
    2,233,000(Loss) on Sale of Fixed Assets
    
    
    (18,000
    )
    
    
    (3,000
    )Selling, General and Administrative Expenses
    
    
    2,825,000
    
    
    
    3,461,000(Loss) from Operations
    
    
    (990,000
    )
    
    
    (1,231,000
    )Other Income (Expense):Interest Expense
    
    
    (194,000
    )
    
    
    (203,000
    )Non-Cash Interest Expense for Preferred Dividends and Accretion of Discount
    
    
    (297,000
    )
    
    
    (248,000
    )Interest and Other Income
    
    
    20,000
    
    
    
    21,000(471,000
    )
    
    
    (430,000
    )(Loss) Before Income Taxes
    
    
    (1,461,000
    )
    
    
    (1,661,000
    )Income Tax (Benefit)
    
    
    
    
    
    
    (517,000
    )Net (Loss)
    
    $
    (1,461,000
    )
    
    $
    (1,144,000
    )(Loss) Per Common Share  Basic:
    
    $
    (0.07
    )
    
    $
    (0.05
    )(Loss) Per Common Share  Diluted:
    
    $
    (0.07
    )
    
    $
    (0.05
    )Average Common Shares Outstanding
    
    
    20,875,000
    
    
    
    20,814,000Average Dilutive Common Stock Equivalents Outstanding
    
    
    
    
    
    
    Average Common Shares and Dilutive Common Stock

Equivalents Outstanding
    
    
    20,875,000
    
    
    
    20,814,000
 See accompanying notes to consolidated financial statements.
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PDG ENVIRONMENTAL, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 For the Three Months Ended April 30,2009
    
    
    2008Cash Flows from Operating Activities:Net (Loss)
    
    $
    (1,461,000
    )
    
    $
    (1,144,000
    )Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in)
Operating Activities:Depreciation and Amortization
    
    
    417,000
    
    
    
    450,000Deferred Income Taxes
    
    
    
    
    
    
    (517,000
    )Interest Expense for Series C Preferred Stock Dividends and Accretion of Discount
    
    
    297,000
    
    
    
    248,000Stock Based Compensation
    
    
    57,000
    
    
    
    129,000Loss on Sale of Fixed Assets
    
    
    18,000
    
    
    
    3,000Provision for Receivable Allowance
    
    
    (8,000
    )
    
    
    (680,000
    )
    
    
    (831,000
    )Changes in Operating Assets and Liabilities:Contracts Receivable
    
    
    5,793,000
    
    
    
    2,806,000Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts
    
    
    971,000
    
    
    
    59,000Inventories
    
    
    (18,000
    )
    
    
    88,000Accrued Income Taxes
    
    
    (44,000
    )
    
    
    (68,000
    )Other Current Assets
    
    
    1,307,000
    
    
    
    370,000Accounts Payable
    
    
    (1,179,000
    )
    
    
    (1,793,000
    )Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts
    
    
    (143,000
    )
    
    
    27,000Accrued Liabilities
    
    
    44,000
    
    
    
    (81,000
    )Total Changes
    
    
    6,731,000
    
    
    
    1,408,000Net Cash Provided by Operating Activities
    
    
    6,051,000
    
    
    
    577,000Cash Flows From Investing Activities:Purchase of Property, Plant and Equipment
    
    
    (18,000
    )
    
    
    (86,000
    )Proceeds from Sale of Fixed Assets
    
    
    
    
    
    
    1,000Changes in Other Assets
    
    
    19,000
    
    
    
    3,000Net Cash Provided by (Used in) Investing Activities
    
    
    1,000
    
    
    
    (82,000
    )Cash Flows From Financing Activities:Payment of Premium Financing Liability
    
    
    (986,000
    )
    
    
    (326,000
    )Principal Payments on Debt
    
    
    (5,350,000
    )
    
    
    (172,000
    )Net Cash Used in Financing Activities
    
    
    (6,336,000
    )
    
    
    (498,000
    )Net Decrease in Cash and Cash Equivalents
    
    
    (284,000
    )
    
    
    (3,000
    )Cash and Cash Equivalents, Beginning of Year
    
    
    314,000
    
    
    
    90,000Cash and Cash Equivalents, End of Period
    
    $
    30,000
    
    
    $
    87,000Supplementary Disclosure of Non-Cash Investing and Financing Activity:Financing of Annual Insurance Premium
    
    $
    2,730,000
    
    
    $
    1,313,000Non-Cash Purchase of Fixed Assets Financed Through Capital Leases
    
    $
    
    
    
    $
    27,000
 See accompanying notes to consolidated financial statements.
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PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 AS OF AND FOR THE THREE MONTHS ENDED APRIL 30, 2009

(UNAUDITED)
 NOTE 1  BASIS OF PRESENTATION
    NOTE 2  CONTRACTS RECEIVABLE
  April 30, 2009
    
    
    January 31, 2009Billed Completed Contracts
    
    $
    4,931,000
    
    
    $
    5,092,000Contracts in Progress
    
    
    12,862,000
    
    
    
    18,484,00017,793,000
    
    
    
    23,576,000Less Allowance for Uncollectible Accounts
    
    
    (1,081,000
    )
    
    
    (1,079,000
    )Net Contracts Receivable
    
    $
    16,712,000
    
    
    $
    22,497,000
    NOTE 3  INCOME TAXES
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NOTE 4  TERM DEBT
     NOTE 5  NET LOSS PER COMMON SHARE
  For the Three MonthsEnded April 30,2009
    
    
    2008Numerator:Net (Loss)  Numerator for basic earnings per share  income
available to common stockholders
    
    $
    (1,461,000
    )
    
    $
    (1,144,000
    )Effect of dilutive securities:Preferred stock dividends and accretion of discount
    
    
    
    
    
    
    Numerator for diluted earnings per share  income available to
common stock after assumed conversions
    
    $
    (1,461,000
    )
    
    $
    (1,144,000
    )Denominator:Denominator for basic earnings per share  weighted average shares
    
    $
    20,875,000
    
    
    $
    20,814,000Effect of dilutive securities:Convertible Preferred Stock and related accrued dividends
    
    
    
    
    
    
    Warrants
    
    
    
    
    
    
    Employee Stock Options
    
    
    
    
    
    
    Denominator for diluted earnings per share  adjusted
weighted-average shares and assumed conversions
    
    $
    20,875,000
    
    
    $
    20,814,000Basic (loss) per share
    
    $
    (0.07
    )
    
    $
    (0.05
    )Diluted (loss) per share
    
    $
    (0.07
    )
    
    $
    (0.05
    )
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NOTE 6  STOCK OPTIONS
    NOTE 7  PRIVATE PLACEMENT OF SECURITIES  JULY 2005
 Common Private Placement
 Securities Purchase Agreement
  Common Warrants
   8




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Preferred Private Placement
 Securities Purchase Agreement
    Preferred Warrants
    9




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Terms of the Preferred Stock
       Over-Allotment Warrants
  10




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Registration Rights Agreements
  Warrant Derivative Liability
  Conversion of Preferred Stock to Common Stock
  Exercise of Warrants for Common Stock
  NOTE 8  GOODWILL AND OTHER INTANGIBLE ASSETS
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NOTE 9  NEW ACCOUNTING PRONOUNCEMENTS
 Fair Value Measurements
 Employers Accounting for Defined Benefit Pension
and Other Post Retirement Plans Employers Accounting for Pension, Employers Accounting for Postretirement Benefits Other Than Pensions
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an Amendment of FASB Statement No. 115
 Business Combinations
 Noncontrolling Interests in Consolidated Financial
Statements
 Disclosures about Derivative Instruments and
Hedging Activities  an Amendment of FASB Statement No. 133
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The Hierarchy of Generally Accepted Accounting
Principles The Meaning of Present Fairly in Conformity with Generally
Accepted Accounting Principles.
 Accounting for Financial Guarantee Insurance Contracts -
An Interpretation of FASB Statement No. 60.
 Subsequent Events.
 NOTE 10  SUBSEQUENT EVENTS
 Amendment to Loan Agreement
  
    
    Waiver of the non-compliance with the financial covenants as of January 31, 2009
    
    Modification of financial covenants for the period ended January 31, 2010
    
    Extension of maturity date of loan agreement to August 3, 2010
    
    Interest rate of Prime plus 0.75% (with a floor for Prime of 4.25%)
 Exchange of Series C Preferred Stock
   13




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion should be read in conjunction with the Unaudited Condensed Consolidated
Financial Statements and Notes thereto appearing elsewhere in this report.
   OVERVIEW
    14




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CRITICAL ACCOUNTING POLICIES
  RESULTS OF OPERATIONS
 Three Months Ended April 30, 2009 Compared to Three Months Ended April 30, 2008
       FINANCIAL CONDITION
 Liquidity and Capital Resources
   15




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
   16




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PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 6. EXHIBITS
  ExhibitNumber
    
    Description31.1
    
    Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended,
and Section 302 of The Sarbanes-Oxley Act of 2002, filed herewith.31.2
    
    Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended,
and Section 302 of The Sarbanes-Oxley Act of 2002, filed herewith.32
    
    Certification Pursuant to 18 U.S.C. Section 1350, as amended, pursuant to Section 906 of The
Sarbanes-Oxley Act of 2002, filed herewith.
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SIGNATURES
  PDG ENVIRONMENTAL, INC.By
    /s/ John C. ReganJohn C. ReganChief Executive OfficerBy
    /s/ Nicola BattagliaNicola BattagliaChief Financial Officer  18




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EXHIBIT INDEX
 Exhibit No. and Description
 Exhibit 31.1
    
    Certification Pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934, as amended, and Section 302 of The
Sarbanes-Oxley Act of 2002, filed herewith.Exhibit 31.2
    
    Certification Pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934, as amended, and Section 302 of The
Sarbanes-Oxley Act of 2002, filed herewith.Exhibit 32
    
    Certification Pursuant to 18 U.S.C. Section 1350, as amended,
pursuant to Section 906 of The Sarbanes-Oxley Act of 2002,
filed herewith.
 19